AND ALL UNPAID BALANCES APPEARING IN ALL
INVOICES, INSTRUMENTS AND OTHER DOCUMENTS EVIDENCING SUCH ELIGIBLE ACCOUNTS ARE
AND SHALL BE TRUE AND CORRECT AND ALL SUCH INVOICES, INSTRUMENTS AND OTHER
DOCUMENTS, AND ALL OF BORROWER'S BOOKS ARE GENUINE AND IN ALL RESPECTS WHAT THEY
PURPORT TO BE.
ALL SALES AND OTHER TRANSACTIONS UNDERLYING OR GIVING RISE TO
EACH ELIGIBLE ACCOUNT SHALL COMPLY IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE
LAWS AND GOVERNMENTAL RULES AND REGULATIONS.
BORROWER HAS NO KNOWLEDGE OF ANY
ACTUAL OR IMMINENT INSOLVENCY PROCEEDING OF ANY ACCOUNT DEBTOR WHOSE ACCOUNTS
ARE AN ELIGIBLE ACCOUNT IN ANY BORROWING BASE CERTIFICATE.
TO THE BEST OF
BORROWER'S KNOWLEDGE, ALL SIGNATURES AND ENDORSEMENTS ON ALL DOCUMENTS,
INSTRUMENTS, AND AGREEMENTS RELATING TO ALL ELIGIBLE ACCOUNTS ARE GENUINE, AND
ALL SUCH DOCUMENTS, INSTRUMENTS AND AGREEMENTS ARE LEGALLY ENFORCEABLE IN
ACCORDANCE WITH THEIR TERMS.
5.4
LITIGATION.
EXCEPT AS DISCLOSED IN BORROWER'S REPORT OF FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2005 AND, ASSUMING THE ACQUISITION EVENT OCCURS,
IN XENOGEN'S REPORT OF FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005, THERE ARE
NO ACTIONS OR PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF THE RESPONSIBLE
OFFICERS, THREATENED IN WRITING BY OR AGAINST BORROWER OR ANY OF ITS
SUBSIDIARIES INVOLVING MORE THAN ONE MILLION DOLLARS ($1,000,000.00).
5.5
NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS.
ALL CONSOLIDATED
FINANCIAL STATEMENTS FOR BORROWER AND ANY OF ITS SUBSIDIARIES DELIVERED TO BANK
FAIRLY PRESENT IN ALL MATERIAL RESPECTS BORROWER'S CONSOLIDATED FINANCIAL
CONDITION AND BORROWER'S CONSOLIDATED RESULTS OF OPERATIONS.
THERE HAS NOT BEEN
ANY MATERIAL
7
DETERIORATION IN BORROWER'S CONSOLIDATED FINANCIAL CONDITION SINCE THE DATE OF
THE MOST RECENT FINANCIAL STATEMENTS SUBMITTED TO BANK.
5.6
SOLVENCY.
THE FAIR SALABLE VALUE OF BORROWER'S ASSETS (INCLUDING
GOODWILL MINUS DISPOSITION COSTS) EXCEEDS THE FAIR VALUE OF ITS LIABILITIES;
BORROWER IS NOT LEFT WITH UNREASONABLY SMALL CAPITAL AFTER THE TRANSACTIONS IN
THIS AGREEMENT; AND BORROWER IS ABLE TO PAY ITS DEBTS (INCLUDING TRADE DEBTS) AS
THEY MATURE.
5.7
REGULATORY COMPLIANCE.
BORROWER IS NOT AN "INVESTMENT COMPANY" OR
A COMPANY "CONTROLLED" BY AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY
ACT.
BORROWER IS NOT ENGAGED AS ONE OF ITS IMPORTANT ACTIVITIES IN EXTENDING
CREDIT FOR MARGIN STOCK (UNDER REGULATIONS T AND U OF THE FEDERAL RESERVE BOARD
OF GOVERNORS).
BORROWER HAS COMPLIED IN ALL MATERIAL RESPECTS WITH THE FEDERAL
FAIR LABOR STANDARDS ACT.
BORROWER HAS NOT VIOLATED ANY LAWS, ORDINANCES OR
RULES, THE VIOLATION OF WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT ON ITS BUSINESS.
NONE OF BORROWER'S OR ANY OF ITS SUBSIDIARIES'
PROPERTIES OR ASSETS HAS BEEN USED BY BORROWER OR ANY SUBSIDIARY OR, TO THE BEST
OF BORROWER'S KNOWLEDGE, BY PREVIOUS PERSONS, IN DISPOSING, PRODUCING, STORING,
TREATING, OR TRANSPORTING ANY HAZARDOUS SUBSTANCE OTHER THAN LEGALLY.
BORROWER
AND EACH OF ITS SUBSIDIARIES HAVE OBTAINED ALL CONSENTS, APPROVALS AND
AUTHORIZATIONS OF, MADE ALL DECLARATIONS OR FILINGS WITH, AND GIVEN ALL NOTICES
TO, ALL GOVERNMENT AUTHORITIES THAT ARE NECESSARY TO CONTINUE ITS BUSINESS AS
CURRENTLY CONDUCTED,
EXCEPT FOR SUCH CONSENTS, APPROVALS, AUTHORIZATIONS,
DECLARATIONS AND