02052003 8K Exhibit 10.1






PURCHASE AND SALE AGREEMENT

AMONG

GOTTSCHALKS CREDIT RECEIVABLES CORPORATION,

GOTTSCHALKS INC.

AND

HOUSEHOLD BANK (SB), N.A.

Dated as of January 30, 2003
















                             TABLE OF CONTENTS








ARTICLE 11

ARTICLE 2PURCHASE OF ACCOUNT PORTFOLIO ASSETS7
Section 2.1Purchase7

Section 2.2Preliminary Information8

Section 2.3Purchase Price8

Section 2.4Escrow Contribution9



ARTICLE 3THE CLOSING AND POST-CLOSING ADJUSTMENTS9
Section 3.1Place and Date of Closings9

Section 3.2Buyer's Deliveries at Closings.9

Section 3.3Sellers' Deliveries at Closings10

Section 3.4Final Closing Statement11



ARTICLE 4REPRESENTATIONS AND WARRANTIES13
Section 4.1General Representations and Warranties of
Gottschalks13

Section 4.2General Representations and Warranties of GCRC14

Section 4.3Representations and Warranties of Gottschalks Regarding the
Accounts and the Indebtedness15

Section 4.4Representations and Warranties of GCRC Regarding the
Indebtedness17

Section 4.5General Representations and Warranties of
Buyer19



ARTICLE 5CONDITIONS PRECEDENT20
Section 5.1Conditions to Obligations of Buyer20

Section 5.2Conditions to Obligations of Sellers21



ARTICLE 6AGREEMENTS AND COVENANTS22
Section 6.1[INTENTIONALLY OMITTED]22

Section 6.2No Sale of Assets22

Section 6.3Tax on Sale22

Section 6.4Public Announcements22

Section 6.5Confidentiality23

Section 6.6Conversion of Accounts24

Section 6.7Credit Bureau Reporting25

Section 6.8Further Assistance25

Section 6.9Securitization25

Section 6.10Cross-Reference File25

Section 6.11Bulk Sales Laws25

Section 6.12UCC Financing Statements25



ARTICLE 7INDEMNIFICATION26
Section 7.1Indemnification by Sellers26

Section 7.2Indemnification by Buyer26

Section 7.3Procedures27

Section 7.4Limitations on Indemnification28

Section 7.5Survival28



ARTICLE 8TERMINATION29
Section 8.1Grounds for Termination29



ARTICLE 9MISCELLANEOUS29
Section 9.1Waiver29

Section 9.2No Joint Venture29

Section 9.3Payment Terms30

Section 9.4Entire Agreement30

Section 9.5Notices30

Section 9.6Amendment; Modification31

Section 9.7Governing Law; Waiver of Jury Trial31

Section 9.8Dispute Resolution31

Section 9.9Severability33

Section 9.10Assignment33

Section 9.11Accounting Terms33

Section 9.12Singular and Plural33

Section 9.13Headings33

Section 9.14Expenses33

Section 9.15Counterparts34





                 PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement is made and entered into as of the 30th
day of January, 2003 by and among Gottschalks Inc., a Delaware corporation
("Gottschalks"), with its principal place of business at 7 River Park Place
East, Fresno, California 93720, Gottschalks Credit Receivables Corporation, a
Delaware corporation ("GCRC", together with Gottschalks, "Sellers"), with its
principal place of business at 7 River Park Place East, Fresno, California
93720, and Household Bank (SB), N.A., a national banking association ("Buyer" or
"Household"), with its principal place of business at 1111 Town Center Drive,
Las Vegas, NV 89144.

WITNESSETH

WHEREAS, Gottschalks currently operates department and specialty stores
and establishes credit card accounts and extends credit to individuals for the
purchase of Gottschalks' goods and services;

WHEREAS, on March 1, 1999, Gottschalks entered into an agreement with GCRC
pursuant to which it sold and continues to sell on an ongoing basis the
receivables that arise from the sale of goods and services to Gottschalks'
revolving credit card accountholders and which are associated with the portfolio
of credit card accounts;

WHEREAS, Sellers desire to sell on each Closing Date the portfolio of credit
card accounts, accounts receivable and related assets; and

WHEREAS, Buyer desires to purchase from Sellers on each Closing Date
accounts, accounts receivable and related assets with respect to the revolving
credit program established by Gottschalks on the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the premises, the mutual agreements set
forth herein, the benefits to be derived herefrom, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:



                    ARTICLE 1



Definition of Terms Used in the Agreement.

The following terms shall have the following meanings when used in this
Agreement:

"Account" means (a) each private label credit card account,
Indebtedness, and any related contract right, chose in action, general
intangible, chattel paper, instrument, document, note, and proceeds thereof,
wherever located, whether now owned or hereafter acquired by any Seller, (b) all
Account Documentation evidencing the same, (c) any and all rights and remedies
as to stoppage-in-transit, reclamation, return and repossession of Merchandise
and Cross-Marketing Merchandise financed pursuant thereto, and (d) all rights as
to any Merchandise, Cross-Marketing Merchandise, goods or other property,
contracts of indemnity, guaranties or sureties, proceeds of insurance and other
proceeds at any time standing as security therefor, in each of (a) - (d) solely
arising out of Credit Card Agreements; provided, that "Account" shall not
include any Account as of the applicable Cut-Off Time, (i) that is greater than
180 days contractually delinquent, (ii) as to which any Seller has charged off
the balance or any portion thereof, (iii) that is a Bankruptcy Account, (iv) as
to which any Seller has executed a reaffirmation agreement with an Account
Debtor who filed a petition under the Bankruptcy Code, (v) as to which the
Account Debtor is deceased, (vi) as to which any Seller has notice of actual or
possible fraud from the Account Debtor, (vii) that is a Lost or Stolen Account,
(viii) that is a gift card account, (ix) that is a debit card account, (x) that
is subject to any pending litigation, or (xi) as to which any Seller has
violated any representation or warranty set forth in Sections 4.3(e) and 4.4(e)
hereof.

"Account Debtor" means any Person who is or who may become obligated
pursuant to an Account and whose Account has not been purged from Gottschalks'
or Buyer's systems.

"Account Documentation" means any and all documentation relating
solely to a Current Account or Subsequent Account, as the case may be, to the
extent such documentation is in any Seller's possession or control as of the
Cut-Off Time, including, without limitation, applications for such Accounts,
Credit Card Agreements, sales orders, billing statements, memoranda and all
correspondence, magnetic tapes, disks, or hardcopy formats, and all other
written material relating solely to such Account.

"Account Portfolio Assets" means all of the following:  (i) the
Current Accounts or Subsequent Accounts, as the case may be, and (ii) the
Customer Structure; provided, however, that the Account Portfolio
Assets shall not include the Bankers Trust Company account numbered 1419647,
collection account no. 11873, and any payments contained in such collection
account.

"Accrued Interest" means interest which has accrued on a Current
Account but has not yet been billed to the Account Debtor through the Initial
Closing Date and calculated in accordance with the methodology set forth in
Exhibit B.

"Affiliate" means, with respect to any Person, any entity that
controls, is controlled by, or is under common control with such Person.  For
the purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract, or otherwise.

"Agreement" means this Purchase and Sale Agreement, including all
addenda, exhibits, and schedules hereto.

"Agreement Confidential Information" has the meaning assigned to it in
Section 6.5(a).

"Assumption Agreement" means the agreement to be executed by Buyer and
the Sellers and delivered on the Initial Closing Date pursuant to Sections
3.2(a) and 3.3(a) of this Agreement in substantially the form of Exhibit C and
shall be applicable to Accounts transferred on the Initial Closing Date and each
Closing Date thereafter.

"Bankruptcy Account" means an account as to which the Account Debtor
is a Bankrupt Account Debtor provided that (A) the Bankrupt Account Debtor's
bankruptcy case was filed on or prior to the Initial Closing Date, or (B) a
Seller or Buyer determines within the period designated in Section 3.4 that such
Account Debtor became a Bankrupt Account Debtor prior to the applicable Closing
Date based upon a reliable data base.  

"Bankrupt Account Debtor" means an Account Debtor who (i) has filed
for bankruptcy under the Bankruptcy Code on or prior to the Initial Closing Date
and whose bankruptcy case has not been closed or dismissed and (ii) opened the
subject Account prior to the commencement of such bankruptcy case.

"Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C.    101 et seq.

"Bill of Sale" means the agreement to be executed by Buyer and the
Sellers and delivered on the Initial Closing Date pursuant to Sections 3.2(a)
and 3.3(a) of this Agreement in substantially the form of Exhibit D and shall be
applicable to Accounts transferred on the Initial Closing Date and each Closing
Date thereafter.

"Business Day" means any day that is not a Saturday, a Sunday, or a
day on which banks are required or permitted to be closed in the State of
Nevada.

"Buyer Confidential Information" has the meaning assigned to it in
Section 6.5(a).

"Buyer Indemnified Parties" has the meaning assigned to it in Section
7.1.

"Closing" means the transfer, from time to time, of the Account
Portfolio Assets from the Sellers or Gottschalks, as the case may be, to Buyer
in exchange for payment of the Purchase Price upon satisfaction or written
waiver of the conditions precedent by the appropriate Party as set forth in this
Agreement.

"Closing Date" means each date on which a Closing takes place if all
conditions precedent to such Closing have been met, satisfied or waived, which
initial date shall be the Initial Closing Date and thereafter shall be the
second Business Day after which a Subsequent Account is opened.

"Closing Tape" means an electronic tape or tapes of the Accounts to be
transferred as of each Cut-Off Time, which tape or tapes shall be delivered to
Buyer on the Business Day immediately after the Initial Closing Date and on each
subsequent calendar month-end through and including the Conversion Date, and
shall include at least the following information for each Account identified on
such Closing Tape:  Account number; Account Debtor's name and address;
origination date; billed interest; billed fees; credit limit; and aggregated
outstanding Indebtedness.

"Code" has the meaning assigned to it in Section 2.3(c).

"Confidential Information" has the meaning assigned to it in Section
6.5(a).

"Conversion Date" has the meaning assigned to it in the Servicing
Agreement.

"Credit Card Agreement" means the credit agreement between an Account
Debtor and Gottschalks pursuant to which an Account Debtor may be permitted to
purchase, from time to time, Merchandise on credit.

"Cross-Marketing Merchandise" means those goods and services,
including accessories, extended warranties and delivery services, sold in
connection therewith, by any Person other than Gottschalks in connection with
the Program.

"Cross-Reference File" means a file regarding Gottschalks' retained
portfolio account number listing provided by Gottschalks to Buyer as provided in
Section 6.10.

"Current Account" means each Account issued by Gottschalks on or prior
to the Initial Closing Date and in existence on the Initial Closing Date.

"Customer Structure" means, as to the Current Accounts or Subsequent
Accounts, as the case may be, all Credit Card Agreements, and all rights and
privileges accruing under such Credit Card Agreements on and after the Cut-Off
Time; all Indebtedness posted to such Accounts after the Cut-Off Time, and fees
and revenues of such Accounts related to such Indebtedness which are earned
after the Cut-Off Time; any and all rights to process such Accounts; and all
Account Debtor records including (i) all lists and compilations in whatever form
of such Accounts, the Account Debtors, and the Credit Card Agreements, and (ii)
the Account Documentation.

"Cut-Off Time" means (i) for sales of Merchandise, Merchandise
returns, in-store payments and miscellaneous adjustments, the close of
Gottschalks' business on the second Business Day before each Closing Date, and
(ii) for lockbox payments, the close of Gottschalks' business on the first
Business Day before each Closing Date.

"Escrow Account" shall have the meaning assigned to it in Section
2.4.

"Escrow Agent" shall have the meaning assigned to it in Section
2.4.

"Escrow Agreement" means the escrow agreement, dated as of the date
hereof, among Gottschalks, GCRC, Buyer and the Escrow Agent.

"Estimated Initial Purchase Price" has the meaning assigned to it in
Section 2.3(a)(iii).

"Estimated Subsequent Purchase Price" has the meaning assigned to it
in Section 2.3(b).

"Federal Funds Interest Rate" means the average of the high and low
"Federal Funds" interest rates for the Business Day immediately preceding the
Final Settlement Date, as such rate is reported on the Final Settlement Date in
the Money Rates Column of The Wall Street Journal or as determined in such other
mutually acceptable manner as the Parties agree if The Wall Street Journal is no
longer reporting such rate.

"Final Closing Statement" means the final closing statement described
in Section 3.4, satisfactory in form and substance to the Parties, which closing
statement sets forth the Purchase Price and which reflects all adjustments from
the Preliminary Closing Statement and each Subsequent Closing Statement as are
agreed to by the Parties with respect to the Current Accounts and Subsequent
Accounts for each Closing Date.

"Final Settlement Date" shall have the meaning assigned to it in
Section 3.4(a).

"GLBA Privacy Law" means 16 USC 6801-6827, as amended, and the
regulations of the applicable Federal banking agency or the Federal Trade
Commission thereunder.

"Gottschalks' Revolving Credit Business" means Seller's business with
respect to the Account Portfolio Assets.

"Indebtedness" means any account receivable or any other obligation
incurred by an Account Debtor in respect of a Current Account or Subsequent
Account, as the case may be, including, without limitation, any charges for
Merchandise and Cross-Marketing Merchandise, sales tax, and all finance charges,
late charges, and other similar charges and fees added to such Account, as such
charges are billed pursuant to Sellers' accounting practices and net of any
credit balances, returns and payments.

"Indemnified Party" shall have the meaning assigned to it in Section
7.3(a).

"Indemnifying Party" shall have the meaning assigned to it in Section
7.3(a).

"Initial Closing Date" means January 31, 2003 or such other date
mutually agreed to by the parties.

"Initial Purchase Price" means the amount to be paid by Buyer to the
Sellers on the Initial Closing Date pursuant to Section 2.3(a).

"Lost or Stolen Account" means an account as to which the related
credit card or account number has been reported to Gottschalks as lost or
stolen.

"Master Trust Agreement" means the Pooling and Servicing Agreement
dated as of March 1, 1999 by and among GCRC, as depositor, Gottschalks, as
servicer, and Bankers Trust Company, as trustee, as amended and supplemented to
the date hereof.

"Merchandise" means department store merchandise offered by
Gottschalks, including without limitation, apparel, cosmetics, shoes, jewelry,
china, small electrics, housewares, furniture and other related products and
services sold by Gottschalks in the ordinary course of Gottschalks'
business.

"Party" means (i) when used in the singular, Buyer or any Seller, as
the context requires; and (ii) when used in the plural, Buyer and Sellers.

"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity, or government (whether federal,
state, county, city, municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body, or department thereof).

"Preliminary Closing Statement" means a draft closing statement that
is prepared by Gottschalks and presented to Buyer pursuant to Section
2.2(a).

"Prepaid Program Fee" has the meaning assigned to it in Section
2.3.

"Program" means the revolving credit program established by
Gottschalks.

"Program Agreement" means the Credit Card Program Agreement, dated the
date hereof, between Buyer and Gottschalks and delivered pursuant to Sections
3.2(a) and 3.3(a) of this Agreement.

"Purchase Price" means, subject to Section 3.4, in the aggregate, the
Initial Purchase Price and the Subsequent Purchase Price.

"Related Documents" means the Servicing Agreement, the Program
Agreement and all other documents contemplated by this Agreement by the
Parties.

"Residual Amount" means the Estimated Initial Purchase Price
minus the Securitization Amount.

"Securitization Amount" means the amount to be paid by the
Escrow Agent to the trustee under the Master Trust Agreement in full
satisfaction of all amounts owed, and in cancellation of, the securities under
the Securitization Trust,

"Securitization Creation Documents" means, collectively, (i)
the Pooling and Servicing Agreement, dated as of March 1, 1999, among GCRC, as
depositor, Gottschalks, as servicer, and Deutsche Bank Trust Company Americas,
as trustee (the "Trustee"), as amended (the "Pooling
and Servicing Agreement"), (ii) the Series 1999-1 Supplement to the
Pooling and Servicing Agreement, dated March 1, 1999, among Gottschalks, GCRC
and the Trustee (the "1999-1 Supplement"), (iii) the Series
2000-1 Supplement to the Pooling and Servicing Agreement, dated as of November
16, 2000, among Gottschalks, GCRC and the Trustee, as amended (the
"2000-1 Supplement"), (iv) Amendment No. 1 to the Pooling and
Servicing Agreement and the Series 1999-1 Supplement, dated as of November 16,
2000, among GCRC, Gottschalks and the Trustee, (iv) the Amended and Restated
Series 2000-1 Supplement to the Pooling and Servicing Agreement, dated as of
November 15, 2001, among GCRC, Gottschalks, and the Trustee, as amended, and (v)
the Amended and Restated Receivables Purchase Agreement, dated March 1, 1999,
between Gottschalks and GCRC, as amended.

"Securitization Prepayment Documents" means, collectively, the
documents listed as items 6-27 of Schedule II to the Escrow Agreement.

"Securitization Trust" means the Gottschalks Credit Card Master Trust,
formed pursuant to the Master Trust Agreement.

"Seller" has the meaning assigned to it in the introductory
paragraph.

"Seller Indemnified Parties" has the meaning assigned to it in Section
7.2.

"Servicing Agreement" means the Interim Servicing Agreement, dated the
date hereof, between Buyer and Gottschalks and delivered pursuant to Sections
3.2(a) and 3.3(a) of this Agreement.

"Subsequent Account" means each Account issued by Gottschalks after
the Initial Closing Date and on or prior to the Conversion Date.

"Subsequent Closing Statements" means, collectively, the draft closing
statements that are prepared by Gottschalks and presented to Buyer pursuant to
Section 2.2(b).

"Subsequent Purchase Price" means the amount to be paid by Buyer to
Gottschalks on each Closing Date after the Initial Closing Date pursuant to
Section 2.3(b).

"Taxes" means any federal, state, local, or foreign net income, gross
income, gross receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, payroll, withholding, alternative
or add-on minimum, ad valorem, value added, transfer, stamp, or environmental
tax, or any other tax, custom, duty, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or penalty,
addition to tax or additional amount imposed by any governmental authority.

"Trust Securities" means, collectively, the securities
represented by the certificates listed on Schedule III of the Escrow
Agreement.

"UCC Statements" means, collectively, the UCC statements
listed as items 21-23 of Schedule II of the Escrow Agreement.  


                    ARTICLE 2



PURCHASE OF ACCOUNT PORTFOLIO ASSETS


Section 2.1   
Purchase. 

	On the Initial Closing Date, effective as of the Cut-Off Time, and
subject to the terms and conditions of this Agreement, each Seller shall sell,
assign, and transfer to Buyer, and Buyer shall purchase from each Seller for the
Initial Purchase Price, each Seller's entire right, title, and interest in the
Account Portfolio Assets as of the Cut-Off Time.
	On each Closing Date after the Initial Closing Date, effective as of the
respective Cut-Off Time, and subject to the terms and conditions of this
Agreement, Gottschalks shall sell, assign and transfer to Buyer, and Buyer shall
purchase from Gottschalks for the applicable Subsequent Purchase Price,
Gottschalks' entire right, title and interest in the Account Portfolio Assets
owned by Gottschalks as of the Cut-Off Time.
	Subject to the terms herein, commencing on the initial Cut-Off Time and
continuing thereafter, Buyer shall assume the obligations of each Seller, and
each Seller shall assign its rights to Buyer, under the terms of such Seller's
Account Documentation.  



Section 2.2   
Preliminary Information. 

	On the Initial Closing Date, Gottschalks shall deliver to Buyer a
Preliminary Closing Statement that shall calculate the Initial Purchase Price
for the Account Portfolio Assets being transferred on the Initial Closing Date,
which Preliminary Closing Statement shall be based on the best information
available to Gottschalks as of the Cut-Off Time.  
	On the fifteenth day and last day of each calendar month after the Initial
Closing Date, Gottschalks shall deliver to Buyer a Subsequent Closing Statement
that shall calculate the Subsequent Purchase Price for the Account Portfolio
Assets being transferred on each Closing Date after the Initial Closing Date for
the prior semi-monthly period, which Subsequent Closing Statement shall be based
on the best information available to Gottschalks as of each Cut-Off Time during
such semi-monthly period.
	The form of each of the Preliminary Closing Statement, the Subsequent
Closing Statements and the Final Closing Statement, showing the manner in which
the Purchase Price is to be calculated in accordance with each Seller's
established accounting practices, is attached hereto as Exhibit A.  




Section 2.3   
Purchase Price. 

On each Closing Date, the Purchase Price to be paid by Buyer for the
Account Portfolio Assets shall be as follows:


	Initial Purchase Price.  (i)  The Initial Purchase Price to
be paid by Buyer on the Initial Closing Date for the Account Portfolio Assets
shall, subject to Section 3.4, be an amount equal to (A) 100% of all
Indebtedness owing in connection with all of the Accounts as of the Cut-Off
Time, calculated in the manner set forth on Exhibit A; plus (B) Accrued
Interest plus (C) the "Prepaid Program Fee" to be determined as set forth
in subsection (ii) below.  

(ii)The "Prepaid Program Fee" shall be $2,500,000 if the Initial Closing
Date occurs on or before January 31, 2003.  If the Initial Closing Date occurs
on or after February 1, 2003, the Prepaid Program Fee shall be increased by the
amount of $16,666.67 per day after January 31, 2003 up to a maximum Prepaid
Program Fee of $3,500,000 if the Initial Closing Date is April 1, 2003 or
thereafter; provided, however, such additional increases to the Prepaid Program
Fee shall not be payable by Buyer to Sellers if the Initial Closing Date occurs
after January 31, 2003 due to factors completely out of Buyer's control.  

(iii)The estimated Initial Purchase Price (the "Estimated Initial
Purchase Price") shall be (i) an estimate of the Initial Purchase Price
calculated using the Preliminary Closing Statement, (ii) subject to post-
closing adjustments in accordance with Section 3.4 and (iii) paid to the
Escrow Agent by wire transfer of immediately available funds to an Escrow
Account designated by the Escrow Agent as provided in Section 2.4.  For the
avoidance of doubt, the Prepaid Program Fee shall not be subject to the post
closing adjustment set forth in Section 3.4.

	Subsequent Purchase Price.  The Subsequent Purchase Price to be paid
by Buyer to Gottschalks on each Closing Date after the Initial Closing Date
shall, subject to Section 3.4, be an amount equal to 100% of all Indebtedness
owing in connection with all of the Subsequent Accounts as of the applicable
Cut-Off Time.  Each estimated Subsequent Purchase Price (the "Estimated
Subsequent Purchase Price") shall be (i) calculated in the manner set forth
on Exhibit A and (ii) paid by Buyer to Gottschalks on each Closing Date
after the Initial Closing Date by wire transfer of immediately available funds
pursuant to the daily settlement procedure set forth in Section 3.02 of the
Servicing Agreement.
	Buyer and each Seller agree that the Initial Purchase Price (less the
Prepaid Program Fee) and each Subsequent Purchase Price shall be allocated among
the Account Portfolio Assets (and adjusted as soon as possible thereafter
following any post-closing adjustments) in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the "Code").

Section 2.4   
Escrow Contribution.


On the Initial Closing Date, Buyer shall deposit with Deutsche Bank Trust
Company Americas (the "Escrow Agent"), the Estimated Initial Purchase Price
described in Section 2.3(a)(iii) above into an escrow account to be established
and distributed in accordance with the terms and conditions set forth in this
Agreement and the Escrow Agreement (the "Escrow Account").



                    ARTICLE 3



THE CLOSING AND POST-CLOSING ADJUSTMENTS


Section 3.1   
Place and Date of Closings. 

	Initial Closing.  The initial Closing shall take place through wire
transfer of the Estimated Initial Purchase Price as described above, and
facsimile delivery of executed copies of the required closing documents, on or
prior to the Initial Closing Date to the Escrow Agent or as otherwise mutually
agreed by the Parties.  

	Subsequent Closings.  Each subsequent Closing shall take place
through the wire transfer of each Subsequent Purchase Price on each subsequent
Closing Date pursuant to the daily settlement procedure set forth in Section
3.02 of the Servicing Agreement and facsimile exchange of the required closing
documents, if any, as mutually agreed by the Parties.

Section 3.2   
Buyer's Deliveries at Closings. 

	Initial Closing Deliverables.  On the Initial Closing Date, upon
satisfaction or waiver of the conditions precedent in Section 5.1 of this
Agreement, Buyer shall deliver to each Seller or the Escrow Agent, as
applicable:

	the Assumption Agreement;
	the Bill of Sale;
	the Servicing Agreement;
	the Program Agreement;
	the Estimated Initial Purchase Price with respect to the Account Portfolio
Assets being transferred; 
	the Escrow Agreement; 
	the financing statements described in Section 5.1(d); and
	all such additional instruments, documents, or certificates as may be agreed
to in advance by the Parties.



	Subsequent Closing Deliverables.  On each subsequent Closing Date,
upon satisfaction or waiver of the conditions precedent in Section 5.1 of this
Agreement, as may be applicable, Buyer shall deliver to Gottschalks:

	the Assumption Agreement (previously executed and delivered on the Initial
Closing Date);
	the Bill of Sale (previously executed and delivered on the Initial Closing
Date); and
	the Estimated Subsequent Purchase Price with respect to the Account
Portfolio Assets being transferred.




Section 3.3   
Sellers' Deliveries at Closings. 

	Initial Closing Deliverables.  In order to transfer and assign all of
the right, title, and interest of each Seller in the Account Portfolio Assets as
of the Cut-Off Time, upon satisfaction or waiver of the conditions precedent in
Section 5.2 of this Agreement and upon receipt of the Estimated Initial Purchase
Price, Sellers shall deliver the following to Buyer or the Escrow Agent, as
applicable:

	the Assumption Agreement;
	the Bill of Sale;
	the Program Agreement;
	the Servicing Agreement;
	the Escrow Agreement;
	the Closing Tape, together with a format of such file, and a description of
the fields on such file;
	the UCC Statements;
	the Securitization Prepayment Documents; and
	all such additional instruments, documents, or certificates as may be agreed
to in advance by the parties.



	Subsequent Closing Deliverables.  In order to transfer and assign all
of the right, title and interest of Gottschalks in the Account Portfolio Assets
owned by Gottschalks as of the Cut-Off Time, upon satisfaction or waiver of the
conditions precedent in section 5.2 of this Agreement, as may be applicable, and
upon receipt of the Estimated Subsequent Purchase Price, Gottschalks shall
deliver the following to Buyer:

	the Assumption Agreement (as previously executed and delivered on the
Initial Closing Date); and
	the Bill of Sale (as previously executed on the Initial Closing
Date).





Section 3.4   
Final Closing Statement. 

	Within ninety (90) days after the Conversion Date, or at such other time
as is mutually agreed to by the Parties, Buyer shall prepare according to the
directions contained in subsection (c) (with the assistance of Sellers with
respect to items under Sellers' control) and deliver to Sellers a Final Closing
Statement together with a tape or other mutually acceptable documentation
showing the changes to the Preliminary Closing Statement and each Subsequent
Closing Statement.  Sellers shall review such Final Closing Statement within
thirty (30) days and shall promptly notify Buyer of any discrepancies.  The
Parties shall confer until they are in agreement on the Final Closing Statement.
In the event the disputing Parties are unable to reach agreement on the Final
Closing Statement within ten (10) Business Days of the date Buyer has been
notified of any discrepancies by Sellers, with respect to the funds that are the
subject of dispute, the Parties shall jointly hire a nationally recognized
public accounting firm as the Parties mutually agree, to resolve any
discrepancies in the Final Closing Statement, and shall equally share the costs
of such resolution.  The accounting firm selected shall not at the time of
selection (or at any time during its engagement hereunder) be performing
services for the Buyer, any Seller or any of their respective Affiliates.  The
final resolution and decision issued by such accounting firm shall be binding
upon the Parties.  The Parties shall use their commercially reasonable efforts
to cause the work of the accounting firm to be completed and report thereof to
be furnished to the Parties within thirty (30) Business Days following the
appointment of the accounting firm.  The date when Sellers and Buyer reach
agreement on the Final Closing Statement or, in the absence of such agreement
the date when final resolution and decision is issued, is referred to in this
Agreement as the "Final Settlement Date."
	If the Final Closing Statement establishes an increase in the Purchase Price
for the Account Portfolio Assets over that calculated based on the Preliminary
Closing Statement and each Subsequent Closing Statement, the amount of any such
increase shall be delivered to Gottschalks by Buyer within three (3) Business
Days after the Final Settlement Date.  If the Final Closing Statement
establishes a decrease in the Purchase Price over that calculated based on the
Preliminary Closing Statement and each Subsequent Closing Statement, Gottschalks
shall deliver to Buyer any deficiency within three (3) Business Days after the
Final Settlement Date.  Any payment made to any Party pursuant to this Section
3.4(b) shall include interest calculated on a daily basis from the Closing Date
applicable to the Account or Accounts which are the subject matter of the
reconciliation to the date such payment is made at the Federal Funds Interest
Rate.
	If an Account that does not satisfy the definition of "Account" is included
in the Preliminary Closing Statement or a Subsequent Closing Statement, as the
case may be, as of the applicable Cut-Off Time, it shall be excluded from the
Final Closing Statement.  Such exclusion shall be effective retroactively as of
the applicable Cut-Off Time, and Buyer shall add to the Purchase Price reflected
on the Final Closing Statement the amount of any payment Buyer received from an
Account Debtor on such Account net of any amount previously credited to such
Accounts by Buyer which after the applicable Cut-Off Time was determined to be a
check for insufficient funds, stop-payments or any amount required to be
refunded by Buyer to or on behalf of any Account Debtor.  Within ten (10)
Business Days after Buyer and Gottschalks agree to the Final Closing Statement,
Buyer shall deliver to Gottschalks any assignment, acknowledgment, or other
document necessary to evidence Gottschalks' continuing right, title, and
interest in such Account. If an Account is not included in the Preliminary
Closing Statement or a Subsequent Closing Statement, as the case may be, but is
included in the Final Closing Statement because such Account satisfied the
definition of "Account" as of the applicable Cut-Off Time, such addition shall
be deemed to have occurred retroactively as of the applicable Cut-Off Time, and
Gottschalks shall subtract from the Purchase Price reflected on the Final
Closing Statement the amount of any payment Sellers received from an Account
Debtor on such Account on or after the applicable Cut-Off Time net of any amount
previously credited to the Account by Sellers which after the applicable Cut-Off
Time was determined to be a check for insufficient funds, stop-payments or any
amount required to be refunded by Sellers to or on behalf of any Account Debtor;
provided, however, that no subtraction shall be made from the Purchase Price for
any payments remitted by Sellers to Buyer.  Any addition or subtraction to
Purchase Price made by any Party pursuant to this Section 3.4(c) shall include
interest calculated on a daily basis from the Closing Date applicable to the
Account or Accounts which are the subject matter of the reconciliation to the
date such payment is made at the Federal Funds Interest Rate.
	If Indebtedness arising from Cross-Marketing Merchandise is included in the
Preliminary Closing Statement or a Subsequent Closing Statement, as the case may
be, as of the applicable Cut-Off Time and such Indebtedness is subject to a bona
fide dispute by the Account Debtor at any time prior to the applicable Closing
Date, such Indebtedness shall be excluded from the Final Closing Statement.
Such exclusion shall be effective retroactively as of the applicable Cut-Off
Time, and Buyer shall add to the Purchase Price reflected on the Final Closing
Statement the amount of any payment Buyer received from an Account Debtor on
account of such Indebtedness, net of any amount previously credited to such
Indebtedness by Buyer which after the applicable Cut-Off Time was determined to
be a check for insufficient funds, stop-payments or any amount required to be
refunded by Buyer to or on behalf of any Account Debtor.  Within ten (10)
Business Days after Buyer and Gottschalks agree on the Final Closing Statement,
Buyer shall deliver to the Gottschalks any assignment, acknowledgment or other
document necessary to evidence Gottschalks' continuing right, title and interest
in such Indebtedness. Any addition made by Buyer pursuant to this Section 3.4(d)
shall include interest calculated on a daily basis from the Closing Date
applicable to the Indebtedness which is the subject matter of the reconciliation
to the date such payment is made at the Federal Funds Interest Rate.





                    ARTICLE 4



REPRESENTATIONS AND WARRANTIES


Section 4.1   
General Representations and Warranties of
Gottschalks. 

On the date of execution of this Agreement and again as of the Initial
Closing Date, Gottschalks represents and warrants to Buyer as set forth
below:


	Organization.  Gottschalks is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
Gottschalks has the requisite corporate power and authority to own and operate
its properties and to carry on its business as it is now being conducted.

	Authority Relative to this Agreement.  Gottschalks has the requisite
corporate power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The execution and delivery of this Agreement
by Gottschalks and the consummation of the transactions contemplated hereby have
been, or will be prior to the Initial Closing Date, duly authorized by all
necessary action on the part of Gottschalks and will not violate any applicable
laws, rules or regulations including, without limitation, any such laws, rules
or regulations pertaining to bulk sales or transfers, except where such
violation could not have a material adverse effect on the Account Portfolio
Assets or the consolidated operations (financial or otherwise), business or
prospects of the Sellers taken as a whole.  This Agreement has been duly
executed and delivered by Gottschalks and constitutes a legal, valid, and
binding obligation of Gottschalks and is enforceable against Gottschalks in
accordance with its terms except (i) that such enforcement may be subject to
bankruptcy, conservatorship, receivership, insolvency, moratorium, or similar
laws affecting creditors' rights generally; and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.

	No Pending Litigation.  There is no pending or, to the best knowledge
of Gottschalks, threatened suit, action, injunction, investigation, inquiry, or
other proceeding against Gottschalks or any of its Affiliates before any court
or government agency in connection with the Account Portfolio Assets, which
(i) has resulted or could result in an order staying or judgment
restraining or prohibiting the transactions contemplated hereby or subjecting
any Party to material liability on the grounds that it has breached any material
law or regulation or otherwise acted improperly in connection with the
transactions contemplated hereby or (ii) could have a material adverse
effect on the Account Portfolio Assets or the consolidated operations (financial
or otherwise), business or prospects of the Sellers taken as a whole.

	No Broker.  Except as otherwise disclosed on Exhibit E, Gottschalks
has not, directly or indirectly, employed any broker, finder, financial advisor,
or intermediary in connection with the transactions contemplated by this
Agreement who might be entitled to a brokerage, finders', or other fee or
commission upon the execution of this Agreement or consummation of the
transactions contemplated hereby.

	Privacy.  Gottschalks has complied in all material respects with the
requirements of the GLBA Privacy Law.  Gottschalks has maintained a privacy
policy with respect to its handling of the nonpublic personal information of
individual consumers who are consumers or customers of Gottschalks.
Gottschalks' privacy policy has been available on its Internet website.
Gottschalks has complied in all material respects with the provisions of such
privacy policy.

Section 4.2   
General Representations and Warranties of GCRC.


On the date of execution of this Agreement and again as of the Initial
Closing Date, GCRC represents and warrants to Buyer as set forth below:


	Organization.  GCRC is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.  GCRC
has the requisite corporate power and authority to own and operate its
properties and to carry on its business as it is now being conducted.

	Authority Relative to this Agreement.  GCRC has the requisite
corporate power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The execution and delivery of this Agreement
by GCRC and the consummation of the transactions contemplated hereby have been,
or will be prior to the Initial Closing Date, duly authorized by all necessary
action on the part of GCRC and will not violate any applicable laws, rules or
regulations including, without limitation, any such laws, rules or regulations
pertaining to bulk sales or transfers, except where such violation could not
have a material adverse effect on the Account Portfolio Assets or the
consolidated operations (financial or otherwise), business or prospects of the
Sellers taken as a whole.  This Agreement has been duly executed and delivered
by GCRC and constitutes a legal, valid, and binding obligation of GCRC and is
enforceable against GCRC in accordance with its terms except (i) that such
enforcement may be subject to bankruptcy, conservatorship, receivership,
insolvency, moratorium, or similar laws affecting creditors' rights generally;
and (ii) that the remedy of specific performance and injunctive and other forms
of equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceedings therefor may be
brought.

	No Pending Litigation.  There is no pending or, to the best knowledge
of GCRC, threatened suit, action, injunction, investigation, inquiry, or other
proceeding against GCRC or any of its Affiliates before any court or government
agency in connection with the Account Portfolio Assets, which (i) has
resulted or could result in an order staying or judgment restraining or
prohibiting the transactions contemplated hereby or subjecting any Party to
material liability on the grounds that it has breached any material law or
regulation or otherwise acted improperly in connection with the transactions
contemplated hereby or (ii) could have a material adverse effect on the
Account Portfolio Assets or the consolidated operations (financial or
otherwise), business or prospects of the Sellers taken as a whole.

	No Broker.  Except as otherwise disclosed on Exhibit E, GCRC has not,
directly or indirectly, employed any broker, finder, financial advisor, or
intermediary in connection with the transactions contemplated by this Agreement
who might be entitled to a brokerage, finders', or other fee or commission upon
the execution of this Agreement or consummation of the transactions contemplated
hereby.

	Privacy.  GCRC has complied, to the extent applicable, in all
material respects, with all privacy consumer protection and other laws and
regulations, including without limitation the GLBA Privacy Law.

Section 4.3   
Representations and Warranties of Gottschalks
Regarding the Accounts and the Indebtedness.

Gottschalks represents and warrants to Buyer as set forth below:


	Title to Accounts.  

	As of the Initial Closing Date, there are no liens or other encumbrances
with respect to any Current Account (other than Indebtedness in respect of such
Current Account), except for the liens or encumbrances related to the
Securitization Trust, and Gottschalks owns or has good and marketable title to
each Current Account (other than Indebtedness in respect of such Current
Account), free and clear of any liens or other encumbrances, except for the
liens or encumbrances related to the Securitization Trust.  Except for the
ongoing transfer by Gottschalks of Indebtedness into the Securitization Trust,
Gottschalks has not taken any action to transfer ownership of any Current
Account (other than Indebtedness in respect of such Current Account) to anyone
other than Buyer.  Gottschalks has full right and authority to sell and assign
each such Current Account (other than Indebtedness in respect to such Current
Account) to Buyer pursuant to this Agreement.  
	As of each subsequent Closing Date, there are no liens or other encumbrances
with respect to any Subsequent Account and Gottschalks owns and has good
marketable title to each Subsequent Account free and clear of any liens or
encumbrances.  Gottschalks has not taken any action to transfer ownership of the
Subsequent Accounts to anyone other than Buyer.  Gottschalks has full right and
authority to sell and assign each such Subsequent Account to Buyer pursuant to
this Agreement.



	Securitization.  

	As of the Initial Closing Date, the only outstanding securitization trust is
the Securitization Trust and the Master Trust Agreement is the only outstanding
pooling and servicing agreement with respect to the Securitization Trust.
Further, the Series 1999-1 and Series 2000-1 are the only series of certificates
or notes outstanding under the Securitization Trust.  
	As of the Initial Closing Date, assuming the (A) prepayment of the Trust
Securities as contemplated by the Securitization Prepayment Documents and (B)
consummation of the transactions contemplated by this Agreement and each Related
Document, after the Initial Closing Date there shall be no (i) liens or
encumbrances on any Current Account related to the Securitization Trust and (ii)
securities or notes outstanding under the Securitization Trust.
	As of the Initial Closing Date, no default, or event which, with the passage
of time or delivery of notice, would constitute a default, exists under the
Securitization Creation Documents and the transactions contemplated by the
Securitization Prepayment Documents will not constitute a default under the
Securitization Creation Documents.



	Accuracy of Closing Tape.  As of each Closing Date, each Account is
as described in the Closing Tape, and when transmitted by Gottschalks to Buyer,
the information contained in the Closing Tape shall be correct in all material
respects.

	Change in Terms/Underwriting.  As of each Closing Date, except as may
have been required by law, or as set forth in this Agreement or as mutually
agreed to by the Parties, there have been no changes made as a result of the
contemplated sale of Accounts to Buyer, to the manner in which Gottschalks has
accepted or evaluated credit card applications, opened Accounts, collected
Accounts, or administered Accounts during the period from November 20, 2002 to
each Closing Date such that the value of the Accounts was adversely
affected.

	Compliance with Laws.  As of each Closing Date, (i) Gottschalks'
Revolving Credit Business has been conducted in material compliance with all
applicable laws, rules, regulations, and orders; (ii) each of the Accounts and
the interest rates, fees, and charges in connection therewith have, at all times
during Gottschalks' ownership of such Accounts, complied in all material
respects with all applicable laws; (iii) each Account and the related
Indebtedness is the legal, valid and binding obligation of the Account Debtor
and any guarantor named therein; and (iv) Gottschalks has all permits, licenses,
certificates of authority, orders, and approvals of, and has made all filings,
applications and registrations with, federal, state, and local governmental or
regulatory bodies that are required in order to permit Gottschalks to carry on
Gottschalks' Revolving Credit Business as it is presently conducted and all such
permits, licenses, certificates of authority, orders, and approvals are in full
force and effect, except where the failure to comply with such applicable laws
or to have any such permits, licenses, certificates of authority, orders,
applications or registrations could not have a material adverse effect on the
Account Portfolio Assets or the consolidated operations (financial or
otherwise), business or prospects of Sellers taken as a whole.

	Credit Card Agreement.  As of each Closing Date, Gottschalks has
heretofore delivered to Buyer a true and complete copy of each form of Credit
Card Agreement and any changes in terms or amendments thereto used in connection
with the Program, which would be in effect as of the Cut-Off Time with respect
to any Account.

	Effectiveness of Transfer.  As of each Closing Date, the execution
and delivery of the Assumption Agreement and the Bill of Sale in accordance with
this Agreement and the filing of the UCC-1 financing statement referred to in
Section 5.1(d) are sufficient to transfer Gottschalks' title to the Current
Accounts (other than the Indebtedness in respect of such Current Accounts) and
the Subsequent Accounts to Buyer on the Initial Closing Date and each subsequent
Closing Date, respectively.  Upon each such transfer, Buyer will be vested with
all of Gottschalks' right, title, and interest in and to the Account Portfolio
Assets that relate to such Accounts free and clear of any lien, pledge, claim,
security interest, encumbrance, charge, or restriction of any kind existing on
the Account Portfolio Assets.

	Processing.   As of each Closing Date, during the period of
Gottschalks' ownership of the Current Accounts (other than the Indebtedness in
respect of such Current Account) and the Subsequent Accounts, each such Account
has been processed and serviced in material conformance with all of the
requirements of the respective Account Documentation and other applicable
servicing agreements and policies and applicable law and in accordance with
Gottschalks' written policies with respect to such Account.  All such Accounts
presently are, and during the period of Gottschalks' ownership of such Accounts
always have been, processed by Gottschalks or an Affiliate of Gottschalks or
third party contractor of Gottschalks.

	Default.  As of each Closing Date, no default or potential default
exists on the part of Gottschalks with respect to the Accounts or Indebtedness,
other than those defaults or potential defaults which could have a material
adverse effect on the Account Portfolio Assets or the consolidated operations
(financial or otherwise), business or prospects of the Sellers taken as a
whole.

Section 4.4   
Representations and Warranties of GCRC Regarding
the Indebtedness. 

On the date of execution of this Agreement and again as of the Initial
Closing Date, GCRC represents and warrants to Buyer as follows:


	Title to Accounts.  As of the Initial Closing Date, there are no
liens or other encumbrances with respect to any Indebtedness in respect of any
Current Account, except for the liens or encumbrances related to the
Securitization Trust, and GCRC owns or has good and marketable title to the
Indebtedness in respect of each Current Account, free and clear of any liens or
other encumbrances, except for the liens or encumbrances related to the
Securitization Trust.  Except for the ongoing transfer by GCRC of Indebtedness
into the Securitization Trust, GCRC has not taken any action to transfer
ownership of the Indebtedness in respect of any Current Account to anyone other
than Buyer.  GCRC has full right and authority to sell and assign such
Indebtedness in respect of each Current Account to Buyer pursuant to this
Agreement.

	Securitization.  

	As of the Initial Closing Date, the only outstanding securitization trust is
the Securitization Trust and the Master Trust Agreement is the only outstanding
pooling and servicing agreement with respect to the Securitization Trust.
Further, the Series 1999-1 and Series 2000-1 series are the only series of
certificates or notes outstanding under the Securitization Trust.
	As of the Initial Closing Date, assuming the (A) prepayment of the Trust
Securities as contemplated by the Securitization Prepayment Documents and (B)
consummation of the transactions contemplated by this Agreement and each Related
Document, after the Initial Closing Date there shall be no (i) liens or
encumbrances on any Indebtedness in respect of a Current Account related to the
Securitization Trust and (ii) securities or notes outstanding under the
Securitization Trust.
	As of the Initial Closing Date, no default, or event which, with the passage
of time or delivery of notice, would constitute a default, exists under the
Securitization Creation Documents and the transactions contemplated by the
Securitization Prepayment Documents will not constitute a default under the
Securitization Creation Documents.



	Accuracy of Closing Tape.  Each Current Account and the associated
Indebtedness is as described in the Closing Tape, and when transmitted by GCRC
to Buyer, the information contained in the Closing Tape shall be correct in all
material respects.

	Change in Terms/Underwriting.  Except as may have been required by
law, or as set forth in this Agreement or as mutually agreed to by the Parties,
GCRC did not change as a result of the contemplated sale of the Current Accounts
to Buyer, the manner in which it accepted or evaluated Indebtedness in respect
of any Current Account, collected the Indebtedness in respect of any Current
Account, or administered the Indebtedness in respect of any Current Account
during the period from November 20, 2002 to the Initial Closing Date such that
the value of the Indebtedness in respect of any Current Account was adversely
affected.

	Compliance with Laws.  (i) GCRC's purchase and handling of the
Indebtedness in respect of any Current Account has been conducted in material
compliance with all applicable laws, rules, regulations, and orders; (ii) the
Indebtedness in respect of each Current Account is the legal, valid and binding
obligation of the Account Debtor and any guarantor named therein; and (iii) GCRC
has all permits, licenses, certificates of authority, orders, and approvals of,
and has made all filings, applications and registrations with, federal, state,
and local governmental or regulatory bodies that are required in order to permit
GCRC to carry on GCRC's business as it is presently conducted and all such
permits, licenses, certificates of authority, orders, and approvals are in full
force and effect, except where the failure to comply with such applicable laws
or to have any such permits, licenses, certificates of authority, orders,
applications or registrations could not have a material adverse effect on the
Account Portfolio Assets or the consolidated operations (financial or
otherwise), business or prospects of the Sellers taken as a whole.

	Effectiveness of Transfer.  The execution and delivery of the
Assumption Agreement and the Bill of Sale in accordance with this Agreement and
the filing of the UCC-1 financing statement referred to in Section 5.1(d) are
sufficient to transfer GCRC's title to the Indebtedness in respect of any
Current Account to Buyer.  Upon such transfer, Buyer will be vested with all of
GCRC's right, title, and interest in and to the Indebtedness in respect of each
Current Account, free and clear of any lien, pledge, claim, security interest,
encumbrance, charge, or restriction of any kind existing on the Account
Portfolio Assets.

	Processing.  During the period of GCRC's ownership of the
Indebtedness in respect of each Current Account, such Indebtedness has been
processed and serviced in conformance with all of the requirements of the
respective Account Documentation and other applicable servicing agreements and
policies and applicable law and in accordance with GCRC's written policies.  All
such Indebtedness presently is, and during the period of GCRC's ownership of
such Indebtedness always has been, processed by GCRC or an Affiliate of GCRC or
third party contractor of GCRC.

	Default.  No default or potential default exists on the part of GCRC
with respect to the Indebtedness in respect of any Current Account, other than
those defaults or potential defaults which could not be reasonably expected to
have a material adverse effect on the Account Portfolio Assets or the
consolidated operations (financial or otherwise), business or prospects of the
Sellers taken as a whole.  

Section 4.5   
General Representations and Warranties of Buyer.


On the date of execution of this Agreement and again as of each Closing
Date, Buyer represents and warrants to Sellers as set forth below:


	Organization.  Buyer is a national banking association, duly
organized and validly existing, and in good standing under the laws of the
United States.  Buyer has the requisite corporate power and authority to own and
operate its properties and to carry on its business as it is now being
conducted.

	Authority Relative to this Agreement.  Buyer has the requisite
corporate power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The execution and delivery of this Agreement
by Buyer and the consummation of the transactions contemplated hereby have been,
or will be prior to the  Initial Closing Date, duly authorized by all necessary
action on the part of Buyer and will not violate any applicable laws, rules or
regulations including, without limitation, any such laws, rules or regulations
pertaining to bulk sales or transfers, except where such violation could not
have a material adverse effect on the Account Portfolio Assets or the
consolidated operations (financial or otherwise), business or prospects of
Buyer.  This Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid, and binding obligation of Buyer and is enforceable
against Buyer in accordance with its terms except that (i) such enforcement may
be subject to bankruptcy, conservatorship, receivership, insolvency, moratorium,
or similar laws affecting creditors' rights generally; and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceedings therefore may be brought.

	Permits, Licenses and Approvals.  Buyer has all permits, licenses,
certificates of authority, orders, and approvals of, and has, or will prior to
the Initial Closing Date have made all filings, applications and registrations
with, federal, state, and local governmental or regulatory bodies that are
required in order to permit Buyer to acquire, and conduct business with respect
to, the Account Portfolio Assets and all such permits, licenses, certificates of
authority, orders, and approvals are in full force and effect, except where the
failure to comply with such applicable laws or to have any such permits,
licenses, certificates of authority, orders, applications or registrations could
not have a material adverse effect on Buyer's ability to acquire, and conduct
business with respect to, the Account Portfolio Assets or the consolidated
operations (financial or otherwise), business or prospects of Buyer.

	No Pending Litigation.  There is no pending or, to the best knowledge
of Buyer, threatened suit, action, injunction, investigation, inquiry, or other
proceeding against Buyer before any court or government agency, which has
resulted or could result in an order staying or judgment restraining or
prohibiting the transactions contemplated hereby or subjecting any Party to
material liability on the grounds that it has breached any law or regulation or
otherwise acted improperly in connection with the transactions contemplated
hereby.

	No Broker.  Buyer has not, directly or indirectly, employed any
broker, finder, financial advisor, or intermediary in connection with the
transactions contemplated by this Agreement who might be entitled to a
brokerage, finders', or other fee or commission upon the execution of this
Agreement or consummation of the transactions contemplated hereby.

                    ARTICLE 5



CONDITIONS PRECEDENT


Section 5.1   
Conditions to Obligations of Buyer. 

The obligation upon Buyer to consummate the transactions contemplated
herein shall be subject to the fulfillment on or prior to the Initial Closing
Date or each Closing Date, as the case may be, of the following conditions (any
of which may be waived by Buyer), which conditions Sellers agree to use their
reasonable best efforts to fulfill (Buyer agrees to use reasonable efforts to
cooperate with Sellers as Sellers may reasonably request in order to facilitate
the satisfaction of these conditions):


	Closing Documents.  Sellers shall have executed and delivered this
Agreement and the documents set forth in Section 3.3 of this Agreement to which
it is a party, and each such document shall be in full force and effect.

	Compliance with Covenants.  Sellers shall have performed, and be in
compliance with, in all material respects all of its agreements and covenants
under this Agreement.

	Accuracy of Representations and Warranties.  The representations and
warranty of Sellers contained in this Agreement shall be true in all material
respects on and as of each Closing Date as if made on such date, except for
those representations and warranties which address matters only as of a
particular date (which shall be true in all material respects as of such
date).

	Financing Statements.  At or before the Initial Closing Date, each
Seller shall assist Buyer, as reasonably requested, in the preparation of
financing statements for filing, which are reasonably necessary to give notice
of Buyer's interest in the Account Portfolio Assets transferred by Sellers.


	Prepayment of Securitization and Releases.  As of the Initial Closing
Date, Buyer shall have received (i) evidence of the prepayment of the Trust
Securities by its receipt of executed copies of the Securitization Prepayment
Documents, and (ii) the UCC Statements. 

	Hart-Scott Rodino.  On or prior to the Initial Closing Date, the
Parties shall have received evidence of the expiration or early termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 as amended.

	No Proceedings.  There shall not have commenced and be pending
against the Buyer or any Seller any proceeding (a) involving any material
challenge to, or seeking material damages or other material relief in connection
with, the transactions contemplated hereby or (b) that is reasonably likely to
have the effect of preventing, delaying, making illegal or otherwise interfering
with the transactions contemplated by this Agreement.

Section 5.2   
Conditions to Obligations of Sellers. 

The obligation upon Sellers to consummate the transactions contemplated
herein shall be subject to the fulfillment on or prior to the Initial Closing
Date or each Closing Date, as the case may be, of the following conditions (any
of which may be waived by Sellers), which conditions Buyer agrees to use its
reasonable best efforts to fulfill (Sellers agree to use reasonable efforts to
cooperate with Buyer as Buyer may reasonably request in order to facilitate the
satisfaction of these conditions):


	Closing Documents.  Buyer shall have executed and delivered this
Agreement and the documents set forth in Section 3.2 of this Agreement, and each
such document shall be in full force and effect.

	Purchase Price.  On or prior to the Initial Closing Date, (i) the
Initial Purchase Price shall have been delivered to the Escrow Agent pursuant to
the Escrow Agent's written instructions set forth in the Escrow Agreement and
(ii) the Residual Amount shall have been delivered to Gottschalks pursuant to
Gottschalks' wire instructions.  On or prior to each subsequent Closing Date,
each Subsequent Purchase Price shall have been delivered to Gottschalks pursuant
to Gottschalks' written instructions. 

	Compliance With Covenants.  Buyer shall have performed, and be in
compliance with, all of its respective agreements and covenants under this
Agreement.

	Accuracy of Representations and Warranties.  The representations and
warranties of Buyer contained in this Agreement shall be true in all material
respects on and as of each Closing Date as if made on such date.

	Prepayment of Securitization and Releases.  As of the Initial Closing
Date, Sellers shall have received (i) evidence of the prepayment of the Trust
Securities by its receipt of executed copies of the Securitization Prepayment
Documents, (ii) the UCC Statements and (iii) releases from all holders of
securities under the Securitization Trust acknowledging that neither Buyer nor
its Affiliates shall have any liability to such holders for anything done or not
done by Sellers and/or their Affiliates or any other third party.

	Hart-Scott Rodino.  On or prior to the Initial Closing Date, the
Parties shall have received evidence of the expiration or early termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 as amended.

	No Proceedings.  There shall not have commenced and be pending
against the Buyer or any Seller any proceeding (a) involving any material
challenge to, or seeking material damages or other material relief in connection
with, the transactions contemplated hereby or (b) that is reasonably likely to
have the effect of preventing, delaying, making illegal or otherwise interfering
with the transactions contemplated by this Agreement.

                    ARTICLE 6



AGREEMENTS AND COVENANTS


Section 6.1   
[INTENTIONALLY OMITTED].  


Section 6.2   
No Sale of Assets. 

Until the Conversion Date, without the prior written consent of Buyer,
Sellers shall not sell, lease, assign, transfer, encumber, or otherwise dispose
of any of the Account Portfolio Assets, except pursuant to this Agreement and in
the ordinary course of Sellers' business pursuant to the Program.  Nothing in
this Paragraph shall refer or apply to any transactions related to Sellers'
securitization of the Accounts.


Section 6.3   
Tax on Sale. 

	Responsibility for Taxes - Sellers.  Each Seller shall be liable for and
pay (i) any Taxes relating to the Account Portfolio Assets that accrue or
otherwise relate to any taxable year or period (or portion thereof) ending on or
prior to the Cut-Off Time applicable to such Account Portfolio Assets, and (ii)
any Taxes imposed on the Sellers as a result of the sale of the Account
Portfolio Assets to the Buyer.  For purposes of this Agreement, Taxes
attributable to a portion of a taxable year or period shall be determined on a
"closing of the books" basis as of each Cut-Off Time, except that Taxes imposed
on a periodic basis (such as property Taxes) shall be allocated on a daily
basis.  Sellers shall be liable for and pay (i) any Taxes relating to the
Account Portfolio Assets that accrue or otherwise relate to any taxable year or
period (or portion thereof) ending on or prior to the Cut-Off Time applicable to
such Account Portfolio Assets (except that Taxes attributable to transactions or
events occurring during the period after the Cut-Off Time and ending on the
Closing Date shall be apportioned to the Sellers only if such transactions or
events are properly includible in the Sellers' consolidated tax return and shall
otherwise be apportioned to the Buyer, other than any Taxes in connection with
the dissolution of the Securitization Trust which shall be solely Sellers'
liability), and (ii) any Taxes imposed on the Sellers as a result of the sale of
the Account Portfolio Assets to the Buyer.

	Responsibility for Taxes - Buyer.  Buyer shall be liable for and pay
any Taxes relating to the Account Portfolio Assets that accrue or otherwise
relate to any taxable year or period (or portion thereof, as determined in
accordance with Section 6.3(a)) beginning after the Cut-Off Time; except for (i)
Taxes imposed upon the Sellers as a result of the sale of the Account Portfolio
Assets to the Buyer, (ii) any Taxes in connection with the dissolution of the
Securitization Trust, and (iii) any other Taxes for which the Sellers are
responsible as set forth in Section 6.3(a)(i).

	Information Reporting.  Unless otherwise provided herein, Sellers
shall be responsible for any applicable 2003 IRS or state information reporting
for events (including cancellation of indebtedness) or payments related to the
Account Portfolio Assets which occur during the period beginning January 1, 2003
and ending on the Cut-Off Time.  Buyer shall be responsible for any applicable
2003 IRS or state information reporting for events (including cancellation of
indebtedness) or payments related to the Account Portfolio Assets which occur
subsequent to the Cut-Off Time.

Section 6.4   
Public Announcements.  

The Parties shall consult with each other before they or any of their
respective Affiliates or agents issue any press releases or otherwise make, any
public statements with respect to this Agreement and the transactions
contemplated hereby, and none of them nor any Affiliate of any of them shall
issue any such press release or make any public statement prior to receiving
express written approval of the other Party, which approval shall not be
unreasonably withheld, except, in each case, as may be required by applicable
law or regulation, in which case such Party or Affiliate thereof shall consult
with the other Party prior to such release or statement to the extent
practicable.


Section 6.5   
Confidentiality. 

	This Agreement, the Related Documents, the performance of the Parties
hereunder and thereunder and the transactions contemplated hereby and thereby,
shall be confidential ("Agreement Confidential Information") and no Party or its
officers, directors, shareholders, employees, attorneys, accountants, advisors,
lenders, agents, successors, assigns or personal representatives shall disclose
the Agreement Confidential Information to any other Person except as otherwise
required by law or regulation or to enforce their rights with respect to
Agreement Confidential Information, or as otherwise permitted by this Agreement.
Buyer shall not disclose any information, in any form, supplied to the Buyer
and/or its Affiliates by, or at the direction of Sellers and/or their Affiliates
whenever furnished, including any copies, excerpts, summaries, analyses or notes
thereof (the "Seller Confidential Information") to any Person who is not a
partner, officer, employee, counsel, or agent of Buyer, except with the consent
of Gottschalks or pursuant to a subpoena or order issued by a court of competent
jurisdiction or by a judicial or administrative or legislative body or committee
with jurisdiction over Buyer.  Sellers shall not disclose any information, in
any form, supplied to the Sellers and/or their Affiliates by, or at the
direction of Buyer and/or its Affiliates whenever furnished, including any
copies, excerpts, summaries, analyses or notes thereof (the "Buyer Confidential
Information") to any Person who is not a partner, officer, employee, counsel, or
agent of any Seller, except with the consent of Buyer or pursuant to a subpoena
or order issued by a court of competent jurisdiction or by a judicial or
administrative, or legislative body or committee with jurisdiction over Seller.
The Agreement Confidential Information, the Seller Confidential Information, and
the Buyer Confidential Information are hereinafter collectively referred to as
the "Confidential Information."
	In the event that a Party receives a request to disclose any Confidential
Information of the other Party under such subpoena or order, such Party shall
(i) notify the other Party within five (5) Business Days after receipt of such
request; (ii) consult with that Party on the advisability of taking steps to
resist or narrow such request; and (iii) if disclosure is required or deemed
advisable, cooperate with that Party in any attempt that such Party may make to
obtain an order or other reliable assurance that confidential treatment will be
accorded to designated portions of the Confidential Information.
	Information will not be deemed Confidential Information if (i) the
information is already lawfully known to a Party; (ii) the information
thereafter becomes lawfully obtainable from other than as a result of a
disclosure by the disclosing Party or such Party's officers, employees, counsel,
or agents; (iii) the information is required to be disclosed to a regulatory
authority having authority over the disclosing Party; (iv) the information is
disclosed to a Party's Affiliate, provided, however, that such Affiliates agree
to be bound by the provisions of this Section 6.4; (v) the information is
disclosed to a Party's auditors or counsel (each of whom the disclosing Party
shall cause to keep such information confidential and to use the same only in
connection with this Agreement and the Related Documents, including in the case
of auditors, any general or more limited audit or review of such disclosing
Party, and in the case of counsel, any disputes relating to this Agreement, the
Related Documents or legal matters which involve such disclosing Party with
respect to which Confidential Information which is subject to this Section 6.4
is germane) or is required to be disclosed strictly on a need to know basis to
its investors or rating agencies; (vi) the information is required to be
disclosed in the financial statements of such other Party or its Affiliates to
the extent required by GAAP, or in any filing with the U.S. Securities and
Exchange Commission; (vii) the information is required to be disclosed to a
Party's source(s) of funding, provided such source(s) agree to be bound by
confidentiality provisions substantially similar to those contained in this
Section 6.4; (viii) the information is required by law, regulation or court
order to be disclosed by the disclosing Party; provided, however, that prior
notice of such disclosure (other than to the disclosing Party's Affiliates,
auditors, counsel, rating agencies or lenders) has been given to the non-
disclosing Party, when legally permissible, and that the Party which is required
to make the disclosure follows the procedures set forth in Section 6.4(b) to
permit the disclosing Party to take legal action to prevent the disclosure as
otherwise required by law or to enforce their rights with respect to the
Confidential Information; (ix) the information is contained in or derived from
any Account Documentation delivered by Buyer or is otherwise information Buyer
or Buyer's counsel or underwriters determine is reasonably required to be
disclosed in each case in connection with the securitization and sale of
interests in the Accounts or Indebtedness, as permitted in Section 12.3 of the
Program Agreement; provided that the parties to which Buyer discloses such
information agree to be bound by the terms of this provision, or (x) the
information is disclosed by Gottschalks to third parties in connection with
Gottschalks' potential sale of the Account Portfolio Assets under Section 11.5
of the Program Agreement; provided that the parties to which Gottschalks
discloses such information agree to be bound by the terms of these (or similar)
provisions.
	The Parties hereto agree that this Section 6.5 shall supersede in its
entirety the Confidentiality Agreement dated August 21, 2002, between the Buyer
and Gottschalks (the "Confidentiality Agreement"), and that such Confidentiality
Agreement shall thereby be terminated and of no further force and effect.
	Notwithstanding any other provisions contained herein, each Party authorizes
the other to disclose all information and materials regarding the structure and
tax aspects of the transaction to the extent required by Section 6011 of the
Code in order to avoid the transaction described herein being treated as a
"Confidential Transaction" as defined thereby.



Section 6.6   
Conversion of Accounts. 

With respect to all Account Portfolio Assets, Buyer shall be responsible
for handling on and after the Conversion Date all Account Debtor service issues,
any and all losses resulting from service issues, and for refunding credit
balances at its expense to the extent such credit balances were taken into
account in computing the Purchase Price as a reduction thereof or arose as a
result of credit transactions thereafter.  In addition, with respect to all
Account Portfolio Assets, Buyer assumes and agrees to pay, perform in accordance
with the terms of, and be bound by Seller's obligations that are to be performed
after each Closing Date with respect to, the Accounts and under the Account
Documentation, including without limitation, any Cross-Marketing Merchandise,
whether or not arising after such Closing Date.  Buyer agrees that it will
conduct the conversion of Account Portfolio Assets onto its systems.  


Section 6.7   
Credit Bureau Reporting. 

Upon each Closing Date, Sellers will notify the three major credit
reporting bureaus (Equifax, Experian and TransUnion), and any collection
agencies or consumer credit counseling agencies to which Accounts have been
referred that the designation on all Accounts shall reflect that the Accounts
and Indebtedness were transferred.


Section 6.8   
Further Assistance. 

The Parties will use all reasonable efforts to obtain the satisfaction of
the conditions set forth in Article 5 hereof and to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable to carry out all of their respective obligations under this Agreement
and to consummate and make effective the transactions contemplated by this
Agreement, including, but not limited to, (i) assisting Buyer in the orderly
transition of the Account Portfolio Assets being acquired by Buyer, (ii) giving
prompt notice to the other Party regarding any customer service or Federal Fair
Credit Billing Act complaints filed by an Account Debtor which affects such
other Parties and (iii) delivering Account Documentation and such other
information as Buyer may reasonably request in connection with the servicing of
the Accounts to the extent and in the same form and condition that Seller
maintains such information. 


Section 6.9   
Securitization.

On or prior to March 1, 2003, Sellers shall dissolve, or cause to be
dissolved, and pay out the Securitization Trust and terminate the Master Trust
Agreement.


Section 6.10   
Cross-Reference File.

Sellers agree to provide Buyer with the Cross-Reference File no later
than twenty-one (21) days after the Initial Closing Date, and thereafter shall
provide monthly updates thereto.  The account numbers set forth in the Cross-
Reference File shall be used solely for the purpose of researching payments on
accounts which Buyer believes it does not own.  Buyer shall destroy the Cross-
Reference File within one (1) year after the Conversion Date.  Sellers'
obligations under this Section 6.10 shall terminate on the Conversion Date.


Section 6.11   
Bulk Sales Laws.

Buyer and each Seller hereby waive compliance with the provisions of any
applicable "bulk sales" and "bulk transfer" or similar laws of any state.


Section 6.12   
UCC Financing Statements.

Sellers shall file, or cause to be filed, all of the UCC Statements on
the Initial Closing Date.


                    ARTICLE 7





INDEMNIFICATION


Section 7.1   
Indemnification by Sellers. 

Sellers agree to jointly and severally indemnify and hold harmless Buyer
and its officers, directors, employees, partners and Affiliates (the "Buyer
Indemnified Parties"), from any out-of-pocket liability, loss, cost, expense,
including reasonable attorneys' fees and expenses (collectively "Losses"), which
shall result from and be caused by (i) the breach of any of Sellers'
representations or warranties contained in this Agreement, (ii) the breach by
any Seller of any of its covenants or agreements contained in this Agreement,
(iii) any false or misleading advertising or other misrepresentation with
respect to the Account Portfolio Assets by Sellers or any of their Affiliates or
any of their respective agents, directors, officers or employees prior to each
Closing Date, (iv) Sellers' ownership of the Account Portfolio Assets prior to
each Closing Date and the operation and ownership of the Securitization Trust or
Sellers' Affiliates, or third parties' operation and ownership of the
Securitization Trust, (v) any action suit, proceeding or claim or other
litigation, or any investigation by any governmental authority affecting the
Account Portfolio Assets arising out of any action or inaction with respect to
the Account Portfolio Assets prior to each Closing Date, or (vi) any action,
suit, proceeding, claim or other litigation arising out of any action or
inaction of the Sellers or any Seller with respect to the Securitization Trust,
the Escrow Agreement or the Securitization Organizational Documents, including
the failure of any Seller to satisfy its respective obligations as described in
the Securitization Prepayment Documents; provided, that in no event shall
Sellers be obligated under this Article 7 to indemnify the Buyer Indemnified
Parties against any Losses and any interest thereon which shall result solely
from the willful misconduct or negligent acts or omissions of the Buyer
Indemnified Parties, but provided nevertheless that if Buyer and any Seller are
jointly sued by a third party and, except with respect to claims or liability
arising from the Securitization Trust,  Buyer and any Seller are held to be
liable as joint tortfeasors by a court of competent jurisdiction, then the
allocation of loss between Buyer and such Seller shall be as determined by such
court.


Section 7.2   
Indemnification by Buyer. 

Buyer agrees to indemnify and hold harmless each Seller and each of such
Sellers' officers, directors, employees, partners and Affiliates (the "Seller
Indemnified Parties"), from any Losses, which shall result from and be caused by
(i) the breach of any of Buyer's representations or warranties contained in this
Agreement, (ii) the breach by Buyer of any of its covenants or agreements
contained in this Agreement, (iii) Buyer's acts or omissions or failure to
satisfy any of its obligations or liabilities to third parties on or after the
Cut-Off Time, and (iv) Buyer's failure to obtain or maintain any permit,
license, authority, order, approval or other authorization required to own or
operate, or conduct the business with respect to, the Account Portfolio Assets;
provided, that in no event shall Buyer be obligated under this Article 7 to
indemnify the Seller Indemnified Parties against any Losses and any interest
thereon which shall result solely from the willful misconduct or gross negligent
acts or omissions of the Seller Indemnified Parties; but provided nevertheless
that if Buyer and Seller are jointly sued by a third party and Buyer and Seller
are held to be liable as joint tortfeasors by a court of competent jurisdiction,
then the allocation of loss between Buyer and Seller shall be as determined by
such court.


Section 7.3   
Procedures. 

	In the event any claim is made, or any suit or action is commenced,
against a Party with respect to which such Party may seek indemnification under
this Article 7 or under the indemnification provisions in the Servicing
Agreement or Program Agreement from another Party, then such Party shall give
notice thereof to the Party from whom indemnification is sought hereunder.  The
Party against which such claim is made, or any suit or action is commenced, will
hereinafter be referred to as the "Indemnified Party"; the Party to which such
notice is given will hereinafter be referred to as the "Indemnifying Party."
Such notice must be given within ten (10) days of the Indemnified Party's notice
of any such claim, suit or action.  The Indemnifying Party shall be entitled to
participate in the defense thereof and, to the extent the Indemnifying Party
notifies the Indemnified Party in writing, to assume, at the Indemnifying
Party's expense, the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party.  After notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable, except as provided in Section 7.3(b), to
such Indemnified Party under this Section 7.3 for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof.
	The Indemnified Party shall have the right to employ its own counsel if the
Indemnified Party elects, with the consent of the Indemnifying Party, to assume
such defense, but the fees and expenses of such counsel shall be at the
Indemnified Party's expense, unless (i) the employment of such counsel, at the
Indemnifying Party's expense, shall have been authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party shall not have employed counsel
to take charge of the defense within thirty (30) days after the Indemnifying
Party shall have elected to assume the defense of such action after electing to
assume such defense thereof, or (iii) the Indemnified Party has been advised by
legal counsel that the Indemnified Party's interests may differ from those of
the Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified Party),
in any of which events such reasonable fees and expenses shall be borne by the
Indemnifying Party.
	The Indemnified Party shall have the right to reject any settlement approved
by the Indemnifying Party if the Indemnified Party waives its right to
indemnification hereunder or if the settlement requires any obligation of the
Indemnified Party other than the payment of money.  The Indemnified Party shall
have the right to settle any third party claim over the objection of the
Indemnifying Party; provided, that if the Indemnifying Party is contesting such
claim in good faith and has assumed the defense of such claim, the Indemnified
Party waives any right to indemnity therefor.  Any such settlement or compromise
of, or any final judgment or decree entered on or in, any claim, suit or action
which the Indemnified Party defended or participated in the defense of in
accordance herewith, shall be deemed to have been consented to by, and shall be
binding upon, the Indemnified Party as fully as if the Indemnifying Party had
assumed the defense thereof and a final judgment or decree had been entered in
such suit or action, or with regard to such claim, by a court of competent
jurisdiction for the amount of such settlement, compromise, judgment or
decree.
	In the event that the Indemnifying Party reimburses the Indemnified Party
for any third party claim, the Indemnified Party shall remit to the Indemnifying
Party any reimbursement that the Indemnified Party subsequently receives for
such third party claim.



Section 7.4   
Limitations on Indemnification. 

	If the Indemnified Party fails to give notice of any claim being made or
any suit or action being commenced in respect of which indemnification under
this Article 7 may be sought within ten (10) days of the Indemnified Party's
receipt of notice thereof, such failure shall not limit the liability of the
Indemnifying Party; provided, that this provision shall not be deemed to limit
the Indemnifying Party's rights to recover for any loss, cost, or expense that
it can establish resulted from such failure to give prompt notice.
	The language set forth in this Article 7 exclusively governs the obligations
of the Parties with respect to the subject matter thereof.
	Notwithstanding anything to the contrary set forth in this Article 7, none
of Sellers nor Buyer shall have any obligation to indemnify an Indemnified Party
in respect of any breach of a representation or warranty under Section 7.1(i)
(other than Sections 4.3(b) and 4.4(b)) and Section 7.2(i) unless and until
$100,000 in Losses have been incurred in the aggregate by the Indemnified Party
in respect of breaches of representations and warranties under Section 7.1(i)
(other than Sections 4.3(b) and 4.4(b)) or Section 7.2(i), as applicable.  After
the Indemnified Party incurs $100,000 in aggregate Losses, in respect of
breaches of representations and warranties under Section 7.1(i) (other than
Sections 4.3(b) and 4.4(b)) or Section 7.2(i), as applicable, Buyer or Sellers,
whichever the case may be, shall indemnify the Indemnified Party in accordance
with this Article 7 to the extent of the full amount of such Losses in excess of
such $100,000.
	The amount of any Losses under Sections 7.1 and 7.2, as applicable, to be
paid by an Indemnifying Party shall be net of any amounts recovered by the
Indemnified Party under applicable insurance policies.  The Indemnifying Party
shall not be liable for any Losses relating to any matter to the extent the
Indemnified Party had been fully compensated for such matter pursuant to the
Purchase Price adjustment under Section 3.4.



Section 7.5   
Survival. 


The representations and warranties of the respective Parties set forth in
Article IV of this Agreement shall survive the Conversion Date until the date
which is twelve months after the Conversion Date and shall then expire.  Notwithstanding the foregoing, the representations and
warranties in Sections 4.1(e), 4.2(e), 4.3(b), 4.3(e), 4.4(b), 4.4(e) and 4.5(c)
shall survive the Initial Closing Date and remain in effect until the expiration
of the statute of limitations applicable to the matters covered thereby.  Claims
for breach of any such representations or warranties may be asserted after
expiration of the period specified above, and such claims shall not be subject
to any defense based on nonsurvival of such representation and/or warranty if,
but only if, written notice shall have been given with respect thereto on or
before expiration of the period specified above in accordance with the terms of
Section 7.3 hereof.  The obligations of the Parties pursuant to Sections 6.4 and
6.5 with respect to public announcements and Confidential Information shall
survive delivery and transfer of the Account Portfolio Assets to Buyer, and
shall inure to the benefit of Buyer, Sellers and any assignee thereof.  Without
limiting the foregoing, all obligations of an Indemnifying Party to indemnify an
Indemnified Party under this Article 7 shall survive the Initial Closing Date
until expiration of the statute of limitations applicable to the matters covered
thereby.


                    ARTICLE 8



TERMINATION

Section 8.1   
Grounds for Termination.

	This Agreement may be terminated at any time prior to the Initial
Closing Date:

	by mutual written agreement of Buyer and Sellers; and
	by any Party if the initial Closing shall not have occurred on or before
February 28, 2003.



The Party desiring to terminate this Agreement pursuant to Section 8.1(b)
shall provide written notice of termination to the other Parties.

	Effect of Termination.  If this Agreement is terminated as permitted by
Section 8.1(a) such termination shall be without liability to any Party (or any
Affiliate of such Party) to the other Parties to this Agreement; provided, that
if such termination shall result from the willful failure of a Party to fulfill
(unless such willful failure is due to the inability of such Party to obtain
commercially reasonable terms) any closing condition under Article 5, where
fulfillment is solely within such Party's control, such Party shall be fully
liable for any and all Losses incurred or suffered by the other Parties as a
result of such failure.  The provisions of Sections 6.4, 6.5 and 9.14 shall
survive any termination hereof pursuant to Section 8.1(a).

                    ARTICLE 9



MISCELLANEOUS

Section 9.1   
Waiver. 

Failure or delay on the part of any Party to exercise any right provided
for herein, shall not act as a waiver thereof, nor shall any single or partial
exercise of any right by a Party preclude the exercise of any other right or the
further exercise of such right thereof.  In no event shall a term or provision
of this Agreement be deemed to have been waived, modified, or amended, unless
said waiver, modification or amendment is in writing and signed by all of the
Parties hereto.


Section 9.2   
No Joint Venture. 

Nothing in this Agreement shall be deemed to create a partnership or
joint venture between any of the Parties.  Except as expressly set forth herein,
no Party shall have any authority to bind or commit the other Parties.


Section 9.3   
Payment Terms. 

All payments to be made by any Party pursuant to the terms of this
Agreement shall be made by wire transfer in lawful money of the United States,
immediately available funds, to a bank account in a member bank of the Federal
Reserve System designated by the Party to which such payment is to be made.



Section 9.4   
Entire Agreement. 

Each Party acknowledges that no representations, agreements, or promises
were made to it by the other Party or any of the other Party's employees other
than those representations, agreements, or promises specifically contained in
this Agreement.  This Agreement (a) sets forth the entire understanding among
the Parties hereto, (b) supersedes all negotiations, prior discussions and
agreements, including without limitation, the Non-Binding Letter of Intent,
dated December 20, 2002, between Gottschalks and Buyer and the Confidentiality
Agreement, and (c) shall be binding on and shall inure to the benefit of each
Party and their respective successors and assigns, except as otherwise provided
herein.  The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of the Parties with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement.


Section 9.5   
Notices. 

All notices, requests, demands and other communications which are
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given upon the delivery or the fifth
(5th) day after the mailing thereof, as the case may be, sent by
registered or certified mail, return receipt requested, postage prepaid, by fax
if immediately followed by registered or certified mail, or by a nationally
recognized overnight delivery service to:

	Gottschalks Credit Receivables Corporation

   c/o Gottschalks, Inc.

   7 River Park Place East

   Fresno, California  93720

   Attention:  President

   Facsimile:  (559) 434-4666
with copies to:

Gottschalks Inc.

   7 River Park Place East 

   Fresno, California  93720 

   Attention: General Counsel

   Facsimile:  (559) 434-4666

And

O'Melveny & Myers, LLP

   400 South Hope Street, 15th Floor

   Los Angeles, California 90071

   Attention:  Daniel F. Passage, Esq.

   Facsimile:  (213) 430-6407




	Household Bank (SB), N.A.

   2700 Sanders Road

   Prospect Heights, IL 60070

   Attention:   General Counsel

   Facsimile:  847-564-6001
with a copy to:

Household Retail Services

   2700 Sanders Road

   Prospect Heights, IL 60070

   Attention:   President

   Facsimile:  847-564-6280






Section 9.6   
Amendment; Modification. 

This Agreement may not be amended or modified except by a writing signed
by each Party.


Section 9.7   
Governing Law; Waiver of Jury Trial. 

	This Agreement shall be governed by and be construed in accordance with
the laws of the State of New York without regard to internal principles of
conflict of laws.
	The Parties hereto waive all right to trial by jury in any action or
proceeding to enforce or defend any rights pursuant hereto.




Section 9.8   
Dispute Resolution.

	All Disputes shall be resolved in accordance with this Section 9.8.
"Dispute" means any dispute, controversy or claim arising out of or relating to
this Agreement, whether based on contract, tort, statute or other legal or
equitable theory (including without limitation, any claim of fraud,
misrepresentation or fraudulent inducement or any question of validity or effect
of this Agreement including this clause) or the breach or termination
thereof.
	The Parties agree to communicate with each other to achieve informal
resolution of all Disputes that may arise under this Agreement.  However, if
such communication does not resolve such Dispute, the matter in dispute will be
subject to the dispute resolution provisions set forth in this Section 9.8.  The
Party that desires to initiate the dispute resolution shall notify the other
party in writing of the nature and details of the Dispute (the "Dispute
Notice").  Within thirty (30) days from the date of delivery of the Dispute
Notice, a face to face meeting of one or more principal officers of each party
shall be held at a mutually convenient time and location to negotiate a
resolution of the Dispute.  If negotiation does not resolve the matter, the
parties agree to submit the matter to mediation within forty (40) days from the
date of delivery of the Dispute Notice.  The mediation shall be administered in
accordance with American Arbitration Association's Commercial Mediation Rules.
The mediator will not have power to decide the Dispute, but will use mediation
techniques to assist the Parties in reaching a resolution.  The costs of such
mediation shall be shared equally 50% by the Buyer and 50% by the Sellers.  If
the Dispute is not resolved by negotiation or mediation within fifty (50) days
of delivery of the Dispute Notice, the Parties agree to submit the matter in
dispute to binding arbitration which shall be conducted before JAMS/Endispute,
Inc. ("JAMS") in accordance with the rules and regulations promulgated by JAMS
as in effect at the time of the commencement of the arbitration.
	The arbitration shall be held before a single arbitrator acceptable to the
Parties .  If the Parties cannot agree on a single arbitrator, then (i) the
Buyer shall choose one arbitrator and the Sellers shall choose one arbitrator
and (ii) a third arbitrator shall be chosen by the other two arbitrators;
provided, that each Arbitrator chosen under (i) and (ii) above shall not be an
Affiliate of any party to such arbitration (the "Arbitrator(s)").  The
Arbitrator(s) shall be bound by the terms of this Agreement.  Any award made by
the Arbitrator(s) shall be binding on the parties.  Notwithstanding the
foregoing provisions, any Party at any time may require that a matter in dispute
be submitted directly to arbitration, irrespective of whether negotiation or
mediation has been attempted or completed.
	Such arbitration shall be held in New York, New York.
	The Arbitrator shall have the authority, taking into account the Parties'
desire that any arbitration proceeding hereunder be reasonably expedited and
efficient, to permit the Parties to conduct discovery.  Any such discovery shall
be (i) guided generally by and be no broader than permitted under the United
States Federal Rules of Civil Procedure and (ii) subject to the Arbitrator and
the Parties entering into a mutually acceptable confidentiality agreement.
	The Arbitrator's or Arbitrators' decision and award in any such arbitration
shall be made and delivered within 120 days of the date on which such
arbitration proceedings commenced.
	The Arbitrator's or Arbitrators' decision shall be in writing and shall be
as brief as possible and will include the basis for the Arbitrator's decision.
A record of the arbitration proceeding shall be kept.
	Judgment on the award rendered by the Arbitrator may be entered into any
court having jurisdiction thereof.
	The Arbitrator shall have the power but not the obligation to award to the
Party it deems to have prevailed, all or a portion of the costs of the
arbitration (including, transcripts, room rental fees and fees and expenses of
the arbitrator and JAMS, and the reasonable legal fees, costs and disbursements
of the prevailing Party thereto); provided, that if court proceedings to stay
litigation or compel arbitration are necessary, the non-prevailing Party in such
proceedings shall pay all reasonable costs, expenses, and attorney's fees
incurred in connection with such court proceedings.
	The Parties hereto acknowledge and agree that this Section 9.8 shall not
limit the right of any Party to seek from a court of competent jurisdiction any
equitable relief with respect to the Dispute to which such Party may otherwise
be entitled, including, without limitation, specific performance or injunctive
or other relief.
	The Parties agree to participate in any arbitration in good faith.




Section 9.9   
Severability. 

Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity of unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement in such
jurisdiction or in any other jurisdiction.  If any provision of this Agreement
is deemed to be so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.


Section 9.10   
Assignment. 

Neither this Agreement nor any of the rights or obligations hereunder
shall be assignable by any Party without the written consent of the other
Parties.


Section 9.11   
Accounting Terms. 

Accounting terms used herein and not otherwise defined herein shall be
construed in accordance with United States Generally Accepted Accounting
Principles (GAAP) and definitions consistently applied. 


Section 9.12   
Singular and Plural. 

Words used herein in the singular, where the context so permits, shall be
deemed to include the plural and vice versa.  The definitions of words in the
singular herein shall apply to such words when used in the plural where the
context so permits and vice versa.


Section 9.13   
Headings. 

The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.


Section 9.14   
Expenses. 

Except as otherwise specifically provided herein, all costs and expenses
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the Parties, as the case may be, depending upon which Party incurred
such costs and expenses; provided, however, that the Buyer agrees to pay all
filing fees associated with any filings made under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.


Section 9.15   
Counterparts. 

This Agreement may be executed in one or more counterparts, each of which
counterparts shall be deemed to be an original, and all such counterparts shall
constitute one and the same instrument.


IN WITNESS WHEREOF, the Parties have caused their respective duly authorized
representatives to execute this Agreement as of the date first written
above.

	
GOTTSCHALKS INC.:

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



	
HOUSEHOLD BANK (SB), N.A.:

By:/s/ Richard C. Klesse
Title: Vice President




	
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION:

By:/s/ Michael Geele
Title: President



	 




















EXHIBIT A



ESTIMATED AND FINAL CLOSING STATEMENTS

Indebtedness (as calculated
below)$_______________

Plus:  Accrued Interest$_______________

Total Receivables Purchased$_______________

Plus:  Prepaid Program Fee$_______________ 

Total Purchase Price$_______________

Indebtedness shall be calculated as follows:


Total accounts receivable (including Accounts and accounts 

that do not satisfy the definition of an
Account)$_______________

Less:  Charged Off accounts$_______________

Less:  Bankruptcy accounts$_______________

Less:  Reaffirmation accounts$_______________

Less:  Deceased accounts$_______________

Less:  Fraud accounts$_______________

Less:  Lost or Stolen
accounts$_______________

Less:  Pending Litigation
accounts$_______________

Indebtedness (Total)$_______________


















EXHIBIT B



CALCULATION OF ACCRUED INTEREST





Estimated Accrued Interest Report



	






Cycle #
	






Cycle Date
	






Cycle Period
	




Billed Interest
	
# Days in Cycle
	


Average Interest Per Day
	




# Days to 1/31
	


Estimated

Accrued

Interest

	
1
	
01/01/2003
	
12/2/02-1/1/03
	
-
	
31
	
-
	
30
	
-

	
2
	
01/05/2003
	
12/6/02-1/5/03
	
-
	
31
	
-
	
26
	
-

	
3
	
01/08/2003
	
12/9/02-1/8/03
	
-
	
31
	
-
	
23
	
-

	
4
	
01/11/2003
	
12/12/02-1/11/03
	
-
	
31
	
-
	
20
	
-

	
5
	
01/14/2003
	
12/15/02-1/14/03
	
-
	
31
	
-
	
17
	
-

	
6
	
01/15/2003
	
12/16/02-1/15/03
	
-
	
31
	
-
	
16
	
-

	
7
	
01/19/2003
	
12/20/02-1/19/03
	
-
	
31
	
-
	
12
	
-

	
8
	
01/23/2003
	
12/24/02-1/23/03
	
-
	
31
	
-
	
8
	
-

	
9
	
01/26/2003
	
12/27/02-1/26/03
	
-
	
31
	
-
	
5
	 
	
10
	
01/28/2003
	
12/29/02-1/28/03
	
-

_________
	
31
	
-
	
3
	


___________

	


Total
	 	 	
-

________
	 	 	 	
-

_________

	 	 	 	 	 	 	 	 


















EXHIBIT C



ASSUMPTION AGREEMENT

THIS ASSUMPTION AGREEMENT (this "Agreement") is made and entered into as
of the ___ day of January, 2003 by and among Gottschalks Credit Receivables
Corporation ("GCRC"), Gottschalks Inc. ("Gottschalks" together with GCRC the
"Sellers"), and Household Bank (SB), N.A. ("Buyer"), pursuant to that certain
Purchase and Sale Agreement dated as of January ___, 2003 (the "Purchase
Agreement") among Sellers and Buyer.  Capitalized terms not otherwise defined
herein have the meanings given such terms in the Purchase Agreement.

WHEREAS, each Seller desires to sell and assign to Buyer and Buyer wishes to
purchase and accept from each Seller, for the consideration and upon the terms
and conditions set forth in the Purchase Agreement, all of such Seller's right,
title and interest in, to and under the Accounts and Customer Structure
(collectively, the "Account Portfolio Assets"), on and after the Cut-Off Time
applicable to such Account Portfolio Assets;

NOW, THEREFORE, pursuant to the Purchase Agreement, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed that:



	Acceptance and Assumption.  Buyer hereby assumes and agrees to pay,
perform in accordance with the terms of and be bound by each Seller's
obligations that are to be performed after each Closing Date with respect to,
and under, the Account Portfolio Assets of such Seller sold, granted, conveyed,
delivered, transferred or assigned to Buyer on each such Closing Date.

	Benefit: Governing Law.  This Agreement shall inure to the benefit
of, and be binding upon, the respective successors and assigns of the parties
hereto and shall be governed by and construed and interpreted in accordance with
the Purchase Agreement, the internal laws of the State of New York, without
regard to principles of conflicts of laws, and applicable federal law.

	Effect on Purchase Agreement.  Nothing contained in this Agreement
shall be deemed to supersede any of the obligations, agreements, covenants,
representations or warranties of Sellers or Buyer contained in the Purchase
Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.

	
 

GOTTSCHALKS CREDIT RECEIVABLES CORPORATION 


By: /s/ Michael Geele

Title: President

 

GOTTSCHALKS INC. 


By:  /s/ James Famalette

Title: President & CEO
	
HOUSEHOLD BANK (SB), N.A.:

By:/s/ Richard C. Klesse
Title: Vice President


 





















EXHIBIT D



BILL OF SALE

THIS BILL OF SALE (this "Bill of Sale") is made and entered into as of
the ___ day of January, 2003 by and among Gottschalks Credit Receivables
Corporation ("GCRC"), Gottschalks Inc. ("Gottschalks" together with GCRC the
"Sellers"), and Household Bank (SB), N.A. ("Buyer"), pursuant to that certain
Purchase and Sale Agreement dated as of January ___, 2003 (the "Purchase
Agreement") among Sellers and Buyer.  Capitalized terms not otherwise defined
herein have the meanings given such terms in the Purchase Agreement.

WHEREAS, each Seller desires to sell and assign to Buyer and Buyer wishes to
purchase and accept from each Seller, for the consideration and upon the terms
and conditions set forth in the Purchase Agreement, all of such Seller's right,
title and interest in, to and under the Accounts and Customer Structure,
(collectively, the "Account Portfolio Assets") on and after the Cut-Off Time
applicable to such Account Portfolio Assets;

NOW, THEREFORE, pursuant to the Purchase Agreement, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed that:

	Sale and Transfer.  Each Seller hereby sells, grants,
conveys, delivers, transfers, and assigns to Buyer and its successors and
assigns all of such Seller's right, title and interest in the Account Portfolio
Assets on the Closing Date applicable to such Account Portfolio Assets, to have
and to hold the Account Portfolio Assets for its or their own use and benefit
forever.

	Representations and Warranties.  The transfer of the Account
Portfolio Assets pursuant to Section (a) hereof is subject to the
representations and warranties contained in the Purchase Agreement that survive
the Closing.

	Benefit: Governing Law.  This Bill of Sale shall inure to the benefit
of, and be binding upon, the respective successors and assigns of the parties
hereto and shall be governed by and construed and interpreted in accordance with
the Purchase Agreement, the internal laws of the State of New York, without
regard to principles of conflicts of laws, and applicable federal law.

	Effect on Purchase Agreement.  Nothing contained in this Bill of Sale
shall be deemed to supersede any of the obligations, agreements, covenants,
representations or warranties of Sellers or Buyer contained in the Purchase
Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Bill of Sale to be
executed by their duly authorized representatives the day and year first above
written.

	
GOTTSCHALKS  CREDIT RECEIVABLES CORPORATION 


By: /s/ Michael Geele

Title: President

 

GOTTSCHALKS INC.


By: /s/ James Famalette

Title: President & CEO
	
HOUSEHOLD BANK (SB), N.A.:

By:/s/ Richard C. Klesse
Title: Vice President























EXHIBIT E



BROKERS

Financo Inc.