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                          CREDIT AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                            FIRST TEAM SPORTS, INC.,

                         HESPELER HOCKEY HOLDING, INC.,

                            HESPELER HOCKEY COMPANY,

                             FIRST TEAM SPORTS GmbH

                                       AND

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION

                         Dated as of: September 8, 1999

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

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<PAGE>

                          CREDIT AND SECURITY AGREEMENT

                          Dated as of September 8, 1999

         First Team Sports, Inc., a Minnesota corporation, Hespeler Hockey
Holding, Inc., a Minnesota corporation, Hespeler Hockey Company, a Nova Scotia
unlimited liability company, and First Team Sports GmbH, an Austrian corporation
(collectively, the "Borrower"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Lender"), hereby agree as
follows:

                                 1. Definitions

         1.1 Definitions.

         For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

                  (a) the terms defined in this Article have the meanings
         assigned to them in this Article, and include the plural as well as the
         singular; and

                  (b) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with GAAP.

                  "Accounts" means all of the Borrower's accounts, as such term
         is defined in the UCC and the PPSA, including without limitation the
         aggregate unpaid obligations of customers and other account debtors to
         the Borrower arising out of the sale or lease of goods or rendition of
         services by the Borrower on an open account or deferred payment basis.

                  "Advance" means a Revolving Advance or a Term Advance.

                  "Affiliate" or "Affiliates" means any Person controlled by,
         controlling or under common control with the Borrower, including
         (without limitation) any Subsidiary of the Borrower. For purposes of
         this definition, "control," when used with respect to any specified
         Person, means the power to direct the management and policies of such
         Person, directly or indirectly, whether through the ownership of voting
         securities, by contract or otherwise.

                  "Agreement" means this Credit and Security Agreement, as
         amended, supplemented or restated from time to time.

                  "Availability" means the difference of (i) the Borrowing Base
         and (ii) the outstanding principal balance of the Revolving Note plus
         the L/C Amount.

                  "Banking Day" means a day other than a Saturday, Sunday or
         other day on which banks are generally not open for business in
         Minneapolis, Minnesota.

<PAGE>

                  "Borrowing Base" means, at any time and subject to change from
         time to time in the Lender's commercially reasonable judgment, the
         lesser of:

                  (a)      the Maximum Line; or

                  (b)      the sum of:

                           (i) 100% of the balance of the Custodial Account, as
                  determined after conversion into U.S. Dollars at Opening
                  Norwest Spot Price in the North American foreign exchange
                  session as quoted by Reuters, plus

                           (ii)     80% of Eligible Accounts, plus

                           (iii)    35% of Eligible Finished Goods Inventory and
                                    20% of Eligible In-Transit Inventory,
                                    provided that in no event shall Availability
                                    attributable to Eligible In-Transit
                                    Inventory exceed $400,000, provided,
                                    further, that (x) during the period from
                                    February 1 through May 31 in any year,
                                    Advances against Eligible Inventory shall
                                    not exceed $3,500,000, or (y) during the
                                    period from June 1 through January 31 in any
                                    year, Advances against Eligible Inventory
                                    shall not exceed $2,500,000.

                  "City of Anoka Subordination Agreement" means the
         Subordination Agreement of even date herewith, executed by the City of
         Anoka, Minnesota in the Lender's favor and acknowledged by the
         Borrower.

                  "Collateral" means all of the Borrower's Equipment, General
         Intangibles, Inventory, Receivables, Investment Property, all sums on
         deposit in the Custodian Account and in any Collateral Account or
         Toronto Dominion Collateral Account, and any items in any Lockbox or
         Toronto Dominion Lockbox; together with (i) all substitutions and
         replacements for and products of any of the foregoing; (ii) proceeds of
         any and all of the foregoing; (iii) in the case of all tangible goods,
         all accessions; (iv) all accessories, attachments, parts, equipment and
         repairs now or hereafter attached or affixed to or used in connection
         with any tangible goods; and (v) all warehouse receipts, bills of
         lading and other documents of title now or hereafter covering such
         goods.

                  "Collateral Account" has the meaning given in the Collateral
         Account Agreement.

                  "Collateral Account Agreement" means the Collateral Account
         Agreement of even date herewith by and among the Borrower and the
         Lender.

                  "Commitment" means the Lender's commitment to make Advances to
         or for the Borrower's account pursuant to Article 2.

                  "Credit Facility" means the credit facility being made
         available to the Borrower by the Lender pursuant to Article 2.

<PAGE>

                  "Custodial Pledge Agreement" means the Custodial Pledge and
         Security Agreement of even date herewith by and among the Borrower and
         the Lender.

                  "Custodial Account" means those accounts maintained with the
         Lender, in the name of the Lender on behalf of the Borrower, to hold
         Austrian shillings and Canadian Dollars.

                  "Dated Accounts" means (i) all Accounts of First Team Sports,
         Inc. that have a stated due date of more than thirty (30) days from the
         invoice date of such Account and (ii) all Accounts of Hespeler Hockey
         Company that have a stated due date of more than forty-five (45) days
         from the invoice date of such Account.

                  "Debt" of any Person means all items of indebtedness or
         liability which in accordance with GAAP would be included in
         determining total liabilities as shown on the liabilities side of a
         balance sheet of that Person as at the date as of which Debt is to be
         determined. For purposes of determining a Person's aggregate Debt at
         any time, "Debt" shall also include the aggregate payments required to
         be made by such Person at any time under any lease that is considered a
         capitalized lease under GAAP.

                  "Default" means an event that, with giving of notice or
         passage of time or both, would constitute an Event of Default.

                  "Default Period" means any period of time beginning on the
         earlier of (i) the day when a Default or Event of Default occurs or
         (ii) the fifteen day of any month during which a Default or Event of
         Default has occurred, and in either case ending on the date the Lender
         notifies the Borrower in writing that such Default or Event of Default
         has been cured or waived.

                  "Default Rate" means, with respect to the Revolving Advances,
         an annual rate equal to two percent (2%) over the Revolving Floating
         Rate, which rate shall change when and as the Revolving Floating Rate
         changes and with respect to the Term Advance, an annual rate equal to
         two percent (2%) over the Term Floating Rate, which rate shall change
         when and as the Term Floating Rate changes.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended.

                  "Earnings After Taxes" for a period means, post-tax earnings
         from continuing operations for such period.

                  "Eligible Accounts" means all unpaid Accounts, net of any
         credits, except the following shall not in any event be deemed Eligible
         Accounts:

                           (i) That portion of (i) Accounts of First Team
                  Sports, Inc. that have a stated due date of 30 days or less
                  after the invoice date that are unpaid after the earlier of 60
                  days or more after such stated due date or 150 days after the
                  shipping date, or (ii) Accounts of Hespeler Hockey Company
                  that have a stated due date of 45 days or less after the
                  invoice date that are unpaid after the earlier of 60 days or

<PAGE>

                  more after such stated due date or 150 days after the shipping
                  date, provided, however, that Dated Accounts shall be
                  ineligible if not paid within 30 days of the stated due date
                  or 150 days after the shipping date;

                           (ii) That portion of Accounts that is disputed or
                  subject to a claim of offset or a contra account;

                           (iii) That portion of Accounts not yet earned by the
                  final delivery of goods or rendition of services, as
                  applicable, by the Borrower to the customer;

                           (iv) Accounts owed by any unit of government, whether
                  foreign or domestic (provided, however, that there shall be
                  included in Eligible Accounts that portion of Accounts owed by
                  such units of government for which the Borrower has provided
                  evidence satisfactory to the Lender that (A) the Lender has a
                  first priority perfected security interest and (B) such
                  Accounts may be enforced by the Lender directly against such
                  unit of government under all applicable laws);

                           (v) Accounts owed by an account debtor located
                  outside the United States or Canada which are not (A) backed
                  by a bank letter of credit naming the Lender as beneficiary or
                  assigned to the Lender, in the Lender's possession and
                  acceptable to the Lender in all respects, in its sole
                  discretion, (B) covered by a foreign receivables insurance
                  policy acceptable to the Lender in its sole discretion;

                           (vi) Accounts owed by an account debtor that is
                  insolvent, the subject of bankruptcy proceedings or has gone
                  out of business;

                           (vii) Accounts owed by a shareholder, Subsidiary,
                  Affiliate, officer or employee of the Borrower;

                           (viii) Accounts not subject to a duly perfected
                  security interest in the Lender's favor or which are subject
                  to any lien, security interest or claim in favor of any Person
                  other than the Lender including without limitation any payment
                  or performance bond;

                           (ix) That portion of Accounts that has been
                  restructured, extended, amended or modified;

                           (x) That portion of Accounts that constitutes
                  advertising, finance charges, service charges or sales or
                  excise taxes;

                           (xi) Accounts owed by an account debtor, regardless
                  of whether otherwise eligible, if 25% or more of the total
                  amount due under Accounts from such debtor is ineligible under
                  clauses (i), (ii) or (ix) above;

                           (xii) Accounts owed by any one account debtor to the
                  extent such Accounts exceed 15% of the Borrower's total
                  Accounts;

<PAGE>

                           (xiii)   Accounts of First Team Sports GmbH;

                           (xiv) Accounts whose invoice amount equals or exceeds
                  $50,000, unless the Lender receives copies of such invoices
                  and corresponding shipping documents and such documents are
                  deemed acceptable to the Lender in its sole discretion; and

                           (xv) Accounts, or portions thereof, otherwise deemed
                  ineligible by the Lender in its sole discretion.

                  "Eligible Finished Goods Inventory" means Eligible Inventory
         consisting of finished goods ready for sale by Borrower.

                  "Eligible In-Transit Inventory" means Inventory manufactured
         in Asia that the Borrower takes title to immediately after such
         Inventory has left its Asian port in route to the United States.

                  "Eligible Inventory" means all Inventory of the Borrower, at
         the lower of cost or market value as determined in accordance with
         GAAP; provided, however, that the following shall not in any event be
         deemed Eligible Inventory:

                           (i)

                           (i) Inventory that is: in-transit (but not including
                  Eligible In-Transit Inventory as such term is defined herein);
                  located at any warehouse, job site or other premises not
                  approved by the Lender in writing; located outside of the
                  states, or localities, as applicable, in which the Lender has
                  filed financing statements to perfect a first priority
                  security interest in such Inventory; covered by any negotiable
                  or non-negotiable warehouse receipt, bill of lading or other
                  document of title; on consignment from any Person; on
                  consignment to any Person or subject to any bailment unless
                  such consignee or bailee has executed an agreement with the
                  Lender;

                           (ii) Supplies, packaging, parts, raw materials or
                  sample Inventory;

                           (iii) Work-in-process Inventory;

                           (iv) Inventory that is damaged, obsolete, slow moving
                  or not currently saleable in the normal course of the
                  Borrower's operations;

                           (v) Inventory that the Borrower has returned, has
                  attempted to return, is in the process of returning or intends
                  to return to the vendor thereof;

                           (vi) Inventory that is perishable or live;

                           (vii) Inventory manufactured by the Borrower pursuant
                  to a license unless the applicable licensor has agreed in
                  writing to permit the Lender to exercise its rights and
                  remedies against such Inventory except that Kablooe Product

<PAGE>

                  Inc. and Creative Pool Trendscouting GmbH shall be deemed
                  Eligible Inventory; provided, however, if no Default or Event
                  of Default has occurred and is continuing hereunder, the
                  Inventory manufactured by the Borrower pursuant to those
                  certain license agreements between the Borrower and WDG
                  Enterprises, Inc. and International Marketing Management,
                  L.L.C., respectively, shall be deemed to be Eligible Inventory
                  for a period of ninety (90) days from the date of this
                  Agreement even though such licensors have not agreed in
                  writing to permit the Lender to exercise its rights and
                  remedies against such Inventory;

                           (viii) Inventory that is subject to a security
                  interest in favor of any Person other than the Lender;

                           (ix) Inventory that is located in Canada or Austria;
                  and

                           (x) Inventory otherwise deemed ineligible by the
                  Lender in its sole discretion.

                  "Environmental Indemnity Agreement" means the Environmental
         Indemnity Agreement dated of even date herewith and executed by First
         Team Sports, Inc. in favor of the Lender with regard to the Premises.

                 "Environmental Laws" has the meaning specified in Section 5.12.

                  "Equipment" means all of the Borrower's equipment, as such
         term is defined in the UCC and the PPSA, whether now owned or hereafter
         acquired, including but not limited to all present and future
         machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
         equipment, office and record-keeping equipment, parts, tools, supplies,
         and including specifically (without limitation) the goods described in
         any equipment schedule or list herewith or hereafter furnished to the
         Lender by the Borrower.

                  "Event of Default" has the meaning specified in Section 8.1.

                  "Funding Date" has the meaning given in Section 2.1.

                  "GAAP" means generally accepted accounting principles, applied
         on a basis consistent with the accounting practices applied in the
         financial statements described in Section 5.5.

                  "General Intangibles" or "Intangibles" means all of the
         Borrower's general intangibles, as such term is defined in the UCC and
         the PPSA, whether now owned or hereafter acquired, including (without
         limitation) all present and future patents, patent applications,
         copyrights, trademarks, trade names, trade secrets, customer or
         supplier lists and contracts, manuals, operating instructions, permits,
         franchises, the right to use the Borrower's name, and the goodwill of
         the Borrower's business.

                  "Hazardous Substance" has the meaning given in Section 5.12.

<PAGE>

                  "Inventory" means all of the Borrower's inventory, as such
         term is defined in the UCC and the PPSA, whether now owned or hereafter
         acquired, whether consisting of whole goods, spare parts or components,
         supplies or materials, whether acquired, held or furnished for sale,
         for lease or under service contracts or for manufacture or processing,
         and wherever located.

                  "Investment Property" means all of the Borrower's investment
         property, as such term is defined in the UCC, whether now owned or
         hereafter acquired, including but not limited to all securities,
         security entitlements, securities accounts, commodity contracts,
         commodity accounts, stocks, bonds, mutual fund shares, money market
         shares and U.S. Government securities.

                  "L/C Amount" means the sum of (i) the aggregate undrawn face
         amount of any issued and outstanding Letters of Credit and (ii) the
         unpaid amount of the Obligation of Reimbursement.

                  "L/C Application" means an application and agreement for
         letters of credit in a form acceptable to the Lender.

                  "Letter of Credit" has the meaning specified in Section 2.2.

                  "Life Insurance Assignment" means an Assignment of Life
         Insurance Policy as Collateral to be executed by the owner and the
         beneficiary thereof, in form and substance satisfactory to the Lender,
         granting the Lender a first priority lien on the Life Insurance Policy
         to secure payment of the Obligations.

                  "Life Insurance Policy" has the meaning given in Section 6.11.

                  "Loan Documents" means this Agreement, the Notes and the
         Security Documents.

                  "Lockbox" has the meaning given in the Lockbox Agreement.

                  "Lockbox Agreement" means the Lockbox Agreement by and among
         the Borrower and the Lender, of even date herewith.

                  "Maturity Date" means August 31, 2002.

                  "Maximum Line" means $10,000,000, unless said amount is
         reduced pursuant to Section 2.10, in which event it means the amount to
         which said amount is reduced.

                  "Mortgage" means the Mortgage and Security Agreement and
         Fixture Financing Statement dated of even date herewith and executed by
         First Team Sports, Inc. in favor of the Lender, granting the Lender a
         first priority lien with regard to the Borrower's facility in the
         Premises.

<PAGE>

                  "Net Worth" means the Borrower's fiscal year-to-date after-tax
         net worth minus any dividends distributed by the Borrower in such
         fiscal year, as determined in accordance with GAAP.

                  "Note" means the Revolving Note or the Term Note, and "Notes"
         means the Revolving Note and the Term Note.

                  "Obligations" means the Notes and each and every other debt,
         liability and obligation of every type and description which the
         Borrower may now or at any time hereafter owe to the Lender, whether
         such debt, liability or obligation now exists or is hereafter created
         or incurred, whether it arises in a transaction involving the Lender
         alone or in a transaction involving other creditors of the Borrower,
         and whether it is direct or indirect, due or to become due, absolute or
         contingent, primary or secondary, liquidated or unliquidated, or sole,
         joint, several or joint and several, and including specifically, but
         not limited to, all indebtedness of the Borrower arising under this
         Agreement, the Notes or any other loan or credit agreement or guaranty
         between the Borrower and the Lender, whether now in effect or hereafter
         entered into.

                  "Obligations of Reimbursement" has the meaning given in
         Section 2.3.

                  "Patent Security Agreement" means the Patent and Trademark
         Security Agreement by the Borrower in favor of the Lender of even date
         herewith.

                  "Permitted Lien" has the meaning given in Section 7.1.

                  "Person" means any individual, corporation, partnership, joint
         venture, limited liability company, association, joint-stock company,
         trust, unincorporated organization or government or any agency or
         political subdivision thereof.

                  "Plan" means an employee benefit plan or other plan maintained
         for the Borrower's employees and covered by Title IV of ERISA.

                  "PPSA" means the Personal Property Security Act (Ontario), as
         in effect from time to time.

                  "Premises" means all premises where the Borrower conducts its
         business and has any rights of possession, including, but not limited
         to, the premises legally described in Exhibit D attached hereto.

                  "Prime Rate" means the rate of interest publicly announced
         from time to time by the Lender as its "prime rate" or, if such bank
         ceases to announce a rate so designated, any similar successor rate
         designated by the Lender.

                  "Receivables" means each and every right of the Borrower to
         the payment of money, whether such right to payment now exists or
         hereafter arises, whether such right to payment arises out of a sale,
         lease or other disposition of goods or other property, out of a
         rendering of services, out of a loan, out of the overpayment of taxes
         or other liabilities, or otherwise arises under any contract or

<PAGE>

         agreement, whether such right to payment is created, generated or
         earned by the Borrower or by some other person who subsequently
         transfers such person's interest to the Borrower, whether such right to
         payment is or is not already earned by performance, and howsoever such
         right to payment may be evidenced, together with all other rights and
         interests (including all liens and security interests) which the
         Borrower may at any time have by law or agreement against any account
         debtor or other obligor obligated to make any such payment or against
         any property of such account debtor or other obligor; all including but
         not limited to all present and future accounts, contract rights, loans
         and obligations receivable, chattel papers, bonds, notes and other debt
         instruments, tax refunds and rights to payment in the nature of general
         intangibles.

                  "Reportable Event" shall have the meaning assigned to that
         term in Title IV of ERISA.

                  "Revolving Advance" has the meaning given in Section 2.1.

                  "Revolving Floating Rate" means an annual rate equal to the
         Prime Rate, which annual rate shall change when and as the Prime Rate
         changes.

                  "Revolving Note" means the Borrower's revolving promissory
         notes, payable to the order of the Lender in substantially the form of
         Exhibit A hereto and any note or notes issued in substitution therefor,
         as the same may hereafter be amended, supplemented or restated from
         time to time.

                  "Security Documents" means this Agreement, the Mortgage, the
         Environmental Indemnity Agreement, the Collateral Account Agreement,
         the Lockbox Agreement, the Toronto-Dominion Lockbox Agreement, the
         Custodial Pledge Agreement, the Patent Security Agreement and any other
         document delivered to the Lender from time to time to secure the
         Obligations, as the same may hereafter be amended, supplemented or
         restated from time to time.

                  "Security Interest" has the meaning given in Section 3.1.

                  "Subordination Agreement" means the City of Anoka
         Subordiantion Agreement and any other subordination agreement accepted
         by the Lender from time to time, as the same may hereafter be amended,
         supplemented or restated from time to time.

                  "Subsidiary" means any corporation of which more than 50% of
         the outstanding shares of capital stock having general voting power
         under ordinary circumstances to elect a majority of the board of
         directors of such corporation, irrespective of whether or not at the
         time stock of any other class or classes shall have or might have
         voting power by reason of the happening of any contingency, is at the
         time directly or indirectly owned by the Borrower, by the Borrower and
         one or more other Subsidiaries, or by one or more other Subsidiaries.

                  "Term Advance" has the meaning specified in Section 2.4.

<PAGE>

                  "Term Floating Rate" means an annual rate equal to the Prime
         Rate, which annual rate shall change when and as the Prime Rate
         changes.

                  "Term Note" means the Borrower's promissory note, payable to
         the order of the Lender in substantially the form of Exhibit B hereto
         and any note or notes issued in substitution therefor, as the same may
         hereafter be amended, supplemented or restated from time to time.

                  "Termination Date" means the earliest of (i) the Maturity
         Date, (ii) the date the Borrower terminates the Credit Facility, or
         (iii) the date the Lender demands payment of the Obligations.

                  "Toronto-Dominion Lockbox" has the meaning given in the
         Toronto-Dominion Lockbox Agreement.

                  "Toronto-Dominion Lockbox Agreement" means the Lockbox
         Agreement by and among the Borrower and The Toronto-Dominion Bank, of
         even date herewith.

                  "UCC" means the Uniform Commercial Code as in effect from time
         to time in the state designated in Section 9.13 as the state whose laws
         shall govern this Agreement, or in any other state whose laws are held
         to govern this Agreement or any portion hereof.

         1.2 Cross References.

         All references in this Agreement to Articles, Sections and subsections,
shall be to Articles, Sections and subsections of this Agreement unless
otherwise explicitly specified.

                   2. Amount and Terms of the Credit Facility

         2.1 Revolving Advances.

         The Lender agrees to make advances to the Borrower from time to time
from the date all of the conditions set forth in Section 4.1 are satisfied (the
"Funding Date") to the Termination Date, on the terms and subject to the
conditions herein set forth (the "Revolving Advances"). The Lender shall have no
obligation to make a Revolving Advance if, after giving effect to such requested
Revolving Advance, the sum of the outstanding and unpaid Revolving Advances
would exceed the Borrowing Base. The Borrower's obligation to pay the Revolving
Advances shall be evidenced by the Revolving Note and shall be secured by the
Collateral as provided in Article 3 and by the Mortgage, provided, however, that
the amount of Revolving Advances secured by the Mortgage shall be limited to
$1,500,000. Within the limits set forth in this Section 2.1, the Borrower may
borrow, prepay pursuant to Section 2.10 and reborrow. The Borrower agrees to
comply with the following procedures in requesting Revolving Advances under this
Section 2.1:

                  (a) The Borrower shall make each request for a Revolving
         Advance to the Lender before 11:00 a.m. (Minneapolis time) of the day
         of the requested Revolving Advance. Requests may be made in writing or
         by telephone, specifying the date of the requested Revolving Advance
         and the amount thereof. Each request shall be by (i) any officer of the
         Borrower; or (ii) any person designated as the Borrower's agent by any

<PAGE>

         officer of the Borrower in a writing delivered to the Lender; or (iii)
         any person whom the Lender reasonably believes to be an officer of the
         Borrower or such a designated agent.

                  (b) Upon fulfillment of the applicable conditions set forth in
         Article 4, the Lender shall disburse the proceeds of the requested
         Revolving Advance by crediting the same to the Borrower's demand
         deposit account maintained with the Lender unless the Lender and the
         Borrower shall agree in writing to another manner of disbursement. Upon
         the Lender's request, the Borrower shall promptly confirm each
         telephonic request for an Advance by executing and delivering an
         appropriate confirmation certificate to the Lender. The Borrower shall
         repay all Advances even if the Lender does not receive such
         confirmation and even if the person requesting an Advance was not in
         fact authorized to do so. Any request for an Advance, whether written
         or telephonic, shall be deemed to be a representation by the Borrower
         that the conditions set forth in Section 4.2 have been satisfied as of
         the time of the request.

         2.2 Letters of Credit.

                  (a) The Lender agrees, on the terms and subject to the
         conditions herein set forth, to issue, from the Funding Date to the
         Termination Date, one or more irrevocable standby or documentary
         letters of credit (each, a "Letter of Credit") for the Borrower's
         account. The Lender shall have no obligation to issue any Letter of
         Credit if the face amount of the Letter of Credit to be issued would
         exceed the Borrowing Base less the sum of (A) all outstanding and
         unpaid Revolving Advances and (B) the L/C Amount.

         Each Letter of Credit, if any, shall be issued pursuant to a separate
         L/C Application entered into by the Borrower and the Lender and
         completed in a manner satisfactory to the Lender. The terms and
         conditions set forth in each such L/C Application shall supplement the
         terms and conditions hereof, but if the terms of any such L/C
         Application and the terms of this Agreement are inconsistent, the terms
         hereof shall control.

                  (b) No Letter of Credit shall be issued with an expiration
         date later than the Termination Date in effect as of the date of
         issuance.

                  (c) Any request to cause the Lender to issue a Letter of
         Credit under this Section 2.2 shall be deemed to be a representation by
         the Borrower that the conditions set forth in Section 4.2 have been
         satisfied as of the date of the request.

         2.3 Payment of Amounts Drawn Under Letters of Credit; Obligation of
Reimbursement.

         The Borrower agrees to pay to the Lender any and all amounts required
to be paid under the applicable L/C Application, when and as required to be paid
thereby, and the amounts designated below, when and as designated:

                  (a) The Borrower hereby agrees to pay the Lender on the day a
         draft is honored under any Letter of Credit a sum equal to all amounts
         drawn under such Letter of Credit plus any and all reasonable charges
         and expenses that the Lender may pay or incur relative to such draw and

<PAGE>

         the applicable L/C Application, plus interest on all such amounts,
         charges and expenses as set forth below (the Borrower's obligation to
         pay all such amounts is herein referred to as the "Obligation of
         Reimbursement").

                  (b) Whenever a draft is submitted under a Letter of Credit,
         the Lender shall make a Revolving Advance in the amount of the
         Obligation of Reimbursement and shall apply the proceeds of such
         Revolving Advance thereto. Such Revolving Advance shall be repayable in
         accordance with and be treated in all other respects as a Revolving
         Advance hereunder.

                  (c) If a draft is submitted under a Letter of Credit when the
         Borrower is unable, because a Default Period then exists or for any
         other reason, to obtain a Revolving Advance to pay the Obligation of
         Reimbursement, the Borrower shall pay to the Lender on demand and in
         immediately available funds, the amount of the Obligation of
         Reimbursement together with interest, accrued from the date of the
         draft until payment in full at the Default Rate. Notwithstanding the
         Borrower's inability to obtain a Revolving Advance for any reason, the
         Lender is irrevocably authorized, in its sole discretion, to make a
         Revolving Advance in an amount sufficient to discharge the Obligation
         of Reimbursement and all accrued but unpaid interest thereon.

                  (d) The Borrower's obligation to pay any Revolving Advance
         made under this Section 2.3 shall be evidenced by Revolving Note and
         shall bear interest as provided in Section 2.6.

         2.4 Term Advance.

         The Lender agrees, on the terms and subject to the conditions herein
set forth, to make a single advance to the Borrower (via a title insurance
company) in an amount not to exceed $4,500,000, on or after the Funding Date
(the "Term Advance"). The Borrower's obligation to pay the Term Advance shall be
evidenced by the Term Note and shall be secured by the Mortgage. Upon
fulfillment of the applicable conditions set forth in Article 4, the Lender
shall deposit the proceeds of the Term Advance by crediting the same to the
Borrower's demand deposit account identified in Section 2.1(b), unless the
Lender and the Borrower shall agree in writing to another manner of
disbursement.

         2.5 Payment of Term Note.

         The outstanding principal balance of the Term Note shall be due and
payable as follows:

                  (a) Beginning on October 1, 1999, and on the first day of each
         month thereafter, in monthly principal installments equal to $18,750,
         plus interest.

                  (b) On the Termination Date, the entire unpaid principal
         balance of the Term Note, and all unpaid interest accrued thereon,
         shall in any event be due and payable.

<PAGE>

         2.6 Interest; Default Interest; Participations; Usury.

         Interest accruing on the Notes shall be due and payable in arrears on
the first day of each month.

                  (a) Revolving Note. Except as set forth in Sections 2.6(c) and
         2.6(e), the outstanding principal balance of the Revolving Note shall
         bear interest at the Revolving Floating Rate; provided, however, if the
         Borrower generates Net Income of no less than $500,000 for its fiscal
         year ending February 28, 2000 and no Default or Event of Default has
         occurred and is continuing hereunder, the Revolving Note shall bear
         interest at the Revolving Floating Rate less one quarter of one percent
         (.25%) per annum, effective within thirty (30) days of the Lender's
         receipt of the audited financial statements required under Section
         6.1(a).

                  (b) Term Note. Except as set forth in Sections 2.6(c) and
         2.6(e), the outstanding principal balance of the Term Note shall bear
         interest at the Term Floating Rate; provided, however, if the Borrower
         generates Net Income of no less than $500,000 for its fiscal year
         ending February 28, 2000 and no Default or Event of Default has
         occurred and is continuing hereunder, the Term Note shall bear interest
         at the Term Floating Rate less one quarter of one percent (.25%) per
         annum, effective within thirty (30) days of the Lender's receipt of the
         audited financial statements required under Section 6.1(a).

                  (c) Default Interest Rate. At any time during any Default
         Period, in the Lender's sole discretion and without waiving any of its
         other rights and remedies, the principal of the Advances outstanding
         from time to time shall bear interest at the Default Rate, effective
         for any periods designated by the Lender from time to time during that
         Default Period.

                  (d) Participations. If any Person shall acquire a
         participation in the Advances under this Agreement, the Borrower shall
         be obligated to the Lender to pay the full amount of all interest
         calculated under this Agreement, along with all other fees, charges and
         other amounts due under this Agreement, regardless if such Person
         elects to accept interest with respect to its participation at a lower
         rate than the Revolving Floating Rate or the Term Floating Rate, or
         otherwise elects to accept less than its pro rate share of such fees,
         charges and other amounts due under this Agreement.

                  (e) Usury. In any event no rate change shall be put into
         effect which would result in a rate greater than the highest rate
         permitted by law.

         2.7 Fees.

                  (a) Origination Fee. The Borrower hereby agrees to pay the
         Lender a fully earned and non-refundable origination fee of $34,000,
         due and payable upon the execution of this Agreement. The Lender
         acknowledges receipt of $19,000 toward payment of this fee and the
         fees, costs and expenses described in Sections 2.7(b) and 9.6.

<PAGE>

                  (b) Unused Line Fee. For the purposes of this Section 2.7(b),
         "Unused Amount" means the Maximum Line reduced by outstanding Revolving
         Advances and the L/C Amount. The Borrower agrees to pay to the Lender
         an unused line fee at the rate of one quarter of one percent (.25%) per
         annum on the average daily Unused Amount from the date of this
         Agreement to and including the Termination Date, due and payable
         monthly in arrears on the first day of the month and on the Termination
         Date.

                  (c) Audit Fees. The Borrower hereby agrees to pay the Lender,
         on demand, audit fees in connection with any audits or inspections
         conducted by the Lender of any Collateral or the Borrower's operations
         or business at the rates established from time to time by the Lender as
         its audit fees (which fees are currently $500 per day per auditor or
         $62.50 per hour per auditor), together with all actual out-of-pocket
         costs and expenses incurred in conducting any such audit or inspection;
         provided, however, that except during Default Periods, the Borrower
         shall not have to reimburse the Lender for such fees, costs and
         expenses to the extent they exceed $5000 per calendar year. For the
         purposes of this subsection, the term "audit fees" shall not include
         the fees incured by the Lender as a result of due diligence and audit
         pick-ups conducted prior to the date of this Agreement, which fees
         shall be reimbursed by the Borrower up to the amount of $5000.

         2.8 Computation of Interest and Fees; When Interest Due and Payable.

         Interest accruing on the outstanding principal balance of the Advances
and fees hereunder outstanding from time to time shall be computed on the basis
of actual number of days elapsed in a year of 360 days. Interest shall be
payable in arrears on the first day of each month and on the Termination Date.

         2.9 Capital Adequacy.

         If any Related Lender determines at any time that its Return has been
reduced as a result of any Rule Change, such Related Lender may require the
Borrower to pay it the amount necessary to restore its Return to what it would
have been had there been no Rule Change; provided, however, that the Borrower
may prepay without penalty under Section 2.11 or this Section 2.9, all, but not
part, of the Revolving Advances and the Term Advance by obtaining a firm
commitment to lend with terms substantially similar to the terms of the Loan
Facility but, after giving effect to the Rule Change, the loan resulting from
such firm commitment will not subject the Borrower to the costs being required
by such Related Lender to restore its Return. For purposes of this Section 2.9:

                  (a) "Capital Adequacy Rule" means any law, rule, regulation,
         guideline, directive, requirement or request regarding capital
         adequacy, or the interpretation or administration thereof by any
         governmental or regulatory authority, central bank or comparable
         agency, whether or not having the force of law, that applies to any
         Related Lender. Such rules include rules requiring financial
         institutions to maintain total capital in amounts based upon
         percentages of outstanding loans, binding loan commitments and letters
         of credit.

<PAGE>

                  (b) "Return," for any period, means the return as determined
         by such Related Lender on the Advances based upon its total capital
         requirements and a reasonable attribution formula that takes account of
         the Capital Adequacy Rules then in effect. Return may be calculated for
         each calendar quarter and for the shorter period between the end of a
         calendar quarter and the date of termination in whole of this
         Agreement.

                  (c) "Rule Change" means any change in any Capital Adequacy
         Rule occurring after the date of this Agreement, but the term does not
         include any changes in applicable requirements that at the Closing Date
         are scheduled to take place under the existing Capital Adequacy Rules
         or any increases in the capital that any Related Lender is required to
         maintain to the extent that the increases are required due to a
         regulatory authority's assessment of the financial condition of such
         Related Lender.

                  (d) "Related Lender" includes (but is not limited to) the
         Lender, any parent corporation of the Lender and any assignee of any
         interest of the Lender hereunder and any participant in the loans made
         hereunder.

Certificates of any Related Lender sent to the Borrower from time to time
claiming compensation under this Section 2.9, stating the reason therefor and
setting forth in reasonable detail the calculation of the additional amount or
amounts to be paid to the Related Lender hereunder to restore its Return shall
be conclusive absent manifest error. In determining such amounts, the Related
Lender may use any reasonable averaging and attribution methods.

         2.10 Voluntary Prepayment; Reduction of the Maximum Line; Termination
of the Credit Facility by the Borrower.

         Except as otherwise provided herein, the Borrower may prepay the
Revolving Advances in whole at any time or from time to time in part. The
Borrower may prepay the Term Advance (other than in accordance with Section
2.5), terminate the Credit Facility or reduce the Maximum Line at any time if it
(i) gives the Lender at least 30 days' prior written notice and (ii) pays the
Lender the prepayment, termination or line reduction fees in accordance with
Section 2.11. Any prepayment of the Term Advance (other than in accordance with
Section 2.5) or reduction in the Maximum Line must be in an amount not less than
$100,000 or an integral multiple thereof. If the Borrower reduces the Maximum
Line to zero, all Obligations shall be immediately due and payable. Any partial
prepayments of the Term Note (other than in accordance with Section 2.5) shall
be applied to principal payments due and owing in inverse order of their
maturities. Upon termination of the Credit Facility and payment and performance
of all Obligations, the Lender shall release or terminate the Security Interest
and the Security Documents.

         2.11 Termination and Line Reduction Fees; Prepayment Fees.

                  (a) Termination and Line Reduction Fees. If the Credit
         Facility is terminated for any reason as of a date other than the
         Maturity Date, or the Borrower reduces the Maximum Line, the Borrower
         shall pay to the Lender a fee in an amount equal to a percentage of the
         Maximum Line (or the reduction, as the case may be) as follows: (i)
         three percent (3%) if the termination or reduction occurs on or before

<PAGE>

         the first anniversary of the Funding Date; (ii)two percent (2%) if the
         termination or reduction occurs after the first anniversary of the
         Funding Date but on or before the second anniversary of the Funding
         Date; and (iii) one percent (1%) if the termination or reduction occurs
         after the second anniversary of the Funding Date.

                  (b) Prepayment Fees. If any portion of the Term Note is paid
         other than in accordance with Section 2.5, the Borrower shall pay to
         the Lender a prepayment fee in an amount equal to a percentage of the
         amount so paid as follows: (i) three percent (3%) if the payment occurs
         on or before the first anniversary of the Funding Date; (ii) two
         percent (2%) if the payment occurs after the first anniversary of the
         Funding Date but on or before the second anniversary of the Funding
         Date; and (iii) one percent (1%) if the payment occurs after the second
         anniversary of the Funding Date. Any partial prepayments of the Term
         Note shall be applied to principal payments due and owing in inverse
         order of their maturities and must be in a minimum amount of $100,000.

                  (c) Waiver of Termination, Line Reduction and Prepayment Fees.
         The Borrower will not be required to pay the termination, line
         reduction and prepayment fees otherwise due under this Section 2.11 if
         such termination, line reduction or prepayment is made because of
         increased cash flow generated from the Borrower's operations or
         refinancing by an affiliate of the Lender.

         2.12 Mandatory Prepayment.

         Without notice or demand, if the outstanding principal balance of the
Revolving Advances shall at any time exceed the Borrowing Base, the Borrower
shall immediately prepay the Revolving Advances to the extent necessary to
eliminate such excess. Any payment received by the Lender under this Section
2.12 or under Section 2.10 may be applied to the Obligations, in such order and
in such amounts as the Lender, in its discretion, may from time to time
determine; provided that any prepayment under Section 2.10 which the Borrower
designates as a partial prepayment of the Term Note shall be applied to
principal installments of the Term Note in inverse order of maturity.

         2.13 Payment.

         The Lender from time to time at its discretion shall, after allowing
two (2) Banking Days, apply deposited funds in the Collateral Account to the
payment of the Obligations, in any order or manner of application satisfactory
to the Lender, by transferring such funds to the Lender's general account. All
wire transfer funds received by the Lender on behalf of the Borrower shall be
applied on a same-day basis (provided such funds are received prior to 1:00 p.m.
central standard time). The Lender may hold all payments not constituting
immediately available funds for up to three (3) additional days before applying
them to the Obligations. Notwithstanding anything in Section 2.1, the Borrower
hereby authorizes the Lender, in its discretion at any time or from time to time
without the Borrower's request and even if the conditions set forth in Section
4.2 would not be satisfied, to make a Revolving Advance in an amount equal to
the portion of the Obligations from time to time due and payable.

<PAGE>

         2.14 Payment on Non-Banking Days.

         Whenever any payment to be made hereunder shall be stated to be due on
a day which is not a Banking Day, such payment may be made on the next
succeeding Banking Day, and such extension of time shall in such case be
included in the computation of interest on the Advances or the fees hereunder,
as the case may be.

         2.15 Use of Proceeds.

         The Borrower shall use the proceeds of Advances for ordinary working
capital purposes and to payoff loans from its senior lenders.

         2.16 Liability Records.

         The Lender may maintain from time to time, at its discretion, liability
records as to the Obligations. All entries made on any such record shall be
presumed correct until the Borrower establishes the contrary. Upon the Lender's
demand, the Borrower will admit and certify in writing the exact principal
balance of the Obligations that the Borrower then asserts to be outstanding. Any
billing statement or accounting rendered by the Lender shall be conclusive and
fully binding on the Borrower unless the Borrower gives the Lender specific
written notice of exception within 45 days after receipt.

                     3. Security Interest; Occupancy; Setoff

         3.1 Grant of Security Interest.

         The Borrower hereby pledges, assigns and grants to the Lender a
security interest (collectively referred to as the "Security Interest") in the
Collateral, as security for the payment and performance of the Obligations. The
Security Interest created hereby is intended to commence when this Agreement is
executed by the Borrower and delivered to the Lender.

         3.2 Notification of Account Debtors and Other Obligors.

         The Lender may at any time (whether or not a Default Period then
exists) notify any account debtor or other person obligated to pay the amount
due that such right to payment has been assigned or transferred to the Lender
for security and shall be paid directly to the Lender. The Borrower will join in
giving such notice if the Lender so requests. At any time after the Borrower or
the Lender gives such notice to an account debtor or other obligor, the Lender
may, but need not, in the Lender's name or in the Borrower's name, (a) demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of, or securing, any such right to payment, or grant any
extension to, make any compromise or settlement with or otherwise agree to
waive, modify, amend or change the obligations (including collateral
obligations) of any such account debtor or other obligor; and (b) as the
Borrower's agent and attorney-in-fact, notify the United States Postal Service
to change the address for delivery of the Borrower's mail to any address
designated by the Lender, otherwise intercept the Borrower's mail, and receive,
open and handle the Borrower's mail, applying all Collateral as permitted under
this Agreement and holding all other mail for the Borrower's account or
forwarding such mail to the Borrower's last known address.

<PAGE>

         3.3 Assignment of Insurance.

         As additional security for the payment and performance of the
Obligations, the Borrower hereby assigns to the Lender any and all monies
(including, without limitation, proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of the Borrower with
respect to, any and all policies of insurance now or at any time hereafter
covering the Collateral or any evidence thereof or any business records or
valuable papers pertaining thereto, and the Borrower hereby directs the issuer
of any such policy to pay all such monies directly to the Lender. At any time,
whether or not a Default Period then exists, the Lender may (but need not), in
the Lender's name or in the Borrower's name, execute and deliver proof of claim,
receive all such monies, endorse checks and other instruments representing
payment of such monies, and adjust, litigate, compromise or release any claim
against the issuer of any such policy.

         3.4 Occupancy.

                  (a) The Borrower hereby irrevocably grants to the Lender the
         right to take possession of the Premises at any time during a Default
         Period.

                  (b) The Lender may use the Premises only to hold, process,
         manufacture, sell, use, store, liquidate, realize upon or otherwise
         dispose of goods that are Collateral and for other purposes that the
         Lender may in good faith deem to be related or incidental purposes.

                  (c) The Lender's right to hold the Premises shall cease and
         terminate upon the earlier of (i) payment in full and discharge of all
         Obligations and termination of the Commitment, and (ii) final sale or
         disposition of all goods constituting Collateral and delivery of all
         such goods to purchasers.

                  (d) The Lender shall not be obligated to pay or account for
         any rent or other compensation for the possession, occupancy or use of
         any of the Premises; provided, however, that if the Lender does pay or
         account for any rent or other compensation for the possession,
         occupancy or use of any of the Premises, the Borrower shall reimburse
         the Lender promptly for the full amount thereof. In addition, the
         Borrower will pay, or reimburse the Lender for, all taxes, fees,
         duties, imposts, charges and expenses at any time incurred by or
         imposed upon the Lender by reason of the execution, delivery,
         existence, recordation, performance or enforcement of this Agreement or
         the provisions of this Section 3.4.

         3.5 License.

         Without limiting the generality of the Patent Security Agreement, the
Borrower hereby grants to the Lender a non-exclusive, worldwide and royalty-free
license to use or otherwise exploit all trademarks, franchises, trade names,
copyrights and patents of the Borrower for the purpose of selling, leasing or
otherwise disposing of any or all Collateral during any Default Period.

<PAGE>

         3.6 Financing Statement.

         A carbon, photographic or other reproduction of this Agreement or of
any financing statements signed by the Borrower is sufficient as a financing
statement and may be filed as a financing statement in any state or province to
perfect the security interests granted hereby. The Borrower authorizes the
Lender to file such financing statements and financing change statements as the
Lender may deem appropriate to perfect on an on-going basis and continue the
Security Interest. For this purpose, the following information is set forth:

                  Name and address of Debtor:

                  First Team Sports, Inc.
                  1201 Lund Boulevard
                  Anoka, Minnesota 55303

                  Federal Tax Identification No. 41-1545748

                  Hespeler Hockey Holding, Inc.
                  1201 Lund Boulevard
                  Anoka, Minnesota 55303

                  Federal Tax Identification No. 41-1912022

                  Hespeler Hockey Company
                  1201 Lund Boulevard
                  Anoka, Minnesota 55303

                  Federal Tax Identification No. 873538193

                  First Team Sports GmbH
                  Triester Strasse 391
                  Graz, Austria 8055

                  Federal Tax Identification No. 990/9505

                  Name and address of Secured Party:

                  Norwest Bank Minnesota, National Association
                  Norwest Center
                  Sixth Street and Marquette Avenue
                  N9312-040
                  Minneapolis, Minnesota 55479

                  Federal Tax Identification No. 41-1592157

         3.7 Setoff.

         The Borrower agrees that the Lender may at any time or from time to
time, at its sole discretion and without demand and without notice to anyone,
setoff any liability owed to the Borrower by the Lender, whether or not due,
against any Obligation, whether or not due. In addition, each other Person
holding a participating interest in any Obligations shall have the right to
appropriate or setoff any deposit or other liability then owed by such Person to
the Borrower, whether or not due, and apply the same to the payment of said
participating interest, as fully as if such Person had lent directly to the
Borrower the amount of such participating interest.

<PAGE>

         3.8 Rights and Remedies under PPSA.

         In addition to those rights granted herein and in any other agreement
now or hereafter in effect between the Borrower and the Lender and in addition
to any other rights the Lender may have at law or in equity, the Lender shall
have, both before and after any Event of Default, all rights and remedies of a
secured party under the PPSA. However, the Lender shall not be liable or
accountable for any failure to exercise its remedies, take possession of,
collect, enforce, realize, sell, lease, license or otherwise dispose of
Collateral or to institute any proceedings for such purposes.

         3.9 Appointment of Receiver.

         Upon the occurrence of and during the continuance of any Event of
Default, the Lender may appoint or reappoint by instrument in writing, any
person or persons, whether an officer or officers or an employee or employees of
the Lender or not, to be a receiver or receivers (hereinafter called a
"Receiver," which term when used herein shall include a receiver and manager) of
Collateral (including any interest, income or profits therefrom) and may remove
any Receiver so appointed and appoint another in his/her stead. Any such
Receiver shall, so far as concerns responsibility for his/her acts, be deemed
the agent of the Borrower and not of the Lender and the Lender shall not be in
any way responsible for any misconduct, negligence or non-feasance on the part
of any such Receiver, his/her servants, agents or employees. Subject to the
provisions of the instrument appointing him/her, any such Receiver shall have
power to take possession of Collateral, to preserve Collateral or its value, to
carry on or concur in carrying on all or any part of the business of the
Borrower and to sell, lease, license or otherwise dispose of or concur in
selling, leasing, licensing or otherwise disposing of Collateral. To facilitate
the foregoing powers, any such Receiver may, to the exclusion of all others, to
the extent permitted by law (provided that any limitations under applicable law
shall only apply to the extent that they may not be waived or otherwise varied),
including the Borrower, enter upon, use and occupy all premises owned or
occupied by the Borrower wherein Collateral may be situate, maintain Collateral
upon such premises, borrow money on a secured or unsecured basis and use
Collateral directly in carrying on the Borrower's business or as security for
loans or advances to enable the Receiver to carry on Borrower's business or
otherwise, as such Receiver shall, in its discretion, determine. Except as may
be otherwise directed by the Lender, all Money received from time to time by
such Receiver in carrying out his/her appointment shall be received in trust for
and paid over to the Lender. Every such Receiver may, in the discretion of the
Lender, be vested with all or any of the rights and powers of the Lender. This
Section 3.9 shall only apply to the Collateral of Hespeler Hockey Company
located in Canada.

                            4. Conditions of Lending

         4.1 Conditions Precedent to the Initial Revolving and Term Advance.

         The Lender's obligation to make the initial Revolving Advance and Term
Advance hereunder shall be subject to the condition precedent that the Lender
shall have received all of the following, each in form and substance
satisfactory to the Lender:

                  (a) This Agreement, properly executed by the Borrower.

<PAGE>

                  (b) The Notes, properly executed by the Borrower.

                  (c) The Mortgage, properly executed by First Team Sports, Inc.

                  (d) The Environmental Indemnity Agreement, properly executed
         by First Team Sports, Inc.

                  (e) A commitment for a mortgagee's title insurance policy
         regarding the Premises secured by the Mortgage, in form and substance
         acceptable to the Lender.

                  (f) The Life Insurance Assignment, properly executed by the
         beneficiary and owner thereof, and the Life Insurance Policy, each in
         form and substance satisfactory to the Lender, together with such
         evidence as the Lender may request that the Life Insurance Policy is
         subject to no assignments or encumbrances other than the Life Insurance
         Assignment.

                  (g) The Collateral Account Agreement, properly executed by the
         Borrower.

                  (h) The Lockbox Agreement, properly executed by the Borrower.

                  (i) The Toronto-Dominion Lockbox Agreement, properly executed
         by the Borrower and The Toronto-Dominion Bank.

                  (j) The Custodial Pledge Agreement, properly executed by the
         Borrower.

                  (k) The Patent Security Agreement, properly executed by the
         Borrower.

                  (l) The City of Anoka Subordination Agreement, properly
         executed by the City of Anoka, Minnesota and acknowledged by the
         Borrower.

                  (m) Current searches of appropriate filing offices showing
         that (i) no state or federal tax liens have been filed and remain in
         effect against the Borrower, (ii) no financing statements or
         assignments of patents, trademarks or copyrights have been filed and
         remain in effect against the Borrower except those financing statements
         and assignments of patents, trademarks or copyrights relating to
         Permitted Liens or to liens held by Persons who have agreed in writing
         that upon receipt of proceeds of the Advances, they will deliver UCC or
         PPSA releases and/or terminations and releases of such assignments of
         patents, trademarks or copyrights satisfactory to the Lender, and (iii)
         the Lender has duly filed all financing statements (including Canadian
         financing statements) necessary to perfect the Security Interest, to
         the extent the Security Interest is capable of being perfected by
         filing.

                  (n) A certificate of the Borrower's Secretary or Assistant
         Secretary certifying as to (i) the resolutions of the Borrower's
         directors and, if required, shareholders, authorizing the execution,
         delivery and performance of the Loan Documents, (ii) the Borrower's
         articles of incorporation and bylaws, and (iii) the signatures of the
         Borrower's officers or agents authorized to execute and deliver the
         Loan Documents and other instruments, agreements and certificates,
         including Advance requests, on the Borrower's behalf.

<PAGE>

                  (o) A current certificate issued by the Secretary of State or
         similar governing authority of the state or jurisdiction where each
         Borrower is incorporated, certifying that such Borrower is in
         compliance with all applicable organizational requirements of such
         state or jurisdiction.

                  (p) Evidence that the Borrower is duly licensed or qualified
         to transact business in all jurisdictions where the character of the
         property owned or leased or the nature of the business transacted by it
         makes such licensing or qualification necessary.

                  (q) A certificate of an officer of the Borrower in his
         personal capacity as an officer of the Borrower, confirming, in his
         personal capacity, the representations and warranties set forth in
         Article 5.

                  (r) An opinion of counsel to the Borrower, addressed to the
         Lender.

                  (s) Certificates of the insurance required hereunder, with all
         hazard insurance containing a lender's loss payable endorsement in the
         Lender's favor and with all liability insurance naming the Lender as an
         additional insured.

                  (t) After giving effect to the requested initial Revolving
         Advance, Availability will still total at least $1,000,000;

                  (u) Payment of the fees and commissions due through the date
         of the initial Advance under Section 2.7 and expenses incurred by the
         Lender through such date and required to be paid by the Borrower under
         Section 9.6, including all legal expenses incurred through the date of
         this Agreement.

                  (v) Such other documents as the Lender in its sole discretion
         may require.

         4.2 Conditions Precedent to All Advances.

         The Lender's obligation to make each Advance shall be subject to the
further conditions precedent that on such date:

                  (a) the representations and warranties contained in Article 5
         are correct on and as of the date of such Advance as though made on and
         as of such date, except to the extent that such representations and
         warranties relate solely to an earlier date; and

                  (b) no event has occurred and is continuing, or would result
         from such Advance which constitutes a Default or an Event of Default.

<PAGE>

                        5. Representations and Warranties

         The Borrower represents and warrants to the Lender as follows:

         5.1 Corporate Existence and Power; Name; Chief Executive Office;
Inventory and Equipment Locations; Tax Identification Number.

         First Team Sports, Inc. is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Minnesota, Hespeler
Hockey Holding, Inc. is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Minnesota, Hespeler Hockey Company
is an unlimited liability company, duly organized, validly existing and in good
standing under the laws of Nova Scotia, and First Team Sports GmbH is a
corporation, duly organized, validly existing and in good standing under the
laws of Austria. Each Borrower is duly licensed or qualified to transact
business in all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such licensing or
qualification necessary. Each Borrower has all requisite power and authority,
corporate or otherwise, to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under, the Loan
Documents. During their existence, each Borrower has done business solely under
the names set forth in Schedule 5.1 hereto. The Borrower's chief executive
office and principal place of business is located at the address set forth in
Schedule 5.1 hereto, and all of the Borrower's records relating to its business
or the Collateral are kept at that location. All Inventory and Equipment is
located at that location or at one of the other locations set forth in Schedule
5.1 hereto. Each Borrower's tax identification number is correctly set forth in
Section 3.6 hereto.

         5.2 Authorization of Borrowing; No Conflict as to Law or Agreements.

         The execution, delivery and performance by the Borrower of the Loan
Documents and the borrowings from time to time hereunder have been duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or approval of the Borrower's stockholders; (ii) require any
authorization, consent or approval by, or registration, declaration or filing
with, or notice to, any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice as
has been obtained, accomplished or given prior to the date hereof (except for
the Mortgage and fixture financing statements that will be filed by the Lender
after the execution of this Agreement); (iii) violate any provision of any law,
rule or regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or of any order, writ, injunction or
decree presently in effect having applicability to the Borrower or of the
Borrower's articles of incorporation or bylaws; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other material agreement, lease or instrument to which the Borrower is a party
or by which it or its properties may be bound or affected; provided, however,
the Borrower makes no representations or warranties under this subsection (iv)
about any license agreements the Borrower may have with any of its licensors
listed in Section 8.1(r); or (v) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than the Security Interest and
the Mortgage lien) upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower.

<PAGE>

         5.3 Legal Agreements.

         This Agreement constitutes and, upon due execution by the Borrower, the
other Loan Documents will constitute the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms.

         5.4 Subsidiaries.

         Except as set forth in Schedule 5.4 hereto, the Borrower has no
Subsidiaries.

         5.5 Financial Condition; No Adverse Change.

         The Borrower has heretofore furnished to the Lender audited financial
statements of the Borrower for its fiscal year ended February 29, 1999 and
unaudited financial statements of the Borrower for the fiscal year-to-date
period ended June 30, 1999 and those statements fairly present the Borrower's
financial condition on the dates thereof and the results of its operations and
cash flows for the periods then ended and were prepared in accordance with
generally accepted accounting principles. Since the date of the most recent
financial statements, there has been no material adverse change in the
Borrower's business, properties or condition (financial or otherwise).

         5.6 Litigation.

         Except as set forth in Schedule 5.6 hereto, there are no actions, suits
or proceedings pending or, to the Borrower's knowledge, threatened against or
affecting the Borrower or any of its Affiliates or the properties of the
Borrower or any of its Affiliates before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to the Borrower or any of its Affiliates, would
have a material adverse effect on the financial condition, properties or
operations of the Borrower or any of its Affiliates.

         5.7 Regulation U.

         The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Advance will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.

         5.8 Taxes.

         The Borrower and its Affiliates have paid or caused to be paid to the
proper authorities when due all federal, state, provincial, municipal and local
taxes required to be withheld by each of them. The Borrower and its Affiliates
have filed all federal, state, provincial and local tax returns which to the
knowledge of the officers of the Borrower or any Affiliate, as the case may be,
are required to be filed, and the Borrower and its Affiliates have paid or
caused to be paid to the respective taxing authorities all taxes as shown on
said returns or on any assessment received by any of them to the extent such
taxes have become due.

<PAGE>

         5.9 Titles and Liens.

         The Borrower has good and absolute title to all Collateral described in
the collateral reports provided to the Lender and all other Collateral,
properties and assets reflected in the latest financial statements referred to
in Section 5.5 and all proceeds thereof, free and clear of all mortgages,
security interests, liens and encumbrances, except for Permitted Liens. No
financing statement naming the Borrower as debtor is on file in any office
except to perfect only Permitted Liens.

         5.10 Plans.

         Except as set forth in Schedule 5.10 hereto, neither the Borrower nor
any of its Affiliates maintains or has maintained any Plan. Neither the Borrower
nor any Affiliate has received any notice or has any knowledge to the effect
that it is not in full compliance with any of the requirements of ERISA. No
Reportable Event or other fact or circumstance which may have an adverse effect
on the Plan's tax qualified status exists in connection with any Plan. Neither
the Borrower nor any of its Affiliates has:

                  (a) Any accumulated funding deficiency within the meaning of
         ERISA; or

                  (b) Any liability or knows of any fact or circumstances which
         could result in any liability to the Pension Benefit Guaranty
         Corporation, the Internal Revenue Service, the Department of Labor or
         any participant in connection with any Plan (other than accrued
         benefits which are or which may become payable to participants or
         beneficiaries of any such Plan).

         5.11 Default.

         The Borrower is in compliance with all provisions of all agreements,
instruments, decrees and orders to which it is a party or by which it or its
property is bound or affected, the breach or default of which could have a
material adverse effect on the Borrower's financial condition, properties or
operations.

         5.12 Environmental Matters.

                  (a) Definitions. As used in this Agreement, the following
         terms shall have the following meanings:

                           (i) "Environmental Law" means any federal, state,
                  provincial, local or other governmental statute, regulation,
                  law or ordinance dealing with the protection of human health
                  and the environment.

                           (ii) "Hazardous Substances" means pollutants,
                  contaminants, hazardous substances, hazardous wastes,
                  petroleum and fractions thereof, and all other chemicals,
                  wastes, substances and materials listed in, regulated by or
                  identified in any Environmental Law.

<PAGE>

                  (b) Except as provided on Schedule 5.12 hereto, to the
         Borrower's best knowledge, there are not present in, on or under the
         Premises any Hazardous Substances in such form or quantity as to create
         any liability or obligation for either the Borrower or the Lender under
         common law of any jurisdiction or under any Environmental Law, and no
         Hazardous Substances have ever been stored, buried, spilled, leaked,
         discharged, emitted or released in, on or under the Premises in such a
         way as to create any such liability.

                  (c) To the Borrower's best knowledge, the Borrower has not
         disposed of Hazardous Substances in such a manner as to create any
         liability under any Environmental Law.

                  (d) There are not and there never have been any requests,
         claims, notices, investigations, demands, administrative proceedings,
         hearings or litigation, relating in any way to the Premises or the
         Borrower, alleging liability under, violation of, or noncompliance with
         any Environmental Law or any license, permit or other authorization
         issued pursuant thereto. To the Borrower's best knowledge, no such
         matter is threatened or impending.

                  (e) To the Borrower's best knowledge, the Borrower's
         businesses are and have in the past always been conducted in accordance
         with all Environmental Laws and all licenses, permits and other
         authorizations required pursuant to any Environmental Law and necessary
         for the lawful and efficient operation of such businesses are in the
         Borrower's possession and are in full force and effect. No permit
         required under any Environmental Law is scheduled to expire within 12
         months and there is no threat that any such permit will be withdrawn,
         terminated, limited or materially changed.

                  (f) To the Borrower's best knowledge, the Premises are not and
         never have been listed on the National Priorities List, the
         Comprehensive Environmental Response, Compensation and Liability
         Information System or any similar federal, state, provincial or local
         list, schedule, log, inventory or database.

                  (g) The Borrower has delivered to Lender all environmental
         assessments, audits, reports, permits, licenses and other documents
         describing or relating in any way to the Premises or Borrower's
         businesses.

         5.13 Submissions to Lender.

         All financial and other information provided to the Lender by or on
behalf of the Borrower in connection with the Borrower's request for the credit
facilities contemplated hereby is true and correct in all material respects and,
as to projections, valuations or pro forma financial statements, present a good
faith opinion as to such projections, valuations and pro forma condition and
results.

         5.14 Financing Statements.

         The Borrower has provided to the Lender signed financing statements, or
has authorized the Lender's agent to file financing statements, sufficient when
filed to perfect the Security Interest and the other security interests created

<PAGE>

by the Security Documents. When such financing statements are filed in the
offices noted therein, the Lender will have a valid and perfected security
interest in all Collateral and all other collateral described in the Security
Documents which is capable of being perfected by filing financing statements.
None of the Collateral or other collateral covered by the Security Documents is
or will become a fixture on real estate, unless a sufficient fixture filing is
in effect with respect thereto.

         5.15 Rights to Payment.

         Each right to payment and each instrument, document, chattel paper and
other agreement constituting or evidencing Collateral or other collateral
covered by the Security Documents is (or, in the case of all future Collateral
or such other collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in the Borrower's
records pertaining thereto as being obligated to pay such obligation.

                       6. Borrower's Affirmative Covenants

         So long as the Obligations shall remain unpaid, or the Credit Facility
shall remain outstanding, the Borrower will comply with the following
requirements, unless the Lender shall otherwise consent in writing:

         6.1 Reporting Requirements.

         The Borrower will deliver, or cause to be delivered, to the Lender each
of the following, which shall be in form and detail acceptable to the Lender:

                  (a) as soon as available, and in any event within 90 days
         after the end of each fiscal year of the Borrower, the Borrower's
         audited financial statements with the unqualified opinion of
         independent certified public accountants selected by the Borrower and
         acceptable to the Lender, which annual financial statements shall
         include the Borrower's balance sheet as at the end of such fiscal year
         and the related statements of the Borrower's income, retained earnings
         and cash flows for the fiscal year then ended, prepared, if the Lender
         so requests, on a consolidating and consolidated basis to include any
         Affiliates, all in reasonable detail and prepared in accordance with
         GAAP, together with (i) copies of all management letters prepared by
         such accountants; (ii) a report signed by such accountants stating that
         in making the investigations necessary for said opinion they obtained
         no knowledge, except as specifically stated, of any Default or Event of
         Default hereunder and all relevant facts in reasonable detail to
         evidence, and the computations as to, whether or not the Borrower is in
         compliance with the requirements set forth in Sections 6.13 and 6.14;
         and (iii) a certificate of the Borrower's chief financial officer
         stating that such financial statements have been prepared in accordance
         with GAAP and whether or not such officer has knowledge of the
         occurrence of any Default or Event of Default hereunder and, if so,
         stating in reasonable detail the facts with respect thereto;

                  (b) as soon as available and in any event within 20 days after
         the end of each month, an unaudited/internal balance sheet and
         statements of income of the Borrower as at the end of and for such

<PAGE>

         month and for the year to date period then ended, prepared, if the
         Lender so requests, on a consolidating and consolidated basis to
         include any Affiliates, in reasonable detail and stating in comparative
         form the figures for the corresponding date and periods in the previous
         year, all prepared in accordance with GAAP, subject to year-end audit
         adjustments; and accompanied by a certificate of the Borrower's chief
         financial officer, substantially in the form of Exhibit C hereto
         stating (i) that such financial statements have been prepared in
         accordance with GAAP, subject to year-end audit adjustments, (ii)
         whether or not such officer has knowledge of the occurrence of any
         Default or Event of Default hereunder not theretofore reported and
         remedied and, if so, stating in reasonable detail the facts with
         respect thereto, and (iii) all relevant facts in reasonable detail to
         evidence, and the computations as to, whether or not the Borrower is in
         compliance with the requirements set forth in Sections 6.13 and 6.14;

                  (c) within 15 days after the end of each month or more
         frequently if the Lender so requires, agings of the Borrower's accounts
         receivable and its accounts payable, an inventory certification report,
         and a calculation of the Borrower's Accounts, Eligible Accounts,
         Inventory and Eligible Inventory as at the end of such month or shorter
         time period;

                  (d) at least 30 days before the beginning of each fiscal year
         of the Borrower, the projected balance sheets and income statements for
         each month of such year, each in reasonable detail, representing the
         Borrower's good faith projections and certified by the Borrower's chief
         financial officer as being the most accurate projections available and
         identical to the projections used by the Borrower for internal planning
         purposes, together with such supporting schedules and information as
         the Lender may in its discretion require;

                  (e) immediately after the commencement thereof, notice in
         writing of all litigation and of all proceedings before any
         governmental or regulatory agency affecting the Borrower of the type
         described in Section 5.12 or which seek a monetary recovery against the
         Borrower in excess of $100,000;

                  (f) as promptly as practicable (but in any event not later
         than five business days) after an officer of the Borrower obtains
         knowledge of the occurrence of any breach, default or event of default
         under any Security Document or any event which constitutes a Default or
         Event of Default hereunder, notice of such occurrence, together with a
         detailed statement by a responsible officer of the Borrower of the
         steps being taken by the Borrower to cure the effect of such breach,
         default or event;

                  (g) as soon as possible and in any event within 30 days after
         the Borrower knows or has reason to know that any Reportable Event with
         respect to any Plan has occurred, the statement of the Borrower's chief
         financial officer setting forth details as to such Reportable Event and
         the action which the Borrower proposes to take with respect thereto,
         together with a copy of the notice of such Reportable Event to the
         Pension Benefit Guaranty Corporation;

<PAGE>

                  (h) as soon as possible, and in any event within 10 days after
         the Borrower fails to make any quarterly contribution required with
         respect to any Plan under Section 412(m) of the Internal Revenue Code
         of 1986, as amended, the statement of the Borrower's chief financial
         officer setting forth details as to such failure and the action which
         the Borrower proposes to take with respect thereto, together with a
         copy of any notice of such failure required to be provided to the
         Pension Benefit Guaranty Corporation;

                  (i) promptly upon knowledge thereof, notice of (i) any
         disputes or claims by the Borrower's customers exceeding $50,000
         individually or $150,000 in the aggregate during any fiscal year; (ii)
         credit memos exceeding $100,000; (iii) any goods returned to or
         recovered by the Borrower exceeding $100,000; and (iv) any change in
         the persons constituting the Borrower's officers and directors;

                  (j) promptly upon knowledge thereof, notice of any loss of or
         material damage to any Collateral or other collateral covered by the
         Security Documents or of any substantial adverse change in any
         Collateral or such other collateral or the prospect of payment thereof;

                  (k) promptly upon their distribution, copies of all financial
         statements, reports and proxy statements which the Borrower shall have
         sent to its stockholders;

                  (l) promptly after the sending or filing thereof, copies of
         all regular and periodic reports which the Borrower shall file with the
         Securities and Exchange Commission or any national securities exchange;

                  (m) promptly upon knowledge thereof, notice of the Borrower's
         violation of any law, rule or regulation, the non-compliance with which
         could materially and adversely affect the Borrower's business or its
         financial condition; and

                  (n) from time to time, with reasonable promptness, any and all
         receivables schedules, collection reports, deposit records, equipment
         schedules, copies of invoices to account debtors, shipment documents
         and delivery receipts for goods sold, and such other material, reports,
         records or information as the Lender may request.

         6.2 Books and Records; Inspection and Examination.

         The Borrower will keep accurate books of record and account for itself
pertaining to the Collateral and pertaining to the Borrower's business and
financial condition and such other matters as the Lender may from time to time
request in which true and complete entries will be made in accordance with GAAP
and, upon the Lender's request, will permit any officer, employee, attorney or
accountant for the Lender to audit, review, make extracts from or copy any and
all corporate and financial books and records of the Borrower at all times
during ordinary business hours, to send and discuss with account debtors and

<PAGE>

other obligors requests for verification of amounts owed to the Borrower, and to
discuss the Borrower's affairs with any of its directors, officers, employees or
agents. The Borrower will permit the Lender, or its employees, accountants,
attorneys or agents, to examine and inspect any Collateral, other collateral
covered by the Security Documents or any other property of the Borrower at any
time during ordinary business hours.

         6.3 Account Verification.

         The Lender may at any time and from time to time send or require the
Borrower to send requests for verification of Accounts or notices of assignment
to account debtors and other obligors. The Lender may also at any time and from
time to time telephone account debtors and other obligors to verify Accounts.
The Lender will endeavor to use a nominee name when conducting Account
verifications, but is not obligated hereunder to do so.

         6.4 Compliance with Laws.

                  (a) The Borrower will (i) comply with the requirements of
         applicable laws and regulations, the non-compliance with which would
         materially and adversely affect its business or its financial condition
         and (ii) use and keep the Collateral, and require that others use and
         keep the Collateral, only for lawful purposes, without violation of any
         federal, state or local law, statute or ordinance.

                  (b) Without limiting the foregoing undertakings, the Borrower
         specifically agrees that it will comply with all applicable
         Environmental Laws and obtain and comply with all permits, licenses and
         similar approvals required by any Environmental Laws, and will not
         generate, use, transport, treat, store or dispose of any Hazardous
         Substances in such a manner as to create any liability or obligation
         under the common law of any jurisdiction or any Environmental Law.

         6.5 Payment of Taxes and Other Claims.

         The Borrower will pay or discharge, when due, (a) all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income or profits, upon any properties belonging to it (including, without
limitation, the Collateral) or upon or against the creation, perfection or
continuance of the Security Interest, prior to the date on which penalties
attach thereto, (b) all federal, state, provincial, municipal and local taxes
required to be withheld by it, and (c) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien or charge upon any
properties of the Borrower; provided, that the Borrower shall not be required to
pay any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings and for
which proper reserves have been made.

         6.6 Maintenance of Properties.

                  (a) The Borrower will keep and maintain the Collateral, the
         other collateral covered by the Security Documents and all of its other
         properties necessary or useful in its business in good condition,
         repair and working order (normal wear and tear excepted) and will from
         time to time replace or repair any worn, defective or broken parts;
         provided, however, that nothing in this Section 6.6 shall prevent the
         Borrower from discontinuing the operation and maintenance of any of its

<PAGE>

         properties if such discontinuance is, in the Lender's judgment,
         desirable in the conduct of the Borrower's business and not
         disadvantageous in any material respect to the Lender.

                  (b) The Borrower will defend the Collateral against all claims
         or demands of all persons (other than the Lender) claiming the
         Collateral or any interest therein.

                  (c) The Borrower will keep all Collateral and other collateral
         covered by the Security Documents free and clear of all security
         interests, liens and encumbrances except Permitted Liens.

         6.7 Insurance.

         The Borrower will obtain and at all times maintain insurance with
insurers believed by the Borrower to be responsible and reputable, in such
amounts and against such risks as may from time to time be required by the
Lender, but in all events in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which the Borrower operates. Without limiting the
generality of the foregoing, the Borrower will at all times maintain business
interruption insurance including coverage for force majeure and keep all
tangible Collateral insured against risks of fire (including so-called extended
coverage), theft, collision (for Collateral consisting of motor vehicles) and
such other risks and in such amounts as the Lender may reasonably request, with
any loss payable to the Lender to the extent of its interest, and all policies
of such insurance shall contain a lender's loss payable endorsement for the
Lender's benefit acceptable to the Lender and a mortgagee clause. All policies
of liability insurance required hereunder shall name the Lender as an additional
insured.

         6.8 Preservation of Existence.

         The Borrower will preserve and maintain its existence and all of its
rights, privileges and franchises necessary or desirable in the normal conduct
of its business and shall conduct its business in an orderly, efficient and
regular manner.

         6.9 Delivery of Instruments.

         Upon request by the Lender, the Borrower will promptly deliver to the
Lender in pledge all instruments, documents and chattel papers constituting
Collateral, duly endorsed or assigned by the Borrower.

         6.10 Collateral Account.

                  (a) If, notwithstanding the instructions to debtors to make
         payments to the Lockbox, the Borrower receives any payments on
         Receivables (other than the Receivables of First Team Sports GmbH), the
         Borrower shall deposit such payments into the Collateral Account or
         Custodial Account. Until so deposited, the Borrower shall hold all such
         payments in trust for and as the property of the Lender and shall not
         commingle such payments with any of its other funds or property.

<PAGE>

                  (b) Amounts deposited in the Collateral Account shall not bear
         interest and shall not be subject to withdrawal by the Borrower, except
         after full payment and discharge of all Obligations.

                  (c) All deposits in the Collateral Account shall constitute
         proceeds of Collateral and shall not constitute payment of the
         Obligations. The Lender from time to time at its discretion shall,
         after allowing two (2) Banking Days, apply deposited funds in the
         Collateral Account to the payment of the Obligations, in any order or
         manner of application satisfactory to the Lender, by transferring such
         funds to the Lender's general account.

                  (d) All items deposited in the Collateral Account shall be
         subject to final payment. If any such item is returned uncollected, the
         Borrower will immediately pay the Lender, or, for items deposited in
         the Collateral Account, the bank maintaining such account, the amount
         of that item, or such bank at its discretion may charge any uncollected
         item to the Borrower's commercial account or other account. The
         Borrower shall be liable as an endorser on all items deposited in the
         Collateral Account, whether or not in fact endorsed by the Borrower.

         6.11 Key Person Life Insurance.

         First Team Sports, Inc. shall maintain insurance upon the lives of (i)
John J. Egart, its president and chief executive officer and (ii) David G.
Soderquist, its vice chairman, in both instances with a death benefit thereunder
in an amount not less than $500,000 (collectively, the "Life Insurance Policy").
The right to receive the proceeds of the Life Insurance Policy shall be assigned
to the Lender by the Life Insurance Assignment.

         6.12 Performance by the Lender.

         If the Borrower at any time fails to perform or observe any of the
foregoing covenants contained in this Article 6 or elsewhere herein, and if such
failure shall continue for a period of ten calendar days after the Lender gives
the Borrower written notice thereof (or in the case of the agreements contained
in Sections 6.5, 6.7, and 6.10, immediately upon the occurrence of such failure,
without notice or lapse of time), the Lender may, but need not, perform or
observe such covenant on behalf and in the name, place and stead of the Borrower
(or, at the Lender's option, in the Lender's name) and may, but need not, take
any and all other actions which the Lender may reasonably deem necessary to cure
or correct such failure (including, without limitation, the payment of taxes,
the satisfaction of security interests, liens or encumbrances, the performance
of obligations owed to account debtors or other obligors, the procurement and
maintenance of insurance, the execution of assignments, security agreements and
financing statements, and the endorsement of instruments); and the Borrower
shall thereupon pay to the Lender on demand the amount of all monies expended
and all costs and expenses (including reasonable attorneys' fees and legal
expenses) incurred by the Lender in connection with or as a result of the
performance or observance of such agreements or the taking of such action by the
Lender, together with interest thereon from the date expended or incurred at the
applicable floating rate. To facilitate the Lender's performance or observance
of such covenants of the Borrower, the Borrower hereby irrevocably appoints the

<PAGE>

Lender, or the Lender's delegate, acting alone, as the Borrower's attorney in
fact (which appointment is coupled with an interest) with the right (but not the
duty) from time to time to create, prepare, complete, execute, deliver, endorse
or file in the name and on behalf of the Borrower any and all instruments,
documents, assignments, security agreements, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by the Borrower under this Section 6.12.

         6.13 Minimum Net Worth.

         The Borrower's Net Worth, determined as at the end of each month, shall
not decrease by more than $1,750,000 at any time from February 28, 1999 through
the period ending July 31, 2000.

         6.14 Minimum Earnings After Taxes.

         The Borrower will achieve as of its fiscal year ending February 29,
2000, Earnings After Taxes, of not less than $1.00 and will achieve as of July
31, 2000, Earnings After Taxes of not less than $100,000.

         6.15 New Covenants.

         On or before July 31, 2000, the Borrower and the Lender shall agree on
new mutually acceptable covenant levels for Sections 6.13 and 6.14 for periods
after such date. The new covenant levels will be based at such a level as to
require the Borrower to maintain sufficient cash flow to service its Debt and
capital expenditures.

                              7. Negative Covenants

         So long as the Obligations shall remain unpaid, or the Credit Facility
shall remain outstanding, the Borrower agrees that, without the Lender's prior
written consent:

         7.1 Liens.

         The Borrower will not create, incur or suffer to exist any mortgage,
deed of trust, pledge, lien, security interest, assignment or transfer upon or
of any of its assets, now owned or hereafter acquired, to secure any
indebtedness; excluding, however, from the operation of the foregoing, the
following (collectively, "Permitted Liens"):

                  (a) in the case of any of the Borrower's property which is not
         Collateral or other collateral described in the Security Documents,
         covenants, restrictions, rights, easements and minor irregularities in
         title which do not materially interfere with the Borrower's business or
         operations as presently conducted;

                  (b) mortgages, deeds of trust, pledges, liens, security
         interests and assignments in existence on the date hereof and listed in
         Schedule 7.1 hereto, securing indebtedness for borrowed money permitted
         under Section 7.2;

<PAGE>

                  (c) the Security Interest and liens and security interests
         created by the Security Documents; and

                  (d) purchase money security interests relating to the
         acquisition of machinery and equipment of the Borrower not exceeding
         the cost or fair market value thereof and so long as no Default Period
         is then in existence and none would exist immediately after such
         acquisition.

         7.2 Indebtedness.

         The Borrower will not incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any indebtedness
for borrowed money or letters of credit issued on the Borrower's behalf, or any
other indebtedness or liability evidenced by notes, bonds, debentures or similar
obligations, except:

                  (a) indebtedness arising hereunder;

                  (b) indebtedness of the Borrower in existence on the date
         hereof and listed in Schedule 7.2 hereto; and

                  (c) indebtedness relating to liens permitted in accordance
         with Section 7.1.

         7.3 Guaranties.

         The Borrower will not assume, guarantee, endorse or otherwise become
directly or contingently liable in connection with any obligations of any other
Person, except:

                  (a) the endorsement of negotiable instruments by the Borrower
         for deposit or collection or similar transactions in the ordinary
         course of business; and

                  (b) guaranties, endorsements and other direct or contingent
         liabilities in connection with the obligations of other Persons, in
         existence on the date hereof and listed in Schedule 7.2 hereto.

         7.4 Investments and Subsidiaries.

                  (a) The Borrower will not purchase or hold beneficially any
         stock or other securities or evidences of indebtedness of, make or
         permit to exist any loans or advances to, or make any investment or
         acquire any interest whatsoever in, any other Person, including
         specifically but without limitation any partnership or joint venture,
         except:

                           (i) investments in direct obligations of the United
                  States of America or any agency or instrumentality thereof
                  whose obligations constitute full faith and credit obligations
                  of the United States of America having a maturity of one year
                  or less, commercial paper issued by U.S. corporations rated
                  "A-1" or "A-2" by Standard & Poors Corporation or "P-1" or
                  "P-2" by Moody's Investors Service or certificates of deposit
                  or bankers' acceptances having a maturity of one year or less
                  issued by members of the Federal Reserve System having

<PAGE>

                  deposits in excess of $100,000,000 (which certificates of
                  deposit or bankers' acceptances are fully insured by the
                  Federal Deposit Insurance Corporation);

                           (ii) travel advances or loans to the Borrower's
                  officers and employees not exceeding at any one time an
                  aggregate of $25,000;

                           (iii) ownership of or advances to a Borrower or a
                  Subsidiary listed in Schedule 5.4;

                           (iv) advances not to exceed $50,000 in the aggregate
                  to vendors of telephone and copier support and credit report
                  contracts; and

                           (v) advances in the form of progress payments or
                  prepaid rent, not exceeding two (2) months or security
                  deposits.

                  (b) The Borrower will not create or permit to exist any
         Subsidiary, other than the Subsidiaries in existence on the date hereof
         and listed in Schedule 5.4.

         7.5 Dividends.

         Except as set forth below, the Borrower will not declare or pay any
dividends (other than dividends payable solely in stock of the Borrower) on any
class of its stock or make any payment on account of the purchase, redemption or
other retirement of any shares of such stock or make any distribution in respect
thereof, either directly or indirectly.

         7.6 Sale or Transfer of Assets; Suspension of Business Operations.

         The Borrower will not sell, lease, assign, transfer or otherwise
dispose of (i) the stock of any Subsidiary, (ii) all or a substantial part of
its assets, or (iii) any Collateral or any interest therein (whether in one
transaction or in a series of transactions) to any other Person other than the
sale of Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations; provided, however, that the Borrower
may either dissolve Mothership Distribution, Inc. or merge such entity into
First Team Sports, Inc. The Borrower will not in any manner transfer any
property without prior or present receipt of full and adequate consideration.

         7.7 Consolidation and Merger; Asset Acquisitions.

         The Borrower will not consolidate with or merge into any Person, or
permit any other Person to merge into it, or acquire (in a transaction analogous
in purpose or effect to a consolidation or merger) all or substantially all the
assets of any other Person; provided, however, that the Borrower may merge
Mothership Distribution, Inc. into First Team Sports, Inc.

         7.8 Sale and Leaseback.

         The Borrower will not enter into any arrangement, directly or
indirectly, with any other Person whereby the Borrower shall sell or transfer
any real or personal property, whether now owned or hereafter acquired, and then
or thereafter rent or lease as lessee such property or any part thereof or any
other property which the Borrower intends to use for substantially the same
purpose or purposes as the property being sold or transferred.

<PAGE>

         7.9 Restrictions on Nature of Business.

         The Borrower will not engage in any line of business materially
different from that presently engaged in by the Borrower and will not purchase,
lease or otherwise acquire assets not related to its business.

         7.10 Accounting.

         The Borrower will not adopt any material change in accounting
principles other than as required by GAAP. The Borrower will not adopt, permit
or consent to any change in its fiscal year.

         7.11 Discounts.

         The Borrower will not, after notice from the Lender, grant any
discount, credit or allowance to any customer of the Borrower or accept any
return of goods sold, or at any time (whether before or after notice from the
Lender) modify, amend, subordinate, cancel or terminate the obligation
constituting an Eligible Account of any account debtor or other obligor of the
Borrower.

         7.12 Defined Benefit Pension Plans.

         The Borrower will not adopt, create, assume or become a party to any
defined benefit pension plan, unless disclosed to the Lender pursuant to Section
5.10.

         7.13 Other Defaults.

         The Borrower will not permit any breach, default or event of default to
occur under any note, loan agreement, indenture, lease, mortgage, contract for
deed, security agreement or other contractual obligation binding upon the
Borrower that would have a material adverse effect on the financial condition,
properties or operations of the Borrower.

         7.14 Place of Business; Name.

         The Borrower will not transfer its chief executive office or principal
place of business, or move, relocate, close or sell any business location. The
Borrower will not permit any tangible Collateral or any records pertaining to
the Collateral to be located in any state or province or area in which, in the
event of such location, a financing statement covering such Collateral would be
required to be, but has not in fact been, filed in order to perfect the Security
Interest. The Borrower will not change its name.

<PAGE>

         7.15 Organizational Documents; S Corporation Status.

         No Borrower will amend its certificate of incorporation, articles of
incorporation or bylaws. No Borrower will become an S Corporation within the
meaning of the Internal Revenue Code of 1986, as amended.

         7.16 Change in Ownership.

         Except for First Team Sports, Inc., no Borrower will issue or sell any
of its stock so as to change the percentage of voting and non-voting stock owned
by such Borrower's shareholders, and except for First Team Sports, Inc., no
Borrower will permit or suffer to occur the sale, transfer, assignment, pledge
or other disposition of any or all of the issued and outstanding shares of stock
of such Borrower.

                    8. Events of Default, Rights and Remedies

         8.1 Events of Default.

         "Event of Default", wherever used herein, means any one of the
following events:

                  (a) Default in the payment of the Obligations on demand or on
         any portion of the Obligations that otherwise becomes due and payable;

                  (b) Default in the payment of any fees, commissions, costs or
         expenses required to be paid by the Borrower under this Agreement;

                  (c) Default in the performance, or breach, of any covenant or
         agreement of the Borrower contained in this Agreement; provided,
         however, that no Event of Default shall be deemed to exist with regard
         to a Default in the performance of Section 6.13 or Section 6.14 unless
         such Default continues for a period of thirty (30) days from the
         commencement of the Default Period for such Default under Section 6.13
         or Section 6.14;

                  (d) Any Borrower shall be or become insolvent, or admit in
         writing its inability to pay its debts as they mature, or make an
         assignment for the benefit of creditors; or any Borrower shall apply
         for or consent to the appointment of any receiver, trustee, or similar
         officer for it or for all or any substantial part of its property; or
         such receiver, trustee or similar officer shall be appointed without
         the application or consent of such Borrower; or any Borrower shall
         institute (by petition, application, answer, consent or otherwise) any
         bankruptcy, insolvency, reorganization, arrangement, readjustment of
         debt, dissolution, liquidation or similar proceeding relating to it
         under the laws of any jurisdiction; or any such proceeding shall be
         instituted (by petition, application or otherwise) against any
         Borrower; or any judgment, writ, warrant of attachment or execution or
         similar process shall be issued or levied against a substantial part of
         the property of any Borrower;

<PAGE>

                  (e) A petition shall be filed by or against any Borrower under
         the United States Bankruptcy Code or the Bankruptcy and Insolvency Act
         (Canada) naming such Borrower as debtor;

                  (f) The Life Insurance Policy shall be terminated, by the
         Borrower or otherwise; or the Life Insurance Policy shall be scheduled
         to terminate within 30 days and the Borrower shall not have delivered a
         satisfactory renewal thereof to the Lender; or the Borrower shall fail
         to pay any premium on the Life Insurance Policy when due; or the
         Borrower shall take any other action that impairs the value of the Life
         Insurance Policy;

                  (g) Any representation or warranty made by the Borrower in
         this Agreement, or by the Borrower (or any of its officers) in any
         agreement, certificate, instrument or financial statement or other
         statement contemplated by or made or delivered pursuant to or in
         connection with this Agreement or any such guaranty shall prove to have
         been incorrect in any material respect when deemed to be effective;

                  (h) The rendering against the Borrower of a final judgment,
         decree or order for the payment of money in excess of $50,000 and the
         continuance of such judgment, decree or order unsatisfied and in effect
         for any period of 30 consecutive days without a stay of execution;

                  (i) A default under any bond, debenture, note or other
         evidence of indebtedness of the Borrower owed to any Person other than
         the Lender, or under any indenture or other instrument under which any
         such evidence of indebtedness has been issued or by which it is
         governed, or under any lease of any of the Premises, and the expiration
         of the applicable period of grace, if any, specified in such evidence
         of indebtedness, indenture, other instrument or lease;

                  (j) Any Reportable Event, which the Lender determines in good
         faith might constitute grounds for the termination of any Plan or for
         the appointment by the appropriate United States District Court of a
         trustee to administer any Plan, shall have occurred and be continuing
         30 days after written notice to such effect shall have been given to
         the Borrower by the Lender; or a trustee shall have been appointed by
         an appropriate United States District Court to administer any Plan; or
         the Pension Benefit Guaranty Corporation shall have instituted
         proceedings to terminate any Plan or to appoint a trustee to administer
         any Plan; or the Borrower shall have filed for a distress termination
         of any Plan under Title IV of ERISA; or the Borrower shall have failed
         to make any quarterly contribution required with respect to any Plan
         under Section 412(m) of the Internal Revenue Code of 1986, as amended,
         which the Lender determines in good faith may by itself, or in
         combination with any such failures that the Lender may determine are
         likely to occur in the future, result in the imposition of a lien on
         the Borrower's assets in favor of the Plan;

                  (k) An event of default shall occur under any Security
         Document or under any other security agreement, mortgage, deed of
         trust, assignment or other instrument or agreement securing any
         obligations of the Borrower hereunder or under any note;

<PAGE>

                  (l) Any Borrower shall liquidate, dissolve, terminate or
         suspend its business operations or otherwise fail to operate its
         business in the ordinary course, or sell all or substantially all of
         its assets, without the Lender's prior written consent;

                  (m) Any Borrower shall fail to pay, withhold, collect or remit
         any tax or tax deficiency when assessed or due (other than any tax
         deficiency which is being contested in good faith and by proper
         proceedings and for which it shall have set aside on its books adequate
         reserves therefor) or notice of any state or federal tax liens shall be
         filed or issued;

                  (n) Default in the payment of any amount owed by the Borrower
         to the Lender other than any indebtedness arising hereunder;

                  (o) The Borrower shall take or participate in any action which
         would be prohibited under the provisions of any Subordination Agreement
         or make any payment on the Subordinated Indebtedness (as defined in any
         Subordination Agreement) that any Person was not entitled to receive
         under the provisions of such Subordination Agreement;

                  (p) Any event or circumstance with respect to the Borrower
         shall occur such that the Lender shall believe in good faith that the
         prospect of payment of all or any part of the Obligations or the
         performance by the Borrower under the Loan Documents is impaired or any
         material adverse change in the business or financial condition of the
         Borrower shall occur;

                  (q) Any breach, default or event of default by or attributable
         to any Affiliate under any agreement between such Affiliate and the
         Lender;

         8.2 Rights and Remedies.

         During any Default Period, the Lender may exercise any or all of the
following rights and remedies:

                  (a) the Lender may, by notice to the Borrower, declare the
         Commitment to be terminated, whereby the same shall forthwith
         terminate.

                  (b) the Lender may, by notice to the Borrower, declare the
         Obligations to be forthwith due and payable, whereupon all Obligations
         shall become and be forthwith due and payable, without presentment,
         notice of dishonor, protest or further notice of any kind, all of which
         the Borrower hereby expressly waives;

                  (c) the Lender may, without notice to the Borrower and without
         further action, apply any and all money owing by the Lender to the
         Borrower to the payment of the Obligations;

                  (d) the Lender may exercise and enforce any and all rights and
         remedies available upon default to a secured party under the UCC and
         the PPSA, including, without limitation, the right to take possession
         of Collateral, or any evidence thereof, proceeding without judicial
         process or by judicial process (without a prior hearing or notice
         thereof, which the Borrower hereby expressly waives) and the right to

<PAGE>

         sell, lease or otherwise dispose of any or all of the Collateral, and,
         in connection therewith, the Borrower will on demand assemble the
         Collateral and make it available to the Lender at a place to be
         designated by the Lender which is reasonably convenient to both
         parties;

                  (e) the Lender may exercise and enforce its rights and
         remedies under the Loan Documents; and

                  (f) the Lender may exercise any other rights and remedies
         available to it by law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in subsections (d) or (e) of Section 8.1, the Obligations shall be
immediately due and payable automatically without presentment, demand, protest
or notice of any kind.

         8.3 Certain Notices.

         If notice to the Borrower of any intended disposition of Collateral or
any other intended action is required by law in a particular instance, such
notice shall be deemed commercially reasonable if given (in the manner specified
in Section 9.3) at least ten calendar days before the date of intended
disposition or other action.

                                9. Miscellaneous

         9.1 No Waiver; Cumulative Remedies.

         No failure or delay by the Lender in exercising any right, power or
remedy under the Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.

         9.2 Amendments.

         No amendment, modification, termination or waiver of any provision of
any Loan Document or consent to any departure by the Borrower therefrom or any
release of a Security Interest shall be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.

         9.3 Addresses for Notices.

         Except as otherwise expressly provided herein, all notices, requests,
demands and other communications provided for under the Loan Documents shall be
in writing and shall be (a) personally delivered, (b) sent by first class United
States or Canadian mail, as the case may be, (c) sent by overnight courier of

<PAGE>

national reputation, or (d) transmitted by telecopy, in each case addressed or
telecopied to the party to whom notice is being given at its address or
telecopier number as set forth below:

                  If to the Borrower:

                  First Team Sports, Inc., et al.
                  1201 Lund Boulevard
                  Anoka, Minnesota 55303
                  Telecopier:   (612) 576-8000
                  Attention: Kent Brunner

                  If to the Lender:

                  Norwest Bank Minnesota, National Association
                  Norwest Center
                  Sixth Street and Marquette Avenue
                  N9312-040
                  Minneapolis, Minnesota 55479
                  Telecopier:  (612) 341-2472
                  Attention: Susan Mack

or, as to each party, at such other address or telecopier number as may
hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date sent if sent by overnight courier, or (d) the
date of transmission if delivered by telecopy, except that notices or requests
to the Lender pursuant to any of the provisions of Article 2 shall not be
effective until received by the Lender.

         9.4 Further Documents.

         The Borrower will from time to time execute and deliver or endorse any
and all instruments, documents, conveyances, assignments, security agreements,
financing statements and other agreements and writings that the Lender may
reasonably request in order to secure, protect, perfect or enforce the Security
Interest or the Lender's rights under the Loan Documents (but any failure to
request or assure that the Borrower executes, delivers or endorses any such item
shall not affect or impair the validity, sufficiency or enforceability of the
Loan Documents and the Security Interest, regardless of whether any such item
was or was not executed, delivered or endorsed in a similar context or on a
prior occasion).

         9.5 Collateral.

         This Agreement does not contemplate a sale of accounts, contract rights
or chattel paper, and, as provided by law, the Borrower is entitled to any
surplus and shall remain liable for any deficiency. The Lender's duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if it exercises reasonable care in physically keeping such Collateral,
or in the case of Collateral in the custody or possession of a bailee or other
third person, exercises reasonable care in the selection of the bailee or other

<PAGE>

third person, and the Lender need not otherwise preserve, protect, insure or
care for any Collateral. The Lender shall not be obligated to preserve any
rights the Borrower may have against prior parties, to realize on the Collateral
at all or in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application.

         9.6 Costs and Expenses.

         The Borrower agrees to pay on demand all costs and expenses, including
(without limitation) attorneys' fees, incurred by the Lender in connection with
the Obligations, this Agreement, the Loan Documents, and any other document or
agreement related hereto or thereto, and the transactions contemplated hereby,
including without limitation all such costs, expenses and fees incurred in
connection with the negotiation, preparation, execution, amendment,
administration, performance, collection and enforcement of the Obligations and
all such documents and agreements and the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest.

         9.7 Indemnity.

         In addition to the payment of expenses pursuant to Section 9.6, the
Borrower agrees to indemnify, defend and hold harmless the Lender, and any of
its participants, parent corporations, subsidiary corporations, affiliated
corporations, successor corporations, and all present and future officers,
directors, employees, attorneys and agents of the foregoing (the "Indemnitees")
from and against any of the following (collectively, "Indemnified Liabilities"):

                           (i) any and all transfer taxes, documentary taxes,
                  assessments or charges made by any governmental authority by
                  reason of the execution and delivery of the Loan Documents or
                  the making of the Advances;

                           (ii) any claims, loss or damage to which any
                  Indemnitee may be subjected if any representation or warranty
                  contained in Section 5.12 proves to be incorrect in any
                  respect or as a result of any violation of the covenant
                  contained in Section 6.4(b); and

                           (iii) any and all other liabilities, losses, damages,
                  penalties, judgments, suits, claims, costs and expenses of any
                  kind or nature whatsoever (including, without limitation, the
                  reasonable fees and disbursements of counsel) in connection
                  with the foregoing and any other investigative, administrative
                  or judicial proceedings, whether or not such Indemnitee shall
                  be designated a party thereto, which may be imposed on,
                  incurred by or asserted against any such Indemnitee, in any
                  manner related to or arising out of or in connection with the
                  making of the Advances and the Loan Documents or the use or
                  intended use of the proceeds of the Advances.

If any investigative, judicial or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, upon such Indemnitee's request,
the Borrower, or counsel designated by the Borrower and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrower's sole costs and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to

<PAGE>

indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrower shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrower's obligation
under this Section 9.7 shall survive the termination of this Agreement and the
discharge of the Borrower's other obligations hereunder.

         9.8 Participants.

         The Lender and its participants, if any, are not partners or joint
venturers, and the Lender shall not have any liability or responsibility for any
obligation, act or omission of any of its participants. All rights and powers
specifically conferred upon the Lender may be transferred or delegated to any of
the Lender's participants, successors or assigns.

         9.9 Execution in Counterparts.

         This Agreement and other Loan Documents may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same instrument.

         9.10 Binding Effect; Assignment; Complete Agreement; Exchanging
Information.

         The Loan Documents shall be binding upon and inure to the benefit of
the Borrower and the Lender and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights thereunder or
any interest therein without the Lender's prior written consent. This Agreement,
together with the Loan Documents, comprises the complete and integrated
agreement of the parties on the subject matter hereof and supersedes all prior
agreements, written or oral, on the subject matter hereof. Without limiting the
Lender's right to share information regarding the Borrower and its Affiliates
with the Lender's participants, accountants, lawyers and other advisors, the
Lender, Norwest Corporation, and all direct and indirect subsidiaries of Norwest
Corporation, may exchange any and all information they may have in their
possession regarding the Borrower and its Affiliates, and the Borrower waives
any right of confidentiality it may have with respect to such exchange of such
information.

         9.11 Severability of Provisions.

         Any provision of this Agreement which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof.

         9.12 Headings.

         Article and Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

<PAGE>

         9.13 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial.

         The Loan Documents shall be governed by and construed in accordance
with the substantive laws (other than conflict laws) of the State of Minnesota.
This Agreement shall be governed by and construed in accordance with the
substantive laws (other than conflict laws) of the State of Minnesota. The
parties hereto hereby (i) consent to the personal jurisdiction of the state and
federal courts located in the State of Minnesota in connection with any
controversy related to this Agreement; (ii) waive any argument that venue in any
such forum is not convenient, (iii) agree that any litigation initiated by the
Lender or the Borrower in connection with this Agreement or the other Loan
Documents shall be venued in either the District Court of Hennepin County,
Minnesota, or the United States District Court, District of Minnesota, Fourth
Division; and (iv) agree that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. THE PARTIES WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO
THIS AGREEMENT.

         9.14 Taxes.

         All payments of principal of, and interest on, the Notes and all other
amounts payable hereunder shall be made free and clear of and without deduction
for any present or future income, excise, capital, goods and services, use,
stamp or franchise taxes and other taxes, surtaxes, fees, duties, withholdings
or other charges of any nature whatsoever imposed by any governmental authority,
excluding franchise taxes and taxes imposed on or measured by the Lender's net
income or receipts (all non-excluded items being called "Taxes"). If any
withholding or deduction from any payment to be made by any Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then such Borrowers will:

         (1)      pay directly to the relevant authority the full amount
                  required to be so withheld or deducted;

         (2)      promptly forward to the Lender an official receipt or other
                  documentation satisfactory to the Lender evidencing such
                  payment to such authority; and

         (3)      pay to the Lender as additional interest such additional
                  amount or amounts as is necessary to ensure that the net
                  amount actually received by the Lender will equal the full
                  amount the Lender would have received had no such withholding
                  or deduction been required.

Moreover, if any Taxes are directly asserted against the Lender with respect to
any payment received by the Lender hereunder, the Lender may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any penalty,
interest or expense) as is necessary in order that the net amount received by
the Lender after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount the Lender would have received had
such Taxes not been asserted.

<PAGE>

If any Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Lender, the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any such failure, whether or not such Taxes were correctly or
legally asserted. For purposes of this Section 9.14, a distribution hereunder by
the Lender shall be deemed a payment by the Borrower.

         9.15 Joint and Several Liability.

         This Agreement and the Notes are executed by more than one Borrower and
each Borrower agrees to be jointly and severally liable hereon, and the release
by the Lender of one or more such Borrowers shall not release or diminish the
liability of the remaining Borrowers hereof.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION    FIRST TEAM SPORTS, INC.

By:     /s/ Susan N. Mack                       By:    /s/ Kent A. Brunner
Name:   Susan N. Mack                           Name:  Kent A. Brunner
Title:   Vice President                         Title:    CFO

                                                HESPELER HOCKEY HOLDING, INC.

                                                By:   /s/ Kent A. Brunner
                                                Name: Kent A. Brunner
                                                Title:   CFO

                                                HESPELER HOCKEY COMPANY

                                                By:    /s/ Kent A. Brunner
                                                Name:  Kent A. Brunner
                                                Title:    CFO

                                                FIRST TEAM SPORTS GmbH

                                                By:    /s/ Kent A. Brunner
                                                Name:  Kent A. Brunner
                                                Title:  Acting Agent

<PAGE>

                                Table of Contents

1. DEFINITIONS.................................................................1
    1.1 Definitions............................................................1
    1.2 Cross References......................................................10
2. AMOUNT AND TERMS OF THE CREDIT FACILITY....................................10
    2.1 Revolving Advances....................................................10
    2.2 Letters of Credit.....................................................11
    2.3 Payment of Amounts Drawn Under Letters of Credit;
        Obligation of Reimbursement...........................................11
    2.4 Term Advance..........................................................12
    2.5 Payment of Term Note..................................................12
    2.6 Interest; Default Interest; Participations; Usury.....................13
    2.7 Fees..................................................................13
    2.8 Computation of Interest and Fees; When Interest Due and Payable.......14
    2.9 Capital Adequacy......................................................14
    2.10 Voluntary Prepayment; Reduction of the Maximum Line; Termination
         of the Credit Facility by the Borrower...............................15
    2.11 Termination and Line Reduction Fees; Prepayment Fees.................15
    2.12 Mandatory Prepayment.................................................16
    2.13 Payment..............................................................16
    2.14 Payment on Non-Banking Days..........................................17
    2.15 Use of Proceeds......................................................17
    2.16 Liability Records....................................................17
3. SECURITY INTEREST; OCCUPANCY; SETOFF.......................................17
    3.1 Grant of Security Interest............................................17
    3.2 Notification of Account Debtors and Other Obligors....................17
    3.3 Assignment of Insurance...............................................18
    3.4 Occupancy.............................................................18
    3.5 License...............................................................18
    3.6 Financing Statement...................................................18
    3.7 Setoff................................................................20
4. CONDITIONS OF LENDING......................................................21
    4.1 Conditions Precedent to the Initial Revolving and Term Advance........21
    4.2 Conditions Precedent to All Advances..................................23
5. REPRESENTATIONS AND WARRANTIES.............................................23
    5.1 Corporate Existence and Power; Name; Chief Executive Office;
        Inventory and Equipment Locations; Tax Identification Number..........24
    5.2 Authorization of Borrowing; No Conflict as to Law or Agreements.......24
    5.3 Legal Agreements......................................................25
    5.4 Subsidiaries..........................................................25
    5.5 Financial Condition; No Adverse Change................................25
    5.6 Litigation............................................................25
    5.7 Regulation U..........................................................25
    5.8 Taxes.................................................................25
    5.9 Titles and Liens......................................................26
    5.10 Plans................................................................26
    5.11 Default..............................................................26
    5.12 Environmental Matters................................................26
    5.13 Submissions to Lender................................................27
    5.14 Financing Statements.................................................27
    5.15 Rights to Payment....................................................28
6. BORROWER'S AFFIRMATIVE COVENANTS...........................................28
    6.1 Reporting Requirements................................................28
    6.2 Books and Records; Inspection and Examination.........................30
    6.3 Account Verification..................................................31
    6.4 Compliance with Laws..................................................31
    6.5 Payment of Taxes and Other Claims.....................................31
    6.6 Maintenance of Properties.............................................31
    6.7 Insurance.............................................................32
    6.8 Preservation of Existence.............................................32
    6.9 Delivery of Instruments...............................................32
    6.10 Collateral Account...................................................32
    6.11 Key Person Life Insurance............................................33
    6.12 Performance by the Lender............................................33
    6.13 Minimum Net Worth....................................................34
    6.14 Minimum Earnings After Taxes.........................................34
    6.15 New Covenants........................................................34
7. NEGATIVE COVENANTS.........................................................34
    7.1 Liens.................................................................34
    7.2 Indebtedness..........................................................35
    7.3 Guaranties............................................................35
    7.4 Investments and Subsidiaries..........................................35
    7.5 Dividends.............................................................36
    7.6 Sale or Transfer of Assets; Suspension of Business Operations.........36
    7.7 Consolidation and Merger; Asset Acquisitions..........................36
    7.8 Sale and Leaseback....................................................36
    7.9 Restrictions on Nature of Business....................................37
    7.10 Accounting...........................................................37
    7.11 Discounts............................................................37
    7.12 Defined Benefit Pension Plans........................................37
    7.13 Other Defaults.......................................................37
    7.14 Place of Business; Name..............................................37
    7.15 Organizational Documents; S Corporation Status.......................38
    7.16 Change in Ownership..................................................38
8. EVENTS OF DEFAULT, RIGHTS AND REMEDIES.....................................38
    8.1 Events of Default.....................................................38
    8.2 Rights and Remedies...................................................40
    8.3 Certain Notices.......................................................41
9. MISCELLANEOUS..............................................................41
    9.1 No Waiver; Cumulative Remedies........................................41
    9.2 Amendments............................................................41
    9.3 Addresses for Notices.................................................41
    9.4 Further Documents.....................................................42
    9.5 Collateral............................................................42
    9.6 Costs and Expenses....................................................43
    9.7 Indemnity.............................................................43
    9.8 Participants..........................................................44
    9.9 Execution in Counterparts.............................................44
    9.10 Binding Effect; Assignment; Complete Agreement; Exchanging
         Information..........................................................44
    9.11 Severability of Provisions...........................................44
    9.12 Headings.............................................................44
    9.13 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial.............45
    9.14 Taxes................................................................45
    9.15 Joint and Several Liability..........................................46MORTGAGE
                                       AND
                               SECURITY AGREEMENT
                                       AND
                           FIXTURE FINANCING STATEMENT

         THIS INDENTURE (hereinafter referred to as the "Mortgage"), made as of
September 8, 1999, between FIRST TEAM SPORTS, INC., a Minnesota corporation
(hereinafter collectively referred to as the "Mortgagor"), whose post office
address is 1201 Lund Boulevard, Anoka, Minnesota 55303, and Norwest Bank
Minnesota, National Association, a national banking association (hereinafter
referred to as the "Mortgagee"), whose post office address is Norwest Center,
Sixth and Marquette, Minneapolis, Minnesota 55479.

         THIS MORTGAGE SECURES, AMONG OTHER THINGS, A REVOLVING NOTE, PURSUANT
TO WHICH ADVANCES WILL BE MADE TO THE MORTGAGOR AND SUCH AMOUNTS MAY BE REPAID
AND REBORROWED.

         WITNESSETH, that the Mortgagor in consideration of the debt hereinafter
described and the sum of One and 00/100 Dollars ($1.00) to the Mortgagor in hand
paid by the Mortgagee, the receipt whereof is hereby acknowledged, does hereby
MORTGAGE, GRANT, BARGAIN, SELL AND CONVEY unto the Mortgagee, its successors and
assigns, forever, AND GRANTS TO THE MORTGAGEE A MORTGAGE LIEN AND SECURITY
INTEREST IN the following properties (all of the following being hereafter
collectively referred to as the "Premises"):

                                A. REAL PROPERTY

         All the tracts or parcels of real property lying and being in the
County of Anoka, State of Minnesota, all as more fully described in Exhibit "A"
attached hereto and made a part hereof, together with all the estates and rights
in and to the real property and in and to lands lying in streets, alleys and
roads adjoining the real property and all buildings, structures, improvements,
fixtures and annexations, access rights, easements, rights of way or use,
servitudes, licenses, tenements, hereditaments and appurtenances now or
hereafter belonging or pertaining to the real property and all proceeds derived
therefrom; and

                            B. IMPROVEMENTS, FIXTURES

         All buildings, equipment, fixtures, improvements, building supplies and
materials and personal property now or hereafter attached to or necessary to the
use, operation or maintenance of the improvements on the Premises including, but
without being limited to, all machinery, fittings, fixtures, apparatus,
equipment or articles used to supply heating, gas, electricity, air
conditioning, water, light, waste disposal, power, refrigeration, ventilation,
and fire and sprinkler protection, as well as all elevators, escalators,
overhead cranes, hoists and assists, and the like, and all furnishings,
supplies, draperies, maintenance and repair equipment, floor coverings, screens,
storm windows, blinds, awnings, shrubbery and plants, stoves, ranges, ovens,
refrigerators, air conditioners, dishwashers, clothes dryers, washing machines,
disposals and compactors (it being understood that the enumeration of any
specific articles of property shall in no way be held to exclude any items of
property not specifically enumerated), as well as renewals, replacements,
proceeds, additions, accessories, increases, parts, fittings, insurance
payments, awards and substitutes thereof, together with all interest of the
Mortgagor in any such items hereafter acquired, all of which personal property
mentioned herein shall be deemed fixtures and accessory to the freehold and a
part of the realty and not severable in whole or in part without material injury
to the Premises, but excluding therefrom the trade fixtures, inventory,
equipment and removable personal property of any tenant of the Premises; and

<PAGE>

                          C. RENTS, LEASES AND PROFITS

         All rents, issues, income, revenue, receipts, fees, and profits now due
or which may hereafter become due under or by virtue of and together with all
right, title and interest of the Mortgagor in and to any lease, license,
sublease, contract or other kind of occupancy agreement, whether written or
verbal, for the use or occupancy of the Premises or any part thereof; and

                        D. JUDGMENTS, CONDEMNATION AWARDS
                             AND INSURANCE PROCEEDS

         All awards, compensation or settlement proceeds made by any
governmental or other lawful authorities for the threatened or actual taking or
damaging by eminent domain of the whole or any part of the Premises, including
any awards for a temporary taking, change of grade of streets or taking of
access, together with all insurance proceeds resulting from a casualty to any
portion of the Premises; and

                     E. LICENSES, PERMITS, EQUIPMENT LEASES
                             AND SERVICE AGREEMENTS

         All right, title and interest of the Mortgagor in and to any licenses,
permits regulatory approvals, government authorizations, franchise agreements
and equipment or chattel leases, service contracts or agreements and all
proceeds therefrom, arising from, issued in connection with or in any way
related to the use, occupancy, operation, maintenance or security of the
Premises, together with all replacements, additions, substitutions and renewals
thereof, which may be assigned pursuant to agreement or law; and

                 F. ACCOUNTS RECEIVABLE AND GENERAL INTANGIBLES

         All accounts receivable, chattel paper, general intangibles,
instruments, and all proceeds therefrom, whether cash or noncash, derived by the
Mortgagor from the use, occupancy or operation of the Premises, including,
without limitation, all third party payments, but excepting the proceeds of any
borrowed funds, and reserving to the Mortgagor a license to collect the same
unless and until an Event of Default occurs under this Mortgage.

         AND THE MORTGAGOR for the Mortgagor, the Mortgagor's heirs,
administrators, personal representatives, successors and assigns, covenant with
the Mortgagee, its successors and assigns, that the Mortgagor is lawfully seized
of the Premises and has good right to sell and convey the same; that the
Premises are free from all encumbrances except as may be set forth in Exhibit
"B" attached hereto and made a part hereof (hereinafter referred to as the
"Permitted Encumbrances"); that the Mortgagee, its successors and assigns, shall
quietly enjoy and possess the Premises; and that the Mortgagor will WARRANT AND
DEFEND the title to the same against all lawful claims not specifically excepted
in this Mortgage.

         TO HAVE AND TO HOLD THE SAME, together with the possession and right of
possession of the Premises, unto the Mortgagee, its successors and assigns,
forever.

         PROVIDED NEVERTHELESS, that if the Mortgagor, the Mortgagor's heirs,
administrators, personal representatives, successors or assigns, shall pay to
the Mortgagee, its successors or assigns, the sum of Six Million Dollars
($6,000,000), according to the terms of that certain Term Note dated of even
date herewith in the principal amount of Four Million Five Hundred Thousand
Dollars ($4,500,000) and that certain Revolving Note dated of even date herewith
in the principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) (hereinafter collectively referred to herein as the "Note"), the

<PAGE>

terms and conditions of which are incorporated herein by reference and made a
part hereof, together with any extensions or renewals thereof, due and payable
with interest thereon at the variable rate set forth therein, executed by the
Mortgagor and payable to the Mortgagee, the balance of said principal sum
together with interest thereon being due and payable in any event on September
30, 2002, and shall repay to the Mortgagee, its successors or assigns, at the
times demanded and with interest thereon at the same rate as specified in the
Note, all sums advanced in protecting the lien of this Mortgage, including
taxes, assessments, charges, claims, fines, impositions, insurance premiums,
amounts due upon prior or superior mortgages and other prior or superior liens,
encumbrances and interests, and legal expenses and attorney's fees and all sums
advanced for any other purpose authorized herein (the Note and all such sums,
together with interest thereon, being hereinafter collectively referred to as
the "Indebtedness Secured Hereby"), and shall keep and perform all of the
covenants and agreements herein contained, then this Mortgage shall become null
and void, and shall be released at the Mortgagor's expense.

               AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS:

                                       1.

                    1. GENERAL REPRESENTATIONS AND WARRANTIES

         1.1 REPRESENTATIONS AND WARRANTIES. The Mortgagor represents and
warrants as follows:

         The Mortgagor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota, is duly qualified to do
business in the State of Minnesota and has all requisite power and authority to
own and operate the Premises, to enter into the Note, this Mortgage, the Credit
and Security Agreement dated of even date herewith (together with all
amendments, supplements and restatements, the "Credit Agreement"), and any other
document securing the Note and to borrow the monies and otherwise assume and
perform as contemplated thereunder, and is in compliance with all laws,
regulations, ordinances and orders of public authorities applicable to it.

         Neither the borrowing of the monies nor the execution, delivery of the
Note, this Mortgage, the Credit Agreement, or any other document securing the
Note nor the performance or the provisions of the agreements therein contained
on the part of the Mortgagor will contravene, violate or constitute a default
under the Articles of Incorporation or By-Laws of the Mortgagor, or any
agreement with the shareholders of the Mortgagor, or any creditors of the
Mortgagor, or any law, ordinance, governmental regulation, agreement or
indenture to which the Mortgagor is a party or by which the Mortgagor or the
Mortgagor's properties are bound.

         There are no (i) bankruptcy proceedings involving the Mortgagor; (ii)
dissolution proceedings involving the Mortgagor; (iii) unsatisfied judgments of
record against the Mortgagor; or (iv) tax liens filed against the Mortgagor.

         The Note, this Mortgage, the Credit Agreement and all other
documentation executed in connection with the loan evidenced by the Note have
been duly executed and delivered by the Mortgagor and constitute the legal,
valid and binding obligations of the Mortgagor, enforceable in accordance with
their terms, except as to enforcement of remedies, as may be limited by
bankruptcy, insolvency or similar laws affecting generally the enforcement of
creditor's remedies.

         There are no judgments, suits, actions or proceedings at law or in
equity or by or before any governmental instrumentality or agency now pending
against or, to the best of Mortgagor's knowledge, threatened against the
Mortgagor or its properties, or both, nor has any judgment, decree or order been

<PAGE>

issued against the Mortgagor or its properties, or both, which would have a
material adverse effect on the Premises or the financial condition of the
Mortgagor or Mortgagor's properties.

         No consent or approval of any regulatory authority having jurisdiction
over Mortgagor is necessary or required by law as a prerequisite to the
execution, delivery and performance of the terms of the Note, this Mortgage, the
Credit Agreement or any other document securing the Note.

         The Premises is free from any mechanics' or materialmen's liens or
claims. There has been no labor or materials furnished to the Premises that has
not been paid for in full.

         The Mortgagor has no notice, information or knowledge of any change
contemplated in any applicable law, ordinance, regulation or restriction, or any
judicial, administrative, governmental or quasi-governmental action, or any
action by adjacent land owners, or natural or artificial condition existing upon
the Premises which would limit, restrict, or prevent the contemplated or
intended use and purpose of the Premises.

         There is no pending condemnation or similar proceeding affecting the
Premises, or any portion thereof nor, to the best knowledge of the Mortgagor, is
any such action being presently contemplated.

         No part of the Premises is being used for agricultural purposes.

         The Premises is undamaged by fire, windstorm or other casualty.

         The Mortgagor is not, as of the date hereof, in default in the payment
of any of the Mortgagor's obligations.

         The Premises complies with all zoning ordinances, energy and
environmental codes, building and use restrictions and codes, and any
requirements with respect to licenses, permits and agreements necessary for the
lawful use and operation of the Premises.

         The heating, electrical, sanitary sewer plumbing, storm sewer plumbing,
potable water plumbing and other building equipment, fixtures and fittings are
in good condition and working order, are adequate in quantity and quality for
normal and usual use, and are fit for the purposes intended and the use
contemplated.

         1.2 CONTINUING OBLIGATION. All statements made hereunder are true and
correct and all information provided to Mortgagee by the Mortgagor relating to
this transaction has not and does not contain any statement which, at the time
and in the light of the circumstances under which it was made, would be false
and misleading with respect to any material fact, or would omit any material
fact necessary in order to make any such statement contained therein not false
or misleading in any material respect. Should the Mortgagor subsequently obtain
knowledge that such representation was or is untrue, the Mortgagor shall
immediately notify Mortgagee as to the untrue nature of said representation and
agree to take such action as may be necessary to cause such representation to
become true.

                           2. COVENANTS AND AGREEMENTS

         2.1 PAYMENT OF INDEBTEDNESS: OBSERVANCE OF COVENANTS. The Mortgagor
will duly and punctually pay each and every installment of principal and
interest on the Note and all other Indebtedness Secured Hereby, as and when the
same shall become due, and shall duly and punctually perform and observe all of
the covenants, agreements and provisions contained herein, in the Note and any
other instrument given as security for the payment of the Note.

<PAGE>

         2.2 MAINTENANCE: REPAIRS. The Mortgagor agrees that it will keep and
maintain the Premises in good condition, repair and operating condition free
from any waste or misuse, and will comply with all requirements of law,
municipal ordinances and regulations, restrictions and covenants affecting the
Premises and their use, and will promptly repair or restore any buildings,
improvements or structures now or hereafter on the Premises which may become
damaged or destroyed to their condition prior to any such damage or destruction
subject to the provisions of Article 5 hereof. The Mortgagor further agrees that
without the prior written consent of the Mortgagee it will not expand any
improvements on the Premises, erect any new improvements or make any material
alterations in any improvements which will alter the basic structure, adversely
affect the market value or change the existing architectural character of the
Premises, and will complete within a reasonable time any buildings now or at any
time in the process of erection on the Premises. The Mortgagor agrees not to
acquiesce in any rezoning classification, modification or restriction affecting
the Premises without the written consent of the Mortgagee. The Mortgagor agrees
that it will not abandon or vacate the Premises. The Mortgagor agrees that it
will provide, improve, grade, surface and thereafter maintain, clean, repair and
adequately light all parking areas within the Premises, together with any
sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved
areas for ingress and right-of-way to and from the adjacent public thoroughfare
necessary or desirable for the use thereof.

         2.3 PAYMENT OF OPERATING COSTS; LIENS; AND PRIOR INDEBTEDNESS. The
Mortgagor agrees that it will pay all operating costs and expenses of the
Premises; keep the Premises free from mechanics' liens, materialmen's liens,
judgment liens and other liens, executions, attachments or levies (hereinafter
collectively referred to as "Liens"); and will pay when due all permitted
indebtedness which may be secured by mortgage, lien or charge on the Premises
and upon request will exhibit to the Mortgagee satisfactory evidence of such
payment and discharge.

         2.4 PAYMENT OF IMPOSITIONS. The Mortgagor will pay when due and before
any penalty all taxes, installments of assessments, water charges, sewer charges
and other fees, taxes, charges and assessments of every kind and nature
whatsoever assessed or charged against or constituting a lien on the Premises or
any interest therein or the Indebtedness Secured Hereby (hereinafter referred to
as the "Impositions"); and will upon demand furnish to the Mortgagee proof of
the payment of any such Impositions. In the event of a court decree or an
enactment after the date hereof by any legislative authority of any law imposing
upon a mortgagee the payment of the whole or any part of the Impositions herein
required to be paid by the Mortgagor, or changing in any way the laws relating
to the taxation of mortgages or debts secured by mortgages or a mortgagee's
interest in mortgaged premises, so as to impose such Imposition on the Mortgagee
or on the interest of the Mortgagee in the Premises, then, in any such event,
the Mortgagor shall bear and pay the full amount of such Imposition, provided
that if for any reason payment by the Mortgagor of any such Imposition would be
unlawful, or if the payment thereof would constitute usury or render the
Indebtedness Secured Hereby wholly or partially usurious, the Mortgagee, at its
option, may declare the whole sum secured by this Mortgage with interest thereon
to be immediately due and payable, without prepayment premium, or the Mortgagee,
at its option, may pay that amount or portion of such Imposition as renders the
Indebtedness Secured Hereby unlawful or usurious, in which event the Mortgagor
shall concurrently therewith pay the remaining lawful and non-usurious portion
or balance of said Imposition.

         2.5 CONTEST OF LIENS AND IMPOSITIONS. The Mortgagor shall not be
required to pay, discharge or remove any Liens or Impositions so long as the
Mortgagor shall in good faith contest the same or the validity thereof by
appropriate legal proceedings which shall operate to prevent the collection of
the Liens or Impositions so contested and the sale of the Premises, or any part
thereof to satisfy the same, provided that the Mortgagor shall, prior to any
such contest, have given such security as may be demanded by the Mortgagee to
insure such payments and prevent any sale or forfeiture of the Premises by

<PAGE>

reason of such nonpayment. Any such contest shall be prosecuted with due
diligence and the Mortgagor shall promptly after final determination thereof pay
the amount of any such Liens or Impositions so determined, together with all
interest and penalties, which may be payable in connection therewith.
Notwithstanding the provisions of this Section, the Mortgagor shall (and if the
Mortgagor shall fail so to do, the Mortgagee, may but shall not be required to)
pay any such Liens or Impositions notwithstanding such contest if in the
reasonable opinion of the Mortgagee, the Premises shall be in jeopardy or in
danger of being forfeited or foreclosed.

         2.6 PROTECTION OF SECURITY. The Mortgagor agrees to promptly notify the
Mortgagee of and appear in and defend any suit, action or proceeding that
affects the value of the Premises, the Indebtedness Secured Hereby or the rights
or interest of the Mortgagee hereunder. The Mortgagee may elect to appear in or
defend any such action or proceeding and the Mortgagor agrees to indemnify and
reimburse the Mortgagee from any and all loss, damage, expense or cost arising
out of or incurred in connection with any such suit, action or proceeding,
including costs of evidence of title and reasonable attorney's fees.

         2.7 REPORTING REQUIREMENTS. During the term of this Mortgage, the
Mortgagor will deliver, or cause to be delivered, to the Mortgagee all
information and reports required pursuant to section 6.1 of the Credit
Agreement.

         2.8 ADDITIONAL ASSURANCES. The Mortgagor agrees upon reasonable request
by the Mortgagee to execute and deliver such further instruments, financing
statements under the Uniform Commercial Code and assurances and will do such
further acts as may be necessary or proper to carry out more effectively the
purposes of this Mortgage and, without limiting the foregoing, to make subject
to the lien hereof any property agreed to be subjected hereto or covered by the
granting clause hereof, or intended so to be. The Mortgagor agrees to pay any
recording fees, filing fees, stamp taxes or other charges arising out of or
incident to the filing, the issuance and delivery of the Note, the filing or
recording of the Mortgage or the delivery of such further assurances and
instruments as may be required pursuant to the terms of this Section.

         2.9 DUE ON SALE OR MORTGAGING, ETC. In the event:

         (a)    the Mortgagor sells, conveys, transfers, further mortgages,
                changes the form of ownership or encumbers or disposes of the
                Premises, or any part thereof, or any interest therein; or

         (b)    any corporate ownership interest in the Mortgagor is sold,
                conveyed, transferred, pledged or encumbered, whether
                voluntarily or involuntarily, or there is an agreement so to do
                (except as disclosed in the Credit Agreement);

         without the written consent of the Mortgagee being first obtained, then
at the sole option of the Mortgagee, the Mortgagee may declare the entire
principal and interest evidenced by the Note due and payable in full and call
for payment of the same at once, together with the prepayment premium then in
effect under the terms of the Note.

         2.10 UPDATED APPRAISALS. Mortgagor agrees that upon request of
Mortgagee, it shall pay the costs of any updated appraisal of the Premises in
form and content acceptable to Mortgagee at any time that either (a) an Event of
Default shall have occurred hereunder, or (b) Mortgagee determines in its
commercially reasonable judgment that the security for the loan evidenced by the
Note has been physically or financially impaired in any material manner.

<PAGE>

                                  3. INSURANCE

         3.1 INSURANCE. The Mortgagor shall obtain and keep in full force and
effect during the term of this Mortgage at its sole cost and expense the
following insurance:

         (a)    insurance against loss by fire, lightning and risk customarily
                covered by standard extended coverage endorsement, including the
                cost of debris removal, together with a vandalism and malicious
                mischief endorsement, or all perils endorsements, all in the
                amount of not less than the full replacement cost of the
                improvements on the Premises, and together with an
                inflation-guard endorsement, an agreed-amount endorsement, a
                replacement cost endorsement and a waiver of subrogation
                endorsement;

         (b)    Broad Form Boiler and Machinery Insurance on all equipment and
                pressure-fired vehicles or apparatus situate on the Premises,
                and providing for full repair and replacement cost coverage;

         (c)    Flood Insurance in such minimal amounts and with such minimal
                limits as the Mortgagee may require unless evidence is provided
                that the Premises are not within a flood plain as defined by the
                Federal Insurance Administration and the Premises is not
                designated as being within a flood plain during the term of this
                Mortgage;

         (d)    Comprehensive General Public Liability Insurance covering the
                legal liability of the Mortgagor against claims for bodily
                injury, death or property damage occurring on, in or about the
                Premises in such minimal amounts and with such minimal limits as
                the Mortgagee may require;

         (e)    Sprinkler Insurance, if applicable;

         (f)    Contingent Liability Insurance and Worker's Compensation
                Insurance during the making of any alterations or improvements
                to the Premises; and

         (g)    Such other forms of insurance as the Mortgagee may require or
                as may be required by law.

         Such insurance policies shall be written on forms and with insurance
companies having a minimum noncontingent rating in Best's Casualty Reports of A,
shall be satisfactory to the Mortgagee, shall name as the insured parties the
Mortgagor and the Mortgagee, as their interests may appear, shall be in amounts
sufficient to prevent the Mortgagor from becoming a co-insurer of any loss
thereunder, and shall bear a satisfactory mortgagee clause in favor of the
Mortgagee with loss proceeds under any such policies to be made payable to the
Mortgagee. All required policies of insurance or acceptable certificates
thereof, together with evidence of the payment of current premiums therefor,
shall be delivered to the Mortgagee and shall provide that the Mortgagee shall
receive at least sixty (60) days' advance written notice prior to cancellation,
amendment or termination of any such policy of insurance. The Mortgagor shall,
within sixty (60) days prior to the expiration of any such policy, deliver other
original policies or certificates of the insurer evidencing the renewal of such
insurance together with evidence of the payment of current premiums therefor.
The Mortgagor shall at its expense furnish evidence of the replacement value of
the improvements on the Premises in form satisfactory to the Mortgagee on
renewal of insurance policies or upon request of the Mortgagee. Insurance
coverage must at all times be maintained in proper relationship to such
replacement value and must always provide for agreed amount coverage. In the
event of a foreclosure of this Mortgage or any acquisition of the Premises by
the Mortgagee, all such policies and any proceeds payable therefrom, whether
payable before or after a foreclosure sale, or during the period of redemption,
if any, shall become the absolute property of the Mortgagee to be utilized at
its discretion. In the event of foreclosure or the failure to obtain and keep
any required insurance, the Mortgagor empowers the Mortgagee to effect insurance

<PAGE>

upon the Premises at the Mortgagor's expense and for the benefit of the
Mortgagee in the amounts and types aforesaid for a period of time covering the
time of redemption prior to foreclosure sale, and if necessary therefor, to
cancel any or all existing insurance policies. The Mortgagor agrees to furnish
the Mortgagee copies of all inspection reports and insurance recommendations
received by the Mortgagor from any insurer. The Mortgagee makes no
representations that the above insurance requirements are adequate protection
for a prudent mortgagor.

                           4. UNIFORM COMMERCIAL CODE

         4.1 SECURITY AGREEMENT. This Mortgage shall constitute a security
agreement as defined in the Uniform Commercial Code (hereinafter referred to as
the "Code"), and the Mortgagor hereby grants to the Mortgagee a security
interest within the meaning of the Code in favor of the Mortgagee on the
Improvements, Fixtures, Equipment and Personal Property, the Rents, Leases and
Profits, the Judgments, Condemnation Awards and Insurance Proceeds, the
Licenses, Permits, Equipment Leases and Service Agreements, and the Accounts
Receivable and General Intangibles described in Granting Clauses B, C, D, E and
F of this Mortgage (hereinafter referred to as the "Collateral").

         4.2 FIXTURE FILING. As to those items of Collateral described in this
Mortgage that are, or are to become fixtures related to the real estate
mortgaged herein, it is intended as to those items that THIS MORTGAGE SHALL BE
EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING from the date of
its filing in the real estate records of the County where the Premises are
situate. The name of the record owner of said real estate is the Mortgagor set
forth in page one to this Mortgage. Information concerning the security interest
created by this instrument may be obtained from the Mortgagee, as secured party,
at its address as set forth in page one of this Mortgage. The address of the
Mortgagor, as debtor, is as set forth in page one to this Mortgage. This
document covers goods which are or are to become fixtures. The Federal tax
identification number of the Mortgagor is 41-1545748.

         4.3 REPRESENTATIONS AND AGREEMENTS. (a) The Mortgagor is and will be
the true and lawful owner of the Collateral, subject to no liens, charges,
security interest and encumbrances other than the lien hereof and the Permitted
Encumbrances; (b) the Collateral is to be used by the Mortgagor solely for
business purposes being installed upon the Premises for the Mortgagor's own use
or as the equipment and furnishings leased or furnished by the Mortgagor, as
landlord, to tenants of the Premises; (c) the Collateral will not be removed
from the Premises without the consent of the Mortgagee except in accordance with
Section 4.4 hereof; (d) unless stated otherwise in this Mortgage the only
persons having any interest in the Collateral are the Mortgagor and the
Mortgagee and no financing statement covering any such property and any proceeds
thereof is on file in any public office except pursuant hereto; (e) the remedies
of the Mortgagee hereunder are cumulative and separate, and the exercise of any
one or more of the remedies provided for herein or under the Uniform Commercial
Code shall not be construed as a waiver of any of the other rights of the
Mortgagee including having such Collateral deemed part of the realty upon any
foreclosure thereof; (f) if notice to any party of the intended disposition of
the Collateral is required by law in a particular instance, such notice shall be
deemed commercially reasonable if given at least ten (10) days prior to such
intended disposition and may be given by advertisement in a newspaper accepted
for legal publications either separately or as part of a notice given to
foreclose the real property or may be given by private notice if such parties
are known to the Mortgagee; (g) the Mortgagor will from time to time provide the
Mortgagee on request with itemizations of all such Collateral on the Premises;
(h) the filing of a financing statement pursuant to the Code shall never impair
the stated intention of this Mortgage that all Improvements, Fixtures, Equipment
and Personal Property described in Granting Clause B hereof are, and at all
times and for all purposes and in all proceedings both legal or equitable shall
be regarded as part of the real property mortgaged hereunder irrespective of
whether such item is physically attached to the real property or any such item
is referred to or reflected in a financing statement; (i) the Mortgagor will on
demand deliver all financing statements that may from time to time be required
by the Mortgagee to establish and perfect the priority of the Mortgagee's

<PAGE>

security interest in such Collateral; (j) the Mortgagor shall give advance
written notice of any proposed change in the Mortgagor's name, identity, address
or structure and will execute and deliver to the Mortgagee prior to or
concurrently with such change all additional financing statements that the
Mortgagee may require to establish and perfect the priority of the Mortgagee's
security interest; and (k) the Mortgagor shall renew and pay all expenses of
renewing the financing statement covering the Collateral in the event the
security interest in such Collateral will expire by reason of statutory law
prior to the end of the term of this Mortgage.

         4.4 MAINTENANCE OF PROPERTY. Subject to the provisions of this Section,
in any instance where the Mortgagor in its discretion determines that any item
subject to a security interest under this Mortgage has become inadequate,
obsolete, worn out, unsuitable, undesirable or unnecessary for the operation of
the Premises, the Mortgagor may, at its expense, remove and dispose of it and
substitute and install other items not necessarily having the same function,
provided, that such removal and substitution shall not impair the operating
utility and unity of the Premises. All substituted items shall become a part of
the Premises and subject to the lien of the Mortgage. Any amounts received or
allowed the Mortgagor upon the sale or other disposition of the removed items of
property shall be applied only against the cost of acquisition and installation
of the substituted items. Nothing herein contained shall be construed to prevent
any tenant or subtenant from removing from the Premises trade fixtures,
furniture and equipment installed by it and removable by tenant under its terms
of the lease, on the condition, however, that the tenant or subtenant shall at
its own cost and expense, repair any and all damages to the Premises resulting
from or caused by the removal thereof.

                     5. APPLICATION OF INSURANCE AND AWARDS

         5.1 DAMAGE OR DESTRUCTION OF THE PREMISES. The Mortgagor will give the
Mortgagee prompt notice of any damage to or destruction of the Premises, and in
case of loss covered by policies of insurance, the Mortgagee (whether before or
after foreclosure sale) is hereby authorized at its option to settle and adjust
any claim arising out of such policies and collect and receipt for the proceeds
payable therefrom, provided, that the Mortgagor may itself adjust and collect
for any losses arising out of a single occurrence aggregating not in excess of
Twenty-Five Thousand Dollars ($25,000). Any expense incurred by the Mortgagee in
the adjustment and collection of insurance proceeds (including the cost of any
independent appraisal of the loss or damage on behalf of the Mortgagee) shall be
reimbursed to the Mortgagee first out of any proceeds. Except as provided in
Section 5.3 hereof, the proceeds or any part thereof shall be applied to
reduction of the Indebtedness Secured Hereby then most remotely to be paid,
whether due or not, without the application of any prepayment premium, or to the
restoration or repair of the Premises, the choice of application to be solely at
the discretion of the Mortgagee.

         5.2 CONDEMNATION. The Mortgagor will give the Mortgagee prompt notice
of any action, actual or threatened, in condemnation or eminent domain and
hereby assigns, transfers and sets over to the Mortgagee the entire proceeds of
any award or claim for damages for all or any part of the Premises taken or
damaged under the power of eminent domain or condemnation, the Mortgagee being
hereby authorized to intervene in any such action and to collect and receive
from the condemning authorities and give proper receipts and acquittances for
such proceeds. The Mortgagor will not enter into any agreements with the
condemning authority permitting or consenting to the taking of the Premises
unless prior written consent of the Mortgagee is obtained. Any expenses incurred
by the Mortgagee in intervening in such action or collecting such proceeds
(including the cost of any independent appraisal) shall be reimbursed to the
Mortgagee first out of the proceeds. Except as provided in Section 5.3 hereof,
the proceeds or any part thereof shall be applied upon or in reduction of the
Indebtedness Secured Hereby then most remotely to be paid, whether due or not,
together with any applicable prepayment premium, or to the restoration or repair
of the Premises, the choice of application to be solely at the discretion of the
Mortgagee.

<PAGE>

         5.3 THE MORTGAGEE TO MAKE PROCEEDS AVAILABLE UNDER CERTAIN CONDITIONS.
Notwithstanding the provisions of Section 5.1 and 5.2 above, in the event of any
damage to the improvements on the Premises as a result of an insured casualty or
taking, the Mortgagee agrees to make the proceeds of any insurance or
condemnation award available to the restoration or repair of the improvements on
the Premises in accordance with the provisions of Section 5.4 hereof provided:
(a) the improvements can be rebuilt substantially to the same as those
originally financed and can with restoration and repair continue to be operated
for the purposes utilized prior to such damage or taking; (b) no Event of
Default shall exist under this Mortgage, the Note, or other documents securing
the Note; (c) the appraised value of the Premises after such restoration or
repair shall not have been reduced from its appraised value as of the date
hereof and (d) such restoration or repair shall be completed prior to the
maturity of the Notes and this Mortgage.

         5.4 DISBURSEMENT OF INSURANCE AND CONDEMNATION PROCEEDS. Should any
insurance or condemnation proceeds be applied to the restoration or repair of
the Premises in accordance with this Article 5, the restoration or repair shall
be done under the supervision of an architect acceptable to the Mortgagee and
pursuant to site and building plans and specifications approved by the
Mortgagee. The proceeds shall be held by the Mortgagee for such purposes and
will from time to time be disbursed by the Mortgagee to defray the costs of such
restoration or repair under such safeguards and controls as the Mortgagee may
require and in accordance with standard construction loan procedures. Prior to
the payment or application of insurance proceeds or a condemnation or eminent
domain award to the repair or restoration of the improvements upon the Premises,
the Mortgagee shall be entitled to receive the following:

         Evidence that no Event of Default exists under any of the terms,
covenants and conditions of this Mortgage, the Note, or other collateral
security documents.

         Evidence that all leasing requirements for the Premises as established
by the Mortgagee have been met.

         Reasonably satisfactory proof that such improvements have been fully
restored, or that the expenditure of money as may be received from such
insurance proceeds or eminent domain award will be sufficient to repair, restore
or rebuild the Premises, free and clear of all liens, except the lien of this
Mortgage. In the event such insurance proceeds or eminent domain award shall be
insufficient to repair, restore or rebuild the said improvements, the Mortgagor
or its lessee shall deposit with the Mortgagee funds equaling such deficiency,
which, together with the insurance proceeds or eminent domain award, shall be
sufficient to restore, repair and rebuild the Premises.

         A statement of the Mortgagor's architect, certifying the extent of the
repair and restoration completed to the date thereof, and that such repairs,
restoration and rebuilding have been performed to date in conformity with the
plans and specifications approved by the Mortgagee, together with appropriate
evidence of payment for labor or materials furnished to the Premises, and total
or partial lien waivers substantiating such payments.

         A waiver of subrogation from any insurer who claims that it has no
liability as to the Mortgagor or the then owner or other insured under the
policy of insurance in question.

         Such performance and payment bonds, and such insurance, in such
amounts, issued by such company or companies and in such forms and substance, as
are required by the Mortgagee.

         In the event the Mortgagor shall fail to restore, repair or rebuild the
improvements upon the Premises within a reasonable time, then the Mortgagee, at
its option, and upon not less than thirty (30) days written notice to the
Mortgagor, may commence to restore, repair or rebuild the said improvements for

<PAGE>

or on behalf of said Mortgagor, and its tenants, and for such purpose, may
perform all necessary acts to accomplish such restoration, repair or rebuilding.
In the event insurance proceeds or an eminent domain award shall exceed the
amount necessary to complete the repair, restoration or the rebuilding of the
improvements upon the Premises, such excess may, at the Mortgagee's option, be
applied on account of the last maturing installments of the Indebtedness Secured
Hereby, irrespective of whether such installments are then due and payable
without application of a prepayment premium, or be returned to the Mortgagor. In
the event the Mortgagor shall fail to restore, repair or rebuild the
improvements upon the Premises within the reasonable time, and if the Mortgagee
does not restore, repair or rebuild the said improvements as herein provided,
then the Mortgagee may, at its option, apply all or any part of the insurance
proceeds or condemnation or eminent domain award on account of the last maturing
installments of the Indebtedness Secured Hereby whether then due or not, without
application of a prepayment premium, or return the same to the Mortgagor.

                               6. LEASES AND RENTS

         6.1 MORTGAGOR TO COMPLY WITH LEASES. The Mortgagor represents and
warrants that there are currently no leases in existence in connection with any
portion of the Premises. The Mortgagor further covenants and warrants that it
shall not enter into leases for any portion of the Premises without obtaining
the prior written consent of the Mortgagee. With reference to any leases
executed in accordance with this Section 6.1, the Mortgagor will, at its own
cost and expense, perform, comply with and discharge all of the obligations of
the Mortgagor under any leases and use its best efforts to enforce or secure the
performance of each obligation and undertaking of the respective tenants under
any such leases and will appear in and defend, at its own cost and expense, any
action or proceeding arising out of or in any manner connected with the
Mortgagor's interest in any leases of the Premises. The Mortgagor will not
modify, extend, renew, terminate, accept a surrender of, or in any way alter the
terms of the leases, nor borrow against, pledge or assign any rentals due under
the leases nor consent to a subordination or assignment of the interest of the
tenants thereunder to any party other than the Mortgagee, nor anticipate the
rents thereunder for more than one (1) month in advance or reduce the amount of
rents and other payments thereunder, nor waive, excuse, condone or in any manner
release or discharge the tenants of or from their obligations, covenants,
conditions and agreements to be performed. Notwithstanding anything to the
contrary herein contained, the Mortgagor may amend or modify any existing leases
without the prior written consent of the Mortgagee provided that such amendments
or modifications are made in the ordinary course of business and do not diminish
any material benefit accruing to the landlord under such lease or reduce either
the length of the term, the rental or the size of the demised premises.

         6.2 THE MORTGAGEE'S RIGHT TO PERFORM UNDER LEASES. Should the Mortgagor
fail to perform, comply with or discharge any obligations of the Mortgagor under
any lease or should the Mortgagee become aware of or be notified by any tenant
under any lease of a failure on the part of the Mortgagor to so perform, comply
with or discharge its obligations under said lease, the Mortgagee may, but shall
not be obligated to, and without further demand upon the Mortgagor, and without
waiving or releasing the Mortgagor from any obligation in this Mortgage
contained, remedy such failure, and the Mortgagor agrees to repay upon demand
all sums incurred by the Mortgagee in remedying any such failure together with
interest at the rate then in effect under the terms of the Note. All such sums,
together with interest as aforesaid shall become so much additional Indebtedness
Secured Hereby, but no such advance shall be deemed to relieve the Mortgagor
from any default hereunder.

         6.3 ASSIGNMENT OF LEASES AND RENTS. The Mortgagor does hereby sell,
assign and transfer unto the Mortgagee all of the leases, rents and profits now
due and which may hereafter become due under or by virtue of any lease, whether
written or verbal, or any agreement for the use or occupancy of the Premises,

<PAGE>

whether presently in existence or entered into at any time during the term of
this Mortgage, it being the intention of this Mortgage to establish an absolute
transfer and assignment of all such leases and agreements and all of the rents
and profits from the Premises unto the Mortgagee and the Mortgagor does hereby
appoint irrevocably the Mortgagee its true and lawful attorney in its name and
stead, which appointment is coupled with an interest, to collect all of said
rents and profits; provided, the Mortgagor shall have the right to collect and
retain such rents and profits unless and until an Event of Default exists under
this Mortgage.

         6.4 REMEDIES. Upon an Event of Default and whether before or after the
institution of legal proceedings to foreclose the lien hereof or before or after
sale thereunder or during any period of redemption, the Mortgagee, without
regard to waste, adequacy of the security or solvency of the Mortgagor, may
revoke the privilege granted the Mortgagor hereunder to collect the rents and
profits, and may, at its option, without notice, either: (a) in person or by
agent, with or without taking possession of or entering the Premises, with or
without bringing any action or proceeding, give, or require the Mortgagor to
give, notice to any or all tenants under any lease authorizing and directing the
tenant to pay such rents and profits to the Mortgagee; collect all of the rents
and profits; enforce the payment thereof and exercise all of the rights of the
landlord under the leases and all of the rights of the Mortgagee hereunder; may
enter upon, take possession of, manage and operate said Premises, or any part
thereof; may cancel, enforce or modify the leases, and fix or modify rents, and
do any acts which the Mortgagee deems proper to protect the security hereof with
or without taking possession of the Premises; or (b) apply for the appointment
of a receiver in accordance with the statutes and law made and provided for,
which receivership the Mortgagor hereby consents to, who shall collect the rents
and profits, and all other income of any kind; manage the Premises so to prevent
waste; execute leases within or beyond the period of receivership, and perform
the terms of this Mortgage and apply the rents and profits as hereinafter
provided.

         The entering upon and taking possession of the Premises, the
appointment of a receiver, the collection of such rents and profits and the
application thereof as aforesaid shall not cure or waive any Event of Default
under this Mortgage nor in any way operate to prevent the Mortgagee from
pursuing any other remedy which it may now or hereafter have under the terms of
this Mortgage nor shall it in any way be deemed to constitute the Mortgagee a
mortgagee-in-possession. The rights and powers of the Mortgagee hereunder shall
remain in full force and effect both prior to and after any foreclosure of the
Mortgage and any sale pursuant thereto and until expiration of the period of
redemption from said sale, regardless of whether a deficiency remains from said
sale. The purchaser at any foreclosure sale, including the Mortgagee, shall have
the right, at any time and without limitation as provided in Minnesota Statutes
section 582.03, to advance money to any receiver appointed hereunder to pay any
part or all of the items which the receiver would otherwise be authorized to pay
if cash were available from the Premises and the sum so advanced, with interest
at the rate then in effect under the terms of the Note, shall be a part of the
sum required to be paid to redeem from any foreclosure sale. The rights
hereunder shall in no way be dependent upon and shall apply without regard to
whether the Premises are in danger of being lost, materially injured or damaged
or whether the Premises are adequate to discharge the Indebtedness Secured
Hereby.

         6.5 APPLICATION OF RENTS. Any rents collected pursuant to the terms of
Section 6.4 hereof shall be applied in the following order: (a) to payment of
all reasonable fees of any receiver appointed hereunder; (b) to application of
tenant's security deposits as required by Minnesota Statutes section 504.20; (c)
to payment when due of prior or current real estate taxes or special assessments
with respect to the Premises or, if this Mortgage so requires, to the periodic
escrow for payment of the taxes or special assessments then due; (d) to payment
when due of premiums for insurance of the type required by this Mortgage or, if
this Mortgage so requires, to the periodic escrow for the payment of premiums

<PAGE>

then due; and (e) to payment of all expenses for normal maintenance of the
Premises. Any rents remaining after application of the above items shall be
applied to the Indebtedness Secured Hereby on a monthly basis. If the Premises
shall be foreclosed and sold pursuant to a foreclosure sale, then:

         (a)      if the Mortgagee is the purchaser at the foreclosure sale, the
                  rents shall be paid to the Mortgagee to be applied to the
                  extent of any deficiency remaining after the sale, the balance
                  to be retained by the Mortgagee, and if the Premises be
                  redeemed by the Mortgagor or any other party entitled to
                  redeem, to be applied as a credit against the redemption price
                  with any remaining excess rents to be paid to the Mortgagor,
                  provided, if the Premises not be redeemed, any remaining
                  excess rents to belong to the Mortgagee, whether or not a
                  deficiency exists.

         (b)      if the Mortgagee is not the purchaser at the foreclosure sale,
                  the rents shall be paid to the Mortgagee to be applied first,
                  to the extent of any deficiency remaining after the sale, the
                  balance to be retained by the purchaser, and if the Premises
                  be redeemed by the Mortgagor or any other party entitled to
                  redeem, to be applied as a credit against the redemption price
                  with any remaining excess rents to be paid to the Mortgagor,
                  provided, if the Premises not be redeemed any remaining excess
                  rents shall be paid first, to the purchaser at the foreclosure
                  sale in an amount equal to the interest accrued upon the sale
                  price pursuant to Minnesota Statutes section 580.23 or section
                  581.10, then to the Mortgagee to the extent of any deficiency
                  remaining unpaid and the remainder to the purchaser.

                           7. RIGHTS OF THE MORTGAGEE

         7.1 RIGHT TO CURE EVENT OF DEFAULT. If the Mortgagor shall fail to
comply with any of the covenants or obligations of this Mortgage, the Mortgagee
may, but shall not be obligated to, without demand upon the Mortgagor, and
without waiving or releasing the Mortgagor from any obligation in this Mortgage
contained, remedy such failure, and the Mortgagor agrees to repay upon demand
all sums incurred by the Mortgagee in remedying any such failure together with
interest at the Default Rate, as defined under the terms of the Credit
Agreement. All such sums, together with interest as aforesaid shall become so
much additional Indebtedness Secured Hereby, but no such advance shall be deemed
to relieve the Mortgagor from any failure hereunder.

         7.2 NO CLAIM AGAINST THE MORTGAGEE. Nothing contained in this Mortgage
shall constitute any consent or request by the Mortgagee, express or implied,
for the performance of any labor or services or for the furnishing of any
materials or other property in respect of the Premises or any part thereof, nor
as giving the Mortgagor or any party in interest with the Mortgagor any right,
power or authority to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would create any personal liability against the Mortgagee in respect thereof or
would permit the making of any claim that any lien based on the performance of
such labor or services or the furnishing of any such materials or other property
is prior to the lien of this Mortgage.

         7.3 INSPECTION. The Mortgagor will permit the Mortgagee's authorized
representatives to enter the Premises at all times during normal business hours
for the purpose of inspecting the same; provided the Mortgagee shall have no
duty to make such inspections and shall not incur any liability or obligation
for making or not making any such inspections.

         7.4 WAIVERS; RELEASES; RESORT TO OTHER SECURITY, ETC. Without affecting
the liability of any party liable for payment of any Indebtedness Secured Hereby
or performance of any obligation contained herein, and without affecting the
rights of the Mortgagee with respect to any security not expressly released in
writing, the Mortgagee may, at any time, and without notice to or the consent of

<PAGE>

the Mortgagor or any party in interest with the Premises or the Note: (a)
release any person liable for payment of all or any part of the Indebtedness
Secured Hereby or for performance of any obligation herein; (b) make any
agreement extending the time or otherwise altering the terms of payment of all
or any part of the Indebtedness Secured Hereby or modifying or waiving any
obligation, or subordinating, modifying or otherwise dealing with the lien or
charge hereof; (c) accept any additional security; (d) release or otherwise deal
with any property, real or personal, including any or all of the Premises,
including making partial releases of the Premises; or (e) resort to any security
agreements, pledges, contracts of guarantee, assignments of rents and leases or
other securities, and exhaust any one or more of said securities and the
security hereunder, either concurrently or independently and in such order as it
may determine.

         7.5 RIGHTS CUMULATIVE. Each right, power or remedy herein conferred
upon the Mortgagee is cumulative and in addition to every other right, power or
remedy, express or implied, now or hereafter arising, available to the
Mortgagee, at law or in equity, or under the Uniform Commercial Code, or under
any other agreement, and each and every right, power and remedy herein set forth
or otherwise so existing may be exercised from time to time as often and in such
order as may be deemed expedient by the Mortgagee and any such exercise shall
not be a waiver of the right to exercise at any time thereafter any other right,
power or remedy. No delay or omission by the Mortgagee in the exercise of any
right, power or remedy arising hereunder or arising otherwise shall impair any
such right, power or remedy or the right of the Mortgagee to resort thereto at a
later date or be construed to be a waiver of any Event of Default under this
Mortgage or the Note.

         7.6 SUBSEQUENT AGREEMENTS. Any agreement hereafter made by the
Mortgagor and the Mortgagee pursuant to this Mortgage shall be superior to the
rights of the holder of any intervening lien or encumbrance.

         7.7 WAIVER OF APPRAISEMENT, HOMESTEAD, MARSHALING. The Mortgagor hereby
waives to the full extent lawfully allowed the benefit of any homestead,
appraisement, evaluation, stay and extension laws now or hereinafter in force.
The Mortgagor hereby waives any rights available with respect to marshaling of
assets so as to require the separate sales of any portion of the Premises, or as
to require the Mortgagee to exhaust its remedies against a specific portion of
the Premises before proceeding against the other and does hereby expressly
consent to and authorize the sale of the Premises or any part thereof as a
single unit or parcel.

         7.8 BUSINESS LOAN REPRESENTATION. The Mortgagor represents and warrants
to the Mortgagee that the loan evidenced by the Note is a business loan
transacted solely for the purpose of carrying on the business of the Mortgagor
and the Premises does not constitute the homestead of the Mortgagor.

                        8. EVENTS OF DEFAULT AND REMEDIES

         8.1 EVENTS OF DEFAULT. The violation of any provision of this Mortgage
or the occurrence of any Event of Default as defined in the Credit Agreement
shall constitute an Event of Default hereunder ("Event of Default").

         8.2 THE MORTGAGEE'S RIGHT TO ACCELERATE. If an Event of Default shall
occur the Mortgagee may immediately and without notice to the Mortgagor declare
the entire unpaid principal balance of the Note together with all other
Indebtedness Secured Hereby to be immediately due and payable and thereupon all
such unpaid principal balance of the Note together with all accrued interest
thereon and all other Indebtedness Secured Hereby shall be and become
immediately due and payable.

<PAGE>

         8.3 REMEDIES OF THE MORTGAGEE AND RIGHT TO FORECLOSE. If an Event of
Default shall occur the Mortgagee shall have the right to enforce the provisions
of this Mortgage and may, either with or without entry or taking possession,
proceed by suit or suits at law or in equity or by any other appropriate
proceedings or remedy to enforce payment of the Indebtedness Secured Hereby or
the performance of any other term hereof or any other right and the Mortgagor
hereby authorizes and fully empowers the Mortgagee to foreclose this Mortgage by
judicial proceedings or by advertisement with full authority to sell the
Premises at public auction and convey the same to the purchaser in fee simple,
either in one parcel or separate lots and parcels, all in accordance with and in
the manner prescribed by law, and out of the proceeds arising from sale and
foreclosure to retain the principal and interest due on the Note and the
Indebtedness Secured Hereby together with all such sums of money as the
Mortgagee shall have expended or advanced pursuant to this Mortgage or pursuant
to statute together with interest thereon as herein provided and all costs and
expenses of such foreclosure, including, but not limited to, maximum lawful
attorney's fees, costs of environmental inspections and appraisal costs and
expenses, with the balance, if any, to be paid to the persons entitled thereto
by law.

         8.4 RECEIVER. Upon the occurrence of an Event of Default, the Mortgagee
shall be entitled as a matter of right without notice and without giving bond
and without regard to the solvency or insolvency of the Mortgagor, or waste of
the premises or adequacy of the security of the Premises, to apply for the
appointment of a receiver under any statute or law who shall have all the
rights, powers and remedies as provided by such statute or law, including
without limitation the rights of receiver pursuant to Minnesota Statutes section
576.01, as amended, and who shall from the date of his appointment through any
period of redemption existing at law collect the rents, and all other income of
any kind; manage the Premises so as to prevent waste; execute leases within or
beyond the use of receivership; and perform the terms of this Mortgage and apply
the rents, issues and profits to the payment of the expenses enumerated in
Minnesota Statutes section 576.01, subdivision 2 in the priority mentioned
therein and to all expenses for maintenance of the Premises and to the costs and
expenses of the receivership, including reasonable attorneys fees, to the
repayment of the Indebtedness Secured Hereby. The Mortgagor does hereby
irrevocably consent to such appointment.

         8.5 RIGHTS UNDER UNIFORM COMMERCIAL CODE. In addition to the rights
available to a mortgagee of real property, the Mortgagee shall also have all the
rights, remedies and recourse available to a secured party under the Uniform
Commercial Code including the right to proceed under the provisions of the
Uniform Commercial Code governing default as to any Collateral as defined in
Section 4.1 of this Mortgage which may be included in the Premises or which may
be deemed nonrealty in a foreclosure of this Mortgage or to proceed as to such
Collateral in accordance with the procedures and remedies available pursuant to
a foreclosure of real estate.

         8.6 RIGHT TO DISCONTINUE PROCEEDINGS. In the event the Mortgagee shall
have proceeded to invoke any right, remedy or recourse permitted under this
Mortgage and shall thereafter elect to discontinue or abandon the same for any
reason, the Mortgagee shall have the unqualified right to do so and in such
event the Mortgagor and the Mortgagee shall be restored to their former
positions with respect to the Indebtedness Secured Hereby. This Mortgage, the
Premises and all rights, remedies and recourse of the Mortgagee shall continue
as if the same had not been invoked.

         8.7 ACKNOWLEDGMENT OF WAIVER OF HEARING BEFORE SALE. The Mortgagor
understands and agrees that if an Event of Default shall occur, the Mortgagee
has the right, inter alia, to foreclose this Mortgage by advertisement pursuant
to Minnesota Statutes chapter 580, as hereafter amended, or pursuant to any
similar or replacement statute hereafter enacted; that if the Mortgagee elects
to foreclose by advertisement, it may cause the Premises, or any part thereof,
to be sold at public auction; that notice of such sale must be published for six
(6) successive weeks at least once a week in a newspaper of general circulation
and that no personal notice is required to be served upon the Mortgagor. The

<PAGE>

Mortgagor further understands that upon the occurrence of an Event of Default,
the Mortgagee may also elect its rights under the Uniform Commercial Code and
take possession of the Collateral and dispose of the same by sale or otherwise
in one or more parcels provided that at least ten (10) days' prior notice of
such disposition must be given, all as provided for by the Uniform Commercial
Code, as hereafter amended or by any similar or replacement statute hereafter
enacted. The Mortgagor further understands that under the Constitution of the
United States and the Constitution of the State of Minnesota it may have the
right to notice and hearing before the Premises may be sold and that the
procedure for foreclosure by advertisement described above does not insure that
notice will be given to the Mortgagor and neither said procedure for foreclosure
by advertisement nor the Uniform Commercial Code requires any hearing or other
judicial proceeding. THE MORTGAGOR HEREBY EXPRESSLY CONSENTS AND AGREES THAT THE
PREMISES MAY BE FORECLOSED BY ADVERTISEMENT AND THAT THE PERSONAL PROPERTY MAY
BE DISPOSED OF PURSUANT TO THE UNIFORM COMMERCIAL CODE, ALL AS DESCRIBED ABOVE.
THE MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE
SIGNING THIS DOCUMENT THIS SECTION AND THE MORTGAGOR'S CONSTITUTIONAL RIGHTS
WERE FULLY EXPLAINED BY SUCH COUNSEL AND THAT THE MORTGAGOR UNDERSTANDS THE
NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER.

                             9. HAZARDOUS MATERIALS

         9.1 DEFINITIONS. Any terms used in this Article which are defined in
state or federal statutes and/or regulations promulgated in relation thereto
shall have the meaning subscribed to such terms in said statutes and
regulations.

         9.2 REPRESENTATIONS BY THE MORTGAGOR. The Mortgagor hereby represents
to the Mortgagee that: (a) to the best of the Mortgagor's knowledge after due
inquiry, the Premises has never been used either by previous owners or occupants
or by the Mortgagor or current occupants to generate, manufacture, refine,
transport, treat, store, handle or dispose of any toxic material, hazardous
substance or hazardous waste and no such material, substance or waste currently
exists on the Premises or in its soil or groundwater; (b) to the best of the
Mortgagor's knowledge after due inquiry, no portion of the improvements on the
Premises has been constructed with asbestos, asbestos-containing materials, urea
formaldehyde insulation or any other chemical or substance which has been
determined to be a hazard to health and environment; (c) to the best of the
Mortgagor's knowledge after due inquiry, there are no electrical transformers or
other equipment which have dielectric fluid-containing polychlorinated biphenyls
(PCBs) located in, on or under the Premises (the materials, substances and
wastes described in subparagraphs 9.2(a), (b) and (c) above are hereinafter
sometimes collectively referred to as "Hazardous Wastes and Substances"); (d) to
the best of the Mortgagor's knowledge after due inquiry, the Premises has never
contained any underground storage tanks; and (e) the Mortgagor has not received
nor does it have any knowledge of any summons, citation, directive, letter or
other communication, written or oral, from any local, state or federal
governmental agency concerning (i) the existence of Hazardous Wastes and
Substances on the Premises or in the immediate vicinity or (ii) any intentional
or unintentional action or omission on the part of the Mortgagor or any occupant
of the Premises resulting in the releasing, spilling, leaking, pumping, pouring,
emitting, emptying, or dumping of Hazardous Wastes or Substances onto the
Premises or into waters or other lands.

         9.3 COVENANTS OF THE MORTGAGOR. The Mortgagor hereby covenants to the
Mortgagee that

         (a)    the Mortgagor shall (i) comply and shall cause all occupants of
                the Premises to comply with all federal, state and local laws,
                rules, regulations and orders with respect to the discharge,
                generation, removal, transportation, storage and handling of

<PAGE>

                Hazardous Wastes and Substances, (ii) remove any Hazardous
                Wastes and Substances immediately upon discovery of same, and
                (iii) pay or cause to be paid all costs associated with such
                removal;

         (b)    the Mortgagor shall keep the Premises free of any lien imposed
                pursuant to any state or federal law, rule, regulation or order
                in connection with the existence of Hazardous Wastes and
                Substances on the Premises;

         (c)    the Mortgagor shall not install or permit to be installed or to
                exist in or on the Premises any asbestos, asbestos-containing
                materials, urea formaldehyde insulation or any other chemical or
                substance which has been determined to be a hazard to health and
                environment; and

         (d)    the Mortgagor shall not cause or permit to exist, as a result of
                an intentional or unintentional act or omission on the part of
                the Mortgagor or any occupant of the Premises, a releasing,
                spilling, leaking, pumping, emitting, pouring, emptying or
                dumping of any Hazardous Wastes or Substances onto the Premises
                or into waters or other lands.

         9.4 EVENTS OF DEFAULT AND REMEDIES. It shall constitute an Event of
Default hereunder and the Mortgagee shall be entitled to exercise all remedies
available to it hereunder if: (a) any of the Mortgagor's representations
contained in Section 9.2 hereof prove to be false, inaccurate or misleading; (b)
the Mortgagor shall fail to comply with the covenants contained in Section 9.3
hereof; (c) any Hazardous Wastes or Substances are hereafter found to exist on
the Premises or in its soil or groundwater; or (d) any summons, citation,
directive, letter or other communication, written or oral, shall be issued by
any local, state or federal governmental agency concerning the matters described
in Section 9.2(e)(i) and (ii) above. The Mortgagor hereby grants the Mortgagee
and its employees and agents an irrevocable and non-exclusive license to enter
the Premises, subject to rights of tenants, in order to inspect, conduct testing
and remove Hazardous Wastes and Substances. All costs of such inspection,
testing and removal shall immediately become due and payable to the Mortgagee,
shall be secured by this Mortgage and shall constitute additional Indebtedness
Secured Hereby.

         9.5 INDEMNIFICATION. The Mortgagor hereby agrees to defend, indemnify
and hold harmless the Mortgagee, its directors, officers, employees, agents,
contractors, subcontractors, licensees, invitees, successors and assigns
("Indemnified Parties") from and against any and all claims, losses, damages,
liabilities, judgments, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs incurred in the investigation, defense and
settlement of claims) incurred by the Indemnified Parties as a result of or in
connection with the presence or removal of any Hazardous Wastes or Substances or
as a result of or in connection with activities prohibited under this Article.
The Mortgagor shall bear, pay and discharge, as and when the same become due and
payable, any and all such judgments or claims for damages, penalties or
otherwise, against the Indemnified Parties, shall hold the Indemnified Parties
harmless against all claims, losses, damages, liabilities, costs and expenses,
and shall assume the burden and expense of defending all suits, administrative
proceedings, and negotiations of any description with any and all persons,
political subdivisions or government agencies arising out of any of the
occurrences set forth in this Article. This indemnification shall remain in full
force and effect and shall survive the repayment of the Indebtedness Secured
Hereby and the satisfaction of the documents securing the same, as well as the
exercise of any remedy by the Mortgagee hereunder or under the other documents
securing this Mortgage, including a foreclosure of the Mortgage or the
acceptance of a deed in lieu of foreclosure.

<PAGE>

                                10. MISCELLANEOUS

         10.1 RELEASE OF MORTGAGE. When all Indebtedness Secured Hereby has been
paid, this Mortgage and all assignments herein contained shall be void and this
Mortgage shall be released by the Mortgagee at the Mortgagor's expense.

         10.2 CHOICE OF LAW. This Mortgage is made and executed under the laws
of the State of Minnesota and is intended to be governed by the laws of said
State.

         10.3 SUCCESSORS AND ASSIGNS. This Mortgage and each and every covenant,
agreement, indemnity and other provision hereof shall be binding upon the
Mortgagor and its successors and assigns including without limitation each and
every from time to time record owner of the Premises or any other person having
an interest therein, shall run with the land and shall inure to the benefit of
the Mortgagee and its successors and assigns. As used herein the words
"successors and assigns" shall also be deemed to include the heirs,
representatives, administrators and executors of any natural person who is a
party to this Mortgage.

         10.4 UNENFORCEABILITY OF CERTAIN CLAUSES. The unenforceability or
invalidity of any provisions hereof shall not render any other provision or
provisions herein contained unenforceable or invalid.

         10.5 CAPTIONS AND HEADINGS. The captions and headings of the various
sections of this Mortgage are for convenience only and are not to be construed
as confining or limiting in any way the scope or intent of the provisions
hereof. Whenever the context requires or permits the singular shall include the
plural, the plural shall include the singular and the masculine, feminine and
neuter shall be freely interchangeable.

         10.6 NOTICES. Any notice which any party hereto may desire or may be
required to give to any other party shall be in writing and the mailing thereof
by certified mail to their respective addresses as set forth herein, or to such
other places any party hereto may hereafter by notice in writing designate shall
constitute service of notice hereunder.

         10.7 INTEREST LIMITATION. All agreements between the Mortgagor and the
Mortgagee are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Indebtedness
Secured Hereby or otherwise, shall the amount paid or agreed to be paid to the
Mortgagee for the use, forbearance, loaning or detention of the Indebtedness
Secured Hereby exceed the maximum permissible under applicable law. If from any
circumstances whatsoever, fulfillment of any provisions hereof or of the Note,
the Credit Agreement or any other document securing this Mortgage at any time
given shall involve transcending the limit of validity prescribed by law, then,
the obligation to be fulfilled shall automatically be reduced to the limit of
such validity, and if from any circumstances the Mortgagee should ever receive
as interest an amount which would exceed the highest lawful rate of interest,
such amount which would be in excess of interest shall be applied to the
reduction of the principal balance secured by the Note and not to the payment of
interest thereunder. This provision shall control every other provision of all
agreements between the Mortgagor and Mortgagee and shall also be binding upon
and available to any subsequent holder of the Note.

         Nothing herein contained shall affect or impair the liability or
obligation of any guarantor or other person who by separate instrument shall be
or become liable upon the Indebtedness Secured Hereby.

         IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be
executed as of the date first above written.

                                         FIRST TEAM SPORTS, INC.

                                         By:      /s/ Kent A. Brunner
                                         Name:    Kent A. Brunner
                                         Title:   CFO

                                 ACKNOWLEDGMENT

         STATE OF MINNESOTA         )
                                            )
         COUNTY OF _________        )

         The foregoing instrument was acknowledged before me this ____ day of
September, 1999, by _________________________, the __________________________ of
First Team Sports, Inc., a Minnesota corporation on behalf of said corporation.

                                                   _________________________
                                                        Notary Public

THIS DOCUMENT WAS DRAFTED BY:
OPPENHEIMER WOLFF & DONNELLY LLP
45 South Seventh Street
Suite 3400
Minneapolis, Minnesota 55402
(612) 607-7000

<PAGE>

                                   EXHIBIT "A"

                                LEGAL DESCRIPTION

         Lots 2 and 2A, Block 1, Anoka Enterprise Park Third Addition, according
to the recorded plat thereof, Anoka County, Minnesota.

<PAGE>

                                   EXHIBIT "B"

                             PERMITTED ENCUMBRANCES

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