Document:

18

                         LEASE AGREEMENT

      THIS LEASE AGREEMENT (as hereinafter defined, this "Lease")
made  this the 16th day of February, 2000 by and between SIGNTECH
USA,  LTD., a Texas limited partnership (as hereinafter  defined,
"Landlord"),   and  ARLON  SIGNTECH,  LTD.,   a   Texas   limited
partnership (as hereinafter defined, "Tenant").

                      W I T N E S S E T H:

     1.   Definitions.  When used in this Lease and not otherwise
defined,   the  following  capitalized  terms  shall   have   the
respective meanings as follows:

           "ADA" shall have the meaning set forth in Paragraph 16
of this Lease.

          "Affiliate" shall mean, with respect to any person, any
other  person controlling, controlled by, or under common control
with such person.

          "Base CPI" shall mean the CPI for the most recent month
before the beginning of the initial term of this Lease, it  being
agreed that such CPI was ______.

           "Base  Rent"  shall  have the  meaning  set  forth  in
Paragraph 5 of this Lease.

           "Building" shall mean the building located on the real
property  described  in  Exhibit A and  containing  the  interior
portions  of  the Premises, it being acknowledged by the  parties
that  Landlord or others claiming through Landlord  may  use  the
remaining portions of the Building.

           "CPI"  shall mean the "Consumer Price Index-Seasonally
Adjusted U.S. City Average For All Items For All Urban Consumers,
(1982-84=100)," published monthly in the "Monthly  Labor  Review"
of the Bureau of Labor Statistics of the United States Department
of Labor.  If such CPI is discontinued, the "Consumer Price Index-
Seasonally  Adjusted U.S. City Average For All  Items  For  Urban
Wage  Earners  and  Clerical  Workers  (1982-84=100),"  published
monthly  in  the  "Monthly Labor Review" of the Bureau  of  Labor
Statistics  of the United States Department of Labor  (the  "CPI-
W"),  will be used instead of such CPI for making the computation
set  forth  above.   If  the  CPI-W is  discontinued,  comparable
statistics  on  the  purchasing  power  of  the  consumer  dollar
published by the Bureau of Labor Statistics of the United  States
Department  of Labor will be used for making the computation  set
forth  above.  If the Bureau of Labor Statistics will  no  longer
maintain  statistics  on the purchasing  power  of  the  consumer
dollar,   comparable  statistics  published  by   a   responsible
financial  periodical or recognized authority  agreeable  to  the
parties will be used for making the computation set forth  above.
If  the  base  year "(1982-84=100)" or other base  year  used  in
computing  the  CPI is changed, the figures used  in  making  the
computation  above  will  be changed  accordingly,  so  that  all
increases   in   such   price  index  are  taken   into   account
notwithstanding any such change in the base year.

           "Environmental, Health and Safety Laws" shall mean the
Comprehensive Environmental Response, Compensation and  Liability
Act  of 1980, the Resource Conservation and Recovery Act of 1976,
the  Clean Air Act,  the Federal Water Pollution Control Act, the
Hazardous  Materials Transportation Act, the Safe Drinking  Water
Act, the Toxic Substances Control Act, the Medical Waste Tracking
Act,  the Occupational Safety and Health Act of 1970, as amended,
together  with  all  other  laws (including  rules,  regulations,
codes,  injunctions,  judgments,  orders,  decrees,  and  rulings
thereunder)  of  federal, state, local, and  foreign  governments
(and all agencies thereof) concerning pollution or protection  of
the environment, public health and safety, or employee health and
safety (specifically including the Occupational Safety and Health
Administration),  all as the same now exist or hereafter  may  be
amended.

          "Hazardous  Materials" shall mean any  waste  or  other
substance that is listed, defined, designated, or classified  as,
or  otherwise determined to be, hazardous, radioactive, or  toxic
or  a pollutant or a contaminant under or pursuant to any of  the
Environmental, Health, and Safety Laws, including but not limited
to  any admixture or solution thereof, and specifically including
but  not  limited  to  waste oil, petroleum and  all  derivatives
thereof or synthetic substitutes therefor and friable asbestos.

           "Landlord"  shall  mean Signtech USA,  Ltd.,  a  Texas
limited partnership that soon will change its name to "Salsa"  or
some  other  appropriate name not including the word  "Signtech,"
the  owner  of  the Premises and the landlord under  this  Lease,
together with its successors and permitted assigns.

          "Lease" shall mean this Lease Agreement and all written
amendments hereto that hereafter shall be executed and  delivered
by Landlord and Tenant.

           "New CPI" shall mean, with respect to determination of
Base  Rent  for either renewal term, the CPI for the most  recent
month before the beginning of such renewal term.

          "Premises" shall mean the real property to be leased by
Tenant  from  Landlord  under this Lease, consisting  of  certain
portions  of the real property and improvements located  at  4669
Highway  90  West,  San  Antonio,  Texas  and  more  particularly
described in Exhibit A hereto, including, without limitation, (a)
approximately  90,470 square feet of manufacturing space  located
within  the  Building,  (b) 7,792 square  feet  of  office  space
located  within  the  Building, and (c)  the  right  to  use  the
exterior  portions of the real property described  in  Exhibit  A
hereto,  including a Proportionate Share of the  parking  spaces.
The  portions  of  the  Building to be  occupied  by  Tenant  are
described  in  the  drawing of the Building  attached  hereto  as
Exhibit B.

           "Proportionate  Share" shall  mean,  with  respect  to
either  Landlord or Tenant, a share based upon the size  of  that
portion of the Building allocated to such party, it being  agreed
that:

                (a)   the Proportionate Share of Tenant shall  be
that  fraction  of  the whole of which (1) the numerator  is  the
number  of  square  feet located in the Building  and  leased  by
Tenant  under  this Lease, and (2) the denominator is  the  total
number of square feet in the Building, and

                (b)   the  share of Landlord shall be the  entire
balance of the whole.

           "Tenant"  shall  mean Arlon-Signtech,  Ltd.,  a  Texas
limited partnership, the lessee of the Premises under this Lease,
and  if  this Lease shall be validly assigned, or if the Premises
shall be validly sublet, then "Tenant" shall include the Tenant's
assignees  or  sub-Tenants as to the particular portions  of  the
Premises covered by such assignment or sub-lease.

       2.     Leasing  of  Premises.   Landlord,   for   and   in
consideration   of   the   rents,  covenants,   agreements,   and
stipulations hereinafter mentioned, reserved and contained, to be
paid, kept and performed by Tenant, has leased and rented, and by
these  presents does lease and rent, unto said Tenant,  and  said
Tenant  hereby  agrees  to  lease and take  upon  the  terms  and
conditions  which  hereinafter appear,  the  Premises.   Landlord
covenants   that  Tenant,  provided  it  performs  all   of   its
obligations  under this Lease, will peaceably and  quietly  enjoy
the  Premises during the Lease term without any disturbance  from
Landlord, anyone claiming by, through or under Landlord,  or  any
other  party, except as otherwise specifically provided  in  this
Lease.

      3.    Term.  Unless renewed by Tenant in its discretion  in
the manner hereinafter provided, the term of this Lease shall  be
for  a period of three (3) years, with such term to begin on  the
_____  day  of  February, 2000 and to end on the  ______  day  of
February, 2003.

      4.    Renewal Options.  Provided it is not then in  default
under  the Lease, Tenant may renew the term of this Lease  up  to
two  (2)  consecutive  times for five (5)  additional  years  per
renewal  by  written notice of its election to  do  so  given  to
Landlord  at  least one hundred eighty (180) days  prior  to  the
expiration date of the initial term or the expiration date of the
first  renewal term, as applicable.  With the exception of  rent,
the  renewal  term will be on all of the terms and conditions  of
this Lease.  The rent for each renewal term shall be increased as
follows:

           (a)   For  the  first renewal term, the annual  rental
shall be the amount determined by multiplying the Base Rent by  a
fraction of which:

               (1)  the numerator is New CPI; and

               (2)  the denominator is the Base CPI.

           (b)   For  the second renewal term, the annual  rental
shall be the amount determined by multiplying the Base Rent by  a
fraction of which:

               (1)  the numerator is the New CPI; and

               (2)  the denominator is the Base CPI.

           (c)   In  no  event shall the annual  rental  for  any
renewal term be reduced by operation of the formula set forth  in
this Paragraph.

      5.    Rental.   For the initial term of this Lease,  Tenant
will  pay an annual rental of Four Hundred Twelve Thousand  Seven
Hundred  and 40/100 Dollars ($412,700.40) (the "Base  Rent")  per
year.   The  annual rental for each year of the initial  term  of
this  Lease  will  be  due and payable in  twelve  equal  monthly
installments of Thirty Four Thousand Three Hundred Ninety-One and
70/100  Dollars ($34,391.70) in advance on the first day of  each
and  every calendar month during the initial term of this  Lease.
The  first  payment of such annual rental is to be  made  on  the
_____  day of February, 2000, pro-rated if the term begins  on  a
day  other  than  the  first  day  of  the  month.   The  parties
acknowledge that the Base Rent during the initial term  is  based
on  an  agreed  rental amount of four dollars  and  twenty  cents
($4.20)  per  square  foot  and a gross  square  footage  of  the
interior  portions  of  the  Premises  of  98,262  square   feet,
consisting of 90,470 square feet of manufacturing space and 7,792
square feet of office space.  If the actual square footage of the
Premises is less than as set forth above, the annual rental  (and
monthly payments) shall abate proportionately.

      The annual rental for each year of any renewal term of this
Lease   will   be  due  and  payable  in  twelve  equal   monthly
installments  in  advance on the first  day  of  each  and  every
calendar month during the renewal term.

     6.   Utility Bills.

           (a)   For  any utilities that are separately  metered,
Tenant  will  pay all utility bills of all types, including,  but
not  limited  to,  water and sewer, natural gas, electricity  and
sanitary  pick up bills for the Premises, or used  by  Tenant  in
connection  therewith. If Tenant does not pay same, Landlord  may
pay  the  same, and such payment will be added to  the  next  due
monthly installment of rental of the Premises.

          (b)  For any utilities that are not separately metered,
Tenant  will pay to Landlord its Proportionate Share  of  utility
costs  no  later  than the date such utility costs  are  due  and
payable  to the utility provider.  If Landlord does not then  pay
same,  Tenant may pay such utility costs, and Tenant's rent  will
be abated by such amount so paid by Tenant.

     7.   Ad Valorem Taxes.

            (a)    Tenant  shall  pay  as  additional  rent   its
Proportionate Share of any and all ad valorem real  estate  taxes
assessed  and  levied  against the  real  property  described  in
Exhibit  A to this Lease and the improvements thereto.   Tenant's
proportionate  share shall be payable to Landlord no  later  than
the date such taxes may be paid without penalty or interest.

           (b)   Tenant  shall pay its fair share of any  special
assessment  imposed  upon  the Property,  it  being  agreed  that
Tenant's   fair  share  shall  be  based  on  both  (1)  Tenant's
Proportionate  Share of the Building, and (2) the  ratio  of  the
then  remaining  term of this Lease to the  useful  life  of  the
improvement  to which the special assessment pertains.   Tenant's
fair  share shall be payable to Landlord no later than  the  date
such taxes may be paid without penalty or interest.

           (c)   Tenant  will pay timely any and all  ad  valorem
taxes assessed against the personal property of Tenant located on
the Premises, during the entire term thereof.

           (d)   Tenant  shall have the right, at  Tenant's  sole
expense,  to appeal any and all taxes applicable to the  Premises
and  Landlord  agrees  that Landlord will cooperate  with  Tenant
reasonably   and  sign  all  documents  reasonably  required   in
connection  with  any such appeal.  Provided that  an  appeal  or
protest  of  a  tax  assessment  will  operate  to  suspend   the
collection of assessed taxes and the enforcement of the lien  for
the assessed tax, Tenant may delay payment of any portion of such
taxes  which  are the subject of an appeal or protest  until  the
resolution of such appeal or protest, in which event Tenant shall
be solely responsible for the payment of any penalties, interest,
or    additional   taxes   which   result   from   such    delay.
Notwithstanding the foregoing, Tenant shall not permit the filing
of a tax lien against the Premises.

     8.   Insurance.

           (a)  Landlord will carry "All Risk" Insurance Coverage
on  the  demised  Premises in an amount not less  than  the  full
insurable  value. The term "full insurable value" will  mean  the
actual  replacement  cost,  excluding foundation  and  excavation
costs, as reasonably determined by Landlord.  Such policies  will
name   Tenant  as  an  additional  named  insured.   Tenant  will
reimburse Landlord for its Proportionate Share of the "All  Risk"
Insurance  Coverage  no later than the date the  premium  on  the
coverage  is  due  and  payable to  the  insurance  carrier.   If
Landlord  fails  in its obligations to obtain  or  maintain  said
insurance,  Tenant  may,  at  its option,  either  (1)  make  the
requisite  payments for Landlord's insurance and  have  its  rent
abated by said amount, or (2) obtain its own insurance, for which
Landlord will be liable to Tenant for its Proportionate Share  of
the costs thereof.

            (b)   Tenant  will  carry  at  Tenant's  own  expense
insurance  coverage  on all equipment, fixtures  and  appliances.
Landlord  acknowledges  that consistent  with  the  practices  of
Tenant's ultimate parent entity, certain perils that are  insured
by  many  businesses are self-insured by Tenant up to the  parent
entity's prescribed excess insurance attachment point.

           (c)   Landlord and Tenant waive all rights to  recover
against each other or against any other Tenant or occupant of the
Building,  or  against  the  officers,  directors,  shareholders,
partners,   joint   venturers,  employees,   agents,   customers,
invitees,  or  business visitors of each other or  of  any  other
Tenant  or  occupant  of the Building, for  any  loss  or  damage
arising  from any cause covered by any insurance required  to  be
carried  by each of them pursuant to this Paragraph or any  other
insurance actually carried by each of them.  Landlord and  Tenant
will  cause their respective insurers to issue appropriate waiver
of  subrogation rights endorsements to all policies of  insurance
carried  in connection with the Building or the Premises  or  the
contents  of  either  of  them to the  extent  such  waivers  are
available.

      9.    Maintenance and Repairs by Tenant.  Landlord warrants
as  of the commencement date of this Lease that the Premises  are
structurally  sound  and that all electrical, lighting,  utility,
fire  safety, HVAC, and all operating systems are in good working
condition and are not in need of repair.  Except as set forth  in
Paragraph 10, Tenant will, at its own expense, keep and  maintain
the interior of the Premises, including all systems pertaining to
electrical,  lighting, and HVAC; provided, however, if  the  HVAC
system  serves  both  Landlord  and  Tenant,  Landlord  shall  be
responsible  for  its maintenance and repair,  and  Tenant  shall
reimburse  Landlord for its Proportionate Share of the  costs  of
said  repair  no later than the date the cost of the  maintenance
and repairs is due and payable by Landlord.  It is the intent  of
the parties that Tenant will only be required to make repairs  or
replacements which are not structural in nature.

      10.  Repairs by Landlord.  Landlord agrees to maintain  and
keep in good repair the roof, exterior walls, structural supports
(including foundations), exterior doors of any and all  buildings
located  on  the Premises, and all water or sewer  pipes  located
underground  or  in the slab, sidewalks, parking lots,  driveways
and  other vehicular access and maneuvering areas.  Landlord will
also  be  responsible for any repairs or replacements  which  are
structural  in  nature,  which are extraordinary  or  capital  in
nature,  which will increase the value of the Premises subsequent
to  the end of the then term, and any other repairs not expressly
delegated  to Tenant in this Lease.  Landlord will also  promptly
clean  up and dispose of any Hazardous Materials found on, in  or
under  any  portion of the Premises, remediate  the  Premises  to
comply  with  any and all environmental laws applicable  thereto,
and pay for all clean up and disposal costs at no cost to Tenant,
unless  directly  caused  by Tenant,  its  employees,  agents  or
contractors.

      11.   Destruction  of or Damage to the  Premises.   If  the
Premises   are  totally  destroyed  by  storm,  fire,  lightning,
earthquake or other casualty, this Lease will terminate as of the
date  of  such destruction, and rental will be accounted  for  as
between Landlord and Tenant as of that date. If the Premises  are
damaged  but  not  wholly destroyed by any  of  such  casualties,
rental  will abate in such proportion as use of the Premises  has
been  destroyed,  and  Landlord  will  restore  the  Premises  to
substantially the same condition as before the damage as speedily
as  practicable, whereupon full rental will recommence;  however,
if  the damage will be so extensive the same cannot be reasonably
repaired  and restored within _______ (__) months' time from  the
date  of the casualty, then either Landlord or Tenant may  cancel
this  Lease  by giving written notice to the other  party  within
thirty  (30) days from the date of such casualty.  In such event,
rental  will  be  apportioned and paid up to  the  date  of  such
casualty.

      12.   Modifications and Alterations to  the  Premises.   No
modifications,  alterations, or improvements to the  Building  or
openings  cut  through  the roof are allowed  without  the  prior
written   consent  of  Landlord,  which  consent  will   not   be
unreasonably withheld or delayed.

      13.   Removal of Fixtures.  Tenant may (if not  in  default
hereunder) prior to the expiration of this Lease, or any  renewal
or  extension thereof, remove all personal property, fixtures and
equipment which Tenant has placed in the Premises, provided  that
during  such  removal  Tenant will make  all  reasonable  repairs
necessary  to  return  the  Premises to its  original  condition,
reasonable wear and tear excepted.

      14.   Return of the Premises.  Tenant agrees to return  the
Premises  to  Landlord at the expiration or prior termination  of
this  Lease  in  same condition and repair, reasonable  wear  and
tear,  damage  by  storm, fire, lightning,  earthquake  or  other
casualty alone excepted.

     15.  Condemnation.

           (a)   If  the  whole of the Premises, or such  portion
thereof as will make the Premises unusable for the purpose herein
leased,  shall be condemned by any legally constituted  authority
for  any  public  use or purpose or if Landlord  shall  sell  the
Premises  under threat of condemnation, then in either such  case
the  term  of  this  Lease will end at the time  when  possession
thereof  is  taken  by public authorities,  and  rental  will  be
accounted  for  as between Landlord and Tenant as of  that  date.
Such  termination,  however, will be  without  prejudice  to  the
rights  of Landlord to recover compensation and damage caused  by
condemnation  from  the  condemnor or the  rights  of  Tenant  to
recover  from  the  condemnor  compensation  for  its  costs   of
relocation (including for any business disadvantage or  increased
rent  resulting  from  such relocation) and for  the  unamortized
value  of  leasehold improvements made by Tenant.  It is  further
understood and agreed that neither Tenant nor Landlord will  have
any  rights  in  any  award made to the other by  any  condemning
authority.

           (b)   If there is a partial taking of the Premises  by
condemnation  and  if it is not so extensive  as  to  render  the
remaining  portion  (after  restorations)  unsuitable   for   the
business  of Tenant, then this Lease will continue in effect  and
Landlord,  upon  receipt  of  the  award  in  condemnation,  will
expeditiously  commence and complete all  necessary  repairs  and
restorations to the Premises so as to constitute the  portion  of
the  Building not taken a complete architectural unit and restore
the  Premises  as  nearly as practicable to its prior  condition;
provided,  however, that such work does not exceed the  scope  of
the  original  construction, and Landlord will not be  under  any
duty  to  expend  amounts  in excess of  the  award  received  by
Landlord.   Rent, taxes and other charges payable by Tenant  will
equitably abate while Landlord's repairs and restorations are  in
process.   If a partial taking consists only of a street widening
or  utility  easement which, at Tenant's reasonable judgment,  is
determined not to materially affect Tenant's use of the Premises,
this  Lease  will  continue  in full  force  and  effect  without
abatement of rent, taxes or other charges.

      16.   Governmental  Orders.   Tenant  agrees,  at  its  own
expense  and solely in relation to those portions of the Premises
which Tenant is required to maintain or repair under Paragraph 9,
to   promptly  comply  with  all  requirements  of  any   legally
constituted public authority made necessary by reason of Tenant's
specific  use  of said Premises.  Notwithstanding the  foregoing,
the  Tenant  will  not  be liable for: (a) repairs,  alterations,
replacements  or  retrofitting required by the  accessibility  or
path  of  travel  requirements set forth  in  Title  III  of  the
Americans  With Disabilities Act of 1990, 42 USC 12101,  et  seq.
and regulations and guidelines promulgated thereunder, as amended
from  time  to  time (collectively referred to  as  "ADA");   (b)
repairs,  alterations  or replacements required  to  comply  with
federal,  state  or  local  indoor air  quality  laws,  rules  or
regulations  (separate and apart from any  such  laws,  rules  or
regulations  that  are  specific to Tenant's  industry);  or  (c)
repairs,  alterations or replacements described in Paragraph  10.
Landlord agrees to promptly comply with any other governmental or
regulatory  requirements  if  not made  necessary  by  reason  of
Tenant's  occupancy of the Premises or relating to those portions
of  the Premises which Landlord is required to maintain or repair
under Paragraph 10.

     17.  Assignment.  Tenant may assign this Lease or sublet all
or  part of the Premises to (a) any Affiliate of Tenant, and  (b)
any  entity  that is not an Affiliate of Tenant that succeeds  to
the   entire   business  of  Tenant  through  purchase,   merger,
consolidation or reorganization.  Any other subletting of all  or
any portion of the Premises or assignment in whole or in part  of
this  Lease shall be prohibited without the prior written consent
of   Landlord,   which   shall  not  be  withheld   unreasonably.
Subtenants  or assignees will become liable directly to  Landlord
for  all  obligations  of  Tenant  hereunder,  without  relieving
Tenant's liability.

     18.  Mortgagee's Rights.  Tenant's rights will be subject to
any  bona fide mortgage or deed to secure debt which is  now,  or
may  hereafter  be,  placed upon the Premises  by  Landlord,  and
Tenant  agrees, at Landlord's cost, to execute and  deliver  such
documentation as may be reasonably required by any such mortgagee
to effect any subordination. Provided, however, as a condition to
such  subordination, Landlord must secure from each  mortgagee  a
nondisturbance agreement acceptable to Tenant providing  that  in
the  event  of  a  foreclosure the mortgagee will  recognize  the
validity  of  this  Lease and, provided that  Tenant  is  not  in
default, will not disturb Tenant's possession or its rights under
this Lease.  Landlord and Tenant specifically approve the form of
Subordination,  Nondisturbance and Attornment Agreement  attached
hereto as Exhibit C.

      19.   Use of the Premises.  The Tenant may use the Premises
for    the   manufacturing  of  plastics   or   other   products,
warehousing,  storage, and related office purposes, for  engaging
in the flexible signage materials, screen-printing, heat transfer
and related products businesses, or for any other lawful purpose.
The  Premises will not be used for any illegal purposes,  nor  in
any  manner to create any nuisance or trespass; nor in any manner
to  vitiate the insurance, based on the above purposes for  which
the Premises are leased.

     20.  Signs.  Tenant will have the right to erect at Tenant's
sole  expense  signage at the entrance to and upon the  Premises,
including  but not limited to a customary trade sign  identifying
the  business of Tenant.  The erection of signage by Tenant  will
be  subject to and in conformity with all applicable laws, zoning
ordinances and building restrictions or covenants of record.   On
or  before  termination  of this Lease, Tenant  will  remove  the
signage   thus   erected,  and  will   repair   any   damage   or
disfigurement, caused by such removal.  All signage  proposed  by
Tenant shall be subject to Landlord's review and approval,  which
approval  shall  not  be  unreasonably withheld,  conditioned  or
delayed.

      21.  Tenant's Right of First Refusal to Purchase.  Landlord
will  have  the  right  to sell the real  property  described  in
Exhibit  A and all improvements thereto, but such right shall  be
subject to the following conditions:

           (a)  Landlord shall give notice of each proposed sale,
including  the purchase price and all other terms and conditions,
to Tenant;

           (b)   Tenant will have the right to purchase such real
property  at  the  purchase price and  on  the  other  terms  and
conditions  offered  by Landlord or offered to  Landlord  by  the
third  party (which offer Landlord wishes to accept),  by  giving
notice  to  Landlord  within  twenty  (20)  business  days  after
Landlord  has notified Tenant of the terms of Landlord's proposed
sale; and

           (c)  if Tenant does not give notice of the exercise of
its option within such time, Landlord will have the right to sell
such  real  property upon the terms stated in the offer  made  or
received  by Landlord, but not upon terms more favorable  to  the
purchaser,  unless  Landlord  again  gives  notice  pursuant   to
Subparagraph (a) above, and Tenant does not exercise  its  option
based   upon  the  new  terms.   Notwithstanding  the  foregoing,
Tenant's  right of first refusal to purchase such  real  property
shall not apply to Landlord's sale of such real property as  part
of  the  sale  by  Landlord  of a portfolio  of  properties  that
includes such real property and at least two other properties  of
equal or greater value.

     22.  Entry for Carding, etc.  Landlord may card the Premises
"For Rent" ninety (90) days before the termination of this Lease.
Landlord  may enter the Premises at reasonable hours  during  the
term  of this Lease to exhibit the same to prospective purchasers
and  to make repairs required of Landlord under the terms hereof.
Landlord may card the real property described on Exhibit "A" "For
sale" or any portion of the real property other than the Premises
"For Rent" at any time.

     23.  Indemnity.

           (a)   Landlord  agrees to indemnify and save  harmless
Tenant  and  its  parents, subsidiaries,  Affiliates,  directors,
officers,    employees,   agents,   servants,    attorneys    and
representatives  from  any  and all  claims,  causes  of  action,
damages,    fines,   judgments,   penalties,   costs   (including
environmental  clean-up costs and response  costs),  liabilities,
expenses  or  losses  (including without  limitation,  reasonable
attorneys'  fees  and expenses of litigation) arising  during  or
after  the  Lease  term:  (1) as a result  of  any  violation  by
Landlord  or  prior owners or occupants of the  Premises  of  any
applicable  federal,  state  or  local  environmental   laws   or
regulations,  as  now  or  hereinafter  in  effect,   regulating,
relating  to  or  imposing  liability or  imposing  standards  of
conduct concerning any Hazardous Materials; or (2) as a result of
the presence, disturbance, discharge, release, removal or cleanup
of   Hazardous   Materials  or  as  a  result  of   environmental
contamination or other similar conditions which existed prior  to
commencement of the Lease term, including the matters  referenced
in  the Asset Purchase Agreement between Landlord, as Seller, and
Tenant,   as   Buyer,   under  which  Landlord   has   undertaken
responsibility for certain corrective environmental measures;  or
(3) as a result of any violation of the accessibility or path  of
travel requirements imposed by ADA; or (4) as a result of any  of
Landlord's  representations and warranties  being  untrue.  These
indemnities   will  survive  the  expiration,   cancellation   or
termination   of  the  Lease.   Notwithstanding  the   foregoing,
Landlord's  indemnities  shall not  apply  or  extend  to  claims
arising from or caused by Tenant.

           (b)   Tenant  agrees to indemnify  and  save  harmless
Landlord  and  its parents, subsidiaries, Affiliates,  directors,
officers,    employees,   agents,   servants,    attorneys    and
representatives  from  any  and all  claims,  causes  of  action,
damages,    fines,   judgments,   penalties,   costs   (including
environmental  clean-up costs and response  costs),  liabilities,
expenses  or  losses  (including without  limitation,  reasonable
attorneys'  fees  and expenses of litigation) arising  during  or
after  the Lease term: (1) as a result of any violation by Tenant
of  any  applicable federal, state or local environmental laws or
regulations,  as  now  or  hereinafter  in  effect,   regulating,
relating  to  or  imposing  liability or  imposing  standards  of
conduct concerning any Hazardous Materials; or (2) as a result of
the presence, disturbance, discharge, release, removal or cleanup
of   Hazardous   Materials  or  as  a  result  of   environmental
contamination  or  other similar conditions which  existed  after
commencement of the Lease term and which was caused by or brought
onto  the  Premises  by  Tenant or Tenant's agents,  contractors,
employees,  licensees and invitees; or (3) as  a  result  of  any
violation  by  Tenant  of the accessibility  or  path  of  travel
requirements  imposed  by ADA; or (4)  as  a  result  of  any  of
Tenant's  representations  and warranties  being  untrue.   These
indemnities   will  survive  the  expiration,   cancellation   or
termination of the Lease; provided, however, that Tenant will not
be  liable  for the acts of Landlord or of any other  tenants  of
said property.

     24.  Default of Tenant.

           (a)   It shall be a default by Tenant if: (1) the rent
herein required is not paid at the time and place when and  where
due  and Tenant fails to pay said rent within ten (10) days after
written demand from Landlord; or (2) Tenant fails to comply  with
any  material  term, provision, condition, or  covenant  of  this
Lease,  other  than the payment of rent, and will not  cure  such
failure  within thirty (30) days after notice to Tenant  of  such
failure  to  comply  or  such  additional  time  period  as   may
reasonably be necessary to effect a cure of the default  provided
that  Tenant  commences  and diligently pursues  a  cure  of  the
default;  or (3) Tenant causes any lien to be placed against  the
Premises and does not cure the same within thirty (30) days after
notice from Landlord to Tenant demanding cure.

            (b)   Upon  any  default  by  Tenant  referenced   in
Subparagraph (a) above, Landlord may, in addition to, and not  in
limitation of any other remedy permitted by law or by this Lease:

                (1)   terminate this Lease, in which case  Tenant
shall (A) immediately surrender the Premises to Landlord, and (B)
indemnify  Landlord  for all loss and damage  that  Landlord  may
suffer  by  reason of such termination, whether through inability
to relet the Premises, or through decrease in rent, or otherwise;
or

               (2)  acting as Tenant's agent, without terminating
this  Lease, may terminate Tenant's right of possession, and,  at
Landlord's option, enter upon and rent the Premises at  the  best
price obtainable by reasonable effort, without advertisement  and
by  private negotiations and for any term Landlord deems  proper,
in  which  case  Tenant  will  be  liable  to  Landlord  for  the
deficiency, if any, between Tenant's rent hereunder and the price
obtained by Landlord on reletting.

Pursuit  of  any  of  the foregoing remedies  will  not  preclude
pursuit of any of the other remedies herein provided or any other
remedies  provided  by  law.   In any  case,  Landlord  will  use
reasonable efforts to mitigate Tenant's damages.  Any  notice  in
this  provision  may be given by Landlord or  its  attorney.   No
termination of this Lease prior to the normal ending thereof,  by
lapse  of  time  or  otherwise, will affect Landlord's  right  to
collect rent for the period prior to the termination thereof.

     25.  Default of Landlord.  It shall be a default by Landlord
if  Landlord  fails to comply with any material term,  provision,
condition  or  covenant  of this Lease and  will  not  cure  such
failure within thirty (30) days after notice to Landlord of  such
failure  to  comply  or  such  additional  time  period  as   may
reasonably be necessary to effect a cure of the default  provided
that  Landlord  commence and diligently pursues  a  cure  of  the
default.   Upon  any  default by Landlord,  Tenant  may,  at  its
option, elect to: (a) terminate this Lease upon thirty (30)  days
written  notice  to  Landlord; (b) bring  an  action  to  require
specific  performance  of  Landlord's  obligations;  (c)  provide
Landlord with an additional period of time within which to effect
that  cure; (d) commence such cure itself, and Tenant may either,
at  its  option, offset any expenses it incurs in effecting  such
cure against the rent and other charges due and payable by Tenant
hereunder, or require that Landlord immediately reimburse  Tenant
for  its  expenses;  provided,  however,  in  the  event  of   an
emergency,  Tenant  may immediately effect a cure  of  Landlord's
failure should Landlord fail to act immediately to do so, without
the  requirement of any notice by Tenant to Landlord; and/or  (e)
pursue any other remedies provided herein or provided by law.

     26.  Warranties of Landlord.  Landlord warrants that:

           (a)  Landlord owns the Premises in fee simple and  has
the  right to enter into this Lease.  The Premises are free  from
liens  and encumbrances, except for utility easements, unviolated
restrictive  covenants which do not materially  adversely  affect
Tenant's intended use of the Premises, and other title matters to
which  the  conveyance of the Premises by Landlord to Tenant  was
subject,  including a mortgage for which the mortgagee,  Landlord
and  Tenant  have  executed a subordination,  nondisturbance  and
attornment   agreement.   The  Premises   have   legal,   direct,
pedestrian and vehicular access to and from and abuts one or more
publicly dedicated roads;

           (b)   Except  for  the corrective  environmental  work
called  for by the Asset Purchase Agreement between Landlord,  as
Seller,  and  Tenant,  as  Buyer,  to  Landlord's  knowledge  the
Premises  are  in compliance with all Environmental,  Health  and
Safety Laws.

           (c)   Except  for  the  citations  that  Landlord  has
separately  disclosed  to Tenant, Landlord  has  not  received  a
citation  from  any  regulatory  agency  for  noncompliance  with
Environmental, Health and Safety Laws.  Landlord alone  shall  be
responsible  for fines, penalties, and all other damages  arising
out  of  any  such  citation  with  respect  to  occurrences   or
conditions at the Premises prior to the date hereof and  for  any
such  items  in  the  portions of the  Building  other  than  the
Premises  or  resulting from Landlord's use of such land  at  any
time subsequent to the date hereof.

      27.  Holding Over.  If Tenant remains in possession of  the
Premises  after  expiration of the term  hereof  with  Landlord's
acquiescence,  Tenant shall be a month to  month  tenant  on  the
terms that were in effect immediately prior to expiration of  the
term  of  this  Lease.  If Tenant remains in  possession  of  the
Premises  after expiration of the term hereof without  Landlord's
acquiescence  and after Landlord's written demand for  return  of
the  Premises, Tenant will be a tenant-at-sufferance at  150%  of
the  rental rate in effect at end of the Lease.  In neither  case
shall  there be deemed to be a renewal of this Lease (other  than
to a month-to-month basis, as stated above) by operation of law.

      28.  Notices.  Any notice given pursuant to this Lease will
be in writing and sent by certified mail to:

          If to Landlord:     Signtech USA, LTD.
                              4669 Highway 90 West
                              San Antonio, TX 78237
                              Attn:     Mr. James Gandy

          Copy to:            Deven N. Dixon, P.C.
                              Law Office, Trinity Plaza
                              745 East Mulberry Street, Suite 870
                              San Antonio, TX 78212

          If to Tenant:       Arlon Signtech, Ltd.
                              c/o Arlon, Inc.
                              Adhesives and Films Division
                              2811 South Harbor Boulevard
                              Santa Ana, CA 92704
                              Attn:     Mr. Elmer G. Pruim, III
                                        Division President

          Copies to:          Mr. James W. Lambert
                              Vice President
                              Arlon, Inc.
                              300 Primera Blvd., Suite 432
                              Lake Mary, FL 32746

                              Holland & Knight LLP
                              200 South Orange Avenue, Suite 2600
                              Orlando, Florida 32801
                              Attn:     Leighton D. Yates, Jr.

      29.   Construction of Lease Terms.  Irrespective  of  which
party  was responsible for the preparation and drafting  of  this
Lease,  the  terms  of  this Lease will  not  be  construed  more
strictly against such party than against any other party.

      30.   Waiver of Rights.  No failure of Landlord to exercise
any  power  given  Landlord hereunder, or to insist  upon  strict
compliance  by  Tenant  with its obligations  hereunder,  and  no
custom  or  practice of the parties at variance  with  the  terms
hereof  will  constitute a waiver of Landlord's right  to  demand
exact compliance with the terms hereof.

      31.   Rights Cumulative.  All rights, powers and privileges
conferred  hereunder upon the parties hereto will  be  cumulative
but not restrictive to those given by law.

      32.   Time  of  Essence.   Time is of the essence  of  this
Lease.

      33.   Entire  Agreement.  This Lease  contains  the  entire
agreement   of   the  parties  hereto,  and  no  representations,
inducements,  promises or agreements, oral or otherwise,  between
the parties, not embodied herein, will be of any force or effect.

      34.  Severability and Governing Law.  If any term, covenant
or  condition  of this Lease or the application  thereof  to  any
person, entity or circumstance will, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of
such  term,  covenant,  or  condition  to  persons,  entities  or
circumstances other than those which or to which sued may be held
invalid or unenforceable, will not be affected thereby, and  each
term,  covenant  or  condition of this Lease will  be  valid  and
enforceable to the fullest extent permitted by law.   This  Lease
shall be governed by and construed in accordance with the law  of
the state in which the Premises are located.

      35.  Brokerage.    Each of Landlord and Tenant warrants  to
the  other that   no commissions are payable or due to any broker
or  finder in connection with this Lease and each of Landlord and
Tenant  agrees  to indemnify, defend and hold the other  harmless
from   and  against  any  commissions  or  fees  or  claims   for
commissions  or fees arising under the indemnifying party,  which
indemnification  will expressly survive the termination  of  this
Lease.

      36.   No Recording; Memorandum of Lease.  This Lease  shall
not be recorded, but a written Memorandum of Lease in the form of
Exhibit  D hereto shall be placed of record in the public records
of  Bexar County, Texas.  Such Memorandum of Lease makes specific
reference to the term of this Lease, including renewals,  and  to
the  right of first refusal granted to Tenant under Paragraph  21
of this Lease.

      IN  WITNESS WHEREOF, the parties herein have executed  this
Lease on the day and year first above written.

                                   "LANDLORD"

                                   SIGNTECH USA, LTD., a Texas
                                   limited partnership

                                     By:    GANDY  GROUP,   INC.,
General                                      Partner
Witnesses:

_____________________________
By:____________________________
Printed:_______________________
Name:_________________________

Its:____________________________

______________________________
Printed:________________________

"TENANT"

                                   ARLON SIGNTECH, LTD., a
                                   Texas limited partnership

                                   By:  ARLON ADHESIVES &
                                               FILMS,       INC.,
General Partner

Witnesses:

_____________________________
By:___________________________
Printed:_______________________
Name:________________________

Its:___________________________

______________________________
Printed:________________________

ORL1 #534655 v7
                EXHIBIT LIST FOR LEASE AGREEMENT

Exhibit  A                     Legal Description of Real Property
Including                                    the Premises

Exhibit  B                      Drawing  of Building  Identifying
Interior                                  Portions  of   Premises
Leased by Tenant

Exhibit  C                      Approved Form  of  Subordination,
Nondisturbance and Attornment Agreement

Exhibit D                     Form of Memorandum of Lease

                            EXHIBIT A

 (Legal Description of the Real Property Including the Premises)SEVENTH AMENDMENT TO LOAN AND SECURITY
                   AGREEMENT

     THIS SEVENTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT (the "Amendment"), dated as
of March 27,  2000, is entered into between
CONGRESS FINANCIAL CORPORATION (WESTERN), a
California corporation ("Lender), and
GOTTSCHALKS INC., a Delaware corporation
("Borrower"), with its corporate office
located at 7 River Park Place East, Fresno,
California 93720.

                    RECITAL

     A.   Borrower and Lender have previously
entered into that certain Loan and Security
Agreement dated December 20, 1996, as amended
by the First Amendment to Loan and Security
Agreement, dated as of August 20, 1998, the
Second Amendment to Loan and Security
Agreement, dated as of September 1, 1998, the
Third Amendment to Loan and Security
Agreement, dated as of December 18, 1998, the
Fourth Amendment to Loan and Security
Agreement, dated as of January 29, 1999, the
Fifth Amendment to Loan and Security
Agreement, dated as of March 1, 1999 and the
Sixth Amendment to Loan and Security
Agreement, dated as of August 12, 1999 (as
amended, supplemented or modified from time to
time, the "Loan Agreement"), pursuant to which
Lender has made certain loans and financial
accommodations available to Borrower. Terms
used herein without definition shall have the
meanings ascribed to them in the Loan
Agreement.

     B.   Lender and Borrower wish to further amend
the Loan Agreement under the terms and
conditions set forth in this Amendment.
Lender and Borrower are entering into this
Amendment with the understanding and agreement
that, except as specifically provided herein,
none of Lender's rights or remedies as set
forth in the Loan Agreement is being waived or
modified by the terms of this Amendment.

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

     1.   Definitions.

          (a)  Section 1.59 is hereby added to
the Loan Agreement and reads in its entirety
as follows:

          "1.59  "Net Income" shall
     mean, with respect to any Person, for any
     period, the aggregate of the net income
     (loss) of such Person and its
     Subsidiaries, on a consolidated basis,
     for such period (excluding to the extent
     included therein any extraordinary or one-
     time gains or losses) after deducting all
     charges which should be deducted before
     arriving at the net income (loss) for
     such period and after deducting the
     Provision for Taxes for such period, all
     as determined in accordance with GAAP."

          (b)  Section 1.60 is hereby added to
the Loan Agreement and reads in its entirety
as follows:

          "1.60   "Provision for Taxes"
     shall mean an amount equal to all taxes
     imposed on or measured by net income,
     whether Federal, State or local, whether
     current or deferred,  and whether foreign
     or domestic, that are paid or payable by
     any Person and its Subsidiaries in
     respect of such fiscal year on a
     consolidated basis in accordance with
     GAAP."

     2.   Interest Rate.  Section 1.34 of the
Loan Agreement is hereby amended to read in
its entirety as follows:

          "1.34   "Interest Rate"
     shall mean, (a) as to Prime Rate Loans, a
     rate of one quarter of one (.25)
     percentage point per annum less than the
     Prime Rate and, as to Eurodollar Rate
     Loans, a rate of two (2.00) percentage
     points per annum in excess of the
     Adjusted Eurodollar Rate (based on the
     Eurodollar Rate applicable for the
     Interest Period selected by Borrower as
     in effect three (3) Business Days after
     the date of receipt by Lender of the
     request of Borrower for such Eurodollar
     Rate Loans in accordance with the terms
     hereof, whether such rate is higher or
     lower than any rate previously quoted to
     Borrower); and (b) with respect to
     Revolving Loans outstanding during any
     period in which Borrower shall have
     elected to use the advance rate option
     provided for in Section 2.1(a)(i)(B) and
     in which the sum of the Revolving Loans
     and Letter of Credit Accommodations
     exceeds the least of seventy five percent
     (75%) of the Value of the Eligible
     Inventory, thirty-eight and one half
     percent (38.5%) of the Retail Sales Price
     of the Eligible Inventory, or eighty-five
     percent (85%) of the Appraised Value of
     the Eligible Inventory, a rate of two and
     one-quarter (2.25) percentage points per
     annum in excess of the Adjusted
     Eurodollar Rate; provided, however, that
     (y) in the event Borrower's Net Income
     for its fiscal year ending January 29,
     2000 exceeds Six Million Dollars
     ($6,000,000) and (z) Borrower has average
     Excess Availability for the ninety (90)
     days preceding such date of not less than
     Ten Million Dollars ($10,000,000) and
     Twenty Million Dollars ($20,000,000)
     thereafter (it being understood that
     Lender may reduce such Excess
     Availability amount upon the completion
     of an acquisition of another entity
     permitted by Lender), the applicable
     Interest Rate provided for in the
     preceding clause (a) of this Section 1.34
     shall be reduced by one-eighth of one
     (.125) percentage point, such reduction
     in the applicable Interest Rate to be
     effective as of the first day of the
     month immediately following the date of
     receipt by Lender of Borrower's audited
     annual financial statements, as provided
     by Borrower to Lender pursuant to Section
     9.6(a)(iii) hereof, indicating the
     required pretax income (and such
     reduction shall continue to be in effect
     for so long as the Excess Availability is
     not less than Twenty Million Dollars
     ($20,000,000) (it being understood that
     Lender may reduce such Excess
     Availability amount upon the completion
     of an acquisition of another entity
     permitted by Lender) and continues to be
     met as measured on a quarterly basis);
     and provided further, however, the
     Interest Rate shall mean the rate of two
     and one-quarter (2.25) percentage points
     per annum in excess of the Prime Rate as
     to Prime Rate Loans and the rate of four
     and one-half (4.50) percentage points per
     annum in excess of the Adjusted
     Eurodollar Rate as to Eurodollar Rate
     Loans, at Lender's option, without
     notice, (a) for the period on and after
     the date of termination or non-renewal
     hereof, or the date of the occurrence of
     any Event of Default or event which with
     notice or passage of time or both would
     constitute an Event of Default, and for
     so long as such Event of Default or other
     event is continuing as determined by
     Lender and until such time as all
     Obligations are indefeasibly paid in full
     (notwithstanding entry of any judgment
     against Borrower) and (b) on the
     Revolving Loans at any time outstanding
     in excess of the amounts available to
     Borrower under Section 2 (whether or not
     such excess(es) arise or are made with or
     without Lender's knowledge or consent and
     whether made before or after an Event of
     Default)."

     3.   Revolving Loans.  Section 2.1(a)(i)
of the Loan Agreement is hereby amended to
read in its entirety as follows:

          "(i) either (A) the least of:  (I)
     seventy-five percent (75%) of the Value
     of the Eligible Inventory, (II) eighty-
     five percent (85%) of the Appraised Value
     of the Eligible Inventory, or (III)
     thirty-seven and one-half percent (37.5%)
     of the Retail Sales Price of the Eligible
     Inventory; or (B) provided no Event of
     Default shall have occurred and be
     continuing, then at Borrower's option and
     upon one (1) day's prior written notice
     to Lender, from November 1 through
     December 31 of each calendar year, the
     least of (I) eighty percent (80%) of the
     Value of Eligible Inventory, (II) eighty-
     five percent (85%) of the Appraised Value
     of the Eligible Inventory, or (III)
     thirty-nine percent (39%) of the Retail
     Sales Price of the Eligible Inventory,
     which percentages shall remain in effect
     through December 31 unless revoked by
     Borrower upon one (1) day's prior written
     notice to Lender; provided, however, that
     advances against Eligible Domestic In-
     Transit Inventory shall not, at any one
     time, exceed Five Million Dollars
     ($5,000,000); minus"

     4.   Inventory Covenants.  Section 7.3(d)
of the Loan Agreement is hereby amended to
read in its entirety as follows:

          "(d) upon Lender's request, Borrower
     shall, at its expense, no more than once
     in any calendar quarter, but at any time
     or times as Lender may request upon the
     occurrence and during the continuance of
     an Event of Default, deliver or cause to
     be delivered to Lender written reports or
     appraisals as to the Inventory in form,
     scope and methodology reasonably
     acceptable to Lender by an appraiser
     reasonably acceptable to Lender,
     addressed to Lender or upon which Lender
     is expressly permitted to rely (with the
     understanding that Lender may revise the
     definition of "Eligible Inventory"
     hereunder or establish Availability
     Reserves as Lender may deem advisable in
     good faith based upon the results of such
     updated appraisals), but in any event, at
     least two of such appraisals delivered in
     any calendar year shall be conducted to
     include the full scope of Inventory and
     at least two other of such appraisals
     shall be conducted to include gross
     recovery updates of the Inventory;"

     5.   Adjusted Net Worth.  Section 9.14 of
the Loan Agreement is hereby amended to read
in its entirety as follows:

               "Borrower shall, at all times,
     maintain Adjusted Net Worth of not less
     than One Hundred Fifteen Million Dollars
     ($115,000,000) and beginning with fiscal
     January 31, 2002, One Hundred Fifteen
     Million Dollars ($115,000,000) plus fifty
     percent (50%) of Borrower's Net Income;
     provided, however, Lender will only test
     for Borrower's compliance with this
     financial covenant only in the event that
     Borrower's Excess Availability is less
     than Ten Million Dollars ($10,000,000)."

     6.   Term.  Lender and Borrower hereby
agree to renew the term of the Loan Agreement
and the other Financing Agreements pursuant to
Section 12.1(a) of the Loan Agreement.  The
Loan Agreement and the other Financing
Agreements shall continue in force and effect
for a term ending on March 31, 2002.

     7.   Consent to Acquisition Financing.
Notwithstanding Sections 9.8 and 9.9 of the
Loan Agreement, Lender hereby consents to
Borrower obtaining acquisition financing for
the purpose of acquiring all of the assets or
stock of an entity up to the amount of Twenty
Million Dollars ($20,000,000) on terms and
conditions reasonably acceptable to Lender in
its sole discretion.  Lender's consent is
contingent upon its receipt of certain
documentation as reasonably required by
Lender, including without limitation a
subordination agreement, intercreditor
agreement and access agreement, delivered to
Lender and reasonably satisfactory to Lender
in form and substance.

     8.   Effectiveness of this Amendment.
Lender must have received the following items,
in form and content acceptable to Lender,
before this Amendment is effective and before
Lender is required to extend any credit to
Borrower as provided for by this Amendment.
The date on which all of the following
conditions have been satisfied is the "Closing
Date".

          (a)  Amendment.  This Amendment
     fully executed in a sufficient number of
     counterparts for distribution to Lender
     and Borrower.

          (b)  Authorizations.  Evidence that
     the execution, delivery and performance
     by Borrower and any instrument or
     agreement required under this Amendment
     have been duly authorized.

          (c)  Representations and Warranties.
     The representations and warranties set
     forth herein and in the Loan Agreement
     must be true and correct.

          (d)  Accommodation Fee.  Lender
     shall have received from Borrower a fee
     in the amount of Seventy Five Thousand
     Dollars ($75,000) for the processing and
     approval of this Amendment.

          (e)  Other Required Documentation.
     All other documents and legal matters in
     connection with the transactions
     contemplated by this Amendment shall have
     been delivered or executed or recorded
     and shall be in form and substance
     satisfactory to Lender.

     7.   Representations and Warranties.  The
Borrower represents and warrants as follows:

          (a)  Authority.  The Borrower and
     each other Loan Party has the requisite
     corporate power and authority to execute
     and deliver this Amendment, as
     applicable, and to perform its
     obligations hereunder and under the Loan
     Documents (as amended or modified hereby)
     to which it is a party.  The execution,
     delivery and performance by the Borrower
     of this Amendment and by each other Loan
     Party of each Loan Document (as amended
     or modified hereby) to which it is a
     party have been duly approved by all
     necessary corporate action of such Loan
     Party and no other corporate proceedings
     on the part of such Loan Party are
     necessary to consummate such
     transactions.

          (b)  Enforceability.  This Amendment
     has been duly executed and delivered by
     the Borrower. This Amendment and each
     Loan Document (as amended or modified
     hereby) is the legal, valid and binding
     obligation of each Loan Party hereto or
     thereto, enforceable against such Loan
     Party in accordance with its terms, and
     is in full force and effect.

          (c)  Representations and Warranties.
     The representations and warranties
     contained in each Loan Document (other
     than any such representations or
     warranties that, by their terms, are
     specifically made as of a date other than
     the date hereof) are correct on and as of
     the date hereof as though made on and as
     of the date hereof.

          (d)  No Default.  No event has
     occurred and is continuing that
     constitutes an Event of Default.

     8.   Choice of Law.  The validity of this
Amendment, its construction, interpretation
and enforcement, the rights of the parties
hereunder, shall be determined under, governed
by, and construed in accordance with the
internal laws of the State of California
governing contracts only to be performed in
that State.

     9.   Counterparts.  This Amendment may be
executed in any number of counterparts and by
different parties and separate counterparts,
each of which when so executed and delivered,
shall be deemed an original, and all of which,
when taken together, shall constitute one and
the same instrument.  Delivery of an executed
counterpart of a signature page to this
Amendment by telefacsimile shall be effective
as delivery of a manually executed counterpart
of this Amendment.

     10.  Due Execution.  The execution,
delivery and performance of this Amendment are
within the power of Borrower, have been duly
authorized by all necessary corporate action,
have received all necessary governmental
approval, if any, and do not contravene any
law or any contractual restrictions binding on
Borrower.

     11.  Reference to and Effect on the Loan
Documents.

          (a)  Upon and after the
     effectiveness of this Amendment, each
     reference in the Loan Agreement to "this
     Agreement", "hereunder", "hereof" or
     words of like import referring to the
     Loan Agreement, and each reference in the
     other Loan Documents to "the Loan
     Agreement", "thereof" or words of like
     import referring to the Loan Agreement,
     shall mean and be a reference to the Loan
     Agreement as modified and amended hereby.

          (b)  Except as specifically amended
     above, the Loan Agreement and all other
     Loan Documents, are and shall continue to
     be in full force and effect and are
     hereby in all respects ratified and
     confirmed and shall constitute the legal,
     valid, binding and enforceable
     obligations of Borrower to Lender.

          (c)  The execution, delivery and
     effectiveness of this Amendment shall
     not, except as expressly provided herein,
     operate as a waiver of any right, power
     or remedy of Lender under any of the Loan
     Documents, nor constitute a waiver of any
     provision of any of the Loan Documents.

          (d)  To the extent that any terms
     and conditions in any of the Loan
     Documents shall contradict or be in
     conflict with any terms or conditions of
     the Loan Agreement, after giving effect
     to this Amendment, such terms and
     conditions are hereby deemed modified or
     amended accordingly to reflect the terms
     and conditions of the Loan Agreement as
     modified or amended hereby.

     12.  Ratification.  Borrower hereby
restates, ratifies and reaffirms each and
every term and condition set forth in the Loan
Agreement, as amended hereby, and the Loan
Documents effective as of the date hereof.

     13.  Estoppel.  To induce Lender to enter
into this Amendment and to continue to make
advances to Borrower under the Loan Agreement,
Borrower hereby acknowledges and agrees that,
after giving effect to this Amendment, as of
the date hereof, there exists no Event of
Default and no right of offset, defense,
counterclaim or objection in favor of Borrower
as against Lender with respect to the
Obligations.

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

          "BORROWER"

           GOTTSCHALKS INC.,
           a Delaware corporation

           By:/s/Michael S. Geele
           Title: Senior Vice President/CFO

           "LENDER"

           CONGRESS FINANCIAL CORPORATION
           (WESTERN), a California corporation

           By:/s/Kristine Metchikian
           Title: Vice President

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