EXHIBIT H
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is made and
entered into as of ____________, 1998, between
Gottschalks Inc.,
a Delaware corporation ("Gottschalks"), and The Xxxxxx
Company, a
California corporation ("Xxxxxx").
RECITALS
WHEREAS, Gottschalks has entered into that certain
Asset Purchase
Agreement, dated as of July 21, 1998 (the "Asset
Purchase
Agreement"; all capitalized terms used herein and not
otherwise
defined shall have the meanings given to such terms in
the Asset
Purchase Agreement), with Xxxxxx and El Corte Ingles,
S.A., a
Spanish corporation and the parent of Xxxxxx ("ECI").
WHEREAS, pursuant to the Asset Purchase Agreement (i)
Gottschalks
has agreed to issue to Xxxxxx on the Closing Date two
million
ninety-five thousand nine hundred (2,095,900) shares
(the
"Shares") of Gottschalks' common stock, par value $.01
per share
(the "Gottschalks Common Stock"),
WHEREAS, the Shares have not been registered under the
Securities
Act and are subject to restrictions on resale or other
disposition;
WHEREAS, Gottschalks desires to grant, and Xxxxxx
desires to
accept, the registration rights set forth in this
Agreement in
respect of the Registrable Shares, as defined herein;
and
WHEREAS, execution and delivery of this Agreement by
the parties
hereto is a condition precedent to the closing of the
Asset
Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
contained
herein and intending to be legally bound the parties
agree as
follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall
have the
following respective meanings:
"Divesture Date" means any date upon which Xxxxxx or
ECI (if the
Shares are transferred to ECI pursuant to Section 8
hereof) is
the registered owner of less than ten percent (10%) on
a fully
diluted basis of the Gottschalks Common Stock then
outstanding.
"fully diluted" means, with respect to the Gottschalks
Common
Stock, the total number of outstanding shares of the
Gottschalks
Common Stock (for such purposes, treating as
outstanding
Gottschalks Common Stock all options or warrants to
purchase and
securities convertible into (or exchangeable or
redeemable for)
the Gottschalks Common Stock as of the relevant
measurement
date).
"Holder" means Xxxxxx and any transferee or assignee as
permitted
under Section 8 hereof up until but not including and
not beyond
the Divesture Date.
"Registrable Shares" means the Shares issued to Xxxxxx
pursuant
to the Asset Purchase Agreement or the transactions
contemplated
thereby, including any securities issued in respect
thereof
pursuant to a stock dividend, stock split,
recapitalization or
similar event. As to any particular Registrable
Shares, once
issued such securities shall cease to be Registrable
Shares when
(A) a registration statement with respect to the sale
of such
securities shall have become effective under the
Securities Act
and such securities shall have been disposed of in
accordance
with such registration statement, (B) such securities
shall have
been sold in accordance with Rule 144 (or any successor
provision) under the Securities Act or (C) such
securities are
eligible to be resold pursuant to Rule 144(k).
The terms "register," "registered" and "registration"
refer to
the preparation and filing with the SEC of a
registration
statement or similar document in compliance with the
Securities
Act and the declaration or ordering of the
effectiveness of such
registration statement or document.
"Registration Expenses" means all expenses, except
Selling
Expenses, incurred by Gottschalks while complying with
Section 2
of this Agreement. Registration Expenses shall
include, without
limitation, all registration and filing fees and other
qualification fees, blue sky fees, printing expenses
and fees and
disbursements of Gottschalks' accountants and legal
counsel
incurred in any registration pursuant to Section 2.
"SEC" means the United States Securities and Exchange
Commission
or any successor agency.
"Securities Act" means the Securities Act of 1933, as
amended
from time to time, and any successor statute.
"Selling Expenses" means all underwriting discounts,
selling
commissions, stock transfer taxes relating to any
Holder's
registered securities and any fees and disbursements of
counsel,
accountants or other agents for any Holder.
"Asset Purchase Agreement" shall have the meaning given
in the
recitals hereof.
SECTION 2. Registration.
(a) Registration Statement. If Gottschalks proposes
to register
any Gottschalks Common Stock, whether or not for sale
for its own
account (other than a registration relating to the sale
of
securities to participants in a dividend reinvestment
plan, a
registration on Form S-4 relating to a business
combination or
similar transaction permitted to be registered on such
Form S-4,
a registration on Form S-8 relating to the sale of
securities to
participants in a stock or employee benefit plan, a
registration
permitted under Rule 462 under the Securities Act
registering
additional securities of the same class as were
included in an
earlier registration statement for the same offering,
and
declared effective, or any other registration on a Form
not
suitable for the registration of Registrable Shares),
Gottschalks
will give written notice to all Holders of Gottschalks'
intention
to effect such a registration and include in such
registration
all Registrable Shares with respect to which
Gottschalks has
received written notice from a Holder for inclusion
therein
within 10 days after the date of Gottschalks' notice
(in such
capacity such Holder a "Requesting Holder"); provided,
however,
that nothing in this Section 2 shall be construed as
granting to
any Holder the right to require Gottschalks to initiate
the
registration of any Gottschalks Common Stock; provided,
further,
that:
(i) if, at any time after giving written notice of its
intention
to register any shares and, prior to the effective date
of the
Registration Statement filed in connection with such
registration, Gottschalks shall determine for any
reason not to
register such shares, Gottschalks may, at its election,
give
written notice of such determination to each Holder
requesting
inclusion therein, and, thereupon, Gottschalks shall be
relieved
of its obligation to register any Registrable Shares in
connection with such withdrawn or unfiled registration
(but not
of its obligation to pay the Registration Expenses in
connection
therewith pursuant to Section 3 hereto); and
(ii) if such registration shall be in connection with
an
underwritten public offering and the underwriter or
managing
underwriter, as the case may be, shall advise
Gottschalks that in
its opinion the number of shares requested to be
included in such
registration or offering exceeds the number of such
securities
which can be sold in (or during the time of) such
offering or
would have an adverse impact on the price of such
securities, the
amount to be registered shall be allocated first, to
Gottschalks,
and second, pro rata among the Requesting Holders
desiring to
participate in such registration and the other holders
of the
Gottschalks' securities requested to be included in
such
registration, based on the numbers of shares initially
proposed
to be included by such holders.
(b) Selection of Managing Underwriter; Customary
Agreements. If
any registration pursuant to this Section 2 is an
underwritten
public offering:
(i) the Holders shall not have the right to select the
managing
underwriter to administer such offering; and
(ii) the Requesting Holders agree to enter into
customary
agreements (including, if requested, an underwriting
agreement),
and take such other actions in connection therewith as
Gottschalks or the underwriter(s) shall request in
order to
consummate such registration.
(c) Notice of Effectiveness. Upon declaration of
effectiveness
by the SEC of a registration statement filed pursuant
to this
Agreement, Gottschalks shall give written notice
thereof to each
Holder whose Registrable Securities are included in
such
registration statement.
(d) Blackout Periods. Following the effective date of
any
registration statement filed pursuant to this Section
2,
Gottschalks shall be entitled, from time to time, to
notify the
Holders to discontinue offers or sales of Registrable
Securities
pursuant to such registration statement for the period
of time
stated in such notice, up to a maximum of sixty (60)
consecutive
days (such notice being a "Blackout Notice"), if
Gottschalks
determines, in its reasonable business judgment, that
such offers
and sales would materially interfere with any
financing,
acquisition, corporate reorganization, securities
offering or
other material transaction, or if there has been any
development,
event, occurrence or change in circumstances which
Gottschalks
would not be required to disclose at such time other
than in
connection with a registration statement, involving
Gottschalks
or any of its subsidiaries, taken as a whole. Such
notice shall
be signed by an authorized officer of Gottschalks and
shall
certify such determination. Each Holder agrees that
upon receipt
of a Blackout Notice such Holder shall discontinue
offers or
sales of Registrable Securities pursuant to any such
registration
statement for the period of time stated in the Blackout
Notice
and the time period set forth in subsection 2(e) shall
be tolled
during such period. Gottschalks may issue any number
of Blackout
Notices and such notices may be given consecutively.
(e) Effectiveness of Registration Statements.
Gottschalks shall
cause any registration statement filed pursuant to this
Section 2
to remain effective for at least ninety (90) days after
it is
declared or ordered effective or until the Holders have
completed
the distribution described therein, whichever first
occurs;
provided, however, that in no event will Gottschalks be
required
to prepare or file audited financial statements with
respect to
any fiscal year by a date prior to the date on which
Gottschalks
would be so required to prepare and file such audited
financial
statements if such registration statement were no
longer
effective and usable.
(f) Holdback Agreement. In the event of any filing of
a
prospectus supplement or the commencement of an
underwritten
public distribution of the Gottschalks Common Stock
under a
Registration Statement, whether or not Registrable
Shares are
included, each Holder agrees not to effect any public
sale or
distribution of the Gottschalks Common Stock (except as
part of
such underwritten public distribution), including a
sale pursuant
to Rule 144 or Rule 144A under the Securities Act,
during a
period designated by Gottschalks in a written notice
duly given
to Holders, which period shall commence approximately
14 days
prior to the effective date of any such filing of such
prospectus
supplement or the commencement of such underwritten
public
distribution of such Gottschalks Common Stock under a
Registration Statement and shall continue for up to 90
consecutive days after such effective date or
commencement.
SECTION 3. Expenses of Registration.
For the first two registrations of Gottschalks Common
Stock in
which any Holder exercises its right to include in such
registration Registrable Shares pursuant to Section 2
hereof (in
such capacity such Holder a "Participating Holder"),
Gottschalks
shall bear the Registration Expenses arising out of
such
registrations; provided, however, that all Selling
Expenses
relating to the registered securities of any
Participating Holder
shall be borne by all Participating Holders and
Gottschalks shall
have no liability therefor. Thereafter, for any
registration of
Gottschalks Common Stock pursuant to Section 2 hereof,
the
Participating Holders, jointly and severally, shall
promptly
reimburse Gottschalks for all incremental Registration
Expenses
attributable to the inclusion of Registrable Shares in
such
registration statement in addition to bearing pro rata
all
Selling Expenses relating to the Registrable Shares.
SECTION 4. Registration Procedures.
For each registration, qualification or compliance
carried out by
Gottschalks pursuant to this Agreement, Gottschalks
shall give
each Holder written notice of the initiation of such
registration, qualification or compliance and
Gottschalks will:
(a) provide to each Holder participating in such
registration a
reasonable number of copies of the registration
statement,
preliminary prospectus, final prospectus and any other
documents
as may reasonably be necessary to facilitate a public
offering;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus
used in connection therewith as may be necessary to
keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the
disposition
of all Shares covered by such registration statement
during the
effectiveness of such registration statement;
(c) use its best efforts to register or qualify all
Shares
covered by such registration statement under such
securities or
blue sky laws of such jurisdiction as each Holder shall
reasonably request, except that Gottschalks shall not
for any
such purpose be required to qualify generally to do
business as a
foreign corporation in any jurisdiction wherein it is
not so
qualified, or to subject itself to taxation in any such
jurisdiction or to consent generally to service of
process in any
such jurisdiction; and
(d) immediately notify each Holder of Shares covered
by such
registration statement, at any time when a prospectus
relating
thereto is required to be delivered under the
Securities Act, of
the happening of any event as a result of which the
prospectus
included in such registration statement, as then in
effect,
includes an untrue statement of a material fact or
omits to state
any material fact required to be stated therein or
necessary to
make the statements therein not misleading in light of
the
circumstances then existing, and at the request of any
such
Holder prepare and furnish to such Holder a reasonable
number of
copies of a supplement to or an amendment of such
prospectus as
may be necessary so that, as thereafter delivered to
the
purchasers of such Shares, such prospectus shall not
include an
untrue statement of a material fact or omit to state a
material
fact required to be stated therein or necessary to make
the
statements therein not misleading in light of the
circumstances
then existing.
SECTION 5. Information by Holder.
Each Holder of Registrable Securities participating in
any
registration shall provide Gottschalks, when requested,
with
written information regarding itself, its ownership of
securities
of Gottschalks, the distribution proposed by such
Holder and such
other information as may be legally required in
connection with
such registration. Such writing shall expressly state
that it is
being furnished to Gottschalks for use in the
preparation of a
registration statement, preliminary prospectus,
supplementary
prospectus, final prospectus or amendment or supplement
thereto,
as the case may be. Each Holder agrees, by its
acquisition of
Registrable Shares and its acceptance of the benefits
provided to
it hereunder, to furnish promptly to Gottschalks all
information
required to be disclosed in order to make any
previously
furnished information not misleading.
SECTION 6. Delay of Registration.
No Holder shall obtain or seek an injunction
restraining or
otherwise delaying any registration referred to in this
Agreement
as a result of any controversy arising out of the
interpretation
or implementation of this Agreement.
SECTION 7. Indemnification.
(a) Gottschalks will indemnify each Holder of Shares
covered by
any such registration statement, its officers,
directors and
partners and each person who controls such Holder
within the
meaning of Section 15 of the Securities Act against all
reasonable expenses, claims, losses, damages and
liabilities (or
actions in respect thereof), including any of the
foregoing
incurred in the defense and settlement of any
litigation, arising
out of or based upon any untrue statement (or alleged
untrue
statement) of a material fact contained in any
registration
statement, prospectus or documents incorporated by
reference
therein, or based upon any omission (or alleged
omission) of a
material fact required to be stated therein or
necessary to make
the statements therein not misleading, and including
any of the
foregoing incurred or arising out of any violation by
Gottschalks
of the Securities Act or any rule or regulation
promulgated under
the Securities Act; provided, however, that Gottschalks
will not
be under an obligation to indemnify any of them (i) if
any of the
foregoing are based upon any untrue statement or
omission or
alleged untrue statement or omission made in reliance
upon
information furnished to Gottschalks by any Holder or
controlling
person or (ii) to the extent that any such loss, claim,
damage,
liability (or action or proceeding in respect thereof)
or expense
arises out of any Holder's or underwriter's failure to
send or
give a copy of the final prospectus or supplement to
the persons
asserting an untrue statement or alleged untrue
statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Shares to such
person if
such statement or omission was corrected in such final
prospectus
or supplement; provided further, that the indemnity
agreements
contained in this subsection shall not apply to amounts
paid in
any settlement if such settlement is effected without
the consent
of Gottschalks.
(b) Each Holder participating in a registration
pursuant to this
Agreement will indemnify Gottschalks, its directors and
officers,
each person who controls Gottschalks within the meaning
of
Section 15 of the Securities Act, and each other Holder
and each
of its officers and directors and each person
controlling such
Holder within the meaning of Section 15 of the
Securities Act,
against all reasonable expenses, claims, losses,
damages and
liabilities incurred and actions arising out of any
untrue
statement (or alleged untrue statement) of a material
fact
contained in any registration statement and any
documents related
thereto or based upon any omission (or alleged
omission) of a
material fact required to be stated therein or
necessary to make
the statements therein not misleading, and including
any of the
foregoing incurred or arising out of the violation by
any such
Holder of the Securities Act or any rule or regulation
promulgated thereunder; provided, however, that such
Holder will
only be obligated to indemnify any of them for any of
the
foregoing based upon a material misstatement or an
omission
(alleged or otherwise) made in reliance upon
information
furnished to Gottschalks by such Holder.
(c) Each party entitled to indemnification under this
Section 7
("Indemnified Party") shall give prompt notice to the
party
required to provide indemnification ("Indemnifying
Party") as
soon as Indemnified Party has actual knowledge of any
claim for
which indemnify may be sought, and shall permit
Indemnifying
Party to assume and control the defense of any such
claim or any
litigation resulting therefrom, provided that
Indemnified Party
will have the right to approve (whose approval shall
not be
unreasonably withheld) of the counsel chosen by
Indemnifying
Party to defend such claim or litigation, and provided
that
Indemnified Party may participate in such defense at
Indemnified
Party's expense. The failure of any Indemnified Party
to give
notice of a claim subject to indemnification shall not
relieve
Indemnifying Party of its obligations under this
Agreement unless
the failure to give such notice is materially
prejudicial to
Indemnifying Party's ability to defend such claim.
Indemnifying
Party shall not assume the defense for matters as to
which there
is a conflict of interest or separate and different
defense. In
defending such claim, Indemnifying Party shall not,
without the
prior written consent of Indemnified Party, consent to
the entry
of any judgment or enter into any settlement which does
not
include an unconditional provision releasing
Indemnified Party
from all liability in respect to such claim or
litigation.
(d) The obligations of Gottschalks and Holders under
this
Section 7 shall survive the completion of any offering
of
Registrable Securities in a registration statement
under this
Agreement, and otherwise.
SECTION 8. Transfer of Registration Rights.
Any Holder's rights under Section 2 hereof may not be
assigned or
transferred except to an affiliate that is bound by and
becomes a
party to that certain Stockholders' Agreement dated as
of _______
__, 1998 among Gottschalks, ECI, Xxxxxx Xxxx and Xxxx
Xxxx.
SECTION 9. Amendment of Registration Rights.
Any provision of this Agreement may be amended and the
observance
thereof may be waived (either generally or in a
particular
instance and either retroactively or prospectively),
only with
the written consent of Gottschalks and Holders of a
majority of
the Registrable Securities then outstanding. Any
amendment or
waiver effected in accordance with this Section 9 shall
be
binding upon each Holder, each transferee or assignee
of Holder
pursuant to Section 8 of this Agreement.
SECTION 10. Termination of Registration Rights.
No Holder shall be entitled to exercise any right
provided for in
this Agreement after the fifteenth anniversary of the
date
hereof.
SECTION 11. Notices.
All notices, requests, consents and other
communications
hereunder shall be in writing and shall be deemed to
have been
made (i) when delivered personally or by telecopier,
(ii) if to a
party in the same country as the mailing party, when
mailed first
class registered or certified mail, postage prepaid, or
(iii) if
to a party in a different country from the sending
party, on the
second day following deposit with a reputable
commercial air
courier, charges prepaid, to each respective party as
shown
below:
(a) If to the holders of Registrable Securities, to
the
addresses shown on the signature page(s) hereto, with a
copy to:
McPeters, McAlearney, Shimoff & Xxxx
0 X. Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxx, Esq.
Telecopier: (000) 000-0000
(b) If to Gottschalks to:
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: D. Xxxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 12. Parties in Interest.
This Agreement shall be binding upon and inure to the
benefit of
each party, and nothing in this Agreement, express or
implied, is
intended to confer upon any other person any rights or
remedies
of any nature whatsoever under or by reason of this
Agreement.
Nothing in this Agreement is intended to relieve or
discharge the
obligation of any third person to any party to this
Agreement.
SECTION 13. Counterparts.
This Agreement may be executed in any number of
counterparts and
by different parties in separate counterparts, each of
which when
so executed shall be deemed to be an original and all
of which
taken together shall constitute one and the same
agreement.
SECTION 14. Headings.
The headings in this Agreement are for convenience only
and shall
not limit or otherwise affect the meaning hereof.
SECTION 15. Governing Law.
This Agreement shall be governed by and construed in
accordance
with the laws of the State of California, without
regard to
principles of conflict of law.
SECTION 16. Arbitration.
(a) Any controversy, dispute or claim under, arising
out of, in
connection with or in relation to this Agreement,
including but
not limited to the negotiation, execution,
interpretation,
construction, coverage, scope, performance,
non-performance,
breach, termination, validity or enforceability of this
Agreement
or this Section 16 shall be determined by arbitration
conducted
in accordance with the Commercial Arbitration Rules or
then
existing rules for commercial arbitration of the
American
Arbitration Association. The arbitration shall
additionally be
governed by the California Arbitration Act. The
arbitration
shall be before a single arbitrator who shall be
selected by
mutual agreement of the parties from among a list of
seven
potential arbitrators provided by the American
Arbitration
Association. If the parties cannot agree on an
arbitrator from
this first list, the parties hereto shall select an
arbitrator
for such arbitration from a second list of seven
potential
arbitrators provided by the American Arbitration
Association with
the Holders, on the one hand, and Gottschalks, on the
other,
alternately striking names, with the last name
remaining to be
the arbitrator so selected. In the event that either
party seeks
a temporary restraining order, preliminary injunction
or other
provisional relief, the provisions of Section 1281.8 of
the Cal.
Civ. Proc. Code shall apply. The arbitration of such
issues,
including without limitation any award of damages
suffered by any
party hereto by reason of the acts or omissions of any
party,
shall be final and binding upon the parties to the
maximum extent
permitted by law. The parties intend that this Section
shall be
valid, binding, enforceable and irrevocable and shall
survive the
termination of this Agreement.
(b) Any arbitration proceedings hereunder shall be held
in Los
Angeles, California.
(c) Judgment upon any award rendered by the
arbitrator(s) may be
entered by any court having jurisdiction thereof.
SECTION 17. Attorney's Fees. In the event of any
action
complaint, petition or other proceeding, ("Action") by
any party
arising under or out of, in connection with or in
respect of,
this Agreement, the prevailing party shall be entitled
to
reasonable attorney's fees, costs and expenses incurred
in such
Action. Attorney's fees incurred in enforcing any
judgment in
respect of this Agreement are recoverable as a separate
item.
The parties intend that the preceding sentences be
severable from
the other provisions of this Agreement, survive any
judgement
and, to the maximum extent permitted by law, not be
deemed merged
into such judgment.
SECTION 18. Severability.
In the event that any one or more of the provisions
contained
herein, or the application thereof in any circumstance,
is held
invalid, illegal or unenforceable, the validity,
legality and
enforceability of any such provision in every other
respect and
of the remaining provisions contained herein shall not
be
affected or impaired thereby.
SECTION 19. Entire Agreement.
This Agreement, together with the Asset Purchase
Agreement and
the other agreements of Gottschalks, Xxxxxx and ECI of
even date
herewith, contains the entire understanding of the
parties with
respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as
of the date first written above.
GOTTSCHALKS INC.
By:
Its:
THE XXXXXX COMPANY
By:
Its:
Notice Address:
EXHIBIT I
FORM OF SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
PREPARED BY AND
RETURN TO WHEN RECORDED:
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
_________________________________________________________________
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the _____
day of
____________, 1998, by and between
_____________________________
("Lender") and GOTTSCHALKS INC., 0 Xxxxx Xxxx Xxxxx
Xxxx, Xxxxxx,
Xxxxxxxxxx 00000 ("Tenant").
WITNESSETH:
WHEREAS, by the lease described on Schedule 1 hereto
(the
"Lease"), the Tenant has leased from
______________________
("Landlord") certain premises ("Premises") located in
the City of
_____________, County of _______________, State of
California,
which Premises are legally described on Schedule 2
attached
hereto, together with and subject to various easements
and rights
as referenced in the Lease.
WHEREAS, Lender is the holder of a [deed of trust and
assignment
of rents] on the Premises, given to the Lender by
Landlord, dated
as of ___________ ____, 19___, recorded in the Official
Records
of ______________ County, California as Instrument No.
_____________ (collectively referred to herein with any
other
documents securing the debt secured by the deed of
trust as the
"Mortgage").
NOW, THEREFORE, in consideration of the premises and
other
valuable consideration, the receipt and sufficiency of
which are
hereby acknowledged, the parties hereby agree as
follows:
1. Lender hereby consents to the Lease. The Lease
and all
extensions, renewals, replacements or modifications
thereof are
and shall be subject and subordinate to the Mortgage
and all
terms and conditions thereof insofar as it affects the
Premises,
and to all renewals, modifications, consolidations,
replacements
and extensions thereof, to the full extent of amounts
secured
thereby and interest thereon.
2. Tenant shall attorn to and recognize any purchaser
at a
foreclosure sale under the Mortgage, any transferee who
acquires
the Premises by deed in lieu of foreclosure, and the
successors
and assigns of such purchaser(s), as its landlord for
the
unexpired balance (and any extensions, if exercised) of
the term
of the Lease on the same terms and conditions set forth
in the
Lease.
3. If it becomes necessary to foreclose the Mortgage,
Lender
shall neither terminate the Lease nor join Tenant in
summary or
foreclosure proceedings so long as Tenant is not in
default under
any of the terms, covenants or conditions of the Lease.
4. Nothing herein contained shall impose any
obligations upon
Lender to perform any of the obligations of Landlord as
landlord
under the Lease, unless and until Lender shall become
owner or
lender in possession of the Premises.
5. Any notice required or desired to be given under
this
Agreement shall be in writing and shall be deemed given
(a) upon
receipt if delivered personally; (b) two (2) business
days after
being deposited into the U.S. mail if being sent by
certified or
registered mail, return receipt requested, postage
prepaid; or
(c) one (1) business day after being sent by reputable
overnight
courier service (e.g., Federal Express, Airborne, etc.)
with
guaranteed overnight delivery, and addressed as
follows:
If to Lender:
_________________________
_________________________
_________________________
_________________________
If to Tenant: GOTTSCHALKS INC.
[Store Address]
_________________________
Attn: Manager
With a copy to: GOTTSCHALKS INC.
0 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
6. This Agreement shall be binding upon and inure to
the
benefit of any person or entity acquiring rights to the
Premises
by virtue of the Mortgage, and the successors,
administrators and
assigns of the parties hereto.
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed
these
presents as of the day and year first above written.
LENDER:
By:
Name:
Title:
TENANT: GOTTSCHALKS INC.,
a Delaware corporation
By:
Name:
Title:
State of California )
) SS.
County of ____________________ )
On ______________________, 1998 before me,
___________________________, personally appeared
______________________________________, personally
known to me
(or proved to me on the basis of satisfactory evidence)
to be the
person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they
executed the
same in his/her/their authorized capacity(ies), and
that by
his/her/their signature(s) on the instrument the
person(s), or
the entity upon behalf of which the person(s) acted,
executed the
instrument.
WITNESS my hand and official seal.
Signature ________________________________ (Seal)
State of California )
) SS.
County of ____________________ )
On ______________________, 1998 before me,
___________________________, personally appeared
______________________________________, personally
known to me
(or proved to me on the basis of satisfactory evidence)
to be the
person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they
executed the
same in his/her/their authorized capacity(ies), and
that by
his/her/their signature(s) on the instrument the
person(s), or
the entity upon behalf of which the person(s) acted,
executed the
instrument.
WITNESS my hand and official seal.
Signature ________________________________ (Seal)
SCHEDULE 1
Description of Lease
[Insert description of Lease]
SCHEDULE 2
Description of Premises
[Insert description of Premises]
EXHIBIT J
STANDSTILL AGREEMENT
This Standstill Agreement (this "Agreement") is entered
into as
of ________, 1998 between El Corte Ingles, S.A., a
Spanish
corporation ("ECI"), and Gottschalks Inc., a Delaware
corporation
("Gottschalks").
RECITALS
WHEREAS, pursuant to that certain Asset Purchase
Agreement dated
as of July 21, 1998 (the "Asset Purchase Agreement";
all
capitalized terms used herein and not otherwise defined
shall
have the meanings given to such terms therein) by and
among
Gottschalks, ECI and The Xxxxxx Company, a California
corporation
and a wholly-owned subsidiary of ECI ("Xxxxxx"),
Gottschalks has
agreed to acquire from Xxxxxx substantially all of the
assets and
certain liabilities of Xxxxxx for certain
consideration,
including, but not limited to, certain shares of Common
Stock,
par value $0.01 per share, of Gottschalks (the
"Gottschalks
Common Stock"), all as more fully set forth in the
Asset Purchase
Agreement; and
WHEREAS, pursuant to the Asset Purchase Agreement,
Xxxxxx shall
acquire as of the date hereof, 2,095,900 shares of
Gottschalks
Common Stock (such shares, together with all
Gottschalks Common
Stock subsequently acquired by Xxxxxx, ECI, or its
Affiliates or
Associates, the "ECI Shares");
WHEREAS, ECI and Gottschalks are entering into this
Agreement to
define certain rights between ECI and Gottschalks in
respect of
the ECI Shares and certain other matters in
consideration of the
mutual covenants contained herein; and
WHEREAS, execution and delivery of this Agreement by
the parties
hereto is a condition precedent to the closing of the
Asset
Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
contained
herein and for other good and valuable consideration,
Gottschalks
and ECI hereby agree as follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall
have the
following respective meanings:
Section 1.1 "8% Subordinated Note" means that
certain
$22,217,598.00 principal amount of 8% Non-Negotiable,
Extendable
Subordinated Note of Gottschalks in favor of Xxxxxx due
2003.
Section 1.2 "Affiliate" has the meaning ascribed
thereto in
Rule 12b-2 promulgated under the Exchange Act, and as
in effect
on the date hereof.
Section 1.3 "Associate" of a person means
(a) a corporation or organization
(other than a
party to this Agreement) of which such person is a
director, an
officer or partner or is, directly or indirectly, the
beneficial
owner of 10% or more of any class of equity securities;
(b) any trust or other estate in which
such
person has a substantial beneficial interest or as to
which such
person serves as trustee or in a similar capacity;
(c) any relative or spouse of such
person or any
relative of such spouse; and
(d) a director or officer of such
person, or a
person that directly or indirectly, is the beneficial
owner of
10% or more of any class of equity securities of such
person or
any relative or spouse of such director, officer or
beneficial
owner or any relative of such spouse.
Section 1.4 "Beneficially Own" means, with respect
to any
security, having direct or indirect (including through
any
Subsidiary or Affiliate) "beneficial ownership" of such
security,
as determined pursuant to Rule 13d-3 under the Exchange
Act,
including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
Section 1.5 "Gottschalks Common Stock" has the
meaning set
forth in the recitals of this Agreement.
Section 1.6 "Covered Transaction" means any merger,
consolidation, other business combination, liquidation,
sale of
Gottschalks or all or substantially all of the assets
of
Gottschalks or any other change of control of
Gottschalks or
similar extraordinary transaction but excluding an
acquisition by
Gottschalks involving an amount which is less than 50%
of the Pro
Forma Value of Gottschalks after the acquisition and in
which
Gottschalks remains in control following the
acquisition.
Section 1.7 "Director" means a member of the Board
of
Directors of Gottschalks.
Section 1.8 "Early Standstill Termination Event" has
the
meaning set forth in Section 3.6.
Section 1.9 "Exchange Act" means the Securities
Exchange Act
of 1934, as amended.
Section 1.10 "Gottschalks" has the meaning set forth
in the
recitals of this Agreement.
Section 1.11 "Governmental Entity" means any
government or any
agency, bureau, board, commission, court, department,
official,
political subdivision, tribunal or other
instrumentality of any
government, whether federal, state or local, domestic
or foreign.
Section 1.12 "person" means any individual,
corporation,
partnership, limited liability company, joint venture,
trust,
unincorporated organization, other form of business or
legal
entity or Governmental Entity.
Section 1.13 "Pro Forma Value" means the market value
of
outstanding equity securities of Gottschalks (based
upon a 20
trading day average closing price for publicly traded
equity
securities), plus the debt reflected on Gottschalks'
balance
sheet, less any cash on such balance sheet, immediately
following
the consummation of the acquisition, merger or other
business
combination transaction.
Section 1.14 "Standstill Extension Term" has the
meaning set
forth in Section 3.6(a).
Section 1.15 "Standstill Period" has the meaning set
forth in
Section 3.6(a).
Section 1.16 "Stockholders' Agreement" means that
certain
Stockholders' Agreement among ECI, Gottschalks, Xxxxxx
Xxxx and
Xxxx Xxxx dated the date hereof.
Section 1.17 "Asset Purchase Agreement" has the
meaning set
forth in the recitals of this Agreement.
Section 1.18 "Subsidiary" means any corporation,
partnership
limited liability company, joint venture, business
trust or other
entity of which the specified person, directly or
indirectly,
owns or controls 50% or more of the securities or other
interests
entitled to vote in the election of directors (or
others
performing similar functions) with respect to such
corporation or
other organization, or otherwise has the ability to
control such
corporation, partnership, limited liability company,
joint
venture, business trust or other entity.
ARTICLE 2. STANDSTILL PROVISIONS
Section 2.1 Standstill Provisions. ECI agrees that,
during the
term of this Agreement, without Gottschalks' prior
written
consent, ECI will not and will cause its Affiliates and
Associates not to, directly or indirectly:
(a) purchase or otherwise acquire shares of
Gottschalks Common
Stock (or options, rights or warrants or other
commitments to
purchase and securities convertible into (or
exchangeable or
redeemable for) shares of Gottschalks Common Stock) as
a result
of which, after giving effect to such purchase or
acquisition,
ECI and its Affiliates and Associates would
Beneficially Own in
the aggregate more than 33?% of the outstanding shares
of
Gottschalks Common Stock;
(b) form, join or in any way participate in a "group"
(within
the meaning of Section 13(d)(3) of the Exchange Act)
with respect
to any securities of Gottschalks;
(c) participate in or solicit, encourage or propose to
effect or
negotiate any Covered Transaction (other than pursuant
to the
Asset Purchase Agreement);
(d) initiate or propose any stockholder proposal with
respect to
a Covered Transaction other than with the consent of
Gottschalks'
Board of Directors or induce or attempt to induce any
other
person to initiate any stockholder proposal with
respect to a
Covered Transaction other than with the consent of
Gottschalks'
Board of Directors or make any statement or proposal,
whether
written or oral, to the Board of Directors of
Gottschalks with
respect to a Covered Transaction, or to any director,
officer or
agent of Gottschalks, or make any public announcement
or proposal
whatsoever with respect to a Covered Transaction or
solicit or
encourage any other person to make any such statement
or
proposal;
(e) solicit, initiate, encourage or in any way
participate,
directly or indirectly, in any "solicitation" of
"proxies" or
become a "participant" in any "election contest" (as
such terms
are defined or used in Regulation 14A under the
Exchange Act,
disregarding clause (iv) of Rule 14a-1(l)(2) and
including an
exempt solicitation pursuant to Rule 14a-2(b)(1));
call, or in
any way encourage or participate in a call for, any
special
meeting of stockholders of Gottschalks (or take any
action with
respect to acting by written consent of the
stockholders of
Gottschalks); request, or take any action to obtain or
retain any
list of holders of any securities of Gottschalks; or
initiate or
propose any stockholder proposal or participate in or
encourage
the making of, or solicit stockholders of Gottschalks
for the
approval of, one or more stockholder proposals;
(f) propose a nominee for director, or express support
or
opposition for any nominee for director or seek a
change in the
composition or size of Gottschalks' Board of Directors
other than
as provided in the Stockholders' Agreement; or
(g) make a request to Gottschalks (or its directors,
officers,
stockholders, employees or agents) to amend or waive
any
provisions of this Agreement, the Certificate of
Incorporation or
Bylaws of Gottschalks or seek to challenge the legality
or effect
thereof, including without limitation any public
request to
permit ECI or any other person to take any action in
respect of
the matters referred to in this Section 2.1;
(h) assist, advise, encourage or act in concert with
any person
with respect to, or seek to do, any of the foregoing;
or
(i) disclose any intention, plan or arrangement
inconsistent
with the foregoing.
Without limiting the foregoing, but for clarification
purposes
only, the above restrictions are not intended to limit
the
performance by the ECI Directors of their fiduciary
duties as
directors acting solely in that cacacity.
ARTICLE 3. GENERAL
Section 3.1 Notification as to Certain Matters. ECI
will notify
Gottschalks of any change in the Beneficial Ownership
of ECI and
its Affiliates and Associates involving in the
aggregate not less
than 50,000 shares of Gottschalks Common Stock not
later than two
business days after such change and from time to time,
upon
request, will notify Gottschalks of the number of
shares of
Gottschalks Common Stock Beneficially Owned by ECI and
its
Affiliates and Associates and of the names and
addresses of all
such persons, including, without limitation, Affiliates
to whom
ECI Shares have been transferred in accordance with the
Stockholders' Agreement. Gottschalks will notify ECI
from time
to time, upon request, of the number of shares of
Gottschalks
Common Stock outstanding.
Section 3.2 Specific Performance. ECI and Gottschalks
each
acknowledge that, in view of the uniqueness of
arrangements
contemplated by this Agreement, each party would not
have an
adequate remedy at law for money damages in the event
that this
Agreement has not been performed in accordance with its
terms,
and therefore agrees that the other party shall be
entitled to
specific enforcement of the terms hereof in addition to
any other
remedy to which it may be entitled, at law or in
equity.
Section 3.3 Amendments; Waiver. This Agreement may be
amended
only by agreement in writing of all parties. No waiver
of any
provision nor consent to any exception to the terms of
this
Agreement or any agreement contemplated hereby shall be
effective
unless in writing and signed by the party to be bound
and then
only to the specific purpose, extent and instance so
provided.
Section 3.4 Entire Agreement. This Agreement,
together with the
Asset Purchase Agreement and the other agreements of
the parties
of even date herewith, contains the entire
understanding of the
parties with respect to the subject matter of this
Agreement.
Except as specifically provided herein, this Agreement
is not
assignable by either of the parties. This Agreement is
binding
upon the respective successors of the parties and upon
the
Affiliates of ECI to whom any of the ECI Shares have
been
transferred in accordance with the Stockholders'
Agreement.
Section 3.5 Severability. In the event that any one
or more of
the provisions contained herein, or the application
thereof in
any circumstance, is held invalid, illegal or
unenforceable, the
validity, legality and enforceability of any such
provision in
every other respect and of the remaining provisions
contained
herein shall not be affected or impaired thereby.
Section 3.6 Notices. All notices, requests, consents
and other
communications hereunder shall be in writing and shall
be deemed
to have been made (i) when delivered personally or by
telecopier,
(ii) if to a party in the same country as the mailing
party, when
mailed first class registered or certified mail,
postage prepaid,
or (iii) if to a party in a different country from the
sending
party, on the second day following deposit with a
reputable
commercial air courier, charges prepaid, to each
respective party
as shown below:
(a) If to Gottschalks:
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Telecopier: (000) 000-0000
with copies to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: D. Xxxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
(b) If to ECI:
El Corte Ingles, X.X.
Xxxxxxxxxx, 000
00000 Xxxxxx XXXXX
Attention: Xxxxx Xxxx
Telecopier: 011-34-91-402-1567
With copies to:
McPeters, McAlearney, Shimoff & Xxxx
0 X. Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxx, Esq.
Telecopier: (000) 000-0000
Section 3.7 Term.
(a) This Agreement shall be effective from the date
hereof
through ___________, 2003 [the fifth anniversary of the
Closing]
(the "Standstill Period"), provided, however, that the
Standstill
Period shall be automatically extended for successive
one-year
periods (each such period, a "Standstill Extension
Term") unless
ECI shall have given Gottschalks 120-days' notice prior
to the
commencement of a Standstill Extension Term that ECI
elects that
such Standstill Extension Term not commence.
(b) Notwithstanding the above, the Standstill Period
(or the
Standstill Extension Term, as applicable) shall
terminate upon
the occurrence of any of the following events:
(i) any default (not cured within the applicable cure
period) by
Gottschalks under any of Gottschalks' material debt
agreements
which default would result in a material adverse effect
on
Gottschalks and its Subsidiaries taken as a whole;
(ii) approval by the Board of Directors of Gottschalks
(without
ECI's or its Affiliates' approval) of a Covered
Transaction;
(iii) material breach by Gottschalks, Xxxxxx Xxxx
or Xxxx
Xxxx of the Stockholders' Agreement which is neither
cured nor
desisted from within 30 days of receipt of written
notice from
ECI of such breach; or
(iv) material breach by Gottschalks of the 8%
Subordinated Note,
which is neither cured nor desisted from within 30 days
of
receipt of written notice from ECI of such breach.
Any event set forth in paragraph (b) of this Section
3.7 shall be
an "Early Standstill Termination Event."
Section 3.8 Governing Law. This Agreement shall be
governed by
and construed in accordance with the laws of the State
of
California without regard to principles of conflict of
law. Each
party hereby irrevocably submits to and accepts for
itself and
its properties, generally and unconditionally, the
exclusive
jurisdiction of and service of process pursuant to the
laws of
the State of California and the rules of its courts,
waives any
defense of forum non conveniens and agrees to be bound
by any
judgment rendered thereby arising under or out of in
respect of
or in connection with this Agreement or any related
document or
obligation. Each party further irrevocably designates
and
appoints the individual identified in or pursuant to
Section 3.6
hereof to receive notices on its behalf, as its agent
to receive
on its behalf service of all process in any such Action
before
any body, such service being hereby acknowledged to be
effective
and binding service in every respect. A copy of any
such process
so served shall be mailed by registered mail to each
party at its
address provided in Section 3.6; provided that, unless
otherwise
provided by applicable law, any failure to mail such
copy shall
not affect the validity of the service of such process.
If any
agent so appointed refuses to accept service, the
designating
party hereby agrees that service of process sufficient
for
personal jurisdiction in any action against it in the
applicable
jurisdiction may be made by registered or certified
mail, return
receipt requested, to its address provided in Section
3.6. Each
party hereby acknowledges that such service shall be
effective
and binding in every respect. Nothing herein shall
affect the
right to serve process in any other manner permitted by
law.
Section 3.9 Attorney's Fees. In the event of any
action,
complaint, petition or other proceeding, ("Action") by
any party
arising under or out of, in connection with or in
respect of,
this Agreement, the prevailing party shall be entitled
to
reasonable attorney's fees, costs and expenses incurred
in such
Action. Attorney's fees incurred in enforcing any
judgment in
respect of this Agreement are recoverable as a separate
item.
The parties intend that the preceding sentences be
severable from
the other provisions of this Agreement, survive any
judgment and,
to the maximum extent permitted by law, not be deemed
merged into
such judgment.
Section 3.10 Counterparts. This Agreement may be
executed in
any number of counterparts and by different parties in
separate
counterparts, each of which when so executed shall be
deemed to
be an original and all of which taken together shall
constitute
one and the same agreement.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have caused this
Agreement
to be duly executed and delivered by their respective
officers
thereunto duly authorized as of the date provided first
written
above.
EL CORTE INGLES, S.A.
By:
Name:
Title:
GOTTSCHALKS INC.
By:
Name:
Title:
EXHIBIT K
STOCKHOLDERS' AGREEMENT
by and among
EL CORTE INGLES, S.A.,
GOTTSCHALKS INC.,
XXXXXX XXXX
and
XXXX XXXX
dated as of
___________, 1998
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions 1
Section 1.1 "Affiliate" 1
Section 1.2 "Agreement" 1
Section 1.3 "Asset Purchase
Agreement" 2
Section 1.4 "Beneficially Own" 2
Section 1.5 "Board" 2
Section 1.6 "Change in Control" 2
Section 1.7 "Closing" 3
Section 1.8 "Gottschalks Common
Stock" 3
Section 1.9 "Designated Board" 3
Section 1.10 "Director" 3
Section 1.11 "Early Standstill
Termination Event" 4
Section 1.12 "ECI" 4
Section 1.13 "Exchange Act" 4
Section 1.14 "fully diluted" 4
Section 1.15 "Gottschalks" 4
Section 1.16 "Xxxxxx" 4
Section 1.17 "Governmental Entity" 4
Section 1.18 "Group" 4
Section 1.19 "Independent Nominees" 4
Section 1.20 "Investor" 4
Section 1.21 "Investor Nominees" 4
Section 1.22 "Management" 4
Section 1.23 "Management Nominees" 4
Section 1.24 "Nominating Committee" 4
Section 1.25 "person" 4
Section 1.26 "Securities Act" 5
Section 1.27 "Standstill Agreement" 5
Section 1.28 "Subsidiary" 5
Section 1.29 "Transfer" 5
Section 1.30 "Transferee" 5
Section 1.31 "Voting Securities" 5
ARTICLE 2 Board of Directors 5
Section 2.1 Members of the Board 5
Section 2.2 Committee
Representation. 8
Section 2.3 Vacancies 8
ARTICLE 3 Voting Rights 9
Section 3.1 Gottschalks Common
Stock - Voting Rights and
Obligations 9
Section 3.2 Management Registration
Rights 9
ARTICLE 4 Restrictions on Transfer 9
Section 4.1 Restrictions on
Transfer 9
Section 4.2 Notification of
Restrictions 10
Section 4.3 Notice to Gottschalks 11
Section 4.4 Compliance with
Xxxxxxx Xxxxxxx
Policy 11
Section 4.5 Compliance with Law 11
ARTICLE 5 Non-Competition 11
ARTICLE 6 Miscellaneous 11
Section 6.1 Term 11
Section 6.2 Counterparts 12
Section 6.3 Governing Law 12
Section 6.4 Entire Agreement 12
Section 6.5 Expenses 12
Section 6.6 Notices 12
Section 6.7 Successors and
Assigns 14
Section 6.8 Headings 14
Section 6.9 Amendments and
Waivers 14
Section 6.10 Interpretation;
Absence of
Presumption 14
Section 6.11 Severability 14
Section 6.12 Further Assurances 14
Section 6.13 Specific
Performance 14
Section 6.14 Arbitration 15
Section 6.15 Attorney's Fees 15
THIS STOCKHOLDERS' AGREEMENT (the
"Agreement"), dated
as of ________, 1998, is made by and among El Corte
Ingles, S.A.,
a Spanish corporation ("ECI"), Gottschalks Inc., a
Delaware
corporation ("Gottschalks"), Xxxxxx Xxxx, an individual
and Xxxx
Xxxx, an individual. Capitalized terms used and not
defined
herein have the meanings given to them in the Asset
Purchase
Agreement (hereinafter defined).
RECITALS
WHEREAS, Gottschalks, ECI and The Xxxxxx Company, a
California
corporation and a wholly-owned subsidiary of ECI
("Xxxxxx"), have
entered into an Asset Purchase Agreement, dated as of
July 21,
1998 (the "Asset Purchase Agreement"), pursuant to
which Xxxxxx
has agreed to sell, and Gottschalks has agreed to
purchase,
substantially all of the assets and certain of the
liabilities of
Xxxxxx for certain consideration, including, but not
limited to,
certain shares of Gottschalks Common Stock (hereinafter
defined),
upon the terms and subject to the conditions set forth
therein;
and
WHEREAS, the shares of Gottschalks Common Stock to be
issued
pursuant to the Asset Purchase Agreement will be issued
to
Xxxxxx, ECI's wholly-owned subsidiary; and
WHEREAS, it is a condition to the transactions
contemplated by
the Asset Purchase Agreement and the parties believe it
to be in
their best interests that they enter into this
Agreement and
provide for certain rights and restrictions with
respect to the
investment by ECI (through Xxxxxx) in Gottschalks,
certain rights
and restrictions of Xxxxxx Xxxx and Xxxx Xxxx with
respect to
their ownership of Gottschalks Common Stock and the
corporate
governance of Gottschalks.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and
the
covenants and agreements contained herein and for good
and
valuable consideration, the receipt and sufficiency of
which are
hereby acknowledged, and intending to be legally bound
hereby,
the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall
have the
following respective meanings:
Section 1.1 "Affiliate" shall have the meaning
ascribed
thereto in Rule 12b-2 promulgated under the Exchange
Act, and as
in effect on the date hereof.
Section 1.2 "Agreement" shall have the meaning set
forth in
the first paragraph hereof.
Section 1.3 "Asset Purchase Agreement" shall have
the meaning
set forth in the second paragraph hereof.
Section 1.4 "Beneficially Own" shall mean, with
respect to any
security, having direct or indirect (including through
any
Subsidiary or Affiliate) "beneficial ownership" of such
security,
as determined pursuant to Rule 13d-3 under the Exchange
Act,
including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
Section 1.5 "Board" shall mean the board of
directors of
Gottschalks.
Section 1.6 "Change in Control" shall mean the
occurrence of
any of the following events:
(a) An acquisition (other than directly from
Gottschalks) of any
Voting Securities by any person immediately after which
such
person has Beneficial Ownership of fifty percent (50%)
or more of
the combined voting power of Gottschalks' then
outstanding Voting
Securities; provided, however, in determining whether a
Change in
Control has occurred, Voting Securities which are
acquired in a
"Non-Control Acquisition" (as hereinafter defined)
shall not
constitute an acquisition which would cause a Change in
Control.
A "Non-Control Acquisition" shall mean an acquisition
by (1) an
employee benefit plan (or a trust forming a part
thereof)
maintained by (i) Gottschalks or (ii) a Subsidiary of
Gottschalks, (2) Gottschalks or any Subsidiary of
Gottschalks,
(3) any person or Group who, immediately prior to the
date hereof
had Beneficial Ownership of fifteen percent (15%) or
more of the
Gottschalks Common Stock or (4) any person in
connection with a
"Non-Control Transaction" (as hereinafter defined).
(b) A merger, consolidation or reorganization
involving
Gottschalks, unless:
(i) the stockholders of Gottschalks immediately
before such
merger, consolidation or reorganization, own, directly
or
indirectly immediately following such merger,
consolidation or
reorganization, at least fifty percent (50%) of the
combined
voting power of the outstanding voting securities of
the
corporation resulting from such merger or consolidation
or
reorganization (the "Surviving Corporation") in
substantially the
same proportion as their ownership of the Voting
Securities
immediately before such merger, consolidation or
reorganization;
and
(ii) the individuals who were members of the
Designated
Board immediately prior to the execution of the
agreement
providing for such merger, consolidation or
reorganization
constitute at least two-thirds of the members of the
Board of the
Surviving Corporation; and
(iii) no person (other than Gottschalks or any
Subsidiary of Gottschalks, any employee benefit plan
(or any
trust forming a part thereof) maintained by
Gottschalks, the
Surviving Corporation or any Subsidiary of Gottschalks,
or any
person who, immediately prior to such merger,
consolidation or
reorganization had Beneficial Ownership of twenty-five
percent
(25%) or more of the then outstanding Voting
Securities) has
Beneficial Ownership of twenty-five percent (25%) or
more of the
combined voting power of the Surviving Corporation's
then
outstanding voting securities; and
(iv) a transaction described in clauses (i)
through (iii) of
this paragraph (b) shall herein be referred to as a
"Non-Control
Transaction."
(c) A complete liquidation or dissolution of
Gottschalks.
(d) An agreement for the sale or other disposition of
all or
substantially all of the assets of Gottschalks to any
person
(other than a transfer to a Subsidiary).
(e) The acquisition of any Voting Securities by Xxxxxx
Xxxx,
Xxxxxx Xxxx or their lineal descendents immediately
after which
Xxxxxx Xxxx, Xxxxxx Xxxx and their lineal descendents
together
have a pecuniary interest in more than fifty percent
(50%) of
Gottschalks' then outstanding equity securities.
(f) The acquisition of any Voting Securities by Xxxxxx
Xxxx, his
spouse or his lineal descendents immediately after
which Xxxxxx
Xxxx, his spouse and his lineal descendents together
have a
pecuniary interest in more than fifty percent (50%) of
Gottschalks' then outstanding equity securities.
(g) Buyer is no longer a reporting company under the
Exchange
Act.
Notwithstanding the foregoing, a Change in Control
shall not be
deemed to occur solely because any person (the "Subject
Person")
acquired Beneficial Ownership or pecuniary interest of
more than
the permitted amount of the outstanding Voting
Securities or
equity securities as a result of the acquisition of
Voting
Securities or equity securities by Gottschalks which,
by reducing
the number of Voting Securities or equity securities
outstanding,
increases the proportional number of shares
Beneficially Owned by
the Subject Person or in which the subject person has a
pecuniary
interest, provided that if a Change in Control would
occur (but
for the operation of this sentence) as a result of the
acquisition of Voting Securities by Gottschalks, and
after such
share acquisition by Gottschalks, the Subject Person
becomes the
Beneficial Owner of the additional Voting Securities
which
increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person,
then a
Change in Control shall occur.
Section 1.7 "Closing" shall have the meaning set
forth in the
Stock Purchase Agreement.
Section 1.8 "Gottschalks Common Stock" shall mean
the common
stock, par value $0.01 per share, of Gottschalks.
Section 1.9 "Designated Board" shall have the
meaning set
forth in Section 2.1(a).
Section 1.10 "Director" shall mean a member of the
Board.
Section 1.11 "Early Standstill Termination Event"
shall have
the meaning set forth in the Standstill Agreement.
Section 1.12 "ECI" shall have the meaning set forth
in the
first paragraph hereof.
Section 1.13 "Exchange Act" shall mean the Securities
Exchange
Act of 1934, as amended.
Section 1.14 "fully diluted" shall mean, with respect
to the
Gottschalks Common Stock, the total number of
outstanding shares
of Gottschalks Common Stock (for such purposes,
treating as
outstanding Gottschalks Common Stock all options or
warrants to
purchase and securities convertible into (or
exchangeable or
redeemable for) the Gottschalks Common Stock as of the
relevant
measurement date).
Section 1.15 "Gottschalks" shall have the meaning set
forth in
the first paragraph hereof.
Section 1.16 "Xxxxxx" shall have the meaning set
forth in the
second paragraph hereof.
Section 1.17 "Governmental Entity" means any
government or any
agency, bureau, board, commission, court, department,
official,
political subdivision, tribunal or other
instrumentality of any
government, whether federal, state or local, domestic
or foreign.
Section 1.18 "Group" shall mean a "group" as such
term is used
in Section 13(d)(3) of the Exchange Act.
Section 1.19 "Independent Nominees" shall have the
meaning set
forth in Section 2.1(a).
Section 1.20 "Investor" shall mean ECI (through
Xxxxxx),
together with and any Transferee, and so long as Xxxxxx
and any
Transferee own shares of Gottschalks Common Stock, such
persons
shall be treated as one entity for the purposes of this
Agreement.
Section 1.21 "Investor Nominees" shall have the
meaning set
forth in Section 2.1(a).
Section 1.22 "Management" shall mean Xxxxxx Xxxx and
Xxxx Xxxx.
Section 1.23 "Management Nominees" shall have the
meaning set
forth in Section 2.1(a).
Section 1.24 "Nominating Committee" shall mean the
nominating
committee of the Board as it is constituted from time
to time.
Section 1.25 "person" shall mean any individual,
corporation,
partnership, limited liability company, joint venture,
trust,
unincorporated organization, other form of business or
legal
entity or Governmental Entity.
Section 1.26 "Securities Act" shall mean the
Securities Act of
1933, as amended.
Section 1.27 "Standstill Agreement" shall mean that
certain
Standstill Agreement by and between ECI and Gottschalks
dated the
date hereof.
Section 1.28 "Subsidiary" shall mean any corporation,
partnership limited liability company, joint venture,
business
trust or other entity of which the specified person,
directly or
indirectly, owns or controls 50% or more of the
securities or
other interests entitled to vote in the election of
directors (or
others performing similar functions) with respect to
such
corporation or other organization, or otherwise has the
ability
to control such corporation, partnership, limited
liability
company, joint venture, business trust or other entity.
Section 1.29 "Transfer" shall have the meaning set
forth in
Section 4.1.
Section 1.30 "Transferee" shall mean any Affiliate of
Xxxxxx to
whom Xxxxxx has transferred shares of Gottschalks
Common Stock
pursuant to Section 4.1(a)(iii) of this Agreement.
Section 1.31 "Voting Securities" shall mean at any
time shares
of any class of capital stock of Gottschalks which are
then
entitled to vote generally in the election of
Directors.
ARTICLE 2
Board of Directors
Section 2.1 Members of the Board.
(a) Prior to the Closing, the Board is comprised of
three
members of management of Gottschalks, one person
related to
certain members of management of Gottschalks and five
independent
directors. Immediately following the Closing,
Gottschalks,
Management and ECI will take all action necessary to
cause two
Investor Nominees (hereinafter defined) to be added to
the Board.
Thereafter, subject to the terms of this Agreement, at
each
annual or special meeting of stockholders of
Gottschalks at, or
the taking of action by written consent of stockholders
of
Gottschalks with respect to, which any Directors are to
be
elected, Gottschalks, Management and Investor will take
all
action required by this Agreement to cause the Board to
be
structured to consist of eleven (11) members, of which
two (2)
members will be designees of ECI (the "Investor
Nominees") and
the remaining nine (9) members will consist of members
of
management or persons affiliated with management that
are
designated by Management (the "Management Nominees")
and
independent directors (the "Independent Nominees"),
collectively,
the "Designated Board"; provided, however, that the
Designated
Board shall be increased to twelve (12) members, and
Investor
shall be entitled to a total of three (3)
representatives on the
Designated Board, if and during such time as Investor
Beneficially Owns a number of shares of Gottschalks
Common Stock
equal to at least 30% of the outstanding Gottschalks
Common
Stock, on a fully diluted basis.
(b) Investor's representation on the Designated Board
will be
reduced to one representative and the size of the
Designated
Board will be reduced by the number of Investor
Nominees so
resigning if either: (i) Investor disposes of more than
700,000
shares of Gottschalks Common Stock; or (ii) Investor
and its
Affiliates Beneficially Own a number of shares of
Gottschalks
Common Stock equal to less than 10% of the outstanding
Gottschalks Common Stock, on a fully diluted basis.
(c) Investor's representation on the Board will be
terminated on
the earlier of: (i) the date Investor disposes of more
than
1,350,000 shares of Gottschalks Common Stock; or (ii)
Investor
and its Affiliates Beneficially Own a number of shares
of
Gottschalks Common Stock equal to less than 5% of the
outstanding
Gottschalks Common Stock, on a fully diluted basis.
(d) Subject to the terms of this Agreement: (i)
Investor has
the right to designate the Investor Nominees; (ii)
Xxxxxx Xxxx
(if he is alive and has the capacity) or Xxxx Xxxx (if
Xxxxxx
Xxxx is not alive or no longer has the capacity) has
the right to
designate the Management Nominees; and (iii) the
Nominating
Committee, or the Board if there is no Nominating
Committee, has
the right to designate the Independent Nominees. In
the event
both Xxxxxx Xxxx and Xxxx Xxxx are deceased or
incapacitated, the
Management Nominees shall be chosen by the Chief
Executive
Officer of Gottschalks.
(e) Investor and Management each agrees not to name
any person
as a nominee to the Board if (i) such person is not
reasonably
experienced in business or financial matters, (ii) such
person
has been convicted of, or has pled nolo contendere to,
a felony,
(iii) the election of such person would violate any
law, or (iv)
any event required to be disclosed pursuant to Item
401(f) of
Regulation S-K of the Exchange Act has occurred with
respect to
such person. Investor and Management, respectively,
shall each
use reasonable efforts to afford the Independent
Nominees of
Gottschalks a reasonable opportunity to meet any
individual that
it is considering naming as a nominee to the Board.
(f) Subject to Section 6.1 of this Agreement,
Gottschalks will
support the nomination of and the election of each
Investor
Nominee, each Management Nominee and each Independent
Nominee to
the Board, and Gottschalks will exercise all authority
under
applicable law to cause each Investor Nominee, each
Management
Nominee and each Independent Nominee to be elected to
the Board
as provided herein. Without limiting the generality of
the
foregoing, with respect to each meeting of stockholders
of
Gottschalks at which Directors are to be elected,
Gottschalks
shall use its reasonable efforts to solicit from the
stockholders
of Gottschalks eligible to vote in the election of
Directors
proxies in favor of each Investor Nominee, each
Management
Nominee and each Independent Nominee.
(g) Subject to Section 6.1 of this Agreement:
(i) During the period under this Agreement, if
any, that
Investor shall be entitled pursuant to the proviso of
Section
2.1(a) to designate three Investor Nominees, if the
total size of
the Board is later increased (other than as the result
of an
acquisition transaction approved by the Board) Investor
shall be
entitled to a proportionate increase in the number of
Investor
Nominees. The new number of Investor Nominees shall be
calculated by multiplying 3/12 by the size of the new
Board
(excluding any Directors who have been added as a
result of any
acquisition transaction approved by the Board) and
rounding the
result up to the next whole number where the resulting
fraction
is .5 or above. The table below is provided by way of
example:
Number of Directors Number of Investor Nominees
13 3
14 4
15 4
16 4
17 4
(ii) During the period under this Agreement, if
any, that
Investor shall be entitled to designate two Investor
Nominees, if
the total size of the Board is increased (other than as
the
result of an acquisition transaction approved by the
Board),
Investor shall be entitled to a proportionate increase
in the
number of Investor Nominees. The new number of
Investor Nominees
shall be calculated by multiplying 2/11 by the size of
the new
Board (excluding any Directors who have been added as a
result of
any acquisition transaction approved by the Board) and
rounding
the result up to the next whole number where the
resulting
fraction is .5 or above. The table below is provided
by way of
example:
Number of Directors Number of Investor Nominees
12 2
13 2
14 3
15 3
16 3
17 3
(iii) During the period under this Agreement,
if any,
that Investor shall be entitled to designate one
Investor
Nominee, if the total size of the Board is increased
(other than
as the result of an acquisition transaction approved by
the
Board), Investor shall be entitled to a proportionate
increase in
the number of Investor Nominees. The new number of
Investor
Nominees shall be calculated by multiplying 1/11 by the
size of
the new Board (excluding any Directors who have been
added as a
result of any acquisition transaction approved by the
Board) and
rounding the result up to the next whole number where
the
resulting fraction is .5 or above. The table below is
provided
by way of example:
Number of Directors Number of Investor Nominees
12 1
13 1
14 1
15 1
16 1
17 2
(h) If the Board is increased as provided in paragraph
(g) of
this Section 2.1, other than those new Directors which
must be
Investor Nominees pursuant to such paragraph (g), new
Directors
to be added to the Board shall be either Management
Nominees or
Independent Nominees. Such Board, as then constituted,
will be
the "Designated Board" for all purposes hereunder.
(i) If Investor's right to nominate directors to the
Board is
reduced or terminated as set forth in this Agreement,
Investor
shall cause the applicable number of its Investor
Nominees to
immediately resign (regardless of the remaining term,
if any)
and, in the event that the number of Investor Nominees
is reduced
rather than terminated, the Designated Board shall be
reduced in
size by the number of Investor Nominees so resigning.
(j) Except as otherwise set forth in this Section 2.1,
Gottschalks shall not reduce the number of Investor
Nominees or
Independent Nominees without Investor's consent.
Section 2.2 Committee Representation. During such
time, if
any, as Investor is entitled to have at least one
Investor
Nominee on the Board, unless Investor chooses not to
exercise its
rights under this Section 2.2, Gottschalks shall cause
at least
one Director who is an Investor Nominee to be appointed
to each
standing committee of the Board. Notwithstanding the
foregoing,
if none of the Directors who are Investor Nominees
would be
considered "independent" of Gottschalks,
"disinterested,"
"nonemployee directors" and "outside directors" (i) for
purposes
of any applicable rule of the New York Stock Exchange
or any
other securities exchange or other self-regulating
organization
requiring that members of the audit committee of the
Board be
independent of Gottschalks or (ii) for purposes of any
law or
regulation that requires, in order to obtain or
maintain
favorable tax, securities, corporate law or other
material legal
benefits with respect to any plan or arrangement for
employee
compensation or benefits, that the members of the
committee of
the Board charged with responsibility for such plan or
arrangement be "independent" of Gottschalks,
"disinterested,"
"nonemployed directors" or "outside directors," then a
Director
who is an Investor Nominee shall not be required to be
appointed
to any such standing committee. In no event shall any
Investor
Nominee serve on any committee of the Board evaluating
any
transaction or potential transaction involving
Gottschalks and
any of Investor, its Affiliates or any Group of which
Investor is
a member or such other transaction or potential
transaction which
would involve an actual or potential conflict of
interest on the
part of the Directors who are Investor Nominees. Any
members of
any committee who are Investor Nominees shall, in the
event of
any vacancy in such membership, be replaced by a
Director who is
an Investor Nominee elected by the Directors who are
Investor
Nominees.
Section 2.3 Vacancies. In the event that any
Investor Nominee
shall cease to serve as a Director for any reason other
than the
fact that Investor no longer has a right to nominate
such
Director, the vacancy resulting thereby shall be filled
by an
Investor Nominee designated by Investor; provided,
however, that
any Investor Nominee so designated shall satisfy the
qualification requirements set forth in Section 2.1(e).
In the
event that any Management Nominee or Independent
Nominee shall
cease to serve as a Director, the vacancy resulting
thereby shall
be filled in accordance with the terms of this
Agreement with
either a Management Nominee or an Independent Nominee
provided,
however, that any nominee so designated shall satisfy
the
qualification requirements set forth in Section 2.1(e).
ARTICLE 3
Voting Rights
Section 3.1 Gottschalks Common Stock - Voting Rights
and
Obligations.
(a) Subject to the provisions of this Section 3.1(a),
Investor
and its Affiliates may vote the shares of Gottschalks
Common
Stock which they own in their sole and absolute
discretion.
Investor shall and shall cause its Affiliates to: (i)
be
present, in person or represented by proxy, at all
stockholder
meetings of Gottschalks so that all Gottschalks Common
Stock
beneficially owned by Investor and its Affiliates may
be counted
for the purpose of determining the presence of a quorum
at such
meetings; and (ii) vote or consent, or cause to be
voted or a
consent to be given, with respect to all Gottschalks
Common Stock
owned beneficially or of record by Investor or its
Affiliates or
of which Investor or its Affiliates otherwise has the
power to
vote: (A) in favor of the election of the Investor
Nominees, the
Management Nominees and the Independent Nominees; and
(B) with
regard to any transaction which would result in a
Change in
Control that has been approved by the Board and
submitted to a
vote of Gottschalks' stockholders, as recommended by
the Board.
(b) Subject to the provisions of this Section 3.1(b),
each
member of Management may vote the shares of Gottschalks
Common
Stock owned by such member in his sole and absolute
discretion.
Management shall: (i) be present, in person or
represented by
proxy, at all stockholder meetings of Gottschalks so
that all
Gottschalks Common Stock beneficially owned by
Management may be
counted for the purpose of determining the presence of
a quorum
at such meetings; and (ii) vote or consent, or cause to
be voted
or a consent to be given, with respect to all
Gottschalks Common
Stock owned beneficially or of record by Management or
of which
Management otherwise has the power to vote in favor of
the
election of the Investor Nominees, the Independent
Nominees and
the Management Nominees.
Section 3.2 Management Registration Rights. With
respect to
any request by members of management of Gottschalks or
members of
the Xxxxxx Xxxx family to the Board to participate in
any
registration of shares of Gottschalks stock owned by
such
persons, Investor shall cause the Investor Nominees to
vote
proportionately with the group of Directors composed of
the
Management Nominees and the Independent Nominees voting
on such
request, taken as a whole.
ARTICLE 4
Restrictions on Transfer
Section 4.1 Restrictions on Transfer.
(a) Until the earlier of (x) __________, 2003 [fifth
anniversary
of Closing], or (y) approval by the stockholders of
Gottschalks
of a transaction which would result in a Change in
Control,
Investor will not directly or indirectly sell,
transfer, pledge
or otherwise dispose of (collectively, "Transfer") any
shares of
Gottschalks Common Stock issued to Xxxxxx except for:
(i)
Transfers made in compliance with the requirements of
Rule 144 of
the Securities Act, (ii) Transfers pursuant to
negotiated
transactions with third parties, provided that: (A) the
transferee acknowledges that it is subject to the
Standstill
Agreement and the provisions of Articles 3 and 4 of
this
Agreement; and (B) Gottschalks approves any such
Transfer that
would result in a person beneficially owning more than
9.8% of
the Gottschalks Common Stock, (iii) Transfers to one or
more
Affiliates of Investor who agree to be bound by the
terms and
conditions of the Standstill Agreement and the
obligations of the
transferor under this Agreement, (iv) pledges to a bona
fide
financial institution for the purpose of securing bona
fide
indebtedness of Investor; provided, that: (A) such
indebtedness
is full recourse indebtedness; and (B) no such pledge,
if
enforced, would result in the bona fide financial
institution or
any person acquiring the pledged shares having
Beneficial
Ownership of more than 9.8% of the Gottschalks Common
Stock and
(v) Transfers pursuant to or in accordance with the
Registration
Rights Agreement in a bona fide public offering.
(b) Any Transferee hereunder shall succeed to the
obligations,
but not the rights, of ECI under this Agreement.
Notwithstanding
the foregoing, ECI agrees that it shall remain fully
liable for
ensuring that the Transferee complies with all
obligations
assumed by Transferee pursuant to this Agreement.
(c) Any Transfer contrary to the provisions of this
Section 4.1
shall be null and void and the transferee shall not be
recognized
by Gottschalks as the holder or owner of such shares
for any
purposes (including voting and dividend rights) unless
and until
such provisions are satisfied.
(d) This Agreement places no restrictions on the
Transfer by
Management of any shares of Gottschalks Common Stock
owned by
Management.
Section 4.2 Notification of Restrictions.
(a) Any certificates representing the shares of
Gottschalks
Common Stock issued by Gottschalks to Investor will
bear the
following legend, which legend will remain until such
time as the
securities represented by the certificates are
transferred
without such shares continuing to be subject to this
Agreement:
"THESE SECURITIES ARE SUBJECT TO THE PROVISIONS OF AN
AGREEMENT
AMONG EL CORTE INGLES, S.A. [OR TRANSFEREE], THE
ISSUER, XXXXXX
XXXX AND XXXX XXXX AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT IN
ACCORDANCE THEREWITH."
(b) The following legend: (i) will be placed on any
certificates
representing the shares of Gottschalks Common Stock
owned or
acquired by Investor or its Affiliates that were not
issued by
Gottschalks to Xxxxxx and will remain on such
certificates until
the termination of this Agreement; and (ii) will be
placed on any
certificates representing the shares of Gottschalks
Common Stock
owned by Management and will remain on such
certificates until
the earlier of the termination of this Agreement and
the date on
which the shares represented by such certificate or
certificates
are transferred by Management:
"THESE SECURITIES ARE SUBJECT TO THE PROVISIONS OF AN
AGREEMENT
AMONG EL CORTE INGLES, S.A., THE ISSUER, XXXXXX XXXX
AND XXXX
XXXX."
(c) None of Investor, any Affiliate of Investor or
Management
shall deposit any shares of Gottschalks Common Stock
owned by
them into a voting trust or subject any such shares to
any
arrangement or agreement with respect to the voting of
such
shares inconsistent with the terms of this Agreement.
Section 4.3 Notice to Gottschalks. During the
period
specified in Section 4.1, if Investor wishes to sell
pursuant to
Section 4.1 any shares of Gottschalks Common Stock,
Investor
shall give Gottschalks 15 days' prior written notice of
such
proposed sale, setting forth the number of shares of
Gottschalks
Common Stock that Investor proposes to sell, the
expected timing
of the proposed sale, and the details of such sale, in
order to
enable Gottschalks and Management to confirm that such
sale
complies with this Agreement.
Section 4.4 Compliance with Xxxxxxx Xxxxxxx Policy.
For as
long as Investor Beneficially Owns any shares of
Gottschalks
Common Stock, it will, and will use its best efforts to
cause its
directors, officers, employees, agents, and
representatives to,
comply with the written policy of Gottschalks designed
to prevent
violations of xxxxxxx xxxxxxx and similar laws.
Section 4.5 Compliance with Law. During the term of
this
Agreement, Investor shall comply with, and make timely
filings in
accordance with, Sections 13 and 16 of the Exchange
Act.
ARTICLE 5
Non-Competition
Investor acknowledges that in light of Investor's
representation
on the Board, it would be unfair for Investor to
compete with
Gottschalks. For these and other reasons, and as an
inducement
to Gottschalks to enter into this Agreement, Investor
agrees that
during the term of this Agreement, Investor will not
and will not
allow Xxxxxx to, directly or indirectly, for its own
benefit or
as agent for another, carry on or participate in the
ownership,
management or control of, or the financing of, or be
employed by,
or consult for or otherwise render services to, or
allow its name
or reputation to be used in or by any other present or
future
business enterprise that competes with Gottschalks in
the States
of Arizona, California, Colorado, Idaho, Montana,
Nevada, New
Mexico, Oklahoma, Oregon, Texas, Utah, Washington or
Wyoming;
provided, however, that nothing contained herein shall
limit the
right of Investor as an investor to hold and make
investments in
securities of any corporation or limited partnership
that is
registered on a national securities exchange or
admitted to
trading privileges thereon or actively traded in a
generally
recognized over-the-counter market, provided Investor's
equity
interest therein does not exceed 5% of the outstanding
shares or
interests in such corporation or partnership.
ARTICLE 6
Miscellaneous
Section 6.1 Term. The provisions of Article 4 of
this
Agreement shall expire, upon the earlier of (i)
__________, 2003
[fifth anniversary of Closing], or (ii) approval by the
stockholders of Gottschalks of a transaction which
would result
in a Change of Control. All other provisions of this
Agreement
shall expire, and Investor shall, in accordance with
the
provisions of paragraph (i) of Section 2.1 require its
Investor
Nominees to immediately resign, upon the earlier of:
(i) the
date on which Investor no longer is entitled pursuant
to Section
2.1 of this Agreement to a representative on the Board;
and (ii)
the expiration of the Standstill Agreement (other than
as the
result of an Early Standstill Termination Event).
Section 6.2 Counterparts. This Agreement may be
executed in
any number of counterparts and by different parties in
separate
counterparts, all of which shall constitute one and the
same
agreement, and shall become effective when one or more
counterparts have been signed by each of the parties
and
delivered to the other parties.
Section 6.3 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF
DELAWARE WITHOUT REFERENCE TO THE CHOICE OF LAW
PRINCIPLES
THEREOF.
Each party hereby irrevocably submits to and accepts
for itself
and its properties, generally and unconditionally, the
exclusive
jurisdiction of and service of process pursuant to the
laws of
the State of California and the rules of its courts,
waives any
defense of forum non conveniens and agrees to be bound
by any
judgment rendered thereby arising under or out of in
respect of
or in connection with this Agreement or any related
document or
obligation. Each party further irrevocably designates
and
appoints the individual identified in or pursuant to
Section 6.6
hereof to receive notices on its behalf, as its agent
to receive
on its behalf service of all process in any such action
before
any body, such service being hereby acknowledged to be
effective
and binding service in every respect. A copy of any
such process
so served shall be mailed by registered mail to each
party at its
address provided in Section 6.6; provided that, unless
otherwise
provided by applicable law, any failure to mail such
copy shall
not affect the validity of the service of such process.
If any
agent so appointed refuses to accept service, the
designating
party hereby agrees that service of process sufficient
for
personal jurisdiction in any action against it in the
applicable
jurisdiction may be made by registered or certified
mail, return
receipt requested, to its address provided in Section
6.6. Each
party hereby acknowledges that such service shall be
effective
and binding in every respect. Nothing herein shall
affect the
right to serve process in any other manner permitted by
law.
Section 6.4 Entire Agreement. This Agreement,
together with
the Asset Purchase Agreement and the other agreements
of the
parties hereto and Xxxxxx of even date herewith,
contain the
entire agreement among the parties with respect to the
subject
matter hereof. This Agreement is not intended to
confer upon any
person not a party hereto (and their successors and
assigns) any
rights or remedies hereunder.
Section 6.5 Expenses. Except as set forth in the
Asset
Purchase Agreement, all legal and other costs and
expenses
incurred in connection with this Agreement and the
transactions
contemplated hereby shall be paid by the party
incurring such
costs and expenses.
Section 6.6 Notices. All notices, requests,
consents and
other communications hereunder shall be in writing and
shall be
deeded to have been made (i) when delivered personally
or by
telecopier, (ii) if to a party in the same country as
the mailing
party, when mailed first class registered or certified
mail,
postage prepaid, or (iii) if to a party in a different
country
from the sending party, on the second day following
deposit with
a reputable commercial air courier, charges prepaid, to
each
respective party as shown below:
(a) If to Gottschalks:
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Telecopier: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: D. Xxxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
(b) If to Management, to each of the following:
Xxxxxx Xxxx
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Telecopier: (000) 000-0000
Xxxx Xxxx
Gottschalks Inc.
0 Xxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Telecopier: (209) ________
(c) If to ECI:
El Corte Ingles, X.X.
Xxxxxxxxxx, 000
00000 Xxxxxx XXXXX
Attention: Xx Xxxxx Xxxx
Telecopier: 011-34-91-402-1567
With a copy to:
McPeters, McAlearney, Shimoff & Xxxx
0 X. Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxx, Esq.
Telecopier: (000) 000-0000
Section 6.7 Successors and Assigns. This Agreement
shall be
binding upon and inure to the benefit of the parties
hereto and
nothing in this Agreement, express or implied, is
intended to
confer upon any other person any rights or remedies of
any nature
whatsoever under or by reason of this Agreement.
Neither this
Agreement nor any rights or obligations under it are
assignable
by any party hereto, except that ECI and any subsequent
Transferee shall be permitted to assign its rights
hereunder as
provided in Section 4.1 hereof.
Section 6.8 Headings. The headings in this
Agreement are for
convenience only and shall not limit or otherwise
affect the
meaning hereof.
Section 6.9 Amendments and Waivers. This Agreement
may be
amended only by agreement in writing of all parties.
No waiver
of any provision nor consent to any exception to the
terms of
this Agreement shall be effective unless in writing and
signed by
the party to be bound and then only to the specific
purpose,
extent and instance so provided.
Section 6.10 Interpretation; Absence of Presumption.
(a) For the purposes hereof, (i) words in the singular
shall be
held to include the plural and vice versa and words of
one gender
shall be held to include the other gender as the
context
requires, (ii) the terms "hereof", "herein", and
"herewith" and
words of similar import shall, unless otherwise stated,
be
construed to refer to this Agreement as a whole and not
to any
particular provision of this Agreement, and Article,
Section and
paragraph references are to the Articles, Sections and
paragraphs, of this Agreement unless otherwise
specified, (iii)
the word "including" and words of similar import when
used in
this Agreement shall mean "including, without
limitation," unless
the context otherwise requires or unless otherwise
specified,
(iv) the word "or" shall not be exclusive, and (v)
provisions
shall apply, when appropriate, to successive events and
transactions.
(b) This Agreement shall be construed without regard
to any
presumption or rule requiring construction or
interpretation
against the party drafting or causing any instrument to
be
drafted.
Section 6.11 Severability. In the event that any one
or more
of the provisions contained herein, or the application
thereof in
any circumstance, is held invalid, illegal or
unenforceable, the
validity, legality and enforceability of any such
provision in
every other respect and of the remaining provisions
contained
herein shall not be affected or impaired thereby.
Section 6.12 Further Assurances. Gottschalks and
Investor
agree that, from time to time, each of them will, and
will cause
their respective Affiliates to, and Management agrees
that it
will execute and deliver such further instruments and
take such
other action as may be necessary to carry out the
purposes and
intents hereof.
Section 6.13 Specific Performance. Each of the
parties hereto
acknowledges that, in view of the uniqueness of the
arrangements
contemplated by this Agreement, each party would not
have an
adequate remedy at law for money damages in the event
that this
Agreement has not been performed in accordance with its
terms,
and therefore agree that the other parties hereto shall
be
entitled to specific enforcement of the terms hereof in
addition
to any other remedy to which the parties hereto may be
entitled,
at law or in equity.
Section 6.14 Arbitration.
(a) Any controversy, dispute or claim under, arising
out of, in
connection with or in relation to this Agreement,
including but
not limited to the negotiation, execution,
interpretation,
construction, coverage, scope, performance,
non-performance,
breach, termination, validity or enforceability of this
Agreement
or this Section 6.14 shall be determined by arbitration
conducted
in accordance with the Commercial Arbitration Rules or
then
existing rules for commercial arbitration of the
American
Arbitration Association. The arbitration shall
additionally be
governed by the California Arbitration Act. The
arbitration
shall be before a single arbitrator who shall be
selected by
mutual agreement of the parties from among a list of
seven
potential arbitrators provided by the American
Arbitration
Association. If the parties cannot agree on an
arbitrator from
this first list, the parties hereto shall select an
arbitrator
for such arbitration from a second list of seven
potential
arbitrators provided by the American Arbitration
Association with
each party, alternately striking names, with the last
name
remaining to be the arbitrator so selected. In the
event that
either party seeks a temporary restraining order,
preliminary
injunction or other provisional relief, the provisions
of Section
1281.8 of the Cal. Civ. Proc. Code shall apply. The
arbitration
of such issues, including without limitation any
party's rights
to specific performance pursuant to Article 5 or
Section 6.13
hereof or to any award of damages suffered by any party
hereto by
reason of the acts or omissions of any party, shall be
final and
binding upon the parties to the maximum extent
permitted by law.
The parties intend that this Article shall be valid,
binding,
enforceable and irrevocable and shall survive the
termination of
this Agreement.
(b) Proceedings under and the provisions of this
Section 6.14
shall be subject to Section 6.3 of this Agreement.
(c) Any arbitration proceedings hereunder shall be
held in Los
Angeles, California.
(d) Judgment upon any award rendered by the
arbitrator(s) may be
entered by any court having jurisdiction thereof.
Section 6.15 Attorney's Fees. In the event of any
action,
complaint, petition, or other proceeding ("Action") by
any party
arising under or out of, in connection with or in
respect of,
this Agreement, the prevailing party shall be entitled
to
reasonable attorney's fees, costs and expenses incurred
in such
Action. Attorney's fees incurred in enforcing any
judgment in
respect of this Agreement are recoverable as a separate
item.
The parties intend that the preceding sentences be
severable from
the other provisions of this Agreement, survive any
judgment and,
to the maximum extent permitted by law, not be deemed
merged into
such judgment.
IN WITNESS WHEREOF, this Agreement has been signed by
or on
behalf of each of the parties hereto as of the day
first above
written.
EL CORTE INGLES,S.A.
By_______________________________
Name:
Title:
GOTTSCHALKS INC.
By_______________________________
Name:
Title:
__________________________________
XXXXXX XXXX
__________________________________
XXXX XXXX
ACKNOWLEDGEMENT AND AGREEMENT OF SPOUSE
The undersigned spouse of Xxxxxx Xxxx acknowledges that
she has
read the attached Stockholders' Agreement of even date
herewith
and agrees to be bound thereby.
Dated:
XXXXXX XXXX
ACKNOWLEDGEMENT AND AGREEMENT OF SPOUSE
The undersigned spouse of Xxxx Xxxx acknowledges that
she has
read the attached Stockholders' Agreement of even date
herewith
and agrees to be bound thereby.
Dated:
EXHIBIT L
TRADENAME LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (the
"Agreement")
dated as of __________ __, 1998, is entered by and
between The
Xxxxxx Company (the "Licensor"), a California
corporation, and
Gottschalks Inc. (the "Licensee"), a Delaware
corporation.
WHEREAS, Licensor and Licensee have entered
into an
Asset Purchase Agreement dated as of July 21, 1998 (the
"Sale
Agreement"), whereby Licensee agreed to purchase
substantially
all of the Assets of Licensor; and
WHEREAS, Licensor is the owner of certain
tradenames,
trademarks and servicemarks used by Licensor that were
not sold
to Licensee as part of the Sale Agreement; and
WHEREAS, Licensee desires to use said
tradenames,
trademarks and servicemarks for an unlimited period of
time
following the closing of the transactions contemplated
by the
Sale Agreement (the "Closing");
WHEREAS, the parties desire to set forth
their
agreement as to the use of said tradenames, trademarks
and
servicemarks by Licensor and Licensee following the
Closing.
NOW, THEREFORE, in consideration of the
foregoing and
of the mutual promises herein contained, Licensor and
Licensee
agree as follows:
1. Definition
The term "Marks" when used herein means the
tradenames,
trademarks and servicemarks listed on Schedule 1
hereto, whether
or not such tradenames, trademarks or servicemarks have
been
registered by the Licensor. All capitalized terms not
defined
herein shall have the meanings specified in the Sale
Agreement.
2. Grant of License
(a) Licensor hereby grants to Licensee a
royalty-free,
exclusive license to use the Marks in connection with
the
operation of department stores, retail or specialty
stores or in
any related activity (including in connection with the
sale of
merchandise via the Internet) (collectively, the
"Field") in the
United States of America for a period of six months
after the
Closing Date (the "Transitional License"); except that
Licensee
shall be entitled to use the Marks beyond such
six-month period
in connection with the following: (i) Licensee may
continue to
use existing supplies, including but not limited to,
shopping
bags with the Marks, and (ii) Licensee may allow
customers of
Licensor to maintain existing customer credit cards
using the
Marks rather than replacing such credit cards with
credit cards
bearing Licensee's name.
(b) Licensor hereby further grants to Licensee a
perpetual,
royalty-free, exclusive license to use the servicemark
"Xxxxxx",
but only if used together with "Gottschalks", in
connection with
the Field (the "Perpetual License"). Such Exclusive
License is
exclusive to Licensee.
(c) Licensor agrees that it shall not use or
grant to any
third party the right to use the Marks or any
derivative thereof
in the Field.
(d) Licensee shall not sublicense its rights
hereunder
except to any of its wholly-owned subsidiaries.
3. Representations
Licensor has complete rights to and ownership of
the Marks
for use in the Field as set forth in this Agreement and
does not
use the Marks in the Field by consent of any other
person and is
not required to and does not make payments to others
with respect
thereto. Licensor has not received any notice to the
effect (or
is otherwise aware) that its use of the Marks in the
Field
conflicts with or infringes (or allegedly conflicts
with or
infringes) the rights of any person.
4. Ownership
Licensee acknowledges that the Marks belong, subject to
the terms
of this License Agreement, to Licensor.
5. Quality Maintenance
Licensor and Licensee each agree to supply each
other with
specimens of Licensor's or Licensee's, as applicable,
use of the
Marks upon request. Licensor and Licensee shall advise
each
other of any new goods to be sold or services to be
rendered by
Licensor or Licensee, as applicable, using the Marks in
order to
enable the other party to confirm that such use of the
Marks
complies with the terms of this Agreement. Licensor
and Licensee
each warrant and agree that it shall comply with all
applicable
laws and regulations and obtain all appropriate
government
approvals pertaining to the sale, distribution and
advertising of
goods and services covered by this Agreement.
6. Form of Use
Licensee and Licensor each agree that it will not
use the
Marks in any way that would jeopardize, dilute,
degrade, demean,
injure, or lessen the value of the Marks, Licensor or
Licensee
and/or Licensor's or Licensee's image nor will Licensor
or
Licensee allow any third party to jeopardize, dilute,
degrade,
demean, injure or lessen the value of the Marks.
7. Infringement Proceedings
Licensor and Licensee each agree to notify the
other in
writing of any unauthorized use of the Marks by others
as soon as
it comes to such party's attention. Licensor agrees,
at
Licensee's request, to pursue infringement or other
unfair
competition proceedings involving the Marks in the
Field (where
Licensee believes that such use is in violation of
Licensee's
rights to the Marks as provided herein) at Licensee's
cost with
counsel satisfactory to Licensee but Licensee shall
have the
right to conduct and control the proceedings,
compromise or
settlement if Licensee chooses to do so. Licensee
shall be
entitled to all damages recovered in the event that
such use is
in violation of Licensee's rights to the Marks in the
Field as
provided herein.
8. Termination for Cause
Licensor shall have the right to terminate this
Agreement in
the event of (i) any affirmative act of insolvency by
Licensee,
(ii) the appointment of any receiver or trustee to take
possession of the properties of Licensee or upon the
winding up
of Licensee or (iii) in the event of a material breach
of this
Agreement by Licensee, if such breach remains uncured
after ten
(10) days' written notice to Licensee.
9. Effect of Termination
Upon termination of this Agreement, Licensee
agrees to
discontinue all use of the Marks as promptly as
reasonably
practicable, and to cooperate with Licensor or its
appointed
agent to apply to the appropriate authorities to cancel
recording
of this Agreement from all government records.
10. Governing Law
It is agreed that this Agreement shall be governed
by the
Laws of the State of California.
11. Relationship of the Parties
This Agreement does not create a partnership or
joint
venture between the parties.
12. Assignment
The license granted to Licensee hereunder shall
not be
assigned by either party, except that Licensee may
assign its
rights hereunder to any wholly-owned Subsidiary of
Licensee, and
Licensor may assign its rights hereunder to any
Affiliate of
Licensor.
13. No Waivers
Failure by either party to enforce any rights
under this
Agreement shall not be construed as a waiver of such
rights nor
shall a waiver or default in one or more instances be
construed
as constituting a continuing waiver or as a waiver in
other
instances.
14. Specific Performance
Licensor and Licensee each acknowledge that, in
view of the
uniqueness of the Marks and the license thereto being
granted by
this Agreement, neither Licensor nor Licensee would
have an
adequate remedy at law in the event that this Agreement
has not
been performed in accordance with its terms, and
therefore agrees
that each party shall be entitled to specific
enforcement of the
terms hereof in addition to any other remedy to which
each may be
entitled at law or in equity.
15. Attorney's Fees
In the event of any action, complaint, suit
or other
proceeding by any party arising under or out of, in
connection
with or in respect of, this Agreement and the license
of the
Marks contemplated hereby, the prevailing party shall
be entitled
to reasonable attorney's fees, costs and expenses
incurred in
such action, complaint, suit or other proceeding.
Attorney's
fees incurred in enforcing any judgment in respect of
this
Agreement are recoverable as a separate item. The
parties intend
that the preceding sentences be severable from the
other
provisions of this Agreement, survive any judgment and,
to the
maximum extent by law, not be deemed merged into such
judgment.
16. Consent to Jurisdiction
Each party hereby irrevocably submits to and
accepts
for itself and its properties, generally and
unconditionally, the
exclusive jurisdiction of and service of process
pursuant to the
laws of the State of California and the rules of its
courts,
waives any defense of forum nonconveniens and agrees to
be bound
by any judgement rendered thereby arising under or out
of in
respect of or in connection with this Agreement or any
related
document or obligation. Each party further irrevocably
agrees
that service of process in any such proceeding in any
such court
may be made by registered or certified mail, return
receipt
requested, to Licensor or Licensee.
17. Agreement to Arbitrate
The provisions of Article 13 of the Sale
Agreement are
incorporated by reference herein as if set forth in
full herein.
18. Titles
Articles and paragraph titles used in this
Agreement are for
convenience only and shall not be deemed to affect the
meaning or
construction of any of the terms, provisions, covenants
or
conditions of this Agreement.
19. Entire Agreement
This Agreement contains all of the terms and
conditions
agreed upon by the parties hereto with reference to the
subject
matter hereof. No other agreements, oral or otherwise,
pertaining to the subject matter hereof shall be deemed
to exist
or to bind any of the parties hereto and all such prior
agreements and understandings are superseded hereby.
No officer
or employee or agent of Licensor or Licensee has any
authority to
make any representation or promise not contained in
this
Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this
Agreement to be executed as of the day and year first
above
written.
THE XXXXXX COMPANY,
Licensor
By:____________________________
Name:__________________________
Title:___________________________
GOTTSCHALKS INC.
Licensee
By:____________________________
Name:__________________________
Title:___________________________
SCHEDULE 1
"Xxxxxx Stores"
"Xxxxxx"
