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Item 5.02.
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Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On February 10, 2020, the Board of Directors
(the “Board”) of Francesca’s Holdings Corporation (the “Company”) appointed Andrew Clarke as the
Company’s Chief Executive Officer, effective as of March 9, 2020. On February 12, 2020, the Board also appointed Mr. Clarke
to serve as a Class II director of the Board, effective as of March 9, 2020. At such time, Mr. Michael Prendergast, who has been
serving as the Company’s Interim Chief Executive Officer since February 2019, will resign as Interim Chief Executive Officer.
Mr. Clarke, 46, previously served as President
of LOFT, a women’s specialty apparel retail brand owned by Ascena Retail Group, from July 2018 to July 2019. Prior to that,
Mr. Clarke was EVP, Chief Merchandising Officer at Justice, also owed by Ascena Retail Group, from August 2017 to July 2018. Prior
to joining Ascena Retail Group, Mr. Clarke served as President, Kmart Apparel from September 2014 to July 2017. Mr. Clarke also
previously held various merchandising leadership positions at Pimke, a women’s fashion brand owned by French retail conglomerate,
Mulliez, Marks & Spencer, and New Look Retailers, a fast fashion apparel retailer in based in Europe.
On February 10, 2020, the Compensation Committee
of the Board (the “Committee”) approved a new employment letter agreement for Mr. Clarke, which will become effective
upon the date he commences employment with the Company (expected to be March 9, 2020). The agreement does not have a specified
term and provides that Mr. Clarke will receive an annual base salary of $700,000. He will also be eligible to receive an annual
incentive bonus pursuant to the Company’s annual bonus plan as in effect from time to time (including a pro-rated bonus for
2020), with his target bonus to be set at 125% of his base salary. The agreement also provides for Mr. Clarke to participate in
the Company’s savings and welfare benefit plans made available to employees generally. He will also receive certain relocation
benefits in connection with his moving to the Houston area, including a lump-sum payment of $200,000 to help cover his relocation
costs. However, he will be required to repay this amount to the Company in full if he terminates his employment other than for
Good Reason (as defined in the agreement) or is terminated by the Company for Cause (as defined in the agreement) during the first
year of his employment or on a pro-rated basis if such a termination occurs during the second year of his employment.
Pursuant to the agreement, Mr. Clarke
will also be entitled to receive (i) a grant of restricted stock units with a value of $500,000 (determined as of the first
day of his employment with the Company) that vest in three annual installments and (ii) a grant of performance stock units
with a target value (determined as of the first day of his employment with the Company) equal to $500,000, prorated to
reflect his period of employment with the Company during its 2020 fiscal year, that will vest on the same terms and
conditions that apply to the performance stock units to be granted to the Company’s other executive officers in March
2020 for the Company’s 2020 fiscal year (including the performance metrics, goals and weightings applicable to such
awards), subject in each case to Mr. Clarke’s continued employment with the Company through the applicable vesting
period. Mr. Clarke will also be eligible for future long-term incentive grants each fiscal year beginning with 2021, with the
target value of such grants expected to be not less than $1,000,000. In addition, Mr. Clarke will receive a cash incentive
award, with a potential payout of up to $275,000 if the Company’s average market capitalization exceeds certain target
levels specified in the agreement for any period of 30 consecutive trading days during the period between six months and 18
months after his start date and subject to his continued employment with the Company.
If Mr. Clarke’s employment is
terminated by the Company without Cause or by him for Good Reason, he will be entitled to a severance payment equal to 1.5
times his annual base salary that would be payable in installments over 12 months, provided that this payment is subject to a
reduction if Mr. Clarke accepts employment with another employer during that period. The Company will also arrange for Mr.
Clarke to continue participation for up to 12 months in the Company’s health insurance plans on substantially the same
terms as during his employment (including any required contribution by the Company). These severance benefits are subject to
Mr. Clarke’s providing a release of claims in favor of the Company and to his compliance with certain restrictive
covenants in the agreement, including provision that, during the period of Mr. Clarke’s employment and for a period of
12 months following a termination of his employment for any reason, he will not compete with the Company or its affiliates or
solicit any Company employees or customers. If Mr. Clarke’s employment with the Company terminates due to his death or
disability, he would be entitled to a pro-rated annual bonus for the fiscal year in which his termination occurs.
On February 10, 2020, the Committee also
approved a new change in control agreement for Mr. Clarke, which will become effective upon his commencing employment with the
Company. This agreement provides that if, during the period beginning 30 days before a Change in Control (as defined in the agreement)
and ending one year after the Change in Control, Mr. Clarke’s employment is terminated by the Company without Cause or by
him for Good Reason (as such terms are defined in his employment letter agreement), he will be entitled to receive, in connection with the termination of his employment under his employment
letter agreement as described above, a lump-sum payment in cash equal to 1.5 times his annual base salary, a pro-rated amount
of his target annual bonus for the fiscal year in which his termination occurs (regardless of whether the applicable performance
goals are met), and full acceleration of vesting of all of his then-outstanding and unvested stock incentive awards granted by
the Company (with any performance-based awards vesting as though the maximum level of performance for each metric under the award
had been achieved).
The foregoing summaries of Mr. Clarke’s
new employment letter agreement and change in control agreement are qualified in their entirety by the provisions of these agreements,
which are filed herewith as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.
Mr. Clarke will also enter into an indemnification
agreement with the Company in the form previously approved by the Board and filed with the Securities and Exchange Commission as
Exhibit 10.4 of Amendment No. 5 to the Company’s Registration Statement on Form S-1 filed on July 14, 2011.
There are no arrangements or understandings
between Mr. Clarke and any other person pursuant to which Mr. Clarke was appointed as Chief Executive Officer and a member of the
Board and there are no transactions between the Company and Mr. Clarke that would require disclosure under Item 404(a) of Regulation
S-K. No family relationship exists between Mr. Clarke and
any other director or executive officer of the Company.