Exhibit 10.1

 

CHRISTOPHER & BANKS CORPORATION
PERFORMANCE AWARD AGREEMENT

(Fiscal 2015 Long Term Incentive Plan – Two Year Performance Period)

 

 

THIS PERFORMANCE AWARD AGREEMENT (this “Agreement”) is made effective as of the
_____ day of _____ 2015 (the “Effective Date”), between Christopher & Banks
Corporation, a Delaware corporation (the “Company”), and _____ (“Employee”).

 

1.Award.

 

(a)Performance Share Units.  Pursuant to the Christopher & Banks Corporation
2014 Stock Incentive Plan (the “Plan”), Employee has been granted this
performance award in the form of performance share units (the “Award”), which
entitles Employee to the number of performance share units (“Units”) equal to
the “Target Award Number” set forth on Exhibit A to this Agreement, subject to
adjustment as provided herein.  Each Unit represents the right to receive one
share of the Company’s common stock, par value $0.01 per share (“Common Stock”)
subject to fulfillment of the vesting conditions set forth in this Agreement and
in Exhibit A to this Agreement.  The Units may not be sold, assigned,
transferred or pledged, other than by will or the laws of descent and
distribution, and any such attempted transfer shall be void.

 

(b)Vesting Schedule.  Subject to the other terms and conditions of this
Agreement and the Plan, this Award will vest, and shares of Common Stock will be
awarded to Employee, in accordance with and to the extent provided in Exhibit A
to this Agreement, following completion of the fiscal year 2016 audit performed
by the Company’s independent registered public accounting firm and a
determination, as described in the next succeeding sentence, by the Compensation
Committee (the “Committee”) that all or a portion of the Units shall vest;
provided that, except as otherwise provided in Sections 3, 4, 5 or 6, Employee
has been continuously employed since the Effective Date and through the
Determination Date by the Company or any employing subsidiary of the
Company.  The number of Units that will vest will be based on whether and to
what extent the threshold, target or maximum performance level of each of the
performance goals has been achieved, as set forth in Exhibit A to this Agreement
and as determined by the Committee in its sole discretion.  The Target Award
Number will be increased to the “Maximum Award Number” set forth on Exhibit A to
this Agreement if the Company’s performance goals are achieved at the maximum
level, or decreased to zero if the Company’s performance goals are not achieved
at the threshold performance level.  The “Threshold Award Number” set forth on
Exhibit A to this Agreement represents the number of Units that would vest if
the Company achieves each of the performance goals at the threshold
level.  Except as set forth on Exhibit A to this Agreement, achievement of each
of the performance goals shall be considered by the Committee independent of the
other performance goals.  Failure to achieve a specific performance goal shall
not prohibit vesting of Units based on achievement of other performance
goals.  The day on which the Award is determined to vest pursuant to this
Section 1(b) is referred to in this Agreement as the “Determination Date.”

 

(c)Plan Controls.  Employee hereby agrees to be bound by all of the terms and
provisions of the Plan, including any term or provision which may conflict with
those contained in this Agreement.  The Plan is hereby incorporated by reference
into this Agreement, and this Agreement is subject in all respects to the terms
and conditions of the Plan.  In the event of any conflict between this Agreement
and the Plan, the terms of the Plan shall control.  Except as otherwise defined
herein, capitalized terms contained in this Agreement shall have the same
meaning as set forth in the Plan.    

 

2.Shares of Common Stock.  Subject to the other terms and conditions of this
Agreement and the Plan, upon the Determination Date, Employee shall be entitled
to receive, in accordance with the terms and provisions of the Plan and this
Agreement, the number of shares of Common Stock calculated as provided in
Exhibit A to this Agreement and as determined by the Committee pursuant to
Section 1(b).  The Company will issue such shares in book entry form, or
otherwise, of Common Stock to Employee on the Determination Date or as soon as
administratively feasible following such date, but in no event not later than
ten (10) business days following the

1

--------------------------------------------------------------------------------

 

Determination Date and not later than seventy-five (75) days following the end
of fiscal year 2016.  If the number of shares of Common Stock to be delivered to
Employee is not a whole number, then the number of shares of Common Stock shall
be rounded down to the nearest whole number.  No fractional shares of Common
Stock shall be issued upon vesting of the Award.

 

Notwithstanding any other provisions of this Agreement, the issuance or delivery
of any shares of Common Stock (whether subject to restrictions or unrestricted)
may be postponed for such period as may be required to comply with applicable
requirements of any national securities exchange or any requirements under any
law.  The Company shall not be obligated to issue or deliver any shares of
Common Stock if the issuance or delivery thereof would constitute a violation of
any provision of applicable law or of any regulation of any governmental
authority or any national securities exchange.  In addition, the grant of the
Award and the delivery in the future of any shares of Common Stock pursuant to
this Agreement are subject to any clawback policies the Company may adopt,
whether in compliance with the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, Section 10D of the Securities Exchange Act of 1934 and
any applicable rules and regulations of the Securities and Exchange Commission,
or otherwise.

 

Prior to the distribution of shares of Common Stock with respect to the Units,
Employee shall not have ownership or rights of ownership of or with respect to
any shares of Common Stock underlying the Units.  Notwithstanding the foregoing,
Employee shall accumulate an unvested right to payment of cash dividend
equivalents on the shares of Common Stock underlying the Units if cash dividends
are declared by the Company’s Board of Directors on the Common Stock on or after
the Effective Date.  Such dividend equivalents will be in an amount of cash per
Unit equal to the cash dividend paid with respect to one share of outstanding
Common Stock.  Employee shall be entitled solely to payment of accumulated
dividend equivalents with respect to the number of Units equal to the number of
shares of Common Stock distributable to Employee pursuant to this
Agreement.  Dividend equivalents will be paid to Employee on the date that the
shares of Common Stock, if any, are distributed to the Employee pursuant to this
Agreement.  Employee shall not be entitled to dividend equivalents with respect
to dividends declared prior to the Effective Date.  All dividend equivalents
accumulated with respect to forfeited Units shall be irrevocably forfeited. 

 

3.Termination of Employment.  In the event of termination of Employee’s
employment with the Company or any employing subsidiary of the Company for Cause
(as defined below) prior to the Determination Date, the entire Award shall be
forfeited and immediately cancelled as of the date of such termination of
employment.  Except as set forth in Section 6, in the event of termination of
Employee’s employment with the Company or any employing subsidiary of the
Company other than by reason of Retirement (as defined below), Disability, death
or by the Company other than for Cause prior to 50% of the performance period
elapsing, the entire Award shall be forfeited and immediately cancelled as of
the date of such termination of employment.  In the event of termination of
Employee’s employment with the Company or any employing subsidiary of the
Company other than by reason of Retirement, Disability, death or by the Company
other than for Cause following 50% or more of the performance period elapsing,
the Committee reserves the right, in its sole discretion, to determine the
extent, if any, to which the Employee shall be entitled to receive up to a
pro-rata portion of the Units (based on the amount of time elapsed between the
beginning of the performance period and the date of termination of Employee’s
employment), to be converted into shares of Common Stock after the end of the
performance period to the extent that the threshold, target or maximum
performance level of one or more of the performance goals is achieved, as set
forth in the attached Exhibit A and as determined by the Committee in its sole
discretion.  Except as set forth in Section 6, in the event of Employee’s
voluntary resignation of employment with the Company or any employing subsidiary
of the Company at any time prior to the Determination Date other than by reason
of Retirement, Disability or death, the entire Award shall be forfeited and
immediately cancelled as of the date of such termination of employment.

 

4.Retirement.  Except as set forth in Section 6, in the event of termination of
Employee’s employment with the Company or any employing subsidiary of the
Company by reason of Retirement prior to 50% of the performance period elapsing,
the entire Award shall be forfeited and immediately cancelled as of the date of
such termination of employment.  In the event Employee’s employment is
terminated by reason of Retirement following 50% or more of the performance
period elapsing, the Committee reserves the right, in its sole discretion, to
determine the extent, if any, to which the Employee shall be entitled to receive
up to a pro-rata portion of the Units (based on the amount of time elapsed
between the beginning of the performance period and the date the

2

--------------------------------------------------------------------------------

 

Employee’s employment is terminated) to be converted into shares of Common Stock
after the end of the performance period to the extent that the threshold, target
or maximum performance level of the performance goals is achieved, as set forth
in the attached Exhibit A and as determined by the Committee in its sole
discretion. 

 

5.Death or Disability.  Except as set forth in Section 6, in the event
Employee’s employment is terminated prior to the Determination Date by reason of
Disability or death, the Employee or the Employee’s estate, as applicable, shall
be entitled to receive up to a pro-rata portion of the Units (based on the
amount of time elapsed between the beginning of the performance period and the
date the Employee’s employment is terminated) and the performance period shall
be deemed to end on the date the Employee’s employment is terminated.  The
number of Units that are eligible to vest will be based on the extent of
achievement of the threshold, target or maximum performance level of the
performance goals as set forth in the attached Exhibit A, as adjusted for the
truncated performance period and as determined by the Committee in its sole
discretion, and the Company will issue shares of Common Stock, if any, to
Employee or the Employee’s estate, as applicable, no later than thirty (30) days
following such determination by the Committee.  In all events, the Company will
issue shares of Common Stock, if any, not later than seventy-five (75) days
following the date of such termination of employment.

 

6.Change in Control.  If a Change in Control of the Company occurs prior to the
end of the performance period, then, for purposes of determining the number of
Units that are eligible to vest, the performance period shall be deemed to end
on the date of the Change in Control (the shortened performance period is
referred to herein as the “Change in Control Performance Period”).  The number
of Units that are eligible to vest (the “Vesting Eligible Units”) will be based
on the extent of achievement of the threshold, target or maximum performance
level of the performance goals set forth in the attached Exhibit A, as adjusted
proportionally for the Change in Control Performance Period and as determined by
the Committee in its sole discretion.  The Employee’s Vesting Eligible Units
shall vest if the Employee remains as an Employee of the Company or its
successor or any affiliate of the Company or its successor through the end of
the original performance period; provided, however, that: 

 

(a) If the Employee’s employment is terminated prior to the end of the original
performance period by reason of Retirement, Disability or death, the Employee or
the Employee’s estate, as applicable, shall be entitled to receive shares of
Common Stock, or the consideration payable per share of Common Stock to holders
of Common Stock generally pursuant to the definitive agreement governing the
Change in Control of the Company, with respect to all of the Vesting Eligible
Units as of the date of such termination of employment, with the Company issuing
such shares of Common Stock or other consideration payable, if any, not later
than seventy-five (75) days following the date of such termination of
employment, and

 

(b) If the Employee’s employment is terminated by the Company without Cause or
by the Employee for Good Reason (as defined below) within one hundred-eighty
(180) days prior to a Change in Control of the Company or following a Change in
Control of the Company prior to the end of the original performance period, the
Employee shall be entitled to receive shares of Common Stock, or the
consideration payable per share of Common Stock to holders of Common Stock
generally pursuant to the definitive agreement governing the Change in Control
of the Company, with respect to all of the Vesting Eligible Units as of the date
of such termination of employment, with the Company issuing such shares of
Common Stock or other consideration payable, if any, not later than seventy-five
(75) days following the date of such termination of employment.

 

If the Employee’s employment is terminated following a Change in Control of the
Company prior to the end of the original performance period under any
circumstances not described above in this Section 6, the Vesting Eligible Units
shall be immediately and irrevocably forfeited and no shares of Common Stock
shall be distributable to the Employee.

 

7.Employment Relationship.  Nothing in this Agreement shall be construed as
constituting a commitment, guaranty, agreement, or understanding of any kind or
nature that the Company or its subsidiaries shall continue to employ Employee,
and this Agreement shall not affect in any way the right of the Company or any
of its subsidiaries to terminate the employment of Employee.  For purposes of
this Agreement, Employee shall be considered to be in the employment of the
Company as long as Employee remains an employee of either the Company, any
successor corporation or a parent or subsidiary corporation of the Company or
any successor corporation.  Any question as to whether and when there has been a
termination of such employment, and the cause

3

--------------------------------------------------------------------------------

 

of such termination, shall be determined by the Committee, or its delegate, as
appropriate, and its determination shall be final.

 

8.Committee’s Powers.  No provision contained in this Agreement shall in any way
terminate, modify or alter, or be construed or interpreted as terminating,
modifying or altering any of the powers, rights or authority vested in the
Committee or, to a delegate to the extent of such delegation, pursuant to the
terms of the Plan or resolutions adopted in furtherance of the Plan, including,
without limitation, the right to make certain determinations and elections with
respect to the Units.

 

9.Income Tax Matters.  In order to comply with all applicable federal, state or
local income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal, state or local payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of Employee, are withheld or collected from Employee.  In
accordance with the terms of the Plan, and such rules as may be adopted by the
Committee under the Plan, Employee may elect to satisfy Employee’s tax
withholding obligations arising from the receipt of, or the lapse of
restrictions relating to, the shares of Common Stock, by (i) delivering cash, a
check (bank check, certified check or personal check) or a money order payable
to the Company, (ii) having the Company withhold a portion of the  shares of
Common Stock otherwise to be delivered having a Fair Market Value equal to the
amount of such taxes, (iii) delivering to the Company shares of Common Stock
held by Employee for more than six (6) months (or such period as the Committee
may deem appropriate for accounting purposes or otherwise) having a Fair Market
Value equal to the amount of such taxes, or (iv) a combination of the methods
described above, as approved by the Committee or its designee.  Employee’s
election regarding satisfaction of withholding obligations must be made on or
before the date that the amount of tax to be withheld is determined.

 

10.Binding Effect.  This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all lawful successors to Employee
permitted under the terms of the Plan.

 

11.Section 409A Provision.  The parties hereto intend that any payment or
benefit that is provided pursuant to or in connection with this Agreement that
is considered to be deferred compensation subject to Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) shall be paid and
provided in a manner, and at such time and form, as complies with the applicable
requirements of Section 409A of the Code to avoid the unfavorable tax
consequences provided therein for non-compliance.  The parties hereto further
intend that the payments hereunder shall, to the maximum extent permissible
under Section 409A of the Code, be exempt from Section 409A of the Code under
the short-term deferral exception described in Treasury Regulation Section
1.409A-1(b)(4) to the extent that all payments are payable no later than two and
a half months after the end of the first taxable year in which the right to the
payment is no longer subject to a substantial risk of forfeiture.  If the
Employee is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of
the Code, any payments to be made or benefits to be delivered in connection with
the Employee’s “Separation from Service” (as defined below) that constitute
deferred compensation subject to Section 409A of the Code shall not be made
until the earlier of (i) the Employee’s death or (ii) six (6) months plus one
day after the Employee’s Separation from Service (the “409A Deferral Period”) as
required by Section 409A of the Code.  For purposes of this Agreement, with
respect to the timing of any amounts that constitute deferred compensation
subject to Section 409A of the Code that depends on termination of employment,
termination of employment shall mean a “Separation from Service” within the
meaning of Section 409A of the Code where it is reasonably anticipated that no
further services would be performed after such date or that the level of bona
fide services the Employee would perform after that date (whether as an employee
or independent contractor) would permanently decrease to a level less than or
equal to twenty percent (20%) of the average level of bona fide services the
Employee performed over the immediately preceding thirty-six (36) month period.

 

12.Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without reference to the
principles of conflicts of laws.

 

13.Defined Terms.  The following terms shall have the meanings ascribed to them
below for purposes of this Agreement:

 

(a) “Cause” shall mean (i) any fraud, misappropriation or embezzlement by
Employee in connection with or affecting the business of the Company or its
affiliates, (ii) any conviction of (including any plea

4

--------------------------------------------------------------------------------

 

of guilty or no contest to) a felony or a gross misdemeanor by Employee, (iii)
any gross neglect or persistent neglect by Employee to perform the duties
assigned to Employee or any other act that can be reasonably expected to cause
substantial economic or reputational injury to the Company, or (iv) any material
violation of the Company’s written policies, procedures or codes of conduct by
Employee; provided that, in connection with clauses (iii) and (iv), Employee
shall first have received a written notice from the Company’s Chief Executive
Officer or the Board that summarizes and reasonably describes the manner in
which Employee has grossly or persistently neglected his or her duties, engaged
in an act reasonably expected to cause substantial injury, or materially
violated a Company policy, procedure or code of conduct (the “Event”) and, to
the extent the Event is capable of being cured, Employee shall have fourteen
(14) calendar days from the date notice of the Event is delivered to Employee
(via electronic mail, regular mail, in person or otherwise) to cure the same,
but the Company is not required to give written notice of, nor shall Employee
have a period to cure the same or any similar failure, which was the subject of
an earlier written notice to Employee under this provision.

 

(b) “Change in Control” shall mean:

(i) the occurrence of an acquisition by an individual, entity or group (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) of a percentage of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (but excluding (1) any
acquisition directly from the Company (other than an acquisition by virtue of
the exercise of a conversion privilege of a security that was not acquired
directly from the Company), (2) any acquisition by the Company or an Affiliate
and (3) any acquisition by an employee benefit plan (or related trust) sponsored
or maintained by the Company or any Affiliate) (an “Acquisition”) that is thirty
percent (30%) or more of the Company’s then outstanding voting securities;

(ii) at any time during a period of two (2) consecutive years or less,
individuals who at the beginning of such period constitute the Board (and any
new directors whose election to the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was so approved) cease
for any reason (except for death, disability or voluntary retirement) to
constitute a majority thereof;

(iii) the consummation of a merger, consolidation, reorganization or similar
corporate transaction, whether or not the Company is the surviving company in
such transaction, other than a merger, consolidation, or reorganization that
would result in the Persons who are beneficial owners of the Company’s voting
securities outstanding immediately prior thereto continuing to beneficially own,
directly or indirectly, in substantially the same proportions, at least fifty
percent (50%) of the combined voting power of the Company’s voting securities
(or the voting securities of the surviving entity) outstanding immediately after
such merger, consolidation or reorganization;

(iv) the sale or other disposition of all or substantially all of the assets of
the Company;

(v) the approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company; or

(vi) the occurrence of any transaction or event, or series of transactions or
events, designated by the Board in a duly adopted resolution as representing a
change in the effective control of the business and affairs of the Company,
effective as of the date specified in any such resolution.

(c) “Good Reason” shall mean (i) if the Employee is a party to an employment (or
similar) agreement with the Company or any employing subsidiary of the Company
that defines the word “good reason” (or “constructive termination” or similar
term), then Good Reason for purposes of this Agreement shall have the meaning
ascribed to it under that agreement; and (ii) if there is no such agreement or
definition, Good Reason means the Employee has complied with the “Good Reason
Process” (hereinafter defined) following the occurrence of any of the following
events without the consent of the Employee: (A) the assignment to the Employee
of duties inconsistent with, or the removal of duties material to the usual and
customary performance of, the Employee’s

5

--------------------------------------------------------------------------------

 

position (including status, offices, titles, and reporting requirements),
authority, duties, or responsibilities, excluding for this purpose an isolated,
insubstantial, and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee; (B) a reduction in base salary of 10% or more, except for an
across-the-board reduction of not more than 10% per person, and applicable to
all employees of the Company; (C) a material reduction in aggregate benefits
available to the Employee; or (D) the relocation of the office at which the
Employee is principally employed to a location more than 30 miles from such
office.

 

(d) “Good Reason Process” shall mean that (A) the Employee determines that a
Good Reason condition has occurred; (B) the Employee notifies the Company in
writing of the Good Reason condition within ninety (90) days of the first
occurrence of such condition; (C) thirty (30) days following such notice (the
“Cure Period”) shall have passed, during which the Company shall use its best
efforts to remedy such condition; (D) notwithstanding the Company’s efforts, the
Good Reason condition continues to exist at the end of the Cure Period; and (E)
the Employee terminates his or her employment within sixty (60) days after the
end of the Cure Period. If the Company cures the Good Reason condition during
the Cure Period, Good Reason shall be deemed not to have occurred.

 

(e) “Retirement” shall mean the Employee’s voluntary termination of his or her
employment relationship with the Company on a date upon which the sum of
Employee’s age and number of years of employment with the Company equals or
exceeds sixty-five (65) years.

 

 

(This space intentionally left blank.)

 

*********

6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, and Employee has executed this Agreement,
all effective as of the date first above written.

 

 

CHRISTOPHER & BANKS CORPORATION

 

By: 

 

 

Title: 

 

 

EMPLOYEE

 

Signed: 

 

 

 

7

--------------------------------------------------------------------------------

 

EXHIBIT A

(Two-Year Performance Period)

 

This Exhibit A to the Performance Award Agreement effective as of the _____ day
of _____ 2015 (the “Agreement”) contains the performance requirements for the
vesting of the Award.  Capitalized terms used but not defined herein shall have
the same meanings assigned to them in the Plan and the Agreement.

 

Number of Performance Share Units

 

 

 

 

Threshold Award Number

Target Award Number

Maximum Award Number

_____

_____

_____

 

Performance Period

 

Fiscal Year 2015 through Fiscal Year 2016

 

Performance Goals for the Performance Period

 

Performance Goal

Threshold

Target

Maximum

Fiscal Year 2016 Operating Margin % to Sales (weighted as 70%)

___%

___%

___%

Two-Year Compounded Net Sales Annual Growth Rate (weighted as 30%)

___%

___%

___%

 

·

The number of Units earned by Employee for performance between the threshold,
target and maximum performance levels will be linearly interpolated.

·

The achievement of each of the performance goals shall be considered by the
Committee independent of the other performance goal.

·

Operating Margin % is Operating Income (defined as income before interest and
taxes as reported in the Company’s financial statements, but excluding the
impact (whether positive or negative) thereon of any change in accounting
standards, impairment charges or extraordinary items) divided by Net Sales (as
reported in the Company’s financial statements).

·

Two-Year Compounded Net Sales Annual Growth Rate shall be measured as follows
(using net sales as reported in the Company’s financial statements):

 

Fiscal 2015 Net Sales                                       Fiscal 2016 Net
Sales

_________________  -1             +                    _________________  -1    
        ÷ 2         =      ___%

 

Fiscal 2014 Net Sales                                       Fiscal 2015 Net
Sales

 

 

Chief Financial Officer Certification Required as Condition to Vesting

 

Prior to the Determination Date, the Chief Financial Officer shall certify in
writing to the Committee (i) the Fiscal Year 2016 Operating Margin % to Sales,
and (ii) the Two-Year Compounded Net Sales Annual Growth Rate for Fiscal Years
2015-2016, each based on the Company’s audited financial statements.  Such
certification shall include supporting documentation for each performance goal,
as appropriate.

 

8

--------------------------------------------------------------------------------