THIS EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered into this
1 st
day of April, 2006 (the
“Effective Date”), by and between CHICO’S FAS,
INC. a Florida corporation (the “Company”), and
PATRICIA MURPHY KERSTEIN (the “Executive”).
1.
Employment . The Company agrees to employ the Executive, and
the Executive accepts such employment, upon the terms and
conditions set forth in this Agreement.
2.
Term . The term of this Agreement shall be for an initial
period of two (2) years, commencing on the Effective Date and
ending on March 31, 2008 (the “Initial Term”),
except that Executive’s employment may be terminated before
the end of the Initial Term in accordance with Section 7 of
this Agreement. After the expiration of the Initial Term, the
Company shall continue to employ Executive in a consulting capacity
for three (3) additional years (the “Consulting
Term”), commencing on April 1, 2008 (the
“Conversion Date”) and ending on March 31, 2011,
except that Executive’s employment may be terminated at any
time during the Consulting Term in accordance with Section 7
of this Agreement. In no event shall the total duration of this
Agreement exceed five (5) years from the Effective
Date.
(a) During
the Initial Term, the Executive will be employed as the Executive
Vice President and Chief Merchandising Officer of the Company.
While employed by the Company during the Initial Term, Executive
shall serve the Company in such capacities as shall be determined
by the Chief Executive Officer or the Board of Directors of the
Company, including without limitation, and without additional
compensation, acting as an officer, of the Company and one or more
subsidiaries or affiliates of the Company if so appointed.
Executive agrees to devote her entire time, energy and skill to
further the interests of the Company, and its subsidiaries and
affiliates, during her employment. Executive shall not engage in
any activities competitive with, or antithetical to, those of the
Company, its subsidiaries or affiliates, on either a paid or unpaid
basis, during the Initial Term, and any outside activities of
Executive shall neither detract from nor impair Executive’s
ability to fulfill her obligations and responsibilities
hereunder.
(b) During
the Consulting Term, the Executive will be employed as a
consultant. While employed by the Company during the Consulting
Term, Executive shall serve the Company in such consulting
capacities as shall be determined by the Chief Executive Officer or
the Board of Directors of the Company. Executive agrees to devote
her entire time, energy and skill to further the interests of the
Company, and its subsidiaries and affiliates, during the Consulting
Term. Executive shall not engage in any activities competitive
with, or antithetical to, those of the Company, its subsidiaries or
affiliates, on either a paid or unpaid basis, during the Consulting
Term, and any outside activities of Executive shall neither detract
from nor impair Executive’s ability to fulfill her
obligations and responsibilities hereunder.
4. Office
Space and Equipment. During the Initial Term, the Company shall
provide Executive with a fully furnished office, computer
equipment, and other necessary supplies, and the
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facilities of
the Company shall be generally available to Executive in the
performance of her duties pursuant to this Agreement, it being
understood and contemplated by the parties that all equipment,
supplies and office personnel required in the performance of the
Executive’s duties under this Agreement shall be supplied by
the Company during the Initial Term. During the Consulting Term,
the Company shall not provide Executive with a dedicated office and
related furnishings, but shall provide Executive with a laptop
computer, mobile phone and/or wireless email device.
5.
Compensation, Vacation and Reimbursement of Expenses During
Initial Term
(a) During
the first year of the Initial Term, the Company shall pay the
Executive a base salary of $700,000. During the second year of the
Initial Term, the Company shall pay the Executive a base salary of
$800,000. Executive’s salary shall be payable to Executive in
accordance with the Company’s regular payroll policy, from
which taxes, social security and such other amounts as shall be
required under applicable law and regulations shall be
deducted.
(b) The
Board of Directors of the Company, in its discretion, may, with
respect to any year during the Initial Term, award stock options or
restricted stock to Executive in addition to the bonuses provided
for in Section 5(c) of this Agreement. Said bonus, if any, shall be
in addition to any pension or profit sharing payments set aside or
allocated for the benefit of Executive.
(c) In
addition to the basic salary paid pursuant to Section 5(a) of this
Agreement and any discretionary bonus as set forth in Section 5(b)
of this Agreement, the Company shall pay as incentive compensation
during the Initial Term a semi-annual bonus based upon
Executive’s performance and computed in accordance with the
incentive bonus plan adopted each year by the Board of Directors of
the Company.
(d) Executive
shall provide her own automobile for use as an employee hereunder.
Executive shall at all times maintain said automobile in good
repair and condition and shall adequately insure both Company and
Executive against claims for bodily injury, death or property
damage occurring as a result of its use. During the Initial Term,
the Company shall provide Executive with an automobile allowance of
$2,000.00 per month ($24,000.00 per year).
(e) During
the Initial Term, the Executive shall be entitled to such fringe
benefits including, but not limited to, medical and insurance
benefits as may be provided from time to time by the Company to
other management employees of the Company.
(f) During
the Initial Term, the Executive shall be entitled to vacations with
pay and to such personal and sick leave with pay in accordance with
the policy of the Company as may be established from time to time
by the Company.
(g) Upon
the Executive’s submission of timely and appropriate itemized
expense reports, the Company shall reimburse Executive for all
reasonable business-related expenses incurred in the furtherance of
Executive’s duties under this Agreement.
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6.
Compensation and Reimbursement of Expenses During Consulting
Term
(a) During
the Consulting Term, the Company shall pay the Executive on the
following graduated scale:
(i) Consulting
Term Year One: Monthly salary of $20,000.00.
(ii) Consulting
Term Year Two: Monthly salary of $15,000.00.
(iii) Consulting
Term Year Three: Monthly salary of $10,000.00.
(b) During
the Consulting Term, the Executive shall be entitled to such fringe
benefits including, but not limited to, medical and insurance
benefits as may be provided from time to time by the Company to
other management employees of the Company.
(c) Upon
the Executive’s submission of timely and appropriate itemized
expense reports, the Company shall reimburse Executive for all
reasonable business-related expenses, including automobile mileage
related expenses, incurred during the Consulting Term in the
furtherance of Executive’s duties under this Agreement in
accordance with the Company’s then applicable expense
reimbursement policy.
(d) The
Company will provide Executive with a lifetime Chico’s
clothing discount, in accordance with its Headquarters associate
discount program, as that discount may be amended from
time-to-time.
(e) Executive
shall not be entitled to any bonuses, a car allowance, or any other
forms of compensation during the Consulting Term of the Agreement,
other than the compensation described in Section 6 of this
Agreement. The Company in the sole discretion of the Chief
Executive Officer reserves the right, however, to make grants of
restricted stock or stock options or to provide the Executive with
a bonus.
7.
Termination of the Agreement .
(a)
Voluntary Termination By Executive .
(i) During
either the Initial Term, the Executive may terminate her employment
under this Agreement by giving the Company at least one-hundred
eighty (180) days’ prior written notice. During the
Consulting Term, the Executive may terminate her employment under
this Agreement by giving the Company at least thirty
(30) days’ prior written notice.
(ii) If,
during the Initial Term or Consulting Term, there is a greater than
50% change in the Company’s ownership or greater than 50%
turnover in the Company’s Board of Directors in any 12 month
period that results in the Executive’s good faith
determination that she can no longer adequately perform her duties
as a senior officer resulting in her voluntarily terminating her
employment, then the Executive shall continue to receive her annual
salary and other compensation and employee benefits (including
without limitation the bonus that would otherwise have been payable
during such compensation continuation period under the bonus plan
in effect immediately before the end of the Initial Term) that the
Company has in Section 5 agreed to pay and to provide for the
Executive; provided that, notwithstanding such termination
of
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employment, the
Executive’s covenants set forth in Section 10 and
Section 11 are intended to and shall remain in full force and
effect.. If, however, the Company adopts a severance plan
applicable to all officers that covers a change of control, any
such plan will supersede the provisions of this
paragraph.
(iii) If
the Executive gives notice pursuant to Section 7(a), the
Company shall have the right to relieve the Executive, in whole or
in part, of her duties under this Agreement (without reduction in
compensation through the termination date).
(b)
Termination by Company .
(i) Except
as otherwise provided in this Agreement, the Company may terminate
the employment of the Executive under this Agreement immediately
for good cause and upon written notice.
(ii) As
used herein, “good cause” shall include:
(1)
the Executive’s conviction of a felony that involves moral
turpitude;
(2)
the Executive’s conviction of any crime related to her
employment by the Company;
(3)
the Executive’s willful neglect of, or gross negligence
concerning, her duties, or engaging in willful misconduct in the
performance of her duties, in any such instance so as to cause the
risk of harm to the Company;
(4)
the Executive’s commission of fraud, misappropriation or
embezzlement in the performance of her duties as an employee of the
Company;
(5)
the Executive’s willful failure to take actions permitted by
law and necessary to implement policies of the Company’s
Board of Directors which the Board of Directors has communicated to
her in writing;
(6)
the Executive’s continued failure to attend to her duties as
an management employee of the Company;
(7)
the Executive’s material breach of the terms of this
Agreement; or,
(8)
any condition which either resulted from the Executive’s
substantial dependence, as determined by the Board of Directors of
the Company, on alcohol, or any narcotic drug or other controlled
or illegal substance.
(c)
Termination Upon Executive’s Death During Initial
Term. If the Executive dies during the Initial Term of this
Agreement, this Agreement shall terminate as of the date of the
Executive’s death, except that the Executive’s estate
or beneficiaries shall be entitled to receive
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any annual
salary, bonus and other benefits earned and accrued prior to the
date of the Executive’s death, including without limitation
any bonus compensation or unused vacation earned but not yet paid,
as would otherwise have been payable to the Executive up to the end
of the month in which her death occurs, plus six (6) months
additional compensation based upon her annual salary at the time of
her death. Executive’s estate or beneficiaries shall also be
entitled to reimbursement for expenses incurred by the Executive
prior to the date of death, subject to Section 5(g) above. The
Company shall have no additional financial obligation under this
Agreement to the Executive or her estate. After receiving the
payments provided in this subparagraph (c), the Executive and her
estate shall have no further rights under this
Agreement.
(d)
Termination Upon Executive’s Death During Consulting
Term. If the Executive dies during the Consulting Term of this
Agreement, this Agreement shall terminate as of the date of the
Executive’s death, except that the Executive’s estate
or beneficiaries shall be entitled to receive any
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