FACTORY 2 U STORES INC
EXHIBIT 10.8 3RD AMENDMENT TO FIN AGT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>thirdamendment.txt
<DESCRIPTION>EXHIBIT 10.8 3RD AMENDMENT TO FIN AGT
<TEXT>
Exhibit 10.8

                                THIRD AMENDMENT TO
                               FINANCING AGREEMENT


     This Third Amendment to Financing Agreement (this "Amendment") is entered
into as of this 9th day of April, 2002 among FACTORY 2-U STORES, INC., a
Delaware corporation ("Company"), the Lenders who are a party to the Financing
Agreement referred to below (collectively, "Lenders") and THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation ("Agent"), in its capacity as Agent for the
Lenders, with reference to the following facts:

     A.  Agent, Company and Lenders previously entered into that certain
Financing Agreement dated as of March 3, 2000, as amended by that certain First
Amendment to Financing Agreement dated as of April 13, 2000 and that certain
Second Amendment to Financing Agreement dated as of April 10, 2001
(collectively, the "Financing Agreement"), pursuant to which Lenders have
provided Company with certain loans and other financial accommodations.

     B.  Company has requested that Agent and Lenders amend the Financing
Agreement to increase the Letter of Credit Sub-Line from $5,000,000 to
$10,000,000.

     C.  Agent and Lenders are willing to amend the Financing Agreement on the
terms and subject to the conditions set forth in this Amendment.

     NOW THEREFORE, in consideration of the foregoing and the terms and
conditions hereof, the parties do hereby agree as follows, effective as of the
date set forth above:

     1.  Definitions.  Terms used herein, unless otherwise defined herein, shall
have the meanings set forth in the Financing Agreement.

     2.  Amendment to Financing Agreement.  The definition of "Letter of Credit
Sub-Line" set forth in Section 1 of the Financing Agreement is hereby amended
and restated in its entirety to read as follows:

         "Letter of Credit Sub-Line shall mean $10,000,000 in the aggregate."

     3.  Agreement between Lenders. Lenders hereby agree with each other that
upon the effective date of this Amendment, Lenders' interests in the maximum
face amount of Letters of Credit shall be increased pro-rata based on their
current interests in the Letters of Credit by $5,000,000 in the aggregate.

     4.  Fee. In consideration of the foregoing amendment, Company shall pay to
Agent, for the pro-rate benefit of Lenders, an amendment fee of $5,000
(the "Amendment Fee"). The Amendment Fee shall be fully earned by Lenders as of
the date hereof and shall be charged to Company's Revolving Loan Account upon
execution of this Amendment by Company.

     5.  Conditions Precedent. The effectiveness of the foregoing amendment
shall be, and hereby is, subject to the fulfillment to Agent's satisfaction of
the Conditions Precedent.  The "Conditions Precedent" shall mean each of the
following:

         (a)   Receipt by Agent of this Amendment duly executed by each of the
     parties hereto;

         (b)   Company shall have paid to Agent the Amendment Fee; and

         (c)   As of the date hereof, the representations and warranties
     contained in Section 7 of the Financing Agreement are (before and after
     giving effect to this Amendment) true and correct in all material respects
     (except to the extent any such representation and warranty is expressly
     stated to have been made as of a specific date, in which case it shall be
     true and correct as of such specific date) and no Default or Event of
     Default shall be existing or have occurred and is continuing.

     6.  Miscellaneous.

         (a)   Reference to and Effect on the Financing Agreement.

               (i)  Except as specifically amended by this Amendment and the
     documents executed and delivered in connection herewith, the Financing
     Agreement shall remain in full force and effect and is hereby ratified and
     confirmed.

               (ii) The execution and delivery of this Amendment shall not,
     except as expressly provided herein, constitute a waiver of any provision
     of, or operate as a waiver of any right, power or remedy of Agent or any
     Lender under the Financing Agreement or any agreement or document executed
     in connection therewith.

               (iii)Upon the Conditions Precedent being satisfied, this
     Amendment shall be construed as one with the existing Financing Agreement,
     and the existing Financing Agreement shall, where the context requires, be
     read and construed throughout so as to incorporate this Amendment.

<PAGE>

         (b)   Fees and Expenses. The Borrower acknowledges that all costs, fees
     and expenses incurred in connection with this Amendment will be paid in
     accordance with Section 8.5 of the Financing Agreement.

         (c)   Headings. Section and subsection headings in this Amendment are
     included for convenience of reference only and shall not constitute a part
     of this Amendment for any other purpose or be given any substantive effect.

         (d)   Counterparts. This Amendment may be executed in one or more
     counterparts, each of which shall be deemed an original but all of which
     together shall constitute one and the same instrument.

         (e)   Governing Law.  This Amendment shall be governed by and construed
     according to the laws of the State of California.


     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.

                                    Company:

                                      FACTORY 2-U STORES, INC.

                                      By:    /s/Douglas C. Felderman
                                             -----------------------
                                      Name:  Douglas Felderman
                                      Title: Executive Vice President
                                             Chief Financial Officer


                                    Lenders:

                                      THE CIT GROUP/BUSINESS CREDIT, INC.

                                      By:    /s/James J. Karnowski
                                             ---------------------
                                      Name:  James J. Karnowski
                                      Title: Vice President


                                      FLEET RETAIL FINANCE, INC.

                                      By:    /s/Daniel Platt
                                             ---------------
                                      Name:  Daniel Platt
                                      Title: Assistant Vice President


                                    Agent:

                                      THE CIT GROUP/BUSINESS CREDIT, INC.

                                      By:    /s/Jame J. Karnowski
                                             --------------------
                                      Name:  James J. Karnowski
                                      Title: Vice President

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</DOCUMENT>
