02052003 8K Exhibit 10.5




Consent and Fourth AMENDMENT TO CREDIT AGREEMENT

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

W I T N E S S E T H

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

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

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

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

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



	

RELATION TO THE CREDIT AGREEMENT; DEFINITIONS.



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



	



 CONSENT, AMENDMENT, AND WAIVER



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

	Amendment to Credit Agreement.  


	Section 5.15 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

"5.15  Payments from Household Agreements and Escrow
Agreement.  

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

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

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

"5.16[Intentionally Deleted]"

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

"5.17[Intentionally Deleted]"

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

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

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

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

"6.21[Intentionally Deleted]"

	Annex A to the Credit Agreement is hereby amended by:

	adding the following new definitions in alphabetical order thereto:

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

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

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

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

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

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

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

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

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

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

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

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

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

	Amendment to Security Agreement.  


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

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

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


	



CONDITIONS



	Effective Date.  The consent, waiver, and release set forth in
this Agreement shall become effective as of the date first written above (the
"Effective Date") when (and only when) all of the conditions
set forth in this Section shall have been, or shall be concurrently with the
effectiveness hereof, satisfied or waived, in each case as determined by Agent
in its sole discretion.


	Execution and Delivery of Documents.  Agent shall have
received counterparts of the following documents, duly executed by the parties
thereto and otherwise in form and substance satisfactory to Agent:

	this Agreement 
	the Household Purchase Agreement 
	the Household Servicing Agreement
	the Household Credit Card Agreement;
	the Escrow Agreement;
	that certain Escrowed Funds Letter of Direction from Borrower and GCRC to
Agent, and agreed to and acknowledged by Escrow Agent in substantially the form
of Exhibit F hereto; 
	that certain Household Letter of Direction among Borrower, Agent, and
Household in substantially the form of Exhibit G hereto; and
	that certain Consent and Amendment among Borrower, Kimco, and GCRC dated as
of the date hereof.



	Initial Closing; Deposit of Estimated Initial Purchase Price into
Escrow Account.  The initial Closing shall have occurred under the
Household Purchase Agreement and the Estimated Initial Purchase Price (as
defined in the Household Purchase Agreement) shall have been deposited into the
Escrow Account (as defined in the Household Purchase Agreement).

	Termination of Securitization.  Agent shall have received
evidence that the Certificates (as defined in the Escrow Agreement) are being
cancelled concurrently with the initial Closing (as defined in the Household
Purchase Agreement).


	



MISCELLANEOUS.



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



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










	Certificate as to Representations and Warranties and No Event
of Default.   Borrower shall deliver to Agent an officer's certificate,
dated the date of this Agreement, certifying that the representations and
warranties of the Borrower contained in the Credit Agreement are true on and as
of the date of this Agreement (except to the extent that any such
representations or warranties relate to a specific prior date or period) and
that there exists no Event of Default or Default as of the date of this
Agreement.

	Expenses.  Borrower hereby reconfirms its obligations pursuant
to Section 11.3 of the Credit Agreement to pay and reimburse Agent for
all reasonable costs and expenses (including, without limitation, reasonable
fees of counsel) incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and all other documents and instruments
delivered in connection herewith. 

	GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

	Counterparts; Telefacsimile Transmission.  This Agreement may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute
this Agreement by signing any such counterpart.  Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Agreement.  Any party
delivering an executed counterpart of this Agreement by telefacsimile also shall
deliver an original executed counterpart of this Agreement, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.

 

 

 

 

[Signature Page to Follow]


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

By: /s/ James Famalette 

       Title:  President & CEO


  

GENERAL ELECTRIC CAPITAL

CORPORATION,

as Agent and Lender


By: /s/ Todd Gronski

       Title:  Its Duly Authorized Signatory


 

THE CIT GROUP/BUSINESS CREDIT INC.,

as Lender


By:  /s/ Adrian Avalos

       Title: Vice President  

FOOTHILL CAPITAL CORPORATION,

as Lender


By:  /s/ Juan Barrera

       Title:  Assistant Vice President  

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

as Lender


By:  /s/ Daniel O'Rourke

       Title:  Vice President  











[Signature Page to Consent and Fourth Amendment]

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

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

Acknowledged, consented and agreed to as of January 30, 2003.
GOTTSCHALKS CREDIT RECEIVABLES CORPORATION, a Delaware corporation


 

By:  /s/ Michael Geele

Title:  President


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 











[GCRC Acknowledgement and Consent to Consent and Fourth
Amendment]



 

Exhibit A



Household Credit Card Agreement



Exhibit B



Household Purchase Agreement



 

Exhibit C



Household Servicing Agreement



Exhibit D



Escrow Agreement



 

Exhibit E



Partial Release



Exhibit F



Escrowed Funds Letter of Direction 



 

 

Exhibit G



Household Letter of Direction