Exhibit 10.26

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT is made as of the 12th day of June, 2006 between
Christopher & Banks Corporation, a Delaware corporation (the “Company”), and
Matthew P. Dillon (“Employee”).

1.    Award.

(a)          Shares. Pursuant to the Christopher & Banks Corporation 2005 Stock
Incentive Plan, as amended (the “Plan”), Two Hundred Thousand (200,000) shares
(the “Restricted Shares”) of the Company’s common stock, par value $0.01 per
share (“Stock”), shall be issued as hereinafter provided in Employee’s name
subject to certain restrictions thereon.

(b)         Issuance of Restricted Shares. The Restricted Shares shall be issued
upon acceptance hereof by Employee and upon satisfaction of the conditions of
this Agreement.

(c)          Plan Incorporated. Employee acknowledges receipt of a copy of the
Plan, and agrees that this award of Restricted Shares shall be subject to all of
the terms and conditions set forth in the Plan, including future amendments
thereto, if any, pursuant to the terms thereof, which Plan is incorporated
herein by reference as a part of this Agreement.

2.    Restricted Shares. Employee hereby accepts the Restricted Shares when
issued and agrees with respect thereto as follows:

(a)          Forfeiture Restrictions. The Restricted Shares may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of, and no dividends will be paid to employee or accrue to
Employee’s benefit, to the extent the Restricted Shares continue to be subject
to the Forfeiture Restrictions described in this paragraph 2(a). In the event
that these Forfeiture Restrictions have not lapsed in accordance with paragraph
2(b) below by the dates applicable to such Restricted Shares, Employee shall,
for no consideration, forfeit and surrender to the Company the Restricted Shares
applicable to that lapse date, with the exception that if the Forfeiture
Restrictions do not lapse on May 31, 2007, the 15,000 shares applicable to that
lapse date will not be forfeited. (See footnote to the schedule in subparagraph
2(b) below.)  Furthermore, in the event Employee is terminated for any reason
other than normal retirement on or after age sixty-five (65), the death of
Employee, or as otherwise provided in subparagraph 2(b), Employee shall, for no
consideration, forfeit and surrender to the Company all Restricted Shares to the
extent they continue to be subject to the Forfeiture Restrictions.

(b)         Lapse of Forfeiture Restrictions. The Forfeiture Restrictions
identified in subparagraph 2(a) above shall lapse as to the Restricted Shares in
accordance with the following schedule, provided that the following conditions
have been satisfied as of each lapse date:  (i) 

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Employee has been continuously employed by the Company from the date of this
Agreement through the lapse date applicable to the Restricted Shares (as set
forth in paragraph 2(b) below), and no notice of resignation shall have been
given to the Corporation by Employee preceding or on the date of vesting;
(ii) the Operating Profit (profit before interest and taxes) for the fiscal year
completed in the February prior to the lapse date must be greater than the
Operating Profit in the prior fiscal year; and (iii) the Operating Profit for
the fiscal year completed in the February prior to the lapse date must be
greater than $65 million:

 

Lapse Date

 

Total Restricted Shares
 to which Forfeiture 
Restrictions Lapse

 

May 31, 2007

 

15,000

*

May 31, 2008

 

22,500

 

May 31, 2009

 

22,500

 

May 31, 2010

 

35,000

 

May 31, 2011

 

35,000

 

May 31, 2012

 

35,000

 

May 31, 2013

 

35,000

 

 

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*                    In the event the Forfeiture Restrictions do not lapse on
May 31, 2007, the 15,000 shares will not be forfeited but will instead be added
to the 22,500 Restricted Shares as to which 37,500 Restricted Shares  the
Forfeiture Restrictions will lapse on May 31, 2008. In the event the Forfeiture
Restrictions do not lapse on future lapse dates, the Restricted Shares subject
to the lapse of restriction on such dates will be forever forfeited.

Notwithstanding the foregoing, the Forfeiture Restrictions shall lapse as to all
of the Restricted Shares on the earlier of (i) the occurrence of a Corporate
Change (as such term is defined in the Plan), or (ii) the date Employee’s
employment with the Company is terminated by reason of death or normal
retirement on or after age sixty-five. In the event Employee’s employment is
terminated for any other reason, including retirement prior to age sixty-five
with the approval of the Company or employing subsidiary, the Committee which
administers the Plan (the “Committee”) or its delegate, as appropriate, may, in
the Committee’s or such delegate’s sole discretion, approve the lapse of
Forfeiture Restrictions as to any or all Restricted Shares still subject to such
restrictions, such lapse to be effective on the date of such approval or
Employee’s termination date, if later.

(c)          Certificates. A certificate evidencing the Restricted Shares shall
be issued by the Company in Employee’s name, or at the option of the Company, in
the name of a nominee of the Company, pursuant to which Employee shall have
voting rights unless and until the Restricted Shares are forfeited pursuant to
the provisions of this Agreement. Employee shall not be entitled to receive
dividends with respect to the Restricted shares. The certificate shall bear a
legend evidencing the nature of the Restricted Shares, and the Company may cause
the certificate to be delivered upon issuance to the Secretary of the Company or
to such other depository as may be designated by the Company as a depository for
safekeeping until the forfeiture occurs or the Forfeiture Restrictions lapse
pursuant to the terms of the Plan and this award. Upon request of the

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Committee or its delegate, Employee shall deliver to the Company a stock power,
endorsed in blank, relating to the Restricted Shares then subject to the
Forfeiture Restrictions. Upon the lapse of the Forfeiture Restrictions without
forfeiture, the Company shall cause a new certificate or certificates to be
issued without legend in the name of Employee for the shares upon which
Forfeiture Restrictions lapsed. Notwithstanding any other provisions of this
Agreement, the issuance or delivery of any shares of 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 or regulation applicable to the
issuance or delivery of such shares. The Company shall not be obligated to issue
or deliver any shares of Stock if the issuance or delivery thereof shall
constitute a violation of any provision of any law or of any regulation of any
governmental authority or any national securities exchange.

3.    Withholding of Tax. To the extent that the receipt of the Restricted
Shares or the lapse of any Forfeiture Restrictions results in income to Employee
for federal or state income tax purposes, Employee shall deliver to the Company
at the time of such receipt or lapse, as the case may be, such amount of money
as the Company may require to meet its withholding obligation under applicable
tax laws or regulations, and, if Employee fails to do so, the Company is
authorized to withhold from any cash or Stock remuneration then or thereafter
payable to Employee any tax required to be withheld by reason of such resulting
compensation income.

4.    Status of Stock. Employee agrees that the Restricted Shares will not be
sold or otherwise disposed of in any manner which would constitute a violation
of any applicable federal or state securities laws. Employee also agrees
(i) that the certificates representing the Restricted Shares may bear such
legend or legends as the Company deems appropriate in order to assure compliance
with applicable securities laws, (ii) that the Company may refuse to register
the transfer of the Restricted Shares on the stock transfer records of the
Company if such proposed transfer would be in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the Restricted Shares.

5.    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 the
Employee and this Agreement shall not affect in any way the right of the Company
or its subsidiaries to terminate the employment of the 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 of such termination, shall be
determined by the Corporation’s Board of Directors and its determination shall
be final.

6.    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 the extent delegated, in its delegate pursuant to the terms of
the Plan or resolutions adopted in furtherance of the Plan, including,

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without limitation, the right to make certain determinations and elections with
respect to the Restricted Shares.

7.    Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Employee.

8.    Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota.

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 as of the date first above written.

 

CHRISTOPHER & BANKS

CORPORATION

 

 

 

 

 

 

 

By:

/c/ Joseph E. Pennington

 

 

Joseph E. Pennington

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

/c/ Matthew P. Dillon

 

 

Matthew P. Dillon

 

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