Item 3.01. Notice of Delisting or Failure to Satisfy Listing Rule or Standard.
On February 1, 2019, Francesca's Holdings Corporation (the "Company") received a
letter ("Notice") from the Listing Qualifications staff of The Nasdaq Stock
Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the
Company's common stock for the last 30 consecutive business days, the Company no
longer meets the requirement of the Nasdaq Global Select Market to maintain a
minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule
The Notice does not result in the immediate delisting of the Company's common
stock from the Nasdaq Global Select Market. In accordance with Nasdaq Listing
Rule 5810(c)(3)(A), the Company has been provided a period of 180 calendar days,
or until July 31, 2019, in which to regain compliance. In order to regain
compliance with the minimum bid price requirement, the closing bid price of the
Company's common stock must be at least $1 per share for a minimum of ten
consecutive business days during this 180-day period. In the event that the
Company does not regain compliance within this 180-day period, the Company may
be eligible to transfer to the Nasdaq Capital Market and seek an additional
compliance period of 180 calendar days if it (i) meets the continued listing
requirement for market value of publicly held shares and all other initial
listing standards for the Nasdaq Capital Market, with the exception of the bid
price requirement, and (ii) provides written notice to Nasdaq of its intent to
cure the deficiency during this second compliance period, including by effecting
a reverse stock split, if necessary. However, if it appears to the Nasdaq staff
that the Company will not be able to cure the deficiency, or if the Company is
otherwise not eligible, Nasdaq will provide notice to the Company that it will
not be eligible for the additional compliance period and its common stock will
be subject to delisting. The Company would then be entitled to appeal the
determination to a Nasdaq Listing Qualifications Panel and request a hearing.
The Company will consider its available options to regain compliance. There can
be no assurance that the Company will be able to regain compliance with the
minimum bid price requirement or maintain compliance with the other listing
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On January 29, 2019, Mr. Steven Lawrence resigned from the Board of
Directors (the "Board") of the Company as a Class II director of the Board and
his positions as President and Chief Executive Officer and from all other
positions he holds with the Company and each of its subsidiaries, effective
February 1, 2019. The resignation of Mr. Lawrence was not as a result of a
disagreement with the Company or on any matter relating to the Company's
operations, policies or practices. The Company thanks Mr. Lawrence for his
service with the Company.
(c) On February 4, 2019, the Board appointed Mr. Michael Prendergast as the
Company's Interim Chief Executive Officer, effective immediately. Mr.
Prendergast, 46, is a Senior Director at Alvarez & Marsal, part of a global
professional services firm ("A&M") where he has been employed since June of
2018. Prior to joining A&M, Mr. Prendergast served as Chief Executive Officer of
Maxima Global Holdings, LLC from 2015 to June 2018 and as Chief Executive
Officer at MPI Industries, LLC from 2013 to 2015.
(e) In connection with the appointment of Mr. Prendergast as Interim Chief
Executive Officer, on February 4, 2019, the Company entered into an engagement
letter with A&M to provide for, among other things, Mr. Prendergast's services
as the Company's Interim Chief Executive Officer (the "Engagement Letter").
Under the terms of the Engagement Letter, during his service at the Company,
Mr. Prendergast will continue to be employed by A&M and will not receive any
compensation from the Company or participate in any of the Company's employee
benefit plans. The Company will instead pay A&M a fee at an average monthly rate
of approximately $100,000 for the Interim Chief Executive Officer services
provided by Mr. Prendergast in accordance with the terms of the Engagement
Letter. Pursuant to the Engagement Letter, the Company will pay A&M a retainer
in the amount of $250,000, which will be credited against amounts due at
termination of the engagement and returned upon the satisfaction of all
obligations under the Engagement Letter, and will also reimburse A&M for
reasonable and documented out-of-pocket expenses. In addition, the Company and
A&M recognize that it is appropriate that A&M receive incentive compensation for
its services, and the parties will seek to reach an agreement on the terms and
amount of such incentive compensation.
The Engagement Letter may be terminated with immediate effect by either party at
any time without cause by giving written notice to the other party, subject to
the payment of fees and expenses incurred by A&M through the effective date of
termination (and, under certain circumstances, the payment of incentive
compensation to A&M on terms to be agreed between the parties). The Engagement
Letter also contains certain covenants, including a two year-non-solicitation
provision applicable to the Company.
Except as described above, there are no arrangements or understandings between
Mr. Prendergast and any other person pursuant to which Mr. Prendergast was
appointed as Interim Chief Executive Officer and there are no transactions
between the Company and Mr. Prendergast that would require disclosure under Item
404(a) of Regulation S-K. No family relationship exists between Mr. Prendergast
and any other director or executive officer of the Company.
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