Document:

EXHIBIT 10.1

 

Management Incentive Program

SECTION 1.                            Purpose; Definitions. The purpose of the Mothers Work, Inc.
Management Incentive Program (the “Program”) is to enable Mothers Work,
Inc. (the “Company”) and its affiliated companies to motivate and reward
favorable performance by providing cash bonus payments based upon the
achievement of pre-established and objective performance goals for each fiscal
year.

For
purposes of the Program, the following terms will have the meanings defined
below, unless the context clearly requires a different meaning:

(a)          “Affiliate” means, with respect to any Person, any other person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person.  For
purposes of this definition, the term “control,” including its correlative
terms “controlled by” and “under common control with,” mean, with respect to
any Person, the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

(b)         “Award” means a cash bonus under the Program.

(c)          “Board” means the Board of Directors of the Company, as
constituted from time to time.

(d)         “Code” means the Internal Revenue Code of 1986, as amended, and
any successor thereto.

(e)          “Committee” means the Compensation Committee of the Board, and
shall consist of members of the Board who are not employees of the Company or
any affiliate thereof and who qualify as “outside directors” under Section
162(m) of the Code.

(f)            “Fiscal Year” means the period
beginning on October 1 and ending on September 30.

(g)         “Participant” means the executive officers of the Company and
any other key employee of the Company or any Affiliate with the title of “manager”
or above selected by the Committee to participate in the Program.

(h)         “Person” means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization.

(i)             “Performance Period” means each Fiscal
Year or another period as designated by the Committee, so long as such period
does not exceed one year.

SECTION 2.                            Administration of Program. The Committee shall administer and
interpret the Program, provided, that,
the Program will not be interpreted in a manner that causes

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an Award intended to qualify
as “qualified performance-based compensation” under Section 162(m) of the Code
to fail to so qualify. The Committee shall have the power, from time to time,
to: (i) select Participants; (ii) determine the amount of cash to be paid
pursuant to each Participant; (iii) determine the terms and conditions of each
Award; (iv) establish the performance objectives for any Performance Period in
accordance with Section 3 and certify whether such performance objectives have
been obtained; (v) establish and amend rules and regulations relating to the
Program, and to make all other determinations necessary and advisable for the
administration of the Program; and (vi) correct any defect, supply any omission
or reconcile any inconsistency in the Program or any Award.

Nothing in the Program shall
be deemed to limit the ability of the Committee to grant Awards to Participants
under the Program which are not intended to qualify as “qualified
performance-based compensation” under Section 162(m) of the Code and which are
not exempt from the limitations thereof.

All decisions made by the
Committee pursuant to the Program shall be made in the Committee’s sole and
absolute discretion and shall be final and binding on the Participants, and the
Company.  No member or former member of
the Board or the Committee shall be liable for any act, omission,
interpretation, construction or determination made in connection with the
Program other than as a result of such individual’s willful misconduct.

SECTION
3.                            Awards.

(a)          Performance Criteria. Within 90 days after each Performance
Period begins (or such other date as may be required or permitted under Section
162(m)), the Committee shall establish the performance objective or objectives
that must be satisfied in order for a Participant to receive an Award for that
Performance Period.  In addition, at that
time the Committee will also specify the portion of Awards that will be payable
upon the full, partial or over-achievement of specified performance objectives
for that Performance Period.  Except with
respect to an Award that is not intended to constitute “qualified
performance-based compensation” under Section 162(m) of the Code, such
performance objectives will be based upon the following criteria, as determined
by the Committee for the applicable Performance Period (subject to adjustment
in accordance with Section 3(b), below):

(i)                                     the attainment of certain target levels of,
or a specified percentage increase in, (1) revenues, (2) income before taxes
and extraordinary items, (3) net income, (4) operating income, (5) earnings
before income tax, (6) earnings before interest, taxes, depreciation and
amortization, (7) after-tax or pre-tax profits, (8) operational cash flow, (9)
return on capital employed or returned on invested capital, (10) after-tax or
pre-tax return on stockholders’ equity, (11) the price of our common stock or
(12) a combination of the foregoing;

(ii)                                  the achievement of a certain level of,
reduction of, or other specified objectives with regard to limiting the level
of increase in, our bank debt or  other
public or private debt or financial obligations;

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(iii)                               earnings per share or the attainment of a specified percentage increase
in earnings per share or earnings per share from continuing operations;

(iv)                              the attainment of certain target levels of, or a specified increase in,
economic value added targets based on a cash flow return on investment formula;

(v)                                 the growth in the value of an investment in
our common stock assuming the reinvestment of dividends;

(vi)                              the attainment of a certain level of, reduction of, or other specified
objectives with regard to limiting the level in or increase in all or a portion
of controllable expenses or costs or other expenses or costs; and/or

(vii)                           any other objective business criteria that would not cause an Award to
fail to constitute “qualified performance-based compensation” under Section
162(m) of the Code.

(viii)                        Performance goals may be established on a Company-wide basis or with
respect to one or more business units, divisions, Affiliates, or products; and
in either absolute terms or relative to the performance of one or more
comparable companies or an index covering multiple companies.  The performance objectives for a particular
Performance Period need not be the same for all Participants.

(b)         Adjustments to Performance Criteria.  The
Committee may provide, at the time the performance goals are established in
accordance with Section 3(a), that adjustments will be made to the applicable
performance goals to take into account, in any objective manner specified by
the Committee, the impact of one or more of the following: (i) gain or loss
from all or certain claims and/or litigation and insurance recoveries, (ii) the
impairment of tangible or intangible assets, (iii) stock-based compensation
expense, (iv) extraordinary, unusual or infrequently occurring events reported
in the Company’s public filings, (v) restructuring activities reported in the
Company’s public filings, (vi) investments, dispositions or acquisitions, (vii)
gain or loss from the disposal of certain assets, (viii) gain or loss from the
early extinguishment, redemption, or repurchase of debt, (ix) cash or non-cash
charges related to store closing expenses, (x) changes in accounting principles
that become effective during the performance period, or (xi) any other item,
event or circumstance that would not cause an Award to fail to constitute “qualified
performance-based compensation” under Section 162(m) of the Code.

Any
adjustment described in this Section 3(b) may relate to the Company or to any
subsidiary, division or other operational unit of the Company or its
Affiliates, as determined by the Committee at the time the performance goals
are established.  Any adjustment shall be
determined in accordance with generally accepted accounting principles and
standards, unless such other objective method of measurement is designated by
the Committee at the time performance goals are established.  Notwithstanding the foregoing, adjustments
will be made as necessary to any performance criteria related to the Company’s
stock to reflect changes in corporate capitalization, including a
recapitalization, stock split or combination, stock dividend,

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spin-off, merger,
reorganization or other similar event or transaction affecting the Company’s
stock.

(c)          Maximum Award Amount Payable. The maximum amount payable hereunder to any
single Participant with respect to any particular Performance Period will not
exceed $1,500,000.

(d)         Payment Conditioned on Continued Employment.  No
Participant will be entitled to any payment hereunder with respect to any
particular Performance Period unless he or she has remained continuously
employed by the Company or its Affiliates through the last day of that Performance
Period (or such other date as is specified by the Committee at the time that
performance objectives are established).

(e)          Negative Discretion. Notwithstanding anything else contained in
Section 3(b) to the contrary, the Committee shall have the right, in its
absolute discretion, (i) to reduce or eliminate the amount otherwise payable to
any Participant under Section 3(b) based on individual performance or any other
factors that the Committee, in its discretion, shall deem appropriate and (ii) to
establish rules or procedures that have the effect of limiting the amount
payable to each Participant to an amount that is less than the maximum amount
otherwise authorized under Section 3(b).

SECTION
4.                            PAYMENT.  To
the extent that the Committee determines at the time of grant to qualify an
Award as performance-based compensation under Section 162(m) of the Code, no
Award shall be payable except upon written certification by the Committee that
the performance goals have been satisfied to a particular extent and that any
other material terms and conditions precedent to payment of an Award have been
satisfied.  Payment hereunder will be
made as soon as practicable after the Committee certification referenced above
is completed, but in no event later than 21⁄2 months following the end of the
Fiscal Year to which the Award relates.

SECTION 5.                            GENERAL PROVISIONS

(a)          Amendment and Termination. The Board or the Committee may at any time
amend, suspend, discontinue or terminate the Program; provided; however, that no such action
shall be effective without approval by the shareholders of the Company to the
extent necessary to continue to qualify the amounts payable hereunder to
Participants as “qualified performance-based compensation” under Section 162(m)
of the Code.

(b)         Unsecured Creditor Status.  A
Participant entitled to payment hereunder shall rely solely upon the unsecured
promise of the Company and nothing herein contained shall be construed to give
to or vest in a Participant or any other person now or at any time in the
future, any right, title, interest, or claim in or to any specific asset, fund,
reserve, account, insurance or annuity policy or contract, or other property of
any kind whatever owned by the Company, or in which the Company may have any
right, title, or interest, nor or at any time in the future.

(c)          Non-Assignment of Awards.  The
Participant shall not be permitted to sell, transfer, pledge or assign any
amount payable pursuant to the Program or an Award, provided

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that the right to payment of an Award earned hereunder may pass by will
or the laws of descent and distribution.

(d)         Separability.  If
any term or condition of the Program shall be invalid or unenforceable to any
extent or in any application, then the remainder of the Program, with the exception
of such invalid or unenforceable provision, shall not be affected thereby, and
shall continue in effect and application to its fullest extent.

(e)          Continued Employment. 
Neither the adoption of the Program nor the execution of any document in
connection with the Program will: (i) confer upon any employee of the Company
or an Affiliate any right to continued employment with the Company or such
Affiliate, or (ii) interfere in any way with the right of the Company or such
Affiliate to terminate the employment of any of its employees at any time.

(f)            Incapacity.  If the Committee determines
that a Participant is unable to care for his affairs because of illness or
accident, any amount due such Participant under the Program may be paid to his
spouse, child, parent, or any other person deemed by the Committee to have
incurred expense for such Participant (including a duly appointed guardian,
committee, or other legal representative), and any such payment shall be a
complete discharge of the Company’s obligation hereunder.

(g)         Withholding.  The Company shall withhold the
amount of any federal, state, local or other tax, charge or assessment
attributable to the payment of any Award as it may deem necessary or
appropriate, in its sole discretion.

(h)         Governing Law.  The Program and all Awards granted hereunder
will be governed by and construed in accordance with the laws and judicial
decisions of the Commonwealth of Pennsylvania, without regard to the
application of the principles of conflicts of laws.

 5Exhibit
10.1

AMENDMENT NO. 3 TO

AMENDED AND RESTATED EXECUTIVE
EMPLOYMENT AGREEMENT

EFFECTIVE DATE:             December
14, 2006

PARTIES:

	
  

  	
  Christopher & Banks Corporation

  	
  (“Company”)

  
	
   

  	
  Joseph E. Pennington

  	
  (“Executive”)

  

 

WHEREAS,
the Company and Executive are parties to an existing Amended and Restated
Executive Employment Agreement dated March 1, 2002, as amended by Amendment No.
1 dated September 22, 2005 and Amendment No. 2 April 5, 2006 (hereinafter
referred to collectively as “Executive Employment Agreement”); and

WHEREAS,
the Company and Executive desire to amend the Executive Employment Agreement in
connection with Executive’s desire to resign his position as Chief Executive
Officer as of the close of business on December 31, 2006.

NOW,
THEREFORE, the Company and Executive agree that as of the Effective Date
written above the following amendments shall be made a part of the Executive
Employment Agreement:

1.             All references in the Executive
Employment Agreement to “February 28, 2007” shall be deleted and replaced with “December 31, 2006.”

2.             Notwithstanding anything in the
Executive Employment Agreement to the contrary, effective as of the close of
business on December 31, 2006, Executive resigns from his position as Chief
Executive Officer, and the Company hereby accepts this resignation.  It is agreed that effective as of the close
of business on December 31, 2006, Executive has no further privileges, duties
or obligations in such capacity.

3.             Notwithstanding anything herein or
in the Executive Employment Agreement to the contrary, Executive’s base salary
with the Company as of December 31, 2006 shall continue in effect until
February 28, 2007.

4.             Notwithstanding anything herein or
in the Executive Employment Agreement to the contrary, Executive shall remain
employed by the Company through February 28, 2007 in an advisory role.

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5.             Notwithstanding anything herein or
in the Executive Employment Agreement to the contrary, Executive shall remain
on the Company’s Board of Directors until the close of business on December 31,
2006, at which time Executive shall resign from the Board.

6.             Executive’s employment with the
Company under the Employment Continuation Agreement dated September 22, 2005,
as amended on April 5, 2006, shall commence as scheduled on March 1, 2007.

This
Amendment No. 3 shall be attached to and be a part of the Executive Employment
Agreement between Christopher & Banks Corporation and Joseph E. Pennington.

Except
as set forth herein, the Executive Employment Agreement shall remain in full
force without modification.

In
consideration of the mutual covenants contained herein, the parties have
executed this Amendment No. 3 effective as of the date and year above written.

 

	
  CHRISTOPHER & BANKS CORPORATION

  	
  JOSEPH E. PENNINGTON

  
	
   

  	
   

  
	
         

  	
  /s/ Larry C.
  Barenbaum

  	
   

  	
              /s/
  Joseph E. Pennington

  	
   

  
	
  By: 

  	
  Larry C.
  Barenbaum

  	
  Joseph E. Pennington

  
	
  Its: 

  	
  Chairman

  	
   

  
					

 

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