Document:

Exhibit 10.1

 

AMENDMENT NO. 2

to

CREDIT AGREEMENT

 

THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “Amendment”)  is made as of February 29, 2012, by and among WINMARK CORPORATION, WIRTH BUSINESS CREDIT, INC., WINMARK CAPITAL CORPORATION and GROW BIZ GAMES, INC. (each of the foregoing are referred to herein individually as a “Loan Party” and collectively as the “Loan Parties”), THE PRIVATEBANK AND TRUST COMPANY (the “Administrative Agent” and a “Lender”), and BMO HARRIS BANK N.A. (formerly known as HARRIS N.A.) (also a “Lender”).

 

RECITALS:

 

A.                                    The Loan Parties, the Administrative Agent and the Lenders are parties to that certain Credit Agreement, dated as of July 13, 2010, as amended prior to the date hereof (the “Credit Agreement”).

 

B.                                    Winmark Corporation has requested an increase in the Commitments (as defined in the Credit Agreement) pursuant to Section 2.6 of the Credit Agreement in an aggregate amount of $5,000,000, and the Lenders are willing to increase their Commitments as provided herein.

 

C.                                    The Loan Parties, the Administrative Agent and the Lenders desire to further amend the Credit Agreement as provided herein.

 

AGREEMENTS:

 

IN CONSIDERATION of the premises and mutual covenants herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                      Definitions.  Capitalized terms not otherwise defined in this Amendment have the same meanings as set forth in the Credit Agreement.

 

2.                                      Amendment of Section 1.1.  Section 1.1 of the Credit Agreement is hereby amended by amending and restating the definition of “Termination Date” appearing in such Section in its entirety to read as follows:

 

“Termination Date”:  The earlier to occur of (a) February 29, 2016, or (b) such other date on which the Commitment terminates pursuant to Section 13.

 

1

 

3.                                      Increase in Commitments.  Pursuant to Section 2.6 of the Credit Agreement, the parties acknowledge and agree that (i) the Aggregate Commitment shall increase from $30,000,000 to $35,000,000; (ii) the Commitment of The PrivateBank and Trust Company shall increase from $17,500,000 to $20,500,000; (iii) the Commitment of BMO Harris Bank N.A. (f/k/a Harris N.A.) shall increase from $12,500,000 to $14,500,000; and (iii) the “Increase Effective Date” with respect to the foregoing increases shall be February 29, 2012.

 

4.                                      Amendment of Schedule 2.1.  Schedule 2.1 of the Credit Agreement is hereby amended in its entirety to read as set forth in the Schedule 2.1 attached to this Amendment.

 

5.                                      Amendment of Exhibit C.  Exhibit C of the Credit Agreement is hereby amended in its entirety to read as set forth in the Exhibit C attached to this Amendment.

 

6.                                      Conditions to Effectiveness.  The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

 

(a)                                 The Administrative Agent shall have received a counterpart signature page to this Amendment, duly executed by the Loan Parties and the Lenders.

 

(b)                                 Each Lender shall have received a Note, duly executed by the Loan Parties, in favor of such Lender in the principal amount of such Lender’s Commitment.

 

(c)                                  The Administrative Agent shall have received such certificates of good standing, certified organizational documents and officer’s certificate, in each case respecting the Loan Parties, as the Administrative Agent may request.

 

7.                                      Representations and Warranties.  To induce the Administrative Agent and the Lenders to enter into this Amendment, the Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and the Lenders as follows:

 

(a)                                 The execution, delivery and performance by the Loan Parties of this Amendment and any other documents required to be executed and/or delivered by the Loan Parties by the terms of this Amendment have been duly authorized by all necessary corporate action, do not require any approval or consent of, or any registration, qualification or filing with, any government agency or authority or any approval or consent of any other person, do not and will not conflict with, result in any violation of or constitute any default under, any provision of the Loan Parties’ organizational documents, any agreement binding on or applicable to the Loan Parties or any of their property, or any law or governmental regulation or court decree or order, binding upon or applicable to the Loan Parties or of any of their property and will not result in the creation or imposition of any Lien in or on any of their property pursuant to the provisions of any agreement applicable to the Loan Parties or any of their property, other than Liens in favor of the Administrative Agent.

 

2

 

(b)                                 Both before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct as of the date hereof, and as of the Increase Effective Date, as though made on the date hereof, and on the Increase Effective Date, except to the extent that such representations and warranties relate solely to an earlier date.

 

(c)                                  There does not exist any Unmatured Event of Default or Event of Default.

 

8.                                      No Waiver.  This Amendment is not intended to operate as, and shall not be construed as, a waiver of any Unmatured Event of Default or Event of Default whether known to the Administrative Agent and/or the Lenders, or unknown, as to which all rights and remedies of the Administrative Agent and the Lenders shall remain reserved.

 

9.                                      Binding Nature of Loan Documents.  Each Loan Party acknowledges and agrees that the terms, conditions and provisions of the Credit Agreement and of each Loan Document are fully binding and enforceable agreements, and are not subject to any defense, counterclaim, set off or other claim of any kind or nature.  Each Loan Party hereby reaffirms and restates its duties, obligations and liability under the Credit Agreement, as amended hereby, and each other Loan Document.

 

10.                               Reference to the Loan Documents.  From and after the date of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference to the “Credit Agreement” or “Agreement”, “thereunder”, “thereof”, “therein” or words of like import referring to the Credit Agreement in any other Loan Document, shall mean and be a reference to the Credit Agreement as amended hereby.

 

11.                               Release.  Each Loan Party hereby releases, acquits, and forever discharges each of the Administrative Agent and the Lenders and each and every past and present subsidiary, affiliate, stockholder, officer, director, agent, servant, employee, representative, and attorney of any of them from any and all claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character, or nature whatsoever, known or unknown, fixed or contingent, which any Loan Party may have or claim to have now or which may hereafter arise out of or be connected with any act of commission or omission of the Administrative Agent and/or the Lenders existing or occurring prior to the date of this Amendment or any instrument executed prior to the date of this Amendment including, without limitation, any claims, liabilities or obligations arising with respect to the indebtedness evidenced by any Loan Document.  The provisions of this Section shall survive payment of all Obligations and shall be binding upon the Loan Parties and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns.

 

12.                               Estoppel.  Each Loan Party represents and warrants that there are no known claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character or nature whatsoever, fixed or 

 

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contingent, which any Loan Party may have or claim to have against the Administrative Agent and/or the Lenders, which might arise out of or be connected with any act of commission or omission of the Administrative Agent and/or the Lenders existing or occurring on or prior to the date of this Amendment, including, without limitation, any claims, liabilities or obligations arising with respect to the indebtedness evidenced by any Loan Document.

 

13.                               Expenses.  Without in any way limiting the generality of Section 16.5 of the Credit Agreement, the Loan Parties, jointly and severally, hereby agree to pay to the Administrative Agent all of the Administrative Agent’s reasonable legal fees and expenses incurred in connection with this Amendment, the Credit Agreement and/or any other Loan Document, which amount shall be due and payable upon execution of this Amendment.

 

14.                               Captions.  The captions or headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Amendment.

 

15.                               Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  Any executed counterpart of this Amendment delivered by facsimile or other electronic transmission to a party hereto shall constitute an original counterpart of this Amendment.

 

16.                               No Other Modification.  Except as expressly amended by the terms of this Amendment, all other terms of the Credit Agreement shall remain unchanged and in full force and effect.

 

[The signature pages follow.]

 

4

 

THE PARTIES HAVE EXECUTED this Amendment No. 2 to Credit Agreement in the manner appropriate to each as of the date and year first above written.

 

	
LOAN PARTIES:
    	
 
    
	
 
    	
WINMARK CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Brett D. Heffes
    
	
 
    	
Name: 
    	
Brett D. Heffes
    
	
 
    	
Title: 
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WIRTH BUSINESS   CREDIT, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Brett D. Heffes
    
	
 
    	
Name: 
    	
Brett D. Heffes
    
	
 
    	
Title: 
    	
Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WINMARK CAPITAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Brett D. Heffes
    
	
 
    	
Name: 
    	
Brett D. Heffes
    
	
 
    	
Title: 
    	
Chief Financial   Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GROW BIZ   GAMES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Brett D. Heffes
    
	
 
    	
Name: 
    	
Brett D. Heffes
    
	
 
    	
Title: 
    	
Treasurer
    

 

(Signatures continue on next page.)

 

5

 

	
ADMINISTRATIVE   AGENT AND A LENDER:
    	
 
    
	
 
    	
THE   PRIVATEBANK AND TRUST COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   John Falb
    
	
 
    	
Name:   
    	
John   Falb
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
 
    
	
A   LENDER:
    	
BMO   HARRIS BANK N.A. (f/k/a Harris N.A.)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Andrew K. Peterson
    
	
 
    	
Name:
    	
Andrew   K. Peterson
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

6

 

SCHEDULE 2.1

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

	
 
    	
 
    	
 
    	
 
    	
Applicable
    	
 
    
	
Lender
    	
 
    	
Commitment
    	
 
    	
Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
The PrivateBank and Trust Company
    	
 
    	
$
    	
20,500,000
    	
 
    	
58.57142857
    	
%
    
	
BMO Harris Bank N.A.
    	
 
    	
$
    	
14,500,000
    	
 
    	
41.42857143
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
$
    	
35,000,000
    	
 
    	
100.00
    	
%
    

 

 

EXHIBIT C

 

FORM OF BORROWING BASE CERTIFICATE

 

To:                             The PrivateBank and Trust Company (the “Administrative Agent”) and the Lenders referred to below

 

Please refer to the Credit Agreement dated as of July 13, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Winmark Corporation (the “Company”) and its subsidiaries (together with the Company, the “Loan Parties”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), THE PRIVATEBANK AND TRUST COMPANY (“PrivateBank”), as a Lender and as Administrative Agent for the Lenders.  Capitalized terms used but not otherwise defined herein shall have the same meanings herein as in the Credit Agreement.

 

The Company hereby certifies and warrants to the Administrative Agent and the Lenders that at the close of business on                     ,          (the “Calculation Date”), the Borrowing Base was $                    , computed as set forth on the schedule attached hereto.

 

Attached hereto is an aging of the Loan Parties’ lease receivables as of the date hereof.

 

The Company has caused this Certificate to be executed and delivered by its officer thereunto duly authorized on                     , 20    .

 

	
 
    	
WINMARK   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

C-1

 

SCHEDULE TO BORROWING BASE CERTIFICATE

Dated as of [                          ]

 

	
A.
    	
Availability Created by Eligible Leased Assets
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Net   book value of Eligible Leased Assets
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
Advance rate
    	
 
    	
90
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Availability   created by Eligible Leases
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
B.
    	
Availability created by EBITDA of franchising and   corporate segments 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
TTM   EBITDA of franchising segment
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
TTM   EBITDA of corporate segment
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
Total
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
Advance rate
    	
 
    	
200
    	
%
    
	
 
    	
Availability created by EBITDA of franchising and   corporate segments
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Availability: A+B (not to   exceed $35,000,000)
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Less Outstandings:
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Excess Availability
    	
 
    	
$
    	
 
    	
 
    

 

C-2

 

REVOLVING NOTE

 

	
$20,500,000
    	
February 29, 2012
    
	
 
    	
Minneapolis, Minnesota
    

 

The undersigned, jointly and severally, for value received, promise to pay to the order of THE PRIVATEBANK AND TRUST COMPANY, an Illinois bank and trust company (the “Lender”), at the Administrative Agent’s Office (as defined in the Credit Agreement referred to below), the principal sum of Twenty Million Five Hundred Thousand Dollars ($20,500,000) or the aggregate unpaid amount of all Loans made to the undersigned by the Lender pursuant to the Credit Agreement (as shown on the schedule attached hereto (and any continuation thereof) or in the records of the Lender), such principal amount to be payable on the dates set forth in the Credit Agreement.

 

The undersigned, jointly and severally, further promise to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the Credit Agreement.  Payments of both principal and interest are to be made in lawful money of the United States of America.

 

This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement, dated as of July 13, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; terms not otherwise defined herein are used herein as defined in the Credit Agreement), among the undersigned, The PrivateBank and Trust Company as Administrative Agent for the lenders, certain other lenders party thereto and the Lender, to which Credit Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to its due date or its due date accelerated.

 

The undersigned, jointly and severally, agree to pay all costs of collection, including attorneys’ fees, in the event this Note is not paid when due.  This Note is being delivered in, and shall be governed by, the laws of the State of Minnesota.  Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

 

This Note amends and restates in it entirety that certain Revolving Note, dated as of October 19, 2010, in the original principal amount of $17,500,000 payable to the Lender (the “Prior Note”), and is issued in substitution for and replacement of, but not in payment of, the Prior Note.

 

[The signature page follows.]

 

1

 

[Signature page to $20,500,000 Revolving Note payable

to The PrivateBank and Trust Company]

 

 

	
WINMARK   CORPORATION
    	
 
    	
GROW   BIZ GAMES, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Brett D. Heffes
    	
 
    	
By:
    	
/s/   Brett D. Heffes
    
	
Name:
    	
Brett   D. Heffes
    	
 
    	
Name:
    	
Brett   D. Heffes
    
	
Title:
    	
President
    	
 
    	
Title:
    	
Treasurer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
WIRTH   BUSINESS CREDIT, INC.
    	
 
    	
WINMARK   CAPITAL CORPORATION
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Brett D. Heffes
    	
 
    	
By:
    	
/s/   Brett D. Heffes
    
	
Name:
    	
Brett   D. Heffes
    	
 
    	
Name:
    	
Brett   D. Heffes
    
	
Title:
    	
Treasurer
    	
 
    	
Title:
    	
Chief   Financial Officer and Treasurer
    
						

 

2

 

REVOLVING NOTE

 

	
$14,500,000
    	
February 29, 2012
    
	
 
    	
Minneapolis, Minnesota
    

 

The undersigned, jointly and severally, for value received, promise to pay to the order of BMO HARRIS BANK N.A. (f/k/a HARRIS N.A.), a national banking association  (the “Lender”), at the Administrative Agent’s Office (as defined in the Credit Agreement referred to below), the principal sum of Fourteen Million Five Hundred Thousand Dollars ($14,500,000) or the aggregate unpaid amount of all Loans made to the undersigned by the Lender pursuant to the Credit Agreement (as shown on the schedule attached hereto (and any continuation thereof) or in the records of the Lender), such principal amount to be payable on the dates set forth in the Credit Agreement.

 

The undersigned, jointly and severally, further promise to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the Credit Agreement.  Payments of both principal and interest are to be made in lawful money of the United States of America.

 

This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement, dated as of July 13, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; terms not otherwise defined herein are used herein as defined in the Credit Agreement), among the undersigned, The PrivateBank and Trust Company as Administrative Agent for the lenders, certain other lenders party thereto and the Lender, to which Credit Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to its due date or its due date accelerated.

 

The undersigned, jointly and severally, agree to pay all costs of collection, including attorneys’ fees, in the event this Note is not paid when due.  This Note is being delivered in, and shall be governed by, the laws of the State of Minnesota.  Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

 

This Note amends and restates in it entirety that certain Revolving Note, dated as of October 19, 2010, in the original principal amount of $12,500,000 payable to the Lender (the “Prior Note”), and is issued in substitution for and replacement of, but not in payment of, the Prior Note.

 

[The signature page follows.]

 

1

 

[Signature page to $14,500,000 Revolving Note payable

to BMO Harris Bank N.A.]

 

 

	
WINMARK CORPORATION
    	
GROW   BIZ GAMES, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/  Brett D. Heffes
    	
 
    	
By:
    	
/s/  Brett D. Heffes
    
	
Name:
    	
Brett   D. Heffes
    	
 
    	
Name:
    	
Brett   D. Heffes
    
	
Title:
    	
President
    	
 
    	
Title:
    	
Treasurer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
WIRTH   BUSINESS CREDIT, INC.
    	
 
    	
WINMARK   CAPITAL CORPORATION
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/  Brett D. Heffes
    	
 
    	
By:
    	
/s/  Brett D. Heffes
    
	
Name:
    	
Brett   D. Heffes
    	
 
    	
Name:
    	
Brett   D. Heffes
    
	
Title:
    	
Treasurer
    	
 
    	
Title:
    	
Chief   Financial Officer and Treasurer
    

 

2Exhibit 10.1

 

AMENDED
 AGREEMENT
 BETWEEN
 CHRISTOPHER & BANKS CORPORATION
 AND
 JOEL N. WALLER

 

THIS AMENDED AGREEMENT is to be effective as of the date it is fully executed (the “Effective Date”), by and between Christopher & Banks Corporation, a corporation duly organized and existing under the laws of the State of Delaware (the “Corporation”), and Joel N. Waller (“Executive”) and amends and restates in its entirety the Agreement entered into effective January 3, 2012 between Corporation and Executive.

 

PREAMBLE

 

Based upon the mutual promises contained in this Agreement and other consideration, Corporation and Executive have agreed to execute this Agreement containing the following terms and conditions:

 

ARTICLE 1
 EMPLOYMENT

 

1.1        Commencing as of February 17, 2012, the Corporation hereby employs Executive and Executive agrees to be employed by the Corporation as its President and Chief Executive Officer.  Executive further agrees to perform such duties as are customarily incident to such positions and such other duties which may be assigned to Executive from time to time by the Board of Directors of Corporation.

 

ARTICLE 2
 TERM

 

2.1          The term of this Agreement shall be until December 13, 2012, unless terminated earlier as provided in Section 7.5.

 

ARTICLE 3
 COMPENSATION AND BENEFITS

 

3.1        Effective February 17, 2012, the Corporation agrees to pay Executive an annualized salary of $500,000, less required and authorized deductions and withholdings.

 

3.2        Effective December 14, 2011 Corporation granted to Executive, subject to and in accordance with equity award agreements entered into between Executive and Corporation, 100,000 shares of its Common Stock as a time based restricted stock grant and a non-qualified stock option to acquire 150,000 shares of Common Stock with an exercise price equal to the closing price on the New York Stock Exchange as of December 14, 2011.

 

3.3        Effective on or about March 29, 2012, Corporation shall grant to Executive a time-based restricted stock grant of 50,000 shares to be evidenced by an agreement between Executive and Corporation and based on the form of agreement previously entered into by Executive and Corporation effective December 14, 2011.

 

3.4        Subject to the terms and conditions of such plans and programs, Executive shall be entitled to participate in the employee benefit plans and programs generally applicable to senior executives of the Corporation.

 

ARTICLE 4
 DUTIES

 

4.1        Executive agrees to devote Executive’s full time and effort, to the best of Executive’s ability, to carry out the duties of President and Chief Executive Officer for the profit, benefit and advantage of the Corporation.  Executive shall report directly to the Board of Directors of Corporation.

 

ARTICLE 5
 COOPERATION

 

5.1        During Executive’s employment and for one (1) year thereafter, Executive agrees to cooperate fully with the Company, including its attorneys and accountants, in connection with any potential or actual litigation, other real or potential disputes, internal 

 

 

investigations or government investigations, which directly or indirectly involve the Company.  Executive agrees to appear as a witness voluntarily upon the Company’s request regardless of whether served with a subpoena and be available to attend depositions, court proceedings, consultations or meetings regarding investigations, litigation or potential litigation as requested by the Company.  With respect to the Executive’s cooperation obligations under this provision, for the one (1) year period following the cessation of Executive’s employment with the Corporation, the Company acknowledges that these cooperation obligations, if exercised, will impose on Executive’s time and could likely interfere with other commitments Executive may have in the future.  Consequently, the Company shall attempt to schedule such depositions, court proceedings, consultations or meetings in coordination with Executive’s schedule and to allow Executive to participate telephonically as appropriate but Executive recognizes that scheduling of certain court proceedings, including depositions and trials, may be beyond the Company’s control and that for some matters or proceedings Executive’s physical presence may be required.

 

5.2        The Corporation agrees to reimburse Executive for his time incurred under this Article 5 at a rate of $195.00 per hour for actual time spent preparing for and attending such depositions, consultations or meetings.  The Corporation also agrees to reimburse Executive for the out-of-pocket expenditures actually and reasonably incurred by Executive in connection with the performance of services contemplated by this Article 5, including hotel accommodations, coach airfare, transportation and meals consistent with the Corporation’s generally applicable expense reimbursement policies at such time.

 

5.3        It is expressly understood by the parties that (i) any services Executive may provide to Company pursuant to this Article 5 shall not be as an employee and Executive’s provision of such services shall not create an employment relationship between Executive and the Company, (ii) any payments to Executive pursuant to this provision are not wages and instead shall be reflected on a federal 1099 tax form, and (iii) the payment or reimbursement of expenses by the Corporation to Executive under this Article 5 shall be in exchange for Executive’s time and/or reimbursement for expenses actually incurred and are not intended or understood to be dependent upon the character or content of any information Executive discloses in good faith in any such proceedings, meetings or consultations.

 

ARTICLE 6
 DEFINITIONS

 

6.1        “Cause” shall mean (i) any fraud, misappropriation or embezzlement by Executive in connection with or affecting the business of the Company or its affiliates, (ii) any conviction of (including any plea of guilty or no contest to) a felony or a gross misdemeanor by Executive, (iii) any gross neglect or persistent neglect by Executive to perform the duties assigned to Executive or any other act that can be reasonably expected to cause substantial economic or reputational injury to the Company, (iv) any material breach of Sections 4.1, 5.1, or Articles 7 or 8 of this Agreement, or (v) any material violation of the Company’s written policies, procedures or Code of Conduct; provided further that in connection with clauses (iii) — (v), Executive shall first have received a written notice from the Chair of the Corporation’s Board of Directors or from its Board of Directors that summarizes and reasonably describes the manner in which Executive has persistently neglected his duties, engaged in an act reasonably expected to cause substantial harm, materially breached Sections 4.1, 5.1, or Articles 7 or 8 of the Agreement, or materially violated a Company policy, procedure or the Code of Conduct (the “Event”).  To the extent the Event is capable of being cured, Executive shall have fourteen (14) calendar days from the date notice of the Event is delivered to Executive (via electronic mail, regular mail, in person or otherwise) to cure the same.  The Corporation is not required to give written notice of, nor shall Executive have a period to cure the same or any similar failure, which was the subject of an earlier written notice to Executive under this Section 6.1.

 

6.2        “Company” shall mean Corporation and/or its majority-owned and wholly-owned subsidiaries.

 

6.3        “Confidential Information” means any information that is not generally known outside the Company, including but not limited to trade secrets, and that is proprietary to the Company, relating to any phase of the Company’s existing or reasonably foreseeable business, including information conceived, discovered or developed by Executive.  Confidential Information includes, but is not limited to, business plans; strategic plans and initiatives; financial information, statements and projections; new store plans or locations; payroll and personnel records and information; marketing information, materials and plans; product designs; supplier information; customer information; customer lists; project lists; information relating to pricing and costs; or other information that is designated by the Company as “Confidential” or other similar designation or is treated by the Company as Confidential.

 

6.4        (a)  A “Prohibited Company” means any of the following women’s specialty apparel companies:  Ann Taylor Stores Corporation; Ascena Retail Group, Inc.; Cato Corporation; Charming Shoppes, Inc.; Chicos FAS, Inc.; Coldwater Creek, Inc.; New York & Co., Inc.; and The Talbots, Inc.  (b) “Prohibited Company” shall also include:  (i) all divisions, subsidiaries, affiliates and successors in interest of the stores or legal entities identified in Section 6.4(a); and (ii) any person, business, or entity where a substantial portion of Executive’s duties involve providing advice, consultation, products or services to any of the entities or their affiliates identified in this Section 6.4(a) or (b) (i).

 

ARTICLE 7
 NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT

 

7.1        During Executive’s employment, (i) Executive shall not plan, organize or engage in any business competitive with the Company or any product or service marketed or planned for marketing by the Company or assist or work with any other person or entity to do 

 

 

so; (ii) Executive shall not, without the prior written permission of the Corporation’s Board of Directors, (x) directly or indirectly engage in activities with a Prohibited Company or (y) own (whether as a shareholder, partner or otherwise, other than as a 3% or less shareholder of a publicly held company) any interest in a Prohibited Company, or (z) be connected as an officer, director, advisor, consultant, agent or employee or participate in the management of any Prohibited Company.  For purposes of this Section 7.1, G-III Apparel Group, Ltd. and all of its divisions, subsidiaries, affiliates and successors in interest shall be considered a Prohibited Company.

 

7.2          During Executive’s employment and for a period of one year after termination of Executive’s employment with the Corporation for any reason, under any circumstance, by either party, whether voluntary or involuntary, Executive shall not solicit, entice, encourage, or induce (or attempt to do so, directly or indirectly), any employee of the Company to leave or terminate his or her employment with the Company or to establish a relationship with a Prohibited Company.  This Section 7.2 shall apply to the then-current employees of the Company and any individual who was employed by the Company at any time in the forty-five (45) day period immediately prior to Executive’s last day of employment with the Company.

 

7.3          During Executive’s employment with the Corporation, Executive shall not solicit, entice, encourage, or induce (or attempt to do so, directly or indirectly) any employee of G-III Apparel Group, Ltd. or its subsidiaries or affiliates (“G-III”) to leave or terminate his or her employment with G-III in order to become employed by or serve as an independent contractor or consultant to the Company.  This Section 7.3 shall apply to the then-current employees of G-III.

 

7.4          During Executive’s employment and for a period of one year after termination of Executive’s employment with the Corporation for any reason, under any circumstance, by either party, whether voluntary or involuntary, Executive shall not solicit, engage, or induce (or attempt to do so, directly or indirectly) any vendor, supplier, sales agent or buying agent of the Company to commence work on behalf of, or to establish a relationship with, a Prohibited Company or to sever or materially alter his/her/its relationship with the Company.  The post-termination obligations of this Section 7.4 shall apply to the vendors, suppliers, sales agents and buying agents of the Company as of the date of Executive’s termination and at any time in the six-month period immediately prior to Executive’s termination date.

 

7.5          If Executive’s employment is involuntarily terminated by the Corporation other than for Cause prior to December 13, 2012, the Corporation shall pay through December 13, 2012 the remaining portion of Executive’s annualized salary, paid according to the Corporation’s normal payroll schedule and subject to applicable withholdings, deductions, and tax reporting requirements and shall pay through December 13, 2012 the employer portion of any health, dental and other employee benefit program premiums, to the extent Executive is participating in such programs prior to such involuntary termination, or the cash equivalent if the benefit may not be continued after employment with the Company ceases.

 

7.6          Executive promises and agrees not to disparage the Company and the Company’s officers, directors, employees, products or services.

 

ARTICLE 8
 CONFIDENTIAL AND PROPRIETARY INFORMATION, IDEAS, AND PROPERTY

 

8.1        Executive promises and agrees to take reasonable measures to maintain and preserve the confidentiality of the Confidential Information.

 

8.2        Executive promises and agrees not to use or disclose Confidential Information except in the course of performing Executive’s duties solely for the benefit of, and on behalf of, the Company.

 

8.3        Executive promises and agrees not to use, discuss, disclose, divulge, or make available in any way, whether directly or indirectly, Confidential Information to any person or entity not authorized by the Company to receive or use it.

 

8.4        Employee acknowledges and agrees that all documents, electronic data or files, or other tangible property relating in any way to the business of the Company, including those which are conceived by Executive or come into Executive’s possession during Executive’s employment, are and shall remain the exclusive property of the Company, and Executive agrees to return all such documents, electronic data and files, and tangible property to the Company upon termination of Executive’s employment or at such earlier time as the Company may request of Executive, and Executive further promises and agrees not retain any copies, summaries, or abstracts thereof.

 

8.5        The obligations of this section shall continue after the termination of Executive’s employment and shall be binding on Executive’s assigns, executors, administrators, or other legal representatives.

 

ARTICLE 9
 JUDICIAL CONSTRUCTION

 

9.1        Executive believes and acknowledges that the provisions contained in this Agreement, including without limitation the provisions contained in Section 5.1 and Articles 7, and 8 of this Agreement, are fair and reasonable and necessary to protect the Company’s legitimate interests.  Nonetheless, it is agreed that if a court finds any of these provisions to be invalid in whole or in part, such finding shall 

 

 

not invalidate any such provision, nor the Agreement, in its entirety, but rather the provision in question shall be construed, blue-lined, reformed, rewritten, and/or equitably modified by the court as if the most restrictive covenants permissible under applicable law were contained herein.

 

ARTICLE 10
 RIGHT TO INJUNCTIVE RELIEF

 

10.1      Executive acknowledges that a breach or threatened breach by Executive of any of the terms of Section 5.1 or Articles 7 or 8 of this Agreement will render irreparable harm to the Corporation or its related entities.  Accordingly, the Corporation shall therefore be entitled to any and all equitable relief, including, but not limited to, temporary and permanent injunctive relief, and to any other remedy that may be available under any applicable law or agreement between the parties, and to recover from Executive all costs of litigation including, but not limited to, attorneys’ fees and court costs incurred in enforcing the provisions of Articles 5, 7 and 8.

 

10.2      Executive acknowledges and agrees that, in the event a court determines that a bond is necessary in connection with any grant to the Corporation of injunctive relief, then a fair and reasonable amount for any such bond would be $5,000.

 

ARTICLE 11
 ASSIGNMENT

 

11.1      Executive consents to and the Corporation shall have the right to assign this Agreement to its successors or assigns.  Additionally, Executive consents to and the Corporation shall have the right to assign this Agreement to any subsidiary.  All covenants or agreements hereunder shall inure to the benefit of and be enforceable by Corporation’s successors or assigns.

 

11.2      For purposes of Section 11.1 and the possible assignment of this Agreement, the terms “successors” and “assigns” shall include any corporation which buys all or substantially all of the Corporation’s assets, or a controlling portion of its stock, or with which it merges or consolidates.

 

11.3      Executive’s rights under this Agreement are personal to Executive and may not be assigned except with the written consent of the Corporation’s Board of Directors.

 

ARTICLE 12
 FAILURE TO DEMAND PERFORMANCE AND WAIVER

 

12.1      The Corporation’s failure at any time to demand strict performance or compliance by Executive either during or after Executive’s employment with any part of this Agreement shall not be deemed to be a waiver of the Corporation’s rights under this Agreement or by operation of law.  The Corporation’s rights under this Agreement can only be waived expressly, in writing by the Corporation’s Board of Directors.  Any express waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

 

ARTICLE 13
 ENTIRE AGREEMENT

 

13.1      The Corporation and Executive agree that no modifications of this Agreement may be made except by means of a written agreement or memorandum signed by both parties and also acknowledge that this Agreement contains the full and complete agreement between and among them, that there are no oral or implied agreements or other modifications relating to the same subject matter.

 

ARTICLE 14
 GOVERNING LAW

 

14.1      The parties acknowledge that the Corporation’s principal place of business is located in the State of Minnesota.  The parties hereby agree that this Agreement shall be construed in accordance with the internal laws of the State of Minnesota without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of Minnesota.

 

14.2      Executive and the Company agree to submit to the exclusive jurisdiction of, and venue in, the courts of the State of Minnesota, County of Hennepin, or of the Federal District Court of Minnesota with respect to any dispute that may arise between them.

 

ARTICLE 15
 SURVIVAL

 

15.1      The parties agree that Articles 5, 7 and 8 of this Agreement, and those provisions necessary for the enforcement of Articles 5, 7 and 8 of this Agreement, shall survive termination of this Agreement and termination of Executive’s employment for any reason.

 

 

ARTICLE 16
 UNDERSTANDINGS

 

16.1      Executive hereby acknowledges that (i) this Agreement constitutes good and valuable consideration in exchange for the obligations and agreements undertaken by Executive by this Agreement, including, without limitation, the provisions contained in Articles 7 and 8 of this Agreement and (ii) that Executive has carefully considered the obligations, restrictions, and undertakings contained in this Agreement and, having had the opportunity to confer with counsel of Executive’s own choosing, has determined that they are reasonable.

 

16.2      By signing below, Executive authorizes the Corporation to notify third parties (including, but not limited to, Executive’s actual or potential future employers) of Articles 7 and 8 of this Agreement, and those provisions necessary for the enforcement of Articles 7 and 8 of this Agreement, and Executive’s responsibilities hereunder.

 

16.3      Executive represents and warrants to the Corporation that Executive is not under, or currently bound to be under in the future, any obligation to any person or entity that is or would be inconsistent or in conflict with this Agreement or would prevent, limit, or impair in any way the performance by Executive of Executive’s obligations hereunder.

 

16.4      If Executive possesses any information that Executive knows or should know is considered by any third party to be the confidential, trade secret, or otherwise proprietary information of such third party, Executive shall not disclose such information to the Company or use such information in the course of Executive’s employment or in any other way to benefit the Company.

 

IN WITNESS WHEREOF, the Corporation has hereunto signed its name and Executive hereunder has signed Executive’s name, all as of the day and year written below.

 

 

	
 
    	
 
    	
 
    	
CHRISTOPHER &   BANKS CORPORATION
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
February   29, 2012
    	
 
    	
By:
    	
/s/   Luke R. Komarek
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Witness:
    	
/s/   Sandra Miller
    	
 
    	
Its:
    	
Senior   Vice President, General Counsel
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
JOEL   N. WALLER
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
February   29, 2012
    	
 
    	
/s/   Joel N. Waller
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Witness:
    	
/s/   Sandra Miller

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