Document:

exh_4-1.htm

Exhibit 4.1

 

 

AVISTAR COMMUNICATIONS CORPORATION

 

2009 EQUITY INCENTIVE PLAN

 

1. Purposes of the Plan.  The purposes of this Plan are:

 

	
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to attract and retain the best available personnel for positions of substantial responsibility,

 

	
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to provide additional incentive to Employees, Directors and Consultants, and

 

	
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to promote the success of the Company’s business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units.

 

2. Definitions.  As used herein, the following definitions will apply:

 

(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of
the Plan.

 

(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

 

(c) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, or Restricted Stock Units.

 

(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan.  The
Award Agreement is subject to the terms and conditions of the Plan.

 

(e) “Board” means the Board of Directors of the Company.

 

(f) “Change in Control” means the occurrence of any of the following events:

 

(i) Change in Ownership of the Company.  A change in the ownership of the Company which occurs on the date that any one person (other than Gerald J. Burnett and
his affiliates) or more than one person acting as a group, (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or

 

 

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(ii) Change in Effective Control of the Company.  If the Company has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in
the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a
Change in Control; or

 

(iii) Change in Ownership of a Substantial Portion of the Company’s Assets.  A change in the ownership of a substantial portion of the Company’s assets
which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, provided that the sale or grant of an exclusive license to the Company’s patent porfolio alone will not be considered
a Change of Control.  For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

For purposes of this Section 2(f), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and the final Treasury Regulations and Internal Revenue Service guidance that has been promulgated
or may be promulgated thereunder from time to time.

 

Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.

 

(g) “Code” means the Internal Revenue Code of 1986, as amended.  Any reference to a section of the Code herein will be a reference to any successor
or amended section of the Code.

 

(h) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or by the compensation committee of
the Board,  in accordance with Section 4 hereof.

 

(i) “Common Stock” means the common stock of the Company.

 

(j) “Company” means Avistar Communication Corporation, a Delaware corporation, or any successor thereto.

 

 

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(k) “Consultant” means any individual, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.  For
the avoidance of doubt, the term “Consultant” shall not include any entity or any non-natural person.

 

(l) “Director” means a member of the Board.

 

(m) “Disability” means total and permanent disability as defined in Code Section 22(e)(3), provided that in the case of Awards other than Incentive Stock
Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

 

(n) “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  Neither service
as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(p) “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have
higher or lower exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced or increased.  The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.

 

(q) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock
Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the
day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

 

(r) “Fiscal Year” means the fiscal year of the Company.

 

 

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(s) “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning
of Code Section 422 and the regulations promulgated thereunder.

 

(t) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

 

(u) “Option” means a stock option granted pursuant to the Plan.

 

(v) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e).

 

(w) “Participant” means the holder of an outstanding Award.

 

(x) “Performance Goal” means the goal(s) determined by the Administrator (in its discretion) to be applicable to a Participant with respect to an Award.  As
determined by the Administrator, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (i) revenue, (ii) gross margin, (iii) operating margin, (iv) operating income, (v) pre-tax profit, (vi) earnings before interest, taxes and depreciation, (vii) net income, (viii) cash flow, (ix) expenses, (x) the market price of the Share, (xi) earnings, (xii) return on stockholder equity, (xiii) return on capital, (xiv) product quality,
(xv) economic value added, (xvi) number of customers, (xvii) market share, (xviii) return on investments, (xix) profit after taxes, (xx) customer satisfaction, (xxi) business divestitures and acquisitions, (xxii) supplier awards from significant customers, (xxiii) new product development, (xxiv) working capital, (xxv) individual objectives, (xxvi) time to market, (xxvii)  return on net assets, and (xxviii) sales.  The Performance Goals may differ from Participant to Participant and from Award
to Award.  Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, passage of time and/or against another company or companies), (iii) on a per-share basis, (iv) against the performance of the Company as a whole or a segment of the Company, and (v) on a pre-tax or after-tax basis.

 

(y) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are
subject to a substantial risk of forfeiture.  Such restrictions may be based on the passage of time, the achievement of target levels of performance, Performance Goals, or the occurrence of other events as determined by the Administrator.

 

(z) “Plan” means this 2009 Equity Incentive Plan.

 

(aa) “Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 8 of the Plan, or issued pursuant to the early exercise
of an Option.

 

(bb) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9.  Each
Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

(cc) “Service Provider” means an Employee, Director or Consultant.

 

 

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(dd) “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan.

 

(ee) “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 7 is designated as a Stock Appreciation
Right.

 

(ff) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter exist­ing, as defined in Code Section 424(f).

 

3. Stock Subject to the Plan.

 

(a) Stock Subject to the Plan.  Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold
under the Plan is 12,543,791 Shares, which is composed of (i) 2,508,325 Shares that, as of September 21, 2009, have been reserved but not issued pursuant to any awards granted under the Avistar Communication Corporation 2000 Stock Option Plan (the “2000 Plan”) and are not subject to any awards granted thereunder, and (ii) up to an additional 10,035,466 Shares subject to stock options or similar awards granted under the 2000 Plan that expire or otherwise terminate without having been exercised in full
and Shares issued pursuant to awards granted under the 2000 Plan that are forfeited to or repurchased by the Company. The Shares may be authorized but unissued, or reacquired Common Stock.

 

(b) Automatic Share Reserve Increase.  The number of Shares available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning
with the 2010 Fiscal Year, in an amount equal to the lesser of (i) 6,000,000 Shares, (ii) four percent (4%) of the number of Shares outstanding on the last day of the immediately preceding Fiscal Year, calculated on a fully diluted basis, and (iii) such lesser number of Shares as may be determined by the Board.

 

(c) Lapsed Awards.  If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with
respect to Restricted Stock or Restricted Stock Units, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated).  With respect to Stock Appreciation Rights, only Shares actually issued pursuant to a Stock Appreciation Right will cease to be available
under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated).  Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock or Restricted Stock Units are repurchased by the Company or are forfeited to the Company
due to the failure to vest, such Shares will become available for future grant under the Plan.  Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.  Notwithstanding the foregoing
and, subject to adjustment as provided in Section 13, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Code Section 422 and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Sections 3(b) and 3(c).

 

 

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(d) Share Reserve.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy
the requirements of the Plan.

 

4. Administration of the Plan.

 

(a) Procedure.

 

(i) Multiple Administrative Bodies.  Different Committees with respect to different groups of Service Providers may administer the Plan.

 

(ii) Section 162(m).  To the extent that the Administrator determines it to be desirable or necessary to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.

 

(iii) Rule 16b-3.  To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured
to satisfy the requirements for exemption under Rule 16b-3.

 

(iv) Other Administration.  Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which Committee will be
constituted to satisfy Applicable Laws.

 

(b) Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator will have the authority, in its discretion:

 

(i) to determine the Fair Market Value;

 

(ii) to select the Service Providers to whom Awards may be granted hereunder;

 

(iii) to determine the number of Shares to be covered by each Award granted hereunder;

 

(iv) to approve forms of Award Agreements for use under the Plan;

 

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when
Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;

 

 

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(vi) to institute and determine the terms and conditions of an Exchange Program;

 

(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

 

(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable
tax treatment under applicable foreign laws;

 

(ix) to modify or amend each Award (subject to Section 18(c) of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of
an Option (subject to Section 6(d));

 

(x) to allow Participants to satisfy withholding tax obligations in a manner prescribed in Section 14;

 

(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise would be due to such Participant under an Award; and

 

(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.

 

(c) Effect of Administrator’s Decision.  The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.

 

5. Eligibility and Limitations.

 

(a) Eligibility.  Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, and Restricted Stock Units may be granted to Service Providers.  Incentive
Stock Options may be granted only to Employees.

 

(b) Limitations.  The following limitations shall apply to Awards under the Plan:

 

(i) No Service Provider shall be granted, in any Fiscal Year, (A) Options or Stock Appreciation Rights to purchase more than 3,000,000 Shares, (or B) Restricted Stock and Restricted Stock Units covering more than 3,000,000 Shares.

 

(ii) In connection with his or her initial service, a Service Provider may be granted (A) Options or Stock Appreciation Rights to purchase up to an additional 4,500,000 Shares, or (B) Restricted Stock or Restricted Stock Units covering
up to an additional 1,000,000 Shares, which shall not count against the limit set forth in subsection (i) above.

 

 

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(iii) The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 13(a).

 

6. Stock Options.

 

(a) Grant of Options.  Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Options in such amounts
as the Administrator, in its sole discretion, will determine.

 

(b) Option Agreement.  Each Award of an Option will be evidenced by an Award Agreement that will specify the exercise price, the term of the Option, the number
of Shares subject to the Option, the exercise restrictions, if any, applicable to the Option, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(c) Limitations.  Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  Notwithstanding
such designation, however, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options.  For purposes of this Section 6(c), Incentive Stock Options will be taken into account in the order in which they were
granted, the Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted, and calculation will be performed in accordance with Code Section 422 and Treasury Regulations promulgated thereunder.

 

(d) Term of Option.  The term of each Option will be stated in the Award Agreement; provided, however, that the term will be no more than ten (10) years from the
date of grant thereof.  In the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

 

(e) Option Exercise Price and Consideration.

 

(i) Exercise Price.  The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option will be determined by the Administrator, but
will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.  In addition, in the case of an Incentive Stock Option granted to an Employee who owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.  Notwithstanding the foregoing
provisions of this Section 6(e)(i), Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Code Section 424(a).

 

 

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(ii) Waiting Period and Exercise Dates.  At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and
will determine any conditions that must be satisfied before the Option may be exercised.

 

(iii) Form of Consideration.  The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment.  In
the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant.  Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided further that accepting such Shares will not
result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) consideration received by the Company under a net exercise program implemented by the Company in connection with the Plan, (7) such other consideration and method of payment for the issuance of Shares to the extent permitted
by Applicable Laws, or (8) any combination of the foregoing methods of payment.  In making its determination as to the type of consideration to accept, the Administrator will consider if acceptance of such consideration may be reasonably expected to benefit the Company.

 

(f) Exercise of Option.

 

(i) Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and
under such conditions as determined by the Administrator and set forth in the Award Agreement.  An Option may not be exercised for a fraction of a Share.

 

An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable tax withholding).  Full
payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option.  The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.

 

Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

 

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(ii) Termination of Relationship as a Service Provider.  If a Participant ceases to be a Service Provider, other than upon the Participant’s termination
as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within thirty (30) days of termination, or such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the extent that the Option is vested on the date of termination.  Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as
to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan.  If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(iii) Disability of Participant.  If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise
his or her Option within six (6) months of termination, or such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the extent the Option is vested on the date of termination.  Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert
to the Plan.  If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(iv) Death of Participant.  If a Participant dies while a Service Provider, the Option may be exercised within six (6) months following the Participant’s
death, or within such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the extent that the Option is vested on the date of death, by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form acceptable to the Administrator.  If no such beneficiary has been designated by the Participant, then such
Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution.  Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan.  If the Option is not so
exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

7. Stock Appreciation Rights.

 

(a) Grant of Stock Appreciation Rights.  Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its sole discretion.

 

(b) Number of Shares.  The Administrator will have complete discretion to determine the number of Shares subject to any Award of Stock Appreciation Rights.

 

(c) Exercise Price and Other Terms.  The per Share exercise price for the Shares that will determine the amount of the payment to be received upon exercise of
a Stock Appreciation Right as set forth in Section 7(f) will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.  Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.

 

 

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(d) Stock Appreciation Right Agreement.  Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the
term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(e) Expiration of Stock Appreciation Rights.  A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its
sole discretion, and set forth in the Award Agreement.  Notwithstanding the foregoing, the rules of Section 6(d) relating to the maximum term and Section 6(f) relating to exercise also will apply to Stock Appreciation Rights.

 

(f) Payment of Stock Appreciation Right Amount.  Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company
in an amount determined by multiplying:

 

(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 

(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.

 

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

 

8. Restricted Stock.

 

(a) Grant of Restricted Stock.  Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted
Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b) Restricted Stock Agreement.  Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number
of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.  Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

 

(c) Transferability.  Except as provided in this Section 8 or as the Administrator determines, Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

 

(d) Other Restrictions.  The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or
appropriate.

 

 

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(e) Removal of Restrictions.  Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine.  The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

 

(f) Voting Rights.  During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares, unless the Administrator determines otherwise.

 

(g) Dividends and Other Distributions.  During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise.  If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

 

(h) Return of Restricted Stock to Company.  On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert
to the Company and again will become available for grant under the Plan.

 

9. Restricted Stock Units.

 

(a) Grant.  Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator.  After the Administrator determines
that it will grant Restricted Stock Units, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

 

(b) Vesting Criteria and Other Terms.  The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are
met, will determine the number of Restricted Stock Units that will be paid out to the Participant.  The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment or service), Performance Goals, or any other basis determined by the Administrator in its discretion.

 

(c) Earning Restricted Stock Units.  Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator.  Notwithstanding
the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

 

(d) Form and Timing of Payment.  Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator
and set forth in the Award Agreement.  The Administrator, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both.

 

(e) Cancellation.  On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.

 

 

12

 

10. Compliance With Code Section 409A.  Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply
with, the requirements of Code Section 409A, except as otherwise determined in the sole discretion of the Administrator.  The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator.  To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A
the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A.

 

11. Leaves of Absence/Transfer Between Locations.  Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any
unpaid leave of absence.  A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.  For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved
by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave, any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

 

12. Limited Transferability of Awards.

 

(a) Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned,
hypothecated, or otherwise transferred in any manner other than by will or by the laws of descent and distribution, and may be exercised, during the lifetime of the Participant, only by the Participant.  If the Administrator makes an Award transferable, such Award may only be transferred (i) by will, (ii) by the laws of descent and distribution, (iii) as permitted by Rule 701 of the Securities Act of 1933, as amended (the “Securities Act”), or (iv) if applicable, if such transferred
Award would be eligible for registration under Exchange Act Form S-8.

 

(b) Further, until the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or after the Administrator determines that it is, will, or may no longer be relying
upon the exemption from registration under the Exchange Act as set forth in Rule 12h-1(f) promulgated under the Exchange Act, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange
Act, respectively), other than to (i) persons who are “family members” (as defined in Rule 701(c)(3) of the Securities Act) through gifts or domestic relations orders, or (ii) to an executor or guardian of the Participant upon the death or disability of the Participant.  Notwithstanding the foregoing sentence, the Administrator, in its sole discretion, may determine to permit transfers to the Company or in connection with a Change in Control or other acquisition transactions involving the
Company to the extent permitted by Rule 12h-1(f).

 

 

13

 

13. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

 

(a) Adjustments.  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class,
and price of Shares covered by each outstanding Award; provided, however, that the Administrator will make such adjustments to an Award required by Section 25102(o) of the California Corporations Code to the extent the Company is relying upon the exemption afforded thereby (or any related or similar California exemption) with respect to the Award.

 

(b) Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon
as practicable prior to the effective date of such proposed transaction.  To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

 

(c) Merger or Change in Control.  In the event of a merger or Change in Control, each outstanding Award will be treated as the Administrator determines (subject
to the provisions of the proceeding paragraph) without a Participant’s consent, including, without limitation, that (i) Awards will be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or
Change in Control; (iii) outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger of Change in Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would
have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award
with other rights or property selected by the Administrator in its sole discretion; or (v) any combination of the foregoing.  In taking any of the actions permitted under this subsection 13(c), the Administrator will not be obligated to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly.

 

In the event that the successor corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions
on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.  In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a merger or Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or
Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

 

 

14

 

For the purposes of this subsection 13(c), an Award will be considered assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property)
received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control.

 

Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification
to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

 

Notwithstanding anything in this Section 13(c) to the contrary, if a payment under an Award Agreement is subject to Code Section 409A and if the change in control definition contained in the Award Agreement does not comply with the definition of “change of control” for purposes of a distribution under Code Section 409A, then
any payment of an amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Code Section 409A without triggering any penalties applicable under Code Section 409A.

 

14. Tax Withholding.

 

(a) Withholding Requirements.  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the
right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

 

(b) Withholding Arrangements.  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant
to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the statutory amount required to be withheld, provided the delivery of such Shares will not result in any adverse accounting consequences, as the Administrator
determines in its sole discretion, or (iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld.  The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum
federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined.  The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

 

15

 

15. No Effect on Employment or Service.  Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

 

16. Date of Grant.  The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or
such other later date as is determined by the Administrator.  Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

 

17. Term of Plan.  Subject to Section 21 of the Plan, the Plan will become effective upon its adoption by the Board.  Unless sooner terminated under
Section 18, it will continue in effect for a term of ten (10) years from the later of (a) the effective date of the Plan, or (b) the earlier of the most recent Board or stockholder approval of an increase in the number of Shares reserved for issuance under the Plan.

 

18. Amendment and Termination of the Plan.

 

(a) Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b) Stockholder Approval.  The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c) Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually
agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

 

16

 

19. Conditions Upon Issuance of Shares.

 

(a) Legal Compliance.  Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares
will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b) Investment Representations.  As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant
at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

20. Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by
the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

 

21. Stockholder Approval.  The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted
by the Board.  Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

 

22. Information to Participants.  Beginning on the earlier of (i) the date that the aggregate number of Participants under
this Plan is five hundred (500) or more and the Company is relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange Act and (ii) the date that the Company is required to deliver information to Participants pursuant to Rule 701 under the Securities Act, and until such time as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, is
no longer relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange Act or is no longer required to deliver information to Participants pursuant to Rule 701 under the Securities Act, the Company shall provide to each Participant the information described in paragraphs (e)(3), (4), and (5) of Rule 701 under the Securities Act not less frequently than every six (6) months with the financial statements being not more than 180 days old and with such information
provided either by physical or electronic delivery to the Participants or by written notice to the Participants of the availability of the information on an Internet site that may be password-protected and of any password needed to access the information.  The Company may request that Participants agree to keep the information to be provided pursuant to this section confidential.  If a Participant does not agree to keep the information to be provided pursuant to this section confidential,
then the Company will not be required to provide the information unless otherwise required pursuant to Rule 12h-1(f)(1) under the Exchange Act or Rule 701 of the Securities Act.

 

 

17December 8, 2009 8K Exhibit 10.2

                                                   Exhibit 10.1

IN THE UNITED STATES BANKRUPTCY COURT

                  FOR THE DISTRICT OF DELAWARE 

	 	
)
	 
	
In re:
	
)
	
Chapter 11

	 	
)
	 
	
GOTTSCHALKS INC., a Delaware
	
)
	
Case No. 09-10157 (KJC)

	
corporation,1
	
)
	 
	 	
)
	 
	
Debtor.
	
)
	 
	 	
)
	 

 

DEBTOR'S CHAPTER 11 PLAN OF LIQUIDATION

Mark D. Collins (No. 2981)

   Michael J. Merchant (No. 3854)

   Lee E. Kaufman (No. 4877)

   Drew G. Sloan (No. 5069)

   RICHARDS, LAYTON & FINGER, P.A.

   One Rodney Square

   P.O. Box 551

   Wilmington, Delaware  19899

   (302) 651-7700

Stephen H. Warren

   Karen Rinehart

   Alexandra B. Redwine

   Ana Acevedo

   Michael Heinrichs

   O'MELVENY & MYERS LLP

   400 South Hope St.

   Los Angeles, California 90071

   (213) 430-6000

ATTORNEYS FOR DEBTOR AND DEBTOR IN POSSESSION

Dated:  December 3, 2009

____________________

1
The Debtor in this case, along with the last four digits of the federal tax identification number for the Debtor,
is Gottschalks Inc. (9791).  The Debtor's corporate offices are located at 7 River Park Place East, Fresno, California 93720.

                                                                Docket No. 1292 
 Filed 12/3/09 

ARTICLE 1

DEFINITIONS

	Defined
Terms.  For the purposes of this Plan, all capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to them in this Article 1.  Any term used in this Plan that is not defined herein, but is defined in the
Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that term in the Bankruptcy Code or the Bankruptcy Rules.

"Administrative Claim" shall mean a Claim for payment of an administrative expense of a kind specified in
section 503(b) of the Bankruptcy Code and referred to in section 507(a)(1) of the Bankruptcy Code, including, without limitation, the actual,
necessary costs and expenses incurred after the Petition Date of preserving the estate and operating the business of the Debtor, including
wages, salaries or commissions for services, compensation for legal and other services and reimbursement of expenses awarded under
section 330(a) or 331 of the Bankruptcy Code, certain retiree benefits under section 1114(e)(2) of the Bankruptcy Code, certain pre-petition
trade claims under section 503(b)(9) of the Bankruptcy Code and all fees and charges assessed against the estate under Chapter 123 of Title
28, United States Code.

"Allowed Administrative Claim" shall mean all or the portion of any Administrative Claim which either (a) becomes an
Allowed Claim or (b) was incurred by the Debtor in the ordinary course of business during the Chapter 11 Case and is allowable under section 503(b) of the Bankruptcy Code.

"Administrative Expense Request" shall mean a request for payment of an
Administrative Claim that is to be filed with the Bankruptcy Court and served on counsel for the Debtor by no later than the Second
Administrative Expense Request Deadline.

"Allowed GECC Obligation" shall mean a GECC
Obligation that is valid, due and presently owing to GECC.  

"Allowed Claim" or "Allowed Interest" shall mean, respectively, any Claim against or Interest in the
Debtor, proof of which was filed on or before the bar date, if any, for such Claim or Interest with the Bankruptcy Court, or, if no proof of claim
was filed, which has been or is hereafter listed by the Debtor in its schedules as liquidated in amount and not disputed or contingent and, in
either case, as to which no objection to the allowance thereof, or motion for estimation thereof, has been interposed within the applicable
period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court, or as to which an objection or
motion to estimate has been interposed, following which such Claim or Interest has been allowed, in whole or in part, by Final Order;
provided, however, that proofs of claim need not be filed with respect to compensation or reimbursement of expenses allowed by the
Bankruptcy Court under section 330 or 503 of the Bankruptcy Code upon appropriate application; and provided further, after the Effective
Date, the Debtor and any holder of a General Unsecured Claim can agree that such Claim should be an "Allowed Claim," and
thereafter treat such Claim as an Allowed Claim without the need to file a proof of claim or seek further order of the Bankruptcy Court.  For
purposes of determining the amount of an "Allowed Claim," the Debtor may, at its option, deduct therefrom an amount equal to the
amount of any claim which the Debtor may hold against the holder thereof, to the extent such claim may be set off pursuant to applicable law.

"Allowed GECC Administrative Claim" shall mean an Allowed Administrative Claim that is valid, due and presently
owing to GECC.

 "Allowed General Unsecured Claim" shall mean an Allowed Claim that is a General Unsecured Claim.

"Ambro Retention Agreement" shall mean the agreement under which J. Gregory Ambro serves as Responsible
Person and as liquidating agent under the Plan.

"Assets" shall mean with respect to the Debtor, all of the right, title, and interest in and to property of whatever type
or nature owned by the Debtor or subsequently acquired by the Debtor, including any property of the Estate for purposes of Section 541 of
the Bankruptcy Code including, without limitation, Cash and Rights of Action, as of the Confirmation Date.

"Available Assets" shall mean the Assets (including any assets transferred to the Liquidating Trust) remaining after
(i) the establishment of the Gottschalks Senior Claims Reserve and the Disputed Claims Reserve, (ii) the establishment of the Gottschalks
Administrative Fund and (iii) any amounts remaining in the Gottschalks Senior Claims Reserve and Gottschalks Administrative Fund
after amounts are paid pursuant to Article 8.A.

"Avoidance Action" means any Right of Action to avoid or recover a transfer of property of the Estate or an
interest of any of the Debtor in property, including, without limitation, actions arising under sections 506, 510, 541, 542, 544,
545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other applicable federal or common law.

 "Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as amended and codified in title 11 of the United
States Code, 11 U.S.C. §§  101-1532, as in effect on the Petition Date.

"Bankruptcy Court" shall mean the United States Bankruptcy Court for the District of Delaware and any other court
that exercises jurisdiction over the Chapter 11 Cases.

"Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy Procedure and the Official Bankruptcy Forms, as
amended, the Federal Rules of Civil Procedure, as amended, as applicable to the Chapter 11 Cases and the Local Rules of the Bankruptcy
Court, as applicable to the Chapter 11 Cases or proceedings therein, as the case may be.

"Bar Date Order" shall mean that certain order of the Bankruptcy Court dated as of June 18, 2009 [D.I. 655]
establishing bar dates for filing certain proofs of claim (including Administrative Claims), with only those exceptions permitted thereby.

"Business Day" shall mean any day except a Saturday, Sunday or a "legal holiday," as such term is
defined in Bankruptcy Rule 9006(a).

                                                    -2-

"Carve Out Amount" shall have the meaning ascribed to it in the DIP Financing Order and the DIP Financing
Agreement.

"Case Carve Out" shall have the meaning ascribed to it in the DIP Financing Order and the DIP Financing
Agreement.

"Cash" shall mean legal tender of the United States of America and equivalents thereof.

"Chapter 11 Case" shall mean the above-captioned chapter 11 cases of the Debtor pending in the Bankruptcy Court
as Case No. 09-10157 (KJC).

"Claim" shall mean, as against the Debtor (i) a right to payment, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured; or (ii) a right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or
unsecured.

"Claimholder" shall mean a holder of a Claim.

"Class" shall mean a category of Claims or Interests as classified under this Plan.

 "Common Stock" shall mean all shares of Gottschalks' Common Stock, no par value, issued and outstanding
immediately subsequent to the Effective Date.

"Confirmation Date" shall mean the date and time the Clerk of the Bankruptcy Court enters the Confirmation Order
on its docket.

"Confirmation Hearing" shall mean the hearing held by the Bankruptcy Court to consider confirmation of this Plan
and related matters under section 1128 of the Bankruptcy Code, as such hearing may be adjourned or continued from time to time.

"Confirmation Order" shall mean the order of the Bankruptcy Court confirming this Plan pursuant to Section 1129 of
the Bankruptcy Code.

"Creditors' Committee" shall mean the Official Committee of Unsecured Creditors appointed
in the Chapter 11 Case [D.I. 74] by the Office of the United States Trustee for the District of Delaware
pursuant to section 1102(a) of the Bankruptcy Code.

"Debtor" shall mean Gottschalks Inc., a Delaware corporation and, from and after
the Effective Date, shall include any successor to the Debtor under the Plan.

"DIP Financing Agreement" shall mean that certain Senior Secured, Super-Priority Debtor-in-Possession Credit
Agreement dated as of January 16, 2009 among inter alia, GECC and the Debtor.

                                                    -3-

"DIP Financing Order" shall mean that certain Final Order Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364
and 507(1) Approving Senior Secured Superpriority Postpetition Financing, (2) Authorizing Use of Cash Collateral, (3) Granting Liens and
Providing Superpriority Administrative Expense Status, (4) Granting Adequate Protection and (5) Modifying Automatic Stay, signed by the
Bankruptcy Court on February 13, 2009 [D.I. 171].

"Disallowed Claim" shall mean a claim or any portion thereof that (a) has been disallowed by a Final Order, (b) is
Scheduled as zero or as contingent, disputed or unliquidated and as to which no proof of claim or Administrative Expense Request has been
timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy
Court or otherwise deemed timely filed under applicable law or this Plan, (c) is not Scheduled and as to which no proof of claim or
Administrative Expense Request has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy
Code or any Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law or this Plan, (d) has been withdrawn by
agreement of the Debtor and the holder thereof or (e) has been withdrawn by the holder thereof.

"Disclosure Statement" shall mean the disclosure statement that relates to this Plan, as approved by the Bankruptcy
Court pursuant to section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure statement may be amended, modified
or supplemented from time to time.

"Disputed Claim" shall mean a Claim or any portion thereof, that is neither an Allowed Claim nor a Disallowed Claim,
including without limitation Claims

(a) have not been Scheduled by the Debtor or have been Scheduled as unknown, contingent, unliquidated, disputed or at zero, and for which
a proof of claim has been filed in the Chapter 11 Case, (b) that are the subject of a proof of claim or Administrative Expense Request that
differs in nature, amount or priority from the Schedules or Administrative Expense Claim Schedules or (c) are the subject of an objection filed
with the Bankruptcy Court, which has not been withdrawn or overruled by a Final Order of the Bankruptcy Court; provided however, that a
Claim shall not be a Disputed Claim to the extent it becomes an Allowed Claim or a Disallowed Claim.  

"Disputed Claims Reserve" shall mean a Cash reserve that shall be maintained by the Responsible Person, in
consultation with the Debtor and the Post-Effective Date Committee (as applicable) in an interest-bearing account in the amount necessary to
pay all Disputed Claims other than disputed Administrative Claims in accordance with the provisions of this Plan, if such Disputed Claims
become Allowed Claims.

"Disputed Interest" shall mean, respectively, any Interest which on or by the Effective Date (i) is the subject of an
objection filed by the Debtor or any other party in interest and which objection has not been withdrawn or overruled by Final Order or
(ii) has been disallowed by a Final Order. 

"Distribution" shall mean any distribution pursuant to the Plan to the holders of Allowed Claims or Allowed
Interests.

 "Distribution Date" shall mean the date on which a Distribution is made by the Debtor in accordance with the Plan to
holders of fully or partially Allowed Claims entitled to receive distributions under the Plan.

                                                    -4-

"Effective Date" shall mean the first Business Day determined by the Debtor on which all conditions to the
consummation of this Plan set forth in Article 10.A. have been either satisfied or waived as provided in Article 10.B. of this Plan and is the day
upon which this Plan is substantially consummated.

"Estate" shall mean the estate created by the commencement of the Chapter 11 Case pursuant to Section 541 of the
Bankruptcy Code.

"Executory Contract" shall mean an executory contract or unexpired lease described in
Bankruptcy Code section 365.

"Exhibit" shall mean an exhibit annexed to either this Plan or the Disclosure Statement.

"Existing Stock" shall mean shares of stock of the Debtor that are authorized, issued and outstanding prior to the
Effective Date.

"Face Amount" shall mean when (a) used in reference to a Disputed or Disallowed Claim, the full stated liquidated
amount claimed by the Claimholder in any proof of claim timely filed with the Bankruptcy Court or otherwise deemed timely filed by any Final
Order of the Bankruptcy Court or other applicable bankruptcy law and (b) used in reference to an Allowed Claim, the allowed amount of such
Claim. 

"Fee Application" shall mean an application filed with the Bankruptcy Court in accordance with the Bankruptcy Code
and Bankruptcy Rules for compensation of a Fee Claim.

"Fee Claim" shall mean a Claim under Sections 330(a), 331 or 503 of the Bankruptcy Code for compensation for
professional services rendered and reimbursement of expenses incurred in the Chapter 11 Case made pursuant to a Fee
Application.

"Final Order" shall mean an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction,
entered on the docket of such court, that has not been reversed, rescinded, stayed, modified or amended, that is in full force and effect, and
with respect to which:  (a) the time to appeal, seek review or rehearing, or petition for certiorari has expired and no timely filed appeal or
petition for review, rehearing, remand or certiorari is pending; or (b) any appeal taken or petition for certiorari filed has been resolved by the
highest court to which the order or judgment was appealed or from which review, rehearing or certiorari was sought.

"GECC" shall mean General Electric Capital Corporation, a Delaware corporation, in its capacities as a lender and
as agent for lenders under the Prepetition Loan Agreement and the DIP Financing Agreement.  

 "GECC Administrative Claim" shall mean any amount due and owing by the Debtor to GECC itself and as
agent for the lenders pursuant to the DIP Financing Order and the DIP Financing Agreement. 

"GECC Prepetition Claim" shall mean a Claim asserted by GECC itself and as agent for the lenders against the
Debtor under the Pre-Petition Loan Agreement.

                                                    -5-

 "General Unsecured Claim" shall mean any Claim against the Debtor that is not an Administrative Expense Claim,
GECC Claim, Priority Tax Claim, Other Priority Claim, Other Secured Claim, or a Securities Subordinated Claim, provided that General
Unsecured Claims shall include, without limitation, any claim of a holder of an Other Secured Claim secured by an interest in property of the
Estate to the extent the amount of such claim exceeds the value, as determined by the Bankruptcy Court pursuant to section 506(a) of the
Bankruptcy Code, in the interest in property of the Estate securing such Claim.

"Gottschalks" shall mean Gottschalks Inc., a Delaware corporation, debtor-in-
possession in the Chapter 11 Case pending in the Bankruptcy Court.

"Gottschalks Administrative Budget" shall mean a budget, approved by the Debtor following consultation with the
Creditors' Committee, and which may be adjusted from time to time by the Debtor or Responsible Person following consultation with the
Creditors' Committee or Post-Effective Date Committee, as the case may be, established to satisfy the projected costs and expenses of
liquidating and administering the Estate.

"Gottschalks Administrative Fund" shall mean the reserve established in accordance
with Article 8.A. of this Plan, and which may be adjusted from time to time by the Debtor or Responsible Person following consultation with
the Creditors' Committee or Post-Effective Date Committee, as the case may be, for the payment of the projected costs and expenses of
liquidating and administering the Estate.  Any amounts that remain in the Gottschalks Administrative Fund shall
become Available Assets and be distributed pursuant to the terms of this Plan.

"Gottschalks Senior Claims Reserve" shall mean the reserve established in accordance with Article 8.A. of this Plan
for the payment of Allowed and/or Disputed Administrative Expense, Priority Tax, Other Priority, GECC Claims and Other Secured Claims to
the extent such Claims are not paid by the Debtor by the Initial General Unsecured Claims Distribution Date.  Any amounts that remain in the
Gottschalks Senior Claims Reserve shall be paid in accordance with Article 8.A.of this Plan.

"Governmental Unit" shall mean the governmental units described in Bankruptcy Code section 101(27).

"Impaired" shall mean, with respect to any Claim, Interest or Class, the condition or effects described in section 1124
of the Bankruptcy Code.

"Initial Distribution Date" shall mean the first Distribution Date following the Effective Date.

 "Initial General Unsecured Claims Distribution Date" shall mean the date on which the first distribution on account of
Allowed Claims that are General Unsecured Claims.

"Interest" shall mean any rights of holders of issued and outstanding shares of common stock, preferred stock or
other equity securities of the Debtor in respect thereof.

"Interestholder" shall mean a holder of an Interest.

                                                    -6-

"Liquidating Trust" shall mean any liquidating trust established pursuant to this Plan, as
set forth in Article 6 hereof.

"Ordinary Course Professional Order" shall mean that certain Order Authorizing Retention of Professionals Utilized
in the Ordinary Course of Business Pursuant to Sections 327 and 328 of the Bankruptcy Code [D.I. 157], entered by the Bankruptcy Court on
or about February 12, 2009.

"Other Priority Claim" shall mean a Claim entitled to priority pursuant to section 507(a) of the Bankruptcy Code, other
than an Administrative Expense Claim, GECC Obligation or a Priority Tax Claim.

"Other Secured Claim" shall mean a Claim, other than a GECC Claim, that is secured by a valid unavoidable
security interest in or lien on property of the Debtor, but only to the extent of the value, as determined by the Bankruptcy Court pursuant to
section 506(a) of the Bankruptcy Code, of the Estate's interest in the property of the Debtor that secures payment of the Claim. 

"Park 41 Partnership" shall mean the partnership created by the Park 41 Partnership Agreement.

"Park 41 Partnership Agreement" shall mean that certain Agreement of Limited Partnership of Park 41, A California
Limited Partnership, dated March 16, 1990 as amended.

"Park 41 Interest" shall mean the limited partnership interest of the Debtor and any rights related thereto under the
Park 41 Partnership Agreement.  

"Person" shall mean an individual, corporation, partnership, joint venture, association, joint stock company, limited
liability company, limited liability partnership, trust, estate, unincorporated organization, Governmental Unit or other entity.

"Petition Date" shall mean January 14, 2009, the date on which the Debtor filed its petition for relief in the
Bankruptcy Court commencing the Chapter 11 Case.

"Plan" shall mean this chapter 11 plan of liquidation, including the Plan Supplement
and all other supplements, appendices and schedules hereto, either in their present form or as the same may be altered, amended or
modified from time to time in accordance with the Bankruptcy Code and Bankruptcy Rules.

"Plan Supplement" shall mean the supplement to the Plan containing, without limitation, the Ambro Retention
Agreement and the list of assumed contracts and leases that the Debtor will file with the Bankruptcy Court on or before the date that is at
least ten (10) days prior to the Confirmation Hearing or such later date as may be established by order of the Bankruptcy Court.

"Post-Effective Date Committee" means the Creditors' Committee as it shall be reconstituted and function after the
Effective Date in accordance with Article 6.C and D of this Plan.

                                                    -7-

"Preference Action" shall mean a Right of Action pertaining to Bankruptcy Code section 547 for recovery of
prepetition payments made by the Debtor (but expressly excluding security interests, liens and similar interests).

 "Prepetition Loan Agreement" shall mean that certain Second Amended and Restated Credit Agreement dated as of
September 26, 2007, between the Debtor, GECC and certain other parties.

"Priority Claim" shall mean a Claim for an amount entitled to priority under section 507(a) of the Bankruptcy Code,
other than an Administrative Claim or a Priority Tax Claim.

"Priority Tax Claim" shall mean a Claim for an amount entitled to priority under section
507(a)(8) of the Bankruptcy Code.

"Professionals" shall mean those Persons retained or authorized to be retained in the Chapter 11 Cases by an Order
of the Bankruptcy Court pursuant to sections 327 and 1103 of the Bankruptcy Code or otherwise, including those Persons retained pursuant
to the Ordinary Course Professional Order.

"Pro Rata Share" shall mean the proportion that the Face Amount of a Claim in a particular Class or Classes bears
to the aggregate Face Amount of all Claims (including Disputed Claims, but excluding Disallowed Claims) in such Class or Classes, unless
this Plan provides otherwise.

"Reclamation Claim" means a claim related to the right of a creditor to reclaim goods as
set forth in Bankruptcy Code Section 546(c)(1) (including an Administrative Claim or other right granted in lieu thereof pursuant to the Order
of the Bankruptcy Court.) 

"Reclamation Claimant" means a holder of a Reclamation Claim.

"Responsible Person" shall mean J. Gregory Ambro, acting pursuant to (i) the Ambro Retention
Agreement, which shall be submitted as part of the Plan Supplement and (ii) as liquidating agent of and for the Estate from and after the
Effective Date in accordance with Article 6 of this Plan.

"Rights of Action" shall mean any and all actions, proceedings, causes of action (including, without limitation, any
causes of action of a debtor or debtor in possession under chapter 5 of the Bankruptcy Code), suits, accounts, debts, sums of money,
accounts, reckonings, covenants, contracts, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies,
rights to payment and claims, variances, trespasses, damages, judgments, executions, claims and demands whatsoever, whether known,
unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured or whether asserted or assertable directly or derivatively, in law, equity or otherwise, and all rights
thereunder or attendant thereto.

"Scheduled" shall mean with reference to any Claim or Interest, the status, priority and amount, if any, of such Claim
or Interest as set forth in the Schedules.

                                                    -8-

"Schedules" shall mean the schedules of assets and liabilities and the statement of financial affairs filed by the
Debtor, pursuant to section 521 of the Bankruptcy Code and the Official Bankruptcy Forms, as may be amended from time to time.

"Second Administrative Expense Request Deadline" shall mean the date set as the deadline for filing Administrative Expense Requests
for Administrative claims not subject to the Bar Date Order, which shall be thirty (30) days after the Effective Date, unless otherwise ordered
by the Bankruptcy Court except with respect to Fee Claims.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Securities Subordinated Claim" shall mean any Claim against the Debtor arising from the purchase or sale of a
security in the Debtor, or any Claim against the Debtor by an entity that asserts equitable or contractual rights of reimbursement, contribution
or indemnification arising from such Claim.   

"Senior Claims" shall mean all Administrative Claims, Priority Tax Claims, Other Priority Claims, GECC Claims
and Other Secured Claims.

"Servicer" shall mean an indentured trustee, agent or servicer that administers an agreement that governs the rights
of a Claimholder.

	Other
Terms.  The words "herein," "hereof," "hereto,"
"hereunder" and others of similar import refer to this Plan as a whole and not to any particular article, section or clause contained
in this Plan.  A reference to an "Article" or "Section" refers to an Article or Section of this Plan.  A term used herein that
is not defined herein shall have the meaning ascribed to that term, if any, in or by the Bankruptcy Code.  The rules of construction set forth in
section 102 of the Bankruptcy Code shall apply in constructing this Plan.
	Exhibits.  All Exhibits to this Plan are incorporated by reference into and are
made a part of this Plan as if set forth in full herein.

ARTICLE 2 

CLASSIFICATION OF CLAIMS

AND INTERESTS

	Summary.  The categories of Claims and Interests listed below classify Claims
(except for Administrative Expense Claims and Priority Tax Claims) and Interests for all purposes, including voting, confirmation and
distribution pursuant to this Plan.

	
CLASS
	
DESCRIPTION
	
STATUS

	
[unclassified]
	
Administrative Expense Claims, Priority Tax Claims
	
Unimpaired - not entitled to vote

	
Class 1
	
Class 1 consists of Other Priority Claims.
	
Unimpaired - not entitled to vote

                                                    -9-

	
CLASS
	
DESCRIPTION
	
STATUS

	
Class 2
	
Class 2 consists of GECC Prepetition Claims 
	
Unimpaired - not entitled to vote

	
Class 3
	
Class 3 consists of Other Secured Claims.
	
Impaired - entitled to vote

	
Class 4
	
Class 4 consists of General Unsecured Claims.
	
Impaired - entitled to vote

	
Class 5
	
Class 5 consists of Interests and Securities Subordinated Claims.
	
Deemed to reject - not entitled to vote

	Classification.  The Claims against the Debtor shall be classified as specified
below (other than Administrative Claims and Priority Tax Claims, which shall be treated in accordance with Article 3 below).  Consistent with
section 1122 of the Bankruptcy Code, a Claim or Interest is classified by the Plan in a particular Class only to the extent the Claim or Interest
is within the description of the Class, and a Claim or Interest is classified in a different Class to the extent it is within the description of that
different Class.  The classification of any Claim for purposes of the Plan (including voting) shall not be deemed consent to the Allowance
of such Claim or preclude any objection thereto for any purpose (including voting). 

	Class 1.
Class 1 consists of Other Priority Claims.

	Class 2.
Class 2 consists of GECC Prepetition Claims.

	Class 3.
Class 3 consists of Other Secured Claims.

	Class 4.
Class 4 consists of General Unsecured Claims.

	Class 5.
Class 5 consists of Interests and Securities Subordinated Claims.

ARTICLE 3

TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS

	Administrative Expense
Claims and Priority Tax Claims.  As provided in section 1123(a)(1) of the Bankruptcy Code,
Administrative Expense Claims and Priority Tax Claims shall not be classified for the purposes of voting or receiving distributions under this
Plan.  Rather, all such Claims shall be treated separately as unclassified Claims on the terms set forth in this Article 3.

	Administrative Claims
and Second Administrative Expense Request Deadline.  Any holder of an Administrative Claim must
file an Administrative Expense Request requesting payment of such Administrative Claim with the Bankruptcy Court by no later than
(i) August 24, 2009 for any Claims covered by the Bar Date Order or (ii) the Second Administrative Expense Request Deadline
for all other Administrative Claims besides Fee Claims; provided, however, that any such Administrative Expense Request should not be filed
with a hearing date.  Nothing herein extends a bar date established in the Bar Date Order.

                                                    -10-

	Treatment of
Administrative Claims (other than Fee Claims).  Except as otherwise set forth in this Article 3, each
holder of an Allowed Administrative Claim (other than Fee Claims) shall receive, in full satisfaction, settlement, release and discharge of, and
in exchange for, such Administrative Claim, on the later of (a) the Effective Date and (b) the date such Administrative Claim becomes an
Allowed Administrative Claim and (c) the date such Allowed Administrative Claim is due for payment under any applicable agreement
between the holder of the Allowed Administrative Claim and the Debtor, (i) Cash equal to the unpaid portion of such Allowed Administrative
Claim or (ii) such other treatment as to which the Debtor and the holder of such Administrative Claim shall have agreed upon in writing. 

	GECC Administrative Claims.  On, or as soon as reasonably practicable following the later of (a)
the Initial Distribution Date or (b) the Distribution Date immediately following the date on which a GECC Administrative Claim becomes an
Allowed Claim, the holder of such claim shall receive, in full satisfaction, settlement, release and discharge of, and in exchange for such
Allowed GECC Administrative Claim, (i) Cash in an amount equal to the amount of such Allowed GECC Administrative Claims; (ii) the
treatment provided in the DIP Financing Agreement, DIP Financing Order, other orders of the Bankruptcy Court or applicable law or (iii) such
other less favorable treatment as to which the Debtor and such holder shall have agreed upon on writing.  

	Professional Fee
Claims.

	Final Fee
Applications.  All final requests for payment of Fee Claims and requests for reimbursement of
expenses of members of the Creditors' Committee must be filed no later than forty-five (45) days after the Effective Date.  After notice and a
hearing in accordance with the procedures established by the Bankruptcy Code and prior orders of the Bankruptcy Court, the allowed
amounts of such Fee Claims and expenses shall be determined by the Bankruptcy Court and paid in full in Cash.

	Professional Fees and Expenses Carve
Out.  Nothing herein shall alter or impair the provisions of the DIP Financing Agreement or the DIP
Financing Order with respect to the Case Carve Out or the Carve Out Amount, which shall be administered for the beneficiaries thereof.  To
the extent of any surplus after satisfaction of all Claims by the beneficiaries of the Case Carve Out and the Carve Out Amount, such surplus
shall be treated as an Available Asset.

	Post-Effective Date
Retention.  Upon the Confirmation Date, any requirement that Professionals comply with sections 327
through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date will terminate, and the Debtor
and the Post-Effective Date Committee may employ and pay Professionals in the ordinary course of business in accordance with the terms of
the Gottschalks Administrative Budget.

	Treatment of Priority
Tax Claims.  Each holder of an Allowed
Priority Tax Claim shall be entitled to receive on account of such Priority Tax Claim, at the sole option of the Debtor following consultation
with the Post-Effective Date Committee and in full satisfaction, settlement, release and discharge of, and in exchange for, such Priority Tax
Claim, (i) Cash in an amount equal to the amount of such Allowed Priority Tax Claim or (ii) such other treatment as to which the Debtor and
the holder of such Allowed Priority Tax Claim shall have agreed upon in writing.

                                                    -11-

	Treatment of Reclamation
Claims.  To the extent that Reclamation Claimants seek to assert that their Reclamation Claims are
Secured Claims under the Bankruptcy Code, the Debtor asserts that the Reclamation Claims are not entitled to such treatment because (i)
the Reclamation Claimants' reclamation rights were subject at all times to GECC's perfected Liens, (ii) the Reclamation Claimants'
reclamation rights did not satisfy Bankruptcy Code section 546(c) and other applicable nonbankruptcy law, and (iii) as a result of the
amendments to the Bankruptcy Code in 2005, Bankruptcy Code section 546(c) no longer provides that a reclamation claim is entitled to
administrative expense priority under section 503(b) of the Bankruptcy Code.  Accordingly, each Reclamation Claimant shall be considered to
be a holder of a Class 4 General Unsecured Claim with respect to the value of the goods sold and delivered to the Debtor by such
Reclamation Claimant.  

ARTICLE 4

TREATMENT OF CLASSIFIED CLAIMS

AND INTERESTS 

	Other Priority Claims
(Class 1).  Each holder of an Allowed Other Priority Claim shall receive, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Allowed Other Priority Claim, (i) Cash in an amount equal to the amount of
such Allowed Other Priority Claim or (ii) such other treatment as to which the Debtor and such Claimholder shall have agreed upon in writing.

	GECC Prepetition Claims (Class
2).  GECC shall receive, in full satisfaction, settlement, release and discharge of, and in exchange for
such Allowed GECC Prepetition Claim, (i) Cash in an amount equal to the amount of such Allowed GECC Prepetition Claims; (ii) treatment
provided in the DIP Financing Agreement, DIP Financing Order, other orders of the Bankruptcy Court or applicable law or (iii) such other less
favorable treatment as to which the Debtor and such holder shall have agreed upon on writing.  All GECC Prepetition Claims are deemed to
have been satisfied in full by the entry of the final DIP Order and the payment of any amounts required thereunder.  

	Other Secured
Claims (Class 3).  Each holder of an Allowed Other Secured Claim shall receive one or a
combination of the following, in full satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Other Secured
Claim, (i) Cash in an amount equal to the amount of such Allowed Other Secured Claim; (ii) the collateral securing such Allowed
Other Secured Claims or proceeds thereof; (iii) the sale of the Collateral securing such Allowed Other Secured Claims, with the liens to attach
to the proceeds of such sale; (iv) realization of the indubitable equivalent on account of such Claims; (v) deferred cash payments
totaling at least the allowed amount of such claim, of a value, as of the Effective Date, of at least the value of such holder's interest in the
Estate's interest in such property or (vi) such other treatment as to which the Debtor and such Claimholder shall have agreed upon in writing
(including without limitation any settlement agreement previously approved by the Bankruptcy Court).  The foregoing consideration shall be
determined on the later of the date that the Other Secured Claim becomes an Allowed Other Secured Claim or within sixty (60) days after the
Effective Date.  A separate subclass will be created for each Other Secured Claimholder or each group thereof that shares collateral (if
any).  

                                                    -12-

	General Unsecured
Claims (Class 4).  Each holder of a General Unsecured Claim shall be entitled to receive his, her or
its Pro Rata Share of proceeds of the Available Assets.

	Interests and
Securities Subordinated Claims (Class 5).  On the Effective Date, the Existing Stock and Interests
shall be cancelled.  Each holder of an Interest or Securities Subordinated Claim shall not receive anything on account of such Interest or
Claim.  Subject to the provisions of Article 8.J. of this Plan, the entry of the Confirmation Order shall act as an order approving and effecting
the cancellation of all shares of the capital stock of the Debtor (and all securities convertible or exercisable for or evidencing any other right in
or with respect to shares of the capital stock of the Debtor) outstanding immediately prior to the Effective Date without any conversion thereof
or distribution with respect thereto.

ARTICLE 5

ACCEPTANCE OR REJECTION OF THIS PLAN

	Impaired Classes of
Claims Entitled to Vote.  Except as otherwise provided in order(s) of the Bankruptcy Court pertaining
to solicitation of votes on this Plan, Classes 3 and 4 are impaired and shall be entitled to vote to accept or reject this Plan.
	Classes Deemed to
Accept the Plan.  Classes 1 and 2 are unimpaired by this Plan.  Pursuant to section 1126(f) of the
Bankruptcy Code, Classes 1 and 2 are conclusively presumed to have accepted this Plan, and the votes of Claimholders in Classes 1 and 2
will therefore not be solicited.  
	Classes Deemed to
Reject the Plan.  Holders of Claims and Interests in Class 5 are not entitled to receive any
distribution under the Plan on account of their Claims and Interests.  Pursuant to section 1126(g) of the Bankruptcy Code, Class 5 is impaired
and is conclusively presumed to have rejected this Plan, and the votes of Claimholders and Interestholders in Class 5 therefore will not be
solicited.
	Nonconsensual
Confirmation.  If any impaired Class fails to accept this Plan, the Debtor intends to request that the
Bankruptcy Court confirm this Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to that Class.

ARTICLE 6

MEANS FOR IMPLEMENTATION OF THE PLAN

	Implementation of
Plan.  The Debtor proposes to implement and consummate the Plan on and after the Effective
Date.

	Liquidation of
Estate.  Prior to the Effective Date, the Debtor shall continue to wind down its business subject to all
applicable requirements of the Bankruptcy Code and the Bankruptcy Rules.  On and after the Effective Date, the Estate shall be liquidated in
accordance with this Plan, the Gottschalks Administrative Budget and applicable law, and the operations of the Debtor shall become the
responsibility of the Responsible Person who shall thereafter have responsibility for the management, control and operation thereof, and who
may use, acquire and dispose of property free of any

                                                    -13-

restrictions of the Bankruptcy Code or the Bankruptcy Rules.  Subject to further order of
the Bankruptcy Court, the Responsible Person shall act as liquidating agent of and for the Estate from and after the Effective Date.  The
Responsible Person shall be both authorized and obligated, as agent for and on behalf of the Estate, to take any and all actions necessary or
appropriate to implement this Plan or wind up the Estate in accordance with applicable law, including any and all actions necessary to (i)
liquidate the Assets of the Debtor and the Estate, (ii) investigate, prosecute and, if necessary, litigate, any Right of Action on behalf of the
Debtor and the Estate (provided that the Post-Effective Date Committee may investigate any Right of Action; and provided further that the
Post-Effective Date Committee may seek permission of the Court to prosecute any Right of Action on behalf of the Debtor and the Estate if
the Post-Effective Date Committee requests that the Responsible Person take such action and the Responsible Person refuses to confirm his
or her intent to pursue such Right of Action within fifteen (15) days following written receipt of the Post-Effective Date Committee's express
and detailed request as provided herein), (iii) defend, protect and enforce any and all rights and interests of the Debtor and the Estate, (iv)
make any and all Distributions required or permitted to be made under this Plan, (v) file any and all reports, requests for relief or opposition
thereto, (vi) dissolve the Debtor, terminate joint ventures, or otherwise wind up any corporate entity owned by the Debtor and the Estate and
(vii) pay any and all claims, liabilities, losses, damages, costs and expenses incurred in connection therewith or as a result thereof, including
all fees and expenses of his or her Professionals, the Debtor's and the Post-Effective Date Committee's Professionals accruing from and after
the Confirmation Date, to the extent such payment of such amounts are included in the Gottschalks Administrative Budget, without any
further application to the Bankruptcy Court.  The Responsible Person shall be authorized to execute such documents and take such other
action as is necessary to effectuate this Plan and perform his or her duties as liquidating agent of and for the Estate, including authorization to
execute such documents and take such other action on behalf of the Debtor.  The Responsible Person shall also be authorized to retain
professionals and may incur any reasonable and necessary expenses (up to the amounts set forth in the Gottschalks Administrative Budget)
in the performance of his or her duties as liquidating agent of and for the Estate.  The Responsible Person shall report to and be subject
to the oversight of the Post-Effective Date Committee as provided herein.  The Responsible Person may, in his or her discretion following
consultation with the Post-Effective Date Committee, form a Liquidating Trust to which any or all assets of the estate that have not been
previously liquidated shall be transferred.  The liquidation of the Debtor's estate may be effected pursuant to the Plan through the Liquidating
Trust, which shall succeed to all the rights, privileges, duties, obligations and protections provided to the Debtor, the Estate, the Responsible
Person (including without limitation such parties' respective present or former members, officers, directors, employees, advisors, attorneys,
representatives, financial advisors, investment bankers or agents and any of such parties' successors and assigns) set forth in this Plan.  The
proceeds of any such Liquidating Trust shall be administered under the terms of this Plan.    

	Appointment of the Post-Effective Date Committee.
Until the Effective Date, the Creditors' Committee shall continue in existence; provided, however,
that as of the Effective Date, the Creditors' Committee shall be reconstituted as the Post-Effective Date Committee and shall be comprised of
one or more members of the Creditors' Committee which members shall be designated by the Creditors' Committee at least three (3) days
prior to the commencement of the Confirmation Hearing.  The Creditors' Committee members who are not members of the Post-Effective
Date Committee shall be released and discharged of and from all further authority, duties, responsibilities and obligations related to and
arising from their service as Creditors'
Committee members.

                                                    -14-

In the event of death or resignation of any member of the Post-Effective Date
Committee, the remaining members of the Post-Effective Date Committee shall have the right to designate a successor from among the
holders of Allowed Class 4 Claims.  If a Post-Effective Date Committee member assigns its Claim in full or releases the Debtor from payment
of the balance of its Claim, such act shall constitute a resignation from the Post-Effective Date Committee.  Until a vacancy on the
Post-Effective Date Committee is filled, the Post-Effective Date Committee shall function in its reduced number.  Following all payments being
made to the holders of Allowed Unsecured Claims under the Plan, the Post-Effective Date Committee shall be dissolved and the members
thereof shall be released and discharged of and from all further authority, duties, responsibilities and obligations related to and arising from
their service as Post-Effective Date Committee members, and the retention or employment of the Committee's attorneys and Professionals
shall terminate.  The members of the Post-Effective Date Committee shall undertake their duties as specified in this Plan.  With respect to all
conduct while acting in such capacity, members of the Post-Effective Date Committee shall not assume or be deemed to have assumed any
liability to creditors, the Debtor, or any other parties in interest in the Chapter 11 Case and shall not be liable for any acts or omissions while
acting in that capacity, except for bad faith and acts or omissions constituting malfeasance or gross negligence.  The Post-Effective Date
Committee shall have the right to retain counsel or other Professionals, which shall be paid reasonable fees and expenses by the Debtor.
The Post-Effective Date Committee shall benefit from each and every insurance policy obtained by or for the
benefit of the officers or employees of the Debtor.  Such authorization and benefits shall also extend to any, each and every successor,
without reservation or limitation.

	Rights and Duties of the Post-Effective Date
Committee.  As of the Effective Date, the Post-Effective Date Committee shall: 

(i) have the right to make and file objections to Claims and to withdraw such objections; 

(ii) have the right, jointly with the Responsible Person, to review and approve settlements and proposed
releases or abandonment of Rights of Action by the Debtor where the amount in controversy exceeds $50,000, or the sale of the Debtor's
Assets in which the gross proceeds from a sale transaction exceed $100,000.  The Responsible Person or Post-Effective Date Committee, as
the case may be, shall provide counsel for the other of the Post-Effective Date Committee or the Responsible Person with fifteen (15) days'
written notice of any proposed settlement, release or abandonment of Rights of Action in which the amount in controversy exceeds $50,000
or sale of Assets in which the gross proceeds from a sale transaction exceed $100,000.  If no objection is served on the Responsible Person
or Post-Effective Date Committee, as the case may be, within fifteen (15) days of the date of such notice, the Post-Effective Date Committee
or Responsible Person, as the case may be, shall be deemed to have consented to such settlement, release, abandonment or sale.
The Post-Effective Date Committee and the Responsible Person will consult in good faith before selling
an Asset, settling a Right of Action or filing a claim related to a Right of Action.  If there is ultimately no
agreement between the two, then the proponent, whether the Post-Effective Date Committee or the Responsible Person,
shall have the right to ask the Bankruptcy Court to approve its proposed course of action and the Bankruptcy Court shall
authorize the same if it is in the best interests of the Estate. Both the Post-Effective Date Committee and
the Responsible Person shall have the same standing to bring such matters before the Bankruptcy Court after working in good
faith to resolve any disagreement; and 

                                                    -15-

(iii) perform such additional functions as may be agreed to by the Responsible Person, are provided for in the Confirmation Order, or
provided for by further Order of the Court entered after the Effective Date.

	Appointment of Responsible
Person.  Upon the Effective Date, the Responsible Person shall be deemed elected and appointed
by all requisite action under law as the sole board-appointed officer and shareholder-appointed director for the Debtor for all purposes and in
all respects, with all necessary and appropriate power to act for, on behalf of and in the name of the Debtor, with the same power and effect
as if each of his or her actions in furtherance of his or her duties as responsible person and as a board-appointed officer and
shareholder-appointed director for the Debtor were explicitly authorized by the appropriate board of directors or shareholders, including without limitation
the power to open, close and manage bank accounts, enter into business transactions within or without the ordinary course of business and
authorize and benefit from any insurance policies and rights of indemnification, commence and pursue dissolution or winding up proceedings
for the Debtor, to the extent necessary or appropriate, and to take any and all actions and execute all documents and instruments as may be
necessary or appropriate in connection with such dissolution, winding up, bankruptcy or insolvency proceedings, subject only to the
responsibilities and requirements imposed upon the Debtor by this Plan, the Bankruptcy Code and other applicable law, with such
appointment deemed effective as of the Effective Date.  The Responsible Person may be removed for Cause by order of the Bankruptcy
Court following notice and a hearing, or by the Post-Effective Date Committee with or without Cause; provided, however, that if the
Responsible Person is removed without Cause by the Post-Effective Date Committee, the Responsible Person shall receive, on the date that
such removal becomes effective, payment in full in cash of the total compensation that would be payable to the Responsible Person pursuant
to the Ambro Retention Agreement for the full term of the Ambro Retention Agreement if the Responsible Person had served for the entire
term of the Ambro Retention Agreement (other than any extensions thereof), less compensation that the Responsible Person has received
prior to the effective date of such removal.  As used in this Article 6.E, "Cause" shall be a judicial determination that the
Responsible Person has engaged in willful misconduct, gross negligence or fraud or has otherwise materially and substantially failed to
discharge the Responsible Person's duties pursuant to this Plan, and such material and substantial failure has continued for sixty (60) days
following the Responsible Person's receipt of written notice (such notice to be concurrently served on the Debtor) specifically asserting such
failures.  The Post-Effective Date Committee shall have standing to file an assertion of Cause and/or to seek the entry of a Bankruptcy Court
order removing the Responsible Person, or remove the Responsible Person without Cause pursuant to the provisions of and subject to the
payment obligation to the Responsible Person set forth in this Article 6.E.  If the Responsible Person is removed pursuant to this Article 6.E,
the Post-Effective Date Committee shall appoint an interim successor Responsible Person pending Bankruptcy Court approval of a successor
Responsible Person and shall file a motion with the Bankruptcy Court, within thirty days following the Responsible Person's removal,
requesting appointment of a successor Responsible Person, to serve as Responsible Person only upon Bankruptcy Court approval following
notice and a hearing.  If the Post-Effective Date Committee fails to appoint an interim successor Responsible Person and/or successor
Responsible Person, then the Bankruptcy Court shall make such appointment.  With respect to all conduct taken while acting in such
capacity, the Responsible Person shall benefit from each and every insurance policy obtained by or for the benefit of the officers or
employees of the Debtor.  Such authorization and benefits shall also extend to any, each and every successor, without reservation or
limitation.  

                                                    -16-

	Liability,
Indemnification.  The Responsible Person, the Post-Effective Date Committee and all of their
respective designees, employees or professionals or any duly designated agent or representative of the Responsible Person, the Post-Effective
Date Committee, or their respective employees, shall not be liable for the act or omission of any other member, designee, agent or
representative of the Responsible Person or the Post-Effective Date Committee, nor shall they be liable for any act or omission taken or
omitted to be taken in their respective capacities, including as a board appointed officer of the Debtor, other than acts or omissions resulting
from willful misconduct, gross negligence or fraud.  The Responsible Person and the Post-Effective Date Committee may, in connection with
the performance of their functions, and in their sole and absolute discretion, consult with attorneys, accountants, financial advisors and
agents, and shall not be liable for any act taken, omitted to be taken, or suffered to be done in accordance with advice or opinions rendered
by such persons.  Notwithstanding such authority, the Responsible Person and the Post-Effective Date Committee shall not be under any
obligation to consult with attorneys, accountants, financial advisors or agents, and their determination not to do so shall not result in the
imposition of liability, unless such determination is based on willful misconduct, gross negligence or fraud.  The Debtor and the Estate shall
indemnify and hold harmless the Responsible Person and the Post-Effective Date Committee and their designees and professionals, and all
duly designated agents and representatives thereof (in their capacity as such), from and against and in respect of all liabilities, losses,
damages, claims, costs and expenses, including, but not limited to attorneys' fees and costs arising out of or due to such actions or
omissions, or consequences of their actions or omissions with respect or related to the performance of their duties or the implementation or
administration of this Plan; provided, however, that no such indemnification will be made to such persons for such actions or omissions as a
result of willful misconduct, gross negligence or fraud.

	Corporate
Action.  On the Effective Date, the matters under this Plan involving or requiring corporate action of
the Debtor, including, but not limited to, actions requiring a vote or other approval of the board of directors or shareholders and execution of
all documentation incident to this Plan, shall be deemed to have been authorized by the Confirmation Order and to have occurred and be in
effect from and after the Effective Date without any further action by the Bankruptcy Court or the officers or directors of the Debtor.  

	Continued Corporate
Existence; Dissolution of the Debtor.  From and after the Effective Date, the Debtor shall remain in
existence for the purpose of liquidating and winding up the Estate.  As soon as practicable after the liquidation and the winding up of the
Estate and the completion of distributions under this Plan, the Responsible Person shall file a certificate of dissolution in the applicable state
of incorporation of the Debtor and the Debtor shall dissolve and cease to exist.  

	Saturday, Sunday or
Legal Holiday.  If any payment or act under this Plan is required to be made or performed on a date
that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding
Business Day, but shall be deemed to have been completed as of the required date.

	Preservation of All
Rights of Action.  Except as otherwise provided
in this Plan or in any contract, instrument, release or agreement entered into in connection with this Plan, in accordance with section 1123(b)
of the Bankruptcy Code, all claims, causes or Rights of Action that the Debtor or the Estate may have against any person or entity will be
preserved, including without limitation any and all Rights of Action the Debtor, the Estate or other appropriate party in interest may assert
under sections 502, 510,

                                                    -17-

522(f), 522(h), 542, 543, 544, 545, 547, 548, 549, 550, 551, 553 and 724(a) of the Bankruptcy Code; provided,
however, that the Debtor or the Responsible Person may assert Preference Actions as a defense or counterclaim against a creditor party and
not as affirmative relief to recover prepetition payments made by the Debtor.  Subject to the preceding sentence, the Responsible Person and
the Post-Effective Date Committee will jointly determine whether to bring, settle, release, compromise or enforce such claims, causes or
Rights of Action, and will not be required to seek further approval of the Bankruptcy Court for such actions.  The Responsible Person
shall not consult with any Post-Effective Date Committee member whose Claim is the subject of a Preference Action, and such Post-Effective
Date Committee member shall recuse himself or herself from any discussion with the Responsible Person with respect thereto.  The Post-
Effective Date Committee may investigate any Right of Action and has standing to seek permission of the Court to prosecute any Right of
Action on behalf of the Debtor and the Estate if the Post-Effective Date Committee requests that the Responsible Person take such action
and the Responsible Person refuses to confirm his or her intent to pursue such Right of Action within fifteen (15) days following written receipt
of the Post-Effective Date Committee's express and detailed request, as provided herein.  

ARIICLE 7

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

	Assumed and Rejected
Contracts and Leases.  Except as otherwise provided in this Plan, each executory contract and
unexpired lease as to which any of the Debtor is a party, including without limitation (y) any guaranties by the Debtor with respect to real
estate leases and businesses of the Debtor, and (z) any obligations under leases assigned or subleased by the Debtor prior to the Petition
Date (or agreements providing for the guarantee of the payment of rent or performance thereunder), shall be deemed automatically rejected
in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code on the Effective Date, unless such
executory contract or unexpired lease (i) shall have been previously assumed by the Debtor by order of the Bankruptcy Court, (ii) is the
subject of a motion to assume pending on or before the Effective Date or (iii) is otherwise assumed pursuant to the terms of this Plan
including, without limitation that certain Schedule of Assumed Contracts set forth as Exhibit B to this Plan.  Entry of the Confirmation Order by
the Bankruptcy Court shall constitute approval of the rejections contemplated by this Plan pursuant to sections 365 and 1123 of the
Bankruptcy Code as of the Effective Date.  Notwithstanding anything contained in this Plan to the contrary, this Plan shall constitute a motion
to assume the executory contracts set forth in Exhibit B to this Plan.  Subject to the occurrence of the Effective Date, the entry of the
Confirmation Order shall constitute approval of such assumption pursuant to section 365(a) of the Bankruptcy Code and a finding by the
Bankruptcy Court that each such assumption is in the best interest of the Debtor, the Estate and all parties in interest in the Chapter 11 Case.
Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date,
no payments are required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to each such executory contract
set forth in Exhibit B to this Plan.  To the extent that the Bankruptcy Court determines otherwise with respect to any executory contract, the
Debtor reserves the right to seek rejection of such executory contract or seek other available relief.  The Estate reserves the right to
assert that any property interest is an Asset of the Estate (including any limited partnership owned by the Debtor or the Estate) and is not
subject to assumption or rejection as an executory contract.  Provided however, to the extent that the Debtor's Park 41 Interest and rights
related thereto are deemed an executory contract under the Park 41 Partnership Agreement, the Debtor hereby assumes the Park 41
Partnership Agreement on the terms applicable to Assumed Contracts set forth on Exhibit B to the Plan.     

                                                    -18-

	Rejection Damages
Bar Date.  If a Claim arises from the rejection of any executory contract or unexpired lease (including
claims under section 365(d)(3) of the Bankruptcy Code), then such Claim shall be forever barred and shall not be enforceable against the
Debtor or the Estate or such entities' properties unless a proof of claim asserting such Claim is filed with the Bankruptcy Court and served on
the Debtor within thirty (30) days after the Effective Date or such earlier date previously set by order of the Bankruptcy Court.  Unless
otherwise ordered by the Bankruptcy Court, all such Claims arising from the rejection of executory contracts shall be treated as General
Unsecured Claims under this Plan.

	Insurance
Policies.  To the extent that any or all of the insurance policies set forth in Exhibit A to this Plan are
considered to be executory contracts, then notwithstanding anything contained in this Plan to the contrary, this Plan shall constitute a motion
to assume the insurance policies set forth in Exhibit A to this Plan.  Subject to the occurrence of the Effective Date, the entry of the
Confirmation Order shall constitute approval of such assumption pursuant to section 365(a) of the Bankruptcy Code and a finding by the
Bankruptcy Court that each such assumption is in the best interest of the Debtor, the Estate and all parties in interest in the Chapter 11 Case.
Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date,
no payments are required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to each such insurance policy
set forth in Exhibit A to this Plan.  To the extent that the Bankruptcy Court determines otherwise with respect to any insurance policy, the
Debtor reserves the right to seek rejection of such insurance policy or other available relief.

ARTICLE 8

PROVISIONS GOVERNING DISTRIBUTIONS AND CLAIMS ADMINISTRATION

	Gottschalks Senior
Claims Reserve and Gottschalks Administrative Fund.  Prior to making any distribution on account of
Allowed General Unsecured Claims, the Debtor shall establish (i) the Gottschalks Senior Claims Reserve with sufficient funds to pay all
Allowed and Disputed Senior Claims to the extent such Claims are not previously paid by the Debtor and (ii) the Gottschalks Administrative
Fund with sufficient funds to pay the projected costs and expenses of liquidating and administering the Estate as set forth in the Gottschalks Administrative Budget.  In addition, the Responsible Person shall
manage a Disputed Claims Reserve for the treatment of Disputed Claims other than Administrative Claims.  The Debtor shall deposit from the
Available Assets into the Disputed Claims Reserve an amount equal to the Pro Rata Share of the Distribution allocable to Disputed Claims,
as if such claims were Allowed Claims.  The Disputed Claims Reserve shall be held in trust by the Responsible Person for the benefit of
holders of Allowed Claims whose Distributions are unclaimed and the holders of such Disputed Claims pending a determination of such
claimants' entitlement thereto pursuant to the terms of this Plan.  After the Effective Date, the Responsible Person shall make distributions to
the holders of Allowed Senior Claims which become Allowed after the Effective Date from the Gottschalks Senior Claims Reserve.  Any
amounts remaining in (i) the Gottschalks Senior Claims Reserve after payment of all Allowed Senior Claims, (ii) the Disputed Claims Reserve
and (iii) the Gottschalks Administrative Fund after payment of all costs and expenses of liquidating and administering the Estate shall be
distributed to the holders of other Claims as soon as practicable and in accordance with the provisions of this Plan.

                                                    -19-

	Responsible
Person as
Disbursing Agent.  The Responsible Person shall make all distributions required under this Plan
except with respect to a holder of a Claim whose distribution is governed by an agreement and is administered by a Servicer, which
distributions shall be deposited with the appropriate Servicer, who shall deliver such distributions to the holders of Claims in accordance with
the provisions of this Plan and the terms of the governing agreement; provided, however, that if any such Servicer is unable to make such
distributions, the Responsible Person, with the cooperation of such Servicer, shall make such distributions.  The Responsible Person
shall be bonded in connection with his or her obligations under this Plan.  The appointment of the Responsible Person as disbursing agent
shall be approved by the Bankruptcy Court in accordance with this Plan and confirmed by the Bankruptcy Court as part of the Confirmation
Order, provided that the proposed Responsible Person provides evidence of a bond prior to the Confirmation Hearing, or by supplemental
Order of the Bankruptcy Court if the proposed Responsible Person provides evidence of a bond thereafter.  The fees, expenses and any
bond premiums incurred by the Debtor and/or the Responsible Person in connection with his, her or its duties hereunder shall be paid from
the Gottschalks Administrative Fund. 

	Time and Manner of Distributions.  Except as otherwise provided
in this Plan or ordered by the Bankruptcy Court, distributions with respect to Claims that, on the Effective Date, are Allowed Claims, shall be
made on or as promptly as practicable after the Effective Date.  Distributions with respect to or as a result of Claims that become Allowed
Claims after the Effective Date shall be made as soon as practicable after such Claim becomes an Allowed Claim subject to the other terms
of the Plan.  At the option of the Responsible Person, monetary distributions may be made in Cash, by wire transfer or by a check drawn on a
domestic bank.  Notwithstanding any other provision hereof, if any portion of a Claim is a Disputed Claim, no payment or distribution shall be
made to the holder on account of such portion of the Claim that constitutes a Disputed
Claim unless and until such Disputed Claim becomes Allowed.  Nothing contained herein, however, shall
be construed to prohibit or require payment or distribution on account of any undisputed portion of a Claim and, when only a portion of a
Claim is disputed, interim or partial distributions may be made with respect to the portion of such Claim that is not disputed, in the discretion
of the Responsible Person following consultation with the Post-Effective Date Committee.  The Responsible Person is not obligated to
make a final Distribution if, in consultation with the Post-Effective Date Committee, he or she determines that there are insufficient Available
Assets to make a cost-efficient Distribution, taking into account the size of the Distribution to be made and the number of recipients of such
Distribution, in which event such funds, in the Responsible Person's discretion following consultation with the Post-Effective Date Committee,
will be donated to a reputable charitable organization.

	Delivery of Distributions.  Distributions to Allowed Claimholders shall be made by the Responsible
Person or the appropriate Servicers (a) at the addresses set forth on the proofs of claim filed by such Claimholders (or at the last known
addresses of such Claimholder if no motion requesting payment or proof of claim is filed or the Debtor has been notified in writing of a change
of address), (b) at the addresses set forth in any written notices of address changes delivered to the Responsible Person after the date of any
related proof of claim, (c) at the addresses reflected in the Schedules if no proof of claim has been filed and the Responsible Person has not
received a written notice of a change of address or (d) in the case of a Claimholder whose Claim is governed by an agreement or
administered by a Servicer, at the addresses contained in the official records of such Servicer. 

                                                    -20-

	Undeliverable Distributions.  If a Claimholder's distribution is returned as undeliverable, no further
distributions to such Claimholder shall be made unless and until the Responsible Person or the appropriate Servicer is notified of such
Claimholder's then current address, at which time all missed distributions shall be made to such Claimholder without interest.  Amounts in
respect of undeliverable distributions shall be returned to the Responsible Person until such distributions are claimed.  All funds or other
undeliverable distributions returned to the Responsible Person and not claimed within six (6) months of return shall be with respect to Claims
in Class 4 distributed to the other creditors of Class 4 in accordance with the provisions of the Plan applicable to distributions to that Class.

	Claims Administration Responsibility.

	Reservation of Rights
to Object to Claims.  Unless a Claim is specifically Allowed pursuant to or under this Plan, or
otherwise Allowed prior to or after the Effective Date, the Debtor, the Responsible Person and the Post-Effective Date Committee reserve any
and all objections to any and all Claims and motions or requests for the payment of Claims, whether administrative expense, secured or
unsecured, including without limitation any and all objections to the validity or amount of any and all alleged Administrative Claims, Priority
Tax Claims, Other Priority Claims, Other Secured Claims, liens and security interests, whether under the Bankruptcy Code, other applicable
law or contract.  The Debtor's failure to object to any Claim in the Chapter 11 Case shall be without prejudice to the Responsible Person's
and/or the Post-Effective Date Committee's right to contest or otherwise defend against such Claim in the Bankruptcy Court when and if such
Claim is sought to be enforced by the holder of the Claim.

	Objections to
Claims.  Prior to the Effective Date, the Debtor shall be responsible for pursuing any objection to the
allowance of any Claim.  From and after the Effective Date, the Responsible Person (and, to the extent set forth herein, the Post-Effective
Date Committee) will retain responsibility for administering, disputing, objecting to, compromising or otherwise resolving and making
distributions (if any) with respect to all Claims.  Unless otherwise provided in this Plan or ordered by the Bankruptcy Court, all objections
to Claims will be filed and served not later than 180 days after the Effective Date, provide that the Debtor or the Responsible Person
(following consultation with the Post-Effective Date Committee) may request (and the Bankruptcy Court may grant) an extension of time by
filing a motion with the Bankruptcy Court, based on a reasonable exercise of his or her business judgment.

	Filing of
Objections.  An objection to a Claim shall be deemed properly served on the Claimholder if the
Debtor, the Responsible Person or the Post-Effective Date Committee effect service by any of the following methods: (i) in accordance with
Federal Rule of Civil Procedure 4, as modified and made applicable by Bankruptcy Rule 7004; (ii) to the extent counsel for a Claimholder is
unknown, by first class mail, postage prepaid, on the signatory on the proof of claim or interest or other representative identified on the proof
of claim or interest or any attachment thereto or (iii) by first class mail, postage prepaid, on any counsel that has appeared on the behalf of
the Claimholder in the Chapter 11 Case.

                                                    -21-

	Determination of
Claims.  Except as otherwise agreed by the Debtor, any Claim as to which a proof of claim or motion
or request for payment was timely filed in the Chapter 11 Case may be determined and liquidated pursuant to (i) an order of the Bankruptcy
Court or (ii) applicable non-bankruptcy law (which determination has not been stayed, reversed or amended and as to which determination
(or any revision, modification or amendment thereof) the time to appeal or seek review or rehearing has expired and as to which no appeal or
petition for review or rehearing was filed or, if filed, remains pending), and shall be deemed in such liquidated amount and satisfied in
accordance with this Plan.  Nothing contained in this Article 8.F. shall constitute or be deemed a waiver of any claim, right, or Rights of Action
that the Debtor or the Responsible Person may have against any Person in connection with or arising out of any Claim or Claims, including
without limitation any rights under Section 157(b) of title 28 of the United States Code.

	Procedures for Treating and Resolving Disputed and Contingent Claims.  

	Claim
Estimation.  The Debtor or the Responsible Person (following consultation with the Post-Effective
Date Committee) may request estimation or limitation of any Disputed Claim that is contingent or unliquidated pursuant to section 502(c) of
the Bankruptcy Code; provided, however, that the Bankruptcy Court shall determine (i) whether such Disputed Claims are subject to
estimation pursuant to section 502(c) of the Bankruptcy Code and (ii) the timing and procedures for such estimation proceedings, if any.
The Responsible Person shall not consult with any Post-Effective Date Committee member whose Claim is the subject of a request for
estimation or limitation, and such Post-Effective Date Committee member shall recuse himself or herself from any discussion with the
Responsible Person with respect thereto.

	Setoffs and
Recoupments.  The Responsible Person (following consultation with the Post-Effective Date
Committee) may, but shall not be required to, set off against or recoup from the payments to be made pursuant to this Plan with respect to
any Claim, and the payments or other distributions to be made pursuant to this Plan in respect of such Claim, claims of any nature
whatsoever that the Debtor may have against such Claimholder; provided, however, that neither the failure to do so nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Debtor or the Responsible Person of any such claim that the Debtor or the
Responsible Person may have against such Claimholder.  The Responsible Person shall not consult with any Post-Effective Date
Committee member whose Claim is the subject of a setoff or recoupment, and such Post-Effective Date Committee member shall recuse
himself or herself from any discussion with the Responsible Person with respect thereto.

	Allowance of Claims
Subject to Bankruptcy Code Section 502(d).  Allowance of Claims shall be in all respects subject to
the provisions of section 502(d) of the Bankruptcy Code.

	Cancellation of
Existing Stock and Interests.  On the Effective Date, (a) the Existing Stock, Interests and any other
note, bond, indenture, or other instrument or document evidencing or creating any indebtedness or obligation of or ownership interest in the
Debtor will be cancelled and (b) the obligations of, Claims against, and/or Interests in the Debtor under, relating, or pertaining to any
agreements, indentures, certificates of designation, bylaws, or certificate or articles of incorporation or similar documents governing the
Existing Stock, Interests and any other note, bond, indenture, or other

                                                    -22-

instrument or document evidencing or creating any indebtedness or
obligation of the Debtor will be released and discharged, and the holders thereof shall have no rights against the Debtor, the Responsible
Person or the Estate, and such instruments shall evidence no such rights, except the right to receive the distributions provided for in this
Plan.

	No Interest on
Claims.  Unless otherwise specifically provided for in this Plan, Confirmation Order or a postpetition
agreement in writing between the Debtor and a Claimholder, postpetition interest shall not accrue or be paid on Claims, and no Claimholder
shall be entitled to interest accruing on or after the Petition Date on any Claim.  In addition, and without limiting the foregoing, interest shall
not accrue on or be paid on any Disputed Claim in respect of the period from the Effective Date to the date a final distribution is made when
and if such Disputed Claim or becomes an Allowed Claim.

	Withholding
Taxes.  The Responsible Person shall be entitled to deduct any federal, state or local withholding
taxes from any payments under this Plan.  As a condition to making any distribution under this Plan, the Responsible Person may require that
the holder of an Allowed Claim provide such holder's taxpayer identification number and such other information and certification as may be
deemed necessary for the Responsible Person to comply with applicable tax reporting and withholding laws.

ARTICLE 9

EFFECTS OF PLAN CONFIRMATION

	Injunction.  Except as otherwise expressly provided in this Plan, and except in
connection with the enforcement of the terms of this Plan or any documents provided for or contemplated in this Plan, all entities who have
held, hold or may hold Claims against or Interests in the Debtor or the Estate that arose prior to the Effective Date are permanently enjoined
from: (a) commencing or continuing in any manner, directly or indirectly, any action or other proceeding of any kind against the Debtor, the
Responsible Person or the Estate, or any property of the Debtor, the Responsible Person or the Estate, with respect to any such Claim or
Interest; (b) the enforcement, attachment, collection or recovery by any manner or means, directly or indirectly, of any judgment, award,
decree, or order against the Debtor, the Responsible Person or the Estate, or any property of the Debtor, the Responsible Person or the
Estate, with respect to any such Claim or Interest; (c) creating, perfecting or enforcing, directly or indirectly, any Lien or encumbrance or any
kind against the Debtor, the Responsible Person or the Estate, or any property of the Debtor, the Responsible Person or the Estate, with
respect to any such Claim or Interest; (d) asserting, directly or indirectly, any setoff, or recoupment of any kind against any obligation due the
Debtor, the Responsible Person, or the Estate, or any property of the Debtor, the Responsible Person or the Estate, with respect to any such
Claim or Interest; and (e) any act, in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Plan
with respect to such Claim or Interest.  Without limiting the foregoing, the automatic stay provided under Bankruptcy Code Section 362(a)
shall remain in effect.  Nothing contained in this Article 9.A. shall prohibit the holder of a timely-filed proof of Claim or Interest from litigating its
right to seek to have such Claim or Interest declared an Allowed Claim or Interest and paid in accordance with the distribution provisions of
this Plan, or enjoin or prohibit the interpretation or enforcement by the holder of such Claim or Interest of any of the obligations of the Debtor
or the Responsible Person under this Plan.  The Confirmation Order shall also constitute an injunction enjoining any Person from enforcing or
attempting to enforce any

                                                    -23-

Right of Action against any present or former shareholder, director, officer, employee, attorney or agent of the
Debtor based on, arising from or related to any failure to pay, or make provision for payment of, any amount payable with respect to any
Priority Tax Claim on which the payments due under Article 3.F. of this Plan have been made or are not yet due under Article 3.F. of this
Plan.

	Exculpation and
Limitation of Liability.  The Debtor, the Creditors' Committee in its capacity as such, the Post-Effective
Date Committee in its capacity as such, and any such parties' respective present or former members, officers, directors, employees,
advisors, attorneys, representatives, financial advisors, investment bankers or agents and any of such parties' successors and assigns, shall
not have or incur, and are hereby released from, any claim, obligation, Rights of Action, or liability to one another or to any Claimholder or
Interestholder, or any other party in interest, or any of their respective agents, employees, representatives, financial advisors, attorneys or
affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to or arising out of the Debtor's Chapter 11
Case, negotiation and filing of this Plan, filing the Chapter 11 Case, the pursuit of confirmation of this Plan, the consummation of this Plan, or
the administration of this Plan or the property to be distributed under this Plan, except for their willful misconduct or gross negligence and
except with respect to obligations arising under confidentiality agreements, joint interest agreements and protective orders entered during the
Chapter 11 Case, and in all respects shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and
responsibilities under this Plan.  

	Release of Officers
and Directors.  On the Effective Date, the Debtor, in its individual capacity and as debtor-in-
possession for and on behalf of its Estate, shall release and discharge and be deemed to have forever released and discharged any and all
claims or Rights of Action against the officers and directors of the Debtor, known or unknown, and such officers and directors shall release
and discharge and be deemed to have forever released and discharged any and all claims or causes of action against the Debtor, known or
unknown, other than claims arising from the self-dealing, gross negligence or willful misconduct of such officers and directors, provided that
such releases shall not affect or include the Debtor's indemnification obligations or other contractual obligations to such officers and
directors. 

	Term of Injunctions
or Stays.  Unless otherwise provided herein or in the Confirmation Order, all injunctions or stays
provided for in the Chapter 11 Case under section 105 or 362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date,
shall remain in full force and effect until the closing of the Chapter 11 Case.  

ARTICLE 10

CONDITIONS PRECEDENT

	Conditions to the
Effective Date.  This Plan shall not become effective unless and until each of the following conditions
shall have been satisfied in full in accordance with the provisions specified below:

	The Bankruptcy Court shall have approved by Final Order a disclosure statement with respect to this Plan in form and substance
acceptable to the Debtor and the Creditors' Committee in their sole and absolute discretion.

                                                    -24-

	The Confirmation Order shall be in form and substance acceptable to the Debtor and the Creditors' Committee in their sole and absolute
discretion.

	The Confirmation Order shall have been entered by the Bankruptcy Court and shall not subject to any stay of effectiveness, the
Confirmation Date shall have occurred and no request for revocation of the Confirmation Order under section 1144 of the Bankruptcy Code
shall have been made, or, if made, shall remain pending.

	The Effective Date shall occur by no later than May 1, 2010.

	Revocation,
Withdrawal or Non-Consummation of Plan.  If after the Confirmation Order is entered, each of the
conditions to effectiveness has not been satisfied or duly waived on or by forty-five (45) days after the Confirmation Date, then upon motion
by the Debtor or the Creditors' Committee, the Confirmation Order may be vacated by the Bankruptcy Court; provided, however, that
notwithstanding the filing of such a motion, the Confirmation Order shall not be vacated if each of the conditions to effectiveness is either
satisfied or duly waived before the Bankruptcy Court enters an order granting the relief requested in such motion.  As used in the preceding
sentence, a condition to effectiveness may only be waived by a writing executed by the Debtor.  If the Confirmation Order is vacated pursuant
to this Article 10.B., this Plan shall be null and void in all respects, and nothing contained in this Plan shall (i) constitute a waiver or release of
any Claims against or Interests in the Debtor, (ii) prejudice in any manner the rights of the holder of any Claim against or Interest in the
Debtor or (iii) prejudice in any manner the rights of the Debtor in the Chapter 11 Case.

ARTICLE 11

ADMINISTRATIVE PROVISIONS

	Retention of
Jurisdiction.  This Plan shall not in any way limit the Bankruptcy Court's post-confirmation jurisdiction
as provided under the Bankruptcy Code.  Pursuant to sections 105(a) and 1142 of the Bankruptcy Code, the Bankruptcy Court shall retain
and have exclusive jurisdiction (to the extent granted by applicable law, including any provisions permitting mandatory or discretionary
withdrawal of such jurisdiction) over any matter arising out of, and related to, the Chapter 11 Case and this Plan, including without limitation
the following matters:

	To hear and determine motions for (i) the assumption or rejection or (ii) the assumption and assignment of executory contracts or
unexpired leases to which the Debtor is a party or with respect to which the Debtor may be liable, and to hear and determine the allowance of
Claims resulting therefrom including the amount of Cure, if any, required to be paid;

	To adjudicate any and all adversary proceedings, motions, applications and contested matters that may be commenced or maintained
pursuant to the Chapter 11 Case or this Plan, proceedings to adjudicate the allowance of Disputed Claims and all controversies and issues
arising from or relating to any of the foregoing;

	To adjudicate any and all disputes over the ownership of a Claim or Interest;

                                                    -25-

	To adjudicate any and all disputes arising from or relating to the distribution or retention of consideration under this Plan;

	To ensure that distributions to Allowed Claimholders are accomplished as provided herein;

	To hear and determine any and all objections to the allowance or estimation of Claims filed, both before and after the Confirmation Date,
including any objections to the classification of any Claim, and to allow or disallow any Claim, in whole or in part;

	To enter and implement such orders as may be appropriate if the Confirmation Order is for any reason stayed, revoked, modified and/or
vacated;

	To issue orders in aid of execution, implementation or consummation of this Plan;

	To consider any modifications of this Plan, to cure any defect or omission or to reconcile any inconsistency in any order of the
Bankruptcy Court, including without limitation the Confirmation Order;

	To hear and determine all Fee Applications for allowance of compensation and reimbursement of Professional Claims under this Plan or
under sections 330, 331, 503(b), 1103 and 1129(a)(4) of the Bankruptcy Code;

	To hear and determine all motions requesting allowance of an Administrative Expense Claim;

	To determine requests for the payment of Claims entitled to priority under section 507(a)(1) of the Bankruptcy Code, including
compensation and reimbursement of expenses of parties entitled thereto;

	To hear and determine disputes arising in connection with the interpretation, implementation or enforcement of this Plan or the
Confirmation Order including disputes arising under agreements, documents or instruments executed in connection with this Plan;

	To hear and determine all suits or adversary proceedings to recover assets of the Debtor and property of its Estate, wherever
located;

	To hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the
Bankruptcy Code;

	To hear any other matter not inconsistent with the Bankruptcy Code;

	To hear and determine all disputes involving the existence, nature or scope of the Debtor's discharge, including any dispute relating to
any liability arising out of the termination of employment or the termination of any employee or retiree benefit program, regardless of whether
such termination occurred prior to or after the Effective Date;

	To enter a final decree closing the Chapter 11 Case; and

                                                    -26-

	To enforce all orders previously entered by the Bankruptcy Court.

	Payment of Statutory
Fees.  All fees payable through the Effective Date pursuant to section 1930 of Title 28 of the United
States Code shall be paid on or before the Effective Date.  All fees payable after the Effective Date pursuant to section 1930 of Title 28 of the
United States Code shall be paid by the Debtor.

	Headings.  Headings are used in this Plan for convenience and reference only
and shall not constitute a part of this Plan for any other purpose.

	Binding Effect of
Plan.  Except as otherwise provided in section 1141(d)(3) of the Bankruptcy Code, on and after the
Confirmation Date, the provisions of this Plan shall bind any holder of a Claim against, or Interest in, the Debtor, the Estate and their
respective successors or assigns, whether or not the Claim or Interest of such holders is impaired under the Plan and whether or not such
holder has accepted this Plan.  The rights, benefits and obligations of any entity named or referred to in the Plan, whose actions may be
required to effectuate the terms of the Plan, shall be binding on and shall inure to the benefit of any heir, executor, administrator, successor or
assign of such entity (including, without limitation, any trustee appointed for the Debtor under Chapters 7 or 11 of the Bankruptcy Code).

	Final
Order.  Except as otherwise expressly provided in this Plan, any requirement in this Plan for a Final
Order may be waived by the Debtor upon written notice to the Bankruptcy Court.  No such waiver shall prejudice the right of any party in
interest to seek a stay pending appeal of any order that is not a Final Order.

	Amendments and
Modifications.  The Debtor may alter, amend or modify this Plan under section 1127(a) of the
Bankruptcy Code at any time prior to the Confirmation Hearing.  After the Confirmation Date and prior to substantial consummation of this
Plan with respect to the Debtor as defined in section 1101(2) of the Bankruptcy Code, the Debtor may, under section 1127(b) of the
Bankruptcy Code, institute proceedings in the Bankruptcy Court to remedy any defect or omission or reconcile any inconsistencies in this
Plan, the Disclosure Statement or the Confirmation Order, and such matters as may be necessary to carry out the purposes and effects of
this Plan.

	Withholding and
Reporting Requirements.  In connection with this Plan and all instruments issued in connection
therewith and distributions thereunder, the Debtor shall comply with all withholding and reporting requirements imposed by any federal, state,
local or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements.

	Tax
Exemption.  Pursuant to section 1146 of the Bankruptcy Code, any transfers from the Debtor or the
Responsible Person to any other Person or entity pursuant to this Plan, or any agreement regarding the transfer of title to or ownership of any
of the Debtor's real or personal property, or the issuance, transfer or exchange of any security under this Plan, or the execution, delivery or
recording of an instrument of transfer pursuant to, in implementation of or as contemplated by this Plan, including, without limitation, any
transfers to or by the Responsible Person of the Debtor's property in implementation of or as contemplated by this Plan (including, without
limitation, any subsequent transfers of property by the Responsible Person) shall not be subject to any document recording tax, stamp tax,
conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial

                                                    -27-

Code filing or recording fee or other similar tax or governmental assessment.  Consistent with the foregoing, each recorder of deeds or similar
official for any county, city or governmental unit in which any instrument hereunder is to be recorded shall, pursuant to the Confirmation
Order, be ordered and directed to accept such instrument, without requiring the payment of any documentary stamp tax, deed stamps, stamp
tax, transfer tax, intangible tax or similar tax.

	Termination of the
Creditors' Committee.  Upon the Effective Date, the Creditors' Committee shall dissolve
automatically, whereupon its members, professionals and agents shall be released from any further duties and responsibilities in the Chapter
11 Case and under the Bankruptcy Code, except with respect to obligations arising under confidentiality agreements, joint interest
agreements, and protective orders entered during the Chapter 11 Case which shall remain in full force and effect according to their terms;
applications for Professional Claims; requests for compensation and reimbursement of expenses pursuant to section 503(b) of the
Bankruptcy Code for making a substantial contribution in the Chapter 11 Case; and any motions or other actions seeking enforcement or
implementation of the provisions of this Plan or the Confirmation Order.  

	Governing
Law.  Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code
and Bankruptcy Rules) or unless specifically stated, the laws of the State of Delaware shall govern the construction and implementation of
this Plan, any agreements, documents and instruments executed in connection with this Plan (except as otherwise set forth in those
agreements, in which case the governing law of such agreements shall control), and corporate governance matters.  

	Conflicts.  In the event that the provisions of the Disclosure Statement and the
provisions of the Plan conflict, the terms of the Plan shall govern.  

	Notices.  Any notices required under the Plan or any notices or requests of the
Debtor or the Responsible Person by parties in interest under or in connection with the Plan shall be in writing and served either by (a)
certified mail, return receipt requested, postage prepaid, (b) hand delivery or (c) reputable overnight delivery service, all charges prepaid, and
shall be deemed to have been given when received by the following parties:

If to the Debtor or the Responsible Person:

Gottschalks Inc. 

J. Gregory Ambro

7 River Park Place East

Fresno, CA 93720

with a copy to:

Counsel to the Debtor

O'Melveny & Myers LLP

400 South Hope Street

Los Angeles, CA  90071

Attn:  Stephen H. Warren, Esq.

         Karen Rinehart, Esq.

                                                    -28-

with a copy to:

Counsel to the Official Committee of Unsecured Creditors

Cooley Godward Kronish LLP

1114 Avenue of the Americas

New York, NY  10036-7798

Attn: Lawrence Gottlieb, Esq.

             Michael Klein, Esq.

Dated:  Fresno, CaliforniaRespectfully submitted,

  December 3, 2009

	 	
GOTTSCHALKS INC. 

on behalf of the Debtor and Debtor-in-Possession    

            /s / J. Gregory Ambro 

    Its:Chief Operating Officer

                                                    -29-

 

EXHIBIT A

INSURANCE POLICIES

(to be filed at a later date)
 

 

                                                    -i-

EXHIBIT B

SCHEDULE OF ASSUMED CONTRACTS

(to be filed at a later date)

                                                    -ii-

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