Consent and Fourth AMENDMENT TO CREDIT AGREEMENT

CONSENT AND FOURTH AMENDMENT, dated as of January 30, 2003 (this "Agreement"),
to the Credit Agreement referred to below, is entered into by and among
GOTTSCHALKS INC., a Delaware corporation ("Borrower"); GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"),
for itself, as a Lender, and as Agent for Lenders; The CIT GROUP/BUSINESS
CREDIT, INC., as a Lender; LASALLE RETAIL FINANCE, a division of LASALLE
BUSINESS CREDIT, INC, as agent for STANDARD FEDERAL BANK NATIONAL ASSOCIATION,
as a Lender; and FOOTHILL CAPITAL CORPORATION, as a Lender.

W I T N E S S E T H

WHEREAS, Borrower, Agent and Lenders are parties to that certain Credit
Agreement dated as of January 31, 2002 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement");

WHEREAS, Borrower and Gottschalks Credit Receivables Corporation, a Delaware
corporation ("GCRC"), desire (i) to sell, free and clear of Agent's Liens, all
of their interests in the Account Portfolio Assets (as defined in the Household
Purchase Agreement defined below) to Household Bank (SB), N.A. ("Household")
pursuant to the terms and conditions of that certain Purchase and Sale Agreement
attached as Exhibit B hereto (the "Household Purchase Agreement"), (ii) to
provide for certain temporary services by Borrower to Household pursuant to that
certain Interim Servicing Agreement attached as Exhibit C hereto (the "Household
Servicing Agreement") and (iii) to provide for the termination of the
Securitization Facility and the prepayment and cancellation of the Certificates
(as defined in that certain Escrow Agreement attached as Exhibit D hereto (the
"Escrow Agreement")) including, without limitation, the Pledged Certificates (as
defined in the GCRC Pledge Agreement), pursuant to the terms and conditions of
the Prepayment Agreements (as defined in the Escrow Agreement);

WHEREAS, in connection with the transactions contemplated by the Household
Purchase Agreement, Borrower desires to terminate the private label credit card
program presently in place pursuant to the Securitization Facility and enter
into a private label credit card program to be provided by Household pursuant to
that certain Credit Card Program Agreement attached as Exhibit A hereto (the
"Household Credit Card Agreement");

WHEREAS, Borrower has requested that Agent and each Lender (i) consent to (a)
the execution and delivery of the Household Credit Card Agreement, the Household
Purchase Agreement, the Household Servicing Agreement and the Prepayment
Agreements and (b) the termination of the Securitization Facility and the
prepayment and cancellation of the Certificates (as defined in the Escrow
Agreement) including, without limitation, the Pledged Certificates (as defined
in the GCRC Pledge Agreement), (ii) waive compliance with Sections 5.1, 6.1,
6.7, and 6.8 of the Credit Agreement to the extent necessary to permit (1) the
Closings (as defined in the Household Purchase Agreement and, as so defined, the
"Closings") contemplated by the Household Purchase Agreement, (2) the
dissolution of GCRC, and (3) subject to Section (h) of Annex C to the Credit
Agreement (as amended hereby), Household's lien on the account described therein
and (iii) release their Liens on the Released Assets (as hereinafter defined),
and Agent and each Lender is willing to do so but only on the terms and
conditions set forth herein;

NOW THEREFORE, in consideration of the agreement herein contained and for other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:

RELATION TO THE CREDIT AGREEMENT; DEFINITIONS.

Capitalized Terms.

For all purposes of this Amendment, capitalized terms used herein without
definition shall have the meaning specified in the Credit Agreement, as said
agreement shall be in effect on the Effective Date (as hereinafter defined)
after giving effect to this Agreement.

CONSENT, AMENDMENT, AND WAIVER

Consent. Waiver, and Release

. Upon (and subject to) the occurrence of the Effective Date (as hereinafter
defined), Agent and each Lender will and hereby does (a) consent to (i) the
execution and delivery by Borrower and GCRC, as applicable, of the Household
Credit Card Agreement, the Household Purchase Agreement, the Household Servicing
Agreement and the Prepayment Agreements, and to the sale of the Account
Portfolio Assets (as defined in the Household Purchase Agreement) upon each
Closing pursuant to the Household Purchase Agreement and (ii) the termination of
the Securitization Facility and the prepayment and cancellation of the
Certificates (as defined in the Escrow Agreement) including, without limitation,
the Pledged Certificates (as defined in the GCRC Pledge Agreement), (b) waive
compliance with Sections 5.1, 6.1, 6.7, and 6.8 of the Credit Agreement to the
extent necessary to permit (i) the Closings (as defined in the Household
Purchase Agreement and, as so defined, the "Closings") contemplated by the
Household Purchase Agreement, (ii) the dissolution of GCRC, and (iii) subject to
Section (h) of Annex C to the Credit Agreement (as amended hereby), Household's
lien on the account described therein, and (c) release its Liens in that certain
Collateral that constitutes Account Portfolio Assets (as defined in the
Household Purchase Agreement) existing as of and sold at each Closing pursuant
to the Household Purchase Agreement (such assets herein referred to as "Released
Assets"). Agent will, at the Borrowers' sole expense, execute and deliver and
/or cause to be filed such documents as Borrower or Household may require,
including the delivery of a partial release of the Released Assets pursuant to a
UCC financing statement amendment in substantially the form of Exhibit E
attached hereto, provided, however, that the Liens of Agent for the benefit of
the Lenders shall automatically attach to the Borrower's interest in the
proceeds under the Household Purchase Agreement and, further provided, that this
release shall only apply to Released Assets. Amendment to Credit Agreement.
Section 5.15
of the Credit Agreement is hereby deleted in its entirety and replaced with the
following:

"5.15 Payments from Household Agreements and Escrow Agreement.

(a) Payments relating to Escrow Agreement. Borrower shall cause all amounts
payable to Borrower and/or GCRC pursuant to the Escrow Agreement to be directed
to the account specified in the Escrowed Funds Letter of Direction; and

(b) Payments relating to Household Agreements. Borrower shall cause all amounts
payable to Borrower and/or GCRC pursuant to the Household Agreements to be
directed to the account specified in the Household Letter of Direction."

Section 5.16
of the Credit Agreement is hereby deleted in its entirety and replaced with the
following:

"5.16 [Intentionally Deleted]"

Section 5.17
of the Credit Agreement is hereby deleted in its entirety and replaced with the
following:

"5.17 [Intentionally Deleted]"

Section 5.18
to the Credit Agreement is hereby amended by adding the following new
subsections (h) and (i) thereto:

"(h) As soon as reasonably practicable, but in no event later than June 30, 2003
and notwithstanding Sections 5.1 and 6.1, GCRC shall have ceased doing business
and Borrower shall have filed all documents and taken all other actions required
to effect the dissolution of GCRC. Concurrently with the completion of such
dissolution, the GCRC Pledge Agreement shall be deemed terminated and of no
further force or effect and all Liens of Agent on the Stock of GCRC shall be
deemed terminated."

"(i) On or before June 30, 2003, Borrower shall have caused the Securitization
Trust (as defined in the Household Purchase Agreement) to have been dissolved
and all proceeds relating thereto and payable to Borrower and/or GCRC to be
transferred into the Concentration Account."

Section 6.21
of the Credit Agreement is hereby deleted in its entirety and replaced with the
following:

"6.21 [Intentionally Deleted]"

Annex A
to the Credit Agreement is hereby amended by:
 a. adding the following new definitions in alphabetical order thereto:

    ""Escrow Agent" means Deutsche Bank Trust Company Americas, a New York
    banking corporation and a wholly-owned subsidiary of Deutsche Bank AG."

    ""Escrow Agreement means that certain Escrow Agreement dated as of January
    30, 2003 between Household, GCRC, Borrower, and Deutsche Bank Trust Company
    Americas, a New York banking corporation and a wholly-owned subsidiary of
    Deutsche Bank AG."

    ""Escrowed Funds Letter of Direction" means that certain Escrowed Funds
    Letter of Direction dated January 30, 2003 from Borrower and GCRC to Agent
    and agreed to and acknowledged by Escrow Agent."

    ""Household" means Household Bank (SB), N.A.

    ""Household Agreements" means, collectively, the Household Purchase
    Agreement, the Household Servicing Agreement and the Household Credit Card
    Agreement."

    ""Household Credit Card Agreement" means that certain Credit Card Program
    Agreement between Household and Borrower dated January 30, 2003."

    ""Household Letter of Direction" means that certain Household Letter of
    Direction dated January 30, 2003 from Borrower and GCRC to Household."

    ""Household Purchase Agreement" means that certain Purchase and Sale
    Agreement between Household, Borrower, and GCRC dated January 30, 2003."

    ""Household Servicing Agreement" means that certain Interim Servicing
    Agreement between Household and Borrower dated January 30, 2003."

 b. deleting the last sentence of the definition of "Accounts" and replacing it
    with the following:

"For purposes of this Agreement, the term "Accounts" shall not include (i) GCRC
Receivables only to the extent such GCRC Receivables have been sold or otherwise
transferred to the Gottschalks Master Credit Card Trust pursuant to the
Receivables Purchase Agreement or (ii) any Released Assets (as defined in that
certain Consent and Fourth Amendment to Credit Agreement dated as of January 30,
2003 among Borrower, Agent and the Lenders."

Annex C
to the Credit Agreement is hereby amended by adding the following new subsection
(h) thereto:

"(h) Pursuant to the Household Agreements, Borrower will from time to time
receive payments on behalf of Household with respect to credit card receivables
owned by Household. Borrower shall at all times: (1) keep such payments separate
from other funds belonging to the Borrower, (2) cause such payments to be
deposited by the Borrower into a bank account of the Borrower separate from any
other account containing other funds belonging to the Borrower (which account
will not be subject to subsection (a) of this Annex C), and (3) each day
immediately after the settlement between the Company and Household and, if
applicable, the transfer of any amounts due and payable to Household pursuant to
and in accordance with (a) the daily settlement provisions provided in Sections
3.1 and 5.8 of the Household Credit Card Agreement and (b) the settlement
provisions provided in Section 3.02 of the Household Servicing Agreement, remit
all funds remaining in such account to the Concentration Account; and all such
remaining funds in such account shall be subject to the Lien of Agent, for the
benefit of the Lenders. In furtherance of this subsection (h), Borrower shall
maintain a separate account and enter into control arrangements relating thereto
in form and substance reasonably acceptable to Agent and Household and
reflecting the foregoing arrangements. Notwithstanding the provisions of Section
6.7 of this Agreement, and subject to Borrower's compliance with this subsection
(h), Household's interest in such funds received on behalf of Household as
described herein, including any security interest in any such funds until the
completion of the applicable settlement and transfer (if any) relating thereto
as described above, shall be considered a Permitted Encumbrance under this
Agreement."

Amendment to Security Agreement.
Section 2(a)(i)
of the Security Agreement is hereby deleted in its entirety and replaced with
the following:

"(i) all Accounts (including, without limitation, all Credit Card Receivables
and all GCRC Receivables which have not been sold or otherwise transferred to
the Gottschalks Master Credit Card Trust pursuant to the Receivables Purchase
Agreement, but not including any Released Assets (as defined in that certain
Consent and Fourth Amendment to Credit agreement dated as of January 30, 2003
among Borrower, Agent and the Lenders));"

Limitation. Except as expressly waived under Section 2.1 hereof and amended
under Sections 2.2 and 2.3 hereof, all of the representations, warranties,
terms, covenants, conditions, and Events of Default of the Credit Agreement
shall remain unamended and unwaived and shall continue to be, and shall remain,
in full force and effect in accordance with their respective terms. The consent
and waiver set forth herein shall be limited precisely as provided for herein,
and shall not be deemed a waiver of, amendment of, consent to or modification of
any other term, provision or Event of Default under the Credit Agreement or of
any term or provision of any other instrument referred to therein or herein or
of any transaction or further or future action on the part of Borrower which
would require the consent of the Agent or any Lender under the Credit Agreement.

CONDITIONS

Effective Date

. The consent, waiver, and release set forth in this Agreement shall become
effective as of the date first written above (the "Effective Date") when (and
only when) all of the conditions set forth in this Section shall have been, or
shall be concurrently with the effectiveness hereof, satisfied or waived, in
each case as determined by Agent in its sole discretion.
Execution
and Delivery of Documents.
Agent shall have received counterparts of the following documents, duly executed
by the parties thereto and otherwise in form and substance satisfactory to
Agent:
 a. this Agreement
 b. the Household Purchase Agreement
 c. the Household Servicing Agreement
 d. the Household Credit Card Agreement;
 e. the Escrow Agreement;
 f. that certain Escrowed Funds Letter of Direction from Borrower and GCRC to
    Agent, and agreed to and acknowledged by Escrow Agent in substantially the
    form of Exhibit F hereto;
 g. that certain Household Letter of Direction among Borrower, Agent, and
    Household in substantially the form of Exhibit G hereto; and
 h. that certain Consent and Amendment among Borrower, Kimco, and GCRC dated as
    of the date hereof.

Initial Closing; Deposit of Estimated Initial Purchase Price into Escrow Account
. The initial Closing shall have occurred under the Household Purchase Agreement
and the Estimated Initial Purchase Price (as defined in the Household Purchase
Agreement) shall have been deposited into the Escrow Account (as defined in the
Household Purchase Agreement).
Termination of Securitization.
Agent shall have received evidence that the Certificates (as defined in the
Escrow Agreement) are being cancelled concurrently with the initial Closing (as
defined in the Household Purchase Agreement).

MISCELLANEOUS.

Representations and Warranties
. To induce Agent and Lenders to enter into this Agreement, Borrower hereby
represents and warrants that:

 a. The execution, delivery and performance by Borrower of this Agreement are
    within Borrower's corporate power and have been duly authorized by all
    necessary corporate and shareholder action.
 b. This Agreement has been duly executed and delivered by or on behalf of
    Borrower.
 c. This Agreement constitutes a legal, valid and binding obligation of Borrower
    enforceable against Borrower in accordance with its terms, except as
    enforceability may be limited by applicable bankruptcy, insolvency,
    reorganization, moratorium or similar laws affecting creditors' rights
    generally and by general equitable principles (whether enforcement is sought
    by proceedings in equity or at law).
 d. No Default has occurred and is continuing after giving effect to this
    Agreement.
 e. No action, claim or proceeding is now pending or, to the knowledge of
    Borrower, threatened against Borrower, at law, in equity or otherwise,
    before any court, board, commission, agency or instrumentality of any
    federal, state, or local government or of any agency or subdivision thereof,
    or before any arbitrator or panel of arbitrators, (i) which challenges
    Borrower's right, power, or competence to enter into this Agreement or, to
    the extent applicable, perform any of its obligations under this Agreement,
    the Credit Agreement as amended hereby or any other Loan Document, or the
    validity or enforceability of this Agreement, the Credit Agreement as
    amended hereby or any other Loan Document or any action taken under this
    Agreement, the Credit Agreement as amended hereby or any other Loan Document
    or (ii) which if determined adversely, is reasonably likely to have or
    result in a Material Adverse Effect after giving effect to this Agreement.
    To the knowledge of Borrower, there does not exist a state of facts which is
    reasonably likely to give rise to such proceedings.

Certificate as to Representations
and Warranties and No Event of Default.
Borrower shall deliver to Agent an officer's certificate, dated the date of this
Agreement, certifying that the representations and warranties of the Borrower
contained in the Credit Agreement are true on and as of the date of this
Agreement (except to the extent that any such representations or warranties
relate to a specific prior date or period) and that there exists no Event of
Default or Default as of the date of this Agreement.
Expenses
. Borrower hereby reconfirms its obligations pursuant to
Section 11.3
of the Credit Agreement to pay and reimburse Agent for all reasonable costs and
expenses (including, without limitation, reasonable fees of counsel) incurred in
connection with the negotiation, preparation, execution and delivery of this
Agreement and all other documents and instruments delivered in connection
herewith.
GOVERNING LAW
. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
Counterparts; Telefacsimile Transmission
. This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement, but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.

 

 

 

 

[Signature Page to Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

GOTTSCHALKS INC.

By: /s/ James Famalette
Title: President & CEO

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and Lender

By: /s/ Todd Gronski

Title: Its Duly Authorized Signatory

 

THE CIT GROUP/BUSINESS CREDIT INC.,

as Lender

By: /s/ Adrian Avalos

Title: Vice President

FOOTHILL CAPITAL CORPORATION,

as Lender

By: /s/ Juan Barrera

Title: Assistant Vice President

LASALLE RETAIL FINANCE, a division of LASALLE BUSINESS CREDIT, INC., as agent
for STANDARD FEDERAL BANK NATIONAL ASSOCIATION N.A.,

as Lender

By: /s/ Daniel O'Rourke

Title: Vice President

[Signature Page to Consent and Fourth Amendment]

Acknowledgment, Consent and Agreement to Consent and Fourth Amendment to Credit
Agreement:

The undersigned hereby (i) acknowledges and consents to each of the amendments
to the Credit Agreement effected by this Amendment and (ii) confirms and agrees
that its obligations under the GCRC Letter (except to the extent that any
obligations thereunder are modified by the Fourth Amendment to the Credit
Agreement) shall continue without any diminution thereof and shall remain in
full force and effect on and after the effectiveness of this Amendment.

Acknowledged, consented and agreed to as of January 30, 2003.

GOTTSCHALKS CREDIT RECEIVABLES CORPORATION, a Delaware corporation

 

By: /s/ Michael Geele

Title: President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[GCRC Acknowledgement and Consent to Consent and Fourth Amendment]

 

Exhibit A

Household Credit Card Agreement

Exhibit B

Household Purchase Agreement

 

Exhibit C

Household Servicing Agreement

Exhibit D

Escrow Agreement

 

Exhibit E

Partial Release

Exhibit F

Escrowed Funds Letter of Direction

 

 

Exhibit G

Household Letter of Direction

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