Document/Exhibit Description Pages Size
1: 8-K Current Report 4± 24K
10: EX-2.10 Plan of Acquisition, Reorganization, Arrangement, 54± 227K
Liquidation or Succession
11: EX-2.11 Plan of Acquisition, Reorganization, Arrangement, 42± 175K
Liquidation or Succession
2: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 9± 39K
Liquidation or Succession
3: EX-2.3 Plan of Acquisition, Reorganization, Arrangement, 12± 56K
Liquidation or Succession
4: EX-2.4 Plan of Acquisition, Reorganization, Arrangement, 6± 27K
Liquidation or Succession
5: EX-2.5 Plan of Acquisition, Reorganization, Arrangement, 6± 24K
Liquidation or Succession
6: EX-2.6 Plan of Acquisition, Reorganization, Arrangement, 17± 79K
Liquidation or Succession
7: EX-2.7 Plan of Acquisition, Reorganization, Arrangement, 7± 36K
Liquidation or Succession
8: EX-2.8 Plan of Acquisition, Reorganization, Arrangement, 54± 225K
Liquidation or Succession
9: EX-2.9 Plan of Acquisition, Reorganization, Arrangement, 54± 226K
Liquidation or Succession
EX-2.7 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Exhibit Table of Contents
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
Dates Referenced Herein and Documents Incorporated by Reference
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