EMPLOYMENT AGREEMENT
Exhibit 10.14
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 1st day of
April, 2006 (the “Effective Date”), by and between CHICO’S FAS, INC. a Florida corporation (the
“Company”), and XXXXXXXX XXXXXX XXXXXXXX (the “Executive”).
W I T N E S S E T H:
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.
3. Duties.
(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 annual salary and other benefits, including, without limitation, unused vacation earned and
accrued prior to the date of the Executive’s death, as would otherwise have been payable to the
Executive up to the end of the month in which her death occurs. 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 (d), the Executive and her estate shall have no further
rights under this Agreement.
(e) Termination Upon Executive’s Disability. If the Executive, by virtue of ill
health or other disability, is unable to perform substantially and continuously the duties assigned
to her on a full-time basis for a period in excess of ninety (90) days in any twelve-month period,
the Company shall have the right to terminate this Agreement by giving written notice to the
Executive. In the event of such termination, the Executive shall be entitled to receive any annual
salary, bonus and other benefits, including, without limitation, unused vacation earned and accrued
prior to the date of termination, and reimbursement for expenses incurred prior to the date of
termination, subject to Section 5(g) above. This right to terminate Executive’s employment due to
her unavailability shall be subject to the overriding obligations of the Company under the
Americans with Disabilities Act, and, if applicable, similar state and local laws.
(f) Compensation Payable Upon Termination by Company for Good Cause or Voluntarily by
Executive. If the employment of the Executive is terminated for good cause under Section
7(b)(ii) of this Agreement during the Initial Term, or if the Executive voluntarily terminates her
employment by written notice to the Company under Section 7(a) of this Agreement during the Initial
Term, the Company shall pay to the Executive any compensation earned but not paid to the Executive
prior to the effective date of such termination, including,
without limitation, unused vacation. Under such circumstances, such payment shall be in full and
complete discharge of any and all liabilities or obligations of the Company to the Executive
hereunder, and the Executive shall be entitled to no further benefits under this Agreement.
(g) Compensation Payable Upon Termination by Company During Initial Term Without Good
Cause.
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(i) If the Company terminates the employment of the Executive during the Initial Term without
good cause effective on a date earlier than the end of the Initial Term provided for in Section 2,
the Executive, until the end of the Initial Term, 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
employment, the Executive’s covenants set forth in Section 10 and Section 11 are intended to and
shall remain in full force and effect.
(ii) The parties agree that, because there can be no exact measure of the damage that would
occur to the Executive as a result of a termination by the Company of the Executive’s employment
without good cause, the payments and benefits paid and provided pursuant to this Section 7(g) shall
be deemed to constitute liquidated damages and not a penalty for the Company’s termination of the
Executive’s employment without good cause, and the Company agrees that the Executive shall not be
required to mitigate her damages.
(h) Termination By Notice During Consulting Term. During the Consulting Term, the
Company may terminate Executive’s employment under this Agreement by giving the Executive at least
thirty (30) days’ prior written notice, or the payment of Executive’s then monthly salary for
thirty (30) days in lieu of said notice, or a combination of notice and monthly salary in lieu of
said notice. In addition to the notice and/or the payment of the monthly salary provided for
herein, the Executive shall be entitled to a lump sum payment equal to the total of all payments
remaining under this Agreement plus an amount equal to the monthly COBRA payment required to
maintain her medical benefits times the number of months remaining under this Agreement in the
event that the Company terminates the Executive’s employment during the Consulting Term pursuant to
Section 7(h) of this Agreement.
(i) Release. Payment of any compensation to the Executive under Section 7 of this
Agreement that is not earned and accrued following termination of employment shall be conditioned
upon the Executive’s Execution of a release executed in substantially the form attached to this
Agreement as Exhibit A.
8. Disclosure. The Executive agrees that during the term of her employment by the
Company, she will disclose and disclose only to the Company all ideas, methods, plans, developments
or improvements known by her which relate directly or indirectly to the business of the Company,
whether acquired by the Executive before or during her employment by the Company. Nothing in this
Section 8 shall be construed as requiring any such communication where the idea, plan, method or
development is lawfully protected from
disclosure as a trade secret of a third party or by any other lawful prohibition against such communication.
9. Trade Secrets and Confidential Information. Executive acknowledges that the
business of the Company is highly competitive, and that the Company has provided, continues to
provide, and will provide Executive with access to Trade Secrets and other Confidential Information
relating to the business of the Company. “Confidential Information” means and includes the
Company’s confidential and proprietary information (including Trade Secrets as defined by
applicable law) that has been developed or used by the Company and/or will be developed and that
cannot be obtained readily by third parties from outside sources. Confidential
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information includes, by way of example and without limitation, the following: information regarding
customers, employees, contractors, and the industry not generally known to the public; strategies,
methods, books, records, and documents; technical information concerning products, equipment,
services, and processes; the names of and other information concerning customers, investors, and
business affiliates; pricing information and strategies; budgets; customer lists; financial and
sales data; evaluations, opinions, and interpretations of information and data; marketing and
merchandising techniques; electronic databases; computer programs; internal business records;
contracts, bids or proposals; technologies and methods; training methods and training processes;
salaries of personnel; and other such confidential or proprietary information.
Executive acknowledges that this Confidential Information constitutes a valuable, special, and
unique asset used by the Company in its business to obtain a competitive advantage over its
competitors. Executive further acknowledges that protection of such Confidential Information
against unauthorized use and disclosure is of critical importance to the Company in maintaining its
competitive position. Executive therefore agrees that Executive will not, at any time after the
termination of her employment with the Company for any reason, disclose or use any Trade Secrets or
other Confidential Information of the Company, directly or indirectly, personally or on behalf of
any other person, business, corporation or entity, except in the carrying out of Executive’s
employment responsibilities with the Company. Executive understands the importance of this
confidentiality obligation and acknowledge that the use or disclosure of the Company’s Trade
Secrets or Confidential Information by Executive could be damaging to the Company’s business
operations, particularly if such use or disclosure is by or to a competitor of the Company.
Executive further agrees that if Executive should ever accept employment from, or provide
consulting services to, or become a competitor of the Company, Executive will not disclose, use or
permit the use of Trade Secrets or Confidential Information for the benefit of such competitor.
This clause is not intended to, and does not limit in any way, the rights and remedies provided to
the Company under common and statutory law.
Executive also agrees that at the termination of Executive’s employment with the Company for
any reason, Executive shall immediately return all of the Company’s documents, data, or other
property to the Company at the Company’s headquarters in Fort Xxxxx, Florida.
10. Noncompetition and Nonsolicitation.
The Executive hereby acknowledges that, during and solely as a result of her employment by the
Company in a high level executive position, she may have received and shall continue to receive:
(1) special training and education with respect to the operations of a retail clothing chain and
other related matters; (2) access to confidential information; and (3) access to the Company’s
business and professional contacts with clients, customers, suppliers and others. In consideration
of the special and unique opportunities afforded to the Executive by the Company as a result of the
Executive’s employment, as outlined in the previous sentence, the Executive hereby agrees as
follows:
(a) Except as may be otherwise provided in this section of the Agreement, Executive agrees
that for a period of two (2) years after the termination of her employment with
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the Company for any reason, she shall not, directly or indirectly within the Territory, (i) for herself; (ii) as a
consultant, manager, supervisor, employee or owner; or (iii) as an independent contractor, enter
into, engage in, be employed by or consult with any business which competes with the business of
the Company by selling, offering to sell, soliciting offers to buy, or producing, or by consulting
with others concerning the selling or producing of, any product substantially similar to those now
sold or produced by the Company or included in the product lines then developed by the Company for
sale or production, specifically including, but not limited to, all women’s specialty retail
apparel and related accessories. For purposes of this agreement, “Territory” is defined as the
United States and its territories, which are the states and territories in which the Company
currently operates clothing stores. The restrictions of Section 10(a) shall not be violated by (i)
the ownership of no more than 2% of the outstanding securities of any company whose stock is traded
on a national securities exchange or is quoted in the Automated Quotation System of the National
Association of Securities Dealers (NASDAQ), or (ii) other outside business investments that do not
in any manner conflict with the services to be rendered by the Executive for the Company and that
do not diminish or detract from the Executive’s ability to render her required attention to the
business of the Company.
(b) Executive agrees that for a period of two (2) years after the termination of her
employment with the Company for any reason, Executive shall not, either directly or indirectly, on
behalf of herself or any person, firm, company, business, corporation, partnership, sole
proprietorship or other legal entity, solicit, contact, call upon, or attempt to communicate with
any customer or prospective customer of the Company for the purpose of selling or providing retail
clothing products, provided that said restriction shall apply only to those customers and
prospective customers (i) with whom Executive had contact during her employment with the Company;
or (ii) about whom the Company maintained confidential information accessible to the Executive
during her employment with the Company.
(c) Executive agrees that for a period of two (2) years after the termination of her
employment with the Company for any reason, she shall not, either directly or indirectly, on behalf
of herself or any person, firm, company, business, corporation, partnership, sole proprietorship or
other legal entity, influence or attempt to influence any employee, representative or advisor
affiliated with the Company, to terminate their employment or relationship with the Company.
(d) The period of time during which the Executive is prohibited from engaging in certain
business practices pursuant to Sections 10(a), 10(b) or 10(c) shall be extended by any length of
time during which the Executive is in breach of such covenants.
(e) It is understood by and between the parties hereto that the foregoing restrictive
covenants set forth in Sections 10(a) through (c) are essential elements of this Agreement, and
that, but for the agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement.
(f) The consideration for these covenants by the Executive consists of: (1) special training
and education with respect to the operations of a retail clothing chain and other related matters,
and (2) access to the Company’s confidential information, and (3) access to the Company’s business
and professional contacts with clients, customers, suppliers and others.
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Accordingly, such covenants by the Executive shall be construed as agreements independent of any other provision in
this Agreement. The existence of any other claim or cause of action of the Executive against the
Company, whether predicated on this Agreement, or otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants.
(g) It is agreed by the Company and Executive that if any portion of the covenants set forth
in this Section 10 are held to be invalid, unreasonable, arbitrary, or against public policy, then
such portion of such covenants shall be considered divisible both as to time and geographical area.
The Company and Executive agree that, if any court of competent jurisdiction determines the
specified time period or the specified geographical area applicable to this Section 10 to be
invalid, unreasonable, arbitrary or against public policy, a lesser time period or geographical
area which is determined to be reasonable, non-arbitrary and not against public policy may be
enforced against the Executive. The Company and the Executive agree that the foregoing covenants
are appropriate and reasonable when considered in light of the nature and extent of the business
conducted by the Company.
11. Specific Performance. The Executive agrees that damages at law will be an
insufficient remedy to the Company if the Executive violates the terms of Sections 8, 9 or 10 of
this Agreement and that the Company would suffer irreparable damage as a result of such violation.
Accordingly, it is agreed that the Company shall be entitled, upon application to a court of
competent jurisdiction, to obtain injunctive relief to enforce the provisions of such Sections,
which injunctive relief shall be in addition to any other rights or remedies available to the
Company.
12. Waiver of Breach. The waiver by the Company of a breach of any of the provisions
of this Agreement by the Executive shall not be construed as a waiver of any subsequent breach by
the Executive.
13. Binding Effect; Assignment. The obligations of the Executive under this Agreement
shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.
It is expressly acknowledged that the provisions of Section 10 relating to noncompetition,
nonsolicitation and nonacceptance may be enforced by the Company’s successors and assigns. This
Agreement is a personal employment contract and the rights, obligations and interests of the
Executive hereunder may not be sold, assigned, transferred, pledged or hypothecated.
14. Entire Agreement. This Agreement contains the entire agreement between the
parties and supersedes all prior agreements and understandings, oral or written, with respect to
the subject matter hereof. This Agreement may be changed only by an agreement in writing signed by
the party against whom any waiver, change, amendment, modification or discharge is sought.
15. Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
16. Governing Law/Consent to Jurisdiction/Forum Selection. As the Executive
acknowledges that the Company is headquartered in Florida, that confidential
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information being disclosed to the Executive is maintained by the Company in Florida, that the services the Executive
is to provide will be provided in several states including Florida, and because the injury to the
Company as a result of any breach of this Agreement would be felt primarily in Florida, therefore,
the parties agree: a) This Agreement shall be construed and enforced in accordance with the laws of
the State of Florida (except any choice of law provision of Florida law shall not apply if the
effect of such provision would be to apply the law of another state or jurisdiction); b) the
Executive consents to the jurisdiction of the state and federal courts in Florida for the
resolution of any dispute arising out of the Executive’s employment and/or this Agreement; and c)
the parties agree that any such action may only be brought in the state or federal courts
in Ft. Xxxxx, Xxx County, Florida .
17. Mediation Requirement. The parties agree to mediate any dispute arising under
this Agreement or related to Executive’s employment with the Company, with the exception of any
dispute related to Executive’s breach of Sections 8 through 10 of the Agreement, prior to filing a
lawsuit or other legal claim. Any such mediation shall take place in Ft. Xxxxx, Florida. The
parties shall agree on a certified mediator, and each party will be responsible for one half (1/2)
of the mediator’s fees.
18. Notice. All notices which are required or may be given under this Agreement shall
be in writing and shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy or similar electronic transmission method; one working
day after it is sent, if sent by recognized expedited delivery service; and five days after it is
sent, if mailed, first class mail, certified mail, return receipt requested, with postage prepaid.
In each case notice shall be sent to:
| If to the Executive: | Xxxxxxxx Xxxxxx Xxxxxxxx | |||
| 0000 Xxxxxxx Xxx | ||||
| Xxxxx Xxxxx, Xxxxxxx 00000 | ||||
| If to the Company: | Chico’s FAS, Inc. | |||
| 00000 Xxxxx Xxxxxxx | ||||
| Xx. Xxxxx, Xxxxxxx 00000 |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first
above written.
| CHICO’S FAS, INC. | ||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| EMPLOYEE: | ||||
| /s/ Xxxxxxxx Xxxxxx Xxxxxxxx | ||||
| XXXXXXXX XXXXXX XXXXXXXX | ||||
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