Exhibit 10.25
EXECUTIVE EMPLOYMENT
AGREEMENT
BETWEEN
CHRISTOPHER & BANKS CORPORATION
AND
MATTHEW DILLON
THIS AGREEMENT
is effective June 12, 2006, by
and between Christopher & Banks Corporation, a corporation
duly organized and existing under the laws of the State of Delaware
(the “Corporation”), and Matthew Dillon
(“Executive”).
PREAMBLE
Executive is currently serving as
President and Chief Merchandising Officer of the Corporation. The
Board of Directors of the Corporation (the “Board”)
desires to recognize Executive’s performance since he joined
the Corporation by prospectively agreeing to name Executive as
Chief Executive Officer (CEO) of the Corporation effective as of
March 1, 2007, or earlier if the Board concludes that it would
be in the Corporation’s best interests to have Executive
assume the position of CEO prior to March 1, 2007. The parties
have agreed to execute this Employment Agreement, effective as of
this 12 th day of June, 2006, containing the
following terms and conditions:
ARTICLE 1
EMPLOYMENT
1.1
The Corporation hereby employs Executive, and Executive agrees to
be employed by the Corporation as President and Chief Merchandising
Officer through February 28, 2007. So long as Executive
remains employed on March 1, 2007, effective March 1,
2007, he will assume the position of President and Chief Executive
Officer. The appointment of Executive to the position of President
and CEO will not require further Board approval unless the Board
elects to appoint Executive to the position of CEO prior to
March 1, 2007. Executive agrees to continue performing his
duties as President and Chief Merchandising Office and, upon his
appointment to the position of CEO, Executive agrees to perform
such duties as are customarily incident to his positions as
President and CEO and are assigned to him from time to time by the
Board of Directors of the Corporation. Concurrently with
Executive’s appointment as CEO of the Corporation, Executive
will be appointed to the Board of Directors of the Corporation to
serve until his successor is appointed or shall have been elected.
However, in the event that Executive is terminated or elects to
resign as an employee of the Corporation, Executive agrees to
submit his resignation as a director of the Corporation effective
concurrently with the effective date of his termination or
resignation as an employee of the Corporation.
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ARTICLE 2
TERM
2.1
The term of this Agreement shall be the period commencing on
June 12, 2006 and ending on February 28, 2010, unless
sooner terminated as hereinafter provided in Article 13. The
term of this Agreement will continue on a year-to-year basis after
February 28, 2010 unless either party gives written notice of
intention to terminate the Employment Agreement within 90 days
prior to the end of the initial three-year term or any one-year
extension.
ARTICLE 3
DUTIES
3.1
Executive agrees to devote his full time and effort, to the best of
his ability, to carry out his duties as an Executive of the
Corporation for the profit, benefit and advantage of the business
of the Corporation. Through February 28, 2007, Executive shall
report directly to the Chief Executive Officer of the Corporation.
Beginning March 1, 2007, Executive shall report directly to
the Board of Directors.
ARTICLE 4
COMPENSATION AND BENEFITS
4.1
Until March 1, 2007, Executive’s base salary will
continue to be $475,000. Effective March 1, 2007, and upon the
Executive’s appointment as CEO of the Corporation, the
Corporation agrees to pay Executive an annual base salary of
$775,000, less required and authorized deductions and withholding.
For fiscal 2008 and for each fiscal year thereafter,
Executive’s base salary shall be reviewed and increases, if
any, shall be awarded to Executive by the Board of Directors in its
sole discretion, but the base salary shall not be reduced from that
of the prior fiscal year. Executive’s base salary shall be
payable at the same intervals as the Corporation pays other
executives.
4.2
Executive will receive a restricted stock grant of 200,000 shares
of the Corporation’s Common Stock as of the effective date of
this Agreement. The restricted stock will be granted under the
Corporation’s 2005 Stock Incentive Plan, and will be subject
to a Restricted Stock Agreement entered into by Executive
concurrently with this Employment Agreement.
4.3
Executive shall continue to be eligible to receive annual bonuses
in accordance with the Corporation’s senior executive
incentive plan as in effect and approved by the Board of Directors
from time to time.
4.4
Subject to the terms and conditions of such plans and programs,
Executive shall be entitled to participate in the various other
employee benefit plans and programs applicable to senior executives
of the Corporation including, but not limited to, medical, life and
other benefits.
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4.5
The Corporation shall pay to Executive a car allowance of $1,250
per month.
4.6
Executive shall be entitled during each full calendar year in which
this Agreement remains in effect to four (4) weeks of paid
vacation time, and a pro rata portion thereof for any partial
calendar year. Any vacation time not used during any such calendar
year may not be carried forward to any succeeding calendar year and
shall be forfeited. Employee shall not be entitled to receive any
payment in cash for vacation time remaining unused at the end of
any year.
ARTICLE 5
INSURANCE
5.1
The Corporation, at its own expense, shall provide life insurance
coverage on Executive’s life. The death benefit shall be in
the amount of $2,000,000, $1,000,000 in the form of whole life
insurance and $1,000,000 in the form of term life insurance. The
Executive will be the owner of both policies. The death benefit
shall be payable to a beneficiary designated solely by Executive.
The Corporation shall have the right at its own expense and for its
own benefit to purchase additional insurance on Executive’s
life, and Executive shall cooperate by providing necessary
information, submitting to required medical examinations, and
otherwise complying with the insurance carrier’s
requirements.
5.2
The Corporation shall have the right to maintain a term life
insurance policy in the amount of $2,000,000 on Executive’s
life, naming the Company as beneficiary.
5.3
Executive shall be entitled to disability insurance in line with
the present policy of the Corporation, to be provided at the
expense of the Corporation.
5.4
Executive shall be entitled to “long-term care
insurance,” which insurance shall be provided at the expense
of the Corporation. The annual premiums for such insurance will be
paid by the Corporation during Executive’s employment based
upon a ten-year paid schedule.
5.5
The Corporation will seek to obtain health coverage for
Executive’s domestic partner, under the Corporation’s
group health insurance plan, to be effective in the event of
Executive’s death. The coverage would be for the twelve month
period following the Executive’s death, and the cost of such
insurance would be paid for by the Corporation. Such twelve-month
period shall run concurrently with any Federal or state COBRA
rights. In the event that the Corporation’s group health plan
does not cover Executive’s domestic partner, the Corporation
will make a lump sum cash payment to Executive’s domestic
partner within thirty (30) days after Executive’s death. The
amount of the payment will be equal to the cost the Corporation
would have incurred to keep the health insurance in effect for
Executive’s domestic partner for twelve months after
Executive’s death.
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ARTICLE 6
DEFINITIONS
6.1
“Cause” shall mean (i) any fraud, misappropriation
or embezzlement by Executive in connection with the business of the
Corporation, (ii) any conviction of a felony or a gross
misdemeanor by Executive, (iii) any gross neglect or
persistent neglect by Executive to perform the duties assigned to
him hereunder or any other act that can be reasonably expected to
cause substantial economic or reputational injury to the
Corporation or (iv) any material breach of Articles 7, 8 or 9
of this Agreement, provided that the existence of such neglect or
material breach shall be determined by a majority of the directors
and their determination shall be set forth in writing and attested
to by each concurring director. If Executive is a member of the
Board of Directors, he shall neither vote on any such determination
of “Cause,” nor shall he be counted for purposes of
determining a majority of the directors. Provided further that in
connection with an event described in
Section 6.1(iii) above, Executive shall first have
received a written notice from the Corporation which sets forth in
reasonable detail the manner in which Executive has grossly or
persistently neglected his duties, and Executive shall have a
period of ten (10) days to cure the same, but the Corporation
shall neither be required to give written notice of, nor shall
Executive have a period to cure, the same or any similar gross or
persistent neglect or material breach which the Corporation has
previously given written notice to Executive hereunder and
Executive has cured such neglect or breach.
6.2
A “Change of Control” shall be deemed to have occurred
if (i) there shall be consummated (A) any consolidation
or merger in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of the
Corporation’s common stock would be converted into cash,
securities or other property, other than a consolidation or a
merger having the same proportionate ownership of common stock of
the surviving corporation immediately after the consolidation or
merger or (B) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions other than in
the ordinary course of business of the Corporation) of all, or
substantially all, of the assets of the Corporation to any
corporation, person or other entity which is not a direct or
indirect wholly-owned subsidiary of the Corporation, or
(ii) any person, group, corporation or other entity
(collectively, “Persons”) shall acquire beneficial
ownership (as determined pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, and rules and
regulations promulgated hereunder) of 50% or more of the
Corporation’s outstanding common stock. In all cases, the
determination of whether a Change of Control has occurred shall be
made in accordance with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), and the
regulations, notices and other guidance of general applicability
issued thereunder.
6.3
“Confidential Information” means any information that
is not generally known, including trade secrets, outside the
Corporation and that is proprietary to the Corporation, relating to
any phase of the Corporation’s existing or reasonably
foreseeable business which is disclosed to Executive during
Executive’s employment by the Corporation including
information conceived, discovered or developed by Executive.
Confidential Information includes, but is not limited to, business
plans; financial statements and projections; operating forms
(including contracts) and procedures; payroll and personnel
records; marketing materials and plans; proposals; supplier
information; customer information; software codes and computer
programs;
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customer lists; project lists;
project files; training manuals; policies and procedures manuals;
health and safety manuals; target lists for new stores and
information relating to potential new store locations; price
information and cost information; administrative techniques or
documents or information that is designated by the Corporation as
“Confidential” or similarly designated.
6.4
A “Competitor” means any person or
organization (1) which is a women’s specialty
apparel store retailer whose operations on the date of termination
of Executive’s employment compete with twenty percent
(20%) of the Corporation’s Christopher & Banks,
CJ Banks and Acorn store operations, including, but not
limited to, The Cato Corporation, Talbots, Inc., Chico’s
FAS, Inc., Coldwater Creek, Inc., The Limited, Inc.,
Dress Barn Inc. United Retail Group, Inc., Charming
Shoppes, Inc., New York and Company, Bebe, Charlotte Russe and
Ann Taylor; and (2) the following department stores and large
box retailers:
