THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM) OR OF ANY ORDER, WRIT,
INJUNCTION OR DECREE PRESENTLY IN EFFECT HAVING APPLICABILITY TO THE BORROWER OR
OF THE BORROWER'S CONSTITUENT DOCUMENTS; (IV) RESULT IN A BREACH OF OR
CONSTITUTE A DEFAULT UNDER ANY INDENTURE OR LOAN OR CREDIT AGREEMENT OR ANY
OTHER MATERIAL AGREEMENT, LEASE OR INSTRUMENT TO WHICH THE BORROWER IS A PARTY
OR BY WHICH IT OR ITS PROPERTIES MAY BE BOUND OR AFFECTED; OR (V) RESULT IN, OR
REQUIRE, THE CREATION OR IMPOSITION OF ANY LIEN (OTHER THAN THE SECURITY
INTEREST) UPON OR WITH RESPECT TO ANY OF THE PROPERTIES NOW OWNED OR HEREAFTER
ACQUIRED BY THE BORROWER.
SECTION 5.4
LEGAL AGREEMENTS.
THIS AGREEMENT CONSTITUTES AND, UPON
DUE EXECUTION BY THE BORROWER, THE OTHER LOAN DOCUMENTS WILL CONSTITUTE THE
LEGAL, VALID AND BINDING OBLIGATIONS OF THE BORROWER, ENFORCEABLE AGAINST THE
BORROWER IN ACCORDANCE WITH THEIR RESPECTIVE TERMS.
22
SECTION 5.5
SUBSIDIARIES.
CHRISTOPHER & BANKS, INC.
HAS ONE
SUBSIDIARY, CHRISTOPHER & BANKS COMPANY.
CHRISTOPHER & BANKS COMPANY HAS ONE
SUBSIDIARY, CHRISTOPHER & BANKS SERVICES COMPANY.
THERE ARE NO RIGHTS TO
ACQUIRE OWNERSHIP INTERESTS WHICH IF FULLY EXERCISED WOULD CAUSE SUCH PERSON TO
HOLD MORE THAN FIVE PERCENT (5%) OF ALL OWNERSHIP INTERESTS OF THE BORROWER ON A
FULLY DILUTED BASIS.
BORROWER WILL PROVIDE LENDER NOT LESS THAN THIRTY (30)
DAYS' NOTICE PRIOR TO THE CREATION OF ANY NEW SUBSIDIARY, PROVIDED FURTHER THAT
SUCH SUBSIDIARY SHALL IMMEDIATELY EXECUTE AND DELIVER TO LENDER A GUARANTY IN
FAVOR OF THE LENDER, IN FORM AND SUBSTANCE SATISFACTORY TO THE LENDER,
GUARANTEEING THE OBLIGATIONS OF THE BORROWER, OR, AT LENDER'S DISCRETION, SUCH
SUBSIDIARY SHALL BECOME A BORROWER.
SECTION 5.6
FINANCIAL CONDITION; NO ADVERSE CHANGE.
THE BORROWER HAS
FURNISHED TO THE LENDER ITS AUDITED FINANCIAL STATEMENTS FOR ITS FISCAL YEAR
ENDED FEBRUARY 26, 2005, AND UNAUDITED FINANCIAL STATEMENTS FOR THE
FISCAL-YEAR-TO-DATE PERIOD ENDED AUGUST 27, 2005, AND THOSE STATEMENTS FAIRLY
PRESENT THE BORROWER'S FINANCIAL CONDITION ON THE DATES THEREOF AND THE RESULTS
OF ITS OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED AND WERE PREPARED IN
ACCORDANCE WITH GAAP.
SINCE THE DATE OF THE MOST RECENT FINANCIAL STATEMENTS,
THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN THE BORROWER'S BUSINESS, PROPERTIES
OR CONDITION (FINANCIAL OR OTHERWISE).
SECTION 5.7
LITIGATION.
THERE ARE NO ACTIONS, SUITS OR PROCEEDINGS
PENDING OR, TO THE BORROWER'S KNOWLEDGE, THREATENED AGAINST OR AFFECTING THE
BORROWER OR ANY OF ITS AFFILIATES OR THE PROPERTIES OF THE BORROWER OR ANY OF
ITS AFFILIATES BEFORE ANY COURT OR GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD,
BUREAU, AGENCY OR INSTRUMENTALITY, DOMESTIC OR FOREIGN, WHICH, IF DETERMINED
ADVERSELY TO THE BORROWER OR ANY OF ITS AFFILIATES, WOULD HAVE A MATERIAL
ADVERSE EFFECT ON THE FINANCIAL CONDITION, PROPERTIES OR OPERATIONS OF THE
BORROWER OR ANY OF ITS AFFILIATES.
SECTION 5.8
REGULATION U.
THE BORROWER IS NOT ENGAGED IN THE
BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN
STOCK (WITHIN THE MEANING OF REGULATION U OF THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM), AND