SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT
TO RULE 13d-2(a)
(Amendment No. _____________) (1)
Gottschalks Inc.
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
383495109
(CUSIP Number)
D. Stephen Antion, Esq.
O'Melveny & Myers LLP
400 S. Hope Street, Los Angeles, CA 90071 Telephone
(213) 430-6000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 20, 1998
(Date of Event Which Requires Filing
of This Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition that is the
subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g),
check the following box. ______
Note: Schedules filed in paper format shall include a
signed original and five copies of the schedule,
including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
_______________
(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
CUSIP NO. 383495109 13D
- ---------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OR ABOVE PERSON (ENTITIES
ONLY)
The Harris Company
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) X
(b)
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH:
7. SOLE VOTING POWER
2,095,900 shares
8. SHARED VOTING POWER
None
9. SOLE DISPOSITIVE POWER
2,095,900 shares
10. SHARED DISPOSITIVE POWER
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 2,095,900 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (1)
EXCLUDES CERTAIN SHARES*
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (1)
16.7%
14. TYPE OF REPORTING PERSON
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 383495109 13D
- -----------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OR ABOVE PERSON (ENTITIES
ONLY)
El Corte Ingles, S.A.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) X
(b)
3. SEC USE ONLY
4. SOURCE OF FUNDS*
N/A**
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Spain
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH:
7. SOLE VOTING POWER
2,095,900 shares
8. SHARED VOTING POWER
None
9. SOLE DISPOSITIVE POWER
2,095,900 shares
10. SHARED DISPOSITIVE POWER
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,095,900 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (1)
EXCLUDES CERTAIN SHARES*
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (1)
16.7%
14. TYPE OF REPORTING PERSON
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
** All shares are beneficially owned by The Harris Company
which is wholly-owned by El Corte Ingles, S.A
CUSIP NO. 383495109 13D
- -------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OR ABOVE PERSON (ENTITIES ONLY)
Joseph Levy
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) X
(b)
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH:
7. SOLE VOTING POWER
1,377,225 shares
8. SHARED VOTING POWER
None
9. SOLE DISPOSITIVE POWER
1,377,225 shares
10. SHARED DISPOSITIVE POWER
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 1,377,225 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (1) EXCLUDES
CERTAIN SHARES* X
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (1)
11%
14. TYPE OF REPORTING PERSON
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 383495109 13D
- -----------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OR ABOVE PERSON (ENTITIES ONLY)
Bret Levy
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) X
(b)
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH:
7. SOLE VOTING POWER
347,782 shares
8. SHARED VOTING POWER
None
9. SOLE DISPOSITIVE POWER
347,782 shares
10. SHARED DISPOSITIVE POWER
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 347,782 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (1) EXCLUDES
CERTAIN SHARES* X
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (1)
2.8%
14. TYPE OF REPORTING PERSON
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
EXPLANATORY NOTE
Joseph Levy and Bret Levy filed a Schedule 13D on
February 23, 1994. This filing represents an amendment
in full to that earlier filing and an original filing
on behalf of the group described below.
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D ("Schedule 13D")
relates to the common stock, $0.01 par value per share
of Gottschalks Inc., a Delaware corporation (the
"Company"). The Company's principal executive offices
are located at 7 River Park Place, Fresno, California
93720.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is being filed by the following:
1. The Harris Company, a California corporation
("Harris"), whose principal business and office address
is 300 North "E" Street, San Bernardino, California
92416
2. El Corte Ingles, S.A., a Spanish corporation
("ECI"), whose principal business and office address
is Hermosilla 112, 28009 Madrid, SPAIN
3. Joseph Levy, an individual, whose business
address is 7 River Park Place, Fresno, California
93720.
4. Bret Levy, an individual, whose business address
is 7 River Park Place, Fresno, California 93720.
The persons serving as directors and executive
officers of Harris and ECI are set forth on Schedule A
hereto.
The entities listed in subparagraphs (1) through
(4) above are herein collectively referred to as the
"Reporting Persons" and individually as a "Reporting
Person." Harris formerly operated nine department
stores in Southern California but sold its business to
the Registrant. ECI is a Spanish corporation that
operates department stores and other retail
establishments and is the owner of Harris. Joseph
Levy, a citizen of the United States, is the Chairman
of the Board and Chief Executive Officer of the
Company. Bret Levy, a citizen of the United States, is
the Vice President, Treasurer and Director of the
Company and the son of Joseph Levy.
During the last five years, none of the Reporting
Persons nor any person listed on Schedule A has been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last
five years, none of the Reporting Persons nor any
person listed on Schedule A was a party to a civil
proceeding of a judicial or administrative body of
competent jurisdiction and as a result of which was or
is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State
securities laws or finding any violation with respect
to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER
CONSIDERATION
Pursuant to an Asset Purchase Agreement, dated as
of July 21, 1998, by and among the Company, ECI and
Harris (the "Purchase Agreement"), the Company
purchased substantially all of the assets and certain
of the liabilities of Harris for certain consideration,
including, but not limited to 2,095,900 shares of the
Company's common stock, par value $.01 per share,
issued to Harris (the "Shares"). As a condition to the
transactions contemplated by the Purchase Agreement,
the Company and the Reporting Persons entered into a
Stockholders' Agreement (as described in Item 6 below).
All shares of common stock held by Joseph Levy
and Bret Levy were acquired either by gift or bequest,
or by purchases made with personal funds.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons are filing this statement
because they have recently entered into a Stockholders'
Agreement with the Company (as described in Item 6
below). This statement is also being filed because of
the recent acquisition of the Shares by Harris as
consideration for the sale of its business to the
Company.
The Reporting Persons may acquire or dispose of
shares of common stock from time to time in the open
market or in privately-negotiated transactions, or by
gift or bequest, provided, however, that pursuant to a
Standstill Agreement, dated as of August 20, 1998,
between ECI and the Company (the "Standstill
Agreement"), ECI and its affiliates and associates may
not purchase or otherwise acquire shares of the
Company's 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 1/2% of the outstanding
shares of the Company's common stock: provided,
further, that pursuant to the Stockholders' Agreement
(as described in Item 6 below), until the earlier of
(i) August 20, 2003, or (ii) approval by the Company's
stockholders of a transaction which would result in a
Change in Control (as defined in the Stockholders'
Agreement). ECI (through Harris) will not directly or
indirectly sell, transfer, pledge or otherwise dispose
of any shares of the Company's common stock issued to
Harris, except for specific types of transfers as set
forth in the Stockholders' Agreement. The Shares have
not been registered under the Securities Act of 1933
and are subject to restrictions on resale or other
disposition. However, pursuant to a Registration
Rights Agreement, dated as of August 20, 1998, between
the Company and Harris (the "Registration Rights
Agreement"), the Company granted to Harris certain
rights to participate in a Company-initiated
registration of securities.
Pursuant to the Stockholders' Agreement (as
described in Item 6 below), the Company and the
Reporting Persons will take the actions described in
Item 6. Such actions will result in a change in the
present board of directors of the Company (the
"Board"), including a change in the number of
directors.
Except as described herein or in Item 6, none of
the Reporting Persons has any current plans or
proposals which would relate to or result in:
(i) An extraordinary corporate transactions,
such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries;
(ii) A sale or transfer of a material amount of
assets of the Company or any of its subsidiaries;
(iii) Any material change in the present
capitalization or dividend policy of the Company;
(iv) Any other material change in the Company's
business or corporate structure;
(v) Changes in the Company's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Company by any person;
(vi) Causing a class of securities of the
Company to be delisted from a national securities
exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered
national securities association;
(vii) A class of equity securities of the Company
becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act; or
(viii) Any action similar to any of those
enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of August 20, 1998, the Reporting
Persons identified in Item 2 of this Schedule 13D
beneficially owned the number and percentage of shares
of common stock of the Company indicated below:
<TABLE>
<CAPTION>
Percentage of
Name Number of Shares Outstanding Shares
<S> <C> <C>
Harris(1) 2,095,900 16.7%
Joseph Levy 1,377,225(2) 11.0%(3)
Bret Levy 347,782(4) 2.8%(3)
</TABLE>
[Except as set forth above, none of the other
Reporting Persons identified in Item 2 of this Schedule
13D beneficially owned any shares of the Company's
common stock as of August 20, 1998.]
- --------------------
(1) All shares are beneficially owned by Harris which
is wholly-owned by ECI.
(2) Includes shares of common stock held in the Company's
Retirement Savings Plan. Excludes (a) shares owned by Joseph
Levy's adult children, over which shares he disclaims beneficial
ownership, and (b) 580,000 beneficially owned as a beneficiary
of the trust established by the will of Gertrude H. Klein, over
which he does not exercise voting or dispositive power.
(3) Assumes that only those options of Joseph Levy or
Bret Levy, as applicalbe, that are exercisable within 60 days
of August 20, 1998 have been exercised and no others.
(4) Includes (a) shares of common stock held in the
Company's Retirement Savings Plan, and (b) 61,400 shares owned
by Bret Levy's children, for which he serves as custodian.
Excludes 13,700 shares owned by Bret Levy's spouse.
(b) Subject to the terms of the Stockholders'
Agreement (as described in Item 6 below), ECI (through
Harris) has sole voting and disposition power with
respect to 2,095,900 shares of common stock of the
Company. Joseph Levy has sole voting and disposition
power with respect to 1,377,225 shares of common stock
of the Company and Bret Levy has sole voting and
disposition power with respect to 347,782 shares of
common stock of the Company. However, the Reporting
Persons will vote as a group in the election of
directors of the Company and currently control
2,820,907 shares or 30.4% in the aggregate.
(c) Item 3 is incorporated herein by reference.
(d) No other person has the right to receive or
the power to direct the receipt of dividends from, or
the proceeds from the sale of, the shares set forth
above.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIP WITH RESPECT TO SECURITIES OF THE ISSUER
None of the Reporting Persons has any contracts,
arrangements, understandings or relationships (legal or
otherwise) with respect to any securities of the
Company other than as set forth below.
Pursuant to a Stockholders' Agreement with the
Company dated as of August 20, 1998 (the "Stockholders
Agreement"), the Reporting Persons have agreed to (i)
take all action necessary to cause two designees of ECI
(the "Investor Nominees") to be added to the Board,
(ii) take all action required by the Stockholders'
Agreement to cause the Board to be structured to
consist of eleven members (the "Designated Board"), of
which two members will be Investor Nominees and the
remaining nine members will consist of members of
management or persons affiliated with management that
are designated by Joseph Levy (or Bret Levy under
certain circumstances), (the "Management Nominees") and
independent directors (the "Independent Nominees") and
(iii) vote or consent, or cause to be voted or a
consent to be given, with respect to all shares of the
Company's common stock owned beneficially or of record
by the Reporting Persons or of which the Reporting
Persons otherwise have the power to vote in favor of
the election of the Investor Nominees, the Management
Nominees and the Independent Nominees.
Notwithstanding the foregoing, ECI's
representation on the Designated Board shall be
adjusted under certain circumstances set forth in the
Stockholders' Agreement. The Designated Board shall
increase to 12 members, and ECI shall be entitled to a
total of three representatives on the Designated Board,
if an during such time as ECI, directly or indirectly,
beneficially owns a number of shares of the Company's
common stock equal to at least 30% of the Company's
outstanding common stock, on a fully diluted basis.
ECI's representation on the Designated Board will
decrease to one representative, and the size of the
Designated Board will decrease by the number of
Investor Nominees so resigning, if (i) ECI disposes of
more than 700,000 shares of the Company's common stock,
or (ii) ECI and its affiliates beneficially own a
number of shares of the Company's common stock equal to
less than 10% of the Company's outstanding common
stock, on a fully diluted basis. ECI's representation
on the Board will terminate on the earlier of (x) the
date ECI disposes of more than 1,350,000 shares of the
Company's common stock, or (y) ECI and its affiliates
beneficially own a number of shares of the Company's
common stock equal to less than 5% of the Company's
outstanding common stock, on a fully diluted basis.
The Stockholders' Agreement restricts the
transfer of any shares of the Company's common stock
issued to Harris. Until the earlier of (x) August 20,
2003, or (y) the approval by the Company's stockholders
of a transaction which would result in a Change in
Control (as defined in the Stockholders' Agreement),
ECI may not directly or indirectly transfer any shares
of the Company's common stock issued to Harris except
for (i) transfers made in compliance with the
requirements of Rule 144 of the Securities Act of 1933,
(ii) certain transfers pursuant to negotiated
transactions with third parties, (iii) transfers to one
or more affiliates of ECI who agree to be bound by the
terms and conditions of the Standstill Agreement and
the obligations of the transferor under the
Stockholders' Agreement, (iv) certain pledges to bona
fide financial institutions for the purpose of securing
bona fide indebtedness of ECI and (v) transfers
pursuant to or in accordance with the Registration
Rights Agreement in a bona fide public offering.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Joint Filing Agreement, dated as of
August 20, 1998, by and among Harris,
ECI, Joseph Levy and Bret Levy.
Exhibit 2 Stockholders' Agreement, dated as of
August 20, 1998, by and among the Company
and the Reporting Persons.
Exhibit 3 Standstill Agreement, dated as of August
20, 1998, between ECI and the Company.
Exhibit 4 Registration Rights Agreement, dated as of
August 20, 1998, between the Company and
Harris.
SIGNATURES
After reasonable inquiry and to the best of the
undersigneds' knowledge and belief, each of the
undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated: August 20, 1998
THE HARRIS COMPANY, a California corporation
By: /s/ Thomas H. McPeters
Title: Secretary
EL CORTE INGLES, S.A., a Spanish corporation
By: /s/ Jorge Pont
Title: International Division Director
/s/ Joseph Levy
/s/ Bret Levy
Schedule A
Directors and Executive Officers
The name, present principal occupation and
citizenship of each director and executive officer of
The Harris Company ("Harris") and El Corte Ingles, S.A.
("ECI") are set forth below. The business address of
each director and executive officer of Harris is 300
North "E" Street, San Bernardino, California 92416.
The business address of each director and executive
officer of ECI is Hermosilla 112, 28009 Madrid, Spain.
Harris
Name Position Citizenship
Isidoro Alvarez Director Spain
Leopoldo Del Nogal Director; United States
President;
Chief Executive
Officer
David Gonzalez Director Spain
Theodore H. Grady Senior Vice United States
President
Of Finance;
Treasurer
Rudy Greer Director; United States
Chairman,
Board of Directors
Louis Horvitz Executive Vice United States
President;
Chief Operating Officer
Florencio Lasaga Director Spain
Carlos Martinez-
Echavarria Director Spain
Thomas H. McPeters Director;
Secretary United States
Jorge Pont Director Spain
ECI
Name Position Citizenship
Isidoro Alvarez Chairman Spain
Luis Areces Rodriguez Vice-Chairman Spain
Celestino Areces
Rodriguez Director Spain
Jose Antonio Garcia
Miranda Director Spain
David Gonzalez
Fernandez Director Spain
Florencio Lasaga
Munarriz Director Spain
Carlos Martinez
Echavarria Director Spain
Juan Manuel de Mingo
y Contreras Director Spain
Exhibit 1
Joint Filing Agreement
(Pursuant to Rule 13d-1(f)(s))
August 20, 1998
The Harris Company, a California corporation, El Corte
Ingles, S.A., a Spanish corporation, Joseph Levy and
Bret hereby agree that a Securities and Exchange
Commission ("SEC") Schedule 13D dated August 28, 1998,
and relating to the common stock, $0.01 par value, of
Gottschalks Inc., a Delaware corporation (the
"Issuer"), shall be jointly filed on behalf of each of
them with the SEC, the New York Stock Exchange, the
Pacific Stock Exchange and the Issuer.
THE HARRIS COMPANY
THE HARRIS COMPANY, a California corporation
By: /s/ Thomas H. McPeters
Title Secretary
EL CORTE INGLES, S.A., a Spanish corporation
By: /s/ [Jorge Pont]
Title [International Division Director]
/s/ Joseph Levy
/s/ Bret Levy
STOCKHOLDERS' AGREEMENT
by and among
EL CORTE INGLES, S.A.,
GOTTSCHALKS INC.,
JOSEPH LEVY
and
BRET LEVY
dated as of
August 20, 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 "Harris" 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 Insider
Trading 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 August 20, 1998, is made
by and among El Corte Ingles, S.A., a Spanish
corporation ("ECI"), Gottschalks Inc., a Delaware
corporation ("Gottschalks"), Joseph Levy, an individual
and Bret Levy, 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 Harris Company, a
California corporation and a wholly-owned subsidiary of
ECI ("Harris"), have entered into an Asset Purchase
Agreement, dated as of July 21, 1998 (the "Asset
Purchase Agreement"), pursuant to which Harris has
agreed to sell, and Gottschalks has agreed to purchase,
substantially all of the assets and certain of the
liabilities of Harris 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 Harris, 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 Harris) in Gottschalks, certain rights
and restrictions of Joseph Levy and Bret Levy 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
Joseph Levy, Sharon Levy or their lineal descendents
immediately after which Joseph Levy, Sharon Levy 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
Gerald Blum, his spouse or his lineal descendents
immediately after which Gerald Blum, 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 "Harris" 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
Harris), together with and any Transferee, and so long
as Harris 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 Joseph Levy
and Bret Levy.
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 Harris to whom Harris 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) Joseph Levy (if he is alive and has the
capacity) or Bret Levy (if Joseph Levy 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 Joseph Levy and Bret Levy
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 Joseph Levy 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) August ___, 2003, 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 Harris 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, JOSEPH LEVY AND BRET LEVY 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
Harris 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,
JOSEPH LEVY AND BRET LEVY."
(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 Insider Trading 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 insider trading 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 Harris 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) August
20, 2003, 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 Harris 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.
7 River Park Place
Fresno, CA 93720
Attention: General Counsel
Telecopier: (209) 434-4666
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071
Attention: D. Stephen Antion, Esq.
Telecopier: (213) 430-6407
(b) If to Management, to each of the following:
Joseph Levy
Gottschalks Inc.
7 River Park Place
Fresno, CA 93720
Telecopier: (209) 434-4804
Bret Levy
Gottschalks Inc.
7 River Park Place
Fresno, CA 93720
Telecopier: (209) 434-4804
(c) If to ECI:
El Corte Ingles, S.A.
Hermosilla, 112
28009 Madrid SPAIN
Attention: Mr Jorge Pont
Telecopier: 011-34-91-402-1567
With a copy to:
McPeters, McAlearney, Shimoff & Hatt
4 W. Redlands Boulevard, 2nd Floor
Redlands, California 92373
Attention: Thomas H. McPeters, Esq.
Telecopier: (909) 792-6234
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.
/S/ JORGE PONT
GOTTSCHALKS INC.
/S/ JAMES FAMALETTE
/S/ JOSEPH LEVY
/S/ BRET LEVY
ACKNOWLEDGEMENT AND AGREEMENT OF SPOUSE
The undersigned spouse of Joseph Levy acknowledges that
she has read the attached Stockholders' Agreement of
even date herewith and agrees to be bound thereby.
Dated: August 20, 1998
/S/ SHARON LEVY
ACKNOWLEDGEMENT AND AGREEMENT OF SPOUSE
The undersigned spouse of Bret Levy acknowledges that
she has read the attached Stockholders' Agreement of
even date herewith and agrees to be bound thereby.
Dated: August 20, 1998
STANDSTILL AGREEMENT
This Standstill Agreement (this "Agreement") is entered
into as of August 20, 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 Harris Company, a California corporation and a
wholly-owned subsidiary of ECI ("Harris"), Gottschalks
has agreed to acquire from Harris substantially all of
the assets and certain liabilities of Harris 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,
Harris 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 Harris, 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
$22,179,598.00 principal amount of 8% Non-Negotiable,
Extendable Subordinated Note of Gottschalks in favor of
Harris 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,
Joseph Levy and Bret Levy 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.
7 River Park Place
Fresno, CA 93720
Attention: General Counsel
Telecopier: (209) 434-4666
with copies to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071
Attention: D. Stephen Antion, Esq.
Telecopier: (213) 430-6407
(b) If to ECI:
El Corte Ingles, S.A.
Hermosilla, 112
28009 Madrid SPAIN
Attention: Jorge Pont
Telecopier: 011-34-91-402-1567
With copies to:
McPeters, McAlearney, Shimoff & Hatt
4 W. Redlands Boulevard, 2nd Floor
P.O. Box 2084
Redlands, California 92373
Attention: Thomas H. McPeters, Esq.
Telecopier: (909) 792-6234
Section 3.7 Term.
(a) This Agreement shall be effective from the date
hereof through August 20, 2003 (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, Joseph Levy or
Bret Levy 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.
/S/ JORGE PONT
GOTTSCHALKS INC.
/S/ JAMES FAMALETTE
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is made and entered into as of August 20, 1998, between
Gottschalks Inc., a Delaware corporation
("Gottschalks"), and The Harris Company, a California
corporation ("Harris").
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 Harris and El Corte Ingles, S.A., a
Spanish corporation and the parent of Harris ("ECI").
WHEREAS, pursuant to the Asset Purchase Agreement (i)
Gottschalks has agreed to issue to Harris 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 Harris
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 Harris 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 Harris 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 Harris
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 August 20, 1998
among Gottschalks, ECI, Joseph Levy and Bret Levy.
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 & Hatt
4 W. Redlands Boulevard, 2nd Floor
P.O. Box 2084
Redlands, California 92373
Attention: Thomas H. McPeters, Esq.
Telecopier: (909) 792-6234
(b) If to Gottschalks to:
Gottschalks Inc.
7 River Park Place
Fresno, California 93720
Attention: General Counsel
Telecopier: (209) 434-4666
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: D. Stephen Antion, Esq.
Telecopier: (213) 430-6407
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,
Harris 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.
/S/ JAMES FAMALETTE
THE HARRIS COMPANY
/S/ LEOPOLDO DEL NOGAL
/S/ THOMAS MCPETERS
Notice Address:
c/o El Corte Ingles, S.A.
Hermosilla, 112
28009 Madrid, SPAIN
Attn: Jorge Pont
Facsimile: 011-34-91-402-1567
With a copy to:
McPeters McAlearney Shimoff
& Hatt
4 W.Redlands Boulevard, 2nd Floor
P.O. Box 2084
Redlands, CA 92373
Attn: Thomas H. McPeters, Esq.
Facsimile: (909) 792-6234
