<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT
For the Quarter Ended: Commission File Number:
June 30, 1996 0-21258
CHICO'S FAS, INC.
(Exact name of registrant as specified in charter)
Florida 59-2389435
(State of Incorporation) (I.R.S. Employer Identification No.)
11215 Metro Parkway, Fort Myers, Florida 33912
(Address of principal executive offices)
941-277-6200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
At August 6, 1996, there were 7,881,255 shares outstanding of Common Stock,
$.01 par value per share.
<PAGE> 2
CHICO'S FAS, INC.
Index
<TABLE>
<CAPTION>
PART I - Financial Information Page
Item 1. Financial Statements (Unaudited):
<S> <C>
Condensed Balance Sheets - June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Condensed Statements of Income for the Thirteen and Twenty-Six Week Periods Ended
June 30, 1996 and July 2, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows for the Twenty-Six Weeks Ended
June 30, 1996 and July 2, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
CHICO'S FAS, INC.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
As of As of
6/30/96 12/31/95
----------------- ----------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,972,652 $ 1,099,929
Receivables, net 450,541 571,482
Inventories 6,994,537 6,775,374
Prepaid expenses 376,389 376,987
Deferred taxes 907,000 867,000
---------------- ----------------
Total Current Assets 14,701,119 9,690,772
---------------- ----------------
Land, Building and Equipment:
Cost 20,440,727 20,067,061
Less accumulated depreciation and amortization (4,330,463) (3,847,093)
---------------- ----------------
Land, Building and Equipment, Net 16,110,264 16,219,968
---------------- ----------------
Other Assets:
Deferred taxes 539,000 540,000
Other assets 661,732 558,540
---------------- ----------------
Total Other Assets 1,200,732 1,098,540
---------------- ----------------
$ 32,012,115 $ 27,009,280
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,004,607 $ 2,035,074
Accrued liabilities 2,867,836 2,467,231
Accrued income taxes 863,430 -
Current portion of notes payable and lease obligations 640,209 652,264
---------------- ---------------
Total Current Liabilities 7,376,082 5,154,569
---------------- ----------------
Noncurrent Liabilities:
Notes and capital leases payable 5,252,495 3,683,099
Credit line payable - 722,942
Deferred rent 1,464,598 1,489,720
---------------- ----------------
Total Noncurrent Liabilities 6,717,093 5,895,761
---------------- ----------------
Stockholders' Equity:
Common stock 78,813 77,825
Additional paid-in capital 7,539,237 7,087,636
Retained earnings 10,300,890 8,793,489
---------------- ----------------
Total Stockholders' Equity 17,918,940 15,958,950
---------------- ----------------
$ 32,012,115 $ 27,009,280
================ ===============
</TABLE>
Page 3
See Accompanying Notes
<PAGE> 4
CHICO'S FAS, INC.
Condensed Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended Thirteen Weeks Ended
6/30/96 7/2/95 6/30/96 7/2/95
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net Sales by Company Stores $ 31,700,203 $ 28,686,466 $ 16,375,377 $ 14,666,280
Net Sales to Franchisees 755,019 1,500,704 430,687 860,916
----------------- ----------------- ----------------- -----------------
NET SALES 32,455,222 30,187,170 16,806,064 15,527,196
Cost of Goods Sold 13,653,437 13,210,664 6,369,792 6,345,841
----------------- ----------------- ----------------- -----------------
Gross Profit 18,801,785 16,976,506 10,436,272 9,181,355
General, Administrative and Store
Operating Expenses 16,091,546 15,172,239 8,376,950 7,852,066
----------------- ----------------- ----------------- -----------------
Income from Operations 2,710,239 1,804,267 2,059,322 1,329,289
Interest Expense, Net 198,836 289,226 83,962 132,665
----------------- ----------------- ----------------- -----------------
Income Before Taxes 2,511,403 1,515,041 1,975,360 1,196,624
Provision for Income Taxes 1,004,000 625,000 790,000 493,000
----------------- ----------------- ----------------- -----------------
NET INCOME $ 1,507,403 $ 890,041 $ 1,185,360 $ 703,624
================= ================= ================= =================
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.18 $ 0.11 $ 0.14 $ 0.09
================= ================= ================= =================
Weighted average common and
common equivalent shares
outstanding 8,188,195 7,897,992 8,248,449 7,865,336
================= ================= ================= =================
</TABLE>
Page 4
See Accompanying Notes
<PAGE> 5
CHICO'S FAS, INC.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
6/30/96 7/2/95
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,507,403 $ 890,041
------------ -------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 897,394 815,412
Deferred taxes (39,000) 60,000
Loss on disposal of property and equipment 106,719 14,368
Decrease in deferred rent (25,122) (38,816)
Change in assets and liabilities:
Decrease (increase) in receivables, net 120,941 (8,473)
(Increase) decrease in inventories (219,163) 378,990
Decrease in prepaids and other assets 44,874 45,985
Increase (decrease) in accounts payable 969,533 (639,736)
Increase in accrued liabilities 400,603 190,690
Increase in accrued income taxes 863,430 327,220
------------ -------------
Total adjustments 3,120,209 1,145,640
------------ -------------
Net cash provided by operating activities 4,627,612 2,.035,681
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets - 9,982
Purchases of land, buildings and equipment (809,186) (672,332)
------------ -------------
Net cash used in investing activities (809,186) (662,350)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 452,589 8,167
Credit line payments (722,942) (505,366)
Principal payments on debt (4,030,159) (323,395)
Borrowings under noncurrent debt 5,587,500 -
Deferred finance costs (232,691) (137,544)
------------ -------------
Net cash provided by (used in) financing activities 1,054,297 (958,138)
------------ -------------
Net increase in cash and cash equivalents 4,872,723 415,193
CASH AND CASH EQUIVALENTS - Beginning of Period 1,099,929 805,979
------------ -------------
CASH AND CASH EQUIVALENTS - End of Period $ 5,972,652 $ 1,221,172
============ =============
</TABLE>
Page 5
See Accompanying Notes
<PAGE> 6
CHICO'S FAS, INC.
Notes to Condensed Financial Statements
(Unaudited)
June 30, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed financial statements of Chico's
FAS, Inc. (the "Company") have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. For further information, refer
to the financial statements and notes thereto for the year ended
December 31, 1995, included in the Company's Annual Report on Form 10-K
filed on March 29, 1996. The December 31, 1995 balance sheet amounts
were derived from audited financial statements included in the
Company's Annual Report.
Operating results for the twenty-six weeks ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the
entire fiscal year.
Net Income Per Common and Common Equivalent Share
Net income per common and common equivalent share is computed by
dividing net income by the weighted average number of common and common
equivalent shares outstanding during the periods, adjusted to include
the number of additional shares (360,459 and 122,384 for the twenty-six
weeks ended June 30, 1996 and July 2, 1995, respectively, and 384,909
and 89,425 for the thirteen weeks ended June 30, 1996 and July 2, 1995,
respectively) that would have been outstanding if the stock options
granted had been exercised, with the proceeds being used to buy shares
from the market (i.e., the treasury stock method). Net income per
common and common equivalent share represents both primary and fully
diluted per share information.
2. RESTRICTED CASH
The Company's $3 million letter of credit facility, which expires in
May 1997, requires that $1.6 million of cash be placed in a certificate
of deposit with the lender to serve as partial collateral for such
facility. As such, this cash, which is included in cash and cash
equivalents on the balance sheet, is not available for general use by
the Company.
Page 6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED JUNE 30, 1996 COMPARED TO THE
THIRTEEN WEEKS ENDED JULY 2, 1995.
Net Sales. Net sales by Company-owned stores for the thirteen weeks ended June
30, 1996 increased by $1.7 million, or 11.7%, over net sales by Company-owned
stores for the comparable thirteen weeks ended July 2, 1995. The increase was
the result of approximately $759,000 additional sales from the new (or
reacquired) stores not yet included in the Company's comparable store base (net
of prior year sales of approximately $499,000 from six stores closed in 1995),
and by a comparable Company-owned store net sales increase of approximately
$950,000.
Net sales to franchisees for the thirteen weeks ended June 30, 1996 decreased
approximately $430,000, or 50.0% compared to net sales to franchisees for the
thirteen weeks ended July 2, 1995. The Company believes that the decrease in
net sales to franchisees was primarily caused by conservative buying positions
established by the franchisees as the Company began delivering its new designs
and styles in late March 1996, combined with increased returns of older
merchandise in anticipation of a new, more restrictive return policy which
became effective in July 1996. In addition, the Company acquired five
franchises in 1995 and one franchise closed in early 1996 resulting in a
decrease in net sales of approximately $150,000 for the thirteen weeks ended
June 30, 1996.
Gross Profit. Gross profit for the thirteen weeks ended June 30, 1996 was
$10.4 million, or 62.1% of net sales, compared with $9.2 million, or 59.1% of
net sales for the thirteen weeks ended July 2, 1995. The increase in the gross
profit percentage primarily resulted from improved gross margins related to
more full-price selling due to the Company's move to new designs, fabrics and
styles in late March 1996, combined with a general shortage of available new
goods in April and May 1996 which resulted in fewer markdowns. To a lesser
degree, the increase in gross profit percentage was caused by an increase in
the proportion of net sales by Company-owned stores as compared to the net
sales to franchisees (which sales carry a lower gross margin) and to a revised
merchandising strategy for the Company's outlet stores which resulted in
significantly higher margins for these seven stores.
General, Administrative and Store Operating Expenses. General, administrative
and store operating expenses increased to $8.4 million, or 49.8% of net sales,
in the thirteen weeks ended June 30, 1996 from $7.9 million, or 50.6% of net
sales, in the thirteen weeks ended July 2, 1995. The increase in general,
administrative and store operating expenses was, for the most part, the result
of increases in store operating expenses, including store compensation,
occupancy and other costs associated with additional store openings. The
decrease in these expenses as a percentage of net sales was principally due to
a decrease in direct store payroll as a percentage of net sales resulting from
improved scheduling and staffing procedures, which were gradually implemented
over the first and second quarter of 1996.
Interest Expense, Net. Interest expense, net decreased to approximately
$84,000 in the thirteen weeks ended June 30, 1996 from approximately $133,000
in the thirteen weeks ended July 2, 1995. This decrease was primarily a
result of increased interest income due to improved cash flow resulting from
improved profitability and lower inventory levels since the beginning of 1996.
Net Income. As a result of the factors discussed above, net income reflects an
increase of 68.5% to $1.2 million in the thirteen weeks ended June 30, 1996
from net income of approximately $704,000 in the thirteen weeks ended July 2,
1995. The income tax provision represented an effective rate of 39.9% for the
thirteen weeks ended June 30, 1996 while the income tax provision for the
thirteen weeks ended July 2, 1995 represented an effective rate of 41.2%. The
decrease in the effective rate is largely attributable to changes in the
permanent book-to-tax differences.
Page 7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED JUNE 30, 1996 COMPARED TO THE
THIRTEEN WEEKS ENDED JULY 2, 1995. (CONTINUED)
Comparable Company Store Net Sales. Comparable Company store net sales
increased by 7.0% in the thirteen weeks ended June 30, 1996 when compared to
the comparable period in fiscal 1995. Comparable Company store net sales data
is calculated based on the change in net sales of currently open Company-owned
stores that have been operated as a Company store for at least thirteen months
(103 stores).
The Company believes that the increase in comparable Company store net sales
reflects improvements in the merchandise offered by the Company including
changes in merchandise design, construction, fabric and product assortment. In
addition, the Company believes the increase is also attributable to an increase
in average price points due to improved outlet pricing strategies and better
quality fabric and construction. To a lesser degree, the Company believes that
the increase is attributable to a general improvement in the woman's retail
apparel environment for the second quarter of 1996. This trend has not
continued for the Company in the third quarter of 1996.
In March 1996 the Company moved to a more full price environment in its
Company's front-line stores, while continuing inventory clearance via a local
warehouse sale which was not included in the comparable store sales base.
During 1995, inventory was still being cleared via sidewalk sales at individual
Company-owned stores. Due to this change in inventory clearance strategies,
the Company excluded approximately $90,000 in second quarter 1995 local store
sales to more accurately portray its year-over-year sales. See the Company's
Annual Report on Form 10-K and Annual Report to Stockholders for the fiscal
year ended December 31, 1995 for a more detailed description of the comparable
company store sales trends appearing on page 6 of the Annual Report to
Stockholders, and the status of the Company's transition plan appearing on page
2 and 3 of the Company's Annual Report on Form 10-K; such portions of the
Annual Report to Stockholders and Annual Report on Form 10-K are incorporated
by reference into this Quarterly Report.
RESULTS OF OPERATIONS - TWENTY-SIX WEEKS ENDED JUNE 30, 1996 COMPARED TO THE
TWENTY-SIX WEEKS ENDED JULY 2, 1995.
Net Sales. Net sales by Company-owned stores for the twenty-six weeks ended
June 30, 1996 increased by $3.0 million, or 10.5%, over net sales by
Company-owned stores for the comparable twenty-six weeks ended July 2, 1995.
The increase was the result of approximately $968,000 in additional sales
generated through a warehouse sale held at the Company's headquarters and at a
temporary outlet store located in Florida that has since been closed, $1.1
million in additional sales from the new (or reacquired) stores not yet
included in the Company's comparable store base (net of prior year sales of
$1.1 million from six stores closed in 1995), and by a comparable Company-owned
store net sales increase of approximately $992,000.
Net sales to franchisees for the twenty-six weeks ended June 30, 1996 decreased
approximately $746,000, or 49.7% compared to net sales to franchisees for the
twenty-six weeks ended July 2, 1995. The decrease in net sales to franchisees
was principally caused by an approximate $394,000 decrease in net sales to
franchisees due to the acquisition of five franchises by the Company during
1995 and the closing of one franchise in early 1996. Management believes the
balance of the decrease in net sales to franchisees resulted in part from
conservative buying positions established by the franchisees as the Company
began delivering its new designs and styles in late March 1996, combined with
increased returns of older merchandise in anticipation of a new, more
restrictive return policy which became effective in July 1996.
Page 8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS - TWENTY-SIX WEEKS ENDED JUNE 30, 1996 COMPARED TO THE
TWENTY-SIX WEEKS ENDED JULY 2, 1995. (CONTINUED)
Gross Profit. Gross profit for the twenty-six weeks ended June 30, 1996 was
$18.8 million, or 57.9% of net sales, compared with $17.0 million, or 56.2% of
net sales for the twenty-six weeks ended July 2, 1995. The increase in the
gross profit percentage primarily resulted from improved gross margins related
to the Company's new spring goods which generally arrived at the front-line
stores in March 1996, and an increase in the Company's outlet gross margins due
to a change in its merchandising strategies. To a lesser degree, the increase
in gross profit percentage was caused by an increase in the proportion of net
sales by Company-owned stores as compared to the net sales to franchisees
(which sales carry a lower gross margin).
General, Administrative and Store Operating Expenses. General, administrative
and store operating expenses increased to $16.1 million, or 49.6% of net sales,
in the twenty-six weeks ended June 30, 1996 from $15.2 million, or 50.3% of
sales, in the twenty-six weeks ended July 2, 1995. The increase in general,
administrative and store operating expenses was, for the most part, the result
of increases in store operating expenses, including store compensation,
occupancy and other costs associated with additional store openings. The
decrease in these expenses as a percentage of net sales was principally due to
the additional sales at the Company's warehouse sale which required little in
the way of operating expenses as a percentage of such sales, as well as a
reduction in direct store payroll as a percentage of net sales.
Interest Expense, Net. Interest expense, net decreased to approximately
$199,000 in the twenty-six weeks ended June 30, 1996 from approximately
$289,000 in the twenty-six weeks ended July 2, 1995. This decrease was
primarily a result of increased interest income due to improved cash flow
resulting from improved profitability since the beginning of 1996 combined with
the success of the Company's warehouse sales and to lower inventory levels.
Net Income. As a result of the factors discussed above, net income reflects an
increase of 69.4% to $1.5 million in the twenty-six weeks ended June 30, 1996
from net income of approximately $890,000 in the twenty-six weeks ended July 2,
1995. The income tax provision represented an effective rate of 40.0% for the
twenty-six weeks ended June 30, 1996 while the income tax provision for the
twenty-six weeks ended July 2, 1995 represented an effective rate of 41.3%.
The decrease in the effective rate is largely attributable to changes in the
permanent book-to-tax differences.
Comparable Company Store Net Sales. Comparable Company store net sales
increased by 3.7% in the twenty-six weeks ended June 30, 1996 when compared to
the comparable period in fiscal 1995. Comparable Company store net sales data
is calculated based on the change in net sales of currently open Company-owned
stores that have been operated as a Company store for at least thirteen months
(98-103 stores).
The Company believes that the increase in comparable Company store net sales
reflects improvements in the merchandise offered by the Company, including
changes in merchandise design, construction, fabric and product assortment. In
addition, the Company believes the increase is also attributable to an increase
in average price points and a general improvement in the women's retail apparel
environment in the second quarter of 1996.
In March 1996 the Company moved to a more full price environment in its
Company's front-line stores, while continuing inventory clearance via a local
warehouse sale which was not included in the comparable store sales base.
During 1995, inventory was still being cleared via sidewalk sales at individual
Company-owned stores. Due to this change in inventory clearance strategies,
the Company excluded approximately $176,000 in the first twenty-six weeks of
1995 local store sales to more accurately portray its year-over-year sales. See
the Company's Annual Report on Form 10-K and Annual Report to Stockholders for
the fiscal year ended December 31, 1995 for a more detailed description of the
comparable company store sales trends appearing on page 6 of the Annual Report
to Stockholders, and the status of the Company's transition plan appearing on
Page 9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS - TWENTY-SIX WEEKS ENDED JUNE 30, 1996 COMPARED TO THE
TWENTY-SIX WEEKS ENDED JULY 2, 1995. (CONTINUED)
page 2 and 3 of the Company's Annual Report on Form 10-K; such portions of the
Annual Report to Stockholders and Annual Report on Form 10-K are incorporated
by reference into this Quarterly Report.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary on going capital requirements are for funding capital
expenditures related to new store openings and merchandise inventory purchases.
During the first twenty-six weeks of fiscal 1996 and the first twenty-six weeks
of fiscal 1995, the Company's primary source of working capital was cash flow
from operations of $4.6 million and $2.0 million, respectively. The increase
in cash flow from operations was primarily due to an increase in accounts
payable in fiscal 1996 of $1.0 million principally related to large receipts of
merchandise near the end of the quarter for which payment had not yet been
made. This compares to a decrease in accounts payable of approximately
$640,000 in fiscal 1995 due to payments of the final liabilities related to the
Company's new combined corporate headquarters, distribution center and
woodshop. The increase in cash flow was also due to improved profitability of
approximately $617,000 combined with an increase in the associated accrued
income tax liabilities of approximately $536,000. This increase in cash flow
from operations was partially offset by an increase in inventories of
approximately $219,000 in the first twenty-six weeks of fiscal 1996, as
compared to a decrease of approximately $379,000 in the first twenty-six of
weeks fiscal 1995.
In early January 1996, the Company obtained a seven year $5.6 million mortgage
facility from a lender which was in addition to the Company's current $6
million working capital line and letter of credit facility made available by
another lender. The proceeds of the mortgage facility were used in part to
repay the $3.9 million balance of certain term and note facilities that had
been put in place in 1994 and were used in part to provide $1.6 million of cash
to serve as collateral (along with inventories and accounts receivable which
serve as collateral for both the line and letter of credit facilities) for its
letter of credit facility. As part of this refinancing, the collateral
deposits previously provided by certain shareholders to secure the letter of
credit facility were no longer required. The Company also repaid approximately
$130,000 of other indebtedness in the first twenty-six weeks of fiscal 1996.
Also, during the first twenty-six weeks of fiscal 1996, the Company repaid
approximately $723,000 under its available working capital credit lines, while
in the first twenty-six weeks of fiscal 1996, the Company repaid approximately
$505,000 under its then available credit lines.
The Company has aggressively pursued a strategy during fiscal 1995, and
continuing into 1996, to expand and shift its vendor base to new vendors in
Hong Kong, Turkey, Guatemala, Peru, India and the U.S. This shift in vendor
base has been implemented by the Company for several reasons. First,
management was concerned that the quality and timeliness of deliveries from its
vendor base were not measuring up to the standards required for the new line of
merchandise. Second, management determined that it was important to make
further efforts to reduce its reliance on a limited number of suppliers.
Although the Company has achieved satisfactory results on the merchandise
received thus far from these new vendors, there can be no assurance that the
Company will achieve its goal of continuing to improve the quality and
timeliness of deliveries. In addition, this shift to new vendors has increased
the Company's needs for documentary letters of credit. As of June 30, 1996,
the Company has issued and outstanding letters of credit which totaled $2.5
million. The Company has letter of credit facilities totaling $3.0 million
available under the existing credit facilities which mature in May 1997. See
"Item 1-Business" appearing on pages 12 through 15 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 for additional
information about the impact of the shift in vendors and the
Page 10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
business and political risks associated with these vendors' countries; such
portions of the Annual Report on Form 10-K are incorporated by reference into
this Quarterly Report.
The Company invested approximately $809,000 during the first twenty-six weeks
of fiscal 1996 for capital expenditures principally associated with the opening
of three new Company stores, the remodeling of four existing Company stores and
with the costs of new fixtures required for a Company-wide refixturing program
to convert all Company stores from principally folded displays to principally
hanging displays. It is estimated that this refixturing effort will require an
investment of approximately $10,000 in capital expenditures for each store,
totaling $1.0 to $1.2 million for the Company, and that approximately
one-third of the estimated costs have been incurred at June 30, 1996. The
Company intends to complete this refixturing effort in several stages that will
extend into mid-1997. The Company also closed, during this period, the
temporary store located in Florida that was used as an outlet and one store
whose lease had expired which the Company elected not to renew.
During the first quarter of 1996, one of the Company's former officers
exercised 71,540 stock options at the price of $4.08. In addition, during the
first twenty-six weeks of fiscal 1996, several other employees exercised 6,180
options at various prices ranging from $5.50 to $8.75 and the Company sold
21,037 shares at a price of $3.83 under its Employee Stock Purchase Plan. The
proceeds from these issuances of stock amounted to approximately $453,000. In
1995 the proceeds from issuance of stock under its Employee Stock Purchase Plan
amounted to approximately $8,000.
During the first twenty-six weeks of fiscal 1995, the Company invested
approximately $662,000 for capital expenditures associated with the opening of
five new Company stores. During this time frame, the Company also acquired the
assets and franchise rights for four franchise locations in exchange for two
year notes of approximately $323,000, net of receivables due to the Company.
These transactions are not included in the condensed statement of cash flows
since they were noncash transactions. In addition, the Company also repaid
approximately $323,000 of indebtedness.
In the first quarter of fiscal 1995, the Company also received from a
franchisee a thirty month note of approximately $274,000 in exchange for past
due receivables to assist the franchisee through a transition period and in an
effort to help support the operations of the franchisee's most recently opened
franchised store. The note is current, with approximately $152,000 of
principal remaining to be paid.
The Company plans to open approximately 8 to 12 new stores in fiscal 1996.
Previously the Company had indicated that it was considering testing the sale
of folk art and other lifestyle accessories in one or more of its Company
stores in 1996. The Company has decided that it will postpone this test until
at least late 1997 to allow it to concentrate on its transition and new store
opening programs. The Company believes that the liquidity needed for its
planned new store growth and maintenance of proper inventory levels associated
with this growth will be funded primarily from cash flow from operations. The
Company further believes that this liquidity will be sufficient, based on
currently planned new store openings, to fund anticipated capital needs over
the near-term, including scheduled debt repayments. If cash flow from
operations should prove to be less than anticipated or if there should arise a
need for additional letter of credit capacity due to establishing new and
expanded sources of supply, or if the Company were to increase the number of
new Company stores planned to be opened in future periods, the Company might
need to seek other sources of financing to conduct its operations or pursue its
expansion plans and there can be no assurance that such other sources of
financing would be available.
Page 11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
SEASONALITY AND INFLATION
The Company has historically experienced, and expects to continue to
experience, seasonal fluctuations in its sales and net income. Historically, a
greater portion of the Company's sales have been realized during the period
from approximately November 1 through March 31, thus impacting the first and
fourth quarters. Historically, sales generated during this period have had a
significant impact on the Company's results of operations. Fewer of the
Company's new stores have been opened in warm-weather tourist locations and, as
a result, the difference in sales and net income during the first three
quarters of the fiscal year has been reduced. Moreover, performance during the
first quarter of 1995 and during the first quarter of 1996 was negatively
impacted by separate transitions needed to clear out the old merchandise and
prepare for the arrival of new designs and styles.
Even though the Company is not as dependent on the Christmas selling season as
many other retailers are, sales in the months of November and December are
still expected to continue to represent, in the future, a greater portion of
the Company's sales. If for any reason the Company's sales during November and
December do not represent increased sales activity as compared with the
remainder of the year, or if there is a decrease in availability of working
capital in the months prior to November and December, the Company's
profitability could be materially and adversely affected. The Company's
quarterly results of operations may also fluctuate significantly as a result of
a variety of factors, including the timing of new stores openings, the net
sales contributed by new stores, and store closings.
Although the operations of the Company are influenced by general economic
conditions, the Company does not believe that inflation has had a material
effect on the results of operations during the first twenty-six weeks of fiscal
1996 and during the first twenty-six weeks of fiscal 1995.
Page 12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C> <C>
(a) Exhibits: 10.1 Supplement to Employment Agreement by and between Chico's FAS, Inc. and Melissa
Payner-Gregor dated May 1, 1996.
10.2 Stock Option Agreement by and between Chico's FAS, Inc. and Melissa Payner-Gregor
dated May 1, 1996
10.3 Non-Employee Stock Option Agreement for Verna Gibson
10.4 Non-Employee Stock Option Agreement for Keith Schilit
10.5 Second Supplement to Employment Agreement by and between Chico's FAS, Inc. and
Melissa Payner-Gregor dated July 1, 1996
10.6 First Amendment to Stock Option Agreement by and between Chico's FAS, Inc. and
Melissa Payner-Gregor dated July 1, 1996
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K: The Company did not file any reports on Form 8-K during the thirteen weeks ended
June 30, 1996.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C> <C>
Date: August 8, 1996 By: /s/ Marvin Gralnick
--------------------- ------------------------------------------
Marvin Gralnick
Chief Executive Officer
(Principal Executive Officer)
Date: August 8, 1996 By: /s/ Charles J. Kleman
--------------------- ------------------------------------------
Charles J. Kleman
Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
Page 13
<PAGE> 1
EXHIBIT 10.1
SUPPLEMENT TO EMPLOYMENT AGREEMENT
THIS SUPPLEMENT TO EMPLOYMENT AGREEMENT is made and entered into as of
the 1st day of May, 1996, by and between CHICO'S FAS, INC. a Florida
corporation (the "Employer"), and MELISSA PAYNER-GREGOR (the "Employee").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into, and continue as parties to,
an Employment Agreement dated July 8, 1995 (the "Employment Agreement"),
pursuant to which the Employee was engaged by the Employer initially as the
Employer's Senior Vice President/General Merchandise Manager; and
WHEREAS, since the date of the Employment Agreement, the Employee has
been promoted to the position of Executive Vice President/General Merchandise
Manager; and
WHEREAS, the Employment Agreement initially provided, among other
things, that the Employee would receive a nonqualified stock option to purchase
75,000 shares of the Employer's common stock, and such stock option was issued
to the Employee on or about July 8, 1995; and
WHEREAS, to further reward the Employee for her efforts on behalf of
the Employer which have contributed significantly to improved operations and
performance of the Employer, to further recognize the Employee's value to the
Employer and to help foster a continued long term commitment by the Employee to
the Employer, the Employer has agreed to supplement the compensation and
benefits provided to the Employee by the Employment Agreement; and
WHEREAS, this Supplement to the Employment Agreement sets forth these
supplemental compensation and benefit items, which shall be in addition to and
not in place of the compensation and benefits set forth in the Employment
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. SPECIAL BONUS. In addition to the bonuses earned and to be
earned under the management team's incentive bonus plan adopted for 1996
consistent with Section 4(g) of the Employment Agreement, the Employer agrees
to pay to the Employee a special one time bonus of $50,000 on or before May 31,
1996.
2. ADDITIONAL STOCK OPTIONS.
(a) CURRENT GRANT. The Employee shall on the date hereof
receive an additional nonqualified stock option to purchase 125,000 shares of
the Employer's common stock. The right to purchase such stock shall be
nontransferable and shall vest in equal fifths on each one year anniversary
date of this Agreement over a 5 year period, with the first portion vesting on
May 1, 1997. The option price shall be equal to the closing market price of the
stock on the date of this Agreement. The Employer may grant said stock option
either under the Employer's currently existing
<PAGE> 2
stock option plans ("Plans"), or in such other manner as may be determined by
the Employer; provided, however, that the terms pursuant to which the stock
option is granted, if granted outside of the Plans, shall be substantially
similar to the terms of grant contained in the Plans.
(b) 1997 GRANT. Provided the Employee is still an
employee of the Employer on May 1, 1997, the Employee shall receive on such
date an additional nonqualified stock option to purchase 50,000 shares of the
Employer's common stock. The right to purchase such stock shall be
nontransferable and shall vest in equal fifths on each one year anniversary
date measured from May 1, 1997 over a 5 year period, with the first portion
vesting on May 1, 1998. The option price shall be equal to the closing market
price of the stock on May 1, 1997. The Employer may grant said stock option
either under the Employer's then existing
(c) 1998 GRANT. Provided the Employee is still an
employee of the Employer on May 1, 1998, the Employee shall receive on such
date an additional nonqualified stock option to purchase 50,000 shares of the
Employer's common stock. The right to purchase such stock shall be
nontransferable and shall vest in equal fifths on each one year anniversary
date measured from May 1, 1998 over a 5 year period, with the first portion
vesting on May 1, 1999. The option price shall be equal to the closing market
price of the stock on May 1, 1998. The Employer may grant said stock option
either under the Employer's then existing stock option plans, or in such other
manner as may be determined by the Employer; provided, however, that the terms
pursuant to which the stock option is granted, if granted outside of such then
existing plans, shall be substantially similar to the terms of grant contained
in the Plans.
(d) 1999 GRANT. Provided the Employee is still an
employee of the Employer on May 1, 1999, the Employee shall receive on such
date an additional nonqualified stock option to purchase 50,000 shares of the
Employer's common stock. The right to purchase such stock shall be
nontransferable and shall vest in equal fifths on each one year anniversary
date measured from May 1, 1999 over a 5 year period, with the first portion
vesting on May 1, 2000. The option price shall be equal to the closing market
price of the stock on May 1, 1999. The Employer may grant said stock option
either under the Employer's then existing stock option plans, or in such other
manner as may be determined by the Employer; provided, however, that the terms
pursuant to which the stock option is granted, if granted outside of such then
existing plans, shall be substantially similar to the terms of grant contained
in the Plans.
(e) 2000 GRANT. Provided the Employee is still an
employee of the Employer on May 1, 2000, the Employee shall receive on such
date an additional nonqualified stock option to purchase 50,000 shares of the
Employer's common stock. The right to purchase such stock shall be
nontransferable and shall vest in equal fifths on each one year anniversary
date measured from May 1, 2000 over a 5 year period, with the first portion
vesting on May 1, 2001. The option price shall
<PAGE> 3
be equal to the closing market price of the stock on May 1, 2000. The Employer
may grant said stock option either under the Employer's then existing stock
option plans, or in such other manner as may be determined by the Employer;
provided, however, that the terms pursuant to which the stock option is
granted, if granted outside of such then existing plans, shall be substantially
similar to the terms of grant contained in the Plans.
3. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida.
4. FULL FORCE AND EFFECT. Except to the extent supplemented by
this Supplement to Employment Agreement, the Employment Agreement shall remain
in full force and effect and as it was prior to this Supplement to Employment
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
ATTEST: CHICO'S FAS, INC.
(Corporate Seal)
<TABLE>
<S> <C>
________________________________ By:_____________________________________________
Secretary Marvin J. Gralnick, Chief Executive Officer
WITNESSES: EMPLOYEE:
________________________________ ________________________________________________
Melissa Payner-Gregor
________________________________
</TABLE>
<PAGE> 1
EXHIBIT 10.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made the 1st day of May, 1996 between
CHICO'S FAS, Inc., a Florida corporation ("Chico's") and MELISSA PAYNER-GREGOR
(the "Optionee").
W I T N E S S E T H
WHEREAS, the Optionee is presently engaged by Chico's as its Executive
Vice President/General Merchandise Manager and pursuant to the terms of that
certain Supplement to Employment Agreement between the parties hereto dated May
1, 1996, Chico's has agreed to grant to the Optionee the option herein provided
for, to the end that the Optionee may thereby be assisted in obtaining an
interest, or an increased interest, as the case may be, in the stock ownership
of Chico's.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. Grant. Chico's hereby grants to the Optionee an option (the
"Option") to purchase 125,000 shares of Chico's common stock, par value $.01
per share ("Common Stock") at $7.00 per share, both as adjusted pursuant to
Section 10 hereof.
2. Exercise. The Option may be exercised at any time during the
period hereinafter permitted by presentation at the principal offices of
Chico's in Ft. Myers, Florida of (a) written notice to Chico's advising Chico's
of the election of the Optionee to purchase the shares of Common Stock covered
by this Option and (b) payment of the aggregate option price therefor.
3. Period of Exercise. The Option is exercisable in whole or
from time to time in part during the period from May 1, 1997 through April 30,
2006, except as provided in Section 8 hereof.
4. Vesting Schedule. The Optionee's rights under the Option
shall vest (on a cumulative basis) over the Exercise Period in accordance with
the following schedule:
<PAGE> 2
<TABLE>
<CAPTION>
Number of Years From the Exercisable Percentage of
Date the Option is Granted Number of Shares Originally
Covered by the Option
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
</TABLE>
5. Requirements of Law. Chico's shall not be required to sell or
issue any shares under the Option if the issuance of such shares shall
constitute a violation of any provisions of any law or regulation of any
governmental authority. Specifically, in connection with the Securities Act of
1933 (the "Act"), upon exercise of the Option, unless a registration statement
under the Act is in effect with respect to the shares of Common Stock covered
by the Option, Chico's shall not be required to issue such shares unless
Chico's has received evidence reasonably satisfactory to the effect that the
Optionee is acquiring such shares for investment and not with a view to the
distribution thereof, and unless the certificate issued representing the shares
of Common Stock bears the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933 AS AMENDED AND APPLICABLE STATE SECURITIES LAWS."
Any reasonable determination in this connection by Chico's shall be final,
binding and conclusive.
At such time as a registration statement under the Act is in effect
with respect to the shares of Common Stock represented by certificates bearing
the above legend or at such time as, in the opinion of counsel for Chico's,
such legend is no longer required solely for compliance with applicable
securities laws, then the holders of such certificates shall be entitled to
exchange such certificates for certificates representing a like number of
shares but without such legend. Chico's may, but shall in no event be obligated
to, register any securities covered hereby pursuant to the Act. Chico's shall
not be obligated
2.
<PAGE> 3
to take any other affirmative action in order to cause the exercise of the
Option or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority.
6. Method of Payment. Payment shall be made:
(a) in United States dollars by certified check, or bank
draft or
(b) by tendering to Chico's Common Stock shares owned by
the person exercising the Option and having a fair market value equal
to the cash exercise price applicable to such Option, such fair market
value to be the closing price, on the date in question (or, if no
shares are traded on such day, on the next preceding day on which
shares were traded), of the Common Stock as reported on the Composite
Tape, or if not reported thereon, then such price as reported in the
trading reports of the principal securities exchange in the United
States on which such stock is listed, or if such stock is not listed
on a securities exchange in the United States, the mean between the
dealer closing "bid" and "ask" prices on the over-the-counter market
as reported by the National Association of Security Dealers Automated
Quotation System (NASDAQ), or NASDAQ's successor, or if not reported
on NASDAQ, the fair market value of such stock as determined by the
Board in good faith and based on all relevant factors, or
(c) by a combination of United States dollars and Common
Stock shares as aforesaid.
7. Transferability of Option. The Option shall not be
transferable by the Optionee otherwise than by will or the laws of descent and
distribution, and shall be exercisable during her lifetime only by her.
8. Death or Other Termination of Employment.
(a) In the event that the Optionee (1) shall cease to be
employed by Chico's because of her discharge for dishonesty, or because she
violated any material provision of any employment or other agreement between
her and Chico's, or (2) shall voluntarily resign or terminate her employment
with Chico's under or followed by such circumstances as would constitute a
breach of any material provision of any employment or other agreement between
her and Chico's, or (3) shall have committed an act of dishonesty not
discovered by Chico's prior to the cessation of her employment but that would
have resulted in her discharge if discovered prior to such date, or (4) shall,
either before or after cessation of her employment with Chico's, without the
written consent of her employer or former employer, use (except for the benefit
of her employer or former employer) or disclose to any other person any
confidential information relating to the continuation or proposed continuation
of her employer's or former employer's business or any trade secrets of Chico's
obtained as a result of or in connection with such employment, or (5) shall,
either before or after the cessation of her employment with Chico's, without
the written consent of her employer or former employer, directly or indirectly,
3.
<PAGE> 4
give advice to, or serve as an employee, director, officer, partner or trustee
of, or in any similar capacity with, or otherwise directly or indirectly
participate in the management, operation or control of, or have any direct or
indirect financial interest in, any corporation, partnership or other
organization that directly or indirectly competes in any respect with Chico's,
then forthwith from the happening of any such event, the Option granted
hereunder shall terminate and become void to the extent that it then remains
unexercised.
(b) In the event that the Optionee shall cease to be
employed by Chico's for any reason other than her death or one or more of the
reasons set forth in Section 8(a), subject to the condition that the Option
shall not be exercisable after the expiration of ten (10) years from the date
it is granted, the Optionee shall have the right to exercise the Option at any
time within three (3) months after such termination of employment to the extent
her right to exercise the Option had accrued and vested hereunder at the date
of such termination and had not previously been exercised; such three-month
limit shall be increased to one (1) year if the Optionee ceases to be employed
by Chico's because she becomes disabled (within the meaning of Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended) or if she dies during the
three-month period and the Option may be exercised within such extended time
limit by the Optionee or, in the case of death, the personal representative of
the Optionee or by any person or persons who shall have acquired the Option
directly from the Optionee by bequest or inheritance. Whether an authorized
leave of absence or absence for military or governmental service shall
constitute termination of employment for purposes of this Agreement shall be
determined by the Compensation and Benefits Committee of the Board of Directors
of Chico's, whose determination shall be final and conclusive.
(c) In the event that an Optionee shall die while in the
employ of Chico's and shall not have fully exercised this Option, the Option
may be exercised, subject to the condition that this Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted,
to the extent that the Optionee's right to exercise this Option had accrued and
vested hereunder at the time of her death and had not previously been
exercised, at any time within one (1) year after the Optionee's death, by the
personal representative of the Optionee or by any person or persons who shall
have acquired the Option directly from the Optionee by bequest or inheritance.
(d) If there shall occur a change in control of Chico's
while any shares of Common Stock remain subject to this Option, then the Option
shall become immediately exercisable without regard to Section 4 hereof and
such exercisability shall terminate only pursuant to Section 3 hereof without
regard to the other provisions of this Section 8. For purposes of this
Agreement, a "change in control" of Chico's shall mean a change in control of a
nature that would be required to reported in response to Item 5(f) of Schedule
14A of Regulation 14A promulgated under the Securities Exchange Act of 1931
(the "Exchange Act") as in effect on the date hereof; provided, that, without
limitation, such a change in control shall be deemed to have occurred if (i)
any "person" (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act and other than the persons who are directors on the date of this
Agreement) is or becomes the beneficial owner, directly or indirectly, of
securities of Chico's representing 20% or more of the combined voting power of
Chico's then outstanding securities
4.
<PAGE> 5
or (ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of Chico's cease for
any reason to constitute at least a majority thereof.
9. No Rights as Stockholder. The Optionee shall have no rights
as a stockholder with respect to shares covered by the Option until the date of
issuance of a stock certificate for such shares; no adjustment for dividends,
or otherwise, except as provided in Section 10, shall be made if the record
date therefor is prior to the date of exercise of such option.
10. Stock Adjustments.
(a) In the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split
or other division or consolidation of shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares effected without any receipt of
consideration by Chico's, then, in any such event, the number of
shares of Common Stock covered by the Option, and the purchase price
per share of Common Stock covered by the Option shall be
proportionately and appropriately adjusted for any such increase or
decrease.
(b) Subject to any required action by the stockholders,
if any change occurs in the shares of Common Stock by reason of any
recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or of any similar change affecting
the shares of Common Stock, then, in any such event, the number and
type of shares covered by the Option, and the purchase price per share
of Common Stock covered by the Option, shall be proportionately and
appropriately adjusted for any such change. A dissolution or
liquidation of Chico's shall cause each outstanding Option to
terminate.
(c) In the event of a change in the Common Stock as
presently constituted that is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from
any change shall be deemed to be shares of Common Stock within the
meaning of this Agreement.
(d) To the extent that the foregoing adjustments relate
to stock or securities of Chico's, such adjustments shall be made by,
and in the discretion of, the Board, whose determination in that
respect shall be final, binding and conclusive.
(e) Except as hereinabove expressly provided in this
Section 10, the Optionee shall have no rights by reason of any
division or consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation, or spin-off of
assets or stock of another corporation; and any issuance by Chico's of
shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for
5.
<PAGE> 6
shares of stock of any class shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of
shares of Common Stock subject to the Option.
(f) The grant of this Option shall not affect in any way
the right or power of Chico's to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to
merge or to consolidate, or to dissolve, to liquidate, to sell, or to
transfer all or any part of its business or assets.
11. Withholding. It shall be a condition to the obligation of
Chico's to issue Common Stock shares upon exercise of an Option, that the
Optionee (or any beneficiary or person entitled to act under Section 8 above)
pay to Chico's, upon its demand, such amount as may be requested by Chico's for
the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, Chico's
may refuse to issue Common Stock shares.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CHICO'S FAS, INC.
ATTEST:
<TABLE>
<S> <C>
_______________________________ By:_________________________________
Secretary President
_______________________________ _____________________________________
Melissa Payner-Gregor
_______________________________
</TABLE>
6.
<PAGE> 1
EXHIBIT 10.3
NONEMPLOYEE DIRECTOR'S STOCK OPTION AGREEMENT
THIS AGREEMENT is made this ____ day of ______________, 1996 but is effective
as of the 1st day of May, 1996, between CHICO'S FAS, Inc., a Florida
corporation ("Chico's") and Verna K. Gibson, a nonemployee member of Chico's
Board of Directors (the "Director").
W I T N E S S E T H
WHEREAS, the Director is now a member of Chico's Board of Directors and Chico's
desires to have the Director remain in its service and desires to encourage
stock ownership by the Director and to increase the Director's proprietary
interest in Chico's success; and as an inducement thereto has determined to
grant to the Director the option herein provided for, to the end that the
Director may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of Chico's.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant. Chico's hereby grants to the Director an option (the
"Option") to purchase 10,000 shares of Chico's common stock, par value $.01 per
share ("Common Stock") at $7.00 per share, both as adjusted pursuant to Section
10 hereof.
2. Exercise. The Option may be exercised at any time during the
period hereinafter permitted by presentation at the principal offices of
Chico's in Ft. Myers, Florida of (a) written notice to Chico's advising Chico's
of the election of the Director to purchase the shares of Common Stock covered
by this Option and (b) payment of the aggregate option price therefor.
3. Period of Exercise. The Option is exercisable in whole or from
time to time in part during the period from November 1, 1996 through April 30,
2006, except as provided in Section 8 hereof.
4. Vesting Schedule. The Optionee's rights under the Option shall
vest 100% on November 1, 1996.
5. Requirements of Law. Chico's shall not be required to sell or
issue any shares under the Option if the issuance of such shares shall
constitute a violation of any provisions of any law or regulation of any
governmental authority. Specifically, in connection with the Securities Act of
1933 (the "Act"), upon exercise of the Option, unless a registration statement
under the Act is in effect with respect to the shares of Common Stock covered
by the Option, Chico's shall not be required to issue such shares unless
Chico's has received evidence reasonably satisfactory to the effect that the
Director is acquiring such shares for investment and not with a view to the
distribution thereof, and unless the certificate issued representing the shares
of Common Stock bears the following legend:
<PAGE> 2
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933 AS AMENDED AND APPLICABLE STATE SECURITIES LAWS."
Any reasonable determination in this connection by Chico's shall be final,
binding and conclusive.
At such time as a registration statement under the Act is in effect
with respect to the shares of Common Stock represented by certificates bearing
the above legend or at such time as, in the opinion of counsel for Chico's,
such legend is no longer required solely for compliance with applicable
securities laws, then the holders of such certificates shall be entitled to
exchange such certificates for certificates representing a like number of
shares but without such legend. Chico's may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Act.
Chico's shall not be obligated to take any other affirmative action in order to
cause the exercise of the Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.
6. Method of Payment. Payment shall be made:
(a) in United States dollars by certified check, or bank
draft or
(b) by tendering to Chico's Common Stock shares owned by
the person exercising the Option and having a fair market value equal
to the cash exercise price applicable to such Option, such fair market
value to be the closing price, on the date in question (or, if no
shares are traded on such day, on the next preceding day on which
shares were traded), of the Common Stock as reported on the Composite
Tape, or if not reported thereon, then such price as reported in the
trading reports of the principal securities exchange in the United
States on which such stock is listed, or if such stock is not listed
on a securities exchange in the United States, the mean between the
dealer closing "bid" and "ask" prices on the over-the-counter market
as reported by the National Association of Security Dealers Automated
Quotation System (NASDAQ), or NASDAQ's successor, or if not reported
on NASDAQ, the fair market value of such stock as determined by the
Board in good faith and based on all relevant factors, or
(c) by a combination of United States dollars and Common
Stock shares as aforesaid.
2.
<PAGE> 3
7. Transferability of Option. The Option shall not be
transferable by the Director otherwise than by will or the laws of descent and
distribution, and shall be exercisable during his lifetime only by him.
8. Termination of Service, Death, Disability and Change in
Control. Except as may be otherwise expressly provided in this Agreement, the
Option herein granted shall terminate and all rights to exercise hereunder
shall terminate (a) immediately in the event of the Director's discontinuance
of service on Chico's Board of Directors as a result of his or her removal for
cause and (b) seven (7) months after the date of the Director's discontinuance
of service on Chico's Board of Directors for any other reason, other than
death, disability or retirement.
In the event of the death, disability or retirement of the Director
while a member of the Board of Directors and before the date of expiration of
the Option, the Option shall terminate and all rights to exercise hereunder
shall terminate on the earlier of such date of expiration or one year following
the date of such death, disability or retirement. After the death of the
Director, his executors or administrators, or any person or persons to whom the
Option may be transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to such termination, to exercise the
Option pursuant to the terms of this Agreement.
If there shall occur a change in control of Chico's while any shares
of Common Stock remain subject to this Option, then the Option shall become
immediately exercisable without regard to Section 2 hereof and such
exercisability shall terminate only pursuant to Section 2 hereof without regard
to the other provisions of this Section 8. For purposes of this Agreement, a
"change in control" of Chico's shall mean a change in control of a nature that
would be required to reported in response to Item 5(f) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1931 (the
"Exchange Act") as in effect on the date hereof; provided, that, without
limitation, such a change in control shall be deemed to have occurred if (i)
any "person" (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act and other than the persons who are directors on the date of this
Agreement) is or becomes the beneficial owner, directly or indirectly, of
securities of Chico's representing 20% or more of the combined voting power of
Chico's then outstanding securities or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of Chico's cease for any reason to constitute at least a
majority thereof.
9. No Rights as Stockholder. The Director shall have no rights
as a stockholder with respect to shares covered by the Option until the date of
issuance of a stock certificate for such shares; no adjustment for dividends,
or otherwise, except as provided in
3.
<PAGE> 4
Section 10, shall be made if the record date therefor is prior to the date of
exercise of such option.
10. Stock Adjustments.
(a) In the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split
or other division or consolidation of shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares effected without any receipt of
consideration by Chico's, then, in any such event, the number of
shares of Common Stock covered by the Option, and the purchase price
per share of Common Stock covered by the Option shall be
proportionately and appropriately adjusted for any such increase or
decrease.
(b) Subject to any required action by the stockholders,
if any change occurs in the shares of Common Stock by reason of any
recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or of any similar change affecting
the shares of Common Stock, then, in any such event, the number and
type of shares covered by the Option, and the purchase price per share
of Common Stock covered by the Option, shall be proportionately and
appropriately adjusted for any such change. A dissolution or
liquidation of Chico's shall cause each outstanding Option to
terminate.
(c) In the event of a change in the Common Stock as
presently constituted that is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from
any change shall be deemed to be shares of Common Stock within the
meaning of this Agreement.
(d) To the extent that the foregoing adjustments relate
to stock or securities of Chico's, such adjustments shall be made by,
and in the discretion of, the Board, whose determination in that
respect shall be final, binding and conclusive.
(e) Except as hereinabove expressly provided in this
Section 10, the Director shall have no rights by reason of any
division or consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation, or spin-off of
assets or stock of another corporation; and any issuance by Chico's of
shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for shares of stock of any
class shall not affect, and no adjustment by reason thereof shall be
made with respect to,
4.
<PAGE> 5
the number or price of shares of Common Stock subject to the Option.
(f) The grant of this Option shall not affect in any way
the right or power of Chico's to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to
merge or to consolidate, or to dissolve, to liquidate, to sell, or to
transfer all or any part of its business or assets.
11. Withholding. It shall be a condition to the obligation of
Chico's to issue Common Stock shares upon exercise of an Option, that the
Director (or any beneficiary or person entitled to act under Section 8 above)
pay to Chico's, upon its demand, such amount as may be requested by Chico's for
the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, Chico's
may refuse to issue Common Stock shares.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CHICO'S FAS, INC.
By:_________________________________
President
____________________________________
Verna K. Gibson, Director
5.
<PAGE> 1
EXHIBIT 10.4
NONEMPLOYEE DIRECTOR'S STOCK OPTION AGREEMENT
THIS AGREEMENT is made this ____ day of ______________, 1996 but is
effective as of the 1st day of May, 1996, between CHICO'S FAS, Inc., a Florida
corporation ("Chico's") and W. Keith Schilit, a nonemployee member of Chico's
Board of Directors (the "Director").
W I T N E S S E T H
WHEREAS, the Director is now a member of Chico's Board of Directors
and Chico's desires to have the Director remain in its service and desires to
encourage stock ownership by the Director and to increase the Director's
proprietary interest in Chico's success; and as an inducement thereto has
determined to grant to the Director the option herein provided for, to the end
that the Director may thereby be assisted in obtaining an interest, or an
increased interest, as the case may be, in the stock ownership of Chico's.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. Grant. Chico's hereby grants to the Director an option (the
"Option") to purchase 10,000 shares of Chico's common stock, par value $.01 per
share ("Common Stock") at $7.00 per share, both as adjusted pursuant to Section
10 hereof.
2. Exercise. The Option may be exercised at any time during the
period hereinafter permitted by presentation at the principal offices of
Chico's in Ft. Myers, Florida of (a) written notice to Chico's advising Chico's
of the election of the Director to purchase the shares of Common Stock covered
by this Option and (b) payment of the aggregate option price therefor.
3. Period of Exercise. The Option is exercisable in whole or
from time to time in part during the period from November 1, 1996 through April
30, 2006, except as provided in Section 8 hereof.
4. Vesting Schedule. The Optionee's rights under the Option
shall vest 100% on November 1, 1996.
5. Requirements of Law. Chico's shall not be required to sell or
issue any shares under the Option if the issuance of such shares shall
constitute a violation of any provisions of any law or regulation of any
governmental authority. Specifically, in connection with the Securities Act of
1933 (the "Act"), upon exercise of the Option, unless a registration statement
under the Act is in effect with respect to the shares of Common Stock covered
by the Option, Chico's shall not be required to issue such shares unless
Chico's has received evidence reasonably satisfactory to the effect that the
Director is acquiring such shares for investment and not with a view to the
distribution thereof, and unless the certificate issued representing the shares
of Common Stock bears the following legend:
<PAGE> 2
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933 AS AMENDED AND APPLICABLE STATE SECURITIES LAWS."
Any reasonable determination in this connection by Chico's shall be final,
binding and conclusive.
At such time as a registration statement under the Act is in effect
with respect to the shares of Common Stock represented by certificates bearing
the above legend or at such time as, in the opinion of counsel for Chico's,
such legend is no longer required solely for compliance with applicable
securities laws, then the holders of such certificates shall be entitled to
exchange such certificates for certificates representing a like number of
shares but without such legend. Chico's may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Act.
Chico's shall not be obligated to take any other affirmative action in order to
cause the exercise of the Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.
6. Method of Payment. Payment shall be made:
(a) in United States dollars by certified check, or bank draft or
(b) by tendering to Chico's Common Stock shares owned by
the person exercising the Option and having a fair market value equal
to the cash exercise price applicable to such Option, such fair market
value to be the closing price, on the date in question (or, if no
shares are traded on such day, on the next preceding day on which
shares were traded), of the Common Stock as reported on the Composite
Tape, or if not reported thereon, then such price as reported in the
trading reports of the principal securities exchange in
the United States on which such stock is listed, or if such stock is
not listed on a securities exchange in the United States, the mean
between the dealer closing "bid" and "ask" prices on the over-the-
counter market as reported by the National Association of Security
Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor,
or if not reported on NASDAQ, the fair market value of such stock as
determined by the Board in good faith and based on all relevant
factors, or
(c) by a combination of United States dollars and Common
Stock shares as aforesaid.
2.
<PAGE> 3
7. Transferability of Option. The Option shall not be
transferable by the Director otherwise than by will or the laws of descent and
distribution, and shall be exercisable during his lifetime only by him.
8. Termination of Service, Death, Disability and Change in
Control. Except as may be otherwise expressly provided in this Agreement, the
Option herein granted shall terminate and all rights to exercise hereunder
shall terminate (a) immediately in the event of the Director's discontinuance
of service on Chico's Board of Directors as a result of his or her removal for
cause and (b) seven (7) months after the date of the Director's discontinuance
of service on Chico's Board of Directors for any other reason, other than
death, disability or retirement.
In the event of the death, disability or retirement of the Director
while a member of the Board of Directors and before the date of expiration of
the Option, the Option shall terminate and all rights to exercise hereunder
shall terminate on the earlier of such date of expiration or one year following
the date of such death, disability or retirement. After the death of the
Director, his executors or administrators, or any person or persons to whom the
Option may be transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to such termination, to exercise the
Option pursuant to the terms of this Agreement.
If there shall occur a change in control of Chico's while any shares
of Common Stock remain subject to this Option, then the Option shall become
immediately exercisable without regard to Section 2 hereof and such
exercisability shall terminate only pursuant to Section 2 hereof without regard
to the other provisions of this Section 8. For purposes of this Agreement, a
"change in control" of Chico's shall mean a change in control of a nature that
would be required to reported in response to Item 5(f) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1931 (the
"Exchange Act") as in effect on the date hereof; provided, that, without
limitation, such a change in control shall be deemed to have occurred if (i)
any "person" (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act and other than the persons who are directors on the date of this
Agreement) is or becomes the beneficial owner, directly or indirectly, of
securities of Chico's representing 20% or more of the combined voting power of
Chico's then outstanding securities or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of Chico's cease for any reason to constitute at least a
majority thereof.
9. No Rights as Stockholder. The Director shall have no rights
as a stockholder with respect to shares covered by the Option until the date of
issuance of a stock certificate for such shares; no adjustment for dividends,
or otherwise, except as provided in
3.
<PAGE> 4
Section 10, shall be made if the record date therefor is prior to the date of
exercise of such option.
10. Stock Adjustments.
(a) In the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split
or other division or consolidation of shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares effected without any receipt of
consideration by Chico's, then, in any such event, the number of
shares of Common Stock covered by the Option, and the purchase price
per share of Common Stock covered by the Option shall be
proportionately and appropriately adjusted for any such increase or
decrease.
(b) Subject to any required action by the stockholders,
if any change occurs in the shares of Common Stock by reason of any
recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or of any similar change affecting
the shares of Common Stock, then, in any such event, the number and
type of shares covered by the Option, and the purchase price per share
of Common Stock covered by the Option, shall be proportionately and
appropriately adjusted for any such change. A dissolution or
liquidation of Chico's shall cause each outstanding Option to
terminate.
(c) In the event of a change in the Common Stock as
presently constituted that is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from
any change shall be deemed to be shares of Common Stock within the
meaning of this Agreement.
(d) To the extent that the foregoing adjustments relate
to stock or securities of Chico's, such adjustments shall be made by,
and in the discretion of, the Board, whose determination in that
respect shall be final, binding and conclusive.
(e) Except as hereinabove expressly provided in this
Section 10, the Director shall have no rights by reason of any
division or consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation, or spin-off of
assets or stock of another corporation; and any issuance by Chico's of
shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for shares of stock of any
class shall not affect, and no adjustment by reason thereof shall be
made with respect to,
4.
<PAGE> 5
the number or price of shares of Common Stock subject to the Option.
(f) The grant of this Option shall not affect in any way
the right or power of Chico's to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to
merge or to consolidate, or to dissolve, to liquidate, to sell, or to
transfer all or any part of its business or assets.
11. Withholding. It shall be a condition to the obligation of
Chico's to issue Common Stock shares upon exercise of an Option, that the
Director (or any beneficiary or person entitled to act under Section 8 above)
pay to Chico's, upon its demand, such amount as may be requested by Chico's for
the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, Chico's
may refuse to issue Common Stock shares.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CHICO'S FAS, INC.
By:_________________________________
President
____________________________________
W. Keith Schilit, Director
5.
<PAGE> 1
EXHIBIT 10.5
SECOND SUPPLEMENT TO EMPLOYMENT AGREEMENT
THIS SECOND SUPPLEMENT TO EMPLOYMENT AGREEMENT is made and entered
into as of the 1st day of July, 1996, by and between CHICO'S FAS, INC. a
Florida corporation (the "Employer"), and MELISSA PAYNER-GREGOR (the
"Employee").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into, and continue as parties to,
an Employment Agreement dated July 8, 1995 (the "Employment Agreement"), as
amended by that certain Supplement to Employment Agreement dated as of May 1,
1996 (the "Supplement to Employment Agreement") (collectively, the "Amended
Employment Agreement"), pursuant to which the Employee was engaged by the
Employer initially as the Employer's Senior Vice President/General Merchandise
Manager; and
WHEREAS, since the date of the Employment Agreement, the Employee has
been promoted to the position of Executive Vice President/General Merchandise
Manager; and
WHEREAS, the Supplement to Employment Agreement provided for the grant
of certain stock options on certain specified terms and conditions, including a
125,000 option grant on May 1, 1996 and serial grants of 50,000 options each
year thereafter thru 2000; and
WHEREAS, as a result of further evaluation of the Employee's
performance, the parties believe it to be appropriate to modify the vesting
schedule for the 125,000 option grant to three years from five years and to
provide that each of the 50,000 option grants, if and when issued, would also
provide for three year vesting rather than five year vesting; and
WHEREAS, this Second Supplement to the Employment Agreement sets forth
an agreement concerning these adjustments to the terms and conditions of the
option grants.
NOW, THEREFORE, the parties hereto agree as follows:
1. ADJUSTMENT TO 1996 OPTION GRANT. The Employer agrees to enter
into an amendment to the Employee's Stock Option Agreement which relates to the
125,000 option grant of May 1, 1996 to the Employee, which amendment will
changes the vesting schedule for the 125,000 options from (a) a vesting in
equal fifths on each one year anniversary date from May 1, 1996 over a 5 year
period, with the first portion vesting on May 1, 1997 to (b) a vesting in equal
thirds on each one year anniversary date from May 1, 1996 over a 3 year period,
with the first portion vesting on May 1, 1997.
2. ADJUSTMENTS TO SUBSEQUENT YEAR OPTION GRANTS. Subsections (b)
through (e) of Section 2 of the Supplement to Employment Agreement are amended
to read as follows:
(b) 1997 GRANT. Provided the Employee is still an
employee of the Employer on May 1, 1997, the Employee shall receive
on such date an additional
<PAGE> 2
nonqualified stock option to purchase 50,000 shares of the Employer's
common stock. The right to purchase such stock shall be
nontransferable and shall vest in equal thirds on each one year
anniversary date measured from May 1, 1997 over a 3 year period, with
the first portion vesting on May 1, 1998. The option price shall be
equal to the closing market price of the stock on May 1, 1997. The
Employer may grant said stock option either under the Employer's then
existing stock option plans, or in such other manner as may be
determined by the Employer; provided, however, that the terms pursuant
to which the stock option is granted, if granted outside of such then
existing stock option plans, shall be substantially similar to the
terms of grant contained in the Plans.
(c) 1998 GRANT. Provided the Employee is still
an employee of the Employer on May 1, 1998, the Employee shall receive
on such date an additional nonqualified stock option to purchase
50,000 shares of the Employer's common stock. The right to purchase
such stock shall be nontransferable and shall vest in equal thirds on
each one year anniversary date measured from May 1, 1998 over a 3 year
period, with the first portion vesting on May 1, 1999. The option
price shall be equal to the closing market price of the stock on May
1, 1998. The Employer may grant said stock option either under the
Employer's then existing stock option plans, or in such other manner
as may be determined by the Employer; provided, however, that the
terms pursuant to which the stock option is granted, if granted
outside of such then existing plans, shall be substantially similar to
the terms of grant contained in the Plans.
(d) 1999 GRANT. Provided the Employee is still
an employee of the Employer on May 1, 1999, the Employee shall receive
on such date an additional nonqualified stock option to purchase
50,000 shares of the Employer's common stock. The right to purchase
such stock shall be nontransferable and shall vest in equal thirds on
each one year anniversary date measured from May 1, 1999 over a 3 year
period, with the first portion vesting on May 1, 2000. The option
price shall be equal to the closing market price of the stock on May
1, 1999. The Employer may grant said stock option either under the
Employer's then existing stock option plans, or in such other manner
as may be determined by the Employer; provided, however, that the
terms pursuant to which the stock option is granted, if granted
outside of such then existing plans, shall be substantially similar to
the terms of grant contained in the Plans.
(e) 2000 GRANT. Provided the Employee is still
an employee of the Employer on May 1, 2000, the Employee shall receive
on such date an additional nonqualified stock option to purchase
50,000 shares of the Employer's common stock. The right to purchase
such stock shall be nontransferable and shall vest in equal thirds on
each one year anniversary date measured from May 1, 2000 over a 3 year
<PAGE> 3
period, with the first portion vesting on May 1, 2001. The option
price shall be equal to the closing market price of the stock on May
1, 2000. The Employer may grant said stock option either under the
Employer's then existing stock option plans, or in such other manner
as may be determined by the Employer; provided, however, that the
terms pursuant to which the stock option is granted, if granted
outside of such then existing plans, shall be substantially similar to
the terms of grant contained in the Plans.
3. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida.
4. FULL FORCE AND EFFECT. Except to the extent supplemented by
this Second Supplement to Employment Agreement, the Amended Employment
Agreement shall remain in full force and effect and as it was prior to this
Second Supplement to Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
ATTEST: CHICO'S FAS, INC.
(Corporate Seal)
<TABLE>
<S> <C>
_______________________________ By:___________________________________________
Secretary Marvin J. Gralnick, Chief Executive Officer
WITNESSES: EMPLOYEE:
_______________________________ __________________________________________
Melissa Payner-Gregor
_______________________________
</TABLE>
<PAGE> 1
EXHIBIT 10.6
FIRST AMENDMENT TO STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENT is made the 12th day of
July, 1996 between CHICO'S FAS, Inc., a Florida corporation ("Chico's") and
MELISSA PAYNER-GREGOR (the "Optionee").
W I T N E S S E T H
WHEREAS, Chico's and the Optionee are parties to a Stock Option
Agreement dated May 1, 1996 (the Stock Option Agreement") which Agreement
evidences the May 1, 1996 grant of 125,000 options to purchase common stock of
Chico's, par value $.01 per share for an option exercise price of $7.00 (the
"Option"); and
WHEREAS, Chico's and the Optionee wish to amend the vesting provisions
of the Option so as to provide for the vesting of the Option ratably over a
three year period rather than over a five year period.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. AMENDMENT TO SECTION 4. Section 4 of the Agreement is hereby
deleted and the following substituted therefor:
4. Vesting Schedule. The Optionee's rights under the
Option shall vest (on a cumulative basis) over the Exercise Period in
accordance with the following schedule:
<TABLE>
<CAPTION>
Number of Years From the Date the Exercisable Percentage of
Option is Granted Number of Shares Originally
Covered by the Option
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 33 1/3%
2 years but less than 3 years 66 2/3%
3 years or more 100%
</TABLE>
2. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida.
<PAGE> 2
3. FULL FORCE AND EFFECT. Except to the extent amended
by this First Amendment to Stock Option Agreement, the Stock Option
Agreement shall remain in full force and effect and as it was prior to
this First Amendment to Stock Option Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CHICO'S FAS, INC.
ATTEST:
<TABLE>
<S> <C>
_______________________________ By:_________________________________
Secretary President
_______________________________ ____________________________________
Melissa Payner-Gregor
_______________________________
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED FINANCIAL STATEMENTS (UNAUDITED) AT CHICO'S FAS, INC. FOR THE
TWENTY-SIX WEEKS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,972,652
<SECURITIES> 0
<RECEIVABLES> 450,541
<ALLOWANCES> 0
<INVENTORY> 6,994,537
<CURRENT-ASSETS> 14,701,119
<PP&E> 20,440,727
<DEPRECIATION> 4,330,463
<TOTAL-ASSETS> 32,012,115
<CURRENT-LIABILITIES> 7,376,082
<BONDS> 5,252,495
0
0
<COMMON> 78,813
<OTHER-SE> 17,840,127
<TOTAL-LIABILITY-AND-EQUITY> 32,012,115
<SALES> 32,455,222
<TOTAL-REVENUES> 32,455,222
<CGS> 13,653,437
<TOTAL-COSTS> 13,653,437
<OTHER-EXPENSES> 16,091,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198,836
<INCOME-PRETAX> 2,511,403
<INCOME-TAX> 1,004,000
<INCOME-CONTINUING> 1,507,403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,507,403
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
