Document:

exv10wp

 

Exhibit 10.P

JOHNSON CONTROLS, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE 1.

PURPOSE AND DURATION

     Section 1.1. Purpose. The Johnson Controls, Inc. Executive Deferred Compensation Plan (the “Plan”)
is established as an amendment, restatement and consolidation of the various
deferral options contained in the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Deferred Option Qualified), referred to as the EICP(DOQ),
the Johnson Controls, Inc. Executive Incentive Compensation Plan (Deferred
Option), merged into the EICP(DOQ) effective October 1, 2001, and the Johnson
Controls, Inc. Long Term Performance Plan and the policies adopted by the
Committee under the Johnson Controls, Inc. 1992 Stock Option Plan. The Plan
also implements the deferral provisions of the Johnson Controls, Inc. 2000
Stock Option Plan, and the Johnson Controls, Inc. Restricted Stock Plan.

     Section 1.2. Duration. The Plan is effective on October 1, 2001. The
Plan was most recently amended and restated effective October 1, 2003. The
Plan shall remain in effect until terminated by the Board pursuant to Section
9.5.

ARTICLE 2.

DEFINITIONS AND CONSTRUCTION

     Section 2.1. Definitions. Wherever used in the Plan, the following
terms shall have the meanings set forth below and, where the meaning is
intended, the initial letter of the word is capitalized:

     (a) “Account” means the record keeping account or accounts maintained to
record the interest of each Participant under the Plan. An Account is
established for record keeping purposes only and not to reflect the physical
segregation of assets on the Participant’s behalf, and may consist of such
subaccounts or balances as the Committee may determine to be necessary or
appropriate.

     (b) “Act” means the Securities Act of 1933, as interpreted by regulations
and rules issued pursuant thereto, all as amended and in effect from time to
time. Any reference to a specific provision of the Act shall be deemed to
include reference to any successor provision thereto.

     (c) “Administrator” means the Employee Benefits Policy Committee of the
Company.

     (d) “Beneficiary” means the person(s) or entity(ies) designated by a
Participant to be his beneficiary for purposes of this Plan as provided in
Section 6.4.

     (e) “Board” means the Board of Directors of the Company.

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     (f) “Code” means the Internal Revenue Code of 1986, as interpreted by
regulations and rulings issued pursuant thereto, all as amended and in effect
from time to time. Any reference to a specific provision of the Code shall be
deemed to include reference to any successor provision thereto.

     (g) “Committee” means the Compensation Committee of the Board, which shall
consist of not less than two members of the Board, each of whom is also a
director of the Company and qualifies as a “non-employee director” for purposes
of Rule 16b-3 of the Exchange Act.

     (h) “Company” means Johnson Controls, Inc., and its successors as provided
in Section 9.7.

     (i) “Deferral” means the amount credited, in accordance with a
Participant’s election or deemed election, to the Participant’s Account under
the Plan in lieu of the payment in cash thereof, or the issuance of Shares with
respect thereto. Deferrals include the following:

(1) Incentive Deferrals: A deferral of all or a
portion of a Participant’s performance cash award
under the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Deferred Option Qualified), and the
Johnson Controls, Inc. Long Term Performance Plan.

(2) Option Deferrals: A deferral of all or a portion
of the Shares that would otherwise be issuable upon a
Participant’s exercise of his stock option under the
Johnson Controls, Inc. 1992 Stock Option Plan or 2000
Stock Option Plan.

(3) Restricted Stock Deferrals: A deferral of the
Shares that would otherwise be issuable to a
Participant in the form of restricted stock under the
Johnson Controls, Inc. Restricted Stock Plan.

(4) Dividend Deferrals: A deferral of the dividends
paid on restricted shares under the Johnson Controls,
Inc. Restricted Stock Plan while such shares are
subject to a period of restriction.

     (j) “ERISA” means the Employee Retirement Income Security Act of 1974, as
interpreted by regulations and rulings issued pursuant thereto, all as amended
and in effect from time to time. Any reference to a specific provision of
ERISA shall be deemed to include reference to any successor provision thereto.

     (k) “Exchange Act” means the Securities Exchange Act of 1934, as
interpreted by regulations and rules issued pursuant thereto, all as amended
and in effect from time to time. Any reference to a specific provision of the
Exchange Act shall be deemed to include reference to any successor provision
thereto.

     (l) “Fair Market Value” means with respect to a Share, except as otherwise
provided herein, the closing sales price on the New York Stock Exchange as of
4:00 p.m. EST on the date in question (or the immediately preceding trading day
if the date in question is not a trading day), and with respect to any other
property, such value as is determined by the Administrator.

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     (m) “Investment Options” means the investment options offered under the
Johnson Controls Savings and Investment (401k) Plan (excluding the Company
stock fund), the Share Unit Account, and any other alternatives made available
by the Administrator, which shall be used for the purpose of measuring
hypothetical investment experience attributable to a Participant’s Account.

     (n) “Participant” means an employee of the Company or any subsidiary who
is selected for participation under the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option Qualified), the Johnson Controls,
Inc. Long Term Performance Plan, the Johnson Controls, Inc. 1992 Stock Option
Plan, the Johnson Controls, Inc. 2000 Stock Option Plan, and/or the Johnson
Controls, Inc. Restricted Stock Plan, and who elected or is deemed to have
elected to make Deferrals hereunder. Notwithstanding the foregoing, the
Committee shall limit the foregoing group of eligible employees to a select
group of management and highly compensated employees, as determined by the
Committee in accordance with ERISA. Where the context so requires, a
Participant also means a former employee entitled to receive a benefit
hereunder.

     (o) “Plan Year” means the fiscal year of the Company.

     (p) “Share” means a share of common stock of the Company.

     (q) “Share Unit Account” means the account described in Section 5.1, which
is deemed invested in Shares.

     (r) “Share Units” means the hypothetical Shares that are credited to the
Share Unit Accounts in accordance with Section 5.1.

     (s) “Valuation Date” means each day when the United States financial
markets are open for business, as of which the Administrator will determine the
value of each Account and will make allocations to Accounts.

     Section 2.2. Construction. Wherever any words are used in the
masculine, they shall be construed as though they were used in the feminine in
all cases where they would so apply; and wherever any words are use in the
singular or the plural, they shall be construed as though they were used in the
plural or the singular, as the case may be, in all cases where they would so
apply. Titles of articles and sections are for general information only, and
the Plan is not to be construed by reference to such items.

     Section 2.3. Severability. In the event any provision of the Plan is
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

ARTICLE 3.

PARTICIPATION

     Section 3.1. Effective Date. Each individual for whom a deferral
account was maintained under the Johnson Controls, Inc. Executive Incentive
Compensation Plan (Deferred Option), the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Qualified Deferred

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Option), the Johnson Controls, Inc. Long Term Performance Plan and the Johnson Controls, Inc. 1992 Stock
Option Plan as of September 30, 2001, shall automatically become a Participant
hereunder on the effective date.

     Section 3.2. New Participants. Each employee of the Company or a
subsidiary shall automatically become a Participant on the date he makes or is
deemed to make a deferral election under the Johnson Controls, Inc. Executive
Incentive Compensation Plan (Deferred Option Qualified), the Johnson Controls,
Inc. Long Term Performance Plan, the Johnson Control, Inc. 1992 Stock Option
Plan, the Johnson Controls, Inc. 2000 Stock Option Plan, and/or the Johnson
Controls, Inc. Restricted Stock Plan.

ARTICLE 4.

DEFERRALS OF COMPENSATION

     Section 4.1. Incentive Deferrals.

     (a) EICP Deferrals. A Participant may elect, in such form and
manner and within such time periods as the Administrator may prescribe, to have
a part or all of his incentive award payable under the Johnson Controls, Inc.
Executive Incentive Compensation Plan (Deferred Option Qualified) (but not less
than $1,000) deferred under this Plan. A Participant’s election to defer an
annual incentive award shall be effective only for the award to which the
election relates, and shall not carry over from award to award.
Notwithstanding the foregoing, a Participant’s election to defer all or a
portion of an incentive award shall not be effective with respect to any amount
payable after the Participant’s termination of employment.

     (b) LTPP Deferrals. A Participant may elect, in such form and
manner and within such time periods as the Administrator may prescribe, to have
a part or all of his incentive award payable under the Johnson Controls, Inc.
Long-Term Performance Plan (but not less than $1,000) deferred under this Plan.
A Participant’s election to defer a long-term incentive payment shall be
effective only for the award to which the election relates, and shall not carry
over from award to award. Notwithstanding the foregoing, a Participant’s
election to defer all or a portion of a long-term incentive award shall not be
effective with respect to any amount payable after the Participant’s
termination of employment.

     Section 4.2. Deferral of Option Exercise Shares. A Participant may
elect, in such form and manner and within such time periods as the
Administrator may prescribe, to defer delivery of the Shares otherwise issuable
to the Participant upon exercise of a stock option under the Johnson Controls,
Inc. 1992 Stock Option Plan or 2000 Stock Option Plan. The election must be
made with respect to all unexercised option shares as of the date of the
election. A Participant’s election to defer option exercise Shares shall be
effective only for the Shares to which the election relates, and shall not
carry over from exercise to exercise. A Participant’s Option Deferrals will be
automatically credited to the Participant’s Share Unit Account.
Notwithstanding the foregoing, a Participant’s election to defer his option
exercise Shares shall not be effective with respect to an option exercised
after the Participant’s termination of employment.

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     Section 4.3. Deferral of Restricted Stock. A Participant may elect, in
such form and manner and within such time periods as the Administrator may
prescribe, to defer all or any portion of the restricted stock awarded to such
Participant under the Johnson Controls, Inc. Restricted Stock Plan. A
Participant’s election to defer restricted shares shall be effective only for
the Shares to which the election relates, and shall not carry over from award
to award. A Participant’s Restricted Stock Deferrals will be automatically
credited to the Participant’s Share Unit Account. The portion of the Share
Unit Account attributable to Restricted Stock Deferrals shall be subject to the
same risk of forfeiture as the restricted shares to which such Deferrals
relate.

     Section 4.4. Deferral of Dividends on Restricted Stock. A Participant
shall be deemed to have elected to have all dividends or other distributions
paid with respect to restricted stock under the Johnson Controls, Inc.
Restricted Stock Plan while such stock is subject to a period of restriction,
deferred to the Participant’s Share Unit Account. The portion of the
Participant’s Account attributable to such Deferrals shall be subject to the
same risk of forfeiture as the restricted shares to which such Deferrals
relate.

     Section 4.5. Involuntary Termination of Deferral Elections. If the
Administrator determines that the Participant is no longer eligible to
participate in the Plan or that revocation of a Participant’s eligibility is
necessary or desirable in order for the Plan to qualify under ERISA as a plan
of deferred compensation for a select group of management or highly compensated
employees, the Administrator may automatically revoke the Participant’s
deferral election or deemed deferral election.

ARTICLE 5.

HYPOTHETICAL INVESTMENT OPTIONS

     Section 5.1. Investment Election.
Amounts credited to a Participant’s Account shall reflect the investment
experience of the Investment Options selected by the Participant, or the
investment experience of the required Investment Option (as described above
under Sections 4.2, 4.3 and 4.4). The Participant may make an initial
investment election at the time of enrollment in the Plan (or with respect to a
Participant who has an Account balance on the restatement effective date,
within such period of time after such effective date as is specified by the
Administrator) in whole increments of one percent (1%). A Participant may also
elect to reallocate his or her Account, and may elect to allocate any future
Deferrals, among the various Investment Options in whole increments of one
percent (1%) from time to time as prescribed by the Administrator; provided
that Option Deferrals, Restricted Stock Deferrals and Dividend Deferrals shall
not be eligible for re-allocation out of the Share Unit Account. Such
investment elections shall remain in effect until changed by the Participant.
All investment elections shall become effective as soon as practicable after
receipt of such election by the Administrator, and must be made in the form and
manner and within such time periods as the Administrator prescribes in order to
be effective. In the absence of an effective election, the Participant’s
Account (to the extent the Plan does not require Deferrals to be allocated to
the Share Unit Account) shall be deemed invested in the default fund specified
for the Johnson Controls Inc. Savings and Investment (401k) Plan.

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On each Valuation Date, the Administrator or its designee shall credit the
deemed investment experience with respect to the selected (or required)
Investment Options to each Participant’s Account. Notwithstanding anything
herein to the contrary, the Company retains the right to allocate actual
amounts hereunder without regard to a Participant’s request.

     Section 5.2. Allocations to Investment Options.

     (a) Incentive Deferrals. Incentive Deferrals will be deemed
invested in an Investment Option as of the date on which the Deferrals would
have otherwise been paid to the Participant.

     (b) Option Deferrals. An Option Deferral will be credited to a
Participant’s Share Unit Account as of the date of exercise.

     (c) Restricted Stock Deferrals. A Restricted Stock Deferral will be
credited to a Participant’s Share Unit Account as of the date the Participant
would have otherwise been issued shares of restricted stock.

     (d) Dividends Deferrals. Whenever the Company declares a dividend
on its Shares, in cash or in property, at a time when a Participant is deemed
to have made a Dividend Deferral election hereunder, a dividend award shall be
made to all such Participants as of the date the dividend is paid or
distributed. The dividend award for a Participant shall be determined by
multiplying the number of restricted shares held by such Participant on the
date the dividend is declared by the amount or Fair Market Value of the
dividend paid or distributed on one Share. All such dividend awards shall be
credited to a Participant’s Share Unit Account as of the date of the dividend
payment or distribution.

     Section 5.3. Securities Law Restrictions. Notwithstanding anything to
the contrary herein, all elections under Article 5 or 6 by a Participant who is
subject to Section 16 of the Exchange Act are subject to review by the
Administrator prior to implementation. In accordance with Section 9.2, the
Administrator may restrict additional transactions, rescind transactions, or
impose other rules and procedures, to the extent deemed desirable by the
Administrator in order to comply with the Exchange Act, including, without
limitation, application of the review and approval provisions of this Section
5.3 to Participants who are not subject to Section 16 of the Exchange Act.

     Section 5.4. Accounts are For Record Keeping Purposes Only. Plan
Accounts and the record keeping procedures described herein serve solely as a
device for determining the amount of benefits accumulated by a Participant
under the Plan, and shall not constitute or imply an obligation on the part of
the Company or any subsidiary to fund such benefits. In any event, the Company
or a subsidiary may, in its discretion, set aside assets equal to part or all
of such Account balances and invest such assets in Company stock, life
insurance or any other investment deemed appropriate. Any such assets,
including Company stock, shall be and remain the sole property of the employer
that set aside such assets, and a Participant shall have no proprietary rights
of any nature whatsoever with respect to such assets.

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ARTICLE 6.

DISTRIBUTION OF ACCOUNTS

     Section 6.1. Distribution Election.

     (a) General. Subject to the provisions of subsections (b) and (c),
a Participant, at the time he commences participation in the Plan, shall make a
distribution election with respect to each of the following types of deferrals:

(1) Deferrals under the Johnson Controls, Inc.
Executive Incentive Compensation Plan, including
interest, earnings or losses thereon.

(2) Deferrals under the Johnson Controls, Inc. Long
Term Performance Plan, including interest, earnings or
losses thereon.

(3) Deferrals under the Johnson Controls, Inc. 1992
Stock Option Plan or 2002 Stock Option Plan, including
dividends, interest, earnings or losses thereon.

(4) Deferrals under the Johnson Controls, Inc.
Restricted Stock Plan, plus interest, earnings or
losses thereon.

     Such election shall be made in such form and manner and within such time
periods as the Administrator may prescribe. The election shall specify whether
distributions shall be made in a single lump sum or from two (2) to ten (10)
annual installments. No election shall be made with respect to Dividend
Deferrals, which are automatically paid in a lump sum.

     (b) Form and Timing of Election. A distribution election shall be
effective only when it is received and approved by the Administrator, and shall
remain in effect until modified by the Participant. A Participant may from time
to time modify his distribution election by completing a revised distribution
election in such form and manner and within such time periods as the
Administrator may prescribe. The Administrator may refuse to honor a
distribution election that is not completed in the manner and in such time as
is prescribed by the Administrator. If no valid election is in effect,
distributions shall be made in ten (10) annual installments.

     (c) Initial Distribution Elections. Notwithstanding the foregoing,
a Participant who is employed by the Company or its subsidiaries when the
Company provides the distribution election with respect to each type of
deferral after July 1, 2003, may make elections as described above, and such
elections shall become immediately effective on the date received by the
Company, provided the election is received by the Company within thirty (30)
days after the election is made available to currently employed Participants.
Any change in such election shall be governed by the provisions of subsection
(b).

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     Section 6.2. Time of Distribution.

     (a) Termination of Employment. Except as provided in subsection
(c), upon termination of a Participant’s employment with the Company or
subsidiary for any reason, the Participant, or his Beneficiary in the event of
his death, shall be entitled to payment of the amount accumulated in such
Participant’s Account.

     (b) Certain Transfers of Employment. If directed by the
Administrator, a Participant whose employment is transferred to a corporation
or other entity (the “Transferee Employer”) that is not the Company or a
subsidiary, but in which the Company or a subsidiary holds an ownership
interest, then until the earliest to occur of (1) the date on which the
Participant ceases to be employed by such Transferee Employer, (2) the date on
which the Company or a subsidiary no longer holds an ownership interest in the
Transferee Employer, or (3) such other date determined by the Administrator,
the Participant shall be treated as if he or she were still actively employed
by the Company or a subsidiary. The foregoing rule shall apply only for the
purpose of determining whether the Participant has terminated employment for
purposes of the distribution provisions of this Article 6; it shall not apply,
and the Participant shall not be entitled to make additional Deferrals, with
respect to remuneration attributable to services rendered with the Transferee
Employer. The Administrator may promulgate such additional rules as may be
necessary or desirable in connection with any such transfer of employment.

     (c) Payment of Dividend Deferrals. Notwithstanding anything herein
to the contrary, the portion of the Participant’s Share Unit Account that is
related to Dividend Deferrals shall be paid to the Participant at the time the
shares of restricted stock to which such deferrals relate are no longer subject
to a period of restriction.

     Section 6.3. Manner of Distribution. The Participant’s Account shall be
paid in cash in the following manner:

     (a) If payment is to be made in a lump sum, payment shall be made in the
first calendar quarter of the year following the year in which the date of
termination of employment occurs (or on such earlier date after the
Participant’s termination of employment as is approved by the Committee with
respect to Participants who are subject to Section 16(b) of the Exchange Act,
or approved by the Administrator with respect to all other Participants), and
shall be in an amount equal to the balance of the Participant’s Account as of
the Valuation Date immediately preceding the distribution date.
Notwithstanding the foregoing, the portion of the Participant’s Share Unit
Account related to Dividend Deferrals shall be paid as provided in Section
6.2(c).

     (b) If payment is to be made in annual installments, the first annual
payment shall be made in the first calendar quarter of the year following the
year in which the date of termination of employment occurs (or on such earlier
date after the Participant’s termination of employment as is approved by the
Committee with respect to Participants who are subject to Section 16(b) of the
Exchange Act, or approved by the Administrator with respect to all other
Participants), and shall be in an amount equal to the value of 1/10th (or
1/9th, 1/8th, 1/7th, etc. depending on the number of installments elected) of
the balance of the Participant’s Account as of the Valuation Date immediately
preceding the distribution date. A second annual payment shall be made in the
first calendar quarter of the second calendar year following the year during
which the Participant

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terminated employment (or on such earlier date as is
approved by the Committee with respect to Participants who are subject to
Section 16(b) of the Exchange Act, or approved by the Administrator with
respect to all other Participants), and shall be in an amount equal to the
value of 1/9th (or 1/8th, 1/7th, 1/6th, etc. depending on the number of
installments elected) of the balance of the Participant’s Account as of the
Valuation Date immediately preceding the distribution date. Each succeeding
installment payment shall be determined in a similar manner, until the tenth
installment which shall equal the then remaining balance of such Account as of
the Valuation Date preceding such final payment date. Notwithstanding the
foregoing provisions, if the balance of a Participant’s Account at any time is
less than $50,000 during the payout period, the remaining balance shall
immediately be paid in the form of a lump sum.

     (c) Notwithstanding the foregoing, if the distribution under this Section
6.3 is made within six (6) months after the Participant ceases to be subject to
Section 16(b) of the Exchange Act, then the distribution shall be delayed until
the date that is six (6) months plus one day after the date such Participant
ceases to be subject to Section 16(b), unless the distribution is approved in
advance by the Committee or the distribution will not result in any liability
to the Participant under Section 16(b).

     Section 6.4. Distribution of Remaining Account Following Participant’s
Death. Each Participant may designate a beneficiary in such form and manner and
within such time periods as the Administrator may prescribe. In the event of
the Participant’s death prior to receiving all payments due hereunder, the
remaining interest shall be paid to the Participant’s Beneficiary in a lump
sum, unless the Committee (with respect to Participants who are subject to
Section 16(b) of the Exchange Act) or Administrator (with respect to all other
Participants) determines that payments may continue in accordance with the
distribution election in effect at the time of the Participant’s death. A
Participant can change his beneficiary designation at any time, provided that
each beneficiary designation shall revoke the most recent designation, and the
last designation received by the Company (or its delegee) while the Participant
was alive shall be given effect. If a Participant designates a Beneficiary
without providing in the designation that the Beneficiary must be living at the
time of each distribution, the designation shall vest in the Beneficiary all of
the distributions payable after the Beneficiary’s death, and any distributions
remaining upon the Beneficiary’s death shall be made to the Beneficiary’s
estate. In the event there is no valid beneficiary designation in effect at
the time of the Participant’s death, in the event the Participant’s designated
Beneficiary does not survive the Participant, or in the event that the
beneficiary designation provides that the Beneficiary must be living at the
time of each distribution and such designated Beneficiary does not survive to a
distribution date, the Participant’s estate will be deemed the Beneficiary and
will be entitled to receive payment. If a Participant designates his spouse as
a beneficiary, such beneficiary designation automatically shall become null and
void on the date of the Participant’s divorce or legal separation from such
spouse; provided the Administrator receives notice of such divorce or legal
separation prior to payment.

     Section 6.5. Distribution in Event of Financial Emergency. If requested
by a Participant while in the employ of the Company or a subsidiary and if the
Administrator determines that a financial emergency has occurred in the
financial affairs of the Participant, all or part of the Participant’s Account
(other than any non-vested portion) may be paid out to the Participant at the
sole discretion of the Administrator in a cash lump sum or in such installment

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payments as the Administrator may specify. The amount to be distributed to the
Participant shall only be such amount as is needed to alleviate the
Participant’s financial hardship.

     Section 6.6. Tax Withholding. The Company shall have the right to
deduct from any deferral or payment of cash made hereunder, or from any other
amount due a Participant, the amount of cash and/or Fair Market Value of Shares
sufficient to satisfy the Company’s or subsidiary’s foreign, federal, state or
local income tax withholding obligations with respect to such deferral (or
vesting thereof) or payment.

     Section 6.7. Offset. The Company or subsidiary shall have the right to
offset from any amount payable hereunder any amount that the Participant owes
to the Company or any subsidiary without the consent of the Participant (or his
Beneficiary, in the event of the Participant’s death).

ARTICLE 7.

RULES WITH RESPECT TO SHARE UNITS

     Section 7.1. Valuation of Share Unit Account. When any amounts are to
be allocated to a Share Unit Account (whether in the form of Deferrals or
amounts that are deemed re-allocated from another Investment Option), such
amount shall be converted to whole and fractional Share Units, with fractional
units calculated to three decimal places, by dividing the amount to be
allocated by the Fair Market Value of a Share on the effective date of such
allocation. If any dividends or other distributions are paid on Shares while a
Participant has Share Units credited to his Account, such Participant shall be
credited with a dividend award equal to the amount of the cash dividend paid or
Fair Market Value of other property distributed on one Share, multiplied by the
number of Share Units credited to his Share Unit Account on the date the
dividend is declared. The dividend award shall be converted into additional
Share Units as provided above using the Fair Market Value of a Share on the
date the dividend is paid or distributed. Any other provision of this Plan to
the contrary notwithstanding, if a dividend is paid on Shares in the form of a
right or rights to purchase shares of capital stock of the Company or any
entity acquiring the Company, no additional Share Units shall be credited to
the Participant’s Share Unit Account with respect to such dividend, but each
Share Unit credited to a Participant’s Share Unit Account at the time such
dividend is paid, and each Share Unit thereafter credited to the Participant’s
Share Unit Account at a time when such rights are attached to Shares, shall
thereafter be valued as of any point in time on the basis of the aggregate of
the then Fair Market Value of one Share plus the then Fair Market Value of such
right or rights then attached to one Share.

     Section 7.2. Transactions Affecting Common Stock. In the event of any
merger, share exchange, reorganization, consolidation, recapitalization, stock
dividend, stock split or other change in corporate structure of the Company
affecting Shares, the Committee may make appropriate equitable adjustments with
respect to the Share Units credited to the Share Unit Accounts of each
Participant, including without limitation, adjusting the date as of which such
units are valued and/or distributed, as the Committee determines is necessary
or desirable to prevent the dilution or enlargement of the benefits intended to
be provided under the Plan.

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     Section 7.3. No Shareholder Rights With Respect to Share Units.
Participants shall have no rights as a stockholder pertaining to Share Units
credited to their Accounts.

ARTICLE 8.

SPECIAL RULES APPLICABLE IN THE EVENT OF A CHANGE OF CONTROL OF

THE COMPANY

     Section 8.1. Acceleration of Payment of Accounts. Notwithstanding any other provision of this Plan, within 30 days after a
Change of Control (as defined in Section 8.2), each Participant shall be
entitled to receive a lump sum payment in cash of all amounts accumulated in
such Participant’s Account. In determining the amount accumulated in a
Participant’s Share Unit Account, each Share Unit shall have a value equal to
the higher of (a) the highest reported sales price, regular way, of a share of
the Company’s common stock on the Composite Tape for New York Stock Exchange
Listed Stocks (the “Composite Tape”) during the sixty-day period prior to the
date of the Change of Control of the Company and (b) if the Change of Control
of the Company is the result of a transaction or series of transactions
described in Section 8.2(a) or (c), the highest price per Share of the Company
paid in such transaction or series of transactions.

     Section 8.2. Definition of a Change of Control. A Change of Control
means any of the following events:

     (a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either:

(1) The then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or

(2) The combined voting power of the then outstanding
voting securities of the Company entitled to vote
generally in the election of directors (the “Company
Voting Securities”),

provided, however, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (y) any corporation
with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Company Voting Securities immediately
prior to such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, shall not
constitute a Change in Control of the Company; or

     (b) Individuals who, as of May 24, 1989, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board, provided that any

59

 

individual becoming a director subsequent to May
24, 1989, whose election or nomination for election by the Company’s
shareholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board, shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Company (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);
or

     (c) Consummation of a reorganization, merger or consolidation (a “Business
Combination”), in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial owners of the
Outstanding Company Common Stock and Company Voting Securities immediately
prior to such Business Combination do not, following such Business Combination,
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors as the case may be, of the corporation resulting from such
Business Combination in substantially the same proportion as their ownership
immediately prior to such Business Combination of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be; or

     (d) A complete liquidation or dissolution of the Company or sale or other
disposition of all or substantially all of the assets of the Company other than
to a corporation with respect to which, following such sale or disposition,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
sale or disposition in substantially the same proportion as their ownership of
the Outstanding Company Common Stock and Company Voting Securities, as the case
may be, immediately prior to such sale or disposition.

     Section 8.3. Maximum Payment Limitation.

     (a) Limit on Payments. Except as provided in subsection (b) below,
if any portion of the payments or benefits described in this Plan or under any
other agreement with or plan of the Company or a subsidiary (in the aggregate,
“Total Payments”), would constitute an “excess parachute payment”, then the
Total Payments to be made to the Participant shall be reduced such that the
value of the aggregate Total Payments that the Participant is entitled to
receive shall be one dollar ($1) less than the maximum amount which the
Participant may receive without becoming subject to the tax imposed by Section
4999 of the Code or which the Company may pay without loss of deduction under
Section 280G(a) of the Code; provided that this Section shall not apply in the
case of a Participant who has in effect a valid employment contract providing
that the Total Payments to the Participant shall be determined without regard
to the maximum amount allowable under Section 280G of the Code. The terms
“excess parachute payment” and “parachute payment” shall have the meanings
assigned to them in Section 280G of the Code, and such “parachute payments”
shall be valued as provided therein. Present value shall be calculated in
accordance with Section 280G(d)(4) of the Code. Within forty (40) days
following delivery of notice by the Company to the Participant of its belief
that there is a

60

 

payment or benefit due the Participant which will result in an
excess parachute payment, the Participant and the Company, at the Company’s
expense, shall obtain the opinion (which need not be unqualified) of nationally
recognized tax counsel selected by the Company’s
independent auditors and acceptable to the Participant in his sole
discretion (which may be regular outside counsel to the Company), which opinion
sets forth (A) the amount of the Base Period Income, (B) the amount and present
value of Total Payments and (C) the amount and present value of any excess
parachute payments determined without regard to the limitations of this
Section. As used in this Section, the term “Base Period Income” means an
amount equal to the Participant’s “annualized includible compensation for the
base period” as defined in Section 280G(d)(1) of the Code. For purposes of
such opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code, which
determination shall be evidenced in a certificate of such auditors addressed to
the Company and the Participant. Such opinion shall be addressed to the
Company and the Participant and shall be binding upon the Company and the
Participant. If such opinion determines that there would be an excess
parachute payment, the payments hereunder that are includible in Total Payments
or any other payment or benefit determined by such counsel to be includible in
Total Payments shall be reduced or eliminated as specified by the Participant
in writing delivered to the Company within thirty days of his receipt of such
opinion or, if the Participant fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment. If such legal
counsel so requests in connection with the opinion required by this Section,
the Participant and the Company shall obtain, at the Company’s expense, and the
legal counsel may rely on in providing the opinion, the advice of a firm of
recognized executive compensation consultants as to the reasonableness of any
item of compensation to be received by the Participant. If the provisions of
Sections 280G and 4999 of the Code are repealed without succession, then this
Section shall be of no further force or effect.

     (b) Employment Contract Governs. The provisions of subsection (a)
above shall not apply to a Participant whose employment is governed by an
employment contract that provides for Total Payments in excess of the
limitation described in subsection (a) above.

ARTICLE 9.

GENERAL PROVISIONS

     Section 9.1. Administration.

     (a) General. The Committee shall have overall authority with
respect to administration of the Plan; provided that the Administrator shall
have responsibility for the general operation and daily administration of the
Plan as specified herein. If at any time the Committee shall not be in
existence or not be composed of members of the Board who qualify as
“non-employee directors”, then all determinations affecting Participants who
are subject to Section 16 of the Exchange Act shall be made by the full Board,
and all determinations affecting other Participants shall be made by the Board
or an officer of the Company or other committee appointed by the Board (with
the assistance of the Administrator). The Committee or Administrator may, in
its discretion, delegate any or all of its authority and responsibility;
provided that the Committee shall not delegate authority and responsibility
with respect to non-

61

 

ministerial functions that relate to the participation by Participants who
are subject to Section 16 of the Exchange Act at the time any such delegated
authority or responsibility is exercised. To the extent of any such
delegation, any references herein to the Committee or Administrator, as
applicable, shall be deemed references to such delegee. Interpretation of the
Plan shall be within the sole discretion of the Committee or the Administrator
with respect to their respective duties hereunder. If any delegee of the
Committee or the Administrator shall also be a Participant or Beneficiary, any
determinations affecting the delegee’s participation in the Plan shall be made
by the Committee or Administrator, as applicable.

     (b) Authority and Responsibility. In addition to the authority
specifically provided herein, the Committee and Administrator shall have the
discretionary authority to take any action or make any determination it deems
necessary for the proper administration of its respective duties under the
Plan, including but not limited to: (a) prescribe rules and regulations for the
administration of the Plan; (b) prescribe forms for use with respect to the
Plan; (c) interpret and apply all of the Plan’s provisions, reconcile
inconsistencies or supply omissions in the Plan’s terms; (d) make appropriate
determinations, including factual determinations, and calculations; and (e)
prepare all reports required by law. Any action taken by the Committee shall
be controlling over any contrary action of the Administrator. The Committee or
Administrator may delegate its ministerial duties to a third party and to the
extent such delegation, references to the Committee or Administrator herein
shall mean such delegee.

     (c) Decisions Binding. The Committee’s and Administrator’s
determination shall be final and binding on all parties with an interest
hereunder, unless determined to be arbitrary and capricious.

     (d) Procedures of the Committee. The Committee’s determinations
must be made by not less than a majority of its members present at the meeting
(in person or otherwise) at which a quorum is present, or by written consent,
which sets forth the action, is signed by each member of the Committee and
filed with the minutes for proceedings of the Committee. A majority of the
entire Committee shall constitute a quorum for the transaction of business.
The Administrator’s determinations shall be made in accordance with such
procedures it establishes.

     (e) Indemnification. Service on the Committee or as an
Administrator shall constitute service as a director or officer of the Company
so that the Committee and Administrator members shall be entitled to
indemnification, limitation of liability and reimbursement of expenses with
respect to their Committee or Administrator services to the same extent that
they are entitled under the Company’s By-laws and Wisconsin law for their
services as directors or officers of the Company.

     Section 9.2. Restrictions to Comply with Applicable Law.
Notwithstanding any other provision of the Plan, the Company shall have no
liability to make any payment unless such payment would comply with all
applicable laws and the applicable requirements of any securities exchange or
similar entity. In addition, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 under the Exchange Act.
The Committee and Administrator shall administer the Plan so that transactions
under the Plan will be exempt from or comply with Section 16 of the Exchange
Act, and shall have the right to restrict or rescind any

62

 

transaction, or impose other rules and
requirements, to the extent it deems necessary or desirable for such exemption
or compliance to be met.

     Section 9.3. Claims Procedures.

     (a) Initial Claim. If a Participant or Beneficiary (the
“claimant”) believes that he is entitled to a benefit under the Plan that is
not provided, the claimant or his legal representative shall file a written
claim for such benefit with the Committee. The Committee shall review the
claim within 90 days following the date of receipt of the claim; provided that
the Committee may determine that an additional 90-day extension is necessary
due to circumstances beyond the Committee’s control, in which event the
Committee shall notify the claimant prior to the end of the initial period that
an extension is needed, the reason therefor and the date by which the Committee
expects to render a decision. If the claimant’s claim is denied in whole or
part, the Committee shall provide written notice to the claimant of such
denial. The written notice shall include: the specific reason(s) for the
denial; reference to specific Plan provisions upon which the denial is based; a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of which such material or
information is necessary; and a description of the Plan’s review procedures (as
set forth in subsection (b)) and the time limits applicable to such procedures,
including a statement of the claimant’s right to bring a civil action under
section 502(a) of ERISA following an adverse determination upon review. If the
claimant does not receive a written decision within the time period(s)
described above, the claim shall be deemed denied on the last day of such
period(s).

     (b) Request for Appeal. The claimant has the right to appeal the
Committee’s decision by filing a written appeal to the Committee within 60 days
after claimant’s receipt of the decision or deemed denial. The claimant will
have the opportunity, upon request and free of charge, to have reasonable
access to and copies of all documents, records and other information relevant
to the claimant’s appeal. The claimant may submit written comments, documents,
records and other information relating to his claim with the appeal. The
Committee will review all comments, documents, records and other information
submitted by the claimant relating to the claim, regardless of whether such
information was submitted or considered in the initial claim determination.
The Committee shall make a determination on the appeal within 60 days after
receiving the claimant’s written appeal; provided that the Committee may
determine that an additional 60-day extension is necessary due to circumstances
beyond the Committee’s control, in which event the Committee shall notify the
claimant prior to the end of the initial period that an extension is needed,
the reason therefor and the date by which the Committee expects to render a
decision. If the claimant’s appeal is denied in whole or part, the Committee
shall provide written notice to the claimant of such denial. The written
notice shall include: the specific reason(s) for the denial; reference to
specific Plan provisions upon which the denial is based; a statement that the
claimant is entitled to receive, upon request and free of charge, reasonable
access to and copies of all documents, records, and other information relevant
to the claimant’s claim; and a statement of the claimant’s right to bring a
civil action under section 502(a) of ERISA. If the claimant does not receive a
written decision within the time period(s) described above, the appeal shall be
deemed denied on the last day of such period(s).

     (c) ERISA Fiduciary. For purposes of ERISA, the Committee shall be
considered the named fiduciary under the Plan and the plan administrator.

63

 

     Section 9.4. Participant Rights Unsecured.

     (a) Unsecured Claim. The right of a Participant or his Beneficiary
to receive a distribution hereunder shall be an unsecured claim, and neither
the Participant nor any Beneficiary shall have any rights in or against any
amount credited to his Account or any other specific assets of the Company or a
subsidiary. The right of a Participant or Beneficiary to the payment of
benefits under this Plan shall not be assigned, encumbered, or transferred,
except as permitted under Section 6.4. The rights of a Participant hereunder
are exercisable during the Participant’s lifetime only by him or his guardian
or legal representative.

     (b) Contractual Obligation. The Company or a subsidiary may
authorize the creation of a trust or other arrangements to assist it in meeting
the obligations created under the Plan. However, any liability to any person
with respect to the Plan shall be based solely upon any contractual obligations
that may be created pursuant to the Plan. No obligation of the Company or a
subsidiary shall be deemed to be secured by any pledge of, or other encumbrance
on, any property of the Company or any subsidiary. Nothing contained in this
Plan and no action taken pursuant to its terms shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company or
a subsidiary and any Participant or Beneficiary, or any other person.

     Section 9.5. Amendment or Termination of Plan.

     (a) General Authority. The Board may at any time amend or
terminate the Plan, including but not limited to modifying the terms and
conditions applicable to (or otherwise eliminating) Deferrals to be made on or
after the amendment or termination date; provided, however, that no amendment
or termination may reduce or eliminate any Account balance accrued to the date
of such amendment or termination (except as such Account balance may be reduced
as a result of investment losses allocable to such Account) without a
Participant’s consent except as otherwise specifically provided herein. In
addition, the Administrator may at any time amend the Plan to make
administrative changes and changes necessary to comply with applicable law.

     (b) Termination; Change of Control. Notwithstanding the foregoing,
the Board may make the following amendments to the Plan without the consent of
an individual with an interest hereunder:

(1) In the event of the Plan’s termination, the Board
may provide that all Deferral elections then
outstanding be cancelled and that all amounts accrued
to the date of termination be distributed to all
Participants or Beneficiaries, as applicable, in a
single sum payment as soon as practicable after the
date of termination or on such other date as is specified by
the Board, regardless of any distribution election
then in effect.

(2) The Board may amend the provisions of Article 8
prior to the effective date of a Change of Control.

64

 

     Section 9.6. Administrative Expenses. Costs of establishing and
administering the Plan will be paid by the Company and participating
subsidiaries.

     Section 9.7. Successors and Assigns. This Plan shall be binding upon
and inure to the benefit of the Company, its successors and assigns and the
Participants and their heirs, executors, administrators, and legal
representatives.

     Section 9.8. Governing Law; Limitation on Actions; Dispute Resolution.

     (a) Governing Law. This Plan is intended to be a plan of deferred
compensation maintained for a select group of management or highly compensated
employees as that term is used in ERISA, and shall be interpreted so as to
comply with the applicable requirements thereof. In all other respects, the
Plan is to be construed and its validity determined according to the laws of
the State of Wisconsin (without reference to conflict of law principles
thereof) to the extent such laws are not preempted by federal law.

     (b) Limitation on Actions. Any action or other legal proceeding
with respect to the Plan may be brought only after the claims and appeals
procedures of Section 9.3 are exhausted and only within period ending on the
earlier of (i) one year after the date claimant receives notice or deemed
notice of a denial upon appeal under Section 9.3(b), or (ii) the expiration of
the applicable statute of limitations period under applicable federal law. Any
action or other legal proceeding not adjudicated under ERISA must be arbitrated
in accordance with the provisions of subsection (c).

     (c) Arbitration.

(1) Application. Notwithstanding any employee
agreement in effect between a Participant and the
Company or any subsidiary employer, if a Participant
or Beneficiary brings a claim that relates to benefits
under this Plan that is not covered under ERISA, and
regardless of the basis of the claim (including but
not limited to, actions under Title VII, wrongful
discharge, breach of employment agreement, etc.), such
claim shall be settled by final binding arbitration in
accordance with the rules of the American Arbitration
Association (“AAA”) and judgment upon the award
rendered by the arbitrator may be entered in any court
having jurisdiction thereof.

(2) Initiation of Action. Arbitration must be
initiated by serving or mailing a written notice of
the complaint to the other party. Normally, such
written notice should be provided the other party
within one year (365 days) after the day the
complaining party first knew or should have known of
the events giving rise to the complaint. However,
this time frame may be extended if the applicable
statute of limitation provides for a longer period of
time. If the complaint is not properly submitted
within the appropriate time frame, all rights and
claims that the complaining party has or

65

 

may have against the other party shall be waived and void. Any
notice sent to the Company shall be delivered to:

Office of General Counsel

Johnson Controls, Inc.

5757 North Green Bay Avenue

P.O. Box 591

Milwaukee, WI 53201-0591

     The notice must identify and describe the nature of all
complaints asserted and the facts upon which such complaints are
based. Notice will be deemed given according to the date of any
postmark or the date of time of any personal delivery.

(3) Compliance with Personnel Policies. Before
proceeding to arbitration on a complaint, the
Participant or Beneficiary must initiate and
participate in any complaint resolution procedure
identified in the Company’s or subsidiary’s personnel
policies. If the claimant has not initiated the
complaint resolution procedure before initiating
arbitration on a complaint, the initiation of the
arbitration shall be deemed to begin the complaint
resolution procedure. No arbitration hearing shall be
held on a complaint until any applicable complaint
resolution procedure has been completed.

(4) Rules of Arbitration. All arbitration will
be conducted by a single arbitrator according to the
Employment Dispute Arbitration Rules of the AAA. The
arbitrator will have authority to award any remedy or
relief that a court of competent jurisdiction could
order or grant including, without limitation, specific
performance of any obligation created under policy,
the awarding of punitive damages, the issuance of any
injunction, costs and attorney’s fees to the extent
permitted by law, or the imposition of sanctions for
abuse of the arbitration process. The arbitrator’s
award must be rendered in a writing that sets forth
the essential findings and conclusions on which the
arbitrator’s award is based.

(5) Representation and Costs. Each party may
be represented in the arbitration by an attorney or
other representative selected by the party. The
Company or subsidiary shall be responsible for its own
costs, the AAA filing fee and all other fees, costs
and expenses of the arbitrator and AAA for
administering the arbitration. The claimant shall be
responsible for his attorney’s or representative’s
fees, if any. However, if any party prevails on a
statutory claim which allows the prevailing party
costs and/or attorneys’ fees, the arbitrator may award
costs and reasonable attorneys’ fees as provided by
such statute.

66

 

(6) Discovery; Location; Rules of Evidence.
Discovery will be allowed to the same extent afforded
under the Federal Rules of Civil Procedure.
Arbitration will be held at a location selected by the
Company. AAA rules notwithstanding, the admissibility
of evidence offered at the arbitration shall be
determined by the arbitrator who shall be the judge of
its materiality and relevance. Legal rules of
evidence will not be controlling, and the standard for
admissibility of evidence will generally be whether it
is the type of information that responsible people
rely upon in making important decisions.

(7) Confidentiality. The existence, content or
results of any arbitration may not be disclosed by a
party or arbitrator without the prior written consent
of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except
to testify.

67Ex-10.1 Richard D. Sarmiento Letter Agreement

 

EXHIBIT 10.1

August 17, 2004

Mr. Richard D. Sarmiento

14510 Jonathan Harbor Drive

Fort Myers, FL 33908

Dear Rick:

This letter agreement will confirm our understanding and agreement with respect
to your employment by and relationship with Chico’s FAS, Inc. (“Chico’s”) from
and after September 6, 2004.

Your Employment Agreement dated as of September 5, 2003 (the “2003 Employment
Agreement”) will terminate on September 6, 2004, and will be superceded by this
letter agreement, except as otherwise set forth herein. Your signing of this
letter agreement shall constitute a resignation by you from all officer and
director positions with Chico’s and with The White House, Inc., all effective
as of September 6, 2004. You will continue to receive your compensation and
benefits under the 2003 Employment Agreement through September 6, 2004, and
shall be entitled to earn and receive your management incentive bonus for the
first six months of Chico’s 2004 fiscal year in accordance with the terms of
Chico’s management incentive bonus plan. Otherwise, you will be entitled to no
additional compensation under and pursuant to the 2003 Employment Agreement.
Notwithstanding such termination of the 2003 Employment Agreement and except as
modified herein, the provisions of Sections 9, 10, 11 and 12 of the 2003
Employment Agreement will continue in full force and effect while you remain
employed under this letter agreement and any post employment period applicable
under these particular Sections will not be measured from September 6, 2004,
but rather will be measured from any date of termination of your employment
under this letter agreement.

Chico’s agrees that the restrictions of Section 9 of the 2003 Employment
Agreement do not apply to your ideas, methods, plans, developments, or
improvements not generated or used in furtherance of our business. In all other
respects, the provisions of Section 9 remain in full force and effect.

Chico’s further agrees to the following changes to Section 11 of the 2003
Employment Agreement:

	 	•	 	The period of noncompetition and nonsolicitation is changed to
one (1) year from the termination of this letter agreement; and
	 
	 	•	 	Any of your efforts on behalf of the operations of The Palm
Jewelers or Quiet Storm stores as each is currently constituted in
the United States Virgin Islands shall not be deemed a violation of
Section 11 of the 2003 Employment Agreement.

 

 

Mr. Richard D. Sarmiento

Page Two

August 17, 2004

Your employment under this letter agreement will commence on September 6, 2004,
and will be on an “at will” basis, with either of us being able to terminate
the arrangement upon thirty days prior notice at any time. As compensation for
your services under this letter agreement, Chico’s will pay you $5,000 per
month, payable on our bi-weekly payroll cycle and, during such time as you
continue to be employed hereunder, Chico’s will continue to allow you to
participate under and receive benefits pursuant to Chico’s medical, dental and
vision plans as they are in effect from time to time, on the same participation
basis as other Chico’s associates participate. During such time as this
employment continues, you will make yourself available to provide such advice
and assistance as Chico’s may from time to time reasonably request in order to
effectuate a smooth transition of management associated with your change in
duties and responsibilities. During such time as this employment continues,
Chico’s shall have the right to control and direct the performance of your
services not only as to the results to be accomplished by you but also as to
the detail and means by which such results are accomplished by you. We both
acknowledge that, among other matters, your services as an employee are being
continued because of your past involvement with and knowledge concerning White
House | Black Market.

We anticipate that the services to be rendered by you under this letter
agreement will be performed away from our Fort Myers offices, with
communications provided principally by way of telephone; however, you are
certainly welcome to perform any such services at our offices and you agree to
provide such services at our offices if expressly requested to do so by one of
our senior executives.

Kindly indicate your agreement to the above by signing and returning to us the
duplicate copy of this letter.

	 	 	 
	

	 	Sincerely,

	

	 	CHICO’S FAS, INC.

	

	 	/s/ Scott A. Edmonds

	

	 	Scott A. Edmonds

President

Chief Executive Officer

SAE:rm

Agreed to and accepted as of

the 17 day of August, 2004.

/s/ Richard D. Sarmiento

Richard D. Sarmiento

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