Exhibit 10.57

CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT

This CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of December 1,
2004 (this "Amendment"), is entered into by and among GOTTSCHALKS INC., a
Delaware corporation ("Borrower"); GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, for itself, as a Lender, and as Agent for Lenders; THE CIT
GROUP/BUSINESS CREDIT, INC., for itself, as a Lender, and as syndication agent
for the Lenders ("Syndication Agent"); and the other Lenders signatory hereto.

W I T N E S S E T H

WHEREAS, Borrower, Agent, Syndication Agent, and the Lenders are parties to that
certain Amended and Restated Credit Agreement dated as of March 1, 2004 (as from
time to time amended, restated, supplemented or otherwise modified, the "Credit
Agreement");

WHEREAS, pursuant to Section 5.15(b) of the Credit Agreement, Borrower was
required to deliver evidence of the dissolution of Gottschalks Antioch and
Palmdale, Inc. to Agent on or prior to August 1, 2004. Borrower has not
satisfied the requirements of Section 5.15(b). Accordingly, an Event of Default
has occurred and is continuing under Section 5.15(b) of the Credit Agreement
(the "Designated Default");

WHEREAS, Borrower has requested that Agent and the Lenders waive the Designated
Default and extend the deadline for delivery of evidence of the dissolution of
Gottschalks Antioch and Palmdale, Inc. from August 1, 2004 to March 1, 2005;

WHEREAS, subject to the satisfaction of the terms and conditions set forth
herein, Agent and the Lenders are willing to grant the Borrower's requests.

NOW THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree upon the terms and conditions set
forth herein as follows:

Relation to Credit Agreement; Definitions
. This Amendment constitutes an integral part of the Credit Agreement and shall
be deemed to be a Loan Document for all purposes. From and after the Amendment
No. 1 Effective Date, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," or words of like import referring to the
Credit Agreement, and each reference in the other Loan Documents to "the Credit
Agreement," "thereunder," "thereof" or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement or
Annex A
thereto.
Consent and Waiver
. Upon, and subject to, the satisfaction of each of the conditions set forth in
Section 8
hereto, Agent and the Lenders hereby (a) consent to the amendment of
Section (c)(iii)(B)
of
Annex C
of the Credit Agreement as set forth herein, and (b) waive the Designated
Default.
Amendments to the Credit Agreement.
 a. Annex A

to the Credit Agreement is hereby amended by adding the following defined terms
in proper alphabetical order:

""Activation Notice" has the meaning ascribed to it in Annex C."

""Amendment No. 1" means that certain Consent and Amendment No. 1 to Credit
Agreement dated as of December 1, 2004 by and among Borrower, Agent, Syndication
Agent, and the Lenders signatory thereto."

""Amendment No. 1 Effective Date" means the date on which Amendment No. 1
becomes effective upon the satisfaction in full in the judgment of Agent of each
of the conditions set forth therein."

Annex A
to the Credit Agreement is hereby further amended by amending and restating the
following definitions in their entirety as follows:

""Loan Documents" means the Agreement, the Amendment No. 1, the Notes, the
Collateral Documents, the Master Standby Agreement, the Master Documentary
Agreement, and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent or any Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, letter of credit agreements and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party or any employee of any Credit Party, and delivered to
Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Loan Document
to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto,
and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative."

Section 5.15(b)
of the Credit Agreement is hereby amended and restated in its entirety as
follows:

"(b) Gottschalks Antioch and Palmdale. As soon as is reasonably practicable, but
in no event later than March 1, 2005, Borrower shall deliver to Agent evidence
of the dissolution of Gottschalks Antioch and Palmdale, Inc., satisfactory to
Agent."

Representations and Warranties. To induce Agent and Lenders to enter into this
Amendment, Borrower hereby represent and warrant that:
 a. The execution, delivery and performance of this Amendment and the
    performance of the Credit Agreement, as amended by this Amendment, by
    Borrower: (a) are within Borrower's organizational power; (b) have been duly
    authorized by all necessary or proper action; (c) do not contravene any
    provision of Borrower's charter or bylaws or equivalent organizational
    documents; (d) do not violate any law or regulation, or any order or decree
    of any court or Governmental Authority; (e) do not conflict with or result
    in the breach or termination of, constitute a default under or accelerate or
    permit the acceleration of any performance required by, any indenture,
    mortgage, deed of trust, lease, agreement or other instrument to which
    Borrower is a party or by which Borrower or any of its property is bound;
    (f) do not result in the creation or imposition of any Lien upon any of the
    property of Borrower other than those in favor of Agent pursuant to the Loan
    Documents; and (g) do not require the consent or approval of any
    Governmental Authority or any other Person.
 b. This Amendment has been duly executed and delivered by or on behalf of
    Borrower.
 c. This Amendment 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 or Event of Default has occurred (other than the Designated
    Default) and is continuing after giving effect to this Amendment.
 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 Amendment or, to
    the extent applicable, perform any of its obligations under this Amendment,
    the Credit Agreement as amended hereby or any other Loan Document, or the
    validity or enforceability of this Amendment, the Credit Agreement as
    amended hereby or any other Loan Document or any action taken under this
    Amendment, 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 Amendment.
    To the knowledge of Borrower, there does not exist a state of facts which is
    reasonably likely to give rise to such proceedings.
 f. The representations and warranties of the Borrower contained in the Credit
    Agreement and each other Loan Document shall be true and correct on and as
    of the Amendment No. 1 Effective Date with the same effect as if such
    representations and warranties had been made on and as of such date, except
    that any such representation or warranty which is expressly made only as of
    a specified date need be true only as of such date.

No Other Amendments. Except for the consent and waiver set forth in Section 2 of
this Amendment and the amendments set forth in Section 3 of this Amendment, the
Credit Agreement shall be unmodified and shall continue to be in full force and
effect in accordance with its terms. Except as expressly set forth herein, this
Amendment shall not be deemed a waiver of any term or condition of any Loan
Document and shall not be deemed to prejudice any right or rights which Agent,
for itself and Lenders, may now have or may have in the future under or in
connection with any Loan Document or any of the instruments or agreements
referred to therein, as the same may be amended from time to time. The consent
and waiver set forth in Section 2 of this Amendment is limited to the precise
terms thereof, and Agent and the Lenders are not obligated to consider or
consent to any additional request by Borrower for any other consent, waiver,
forbearance or amendment with respect to this Amendment or any other Loan
Document. Outstanding Indebtedness; Waiver of Claims. Borrower hereby
acknowledges and agrees that as of December 1, 2004 the aggregate outstanding
principal amount of the Revolving Loans is $79,392,703.73 and the aggregate
outstanding principal amount of the Term Loan is $9,000,000 and that such
principal amounts are payable pursuant to the Credit Agreement without defense,
offset, withholding, counterclaim or deduction of any kind. Each Credit Party,
each of their successors-in-title, legal representatives and assignees and, to
the extent the same is claimed by right of, through or under any Credit Party,
for their past, present and future employees, agents, representatives, officers,
directors, shareholders, and trustees, does hereby forever remise, release and
discharge the Agent and each Lender and each of their respective
successors-in-title, legal representatives and assignees, past, present and
future officers, directors, shareholders, trustees, agents, employees,
consultants, experts, advisors, attorneys and other professionals and all other
persons and entities to whom the Agent or any Lender would be liable if such
persons or entities were found to be liable to any Credit Party, or any of them
(collectively hereinafter the "Lender Parties"), from any and all manner of
action and actions, cause and causes of action, claims, charges, demands,
counterclaims, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, damages, judgments,
expenses, executions, liens, claims of liens, claims of costs, penalties,
attorneys' fees, or any other compensation, recovery or relief on account of any
liability, obligation, demand or cause of action of whatever nature relating to,
arising out of or in connection with the Credit Agreement or any other Loan
Document, including but not limited to, acts, omissions to act, actions,
negotiations, discussions and events resulting in the finalization and execution
of this Amendment, as, among and between the Borrower and the Lender Parties,
such claims whether now accrued and whether now known or hereafter discovered
from the beginning of time through the date hereof.

Each Credit Party hereby knowingly, voluntarily, intentionally and expressly
waives and relinquishes any and all rights and benefits that it may have under
Section 1542 of the California Civil Code, or any other similar provision of any
other jurisdiction, as against the Lender Parties. Section 1542 of the Civil
Code of California provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Each Credit Party hereby acknowledges that the foregoing waiver of the Section
1542 of the California Civil Code was separately bargained for. Each Credit
Party knowingly, voluntarily, intentionally and expressly waives any and all
rights and benefits conferred by Section 1542, or by any law of the any state or
territory of the United States or any foreign country or principle of common law
that is similar or analogous to Section 1542 and agrees and acknowledges that
this waiver is an essential term of this Amendment, without which the
consideration would not have been given by the Agent and the Lenders to the
Borrower. As to each and every claim released hereunder, each Credit Party
hereby represents that it has received the advice of legal counsel with regard
to the releases contained herein.

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
Amendment and all other documents and instruments delivered in connection
herewith. Effectiveness. This Amendment shall become effective (the "Amendment
No. 1 Effective Date") only upon satisfaction in full in the judgment of the
Agent of each of the following conditions:
Documents
. Agent shall have received this Amendment, duly executed by the parties hereto,
and the same shall be in full force and effect; and
No Material Adverse Effect
. No event or circumstance shall have occurred which could reasonably be
expected to have a Material Adverse Effect.

GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Counterparts. This Amendment
may be executed by the parties hereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver an original executed
counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

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

GOTTSCHALKS INC.

By: ___________________________

Name: J. Gregory Ambro

Title: Senior Vice President and
Chief Administrative Officer

 

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and as a Lender

By: ___________________________

Name: Todd Gronski

Title: Its Duly Authorized Signatory

THE CIT GROUP/BUSINESS CREDIT, INC.,

as Lender

By: ___________________________

Name:

Title:

WELLS FARGO FOOTHILL, INC.,

as Lender

By: ___________________________

Name:

Title:

 

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

as Lender

By: ___________________________

Name:

Title:

--------------------------------------------------------------------------------

CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT

This CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of December 1,
2004 (this "Amendment"), is entered into by and among GOTTSCHALKS INC., a
Delaware corporation ("Borrower"); GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, for itself, as a Lender, and as Agent for Lenders; THE CIT
GROUP/BUSINESS CREDIT, INC., for itself, as a Lender, and as syndication agent
for the Lenders ("Syndication Agent"); and the other Lenders signatory hereto.

W I T N E S S E T H

WHEREAS, Borrower, Agent, Syndication Agent, and the Lenders are parties to that
certain Amended and Restated Credit Agreement dated as of March 1, 2004, as
amended by that certain Consent and Amendment No. 1 to Credit Agreement dated as
of December 1, 2004 (as from time to time further amended, restated,
supplemented or otherwise modified, the "Credit Agreement");

WHEREAS, Borrower has requested that Agent and the Lenders consent to Borrower's
execution and delivery of that certain Non-Negotiable Subordinated Unsecured
Note Due May 30, 2009 in the form attached as Exhibit A hereto (the "New
Subordinated Note"), which, upon its execution and delivery by Borrower and
Harris, amends and restates the Subordinated Note;

WHEREAS, pursuant to Section 7.1 of the Credit Agreement, Borrower has requested
that Agent and the Lenders consent to the extension of the Commitment
Termination Date from February 1, 2007 to February 2, 2009;

WHEREAS, subject to the satisfaction of the terms and conditions set forth
herein, Agent and the Lenders are willing to grant the Borrower's requests.

NOW THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree upon the terms and conditions set
forth herein as follows:

Relation to Credit Agreement; Definitions
. This Amendment constitutes an integral part of the Credit Agreement and shall
be deemed to be a Loan Document for all purposes. From and after the Amendment
No. 2 Effective Date, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," or words of like import referring to the
Credit Agreement, and each reference in the other Loan Documents to "the Credit
Agreement," "thereunder," "thereof" or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement or
Annex A
thereto.
Consent
. Upon, and subject to, the satisfaction of each of the conditions set forth in
Section 8
hereto, Agent and the Lenders hereby consent to Borrower's execution and
delivery of the New Subordinated Note in the form attached as
Exhibit A
hereto solely to the extent that such New Subordinated Note will amend and
restate the existing Subordinated Note.
Amendments to the Credit Agreement.
 a. Annex A

to the Credit Agreement is hereby amended by adding the following defined terms
in proper alphabetical order:

""Amendment No. 2" means that certain Consent and Amendment No. 2 to Credit
Agreement dated as of December 1, 2004 by and among Borrower, Agent, Syndication
Agent, and the Lenders signatory thereto."

""Amendment No. 2 Effective Date" means the date on which Amendment No. 2
becomes effective upon the satisfaction in full in the judgment of Agent of each
of the conditions set forth therein."

""New Subordinated Note" means the Non-Negotiable Subordinated Unsecured Note
Due May 30, 2009 dated December ___, 2004 issued by Borrower in favor of Harris
in an aggregate original principal amount of $22,179,598.00, which, upon its
execution and delivery, amends and restates the Subordinated Note."

Annex A
to the Credit Agreement is hereby further amended by amending and restating the
following definitions in their entirety as follows:

""Commitment Termination Date" means the earliest of (a) February 2, 2009, (b)
the date of termination of Lenders' obligations to make Advances and to incur
Letter of Credit Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible prepayment in full
by Borrower of the Loans and the cancellation and return (or stand-by guarantee)
of all Letters of Credit or the cash collateralization of all Letter of Credit
Obligations pursuant to Annex B, and the permanent reduction of all Commitments
to zero dollars ($0)."

""Loan Documents" means the Agreement, the Amendment No. 1, the Amendment No. 2,
the Notes, the Collateral Documents, the Master Standby Agreement, the Master
Documentary Agreement, and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit agreements
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of any Credit Party or any employee of any Credit Party, and delivered
to Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Loan Document
to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto,
and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative."

""Subordinated Debt" means the Indebtedness of Borrower to Harris evidenced by
the Subordinated Note, the New Subordinated Note, and any other Indebtedness of
any Credit Party subordinated to the Obligations in a manner and form
satisfactory to Agent and Lenders in their sole discretion, as to right and time
of payment and as to any other rights and remedies thereunder."

Section 3.26
of the Credit Agreement is hereby amended and restated in its entirety as
follows:

"3.26 Subordinated Debt and Capital Leases. As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Subordinated Note
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith) and of all Capital Leases to which Borrower is a party. Borrower has
the corporate power and authority to incur the Indebtedness evidenced by the
Subordinated Note. As of the Amendment No. 2 Effective Date, Borrower has
delivered to Agent a complete and correct copy of the New Subordinated Note
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). Borrower has the corporate power and authority to incur the
Indebtedness evidenced by the New Subordinated Note. Until the execution and
delivery of the New Subordinated Note by Borrower and Harris, the subordination
provisions of the Subordinated Note are enforceable against the holders of the
Subordinated Note by Agent and Lenders, and all Obligations, including the
Letter of Credit Obligations, constitute senior Indebtedness entitled to the
benefits of such subordination provisions. Upon execution and delivery of the
New Subordinated Note by Borrower and Harris, the subordination provisions of
the New Subordinated Note are enforceable against the holders of the New
Subordinated Note by Agent and Lenders, and all Obligations, including the
Letter of Credit Obligations, constitute senior Indebtedness entitled to the
benefits of the subordination provisions contained in the New Subordinated Note.
Borrower acknowledges that Agent and each Lender are entering into this
Agreement and are extending the Commitments in reliance upon the subordination
provisions of the Subordinated Note, the New Subordinated Note and this Section
3.26."

Section 6.14
of the Credit Agreement is hereby amended and restated in its entirety as
follows:

"6.14 Restricted Payments. No Credit Party shall make any Restricted Payment,
except (a) dividends and distributions by Subsidiaries of Borrower paid to
Borrower, (b) employee loans permitted under Section 6.4(b), (c) scheduled
payments of interest with respect to the Subordinated Note and the New
Subordinated Note so long as no Default or Event of Default has occurred and is
continuing or would result after giving effect thereto, or (d) scheduled
payments of principal under the New Subordinated Note so long as (i) no Default
or Event of Default has occurred and is continuing or would result after giving
effect thereto and (ii) prior to making such payment and immediately after
giving effect thereto, Borrowing Availability is at least $15,000,000, or (d)
open market purchases of Borrower's common Stock on a public exchange by
Borrower in accordance with applicable laws; provided that: (i) no Default or
Event of Default has occurred and is continuing or would result therefrom, (ii)
the total amount expended by Borrower in making such purchases does not exceed
$2,000,000 in the aggregate, and (iii) for the ninety (90) day period prior to
the proposed purchase and immediately after giving effect thereto, Borrowing
Availability is at least $40,000,000."

Section 6.19(b)
of the Credit Agreement is hereby amended and restated in its entirety as
follows:

"(b) Unless consented to by Agent and Requisite Lenders in writing, no Credit
Party shall change or amend the terms of (i) the Subordinated Note (other than
by execution and delivery of the New Subordinated Note), (ii) any Credit Card
Agreement, (iii) any agreement with United Security Bank, or (iv) the New
Subordinated Note."

Representations and Warranties. To induce Agent and Lenders to enter into this
Amendment, Borrower hereby represent and warrant that:
 a. The execution, delivery and performance of this Amendment and the
    performance of the Credit Agreement, as amended by this Amendment, by
    Borrower: (a) are within Borrower's organizational power; (b) have been duly
    authorized by all necessary or proper action; (c) do not contravene any
    provision of Borrower's charter or bylaws or equivalent organizational
    documents; (d) do not violate any law or regulation, or any order or decree
    of any court or Governmental Authority; (e) do not conflict with or result
    in the breach or termination of, constitute a default under or accelerate or
    permit the acceleration of any performance required by, any indenture,
    mortgage, deed of trust, lease, agreement or other instrument to which
    Borrower is a party or by which Borrower or any of its property is bound;
    (f) do not result in the creation or imposition of any Lien upon any of the
    property of Borrower other than those in favor of Agent pursuant to the Loan
    Documents; and (g) do not require the consent or approval of any
    Governmental Authority or any other Person (other than, in respect of
    execution and delivery of the New Subordinated Note, Harris).
 b. This Amendment has been duly executed and delivered by or on behalf of
    Borrower.
 c. This Amendment 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 or Event of Default has occurred and is continuing after giving
    effect to this Amendment.
 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 Amendment or, to
    the extent applicable, perform any of its obligations under this Amendment,
    the Credit Agreement as amended hereby or any other Loan Document, or the
    validity or enforceability of this Amendment, the Credit Agreement as
    amended hereby or any other Loan Document or any action taken under this
    Amendment, 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 Amendment.
    To the knowledge of Borrower, there does not exist a state of facts which is
    reasonably likely to give rise to such proceedings.
 f. The representations and warranties of the Borrower contained in the Credit
    Agreement and each other Loan Document shall be true and correct on and as
    of the Amendment No. 2 Effective Date with the same effect as if such
    representations and warranties had been made on and as of such date, except
    that any such representation or warranty which is expressly made only as of
    a specified date need be true only as of such date.

No Other Amendments. Except for the consent set forth in Section 2 of this
Amendment and the amendments set forth in Section 3 of this Amendment, the
Credit Agreement shall be unmodified and shall continue to be in full force and
effect in accordance with its terms. Except as expressly set forth herein, this
Amendment shall not be deemed a waiver of any term or condition of any Loan
Document and shall not be deemed to prejudice any right or rights which Agent,
for itself and Lenders, may now have or may have in the future under or in
connection with any Loan Document or any of the instruments or agreements
referred to therein, as the same may be amended from time to time. The consent
set forth in Section 2 of this Amendment is limited to the precise terms
thereof, and Agent and the Lenders are not obligated to consider or consent to
any additional request by Borrower for any other consent, waiver, forbearance or
amendment with respect to this Amendment or any other Loan Document. Outstanding
Indebtedness; Waiver of Claims. Borrower hereby acknowledges and agrees that as
of December 1, 2004 the aggregate outstanding principal amount of the Revolving
Loans is $79,392,703.73 and the aggregate outstanding principal amount of the
Term Loan is $9,000,000 and that such principal amounts are payable pursuant to
the Credit Agreement without defense, offset, withholding, counterclaim or
deduction of any kind. Each Credit Party, each of their successors-in-title,
legal representatives and assignees and, to the extent the same is claimed by
right of, through or under any Credit Party, for their past, present and future
employees, agents, representatives, officers, directors, shareholders, and
trustees, does hereby forever remise, release and discharge the Agent and each
Lender and each of their respective successors-in-title, legal representatives
and assignees, past, present and future officers, directors, shareholders,
trustees, agents, employees, consultants, experts, advisors, attorneys and other
professionals and all other persons and entities to whom the Agent or any Lender
would be liable if such persons or entities were found to be liable to any
Credit Party, or any of them (collectively hereinafter the "Lender Parties"),
from any and all manner of action and actions, cause and causes of action,
claims, charges, demands, counterclaims, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, damages, judgments, expenses, executions, liens, claims of liens,
claims of costs, penalties, attorneys' fees, or any other compensation, recovery
or relief on account of any liability, obligation, demand or cause of action of
whatever nature relating to, arising out of or in connection with the Credit
Agreement or any other Loan Document, including but not limited to, acts,
omissions to act, actions, negotiations, discussions and events resulting in the
finalization and execution of this Amendment, as, among and between the Borrower
and the Lender Parties, such claims whether now accrued and whether now known or
hereafter discovered from the beginning of time through the date hereof.

Each Credit Party hereby knowingly, voluntarily, intentionally and expressly
waives and relinquishes any and all rights and benefits that it may have under
Section 1542 of the California Civil Code, or any other similar provision of any
other jurisdiction, as against the Lender Parties. Section 1542 of the Civil
Code of California provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Each Credit Party hereby acknowledges that the foregoing waiver of the Section
1542 of the California Civil Code was separately bargained for. Each Credit
Party knowingly, voluntarily, intentionally and expressly waives any and all
rights and benefits conferred by Section 1542, or by any law of the any state or
territory of the United States or any foreign country or principle of common law
that is similar or analogous to Section 1542 and agrees and acknowledges that
this waiver is an essential term of this Amendment, without which the
consideration would not have been given by the Agent and the Lenders to the
Borrower. As to each and every claim released hereunder, each Credit Party
hereby represents that it has received the advice of legal counsel with regard
to the releases contained herein.

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
Amendment and all other documents and instruments delivered in connection
herewith. Effectiveness. This Amendment shall become effective (the "Amendment
No. 2 Effective Date") only upon satisfaction in full in the judgment of the
Agent of each of the following conditions:
Documents
.
 i.  (y) with respect to the effectiveness of every provision of this Amendment
     other than the amendment and restatement of the definition of Commitment
     Termination Date, Agent shall have received this Amendment, duly executed
     by the Borrower and the Requisite Lenders, and the same shall be in full
     force and effect; and (z) with respect to the effectiveness of the
     amendment and restatement of the definition of Commitment Termination Date
     set forth herein, duly executed by each party listed on the signature pages
     hereto, and the same shall be in full force and effect; and
 ii. Agent shall have received a copy of the New Subordinated Note, in form and
     substance satisfactory to Agent, duly executed and delivered by each of the
     parties thereto.

No Material Adverse Effect
. No event or circumstance shall have occurred which could reasonably be
expected to have a Material Adverse Effect.

Subordinated Note. Upon the execution and delivery of the New Subordinated Note,
Borrower shall deliver to Agent a copy of the Subordinated Note marked
"CANCELLED". GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Counterparts. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed counterpart of
this Amendment by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile also shall deliver an
original executed counterpart of this Amendment, but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.

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

GOTTSCHALKS INC.

By: ___________________________

Name: J. Gregory Ambro

Title: Senior Vice President and
Chief Administrative Officer

 

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and as a Lender

By: ___________________________

Name: Todd Gronski

Title: Its Duly Authorized Signatory

THE CIT GROUP/BUSINESS CREDIT, INC.,

as Lender

By: ___________________________

Name:

Title:

WELLS FARGO FOOTHILL, INC.,

as Lender

By: ___________________________

Name:

Title:

 

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

as Lender

By: ___________________________

Name:

Title:

--------------------------------------------------------------------------------

Exhibit A

New Subordinated Note

 

 

--------------------------------------------------------------------------------

AMENDMENT NO. 3 TO CREDIT AGREEMENT

This AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of January 25, 2004 (this
"Amendment"), is entered into by and among GOTTSCHALKS INC., a Delaware
corporation ("Borrower"); GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, for itself, as a Lender, and as Agent for Lenders; THE CIT
GROUP/BUSINESS CREDIT, INC., for itself, as a Lender, and as syndication agent
for the Lenders ("Syndication Agent"); and the other Lenders signatory hereto.

W I T N E S S E T H

WHEREAS, Borrower, Agent, Syndication Agent, and the Lenders are parties to that
certain Amended and Restated Credit Agreement dated as of March 1, 2004, as
amended by that certain Consent and Amendment No. 1 to Credit Agreement dated as
of December 1, 2004, as amended by that certain Consent and Amendment No. 2 to
Credit Agreement dated as of December 1, 2004 (as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement");

WHEREAS, Borrower has requested that Agent and the Lenders consent to the
amendment of Section (c)(iii)(B) of Annex C of the Credit Agreement as set forth
herein; and

WHEREAS, subject to the satisfaction of the terms and conditions set forth
herein, Agent and the Lenders are willing to grant the Borrower's requests.

NOW THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree upon the terms and conditions set
forth herein as follows:

Relation to Credit Agreement; Definitions
. This Amendment constitutes an integral part of the Credit Agreement and shall
be deemed to be a Loan Document for all purposes. From and after the Amendment
No. 3 Effective Date, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," or words of like import referring to the
Credit Agreement, and each reference in the other Loan Documents to "the Credit
Agreement," "thereunder," "thereof" or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement or
Annex A
thereto.
Amendments to the Credit Agreement.
 a. Section 8.1(m)

of the Credit Agreement is hereby amended and restated in its entirety as
follows:

"(m) Except to the extent permitted pursuant to Section 6.14, the payment of all
or any portion of the principal amount of any Subordinated Debt whether at
maturity, upon acceleration or otherwise, so long as the Obligations under this
Agreement have not been paid in full and the Commitments have not been
terminated."

Annex A
to the Credit Agreement is hereby amended by adding the following defined terms
in proper alphabetical order:

""Activation Notice" has the meaning ascribed to it in Annex C."

""Amendment No. 3" means that certain Consent and Amendment No. 3 to Credit
Agreement dated as of January 25, 2004 by and among Borrower, Agent, Syndication
Agent, and the Lenders signatory thereto."

""Amendment No. 3 Effective Date" means the date on which Amendment No. 3
becomes effective upon the satisfaction in full in the judgment of Agent of each
of the conditions set forth therein."

""Concentration Account Bank" has the meaning ascribed to it in Annex C."

Annex A
to the Credit Agreement is hereby further amended by amending and restating the
following definitions in their entirety as follows:

""Loan Documents" means the Agreement, the Amendment No. 1, the Amendment No. 2,
the Amendment No. 3, the Notes, the Collateral Documents, the Master Standby
Agreement, the Master Documentary Agreement, and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party or any
employee of any Credit Party, and delivered to Agent or any Lender in connection
with the Agreement or the transactions contemplated thereby. Any reference in
the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative."

Annex C
of the Credit Agreement is hereby amended by amending and restating
Section (c)(iii)(B)
in its entirety as follows:

"(B) with respect to the Concentration Account Bank, such bank agrees to
immediately forward all amounts received in the Concentration Account to the
Collection Account through daily sweeps from such Concentration Account into the
Collection Account, provided however that, until such bank receives written
notice otherwise from Agent (an "Activation Notice"), (1) such bank shall not
sweep amounts received in the concentration account into the Collection Account
and (2) Borrower shall have the right to withdraw monies from time to time from
the Concentration Account. Borrower shall not, or shall not cause or permit any
Subsidiary thereof to, accumulate or maintain cash in Disbursement Accounts or
payroll accounts as of any date of determination in excess of checks outstanding
against such accounts as of that date and amounts necessary to meet minimum
balance requirements. Notwithstanding anything to the contrary in this Annex C,
an Activation Notice may only be delivered by Agent to a Concentration Account
Bank if at the time of delivery (x) a Default or an Event of Default shall have
occurred and is continuing or (y) Borrowing Availability is less than
$15,000,000. Once an Event of Default has occurred and is continuing or after
Borrowing Availability drops below $15,000,000, Agent shall be free to exercise
its right to issue such Activation Notice and the subsequent elimination of the
subject Event of Default or the subsequent increase in Borrowing Availability to
an amount above $15,000,000 shall not eliminate the effectiveness of such
Activation Notice, until and unless Agent, at its sole discretion, provides the
Concentration Account Bank written notice to cancel any Activation Notice
previously delivered."

Representations and Warranties. To induce Agent and Lenders to enter into this
Amendment, Borrower hereby represent and warrant that:
 a. The execution, delivery and performance of this Amendment and the
    performance of the Credit Agreement, as amended by this Amendment, by
    Borrower: (a) are within Borrower's organizational power; (b) have been duly
    authorized by all necessary or proper action; (c) do not contravene any
    provision of Borrower's charter or bylaws or equivalent organizational
    documents; (d) do not violate any law or regulation, or any order or decree
    of any court or Governmental Authority; (e) do not conflict with or result
    in the breach or termination of, constitute a default under or accelerate or
    permit the acceleration of any performance required by, any indenture,
    mortgage, deed of trust, lease, agreement or other instrument to which
    Borrower is a party or by which Borrower or any of its property is bound;
    (f) do not result in the creation or imposition of any Lien upon any of the
    property of Borrower other than those in favor of Agent pursuant to the Loan
    Documents; and (g) do not require the consent or approval of any
    Governmental Authority or any other Person.
 b. This Amendment has been duly executed and delivered by or on behalf of
    Borrower.
 c. This Amendment 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 or Event of Default has occurred and is continuing after giving
    effect to this Amendment.
 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 Amendment or, to
    the extent applicable, perform any of its obligations under this Amendment,
    the Credit Agreement as amended hereby or any other Loan Document, or the
    validity or enforceability of this Amendment, the Credit Agreement as
    amended hereby or any other Loan Document or any action taken under this
    Amendment, 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 Amendment.
    To the knowledge of Borrower, there does not exist a state of facts which is
    reasonably likely to give rise to such proceedings.
 f. The representations and warranties of the Borrower contained in the Credit
    Agreement and each other Loan Document shall be true and correct on and as
    of the Amendment No. 3 Effective Date with the same effect as if such
    representations and warranties had been made on and as of such date, except
    that any such representation or warranty which is expressly made only as of
    a specified date need be true only as of such date.

No Other Amendments. Except for the amendments set forth in Section 2 of this
Amendment, the Credit Agreement shall be unmodified and shall continue to be in
full force and effect in accordance with its terms. Except as expressly set
forth herein, this Amendment shall not be deemed a waiver of any term or
condition of any Loan Document and shall not be deemed to prejudice any right or
rights which Agent, for itself and Lenders, may now have or may have in the
future under or in connection with any Loan Document or any of the instruments
or agreements referred to therein, as the same may be amended from time to time.
Outstanding Indebtedness; Waiver of Claims. Borrower hereby acknowledges and
agrees that as of January 25, 2004 the aggregate outstanding principal amount of
the Revolving Loans is $37,354186.05 and the aggregate outstanding principal
amount of the Term Loan is $9,000,000 and that such principal amounts are
payable pursuant to the Credit Agreement without defense, offset, withholding,
counterclaim or deduction of any kind. Each Credit Party, each of their
successors-in-title, legal representatives and assignees and, to the extent the
same is claimed by right of, through or under any Credit Party, for their past,
present and future employees, agents, representatives, officers, directors,
shareholders, and trustees, does hereby forever remise, release and discharge
the Agent and each Lender and each of their respective successors-in-title,
legal representatives and assignees, past, present and future officers,
directors, shareholders, trustees, agents, employees, consultants, experts,
advisors, attorneys and other professionals and all other persons and entities
to whom the Agent or any Lender would be liable if such persons or entities were
found to be liable to any Credit Party, or any of them (collectively hereinafter
the "Lender Parties"), from any and all manner of action and actions, cause and
causes of action, claims, charges, demands, counterclaims, suits, debts, dues,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, damages, judgments, expenses, executions, liens,
claims of liens, claims of costs, penalties, attorneys' fees, or any other
compensation, recovery or relief on account of any liability, obligation, demand
or cause of action of whatever nature relating to, arising out of or in
connection with the Credit Agreement or any other Loan Document, including but
not limited to, acts, omissions to act, actions, negotiations, discussions and
events resulting in the finalization and execution of this Amendment, as, among
and between the Borrower and the Lender Parties, such claims whether now accrued
and whether now known or hereafter discovered from the beginning of time through
the date hereof.

Each Credit Party hereby knowingly, voluntarily, intentionally and expressly
waives and relinquishes any and all rights and benefits that it may have under
Section 1542 of the California Civil Code, or any other similar provision of any
other jurisdiction, as against the Lender Parties. Section 1542 of the Civil
Code of California provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Each Credit Party hereby acknowledges that the foregoing waiver of the Section
1542 of the California Civil Code was separately bargained for. Each Credit
Party knowingly, voluntarily, intentionally and expressly waives any and all
rights and benefits conferred by Section 1542, or by any law of the any state or
territory of the United States or any foreign country or principle of common law
that is similar or analogous to Section 1542 and agrees and acknowledges that
this waiver is an essential term of this Amendment, without which the
consideration would not have been given by the Agent and the Lenders to the
Borrower. As to each and every claim released hereunder, each Credit Party
hereby represents that it has received the advice of legal counsel with regard
to the releases contained herein.

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
Amendment and all other documents and instruments delivered in connection
herewith. Effectiveness. This Amendment shall become effective (the "Amendment
No. 3 Effective Date") only upon satisfaction in full in the judgment of the
Agent of each of the following conditions:
Documents
. Agent shall have received this Amendment, duly executed by the parties hereto,
and the same shall be in full force and effect; and
No Material Adverse Effect
. No event or circumstance shall have occurred which could reasonably be
expected to have a Material Adverse Effect.

GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Counterparts. This Amendment
may be executed by the parties hereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver an original executed
counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

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

GOTTSCHALKS INC.

By: ___________________________

Name: J. Gregory Ambro

Title: Senior Vice President and
Chief Administrative Officer

 

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and as a Lender

By: ___________________________

Name: Todd Gronski

Title: Its Duly Authorized Signatory

THE CIT GROUP/BUSINESS CREDIT, INC.,

as Lender

By: ___________________________

Name:

Title:

WELLS FARGO FOOTHILL, INC.,

as Lender

By: ___________________________

Name:

Title:

 

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

as Lender

By: ___________________________

Name:

Title:

--------------------------------------------------------------------------------

AMENDMENT NO. 4 TO CREDIT AGREEMENT

This AMENDMENT NO. 4 TO CREDIT AGREEMENT, dated as of December 9, 2005 (this
"Amendment"), is entered into by and among GOTTSCHALKS INC., a Delaware
corporation ("Borrower"); GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, for itself, as a Lender, and as Agent for Lenders; THE CIT
GROUP/BUSINESS CREDIT, INC., for itself, as a Lender, and as syndication agent
for the Lenders ("Syndication Agent"); and the other Lenders signatory hereto.

W I T N E S S E T H

WHEREAS, Borrower, Agent, Syndication Agent, and the Lenders are parties to that
certain Amended and Restated Credit Agreement dated as of March 1, 2004, as
amended by that certain Consent and Amendment No. 1 to Credit Agreement dated as
of December 1, 2004, as amended by that certain Consent and Amendment No. 2 to
Credit Agreement dated as of December 1, 2004, as amended by that certain
Amendment No. 3 to Credit Agreement dated as of January 25, 2005 (as from time
to time amended, restated, supplemented or otherwise modified, the "Credit
Agreement");

WHEREAS, Borrower has requested that Agent and the Lenders consent make certain
amendments to the Credit Agreement as set forth herein; and

WHEREAS, subject to the satisfaction of the terms and conditions set forth
herein, Agent and the Lenders are willing to grant the Borrower's requests.

NOW THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree upon the terms and conditions set
forth herein as follows:

     Relation to Credit Agreement; Definitions
     . This Amendment constitutes an integral part of the Credit Agreement and
     shall be deemed to be a Loan Document for all purposes. From and after the
     Amendment No. 4 Effective Date, each reference in the Credit Agreement to
     "this Agreement," "hereunder," "hereof," or words of like import referring
     to the Credit Agreement, and each reference in the other Loan Documents to
     "the Credit Agreement," "thereunder," "thereof" or words of like import
     referring to the Credit Agreement, shall mean and be a reference to the
     Credit Agreement as amended hereby. Capitalized terms not otherwise defined
     herein shall have the meanings ascribed to them in the Credit Agreement or
     Annex A
     thereto.
     Amendments to the Credit Agreement.
 31. The following is added to the Credit Agreement as Section 1.2(A):

     "1.2A Swap Related Reimbursement Obligations.

     (a) Borrower agrees to reimburse GE Capital in immediately available funds
     in the amount of any payment made by GE Capital under a Swap Related L/C
     (such reimbursement obligation, whether contingent upon payment by GE
     Capital under the Swap Related L/C or otherwise, being herein called a
     "Swap Related Reimbursement Obligation"). No Swap Related Reimbursement
     Obligation for any Swap Related L/C may exceed the amount of the payment
     obligations owed by Borrower under the interest rate protection or hedging
     agreement or transaction supported by the Swap Related L/C.

     (b) A Swap Related Reimbursement Obligation shall be due and payable by
     Borrower within one (1) Business Day after the date on which the related
     payment is made by GE Capital under the Swap Related L/C.

     (c) Any Swap Related Reimbursement Obligation shall, during the period in
     which it is unpaid, bear interest at the rate per annum equal to the LIBOR
     Rate plus one percent (1%), as if the unpaid amount of the Swap Related
     Reimbursement Obligation were a LIBOR Loan, and not at any otherwise
     applicable Default Rate. Such interest shall be payable upon demand. The
     following additional provisions apply to the calculation and charging of
     interest by reference to the LIBOR Rate:

     (i) The LIBOR Rate shall be determined for each successive one-month LIBOR
     Period during which the Swap Related Reimbursement Obligation is unpaid,
     notwithstanding the occurrence of any Event of Default and even if the
     LIBOR Period were to extend beyond the Commitment Termination Date.

     (ii) If a Swap Related Reimbursement Obligation is paid during a monthly
     period for which the LIBOR Rate is determined, interest shall be pro-rated
     and charged for the portion of the monthly period during which the Swap
     Related Reimbursement Obligation was unpaid. Section 1.13(b) shall not
     apply to any payment of a Swap Related Reimbursement Obligation during the
     monthly period.

     (iii) Notwithstanding the last paragraph of the definition of "LIBOR Rate",
     if the LIBOR Rate is no longer available from Telerate News Service, the
     LIBOR Rate shall be determined by GE Capital from such financial reporting
     service or other information available to GE Capital as in GE Capital's
     reasonable discretion indicates GE Capital's cost of funds.

     (d) Except as provided in the foregoing provisions of this Section 1.2A and
     in Section 11.3, Borrower shall not be obligated to pay to GE Capital or
     any of its Affiliates any Letter of Credit Fee, or any other fees, charges
     or expenses, in respect of a Swap Related L/C or arranging for any interest
     rate protection or hedging agreement or transaction supported by the Swap
     Related L/C. GE Capital and its Affiliates shall look to the beneficiary of
     a Swap Related L/C for payment of any such letter of credit fees or other
     fees, charges or expenses and such beneficiary may factor such fees,
     charges, or expenses into the pricing of any interest rate protection or
     hedging arrangement or transaction supported by the Swap Related L/C.

     (e) If any Swap Related L/C is revocable prior to its scheduled expiry
     date, GE Capital agrees not to revoke the Swap Related L/C unless the
     Commitment Termination Date or an Event of Default has occurred.

     (f) GE Capital or any of its Affiliates shall be permitted to (i) provide
     confidential or other information furnished to it by any of the Credit
     Parties (including, without limitation, copies of any documents and
     information in or referred to in the Closing Checklist, Financial
     Statements and Compliance Certificates) to a beneficiary or potential
     beneficiary of a Swap Related L/C and (ii) receive confidential or other
     information from the beneficiary or potential beneficiary relating to any
     agreement or transaction supported or to be supported by the Swap Related
     L/C. However, no confidential information shall be provided to any Person
     under this paragraph unless the Person has agreed to comply with the
     covenant substantially as contained in Section 11.8 of this Agreement.

     (g) Agent shall have the right but not the obligation to establish Reserves
     in an amount not to exceed $5,000,000 (based upon Agent's reasonable
     determination of the potential exposure of Borrower in respect of any
     transactions supported by a Swap Related L/C) in respect of any
     transactions supported by a Swap Related L/C then outstanding (such
     Reserves, the "Swap Related Reserve")."

     Section 1.11
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "

1.11 Application and Allocation of Payments.

Any amounts received by Agent or the Lenders (including any voluntary and
mandatory prepayments at any time when an Event of Default shall have occurred
and be continuing), shall be applied as follows: (i) any proceeds of Revolving
Priority Collateral shall be applied: (A) first, to Fees due to the Revolving
Lenders and Agent and reimbursable expenses of Agent then due and payable
pursuant to any of the Loan Documents until paid in full; (B) second, to
interest then due and payable on the Swing Line Loan until paid in full; (C)
third, to the principal balance of the Swing Line Loan until the same shall have
been paid in full; (D) fourth, to interest then due and payable on the Revolving
Credit Advances and unpaid Swap Related Reimbursement Obligations (in an amount
up to the amount of the Swap Related Reserve then extant), ratably in proportion
to the interest accrued as to each Revolving Credit Advance and such unpaid Swap
Related Reimbursement Obligation, as applicable, until paid in full; (E) fifth,
to the principal balance of the Revolving Credit Advances and unpaid Swap
Related Reimbursement Obligations (in an amount up to the amount of the Swap
Related Reserve then extant), ratably to the aggregate, combined principal
balance of the Revolving Credit Advances and such unpaid Swap Related
Reimbursement Obligations, until paid in full; (F) sixth, to any Letter of
Credit Obligations to provide cash collateral therefor in the manner set forth
in Annex B; (G) seventh, to Fees due to the Term Lenders until paid in full; (H)
eighth, to interest then due and payable on the Term Loan until paid in full,
(I) ninth, to the principal balance of the Term Loan until paid in full; (J)
tenth, to all other Obligations including, without limitation, all unpaid Swap
Related Reimbursement Obligations and expenses of the Lenders to the extent
reimbursable under Section 11.3; and (ii) any proceeds of Term Priority
Collateral shall be applied: (A) first, to Fees due to the Term Lenders and
Agent and reimbursable expenses of Agent then due and payable pursuant to any of
the Loan Documents until paid in full; (B) second, to interest then due and
payable on the Term Loan; until paid in full, (C) third, to the principal
balance of the Term Loan, until paid in full; (D) fourth, to Fees due to the
Revolving Lenders and Agent and Agent's expenses reimbursable hereunder until
paid in full; (E) fifth, to interest then due and payable on the Swing Line Loan
until paid in full; (F) sixth, to the principal balance of the Swing Line Loan
until the same shall have been paid in full; (G) seventh, to interest then due
and payable on the Revolving Credit Advances until paid in full; (H) eighth, to
the principal balance of the Revolving Credit Advances until the same shall have
been paid in full; (I) ninth, to any Letter of Credit Obligations to provide
cash collateral therefor in the manner set forth in Annex B until all such
Letter of Credit Obligations have been fully cash collateralized; and (J) tenth,
to all other Obligations including, without limitation, all unpaid Swap Related
Reimbursement Obligations and expenses of the Lenders to the extent reimbursable
under Section 11.3. So long as no Default or Event of Default shall have
occurred and be continuing (i) voluntary prepayments shall be applied in
accordance with the provisions of Section 1.3(a); and (ii) mandatory prepayments
shall be applied as set forth in Sections 1.3(c) and 1.3(d). All payments and
prepayments applied to a particular Loan shall be applied ratably to the portion
thereof held by each Lender as determined by its Pro Rata Share. As to all
payments made when a Default or Event of Default has occurred and is continuing
or following the Commitment Termination Date, Borrower hereby irrevocably waives
the right to direct the application of any and all payments received from or on
behalf of Borrower, and Borrower hereby irrevocably agrees that Agent shall have
the continuing exclusive right to apply any and all such payments against the
Obligations of Borrower as set forth above notwithstanding any previous entry by
Agent in the Loan Account or any other books and records."

The following is added to the Credit Agreement as Section 9.1(g):

"(g) Nothing contained in this Section 9 shall require the consent of any party
for GE Capital to assign any of its rights in respect of any Swap Related
Reimbursement Obligation."

The second sentence of Section 11.2(c) is hereby amended and restated in its
entirety as follows:

"Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent or L/C Issuer, or of GE Capital in respect of any Swap
Related Reimbursement Obligations, under this Agreement or any other Loan
Document, including any release of any Guaranty or Collateral requiring a
writing signed by all Lenders, shall be effective unless in writing and signed
by Agent or L/C Issuer or GE Capital, as the case may be, in addition to Lenders
required hereinabove to take such action."

Annex A to the Credit Agreement is hereby amended by adding the following
defined terms in proper alphabetical order or amending and restating the
following defined terms in their entirety, as the case may be:

"Letters of Credit" means documentary or standby letters of credit issued for
the account of Borrower by any L/C Issuer, and bankers' acceptances issued by
Borrower, for which Agent and Revolving Lenders have incurred Letter of Credit
Obligations. The term does not include a Swap Related L/C.

"Obligations" means all loans, advances, debts, liabilities and obligations, for
the performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such amounts
are liquidated or determinable) owing by any Credit Party to Agent or any
Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement,
letter of credit agreement or other instrument, arising under the Agreement or
any of the other Loan Documents. This term includes all principal, interest
(including all interest that accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether or not allowed
in such case or proceeding), Fees, Swap Related Reimbursement Obligations,
expenses, attorneys' fees and any other sum chargeable to any Credit Party under
the Agreement or any of the other Loan Documents.

"Swap Related L/C" means a letter of credit or other credit enhancement provided
by GE Capital to the extent supporting the payment obligations by Borrower under
an interest rate protection or hedging agreement or transaction (including, but
not limited to, interest rate swaps, caps, collars, floors and similar
transactions) designed to protect or manage exposure to the fluctuations in the
interest rates applicable to any of the Loans, and which agreement or
transaction Borrower entered into as the result of a specific referral pursuant
to which GE Capital, GE Corporate Financial Services, Inc. or any other
Affiliate of GE Capital had arranged for Borrower to enter into such agreement
or transaction. The term includes a Swap Related L/C as it may be increased from
time to time fully to support Borrower's payment obligations under any and all
such interest rate protection or hedging agreements or transactions.

"Swap Related Reimbursement Obligation" has the meaning ascribed to it in
Section 1.2A.

"Swap Related Reserve" has the meaning ascribed to it in Section 1.2A(g).

Representations and Warranties. To induce Agent and Lenders to enter into this
Amendment, Borrower hereby represent and warrant that:
 a. The execution, delivery and performance of this Amendment and the
    performance of the Credit Agreement, as amended by this Amendment, by
    Borrower: (a) are within Borrower's organizational power; (b) have been duly
    authorized by all necessary or proper action; (c) do not contravene any
    provision of Borrower's charter or bylaws or equivalent organizational
    documents; (d) do not violate any law or regulation, or any order or decree
    of any court or Governmental Authority; (e) do not conflict with or result
    in the breach or termination of, constitute a default under or accelerate or
    permit the acceleration of any performance required by, any indenture,
    mortgage, deed of trust, lease, agreement or other instrument to which
    Borrower is a party or by which Borrower or any of its property is bound;
    (f) do not result in the creation or imposition of any Lien upon any of the
    property of Borrower other than those in favor of Agent pursuant to the Loan
    Documents; and (g) do not require the consent or approval of any
    Governmental Authority or any other Person.
 b. This Amendment has been duly executed and delivered by or on behalf of
    Borrower.
 c. This Amendment 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 or Event of Default has occurred and is continuing after giving
    effect to this Amendment.
 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 Amendment or, to
    the extent applicable, perform any of its obligations under this Amendment,
    the Credit Agreement as amended hereby or any other Loan Document, or the
    validity or enforceability of this Amendment, the Credit Agreement as
    amended hereby or any other Loan Document or any action taken under this
    Amendment, 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 Amendment.
    To the knowledge of Borrower, there does not exist a state of facts which is
    reasonably likely to give rise to such proceedings.
 f. The representations and warranties of the Borrower contained in the Credit
    Agreement and each other Loan Document shall be true and correct on and as
    of the Amendment No. 4 Effective Date with the same effect as if such
    representations and warranties had been made on and as of such date, except
    that any such representation or warranty which is expressly made only as of
    a specified date need be true only as of such date.

No Other Amendments. Except for the amendments set forth in Section 2 of this
Amendment, the Credit Agreement shall be unmodified and shall continue to be in
full force and effect in accordance with its terms. Except as expressly set
forth herein, this Amendment shall not be deemed a waiver of any term or
condition of any Loan Document and shall not be deemed to prejudice any right or
rights which Agent, for itself and Lenders, may now have or may have in the
future under or in connection with any Loan Document or any of the instruments
or agreements referred to therein, as the same may be amended from time to time.
Waiver of Claims. Each Credit Party, each of their successors-in-title, legal
representatives and assignees and, to the extent the same is claimed by right
of, through or under any Credit Party, for their past, present and future
employees, agents, representatives, officers, directors, shareholders, and
trustees, does hereby forever remise, release and discharge the Agent and each
Lender and each of their respective successors-in-title, legal representatives
and assignees, past, present and future officers, directors, shareholders,
trustees, agents, employees, consultants, experts, advisors, attorneys and other
professionals and all other persons and entities to whom the Agent or any Lender
would be liable if such persons or entities were found to be liable to any
Credit Party, or any of them (collectively hereinafter the "Lender Parties"),
from any and all manner of action and actions, cause and causes of action,
claims, charges, demands, counterclaims, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, damages, judgments, expenses, executions, liens, claims of liens,
claims of costs, penalties, attorneys' fees, or any other compensation, recovery
or relief on account of any liability, obligation, demand or cause of action of
whatever nature relating to, arising out of or in connection with the Credit
Agreement or any other Loan Document, including but not limited to, acts,
omissions to act, actions, negotiations, discussions and events resulting in the
finalization and execution of this Amendment, as, among and between the Borrower
and the Lender Parties, such claims whether now accrued and whether now known or
hereafter discovered from the beginning of time through the date hereof.

Each Credit Party hereby knowingly, voluntarily, intentionally and expressly
waives and relinquishes any and all rights and benefits that it may have under
Section 1542 of the California Civil Code, or any other similar provision of any
other jurisdiction, as against the Lender Parties. Section 1542 of the Civil
Code of California provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Each Credit Party hereby acknowledges that the foregoing waiver of the Section
1542 of the California Civil Code was separately bargained for. Each Credit
Party knowingly, voluntarily, intentionally and expressly waives any and all
rights and benefits conferred by Section 1542, or by any law of the any state or
territory of the United States or any foreign country or principle of common law
that is similar or analogous to Section 1542 and agrees and acknowledges that
this waiver is an essential term of this Amendment, without which the
consideration would not have been given by the Agent and the Lenders to the
Borrower. As to each and every claim released hereunder, each Credit Party
hereby represents that it has received the advice of legal counsel with regard
to the releases contained herein.

Reaffirmation and Consent. Borrower hereby (a) acknowledges and agrees that (i)
its obligations, including the Obligations owing to Agent and the Lenders
pursuant to the Credit Agreement and the other Loan Documents, as amended hereby
and (ii) the prior grant or grants of security interests in favor of Agent, for
itself and the benefit of the Lenders, in its properties and assets, under the
Credit Agreement and the other Loan Documents to which it is a party shall be in
respect of and shall secure payment and performance of the Obligations under the
Credit Agreement and the other Loan Documents, as amended hereby; (b) reaffirms
(i) all of its obligations (including the Obligations) owing to Agent under the
Credit Agreement and the Loan Documents, as amended hereby, and (ii) all liens
and prior grants (if any) of security interests in favor of Agent under the
Credit Agreement and the Loan Documents, as amended hereby; (c) agrees that the
Credit Agreement and the Loan Documents, as amended hereby, are and shall
remain, in full force and effect following the execution and delivery of the
Amendment; and (d) agrees that (i) all references in the Loan Documents to the
"Loan Documents" shall include the Loan Documents, as amended hereby, (ii) all
references in the Loan Documents to the "Credit Agreement" shall include the
Credit Agreement, as amended hereby, and (iii) all references in the Loan
Documents to the "Obligations" shall include the Obligations (as defined in the
Credit Agreement, as amended hereby). 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 Amendment and all other
documents and instruments delivered in connection herewith. Effectiveness. This
Amendment shall become effective (the "Amendment No. 4 Effective Date") only
upon satisfaction in full in the judgment of the Agent of each of the following
conditions:
Documents
. Agent shall have received this Amendment, duly executed by the parties hereto,
and the same shall be in full force and effect; and
No Material Adverse Effect
. No event or circumstance shall have occurred which could reasonably be
expected to have a Material Adverse Effect.

GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Counterparts. This Amendment
may be executed by the parties hereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver an original executed
counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

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

GOTTSCHALKS INC.

By: ___________________________

Name: J. Gregory Ambro

Title: Senior Vice President and
Chief Administrative Officer

 

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and as a Lender

By: ___________________________

Name: Todd Gronski

Title: Its Duly Authorized Signatory

THE CIT GROUP/BUSINESS CREDIT, INC.,

as Lender

By: ___________________________

Name:

Title:

WELLS FARGO FOOTHILL, INC.,

as Lender

By: ___________________________

Name:

Title:

 

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

as Lender

By: ___________________________

Name:

Title:

--------------------------------------------------------------------------------

AMENDMENT NO. 5 TO CREDIT AGREEMENT

This AMENDMENT NO. 5 TO CREDIT AGREEMENT, dated as of January 26 2006 (this
"Amendment"), is entered into by and among GOTTSCHALKS INC., a Delaware
corporation ("Borrower"); GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, for itself, as a Lender, and as Agent for Lenders; THE CIT
GROUP/BUSINESS CREDIT, INC., for itself, as a Lender, and as syndication agent
for the Lenders ("Syndication Agent"); and the other Lenders signatory hereto.

W I T N E S S E T H

WHEREAS, Borrower, Agent, Syndication Agent, and the Lenders are parties to that
certain Amended and Restated Credit Agreement dated as of March 1, 2004, (as
from time to time amended, restated, supplemented or otherwise modified, the
"Credit Agreement");

WHEREAS, Borrower has requested that Agent and the Lenders consent make certain
amendments to the Credit Agreement as set forth herein; and

WHEREAS, subject to the satisfaction of the terms and conditions set forth
herein, Agent and the Lenders are willing to grant the Borrower's requests.

NOW THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree upon the terms and conditions set
forth herein as follows:

     Relation to Credit Agreement; Definitions
     . This Amendment constitutes an integral part of the Credit Agreement and
     shall be deemed to be a Loan Document for all purposes. From and after the
     Amendment No. 5 Effective Date, each reference in the Credit Agreement to
     "this Agreement," "hereunder," "hereof," or words of like import referring
     to the Credit Agreement, and each reference in the other Loan Documents to
     "the Credit Agreement," "thereunder," "thereof" or words of like import
     referring to the Credit Agreement, shall mean and be a reference to the
     Credit Agreement as amended hereby. Capitalized terms not otherwise defined
     herein shall have the meanings ascribed to them in the Credit Agreement or
     Annex A
     thereto.
     Amendments to the Credit Agreement.
      a. Section 1.1(a)(ii)

     of the Credit Agreement is hereby amended by adding the words, "Amendment
     No. 5" immediately prior to the words "Closing Date" therein.
 41. The following is added to the Credit Agreement as Section 1.1(e):

     "(e) Increase of the Revolving Credit Facility. At any time after the
     Amendment No. 5 Closing Date and prior to the Commitment Termination Date,
     upon not less than 15 Business Days prior written notice by Borrower to
     Agent, Borrower may request a one-time increase in the Revolving Loan
     Commitments in an amount equal to $19,000,000. Subject to the foregoing,
     the Revolving Loan Commitments shall automatically increase by such amount
     on the proposed date set forth in such written notice (the "Revolver
     Increase Date"), so long as (i) no Default or Event of Default has occurred
     and is continuing as of the Revolver Increase Date or would result
     therefrom, (ii) no Material Adverse Effect has occurred or is reasonably
     likely to occur, (iii) the Borrower has paid to Agent the additional fee
     provided for in the GE Capital Fee Letter and (iv) Borrower shall have
     delivered to Agent, in form and substance satisfactory to Agent, duly
     executed originals of the Revolving Notes for each applicable Lender, dated
     the Revolver Increase Date. Such increase of the Revolving Loan Commitments
     pursuant to this Section 1.1(e) shall increase the Revolving Loan
     Commitment of each Revolving Lender on a pro rata basis.

     Section 1.4
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Term Loan
     solely for the Refinancing (and to pay any related transaction expenses),
     and shall utilize the proceeds of the Revolving Loan and Swing Line Loan
     for the financing of Borrower's ordinary working capital, general corporate
     needs and to repay Existing Designated Properties Indebtedness to the
     extent permitted by Section 6.3 hereto."

 42. The grid setting forth Applicable Margins for certain corresponding levels
     in Section 1.5 of the Credit Agreement is hereby amended and restated in
     its entirety as follows:

     Level I
     
     Level II
     
     Level III
     
     Level IV
     
     Level V
     
     Level VI
     
     Applicable Revolver
     
     Index Margin
     
     0.50%
     
     .25%
     
     0.0%
     
     0.0%
     
     0.0%
     
     0.0%
     
     Applicable Revolver LIBOR Margin
     
     2.50%
     
     2.25%
     
     2.00%
     
     1.75%
     
     1.50%
     
     1.25%
     
     Applicable L/C Margin
     
     Documentary
     
     1.00%
     
     Stand-by
     
     2.50%
     
     Documentary
     
     1.00%
     
     Stand-by
     
     2.25%
     
     Documentary
     
     1.00%
     
     Stand-by
     
     2.00%
     
     Documentary
     
     1.00%
     
     Stand-by
     
     1.75%
     
     Documentary
     
     1.00%
     
     Stand-by
     
     1.50%
     
     Documentary
     
     1.00%
     
     Stand-by
     
     1.25%

     Section 1.9(a)
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "(a) Borrower shall pay to GE Capital, individually, the Fees specified in
     that certain fee letter dated as of January 26, 2006 among Borrower and
     GE Capital (the "GE Capital Fee Letter"), at the times specified for
     payment therein."

     Section 1.9(c)
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "(c) If Borrower pays after acceleration or prepays the Revolving Loan and
     terminates the Revolving Loan Commitment, whether voluntarily or
     involuntarily and whether before or after acceleration of the Obligations,
     or if any of the Commitments are otherwise terminated, Borrower shall pay
     to Agent, for the benefit of Revolving Lenders as liquidated damages and
     compensation for the costs of being prepared to make funds available
     hereunder an amount equal to the Applicable Percentage (as defined below)
     multiplied by the amount of the Revolving Loan Commitment. As used herein,
     the term "Applicable Percentage" shall mean (x) 1%, in the case of a
     prepayment on or prior to the first anniversary of the Amendment No. 5
     Closing Date, (y) .50%, in the case of a prepayment after the first
     anniversary of the Amendment No. 5 Closing Date but on or prior to the
     second anniversary thereof, and (z) 0.25%, in the case of a prepayment
     after the second anniversary of the Amendment No. 5 Closing Date but on or
     prior to (1) September 1, 2008 if the Commitment Termination Date is
     February 2, 2009 and (2) July 1, 2010 if the Commitment Termination Date
     has been extended to February 2, 2011. The Credit Parties agree that the
     Applicable Percentages are a reasonable calculation of Revolving Lenders'
     lost profits in view of the difficulties and impracticality of determining
     actual damages resulting from an early termination of the Commitments.
     Notwithstanding the foregoing, no prepayment fee shall be payable by
     Borrower upon a mandatory prepayment made pursuant to Sections 1.3(b),
     1.3(d) or 1.16(c); provided that Borrower does not permanently reduce or
     terminate the Revolving Loan Commitment upon any such prepayment and, in
     the case of prepayments made pursuant to Sections 1.3(b)(ii) or (b)(iii),
     the transaction giving rise to the applicable prepayment is expressly
     permitted under Section 6."

     Section 6.14
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "6.14 Restricted Payments. No Credit Party shall make any Restricted
     Payment, except (a) dividends and distributions by Subsidiaries of Borrower
     paid to Borrower, (b) employee loans permitted under Section 6.4(b), (c)
     scheduled payments of interest with respect to the New Subordinated Note so
     long as no Default or Event of Default has occurred and is continuing or
     would result after giving effect thereto, (d) scheduled payments of
     principal under the New Subordinated Note so long as (i) no Default or
     Event of Default has occurred and is continuing or would result after
     giving effect thereto and (ii) prior to making such payment and immediately
     after giving effect thereto, Borrowing Availability is at least
     $15,000,000, (e) open market purchases of Borrower's common Stock on a
     public exchange by Borrower in accordance with applicable laws; provided
     that: (i) no Default or Event of Default has occurred and is continuing or
     would result therefrom, (ii) the total amount expended by Borrower in
     making such purchases does not exceed $2,000,000 in the aggregate, and
     (iii) for the ninety (90) day period prior to the proposed purchase and
     immediately after giving effect thereto, Borrowing Availability is at least
     $30,000,000, or (f) pre-payment of principal under the New Subordinated
     Note in an aggregate amount totaling not more than $4,000,000 on or before
     January 26, 2007; provided that: (i) no Default or Event of Default has
     occurred and is continuing or would result therefrom and (ii) for the
     ninety (90) day period prior to the each prepayment and immediately after
     giving effect thereto, Borrowing Availability is at least $30,000,000."

     Section 6.3(b)
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "(b) No Credit Party shall, directly or indirectly, voluntarily purchase,
     redeem, defease or prepay any principal of, premium, if any, interest or
     other amount payable in respect of any Indebtedness, other than (1) the
     Obligations and (2) the repayment in full of the Existing Designated
     Properties Indebtedness so long as (i) no Event of Default exists both
     immediately prior to and after giving effect thereto, and (ii) in
     connection with (and on or before the date of) such repayment of the
     Existing Designated Properties Indebtedness, the Existing Designated
     Properties Mortgages are terminated and Borrower delivers to Agent the
     items set forth in clause (2) of the definition of Real Estate Activation
     Date, each in form and substance satisfactory to Agent."

     Section 7.1
     of the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "7.1 Termination. The financing arrangements contemplated hereby shall be
     in effect until the Commitment Termination Date, and the Loans and all
     other Obligations shall be automatically due and payable in full on such
     date."

     Annex A
     to the Credit Agreement is hereby amended by adding the following defined
     terms in proper alphabetical order or amending and restating the following
     defined terms in their entirety, as the case may be:

     "Amendment No. 5" means that certain Amendment No. 5 to Credit Agreement,
     dated as of January 26, 2006, by and among Borrower, Agent, Syndication
     Agent, and the Lenders signatory thereto.

     "Amendment No. 5 Closing Date" means January 26, 2006.

     "Borrowing Base" means, as of any date of determination by Agent, from time
     to time, an amount equal to the sum of:

     (a) the lesser of (1) up to 78% of the book value of Eligible Inventory,
     Eligible In-Transit Inventory and Eligible L/C Inventory valued at the
     lower of cost (determined on a first in, first out basis) or market and (2)
     up to 85% of the net recovery value of Eligible Inventory as determined by
     a third party appraiser acceptable to Agent in its sole discretion;

     (b) up to 85% of the Eligible Credit Card Receivables; and

     (c) from and after the Real Estate Activation Date, the lesser of (1) up to
     60% of the Fair Market Value of the Eligible Designated Properties and (2)
     $21,600,000.

     in each case, less any Reserves established by Agent at such time,
     including, without limitation (i) in the case of Eligible L/C Inventory
     and/or Eligible In Transit Inventory, Reserves for duties, custom brokers,
     freight, taxes, insurance and other charges and expenses pertaining to such
     Inventory and (ii) in the case of Designated Properties, Reserves for real
     and applicable taxes, insurance, capital improvements, repairs, operations
     and maintenance, equipment repair and replacement, remediation, and other
     charges and expenses pertaining to such Designated Properties."

     "Commitment Termination Date" means the earliest of (a) February 2, 2009,
     (or to the extent Agent and the Lenders have received by December 2, 2008
     evidence satisfactory in their sole discretion that the maturity date under
     the New Subordinated Note has been extended to a date not earlier than May
     30, 2011, February 2, 2011) (b) the date of termination of Lenders'
     obligations to make Advances and to incur Letter of Credit Obligations or
     permit existing Loans to remain outstanding pursuant to Section 8.2(b), and
     (c) the date of indefeasible prepayment in full by Borrower of the Loans
     and the cancellation and return (or stand-by guarantee) of all Letters of
     Credit or the cash collateralization of all Letter of Credit Obligations
     pursuant to Annex B, and the permanent reduction of all Commitments to zero
     dollars ($0)."

     "Commitments" means (a) as to any Lender, such Lender's Revolving Loan
     Commitment (including without duplication the Swing Line Lender's Swing
     Line Accommodation as a subset of it Revolving Loan Commitment) and Term
     Loan Commitment as set forth on Annex J to the Agreement or in the most
     recent Assignment Agreement executed by such Lender and (b) as to all
     Lenders, the aggregate of all Lenders' Revolving Loan Commitments
     (including without duplication the Swing Line Lender's Swing Line
     Accommodation as a subset of its Revolving Loan Commitment) and Term Loan
     Commitments, which aggregate commitment shall be One Hundred Eighty One
     Million Dollars ($181,000,000) on the Amendment No. 5 Closing Date, as to
     each of clauses (a) and (b), as such Commitments may be reduced, amortized,
     adjusted or increased, if at all, from time to time in accordance with this
     Agreement.

     "Designated Properties" means the Palmdale, Eureka, Antioch and Yuba City
     properties identified as owned properties on Schedule 3.6.

     "Eligible Designated Property" means each Designated Property which is (a)
     is owned by Borrower, free and clear of all Liens other than Liens set
     forth in clauses (d) and (g) of the definition of Permitted Encumbrances,
     (b) is fully insured in accordance with the requirements of Section 5.4 and
     is in compliance with all other applicable representations, warranties and
     covenants in the Loan Documents, (c) is subject to a duly filed Mortgage
     providing a first priority security interest in and lien upon such
     Designated Property in favor of Agent, on behalf of itself and for the
     benefit of the Lenders, (d) is the subject of an appraisal having been
     delivered to Agent which was (at the time of receipt thereof by Agent) and
     continues to be in form and substance satisfactory to Agent, and (e) is not
     otherwise unacceptable to Agent in its reasonable credit judgment.

     "Existing Designated Properties Indebtedness" means the Indebtedness
     existing as of the Amendment No. 5 Closing Date on the Existing Designated
     Properties, which Indebtedness Borrower intends to repay on or around
     February 3, 2006 and is estimated to be in the amounts of $5,138,468.25 for
     the Palmdale property, $3,679,167.80 for the Eureka property, $4,313,855.38
     for the Antioch property and $3,781,001.96 for the Yuba City property.

     "Existing Designated Properties Lender" means Midland Loan Services, Inc.

     "Existing Designated Properties Mortgages" means those certain Mortgages in
     favor of Existing Designated Properties Lender existing as of the Amendment
     No. 5 Closing Date with respect to each of the Designated Properties.

     "Fair Market Value" means, as of any date of determination with respect to
     any Designated Property, the fair market value thereof as determined by
     Agent based on the most recent satisfactory (to Agent) appraisal having
     been delivered to, or conducted by, Agent pursuant to this Agreement, it
     being understood that Agent shall have the right to adjust such fair market
     value downward in its reasonable credit judgment, including as a result of
     changes to real estate market conditions, or events or circumstances
     affecting such Designated Property or general real estate values in the
     geographical area in which such Designated Property is located.

     "Fixed Charge Coverage Ratio" means, with respect to any Person for any
     fiscal period, the ratio of (a) the sum of EBITDA during such period, less
     cash taxes paid during such period, less cash Capital Expenditures made
     during such period to (b) Fixed Charges. With respect to any fiscal period
     that includes payments to the Prior Lender, such payments shall be excluded
     from Fixed Charges for such fiscal period. With respect to any fiscal
     period that includes the payment in full of principal and interest to
     United Security Bank, such payments shall be excluded from Fixed Charges
     for such fiscal period so long as Borrowing Availability is at least
     $15,000,000 for the ninety (90) day period prior to such payment and
     immediately thereafter. With respect to any fiscal period that includes
     payments in connection with the repayment of Existing Designated Properties
     Indebtedness, such payments shall be excluded from Fixed Charges for such
     fiscal period. With respect to any fiscal period that includes payments in
     connection with the prepayment of the New Subordinated Note pursuant to
     Section 6.14(f), such payments shall be excluded from Fixed Charges for
     such fiscal period.

     "GE Capital Fee Letter" has the meaning ascribed to it in Section 1.9(a).

     "Real Estate Activation Date" means such date as Borrower may select upon
     not less than 15 Business Days (or such other period as Agent may permit in
     its sole discretion) prior written notice delivered to Agent, indicating
     its election to activate clause (c) of the Borrowing Base, so long as
     (1) the Existing Designated Properties Indebtedness shall have been repaid
     in full and the Existing Designated Properties Mortgages fully terminated,
     (2) Borrower shall have delivered to Agent, each in form and substance
     satisfactory to Agent in its sole discretion, (a) appraisals for each of
     the Designated Properties stating forth fair market values satisfactory to
     Agent in its sole discretion, (b) Phase I Environmental Site Assessment
     Reports, consistent with American Society of Testing and Materials (ASTM)
     Standard E 1527-94, and applicable state requirements, dated no more than 6
     months prior to the Real Estate Activation date, prepared by environmental
     engineers reasonably satisfactory to Agent, (c) environmental review and
     audit reports, (d) letters executed by the environmental firms preparing
     such environmental reports authorizing Agent and Lenders to rely on such
     reports, (e) Mortgages covering all of the properties together with titled
     insurance policies, current as-built surveys, zoning letters and
     certificates of occupancy, (f) evidence that Mortgages covering all of the
     properties have been recorded in all places to the extent necessary or
     desirable, in the judgment of Agent, to create a valid and enforceable
     first priority lien (other than the Liens set forth in clauses (d) and (g)
     of the definition of Permitted Encumbrances) on each Designated Property in
     favor of Agent for the benefit of itself and Lenders (or in favor of such
     other trustee as may be required or desired under local law) (g) an opinion
     of counsel in each state in which any Designated Property is located and
     (h) evidence that the Existing Designated Indebtedness shall have been
     repaid in full and the Existing Designated Properties Mortgages fully
     terminated, (3) Agent shall have completed (to its satisfaction) its usual
     and customary due diligence (which shall include, without limitation, such
     further appraisals, environmental reports and surveys as Agent may request
     in its sole discretion based on its customary practices), and (4) on both
     the date of delivery of the such written notice and the selected Real
     Estate Activation Date, there shall be not have occurred and be continuing
     any Default or Event of Default.

     "Revolver Increase Date" has the meaning ascribed to it in Section 1.1(e).

     "Revolving Loan Commitments" means, (a) as to any Revolving Lender, the
     aggregate commitment of such Revolving Lender to make Revolving Credit
     Advances or incur Letter of Credit Obligations as set forth on Annex J to
     the Agreement or in the most recent Assignment Agreement executed by such
     Revolving Lender and (b) as to all Revolving Lenders, the aggregate
     commitment of all Revolving Lenders to make Revolving Credit Advances or
     incur Letter of Credit Obligations, which aggregate commitment shall be One
     Hundred Seventy-Two Million Dollars ($172,000,000) on the Amendment No. 5
     Closing Date, as such amount may be adjusted or increased, if at all, from
     time to time in accordance with this Agreement.

     Clause (a)
     of
     Annex G
     to the Credit Agreement is hereby amended and restated in its entirety as
     follows:

     "(a) Minimum Fixed Charge Coverage Ratio. From and after the first date, if
     any, on which Borrowing Availability is less than $15,000,000 (in case, the
     "Trigger Date") Borrower and its Subsidiaries shall have on a consolidated
     basis on the Trigger Date and as of the last day of each month thereafter,
     a Fixed Charge Coverage Ratio for the 12-month period most recently then
     ended of not less than 1.0:1.0."

     Annex J
     to the Credit Agreement is hereby deleted in its entirety and replaced by
     Annex J
     attached hereto.

Representations and Warranties. To induce Agent and Lenders to enter into this
Amendment, Borrower hereby represent and warrant that:
 a. The execution, delivery and performance of this Amendment and the
    performance of the Credit Agreement, as amended by this Amendment, by
    Borrower: (a) are within Borrower's organizational power; (b) have been duly
    authorized by all necessary or proper action; (c) do not contravene any
    provision of Borrower's charter or bylaws or equivalent organizational
    documents; (d) do not violate any law or regulation, or any order or decree
    of any court or Governmental Authority; (e) do not conflict with or result
    in the breach or termination of, constitute a default under or accelerate or
    permit the acceleration of any performance required by, any indenture,
    mortgage, deed of trust, lease, agreement or other instrument to which
    Borrower is a party or by which Borrower or any of its property is bound;
    (f) do not result in the creation or imposition of any Lien upon any of the
    property of Borrower other than those in favor of Agent pursuant to the Loan
    Documents; and (g) do not require the consent or approval of any
    Governmental Authority or any other Person.
 b. This Amendment has been duly executed and delivered by or on behalf of
    Borrower.
 c. This Amendment 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 or Event of Default has occurred and is continuing after giving
    effect to this Amendment.
 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 Amendment or, to
    the extent applicable, perform any of its obligations under this Amendment,
    the Credit Agreement as amended hereby or any other Loan Document, or the
    validity or enforceability of this Amendment, the Credit Agreement as
    amended hereby or any other Loan Document or any action taken under this
    Amendment, 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 Amendment.
    To the knowledge of Borrower, there does not exist a state of facts which is
    reasonably likely to give rise to such proceedings.
 f. The representations and warranties of the Borrower contained in the Credit
    Agreement and each other Loan Document shall be true and correct on and as
    of the Amendment No. 5 Effective Date with the same effect as if such
    representations and warranties had been made on and as of such date, except
    that any such representation or warranty which is expressly made only as of
    a specified date need be true only as of such date.

No Other Amendments. Except for the amendments set forth in Section 2 of this
Amendment, the Credit Agreement shall be unmodified and shall continue to be in
full force and effect in accordance with its terms. Except as expressly set
forth herein, this Amendment shall not be deemed a waiver of any term or
condition of any Loan Document and shall not be deemed to prejudice any right or
rights which Agent, for itself and Lenders, may now have or may have in the
future under or in connection with any Loan Document or any of the instruments
or agreements referred to therein, as the same may be amended from time to time.
Outstanding Indebtedness; Waiver of Claims. Borrower hereby acknowledges and
agrees that as of January 25, 2006 the aggregate outstanding principal amount of
the Revolving Loans is $42,081,339 and the aggregate outstanding principal
amount of the Term Loan is $9,000,000 and that such principal amounts are
payable pursuant to the Credit Agreement without defense, offset, withholding,
counterclaim or deduction of any kind. Each Credit Party, each of their
successors-in-title, legal representatives and assignees and, to the extent the
same is claimed by right of, through or under any Credit Party, for their past,
present and future employees, agents, representatives, officers, directors,
shareholders, and trustees, does hereby forever remise, release and discharge
the Agent and each Lender and each of their respective successors-in-title,
legal representatives and assignees, past, present and future officers,
directors, shareholders, trustees, agents, employees, consultants, experts,
advisors, attorneys and other professionals and all other persons and entities
to whom the Agent or any Lender would be liable if such persons or entities were
found to be liable to any Credit Party, or any of them (collectively hereinafter
the "Lender Parties"), from any and all manner of action and actions, cause and
causes of action, claims, charges, demands, counterclaims, suits, debts, dues,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, damages, judgments, expenses, executions, liens,
claims of liens, claims of costs, penalties, attorneys' fees, or any other
compensation, recovery or relief on account of any liability, obligation, demand
or cause of action of whatever nature relating to, arising out of or in
connection with the Credit Agreement or any other Loan Document, including but
not limited to, acts, omissions to act, actions, negotiations, discussions and
events resulting in the finalization and execution of this Amendment, as, among
and between the Borrower and the Lender Parties, such claims whether now accrued
and whether now known or hereafter discovered from the beginning of time through
the date hereof.

Each Credit Party hereby knowingly, voluntarily, intentionally and expressly
waives and relinquishes any and all rights and benefits that it may have under
Section 1542 of the California Civil Code, or any other similar provision of any
other jurisdiction, as against the Lender Parties. Section 1542 of the Civil
Code of California provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Each Credit Party hereby acknowledges that the foregoing waiver of the Section
1542 of the California Civil Code was separately bargained for. Each Credit
Party knowingly, voluntarily, intentionally and expressly waives any and all
rights and benefits conferred by Section 1542, or by any law of the any state or
territory of the United States or any foreign country or principle of common law
that is similar or analogous to Section 1542 and agrees and acknowledges that
this waiver is an essential term of this Amendment, without which the
consideration would not have been given by the Agent and the Lenders to the
Borrower. As to each and every claim released hereunder, each Credit Party
hereby represents that it has received the advice of legal counsel with regard
to the releases contained herein.

Reaffirmation and Consent. Borrower hereby (a) acknowledges and agrees that (i)
its obligations, including the Obligations owing to Agent and the Lenders
pursuant to the Credit Agreement and the other Loan Documents, as amended hereby
and (ii) the prior grant or grants of security interests in favor of Agent, for
itself and the benefit of the Lenders, in its properties and assets, under the
Credit Agreement and the other Loan Documents to which it is a party shall be in
respect of and shall secure payment and performance of the Obligations under the
Credit Agreement and the other Loan Documents, as amended hereby; (b) reaffirms
(i) all of its obligations (including the Obligations) owing to Agent under the
Credit Agreement and the Loan Documents, as amended hereby, and (ii) all liens
and prior grants (if any) of security interests in favor of Agent under the
Credit Agreement and the Loan Documents, as amended hereby; (c) agrees that the
Credit Agreement and the Loan Documents, as amended hereby, are and shall
remain, in full force and effect following the execution and delivery of the
Amendment; and (d) agrees that (i) all references in the Loan Documents to the
"Loan Documents" shall include the Loan Documents, as amended hereby, (ii) all
references in the Loan Documents to the "Credit Agreement" shall include the
Credit Agreement, as amended hereby, and (iii) all references in the Loan
Documents to the "Obligations" shall include the Obligations (as defined in the
Credit Agreement, as amended hereby). 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 Amendment and all other
documents and instruments delivered in connection herewith. Effectiveness. This
Amendment shall become effective (the "Amendment No. 5 Effective Date") only
upon satisfaction in full in the judgment of the Agent of each of the following
conditions:
 a. Agent shall have received counterparts of this Amendment executed by the
    Borrower, Agent, Syndication Agent and the Lenders signatory hereto,
 b. Agent shall have received duly executed originals of the GE Capital Fee
    Letter (as defined after taking into effect this Amendment) and all fees due
    to Agent thereunder,
 c. Agent shall have received duly executed originals of the Revolving Notes for
    each applicable Lender, dated the Amendment No. 5 Closing Date,
 d. Agent shall have received for each Credit Party, (a) all amendments to such
    Person's Charter since the Closing Date (or a certificate indicating that
    such Person's Charter remains in effect and unchanged since the Closing
    Date), (b) good standing certificates (including verification of tax status)
    in such Person's state of incorporation and (c) good standing certificates
    (including verification of tax status) and certificates of qualification to
    conduct business in each jurisdiction where such Person's ownership or lease
    of property or the conduct of its business requires such qualification, each
    dated a recent date prior to the Amendment No. 5 Closing Date and certified
    by the applicable Secretary of State or other authorized Governmental
    Authority,
 e. Agent shall have received for each Credit Party, (a) all amendments to such
    Person's bylaws since the Closing Date (or a certificate indicating that
    such Person's bylaws remain in effect and unchanged since the Closing Date)
    and (b) resolutions of such Person's Board of Directors approving and
    authorizing the execution, delivery and performance of this Amendment and
    the other Loan Documents to which such Person is a party and the
    transactions to be consummated in connection therewith, each certified as of
    the Amendment No. 5 Closing Date by such Person's corporate secretary or an
    assistant secretary as being in full force and effect without any
    modification or amendment,
 f. Agent shall have received duly executed originals of an opinion of
    O'Melveny & Myers LLP, counsel for the Credit Parties, in form and substance
    reasonably satisfactory to Agent and its counsel, dated the Amendment No. 5
    Closing Date, accompanied by a letter addressed to such counsel from the
    Credit Parties, authorizing and directing such counsel to address its
    opinion to Agent, on behalf of Lenders, and to include in such opinion an
    express statement to the effect that Agent and Lenders are authorized to
    rely on such opinion,
 g. Agent shall have received duly executed originals of a certificate of the
    Chief Executive Officer and Chief Financial Officer of Borrower, dated the
    Amendment No. 5 Closing Date, stating that, except as otherwise disclosed to
    GE Capital in writing, since the Closing Date, (a) no event or condition has
    occurred or is existing which could reasonably be expected to have a
    Material Adverse Effect; (b) there has been no material adverse change in
    the industry in which Borrower operates; (c) no Litigation has been
    commenced which, if successful, would have a Material Adverse Effect or
    could challenge any of the transactions contemplated by the Agreement and
    the other Loan Documents; (d) there have been no Restricted Payments made by
    any Credit Party; and (e) there has been no material increase in
    liabilities, liquidated or contingent, and no material decrease in assets of
    Borrower or any of its Subsidiaries other than adjustments which are normal
    and customary due to seasonality,
 h. Agent shall have received (i) satisfactory evidence that the Credit Parties
    have obtained all required consents and approvals of all Persons including
    all requisite Governmental Authorities, to the execution, delivery and
    performance of this Amendment and the transactions contemplated thereby or
    (ii) an officer's certificate in form and substance reasonably satisfactory
    to Agent affirming that no such consents or approvals are required,
 i. No Default or Event of Default shall have occurred or be continuing under
    the Credit Agreement both before and after giving effect to this Amendment,
 j. No event or circumstance shall have occurred which could reasonably be
    expected to have a Material Adverse Effect, and
 k. Agent shall have received such other information, documents, instruments,
    approvals or opinions as the Agent, the Lenders or the Agent's counsel may
    require, in each case in form and substance reasonably satisfactory to the
    Agent and the Lenders.

GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Counterparts. This Amendment
may be executed by the parties hereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver an original executed
counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

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

GOTTSCHALKS INC.

By: ___________________________

Name: J. Gregory Ambro

Title: Senior Vice President and
Chief Administrative Officer

 

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and as a Lender

By: ___________________________

Name: Todd Gronski

Title: Its Duly Authorized Signatory

THE CIT GROUP/BUSINESS CREDIT, INC.,

as Lender

By: ___________________________

Name:

Title:

WELLS FARGO FOOTHILL, INC.,

as Lender

By: ___________________________

Name:

Title:

 

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

as Lender

By: ___________________________

Name:

Title:

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ANNEX J (from Annex A - Commitments Definition)
to
CREDIT AGREEMENT

Commitments prior to Revolver Increase Date Commitments after Revolver Increase
Date Lender(s) Revolving Loan Commitment
(including a Swing Line Accommodation
of $15,000,000) of $89,320,000 Revolving Loan Commitment
(including a Swing Line Accommodation
of $15,000,000) of $99,200,000 General Electric Capital Corporation Term Loan
Commitment of $9,000,000 Term Loan Commitment of $9,000,000 General Electric
Capital Corporation Revolving Loan Commitment of $38,520,000 Revolving Loan
Commitment of $42,700,000 The CIT Group/Business Credit, Inc. Revolving Loan
Commitment of $16,600,000 Revolving Loan Commitment of $18,500,000 LaSalle
Retail Finance Revolving Loan Commitment of $27,560,000 Revolving Loan
Commitment of $30,600,000 Wells Fargo Foothill, Inc.

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