*CONFIDENTIAL TREATMENT FOR MARKED
PORTIONS REQUESTED UNDER 17 C.F.R.
SECTION 200.80(b)(4) and 240.24(b).*
-------------------------------------------------------------------------------
$8,000,000
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of July 28, 1997
Between
SOMATOGEN, INC.,
and
XXX XXXXX AND COMPANY
2
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS Page
1.01. Defined Terms---------------------------------------------4
1.02. Terms Generally-------------------------------------------8
ARTICLE II. THE CREDITS
2.01. Commitments-----------------------------------------------8
2.02. Borrowing Procedure---------------------------------------9
2.03. Repayment of Term Loans; Evidence of Debt-----------------9
2.04. Interest on Loans-----------------------------------------9
2.05. Default Interest------------------------------------------10
2.06. Prepayment------------------------------------------------10
2.07. Payments--------------------------------------------------10
2.08. Mandatory Repayment---------------------------------------11
ARTICLE III. REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers--------------------------------------11
3.02. Authorization---------------------------------------------11
3.03. Enforceability--------------------------------------------12
3.04. Governmental Approvals------------------------------------12
3.05. Financial Statements--------------------------------------12
3.06. Litigation; Compliance with Laws--------------------------12
3.07. Use of Proceeds-------------------------------------------13
3.08. Taxes-----------------------------------------------------13
3.09. Solvency--------------------------------------------------13
ARTICLE IV CONDITIONS OF LENDING
4.01. All Borrowings--------------------------------------------13
4.02. Closing Date----------------------------------------------14
ARTICLE V. COVENANTS
5.01. Existence-------------------------------------------------15
5.02. Business and Properties-----------------------------------15
5.03. Financial Statements, Reports, Etc.-----------------------15
5.04. Insurance-------------------------------------------------16
5.05. Obligations and Taxes-------------------------------------16
5.06. Litigation and Other Notices------------------------------16
5.07. Right to Inspect------------------------------------------17
5.08. Consolidations, Mergers, and Sales of Assets--------------17
5.09. Indebtedness----------------------------------------------18
5.10. Dividends; Repurchases of Stock---------------------------18
5.11. Liens-----------------------------------------------------18
5.12. Limitations on Sale and Leaseback Transactions------------19
5.13. Loans-----------------------------------------------------19
5.14. Transactions with Affiliates------------------------------19
3
ARTICLE VI. EVENTS OF DEFAULT
ARTICLE VII. MISCELLANEOUS
7.01. Notices---------------------------------------------------21
7.02. Survival of Agreement-------------------------------------22
7.03. Binding Effect--------------------------------------------22
7.04. Successors and Assigns------------------------------------22
7.05. Expenses; Indemnity---------------------------------------22
7.06. Applicable Law--------------------------------------------23
7.07. Waivers; Amendment----------------------------------------23
7.08. Entire Agreement------------------------------------------23
7.09. Severability----------------------------------------------23
7.10. Counterparts----------------------------------------------24
7.11. Headings--------------------------------------------------24
7.12. Right of Setoff-------------------------------------------24
7.13. Jurisdiction and Venue------------------------------------24
7.14. Confidentiality-------------------------------------------25
EXHIBITS AND SCHEDULES
Exhibit A Form of Opinion of counsel to Somatogen-----------------------------26
4
REVOLVING CREDIT FACILITY AGREEMENT dated as of July 28,
1997 among:
SOMATOGEN, INC.,
a Delaware corporation ("Somatogen");
and
XXX XXXXX AND COMPANY,
an Indiana corporation ("Lilly").
The parties hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"Affiliate" means, when used with respect to a specified
person, another person that directly or indirectly controls or is
controlled by or is under common control with the person specified.
"Board of Directors" means the Board of Directors of Somatogen
or any duly authorized committee thereof.
"Borrowing" means a Loan from Xxxxx to Somatogen under this
Agreement.
"Business Day" means any day (other than a Saturday, Sunday or
legal holiday in the State of New York) on which banks are open for
business in New York City.
"Capital Lease Obligations" of any person means the
obligations of such person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of
such person under GAAP (as defined herein) and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with
GAAP.
5
A "Change in Control" shall be deemed to have occurred if any
person or group of persons (other than Lilly) shall have acquired
beneficial ownership of shares representing more than 50% of the
combined voting power represented by the outstanding Voting Shares of
Somatogen (within the meaning of Section 13(d) or 14(d) of the Exchange
Act, and the applicable rules and regulations thereunder).
"Closing Date" means July 28, 1997, or such other date as may
be mutually agreed by the parties.
"Code" means the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Commitment" means the obligation of Xxxxx to make a loan in
the amount set forth in Section 2.01.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of
a person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled"
shall have meanings correlative thereto.
"Default" means any Event of Default or any event or condition
which upon notice, lapse of time or both would constitute an Event of
Default.
"Dollars" or "$" means lawful money of the United States of
America.
"Event of Default" has the meaning assigned to such term in
Article VI.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Officer" of any corporation means the chairman,
president, chief financial officer, principal accounting officer, or
treasurer of such corporation.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
6
"Guarantee Obligations" of or by any person means any
obligation, contingent or otherwise, of such person guaranteeing or
having the economic effect of guaranteeing any indebtedness (including
any interest and fees owing in respect of such indebtedness) of any
other person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such person, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of
such indebtedness, (b) to purchase property, securities or services for
the purpose of assuring the owner of such indebtedness of the payment
of such indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such indebtedness;
provided that the term Guarantee Obligations shall not include
endorsements for collection or deposit, in either case in the ordinary
course of business.
"Indebtedness" of any person means, without duplication, (a)
all obligations of such person for borrowed money, (b) all obligations
of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person under conditional sale
or other title retention agreements relating to property or assets
purchased by such person, (d) all obligations of such person issued or
assumed as the deferred purchase price of property or services, other
than trade accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable within 30 days of the
date the respective goods or services are delivered or rendered, (e)
all indebtedness of others secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be
secured by), any Lien on property owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (f)
all Guarantee Obligations of such person and (g) all Capital Lease
Obligations of such person. The Indebtedness of any person shall
include the Indebtedness of any partnership in which such person is a
general partner.
"Lien" means any mortgage, lien, pledge, encumbrance, charge
or security interest.
7
"Loan" means a loan from Xxxxx to Somatogen pursuant to this
Agreement.
"Loan Documents" means this Agreement and any agreement
required to be executed and delivered by Somatogen pursuant to this
Agreement.
"Material Adverse Effect" means a materially adverse effect on
the business, results of operations, properties, or financial condition
of Somatogen.
"Maturity Date" means the earlier of (1) the date specified in
Section 2.08 and (2) May 18, 2002.
"Person" means any natural person, corporation, business
trust, joint venture, association, company, limited liability company,
partnership or government, or any agency or political subdivision
thereof.
"Sale and Leaseback Transaction" means any arrangement with
any person pursuant to which Somatogen leases any property that has
been or is to be sold or transferred by Somatogen to such person, other
than (1) temporary leases for a term, including renewals at the option
of the lessee, of not more than three years, (2) leases of property
executed by the time of, or within 12 months after the acquisition of
the property, and (3) arrangements pursuant to any provision of law
with an effect similar to the former Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means, with respect to any person (the "parent"),
any other person (other than a natural person) of which securities or
other ownership interests representing more than 50% of the ordinary
voting power, or more than 50% of the general partnership interests,
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means a subsidiary of Somatogen.
"Transactions" has the meaning assigned to such term in
Section 3.02.
8
"Value" means, with respect to a Sale and Leaseback
Transaction, an amount equal to the net present value of the lease
payments with respect to the term of the lease remaining on the date as
of which the amount is being determined, without regard to any renewal
or extension options contained in the lease, discounted at the interest
rate on the Loans which are outstanding on the effective date of such
Sale and Leaseback Transaction.
"Voting Shares" means, as to shares of a particular
corporation, outstanding shares of stock of any class of such
corporation entitled to vote in the election of directors, excluding
shares entitled so to vote only upon the happening of some contingency,
and including shares that would be entitled to vote but for the
application of a control share statute.
"Weighted Average Cost of Capital" means, for any calendar
year, the "Cost of Capital" for that year determined by Xxxxx in its
discretion pursuant to Section 3.5 of the Xxx Xxxxx and Company EVA
Bonus Plan. For calendar year 1997, the Weighted Average Cost of
Capital is thirteen percent (13%).
Section 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined. The
words "include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP.
ARTICLE II. THE CREDITS
Section 2.01. Commitments.
(a) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, Xxxxx agrees
to make Loans in Dollars to Somatogen, on any Business Day
during the period from and including the Closing Date to the
Maturity Date, in a principal amount not to exceed $8,000,000
outstanding at any time.
(b) Within the foregoing limits, Somatogen may borrow, pay or
prepay and reborrow Loans from and including the Closing Date
to the Maturity Date, subject to the terms, conditions, and
limitations set forth herein.
(c) Loans shall be in an aggregate principal amount of at least
$1,000,000 and may be in integral multiples of $100,000 in
excess of $1,000,000. Loans shall be made only in accordance
with the borrowing procedure set forth in the next Section.
9
Section 2.02. Borrowing Procedure.
(a) In order to effect a Borrowing, Somatogen shall hand deliver
or telecopy to Xxxxx a notice of borrowing not later than
thirty (30) days before the day of such Borrowing. Such notice
shall be irrevocable and shall specify the amount of the
Borrowing, the date of the Borrowing, and funds transfer
instructions.
(b) On the effective date of the Borrowing, Somatogen shall hand
deliver or telecopy the certificate of a Financial Officer
called for under Section 4.01(d).
Section 2.03. Repayment of Loans: Evidence of Debt.
(a) Somatogen hereby promises to pay to Xxxxx the entire aggregate
unpaid principal amount of the Loans on the Maturity Date. The
Loans shall bear interest on the unpaid principal amount as
set forth in Section 2.04.
(b) Xxxxx shall maintain an account or accounts evidencing the
borrowing, including any amounts of principal and interest
payable and paid Xxxxx from time to time under this Agreement.
(c) The entries made in the accounts described above shall be
prima facie evidence of the existence and amounts of the
obligations therein recorded; provided that the failure of
Xxxxx to maintain such accounts or any error therein shall not
in any manner affect the obligations of Somatogen to repay the
Loans in accordance with their terms.
Section 2.04. Interest on Loans.
(a) Subject to the provisions of Section 2.05, each Borrowing
shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 days) at a rate per
annum equal to Xxxxx'x Weighted Average Cost of Capital, as
adjusted for each calendar year. Interest shall compound
annually.
(b) Interest on each Loan shall be payable (i) upon voluntary
prepayment pursuant to Section 2.06; and (ii) at maturity,
whether on the Maturity Date, by acceleration, or otherwise.
10
Section 2.05. Default Interest. If Somatogen shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, Somatogen shall on demand from time to time from Lilly pay
interest on such defaulted amount up to (but not including) the date of actual
payment (after as well as before judgment) at a rate per annum (computed as
provided in Section 2.04(a)) equal to Xxxxx'x Weighted Average Cost of Capital
plus 1%.
Section 2.06. Prepayment.
(a) Somatogen shall have the right at any time and time to time to
prepay any Borrowing, in whole or in part, upon giving
telecopy notice (or phone notice promptly confirmed by
telecopy) to Lilly before 10:00 a.m., New York City time, one
Business Day prior to prepayment. Prepayments shall be in a
minimum amount of $100,000 or in integral multiples thereof.
(b) Each notice of prepayment shall specify the prepayment date
and the principal amount of each Borrowing (or portion
thereof) to be prepaid, shall be irrevocable and shall commit
Somatogen to prepay such Borrowing (or portion thereof) by the
amount stated therein on the date specified therein. All
prepayments under this Section 2.06 shall be accompanied by
accrued interest on the principal amount being prepaid to and
including the date of payment.
Section 2.07. Payments.
(a) Somatogen shall make each payment (including principal of or
interest on any Borrowing and any other amounts) hereunder not
later than 12:00 noon, New York City time, on the date when
due, in Dollars and immediately available funds, to Xxxxx'x
designated account.
(b) Whenever any payment (including principal of or interest on
any Borrowing or any Fees or other amounts) hereunder shall
become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be
included in the computation of interest, if applicable.
11
Section 2.08. Mandatory Repayment. In the event a Change in Control
shall occur and the person or group of persons obtaining control [ * ], the date
of the closing of the transaction which causes the Change in Control shall be
considered the Maturity Date. Somatogen shall pay to Lilly on the Maturity Date
the entire aggregate unpaid principal amount of the Loans, together with all
unpaid interest to and including the date of payment.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Somatogen represents and warrants to Lilly that:
Section 3.01. Organization: Powers. Somatogen
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organiza-
tion,
(b) has all requisite corporate power and authority to own its
property and assets and to carry on its business as now
conducted and as proposed to be conducted,
(c) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to
qualify would not result in a Material Adverse Effect, and (d)
has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to borrow
hereunder.
Section 3.02. Authorization. The execution, delivery and performance by
Somatogen of this Agreement and the Borrowings hereunder (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate action
and (b) will not (i) violate (A) any provision of any law, statute, rule or
regulation or of the certificate of incorporation or other constitutive
documents or bylaws of Somatogen or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which Somatogen or any Subsidiary is a party or by which it or any
of its property is or may be bound, (ii) be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any lien upon any property or assets of Somatogen or
any Subsidiary.
*CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 200.80(b)(4) and
240.24(b).*
12
Section 3.03. Enforceability. This Agreement constitutes a legal, valid
and binding obligation of Somatogen, enforceable in accordance with its terms
(subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity)).
Section 3.04. Governmental Approvals. Other than the filing of the Loan
Agreement as an exhibit to the Borrower's next periodic report filed under the
Exchange Act, no action, consent or approval of, registration or filing with or
other action by any Governmental Authority is required in connection with the
Transactions.
Section 3.05. Financial Statements. Somatogen has heretofore furnished
to Lilly copies of (i) its audited consolidated financial statements for the
year ended June 30, 1996, together with the opinion thereon of Price Waterhouse
LLP, and (ii) its unaudited consolidated financial statements for the quarters
ended September 30, 1996, December 31, 1996, and March 31, 1997. Such financial
statements present fairly, in all material respects, the financial condition and
the results of operations of Somatogen and the Subsidiaries, taken as a whole,
as of, and for accounting periods ending on, such dates in accordance with GAAP
(subject, in the case of said unaudited financial statements, to normal year-end
audit adjustments and the absence of footnotes).
Section 3.06. Litigation: Compliance with Laws.
(a) There are no actions, proceedings or investigations filed or
(to the knowledge of Somatogen) threatened against Somatogen
or any Subsidiary in any court or before any Governmental
Authority or arbitration board or tribunal which question the
validity or legality of this Agreement, the Transactions or
any action taken or to be taken pursuant to this Agreement and
no order or judgment has been issued or entered restraining or
enjoining Somatogen from the execution, delivery or
performance of this Agreement.
(b) Neither Somatogen nor any Subsidiary is in violation of any
law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental
Authority, where such violation or default would be reasonably
likely to result in a Material Adverse Effect.
13
Section 3.07. Use of Proceeds. All proceeds of the Loans shall be
used for working capital or other general corporate purposes.
Section 3.08. Taxes. Somatogen and the Subsidiaries have filed or
caused to be filed all Federal and material state, local and foreign tax returns
which are required to be filed by them, and have paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by any of them, other than any taxes or assessments the validity of which is
being contested in good faith by appropriate proceedings, and with respect to
which appropriate accounting reserves have, to the extent required by GAAP, been
set aside.
Section 3.09. Solvency. To the extent that any proceeds of a Loan are
used by Somatogen, directly or indirectly, to fund the repurchase of Somatogen
common stock from Lilly, Somatogen represents and warrants that, after giving
effect to any Borrowing and such use of the proceeds of such Borrowing, (a) the
aggregate value of all properties of Somatogen at their present fair saleable
value (i.e., the amount that may be realized within a reasonable time,
considered to be six months to one year, either through collection or sale at
the regular market value, conceiving the latter as the amount that could be
obtained for the property in question within such period by a capable and
diligent businessperson from an interested buyer who is willing to purchase
under ordinary selling conditions), exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of Somatogen, (b) Somatogen will not have unreasonably small
capital with which to conduct its business operations as previously conducted
and (c) Somatogen projects that it will have sufficient cash flow to enable it
to pay its debts as they mature.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of Xxxxx to make Loans hereunder are subject to the
satisfaction of the following conditions:
Section 4.01. All Borrowings. On the date of each Borrowing:
(a) Xxxxx shall have received a notice of Borrowing as required by
Section 2.02.
(b) The representations and warranties set forth in Article III
shall be true and correct in all material respects on and as
of the date of such Borrowing with the same effect as though
made on and as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier
date.
(c) At the time of and immediately after such Borrowing no Default
shall have occurred and be continuing.
(d) Xxxxx shall have received a Financial Officer's Certificate of
Somatogen confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of this Section.
14
Section 4.02. Closing Date. On the Closing Date:
(a) Xxxxx shall have received favorable written opinion, dated the
Closing Date, of counsel to Somatogen in substantially the
form of Exhibit A hereto.
(b) Xxxxx xxxx have received (i) copies of the
certificate of incorporation and by-laws, including all
amendments thereto, of Somatogen, certified by the Secretary
or an Assistant Secretary of Xxxxxxxxx, and (ii) a
certificate of the Secretary or an Assistant Secretary of
Somatogen dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of resolutions
duly adopted by the Board of Directors authorizing the
execution, delivery and performance of this Agreement
and the Borrowings hereunder, and that such resolutions
have not been modified, rescinded or amended and are in
full force and effect, and (B) as to the incumbency and
specimen signature of the officer executing this Agreement on
behalf of Somatogen.
(c) Xxxxx shall have received a certificate, dated the Closing
Date and signed by a Financial Officer of Xxxxxxxxx,
confirming compliance with the conditions precedent set forth
in paragraphs (b) and (c) of Section 4.01.
ARTICLE V. COVENANTS
A. Affirmative Covenants.
Somatogen covenants and agrees with Xxxxx that so long as this
Agreement shall remain in effect or the principal of or interest on any Loan or
any other amounts payable hereunder shall be unpaid, unless Xxxxx otherwise
consents in writing, it will, and will cause each of the Subsidiaries to:
15
Section 5.01. Existence. Do or cause to be done all things necessary,
to preserve and keep in full force and effect its corporate existence, rights
and franchises, except as expressly permitted under Section 5.07 and except, in
the case of any Subsidiary, where the failure to do so would not result in a
Material Adverse Effect.
Section 5.02. Business and Properties. Comply in all respects with all
applicable laws, rules, regulations and orders of any Governmental Authority,
whether now in effect or hereafter enacted except instances that could not, in
the aggregate, reasonably be expected to result in a Material Adverse Effect;
and at all times maintain and preserve all property material to the conduct of
its business and keep such property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times except to the extent that the failure to do so would not have a
Material Adverse Effect.
Section 5.03. Financial Statements, Reports. Etc. Furnish to Lilly:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and the related consolidated
earnings statement showing its consolidated financial
condition as of the close of such fiscal year and the
consolidated results of its operations during such year,
all audited by Price Waterhouse LLP or other independent
certified public accountants of recognized national standing
selected by Xxxxxxxxx and accompanied by an opinion of such
accountants to the effect that such consolidated financial
statements fairly present Somatogen' financial condition and
results of operations on a consolidated basis in accordance
with GAAP;
(b) within 60 days after the end of each of the first three fiscal
quarters of each fiscal year, its unaudited consolidated
balance sheet and related consolidated earnings statement,
showing its consolidated financial condition as of the close
of such fiscal quarter and the consolidated results of its
operations during such fiscal quarter and the then elapsed
portion of the fiscal year (and each delivery of such
statements shall be deemed a representation that such
financial condition and results of operations on a
consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes);
(c) at any time in which a Default has occurred and is uncured,
within 20 days after the end of each month that is not also
the end of a fiscal quarter, its unaudited consolidated
balance sheet and related consolidated earnings statement,
showing its consolidated financial condition as of the close
of such month and the consolidated results of its operations
during such month and the then elapsed portion of the fiscal
year;
16
(d) promptly after the same become publicly available, copies of
all periodic and other reports or proxy statements filed by
Somatogen or any Subsidiary with the SEC or with any national
securities exchange; and
(e) concurrently with any delivery of financial statements under
paragraph (a), (b) or (c) above, a certificate of a Financial
Officer of Somatogen (i) certifying as to whether a Default
has occurred and is continuing and, if a Default has occurred
and is continuing, specifying the details thereof and any
action taken or proposed to be taken with respect thereto,
and (ii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the
audited financial statements referred to in Section 3.05(a)
and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such
certificate.
Section 5.04. Insurance. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, and maintain
such other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses.
Section 5.05. Obligations and Taxes. Pay and discharge promptly when
due all material taxes, assessments and governmental charges imposed upon it or
upon its income or profits or in respect of its property, in each case before
the same shall become delinquent or in default and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith by appropriate proceedings and adequate reserves with respect thereto
shall, to the extent required by GAAP, have been set aside.
Section 5.06. Litigation and Other Notices. Give Xxxxx prompt written
notice of the following:
(a) the filing, commencement or written threat of any action,
suit or proceeding of the type described in Section 3.06(a);
and
(b) any Default, specifying the nature and extent thereof and the
action (if any) which is proposed to be taken with respect
thereto.
17
Section 5.07. Right to Inspect. Upon reasonable notice by Xxxxx and
during normal business hours, allow Xxxxx and its representatives to inspect and
photocopy the financial records of Somatogen at Somatogen's principal offices,
and use best efforts to facilitate discussions with Xxxxxxxxx's independent
auditors for review of their work papers, and to discuss such records with
Xxxxxxxxx's independent auditors. So long as Somatogen is not in Default, this
right of inspection shall be limited to twice per calendar year. After a Default
has occurred, this right shall not be limited in number. The information
disclosed in any such inspection is subject to the confidentiality provisions of
Section 7.14 regardless of whether the information is marked as confidential.
B. Negative Covenants.
Somatogen covenants and agrees with Xxxxx that so long as this
Agreement shall remain in effect or the principal of or interest on any Loan
shall be unpaid, unless Xxxxx shall otherwise consent in writing, it will not,
and will not permit any of the Subsidiaries to:
Section 5.08. Consolidations, Mergers, and Sales of Assets.
(a) consolidate or merge with or into any other person or
liquidate, wind up or dissolve (or suffer any liquidation
or dissolution) or
(b) sell, lease or otherwise transfer (in one transaction or a
series of transactions), or permit any Subsidiary to sell,
lease or otherwise transfer (in one transaction or a series of
transactions), all or substantially all of the assets
(including capital stock of any Subsidiary) of Somatogen and
the Subsidiaries, taken as a whole, to any other person;
provided that Somatogen may merge with another person if
(A) Somatogen is the corporation surviving such merger,
or if not, the surviving corporation succeeds to all
the rights, duties and obligations of Somatogen under
this Agreement, and
(B) immediately after giving effect to such merger, no
Default shall have occurred and be continuing
(including no Default as a result of such merger's
giving rise to an earlier Maturity Date pursuant to
Section 2.08).
18
Section 5.09. Indebtedness. Create, incur or suffer to exist any
Indebtedness other than:
(a) Indebtedness existing as of the date of this Agreement and
any refinancing or extensions thereof,
(b) Indebtedness of Somatogen hereunder,
(c) unsecured Indebtedness the payment of which (whether of
principal or interest, and whether at stated maturity, by
acceleration, by reason of an Event of Default or otherwise)
is expressly subordinated to the payment of all principal and
interest under this Agreement as set forth in a subordination
agreement which has been approved in writing by Xxxxx prior to
the creation of such Indebtedness, which approval will not be
unreasonably withheld.
(d) [ * ]
(e) other Indebtedness, not to exceed [ * ].
Section 5.10. Dividends and Stock Repurchases. Declare or pay any
dividends or make any other distribution of cash or other property on any of its
shares of capital stock now or hereafter existing; or purchase, redeem, retire,
or otherwise acquire any of such capital stock, except for (i) stock dividends
or stock splits payable in common stock to holders of common stock, (ii)
distributions of options, warrants or rights to acquire securities of the
Company, (iii) payment of dividends on preferred stock issued after the date
hereof, and (iv) repurchases of common stock from employees pursuant to
employment agreements or similar arrangements not exceeding [ * ] in the
aggregate.
Section 5.11. Liens. Create, assume or suffer to exist any Lien upon
any property to secure any Indebtedness of Somatogen, any Subsidiary or any
other person, or permit any Subsidiary to do so, except that the foregoing shall
not prevent Somatogen or any Subsidiary from creating, assuming or suffering to
exist Liens of the following character:
(a) Liens existing on the date hereof or in conjunction with
refinancing of any indebtedness as to which a Lien exists on
the date hereof;
(b) any Lien existing on property at the time of the acquisition
thereof by Somatogen or any Subsidiary;
(c) [ * ]
(d) any Lien arising by operation of law to secure taxes,
assessments and other government charges.
*CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 200.80(b)(4) and
240.24(b).*
19
Section 5.12. Limitations on Sale and Leaseback Transactions. Enter
into any Sale and Leaseback Transaction, or permit any Subsidiary to do so,
unless Somatogen or such Subsidiary would be entitled to incur Indebtedness (in
a principal amount at least equal to the Value of such Sale and Leaseback
Transaction) secured by Xxxxx on the property to be leased without thereby
violating Section 5.09.
Section 5.13. Loans. Make any loans or advances to any person
including without limitation any Affiliate, officer, director, employee,
consultant, or shareholder of Somatogen except:
(a) advance payments to suppliers and consultants in the ordinary
course of Somatogen's business and consistent with its past
practices;
(b) advances to officers, directors and employees with respect to
reasonable business expenses incurred by them which are
properly reimbursable by Xxxxxxxxx as an ordinary and
necessary business expense under the Code, and loans or
guarantees made in connection with relocation of employees;
and
(c) other loans to non-Affiliates made in connection with
Xxxxxxxxx's business operations and not exceeding an aggregate
of [ * ] at any time.
Section 5.14. Transactions with Affiliates. Except for agreements in
effect on the date hereof, enter into any transaction with an Affiliate,
including any purchase, sale, exchange or lease of property or the rendering of
any service, unless the transaction is otherwise permitted under this Agreement
and is on fair and reasonable terms no less favorable to Somatogen than it would
obtain in a comparable arm's length transaction with a non-affiliate.
ARTICLE VI. EVENTS OF DEFAULT
In case of the happening of any of the following events (each an "Event
of Default"):
(a) any representation, warranty or certification made or deemed
made herein or in any other Loan Document (or in any
modification or supplement hereto or thereto) by Somatogen or
Somatogen, or any certificate furnished to Lilly pursuant to
the provisions hereof or thereof, shall prove to have been
false or misleading as of the time made or furnished in any
material respect;
*CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 200.80(b)(4) and
240.24(b).*
20
(b) default shall be made in the payment of any principal or
interest of any Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any other amount
(other than an amount referred to in paragraph (b) above) due
hereunder, when and as the same shall become due and payable,
and such default shall continue unremedied for a period of
thirty days;
(d) default shall be made in the due observance or performance of
any covenant, condition or agreement contained in Section
5.08, 5.10, or 5.12;
(e) default shall be made in the due observance or performance of
any covenant, condition or agreement contained herein (other
than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of thirty days
after notice thereof from Lilly to Somatogen;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of Somatogen or any Subsidiary,
or of a substantial part of the property or assets of
Somatogen or any Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership
or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for
Somatogen or any Subsidiary or for a substantial part of the
property or assets of Somatogen or any Subsidiary or (iii)
the winding up or liquidation of Somatogen or any Subsidiary;
and such proceeding or petition shall continue undismissed fo
60 days or an order or decree approving or ordering any of
the foregoing shall be entered; or
(g) Somatogen or any Subsidiary shall (i) voluntarily commence an
proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, an
proceeding or the filing of any petition described in (f)
above, (iii) apply for or consent to the appointment of a
trustee, custodian, sequestrator, conservator or similar
official for Somatogen or any Subsidiary or for a substantial
part of the property or assets of Somatogen or any Subsidiary
(iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing;
21
then, and in every such event (other than an event described in paragraph (f) or
(g) above), and at any time thereafter during the continuance of such event,
Lilly shall, by notice to Somatogen, take either or both of the following
actions, at the same or different times: (i) terminate forthwith the Commitments
and (ii) declare the Loans then outstanding to be forthwith due and payable in
whole or in part, whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all other liabilities of
Somatogen accrued hereunder, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding; and, in any event described in paragraph (f) or (g) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all other liabilities of
Somatogen accrued hereunder shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding.
ARTICLE VII. MISCELLANEOUS
Section 7.01. Notices. Except as otherwise expressly provided herein,
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service or sent by telecopy, as
follows:
(a) If to Somatogen:
Xx. Xxxxxxx X. Xxxxxxxx, Senior Vice President of
Finance and Administration, CFO and Treasurer
Somatogen, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx XX0
Xxxxxxx, XX 00000
(Fax: 000-000-0000)
(b) If to Lilly:
Xx. Xxxxx X. Xxxxxx
Vice President and Treasurer
Lilly Corporate Center,
Indianapolis, IN 46285
D.C. 1878
(Fax: 000-000-0000)
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy to such party as provided in this Section or in accordance
with the latest unrevoked direction from such party given in accordance with
this Section.
22
Section 7.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by Somatogen herein and in the certificates
or other instruments prepared or delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by Xxxxx and shall
survive the making by Xxxxx of the Loans regardless of any investigation made by
Xxxxx, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or any Fee or any other amount payable under
this Agreement is outstanding and unpaid or the Commitments have not been
terminated.
Section 7.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by Xxxxxxxxx and Xxxxx, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Somatogen shall not have the Right to assign
any rights hereunder or any interest herein, except in a transaction permitted
by section 5.08 (b) (A) and (B), without the prior consent of Xxxxx.
Section 7.04. Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto or
thereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any
party that are contained in this Agreement shall bind and
inure to the benefit of its successors and assigns.
(b) Neither party shall assign or delegate any of its rights and
duties hereunder without the prior written consent of the
other party, and any attempt so to assign or delegate shall be
void; provided, however, that Xxxxx may assign its rights and
delegate its duties hereunder to an Affiliate of Xxxxx upon 30
days' prior written notice to Somatogen.
Section 7.05. Expenses: Indemnity.
(a) Each party agrees to pay all reasonable out-of-pocket expenses
incurred by or on behalf of the other party in connection with
the enforcement of its rights under this Agreement, including
the reasonable fees and disbursements of counsel.
(b) Xxxxxxxxx agrees to indemnify Lilly, its Affiliates and the
directors, officers,employees and agents of the foregoing
(each such person being called an "Indemnitee") against, and
to hold each indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted
against any Indemnitee arising out of (i) the use of the
proceeds of the Loans or (ii) any claim, litigation,
investigation or proceeding relating thereto, whether or not
any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or
related expenses resulted from the negligence or willful
misconduct of such Indemnitee.
23
(c) The provisions of this Section shall remain operative and in
full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of
this Agreement or any investigation made by or on behalf of
Xxxxx. All amounts due under this Section shall be payable on
written demand therefor.
Section 7.06. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF INDIANA.
Section 7.07. Waivers: Amendment.
(a) No failure or delay of Xxxxx in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and
remedies of Xxxxx xxxxxxxxx are cumulative and are not
exclusive of any rights or remedies which it would otherwise
have. No waiver of any provision of this Agreement or consent
to any departure therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No
notice or demand on Somatogen or any Subsidiary in any case
shall entitle such party to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or
agreements in writing entered into by Somatogen and Lilly.
Section 7.08. Entire Agreement. This Agreement constitutes the entire
contract among the parties relative to the subject matter hereof. Any previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement. Nothing in this Agreement, expressed or implied,
is intended to confer upon any party other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 7.09. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
24
Section 7.10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
Section 7.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
Section 7.12. Right of Setoff. If an Event of Default shall have
occurred and be continuing, Xxxxx is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all indebtedness at any time owing by Xxxxx to Somatogen now or hereafter
existing, irrespective of whether or not such Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. Xxxxx
agrees promptly to notify Somatogen after such setoff and application, but the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of Xxxxx under this Section are in addition to other
rights and remedies (including other rights of setoff) which it may have.
Section 7.13. Jurisdiction and Venue.
(a) Somatogen hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of
any Indiana State court or Federal court of the United States
of America sitting in the Southern District of Indiana, and
any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or
for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Indiana State
or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law. Subject to the foregoing
and to paragraph (b)below, nothing in this Agreement shall
affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement
against any other party hereto in the courts of any
jurisdiction.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or
thereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any
Indiana State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
25
Section 7.14. Confidentiality. Xxxxx agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b)to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (e) with the consent of
Somatogen or (f) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
Lilly on a nonconfidential basis from a source other than Somatogen. For the
purposes of this Section, "Information" means all information received from
Somatogen relating to Somatogen or its business, other than any such information
that is available to Lilly on a nonconfidential basis prior to disclosure by
Xxxxxxxxx, provided that, in the case of information received from Somatogen
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such person has exercised the same degree of
care to maintain the confidentiality of such Information as such person would
accord to its own confidential information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
XXX XXXXX AND COMPANY
By: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
SOMATOGEN, INC.
By: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President of Finance
and Administration, CFO and Treasurer
26
Exhibit A - Form of Opinion of Counsel to Somatogen
July 28, 1997
Xxx Xxxxx and Company
Lilly Corporate Center
Indianapolis, IN 46285
Ladies and Gentlemen:
We have acted as counsel for Somatogen, Inc., a Delaware corporation (the
"Borrower"), in connection with the execution of the Revolving Credit Facility
Agreement dated as of July 28, 1997 by and between Xxx Xxxxx and Company, (the
"Lender") and Borrower (the "Loan Agreement"). We are rendering this opinion
pursuant to Section 4.02a of the Loan Agreement. Except as otherwise defined
herein, capitalized terms used but not defined herein have the meanings given to
them in the Loan Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Loan Agreement by the various parties and upon originals or
copies certified to our satisfaction of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below.
Where we render an opinion "to the best of our knowledge" or concerning an item
"known to us" or our opinion otherwise refers to our knowledge, it is based
solely upon (i) an inquiry of attorneys within this firm who perform legal
services for the Borrower, (ii) receipt of a certificate executed by an officer
of the Borrower covering such matters, and (iii) such other investigation, if
any, that we specifically set forth herein.
In rendering this opinion, we have assumed the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by Borrower of the Loan Agreement) where authorization, execution and delivery
are prerequisites to the effectiveness of such documents. We have also assumed
that all individuals executing and delivering documents had the legal capacity
to so execute and deliver; that you have received all documents you were to
receive under the Loan Agreement; that the Loan Agreement is an obligation
binding upon you; and that there are no extrinsic agreements or understandings
among the parties to the Loan Agreement that would modify or interpret the terms
of the Loan Agreement or the respective rights or obligations of the parties
thereunder.
We have assumed that Xxxxxx will disburse the loan funds in accordance with the
terms of the Loan Agreement and that at the time of each such disbursement all
facts and applicable law will be the same as those existing at closing.
27
Our opinion is expressed with respect only to the laws of the State of Colorado
and the Delaware General Corporation Law. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than Colorado or the Delaware General
Corporation Law are applicable to the subject matter hereof. Our opinion is
expressed only as to the outcome that would pertain were Colorado law or the
Delaware General Corporation Law (excluding choice of law principles and
excluding the effect of any law other than Colorado law or the Delaware General
Corporation Law) the sole law applicable to the subject matter hereof. For
purposes of this opinion, we have assumed, with your permission, that the laws
of Indiana are the same in all material respects as the laws of Colorado.
We express no opinion relative to the applicability or effect of any law, rule
or regulation relating to securities or to the sale or issuance thereof.
With regard to our opinion in paragraph 2 below with respect to defaults or
violations under any material agreement, we have relied solely upon (i)
inquiries of officers of Borrower and (ii) an examination of documents which
Borrower has filed with the Securities and Exchange Commission as exhibits to
either registration statements filed pursuant to the Securities Act of 1933, as
amended or periodic reports filed pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") (the "Material Agreements"); we have made
no further investigation. With regard to the violation or breach of provisions
in the Material Agreements relating to financial covenants and other financial
and factual matters we have relied solely on a certificate of an officer of the
Borrower that such covenants will not be violated or breached by the execution,
delivery and performance by the Borrower of the terms of the Loan Agreement.
With regard to our opinion in paragraph 3, we have assumed with your permission
that the Weighted Average Cost of Capital will not exceed 43.9%.
On the basis of the foregoing, in reliance thereon, and with the foregoing
qualifications, we are of the opinion that:
1. Borrower (a) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, (b) has all requisite
corporate power and authority to own its property and assets and to carry on its
business as now conducted, (c) is, to the best of our knowledge, qualified to do
business in every jurisdiction where such qualification is required, except
where the failure to so qualify would not have a material adverse effect on
Borrower, and (d) has the corporate power and authority to execute, deliver and
perform its obligations under the Loan Agreement and to borrow thereunder.
2. The execution, delivery and performance by Borrower of the Loan
Agreement and the Borrowings thereunder (collectively, the "Transactions") (a)
have been duly authorized by all requisite corporate action on the part of
Borrower and (b) will not (i) result in a violation having a material adverse
effect on Borrower of (A) any provision of any law, statute, rule or regulation
or of the certificate of incorporation or by laws of Borrower, (B) any order of
any Governmental Authority entered against Borrower known to us, or (C) any
provision of any Material Agreement, or (ii) be in material conflict with,
result in a material breach or constitute (alone or with notice or lapse of time
or both) a material default under any such Material Agreement.
28
3. The Loan Agreement constitutes a legal, valid and binding obligation
of Borrower, enforceable in accordance with its terms except (i) as
enforceability may be subject to or limited by rights to indemnity, contribution
or acceleration which may be limited by applicable laws; and (ii) as enforcement
may be limited by (a) the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, receivership, suretyship or other
similar laws relating to or affecting creditors' rights; (b) general equity
principles and limitations on the availability of equitable relief, including
specific performance; (c) compliance with the requirements, and the effect of
the limitations, of Colorado law relating to the exercise of remedies by a
lender; (d) limitations on a lender's ability to waive rights or benefits given
by statute or otherwise; (e) limitations on the right of a lender to impose
added charges for late payments or defaults by the Company, where it is
determined that such charges bear no reasonable relation to the damage suffered
by the lender as a result of such late payments or defaults; (f) limitations on
the enforceability of a clause prohibiting or restricting prepayment of an
indebtedness or imposing prepayment charges; (g) limitations imposed by Colorado
law on the appointment of receivers; (h) laws with respect to fraudulent
conveyance; (i) limitations created by or arising under statute or case law on
the enforceability of certain covenants and provisions of agreements where (x)
the breach of such covenants or provisions imposes restrictions or burdens upon
the Borrower, including the acceleration of indebtedness due under the
Indenture, and it cannot be demonstrated that the enforcement of such
restrictions or burdens is reasonably necessary for the protection of the lender
or (y) the lender's enforcement of such covenants or provisions under the
circumstances would violate the lender's implied covenant of good faith and fair
dealing.
4. Other than the filing of the Loan Agreement as an exhibit to the
Borrower's next periodic report filed under the Exchange Act, no action, consent
or approval of, registration or filing with or other action by any governmental
authority is required on the part of Borrower in connection with the
Transactions.
This opinion is intended solely for your benefit and is not to be made available
to or relied upon by any other person, firm, or entity without our prior written
consent.
Very truly yours,
Xxxxxx Godward LLP
By: _________________
cc:
