SEVERANCE AGREEMENT
This Severance Agreement (this
"Agreement"), is made as of this 21st day
of January, 1999, by and between Gottschalks
Inc., a Delaware Corporation ("Company") and
Xxxxxxx X. Xxxxx, an individual ("Employee").
1. Subject to the provisions of
paragraph (4) below, Company hereby agrees
that in the event Employee's employment with
the Company is terminated by written notice of
Company for other than for cause (as defined
below), Company will pay Employee a severance
benefit equal to twelve (12) months salary,
determined at Employee's annual base rate of
pay in effect at the time such notice of
termination is given (less standard
withholdings and authorized deductions), and
Employee shall have the right to continue
Employee's coverage in Company's group medical
plan with the Company making full payment on
Cobra benefits for a period of one year from
the termination date (such benefits being
referred to herein as the "Severance
Benefit").
2. For purposes of this agreement,
"annual base rate of pay" means Employee's
annual base salary only, and excludes all
other income heretofore received by Employee,
such as, but not limited to, bonuses,
incentive compensation, fringe benefits,
commissions, overtime, retainers, fees under
contracts, income arising from the exercise of
stock options, or expense allowances granted
by Company.
3. The Severance Benefit, less
standard withholding and other authorized
deductions, will be paid to Employee after the
date of Employee's termination out of the
general assets of the Company in the same form
and at the same time as Employee's salary
otherwise would have been paid to Employee if
Employee had continued to be employed by the
Company.
4. Subject to the provisions of
this paragraph (4) following this sentence,
the Severance Benefit shall be paid to
Employee only in the event that Employee's
employment with Company is terminated by
written notice from Company (other than for
cause) and only if Employee continues to
report to work, and adequately performs each
and every duty of Employee's employment until
the date set forth in the notice of
termination as Employee's date of termination
(unless the Company consents to a date of
termination that is prior to such date).
Notwithstanding anything to the contrary
contained in this Agreement, Employee shall
not be entitled to the Severance Benefit if:
(i) Employee's employment with Company is
terminated other than by written notice of
termination from Company, including without
limitation, the retirement, resignation,
disability or death of Employee; (ii) Company
sells all or part of its business (or
otherwise merges, divides, consolidates or
reorganizes) and Employee has the opportunity
to continue employment with the buyer (or with
one of the resulting entities in the event of
a merger, division, consolidation or
reorganization), at or above the employee's
base rate of pay, regardless of whether the
other terms and conditions of Employee's
employment after such sale, division,
consolidation or reorganization are the same
or different from the terms and conditions of
Employee's employment with Company; or (iii)
Employee is terminated for "cause", which
includes, without limitation, a good faith
determination by Company that Employee (1) has
committed a material breach of his duties and
responsibilities, (2) refused to perform
required duties and responsibilities or
performed them incompetently, (3) breached or
violated any fiduciary duty owed to Company or
(4) is or has been personally dishonest, or
has willfully or negligently violated any law,
rule or regulation or has been convicted of a
felony or misdemeanor (other than minor
traffic violations and similar offenses).
5. Nothing contained herein shall
be construed as conferring on Employee the
right to continue in the employ of the Company
in Employee's present or any other capacity.
Employee hereby expressly acknowledges that
Employee's employment with Company is "at
will" and therefore may be terminated by
Company at any time, with or without cause, at
Company's sole discretion. Employee also
expressly acknowledges that, except for
benefits to which Employee may otherwise be
entitled by law, Employee shall not be
entitled to receive from Company any benefits,
compensation or remuneration other than the
Severance Benefit upon satisfaction of the
conditions which entitle Employee to receive
the Severance Benefit. Employee agrees that
the Severance Benefit shall constitute the
exclusive and sole remedy for any termination
of Employee's employment and Employee
covenants not to assert or pursue any other
remedies, at law or in equity, with respect to
any termination of employment.
6. This Agreement shall be
governed by the laws of the State of
California. This Agreement may be amended
only by a subsequent written agreement signed
by Employee and an authorized representative
of Company following approval by the Board of
Directors of Company. This Agreement is
personal to Employee and is not assignable by
Employee. This Agreement shall inure to the
benefit of and be binding upon Company and its
successors and assigns and any such successor
or assignee shall be deemed substituted for
Company under the terms of this Agreement for
all purposes. As used herein, "successor" and
"assignee" shall include any person, firm,
corporation or other business entity which at
any time, whether by purchase, merger or
otherwise, directly or indirectly acquires the
stock of Company or to which Company assigns
this Agreement by operation of law or
otherwise. This instrument constitutes and
contains the entire agreement and
understanding concerning the subject matters
addressed herein between the parties, and
supersedes and replaces all prior negotiations
and all agreements proposed or otherwise,
whether written or oral, concerning the
subject matters hereof. This is an integrated
document.
7. Any dispute, controversy or
claim arising out of or in connection with
this Agreement or any other aspect of
Employee's employment with Company shall be
resolved exclusively through binding
arbitration to be held in Fresno County,
California in accordance with California Civil
Procedure Code 1282-1284.2. In the event
either party institutes arbitration under this
Agreement, the party prevailing in any such
arbitration shall be entitled, in addition to
all other relief, to reasonable attorneys'
fees relating to such arbitration. The
nonprevailing party shall be responsible for
all costs of the arbitration, including but
not limited to, the arbitration fees, court
reporter fees, et.
IN WITNESS WHEREOF, Company has
caused to be executed and delivered, and
Employee has executed and delivered, this
Agreement as of the day and year first above
set forth.
GOTTSCHALKS INC.
By: \s\ Xxx Xxxxxxxxx
Title: PRESIDENT
Employee
\s\ Xxxxxxx Xxxxx
