Current Report — Form 8-K
Filing Table of Contents
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-2.2 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
NON-NEGOTIABLE, EXTENDABLE,
SUBORDINATED NOTE DUE AUGUST 20, 2003
$22,179,598.00 Los Angeles, California
August 20, 1998
FOR VALUE RECEIVED, GOTTSCHALKS INC., a Delaware
corporation (the "Buyer"), promises to pay to The
Harris Company, a California corporation (the
"Seller"), the principal amount of Twenty Two Million
One Hundred Seventy-Nine Thousand Five Hundred
Ninety-Eight Dollars ($22,179,598.00) as specified
below.
1. Interest. Buyer promises to pay simple interest
on the unpaid principal amount hereof from the date
hereof until paid at the rate of eight percent (8%) per
annum.
2. Payments.
(a) Accrued interest shall be due and payable
semi-annually on August 20 and February 20 of each
year, until the indebtedness evidenced by or payable
pursuant to this Extendable Subordinated Note is paid
in full. Interest on this Extendable Subordinated Note
shall accrue from the most recent date to which
interest has been paid or, if no interest has been
paid, from the date of original issuance.
(b) Principal shall be due and payable on August 20,
2003 (the "Maturity Date"), unless the Maturity Date is
extended pursuant to Section 6.
3. Prepayments. Buyer shall have the right at any
time to prepay the principal of this Extendable
Subordinated Note in whole or in part without penalty
or premium.
4. Subordination. This Extendable Subordinated Note
is issued subject to, and Seller accepts and agrees to,
the provision that the indebtedness evidenced by this
Extendable Subordinated Note shall be subordinate and
subject in right of payment to the prior payment in
full of Senior Debt to the extent set forth in
paragraphs (b) and (c) below.
(a) As used in this Extendable Subordinated Note, the
following terms have the following meanings:
"Affiliate" shall have the meaning ascribed thereto in
Rule 12b-2 promulgated under the Exchange Act, and as
in effect on the date hereof.
"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.
"Board" shall mean the board of directors of
Gottschalks.
"Change in Control" shall mean the occurrence of any of
the following events:
(1) An acquisition (other than directly from Buyer)
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 Buyer's 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 (a) an
employee benefit plan (or a trust forming a part
thereof) maintained by (i) Buyer or (ii) a Subsidiary
of Buyer, (b) Buyer or any Subsidiary of Buyer, (c) 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 (d)
any person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(2) A merger, consolidation or reorganization
involving Buyer unless:
(a) the stockholders of Buyer
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
(b) the individuals who were
members of the 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
(c) no person (other than Buyer or
any Subsidiary of Buyer, an employee benefit plan (or
any trust forming a part thereof) maintained by Buyer,
the Surviving Corporation or any Subsidiary of Buyer,
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
(d) a transaction described in
clauses (a) through (c) of this paragraph (2) shall
herein be referred to as a "Non-Control Transaction."
(3) A complete liquidation or dissolution of Buyer.
(4) An agreement for the sale or other disposition of
all or substantially all of the assets of Buyer to any
person (other than a transfer to a Subsidiary).
(5) 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 the
combined voting power of Gottschalks' then outstanding
Voting Securities.
(6) 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 the combined voting
power of Gottschalks' then outstanding Voting
Securities.
(7) 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 of
more than the permitted amount of the outstanding
Voting Securities as a result of the acquisition of
Voting Securities by Buyer which, by reducing the
number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the
Subject Person, 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
Buyer, and after such share acquisition by Buyer, 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.
"Director" shall mean a member of the Board.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Event of Default" shall mean an event of default or a
default under Funded Debt of Buyer, whether now
existing or hereafter arising.
"Funded Debt" shall mean all present or future
indebtedness, contingent or otherwise, created,
incurred, assumed, or guaranteed by Buyer in respect of
borrowed money, or evidenced by bonds, notes,
reimbursement agreements in respect of letters of
credit, debentures, or similar instruments, and any and
all amendments, renewals, extensions, refinancings, or
refundings thereof, and any and all interest (including
all interest accruing after the filing of any petition
under the Bankruptcy Code of the United States), fees,
costs, expenses and other amounts due in connection
therewith, unless the instrument under which such
indebtedness is created, incurred, assumed, or
guaranteed expressly provides that such indebtedness is
not senior or superior in right of payment to this
Extendable Subordinated Note.
"Gottschalks Common Stock" shall mean the common stock,
par value $0.01 per share, of Gottschalks.
"Potential Event of Default" shall mean a condition or
event that, after notice or lapse of time or both,
would constitute an Event of Default.
"Senior Debt" shall mean the Funded Debt and the Trade
Debt together.
"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.
"Trade Debt" shall mean all present or future
indebtedness created or incurred by Buyer in respect of
merchandise or services provided to Buyer by vendors.
"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.
(b) Notwithstanding any other provisions of this
Extendable Subordinated Note:
(i) no direct or indirect payment, whether in cash,
issuance of Gottschalks Common Stock or a combination
thereof, on account of the principal of or interest on
this Extendable Subordinated Note shall be made, nor
shall any property or assets of Buyer be applied to the
purchase or other acquisition or retirement of this
Extendable Subordinated Note, unless full payment of
amounts then due for principal of, premium, if any, or
interest on the Funded Debt has been made;
(ii) no direct or indirect payment, whether in cash,
issuance of Gottschalks Common Stock, or a combination
thereof, on account of principal of or interest on this
Extendable Subordinated Note shall be made, nor shall
any property or assets of Buyer be applied to the
purchase or other acquisition or retirement of this
Extendable Subordinated Note, if immediately after
giving effect to such payment or application an Event
of Default or Potential Event of Default (other than an
Event of Default or Potential Event of Default arising
solely from the nonperformance or nonobservance of any
provision contained in this Extendable Subordinated
Note) exists or would exist; and
(iii) in the event of any dissolution, winding up,
liquidation, reorganization or other similar
proceedings relative to Buyer, or any of its properties
or operations (whether in bankruptcy, insolvency or
receivership proceedings, or upon an assignment for the
benefit of creditors, or any other marshalling of the
assets of Buyer or otherwise), then all principal of,
premium, if any, and interest on Senior Debt shall
first be paid in full in cash before Seller shall be
entitled to receive any payment, whether in cash,
issuance of Common Stock, or a combination thereof, or
distribution in respect to principal of or interest on
this Extendable Subordinated Note, and in any such
proceedings any payment or distribution of any kind or
character, whether in cash, securities or other
property, to which Seller would be entitled if this
Extendable Subordinated Note were not subordinated to
Senior Debt, shall be paid by the trustee or agent or
other person making such payment or distribution, or by
Seller if received by it, directly to the holders of
Senior Debt (according to their relative priorities) or
to the representative of such holders to the extent
necessary to make payment in full of Senior Debt
remaining unpaid, after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Debt, and Seller hereby irrevocably authorizes and
empowers each holder (and its representative or
representatives) of Senior Debt to demand, sue for,
collect and receive all such payments and
distributions, and to file and prove all such claims
and take all such other actions in the name of Seller
or otherwise, as such holder of Senior Debt determines
to be necessary or appropriate.
(c) In the event that Seller shall receive any
payment or distribution on this Extendable Subordinated
Note which Seller is not entitled to retain under the
provisions of the foregoing subparagraph (b), it will
hold any amount so received in trust for the holders of
the Funded Debt and, upon the request of any holder of
The Funded Debt, will forthwith turn over such payment
or distribution (without liability for interest
thereon) to the holders of the Funded Debt (pro rata)
in the form received to be applied to the Funded Debt.
Any such payments transferred by Seller to the holders
of Funded Debt shall not be considered a payment of
interest or principal under this Extendable
Subordinated Note.
(d) The holders of Senior Debt may, at any time and
from time to time, without the consent of or notice to
Seller, without incurring responsibility to Seller and
without impairing or releasing the obligations of
Seller hereunder to the holders of Senior Debt: (i)
renew, extend, modify or amend the Senior Debt; (ii)
change the manner or place of payment of Senior Debt;
(iii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing
Senior Debt; (iv) release any person liable in any
manner for the collection of Senior Debt; (v) exercise
or refrain from exercising any rights against Buyer or
any other person; and (vi) apply any sums by whomsoever
paid or however realized to Senior Debt.
(e) The foregoing provisions regarding subordination
are solely for the purpose of defining the relative
rights of the holders of Senior Debt on the one hand
and Seller on the other hand. Such provisions are for
the benefit of the holders of Senior Debt and shall be
enforceable by them directly against Seller, and no
holder of Senior Debt shall be prejudiced in its right
to enforce subordination of this Extendable
Subordinated Note by any act or failure to act by Buyer
or anyone in custody of its assets or property. Seller
waives any right it may now or hereafter have to
require any holder of Funded Debt to marshal assets, to
exercise rights or remedies in a particular manner, or
to forbear from exercising such rights and remedies in
any particular manner or order. Nothing contained in
this Extendable Subordinated Note is intended to or
shall impair, as between Buyer and Seller, the
obligation of Buyer, which is unconditional and
absolute, to pay to Seller the principal of and
interest on this Extendable Subordinated Note as and
when the same shall become due in accordance with its
terms, nor shall anything herein prevent Seller from
exercising all remedies otherwise permitted by
applicable law upon default under this Extendable
Subordinated Note subject, however, to the rights under
the foregoing subparagraphs of the holders of Senior
Debt. No modification may be made to this Extendable
Subordinated Note if it would adversely affect the
rights of any holder of Funded Debt.
5. Notice of Event of Default. Buyer shall provide
Seller with notice of the occurrence of an Event of
Default or Potential Event of Default within 10 days of
the occurrence thereof.
6. Buyer's Option to Extend Maturity Date. Buyer
shall have the right to extend the Maturity Date of
this Extendable Subordinated Note so that the principal
shall be due and payable on August 20, 2006 (the
"Extended Maturity Date") in the event that an Event of
Default or Potential Event of Default exists, or would
exist as a result of the repayment of the outstanding
principal amount plus accrued interest of this
Extendable Subordinated Note at the Maturity Date, with
respect to Funded Debt existing at the Maturity Date;
provided, that, if some portion of the amount due under
this Extendable Subordinated Note could be paid at the
Maturity Date without resulting in an Event of Default
or Potential Event of Default with respect to Funded
Debt existing at the Maturity Date, Buyer shall pay
such amount at the Maturity Date, with any and all
remaining amounts to be paid at the Extended Maturity
Date and provide further, that Buyer will use
commercially reasonable efforts to refinance the debt
evidenced by this Extendable Subordinated Note with
replacement debt if at the Maturity Date an Event of
Default exists or would exist as a result of repayment
of the outstanding principal amount plus accrued
interest of this Extendable Subordinated Note at the
Maturity Date.
7. Acceleration. If Buyer fails to make any payment
of interest when due under this Extendable Subordinated
Note and such failure continues for 10 business days,
Seller may, by written notice to Buyer, declare the
principal amount of this Extendable Subordinated Note
together with accrued interest thereon to be due and
payable, and the principal amount of this Extendable
Subordinated Note together with such interest shall
thereupon become immediately due and payable without
presentment, demand, notice, protest or other
requirements of any kind (all of which are expressly
waived by Buyer) (an "Acceleration"), subject to the
provisions of Section 4; provided, however, that in the
event that an Event of Default or Potential Event of
Default exists, or as a result of such Acceleration
would exist, with respect to Funded Debt as described
in Section 4, notwithstanding the provisions of Section
4(e) above, Seller shall not declare an Acceleration or
exercise any other remedies with respect to such
non-payment of interest for the shorter of (i) a period
of 180 days or (ii) until the Maturity Date or the
Extended Maturity Date, as applicable.
8. Cancellation of Extendable Subordinated Note.
Seller shall cancel this Extendable Subordinated Note
and return it to Buyer upon repayment in full.
9. Asset Purchase Agreement. This Extendable
Subordinated Note is issued pursuant to the terms of an
Asset Purchase Agreement by and among Buyer, Seller and
El Corte Ingles, S.A., a Spanish corporation and the
parent of the Seller, dated as of July 21, 1998 and is
subject to the terms and conditions thereof, including
Buyer's right of offset contained in Section 11.10
thereof.
10. Miscellaneous.
(a) All payments of interest and principal in respect
of this Extendable Subordinated Note shall be made in
lawful money of the United States of America at 300
North E Street, San Bernardino, California, 92416 or at
such other place as shall be designated in writing for
such purpose by Seller.
(b) This Extendable Subordinated Note shall be
governed by, and shall be construed and enforced in
accordance with, the laws of the State of California
and Seller and any future holder of this Extendable
Subordinated Note consent to exclusive jurisdiction in
California, service of process pursuant to the laws of
the State of California and waives any defense of forum
non conveniens.
11. Change in Control. Buyer shall provide Seller
with notice of a Change in Control within 10 days of
Buyer becoming aware of such Change in Control.
Subject to Section 4, upon the occurrence of a Change
in Control, Seller may, by written notice to Buyer,
require Buyer to redeem this Extendable Subordinate
Note within 30 days of the notice given by Seller
following a Change in Control by paying to Seller all
principal, plus accrued interest, to the date of such
repayment.
12. Senior Subordinated Indebtedness. Buyer shall
not create, incur, issue assume, guarantee or otherwise
become directly or indirectly liable with respect to
any indebtedness that is subordinate in right of
payment to the Funded Debt, unless such indebtedness is
specifically by its terms made pari passu with or
subordinate in right of payment to this Extendable
Subordinated Note.
13. Assignment. This Extendable Subordinated Note
shall not be assigned, except that Seller may assign
its rights hereunder to El Corte Ingles, S.A., its
parent.
IN WITNESS WHEREOF, Buyer has caused this
Extendable Subordinated Note to be executed and
delivered by its duly authorized officer, as of the day
and year and the place first written above.
GOTTSCHALKS INC.
/S/ JAMES FAMALETTE
Dates Referenced Herein and Documents Incorporated by Reference
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