NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS NINTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT (the "Amendment"), dated as of June
28, 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, the
Sixth Amendment to Loan and Security
Agreement, dated as of August 12, 1999, the
Seventh Amendment to Loan and Security
Agreement, dated as of March 27, 2000 and the
Eighth Amendment to Loan and Security
Agreement, dated as of May 19, 2000 (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. Borrower is purchasing 37 store
locations, together with the associated
leases, machinery, equipment, installations,
furniture, tools, spare parts, supplies and
maintenance equipment (collectively, the
"Lamonts Purchased Store"), from Lamonts
Apparel, Inc., a Delaware corporation, in its
capacity as debtor-in-possession in Case No.
00-00045 (TTG) (the "Bankruptcy Case") in the
United States Bankruptcy Court for the Western
District of Washington (the "Bankruptcy
Court"), and is assuming the leases and
certain other contracts with respect to the
Lamonts Purchased Stores, all in accordance
with the Asset Purchase Agreement dated as of
April 24, 2000 between Lamonts Apparel, Inc.
and Borrower previously given to Lender (the
"Purchase Agreement").
C. The Bankruptcy Court issued an Order
approving the transfer to Borrower of good and
marketable title to the Lamonts Purchased
Stores and all assets related thereto free and
clear of any liens and encumbrances (the
"Order") on May 16, 2000, which Order was
acceptable to Lender.
D. An appeal of the Order was filed on
May 26, 2000, which appeal abrogated the
effectiveness of the Eighth Amendment pursuant
to the terms of paragraph 5 thereof. Such
appeal was dismissed by a "Stipulation and
Order Dismissing With Prejudice Appeal By
Alamo Group and Troutman Investment Company"
entered in the United States District Court,
Western District of Washington on June 28,
2000.
E. In light of the dismissal of the
appeal of the Order as described above, Lender
and Borrower wish to amend the Loan Agreement
to reinstate the provisions of the Eighth
Amendment, except the provisions of paragraph
5 of the Eighth Amendment abrogating the
effectiveness of the Eighth Amendment
immediately upon the filing of an appeal of
the Order. The parties by this Ninth
Amendment intend to remove the provisions of
such paragraph 5 of the Eighth Amendment and
to make the other provisions of the Eighth
Amendment effective as of May 19, 2000, all
under the terms and conditions set forth in
this Amendment and the Eighth Amendment
(excluding such paragraph 5). 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: (1) to remove the provisions of
such paragraph 5 of the Eight Amendment and to
make the other provisions of the Eighth
Amendment effective as of May 19, 2000; (2)
all conditions to the effectiveness of the
Eighth Amendment (except such paragraph 5) are
conditions to the effectiveness of this Ninth
Amendment; and (3) 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.
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: SVP/CFO
LENDER
CONGRESS FINANCIAL CORPORATION
(WESTERN), a California corporation
By: /s/ Kristine Metchikian
Title: Vice President
