FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Forbearance
Agreement") is entered into as of the 19th day of
November, 1996, by and between Fleet Capital
Corporation, a Rhode Island corporation ("Lender"), and
Gottschalks Inc., a Delaware corporation ("Borrower"),
with reference to the following facts:
A. Lender and Borrower are parties to that
certain Loan and Security Agreement, dated as of March
30, 1994, as amended, pursuant to which Lender has
provided financial accommodations to Borrower on the
terms and conditions set forth therein. (Said Loan and
Security Agreement, as in effect from time to time,
together with all exhibits and schedules thereto, is
hereinafter referred to as the "Loan Agreement.")
B. Borrower has informed Lender that Borrower
is in violation of the financial covenant contained in
Section 8.3(I) of the Loan Agreement as of the end of
Borrower's October 1996 Fiscal Period.
C. Borrower has requested that Lender agree to
temporarily forbear from taking action against Borrower
based upon such violation of Section 8.3(I) of the Loan
Agreement, and Lender is willing to do so on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the
foregoing and the agreements contained herein, Lender
and Borrower hereby agree as follows:
1. Use of Terms Defined in Loan
Agreement. All capitalized terms that are defined in
the Loan Agreement and that are used without definition
herein shall have the meanings given to them in the
Loan Agreement.
2. Borrower's Acknowledgment of Event of
Default. Borrower acknowledges that, as of the end of
its October 1996 Fiscal Period, Borrower was in
violation of the Payables Turnover Rate covenant set
forth in Section 8.3(I) of the Loan Agreement.
Borrower acknowledges that such violation ("Applicable
Default") constitutes an Event of Default under the
Loan Agreement.
3. Lender's Agreement to Forbear Action
Based on Applicable Default. Lender agrees that until
the earlier of (i) the date upon which Borrower's
financial statements for its November 1996 Fiscal
Period are delivered to Lender, or (ii) the date by
which such financial statements are required to be
delivered to Lender pursuant to the Loan Agreement,
Lender will forbear from exercising any remedies
arising from the occurrence of the Applicable Default;
provided, however, that Lender, in its sole discretion,
may terminate such forbearance without any notice or
demand of any kind whatsoever upon the occurrence of
any other Event of Default under the Loan Agreement,
whether of the same or a different nature. Such
forbearance shall not constitute a waiver by Lender of
the existence of the Applicable Default, and Lender
shall not be under any obligation to waive the
Applicable Default or to grant any further forbearance
with respect thereto. This Forbearance Agreement shall
not constitute a waiver or agreement to forbear with
respect to any other Default or Event of Default that
might not exist or hereafter arise under the Loan
Agreement, whether of the same or a different nature.
4. Continuing Representations of
Borrower. Borrower represents and warrants to Lender
that as of the date hereof all representations and
warranties contained in the Loan Agreement are complete
and correct in all material respects, and that no
Defaults or Events of Default under the Loan Agreement,
other than the Applicable Default, have occurred and
are continuing.
5. Incorporation into Loan Agreement.
The terms and conditions of this Forbearance shall be
incorporated by reference in the Loan Agreement as
though set forth in full therein. In the event of any
inconsistency between the provisions of this
Forbearance Agreement and any other provision of the
Loan Agreement, the terms and provisions of this
Forbearance Agreement shall govern and control. Except
to the extent, if any, otherwise provided herein, all
of the provisions of the Loan Agreement shall remain in
full force and effect to the extent in effect on the
date hereof. The Loan Agreement, this Forbearance
Agreement, and the other Loan Documents constitute the
complete agreement among the parties and supersede any
prior written or oral agreements, writing,
communications, or understandings of the parties with
respect to the subject matter hereof and thereof.
6. Section Headings. The headings of
the Sections hereof are for convenience only and
without substantive meaning, and shall not be used in
interpreting any provision of this Forbearance
Agreement.
7. Counterparts. This Forbearance
Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of
which shall be one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this Forbearance Agreement as of the day and
year first written above.
("Lender")
FLEET CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
Vice President
("Borrower")
GOTTSCHALKS INC.
By: /s/ Xxxx X. Xxxxxxxxx
Senior Vice President and
Chief Financial Officer
