Exhibit 10.1


NONQUALIFIED STOCK OPTION
AGREEMENT


CHRISTOPHER & BANKS
CORPORATION


2006 EQUITY INCENTIVE PLAN FOR
NON-EMPLOYEE DIRECTORS


 


THIS AGREEMENT, made effective as of this           day
of           ,           ,
by and between Christopher & Banks Corporation, a Minnesota corporation
(the “Company”), and                                       
(“Participant”).




W I T N E S S E T H:


WHEREAS, Participant on the date hereof is a director
of the Company or one of its Subsidiaries; and


WHEREAS, the Company wishes to grant a nonqualified
stock option to Participant to purchase shares of the Company’s Common Stock
pursuant to the Company’s 2006 Equity Incentive Plan For Non-Employee Directors
(the “Plan”); and


WHEREAS, the Administrator has authorized the grant of
a nonqualified stock option to Participant and has determined that, as of the
effective date of this Agreement, the fair market value of the Company’s Common
Stock is $            per
share;


NOW, THEREFORE, in consideration of the premises and
of the mutual covenants herein contained, the parties hereto agree as follows:


1.             Grant of Option.  The Company hereby grants to Participant on
the date set forth above (the “Date of Grant”), the right and option (the “Option”)
to purchase all or portions of an aggregate of                             
(               )
shares of Common Stock at a per share price of $            on
the terms and conditions set forth herein, and subject to adjustment pursuant
to Section 13 of the Plan.  This Option
is a nonqualified stock option and will not be treated as an incentive stock
option, as defined under Section 422, or any successor provision, of the
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
thereunder.


2.             Duration and Exercisability.


a.              General.  The term during which this Option may be
exercised shall terminate on                      ,
        , except
as otherwise provided in Paragraphs 2(b) through 2(d) below.  This Option shall become exercisable
according to the following schedule:









 



 




	
  Vesting Date

  	
   

  	
  Cumulative Percentage

  of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  






 


Once the Option becomes fully exercisable, Participant
may continue to exercise this Option under the terms and conditions of this
Agreement until the termination of the Option as provided herein.  If Participant does not purchase upon an
exercise of this Option the full number of shares which Participant is then
entitled to purchase, Participant may purchase upon any subsequent exercise
prior to this Option’s termination such previously unpurchased shares in
addition to those Participant is otherwise entitled to purchase.


b.              Termination of Relationship (other than Disability
or Death).  If Participant
ceases to be a director of the Company or any Subsidiary for any reason other
than disability or death, this Option shall completely terminate on the earlier
of (i) the close of business on the three-month anniversary of the date of
termination of Participant’s relationship, and (ii) the expiration date of
this Option stated in Paragraph 2(a) above. 
In such period following such termination of Participant’s relationship,
this Option shall be exercisable only to the extent the Option was exercisable
on the vesting date immediately preceding the date on which Participant’s
relationship with the Company or Subsidiary has terminated, but had not
previously been exercised.  To the extent
this Option was not exercisable upon the termination of such relationship, or
if Participant does not exercise the Option within the time specified in this
Paragraph 2(b), all rights of Participant under this Option shall be forfeited.


c.              Disability.  If Participant ceases to be a director of the
Company or any Subsidiary because of disability (as defined in Code Section
22(e), or any successor provision), this Option shall completely terminate on
the earlier of (i) the close of business on the twelve-month anniversary of the
date of termination of Participant’s relationship, and (ii) the expiration
date of this Option stated in Paragraph 2(a) above.  In such period following such termination of
Participant’s relationship, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding the date
on which Participant’s relationship with the Company or Subsidiary has
terminated, but had not previously been exercised.  To the extent this Option was not exercisable
upon the termination of such relationship, or if Participant does not exercise
the Option within the time specified in this Paragraph 2(c), all rights of
Participant under this Option shall be forfeited.


d.              Death.  In the event of Participant’s death, this
Option shall terminate on the earlier of (i) the close of business on the
twelve-month anniversary of the date of Participant’s death, and (ii) the
expiration date of this Option stated in Paragraph 2(a) above.  In such period following Participant’s death,
this Option may be exercised by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws
of descent and distribution only to the extent the Option was exercisable on
the vesting date immediately preceding the date of Participant’s death, but had
not previously been exercised.  To 



 2
 






 



the extent this Option was not exercisable upon the
date of Participant’s death, or if such person or persons fail to exercise this
Option within the time specified in this Paragraph 2(d), all rights under this
Option shall be forfeited.


3.             Manner of Exercise.


a.              General.  The Option may be exercised only by
Participant (or other proper party in the event of death or incapacity),
subject to the conditions of the Plan and subject to such other administrative
rules as the Administrator may deem advisable, by delivering within the option
period written notice of exercise to the Company at its principal office.  The notice shall state the number of shares
as to which the Option is being exercised and shall be accompanied by payment
in full of the option price for all shares designated in the notice.  The exercise of the Option shall be deemed
effective upon receipt of such notice by the Company and upon payment that
complies with the terms of the Plan and this Agreement.  The Option may be exercised with respect to
any number or all of the shares as to which it can then be so exercised and, if
partially exercised, may be so exercised as to the unexercised shares any
number of times during the option period as provided herein.


b.              Form of Payment.  Subject to the approval of the Administrator,
payment of the option price by Participant shall be in the form of cash,
personal check, certified check or previously acquired shares of Common Stock
of the Company, or any combination thereof. 
Any stock so tendered as part of such payment shall be valued at its
Fair Market Value as provided in the Plan. 
For purposes of this Agreement, “previously acquired shares of Common
Stock” shall include shares of Common Stock that are already owned by
Participant at the time of exercise.


c.              Stock Transfer Records.  As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership. 
All requisite original issue or transfer documentary stamp taxes shall
be paid by the Company.


4.             Miscellaneous.


a.              Director or Other Relationship; Rights as Shareholder.  This Agreement shall not confer on
Participant any right with respect to the continuance as a director or any
other relationship with the Company or any of its Subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such
directorship or relationship. 
Participant shall have no rights as a shareholder with respect to shares
subject to this Option until such shares have been issued to Participant upon
exercise of this Option.  No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property), distributions or other rights for which the
record date is prior to the date such shares are issued, except as provided in
Section 13 of the Plan.


b.              Mergers, Recapitalizations, Stock Splits, Etc.  Except as otherwise specifically provided in
any employment, change of control, severance or similar agreement executed by
the Participant and the Company, pursuant
and subject to Section 13 of the Plan, certain changes in the number or
character of the Common Stock of the Company (through sale, merger,
consolidation, exchange, reorganization, divestiture (including a spin-off),
liquidation, 



 3
 






 



recapitalization, stock split, stock dividend or
otherwise) shall result in an adjustment, reduction or enlargement, as appropriate,
in Participant’s rights with respect to any unexercised portion of the Option (i.e.,
Participant shall have such “anti-dilution” rights under the Option with
respect to such events, but shall not have “preemptive” rights).


c.              Shares Reserved.  The Company shall at all times during the
option period reserve and keep available such number of shares as will be
sufficient to satisfy the requirements of this Agreement.


d.              Withholding Taxes.  To permit the Company to comply with all
applicable federal and state income tax laws or regulations, the Company may
take such action as it deems appropriate to ensure that, if necessary, all
applicable federal and state payroll, income or other taxes are withheld from
any amounts payable by the Company to Participant.  If the Company is unable to withhold such
federal and state taxes, for whatever reason, Participant hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law.  Subject
to such rules as the Administrator may adopt, the Administrator may, in its
sole discretion, permit Participant to satisfy such withholding tax
obligations, in whole or in part (i) by delivering shares of Common Stock, or
(ii) by electing to have the Company withhold shares of Common Stock otherwise
issuable to Participant, in either case having a Fair Market Value, as
of the date the amount of tax to be withheld is determined under applicable tax
law, equal to the minimum amount
required to be withheld for tax purposes. 
Participant’s request to deliver shares or to have shares withheld for
purposes of such withholding tax obligations shall be made on or before the
date that triggers such obligations or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law.  Participant’s request shall be approved by
the Administrator and otherwise comply with such rules as the Administrator may
adopt to assure compliance with Rule 16b-3 or any successor provision, as then
in effect, of the General Rules and Regulations under the Securities and
Exchange Act of 1934, if applicable.


e.              Nontransferability.  During the lifetime of Participant, the
accrued Option shall be exercisable only by Participant or by the Participant’s
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by the
laws of descent and distribution.


f.               2006 Equity Incentive Plan For Non-Employee
Directors.  The Option
evidenced by this Agreement is granted pursuant to the Plan, a copy of which
Plan has been made available to Participant and is hereby incorporated into
this Agreement.  This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan.
All defined terms of the Plan shall have the same meaning when used in this
Agreement.  The Plan governs this Option
and, in the event of any questions as to the construction of this Agreement or
in the event of a conflict between the Plan and this Agreement, the Plan shall
govern, except as the Plan otherwise provides.


g.              Lockup Period Limitation.  Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of
its Common Stock in compliance with the Securities Act of 1933, as amended, and
that the underwriter(s) seek to impose restrictions under which certain
shareholders may not sell or contract to sell or grant any option to buy or
otherwise dispose of part or all of their stock purchase rights of the
underlying 



 4
 






 



Common Stock, Participant hereby agrees that for a
period not to exceed 180 days from the prospectus, Participant will not sell or
contract to sell or grant an option to buy or otherwise dispose of this Option
or any of the underlying shares of Common Stock without the prior written
consent of the underwriter(s) or its representative(s).


h.              Stock Legend.  The Administrator may require that the
certificates for any shares of Common Stock purchased by Participant (or, in
the case of death, Participant’s successors) shall bear an appropriate legend
to reflect the restrictions of Paragraph 4(g) of this Agreement; provided, however, that failure to so
endorse any of such certificates shall not render invalid or inapplicable
Paragraph 4(g).


i.               Scope of Agreement.  This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and Participant and any
successor or successors of Participant permitted by Paragraph 2 or Paragraph
4(e) above.


j.               Arbitration.  Any dispute arising out of or relating to
this Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement of
any such controversy.  If,
notwithstanding, such dispute cannot be resolved, such dispute shall be settled
by binding arbitration.  Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.  The arbitrator
shall be a retired state or federal judge or an attorney who has practiced
securities or business litigation for at least 10 years.  If the parties cannot agree on an arbitrator
within 20 days, any party may request that the chief judge of the District
Court for Hennepin County, Minnesota, select an arbitrator.  Arbitration will be conducted pursuant to the
provisions of this Agreement, and the commercial arbitration rules of the
American Arbitration Association, unless such rules are inconsistent with the
provisions of this Agreement.  Limited
civil discovery shall be permitted for the production of documents and taking
of depositions.  Unresolved discovery
disputes may be brought to the attention of the arbitrator who may dispose of
such dispute.  The arbitrator shall have
the authority to award any remedy or relief that a court of this state could
order or grant; provided, however, that punitive or exemplary damages shall not
be awarded.  The arbitrator may award to
the prevailing party, if any, as determined by the arbitrator, all of its costs
and fees, including the arbitrator’s fees, administrative fees, travel
expenses, out-of-pocket expenses and reasonable 
attorneys’ fees.  Unless otherwise
agreed by the parties, the place of any arbitration proceedings shall be
Hennepin County, Minnesota.



 5
 






 



 


ACCORDINGLY, the parties hereto have caused this
Agreement to be executed on the day and year first above written.


	
   

  	
  

  CHRISTOPHER & BANKS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Participant

  



 


 


 



 6