Document:

MERRILL LYNCH                                             UNCONDITIONAL GUARANTY
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FOR VALUE  RECEIVED,  and in order to induce  MERRILL LYNCH  BUSINESS  FINANCIAL
SERVICES INC. ("MLBFS") to advance moneys or extend or continue to extend credit
or lease  property to or for the  benefit of, or modify its credit  relationship
with, or enter into any other financial accommodations with MAIN STREET AND MAIN
INCORPORATED D/B/A TGI FRIDAY'S, a corporation  organized and existing under the
laws of the  State of  Delaware  (with any  successor  in  interest,  including,
without  limitation,  any  successor by merger or by  operation  of law,  herein
collectively  referred to as "Customer")  under:  (a) that certain WCMA REDUCING
REVOLVER LOAN  AGREEMENT  NO.  78M-07B82  between  MLBFS and Customer;  (b) that
certain WCMA REDUCING  REVOLVER LOAN AGREEMENT NO.  78M-07B84  between MLBFS and
Customer (collectively, the "Loan Agreements"); (c) any "Additional Agreements",
as that term is defined in the Loan  Agreements;  and (d) all present and future
amendments,  restatements,  supplements  and other  evidences of any extensions,
increases,  renewals,  modifications  and  other  changes  of  or  to  the  Loan
Agreements  or  any  Additional   Agreements   (collectively,   the  "Guaranteed
Documents"),  and for other good and  valuable  consideration,  the  receipt and
sufficiency  of  which  is  hereby  acknowledged,   THE  UNDERSIGNED,  MAIN  ST.
CALIFORNIA,  INC., a corporation  organized  and existing  under the laws of the
State of Arizona ("Guarantor"),  HEREBY UNCONDITIONALLY GUARANTEES TO MLBFS: (i)
the prompt and full payment when due, by acceleration or otherwise,  of all sums
now or any time  hereafter  due from  Customer  to MLBFS  under  the  Guaranteed
Documents,  (ii) the prompt,  full and  faithful  performance  and  discharge by
Customer of each and every other  covenant and warranty of Customer set forth in
the Guaranteed Documents,  and (iii) the prompt and full payment and performance
of all other  indebtedness,  liabilities  and  obligations of Customer to MLBFS,
howsoever  created or evidenced,  and whether now existing or hereafter  arising
(collectively,   the  "Obligations").   Guarantor  further  agrees  to  pay  all
reasonable  costs and expenses  (including,  but not limited to, court costs and
reasonable  attorneys' fees) paid or incurred by MLBFS in endeavoring to collect
or enforce performance of any of the Obligations, or in enforcing this Guaranty.
Guarantor  acknowledges  that MLBFS is relying on the  execution and delivery of
this Guaranty in advancing moneys to or extending or continuing to extend credit
to or for the benefit of Customer.

This  Guaranty is absolute,  unconditional  and  continuing  and shall remain in
effect until all of the Obligations shall have been fully and indefeasibly paid,
performed and discharged.  Upon the occurrence and during the continuance of any
default or Event of Default under any of the Guaranteed Documents, any or all of
the indebtedness  hereby guaranteed then existing shall, at the option of MLBFS,
become immediately due and payable from Guarantor (it being understood, however,
that upon the  occurrence  of any  "Bankruptcy  Event",  as  defined in the Loan
Agreements,  all such indebtedness  shall  automatically  become due and payable
without action on the part of MLBFS). Notwithstanding the occurrence of any such
event,  this Guaranty shall continue and remain in full force and effect. To the
extent MLBFS receives  payment with respect to the  Obligations,  and all or any
part of such payment is subsequently  invalidated,  declared to be fraudulent or
preferential,  set aside,  required  to be repaid by MLBFS or is repaid by MLBFS
pursuant to a settlement agreement,  to a trustee,  receiver or any other person
or entity, whether under any Bankruptcy law or otherwise (a "Returned Payment"),
this Guaranty shall continue to be effective or shall be reinstated, as the case
may  be,  to the  extent  of  such  payment  or  repayment  by  MLBFS,  and  the
indebtedness or part thereof  intended to be satisfied by such Returned  Payment
shall be revived  and  continued  in full  force and effect as if said  Returned
Payment had not been made.

The liability of Guarantor  hereunder  shall in no event be affected or impaired
by any of the following,  any of which may be done or omitted by MLBFS from time
to time,  without  notice to or the  consent  of  Guarantor:  (a) any  renewals,
amendments,  restatements,  modifications  or  supplements  of or to  any of the
Guaranteed Documents, or any extensions,  forbearances,  compromises or releases
of any of the  Obligations  or any of MLBFS' rights under any of the  Guaranteed
Documents;  (b) any  acceptance  by MLBFS of any  collateral or security for, or
other  guarantees  of,  any of the  Obligations;  (c) any  failure,  neglect  or
omission on the part of MLBFS to realize upon or protect any of the Obligations,
or any collateral or security therefor, or to exercise any lien upon or right of
appropriation  of any  moneys,  credits or  property  of  Customer  or any other
guarantor,  possessed by or under the control of MLBFS or any of its affiliates,
toward the  liquidation  or reduction of the  Obligations;  (d) any  invalidity,
irregularity or unenforceability  of all or any part of the Obligations,  of any
collateral security for the Obligations,  or the Guaranteed  Documents;  (e) any
application  of  payments or credits by MLBFS;  (f) the  granting of credit from
time to time by MLBFS to  Customer  in  excess  of the  amount  set forth in the
Guaranteed Documents; or (g) any other act of commission or omission of any kind
or at any time upon the part of MLBFS or any of its  affiliates  or any of their
respective  employees  or agents with  respect to any matter  whatsoever.  MLBFS
shall not be required at any time,  as a condition  of  Guarantor's  obligations
hereunder,  to resort to payment  from  Customer  or other  persons or  entities
whatsoever,  or any of their properties or estates,  or resort to any collateral
or pursue or exhaust any other rights or remedies whatsoever.

No  release  or  discharge  in whole or in part of any  other  guarantor  of the
Obligations  shall  release or discharge  Guarantor  unless and until all of the
Obligations  shall have been indefeasibly  fully paid and discharged.  Guarantor
expressly waives presentment,  protest,  demand,  notice of dishonor or default,
notice of acceptance of this Guaranty,  notice of advancement of funds under the
Guaranteed  Documents and all other notices and formalities to which Customer or
Guarantor might be entitled, by statute or otherwise,  and, so long as there are
any  Obligations or MLBFS is committed to extend credit to Customer,  waives any
right to revoke or terminate this Guaranty  without the express  written consent
of MLBFS.

So long as there are any Obligations, Guarantor shall not have any claim, remedy
or   right   of   subrogation,    reimbursement,    exoneration,   contribution,
indemnification,  or  participation  in any  claim,  right,  or  remedy of MLBFS
against  Customer or any  security  which MLBFS now has or  hereafter  acquires,
whether or not such claim, right or remedy arises in equity, under contract,  by
statute, under common law, or otherwise.

MLBFS is hereby  irrevocably  authorized  by  Guarantor  at any time  during the
continuance of an Event of Default under any of the Loan Agreements or any other
of the Guaranteed Documents or in respect of any of the Obligations, in its sole
discretion and without demand or notice of any kind, to  appropriate,  hold, set
off and apply toward the payment of any amount due  hereunder,  in such order of
application as MLBFS may elect, all cash, credits, deposits, accounts, financial
assets,  investment  property,  securities  and any other  property of Guarantor
which is in  transit  to or in the  possession,  custody  or control of MLBFS or
Merrill Lynch, Pierce, Fenner & Smith Incorporated  ("MLPF&S"),  or any of their
respective agents, bailees or affiliates.  Guarantor hereby collaterally assigns
and grants to MLBFS a  continuing  security  interest  in all such  property  as
additional  security for the  Obligations.  Upon the  occurrence  and during the
continuance of an Event of Default, MLBFS shall have all rights in such property
available to collateral assignees and secured parties under all applicable laws,
including, without limitation, the Uniform Commercial Code.
<PAGE>
Guarantor  agrees to  furnish  to MLBFS such  financial  information  concerning
Guarantor as may be required by any of the Guaranteed  Documents or as MLBFS may
otherwise  from  time to  time  reasonably  request.  Guarantor  further  hereby
irrevocably  authorizes  MLBFS  and each of its  affiliates,  including  without
limitation MLPF&S, to at any time (whether or not an Event of Default shall have
occurred) obtain from and disclose to each other any and all financial and other
information about Guarantor.

No delay on the part of MLBFS in the  exercise of any right or remedy  under any
of the Guaranteed Documents,  this Guaranty or any other agreement shall operate
as a waiver  thereof,  and,  without  limiting  the  foregoing,  no delay in the
enforcement of any security interest, and no single or partial exercise by MLBFS
of any right or remedy shall preclude any other or further  exercise  thereof or
the exercise of any other right or remedy.  This Guaranty may be executed in any
number of counterparts,  each of which counterparts,  once they are executed and
delivered,  shall be deemed  to be an  original  and all of which  counterparts,
taken together,  shall  constitute but one and the same Guaranty.  This Guaranty
shall be binding upon Guarantor and its successors and assigns,  and shall inure
to the benefit of MLBFS and its successors  and assigns.  If there are more than
one  guarantor of the  Obligations,  all of the  obligations  and  agreements of
Guarantor are joint and several with such other guarantors.

This  Guaranty  shall be governed by the laws of the State of Illinois.  WITHOUT
LIMITING THE RIGHT OF MLBFS TO ENFORCE  THIS  GUARANTY IN ANY  JURISDICTION  AND
VENUE  PERMITTED BY APPLICABLE LAW,  GUARANTOR  AGREES THAT THIS GUARANTY MAY AT
THE OPTION OF MLBFS BE ENFORCED BY MLBFS IN ANY  JURISDICTION AND VENUE IN WHICH
ANY OF THE GUARANTEED DOCUMENTS MAY BE ENFORCED. GUARANTOR AND MLBFS HEREBY EACH
EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,  PROCEEDING
OR COUNTERCLAIM  BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER PARTY IN ANY
WAY RELATED TO OR ARISING  OUT OF THIS  GUARANTY  OR THE  OBLIGATIONS.  Wherever
possible each  provision of this Guaranty shall be interpreted in such manner as
to be effective  and valid under  applicable  law, but if any  provision of this
Guaranty shall be prohibited by or invalid under such law, such provision  shall
be ineffective  only to the extent of such  prohibition  or invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty.  No  modification  or waiver of any of the provisions of this Guaranty
shall be effective unless in writing and signed by both Guarantor and an officer
of MLBFS.  Each  signatory  on behalf of Guarantor  warrants  that he or she has
authority to sign on behalf of Guarantor,  and by so signing,  to bind Guarantor
hereunder.

Dated as of November 22, 1999.

MAIN ST. CALIFORNIA, INC.

By:
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                  Signature (1)                      Signature (2)

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                  Printed Name                       Printed Name

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                  Title                              Title

Address of Guarantor:
           5050 N. 40th Street
           Suite 200
           Phoenix, AZ 85018

                                      -2-MERRILL LYNCH                                                 SECURITY AGREEMENT
================================================================================

SECURITY AGREEMENT ("Agreement") dated as of November 22, 1999, between MAIN ST.
CALIFORNIA,  INC., a corporation  organized  and existing  under the laws of the
State of Arizona having its principal office at 5050 N. 40th Street,  Suite 200,
Phoenix,  AZ 85018  ("Grantor"),  and MERRILL LYNCH BUSINESS  FINANCIAL SERVICES
INC.,  a  corporation  organized  and  existing  under  the laws of the State of
Delaware having its principal  office at 222 North LaSalle Street,  Chicago,  IL
60601 ("MLBFS").

In order to induce  MLBFS to extend or continue to extend  credit to MAIN STREET
AND MAIN INCORPORATED D/B/A TGI FRIDAY'S  ("Customer") under the Loan Agreements
(as defined below) or otherwise,  and for other good and valuable consideration,
the receipt and  sufficiency  of which is hereby  acknowledged,  Grantor  hereby
agrees with MLBFS as follows:

1. DEFINITIONS

(a) SPECIFIC  TERMS.  In addition to terms defined  elsewhere in this Agreement,
when used herein the following terms shall have the following meanings:

(i) "Bankruptcy  Event" shall mean any of the following:  (A) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt or
receivership  law or  statute  shall be  filed or  consented  to by  Grantor  or
Customer;  or (B) any such proceeding shall be filed against Grantor or Customer
and shall not be dismissed or withdrawn within sixty (60) days after filing;  or
(C)  Grantor or  Customer  shall make a general  assignment  for the  benefit of
creditors;  or (D) Grantor or Customer  shall  generally fail to pay or admit in
writing  its  inability  to pay its debts as they  become due; or (E) Grantor or
Customer shall be adjudicated a bankrupt or insolvent.

(ii)  "Business Day" shall mean any day other than a Saturday,  Sunday,  federal
holiday or other day on which the New York Stock Exchange is regularly closed.

(iii)  "Collateral"  shall mean all of the Furniture,  Fixtures and Equipment of
Grantor,  whether now owned or hereafter acquired,  and located at a Location of
Collateral;  together  with all  parts  thereof  (including  spare  parts),  all
accessories and accessions  thereto,  all replacements  therefor,  all books and
records  (including  computer  records)  directly related thereto,  all proceeds
thereof  (including,  without  limitation,  proceeds in the form of Accounts and
insurance  proceeds),  and the additional  collateral described in Section 7 (b)
hereof.

(iv) "Default" shall mean an "Event of Default", as defined in Section 6 hereof,
or any event which with the giving of notice,  passage of time,  or both,  would
constitute such an Event of Default.

(v) Loan  Agreements"  shall mean: (a) that certain WCMA REDUCING  REVOLVER LOAN
AGREEMENT NO.  78M-07B82  between MLBFS and Customer;  and (b) that certain WCMA
REDUCING  REVOLVER  LOAN  AGREEMENT  NO.  78M-07B84  between MLBFS and Customer,
together  with all  agreements,  instruments  and  documents  executed  pursuant
thereto,  as any or all of the  same  may  from  time to  time  be or have  been
amended, restated, extended or supplemented.

(vi) "Location of  Collateral"  shall mean the addresses of Grantor set forth on
any exhibit hereto as being a Location of Collateral.

(vii)  "Obligations"   shall  mean  all  liabilities,   indebtedness  and  other
obligations  of  Customer  or Grantor to MLBFS,  howsoever  created,  arising or
evidenced,  whether  now  existing  or  hereafter  arising,  whether  direct  or
indirect,  absolute or contingent, due or to become due, primary or secondary or
joint or several,  and, without  limiting the foregoing,  shall include interest
accruing  after the filing of any  petition in  bankruptcy,  and all present and
future  liabilities,  indebtedness  and  obligations  of Customer under the Loan
Agreements  and the  agreements,  instruments  and documents  executed  pursuant
thereto, and of Grantor under this Agreement.

(viii)  "Permitted  Liens" shall mean with respect to the Collateral:  (A) liens
for current  taxes not  delinquent,  other  non-consensual  liens arising in the
ordinary  course of  business  for sums not due,  and,  if MLBFS'  rights to and
interest in the Collateral are not  materially and adversely  affected  thereby,
any such liens for taxes or other  non-consensual  liens arising in the ordinary
course of business being contested in good faith by appropriate proceedings; (B)
liens in favor of MLBFS; and (C) any other liens expressly  permitted in writing
by MLBFS.

(b) OTHER TERMS.  Except as  otherwise  defined  herein,  all terms used in this
Agreement which are defined in the Uniform  Commercial Code of Illinois  ("UCC")
shall have the meanings set forth in the UCC.

2. COLLATERAL

(a) PLEDGE OF COLLATERAL.  To secure payment and performance of the Obligations,
Grantor hereby pledges, assigns, transfers and sets over to MLBFS, and grants to
MLBFS a first  lien and  security  interest  in and upon all of the  Collateral,
subject only to Permitted Liens.

(b) LIENS.  Except upon the prior  written  consent of MLBFS,  Grantor shall not
create or permit to exist any lien,  encumbrance  or security  interest  upon or
with  respect  to any  Collateral  now owned or  hereafter  acquired  other than
Permitted Liens.
<PAGE>
(c)  PERFORMANCE OF  OBLIGATIONS.  Grantor shall perform all of its  obligations
owing on account of or with respect to the Collateral;  it being understood that
nothing  herein,  and no action or inaction by MLBFS,  under this  Agreement  or
otherwise,  shall be  deemed an  assumption  by MLBFS of any of  Grantor's  said
obligations.

(d) NOTICE OF CERTAIN EVENTS.  Grantor shall give MLBFS immediate  notice of any
attachment,  lien, judicial process, encumbrance or claim affecting or involving
$25,000.00 or more of the Collateral.

(e) INDEMNIFICATION Grantor shall indemnify, defend and save MLBFS harmless from
and against any and all claims,  losses,  costs,  expenses  (including,  without
limitation,  reasonable  attorneys'  fees and expenses),  demands,  liabilities,
penalties,  fines and forfeitures of any nature whatsoever which may be asserted
against or incurred by MLBFS  arising out of or in any manner  occasioned by (i)
the ownership,  use, operation,  condition or maintenance of any Collateral,  or
(ii) any  failure  by  Grantor  to  perform  any of its  obligations  hereunder;
excluding,  however,  from said indemnity any such claims,  losses, etc. arising
out of the  willful  wrongful  act or active  gross  negligence  of MLBFS.  This
indemnity  shall survive the  expiration or  termination of this Agreement as to
all matters arising or accruing prior to such expiration or termination.

(f)  INSURANCE.  Grantor shall insure all of the  Collateral  with an insurer or
insurers reasonably  acceptable to MLBFS, under a policy or policies of physical
damage insurance  reasonably  acceptable to MLBFS providing that (i) losses will
be payable to MLBFS as its  interests  may appear  pursuant  to a Lender's  Loss
Payable  endorsement  , and (ii) MLBFS will  receive not less than 10 days prior
written notice of any cancellation;  and containing such other provisions as may
be reasonably required by MLBFS.  Grantor shall maintain such other insurance as
may be required by law or otherwise  reasonably required by MLBFS. Grantor shall
furnish  MLBFS with a copy or  certificate  of each such policy or policies and,
prior to any expiration or cancellation, each renewal or replacement thereof.

(g) EVENT OF LOSS.  Grantor shall at its expense  promptly repair all repairable
damage to any  Collateral.  In the event that any  Collateral is damaged  beyond
repair,  lost,  totally  destroyed or confiscated  (an "Event of Loss") and such
Collateral had a value prior to such Event of Loss of $25,000.00 or more,  then,
on or before  the first to occur of (i) 90 days  after  the  occurrence  of such
Event of Loss, or (ii) 10 Business  Days after the date on which either  Grantor
or MLBFS shall  receive any  proceeds of  insurance  on account of such Event of
Loss, or any underwriter of insurance on such tangible  Collateral  shall advise
either Grantor or MLBFS that it disclaims  liability in respect of such Event of
Loss, Grantor shall, at Grantor's option,  either replace the Collateral subject
to such Event of Loss with  comparable  Collateral  free of all liens other than
Permitted  Liens (in which  event  Grantor  shall be  entitled  to  utilize  the
proceeds of insurance on account of such Event of Loss for such purpose, and may
retain any excess proceeds of such insurance), or pay to MLBFS on account of the
Obligations  an amount  equal to the  actual  cash value of such  Collateral  as
determined  by either  the  applicable  insurance  company's  payment  (plus any
applicable   deductible)  or,  in  absence  of  insurance  company  payment,  as
reasonably determined by MLBFS. Notwithstanding the foregoing, if at the time of
occurrence of such Event of Loss or any time thereafter  prior to replacement or
payment, as aforesaid, an Event of Default shall have occurred and be continuing
hereunder, then MLBFS may at its sole option, exercisable at any time while such
Event of Default shall be  continuing,  require  Grantor to either  replace such
Collateral or make a payment on account of the Obligations, as aforesaid.

(h) ALTERATIONS AND MAINTENANCE. Except upon the prior written consent of MLBFS,
Grantor  shall not make or permit any  material  alterations  to any  Collateral
which might  materially  reduce or impair its market  value or utility.  Grantor
shall at all times keep the  Collateral  in good  condition and repair and shall
pay or cause to be paid all obligations  arising from the repair and maintenance
of the Collateral,  as well as all  obligations  with respect to any Location of
Collateral,  except for any such  obligations  being  contested in good faith by
Grantor by appropriate proceedings.

(i)  LOCATION.  Except for  movements  in the ordinary  course of its  business,
Grantor  shall give MLBFS 30 days'  prior  written  notice of the  placing at or
movement of any  Collateral to any location other than a Location of Collateral.
In no event shall Grantor cause or permit any  Collateral to be removed from the
United States without the express prior written consent of MLBFS.

3. REPRESENTATIONS AND WARRANTIES

Grantor represents and warrants to MLBFS that:

(a)  ORGANIZATION.  Grantor is a corporation duly organized and validly existing
in good standing under the laws of the State of Arizona,  and is qualified to do
business  and in good  standing  in each  other  state  where the  nature of its
business or the property owned by it make such qualification necessary.

(b) EXECUTION, DELIVERY AND PERFORMANCE. The execution, delivery and performance
by Grantor of this Agreement have been duly authorized by all requisite  action,
do not and will  not  violate  or  conflict  with any law or other  governmental
requirement, or any of the agreements,  instruments or documents which formed or
governed  Grantor,  and do  not  and  will  not  breach  or  violate  any of the
provisions  of, and will not result in a default  by  Grantor  under,  any other
agreement,  instrument  or document to which it is a party or by which it or its
properties are bound.

(c) NOTICE OR CONSENT.  Except as may have been given or obtained,  no notice to
or consent or  approval of any  governmental  body or  authority  or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection  with the  execution,  delivery or  performance by Grantor of this
Agreement.

(d) VALID AND BINDING. This Agreement is the legal, valid and binding obligation
of  Grantor,  enforceable  against it in  accordance  with its terms,  except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally or by general principles of equity.

(e) FINANCIAL STATEMENTS.  Except as expressly set forth in Grantor 's financial
statements,  all financial  statements  of Grantor  furnished to MLBFS have been
prepared  in  conformity   with  generally   accepted   accounting   principles,
consistently  applied,  are true and correct,  and fairly  present the financial
condition  of it as at such  dates and the  results  of its  operations  for the
periods  then ended;  and since the most recent date  covered by such  financial
statements,  there has been no  material  adverse  change in any such  financial
condition or operation.

                                      -2-
<PAGE>
(f) LITIGATION, ETC. No litigation, arbitration,  administrative or governmental
proceedings are pending or threatened against Grantor, which would, if adversely
determined, materially and adversely affect the financial condition or continued
operations of Grantor, or the liens and security interests of MLBFS hereunder.

(g) TAXES.  All  federal,  state and local tax returns,  reports and  statements
required  to  be  filed  by  Grantor  have  been  filed  with  the   appropriate
governmental  agencies and all taxes due and payable by Grantor have been timely
paid  (except  to the  extent  that  any  such  failure  to file or pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder or the financial condition or continued operations of Grantor).

(h) COLLATERAL.  Grantor has good and marketable  title to the Collateral,  and,
except for any  Permitted  Liens:  (i) none of the  Collateral is subject to any
lien,  encumbrance or security interest, and (ii) upon the filing of all Uniform
Commercial  Code  financing  statements  executed by Grantor with respect to the
Collateral or a copy of this Agreement in the appropriate jurisdiction(s) and/or
the completion of any other action required by applicable law to perfect is lien
and  security  interests,  MLBFS will have valid and  perfected  first liens and
security interests upon all of the Collateral.

Each of the foregoing representations and warranties has been and will be relied
upon as an  inducement to MLBFS to advance funds or extend or continue to extend
credit to  Customer,  and is  continuing  and shall be deemed  remade by Grantor
concurrently with each such advance or extension of credit by MLBFS to Customer.

4. FINANCIAL AND OTHER INFORMATION

Grantor  covenants and agrees that Grantor will furnish or cause to be furnished
to MLBFS during the term of this Agreement such financial and other  information
as may be required by the Loan  Agreements or any other document  evidencing the
Obligations  or as MLBFS may from time to time  reasonably  request  relating to
Grantor or the Collateral.

5. OTHER COVENANTS

Grantor further agrees during the term of this Agreement that:

(a)  FINANCIAL  RECORDS;  INSPECTION.  Grantor will:  (i) maintain  complete and
accurate books and records at its principal place of business,  and maintain all
of its financial  records in a manner  consistent with the financial  statements
heretofore  furnished  to  MLBFS,  or  prepared  on such  other  basis as may be
approved  in  writing by MLBFS;  and (ii)  permit  MLBFS or its duly  authorized
representatives,  upon reasonable notice and at reasonable times, to inspect its
properties (both real and personal), operations, books and records.

(b)  TAXES.  Grantor  will  pay  when  due  all  taxes,  assessments  and  other
governmental  charges,  howsoever  designated,  and all  other  liabilities  and
obligations,  except  to the  extent  that  any  such  failure  to pay  will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder, or the financial condition or continued operations of Grantor.

(c)  COMPLIANCE  WITH LAWS AND  AGREEMENTS.  Grantor  will not  violate any law,
regulation or other governmental requirement, any judgment or order of any court
or governmental agency or authority, or any agreement, instrument or document to
which  it is a party  or by  which  it is  bound,  if any  such  violation  will
materially and adversely affect either the liens and security interests of MLBFS
hereunder, or the financial condition or continued operations of Grantor.

(d)  NOTIFICATION  BY GRANTOR.  Grantor shall provide MLBFS with prompt  written
notification  of: (i) any Default;  (ii) any  materially  adverse  change in the
business,  financial  condition or operations of Customer or Grantor;  and (iii)
any  information  which  indicates that any financial  statements of Customer or
Grantor fail in any material  respect to present fairly the financial  condition
and results of  operations  purported to be presented in such  statements.  Each
notification  by Grantor  pursuant hereto shall specify the event or information
causing such  notification,  and, to the extent  applicable,  shall  specify the
steps being taken to rectify or remedy such event or information.

(e)  NOTICE OF  CHANGE  Grantor  shall  give  MLBFS not less than 30 days  prior
written  notice of any change in the name  (including  any  fictitious  name) or
principal place of business of Grantor.

(f) CONTINUITY.  Except upon the prior written  consent of MLBFS,  which consent
will not be  unreasonably  withheld:  (i)  Grantor  shall  not be a party to any
merger  or  consolidation   with,  or  purchase  or  otherwise  acquire  all  or
substantially  all of the assets of, or any material stock,  partnership,  joint
venture or other equity interest in, any person or entity, or sell,  transfer or
lease all or any substantial part of its assets, if any such action would result
in either: (A) a material change in the principal business, ownership or control
of Grantor,  or (B) a material  adverse  change in the  financial  condition  or
operations  of Grantor;  (ii)  Grantor  shall  preserve its  existence  and good
standing in the  jurisdiction(s)  of establishment and operation;  (iii) Grantor
shall not  engage in any  material  business  substantially  different  from its
business in effect as of the date of  application  by  Customer  for credit from
MLBFS,  or cease  operating any such material  business;  (iv) Grantor shall not
cause or permit any other  person or entity to assume or succeed to any material
business or  operations  of Grantor;  and (iv) Grantor shall not cause or permit
any material change in its controlling ownership.

(g) RELEASE OF COLLATERAL.  Provided no default or Event of Default has occurred
and is continuing,  and provided that MLBFS has received  satisfactory  evidence
that the Maximum WCMA Line of Credit of Customer  will be reduced in  accordance
with  paragraph  3.6 of that certain WCMA Reducing  Revolver Loan  Agreement No.
78M-07B84,  MLBFS will release its lien on the  Collateral of a location that is
sold,  exchanged,  transferred or otherwise  disposed of in accordance  with the
terms of said Loan  Agreement.  In  connection  with any  release,  the  monthly
reduction schedule of Customer will be amended accordingly.

                                      -3-
<PAGE>
6. EVENTS OF DEFAULT

The  occurrence  of any of the  following  events shall  constitute an "Event of
Default" under this Agreement:

(a) EVENT OF DEFAULT UNDER ANY LOAN  AGREEMENT.  An Event of Default shall occur
under the terms of any of the Loan Agreements.

(b) FAILURE TO PERFORM.  Grantor shall default in the  performance or observance
of any covenant or agreement on its part to be performed or observed  under this
Agreement (not  constituting  an Event of Default under any other clause of this
Section),  and such default shall continue unremedied for 10 Business Days after
written notice thereof shall have been given by MLBFS to Grantor.

(c) BREACH OF WARRANTY. Any representation or warranty made by Grantor contained
in this Agreement shall at any time prove to have been incorrect in any material
respect when made.

(d)  DEFAULT  UNDER  OTHER  AGREEMENT.  A default or Event of Default by Grantor
shall occur under the terms of any other agreement,  instrument or document with
or intended  for the benefit of MLBFS,  Merrill  Lynch,  Pierce,  Fenner & Smith
Incorporated  ("MLPF&S")  or any of their  affiliates,  and any required  notice
shall have been given and required passage of time shall have elapsed.

(e)  SEIZURE  OR ABUSE OF  COLLATERAL.  The  Collateral,  or any  material  part
thereof,  shall  be or  become  subject  to any  levy,  attachment,  seizure  or
confiscation which is not released within 10 Business Days.

(f) BANKRUPTCY EVENT. Any Bankruptcy Event shall occur.

(g)  MATERIAL  IMPAIRMENT.  Any event shall occur which shall  reasonably  cause
MLBFS to in good faith  believe that the prospect of payment or  performance  by
Grantor  has  been  materially  impaired.  The  existence  of  such  a  material
impairment shall be determined in a manner consistent with the intent of Section
1-208 of the UCC.

(h) ACCELERATION OF DEBT TO OTHER CREDITORS. Any event shall occur which results
in the  acceleration of the maturity of any  indebtedness of $100,000.00 or more
of Grantor to another creditor under any indenture,  agreement,  undertaking, or
otherwise.

7. REMEDIES

(a) REMEDIES UPON DEFAULT Upon the occurrence and during the  continuance of any
Event of Default,  MLBFS may at its sole option do any one or more or all of the
following,  at such time and in such  order as MLBFS may in its sole  discretion
choose:

(i)  ACCELERATION.  MLBFS may declare all  Obligations  to be forthwith  due and
payable,  whereupon  all such  amounts  shall be  immediately  due and  payable,
without presentment,  demand for payment,  protest and notice of protest, notice
of dishonor,  notice of  acceleration,  notice of intent to  accelerate or other
notice or  formality  of any kind,  all of which are  hereby  expressly  waived;
provided,  however,  that  upon  the  occurrence  of any  Bankruptcy  Event  all
Obligations shall automatically become due and payable without any action on the
part of MLBFS.

(ii)  EXERCISE  RIGHTS OF SECURED  PARTY.  MLBFS may  exercise any or all of the
remedies of a secured party under applicable law, including, but not limited to,
the UCC, and any or all of its other rights and remedies under this Agreement.

(iii)  POSSESSION.  MLBFS may  require  Grantor to make the  Collateral  and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS which is reasonably  convenient to Grantor,  or may take possession of the
Collateral and the records  pertaining to the Collateral  without the use of any
judicial process and without any prior notice to Grantor.

(iv) SALE. MLBFS may sell any or all of the Collateral at public or private sale
upon such terms and  conditions as MLBFS may reasonably  deem proper,  and MLBFS
may purchase any Collateral at any such public sale; and the net proceeds of any
such public or private sale and all other amounts actually collected or received
by MLBFS pursuant hereto, after deducting all costs and expenses incurred at any
time in the collection of the Obligations and in the protection,  collection and
sale of the Collateral, will be applied to the payment of the Obligations,  with
any remaining  proceeds paid to Grantor or whoever else may be entitled thereto,
and with Customer and each guarantor of Customer's obligations remaining jointly
and severally liable for any amount remaining unpaid after such application.

(b) SET-OFF.  MLBFS shall have the further right upon the  occurrence and during
the continuance of an Event of Default to set-off,  appropriate and apply toward
payment of any of the  Obligations,  in such order of  application  as MLBFS may
from time to time and at any time elect, any cash, credits, deposits,  accounts,
financial  assets,  investment  property,  securities  and any other property of
Grantor  which is in  transit  to or in the  possession,  custody  or control of
MLBFS,  MLPF&S or any agent,  bailee,  or affiliate of MLBFS or MLPF&S.  Grantor
hereby collaterally  assigns and grants to MLBFS a security interest in all such
property as additional Collateral.

(c) POWER OF ATTORNEY.  Effective upon the occurrence and during the continuance
of an  Event  of  Default,  Grantor  hereby  irrevocably  appoints  MLBFS as its
attorney-in-fact, with full power of substitution, in its place and stead and in
its name or in the name of MLBFS, to from time to time in MLBFS' sole discretion
take any action and to execute any instrument  which MLBFS may deem necessary or
advisable to  accomplish  the  purposes of this  Agreement,  including,  but not
limited  to, to  receive,  endorse  and  collect  all  checks,  drafts and other
instruments  for the  payment of money made  payable to Grantor  included in the
Collateral.

                                      -4-
<PAGE>
(d)  REMEDIES ARE  SEVERABLE  AND  CUMULATIVE.  All rights and remedies of MLBFS
herein are  severable  and  cumulative  and in addition to all other  rights and
remedies  available at law or in equity,  and any one or more of such rights and
remedies may be exercised  simultaneously  or successively.  Any notice required
under this  Agreement or under  applicable  law shall be deemed  reasonably  and
properly  given to Grantor if given at the  address and by any of the methods of
giving notice set forth in this Agreement at least 5 Business Days before taking
any action specified in such notice.

(e) NOTICES.  To the fullest extent  permitted by applicable law, Grantor hereby
irrevocably  waives and releases MLBFS of and from any and all  liabilities  and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed upon MLBFS relating to notices of sale,  holding of sale or reporting of
any sale, and Grantor waives all rights of redemption or reinstatement  from any
such sale.  MLBFS  shall have the right to postpone or adjourn any sale or other
disposition  of  Collateral  at any  time  without  giving  notice  of any  such
postponed or adjourned  date. In the event MLBFS seeks to take possession of any
or all of the Collateral by court process, Grantor further irrevocably waives to
the  fullest  extent  permitted  by law any  bonds and any  surety  or  security
relating thereto required by any statute, court rule or otherwise as an incident
to such  possession,  and any demand for possession prior to the commencement of
any suit or action.

8. MISCELLANEOUS

(a)  NON-WAIVER.  No  failure  or delay on the part of MLBFS in  exercising  any
right,  power or remedy  pursuant to this  Agreement  shall  operate as a waiver
thereof,  and no single or partial  exercise of any such right,  power or remedy
shall  preclude any other or further  exercise  thereof,  or the exercise of any
other  right,  power or  remedy.  Neither  any waiver of any  provision  of this
Agreement,  nor any  consent to any  departure  by Grantor  therefrom,  shall be
effective unless the same shall be in writing and signed by MLBFS. Any waiver of
any provision of this Agreement and any consent to any departure by Grantor from
the terms of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. Except as otherwise expressly provided
herein,  no notice to or demand on Grantor shall in any case entitle  Grantor to
any other or further notice or demand in similar or other circumstances.

(b) COMMUNICATIONS.  All notices and other communications  required or permitted
hereunder shall be in writing, and shall be either delivered personally,  mailed
by postage  prepaid  certified mail or sent by express  overnight  courier or by
facsimile.  Such notices and  communications  shall be deemed to be given on the
date  of  personal  delivery,  facsimile  transmission  or  actual  delivery  of
certified  mail,  or one  Business  Day after  delivery to an express  overnight
courier.  Unless otherwise specified in a notice sent or delivered in accordance
with the terms  hereof,  notices and other  communications  in writing  shall be
given to the  parties  hereto  at their  respective  addresses  set forth at the
beginning of this Agreement, and, in the case of facsimile transmission,  to the
parties at their respective regular facsimile telephone number.

(c) COSTS,  EXPENSES AND TAXES. Grantor shall pay or reimburse MLBFS upon demand
for:  (i) all  Uniform  Commercial  Code  filing  and search  fees and  expenses
incurred  by  MLBFS  in  connection   with  the   verification,   perfection  or
preservation of MLBFS' rights  hereunder or in the Collateral;  (ii) any and all
stamp,  transfer and other taxes and fees payable or determined to be payable in
connection with the execution,  delivery and/or recording of this Agreement; and
(iii) all reasonable fees and out-of-pocket expenses (including, but not limited
to,  reasonable  fees and  expenses  of outside  counsel)  incurred  by MLBFS in
connection  with the  enforcement  of this Agreement or the protection of MLBFS'
rights hereunder, excluding, however, salaries and expenses of MLBFS' employees.
The  obligations of Grantor under this paragraph shall survive the expiration or
termination of this Agreement and the discharge of the other Obligations.

(d) RIGHT TO PERFORM  OBLIGATIONS.  If Grantor shall fail to do any act or thing
which it has  covenanted  to do under this  Agreement or any  representation  or
warranty on the part of Grantor  contained in this Agreement  shall be breached,
MLBFS may, in its sole discretion,  after 5 Business Days written notice is sent
to Grantor (or such lesser notice,  including no notice,  as is reasonable under
the  circumstances),  do the  same or  cause  it to be done or  remedy  any such
breach,  and may  expend  its funds  for such  purpose.  Any and all  reasonable
amounts so expended by MLBFS shall be repayable to MLBFS by Grantor upon demand,
with interest at the highest "Interest Rate" under the Loan Agreements under any
of the Loan Agreements, or the highest interest rate permitted by law, whichever
is less,  during the period from and including the date funds are so expended by
MLBFS to the date of  repayment,  and any such amounts due and owing MLBFS shall
be  additional  Obligations.  The  payment  or  performance  by  MLBFS of any of
Grantor's obligations hereunder shall not relieve Grantor of said obligations or
of the  consequences  of having failed to pay or perform the same, and shall not
waive or be deemed a cure of any Default.

(e) FURTHER ASSURANCES. Grantor agrees to do such further acts and things and to
execute  and  deliver  to MLBFS  such  additional  agreements,  instruments  and
documents as MLBFS may  reasonably  require or deem  advisable to effectuate the
purposes  of this  Agreement,  or to  establish,  perfect  and  maintain  MLBFS'
security interests and liens upon the Collateral, including, but not limited to:
(i) executing financing  statements or amendments thereto when and as reasonably
requested  by  MLBFS;  and  (ii) if in the  reasonable  judgment  of MLBFS it is
required by local law, causing the owners and/or mortgagees of the real property
on which any  Collateral  may be located to execute and deliver to MLBFS waivers
or subordinations reasonably satisfactory to MLBFS with respect to any rights in
such Collateral.

(f)  BINDING  EFFECT.  This  Agreement  shall be binding  upon  Grantor  and its
successors  and  assigns,  and  shall  inure to the  benefit  of  MLBFS  and its
successors and assigns.

(g) HEADINGS.  Captions and section and paragraph headings in this Agreement are
inserted   only  as  a  matter  of   convenience,   and  shall  not  affect  the
interpretation hereof.

(h) GOVERNING LAW. This Agreement  shall be governed in all respects by the laws
of the State of Illinois.

                                      -5-
<PAGE>
(i)  SEVERABILITY  OF  PROVISIONS.  Whenever  possible,  each  provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law.  Any  provision  of  this  Agreement  which  is  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability  without invalidating
the  remaining  provisions  of this  Agreement  or  affecting  the  validity  or
enforceability of such provision in any other jurisdiction.

(j) TERM. This Agreement shall become  effective upon acceptance by MLBFS,  and,
subject to the terms  hereof,  shall  continue in effect so long  thereafter  as
either MLBFS shall be committed to advance funds or extend credit to Customer or
there shall be any Obligations outstanding.

(k)  COUNTERPARTS.  This  Agreement may be executed in one or more  counterparts
which, when taken together, constitute one and the same agreement.

(l)  JURISDICTION;  WAIVER.  GRANTOR  ACKNOWLEDGES  THAT THIS AGREEMENT IS BEING
ACCEPTED BY MLBFS IN PARTIAL  CONSIDERATION  OF MLBFS' RIGHT AND OPTION,  IN ITS
SOLE DISCRETION, TO ENFORCE THIS AGREEMENT IN EITHER THE STATE OF ILLINOIS OR IN
ANY OTHER  JURISDICTION  WHERE GRANTOR OR ANY COLLATERAL FOR THE OBLIGATIONS MAY
BE LOCATED  GRANTOR  CONSENTS TO JURISDICTION IN THE STATE OF ILLINOIS AND VENUE
IN ANY  STATE OR  FEDERAL  COURT IN THE  COUNTY OF COOK FOR SUCH  PURPOSES,  AND
GRANTOR  WAIVES  ANY AND ALL  RIGHTS TO  CONTEST  SAID  JURISDICTION  AND VENUE.
GRANTOR  FURTHER  WAIVES ANY RIGHTS TO COMMENCE ANY ACTION  AGAINST MLBFS IN ANY
JURISDICTION  EXCEPT  IN THE  COUNTY OF COOK AND  STATE OF  ILLINOIS.  MLBFS AND
GRANTOR HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION,  PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE
OTHER PARTY WITH RESPECT TO ANY MATTER RELATING TO, ARISING OUT OF OR IN ANY WAY
CONNECTED  WITH  THE  LOAN   AGREEMENTS,   THIS  AGREEMENT  AND/OR  ANY  OF  THE
TRANSACTIONS  WHICH  ARE THE  SUBJECT  MATTER  OF THE  LOAN  AGREEMENTS  OR THIS
AGREEMENT.

(m) INTEGRATION. THIS WRITTEN AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING AND
REPRESENTS THE FULL AND FINAL AGREEMENT  BETWEEN THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF,  AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN
AGREEMENTS  OR PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. NO AMENDMENT OR
MODIFICATION OF THIS AGREEMENT SHALL BE EFFECTIVE  UNLESS IN A WRITING SIGNED BY
BOTH MLBFS AND GRANTOR.

IN WITNESS  WHEREOF,  this  Agreement  has been  executed as of the day and year
first above written.

MAIN ST. CALIFORNIA, INC.

By:
    ----------------------------------------------------------------------------
                  Signature (1)                      Signature (2)

--------------------------------------------------------------------------------
                  Printed Name                       Printed Name

--------------------------------------------------------------------------------
                  Title                              Title

Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.

By:
    --------------------------------

                                      -6-

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