Executive Employment Agreement with James Famalette

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 2nd AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

Form of Severance Agreement

 

 

 

 

TYPE:  EX-10.42
 SEQUENCE:  4
 
 
 
 
        EXECUTIVE EMPLOYMENT AGREEMENT
 
 
     This     employment    agreement     (the
"Agreement") is made and entered  into  as  of
June  25th,  1999  by and between  Gottschalks
Inc.,  a Delaware corporation (the "Company"),
and James Famalette, (the "Employee").
 
                   Recitals
 
A.   Prior  to  the  date of  this  Agreement,
     Employee   has  held  the   position   of
     President and Chief Operating Officer  of
     the Company.
 
B.   The   Company  desires  to   employ   the
     Employee  from  the  date  set  forth  in
     Article 2.2 (the "Effective Date")  until
     expiration of the term of this Agreement,
     and Employee is willing to be employed by
     Company during that period, on the  terms
     and  subject to the conditions set  forth
     in this Agreement.
 
     In  consideration of the mutual covenants
and  promises of the parties, the Company  and
Employee covenant and agree as follows:
 
1.   Duties
 
     During   the   term  of  this  Agreement,
Employee  will be employed by the  Company  to
serve as President and Chief Executive Officer
of the Company.  The Employee will devote such
amount of business time to the conduct of  the
business  of the Company as may be  reasonably
required  to effectively discharge  Employee's
duties  under this Agreement and,  subject  to
the supervision and direction of the Company's
Board of Directors (the "Board"), will perform
those  duties  and  have  such  authority  and
powers as are customarily associated with  the
offices  of  a  President and Chief  Executive
Officer  of  a company engaged in  a  business
that  is  similar  to  the  business  of   the
Company,  including (without  limitation)  (a)
the authority to direct and manage the day-to-
day operations and affairs of the Company, (b)
the  authority to hire and discharge employees
of  the  Company, and (c) all other  authority
and powers exercised by the Employee prior  to
the  Effective  Date  as President  and  Chief
Operating Officer of the Company.
 
2.   Term of Employment
 
     2.1  Definitions
 
           For  the purposes of this Agreement
the   following   terms  have  the   following
meanings:
          (a)   "Termination for Cause"  means
     termination  by  Company  of   Employee's
     employment  (i) by reason  of  Employee's
     willful  dishonesty towards, fraud  upon,
     or  deliberate injury or attempted injury
     to,  the  Company,  (ii)  by  reason   of
     Employee's   material  breach   of   this
     Agreement,  (iii) by reason of Employee's
     gross     negligence    or    intentional
     misconduct    with   respect    to    the
     performance  of Employee's  duties  under
     this   Agreement,  (iv)  by   reason   of
     Employee's breached or violation  of  any
     fiduciary  duty  owed to Company  or  (v)
     Employee  has been personally  dishonest,
     or  has willfully or negligently violated
     any  law, rule or regulation or has  been
     convicted  of  a  felony  or  misdemeanor
     (other than minor traffic violations  and
     similar offenses) provided, however, that
     no  such termination will be deemed to be
     a   Termination  for  Cause  unless   the
     Company   has   provided  Employee   with
     written  notice  of  what  it  reasonably
     believes   are   the  grounds   for   any
     Termination for Cause.
 
          (b)   "Termination  Other  than  For
     Cause"  means termination by the  Company
     of  Employee's employment by the  Company
     for   reasons  other  than  those   which
     constitute Termination for Cause.
 
          (c)   "Voluntary Termination"  means
     termination  by  the  Employee   of   the
     Employee's  employment with the  Company,
     excluding   termination  by   reason   of
     Employee's   death   or   disability   as
     described in Sections 2.5 and 2.6.
 
     2.2  Basic Term
 
          The  term  of employment of Employee
     by  the  Company  will  commence  on  the
     Effective Date of June 24, 1999 and  will
     extend through the period ending on  July
     2,   2002,   (the  "Termination   Date").
     Company and Employee may extend the  term
     of   this  Agreement  by  mutual  written
     agreement.
 
     2.3  Termination for Cause
 
          Termination   for   Cause   may   be
     effected  by  Company at any time  during
     the  term  of this Agreement and  may  be
     effected   by  written  notification   to
     Employee;  provided,  however,  that   no
     Termination  for Cause will be  effective
     unless  Employee has been  provided  with
     the    prior    written   notice.    Upon
     Termination for Cause, Employee is to  be
     immediately  paid  all  accrued   salary,
     incentive  compensation  to  the   extent
     earned,   vested  deferred   compensation
     (other   than  pension  plan  or   profit
     sharing plan benefits, which will be paid
     in  accordance with the applicable plan),
     and accrued vacation pay, all to the date
     of  termination, but Employee will not be
     paid any severance compensation.
     
     2.4  Termination Other Than for Cause
     
          Notwithstanding  anything  else   in
     this  Agreement,  Company  may  effect  a
     Termination Other Than for Cause  at  any
     time  upon  giving notice to Employee  of
     such  Termination Other Than  for  Cause.
     Upon  any  Termination  Other  Than   for
     Cause, Employee will immediately be  paid
     all   accrued   salary,   all   incentive
     compensation   to  the   extent   earned,
     severance  compensation  as  provided  in
     Section  4,  vested deferred compensation
     (other   than  pension  plan  or   profit
     sharing plan benefits, which will be paid
     in  accordance with the applicable plan),
     and accrued vacation pay, all to the date
     of termination.
     
     2.5  Termination Due to Disability
     
          In  the event that, during the  term
     of  this  Agreement, Employee should,  in
     the  reasonable judgment  of  the  Board,
     fail  to perform Employee'' duties  under
     this  Agreement  because  of  illness  or
     physical     or     mental     incapacity
     ("Disability"),   and   such   Disability
     continues for a period of more than three
     (3) consecutive months, Company will have
     the   right   to   terminate   Employee's
     employment   under  this   Agreement   by
     written  notification  to  Employee   and
     payment to Employee of all accrued salary
     and  incentive compensation to the extent
     earned,    severance   compensation    as
     provided  in  Section 4, vested  deferred
     compensation (other than pension plan  or
     profit sharing plan benefits, which  will
     be paid in accordance with the applicable
     plan), and all accrued vacation pay,  all
     to   the   date   of  termination.    Any
     determination by the Board  with  respect
     to Employee's Disability must be based on
     a   determination  of  competent  medical
     authority or authorities, a copy of which
     determination  must be delivered  to  the
     Employee  at the time it is delivered  to
     the  Board.   In the event  the  Employee
     disagrees    with    the    determination
     described   in  the  previous   sentence,
     Employee will have the right to submit to
     the  Board a determination by a competent
     medical   authority  or  authorities   of
     Employee's  own choosing  to  the  effect
     that   the  aforesaid  determination   is
     incorrect and that Employee is capable of
     performing  Employee's duties under  this
     Agreement.   If,  upon  receipt  of  such
     determination,   the  Board   wishes   to
     continue   to  seek  to  terminate   this
     Agreement  under the provisions  of  this
     section,  the  parties  will  submit  the
     issue   of   Employee's   Disability   to
     arbitration   in  accordance   with   the
     provisions of this Agreement.
     
     2.6  Death
     
          In  the  event  of Employee's  death
     during   the   term  of  this  Agreement,
     Employee's employment is to be deemed  to
     have terminated as of the last day of the
     month   during  which  Employee's   death
     occurred,   and  Company  will   pay   to
     Employee's    estate   accrued    salary,
     incentive  compensation  to  the   extent
     earned,   vested  deferred   compensation
     (other   than  pension  plan  or   profit
     sharing plan benefits, which will be paid
     in  accordance with the applicable plan),
     and accrued vacation pay, all to the date
     of termination.
     
     2.7  Voluntary Termination
     
          In   the   event  of   a   Voluntary
     Termination, Company will immediately pay
     to   Employee  all  accrued  salary,  all
     incentive  compensation  to  the   extent
     earned,   vested  deferred   compensation
     (other   than  pension  plan  or   profit
     sharing plan benefits, which will be paid
     in  accordance with the applicable plan),
     and accrued vacation pay, all to the date
     of  termination, but Employee will not be
     paid any severance compensation.
     
     2.8   Effect  of  Termination  on  Option
           Agreement
     
          Notwithstanding  anything   to   the
     contrary contained in this Agreement, any
     termination  of Employee's employment  by
     the  Company  will  have  no  effect   on
     Employee's  rights  under  that   certain
     Nonqualified   Stock   Option   Agreement
     granted  to  Employee  pursuant  to   the
     Company's Employee-Shareholder
     Performance  Stock  Option  Plan,   which
     agreement  was entered into  between  the
     Employee and the Company as of April  14,
     1997  and November 23, 1998 (the  "Option
     Agreement").   Those  Agreements  contain
     their own terms concerning termination.
     
3.   Salary, Benefits and Other Compensation
     
     3.1  Base Salary
     
          As  payment for the services  to  be
     rendered  by  Employee  as  provided   in
     Section  1  and subject to the terms  and
     conditions  of Section 2, Company  agrees
     to  pay  to  Employee  a  "Base  Salary"
     payable   bi-weekly.   The  Base   Salary
     payable  to  Employee under this  Section
     will  initially  be  $420,000.   Employee
     will   be  entitled  to  regular   salary
     reviews  and  raises during the  term  of
     this Agreement in the same general manner
     as   other   officers  of  the   Company;
     provided,  however, that so long  as  the
     Board first determines that Employee  has
     achieved     satisfactory    performance,
     Employee  will be entitled to  receive  a
     minimum   increase  in  Employee's   Base
     Salary  during the second  year  of  this
     Agreement  to  $460,000, and  subject  to
     that   same   determination,  a   minimum
     increase in Employee's Base Salary during
     the  third  year  of  this  Agreement  to
     $500,000.   Furthermore, the Company  and
     Employee acknowledge that, subject to the
     actual   financial  performance  of   the
     Company   during   the   term   of   this
     Agreement,  during  the  term   of   this
     Agreement it is the mutual intent of  the
     parties that the Base Salary may increase
     to  a level above those minimums provided
     for  above,  provided  such  increase  is
     commensurate    with   the    level    of
     compensation  received  by  other   chief
     executive  officers  of  other  similarly
     situated   companies   in   the    retail
     department store business, or the general
     retail business.
     
     3.2  Incentive Bonus Plans
     
          During  the  term of his  employment
     under  this Agreement, the Employee  will
     be  eligible to participate in all  bonus
     and  incentive plans established  by  the
     Board including, without limitation,  the
     Company's  1999  Management  Bonus   Plan
     (which will be first paid during the year
     2000).   Said  plan  as  it  relates   to
     Employee  shall  provide the  ability  to
     earn  an annual bonus of at least 30%  of
     Base   Salary  if  specific   goals   and
     objectives  adopted  by  the  Board   are
     achieved.
     
     3.3  Benefit Plans
     
          Except    as   modified   in    this
     Agreement,  during the term of Employee's
     employment  under  this  Agreement,   the
     Employee is to be eligible to participate
     in  all  employee benefit  plans  to  the
     extent   maintained   by   the   Company,
     including (without limitation) any  life,
     disability,  health, accident  and  other
     insurance  programs, paid vacations,  and
     similar  plans  or programs,  subject  in
     each  case  to  the generally  applicable
     terms  and  conditions  of  the  plan  or
     program   in   question   and   to    the
     determinations    of    any     committee
     administering such plan or  program.   On
     termination  of  the  Employee  for   any
     reason, the Employee will retain  all  of
     Employee's rights to benefits  that  have
     vested   under   such   plan,   but   the
     Employee's rights to participate in those
     plans   will   cease  on  the  Employee's
     termination unless the termination  is  a
     Termination  Other  Than  for  Cause,  in
     which    case   Employee's   rights    of
     participation will continue for a  period
     of  one  (1)  year  following  Employee's
     termination.
     
     3.4  Vacation
     
          During  the  term of this Agreement,
     Employee  will be entitled to four  weeks
     paid vacation time per year.
     
     3.5  Expenses
     
          During  the  term of this Agreement,
     Company   will  reimburse  Employee   for
     Employee's    reasonable    out-of-pocket
     expenses  incurred  in  connection   with
     Company's   business,  including   travel
     expenses,  food, and lodging  while  away
     from  home,  subject to such policies  as
     Company  may from time to time reasonably
     establish  for  its  employees.   Company
     shall  pay  Employee a car  allowance  of
     $1,000 per month during the term of  this
     Agreement.
     
     3.6  Life Insurance
     
          During   the   term  of   Employee's
     employment, the Company will  pay  for  a
     Term Life Insurance Policy, in the dollar
     amount  equal  to  Employee's  then  Base
     Salary in the form designated by Employee
     and  approved by the Company's  Board  of
     Directors, covering the life of  Employee
     and   with  proceeds  payable   to   such
     beneficiaries  as  Employee   designates.
     The  foregoing is to be in  addition  to,
     and  not in place of, any rights to which
     Employee's  estate may be entitled  under
     this Agreement on Employee's death.  Upon
     any termination of Employee's employment,
     the  aforementioned insurance policy will
     be  assigned to the Employee and Employee
     will   assume  responsibility   for   all
     premium   payments   with   respect   the
     insurance policy.
     
     3.7  One-Time Grant
     
          A  one-time grant of 40,000  options
     for   shares   upon  being  named   Chief
     Executive Officer.
          
     3.8  Withholding of Taxes
     
          The  Employee understands  that  the
     services to be rendered by Employee under
     this Agreement will cause the Employee to
     recognize   taxable  income,   which   is
     considered  under  the  Internal  Revenue
     Code  of 1986, as amended, and applicable
     regulations  thereunder  as  compensation
     income  subject  to  the  withholding  of
     income tax (and Social Security or  other
     employment  taxes).  The Employee  hereby
     consents to the withholding of such taxes
     as are required by the Company.
          
4.   Severance Compensation
     
     4.1   Termination Other Than  for  Cause;
     Payment in Lieu of Notice
     
          In  the  event Employee's employment
     is terminated in a Termination Other Than
     for  Cause,  Employee  will  be  paid  as
     severance pay Employee's Base Salary  for
     the  period commencing on the  date  that
     Employee's  employment is terminated  and
     ending   on   the  date  this   Agreement
     terminates (but not less than  12  months
     severance  payments  regardless  of   the
     termination  date of this Agreement),  on
     the  dates specified in Section  3.1  for
     payment of Employee's Base Salary.
     
     4.2  Termination for Disability
     
          In  the  event Employee's employment
     is   terminated  because  of   Employee's
     disability   pursuant  to  Section   2.5,
     Employee  will  be paid as severance  pay
     Employee's  Base Salary  for  the  period
     commencing  on  the date that  Employee's
     employment  is terminated and  ending  on
     the  date  which is six months thereafter
     (not  to exceed the number of months left
     in   this   Agreement  or  any  extension
     thereof),  on  the  dates  specified   in
     Section  3.1  for payment  of  Employee's
     Base Salary.
     
     4.3  Change in Ownership
     
          In  the event that there is a change
     in  ownership or control of the  Company,
     either  by  sale of all or  substantially
     all  of  the  assets of  the  Company  to
     another   entity,  or  by   a   sale   of
     controlling interest (50% or more of  the
     outstanding   capital   stock)   of   the
     Company's common stock to another entity;
     then  in the event Employee is terminated
     during  the twenty-four (24) month period
     thereafter, a severance benefit shall  be
     payable  on  a monthly basis to  Employee
     beginning  on  the notice of  termination
     date   consisting  of  twenty-four   (24)
     months  Base Salary, (or the proportional
     amount of the remaining twenty-four  (24)
     months   payments  if  such   termination
     occurs within the twenty-four (24)  month
     time  period)  determined  at  Employee's
     annual base rate of pay in effect at  the
     time  such notice is given (less standard
     withholdings and authorized deductions).
 
          Notwithstanding  the  provisions  in
     Article 4.3 above, in the event that  the
     total  capitalization of the  Company  at
     the time that a change of control or sale
     occurs,   is  below  eighty-five  million
     dollars, then Employee will be restricted
     to twelve (12) months base salary instead
     of twenty-four (24) as stated above if he
     is terminated as provided.
          
     4.4  Other Termination
     
          In   the   event  of   a   Voluntary
     Termination,  Termination  for  Cause  or
     Death, Employee or Employee's estate will
     not be entitled to any severance pay.
 
5.   Termination Without Compensation
     
     Notwithstanding anything to the  contrary
contained  in  this Agreement, Employee  shall
not  be entitled to continued compensation  in
any form if Employee terminates his employment
from    the    Company,   including    without
limitation, (i) through retirement, or  death;
(ii) Company sells all or part of its business
(or otherwise merges, divides, consolidates or
reorganizes), and Employee has the opportunity
to continue employment with the buyer (or with
one of the resulting entities in the event  of
a    merger,   division,   consolidation    or
reorganization),  at or above  the  Employee's
base  compensation, provided the  other  terms
and  conditions of Employee's employment after
such   sale,   division,   consolidation    or
reorganization  are the same or  substantially
the  same  as  the  terms  and  conditions  of
Employee's  employment  with  Company   (i.e.,
Employee's   duties,   responsibilities,   and
physical location geographically shall  remain
the  same,  although  the  Company  may  be  a
subsidiary  of  a  larger  entity);  or  (iii)
Employee is terminated for "cause."
     
6.   Confidentiality
     
     Because   of  Employee's  employment   by
Company,  Employee will have access  to  trade
secrets  and  confidential  information  about
Company, its products, its customers, and  its
methods  of  doing business (the "Confidential
Information").    During   and    after    the
termination  of Employee's employment  by  the
Company,   Employee  may   not   directly   or
indirectly   disclose   or   use   any    such
Confidential   Information;   provided,   that
Employee  will  not  incur any  liability  for
disclosure   of  information  which   (a)   is
required   in   the   course   of   Employee's
employment  by the Company, (b) was  permitted
in  writing by the Board or (c) is within  the
public  domain  or  comes  within  the  public
domain without any breach of this Agreement.
     
7.   Assignment of Inventions
     
     All   processes,   inventions,   patents,
copyrights,  trademarks and  other  intangible
rights  (collectively the  "Inventions")  that
may  be  conceived or developed  by  Employee,
either  along or with others, during the  term
of   Employee's  employment,  whether  or  not
conceived   or  developed  during   Employee's
working  hours, and with respect to which  the
equipment,  supplies,  facilities,  or   trade
secret  information of Company  was  used,  or
that  relate  at  the time  of  conception  or
reduction to practice of the Invention to  the
business of the Company or to Company's actual
or   demonstrably  anticipated  research   and
development,  or  that result  from  any  work
performed by Employee for Company, will be the
sole  property of Company, and Employee hereby
assigns  to  the  Company  all  of  Employee's
right,  title  and interest  in  and  to  such
Inventions.  Employee must disclose to Company
all  inventions conceived during the  term  of
employment,  whether  or  not  the   invention
constitutes  property  of  Company  under  the
terms  of  the  preceding sentence,  but  such
disclosure  will  be received  by  Company  in
confidence.    Employee   must   execute   all
documents,  including patent applications  and
assignments, required by Company to  establish
Company's rights under this Section.
 
8.   Miscellaneous
     
     8.1  Waiver
     
          The  waiver  of  any breach  of  any
     provision  of  this  Agreement  will  not
     operate  or be construed as a  waiver  of
     any  subsequent  breach of  the  same  or
     other provision of this Agreement.
     
     8.2  Entire Agreement; Modification
     
          Except as otherwise provided in  the
     Agreement  and  in the Option  Agreement,
     this   Agreement  represents  the  entire
     understanding  among  the  parties   with
     respect  to  the subject matter  of  this
     Agreement,  and this Agreement supersedes
     any   and   all   prior   understandings,
     agreements,   plans,  and   negotiations,
     whether written or oral, with respect  to
     the   subject  matter  hereof,  including
     without  limitation, any  understandings,
     agreements, or obligations respecting any
     past  or  future  compensation,  bonuses,
     reimbursements,  or  other  payments   to
     Employee from Company.  All modifications
     to  the Agreement must be in writing  and
     signed   by   the  party   against   whom
     enforcement   of  such  modification   is
     sought.
     
     8.3  Notice
     
          All notices and other communications
     under  this Agreement must be in  writing
     and  must  be given by personal delivery,
     telecopier  or telegram, or  first  class
     mail, certified or registered with return
     receipt requested, and will be deemed  to
     have  been  duly  given upon  receipt  if
     personally delivered, one (1)  day  after
     mailing, if mailed, or twelve (12)  hours
     after   transmission,  if  delivered   by
     facsimile or electronic transmission,  to
     the respective persons named below:
     
          If to Company:  Gottschalks Inc.
                          7  River Park  Place East
                          Fresno, Ca.  93720
                          Attn: Chairman of the
                          Board
     
          If to Employee: James Famalette
                          10198 N. Spanish Bay Dr.
                          Fresno, Ca.  93720
     
     8.4  Headings
     
          The   Section   headings   of   this
     Agreement are intended for reference  and
     may   not  by  themselves  determine  the
     construction  or interpretation  of  this
     Agreement.
     
     8.5  Governing Law
     
          Except as this Agreement relates  to
     indemnity  of  Employee in Article  8.10,
     this  Agreement is to be governed by  and
     construed in accordance with the laws  of
     the  State  of  California applicable  to
     contracts entered into and wholly  to  be
     performed  within the State of California
     by California residents.  Any controversy
     or  claim  arising out of or relating  to
     this   Agreement,  or  breach   of   this
     Agreement  (except  any  controversy   or
     claim with respect to Section 5 or 6), is
     to  be  settled by arbitration in Fresno,
     California   in   accordance   with   the
     Commercial  Arbitration  Rules   of   the
     American  Arbitration  Association,   and
     judgment  on  the award rendered  by  the
     arbitrators may be entered in  any  court
     having jurisdiction.  There must be three
     arbitrators, one to be chosen directly by
     each   party  at  will,  and  the   third
     arbitrator  to  be selected  by  the  two
     arbitrators so chosen.  Each  party  will
     pay  the fees of the arbitrator he or she
     selects and his or her own attorneys, and
     the  expenses of his or her witnesses and
     all   other   expenses   connected   with
     presenting his or her case.  Other  costs
     of the arbitration, including the cost of
     any   record   or  transcripts   of   the
     arbitration, administrative fees, the fee
     of  the  third arbitrator, and all  other
     fees and costs, will be borne equally  by
     the parties.  Notwithstanding anything in
     this  Agreement to the contrary,  if  any
     controversy  or claim arises between  the
     parties  under Section 5  or  6  of  this
     Agreement,  the  Company  will   not   be
     required to arbitrate that controversy or
     claim but the Company will have the right
     to  institute judicial proceedings in any
     court  of  competent  jurisdiction   with
     respect to such controversy or claim.  If
     such judicial proceedings are instituted,
     the  parties  agree that such proceedings
     will not be stayed or delayed pending the
     outcome  of  any  arbitration  proceeding
     under this Agreement.
     
     8.6  Survival of Company's Obligations
     
          This  Agreement will be binding  on,
     and   inure  to  the  benefit   of,   the
     executors,     administrators,     heirs,
     successors,  and assigns of the  parties;
     provided,   however,   that   except   as
     expressly  provided  in  this  Agreement,
     this Agreement may not be assigned either
     by company or by Employee.
     
     8.7  Counterparts
     
          This  Agreement may be  executed  in
     one  or  more counterparts, all of  which
     taken  together will constitute  one  and
     the same Agreement.
     
     8.8  Withholdings
     
          All  sums payable to Employee  under
     this  Agreement  will be reduced  by  all
     federal,   state,   local,   and    other
     withholdings   and  similar   taxes   and
     payments required by applicable law.
     
     8.9  Enforcement
     
          If  any portion of this Agreement is
     determined     to    be    invalid     or
     unenforceable,  that  portion   of   this
     Agreement  will be adjusted, rather  than
     voided,  to  achieve the  intent  of  the
     parties under this Agreement.
     
     8.10 Indemnification
     
          Subject to the laws of the State  of
     Delaware, and the Company's Articles  and
     Bylaws  covering indemnity,  the  Company
     agrees  that it will indemnify  and  hold
     the  Employee  harmless  to  the  fullest
     extent  permitted by applicable law  from
     and  against any loss, cost,  expense  or
     liability resulting from or by reason  of
     the  fact  of  the Employee's  employment
     hereunder,   whether   as   an   officer,
     employee,  agent, fiduciary, director  or
     other official of the Company.
 
 
     IN  WITNESS  WHEREOF, the parties  hereto
have executed this Agreement as of the day and
year first above written.
 
 
GOTTSCHALKS INC.
 
 
 
By:  /s/ Joe Levy
     Joe Levy
 
 
EMPLOYEE
 
 
 
By:  /s/ James Famalette
     James Famalette
 
 
 
WITNESS:
 
 
     /s/ Warren Williams
        Warren Williams
 
 

 

 

 

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Exhibit 10.47

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

 

This Amendment to the Executive Employment Agreement dated December 3, 2001 between Gottschalks Inc., a Delaware corporation (Company herein) and James Famalette (Employee herein) is entered into effective December 1, 2001.

WHEREAS, the Compensation Committee of the Board of Directors of the Company met and have considered the performance of employee as President and Chief Executive Officer of the Company, and as a result has agreed to changes in Employee's contract as set forth in this Amendment; and

WHEREAS, the Compensation Committee unanimously recommended that the Executive Employment Agreement with James Famalette be approved by the Board of Directors of the corporation, and

WHEREAS, the Board of Directors have unanimously approved the Agreement.

NOW, THEREFORE, it is agreed as follows:

1. Article 2.2 Basic Term, is amended to reflect that the termination date shall be July 1, 2004.

2. Pursuant to Article 3.1, the employee is receiving $560,000 per annum as a base salary and the Committee has determined that the Base Salary shall remain at $560,000 per annum.

3. Article 3.2 Incentive Bonus Plans, shall be amended to provide that Employee shall have the ability to earn an annual bonus of 50% of Base Salary if specific goals and objectives adopted by the Board are met, instead of the previous 30%.

4. Article 4.3 Change in Ownership, shall be amended to delete in its entirety that hand printed addition denoted as part of the article by an asterisk, which reads, "Notwithstanding the provisions in Article 4.3 above, in the event that the total capitalization of the Company at the time that a change of control or sale occurs, is below eighty-five million dollars, then employee will be restricted to twelve (12) months base salary instead of twenty-four (24) as stated above if he is terminated as provided."

5. Article 3.6 Life Insurance, shall be amended to reflect that the dollar amount of the Term Life Insurance Policy shall be a face value of one million dollars, instead of equal to Employee's Base Salary.

6. Except as specifically set forth in this Second Amendment, the contract of Employment dated June 25, 1999 and First Amendment dated June 26, 2001 are ratified and affirmed, and all terms and conditions not amended by this Amendment shall remain in full force and effect.

EXECUTION of this Agreement is evidenced by the signatures below:

 

GOTTSCHALKS INC.

 

 

By: _/s/ Joe Levy

Joe Levy, Chairman of the Board

 

 

REVIEWED AND AGREED:

 

/s/ James Famalette

James Famalette






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Exhibit 10.2

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

This Amendment to Executive Employment Agreement (the "Amendment") is made and entered into as of ____________, 2007, by and between Gottschalks, Inc., a Delaware corporation (the "Company"), and James Famalette (the "Employee").

Recitals

A. The Company and Employee are parties to an employment agreement made and entered into as of December 20, 2005 (the "Agreement").

B. Pursuant to Section 8.2 of the Agreement, both the Company and Employee desire to amend the Agreement as set forth below.

In consideration of the mutual covenants and promises of the parties, the Company and Employee amend the Agreement by adding a new Section 8.11 to the Agreement to read as follows effective as of December 20, 2005:

"Notwithstanding anything in this Agreement to the contrary, the portion of any severance benefit under this Agreement required to be paid to Employee during the first six months following the date of Employee's termination shall be delayed and paid to Employee in a lump sum as soon as administratively practicable following the end of such six-month period in accordance with the requirements of Section 409A of the Internal Revenue Code ("Section 409A"); provided, however, no such six-month delay in payments shall apply to the extent that guidance issued under Section 409A allows payments to made when otherwise due without subjecting Employee to additional taxes under Section 409A."

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

GOTTSCHALKS INC.

By: ____________________

Its: ____________________

 

 

EMPLOYEE

By: ____________________

James Famalette






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Exhibit 10.1

SEVERANCE AGREEMENT

This Severance Agreement (this "Agreement"), is made as of this ___ day of __________, 2007, by and between Gottschalks Inc., a Delaware corporation ("Company") and ______________, an individual ("Employee").

1. Subject to the provisions of Section 4 below, Company hereby agrees that in the event Employee's employment with Company is terminated by written notice of Company for other than for Cause (as defined in Section 4 below), Company will pay Employee a severance benefit equal to twelve (12) months' salary, determined at Employee's annual base rate of pay in effect at the time such notice of termination is given (less standard withholdings and authorized deductions), and Company will pay Employee's health care continuation premiums under Section 4980B of the Internal Revenue Code ("COBRA") for a period of one year from the termination date or, if earlier, until Employee's right to COBRA health care continuation ceases (such benefits being referred to herein as the "Basic Severance Benefit").

Notwithstanding the foregoing, if, during the one-year period commencing with a Corporate Transaction (as defined below), Employee is terminated by Company or its successor without Good Cause (as defined below) or Employee terminates Employee's employment for Good Reason (as defined below), Company will pay Employee a severance benefit equal to twenty-four (24) months' salary, determined at Employee's annual base rate of pay in effect at the time such termination without Good Cause or for Good Reason occurs (less standard withholdings and authorized deductions), and Company will pay Employee's COBRA health care continuation premiums for a period of one year from the date such termination without Good Cause or for Good Reason occurs or, if earlier, until Employee's right to COBRA health care continuation ceases (such benefits being referred to herein as the "Enhanced Severance Benefit"). Unless extended by the Compensation Committee of the Company's Board of Directors, the Employee's rights to receive any Enhanced Severance Benefit pursuant to this Agreement shall terminate if no Corporate Transaction occurs on or prior to March 15, 2008, and, to the extent the Employee had rights in respect of change in control or similar transactions under written agreements existing prior to the date hereof, the Employee reverts to such rights.

As used in this Agreement, "Corporate Transaction" means the consummation of a transaction in which (i) more than 50% of the Company's outstanding common stock or outstanding voting securities are sold to an unrelated entity or (ii) all or substantially all of Company's assets are sold to an unrelated entity.

As used in this Agreement, "Good Cause" means a good faith determination by Company that Employee (i) refused to perform a lawful directive of Company's Board of Directors or refuses to perform any material duties or responsibilities owed to Company; (ii) engaged in willful conduct or gross neglect constituting fraud, misappropriation, embezzlement, or misconduct that is injurious to Company; (iii) is or has been convicted of, or plead guilty or nolo contendere to, a felony or crime of moral turpitude reflecting poorly on Company (other than minor traffic violations and similar offenses); or (iv) has breached in any material respect the terms and provisions of this Agreement.

As used in this Agreement, "Good Reason" means any of the following conditions or events that remain in effect thirty (30) days after written notice is provided by Employee to Company detailing such condition or event: (i) a decrease in Employee's annual base rate of pay or annual target bonus opportunity, (ii) written notice from Company to Employee that Employee's principal place of employment for Company will be moved to a location that is more than fifty (50) miles away from Employee's principal place of employment for Company immediately prior to the Corporate Transaction, or (iii) any failure of Company to obtain an agreement from any successor to Company to assume and agree to perform this Agreement.

2. For purposes of this agreement, "annual base rate of pay" means Employee's annual base salary only, and excludes all other income heretofore received by Employee, such as, but not limited to, bonuses, incentive compensation, fringe benefits, commissions, overtime, retainers, fees under contracts, income arising from the exercise of stock options, or expense allowances granted by Company.

3. The salary-based portion of the Basic Severance Benefit, less standard withholding and other authorized deductions, will be paid to Employee after the date of Employee's termination out of the general assets of Company in the same form and at the same time as Employee's salary otherwise would have been paid to Employee if Employee had continued to be employed by Company. The salary-based portion of the Enhanced Severance Benefit, less standard withholding and other authorized deductions, will be paid to Employee in single cash lump sum as soon as administratively practicable after the date of Employee's termination out of the general assets of Company. The COBRA health care continuation portion of the Basic or Enhanced Severance Benefit (as applicable) will be paid on Employee's behalf at such times as required by Company's general policy concerning COBRA health care continuation premiums to provide Employee with COBRA health care continuation for the period specified in Section 1 above. Notwithstanding the foregoing, any portion of the Basic or Enhanced Severance Benefit required to be paid to Employee during the first six months following the date of Employee's termination shall be delayed and paid to Employee in a lump sum as soon as administratively practicable following the end of such six-month period in accordance with the requirements of Section 409A of the Internal Revenue Code ("Section 409A"); provided, however, no such six-month delay in payments shall apply to the extent that guidance issued under Section 409A allows payments to made when otherwise due without subjecting Employee to additional taxes under Section 409A.

4. Subject to the provisions of this Section 4 following this sentence, the Basic Severance Benefit shall be paid to Employee only in the event that Employee's employment with Company is terminated by written notice from Company (other than for "Cause" as defined in this Section 4) and only if Employee continues to report to work, and adequately performs each and every duty of Employee's employment until the date set forth in the notice of termination as Employee's date of termination (unless Company consents to a date of termination that is prior to such date). Notwithstanding anything to the contrary contained in this Agreement, Employee shall not be entitled to the Basic Severance Benefit if (i) Employee's employment with Company is terminated other than by written notice of termination from Company, including without limitation, the retirement, resignation, disability, or death of Employee; or (ii) Employee is terminated for Cause, which, for purposes of this Section 4, includes without limitation a good faith determination by Company that Employee (a) has committed a material breach of his duties and responsibilities; (b) refused to perform required duties and responsibilities, or performed them incompetently; (c) breached or violated any fiduciary duty owed to Company; or (d) is or has been personally dishonest, or has willfully or negligently violated any law, rule, or regulation, or has been convicted of, or plead guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations and similar offenses).

5. Nothing contained herein shall be construed as conferring on Employee the right to continue in the employ of Company in Employee's present or any other capacity. Employee hereby expressly acknowledges that Employee's employment with Company is "at will" and therefore may be terminated by Company at any time, with or without cause, at Company's sole discretion. Employee also expressly acknowledges that, except for benefits to which Employee may otherwise be entitled by law, Employee shall not be entitled to receive from Company any benefits, compensation, or remuneration other than the Basic or Enhanced Severance Benefit (as applicable) upon satisfaction of the conditions which entitle Employee to receive the Basic or Enhanced Severance Benefit. Notwithstanding anything else herein to the contrary, Company's obligation to pay the Basic or Enhanced Severance Benefit to Employee is subject to the condition precedent that Employee execute and deliver a valid release of all claims against Company in a form approved by Company, which is not revoked by Employee or otherwise rendered unenforceable by Employee. Such release shall include Employee's agreement to promptly notify Company if Employee obtains employment that provides health insurance coverage or Employee otherwise becomes eligible for employer-sponsored health insurance coverage.

6. This Agreement shall be governed by the laws of the State of California. This Agreement may be amended only by a subsequent written agreement signed by Employee and an authorized representative of Company following approval by the Board of Directors of Company. This Agreement is personal to Employee and is not assignable by Employee. This Agreement shall inure to the benefit of and be binding upon Company and its successors and assigns and any such successor or assignee shall be deemed substituted for Company under the terms of this Agreement for all purposes. As used herein, "successor" and "assignee" shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires the stock of Company or to which Company assigns this Agreement by operation of law or otherwise. This instrument constitutes and contains the entire agreement and understanding concerning the subject matters addressed herein between the parties, and supersedes and replaces all prior negotiations and all agreements (proposed, executed, or otherwise), whether written or oral, concerning the subject matters hereof, including, without limitation, the severance agreement by and between Company and Employee dated [__________]. This is an integrated document.

7. Any dispute, controversy, or claim arising out of or in connection with this Agreement or any other aspect of Employee's employment with Company shall be resolved exclusively through binding arbitration to be held in Fresno County, California in accordance with California Civil Procedure Code 1282-1284.2. Company will pay arbitrator's fees and arbitration expenses and any other costs associated with the arbitration or arbitration hearing that are unique to arbitration (recognizing that each side bears its own deposition, witness, expert and attorneys' fees and other expenses as and to the same extent as if the matter were being heard in court). If, however, any party prevails on a statutory claim that affords the prevailing party attorneys' fees and costs, then the arbitrator may award reasonable fees and costs to the prevailing party. The arbitrator shall resolve any dispute as to the reasonableness of any fee or cost.

8. To the extent that any payment or distribution of any type to or for Employee by Company, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (including, without limitation, any accelerated vesting of stock options granted by Company to Employee under the Gottschalks Inc. 2005 Stock Option Plan, the Gottschalks Inc. 1998 Stock Option Plan, or any other equity compensation plan or program maintained by the Company) (collectively, the "Total Payments") is or will be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code ("Section 4999"), then the Total Payments shall be reduced (but not below zero) so that the maximum amount of the Total Payments (after reduction) shall be reduced to the extent necessary so that the Total Payments would not be subject to the excise tax imposed by Section 4999 of the Code and the deductibility of the Total Payments by Company will not be disallowed by Section 280G of the Internal Revenue Code.

IN WITNESS WHEREOF, Company has caused to be executed and delivered, and Employee has executed and delivered, this Agreement as of the day and year first above set forth.

 

GOTTSCHALKS INC.

 

 

By: ___________________________

Title: __________________________

 

 

 

 

Employee

 

 

By: ___________________________





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