As filed with the Securities and Exchange Commission on August
13, 1998
Registration No. ______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
GOTTSCHALKS INC.
(Exact name of registrant as specified in its charter)
___________________
Delaware 77-0159791
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7 River Park Place East, Fresno, California 93720
(Address of principal executive offices)
The Gottschalks Inc. 1998 Stock Option Plan
(Full title of the plan)
______________
Warren L. Williams, Esq.
General Counsel
GOTTSCHALKS INC.
7 River Park Place East
Fresno, California 93720
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for service:
(209) 434-4800
___________________
Copy to:
D. Stephen Antion, Esq.
O'Melveny & Myers LLP
400 South Hope Street, Suite 1500
Los Angeles, California 90071
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per unit price fee
Common Stock, $.01 1,000,000(1) $8.71875(2) $8,718,750(2) $2,572(2)
par value shares
(1) This Registration Statement covers, in addition to
the number of shares of Common Stock stated above,
options and other rights to purchase or acquire
the shares of Common Stock covered by the
Prospectus and, pursuant to Rule 416 under the
Securities Act of 1933 as amended, an additional
indeterminate number of shares which by reason of
certain events specified in the Plan may become
subject to the Plan.
(2) Pursuant to Rule 457(h) under the Securities Act
of 1933 as amended, the maximum offering price,
per share and in the aggregate, and the
registration fee were calculated based upon the
average of the high and low prices of the Common
Stock on August 10, 1998 as reported on the New
York Stock Exchange and published in the Western
Edition of the Wall Street Journal.
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant information)
will be sent or given to employees as specified by Securities and
Exchange Commission Rule 428(b)(1). Such documents need not be
filed with the Securities and Exchange Commission either as part
of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424. These documents, which include
the statement of availability required by Item 2 of Form S-8, and
the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken
together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act of 1933.
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents of Gottschalks Inc. (the
"Company") filed with the Securities and Exchange Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended April 30, 1998; and
(c) The description of the Company's Common Stock
contained in the registration statement (and past and
future amendments thereto) for the Common Stock filed
under Section 12 of the Securities and Exchange Act of
1934, as amended (the "Exchange Act") including any
amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters
all securities then remaining unsold, are deemed to be
incorporated by reference into the prospectus and to be a part
hereof from the date of filing of such documents. Any statement
contained herein or in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or amended, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
The Company's Common Stock is registered pursuant
to Section 12 of the Exchange Act, and therefore,
the description of securities is omitted.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Delaware law provides for the indemnification of
officers and directors in terms sufficiently broad to include
indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the
Securities Act of 1933. Pursuant to Section 145 of the Delaware
General Corporation Law (the "DGCL"), a corporation may indemnify
an officer or director if that person acted in good faith and in
a manner reasonabloy believed to be in or or not opposed to the
best interests of the corporation, and, with respect to criminal
actions or proceedings, had no reason to believe the conduct was
unlawful.
The Certificate of Incorporation of the Company limits
directors' liability for monetary damages to the Company and its
stockholders for breaches of fiduciary duty to the fullest extent
permitted by the DGCL.
The Company's Bylaws provide that each director or
officer of the Company who was or is a party or is threatened to
be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Company or
is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis
of such proceeding is alleged action in an official capacity or
in another capacity while serving as director, officer, employee
or agent, shall be indemnified and held harmless by the Company
to the fullest extent permitted by the laws of Delaware, as the
same exist or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Company to provide broader indemnification rights than said
law permitted the Company to provide prior to such amendment),
against all costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person
who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators;
provided, however, that the Company shall indemnify any such
person seeking indemnification in connection with a proceeding
(or part thereof) initiated by such person only if such
proceeding (or part thereof) was initiated or authorized by one
or more members of the Company's Board of Directors. The right
to indemnification shall be a contract right and shall include
the right to be paid by the Company the expenses incurred in
defending any such proceeding in advance of its final
disposition; provided, however, that if the DGCL so requires, the
payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while
a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of
a proceeding shall be made only upon delivery to the Company of
an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it will ultimately be determined
that such director or officer is not entitled to be indemnified.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
See the attached Exhibit Index at page S-3.
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933 (the
"Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated
by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Fresno, State of California, on this 13th day of
August, 1998.
GOTTSCHALKS INC.
By: /s/ JOE
LEVY
Joe Levy
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ JOE LEVY Chairman and Chief August 13, 1998
Joe Levy Executive Officer
/s/ JAMES R. FAMALETTE President, Chief August 13, 1998
James R. Famalette Operating Officer and
Director
/s/ BRET W. LEVY Vice President, Treasurer August 13, 1998
Bret W. Levy and Director
/s/ MAX GUTMANN Director August 13, 1998
Max Gutmann
/s/ ALAN WEINSTEIN Senior Vice President August 13, 1998
Alan Weinstein and Chief Financial Officer
/s/ SHARON LEVY Director August 13, 1998
Sharon Levy
/s/ JOSEPH J. PENBERA Director August 13, 1998
Joseph J. Penbera
/s/ FREDERICK R. RUIZ Director August 13, 1998
Frederick R. Ruiz
/s/ O. JAMES WOODWARD III Director August 13, 1998
O. James Woodward III
/s/ WILLIAM SMITH Director August 13, 1998
William Smith
EXHIBIT INDEX
Exhibit
Number Description
4 The Gottschalks Inc. 1998
Stock Option Plan.
5 Opinion of Warren L. Williams,
Esq. (opinion re legality).
23.1 Consent of Independent
Auditors.
23.2 Consent of Warren L. Williams,
Esq. (included in Exhibit 5).
EXHIBIT 4
THE GOTTSCHALKS INC.
1998 STOCK OPTION PLAN
1. THE PLAN.
1.1 Purpose. The purpose of this Plan is to promote the
success of the Company and the interests of its
stockholders by attracting, retaining and rewarding
officers, employees, and other eligible persons through
the grant of equity incentives and to attract, motivate
and retain experienced and knowledgeable independent
directors through the benefits provided under Section
3. Capitalized terms used herein are defined in
Section 5.
1.2 Administration and Authorization; Power and Procedure.
1.2.1 Committee. This Plan will be administered by
and all Options to Eligible Persons will be
authorized by the Committee. Action of the
Committee with respect to the administration of
this Plan will be taken pursuant to a majority
vote or by written consent of its members.
1.2.2 Plan Awards; Interpretation; Powers of Committee.
Subject to the express provisions of this Plan
and any express limitations on the delegated
authority of a Committee, the Committee will have
the authority to:
(a) determine eligibility and the particular
Eligible Persons who will receive Options;
(b) grant Options to Eligible Persons, determine
the price at which securities will be offered
and the amount of securities to be offered or
awarded to any of such persons, and determine
the other specific terms and conditions of
such Options consistent with the express
limits of this Plan, and establish the
installments (if any) in which such Options
will become exercisable or will vest, or
determine that no delayed exercisability or
vesting is required, and establish the events
of termination of such Options;
(c) approve the forms of Option Agreements (which
need not be identical either as to type of
Option or among Participants);
(d) construe and interpret this Plan and any
agreements defining the rights and
obligations of the Company and Participants
under this Plan, further define the terms
used in this Plan, and prescribe, amend and
rescind rules and regulations relating to
the administration of this Plan;
(e) cancel, modify, or waive the Corporation's
rights with respect to, or modify,
discontinue, suspend, or terminate any or
all outstanding Options held by Eligible
Persons, subject to any required consent
under Section 4.6;
(f) accelerate or extend the exercisability or
extend the term of any or all such
outstanding Options within the maximum ten-
year term of Options under Section 2.3; and
(g) make all other determinations and take such
other action as contemplated by this Plan or
as may be necessary or advisable for
the administration of this Plan and the
effectuation of its purposes.
Notwithstanding the foregoing, the provisions of
Section 3 relating to Non-Employee Director
Options will be automatic and, to the maximum
extent possible, self-effectuating. To the
extent required, any interpretation or
administration of this Plan in respect of Options
granted under Section 3 will be the
responsibility of the Board.
1.2.3 Binding Determinations. Any action taken by,
or inaction of, the Corporation, any Subsidiary,
the Board or the Committee relating or pursuant
to this Plan will be within the absolute
discretion of that entity or body and
will be conclusive and binding upon all persons.
No member of the Board or Committee, or officer
of the Corporation or any Subsidiary, will
be liable for any such action or inaction of the
entity or body, of another person or, except in
circumstances involving bad faith, of himself or
herself. Subject only to compliance with
the express provisions hereof, the Board and
Committee may act in their absolute discretion in
matters within their authority related to this
Plan.
1.2.4 Reliance on Experts. In making any determination
or in taking or not taking any action under this
Plan, the Committee or the Board, as the case may
be, may obtain and may rely upon the advice of
experts, including professional advisors to the
Corporation. No director, officer or agent of
the Company will be liable for any such action or
determination taken or made or omitted in good
faith.
1.2.5 Bifurcation of Plan Administration & Delegation.
Subject to the limits set forth in the
definition of "Committee" in Section 5, the
Board may delegate different levels of
authority to different Committees with
administration and grant authority under this
Plan, provided that each designated
Committee granting any Options hereunder will
consist exclusively of a member or members of
the Board. A majority of the members
of the acting Committee will constitute a
quorum. The vote of a majority of a quorum or
the unanimous written consent of a
Committee will constitute action by the
Committee. A Committee may delegate
ministerial, non-discretionary functions to
individuals who are officers or employees of the
Company.
1.3 Participation. Options may be granted by the Committee
only to those persons that the Committee determines to
be Eligible Persons. An Eligible Person who has been
granted an Option may, if otherwise eligible, be
granted additional Options if the Committee so
determines. Non-Employee Directors will only be
eligible to receive those Nonqualified Stock Options
granted automatically under the provisions of Section
3.
1.4 Shares Available for Options; Share Limits.
1.4.1 Shares Available. Subject to the provisions
of Section 4.2, the capital stock that may be
delivered under this Plan will be shares of the
Corporation's Common Stock. The Shares may be
delivered for any lawful consideration.
1.4.2 Share Limits. The maximum number of Shares that
may be delivered pursuant to all Options granted
under this Plan is 1,000,000 Shares (the "Share
Limit"). The maximum number of Shares that may
be delivered pursuant to Options granted to Non-
Employee Directors under the provisions of
Section 3 is 100,000 Shares. The maximum number
of Shares subject to those Options that are
granted during any calendar year to any one
individual is 100,000 Shares. Each of the
foregoing numerical limits will be subject to
adjustment as contemplated by this Section 1.4
and Section 4.2.
1.4.3 Share Reservation; Replenishment and Reissue of
Unvested Options. No Option may be granted
under this Plan unless, on the date of grant,
the sum of (i) the maximum number of Shares
issuable at any time pursuant to such Option,
plus (ii) the number of Shares that have
previously been issued pursuant to Options
granted under this Plan, other than reacquired
Shares available for reissue consistent with any
applicable limitations, plus (iii) the maximum
number of Shares that may be issued at any
time after such date of grant pursuant to
Options that are outstanding on such date, does
not exceed the Share Limit. Shares that are
subject to or underlie Options that expire or
for any reason are cancelled or terminated, are
forfeited, fail to vest, or for any other reason
are not paid or delivered under this Plan, as
well as reacquired Shares, will again, except to
the extent prohibited by law, be available for
subsequent Options under this Plan.
1.5 Grant of Option. Subject to the express provisions of
this Plan, the Committee will determine the number of
Shares subject to each Option and the price to be paid
for the Shares. Each Option will be evidenced by an
Option Agreement signed by the Corporation and, if
required by the Committee, by the Participant.
1.6 Option Period. Any option and related right will
expire not more than 10 years after the date of grant;
provided, however, that the delivery of stock pursuant
to an Option may be delayed until a future date if
specifically authorized by the Committee in writing.
1.7 Limitations on Exercise and Vesting of Options.
1.7.1 Provisions for Exercise. Unless the
Committee otherwise expressly provides, no
Option will be exercisable or will vest until at
least six months after the initial Option
Date, and once exercisable an Option will remain
exercisable until the expiration or earlier
termination of the Option.
1.7.2 Procedure. Any exercisable Option will be
deemed to be exercised when the Secretary of the
Corporation receives written notice of such
exercise from the Participant, together with any
required payment made in accordance with Section
2.2(b) or 3.3, as the case may be.
1.7.3 Fractional Shares/Minimum Issue. Fractional
share interests will be disregarded, but may be
accumulated. The Committee, however, may
determine in the case of Eligible Persons that
cash, other securities, or other property will
be paid or transferred in lieu of any fractional
share interests. No fewer than 100 Shares may
be purchased on exercise of any Option at one
time unless the number purchased is the total
number at the time available for purchase under
the Option.
1.8 No Transferability.
1.8.1 Limit on Exercise and Transfer. Unless
otherwise expressly provided in (or pursuant to)
this Section 1.8, by applicable law and by the
Option Agreement, as the same may be
amended, (i) all Options are non-transferable
and will not be subject in any manner to sale,
transfer, anticipation, alienation, assignment,
pledge, encumbrance or charge; (ii) Options will
be exercised only by the Participant; and (iii)
amounts payable or Shares issuable pursuant to
an Option will be delivered only to (or for the
account of) the Participant.
1.8.2 Exceptions. The Committee may permit Options
to be exercised by and paid only to certain
persons or entities related to the Participant
pursuant to such conditions and procedures as
the Committee may establish. Any permitted
transfer will be subject to the condition that
the Committee receive evidence satisfactory to
it that the transfer is being made for estate
and/or tax planning purposes and without
consideration (other than nominal
consideration). Incentive Stock Options will be
subject to any and all additional transfer
restrictions under the Code (notwithstanding
Section 1.8.3).
1.8.3 Further Exceptions to Limits On Transfer. The
exercise and transfer restrictions in Section
1.8.1 will not apply to:
(a) transfers to the Corporation,
(b) the designation of a beneficiary to receive
benefits if the Participant dies or, if the
Participant has died, transfers to or
exercise by the Participant's beneficiary,
or, in the absence of a validly designated
beneficiary, transfers by will or the laws
of descent and distribution,
(c) transfers pursuant to a QDRO order if
approved or ratified by the Committee,
(d) if the Participant has suffered a
disability, permitted transfers or
exercises on behalf of the Participant by
the Participant's legal representative, or
(e) the authorization by the Committee of
"cashless exercise" procedures with third
parties who provide financing for the
purpose of (or who otherwise facilitate)
the exercise of Options consistent with
applicable laws and the express
authorization of the Committee.
2. ELIGIBLE PERSON OPTIONS.
2.1 Grants. One or more Options may be granted under this
Section 2 to any Eligible Person. Each Option granted
will be designated in the applicable Option Agreement,
by the Committee, as either an Incentive Stock Option,
subject to Section 2.4, or a Nonqualified Stock Option.
2.2 Option Price.
2.2.1 Pricing Limits. The purchase price per Share
covered by each Option will be determined by the
Committee at the time of the grant, but in the
case of Incentive Stock Options will not be
less than 100% (110% in the case of a
Participant described in Section 2.5) of the
Fair Market Value of the Common Stock on the
date of grant and in all cases will not be less
than the par value thereof.
2.2.2 Payment Provisions. The purchase price of
any Shares purchased on exercise of an Option
granted under this Section 2 will be paid in
full at the time of each purchase in one or a
combination of the following methods: (i) in
cash or by electronic funds transfer; (ii) by
certified or cashier's check payable to the
order of the Corporation; (iii) by notice and
third party payment in such manner as may be
authorized by the Committee; or (iv) by the
delivery of shares of Common Stock of
the Corporation already owned by the
Participant, provided, however, that the
Committee may in its absolute discretion limit
the Participant's ability to exercise an Option
by delivering such Shares, and any Shares
delivered that were initially acquired upon
exercise of a stock option must have
been owned by the Participant at least six
months as of the date of delivery. Shares used
to satisfy the exercise price of an Option will
be valued at their Fair Market Value on the date
of exercise. Without limiting the generality of
the foregoing, the Committee may provide that
the Option can be exercised and payment made by
delivering a properly executed exercise notice
together with irrevocable instructions to a
broker to promptly deliver to the Corporation
the amount of sale proceeds necessary to pay the
exercise price and, unless otherwise prohibited
by the Committee or applicable law, any
applicable tax withholding under Section 4.5.
The Corporation will not be obligated to deliver
certificates for the Shares unless and until it
receives full payment of the exercise price
therefor and any related withholding obligations
have been satisfied.
2.3 Vesting; Option Period.
2.3.1 Vesting. Subject to Section 1.6, each Option
will vest and become exercisable as of the date
or dates determined by the Committee and set
forth in the applicable Option Agreement.
2.3.2 Option Period. Subject to Section 1.6, each
Option and all rights thereunder will expire no
later than 10 years after the Option Date.
2.4 Limitations on Grant and Terms of Incentive Stock
Options.
2.4.1 $100,000 Limit. To the extent that the
aggregate "Fair Market Value" of stock with
respect to which incentive stock options first
become exercisable by a Participant
in any calendar year exceeds $100,000, taking
into account both Common Stock subject to
Incentive Stock Options under this Plan
and stock subject to incentive stock options
under all other plans of the Company or any
parent corporation, such options will be
treated as Nonqualified Stock Options. For
this purpose, the "Fair Market Value" of the
stock subject to options will be determined
as of the date the options were awarded. In
reducing the number of options treated as
incentive stock options to meet the $100,000
limit, the most recently granted options
will be reduced first. To the extent a
reduction of simultaneously granted
options is necessary to meet the $100,000
limit, the Committee may, in the manner and to
the extent permitted by law, designate
which shares are to be treated as shares
acquired pursuant to the exercise of an
Incentive Stock Option.
2.4.2 Other Code Limits. Incentive Stock Options
may only be granted to Eligible Employees of
the Corporation or a Subsidiary that satisfies
the other eligibility requirements of the
Code. There will be imposed in any Option
Agreement relating to Incentive Stock Options
such other terms and conditions as from
time to time are required in order that the
Option be an "incentive stock option" as that
term is defined in Section 422 of the Code.
2.5 Limits on 10% Holders. No Incentive Stock Option may
be granted to any person who, at the time the Option is
granted, owns (or is deemed to own under Section 424(d)
of the Code) shares of outstanding Common Stock
possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation,
unless the exercise price of such Option is at least
110% of the Fair Market Value of the stock subject to
the Option and such Option by its terms is not
exercisable after the expiration of five years from the
date such Option is granted.
2.6 Repricing/Cancellation and Regrant/Waiver of
Restrictions. Subject to Section 1.4 and Section 4.6
and the specific limitations on Options contained in
this Plan, the Committee from time to time may
authorize, generally or in specific cases only,
for the benefit of any Eligible Person any adjustment
in the vesting schedule, the number of Shares subject
to, or the restrictions upon or the term of, an Option
granted under this Section 2 by cancellation of an
outstanding Option and a subsequent regranting of an
Option, by amendment, by substitution of an outstanding
Option, by waiver or by other legally valid
means; provided, however, that no such amendment or
other action shall reduce the per Share exercise price
of the Option to a price less than 100% of the Fair
Market Value of the Common Stock Date of the initial
Option (subject to permitted adjustments pursuant to
Section 4.2). Such amendment or other action may
provide, among other changes, for a greater
or lesser number of Shares subject to the Option, or a
longer or shorter vesting or exercise period.
2.7 Options in Substitution for Stock Options Granted by
Other Corporations. Options may be granted to Eligible
Persons under this Plan in substitution for employee
stock options granted by other entities to persons who
are or who will become Eligible Persons in respect of
the Company, in connection with a distribution, merger
or reorganization by or with the granting entity or an
affiliated entity, or the acquisition by the Company,
directly or indirectly, of all or a substantial part of
the stock or assets of the employing entity.
3. NON-EMPLOYEE DIRECTOR OPTIONS.
3.1 Participation. Options under this Section 3 will be
made only to Non-Employee Directors and will be
evidenced by Option Agreements substantially in the
form of Exhibit A hereto.
3.2 Option Grants.
3.2.1 Initial Options. Subject to Section 3.2.3,
after approval of this Plan by the stockholders
of the Corporation, each person who is a
Non-Employee Director of the Corporation at
the time of adoption of the Plan and any person
who thereafter becomes a Non-Employee Director
of the Corporation and in each case who,
immediately prior to such date, was not
an officer or employee of the Company, will be
granted automatically (without any action by the
Committee or the Board) a Nonqualified Stock
Option to purchase 5,000 Shares. The Option
Date of such grant will be the date of approval
of this Plan in the case of those individuals
who are Non-Employee Directors at the
time of adoption of the Plan and the date the
director takes office in the case of individuals
who subsequently become Non-Employee Directors.
3.2.2 Subsequent Annual Options. Subject to
Section 3.2.3, at the close of trading on the
first business day in each calendar year during
the term of this Plan commencing in 1999,
there will be granted automatically (without any
action by the Committee or the Board) a
Nonqualified Stock Option (the Option
Date of which will be such date) to each
Non-Employee Director then continuing in office
to purchase 2,000 Shares.
3.2.3 Maximum Number of Shares. Annual grants that
would otherwise exceed the maximum number of
shares under Section 1.4.1 will be prorated
within such limitation. A Non-Employee Director
will not receive more than one Nonqualified
Stock Option under this Section 3.2 in any
calendar year.
3.3 Option Price. The purchase price per Share covered by
each Option granted pursuant to Section 3.2 will be 100
percent of the Fair Market Value of the Common Stock on
the Option Date. The exercise price of any Option
granted under Section 3.2 will be paid in full at the
time of each purchase in cash or by check or in Shares
valued at their Fair Market Value on the date of
exercise of the Option, or partly in Shares and partly
in cash, provided that any Shares used in payment shall
have been owned by the Participant at least six months
prior to the date of exercise.
3.4 Option Period and Exercisability. Each Option granted
under Section 3.2 and all rights or obligations
thereunder will expire on the day before the tenth
anniversary of the Option Date and will be subject to
earlier termination as provided below. Each Option
granted under Section 3.2 will become vested and
exercisable at the rate of 25% per annum commencing on
the first anniversary of the Option Date and each of
the next three anniversaries thereof.
3.5 Termination of Directorship. An Option granted to a
Non-Employee Director pursuant to Section 3.2 shall
terminate upon the Non-Employee Director's termination
of service as a member of the Board, except: (i) if
such termination is due to the Non-Employee Director's
Total Disability, death or retirement, the Option shall
become fully vested and exercisable upon the date of
such termination and the Option may be exercised for
only one year after the date of such termination; or
(ii) if such termination is due to any reason other
than the Non-Employee Director's Total Disability,
death or retirement, the Option, to the extent not
vested and exercisable on the date of such termination,
will be terminated and the portion of the Option
which is then vested and exercisable may be exercised
for only three months after the date of such
termination; in each case subject to earlier
termination pursuant to or as contemplated by
Section 3.4 or Section 3.6. For purposes of this
Section 3.5, "retirement" shall mean the termination of
a director's services on or after the date the director
attains age 65 and on or after the date the director
completes ten years of service as a director of the
Corporation.
3.6 Adjustments; Accelerations; Terminations. Options
granted under Section 3.2 will be subject to
adjustments, accelerations and terminations as provided
in Section 4.2, but only to the extent that in the case
of a Change in Control Event such effect and any Board
or Committee action in respect thereof is effected
pursuant to the terms of a reorganization agreement
approved by stockholders of the Corporation or is
otherwise consistent with the effect on Options held by
persons other than executive officers or directors of
the Corporation (or, if there are none, consistent in
respect of the underlying Shares with the effect on
stockholders generally).
3.7 Acceleration Upon a Change in Control Event. Upon the
occurrence of a Change in Control Event and
acceleration under Section 4.2.2, each Option granted
under Section 3.2 will become fully vested and
immediately exercisable; provided, however, that
none of the Options granted under Section 3.2 will be
accelerated to a date less than six months after the
Option Date of such Option. To the extent that any
Option granted under Section 3.2 is not exercised prior
to (i) a dissolution of the Corporation or (ii) a
merger or other corporate event that the
Corporation does not survive, and no provision is (or
consistent with the provisions of this Plan can be)
made for the assumption, conversion, substitution or
exchange of the Option, the Option will terminate upon
the occurrence of such event.
4. OTHER PROVISIONS.
4.1 Rights of Eligible Persons, Participants and
Beneficiaries.
4.1.1 Employment Status. Status as an Eligible
Person will not be construed as a commitment
that any Option will be granted under this Plan
to an Eligible Person or to Eligible Persons
generally.
4.1.2 No Employment Contract. Nothing contained in
this Plan (or in any other documents related to
this Plan or to any Option) will confer upon
any Eligible Person or other Participant any
right to continue in the employ or other
service of the Company or constitute any
contract or agreement of employment or other
service, nor will interfere in any way with the
right of the Company to change such person's
compensation or other benefits or to terminate
the employment (or services) of such
person, with or without cause, but nothing
contained in this Plan or any related
document will adversely affect any independent
contractual right of such person without the
person's consent thereto.
4.1.3 Plan Not Funded. Options payable under this
Plan will be payable in Shares or from the
general assets of the Corporation, and (except
as provided in Section 1.4.3) no special
or separate reserve, fund or deposit will be
made to assure payment of such Options. No
Participant, Beneficiary or other person will
have any right, title or interest in any fund
or in any specific asset (including Shares,
except as expressly otherwise provided) of the
Company by reason of any Option hereunder.
Neither the provisions of this Plan (or of any
related documents), nor the creation or
adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan will
create, or be construed to create, a trust of
any kind or a fiduciary relationship between
the Company and any Participant, Beneficiary or
other person. To the extent that a
Participant, Beneficiary or other person
acquires a right to receive payment
pursuant to any Option hereunder, such right
will be no greater than the right of any
unsecured general creditor of the Company.
4.2 Adjustments; Acceleration.
4.2.1 Adjustments. The following provisions will
apply if any extraordinary dividend or other
extraordinary distribution occurs in respect of
the Common Stock (whether in the form of
cash, Common Stock, other securities, or other
property), or any reclassification,
recapitalization, stock split (including
a stock split in the form of a stock
dividend), reverse stock split, reorganization,
merger, combination, consolidation, split-
up, spin-off, combination, repurchase, or
exchange of Common Stock or other securities of
the Corporation, or any similar, unusual or
extraordinary corporate transaction (or
event in respect of the Common Stock) or a sale
of substantially all the assets of the
Corporation as an entirety occurs. The Committee
will, in such manner and to such extent (if
any) as it deems appropriate and equitable:
(a) proportionately adjust any or all of (i)
the number and type of Shares (or other
securities) that thereafter may be made
the subject of Options (including the
specific maxima and numbers of
Shares set forth elsewhere in this Plan),
(ii) the number, amount and type of Shares
(or other securities or property) subject
to any or all outstanding Options, (iii)
the grant, purchase, or exercise price of
any or all outstanding Options, or (iv)
the securities, cash or other property
deliverable upon exercise of any
outstanding Options, or
(b) in the case of an extraordinary dividend
or other distribution, recapitalization,
reclassification, merger, reorganization,
consolidation, combination, sale of
assets, split up, exchange, or spin off,
make provision for a cash payment or
for the substitution or exchange of any or
all outstanding Options or the cash,
securities or property deliverable to the
holder of any or all outstanding Options
based upon the distribution or
consideration payable to holders of the
Common Stock upon or in respect of such
event. In each case, with respect to
Incentive Stock Options, no such
adjustment will be made that would cause
this Plan to violate Section 422 or 424(a)
of the Code or any successor provisions
without the written consent of the holders
materially adversely affected thereby. In
any of such events, the Committee may take
such action sufficiently prior to such
event if necessary to permit the
Participant to realize the benefits
intended to be conveyed with respect to
the underlying shares in the same
manner as is available to stockholders
generally.
4.2.2 Acceleration of Options Upon Change in
Control. Unless prior to a Change in Control
Event the Committee determines that,
upon its occurrence, benefits under any or
all Options will not accelerate or determines
that only certain or limited benefits
under any or all Options will be accelerated
and the extent to which they will be
accelerated, and/or establishes a different
time in respect of such Change in Control
Event for such acceleration, then upon the
occurrence of a Change in Control Event, each
Option will become fully vested and
immediately exercisable.
However, in the case of a transaction
intended to be accounted for as a pooling of
interests transaction, the Committee will
have no discretion with respect to the
foregoing acceleration of Options. The
Committee may override the limitations on
acceleration in this Section 4.2.2 by
express provision in the Option Agreement
and may accord any Eligible Person a right
to refuse any acceleration, whether pursuant
to the Option Agreement or otherwise, in
such circumstances as the Committee may
approve. Any acceleration of Options will
comply with applicable legal requirements.
4.2.3 Possible Early Termination of Accelerated
Options. If any Option under this Plan
(other than an Option granted under
Section 3.2) has been fully accelerated as
permitted by Section 4.2.2 but is not
exercised prior to (i) a dissolution of the
Corporation, or (ii) a reorganization event
described in Section 4.2.1 that the
Corporation does not survive, or
(iii) the consummation of reorganization
event described in Section 4.2.1
that results in a Change in Control Event
approved by the Board, and no provision has
been made for the survival, substitution,
exchange or other settlement of such Option,
such Option will thereupon terminate.
4.3 Effect of Termination of Employment; Termination of
Subsidiary Status; Discretionary Provisions.
4.3.1 Options - Resignation or Dismissal. If the
Participant's employment by (or other service
specified in the Option Agreement to) the
Company terminates for any reason (the
date of such termination being referred to as
the "Severance Date") other than due to
Retirement, Total Disability or death,
or "for cause" (as determined in the
discretion of the Committee), the Participant
will have, unless otherwise provided
in the Option Agreement and subject to
earlier termination pursuant to or as
contemplated by Section 1.6 or Section 4.2,
three months after the Severance Date to
exercise any Option to the extent it has
become vested on the Severance Date. In the
case of a termination "for cause", the Option
will terminate on the Severance Date (whether
or not vested). In all cases, the
Option, to the extent not vested on the
Severance Date, will terminate.
4.3.2 Options - Death or Disability. If the
Participant's employment by (or specified
service to) the Company terminates as
a result of Total Disability or death, the
Participant, the Participant's Personal
Representative or the Participant's
Beneficiary, as the case may be, will have,
unless otherwise provided in the Option
Agreement and subject to earlier
termination pursuant to or as contemplated by
Section 1.6 or Section 4.2, until 12 months
after the Severance Date to exercise
any Option to the extent it has become vested
on the Severance Date. The Option, to the
extent not vested on the Severance Date, will
terminate.
4.3.3 Options - Retirement. If the Participant's
employment by (or specified service to) the
Company terminates as a result of Retirement,
the Participant, Participant's Personal
Representative or the Participant's
Beneficiary, as the case may be, will have,
unless otherwise provided in the Option
Agreement and subject to earlier termination
pursuant to or as contemplated by Section 1.6
or Section 4.2, until 12 months after the
Severance Date to exercise any Nonqualified
Stock Option (three months after the
Severance Date in the case of an
Incentive Stock Option) to the extent it has
become vested on the Severance Date. The
Option, to the extent not vested on the
Severance Date, will terminate.
4.3.4 Committee Discretion. Notwithstanding the
foregoing provisions of this Section 4.3, in
the event of, or in anticipation of, a
termination of employment with the Company
for any reason, other than discharge for
cause, the Committee may increase the portion
of the Participant's Option available to the
Participant, or Participant's Beneficiary or
Personal Representative, as the case may be,
or, subject to the provisions of Section 1.6,
extend the exercisability period
upon such terms as the Committee determines
and expressly sets forth in or by amendment
to the Option Agreement.
4.4 Compliance with Laws. This Plan, the granting and
vesting of Options under this Plan and the offer,
issuance and delivery of securities and/or the payment
of money under this Plan or under Options granted
hereunder are subject to compliance with
all applicable federal and state laws, rules and
regulations (including but not limited to state and
federal securities law and federal margin requirements)
and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of
counsel for the Corporation, be necessary or
advisable in connection therewith. Any securities
delivered under this Plan will be subject to such
restrictions and to any restrictions the Committee may
require to preserve a pooling of interests under
generally accepted accounting principles, and the
person acquiring such securities will, if requested by
the Corporation, provide such assurances and
representations to the Corporation as the Corporation
may deem necessary or desirable to assure compliance
with all applicable legal requirements.
4.5 Tax Withholding.
4.5.1 Cash or Shares. Upon any exercise, vesting,
or payment of any Option or upon the disposition
of Shares acquired pursuant to the exercise of an
Incentive Stock Option prior to satisfaction of
the holding period requirements of Section 422 of
the Code, the Company will have the right at its
option to (i) require the Participant (or Personal
Representative or Beneficiary, as the case may be)
to pay or provide for payment of the amount of any
taxes which the Company may be required to
withhold with respect to such Option event or
payment or (ii) deduct from any amount payable in
cash the amount of any taxes which the Company may
be required to withhold with respect to such cash
payment. In any case where a tax is required to
be withheld in connection with the delivery of
shares of Common Stock under this Plan, the
Committee may in its sole discretion (subject to
Section 4.4) grant (either at the time of the
Option or thereafter) to the Participant the right
to elect, pursuant to such rules and subject to
such conditions as the Committee may establish, to
have the Corporation reduce the number of Shares
to be delivered by (or otherwise reacquire) the
appropriate number of Shares valued at their then
Fair Market Value, to satisfy such withholding
obligation.
4.5.2 Tax Loans. The Company may, in its discretion,
authorize a loan to an Eligible Person in the
amount of any taxes which the Company may be
required to withhold with respect to
Shares received (or disposed of, as the case may
be) pursuant to a transaction described in Section
4.5.1. Such a loan shall be for a term, at a rate
of interest and pursuant to such other terms and
conditions as the Company, under applicable law
may establish.
4.6 Plan Amendment, Termination and Suspension.
4.6.1 Board Authorization. The Board may, at any
time, terminate or, from time to time, amend,
modify or suspend this Plan, in whole or in part.
No Options may be granted during any suspension of
this Plan or after termination of this Plan, but
the Committee shall retain jurisdiction as to
Options then outstanding in accordance with the
terms of this Plan.
4.6.2 Stockholder Approval. To the extent then
required under Sections 422 and 424 of the Code or
any other applicable law, or deemed necessary or
advisable by the Board, any amendment to this Plan
will be subject to stockholder approval.
4.6.3 Amendments to Options. Without limiting any other
express authority of the Committee under but
subject to the express limits of this Plan, the
Committee by agreement or resolution may waive
conditions of or limitations on Options to
Eligible Persons that the Committee in the prior
exercise of its discretion has imposed, without
the consent of a Participant, and may make other
changes to the terms and conditions of Options
that do not affect in any manner materially
adverse to the Participant, his or her rights and
benefits under an Option.
4.6.4 Limitations on Amendments to Plan and Options. No
amendment, suspension or termination of this Plan
or change of or affecting any outstanding Option
will, without written consent of the Participant,
affect in any manner materially adverse to the
Participant any rights or benefits of the
Participant or obligations of the Corporation
under any Option granted under this Plan prior to
the effective date of such change. Changes
contemplated by Section 4.2 will not be deemed to
constitute changes or amendments for purposes of
this Section 4.6.
4.7 Privileges of Stock Ownership. Except as otherwise
expressly authorized by the Committee or this Plan, a
Participant will not be entitled to have any privilege of
stock ownership as to any Shares not actually delivered
to and held of record by the Participant. No adjustment
will be made for dividends or other rights as a
stockholder for which a record date is prior to such
date of delivery.
4.8 Effective Date of the Plan. This Plan will be
effective upon its approval by the Board (the "Effective
Date"), subject to approval by the stockholders of the
Corporation within twelve months after the date of such
Board approval.
4.9 Term of the Plan. Unless earlier terminated by the
Board, this Plan will terminate at the close of business
on the day before the tenth anniversary of the Effective
Date (the "Termination Date") and no Options may be
granted under this Plan after that date. Unless
otherwise expressly provided in this Plan or in an
applicable Option Agreement, any Option theretofore
granted may extend beyond such date, and all authority
of the Committee with respect to Options hereunder,
including the authority to amend an Option, will continue
during any suspension of this Plan and in respect of
outstanding Options on the Termination Date.
4.10 Governing Law/Construction/Severability.
4.10.1 Choice of Law. This Plan, the Options, all
documents evidencing Options and all other related
documents will be governed by, and construed in
accordance with the laws of the State of
California.
4.10.2 Severability. If a court of competent
jurisdiction holds any provision invalid and
unenforceable, the remaining provisions of this
Plan will continue in effect.
4.10.3 Plan Construction.
(a) Rule 16b-3. It is the intent of the
Corporation that transactions in and
affecting Options in the case of
Participants who are or may be subject to
Section 16 of the Exchange Act satisfy any
then applicable requirements of Rule 16b-3 so
that such persons (unless they otherwise
agree) will be entitled to the benefits of
Rule 16b-3 or other exemptive rules under
Section 16 of the Exchange Act in respect of
those transactions and will not be subjected
to avoidable liability thereunder.
(b) Section 162(m). It is the further intent of
the Company that Options with an exercise
price not less than Fair Market Value on the
date of grant that are granted to or held by
a person subject to Section 162(m) will
qualify as performance-based compensation
under Section 162(m) to the extent that the
Committee authorizing the Option satisfies
the administrative requirements thereof.
This Plan will be interpreted consistent with
such intent.
4.11 Captions. Captions and headings are given to the
sections and subsections of this Plan solely as a
convenience to facilitate reference. Such headings will
not be deemed in any way material or relevant to the
construction or interpretation of this Plan or any
provision thereof.
4.12 Effect of Change of Subsidiary Status. For purposes of
this Plan and any Option hereunder, if an entity ceases
to be a Subsidiary a termination of employment and
service will be deemed to have occurred with respect to
each Eligible Person in respect of such Subsidiary who
does not continue as an Eligible Person in respect of
another entity within the Company.
4.13 Non-Exclusivity of Plan. Nothing in this Plan will
limit or be deemed to limit the authority of the Board or
the Committee to grant awards or authorize any other
compensation, with or without reference to the Common
Stock, under any other plan or authority.
5. DEFINITIONS.
"Beneficiary" means the person, persons, trust or trusts
designated by a Participant or, in the absence of a
designation, entitled by will or the laws of descent and
distribution, to receive the benefits specified in the
Option Agreement and under this Plan if the Participant
dies, and means the Participant's executor or administrator
if no other Beneficiary is designated and able to act under
the circumstances.
"Board" means the Board of Directors of the Corporation.
"Change in Control Event" means any of the following:
(a) Approval by the stockholders of the Corporation
of the dissolution or liquidation of the Corporation;
(b) Approval by the stockholders of the Corporation
of an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities that are
not Subsidiaries or other affiliates, as a result of
which less than 50% of the outstanding voting
securities of the surviving or resulting entity
immediately after the reorganization are, or will
be, owned, directly or indirectly, by stockholders of
the Corporation immediately before such reorganization
(assuming for purposes of such determination that there
is no change in the record ownership of the
Corporation's securities from the record date
for such approval until such reorganization and
that such record owners hold no securities of the other
parties to such reorganization), but including in such
determination any securities of the other parties to
such reorganization held by affiliates of the
Corporation);
(c) Approval by the stockholders of the Corporation of the
sale of substantially all of the Corporation's business
and/or assets to a person or entity that is not a
Subsidiary or other affiliate; or;
(d) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act but excluding any person
described in and satisfying the conditions of Rule
13d-1(b)(1) thereunder) becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the
Corporation representing more than 50% of the combined
voting power of the Corporation's then outstanding
securities entitled to then vote generally in the
election of directors of the Corporation; or
(e) During any period not longer than two consecutive years,
individuals who at the beginning of such period
constituted the Board cease to constitute at least a
majority thereof, unless the election, or the nomination
for election by the Corporation's stockholders, of each
new Board member was approved by a vote of at least
three-fourths of the Board members then still in office
who were Board members at the beginning of such period
(including for these purposes, new members whose
election or nomination was so approved).
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Committee" means the Board or any one or more committees of
director(s) appointed by the Board to administer this Plan
with respect to the Options within the scope of authority
delegated by the Board. At least one committee will be
comprised only of two or more directors, each of whom, in
respect of any decision involving both (i) a Participant
affected by the decision who is or may be subject to
Section 162(m), and (ii) compensation intended as
performance-based compensation within the meaning of Section
162(m), will be Disinterested; in acting on any transaction
with or for the benefit of a Section 16 Person, the
participating members of such Committee also shall be Non-
Employee Directors within the meaning of Rule 16b-3.
"Common Stock" means the Common Stock of the Corporation,
par value $0.01 per share, and such other securities or
property as may become the subject of Options, or become
subject to Options, pursuant to an adjustment made under
Section 4.2 of this Plan.
"Company" means, collectively, the Corporation and its
Subsidiaries.
"Corporation" means Gottschalks Inc., a Delaware
corporation, and its successors.
"Disinterested" means a director who is an "outside
director" within the meaning of Section 162(m) and any
applicable legal or regulatory requirements.
"Eligible Employee" means an officer (whether or not a
director) or other employee of the Company.
"Eligible Person" means an Eligible Employee, or any Other
Eligible Person, as determined by the Committee.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" on any date means (a) if the stock is
listed or admitted to trade on a national securities
exchange, the closing price of the stock on the Composite
Tape, as published in the Western Edition of The Wall Street
Journal, of the principal national securities exchange on
which the stock is so listed or admitted to trade, on such
date, or, if there is no trading of the stock on such date,
then the closing price of the stock as quoted on such
Composite Tape on the next preceding date on which there was
trading in such shares; (b) if the stock is not listed or
admitted to trade on a national securities exchange, the
last/closing price for the stock on such date, as furnished
by the National Association of Securities Dealers, Inc.
("NASD") through the NASDAQ National Market Reporting System
or a similar organization if the NASD is no longer reporting
such information; (c) if the stock is not listed or admitted
to trade on a national securities exchange and is not
reported on the National Market Reporting System, the mean
between the bid and asked price for the stock on such date,
as furnished by the NASD or a similar organization; or
(d) if the stock is not listed or admitted to trade on a
national securities exchange, is not reported on the
National Market Reporting System and if bid and asked prices
for the stock are not furnished by the NASD or a similar
organization, the value as established by the Committee at
such time for purposes of this Plan. Any determination as
to fair market value made pursuant to this Plan shall be
determined without regard to any restriction other than a
restriction which, by its terms, will never lapse, and shall
be conclusive and binding on all persons.
"Incentive Stock Option" means an Option that is designated
and intended as an incentive stock option within the meaning
of Section 422 of the Code, the award of which contains such
provisions (including but not limited to the receipt of
stockholder approval of this Plan, if the award is made
prior to such approval) and is made under such circumstances
and to such persons as may be necessary to comply with that
section.
"Nonqualified Stock Option" means an Option that is
designated as a Nonqualified Stock Option and will include
any Option intended as an Incentive Stock Option that fails
to meet the applicable legal requirements thereof. Any
Option granted hereunder that is not designated as an
incentive stock option will be deemed to be designated a
nonqualified stock option under this Plan and not an
incentive stock option under the Code.
"Non-Employee Director" means a member of the Board who is
not an officer or employee of the Company.
"Option" means an option to purchase Common Stock granted
under this Plan. The Committee shall designate any Option
granted to an Eligible Employee as a Nonqualified Stock
Option or an Incentive Stock Option. Options granted under
Section 3 shall be Nonqualified Stock Options.
"Other Eligible Person" means any individual consultant or
advisor who or (to the extent provided in the next sentence)
agent who renders or has rendered bona fide services (other
than services in connection with the offering or sale of
securities of the Company in a capital raising transaction)
to the Company, and who is selected to participate in this
Plan by the Committee. A non-employee providing bona fide
services to the Company (other than as an eligible advisor
or consultant) may also be selected as an Other Eligible
Person if such agent's participation in this Plan would not
adversely affect (a) the Corporation's eligibility to use
Form S-8 to register under the Securities Act the offering
of shares issuable under this Plan by the Company or (b) the
Corporation's compliance with any other applicable laws.
"Option Agreement" means any writing setting forth the terms
of an Option that has been authorized by the Committee.
"Option Date" means the date upon which the Committee took
the action granting an Option or such later date as the
Committee designates as the Option Date at the time of the
Option or, in the case of Options under Section 3, the
applicable dates set forth therein.
"Participant" means an Eligible Person who has been granted
an Option under this Plan and a Non-Employee Director who
has been granted an Option under Section 3.2 of this Plan.
"Personal Representative" means the person or persons who,
upon the disability or incompetence of a Participant, has
acquired on behalf of the Participant, by legal proceeding
or otherwise, the power to exercise the rights or receive
benefits under this Plan and who by virtue of having become
the legal representative of the Participant.
"Plan" means this Gottschalks Inc. 1998 Stock Option Plan.
"QDRO" means a qualified domestic relations order as defined
in Section 414(p) of the Code or Title I, Section 206(d)(3)
of ERISA (to the same extent as if this Plan were subject
thereto), or the applicable rules thereunder.
"Rule 16b-3" means Rule 16b-3 as promulgated by the
Commission pursuant to the Exchange Act, as amended from
time to time.
"Section 16 Person" means a person subject to Section 16(a)
of the Exchange Act.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Share" means a share of Common Stock.
"Subsidiary" means any corporation or other entity a
majority of whose outstanding voting stock or voting power
is beneficially owned, directly or indirectly, by the
Corporation.
"Total Disability" means a "permanent and total disability"
within the meaning of Section 22(e)(3) of the Code and
(except in the case of Incentive Stock Options and Options
granted to Non-Employee Directors) such other disabilities,
infirmities, affliction or conditions as the Committee may
include under Section 3.
EXHIBIT A
GOTTSCHALKS INC.
1998 STOCK OPTION PLAN
NON-EMPLOYEE DIRECTOR STOCK
OPTION AGREEMENT
THIS NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT (this
"Agreement") dated as of the ____ day of __________, ____, by and
between Gottschalks Inc., a Delaware corporation (the
"Corporation"), and _______________________, (the "Director").
R E C I T A L S
WHEREAS, the Corporation has adopted and the
stockholders of the Corporation have approved the Gottschalks
Inc. 1998 Stock Option Plan (the "Plan").
WHEREAS, pursuant to Section 3 of the Plan, the
Corporation has granted to the Director effective as of the
_______ day of _____________, _____ (the "Option Date") a stock
option to purchase all or any part of ______________ shares of
the Corporation's Common Stock ("Common Stock") subject to and
upon the terms and conditions set forth in this Agreement and in
the Plan.
NOW, THEREFORE, in consideration of the mutual promises
and covenants made herein and the mutual benefits to be derived
herefrom, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meaning assigned to
such terms in the Plan.
2. Grant of Option. This Agreement evidences the Corporation's
grant to the Director of the right and option to purchase,
subject to and upon the terms and conditions set forth in
this Agreement and in the Plan, all or any part of _________
shares of the Common Stock (the "Shares") at the price of
$_________ per share (the "Option"), exercisable from time
to time, subject to the provisions of this Agreement and the
Plan, prior to the close of business on the day before the
tenth anniversary of the Option Date (the "Expiration
Date"). Such price is equal to the Fair Market Value of a
Share on the Option Date.
3. Exercisability of Option. Except as provided in the Plan or
in any resolution of the Board adopted after the date
hereof, the Option shall become vested and exercisable in
increments of 25% on each of the first, second, third and
fourth anniversaries of the Option Date.
To the extent that the Option is vested and exercisable, if
the Director does not in any year purchase all or any part
of the Shares to which the Director is entitled, the
Director has the right cumulatively thereafter to purchase
any Shares not so purchased and such right shall continue
until the Option terminates or expires. The Option shall
only be exercisable in respect of whole shares, and
fractional share interests shall be disregarded. The Option
shall be exercisable by the delivery to the Secretary of the
Corporation of a written notice stating the number of Shares
to be purchased pursuant to the Option and accompanied by
payment made in accordance with and in a form permitted by
Section 3.3 of the Plan for the full purchase price of the
Shares to be purchased.
4. Service and Effect of Termination of Service. The Director
agrees to serve as a member of the Board in accordance with
the provisions of the Corporation's Certificate of
Incorporation, ByLaws, and applicable law. If the
Director's services as a member of the Board terminate for
any reason, the Option shall terminate at the time and to
the extent set forth in Section 3.5 of the Plan.
5. General Terms. The Option and this Agreement are subject
to, and the Corporation and the Director agree to be bound
by, the terms and conditions of the Plan, incorporated
herein by this reference. The Director acknowledges
receiving a copy of the Plan and reading its applicable
provisions. The Option is subject to adjustment,
acceleration, and early termination as provided in Section
3.6 of the Plan. The Option is nontransferable as provided
in Section 1.8 of the Plan.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
DIRECTOR GOTTSCHALKS INC.
(a Delaware corporation)
Signature
By:
Print Name
Its:
Address
City, State, Zip Code
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Agreement by Gottschalks Inc., I, _________________________, the
spouse of the Director therein named, do hereby agree to be bound
by all of the terms and provisions thereof and of the Plan.
Date:
Signature of Spouse
EXHIBIT 5
August 13, 1998
Gottschalks Inc.
7 River Park Place East
Fresno, CA 93720
RE: Registration on Form S-8 of Gottschalks Inc. (the "Company")
Ladies and Gentlemen:
At your request, I have examined the Registration
Statement on Form S-8 relating to The Gottschalks Inc. 1998 Stock
Option Plan (the "1998 Stock Option Plan") to be filed with the
Securities and Exchange Commission for the registration under the
Securities Act of 1933, as amended, of 1,000,000 shares of Common
Stock, $.01 par value per share of the Company (the "Shares").
At your request, I have examined the proceedings heretofore taken
and to be taken in connection with the authorization of the 1998
Stock Option Plan and the Common Stock that may be sold pursuant
to the 1998 Stock Option Plan.
Based upon such examination and upon such matters of
fact and law as I have deemed relevant, I am of the opinion that
the Shares have been duly authorized by all necessary corporate
action on the part of the Company and, when issued in accordance
with such authorization and appropriate action as contemplated
thereby and by the 1998 Stock Option Plan and related agreements,
the Shares will be validly issued, fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to
the above-referenced Registration Statement.
Respectfully submitted,
/s/ WARREN L. WILLIAMS
Warren L. Williams, Esq.
General Counsel
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement of Gottschalks Inc. on Form S-8 and related Prospectus
pertaining to Gottschalks Inc. 1998 Stock Option Plan of our report
dated February 24, 1998, appearing in the Annual Report on Form
10-K of Gottschalks Inc. for the year ended January 31, 1998.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Fresno, California
August 11, 1998
