FRANCESCA’S COLLECTIONS, INC.


August 6, 2012


 


Re: Employment Letter Agreement


 


Dear Neill:


 


Subject to the
terms and conditions of this letter agreement (this “Agreement”), Francesca’s
Collections, Inc., a Texas corporation (the “Company”), desires to provide
for your continued employment on the terms and conditions of this Agreement. This Agreement is effective as of the date set forth
above (the “Effective Date”). 


 


		1.	Employment;Compensation
                                                                             and Benefits



 


(a)           Position
and Duties. You shall serve as the Company’s President, reporting to the Company’s
Chief Executive Officer. During your period of employment with the Company, you agree to (i) devote substantially all of
your business time, energy and skill to the performance of your duties for the Company, (ii) perform such duties in a
faithful, effective and efficient manner and (iii) hold no other employment.


 


(b)           Period
of Employment. The “Period of Employment” shall
be a period of three (3) years commencing on the Effective Date and ending at the close of business on the third (3rd)
anniversary of the Effective Date. Notwithstanding the foregoing, the Period of Employment is subject to earlier termination as
provided in Section 2(a) of this Agreement. 


 


(c)           Base
Salary; Singing Bonus. Your base salary (the “Base Salary”)
shall be at an annualized rate of Four Hundred and Fifty Thousand Dollars ($450,000.00) and shall be paid in accordance with the
Company’s regular payroll practices in effect from time to time. The Company shall pay you a one-time signing bonus of One
Hundred Sixty-Two Thousand Five Hundred Dollars ($162,500) which shall be payable within seven days of the Effective Date; provided
you shall have reported for work as of the Effective Date. 


 


(d)           Annual
Bonus. You may be eligible for an annual incentive bonus based on the Company’s annual bonus
plan that may exist from time to time. Your target annual incentive bonus amount for a particular fiscal year of the Company during
the Period of Employment shall equal 100% of your Base Salary for that fiscal year. 


 


(e)           Retirement,
Welfare and Fringe Benefits. During the Period of Employment you shall be entitled to participate
in all employee savings and welfare benefit plans and programs, and fringe benefit plans and programs, made available by the Company
to the Company’s employees generally, in accordance with the eligibility and participation provisions of such plans and as
such plans or programs may be in effect from time to time. 


 


(f)           Benefits
Allowance. For each fiscal year during the Period of Employment, commencing on the date
hereof,the Company shall provide you with an allowance of $50,000.00 to apply towards the purchase of additional benefits at
your discretion. Such allowance shall be paid in equal quarterly installments (unless a pro-rata payment is to be made) on
the closest payroll date on or following January 1, April 1, July 1 and October 1 of each calendar year, provided that you
are employed with the Company on such date. 


 


(g)           Option
Award. Provided you shall have reported to work as of the Effective Date, you shall be
eligible to receive an option award (the “Option Award”) entitling you
to acquire 375,000 shares of Francesca’s Holdings Corporation, a Delaware corporation which is the indirect-parent
of the Company (the “Parent”). The Option Award shall be subject to the
applicable plan terms and conditions as adopted by the Board of Directors of Parent and as in effect as of the Effective
Date. The Option Award will vest annually over a period of three( 3) years on each anniversary of the Effective Date. 


 






    	 



    	 



    
 


 


		2.	Termination
and Severance.



 


(a)           Termination.
Your employment by the Company may be terminated by the Company: (i) immediately upon notice, with Cause (as defined
below), or (ii) with no less than thirty (30) days’ advance written notice to you, without Cause, or (iii) immediately
in the event of your Disability (as defined below) or your death. In the event that you are provided with notice of
termination without Cause pursuant to clause (ii) above, the Company will have the option to place you on
administrative leave during the notice period. You may terminate your employment by the Company for any reason with no less
than thirty (30) days’ advance written notice to the Company. Any termination of your employment (by you or by the
Company) must be communicated by written notice from the terminating party to the other party. Such notice of termination
must be hand delivered (if to the Company, to the Company’s chief executive officer) and must indicate the specific
provision(s) of this Agreement relied upon in effecting the termination. The date your employment by the Company terminates
is referred to herein as your “Severance Date.” 


 


(b)           Benefits
upon Termination. Regardless of the reason for the termination of your employment with the
Company, in connection with such termination the Company will pay you (on or within 30 days following your Severance Date)
your accrued and unused vacation (if any) and you will be entitled to any benefits that are due to you under the
Company’s 401(k) plan in accordance with the terms of that plan. If you hold any stock options or other equity or
equity-based awards granted by the Company, the terms and conditions applicable to those awards will control as to the
consequences of a termination of your employment on those awards. In addition to the foregoing, if your employment with the
Company terminates as a result of a termination by the Company of your employment without Cause (as defined below) you will
(subject to the other conditions set forth in Section 2(c) below) be entitled to the following benefits: the Company will pay
you, subject to tax withholding and other authorized deductions, an aggregate amount equal to one and one-half
(11/2) times your Base Salary and the target annual incentive bonus amount as in effect on the Severance Date (the
“Severance Benefit”). Subject to Section 5, the Company will pay this
benefit to you in substantially equal installments (each in the applicable fraction of the aggregate benefit) in accordance
with the Company’s standard payroll practices over a period of eighteen months, with the first installment payable in
the month following the month in which your Separation from Service (as such term is defined below) occurs.


 


(c)           Conditions
for Receipt of Severance Benefit. Notwithstanding anything to the contrary herein, if the Severance
Benefit is otherwise due to you and, at any time, you breach any obligation under Section 6 of this Agreement, from and after the
date of such breach and not in any way in limitation of any right or remedy otherwise available to the Company, you will no longer
be entitled to, and the Company will no longer be obligated to pay, any remaining unpaid portion of the Severance Benefit. In addition,
in order to receive any Severance Benefit, you must, upon or promptly following (and in all events, within twenty-one (21) days
of, unless a longer period of time is required by applicable law) your Severance Date, provide the Company with a separation agreement
which shall contain a valid, executed general release agreement in a form acceptable to the Company, and such release shall have
not been revoked. You agree and acknowledge that such separation agreement may contain additional restrictive covenants, including,
without limitation, non-solicitation covenants and non-disparagement covenants. 


 


(d)           Exclusive
Remedy. You agree that should your employment by the Company terminate for any reason, the payments
and benefits contemplated by this Agreement with respect to the circumstances of such termination shall constitute the exclusive
and sole remedy for any such termination of your employment and you agree not to assert or pursue any other remedies, at law or
in equity, with respect to any termination of employment. You agree that, in the event of a termination of your employment, you
are not and will not be entitled to severance benefits under any other agreement, plan, program, or policy of the Company. 


 






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		3.	Certain Defined
Terms. As used in this Agreement, the following terms shall be defined as follows: 



 


(a)           “Cause”
shall mean that one or more of the following has occurred: (i) you have committed a felony (under the laws of the United
States or any relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction);
(ii) you have engaged in acts of fraud, dishonesty or other acts of material misconduct in the course of your duties; (iii)
your abuse of narcotics or alcohol that has or may reasonably harm the Company; (iv) any violation by you of the
Company’s written policies; (v) your failure to perform or uphold your duties and/or you fail to comply with reasonable
directives of the Company’s chief executive officer or Board of Directors, as applicable; or (vi) any breach by you of
any provision of Section 6, or any material breach by you of this Agreement or any other contract you are a party to with the
Company.


 


(b)           “Disability”
shall mean a physical or mental impairment which renders you unable to perform the essential functions of your employment with
the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than 180 days in
any 12-month period, unless a longer period is required by federal or state law, in which case that longer period would apply.



 


(c)           “Separation
from Service” occurs when you die, retire, or otherwise have a termination of employment with
the Company that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1),
without regard to the optional alternative definitions available thereunder. 


 


4.             Limitation on Benefits.
Notwithstanding anything contained in this Agreement to the contrary, to the extent that any payment, benefit or distribution of
any type to you or for your benefit by the Company or any of its affiliates, whether paid or payable, provided or to be provided,
or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the “Total
Payments”) would be subject to the excise tax imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), then the Total Payments shall be reduced
(but not below zero) so that the maximum amount of the Total Payments (after reduction) shall be one dollar ($1.00) less than the
amount which would cause the Total Payments to be subject to the excise tax imposed by Section 4999 of the Code. Unless you shall
have given prior written notice to the Company to effectuate a reduction in the Total Payments if such a reduction is required,
any such notice consistent with the requirements of Section 409A of the Code to avoid the imputation of any tax, penalty or interest
thereunder, the Company shall reduce or eliminate the Total Payments by first reducing or eliminating any cash severance benefits
(with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting
of stock options or similar awards, then by reducing or eliminating any accelerated vesting of restricted stock or similar awards,
then by reducing or eliminating any other remaining Total Payments. The preceding provisions of this Section 4 shall take precedence
over the provisions of any other plan, arrangement or agreement governing your rights and entitlements to any benefits or compensation.


 


5.             Section 409A.
It is intended that any amounts payable under this Agreement and the Company’s and your exercise of authority or discretion
hereunder shall comply with and avoid the imputation of any tax, penalty or interest under Section 409A of the Code. This Agreement
shall be construed and interpreted consistent with that intent. If you are a “specified employee” within the meaning
of Treasury Regulation Section 1.409A-1(i) as of the date of your Separation from Service and you are entitled to the Severance
Benefit, you shall not be entitled to any payment or benefit pursuant to Section 2(b) until the earlier of (i) the date which is
six (6) months after your Separation from Service for any reason other than your death, or (ii) the date of your death. The provisions
of the preceding sentence shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest
pursuant to Section 409A of the Code. Any amounts otherwise payable to you upon or in the six (6) month period following your Separation
from Service that are not so paid by reason of such 6-month delay provision shall be paid (without interest) as soon as practicable
(and in all events within thirty (30) days) after the date that is six (6) months after your Separation from Service (or, if earlier,
as soon as practicable, and in all events within thirty (30) days, after the date of your death). 


 






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		6.	Protective Covenants.



 


(a)          
Confidential Information .


 


(i)          
You shall not disclose or use at any time, either during the Period of Employment or thereafter, any Trade Secrets and Confidential
Information (as defined below) of which you become aware, whether or not such information is developed by you, except to the extent
that such disclosure or use is directly related to and required by your performance in good faith of duties for the Company. You
will take all appropriate steps to safeguard Trade Secrets and Confidential Information in your possession and to protect it against
disclosure, misuse, espionage, loss and theft. You shall deliver to the Company at the termination of your employment, or at any
time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Trade Secrets and Confidential Information or the Work Product (as hereinafter defined)
of the business of the Company or any of its affiliates which you may then possess or have under your control. Notwithstanding
the foregoing, you may truthfully respond to a lawful and valid subpoena or other legal process, but shall give the Company the
earliest possible notice thereof.


 


(ii)          
For purposes of this Agreement, “Trade Secrets and Confidential Information”
means information that is not generally known to the public and that is used, developed or obtained by the Company in
connection with its business, including, but not limited to, information, observations and data obtained by you while
employed by the Company or any predecessors thereof concerning (i) the business or affairs of the Company (or such
predecessors), (ii) products or services, (iii) fees, costs and pricing structures, (iv) designs, (v) analyses,
(vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program
listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods,
(xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not
reduced to practice, (xii) customers and clients and customer or client lists, (xiii) other copyrightable works, (xiv) all
production methods, processes, technology and trade secrets, and (xv) all similar and related information in whatever form.
Trade Secrets and Confidential Information will not include any information that has been published (other than a disclosure
by you in breach of this Agreement) in a form generally available to the public prior to the date you propose to disclose or
use such information. Trade Secrets and Confidential Information will not be deemed to have been published merely because
individual portions of the information have been separately published, but only if all material features comprising such
information have been published in combination.


 


(iii)          
For purposes of this Agreement, “Work Product” means all inventions,
innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings,
reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or
unpatentable, copyrightable, registerable as a trademark, reduced to writing, or otherwise) which relates to the
Company’s or any of its affiliates’ actual or anticipated business, research and development or existing or
future products or services and which are conceived, developed or made by you (whether or not during usual business hours,
whether or not by the use of the facilities of the Company or any of its affiliates, and whether or not alone or in
conjunction with any other person) while employed by the Company (including those conceived, developed or made prior to the
Effective Date) together with all patent applications, letters patent, trademark, trade name and service mark applications or
registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing. All Work Product that
you may have discovered, invented or originated during your employment by the Company or any of its affiliates prior to the
date hereof, that you may discover, invent or originate during your employment or at any time following the termination of
your employment with the Company, shall be the exclusive property of the Company and its affiliates, as applicable, and you
hereby assign all of your right, title and interest in and to such Work Product to the Company or its applicable
affiliate, including all intellectual property rights therein. You shall promptly disclose all Work Product to the Company,
shall execute at the request of the Company any assignments or other documents the Company may deem necessary to protect or
perfect its (or any of its affiliates’, as applicable) rights therein, and shall assist the Company, at the
Company’s expense, in obtaining, defending and enforcing the Company’s (or any of its affiliates’, as
applicable) rights therein. You hereby appoint the Company as your attorney-in-fact to execute on your behalf any assignments
or other documents deemed necessary by the Company to protect or perfect the Company, the Company’s (and any of its
affiliates’, as applicable) rights to any Work Product.


 






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(b)           Restriction
on Competition. During your employment with the Company and twelve (12) months following the
termination of your employment with the Company (regardless of the reason for such termination and regardless of whether or
not you are entitled to the Severance Benefit) (the “Restricted Period”),
you shall not directly or indirectly, individually or on behalf of any other person or entity, manage, participate in, work
for, consult with, render services for, or take an interest in (as an owner, stockholder, partner or lender) any Competitor.
For purposes of this Agreement, “Competitor” means a Person anywhere in
the world (the “Restricted Area”) that at any time during the period of
time during which you are employed by the Company, or any time during the Restricted Period engages in the business of
operating retail stores for the sale of women’s apparel, jewelry, accessories, gifts, greeting cards, picture frames
and related items or any other business that the Company is engaged in, or reasonably anticipates becoming engaged in. The
parties hereto agree that the Company intends to engage in business throughout the Restricted Area, even if it does not
currently do so, and therefore its scope is reasonable. Nothing herein shall prohibit you from being a passive owner of not
more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as you have no active
participation in the business of such corporation. The term “Person” as
used in this Agreement shall be construed broadly and shall include, without limitation, an individual, a partnership, a
limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision thereof. 


 


(c)           Non-Solicitation
of Employees and Consultants. During your employment with the Company and during the Restricted
Period, you will not, and should be enjoined (if necessary) from being able to directly or indirectly through any other Person:
(i) induce or attempt to induce any employee or independent contractor of the Company or any affiliate of the Company to leave
the employ or service, as applicable, of the Company or such affiliate, or in any way interfere with the relationship between the
Company or any such affiliate, on the one hand, and any employee or independent contractor thereof, on the other hand, or (ii)
hire any person who was an employee of the Company or any affiliate of the Company until twelve (12) months after such individual’s
employment relationship with the Company or such affiliate has been terminated. 


 


(d)           Non-Solicitation
of Customers. During your employment with the Company and during the Restricted Period, you will
not, and should be enjoined (if necessary) from being able to directly or indirectly through any other Person: (i) influence or
attempt to influence customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents, or partners
of the Company or any affiliate of the Company to divert their business away from the Company or such affiliate; and (ii) interfere
with, disrupt or attempt to disrupt the business relationships, contractual or otherwise, between the Company or any affiliate
of the Company, on the one hand, and any of its or their customers, suppliers, vendors, lessors, licensors, joint venturers, associates,
officers, employees, consultants, managers, partners, members or investors, on the other hand. 


 


(e)           Understanding
of Covenants. You acknowledge and agree that the Company would not have entered into
this Agreement, providing for severance protections to you on the terms and conditions set forth herein, but for your
agreements herein. You agree that the foregoing covenants set forth in this Section 6 (the
“Restrictive Covenants”) are reasonable, including in temporal and
geographical scope, and in all other respects, and necessary to protect the Company’s and its affiliates’ Trade
Secrets and Confidential Information, good will, stable workforce, and customer relations. The parties hereto intend that
Restrictive Covenants shall be deemed to be a series of separate covenants, one for each county or province of each
and every state or jurisdiction within the Restricted Area and one for each month of the Restricted Period. You understand
that the Restrictive Covenants may limit your ability to earn a livelihood in a business similar to the business of the
Company and any of its affiliates, but you nevertheless believe that you have received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise provided hereunder or as described in the
recitals hereto to clearly justify such restrictions which, in any event (given your education, skills and ability), you do
not believe would prevent you from otherwise earning a living. You agree that the Restrictive Covenants do not confer a
benefit upon the Company disproportionate to your detriment.


 






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(f)           Enforcement.
You agree that a breach by you of any of the covenants in this Section 6 would cause immediate and irreparable harm to the Company
that would be difficult or impossible to measure, and that damages to the Company for any such injury would therefore be an inadequate
remedy for any such breach. Therefore, you agree that in the event of any breach or threatened breach of any provision of this
Section 6, the Company shall be entitled, in addition to and without limitation upon all other remedies the Company may have under
this Agreement, at law or otherwise, to obtain specific performance, injunctive relief and/or other appropriate relief (without
posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Section 6, or require you
to account for and pay over to the Company all compensation, profits, moneys, accruals, increments or other benefits derived from
or received as a result of any transactions constituting a breach of this Section 6, if and when final judgment of a court of competent
jurisdiction is so entered against you.


 


7.           Withholding Taxes.
Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may
be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment,
or other taxes as may be required to be withheld pursuant to any applicable law or regulation. 


 


8.           Successors and Assigns.
This Agreement is personal to you and without the prior written consent of the Company shall not be assignable by you otherwise
than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by your legal
representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.


 


9.           Governing
Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF
NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS TO
BE APPLIED.


 


10.          Severability.
If any provision of this Agreement is found by any court of competent jurisdiction to be invalid or unenforceable for any reason,
such finding shall not affect, impair or invalidate the remainder of this Agreement. If any aspect of any restriction herein is
too broad or restrictive to permit enforcement to its fullest extent, you and the Company agree that any court of competent jurisdiction
shall modify such restriction to the minimum extent necessary to make it enforceable and then enforce the provision as modified.



 


11.          Entire Agreement,
Amendment and Waiver. This Agreement constitutes the entire agreement between you and the Company
with respect to the subject matter hereof and supersedes any and all prior or contemporaneous oral or written communications respecting
such subject matter. This Agreement shall not be modified, amended or in any way altered except by written instrument signed by
you and the Company’s chief executive officer (or, in the case you are the Company’s chief executive officer, by another
officer of the Company.) A waiver by either party hereto of any rights or remedies hereunder on any occasion shall not be a bar
to the exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time.


 






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12.          Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT. 


 


13.          Remedies.
Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity
is a signatory hereto shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for
any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that each
party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance, injunctive
relief and/or other appropriate equitable relief (without posting any bond or deposit) in order to enforce or prevent any violations
of the provisions of this Agreement. Each party shall be responsible for paying its own attorneys’ fees, costs and other
expenses pertaining to any such legal proceeding and enforcement regardless of whether an award or finding or any judgment or verdict
thereon is entered against either party. 


 


14.          Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose
signature appears thereon, and all of which together shall constitute one and the same instrument. 


 


 


[Signature page follows]


 






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IN WITNESS WHEREOF, you and the Company have executed
this Agreement on June 27, 2012.


 


 


	 	Francesca’s Collections, Inc.
	 	a Texas corporation
	 	 
	 	 
	 	By: 	/s/ John De Meritt
	 	 	John De Meritt, President/CEO








 


 





	 	AGREED BY:
	 	 
	 	 
	 	/s/ Neill P. Davis
	 	Neill P. Davis
	 	 	
	 	 	 




 






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