Document:

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 12th 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: Kohls department
stores, Target, J.C. Penney and Sears. “Competitor” shall also include all
divisions, subsidiaries, and affiliates of the stores identified in this Section 6.4.

ARTICLE 7

NONCOMPETITION AND NONSOLICITATION

7.1           During Executive’s employment,
Executive will not plan, organize or engage in any business competitive with
any product or service marketed or planned for marketing by the Corporation or
conspire with others to do so.

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, whether voluntary or involuntary, Executive will
not, without the written permission of the Corporation, (i) directly or
indirectly engage in activities with a Competitor or (ii) own (whether as
a shareholder, partner or otherwise, other than as a 5% or less shareholder of
a publicly held company) any interest in a Competitor, or (iii) be
connected as an officer, director, advisor, consultant or employee of or
participate in the management of any Competitor.

7.3           During Executive’s employment and for
a period of one year after termination of Executive’s employment with the
Corporation for any reason, whether voluntary or involuntary, Executive will
not solicit, entice, or induce (or attempt to do so, directly or indirectly),
any employee of the Corporation to be employed by any other party. This Section 7.3
shall apply to then-current employees and any individual who was employed by
the Corporation at any time in the one-year period immediately prior to
Executive’s termination date.

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, whether voluntary or involuntary, Executive will
not engage (or attempt to do so, directly or indirectly) any vendor of the
Corporation on behalf of a Competitor. This Section 7.4 shall apply to
then-current vendor and any vendor who was a vendor of the Corporation at any
time in the one-year period immediately prior to Executive’s termination date.

 

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ARTICLE 8

CONFIDENTIAL INFORMATION AND TRADE DOCUMENTS

8.1           Unless authorized in writing by the
Corporation, Executive will not directly or indirectly divulge, either during
or after the term of his employment, or until such information becomes
generally known, to any person not authorized by the Corporation to receive or
use it any Confidential Information for any purpose whatsoever.

8.2           All documents or other tangible
property relating in any way to the business of the Corporation which are
conceived by Executive or come into his possession during his employment shall
be and remain the exclusive property of the Corporation and Executive agrees to
return all such documents and tangible property to the Corporation upon
termination of his employment or at such earlier time as the Corporation may
request of Executive.

ARTICLE 9

INVENTIONS AND COPYRIGHT

9.1         Executive hereby irrevocably assigns to the
Corporation and its successors, assigns, and legal representatives:

 

i)                    Except
as provided by any statutory notice provided herewith, the entire right, title
and interest to all          Inventions;

                           “Inventions”,as used herein,
means all inventions conceived or made or reduced to practice in whole or in
part by Executive during employment by the Corporation, including discoveries,
improvements, designs, processes, techniques, equipment, trademarks, and ideas
(whether patentable or not and including, without limitation, those that might
be copyrightable).

ii)                 The
entire right, title and interest to any United States or foreign Letters
Patents which may issue or that has issued with respect to Inventions;

iii)              The
entire right, title and interest to any renewals, reissues, extensions,
substitutions, continuations, continuations-in-part, or divisions
that may be filed with respect to the Inventions, applications, and patents;

iv)             The
right to apply for Letters Patents in foreign countries in its own name and to
claim any priority rights to which such foreign applications are entitled under
international conventions, treaties or otherwise; and

v)                The
right to sue for past, present, and future infringement of such Inventions and
Letters Patent.

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Executive further agrees to
provide written disclosure of all Inventions to the Corporation, even if a
particular Invention is not assigned according to terms of any statutory notice
provided herewith. Executive hereby authorizes and request the Commissioner of
Patents and Trademarks to issue to the Corporation any Letters Patents which
may be granted in accordance with this Assignment. This Agreement does
not apply to an invention for which no equipment, supplies, facility or trade
secret information of the Corporation was used and which was developed entirely
on Executive’s own time, and (1) which does not relate (a) directly
to the business of the Corporation or (b) to the Corporation’s actual or
demonstrably anticipated research or development, or (2) which does not
result from any work performed by Executive for the Corporation.

9.2           Executive
hereby acknowledges and agrees that, to the extent any work performed by
Executive for the Corporation gives rise to the creation of any copyrightable
material (“Work”), all such Work, including all text, software, source code,
scripts, designs, diagrams, documentation, writings, visual works, or other
materials shall be deemed to be a work made for hire for the Corporation. To
the extent that title to any Work may not, by operation of law, vest in the
Corporation or such Work may not be considered work made for hire for the
Corporation, all rights, title and interest therein were assigned and are
hereby irrevocably assigned to the Corporation, including but not limited to
the right to sue for past, present, and future infringement of any Work. All
such Work shall belong exclusively to the Corporation, with the Corporation
having the right to obtain and to hold in its own name, copyrights,
registrations or such other protection as may be appropriate to the subject
matter, and any extensions and renewals thereof. To the extent that title to
any Work may not be assigned to the Corporation, Executive hereby grants the
Corporation a worldwide, nonexclusive, perpetual, irrevocable, fully paid-up,
royalty-free, unlimited, transferable, sublicensable license, without right of
accounting, in such Work. Executive agrees to execute and deliver without
further consideration such documents and to perform such other lawful acts as
the Corporation, its successors and assigns may deem necessary to fully secure
the Corporation’s rights, title or interest in all Works and Inventions as set
forth in this Agreement.

ARTICLE 10

JUDICIAL CONSTRUCTION

10.1         Executive believes and acknowledges
that the provisions contained in this Agreement, including the covenants
contained in Articles 7, 8 and 9 of this Agreement, are fair and reasonable. Nonetheless,
it is agreed that if a court finds any of these provisions to be invalid in
whole or in part under the laws of any state, such finding shall not invalidate
the covenants, nor the Agreement in its entirety, but rather the covenants
shall be construed and/or bluelined, reformed or rewritten by the court as if
the most restrictive covenants permissible under applicable law were contained
herein.

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ARTICLE 11

RIGHT TO INJUNCTIVE RELIEF

11.1         Executive acknowledges that a breach by
Executive of any of the terms of Articles 7, 8 or 9 of this Agreement will
render irreparable harm to the Corporation. Accordingly, the Corporation shall
therefore be entitled to any and all equitable relief, including, but not
limited to, 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.

ARTICLE 12

CHANGE OF CONTROL

12.1         If Executive’s employment is terminated
by the Corporation or its successor without cause or Executive resigns with
good reason and within twelve (12) months following a Change in Control, all
restricted stock held by Executive shall vest immediately for the benefit of
Executive, and the Board of Directors will use its reasonable efforts to
register such shares under the Securities Act of 1933, as amended, if
necessary.

12.2         If Executive’s employment is terminated
by the Corporation or its successor without cause or Executive resigns for good
reason and within twelve (12) months following a Change in Control, in addition
to any severance pay and benefits under Section 13.1 of this Agreement
Executive shall be entitled to receive from the Corporation or its successor a
lump sum payment equivalent to one (1) year of his then-current base
salary. This payment shall be made by the Corporation within ten (10) business
days following Executive’s termination date, subject to the application of Code
Section 409A as set forth in Section 13.1 of this Employment
Agreement.

12.3         In the event any Change of Control
Benefit, as defined below, payable to Executive would constitute an “excess
parachute payment” as defined in Code Section 280G, Executive shall
receive a “tax gross-up” payment sufficient to pay the initial excise tax
applicable to such excess parachute payment (but excluding the income and
excise taxes, if any, applicable to the tax gross-up payment). Such additional
cash payment shall be made within sixty (60) days following the effective date
of the Change of Control. For purposes of this Section 12.3, a “Change of
Control Benefit” shall mean any payment, benefit or transfer of property in the
nature of compensation paid to or for the benefit of Executive under any
arrangement which is considered contingent on a Change of Control for purposes
of Code Section 280G, including, without limitation, any and all of the
Corporation’s salary, bonus, incentive, restricted stock, stock option,
equity-based compensation or benefit plans, programs or other arrangements, and
shall include benefits payable under this Agreement.

ARTICLE 13

TERMINATION

13.1         Notwithstanding anything herein to the
contrary, the Corporation may terminate the employment of Executive at any time
without cause by written notice of termination of 

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employment to Executive. In
the event that the Corporation terminates the employment of Executive by
delivering notice in accordance with the preceding sentence, Executive shall
receive (A) severance payments equal to his base salary from the date of
termination until February 28, 2010 or severance payments equal to his
monthly base salary for twelve (12) months if the date of termination is twelve
(12) months or less from the end of the employment term, and (B) payment
of Executive’s COBRA premiums for a period equivalent to the severance period
but not to exceed eighteen (18) months. If, however, Executive shall secure
other employment, self employment or a consulting position, the preceding
severance amount payable to or on behalf of Executive by the Corporation shall
be offset and reduced by such other cash compensation Executive earns through
such other employment or consulting arrangements during the severance period
hereunder. Severance pay due to Executive hereunder will be made over time in
accordance with the Corporation’s regular payroll schedule. Executive shall be
entitled to the severance pay and benefits set forth in this Section 13.1
only if he first executes, returns and does not rescind a release of claims
agreement in favor of the Corporation in a form supplied by the Corporation. Executive
agrees to immediately notify the Corporation of the amount of compensation
earned by him through other employment, self-employment or consulting during
the severance period hereunder.

Except as provided
in this Section 13.1, all compensation and benefits, including the vesting
of outstanding restricted stock, provided to Executive under this Agreement
shall immediately cease upon his termination (including, but not limited to,
bonus eligibility), subject to applicable employment laws and regulations.

Notwithstanding
the foregoing, if the severance payments described in this Section 13.1 or
the change of control payments described in Section 12.2 are subject to
the requirements of Code Section 409A and the Corporation determines that
Executive is a “specified employee” as defined in Code Section 409A as of
the date of the termination, such payments shall not be paid or commence
earlier than the date that is six months after the termination, but shall be
paid or commence during the calendar year following the year in which the
termination occurs and within 30 days of the earliest possible date permitted
under Code Section 409A.

13.2         The Corporation may terminate Executive’s
employment at any time for Cause and at such time all compensation and benefits
provided to Executive under this Agreement shall immediately cease, subject to
applicable employment laws and regulations.

13.3         This Agreement will terminate upon
Executive’s death or upon Executive’s disability that prevents him from
performing his essential job functions under this Agreement, with or without
reasonable accommodation, for a continuous period of six (6) months or for
periods aggregating six (6) months in any eighteen (18) month period.

ARTICLE 14

INDEMNIFICATION

14.1         The Corporation shall indemnify
Executive to the full extent permitted by law for damages, costs and expenses
(including, without limitation, judgments, fines, penalties, 

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settlements and
reasonable fees and expenses of Executive’s counsel) incurred in connection
with all matters, events and transactions related to or arising within the
scope of Executive’s employment under this Agreement, unless such damages,
expenses and reasonable fees and expenses resulted from Executive’s intentional
misconduct or gross negligence.

ARTICLE 15

ASSIGNMENT

15.1         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, and all covenants or agreements hereunder shall
inure to the benefit of and be enforceable by or against its successors or
assigns.

15.2         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.

ARTICLE 16

FAILURE TO DEMAND PERFORMANCE AND WAIVER

16.1         The Corporation’s failure to demand
strict performance and compliance with any part of this Agreement during
Executive’s employment shall not be deemed to be a waiver of the Corporation’s
rights under this Agreement or by this operation of law. Any waiver by either
party of a breach of can any provision of this Agreement shall not operate as
or be construed as a waiver of any subsequent breach thereof.

ARTICLE 17

ENTIRE AGREEMENT

17.1         The Corporation and Executive
acknowledge that this Agreement contains the full and complete agreement
between and among the parties, that there are no oral or implied agreements or
other modifications not specifically set forth herein, and that this Agreement
supersedes any prior agreements or understandings, if any, between the
Corporation and Executive, whether written or oral. In particular, this
Agreement supersedes and replaces in full the Prior Agreement. The parties
further agree that no modifications of this Agreement may be made except by
means of a written agreement or memorandum signed by the parties. Notwithstanding
anything in this Agreement to the contrary, the Corporation expressly reserves
the right to amend this Agreement without Executive’s consent to the extent
necessary or desirable to comply with Code Section 409A, and the
regulations, notices and other guidance of general applicability issued
thereunder.

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ARTICLE 18

GOVERNING LAW

18.1         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 regard to the conflict
of laws thereof.

ARTICLE 19

SURVIVAL

19.1         The parties
agree that Articles 7, 8 and 9 of this Agreement, and those provisions
necessary for the enforcement of Articles 7, 8 and 9 of this Agreement, shall
survive termination of this Agreement and termination of Executive’s employment
for any reason.

ARTICLE 20

UNDERSTANDINGS

20.1         Executive
hereby acknowledges that (a) the Corporation informed him, as part of the
offer of employment under this Employment Agreement and prior to his accepting
employment with the Corporation under the terms and conditions set forth in
this Agreement, that the restrictive covenants contained in Articles 7, 8 and 9
of this Agreement would be required as part of the terms and conditions of his
employment with the Corporation under this Agreement; (b) this Agreement
constitutes good and valuable consideration in exchange for the restrictive
covenants contained in Articles 7, 8 and 9 of this Agreement, (c) he has
carefully considered the restrictions contained in this Agreement and
determined that they are reasonable; and (d) the restrictions in this
Agreement will not unduly restrict Executive in securing other employment or
earning a livelihood in the event of his termination from the Corporation.

20.2         By signing below, Executive authorizes
the Corporation to notify third parties (including, but not limited, Executive’s
actual or potential future employers) of Articles 7, 8 and 9 of this Agreement,
and those provisions necessary for the enforcement of Articles 7, 8 and 9 of
this Agreement, and Executive’s responsibilities thereunder.

20.3         Executive represents and warrants to
the Corporation that he is not under, or bound to be under in the future, any
obligation to any person, firm, or corporation that is or would be inconsistent
or in conflict with this Agreement or would prevent, limit, or impair in any
way the performance by him of his obligations hereunder.

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20.4         If Executive possesses any information that he knows or should know is
considered by any third party, such as a former employer of Executive’s, to be
confidential, trade secret, or otherwise proprietary, Executive shall not
disclose such information to the Corporation or use such information to benefit
the Corporation in any way.

IN WITNESS WHEREOF, the
Corporation has hereunto signed its name and Executive hereunder has signed his
name, all as of the day and year first above written.

	
  

  	
   

  	
   

  	
  CHRISTOPHER & BANKS CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  /c/ Matthew Dillon

  
	
   

  	
   

  	
   

  	
  Matthew Dillon

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  

 

 12Exhibit 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)  

 1
 

 

 

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

  	
   

  

 

*                    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 

 2
 

 

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, 

 3
 

 

 

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

  

 

 4

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