SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 29, 1999
BAUSCH & LOMB INCORPORATED
(Exact name of registrant as specified in its charter)
New York 1-4105 16-0345235
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
One Bausch & Lomb Place, Rochester NY 14604-2701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 338-6000
Inapplicable
(Former name or address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Disposal of Remainder of Healthcare Segment
(dollar amounts in millions)
On September 29, 1999, Bausch & Lomb Incorporated ("the company")
completed the sale of Charles River Laboratories (CRL), its
research laboratory animal and services business, to DLJ Merchant
Banking Partners II, L.P., an affiliate of the investment banking
firm of Donaldson, Lufkin & Jenrette, for approximately $400 in
cash and $43 in promissory notes pursuant to a Recapitalization
Agreement dated July 25, 1999 (the "Agreement"). Pursuant to the
Agreement, the company retained a 12.5% equity interest in CRL. A
copy of the Agreement is attached hereto in Exhibit 2(a).
Directors of the surviving CRL business after the sale, Charles
River Laboratories Holdings Inc., and Charles River Laboratories
Inc., include William H. Waltrip, a director of the company, and
Stephen C. McCluski, Senior Vice President and Chief Financial
Officer of the company.
On August 30, 1999 the company completed the sale of its Miracle-
Ear hearing aid business to Amplifon S.p.A., a privately held
Italian company. Its skin care business was divested in 1998
while the oral care and dental implant businesses were sold in
1996. These businesses, together with CRL, comprised the
company's healthcare segment.
CRL accounted for over 75% of the company's healthcare segment,
and its disposition constitutes a disposal of a business segment
as defined by Accounting Principles Board Opinion No. 30 (APB
30). APB 30 treatment was adopted for the second quarter of 1999
and as such, the company's Form 10-Q filed on August 10, 1999
excluded results of the healthcare segment from continuing
operations for both current and historical periods. This
treatment will continue for future filings.
In the second quarter of 1999, the company completed the sale of
its sunglass business, thus completing its exit from the eyewear
segment. As explained in the company's Current Report on Form 8-K
filed on July 12, 1999 (and which is herein incorporated by
reference), this exit from the sunglass business also constituted
the disposal of a business segment as defined by APB 30. APB 30
treatment was adopted for the second quarter of 1999 and as such,
the company's Form 10-Q filed on August 10, 1999 excluded results
of the eyewear segment from continuing operations for both
current and historical periods. This treatment will continue for
future filings.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of June 26, 1999
Unaudited Pro Forma Condensed Consolidated Statements of
Earnings for the following periods:
Six months ended June 26, 1999
Six months ended June 27, 1998
Year ended December 26, 1998
Year ended December 27, 1997
Year ended December 28, 1996
(c) See Exhibit Index for a listing of exhibits.
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma condensed consolidated balance
sheet and pro forma condensed consolidated statements of earnings
of Bausch & Lomb Incorporated have been prepared to illustrate
the effect of the divestiture of its research laboratory animal
and services business to DLJ Merchant Banking Partners II, L.P.,
and the sale of its hearing aid business to Amplifon, S.p.A.
The unaudited pro forma condensed consolidated balance sheet
assumes that the divestitures were consummated on June 26, 1999.
The unaudited pro forma condensed consolidated statements of
earnings assume that the divestitures were consummated as of
December 31, 1995. The pro forma adjustments, and the assumptions
on which they are based, are described in the accompanying
unaudited Notes to the Pro Forma Condensed Consolidated Financial
Statements. Certain pro forma adjustments related to the disposal
of the Eyewear segment are also described in the accompanying
unaudited Notes.
These pro forma financial statements are based upon, and should
be read in conjunction with, the historical consolidated
financial statements and the related notes, which were previously
reported on the company's 1996, 1997 and 1998 annual reports to
shareholders on Form 10-K and the company's quarterly report on
Form 10-Q for the quarter ended June 26, 1999, and which are
incorporated herein by reference.
The pro forma information is presented for illustrative purposes
only and is not necessarily indicative of operating results or
financial position that would have occurred if the divestitures
had been consummated on the dates indicated, nor is it
necessarily indicative of future operating results or financial
position.
<TABLE>
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 26, 1999
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
<CAPTION>
As Eyewear Healthcare
Originally Pro Forma Pro Forma
Filed Adjustments Adjustments Pro Forma
ASSETS
Current Assets
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 433.3 - $ 308.5 (a) $ 741.8
Other investments, short term 275.0 - - 275.0
Trade receivables, net 409.2 - - 409.2
Inventories, net 248.0 - - 248.0
Deferred taxes, net 66.3 - - 66.3
Other current assets 168.9 - - 168.9
Net assets held for disposal
- current 94.4 (47.5) (c) (46.9) (b) -
1,695.1 (47.5) 261.6 1,909.2
Property, plant and
equipment, net 524.4 - - 524.4
Goodwill and other
intangibles, net 623.5 - - 623.5
Other investments 110.6 - 19.7 (a) 130.3
Other assets 168.3 - 45.5 (a) 213.8
Net assets held for disposal
- non-current 168.0 (19.5) (c) (148.5) (b) -
Total Assets $3,289.9 $ (67.0) $ 178.3 $3,401.2
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Notes payable $ 256.1 - - $ 256.1
Current portion of long-term
debt 2.7 - - 2.7
Accounts payable 66.8 - - 66.8
Accrued compensation 67.5 - - 67.5
Accrued liabilities 427.3 - - 427.3
Income taxes payable 152.2 - - 152.2
972.6 - - 972.6
Long-term debt, less current
portion 977.9 - - 977.9
Other long-term liabilities 97.8 - - 97.8
Minority interest 224.9 - - 224.9
Total Liabilities 2,273.2 - - 2,273.2
Shareholders' Equity 1,016.7 (67.0) 178.3 1,128.0
Total Liabilities &
Shareholders' Equity $3,289.9 $ (67.0) $ 178.3 $3,401.2
See accompanying Notes to Condensed Consolidated Pro Forma
Financial Statements.
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 26, 1999
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
<CAPTION>
As Eyewear Healthcare
Originally Pro Forma Pro Forma
Filed Adjustments Adjustments Pro Forma
<S> <C> <C> <C>
Net customer sales $ 843.2 - - $ 843.2
Costs and expenses:
Cost of products sold 339.9 - - 339.9
Selling, administrative and
general 351.2 - - 351.2
Research and development 45.9 - - 45.9
737.0 - - 737.0
Operating earnings 106.2 - - 106.2
Other expense (Income):
Interest and investment
income (18.0) - - (18.0)
Interest expense 48.3 (3.9) (e) - 44.4
Foreign currency (6.6) - - (6.6)
23.7 (3.9) - 19.8
Earnings before minority
interest & tax 82.5 3.9 - 86.4
Income tax expense 29.7 1.4 (e) - 31.1
Minority interest 8.9 - - 8.9
Earnings from continuing
operations $ 43.9 $ 2.5 - $ 46.4
Earnings per share from
continuing operations:
Basic $ 0.77 $ 0.81
Diluted $ 0.75 $ 0.79
Average shares outstanding:
Basic 57,002 57,002
Diluted 58,555 58,555
See Accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 27, 1998
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
<CAPTION>
As Eyewear Healthcare
Originally Pro Forma Pro Forma
Filed Adjustments Adjustments Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net customer sales $ 1,188.1 $(255.3) (d) $ (166.9) (d) $ 765.9
Costs and expenses:
Cost of products sold 574.4 (137.1) (d) (92.4) (d) 344.9
Selling, administrative and
general 474.4 (103.4) (d) (92.4) (d) 322.3
Research and development 43.5 (6.2) (d) (1.8) (d) 35.5
Purchased in-process research
& development 41.0 - - 41.0
Restructuring charges 11.3 (5.9) (d) - (d) 5.4
1,145.7 (252.6) (144.0) 749.1
Operating earnings 42.4 (2.7) (22.9) 16.8
Other expense (Income):
Interest and investment
income (20.7) - 0.6 (d) (20.1)
Interest expense 51.7 (3.9) (e) (0.5) (d) 47.3
Foreign currency (3.6) - (0.1) (d) (3.7)
Gain on divestitures (56.0) - 56.0 (g) -
(28.6) (3.9) 56.0 23.5
Earnings before minority
interest & tax 71.0 1.2 (78.9) (6.7)
Income tax expense 27.4 (0.8) (d) (31.3) (d) (3.3)
1.4 (e)
Minority interest 11.6 (1.4) (d) (0.5) (d) 9.7
Earnings from continuing
operations $ 32.0 $ 2.0 (47.1) $ (13.1)
Earnings per share from
continuing operations:
Basic $ 0.58 $ (0.24)
Diluted $ 0.57 $ (0.24)
Average shares outstanding:
Basic 55,560 55,560
Diluted 56,146 55,560
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 26, 1998
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
<CAPTION>
As Eyewear Healthcare
Originally Pro Forma Pro Forma
Filed Adjustments Adjustments Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net customer sales $2,362.8 $(445.6) (d) $(319.7) (d) $1,597.5
Costs and expenses:
Cost of products sold 1,093.1 (244.7) (d) (186.2) (d) 662.2
Selling, administrative and
general 917.0 (185.1) (d) (89.1) (d) 642.8
Research and development 91.7 (11.4) (d) (3.7) (d) 76.6
Goodwill impairment charge 85.0 - (85.0) (f) -
Purchased in-process research
& development 41.0 - - 41.0
Restructuring charges 11.3 (5.9) (d) - 5.4
2,239.1 (447.1) (364.0) 1,428.0
Operating earnings 123.7 1.5 44.3 169.5
Other expense (Income):
Interest and investment
income (45.1) - 2.1 (d) (43.0)
Interest expense 100.8 (7.9) (e) (1.4) (d) 91.5
Foreign currency (6.4) - (0.2) (d) (6.6)
Gain on divestiture (56.0) - 56.0 (g) -
(6.7) (7.9) 56.5 41.9
Earnings before minority
interest & tax 130.4 9.4 (12.2) 127.6
Income tax expense 79.4 0.7 (d) (37.9) (d) 45.1
2.9 (e)
Minority interest 25.8 (2.5) (d) (1.4) (d) 21.9
Earnings from continuing
operations $ 25.2 $ 8.3 $ 30.0 $ 60.6
Earnings per share from
continuing operations:
Basic $ 0.45 $ 1.09
Diluted $ 0.45 $ 1.08
Average shares outstanding:
Basic 55,824 55,824
Diluted 56,367 56,367
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 27, 1997
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
<CAPTION>
As Eyewear Healthcare
Originally Pro Forma Pro Forma
Filed Adjustments Adjustments Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net customer sales $1,915.7 $(482.9) (d) $(324.1) (d) $1,108.7
Costs and expenses:
Cost of products sold 884.7 (300.3) (d) (183.8) (d) 400.6
Selling, administrative and
general 743.8 (196.9) (d) (90.6) (d) 456.3
Research and development 67.5 (13.7) (d) (4.0) (d) 49.8
Restructuring charges 71.7 (26.7) (d) (5.9) (d) 39.1
1,767.7 (537.6) (284.3) 945.8
Operating earnings 148.0 54.7 (39.8) 162.9
Other expense (Income):
Interest and investment
income (40.4) - 1.3 (d) (39.1)
Interest expense 56.0 (7.9) (e) (1.1) (d) 47.0
Foreign currency (6.6) - (0.3) (d) (6.9)
Litigation provision 21.0 - - 21.0
30.0 (7.9) (90.1) 22.0
Earnings before minority
interest & tax 118.0 62.6 (39.7) 140.9
Income tax expense 45.6 19.7 (d) (14.7) (d) 53.6
3.0 (e)
Minority interest 23.0 (1.1) (d) (1.6) (d) 20.3
Earnings from continuing
operations $ 49.4 $ 41.0 $ (23.4) $ 67.0
Earnings per share from
continuing operations:
Basic $ 0.89 $ 1.21
Diluted $ 0.89 $ 1.20
Average shares outstanding:
Basic 55,383 55,383
Diluted 55,654 55,654
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 28, 1996
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
<CAPTION>
As Eyewear Healthcare
Originally Pro Forma Pro Forma
Filed Adjustments Adjustments Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net customer sales $1,926.8 $ (516.6) (d) $ (343.6) (d) $1,066.6
Costs and expenses:
Cost of products sold 872.3 (299.7) (d) (195.4) (d) 377.2
Selling, administrative and
general 773.1 (201.7) (d) (105.6) (d) 465.8
Research and development 75.5 (17.5) (d) (7.8) (d) 50.2
Restructuring charges 15.1 (1.6) (d) - (d) 13.5
1,736.0 (520.5) (308.8) 906.7
Operating earnings 190.8 3.9 (34.8) 159.9
Other expense (Income):
Interest and investment
income (42.8) - 1.2 (d) (41.6)
Interest expense 51.7 (7.9) (e) (1.2) (d) 42.6
Foreign currency (1.6) - - (1.6)
Gain on divestiture (1.5) - 1.5 (d) -
Litigation provision 16.1 - - 16.1
21.9 (7.9) 1.5 15.5
Earnings before minority
interest & tax 168.9 11.8 (36.3) 144.4
Income tax expense 63.7 1.4 (d) (12.3) (d) 55.8
3.0 (e)
Minority interest 22.1 (0.1) (d) (1.8) (d) 20.2
Earnings from continuing
operations $ 83.1 $ 7.5 $ (22.2) $ 68.4
Earnings per share from
continuing operations:
Basic $ 1.48 $ 1.21
Diluted $ 1.47 $ 1.21
Average shares outstanding:
Basic 56,299 56,299
Diluted 56,510 56,510
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements
</TABLE>
BAUSCH & LOMB INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA
(UNAUDITED)
Pro Forma Condensed Consolidated Balance Sheet Adjustments:
The unaudited pro forma condensed consolidated balance sheet
assumes that the divestiture of the healthcare segment occurred
as of June 26, 1999. The majority of the sunglass business was
disposed of on June 26, 1999. Assumptions and adjustments to
reflect the healthcare and eyewear segment disposals in the
condensed consolidated balance sheet include:
(a) To reflect the estimated net cash proceeds and gain on the
sale of the healthcare segment:
Sales price $465.0
Estimated cash taxes (82.7)
Estimated costs resulting directly from the divestiture
including transaction fees, legal and accounting fees, foreign
exchange losses related to a net investment hedge, and asset
write-offs (28.3)
Non-cash proceeds (45.5)
Estimated net cash proceeds $308.5
Net assets of healthcare segment as of June 26, 1999 (195.4)
12.5% cost based investment in CRL 19.7
Non-cash proceeds 45.5
Estimated after-tax gain $178.3
For purposes of these pro forma statements, the company's
assumption of certain healthcare obligations have been included
in the estimated costs resulting directly from the sale of the
healthcare businesses. These include $4.1 in taxes payable and
$3.4 in accrued expenses.
In accordance with the Agreement, the company retains a 12.5%
cost based-investment in CRL. For purposes of this statement the
company's remaining investment in CRL has been calculated based
on the net assets of CRL as of June 26, 1999.
(b) To reflect the disposition of the June 26, 1999 net assets
held for disposal of the healthcare businesses.
(c) The sale of sunglass business units in certain non-U.S.
locations has been deferred due to local regulatory and legal
considerations, all of which should be resolved to enable
closings to occur within 1-12 months of June 26, 1999. These pro
forma adjustments are to reflect the ultimate closings of these
locations.
Pro Forma Condensed Consolidated Statement of Earnings
Adjustments:
The unaudited pro forma condensed consolidated statements of
earnings assume that the divestiture of the eyewear and
healthcare segments occurred as of December 31, 1995, which was
the first day of fiscal 1996. The unaudited pro forma condensed
consolidated statements of earnings do not include any impact
from the gain on disposal or costs related to the divestitures.
The elimination of the eyewear and healthcare segment results of
operations in adjustment (d) includes all revenues and costs
reported historically by the divested businesses. Assumptions and
adjustments to reflect the segment disposals in the pro forma
condensed consolidated statements of income include:
(d) To eliminate results of operations of the eyewear and
healthcare segments from historical financial statements. For
1999, no eliminations are needed since the statement of earnings
from continuing operations for the six months ended June 26, 1999
filed with Form 10-Q on August 10, 1999 excluded results of
operations for both the healthcare and eyewear segments as these
segments were reported as discontinued operations in the second
quarter of 1999. For 1998, amounts for eyewear relate entirely to
the sunglass product line while amounts reported in periods prior
to 1998 also include results of the previously divested thin film
technology business. For healthcare, all periods prior to 1999
include results for Charles River Laboratories, Miracle-Ear and
the skin care business which was sold during 1998. Adjustments in
1996 also reflect results of the divested oral care and dental
implant businesses, which were sold that year.
(e) To reflect the estimated impact on interest expense from use
of after-tax proceeds on the sale of the sunglass business which
reduces outstanding debt by $157.5 million. For purposes of these
statements, interest savings have been reflected using an average
rate of 5% per annum. A one-eighth of one percentage point change
in the interest rate used for pro forma purposes would have the
following impact on pro forma income from continuing operations:
Per
Amount Share
Six months ended June 26, 1999 $ - $ -
Six months ended June 27, 1998 - -
Year ended December 26, 1998 0.1 -
Year ended December 27, 1997 0.1 -
Year ended December 26, 1996 0.1 -
Debt was not reduced as a result of the divestitures of CRL and
Miracle-Ear, thus yielding no reduction in interest expense for
any of the periods presented.
(f) To eliminate a fourth quarter 1998 impairment charge of $85
or $1.51 per share, with no associated tax benefit, related to
the goodwill acquired as part of the Miracle Ear hearing aid
business.
(g) To eliminate a pre-tax gain of $56 ($33 or $0.59 per share
after tax) resulting from the sale the skin care business.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BAUSCH & LOMB INCORPORATED
/s/ Stephen C. McCluski
Stephen C. McCluski
Senior Vice President and Chief Financial Officer
October 13, 1999
EXHIBIT INDEX
Exhibit No. Description
2(a) Recapitalization Agreement among Bausch & Lomb
Incorporated, Endosafe, Inc., CRL Holdings, Inc., Charles
River Laboratories, Inc., Charles River Spafas, Inc.,
Bausch & Lomb International, Inc., Wilmington Partners,
L.P., Bausch & Lomb Canada, Inc., CRL Acquisition LLC and
DLJ Merchant Banking Partners II, L.P. dated as of July 25,
1999. Omitted schedules and exhibits to the
Recapitalization Agreement as identified within the
schedules and exhibit index of the agreement will be
furnished supplementally to the Commission upon request.
2(b) Amendment No. 1 to Recapitalization Agreement dated as of
September 29, 1999 by and among Bausch & Lomb Incorporated
and CRL Acquisition LLC.
2(c) Investors' Agreement dated as of September 29, 1999 among
CRL Holdings, Inc. and the several Stockholders from time
to time parties hereto.
2(d) Recap Co Subordinated Discount Note due 2010.
RECAPITALIZATION AGREEMENT
Among
BAUSCH & LOMB INCORPORATED,
ENDOSAFE, INC.,
CRL HOLDINGS, INC.,
CHARLES RIVER LABORATORIES, INC., CHARLES RIVER SPAFAS, INC.,
BAUSCH & LOMB INTERNATIONAL, INC.,
WILMINGTON PARTNERS, L.P.,
BAUSCH & LOMB CANADA, INC.,
CRL ACQUISITION LLC
and
DLJ MERCHANT BANKING PARTNERS II, L.P.
Dated as of July 25, 1999
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS, ETC. 2
1.1 Definitions 2
1.2 Construction. 14
1.3 Accounting Conventions 15
1.4 Disclosure Schedule 15
ARTICLE 2 REORGANIZATION, MERGER RECAPITALIZATION,
REDEMPTIONS AND CLOSING 15
2.1 Reorganization; Merger 15
2.2 Recapitalization of Recap Co 16
2.3 Redemptions 16
2.4 Closing 17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER PARENT 17
3.1 Organization, Good Standing and Power 17
3.2 Authorization and Validity 18
3.3 Capitalization of Recap Subco and Recap Subsidiaries 18
3.4 Consent and Approvals; No Conflict 19
3.5 Purchased Shares in Merger 19
3.6 Financial Statements. 19
3.7 Absence of Undisclosed Liabilities 20
3.8 Absence of Certain Changes 20
3.9 Entire CRL Business 21
3.10 Legal Proceedings 21
3.11 Employees and Labor Relations Matters. 22
3.12 CRL Business Tangible Assets; Real Property. 22
3.13 Intellectual Property 23
3.14 Compliance with Applicable Laws 23
3.15 Employee Benefit Plans. 24
3.16 Environmental Matters 26
3.17 Tax Matters. 27
3.18 Contracts 27
3.19 Certain Fees 28
3.20 Year 2000 28
3.21 Insider Interests; Intercompany Transactions 28
3.22 No Other Representations or Warranties 28
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
AND BUYER PARENT 29
4.1 Organization, Good Standing and Power 29
4.2 Authorization and Validity of Agreements 29
4.3 Consents and Approvals; No Conflict 29
4.4 Legal Proceedings 30
4.5 Certain Fees 30
4.6 Financing 30
4.7 Access and Investigation 30
4.8 No Other Representations or Warranties 31
ARTICLE 5 COVENANTS OF THE PARTIES 31
5.1 Access to Information; Confidentiality 31
5.2 Approvals under Competition Laws. 32
5.3 Conduct of the CRL Business Pending the Closing Date 32
5.4 Consents 33
5.5 Tax Matters. 34
5.6 Employee Matters. 35
5.7 Additional Assurances. 36
5.8 Updated Disclosure Schedule 37
5.9 Buyer's Insurance 38
5.10 Cash Management 38
5.11 Company Acquisition Proposal 38
5.12 Books and Records 39
5.13 Use of Names 39
5.14 Commitment Letters 39
5.15 Broekman Sale 39
5.16 Stage I Reorganization Matters 40
5.17 Confidential Information 40
5.18 Closing Efforts 40
5.19 Interim Financial Statements 40
5.20 Financial Assurances 41
5.21 Financial Statements. 41
5.22 Net Underfunding Amount 42
ARTICLE 6 CONDITIONS TO CLOSING 42
6.1 Conditions to Obligations of Buyer and Seller Parent and
Recap Co 42
6.2 Conditions to Obligations of Buyer 43
6.3 Conditions to Obligations of Seller Parent, the Sellers,
Recap Co and Recap Subco 45
ARTICLE 7 TERMINATION AND ABANDONMENT 45
7.1 Termination. 45
7.2 Effect of Termination and Abandonment 46
ARTICLE 8 SURVIVAL AND INDEMNIFICATION 47
8.1 Survival of Representations, Warranties and Covenants 47
8.2 Indemnification by Seller Parent 47
8.3 Indemnification by Recap Co 47
8.4 Certain Limitations on Indemnities 48
8.5 Procedure 49
8.6 No Consequential Damages 50
8.7 Exclusive Remedy 50
8.8 Validity 50
8.9 Waiver 51
ARTICLE 9 MISCELLANEOUS 51
9.1 Public Announcement 51
9.2 Expenses 51
9.3 Transfer Taxes and Recording Expenses 52
9.4 Knowledge 52
9.5 Notices 52
9.6 Severability 54
9.7 Specific Performance 54
9.8 No Conflict of Interest 54
9.9 Binding Effect; Benefit 54
9.10 Assignability 54
9.11 Amendment, Waiver 55
9.12 Section Headings 55
9.13 Counterparts 55
9.14 Applicable Law 55
9.15 Submission to Jurisdiction 55
9.16 Entire Agreement 56
RECAPITALIZATION AGREEMENT
This Recapitalization Agreement is made as of the 25th day
of July, 1999, by and among Bausch & Lomb Incorporated, a New
York corporation ("Seller Parent"), Endosafe, Inc., a Delaware
corporation ("Recap Co"), CRL Holdings, Inc., a Delaware
corporation ("Recap Subco"), Charles River Laboratories, Inc., a
Delaware corporation ("CRL"), Charles River SPAFAS, Inc., a
Delaware corporation ("SPAFAS"), Bausch & Lomb International,
Inc., a New York corporation ("International"), Wilmington
Partners, L.P., a Delaware limited partnership ("WPLP"), Bausch &
Lomb Canada, Inc., a Canadian corporation ("Parent Canada"), CRL
Acquisition LLC, a Delaware limited liability company ("Buyer"),
and DLJ Merchant Banking Partners II, L.P., a Delaware limited
partnership ("Buyer Parent"). Certain terms which are
capitalized in this Agreement are used with the meanings ascribed
thereto in Section 1.1.
RECITALS
Recap Subco, directly and through its direct and indirect
subsidiaries, together with WPLP and Parent Canada, are engaged
in the CRL Business.
Seller Parent, through CRL, SPAFAS and International, owns
all of the issued and outstanding shares of capital stock of
Recap Subco.
Immediately prior to the Closing, Seller Parent, WPLP and
Parent Canada shall cause the reorganization to occur so that at
the Closing, (i) Recap Subco, or a subsidiary thereof, shall own
all of the assets used in the CRL Business (other than the
Excluded Assets), (ii) Recap Subco shall be a wholly owned
subsidiary of Recap Co and (iii) CRL, SPAFAS, International and
WPLP shall own all of the issued and outstanding shares of
capital stock of Recap Co.
Immediately prior to the Closing, Buyer Parent shall cause
Buyer to be capitalized with at least $90,000,000, Acquisition Co
to be formed and capitalized by Buyer with at least $90,000,000
and Acquisition Co to be merged with and into Recap Co.
Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing, Seller Parent shall cause Recap
Co and Recap Subco to incur indebtedness to facilitate the
recapitalization of Recap Co, and Buyer shall assist Recap Co and
Recap Subco in incurring such indebtedness.
At the Closing, immediately following the incurrence of the
foregoing indebtedness, Seller Parent and Buyer shall cause Recap
Subco to use all of the net proceeds of such indebtedness
incurred by it to declare and pay a dividend to Recap Co.
Immediately following the payment of such dividend, Seller
Parent shall cause Recap Co to use the proceeds of such dividend
and the indebtedness incurred by it to redeem for cash all of the
shares of Recap Co Common Stock held by SPAFAS and International
and all of the shares of Recap Co Preferred Stock held by WPLP
and to redeem for cash and the Recap Co Sub Note certain shares
of Recap Co Common Stock held by CRL such that immediately
thereafter CRL shall own 12.5% of the number of issued and
outstanding shares of Recap Co Common Stock and Buyer shall own
87.5% of the number of issued and outstanding shares of Recap Co
Common Stock.
ARTICLE 1
DEFINITIONS, ETC.
1.1 Definitions
. As used in this Agreement, the following terms shall have
the meanings set forth below:
"Accounting Firm" means Arthur Andersen LLP or if such firm
does not accept an engagement, then an independent nationally
recognized accounting firm mutually agreed upon by Seller Parent
and Buyer.
"Acquisition Co" has the meaning set forth in Section 2.1.6.
"Affiliate" means, with respect to any Person, any
subsidiary, officer or director of such Person and any other
Person which directly or indirectly controls, is controlled by or
is under common control with such Person, whether through the
ownership of securities, by contract or otherwise.
"Agreement" means this Recapitalization Agreement and the
Exhibits and the Disclosure Schedule to this Agreement, as the
same may from time to time be amended as provided herein.
"Assumed Liabilities" means all liabilities and obligations
of Seller Parent, any Seller or any of the CRL Companies arising
from or with respect to the CRL Business or the CRL Business
Assets, except for the Excluded Liabilities.
"Audited Financial Statements" has the meaning set forth in
Section 5.21.
"Balance Sheet" means the December 26, 1998 balance sheet of
the CRL Business included in the Audited Financial Statements.
"Balance Sheet Date" means December 26, 1998.
"Benefit Plan" has the meaning set forth in Section 3.15.1.
"Broekman Sale" has the meaning set forth in Section 5.15.
"Business Day" means any day other than a day when the
commercial banks doing business in New York or Massachusetts are
required or permitted by Law to be closed for business.
"Buyer" has the meaning set forth at the beginning of this
Agreement.
"Buyer's Group" means, collectively, Buyer and Buyer Parent.
"Buyer Indemnified Parties" has the meaning set forth in
Section 8.2.
"Buyer Material Adverse Effect" means one or more adverse
changes which, individually or in the aggregate, is or would
reasonably be expected to materially adversely effect the ability
of Buyer or Buyer Parent to consummate the transactions
contemplated by this Agreement on the terms and conditions and
within the time frame set forth herein.
"Buyer Parent" has the meaning set forth at the beginning of
this Agreement.
"CERCLA" has the meaning set forth in Section 3.16.
"Claim" has the meaning set forth in Section 8.5.
"Closing" has the meaning set forth in Section 2.6.
"Closing Date" has the meaning set forth in Section 2.6.
"Code" means the Internal Revenue Code of 1986, as amended,
and the Treasury regulations issued thereunder.
"Commercial Efforts" means diligent, good faith efforts
which shall not require the performing party to (i) take any
action which is unreasonable under the circumstances, (ii) make
any investment or capital contribution not expressly contemplated
by this Agreement or the Commitment Letters, (iii) amend or waive
any rights under this Agreement or the Commitment Letters, or
(iv) incur or expend any amount of funds with respect to any
matter in excess of $5,000 but, notwithstanding the foregoing,
Commercial Efforts shall require the expenditure of all
reasonable out-of-pocket expenses necessary to satisfy a party's
obligations under this Agreement, including the fees, expenses
and disbursements of accountants, counsel, investment bankers and
other professionals.
"Commitment Letters" means those commitment letters attached
hereto as Exhibit 4.6.
"Company Acquisition Proposal" has the meaning set forth in
Section 5.11.
"Computer Systems" has the meaning set forth in
Section 3.20.
"Confidentiality Agreement" has the meaning set forth in
Section 5.1.
"Contracts" has the meaning set forth in Section 3.18.
"Contribution Agreements" has the meaning set forth in the
definition of Stage 1 Reorganization.
"Cost" means, collectively, Losses and Litigation Expenses
which are not unconditionally covered by insurance (provided that
if the CRL Business is unconditionally entitled to insurance with
respect to such Loss or Litigation Expense, such insurance
proceeds shall be applied to the Loss or Litigation Expense).
"CRL" has the meaning set forth at the beginning of this
Agreement.
"CRL Business" means the businesses conducted by Seller
Parent through its direct and indirect subsidiaries, including,
as of the date hereof, Recap Subco, the Recap Subsidiaries, WPLP
and Parent Canada and, prior to the Stage 1 Reorganization, also
through CRL, SPAFAS and International, in each case relating to
(i) the production, supply and resale of laboratory animals for
use in pharmaceutical and other medical testing (the "Research
Models"), (ii) the production and supply of specific pathogen
free eggs for vaccine production and research, (iii) testing and
monitoring of laboratory animal colonies, (iv) special laboratory
animal contract services for the performance of studies for
pharmaceutical and biotechnology companies, (v) research services
for large laboratory animals, (vi) laboratory animal facility
management, (vii) biological and analytical testing of large non-
animal molecule products, (viii) the production and supply of in
vitro test kits for bacterial endotoxin detection in parental
drugs and devices, (ix) the production and supply of monoclonal
and polyclonal antibodies, and (x) the sale of equipment related
to laboratory animal production and maintenance.
"CRL Business Assets" means the CRL Business and all of
Seller Parent's, each of the Sellers' and each CRL Companies'
right, title and interest in and to all of the assets, rights and
properties of every kind and nature, whether real, personal or
mixed, tangible or intangible, whether identifiable or
contingent, wherever located, which are related to or used in the
CRL Business, other than the Excluded Assets, which CRL Business
assets, rights and properties include, without limitation, all of
the following except for the Excluded Assets:
(i) all assets shown or reflected on the Balance
Sheet, except for changes made therein in the
ordinary course of business since the Balance
Sheet Date and through the Closing Date;
(ii) all land and other real property, all buildings
and other improvements located thereon, and all
rights, interests or appurtenances thereto which
are related to or used in the conduct of the CRL
Business;
(iii)all of the fixed assets and other tangible
personal property, including, without limitation,
machinery, vehicles, tools, equipment, furniture,
fixtures, leasehold improvements and supplies
related to or used in the conduct of the CRL
Business wherever located (collectively, the
"Property"), including Property acquired through
the Closing Date;
(iv) all research models, raw materials, components and
other parts, work-in-process, finished goods and
all other inventory whether on hand, on order, in
transit or held by others on a consignment basis
(collectively, the "Inventory") related to or used
in the conduct of the CRL Business wherever
located, including the inventory shown or
reflected on the Balance Sheet and Inventory
acquired after the Balance Sheet Date and through
the Closing Date, excluding only such Inventory as
shall have been sold in the ordinary course of
business after the Balance Sheet Date and through
the Closing Date;
(v) all tradenames, tradename rights, trademarks,
trademark rights, licenses, patents, patent
rights, copyrights, copyright rights, service
marks, service mark rights, trade secrets, trade
secret rights, confidential information, mailing
lists, customer lists, supplier lists, market
studies, training and equipment manuals, trade
dress, designs, patterns, technology, trade
secrets, and manufacturing, engineering, technical
and any other know-how processes, business
opportunities, and businesses, projects and
products planned or under development, other
intellectual property rights (including without
limitation, all goodwill associated with any of
the foregoing, licenses in respect of any of the
foregoing, applications relating to any of the
foregoing and claims for infringement of or
interference with any of the foregoing) and other
proprietary information related to or used in the
conduct of the CRL Business, in any case whether
domestic or foreign or registered or common law
including, without limitation, the names "Charles
River Laboratories," "Charles River" and "SPAFAS"
and all variations thereof (collectively,
"Intellectual Property");
(vi) all receivables related to the CRL Business,
including, without limitation, trade accounts and
other accounts receivable, loans receivable and
advances as at the Balance Sheet Date and all
receivables related to the CRL Business acquired
or created after the Balance Sheet Date and
through the Closing Date (collectively, the
"Receivables"), excluding only such Receivables as
shall have been collected on or prior to the
Closing Date;
(vii)all contracts of or related to the CRL
Business, including without limitation, the
Material Contracts and all contracts relating to
the Benefit Plans and Non-US Benefit Plans;
(viii)all goodwill, other intangible property, and
causes of action, actions, claims, rights and
remedies of any kind as against others (whether by
contract or otherwise) relating to the CRL
Business or any of the other CRL Business Assets
or Seller Parent, any of the Sellers or any of the
CRL Companies in the conduct or operation of the
CRL Business (including without limitation, the
Intellectual Property) or the Assumed Liabilities;
(ix) all books and records (financial, accounting and
other), correspondence, and all sales, marketing,
advertising, packaging and promotional materials,
files, data (whether written, on disk, film, tape
or other media, and including all computerized
data), drawings, engineering and manufacturing
data and other technical information and data, and
all other business and other records, in each case
relating to Recap Subco, any Recap Subsidiary,
WPLP, Parent Canada, the CRL Business Assets, the
Assumed Liabilities or the CRL Business wherever
located, except for any located at Seller Parent
in Rochester, New York;
(x) all Permits to the extent legally transferable;
(xi) all prepaid expenses, refunds, security and like
deposits and all other investments relating to the
CRL Business; and
(xii)all proceeds of any of the foregoing (other than
Excluded Assets).
"CRL Business Material Adverse Effect" means one or more
adverse changes which, individually or in the aggregate, has
resulted in or would reasonably be expected to result in either
(a) the loss of $15,000,000 or more of annual revenue by the CRL
Business or (b) Costs in excess of $15,000,000; provided, however
that none of the events set forth on Schedule 1.1.3 shall
constitute a CRL Business Material Adverse Effect.
"CRL Companies" shall mean Recap Subco, each of the Recap
Subsidiaries, WPLP and Parent Canada.
"Default" means the occurrence of any event which of itself
or with the giving of notice or the passage of time or both would
constitute a breach, a default or an event of default under the
applicable agreement, contract, instrument or lease or would
permit any party thereto to cancel or terminate performance or
seek damages or specific performance for breach or default.
"Disclosure Schedule" means the Disclosure
Schedule delivered by Seller Parent to Buyer simultaneously with
the execution of this Agreement and shall include an Update in
accordance with Section 5.8.
"DOJ" has the meaning set forth in Section 5.2.
"Draft Audited Financial Statements" has the meaning set
forth in Section 3.6.
"Draft Unaudited Financial Statements" has the meaning set
forth in Section 3.6.
"Draft Financial Statements" has the meaning set forth in
Section 3.6.
"Employees" means all of those persons employed as of the
Closing Date by any of the CRL Companies in the CRL Business,
including employees who are on disability (whether short-term or
long-term) or other leave from any of the CRL Companies.
"Environmental Claim" means any notice or claim by any
person or entity alleging potential liability (including
potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property
damages, personal injuries or penalties) arising out of, based on
or resulting from (i) the generation, treatment, storage,
transportation or recycling of any Hazardous Substance or the
presence, or release, discharge, disposal or emission into the
environment, of any Hazardous Substances at the Real Property or
at any other real property, whether or not presently or formerly
owned or leased by any of the CRL Companies, or (ii) any
violation, or alleged violation, of any Environmental Laws by any
of the CRL Companies, Sellers or Seller Parent prior to the
Closing Date, in each case with respect to the CRL Business.
"Environmental Laws" means any and all Laws of any
Governmental Entity in effect as of the Closing Date, relating to
health, pollution control or protection of the environment,
including all Laws relating to the manufacture, processing,
distribution, generation, use, ownership, collection, treatment,
storage, transportation, recovery, recycling, removal, handling,
discharge, disposal, release or threatened release of any
Hazardous Substances, or regarding exposure to, monitoring or
assessment of, or remediation (including operation and
maintenance of remedial systems) of, any Hazardous Substances, or
record keeping, notification or reporting requirements respecting
any Hazardous Substances, or the on-site or off-site
contamination or pollution of the environment, or air, soil, or
water quality, or air or water emissions, or public health and
safety or community right-to-know, including Laws of the United
States, Belgium, Canada, China, France, Germany, Italy, Japan,
Mexico, Netherlands, United Kingdom, Australia, Czech Republic,
Hungary, Japan, Spain and Sweden.
"ERISA" means the Employee Retirement Income Security Act of
1974 and all regulations promulgated thereunder, as the same have
from time to time been amended.
"Excluded Assets" means:
(i) all cash (except to the extent necessary to
satisfy the requirements of Section 5.10 hereof,
except for any cash received with respect to
divested assets pursuant to Section 5.2.2 hereof,
except an amount equal to 50% of all indebtedness
of Charles River Japan, Inc. for borrowed money
evidenced by a note, bond, debenture or similar
instrument, except an amount equal to the Net
Underfunding Amount and except any net proceeds
arising from the sale of assets referred to in
item 6 of Schedule 3.8, all of which shall
constitute CRL Business Assets and all of which
shall be held by Recap Co, Recap Subco or one of
the U.S. wholly owned Recap Subsidiaries) and cash
equivalents of the CRL Business, Recap Subco,
Recap Co and the Recap Subsidiaries on the date
immediately preceding the Closing Date;
(ii) (A) all books and records relating to the CRL
Business that are located at Seller Parent in
Rochester, New York and (B) all books and records
relating to the CRL Business that are located in
Wilmington, Massachusetts or at any of the Recap
Subsidiaries which are required to be retained by
Seller Parent, CRL, WPLP, SPAFAS, International or
Parent Canada pursuant to any applicable Law (in
the case of (A) and (B) of this clause, copies of
such books and records, to the extent related to
the CRL Business, shall be provided to Buyer,
Recap Co and the Recap Subsidiaries upon request);
(iii)all Tax assets of Recap Co and the Recap
Subsidiaries which relate to pre-closing periods;
(iv) all assets set forth on Schedule 1.1.1(iv);
provided, however, in the event the Broekman Sale
is not consummated on or after the Closing Date,
item 2 on Schedule 1.1.1(iv) shall not be an
Excluded Asset; and
(v) all Receivables from Seller Parent or any
Affiliate of Seller Parent which is not one of the
CRL Companies.
"Excluded Debt" shall mean, with respect to Seller Parent,
any Seller, Recap Subco or any Recap Subsidiary, without
duplication, (i) all indebtedness of Seller Parent, any Seller,
Recap Subco or any Recap Subsidiary for borrowed money, and all
indebtedness evidenced by notes, bonds, debentures or similar
instruments, (ii) the deferred purchase price of assets or
services which in accordance with GAAP would be shown on the
liability side of the balance sheet of Seller Parent, any Seller,
Recap Subco or any Recap Subsidiary, (iii) all indebtedness of a
second Person secured by any Lien on any property owned by Seller
Parent, any Seller, Recap Subco or any Recap Subsidiary, whether
or not such indebtedness has been assumed, (iv) all obligations
under any lease of any property (whether real, personal or mixed)
by Seller Parent, any Seller, Recap Subco or any Recap Subsidiary
as lessee which, in conformity with GAAP, would be accounted for
as a capital lease on the balance sheet of such Person (each a
"Capital Lease"), other than Capital Lease obligations as of
June 30, 1999 set forth on Schedule 1.1(x), (v) all net
obligations of Seller Parent, any Seller, Recap Subco or any
Recap Subsidiary under interest rate agreements, swap, cap,
collar or similar agreements or instruments and (vi) all
contingent obligations of Seller Parent, any Seller, Recap Subco
or any Recap Subsidiary arising from the guaranty by Seller
Parent, any Seller, Recap Subco or any Recap Subsidiary of
Excluded Debt of other Persons; provided, however, that Excluded
Debt which is owed by any Joint Venture shall mean the product of
the amount of Excluded Debt of such Joint Venture and the
percentage of the total equity interests of such Joint Venture
held by all CRL Companies (other than such Joint Venture) in such
Joint Venture.
"Excluded Liabilities" means:
(i) all debts, claims, liabilities or obligations for
any Tax (except for any Tax arising as a result of
the breach of any representation or warranty
contained in Article 3 other than Section 3.17)
(A) arising from or with respect to the CRL
Business Assets or the operation or conduct of the
CRL Business on or prior to the Closing Date,
including but not limited to all income taxes
directly arising from the deemed sale of assets
under the Section 338(h)(10) Election, whether or
not due and payable on or before the Closing Date
and whether or not attributable to a Tax period
that ends on or before the Closing Date (in which
event the Tax attributable to the period on or
prior to the Closing Date shall be determined on a
closing-of-the-books method, ending the close of
business on the Closing Date, with respect to
income Taxes and on a per diem basis, including in
such period the Closing Date, with respect to all
other Taxes); (B) of or attributable to any Tax
Sharing Agreement to which Recap Subco or any
Recap Subsidiary is or was a party for any period
on or prior to the Closing Date; and (C) for which
Recap Subco or any Recap Subsidiary is held liable
under Treasury Regulation 1.1502-6 or any
similar provisions of state, local or foreign Law,
which Tax is attributable to income of any Person
other than Recap Subco or any Recap Subsidiary
arising on or prior to the Closing Date.
(ii) all debts, claims, liabilities or obligations of
Seller Parent, any of the CRL Companies or
Sellers, in respect of accounts payable, notes
payable (including intercompany promissory notes
and similar financing arrangements) or other
obligations (whether or not billed or accrued) to
Seller Parent or any Affiliate of Seller Parent
which is not Recap Subco or one of the Recap
Subsidiaries;
(iii)all debts, claims, liabilities or obligations,
whether presently in existence or arising after
the date of the Agreement, relating to fees,
commissions or expenses owed to any broker,
finder, investment banker, accountant, attorney or
other intermediary or advisor employed by Seller
Parent or any Affiliate of Seller Parent in
connection with the transactions contemplated
hereby;
(iv) the Excluded Debt;
(v) all debts, claims, liabilities or obligations
specifically arising out of or relating to any of
the Excluded Assets which fall within
subparagraphs (i), (ii), (iii), (iv) (but only
with respect to such debts, claims, liabilities or
obligations specifically arising out of or related
to (A) the contract for the sale of the property
and assets set forth in item 1 of
Schedule 1.1.1(iv) and (B) businesses and assets
of or operation or ownership thereof by the
entities set forth in item 3 through 7 of
Schedule 1.1.1(iv) other than the CRL Business or
the CRL Business Assets), or (v) of the definition
of Excluded Assets;
(vi) the accrued and unpaid deferred compensation and
bonuses payable or accrued as of June 30, 1999 to
the management and other employees of the CRL
Business;
(vii)all debts, claims, liabilities or obligations
arising out of or relating to the net underfunding
if any, of Non-U.S. Benefit Plans that are defined
benefit plans; provided, however, that as to any
Non-U.S. Benefit Plan covering employees of an
entity as to which a third party holds an equity
interest exceeding 15% of the total equity
interests of such entity (such entity being
referred to herein as a "Joint Venture" and such
Non-U.S. Benefit Plan, a "Joint Venture Non-U.S.
Benefit Plan"), Excluded Liabilities shall be the
product of the aggregate Excluded Liability of
such Joint Venture as to the applicable Joint
Venture Non-U.S. Benefit Plan and the percentage
of the equity interests held by all CRL Companies
(other than such Joint Venture) in such Joint
Venture (the "Net Underfunding Amount"); and
(viii) the obligations under the Retention Agreements
with respect to Section I(A) regarding the EVA
Banks and with respect to Section I(B) regarding
the compensation for accelerated vesting of Seller
Parent stock options for Employees and the
obligations of Seller Parent or, prior to the
Closing Date Recap SubCo, under the Releases.
"Expiration Date" has the meaning set forth in Section 8.1.
"Financial Statements" has the meaning set forth in
Section 5.21.
"FTC" has the meaning set forth in Section 5.2.
"GAAP" means generally accepted U.S. accounting principles,
as in effect at the time to which the financial statements or
records relate, applied on a consistent basis in accordance with
the policies applied in the preparation of the Financial
Statements.
"Governmental Consents" has the meaning set forth in
Section 6.1.1(b).
"Governmental Entity" means, collectively, the United States
government, the government of any of the states constituting the
United States, any municipality and any other domestic or foreign
national or provincial or regional government, and all of their
respective branches, departments, agencies, instrumentalities,
courts, subsidiary corporations or other subdivisions, to the
extent such Governmental Entity has jurisdiction.
"Hazardous Substances" means any (i) material, substance,
waste (including any solid, liquid, semisolid or gas or gaseous
mixture), product, chemical, pesticide, fungicide, rodenticide,
pollutant, contaminant, hazardous material, hazardous substance,
hazardous waste or solid waste, as the foregoing terms are
considered or defined as harmful or toxic under, regulated by or
form the basis of liability under any applicable Environmental
Law; (ii) petroleum (including crude oil or any fraction thereof)
products of any kind; (iii) asbestos, asbestos containing
material; (iv) radioactive substance; and (v) any polychlorinated
biphenyl (PCB).
"Highly Compensated Employee" has the meaning set forth in
Section 3.11.1.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and all regulations promulgated thereunder, as the
same has been amended from time to time.
"Immaterial Injunction" has the meaning set forth in
Section 6.1.1.
"Indemnitee" has the meaning set forth in Section 8.5.
"Indemnitor" has the meaning set forth in Section 8.5.
"Intellectual Property" has the meaning set forth in the
definition of CRL Business Assets.
"Interest Rate" means the sum of the annual rate of interest
from time to time announced publicly by The Chase Manhattan Bank
as its prime rate, plus two percent or if The Chase Manhattan
Bank no longer announces its prime rate, LIBOR plus five percent.
"Internal Reorganization" means, collectively, the Stage 1
Reorganization and the Stage 2 Reorganization.
"International" has the meaning set forth at the beginning
of this Agreement.
"Investors' Agreement" means the agreement entered into as
of the Closing Date among Recap Co, Buyer, CRL and each other
stockholder of Recap Co in substantially the form of
Exhibit 2.3.8.
"IRS" means the U.S. Internal Revenue Service.
"Joint Venture" shall have the meaning set forth in
subparagraph (vii) of the definition of Excluded Liabilities.
"Joint Venture Non-U.S. Benefit Plan" shall have the meaning
set forth in subparagraph (vii) of the definition of Excluded
Liabilities.
"Knowledge" has the meaning set forth in Section 9.4.
"Law" means any constitution, law, statute, code, ordinance,
rule, regulation, order, judgment or decree that is of a binding
nature and enforceable by or through any Governmental Entity
through the Closing Date.
"Litigation Expense" means any costs and expenses incurred
in connection with investigating, defending or asserting any
claim, action, suit or proceeding incident to any matter
indemnified against under this Agreement, including, without
limitation, court filing fees, court costs, arbitration fees or
costs, witness fees and reasonable fees and disbursements of
legal counsel (whether incurred in any action or proceeding
between the parties to this Agreement or between any party to
this Agreement and any third party), investigators, expert
witnesses, accountants and other professionals and all costs and
expenses incurred as a result of Section 8.4.5.
"Loss" means any loss, obligation, claim, liability,
settlement payment, award, judgment, tax, fine, penalty, interest
charge, cost, expense, damage or deficiency or other charge,
other than Litigation Expense and all costs and expenses incurred
as a result of Section 8.4.5.
"Material Contracts" has the meaning set forth in
Section 3.18.
"Merger" shall mean the merger of Acquisition Subco with and
into Recap Co.
"Multiemployer Plans" has the meaning set forth in
Section 3.15.1.
"NewCanCo" has the meaning set forth in Section 2.1.1.
"Net Underfunding Amount" has the meaning set forth in
subparagraph (vii) of the definition of Excluded Liabilities.
"Non-U.S. Benefit Plans" has the meaning set forth in
Section 3.15.13.
"Other Consents" has the meaning set forth in Section 6.2.5.
"Parent Canada" has the meaning set forth at the beginning
of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Section 3.14.
"Permitted Encumbrances" means: (i) those encumbrances
disclosed in Schedule 1.1.4 of the Disclosure Schedule;
(ii) those encumbrances disclosed in the notes to the Audited
Financial Statements, excluding encumbrances in respect of
Excluded Liabilities; (iii) liens for Taxes, assessments and
other governmental charges not yet due and payable or due but not
delinquent or being timely contested in good faith by appropriate
proceedings and for which adequate reserves have been established
in accordance with GAAP; (iv) mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other like liens arising or incurred
in the ordinary course of business and securing obligations which
are not past due or being timely contested in good faith by
appropriate proceedings; (v) Capital Leases and equipment leases
with third parties entered into in the ordinary course of
business excluding Capital Leases constituting Excluded Debt;
(vi) with respect to Real Property: (A) easements, quasi-
easements, leases, licenses, restrictive covenants, rights-of-way
and other similar encumbrances, provided that none of the same
(individually or in the aggregate) could reasonably be expected
to result in Costs in excess of $350,000, (B) any conditions that
would be shown on or disclosed by a current survey, provided that
none of the same (individually or in the aggregate) could
reasonably be expected to result in Costs in excess of $350,000,
and (C) restrictions imposed by any applicable Law, including
zoning and building Laws; and (vii) all rights in Intellectual
Property requiring subsequent recording or registration to
perfect title.
"Person" means any individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an
association, an unincorporated organization, a Governmental
Entity and any other entity.
"Plans" has the meaning set forth in Section 3.15.1.
"Premises" means the real property presently owned, leased
or licensed by or for the CRL Business.
"Purchase Price" means $443,000,000.
"Purchased Shares" means the shares of Recap Co Common Stock
issued to Acquisition Co in the Merger.
"Real Property" has the meaning set forth in Section 3.12.
"Recapitalization" has the meaning set forth in Section 2.2.
"Recapitalization Documents" means all credit facilities,
notes, indentures, securities purchase agreements, security
documents and other agreements, instruments or documents entered
into in connection with the Recapitalization.
"Recap Co" has the meaning set forth at the beginning of
this Agreement.
"Recap Co Common Stock" means the common stock, par value
$.01, per share, of Recap Co.
"Recap Co Sub Note"means the subordinated, pay-in-kind
promissory note to be issued by Recap Co to CRL on the Closing
Date in substantially the form of Exhibit 2.3.1.
"Recap Subco" has the meaning set forth at the beginning of
this Agreement.
"Recap Subco Common Stock" means the common stock, par value
$.01, per share, of Recap Subco.
"Recap Co Preferred Stock" means the Series A Redeemable
Preferred Stock, par value $.01 per share, of Recap Co.
"Recap Subco Preferred Stock" means the Series A Redeemable
Preferred Stock, par value $.01 per share, of Recap Subco.
"Recap Subsidiaries" means the corporations and other
entities whose capital stock or equity interests are owned by
Recap Subco as and in the percentages listed on Schedule 3.3 of
the Disclosure Schedule, and shall mean and include Recap Co.
"Receivables" has the meaning set forth in the definition of
CRL Business Assets.
"Redemptions" means the series of transactions whereby Recap
Co redeems Common Stock held by CRL, SPAFAS, and International
and Preferred Stock held by WPLP, in each case as described in
Section 2.3.
"Releases" means each Agreement and Release, dated the date
hereof, among each Person who is a party to the Retention
Agreements, Recap Subco and Seller Parent.
"Representative" has the meaning set forth in Section 5.1.
"Required Consents" means, collectively, the Governmental
Consents and the Third Party Consents.
"Retention Agreements" means the agreements set forth on
Schedule 5.6.5.
"Section 338(h)(10) Election" has the meaning set forth in
Section 5.5.5.
"Seller Indemnified Parties" has the meaning set forth in
Section 8.3.
"Seller Parent" has the meaning set forth at the beginning
of this Agreement.
"Sellers" means CRL, SPAFAS, WPLP and International.
"Seller's Equity Percentage" shall mean the number of shares
of Recap Co Common Stock that CRL or any Affiliate of CRL owns at
such time divided by the total number of issued and shares of
Recap Co Common Stock.
"SERP" means the Charles River Laboratories Executive Life
Insurance/Supplemental Retirement Income Plan, as amended and
restated.
"SPAFAS" has the meaning set forth at the beginning of this
Agreement.
"Stage 1 Reorganization" means the transactions which
occurred on July 9, 1999 pursuant to the Contribution Agreement
between Recap Subco and CRL, the Contribution Agreement between
Recap Subco and International, the Contribution Agreement between
Recap Subco and SPAFAS, and the Contribution Agreement between
Recap Subco and CRL (with respect to the transfer of all of the
issued and outstanding shares of CRL U.K. Limited) (collectively,
the "Contribution Agreements").
"Stage 2 Reorganization" has the meaning set forth in
Section 2.1.
"Tax" means any federal, state, local, foreign or provincial
income, gross receipts, property, sales, service, use, license,
lease, excise, franchise, employment, payroll, withholding,
employment, unemployment insurance, workers' compensation, social
security, alternative or added minimum, ad valorem, value added,
stamp, business license, occupation, premium, environmental
windfall profit, customs, duties, estimated, transfer or excise
tax, or any other tax, custom, duty, premium, governmental fee or
other assessment or charge of any kind whatsoever, together with
any interest or penalty imposed by any Governmental Entity.
"Tax Returns" means all returns, reports, estimates,
information returns and statements any nature with respect to
Taxes.
"Tax Sharing Agreements" has the meaning set forth in
Section 3.17.1.
"Transfer Taxes" has the meaning set forth in Section 9.3.
"Transfer Tax Returns" has the meaning set forth in
Section 9.3.
"Unaudited Financial Statements" has the meaning set forth
in Section 5.21.
"Update" has the meaning set forth in Section 5.8.
"WPLP" has the meaning set forth at the beginning of this
Agreement.
"Year 2000 Compliant" has the meaning set forth in
Section 3.20.
1.2 Construction.
1.2.1 References in this Agreement to any gender shall
include references to all genders. Unless the context otherwise
requires, references in the singular include references in the
plural and vice versa. References to a party to this Agreement
or to other agreements described herein means those Persons
executing such agreements. The words "include," "including" or
"includes" shall be deemed to be followed by the phrase "without
limitation" or the phrase "but not limited to" in all places
where such words appear in this Agreement. Except with respect
to Sections 3.2 and 4.2, the representation or statement that an
agreement is "enforceable" shall be deemed to include an
exception to the extent that enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting the
enforcement of creditor's rights generally, and general equitable
principles, whether considered in a proceeding in equity or at
law. The words "the transactions contemplated by this Agreement"
shall include the Redemptions, the Merger, the Recapitalization
and the execution and delivery of the Recap Co Sub Note and the
Investors' Agreement. This Agreement is the joint drafting
product of Seller Parent and Buyer and each provision has been
subject to negotiation and agreement and, in the event of an
ambiguity or question of intent or interpretation, shall not be
construed for or against either party as drafter thereof.
1.2.2 The phrases "have heretofore been provided" or
"has provided" or similar words mean that Seller Parent has
delivered copies of such information to Buyer. The phrase "has
provided access" or similar words means that Seller Parent has
allowed Buyer to review such information if requested by Buyer.
1.3 Accounting Conventions
. All references in the Agreement to financial terms shall
be deemed to refer to such terms as they are defined under GAAP,
unless specifically identified otherwise.
1.4 Disclosure Schedule
. The Disclosure Schedule shall be prepared by Seller
Parent and delivered to Buyer simultaneously with the execution
of this Agreement and shall be arranged in Schedules
corresponding to the numbered Sections contained in this
Agreement. The disclosures in any Schedule shall qualify any
other Schedule or Section to the extent that such information is
pertinent unless the Section specifies a specific Schedule and
all contracts, agreements or other documents referred to on any
Schedule are hereby incorporated by reference. The inclusion of
any contract, agreement or matter on any Schedule shall not be
deemed an admission by Seller Parent or Recap Co that such
contract, agreement or matter is material or required to be
disclosed or that all similar contracts, agreements or matters
have been disclosed except as otherwise expressly required by the
terms of this Agreement.
ARTICLE 2
REORGANIZATION, MERGER RECAPITALIZATION,
REDEMPTIONS AND CLOSING
2.1 Reorganization; Merger
. Upon the terms and subject to the conditions of this
Agreement, the parties agree that the following transactions will
take place immediately prior to the Closing in the order set
forth below (with the steps set forth in Section 2.1.1 through
2.1.5 being hereinafter referred to as the "Stage 2
Reorganizations"):
2.1.1 Recap Subco shall form a wholly owned Canadian
Corporation ("NewCanCo").
2.1.2 WPLP shall contribute all of its CRL Business
Assets used in the CRL Business to Recap Subco and, in exchange
therefor, Recap Subco shall issue to WPLP the Recap Subco
Preferred Stock pursuant to a contribution agreement in
substantially the form of the Contribution Agreements.
2.1.3 Each of CRL, SPAFAS, and International shall
exchange all of Recap Subco Common Stock owned by it for the same
number of shares of Recap Co Common Stock and WPLP shall exchange
all of the Recap Subco Preferred Stock for the same number of
shares of Recap Co Preferred Stock.
2.1.4 CRL shall purchase shares of Recap Co Common Stock
in exchange for cash, Recap Co shall purchase shares of Recap
Subco Common Stock in exchange for cash and Recap Subco shall
purchase shares of NewCanCo common stock in exchange for cash.
2.1.5 Parent Canada shall sell all of its CRL Business
Assets used in the CRL Business to NewCanCo in exchange for cash
pursuant to an Asset Purchase Agreement in substantially the form
of the Contribution Agreements.
2.1.6 Buyer shall form a wholly owned Delaware
corporation ("Acquisition Co") and contribute at least
$90,000,000 thereto in exchange for shares of common stock of
Acquisition Co.
2.1.7 Buyer and Seller Parent shall cause Acquisition Co
to merge with and into Recap Co with Recap Co being the surviving
entity and with Buyer receiving such number of shares of Recap Co
Common Stock constituting 87.5% of the total number of shares of
Recap Co Common Stock which shall be issued and outstanding
following the Redemptions.
2.2 Recapitalization of Recap Co
. Upon the terms and subject to the conditions of this
Agreement, prior to the Closing Date, Buyer will use its
Commercial Efforts to assist Recap Co and Recap Subco to obtain
debt financing all upon the terms and conditions set forth in the
Commitment Letters (the "Recapitalization"). On the Closing
Date, Seller Parent shall cause Recap Co and Recap Subco to enter
into the Recapitalization Documents. The proceeds of the
Recapitalization together with the Recap Co Sub Note will be used
to consummate the Redemptions.
2.3 Redemptions
. Upon the terms and subject to the conditions of this
Agreement, at the Closing:
2.3.1 Recap Co shall redeem all of the shares of Recap
Co Preferred Stock owned by WPLP for $242,000,000 in cash payable
by wire transfer of immediately available funds to such account
as is designated by WPLP, and WPLP shall deliver to Recap Co
certificates, duly endorsed for transfer, representing such
shares of Recap Co Preferred Stock.
2.3.2 Recap Co shall redeem all of the shares of Recap
Co Common Stock owned by SPAFAS for $10,000,000 in cash payable
by wire transfer of immediately available funds to such account
as is designated by SPAFAS, and SPAFAS shall deliver to Recap Co
certificates, duly endorsed for transfer, representing such
shares of Recap Co Common Stock.
2.3.3 Recap Co shall redeem all of the shares of Recap
Co Common Stock owned by International for $8,000,000 in cash
payable by wire transfer of immediately available funds to such
account as is designated by International, and International
shall deliver to Recap Co certificates representing such shares
of Recap Co Common Stock.
2.3.4 Recap Co shall redeem such number of shares of
Recap Co Common Stock owned by CRL constituting 87.5% of the
total number of shares of Recap Co Common Stock then issued and
outstanding following the redemptions set forth in Sections 2.3.1
through 2.3.3 so that immediately after all of the Redemptions
CRL shall own 12.5% of the issued and outstanding shares of Recap
Co Common Stock for $140,000,000 in cash, payable by wire
transfer of immediately available funds to such account as is
designated by CRL, and $43,000,000 in principal amount of the
Recap Co Sub Note, and CRL shall deliver to Recap Co
certificates, duly endorsed for transfer, representing such
shares of Recap Co Common Stock.
2.3.5 By execution and delivery of this Agreement, Buyer
and the other parties to this Agreement hereby and as of the
Closing Date consents to the Redemptions.
2.4 Closing
. Unless this Agreement shall have been terminated and the
transactions contemplated herein have been abandoned pursuant to
Article 7, the Closing of the Stage 2 Reorganization,
Recapitalization, Redemptions and Merger (the "Closing") shall
take place at 10:00 a.m. at the offices of Nixon, Peabody LLP,
437 Madison Avenue, New York, New York 10022 on the later of
September 24, 1999 (with an effective date upon the close of
business on September 25, 1999) or the tenth calendar day
following the satisfaction of all conditions in Article 6 or such
other time and place as may be agreed to by Seller Parent and
Buyer (the "Closing Date").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER PARENT
Seller Parent represents and warrants to Buyer as of the
date hereof as follows:
3.1 Organization, Good Standing and Power
. Except as set forth in the Disclosure Schedule, each of
Seller Parent, Recap Co, Recap Subco, CRL, SPAFAS, International
and Parent Canada is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction
of its incorporation. Seller Parent, Recap Co, Recap Subco and
each Seller (other than WPLP) has all requisite corporate power
and authority to enter into this Agreement and to perform its
obligations hereunder. WPLP is a limited partnership duly
organized under the laws of the State of Delaware. WPLP has all
requisite partnership power and authority to enter into this
Agreement and to perform its obligations hereunder. Each of the
Celtics Companies has all requisite corporate power and authority
to own, lease and operate the CRL Business Assets owned by it.
As of the Closing Date, Recap Co, Recap Subco and each of the
Recap Subsidiaries will be duly authorized, qualified or licensed
to do business as a foreign corporation and, where such concept
is applicable, in good standing, in each of the jurisdictions in
which its ownership of the CRL Business Assets owned by it as of
the Closing Date, or the conduct of the CRL Business by it as of
the Closing Date, requires such authorization, qualification or
licensing, except where the failure to so qualify or to be in
good standing would not, individually or in the aggregate,
reasonably be expected to have a CRL Business Material Adverse
Effect.
3.2 Authorization and Validity
. The execution, delivery and performance by Seller Parent,
Recap Co, Recap Subco and each Seller (except WPLP) of this
Agreement and the consummation by such corporations of the
transactions contemplated by this Agreement and the Internal
Reorganization has been duly authorized by the Boards of
Directors of Seller Parent, Recap Co, Recap Subco and each Seller
(except WPLP), respectively. As of the Closing Date, no other
corporate or stockholder action on the part of Seller Parent,
Recap Co, Recap Subco, CRL, SPAFAS, International or Parent
Canada will be necessary for the authorization, execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby or the Internal
Reorganization. The execution, delivery and performance by WPLP
of this Agreement has been duly authorized by all partnership
action required on its part. This Agreement has been duly
executed and delivered by each of Seller Parent, Recap Co, Recap
Subco and each Seller and constitutes a valid and legally binding
obligation of each of them, enforceable against each of them in
accordance with its terms.
3.3 Capitalization of Recap Subco and Recap Subsidiaries
. The Disclosure Schedule sets forth all classes or series,
and the number of shares of capital stock or other equity
interests of Recap Co and Recap Subco authorized, issued and
outstanding and the beneficial and record holders thereof.
Except as described in this Agreement (including the Stage 2
Reorganization) or the Recapitalization Documents and except for
arrangements, understandings, agreements or commitments to which
Buyer is a party or plans of Buyer, there are no outstanding
options, calls, warrants, subscriptions or other rights or
agreements to acquire, or any plans, agreements, or commitments
providing for the issuance or redemption of or the right to
acquire: (i) any capital stock or other equity interest of Recap
Subco or any Recap Subsidiary, or (ii) any securities or other
obligations or rights convertible into, exercisable for or
exchangeable for the capital stock or other equity interests of
Recap Subco or any Recap Subsidiary. Other than the Recap
Subsidiaries, neither Recap Co nor Recap Subco has any equity
ownership interest in any other Person. Except as set forth in
the Disclosure Schedule, as of the Closing Date, all of the
issued and outstanding shares of capital stock or other equity
interests of each of the Recap Subsidiaries will be owned,
directly or indirectly, by Recap Co, free and clear of all liens,
encumbrances and transfer restrictions of any kind. All of the
issued and outstanding shares of common stock and other capital
stock of each Recap Subsidiary have been duly and validly
authorized and issued and are fully paid and non-assessable.
3.4 Consent and Approvals; No Conflict
. Except as described in the Disclosure Schedule and except
for the pre-merger notification requirements of the HSR Act, the
expiration or early termination of the waiting periods thereunder
and such filings, notifications and approvals as are required
under foreign antitrust or competition Laws, the execution,
delivery and performance of this Agreement by Seller Parent,
Recap Co, Recap Subco and by each Seller, and the consummation by
each of them of the transactions contemplated hereby and the
Internal Reorganization: (i) did not (with respect to the
Stage 1 Reorganization) and will not (with respect to the Stage 2
Reorganization and the transactions contemplated hereby), with or
without the giving of notice or the lapse of time or both,
violate, or require any of them to obtain any consent, approval,
or authorization to make any filing or to give any notice to any
Governmental Entity under any provision of any Law except where
the failure to obtain, make or give any such consents, approvals,
filings or notices would not, individually or in the aggregate,
reasonably be expected to result in Costs in excess of $350,000;
and (ii) did not (with respect to the Stage 1 Reorganization) and
will not (with respect to the Stage 2 Reorganization and the
transactions contemplated hereby), with or without the giving of
notice or the lapse of time or both, conflict with, result in the
breach or termination of any provision of, constitute a Default
under, result in the acceleration of the performance of an
obligation of the CRL Business, or result in the creation of a
lien, charge or encumbrance upon any of the CRL Business Assets
pursuant to any of the organizational documents of Recap Subco,
or any Recap Subsidiary, or any Contract to which Seller Parent
(with respect to the CRL Business), any Seller (with respect to
the CRL Business), Recap Subco or any Recap Subsidiary is a party
or by which Seller Parent (with respect to the CRL Business), any
Seller (with respect to the CRL Business), Recap Subco or any
Recap Subsidiary or any of the CRL Business Assets is bound,
except for such conflicts, breaches, terminations, Defaults,
accelerations, liens, charges or encumbrances which would not,
individually or in the aggregate, reasonably be expected to
result in Costs in excess of $350,000. Seller Parent has
delivered to Buyer a true, complete and correct copy of each
agreement or other document relating to the Stage 1
Reorganization prior to the date hereof.
3.5 Purchased Shares in Merger
. The Purchased Shares are duly authorized, validly issued,
fully paid and non-assessable. The issuance of the Purchased
Shares in the Merger are not subject to any preemptive, right of
first refusal, first offer, or other rights on behalf of any
Person. At the Closing, upon the issuance of the Purchased
Shares to the Buyer in the Merger, Buyer will have good and valid
title to the Purchased Shares free and clear of all liens,
restrictions or other encumbrances of any kind.
3.6 Financial Statements.
3.6.1 Seller Parent has delivered to Buyer the most
recent draft of the consolidated balance sheets of the CRL
Business as of December 26, 1998 and December 27, 1997, and the
related consolidated statements of income, changes in
shareholder's equity, and cash flows, including the notes
thereto, for each of the three years in the period ended
December 26, 1998 (the "Draft Audited Financial Statements").
Seller Parent has also delivered to Buyer the most recent draft
of the unaudited consolidated balance sheet of the CRL Business
as of June 26, 1999, and the related unaudited consolidated
statements of income and cash flows, including the notes thereto,
for the six-month periods ended June 26, 1999 and June 27, 1998
(collectively, the "Draft Unaudited Financial Statements" and
together with the Draft Audited Financial Statements, the "Draft
Financial Statements"). Upon delivery of the Financial
Statements to Buyer pursuant to Sections 5.21.1 and 5.21.2, they
will have been prepared from the books and records of the CRL
Business and in accordance with GAAP consistently applied and
maintained throughout the periods indicated (except that the
Unaudited Financial Statements will not include comprehensive
footnotes) and will fairly present in all material respects the
financial condition of the CRL Business as at their respective
dates and the results of its operations and cash flows for the
periods covered thereby. Upon delivery of the Unaudited
Financial Statements to Buyer pursuant to Section 5.21.2, they
will include all adjustments, which consist only of normal
recurring adjustments, necessary for such fair presentation.
3.6.2 Notwithstanding anything contained herein to the
contrary, neither Seller Parent nor Recap Co make any
representation or warranty as to any tax or accounting treatment
which may or may not be available to Recap Co or Buyer upon
consummation of the transactions contemplated by this Agreement,
including the availability of any step-up in basis for tax
purposes or the availability of leveraged recapitalization
accounting treatment and the existence of goodwill (or the amount
thereof) that is or may be required to be in any financial
statements of Recap Co for periods after the Closing Date.
3.7 Absence of Undisclosed Liabilities
. Except as set forth in or reserved against in the Balance
Sheet and except as set forth in the Disclosure Schedule, the CRL
Business does not have any liabilities of any nature (whether
accrued, absolute, contingent or otherwise, whether due or to
become due, and whether or not the amount thereof is readily
ascertainable or required by GAAP to be disclosed on a balance
sheet (or a footnote thereto)), except for current liabilities
(determined in accordance with GAAP consistently applied)
incurred after the Balance Sheet Date in the ordinary course of
business consistent with past practice; provided, however in no
event shall the representation and warranty contained in this
Section 3.7 cover or be deemed to cover any matter, subject,
category or event which is covered by or addressed in any other
representation or warranty of Seller Parent contained in this
Agreement.
3.8 Absence of Certain Changes
. Except as set forth in the Disclosure Schedule, since the
Balance Sheet Date, the CRL Business has been conducted in the
ordinary course of business consistent with past practice, and
other than in the ordinary course of business, there has not been
with respect to the CRL Business any: (i) sale, assignment,
pledge, hypothecation or other transfer of any of the CRL
Business Assets which, individually or in the aggregate, could
reasonably be expected to have a value in excess of $350,000,
except for the sale of inventory, collection of accounts
receivable and the disposal of obsolete or worn out equipment, in
any case in the ordinary course of business consistent with past
practice, (ii) termination or material amendment of any Material
Contract, (iii) suffered any damage, destruction or other
casualty loss (whether or not covered by insurance) which,
individually or in the aggregate, have resulted or are reasonably
likely to result, in Costs in excess of $350,000, (iv) except for
salary, bonuses and incentive compensation paid or adjusted in
the ordinary course of business consistent with past practices,
increase or amend the compensation payable or to become payable
to any Highly Compensated Employee or increase or amend any
employee benefit plan, payment or arrangement for any such Highly
Compensated Employee; (v) labor dispute or, to the Knowledge of
Seller Parent, threatened labor dispute involving any Highly
Compensated Employee or any group of employees, (vi) actual or
threatened dispute with, or loss of business from, any material
customer or supplier, or to the Knowledge of Seller Parent, any
event or circumstances which could reasonably be expected to
result in any such dispute or loss of business, (vii) change in
the method or procedures for billing or collection of customer
accounts or recording of customer accounts receivable or reserves
for doubtful accounts, or any method of accounting or accounting
principles, (viii) cancellation of debts or waiver of any claim
or right which could reasonably be expected to have a value,
individually or in the aggregate, in excess of $350,000,
(ix) agreements or commitments for capital expenditures in excess
of $350,000 (individually or in the aggregate) other than as set
forth in the 1999 capital expenditure budget of the CRL Business
heretofore delivered to Buyer or other than as approved by Buyer
in writing, (x) security interest, lien or other encumbrances
with respect to any of the CRL Business Assets other than
Permitted Encumbrances, (xi) adverse change which is reasonably
likely to have a CRL Business Material Adverse Effect,
(xii) amendment of any charter, by-laws or other governing
documents of Recap Subco or any Recap Subsidiary,
(xiii) employment or consulting agreement entered into with any
Employee or any increase in the compensation of any Employee,
except for increases in the ordinary course of business
consistent with past practice or as a result of any collective
bargaining, employment or other agreement, or pursuant to any
policy or any bonus, pension, profit-sharing or other plan or
commitment set forth in the Disclosure Schedule, (xiv) loans or
any other transaction with any Affiliate other than transactions
entered into in the ordinary course of business consistent with
past practice, (xv) establishment, amendment or contribution to
any pension, retirement, profit sharing, or stock bonus plan or
multiemployer plan covering any of the employees of the CRL
Business, except as required by Law or in accordance with past
practice, or (xvi) an agreement to do any of the foregoing.
3.9 Entire CRL Business
. Except for the Excluded Assets or as set forth on
Schedule 3.9 of the Disclosure Schedule and except for such
assets or rights the failure of which to have would be reasonably
likely to result in Costs in excess of $350,000, the CRL Business
Assets constitute all of the assets, properties and rights used
to conduct the CRL Business as conducted on the date of this
Agreement and will constitute all of the assets, properties and
rights used to conduct the CRL Business on the Closing Date.
3.10 Legal Proceedings
. Except as described in the Disclosure Schedule, there is
no litigation, proceeding, action, suit, order, judgment or
decree before, of or by, or to the Knowledge of Seller Parent,
investigation by, any Governmental Entity or any claim in writing
outside of the ordinary course of business which is pending
against Seller Parent, any Seller or any CRL Company with respect
to the CRL Business or, to the Knowledge of Seller Parent,
threatened in writing against Seller Parent, any Seller or any
CRL Company or the CRL Business: (i) relating to the CRL
Business Assets or the CRL Business as to which there is a
reasonable likelihood of an outcome or outcomes that would,
individually or in the aggregate, reasonably be expected to
result in Costs in excess of $350,000, or (ii) which seeks to
question, delay or prevent the consummation of the transactions
contemplated by this Agreement or the Internal Reorganization.
3.11 Employees and Labor Relations Matters.
3.11.1 The Disclosure Schedule contains a list of all
employees of the CRL Business whose projected 1999 annual base
compensation equals or exceeds $100,000 (each, a "Highly
Compensated Employee").
3.11.2 Except as described in the Disclosure Schedule, to
the Knowledge of Seller Parent, there are no strikes, walk-outs,
lock-outs or other concerted work actions or union organization
activity involving a material number of employees of the CRL
Business pending or threatened with respect to the CRL Business
which, individually or in the aggregate, could reasonably be
expected to result in Costs in excess of $350,000. Neither Recap
Subco nor any Recap Subsidiary nor any Seller is a party to any
collective bargaining agreements with respect to the CRL Business
with any labor union or other representative of employees with
respect to employees of the CRL Business located in the United
States.
3.11.3 Except as set forth in the Disclosure Schedule, no
CRL Company nor any Seller is a party to any collective
bargaining agreements with any labor union or other
representative of employees or any works' council or similar
entity under applicable Laws with respect to employees of the CRL
Business located outside of the United States, including local
agreements, amendments, supplements, letters and memoranda of
understanding of any kind, nor, to the Knowledge of Seller
Parent, is there any pending or threatened union organization
activity by or among any such employees.
3.11.4 Except as set forth in the Disclosure Schedule,
there are no material violations of any Federal, state, local or
foreign statutes, ordinances, rules, regulations, orders,
directives or other Laws with respect to the employment of
individuals by, or the employment practices or work conditions
of, Recap Subco or any Recap Subsidiary or any Seller with
respect the conduct of the CRL Business, or the terms and
conditions of employment, wages and hours of employees of the CRL
Business. Neither Recap Subco nor any Recap Subsidiary nor any
Seller with respect to the CRL Business is engaged in any unfair
labor practice or other unlawful employment practice and, except
as set forth in the Disclosure Schedule, there are no charges of
unfair labor practices or other employee-related complaints
pending or, to the Knowledge of Seller Parent, threatened against
any such Person before the National Labor Relations Board, the
Equal Employment Opportunity Commission, the Occupational Safety
and Health Review Commission, the Department of Labor or any
other Governmental Entity.
3.12 CRL Business Tangible Assets; Real Property.
(a) Except as set forth in the Disclosure Schedule, as
of the Closing Date, (i) Recap Subco or one of the Recap
Subsidiaries will have good, valid and marketable title to all of
the CRL Business Assets which constitute owned real property,
(ii) Recap Subco or one of the Recap Subsidiaries will have good
and valid title to all of the CRL Business Assets which
constitute personal, mixed or other (except Intellectual
Property, as to which Section 3.13 relates) property, (iii) Recap
Subco or one of the Recap Subsidiaries will have a valid and
binding leasehold interest in all of the CRL Business Assets
which constitute leased property, and (iv) Recap Subco or one of
the Recap Subsidiaries will have good and valid title to the
percentage of outstanding capital stock or other equity interests
of all of the Recap Subsidiaries as set forth in Schedule 3.3 of
the Disclosure Schedule, in each case, except to the extent that
such CRL Business Assets have been sold or otherwise disposed of
prior to the Closing Date in the ordinary course of business or
otherwise in accordance with this Agreement, and in each case
free and clear of all liens, charges and other encumbrances of
any kind, except Permitted Encumbrances.
(b) The Disclosure Schedule sets forth a complete and
accurate list of all real property leased to or owned by any of
the CRL Companies and all other real property in which any of the
CRL Companies has any interest (collectively, the "Real
Property").
3.13 Intellectual Property
. Except as described in the Disclosure Schedule, as of the
Closing Date, Recap Subco or one of the Recap Subsidiaries will
own good and valid title to, or be licensed to use, all material
Intellectual Property used to conduct the CRL Business as
presently conducted. Except as set forth in the Disclosure
Schedule, to the Knowledge of Seller Parent (i) there are no
actions or proceedings pending or threatened in writing which
challenge the CRL Business' right to use any of the Intellectual
Property necessary to conduct the CRL Business, and (ii) neither
Seller Parent nor any of its Affiliates has received any written
notice of, nor has knowledge of any facts which indicate the
likelihood of, any infringement by the CRL Business as presently
conducted of the trademark rights of others in any manner which
would, individually or in the aggregate, reasonably be expected
to result in Costs in excess of $350,000 and (iii) neither Seller
Parent nor any of its Affiliates has received any written notice
of, nor has knowledge of any facts which indicate the likelihood
of, any infringement by, or any conflict with any third party
with respect to, the patents included in the Intellectual
Property (including, without limitation, any demand or request
that Seller Parent or its Affiliates license any rights from a
third party). Notwithstanding anything to the contrary contained
in this Agreement, except for the representations and warranties
contained in this Section 3.13, neither Seller Parent nor any
other Person makes any express or implied representation or
warranty on behalf of Seller Parent, Recap Subco or any Recap
Subsidiary with respect to Intellectual Property.
3.14 Compliance with Applicable Laws
. Except as set forth in the Disclosure Schedule, and
without admitting any liability with respect thereto (except to a
Buyer Indemnified Party in the event of a breach of the
representation and warranty contained in this Section 3.14 which
entitles such Buyer Indemnified Party to indemnification pursuant
to Section 8.2(a)), the CRL Business and each of Seller Parent
(with respect to the CRL Business), Sellers (with respect to the
CRL Business), Recap Subco and the Recap Subsidiaries, has been
and is operated and conducted so as to comply with all applicable
Laws, except where the failure to comply with such Laws would
not, individually or in the aggregate, reasonably be expected to
result in Costs in excess of $350,000. Except as described in
the Disclosure Schedule, as of the Closing Date, to the Knowledge
of Seller Parent, Recap Subco and Recap Subsidiaries shall have
all licenses, permits, consents, approvals, authorizations,
qualifications and orders of each Governmental Entity required
for the ownership of the CRL Business Assets and conduct of the
CRL Business as presently conducted (collectively, "Permits"),
except where the failure to have such licenses, permits,
consents, approvals, authorizations, qualifications and orders
would not, individually or in the aggregate, reasonably be
expected to result in costs in excess of $350,000.
3.15 Employee Benefit Plans.
3.15.1 The Disclosure Schedule sets forth with respect to
all United States locations of the CRL Business each pension,
profit-sharing, savings, bonus, incentive or deferred
compensation, severance pay, vacation pay, medical, life
insurance, welfare or other employee benefit plan in which
employees of Recap Subco or any of the Recap Subsidiaries
participate or that Recap Subco or any of the Recap Subsidiaries
maintains or sponsors, or to which Recap Subco or any of the
Recap Subsidiaries is required to make contributions. All
pension, profit-sharing, savings, bonus, incentive or deferred
compensation, severance pay, medical, life insurance, welfare or
other employee benefit plans within the meaning of Section 3(3)
of ERISA in which the U.S. employees of Recap Subco or any of the
Recap Subsidiaries participate (such plans and related trusts,
insurance and annuity contracts, funding media and related
agreements and arrangements, other than any "multiemployer plan"
(within the meaning of Section 3(37) of ERISA), being hereinafter
referred to as the "Benefit Plans" and any such multiemployer
plans being hereinafter referred to as the "Multiemployer Plans")
comply with all requirements of the Department of Labor (the
"DOL") and the IRS, and with all other applicable Laws, except
where the failure to comply with such Laws (individually or in
the aggregate) would not reasonably be expected to result in
Costs in excess of $350,000. The CRL Companies have furnished to
Buyer copies of all Benefit Plans and all financial statements,
actuarial reports and annual reports and returns filed with the
IRS with respect to such Benefit Plans for a period of two years
prior to the date hereof. To the Knowledge of Seller Parent,
such financial statements, actuarial reports and annual reports
and returns are true and accurate in all material respects.
3.15.2 Except as set forth in the Disclosure Schedule,
each Benefit Plan intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS
as to its qualification under Section 401(a) of the Code, and
nothing has occurred in the operation of any such Benefit Plan
which, either individually or in the aggregate, would reasonably
be expected to cause the loss of such qualification or the
imposition of any liability, penalty or tax under ERISA or the
Code which would reasonably be expected to result in Costs in
excess of $350,000.
3.15.3 No Benefit Plan which is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA) (hereinafter
referred to as the "Defined Benefit Plans") has incurred an
"accumulated funding deficiency" (within the meaning of
Section 412(a) of the Code), whether or not waived.
3.15.4 Except as set forth in the Disclosure Schedule, in
the last six (6) years there has been no "reportable event"
(within the meaning of Section 4043 of ERISA) for which there has
been a nonwaiveable notice requirement imposed under Section 4043
of ERISA with respect to any Defined Benefit Plan.
3.15.5 To the Knowledge of Seller Parent, no "prohibited
transaction" (within the meaning of Section 406 of ERISA or
Section 4975(c) of the Code) has occurred with respect to any
Benefit Plan.
3.15.6 None of the CRL Companies has incurred any
liability to the PBGC, except for required premium payments. No
notice of termination has been filed by the plan administrator
(pursuant to Section 4041 of ERISA) or issued by the PBGC
(pursuant to Section 4042 of ERISA) with respect to any Benefit
Plan subject to ERISA. There has been no termination of any
Defined Benefit Plan or any related trust by any of the CRL
Companies.
3.15.7 As of the date of the most recent actuarial
report, the excess of the aggregate present value of accrued
benefits over the aggregate value of the assets of any Defined
Benefit Plan (computed both on a termination basis and on an
ongoing basis) is not more than $-0-, and there are no unfunded
vested benefits (within the meaning of PBGC Reg. 4006.4) with
respect to any Defined Benefit Plan.
3.15.8 There are no overdue contributions which are
required to be made by any of the CRL Companies to trusts in
connection with any Benefit Plan that is a "defined contribution
plan" (within the meaning of Section 3(34) of ERISA).
3.15.9 Other than claims in the ordinary course for
benefits with respect to the Benefit Plans, there are no actions,
suits or claims (including claims for income taxes, interest,
penalties, fines or excise taxes with respect thereto) pending
with respect to any Benefit Plan, or, to the Seller Parent's
Knowledge, any circumstances which would reasonably be expected
to give rise to any such action, suit or claim (including claims
for income taxes, interest, penalties, fines or excise taxes with
respect thereto).
3.15.10 All material reports, returns, notices and similar
documents with respect to the Benefit Plans required to be filed
with the IRS, the DOL, the PBGC or any other Governmental Entity
have been so filed.
3.15.11 Except as set forth in the Disclosure Schedule,
none of the CRL Companies has any obligation to provide health or
other welfare benefits to former, retired or terminated employees
in the CRL Business, except as specifically required under
Section 4980B of the Code or Section 601 of ERISA. Each of the
CRL Companies has complied with the notice and continuation
requirements of Section 4980B of the Code and Section 601 of
ERISA and the regulations thereunder.
3.15.12 None of the CRL Companies maintains, sponsors or
contributes to and has never maintained, sponsored or contributed
to any Multiemployer Plan.
3.15.13 The Disclosure Schedule sets forth all benefit
plans, contracts and arrangements covering non-U.S. CRL Business
employees ("Non-U.S. Benefit Plans"). Each of the CRL Companies
and Sellers is and following the Stage 2 Reorganization each of
Recap Subco and each Recap Subsidiary will be in compliance with
applicable Laws and collective bargaining agreements with respect
to all Non-U.S. Benefit Plans except where the failure to comply
with such Laws and agreements (individually or in the aggregate)
would not reasonably be expected to result in Costs in excess of
$350,000. Except as set forth in the Disclosure Schedule, there
are no unfunded liabilities (determined in accordance with GAAP)
with respect to any Non-U.S. Benefit Plans that are defined
benefit plans.
3.16 Environmental Matters
. Except as set forth in the Disclosure Schedule:
(a) each of the CRL Companies has duly complied with,
and the CRL Business is conducted and has been conducted in
substantial compliance with, all Environmental Laws, except where
the failure to comply with such Laws (individually or in the
aggregate) would not reasonably be expected to result in Costs in
excess of $350,000, and each of the CRL Companies has provided
Buyer with copies of all Phase I and Phase II environmental site
assessments and other material reports, notices and similar
materials in their possession and related to Environmental Laws
or Environmental Claims;
(b) none of the CRL Companies has received written
notice of, nor are there any facts to Seller Parent's Knowledge
which can reasonably be expected to give rise to, any
Environmental Claim against or affecting any of the CRL Companies
in the conduct or operation of the CRL Business as currently
conducted;
(c) none of the CRL Companies, nor, to the Knowledge
of Seller Parent, any other Person, has generated, treated,
transported, stored, recycled, discharged, emitted, disposed of
or released any Hazardous Substances or arranged for the
generation, treatment, transport, storage, recycling, discharge,
emission, disposal or release of any Hazardous Substances, which
could reasonably be expected to give rise to any Environmental
Claim or any liability or corrective or remedial obligation of
any of the CRL Companies in the conduct or operation of the CRL
Business under any Environmental Laws, except for such
Environmental Claims, liabilities or obligations which
(individually or in the aggregate) would not reasonably be
expected to result in Costs in excess of $350,000;
(d) none of the Real Property, or property to which
any of the CRL Companies has transported or arranged for the
transportation of any Hazardous Substances, is listed on the
National Priorities List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), on CERCLIS (as referred to in
CERCLA) or on any similar federal or state list of sites
requiring investigation or clean-up; and
(e) The New Jersey Industrial Site Recovery Act,
N.J.S.A. 13:1 K-6 et seq., and the regulations promulgated
thereunder, will not be applicable to any of the Real Property
upon consummation of the transactions contemplated by this
Agreement or the Internal Reorganization. The Connecticut
Transfer Act, C.G.S.A., Chapter 445, 22a-134 et seq., and the
regulations promulgated thereunder, will not be applicable to any
of the Real Property upon consummation of the transactions
contemplated by this Agreement or the Internal Reorganization.
3.17 Tax Matters.
3.17.1 Except as disclosed in the Disclosure Schedule:
(i) Recap Subco and each Recap Subsidiary has filed all material
Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed,
granted and have not expired; (ii) Recap Subco and each Recap
Subsidiary has paid all Taxes which have become due as shown on
such Tax Returns; (iii) no material claim for unpaid Taxes is
being asserted in writing by a Tax authority with respect to
Recap Subco or any Recap Subsidiary; and (iv) all Tax sharing
agreements to which Recap Subco and any Recap Subsidiary is a
party ("Tax Sharing Agreements") will be terminated as of the
Closing Date and after the Closing Date none of Recap Subco nor
any Recap Subsidiary shall have any liability with respect to any
Tax under any such Tax Sharing Agreement.
3.17.2 CRL is a member of Seller Parent's consolidated
federal income tax group, eligible to file the Section 338(h)(10)
Election.
3.17.3 No election under Section 341(f) of the Code has
been or will be made to treat Recap Subco or any Recap Subsidiary
as a "consenting corporation" as defined therein.
3.17.4 The accrual for Taxes reflected in the Financial
Statements accurately reflects the total amount of unpaid Taxes
arising from or with respect to the CRL Business Assets or the
operation or conduct of the CRL Business on or prior to the
Closing Date, whether or not disputed and whether or not
presently due and payable, of Recap Subco and each Recap
Subsidiary as of the close of the periods covered by the
Financial Statements. Adequate accruals and reserves have been
made in the Financial Statements and the books and records of
each of Recap Subco and each Recap Subsidiary for the payment of
all unpaid federal, state, local, foreign and other Taxes arising
from or with respect to the CRL Business Assets or the operation
or conduct of the CRL Business on or prior to the Closing Date
for all periods through the respective dates thereof, whether or
not yet due and payable and whether or not disputed.
3.18 Contracts
. Except as set forth in the Disclosure Schedule, all
written and, to the Knowledge of Seller Parent, all oral
contracts, employment agreements, consulting agreements, service
agreements, guarantees (or other agreements or commitments
relating to contingent obligations), purchase commitments for
materials and other services, advertising and promotional
agreements, leases, license agreements and other agreements
pertaining to the CRL Business that are included in the CRL
Business Assets ("Contracts") which (a) (i) may be performed in
whole or in part after the Closing Date; (ii) individually
involve payments or other financial commitments as of the date of
this Agreement which, by its terms, must be in excess of $100,000
during any twelve month period; (iii) extend more than twelve
(12) months after the date of this Agreement; and (iv) are not
terminable without penalty within ninety (90) days or (b) are set
forth in Schedule 3.18 of the Disclosure Schedule (collectively
the "Material Contracts") are in full force and effect and are
valid and enforceable in accordance with their respective terms
except where the failure to be in full force and effect and valid
and enforceable would not, individually or in the aggregate,
reasonably be expected to result in Costs in excess of $350,000.
The Disclosure Schedule sets forth a complete and correct list of
each Material Contract and all powers of attorney, if any,
relating to the conduct or operation of the CRL Business. Except
as set forth in the Disclosure Schedule, the CRL Business is not
in Default in the performance of any obligation under any
Contract except for such Defaults which, individually or in the
aggregate, would not reasonably be expected to result in Costs in
excess of $350,000, and the Celtics Business has not received
written notice or, to Seller Parent's Knowledge, oral notice that
any party to any Material Contract intends to terminate, amend or
modify any such Material Contract. To the Knowledge of Seller
Parent, no other party or parties to any Material Contract is in
Default in the performance of any obligation thereunder except
for such Defaults which, individually or in the aggregate, would
not reasonably be expected to result in Costs in excess of
$350,000.
3.19 Certain Fees
. With the exception of fees and expenses payable to Morgan
Stanley & Co. Inc., which shall be paid by Seller Parent, none of
Seller Parent, any Seller, any CRL Company nor any of their
Affiliates has employed any broker or finder or incurred any
other liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by this
Agreement.
3.20 Year 2000
. Except as set forth in the Disclosure Schedule, to the
Knowledge of Seller Parent all computer software, hardware and
related systems (including without limitation embedded
microcontrollers in non computer equipment) (collectively,
"Computer Systems") included in the CRL Business Assets are
either (i) Year 2000 Compliant or (ii) designated (in the 1999
capital expenditure budget of the CRL Business heretofore
delivered to Buyer) to receive upgrades or modifications to
become Year 2000 compliant, except where a failure of such
Computer Systems to be Year 2000 Compliant would not
(individually or in the aggregate) reasonably be expected to
result in Costs in excess of $350,000. For purposes of this
Section 3.20, "Year 2000 Compliant" shall mean that the Computer
Systems are designed, have been modified or will be modified to
be able to process accurately all date/time data to be used prior
to, during, and after the calendar year 2000 A.D., without error,
aborts, delays or other interruptions relating to the processing,
calculation, comparing, sequencing or other use of date/time data
from, into and between the twentieth and twenty-first centuries.
3.21 Insider Interests; Intercompany Transactions
. Except as set forth in the Disclosure Schedule, no
stockholder, officer, director or Affiliate of Seller Parent or
any CRL Company (a) is presently a party to any transaction,
agreement or arrangement pertaining to the CRL Business or
(b) owns any interest in any of the CRL Business Assets.
3.22 No Other Representations or Warranties
. Except for the representations and warranties contained
in this Article 3 or in any certificate executed by Seller
Parent, any CRL Company or any Seller pursuant to Section 6.2.3,
neither Seller Parent nor any other Person makes any express or
implied representation or warranty on behalf of Seller Parent,
any CRL Company or any Seller.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT
Buyer and Buyer Parent, jointly and severally, represent and
warrant to Seller Parent and each of the Sellers as follows:
4.1 Organization, Good Standing and Power
. Buyer is a limited liability company and Buyer Parent is
a limited partnership, in each case, duly organized, validly
existing and in good standing under the Laws of the jurisdiction
of its incorporation or formation, as the case may be, and has
all requisite limited partnership or limited liability company
power and authority to own, lease and operate the assets owned by
it and to conduct the business as now conducted by it. Each of
Buyer and Buyer Parent has all requisite limited partnership or
limited liability power and authority to enter into this
Agreement and the Recapitalization Documents to which it is a
party and to perform its obligations hereunder and thereunder.
Each of Buyer and Buyer Parent is duly authorized, qualified or
licensed to do business as a foreign corporation or entity and,
where such concept is applicable, is in good standing, in each of
the jurisdictions in which its ownership of assets owned by it,
or the conduct of the business as now conducted by it, requires
such authorization, qualification or licensing, except where the
failure to so qualify or to be in good standing would not,
individually or in the aggregate, reasonably be expected to have
a Buyer Material Adverse Effect.
4.2 Authorization and Validity of Agreements
. The execution, delivery, and performance by Buyer and
Buyer Parent of this Agreement and the consummation by Buyer and
Buyer Parent of the transactions contemplated hereby have been
duly authorized by all necessary limited liability company or
partnership action. No other limited liability company or
partnership action on the part of Buyer or Buyer Parent is
necessary for the authorization, execution, delivery and
performance by Buyer or Buyer Parent of this Agreement and the
consummation by Buyer or Buyer Parent of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each of Buyer and Buyer Parent and constitutes a
valid and legally binding obligation of each of Buyer and Buyer
Parent, enforceable against each of Buyer and Buyer Parent in
accordance with its terms.
4.3 Consents and Approvals; No Conflict
. Except for the pre-merger notification requirements of
the HSR Act, the expiration or early termination of the waiting
periods thereunder and such filings, notifications and approvals
as are required under foreign antitrust or competition Laws, the
execution, delivery and performance of this Agreement by Buyer or
Buyer Parent, and the consummation by each of them of the
transactions contemplated hereby and thereby:
(a) will not violate, or require any consent,
approval, filing or notice to be made by the Buyer or Buyer
Parent under, any provision of any Law applicable to the Buyer or
Buyer Parent; and
(b) will not conflict with, result in the breach or
termination of any provision of, constitute a Default under,
result in the acceleration of the performance of an obligation of
Buyer or Buyer Parent under, or result in the creation of a lien,
charge or encumbrance upon the assets of the Buyer or Buyer
Parent pursuant to: (i) the operating agreement, partnership
agreement or by-laws (or analogous organizational documents) of
Buyer or Buyer Parent, or (ii) any indenture, mortgage, deed of
trust, lease, licensing agreement, contract, instrument or other
agreement to which Buyer or Buyer Parent is a party or by which
Buyer or Buyer Parent or any of their respective assets is bound.
4.4 Legal Proceedings
. There is no litigation, proceeding or governmental
investigation pending or, to the Knowledge of Buyer, threatened
against Buyer or Buyer Parent, which seeks to question, delay or
prevent the consummation of, or would impair the ability of Buyer
or Buyer Parent to consummate, the transactions contemplated by
this Agreement.
4.5 Certain Fees
. With the exception of fees and expenses payable to DLJ
Securities Corp. and payable as contemplated by the Commitment
Letters, which shall be paid by Recap Co or Recap Subco on the
Closing Date, none of Buyer, Buyer Parent nor any of their
Affiliates has employed any broker or finder or incurred any
other liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated hereby or
thereby.
4.6 Financing
. Buyer has heretofore delivered to Seller Parent true and
complete copies of the Commitment Letters. As of the date of
this Agreement, the Commitment Letters are in full force and
effect and have not been rescinded, amended or modified in any
respect.
4.7 Access and Investigation
. In connection with the negotiation and execution of this
Agreement, Buyer's Group has performed a comprehensive
investigation of the CRL Business and, with its advisors, has
made its own analysis and evaluation of the CRL Business, the
Purchased Shares and Assumed Liabilities and has received from
Seller Parent or its Affiliates or had access to all information
that Buyer or Buyer Parent deems necessary or desirable in
deciding whether to acquire the Purchased Shares. Buyer's Group
has had the opportunity to ask questions of and receive answers
from officers and other representatives of Seller Parent, Recap
Co and other management of the CRL Business regarding the terms
and conditions of its acquisition of the Purchased Shares. In
entering into this Agreement, Buyer's Group has relied solely
upon its own investigation and analysis and the representations,
warranties and other provisions of this Agreement and
acknowledges that none of the Seller Parent, Recap Co or any
other of their Affiliates, employees, agents or representatives
makes or has made any representation, express or implied, with
respect to the CRL Business or the Purchased Shares except as
expressly set forth in this Agreement or any certificate
delivered pursuant hereto. Buyer, by reason of its business or
financial experience, or the business and financial experience of
its professional advisors has the capacity to evaluate and
protect its own interests in the acquisition of the Purchased
Shares. Buyer, and each of its equity owners, has the financial
capacity to bear the risk of, including the entire loss of, its
investment in the Purchased Shares. Nothing contained in this
Section 4.7 shall prohibit or in any way limit Buyer and Buyer
Parent from relying upon the representations and warranties of
Seller Parent contained in Article 3 nor from being indemnified
pursuant to Article 8.
4.8 No Other Representations or Warranties
. Except for the representations and warranties contained
in this Article 4 or in any certificates or other documents
executed by Buyer or Buyer Parent in connection with the
transactions contemplated by this Agreement, neither Buyer, Buyer
Parent nor any other Person makes any express or implied
representation or warranty on behalf of Buyer or Buyer Parent.
ARTICLE 5
COVENANTS OF THE PARTIES
5.1 Access to Information; Confidentiality
. Each of Seller Parent and Recap Co agrees that, during
the period commencing on the date hereof and ending on the
Closing Date, it will (a) give or cause to be given to Buyer and
its counsel, financial advisors, auditors, lenders, investors and
their respective authorized representatives in connection with
the Recapitalization (collectively, "Representatives") access to
the properties, books and records of the CRL Business and each of
the CRL Companies to the extent that Buyer may from time to time
reasonably request such access, (b) furnish or cause to be
furnished to Buyer or its Representatives such financial and
operating data and other information relating to the CRL
Business, the CRL Business Assets and each of the CRL Companies
as Buyer may from time to time reasonably request, (c) provide
Buyer and its Representatives such access as Buyer may reasonably
request to the representatives, officers and employees of its
Affiliates actively involved in the CRL Business, and (d) assist
Buyer and its Representatives as reasonably requested by Buyer in
connection with the Recapitalization and related transactions,
provided that such assistance will not unreasonably interfere
with the conduct of the CRL Business; provided, however, that
(i) access to the properties, books, records, representatives,
officers and employees shall only be provided during normal
business hours, upon reasonable advance notice and in such manner
as will not unreasonably interfere with the operation of the CRL
Business, (ii) all requests for access shall be directed to
Alan H. Farnsworth, Vice President Business Development of Seller
Parent, or such other person as Seller Parent shall designate
from time to time, and (iii) Seller Parent shall have the right
to have a representative present at all times access to
properties, books, records representatives, officers and
employees is provided. Buyer agrees that, prior to the Closing,
it will, and will cause its Affiliates and Representatives to,
continue to treat all information so obtained from Seller Parent
or any of its Affiliates as "Confidential Information" under the
Confidentiality Agreement entered into between Seller Parent and
Buyer dated January 4, 1999 (the "Confidentiality Agreement"),
and will continue to honor its obligations thereunder and that if
requested by Seller Parent, Buyer will cause any of its
Representatives so requested to enter into a written agreement
acknowledging the terms of the Confidentiality Agreement and
agreeing to be bound thereby.
5.2 Approvals under Competition Laws.
5.2.1 Seller Parent and Buyer will, (i) as promptly as
practicable but in no event later than ten (10) Business Days
after the date of this Agreement, file with the United States
Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") in materially accurate and
complete form, the notification and report form, if any, required
for the transactions contemplated hereby pursuant to the HSR Act
and (ii) as promptly as practicable, make such filings or
notifications and seek such approvals as are required for the
transactions contemplated hereby under foreign antitrust or
competition Laws. Each of Seller Parent and Buyer shall furnish
to the other such necessary information and reasonable assistance
as the other may request in connection with its preparation of
any filing or submission that is necessary under the HSR Act or
under foreign antitrust or competition Laws. Seller Parent and
Buyer shall promptly notify the other of the status of any
communications with, and inquiries or requests for additional
information from, the FTC, the DOJ and the Governmental Entities
which administer the foreign antitrust or competition Laws and
shall comply promptly with any such inquiry or request. Each of
Seller Parent and Buyer will use its Commercial Efforts to obtain
as promptly as possible any clearance required under the HSR Act
and the foreign antitrust or competition Laws for the
consummation of the transactions contemplated hereby.
5.2.2 Buyer and Buyer Parent shall take or cause to be
taken, and Seller Parent shall reasonably cooperate in connection
therewith, any and all reasonable actions, including any
divestitures of assets of (i) Buyer and/or Buyer Parent and/or
their Affiliates and/or (ii) the CRL Business Assets, that may be
required by any Governmental Entity pursuant to the antitrust
laws of the United States or foreign antitrust or competition
Laws in order to obtain required consents or non-opposition to
the transactions contemplated hereby from the United States and
other relevant jurisdictions or to permit the consummation of the
transactions contemplated hereby on terms and conditions
consistent with the terms of any judgment, decree or order issued
by any court of competent jurisdiction that may be in effect on
the Closing Date; provided, however, that Buyer shall not be
required to violate any such judgment, decree or order, or to
effect or agree to effect any divestitures of assets of Buyer
and/or Buyer Parent and/or their Affiliates and/or the CRL
Business Assets if the aggregate annual revenues associated with
all such divested assets of Buyer and/or Buyer Parent and/or
their Affiliates and/or the CRL Business Assets exceed
$15,000,000 (individually or in the aggregate), using for the
purposes of such calculation the most recently completed fiscal
year of Buyer and with respect to the CRL Business, the fiscal
year ended December 26, 1998; provided, however, that any and all
proceeds of any such divestiture of assets shall be the exclusive
property of Buyer (or Recap Subco or one of the Recap
Subsidiaries as may be designated by Buyer).
5.3 Conduct of the CRL Business Pending the Closing Date
. Seller Parent agrees that, except as permitted, required
or contemplated by this Agreement or any Recapitalization
Document, or the Exhibits or Disclosure Schedules attached hereto
(including, without limitation, Schedule 5.3 of the Disclosure
Schedule) or thereto and except that none of the restrictions set
forth in this Section 5.3 shall apply to any of the Excluded
Assets, during the period between the date of this Agreement and
the Closing Date, without the prior written consent of Buyer
which shall not be unreasonably withheld, delayed or conditioned:
5.3.1 Seller Parent will, and will cause its Affiliates
to, operate the CRL Business only in the ordinary course of
business consistent with past practice;
5.3.2 Seller Parent will not, and will cause its
Affiliates not to, amend or modify in any material respect any
Material Contract;
5.3.3 Seller Parent will not permit Recap Subco or any
Recap Subsidiary to amend its charter or by-laws (or analogous
organizational documents), except as may be required in
connection with the consummation of the transactions contemplated
by this Agreement;
5.3.4 Seller Parent will not permit Recap Subco or any
Recap Subsidiary to issue or agree to issue any additional shares
of capital stock of any class or series, or any securities
convertible into or exchangeable for shares of capital stock, or
issue any options, warrants or other rights to acquire any shares
of capital stock;
5.3.5 Seller Parent will not, and will not permit any of
its Affiliates to: (i) sell, transfer, dispose of or encumber
any of the CRL Business Assets having a value, individually or in
the aggregate, in excess of $100,000, other than in the ordinary
course of business consistent with past practice; (ii) enter into
any employment or consulting agreement with any employee of the
CRL Business or grant any increase in the compensation of any
such employee, except for increases in the ordinary course of
business consistent with past practice or as a result of any
collective bargaining, any industrial award or as required by any
employment or other agreement, or pursuant to any policy or any
bonus, pension, profit-sharing or other plan or commitment;
(iii) make any loans or enter into any transaction with any
Affiliate other than transactions entered into in the ordinary
course of business consistent with past practice; (iv) establish,
amend or contribute to any pension, retirement, profit sharing,
or stock bonus plan or multiemployer plan covering any of the
employees of the CRL Business except as required by Law or in the
ordinary course of business consistent with past practice;
(v) waive, cancel, sell or otherwise dispose of for less than the
face value thereof any material claim or right that the CRL
Business has against others, except in the ordinary course of
business consistent with past practices; (vi) incur indebtedness
at any Joint Venture which would constitute Excluded Debt; or
(vii) commit, or enter into any agreement to do, any of the
foregoing.
5.4 Consents
. Seller Parent shall, at its sole cost and expense, use
its Commercial Efforts to promptly obtain the consents, approvals
and authorizations and to take the other actions set forth on
Schedule 3.4. Buyer shall, on Seller Parent's request, use its
Commercial Efforts to assist Seller Parent in obtaining such
consents, approvals and authorizations and shall have the right,
if additional assurances with respect to the assumption of
obligations by Recap Subco or any of the Recap Subsidiaries after
the Closing Date are requested by the Person from whom consent,
approval or authorization is sought, participate, directly or
through its Representatives, in the process of obtaining such
consents, approvals and authorizations. The forms, terms and
conditions of such consents, approvals and authorizations shall
be subject to the prior approval of Buyer, which shall not be
unreasonably withheld or delayed.
5.5 Tax Matters.
5.5.1 Seller Parent shall cause the CRL Business, Recap
Subco and the Recap Subsidiaries to be included in the
consolidated federal income Tax Returns of Seller Parent for any
periods for which it is required to be so included, and in any
other required state, local and foreign consolidated, affiliated,
combined, unitary or other similar group income Tax Returns that
include the CRL Business, for all periods ending on or prior to
the Closing Date. Seller Parent shall prepare information
(including schedules, worksheets and other data) necessary, in
Seller Parent's judgment, to include the CRL Business, Recap
Subco and the Recap Subsidiaries in such income Tax Returns for
such periods. Seller Parent shall timely prepare and file, or
cause to be prepared and filed, all income Tax Returns of or
including the CRL Business, Recap Subco and the Recap
Subsidiaries for all taxable periods ending on or before the
Closing Date and shall pay, or cause to be paid, when due all
income Taxes relating to such Tax Returns.
5.5.2 (a) Seller Parent shall have the right and
obligation to represent the interests of the CRL Business, Recap
Subco or the Recap Subsidiaries in any Tax audit or
administrative or court proceeding relating to Tax Returns for
any periods or portions thereof ending on or prior to the Closing
Date.
(b) Following the Closing, in the event of an audit of
Recap Subco or any Recap Subsidiary as referred to in
Section 5.5.3, Buyer shall execute, or cause the appropriate
Affiliate of Buyer to execute, a federal tax Form 2848 or
comparable Power of Attorney authorizing Seller Parent or Seller
Parent's designated representative to represent Recap Co or such
Recap Subsidiary with respect to income Taxes for which Seller
Parent may be liable pursuant to this Section 5.5 or Article 8.
5.5.3 Buyer shall promptly notify Seller Parent in
writing upon receipt by Buyer or any Affiliate of Buyer of notice
of any pending or threatened Tax audits or assessments of the CRL
Business, Recap Subco or the Recap Subsidiaries so long as any
period or portion thereof prior to the Closing Date remains open
to the Knowledge of Buyer.
5.5.4 After the Closing Date, Buyer and Seller Parent
shall provide each other with such cooperation and information
relating to the CRL Business, Recap Subco or the Recap
Subsidiaries as either party reasonably may request in filing any
Tax Return (or amended Tax Return) or refund claim, determining
any Tax liability or a right to a refund, conducting or defending
any audit or other proceeding in respect of Taxes or effectuating
the terms of this Agreement. The parties shall retain all Tax
Returns, schedules, work papers and other material documents
relating thereto, until the seventh anniversary of the Closing
Date or, if later, the expiration of any relevant statute of
limitations (and, to the extent notified by any party, any
extensions thereof) and, unless such Tax Returns and other
documents are offered and delivered to Seller Parent or Buyer, as
applicable, until the final determination of any Tax in respect
of such years. Any information obtained under this Section 5.5.4
shall be kept confidential, except as may be otherwise necessary
in connection with filing any Tax Return (or amended Tax Return)
or refund claim, determining any Tax liability or a right to a
refund, conducting or defending any audit or other proceeding in
respect of Taxes or otherwise effectuating the terms of this
Agreement. Notwithstanding the foregoing, neither Seller Parent
nor Buyer, nor any of their Affiliates, shall be required
unreasonably to prepare any document, or determine any
information not then in its possession, in response to a request
under this Subsection 5.5.4; provided, however, no request shall
be deemed unreasonable if made in response to the request of a
taxing authority for information or documents not in the
possession of the party receiving the request nor otherwise
reasonably available to it.
5.5.5 CRL will join with Buyer in making a timely
election under Section 338(h)(10) of the Code (the
"Section 338(h)(10) Election") to treat the Merger as the deemed
sale of the assets of all or some (as elected by Buyer) of Recap
Co and the Recap Subsidiaries while such Persons are members of
Seller Parent's consolidated group for federal income tax
purposes. If requested by Buyer, CRL (unless there is a material
detriment to CRL) will also join with Buyer in making any similar
election under state or local law, which if made shall be treated
as part of the Section 338(h)(10) Election. In order to effect a
timely Section 338(h)(10) Election, at the Closing, each of CRL
and Buyer shall jointly prepare and execute copies of IRS Form
8023 and all attachments required to be filed therewith in
accordance with the Code and the applicable regulations
thereunder, which Form 8023 shall be completed by them to the
extent practicable at the time of the Closing in a manner
consistent with the parties' agreement as to the allocation of
the "MADSP" among the assets of Recap Co and the Recap
Subsidiaries as set forth in Schedule 5.5.5 of the Disclosure
Schedule and shall be delivered to Buyer at the Closing.
Following the Closing, Buyer will complete the Form 8023 and will
adjust any allocation to comply with the requirements of
Section 33 8(h)(10) of the Code and in a manner consistent with
provisions of Schedule 5.5.5 of the Disclosure Schedule, and will
file the Form 8023 with the IRS (and any applicable state or
local tax authority) with a copy to CRL in order to effect a
timely Section 338(h)(10) Election. CRL and Buyer agree
otherwise to take all necessary action to make a timely
Section 338(h)(10) Election with respect to the Merger, and shall
otherwise cooperate fully with each other in the making of such
election and to comply with all substantive and procedural
requirements of Section 338(h)(10) of the Code, any applicable
regulations thereunder and any applicable provision of state or
local law. Except as required by applicable Law, neither CRL nor
Buyer will take, nor permit any Affiliate to take, for federal,
state or local income Tax purposes, any position inconsistent
with the Section 338(h)(10) Election or the allocation set forth
in the Form 8023 filed by Buyer. Buyer will make a timely
election under Section 338(g) of the Code with respect to any
Recap Subsidiary which is incorporated in a jurisdiction other
than the United States and shall comply with all substantive and
procedural requirements of Section 338(g) of the Code and any
applicable regulations thereunder, unless Buyer would suffer a
material detriment as a result of making such election.
5.6 Employee Matters.
5.6.1 During the period commencing on the Closing Date
and ending on the eighteen (18) month anniversary of the Closing
Date, Buyer shall, or shall cause Recap Subco and the Recap
Subsidiaries to provide employee benefit plans, programs and
arrangements having benefits not less favorable in the aggregate
to the Employees of Recap Subco and the Recap Subsidiaries than
the Benefit Plans and Non-U.S. Benefit Plans, as applicable,
provided that nothing in this Agreement shall require Buyer,
Recap Subco or any Recap Subsidiary to establish, provide,
sponsor or maintain any specific plan, program or arrangement or
shall require any such Person to continue the employment, or to
refrain from modifying or terminating the terms of employment of
any Employee. In the case of any new plan, program or
arrangement, Buyer shall, or shall cause Recap Subco and the
Recap Subsidiaries to the extent permitted under applicable Law,
provide that periods of service with any of Recap Subco any Recap
Subsidiary, any Seller or any Affiliate of any of the foregoing
Persons prior to the Closing Date shall be credited for
eligibility, vesting and benefits purposes (if applicable and
without duplication) with respect to such plan, program or
arrangement, provided that no service will be credited for
purposes of calculating an employee's benefit accrual under any
Defined Benefit Plan or any Non-U.S. Benefit Plan that is a
defined benefit plan for any period of time that the employee did
not participate in such plan on or before the Closing Date.
5.6.2 For any mass layoff or plant closing which occurs
on or after the Closing Date, Buyer shall cause Recap Subco or
the relevant Recap Subsidiary to give any notice to the Employees
which is required under the Worker Adjustment and Retraining
Notification Act or any similar federal, state, local or foreign
Law.
5.6.3 On the Closing Date, Buyer shall have in effect
and thereafter maintain or cause Recap Subco and the Recap
Subsidiaries to have in effect and maintain all policies of
worker's compensation, employer's liability or similar insurance
which are required by any Governmental Entity to be in effect as
of the Closing Date.
5.6.4 Buyer shall provide or shall cause Recap Subco or
the Recap Subsidiaries to provide continuation health care
coverage pursuant to Part 6 of Title I of ERISA to all current or
former employees of Recap Subco, Recap Subsidiaries and/or their
predecessors and such individuals' qualifying beneficiaries who
are eligible for such coverage.
5.6.5 On the Closing Date, Seller Parent shall pay and
discharge in full all Excluded Debt other than Excluded Debt with
respect to Joint Ventures and terminate all related liens,
security interests or other encumbrances in respect of CRL
Business Assets and comply and cause Recap Subco to comply with
their respective obligations under the Releases.
5.7 Additional Assurances.
5.7.1 After the Closing Date, Seller Parent shall
promptly and shall cause its Affiliates promptly to, and Buyer
shall promptly and shall cause Recap Co and the Recap
Subsidiaries promptly to, take such additional actions and
execute any such additional documents and instruments as may be
reasonably necessary (i) to effectuate the transactions
contemplated by this Agreement, including to fully vest good and
valid title to all of the CRL Business Assets in Recap Subco and
the Recap Subsidiaries, as applicable, and to fully vest good and
valid title in the Excluded Assets in Seller Parent or its
Affiliates free and clear of all liens, claims or other
encumbrances except Permitted Encumbrances, and (ii) to cause
Seller Parent or its Affiliates to retain or assume any Excluded
Liabilities not retained or assumed by Seller Parent or an
Affiliate prior to or on the Closing Date, or to cause Recap
Subco or any Recap Subsidiary to assume any Assumed Liability not
assumed by it prior to or on the Closing Date. Prior to and
after the Closing Date, Seller Parent agrees to assist Buyer in
any reasonable manner requested, and without unreasonable delay,
in the preparation of financial statements of the CRL Business,
including the interim unaudited financial statements at and for
the three months ended March 27, 1999 and at and for nine months
ended September 25, 1999, including so that such financial
statements can be presented in conformity with the accounting
rules of Regulation S-X under the Securities Act of 1933, as
amended; provided however, that Buyer shall bear any out-of-
pocket costs and expenses incurred by Seller Parent or any of its
Affiliates in connection with providing such assistance.
5.7.2 Notwithstanding anything to the contrary contained
in this Agreement, to the extent that the sale, assignment,
transfer, conveyance or delivery or attempted sale, assignment,
transfer, conveyance or delivery of any CRL Business Asset in the
Internal Reorganization or any transaction contemplated by this
Agreement is prohibited by any applicable Law or would require
any Governmental Entity or other third party authorizations,
approvals, consents or waivers and such authorizations,
approvals, consents or waivers shall not have been obtained prior
to the Closing and either such item(s) are not a condition to
Closing or Buyer shall have waived in writing the applicable
condition to Closing with respect to such item(s), this Agreement
shall not constitute a sale, assignment, transfer, conveyance or
delivery, or any attempted sale, assignment, transfer, conveyance
or delivery thereof. Following the Closing, the parties shall
use Commercial Efforts and shall cooperate with each other to
obtain promptly such authorizations, approvals, consents or
waivers. Pending such authorization, approval, consent or
waiver, the parties shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer,
Recap Co and the Recap Subsidiaries the benefits and liabilities
of use of such CRL Business Asset. Once such authorization,
approval, consent or waiver for the sale, assignment, transfer,
conveyance or delivery of a CRL Business Asset not sold,
assigned, transferred, conveyed or delivered at the Closing is
obtained, Seller Parent shall and shall cause its Affiliates to
promptly assign, transfer, convey and deliver, or cause to be
assigned, transferred, conveyed and delivered, such CRL Business
Asset to Recap Subco or a Recap Subsidiary for no additional
consideration free and clear of all liens, claims or other
encumbrances except Permitted Encumbrances. To the extent that
any such CRL Business Asset cannot be transferred or the full
benefits and liabilities of use of any such CRL Business Asset
cannot be provided to Buyer, Recap Subco and the Recap
Subsidiaries following the Closing pursuant to this Section 5.7,
then Buyer and Seller Parent or one or more of its Affiliates
shall enter into such arrangements (including subleasing or
subcontracting if permitted) designed to provide to Recap Subco
and the Recap Subsidiaries the economic and operational
equivalent of obtaining such authorization, approval, consent or
waiver and the performance by Recap Subco and the Recap
Subsidiaries of the obligations thereunder to the extent
permitted by Law.
5.7.3 Subject to Section 5.4, Buyer and Seller Parent
shall cooperate with each other and use their Commercial Efforts,
as soon as practicable after the Closing, to take all actions, if
any are required, to transfer all permits, authorizations and
registrations issued to the CRL Business.
5.8 Updated Disclosure Schedule
. Seller Parent shall prepare and deliver to Buyer at least
five (5) Business Days prior to the Closing an update of the
Disclosure Schedule for the sole purpose of disclosing events or
other matters which have occurred after the date of this
Agreement other than as a result of the breach of this Agreement
by Seller Parent, any of the Sellers, Recap Subco or Recap Co or
occurred prior to the date of this Agreement but did not require
disclosure as of the date of this Agreement (an "Update"). In
the event of the delivery to Buyer of an Update which sets forth
the occurrence or existence of an event or other matter which
would cause the condition set forth in Section 6.2.1 hereof not
to be satisfied (determined without regard to the Update), Buyer
shall have no obligation to complete the Closing of the
transactions contemplated by this Agreement and may terminate
this Agreement pursuant to and in accordance with the procedure
set forth in Section 7.1.1(d) (without regard to the twenty (20)
day cure period); provided that in the event that Buyer does not
so terminate this Agreement and the Closing occurs, the
Disclosure Schedule shall be deemed to be amended as of the date
of this Agreement to include the events or other matters set
forth in the Update for all purposes of this Agreement, including
Article 8.
5.9 Buyer's Insurance
. From and after the Closing and at all times until the
Recap Co Sub Notes have been paid in full and Seller Parent
and/or its Affiliates cease to beneficially own any shares of
Recap Co Common Stock, Buyer shall cause Recap Co and the Recap
Subsidiaries to procure and maintain in full force and effect
insurance coverage in such amounts, covering such risks and
liabilities and with such deductibles or self-insured retentions
as is the normal industry practice for businesses of similar size
operating in similar industries and markets and with similar
financial conditions, including without limitation, Directors and
Officers Liability Insurance with annual limits in an amount not
less than $10,000,000 per occurrence and in aggregate.
5.10 Cash Management
. On the Closing Date, Seller Parent shall cause the
checking and all other applicable bank accounts of Recap Co and
the Recap Subsidiaries to have on deposit all amounts in good
funds to pay in full on or following the Closing Date all checks
and drafts of the CRL Business issued but not drawn on or prior
to the Closing Date.
5.11 Company Acquisition Proposal
. Seller Parent covenants and agrees that, from and after
the date of this Agreement and until the first to occur of its
termination pursuant to Article 7 or the Closing, neither it nor
any of its Affiliates nor any of its representatives shall
directly or indirectly (a) take any action to solicit or initiate
any Company Acquisition Proposal (as hereinafter defined), or
(b) engage in discussions or negotiations with any Person with
respect to any Company Acquisition Proposal, or (c) disclose any
non-public information relating to the CRL Business or afford
access to the employees, properties, books or records of the CRL
Business to any Person that has made or, to Seller Parent's
Knowledge is considering making, a Company Acquisition Proposal.
Within five (5) Business Days after receipt of a Company
Acquisition Proposal or any request for nonpublic information
relating to the CRL Business or for access to the employees,
properties, books or records of the CRL Business by any Person
who indicates that they may be considering making, or has made, a
Company Acquisition Proposal, Seller Parent shall notify Buyer of
the fact that such event has occurred and shall notify Buyer of
the Person if the Company Acquisition Proposal is received,
directly or indirectly, by any Person identified on Schedule 5.11
hereto. For the purposes hereof, "Company Acquisition Proposal"
shall mean any offer or proposal for (whether oral or in
writing), or any indication of interest in, a merger or other
business combination involving any of the CRL Business, Recap
Subco or any Recap Subsidiary or any Seller or the acquisition of
any equity interest in, or all or a substantial portion of the
assets of, any of Recap Subco, any Recap Subsidiary or any Seller
or the CRL Business, other than the transactions contemplated by
this Agreement and other than transactions with respect to the
Excluded Assets.
5.12 Books and Records
. Seller Parent shall retain in accordance with its current
records retention polices all books and records relating to the
CRL Business and, unless otherwise consented to in writing by
Seller Parent or Buyer (as the case may be), Buyer and Seller
Parent will not, for a period of six years following the Closing
Date, destroy, alter, or otherwise dispose of any of such books
and records without first offering to surrender to Seller Parent
or Buyer, as the case may be, such books and records or any
portion thereof which Buyer or Seller Parent, as the case may be,
may intend to destroy, alter, or dispose. Buyer and Seller
Parent will allow the other party's representatives access to
such books and records, upon reasonable request during such
party's normal business hours, for the purpose of examining and
copying the same (but only to the extent they relate to the CRL
Business) in connection with any matter related to or arising out
of this Agreement or the transactions contemplated hereby or the
conduct by Buyer of the CRL Business.
5.13 Use of Names
. Buyer, Recap Co and the Recap Subsidiaries are
purchasing, acquiring or otherwise obtaining right, title or
interest in the names "Charles River Laboratories" and "SPAFAS"
and any tradenames, trademarks, identifying logos or service
marks related thereto or employing the words "Charles River" or
"SPAFAS" (collectively, the "Names"). Seller Parent agrees that,
neither it nor any of its Affiliates shall make any commercial
use of the Names from and after the Closing Date; provided,
however, Seller Parent shall retain the right to make use of the
Names for purposes of reflecting its ownership of the CRL
Business prior to the Closing Date. On the Closing Date, Seller
Parent shall cause the name of each of its Affiliates that
contains the words "Charles River" or "SPAFAS" to be changed to a
name that does not contain such words.
5.14 Commitment Letters
. Buyer shall use its Commercial Efforts to obtain the
financing contemplated by the Commitment Letters and shall use
Commercial Efforts to notify Seller Parent in writing within one
(1) Business Day if any of the Commitment Letters are terminated
or within five (5) Business Days of any of the terms or
conditions of the Commitment Letters are amended or modified in
any material respect.
5.15 Broekman Sale
. In the event that the sale of the Broekman Institute
B.V., a Netherlands corporation located at Schoolstraat 21,5711
CP Someran, The Netherlands, to Panning B.V. or an Affiliate
thereof (the "Broekman Sale") is consummated after the Closing
Date, Buyer shall cause Charles River Laboratories Europe GmbH to
pay to Seller Parent all net proceeds of the Broekman Sale within
two (2) Business Days after receipt of such proceeds by Charles
River Laboratories Europe GmbH; provided, however, Charles River
Laboratories Europe GmbH shall be entitled to retain any and all
sale proceeds which are placed in escrow on the closing date of
the Broekman Sale (the "Escrow Amount") and thereafter released,
regardless of whether the Broekman Sale occurs prior to, on or
after the Closing Date. In the event that Pharming B.V. or an
Affiliate thereof (the "Broekman Purchaser ") makes a claim for
indemnification under the Broekman Sale agreement, after the
Closing Date Buyer shall cause Recap Subco or a Recap Subsidiary,
at Seller Parent's sole cost and expense, to defend the claim, to
the same extent as it would defend any claim for which it was
responsible for payment. In the event the Broekman Purchaser is
entitled to indemnification, such amount first shall be paid out
of the sale proceeds placed in escrow to the extent of the Escrow
Amount and the balance, if any, shall promptly be paid by Seller
Parent. Buyer shall cause Recap Co or a Recap Subsidiary to keep
Seller Parent informed on a timely basis of any and all
indemnification claims and the status thereof. In the event that
the Broekman Sale is consummated after the Closing Date, Seller
Parent shall indemnify Recap Co and the Recap Subsidiaries for
any income tax or similar tax liability arising from any income
or gain realized by Recap Co or any Recap Subsidiaries on the
Broekman Sale.
5.16 Stage I Reorganization Matters
. Seller Parent shall use its Commercial Efforts cause to
CRL, SPAFAS or International, as the case may be, to obtain the
consents, approvals and authorizations and make the filings set
forth in Schedule 5.16 of the Disclosure Schedule on or prior to
the Closing Date.
5.17 Confidential Information
. Seller Parent and the Sellers covenant and agree that
none of them will, following the Closing, without the prior
written consent of Buyer, disclose (or permit to be disclosed) or
use in any way any confidential information of the CRL Business
unless (i) compelled to disclose such confidential information by
judicial or administrative process or, in the opinion of its
counsel, by other requirements of Law, (ii) such confidential
information is available to the public through no fault of Seller
Parent or any of the Sellers, (iii) such confidential information
becomes available to Seller Parent or any of the Sellers from a
third party who to their knowledge, is under no confidential
fiduciary obligation to the CRL Business, Recap Co, the Recap
Subsidiaries or Buyer with respect to such confidential
information, or (iv) such confidential information is used in
connection with reflecting, asserting or defending Seller
Parent's or any of the Seller's ownership of the CRL Business
prior to the Closing Date.
5.18 Closing Efforts
. Each of Buyer, Buyer Parent and Seller Parent shall use
their respective Commercial Efforts to consummate the
transactions contemplated hereby.
5.19 Interim Financial Statements
. Seller Parent will, or will cause its Affiliates to,
maintain the books and records of the CRL Business, on a basis
consistent with past practice, and Seller Parent will furnish, or
will cause its Affiliates to furnish, Buyer for each complete
fiscal quarter occurring after June 26, 1999, financial
statements (the "Quarterly Financial Statements") of the CRL
Business, including consolidated statements of income, changes in
shareholders' equity and cash flows and a consolidated balance
sheet, all prepared in accordance with GAAP (but without
footnotes) on a basis consistent with the preparation of the
Unaudited Financial Statements, within fifteen (15) days of the
end of such fiscal quarter ending on or prior to the Closing.
5.20 Financial Assurances
. As promptly as practicable after the Closing Date, Buyer
shall provide to Seller Parent evidence of the release of Seller
Parent or any Seller from, the cancellation of Seller Parent's or
any Seller's obligation under, or the substitution of Buyer,
Recap Co, Recap Subco or any Recap Subsidiary for Seller Parent
or any Seller in, the financial assurances or Letters of Credit
related to the CRL Business set forth on Schedule 5.20 of the
Disclosure Schedule (the "Financial Assurances"), which evidence
shall be in form and substance reasonably satisfactory to Seller
Parent.
5.21 Financial Statements.
5.21.1 On or before August 4, 1999, Seller Parent shall
deliver to Buyer the audited consolidated balance sheets of the
CRL Business as of December 26, 1998 and December 27, 1997 and
the related audited consolidated statements of income, changes in
shareholder's equity and cash flows, including the notes thereto,
for each of the three years in the period ended December 26,
1998, with an unqualified report thereon by
PricewaterhouseCoopers LLP (the "Audited Financial Statements").
5.21.2 On or before August 4, 1999, Seller Parent shall
deliver to Buyer the final unaudited consolidated balance sheet
of the CRL Business as of June 26, 1999, and the related
unaudited consolidated statements of income and cash flows,
including the notes thereto, for the six-month periods ended
June 26, 1999 and June 27, 1998 (the "Unaudited Financial
Statements"). The Audited Financial Statements and the Unaudited
Financial Statements are collectively referred to as the
"Financial Statements."
5.21.3 On or before midnight on the second Business Day
after the date of delivery of the Financial Statements, Buyer
shall provide a written notice (the "Notice") to Seller Parent
which states whether or not the Financial Statements comply with
the following (the "Standards"): (i) as to the Audited Financial
Statements: (A) the Audited Financial Statements are
substantially identical to the Draft Audited Financial Statements
with respect to the consolidated balance sheets as at
December 27, 1997 and December 26, 1998 and the related
consolidated statements of income and changes in shareholder's
equity for each of the three years in the period ended
December 26, 1998, (B) the Audited Financial Statements are
substantially identical to the Draft Audited Financial Statements
with respect to the line items in the consolidated cash flow
statements for each of the three years in the period ended
December 26, 1998 for cash and cash equivalents at the beginning
of the applicable period, cash and cash equivalents at the end of
the applicable period, depreciation, amortization and capital
expenditures, in each case for the applicable periods, and
(C) the notes to the Audited Financial Statements are
substantially identical as to form with the notes to the Draft
Audited Financial Statements, and the notes to the Audited
Financial Statements contain the financial information required
by GAAP to be contained therein; and (ii) as to the Unaudited
Financial Statements: (A) the Unaudited Financial Statements are
substantially similar to the Draft Unaudited Financial Statements
with respect to the consolidated balance sheet as of June 26,
1999 and the related consolidated statements of income for the
six month periods ended June 26, 1999 and June 27, 1998, (B) the
Unaudited Financial Statements are substantially similar to the
Draft Unaudited Financial Statements with respect to the line
items in the consolidated cash flow statements for the six month
periods ended June 26, 1999 and June 27, 1998 for cash and cash
equivalents at the beginning of the applicable period, cash and
cash equivalents at the end of the applicable period,
depreciation, amortization and capital expenditures, in each case
for the applicable periods, and (C) the notes to the Unaudited
Financial Statements are substantially similar as to form with
the notes to the Draft Unaudited Financial Statements, and the
notes to the Unaudited Financial Statements contain the financial
information required by GAAP to be contained therein. If the
Notice states that the Financial Statements are not in conformity
with the Standards, or if Buyer provides a written notice to
Seller Parent after August 4, 1999 that the Financial Statements
have not been delivered to Buyer, this Agreement automatically
shall terminate and be of no further force and effect. If the
Notice states that the Financial Statements are in conformity
with the Standards, or if the Notice is not timely given, this
Agreement shall continue in full force and effect in accordance
with its terms.
5.22 Net Underfunding Amount
. Ten (10) Business Days prior to the Closing Date, Seller
Parent shall deliver to Buyer its calculation of the Net
Underfunding Amount, together with supporting documentation.
Seller Parent and Buyer shall use their Commercial Efforts to
reach agreement on the Net Underfunding Amount. In the event
they are unable to reach agreement within three Business Days
after Buyer's receipt of Seller Parent's calculation, Arthur
Andersen LLP shall be engaged to determine the Net Underfunding
Amount and Buyer and Seller Parent shall be bound by its
determination. The fees and expenses of Arthur Andersen LLP
shall be paid 50% by Buyer and 50% by Seller Parent.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Buyer and Seller Parent and
Recap Co
. The respective obligations of Buyer, Buyer Parent, Seller
Parent, the Sellers, Recap Co and Recap Subco to consummate the
transactions contemplated by this Agreement shall be subject to
the satisfaction at or prior to the Closing of the following
conditions:
6.1.1 (a) There shall be no injunction, restraining
order or decree of any nature of any Governmental Entity that is
in effect that restrains or prohibits the consummation of the
transactions contemplated hereby, provided that with respect to
injunctions, restraining orders or decrees that do not
individually, or in the aggregate, restrain the transfer of a
material portion of the CRL Business Assets (an "Immaterial
Injunction"), Buyer shall be required to use Commercial Efforts
to remove such Immaterial Injunction by entering into an
agreement with the applicable Governmental Entity to divest such
enjoined CRL Business Assets after the Closing Date, or Buyer
shall have the right to require Seller Parent to divest the
enjoined CRL Business Assets on or prior to the Closing Date, and
in either case Buyer shall be entitled to the proceeds of such
divestiture.
(b) Subject to Section 5.2.2, all consents, approvals,
authorizations and orders of Governmental Entities that are
necessary to permit the consummation of the transactions
contemplated by this Agreement and which are set forth on
Schedule 6.1.1 (the "Governmental Consents") shall have been
obtained in form and substance reasonably satisfactory to Buyer
and Seller Parent, and, without limiting the foregoing, all
applicable waiting periods specified under the HSR Act and
applicable foreign antitrust and competition Laws with respect to
the transactions contemplated by this Agreement, shall have
lapsed or been terminated.
(c) For purposes of Section 6.1.1(a), a material
portion of the CRL Business Assets shall mean CRL Business Assets
generating aggregate annual revenues exceeding $15,000,000 based
on the fiscal year ended December 26, 1998.
6.2 Conditions to Obligations of Buyer
. The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction
(or waiver in writing by Buyer) at or prior to the Closing of
each of the following conditions:
6.2.1 Each representation and warranty of Seller Parent
contained in this Agreement shall be true and correct on and as
of the Closing Date, with the same force and effect as though
such representations and warranties had been made on and as of
the Closing Date, except (i) to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct as of such date, and (ii) to the extent that any
inaccuracies in such representations and warranties, individually
or in the aggregate, have not had, and would not reasonably be
expected to have, a CRL Business Material Adverse Effect.
6.2.2 Seller Parent, Recap Subco and each Seller shall
have performed all obligations and agreements, and complied with
all covenants and conditions, contained in this Agreement to be
performed or complied with by each of them prior to or on the
Closing Date except to the extent that any breaches of such
obligations, agreements, covenants and conditions, individually
or in the aggregate, have not had, and would not reasonably be
expected to have, a CRL Business Material Adverse Effect.
6.2.3 Buyer shall have received a certificate of Seller
Parent, dated the Closing Date and executed by an officer of
Seller Parent, to the effect that each of the representations and
warranties of Seller Parent contained in this Agreement is true
and correct on the Closing Date as if made on such Date, except
as set forth in the Update, and that the Update is true and
correct.
6.2.4 The Affiliates of Parent, other than the CRL
Business employees, who are directors and officers of Recap Subco
and the Recap Subsidiaries and who have been requested to resign
by Buyer shall have tendered their resignations effective as of
the Closing Date.
6.2.5 Buyer shall have received evidence satisfactory to
Buyer of receipt of the consents or approvals to the consummation
of the transactions contemplated by this Agreement and the
Internal Reorganization under (or, as applicable, the taking of
the indicated action in connection with the transactions
contemplated by this Agreement and the Internal Reorganization
with respect to) the contracts, agreements, leases, other
instruments, licenses and other items which have been designated
with an asterisk in Schedule 3.4 of the Disclosure Schedule,
which consents, approvals and actions shall be in form and
substance reasonably satisfactory to Buyer.
6.2.6 On the Closing Date, Seller Parent shall have
delivered to Buyer all of the following:
(i) stock certificates representing the Purchased
Shares. Each such certificate evidencing the
Purchased Shares shall be duly endorsed in blank,
or be accompanied by stock transfer powers duly
executed in blank, and shall be accompanied by all
requisite documentary or stock transfer taxes
affixed thereto and canceled;
(ii) all stock certificates, minute books, stock books,
ledgers and registers, corporate seals and other
corporate records relating to the organization,
ownership and maintenance of Recap Subco and each
Recap Subsidiary which are not located at Recap
Subco or any Recap Subsidiary in Wilmington,
Massachusetts or at the principal place of
business of Recap Subco or any Recap Subsidiary;
(iii)original or copies of consents, filings,
authorizations, approvals and other actions
described in Sections 5.5.5, 6.1.1(b) or 6.2.5;
(iv) certificates as to the valid existence and good
standing of Recap Subco and each Recap Subsidiary
which is organized under the Laws of the United
States of America (or other appropriate
certificates in those jurisdictions that do not
issue such good standing certificates) from the
Secretary of State or other appropriate
Governmental Entity of each of such Person's
respective jurisdiction of incorporation,
organization or formation, as the case may be,
dated as of a date within thirty (30) days of the
Closing Date; and
(v) a true and correct copy of the certificate of
incorporation or articles of organization, as the
case may be, by-laws or other organizational
documents of each of Recap Co, Recap Subco and
each Recap Subsidiary which is organized under the
Laws of the United States of America, certified as
true and correct by the Secretary or Assistant
Secretary of Seller Parent.
6.2.7 Seller Parent, Recap Co and each other stockholder
of Recap Co (other than Buyer) shall have executed and delivered
to Buyer the Investors' Agreement.
6.2.8 Buyer, Recap Co and Recap Subco shall have
received debt and equity proceeds in the amounts and on the terms
and conditions set forth in the Commitment Letters or such other
terms and conditions satisfactory to Buyer.
6.2.9 Buyer shall have received an opinion of counsel
for Seller Parent, Recap Co, Recap Subco and the Sellers, dated
the date of the Closing, in form and substance reasonably
satisfactory to Buyer.
6.3 Conditions to Obligations of Seller Parent, the Sellers,
Recap Co and Recap Subco
. The obligations of Seller Parent, each Seller, Recap Co
and Recap Subco to consummate the transactions contemplated by
this Agreement are subject to the satisfaction (or waiver in
writing by Seller Parent) at or prior to the Closing of each of
the following conditions:
6.3.1 Each of the representations and warranties of
Buyer contained in this Agreement shall be true and correct on
and as of the Closing Date, with the same force and effect as
though such representations and warranties had been made on and
as of the Closing Date, except (i) to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct as of such date, and (ii) to the extent that any
inaccuracies in such representations and warranties, individually
or in the aggregate, have not had, and would not reasonably be
expected to have, a Buyer Material Adverse Effect.
6.3.2 Buyer shall have performed all obligations and
agreements, and complied with all covenants and conditions,
contained in this Agreement to be performed or complied with by
it prior to or on the Closing Date except to the extent that any
breaches of such obligations, agreements, covenants and
conditions, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Buyer Material
Adverse Effect.
6.3.3 Seller Parent shall have received a certificate of
Buyer, dated the Closing Date and executed by an officer of
Buyer, to the effect that the conditions specified in
Sections 6.3.1 and 6.3.2 above have been fulfilled.
6.3.4 Buyer, Recap Co and each other stockholder of
Recap Co (other than CRL) shall have executed and delivered to
Seller Parent the Investors' Agreement.
6.3.5 Seller Parent shall have received an opinion of
counsel for Buyer and Buyer Parent, dated the date of the
Closing, in form and substance reasonably satisfactory to Seller
Parent.
ARTICLE 7
TERMINATION AND ABANDONMENT
7.1 Termination.
7.1.1 This Agreement maybe terminated at anytime prior
to the Closing Date:
(a) by mutual written consent of Seller Parent and
Buyer;
(b) by either Seller Parent or Buyer, if: (i) the
Redemptions, Merger and Recapitalization shall not have been
consummated on or prior to the date which is three (3) months
after the date hereof; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1.1(b) shall
not be available to any party whose breach of any of its
representations, warranties, covenants or other agreements under
this Agreement or failure to perform any of its obligations under
this Agreement results in the failure of the transactions
contemplated by this Agreement to be consummated by such time; or
(ii) subject to Section 5.2.2 any Governmental Entity shall have
issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement
and such order, decree or ruling or other action shall have
become final and non-appealable (but only if the terminating
party (if it has standing to do so) shall have used its
Commercial Efforts to cause such order, decree or ruling or other
action to be lifted or vacated);
(c) by Seller Parent, if (i) Buyer or Buyer Parent
shall have breached any of its representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform is incapable of being cured or has
not been cured within 20 days after the giving of written notice
thereof to Buyer and such breach, individually or in the
aggregate, has had or would reasonably be expected to have, a
Buyer Material Adverse Effect; provided, however, that Seller
Parent may not terminate this Agreement pursuant to this
Section 7.1.1(c) if Seller Parent, Recap Subco, Recap Co or any
Seller is then in breach in any material respect of any of such
Person's representation, warranty, covenant or agreement
contained in this Agreement, or (ii) one or more of the
Commitment Letters have been terminated or have expired and
substitute commitment letters, on substantially the same terms
and conditions, have not been entered into by Buyer at the time
of such termination or expiration.
(d) by Buyer, if Seller Parent, Recap Co, Recap Subco
or any Seller shall have breached any of such Person's
representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform
is incapable of being cured or has not been cured within 20 days
after the giving of written notice thereof to Seller Parent and
such breaches, individually or in the aggregate, have had or
would reasonably be expected to have, a CRL Business Material
Adverse Effect; provided, however, that Buyer may not terminate
this Agreement pursuant to this Section 7.1.1(d) if Buyer is then
in breach in any material respect of any representation,
warranty, covenant or agreement contained in this Agreement.
7.1.2 The party desiring to terminate this Agreement
pursuant to Section 7.1.1 shall give written notice of such
termination to the other party in accordance with Section 9.5
below.
7.1.3 This Agreement shall automatically terminate under
the circumstances set forth in Section 5.21.3.
7.2 Effect of Termination and Abandonment
. In the event of termination of this Agreement and the
abandonment of the transactions contemplated by this Agreement
pursuant to this Article 7, this Agreement (other than as set
forth in this Section 7.2 and Sections 9.1 (Public Announcement),
9.2 (Expenses), 9.5 (Notices) and 9.14 (Applicable Law)) shall
become void and of no effect with no liability on the part of any
party hereto (or of any of its directors, officers, employees,
agents, legal or financial advisors or other representatives);
except nothing contained in this Agreement shall relieve any
party from any liability for any inaccuracy, misrepresentation or
breach of any representation, warranty, covenant or agreement
contained in this Agreement prior to such termination.
ARTICLE 8
SURVIVAL AND INDEMNIFICATION
8.1 Survival of Representations, Warranties and Covenants
. The representations and warranties of the parties
contained in this Agreement shall survive the Closing for the
periods set forth in this Section 8.1. The representations and
warranties of Seller Parent and Recap Co shall survive the
Closing and the representations and warranties of Buyer and Buyer
Parent shall survive the Closing until the close of business on
March 31, 2001 (the "Expiration Date"), provided, however, that
the representations and warranties contained in Sections 3.1,
3.2, 3.3, 3.5, 3.12(a)(i), (ii) and (iv), 4.1, 4.2, 4.3., and 4.7
shall survive the Closing until the sixth year anniversary of the
Closing Date with respect to claims which may be asserted in
connection with a breach thereof, the representations and
warranties contained in Section 3.16 shall survive the Closing
for four years with respect to claims which may be asserted in
connection with a breach thereof, and the representations and
warranties that are the subject of any indemnification claim
shall survive indefinitely, but only with respect to such
indemnification claim until such claim is finally resolved. The
covenants and agreements made by any party which are to be
performed after the Closing Date shall survive until fully
performed and the covenants and agreements made by any party
which are to be performed at or prior to the Closing Date shall
expire at the Closing other than Article 2 and Sections 5.6.5,
5.10 and 5.11.
8.2 Indemnification by Seller Parent
. Subject to the applicable limitations set forth in
Section 8.4 and in the manner herein provided, from and after the
Closing Date, Seller Parent shall indemnify and hold harmless
Recap Co, Recap Subco, each Recap Subsidiary, Buyer and its
Affiliates, and their respective employees, directors, agents and
representatives (collectively, the "Buyer Indemnified Parties"),
from and against any and all Loss and Litigation Expense, which
they or any of them may suffer or incur as a result of or arising
from any of the following: (a) any misrepresentation or breach
of any representation or warranty of Seller Parent contained in
this Agreement or in any certificate delivered pursuant hereto
including, without limitation, pursuant to Section 6.2.3 or as a
result of an Update; or (b) the failure by Seller Parent, any
Seller, Recap Co or Recap Subco to perform any of such Person's
covenants and agreements under this Agreement (in the case of
Recap Co and Recap Subco, covenants and agreements to be
performed on or prior to the Closing Date); or (c) any Excluded
Liability.
8.3 Indemnification by Recap Co
. Subject to the applicable limitations set forth in
Section 8.4 and in the manner herein provided, from and after the
Closing Date, Recap Co shall indemnify and hold harmless Seller
Parent, its Affiliates and their respective employees, directors,
agents and representatives (collectively, the "Seller Indemnified
Parties"), from and against any and all Loss and Litigation
Expense which they, or any of them, may suffer or incur as a
result of or arising from any of the following: (a) any
misrepresentation or breach of warranty of Buyer or Buyer Parent
contained in this Agreement; (b) the failure by Buyer, Buyer
Parent or, after the Closing Date, Recap Co or Recap Subco to
perform any of such Person's covenants and agreements under this
Agreement (in the case of Recap Co and Recap Subco, covenants and
agreements to be performed after the Closing Date); (c) any
Assumed Liability; or (d) the conduct of the CRL Business after
the Closing Date except to the extent the Losses or Litigation
Expense resulted from the conduct of the CRL Business prior to
the Closing Date. Any indemnity payable pursuant to
Section 8.3(a) or Section 8.3(b) (but only with respect to the
covenants and agreements, contained in Section 5.15), shall be
increased by an amount equal to the sum of (i) such Loss and
Litigation Expense and (ii) the product of such amount and
Seller's Equity Percentage at the time.
8.4 Certain Limitations on Indemnities
8.4.1 Subject to the terms hereof, the aggregate
liability of Seller Parent or Recap Co, as the case may be, for
Losses and Litigation Expenses under Sections 8.2(a) or 8.3(a),
respectively, other than Losses and Litigation Expenses arising
from any inaccuracy or breach of any of the representations and
warranties contained in Sections 3.1, 3.2, 3.3, 3.5, 3.12(a)(iv),
4.1, 4.2, 4.3, and 4.7 (in which case the limits set forth in
this Section 8.4.1 shall be inapplicable), is, and shall be,
limited to an amount equal to $100,000,000.
8.4.2 No Buyer Indemnified Party nor any Seller
Indemnified Party shall be entitled to indemnification pursuant
to Sections 8.2(a) or 8.3(a) hereof unless and until the
aggregate amount of all Losses and Litigation Expenses sustained
or incurred by all Buyer Indemnified Parties or all Seller
Indemnified Parties, as the case may be, under Sections 8.2(a) or
8.3(a), respectively, exceeds an aggregate amount (the "Basket
Amount") equal to $4,000,000, and then only for the amount of
such excess, provided however, that the limit set forth in this
Section 8.4.2 shall not be applicable for Losses or Litigation
Expenses for any indemnification obligation arising under
(a) Section 8.2(a) (to the extent relating to misrepresentations,
inaccuracies or breaches of the representations and warranties
contained in Sections 3.1, 3.2, 3.3, 3.5, 3.9, 3.12(a)(iv)) or
(b) Section 8.3(a) (to the extent relating to misrepresentations,
inaccuracies or breaches of the representations and warranties
contained in Sections 4.1, 4.2, 4.3, or 4.7).
8.4.3 Any indemnity payable pursuant to this Agreement
shall be decreased to the extent of any insurance proceeds (net
of all Costs payable in connection therewith) actually received
by a Buyer Indemnified Party or Seller Indemnified Party or which
a Buyer Indemnified Party or a Seller Indemnified Party is
unconditionally entitled to receive in respect of the Loss giving
rise to such indemnity payment.
8.4.4 The indemnifying party under Sections 8.2(a) and
8.3(a) shall not be liable to any Indemnified Party with respect
to any occurrence, event, circumstance, act, omission or conduct
unless such matter or a series of related matters arising from
the same or similar occurrences, events, circumstances, acts,
omissions or conduct which causes a representation or warranty
under Sections 8.2(a) or 8.3(a) to be breached results in Costs
of $25,000 or more, and then only for the amount of such excess.
8.4.5 Each indemnified party shall be obligated, in
connection with any claim for indemnification under Section 8.2
or 8.3, to use Commercial Efforts to mitigate Losses upon and
after becoming aware of any event which could reasonably be
expected to give rise to such Losses.
8.5 Procedure
. Promptly after acquiring knowledge of any Loss, or any
action, suit, investigation, proceeding, demand, assessment,
audit, judgment, or claim ("Claim") which may result in a Loss or
Litigation Expense, the Person seeking indemnity under this
Article 8 (the "Indemnitee") shall give written notice thereof to
the party from whom indemnity is sought (the "Indemnitor");
provided, however, that the failure to promptly notify the
Indemnitor shall not affect the indemnification obligation
hereunder if the Indemnitor was not prejudiced thereby and the
failure to promptly notify was inadvertent. The Indemnitor shall
have the right, at its expense, to defend or contest (subject to
the third to last sentence of this Section 8.5) such Claim,
through counsel of its choice (unless such Indemnitor is relieved
of its liability hereunder with respect to such Claim and Loss
and Litigation Expense by the Indemnitee) and shall not then be
liable for fees or expenses of the Indemnitee's attorneys (unless
the Indemnitor and Indemnitee are parties to the action and there
exists a conflict of interest between the Indemnitor and the
Indemnitee, in which event the Indemnitor will be responsible for
the reasonable fees and expenses of one firm of counsel for all
Indemnitees), and the Indemnitee and the Indemnitor shall provide
to each other all necessary and reasonable cooperation in the
defense of all Claims, including, but not limited to, reasonable
access to employees who are familiar with the transactions out of
which such Claim or Loss may have arisen. In the event that the
Indemnitor shall undertake to defend any Claim, it shall promptly
notify the Indemnitee of its intention to do so within thirty
(30) days of being notified of any such Claim. In the event that
the Indemnitor, after written notice from Indemnitee, fails to
take timely action to defend the same, the Indemnitee shall have
the right to defend the same by counsel of its own choosing, but
at the cost and expense of the Indemnitor, provided no settlement
of a Claim by Indemnitee (other than a Claim relating to an
Excluded Liability) shall be effected without the consent of the
Indemnitor which shall not be unreasonably withheld or delayed
unless Indemnitee waives any right to indemnification therefor.
The Indemnitor may settle or compromise any Claim without the
prior written consent of Indemnitee except for settlement or
compromise of a Claim (i) which includes the unconditional
release by the Person asserting the Claim and any related
claimants of Indemnitee from all liability with respect to such
Claim in form and substance reasonably satisfactory to
Indemnitee, (ii) which would not adversely affect the Indemnitee
and its Affiliates to own, hold, use and operate their respective
assets and businesses, and (iii) for money damages only. Seller
Parent and Buyer shall treat any payment under this Article 8 for
all Tax purposes as an adjustment of the Purchase Price and as
allocable to the assets deemed purchased under the
Section 338(h)(10) Election as shall reasonably be determined by
the Indemnitee, except to the extent such treatment is not
permitted under applicable Law.
8.5.1 (a) The amount of any indemnification payment
otherwise determined to be due under this Article 8 shall be
reduced (but not increased) by the amount of the "Actual Tax
Savings" (as hereinafter defined), if any, realized by the
Indemnitee with respect to the indemnified Loss. For purposes
hereof, the amount of an Indemnitee's Actual Tax Savings shall be
equal to the excess, if any, of the Actual Tax Benefit Amount
over the Actual Tax Detriment Amount, each as defined below and
each of which shall be calculated taking into account only those
items of tax savings or tax liabilities actually incurred by the
Indemnitee in the taxable year in which the indemnification
payment is made (taking into account all of the indemnitee's tax
attributes for the period or periods in question).
(b) The Actual Tax Benefit Amount shall equal the
actual amount of any reduction of the Indemnitee's federal, state
or local (but not foreign) income tax liability for the taxable
year in which the indemnification payment is made, which
reduction would not have been realized but for the occurrence of
the event in respect of which the indemnification payment is made
or the receipt of the indemnification payment. The Actual Tax
Detriment Amount shall equal the actual amount of any increase in
the Indemnitee's federal, state or local (but not foreign) income
tax liability for the taxable year in which the indemnification
payment is made, which increase would not have been realized but
for the occurrence of the event in respect of which the
indemnification payment is made or the receipt of the
indemnification payment.
(c) The parties agree that any determination made
under this Section 8.5.1 shall be made by the Indemnitee, who
shall provide the Indemnitor with its calculation of the Actual
Tax Savings in writing. The parties shall attempt to resolve any
dispute over such determination in good faith, provided that if
such dispute is not resolved by the parties such determination
shall be made by the national accounting firm regularly employed
by the Indemnitee.
8.6 No Consequential Damages
. NEITHER ANY PARTY TO THIS AGREEMENT NOR THEIR AFFILIATES
SHALL BE LIABLE FOR CONSEQUENTIAL DAMAGES SUFFERED BY A PARTY OR
ITS AFFILIATES WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER OF
THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS WAIVER SHALL NOT
LIMIT ANY LIABILITY OF ANY PARTY TO INDEMNIFY THE APPLICABLE
INDEMNIFIED PARTIES FOR LOSS OR LITIGATION EXPENSES ARISING FROM
COSTS OF SUCH TYPE WHICH THE INDEMNIFIED PARTY IS REQUIRED TO PAY
TO ANY OTHER PERSON.
8.7 Exclusive Remedy
. If the Closing occurs, the exclusive remedies for any
breach of any representation, warranty, covenant or agreement
hereunder shall be the indemnification provided by this
Article 8, and each party expressly waives any other rights or
remedies it may have, whether under this Agreement or otherwise,
or (other than in the case of fraudulent conduct) at law or in
equity, provided, however, that equitable relief, including the
remedies of specific performance and injunction shall be
available with respect to any actual or attempted breach of this
Agreement occurring before the Closing Date or with respect to
the breach of any covenant to be performed after the Closing
Date.
8.8 Validity
. The indemnification agreements provided for in this
Article 8 shall apply notwithstanding any knowledge of, or any
investigation made at any time by or on behalf of, any party
hereto.
8.9 Waiver
. It is understood and agreed that neither Seller Parent
nor any Seller shall be entitled to any indemnification, right of
contribution or other right of recovery from Recap Co, Recap
Subco or any Recap Subsidiary in connection with any claim made
by any Buyer Indemnification Party(s) against Seller Parent
hereunder, all of which are hereby irrevocably and
unconditionally waived and released by Seller Parent and each
Seller; provided, however, such waiver shall not preclude Seller
Parent or any Seller from contesting any such claims made by any
Buyer Indemnified Party, including, without limitation, on the
basis that the alleged Loss or Litigation Expense arose, in whole
or in part, as a result of the operation of the CRL Business
after the Closing Date or arose out of an Assumed Liability.
ARTICLE 9
MISCELLANEOUS
9.1 Public Announcement
. Except in furtherance by Buyer and Buyer Parent of its
covenants in Sections 5.14 and 5.18 and notwithstanding anything
contained in this Agreement, no news release or other public
announcement pertaining in any way to the transactions
contemplated by this Agreement will be made by any party without
the prior consent of the other parties (which consent shall not
be unreasonably withheld, conditioned or delayed) unless such
release or announcement is required by applicable Laws or
pursuant to any applicable listing agreement with, or rules or
regulations of, the NYSE, in which case the disclosing party,
prior to making such announcement, shall consult with the other
parties. In the event the transactions contemplated by this
Agreement are not consummated, each party shall return to the
other all documents, work papers and other materials, including
any extracts, summaries, analyses, compilations or other
documents prepared by the receiving party or its representatives
from such information (including any copies thereof whether in
written, electronic or other format) or destroy such materials
and provide to the other a written certification of such
destruction and will hold in absolute confidence any information
obtained from the other party except to the extent (i) such party
is required to disclose such information by Law or such
disclosure is necessary or desirable in connection with the
pursuit or defense of a claim relating to the transactions
contemplated hereby, (ii) such information was known by such
party prior to such disclosure or was thereafter developed or
obtained by such party independent of such disclosure, or
(iii) such information becomes generally available to the public
or is otherwise no longer confidential. Prior to any disclosure
of information pursuant to the exception in clause (i) of the
preceding sentence, the party intending to disclose the same
shall so notify the party that provided the same in order that
such party may seek a protective order or other appropriate
remedy should it choose to do so.
9.2 Expenses
. Subject to the provisions of Sections 7.2 and 9.3,
whether or not the transactions contemplated by this Agreement
are completed, each of the parties hereto shall pay the fees and
expenses incurred by it in connection with the negotiation,
preparation, execution and performance of this Agreement,
including, without limitation, attorneys', accountants', brokers'
and other advisors' fees.
9.3 Transfer Taxes and Recording Expenses
. All excise, sales, use, transfer, stamp, documentary,
filing, recording and other similar taxes or fees which may be
imposed or assessed as the result of the transactions
contemplated hereby, including, without limitation, the Merger
and Redemptions ("Transfer Taxes"), together with any interest or
penalties with respect thereto, shall be shared by the Seller
Parent and Recap Co as follows: the first $100,000 shall be paid
by Seller Parent, the second $100,000 shall be paid by, and all
amounts in excess of $200,000 shall be paid 50% by Recap Co and
50% by Seller Parent. All excise, sales, use, transfer, stamp,
documentary, filing, recording and other similar taxes or fees
which may be imposed or assessed as the result of the Internal
Reorganization, together with any interest or penalties with
respect thereto ("Reorganization Transfer Taxes"), shall be paid
56.25% by Recap Co and 43.75% by Seller Parent. All Tax Returns
required to be filed in connection with any Transfer Taxes or
Reorganization Transfer Taxes ("Transfer Tax Returns") shall be
prepared and filed when due by the party responsible under
applicable Law or custom to file such Transfer Tax Returns. The
filing party shall promptly provide the other applicable parties
with copies of such Transfer Tax Returns. All Transfer Tax
Returns shall be prepared on a basis consistent with
Schedule 5.5.5 of the Disclosure Schedule. From time to time but
not later than ninety (90) days after the Closing Date, Seller
Parent shall provide notice to Buyer of any Transfer Taxes and
Reorganization Transfer Taxes paid by Seller Parent or its
Affiliates and Buyer shall promptly reimburse Seller Parent or
its Affiliates as applicable in accordance with the provisions of
this Section 9.3. From time to time but not later than ninety
(90) days after the Closing Date, Buyer shall provide notice to
Seller Parent of any Transfer Taxes and Reorganization Transfer
Taxes paid by Buyer or its Affiliates and Seller Parent shall
promptly reimburse Buyer or its Affiliates as applicable in
accordance with the provisions of this Section 9.3. Seller
Parent shall pay all interest or penalty charges associated with
Seller Parent's failure to pay when due any Transfer Taxes or any
Reorganization Transfer Taxes, provided that such failure is not
the result of Buyer's failure to remit amounts agreed to be paid
under this Section 9.3 to Seller Parent promptly upon request.
9.4 Knowledge
. Whenever used in this Agreement, the words "knowledge" of
Seller Parent or similar words or phrases shall mean the actual
knowledge of those officers of Seller Parent or the CRL Business
who are listed on Schedule 9.4(a) and the words "knowledge" of
Buyer or similar words or phrases shall mean the actual knowledge
of those officers of Buyer, Buyer Parent or its Affiliates who
are listed on Schedule 9.4(b).
9.5 Notices
. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if
delivered personally, if sent by telecopier or facsimile or sent
by a recognized overnight courier service or mailed, first class
mail, postage prepaid, return receipt requested, as follows:
(a) If to Seller Parent or, prior to the Closing Date,
to Recap Co or Recap Subco:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604-2701
Attention: Alan H. Farnsworth
Vice President - Business Development
Fax: (716)338-8706
with copies to:
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604-2701
Attention: Robert B. Stiles, Esq.
Senior Vice President and General Counsel
Fax: (716)338-5043
Nixon Peabody LLP
P.O. Box 1051
Clinton Square
Rochester, New York 14604
Attention: Lori B. Green, Esq.
Fax: (716) 263-1600
(b) If to Buyer or Buyer Parent or, after the Closing
Date, to Recap Co or Recap Subco:
DLJ Merchant Banking Partners
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes
Fax: (212) 892-2609
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Fax: (212) 682-0200
or to such other address as either party shall have specified by
notice in writing to the other party. All such notices,
requests, demands and communications shall be deemed to have been
given on the date of personal delivery or upon confirmed receipt
to the person to whom addressed if sent by telecopier, overnight
courier service or mail.
9.6 Severability
. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid
or unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement
and the application of such provision to other persons, entities
or circumstances shall not be affected by such invalidity or
unenforceability.
9.7 Specific Performance
. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, the parties further agree
that each party shall be entitled to an injunction or restraining
order to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, all without the
necessity of posting any bond or other security and without the
need to show any actual damages or that money damages would not
afford an adequate remedy, this being in addition to any other
right or remedy to which such party may be entitled under this
Agreement, at law or in equity.
9.8 No Conflict of Interest
. Each of the parties to this Agreement hereby agrees that
Nixon Peabody LLP (or its successor) may serve as counsel to
Seller Parent and its Affiliates and Haythe & Curley (or its
successor) may serve as counsel to Buyer and its Affiliates in
connection with the negotiation, preparation, execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereunder and that either Nixon Peabody
LLP (or its successor) or Haythe & Curley (or any successor) may
serve as counsel to Seller Parent, Seller Parent's Affiliates,
Buyer, Buyer's Affiliates or any director, officer, employee or
affiliate of any one or more of them in connection with any
litigation arising out of or relating to this Agreement or the
transactions contemplated by this Agreement, each of the parties
hereto hereby consenting thereto and waiving any conflict of
interest arising therefrom. This Agreement shall not limit,
impair or modify any existing agreement, arrangement or
understanding relating to the representation by Nixon Peabody LLP
(or its successor) or Haythe & Curley (or its successors) of any
of the parties hereto or any beneficial owner of any such party.
9.9 Binding Effect; Benefit
. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors
and permitted assigns. Except as provided in Article 8 with
respect to indemnification, nothing in this Agreement, expressed
or implied, is intended to confer on any Person other than the
parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
9.10 Assignability
. This Agreement shall not be assigned by Seller Parent,
Parent Canada, any Seller, Recap Subsidiary or Recap Co without
the prior written consent of Buyer or by Buyer without the prior
written consent of Seller Parent; provided, however, that at and
after the Closing, Buyer's, Recap Co's and Recap Subco's rights
or interest under this Agreement may be assigned, upon at least
30 days (or two (2) days in the case of clause (a) below) prior
written notice to Seller Parent, (a) to any Affiliate of Buyer,
and (b) in connection with a sale of all or substantially all of
the assets of Buyer or any of its corporate parents, or direct or
indirect consolidated subsidiaries; and provided further that at
and after the Closing, Buyer's, Recap Co's and Recap Subco's
rights or interests under this Agreement may be assigned to any
bank, financial institution or other Person which has extended
credit to Recap Co, Recap SubCo, Buyer or any Affiliate of Buyer.
Any attempted assignment in violation of this Section 9.10 shall
be null and void.
9.11 Amendment, Waiver
. This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by Seller Parent
and Buyer. No waiver by any party of any of the provisions
hereof shall be effective unless explicitly set forth in writing
and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations,
warranties, covenants or agreements contained herein or in any
other document delivered in connection herewith. The waiver by
any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent
breach. No failure on the part of any party hereto to exercise,
and no delay in exercising, any right hereunder shall operate as
a waiver thereof.
9.12 Section Headings
. The Section headings contained in this Agreement and the
table of contents to this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement.
9.13 Counterparts
. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same
instrument.
9.14 Applicable Law
. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard
to the conflicts of laws principles thereof.
9.15 Submission to Jurisdiction
. The parties hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the federal
courts of the United States of America located in Monroe County,
New York for any actions, suits or proceedings arising out of or
relating to this Agreement, the Recapitalization Documents or the
transactions contemplated hereby or thereby, and the parties
agree not to commence any action, suit or proceeding relating
thereto except in such courts, and further agree that service of
any process, summons, notice or document by U.S. registered mail
shall be effective service of process for any action, suit or
proceeding brought against the parties in any such court. The
parties hereby irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement, any Recapitalization
Document or the transactions contemplated hereby or thereby, in
the federal courts of the United States of America located in
Monroe County, New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such
court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
9.16 Entire Agreement
. This Agreement, including the Exhibits and the Disclosure
Schedule hereto, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral and
written (other than the Confidentiality Agreement which shall not
survive the Closing). There are no restrictions, promises,
representations, warranties, covenants or undertakings, other
than those expressly set forth or referred to herein.
IN WITNESSETH WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
Bausch & Lomb, Incorporated
By:
Name: Alan H. Farnsworth
Title: Vice President
CRL Holdings, Inc.
By:
Name: Alan H. Farnsworth
Title: Vice President
Endosafe, Inc.
By:
Name: Alan H. Farnsworth
Title: Vice President
Bausch & Lomb International,
Inc.
By:
Name: Alan H. Farnsworth
Title: Vice President
Charles River SPAFAS, Inc.
By:
Name: Alan H. Farnsworth
Title: Vice President
Charles River Laboratories,
Inc.
By:
Name: Alan H. Farnsworth
Title: Vice President
Wilmington Partners, L.P.
By: Wilmington Management
Corp., a General Partner
By:
Name: Alan H. Farnsworth
Title: Vice President
Bausch & Lomb Canada, Inc.
By:
Name: Alan H. Farnsworth
Title: Vice President
CRL Acquisition LLC
By:
Name: Reid Perper
Title: President
DLJ Merchant Banking Partners
II, L.P.
By:
Name: Ari Benacerraf
Title: Principal
AMENDMENT NO. 1
TO
RECAPITALIZATION AGREEMENT
AMENDMENT dated as of September 29, 1999 (this "Amendment")
to Recapitalization Agreement dated as of the July 25, 1999 (the
"Recapitalization Agreement") by and among Bausch & Lomb
Incorporated, a New York corporation ("Seller Parent') and CRL
Acquisition LLC, a Delaware limited liability company ("Buyer").
Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Recapitalization Agreement.
W I T N E S S E T H
WHEREAS, Seller Parent, Buyer, Sellers, Parent Canada,
Recap Co, Recap Subco and Buyer Parent have entered into the
Recapitalization Agreement; and
WHEREAS, the parties hereto desire to amend certain of the
provisions of the Recapitalization Agreement pursuant to Section 9.11
thereof as more particularly described below.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I.
AMENDMENTS TO RECAPITALIZATION AGREEMENT
1.1 The parties hereto acknowledge and agree that Section
2.1 of the Recapitalization Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
"2.1 Reorganization and Stock Split. Upon the terms and
subject to the conditions of this Agreement, the parties agree that
the following transactions will take place immediately prior to the
Closing in the order set forth below (with the steps set forth in
Section 2.1.2 through 2.1.5 being hereinafter referred to as the
"Stage 2 Reorganization"):
2.1.1 Recap Co shall redeem 29,000 shares of Recap Co Common
Stock owned by Recap Subco in exchange for $1.00.
2.1.2 Recap Subco shall form a wholly owned Canadian Corporation
("NewCanCo").
2.1.3WPLP shall contribute all of its CRL Business Assets
used in the CRL Business to Recapo Subco and, in exchange therefor,
Recap Subco shall issue to WPLP the Recap Subco Preferred Stock
pursuant to a contribution agreement in substantially the form of the
Contribution Agreements.
2.1.4 CRL shall purchase shares of Recap Subco Common Stock
in exchange for cash and Recap Subco shall purchase shares of
NewCanCo common stock in exchange for cash.
2.1.5 Parent Canada shall sell all of its CRL Business
Assets used in the CRL Business to NewCanCo in exchange for cash
pursuant to an Asset Purchase Agreement in substantially the form of
the Contribution Agreements.
2.1.6 Each of CRL, SPAFAS, and International shall exchange
all of the Recap Subco Common Stock owned by it for the same number
of shares of Recap Co Common Stock and WPLP shall exchange all of the
Recap Subco Preferred Stock for the same number of shares of Recap Co
Preferred Stock."
2.1.7 Recap Co shall redeem 1,000 shares of Recap Co Common
Stock owned by Recap Subco in exchange for $1.00.
2.1.8 Recap Co shall, by way of a stock dividend, effect a stock
split of the issued and outstanding shares of Recap Co Common Stock
by declaring and paying a stock dividend of 46.6190509259 shares of
Recap Co Common Stock in respect of each issued and outstanding share
of Recap Co Common Stock (the "Stock Split").
2.1.9 Buyer shall form a wholly owned Delaware corporation
("Acquisition Co") and contribute at least $90,000,000 thereto in
exchange for shares of common stock of Acquisition Co."
1.2 (a) The parties hereto acknowledge and agree that
Section 2.3 of the Recapitalization Agreement is hereby amended by
deleting the caption thereto in its entirety and replacing such
caption with the following: "Redemptions; Merger."
(b) The parties hereto acknowledge and agree that Section
2.3 of the Recapitalization Agreement is hereby amended by deleting
Section 2.3.4 thereof in its entirety and replacing such Section
2.3.4 with the following:
"2.3.4 Recap Co shall redeem 5,227,167 shares of Recap Co
Common Stock owned by CRL for $50,000,000 in cash, payable by wire
transfer of immediately available funds to such account as is
designated by CRL, and $43,000,000 in principal amount of the Recap
Co Sub Note, and CRL shall deliver to Recap Co certificates, duly
endorsed for transfer, representing such shares of Recap Co Common
Stock."
(c) The parties hereto acknowledge and agree that Section
2.3 of the Recapitalization Agreement is hereby amended by adding a
new Section 2.3.5 thereof to read in its entirety as follows:
"2.3.5 Buyer and Seller Parent shall cause Acquisition Co
to merge with and into Recap Co with Recap Co being the surviving
entity (the "Merger"). At the effective time of the Merger, (i) CRL
shall receive, as the sole shareholder of Recap Co, in exchange for
each one share of the 5,058,548 shares of Recap Co Common Stock
issued and outstanding immediately prior to the effective time of the
Merger, $17.7916666996 and .254166808341 shares of Recap Co Common
Stock as the surviving corporation in the Merger, and (ii) Buyer
shall receive 9,000,000 shares of Recap Co Common Stock in exchange
for all of the issued and outstanding shares of Acquisition Co common
stock, constituting 87.5% of the total number of shares of Recap Co
Common Stock issued and outstanding following all of the Redemptions
and the Merger, including the number of shares so issued. The
parties acknowledge that the Merger will be treated for tax purposes
as a qualified stock purchase within the meaning of section 338(d)(3)
of the Internal Revenue Code, section 1.338-1(c)(8) of the
regulations thereunder and Rev. Rul. 90-95, 1990-2 C.B. 67."
(d) The parties hereto acknowledge and agree that Section
2.3 of the Recapitalization Agreement is hereby amended by
renumbering Section 2.3.5 as Section 2.3.6.
1.3 The parties hereto acknowledge and agree that Section
5.5.5 of the Recapitalization Agreement is hereby amended by deleting
the phrase ", at the Closing," in the third sentence of Section 5.5.5
and replacing such phrase with the following:
",within sixty (60) calendar days after the Closing,"
1.4 The parties hereto acknowledge and agree that Section
8.3 of the Recapitalization Agreement is hereby amended by deleting
clause 8.3(d) thereof in its entirety and replacing such clause with
the following:
"(d) the conduct of the CRL Business after the Closing Date
except to the extent the Losses or Litigation Expense resulted from
the conduct of the CRL Business prior to the Closing Date. Any
indemnity payable pursuant to Section 8.3(a) or Section 8.3(b) (but
only with respect to the covenants and agreements, contained in
Section 5.15), shall be increased by an amount equal to the product
of (i) such Loss and Litigation Expense and (ii) the Seller's Equity
Percentage at the time."
1.5 The parties hereto acknowledge and agree that Section
8.5 of the Recapitalization Agreement is hereby amended by deleting
the fifth sentence thereof in its entirety and replacing such
sentence with the following:
"The Indemnitor may not settle or compromise any Claim
without the prior written consent of Indemnitee except for settlement
or compromise of a Claim (i) which includes the unconditional release
by the Person asserting the Claim and any related claimants of
Indemnitee from all liability with respect to such Claim in form and
substance reasonably satisfactory to Indemnitee, (ii) which would not
adversely affect the Indemnitee and its Affiliates to own, hold use
and operate their respective assets and businesses, and (iii) for
money damages only."
1.6 The parties hereto acknowledge and agree that Section
9.3 of the Recapitalization Agreement is hereby amended by deleting
the first sentence thereof in its entirety and replacing such
sentence with the following:
"All excise, sales, use, transfer, stamp, documentary,
filing, recording and other similar taxes or fees which may be
imposed or assessed as the result of the transactions contemplated
hereby, including, without limitation, the Merger and Redemptions
("Transfer Taxes"), together with any interest or penalties with
respect thereto, shall be shared by the Seller Parent and Recap Co as
follows: the first $100,000 shall be paid by Seller Parent, the
second $100,000 shall be paid by Recap Co, and all amounts in excess
of $200,000 shall be paid 50% by Recap Co and 50% by Seller Parent."
ARTICLE II.
MISCELLANEOUS
2.1 Invalidity, Etc. The provisions of this Amendment
shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability of the
other provisions hereof. If any provision of this Amendment, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Amendment and
the application of such provision to other persons, entities or
circumstances shall not be affected by such invalidity or
unenforceability.
2.2 Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York
without regard to the conflicts of laws principles thereof.
2.3 Recitals. The section headings contained in this
Amendment are for reference purposes only and shall not affect the
meaning or interpretation of this Amendment.
2.4 Counterparts. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
2.5 Ratification. The parties hereto hereby ratify and
approve the Recapitalization Agreement, as amended hereby, and the
parties hereto acknowledge that all of the terms and provisions of
the Recapitalization Agreement as amended hereby, are and remain in
full force and effect.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first above written.
BAUSCH & LOMB, INCORPORATED
By:
Name: Alan H. Farnsworth
Title: Vice President-
Business Development
CRL ACQUISITION LLC
By:
Name:Reid Perper
Title: President
INVESTORS' AGREEMENT
dated as of
September 29, 1999
among
CHARLES RIVER LABORATORIES HOLDINGS, INC.
and the
several Stockholders from time to time parties hereto
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions 1
ARTICLE 2
CORPORATE COVERNANCE
SECTION 2.01. Composition of the Board 8
SECTION 2.02. Removal 9
SECTION 2.03. Vacancies 9
SECTION 2.04. Meetings 9
SECTION 2.05. Action by the Board 9
SECTION 2.06. Conflicting Charter or Bylaw Provisions 10
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. General 10
SECTION 3.02. Legends 10
SECTION 3.03. Permitted Transferees 11
SECTION 3.04. Restrictions on Transfers by Management 11
Stockholders
SECTION 3.05. Restrictions on Transfers by CRL 12
SECTION 3.06. Restrictions on Transfers by New Minority 13
Shareholders; Right of Refusal
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
SECTION 4.01. Rights to Participate in Transfer 15
SECTION 4.02. Right to Compel Participation in Certain 17
Transfers
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Demand Registration 18
SECTION 5.02. Incidental Registration 22
SECTION 5.03. Holdback Agreements 23
SECTION 5.04. Registration Procedures 23
SECTION 5.05. Indemnification by the Company 26
SECTION 5.06. Indemnification by Participating 27
Stockholders
SECTION 5.07. Conduct of Indemnification Proceedings 28
SECTION 5.08. Contribution 29
SECTION 5.09. Participation in Public Offering 30
SECTION 5.10. Other Indemnificaiton 30
SECTION 5.11. Cooperation by the Company 30
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Entire Agreement 31
SECTION 6.02. Binding Effect; Benefit 31
SECTION 6.03. Exclusive Financial and Investment Banking 31
Advisor
SECTION 6.04. Put Right 31
SECTION 6.05. Pre-emptive Rights 32
SECTION 6.06. Assignability 33
SECTION 6.07. Amendment; Waiver; Termination 33
SECTION 6.08. Notices 34
SECTION 6.09. Headings 37
SECTION 6.10. Counterparts 37
SECTION 6.11. Applicable Law 37
SECTION 6.12. Specific Enforcement 37
SECTION 6.13. Consent to Jurisdiction 37
<Page 1>
INVESTORS' AGREEMENT
AGREEMENT dated as of September 29, 1999 among Charles River
Laboratories Holdings, Inc., a Delaware corporation (the
"Company"), CRL Acquisition LLC, a Delaware limited liability
company (the "LLC"), DLJ Investment Partners, L.P., DLJ
Investment Funding, Inc., DLJ ESC II L.P. (collectively with DLJ
Investment Partners, L.P., and DLJ Investment Funding, Inc.,
"DLJIP"), The 1818 Mezzanine Fund, L.P. ("BB"), [Trust Company of
the West] ("TW"), [Carlyle] ("Carlyle"), CRL Holdings, Inc., a
Delaware corporation ("CRL"), and certain other Persons listed on
the signature pages hereof (each, a "Management Stockholder", and
collectively, the "Management Stockholders").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used
herein, have the following meanings:
"Adverse Person" means any Person whom the Board of Directors of
the Company reasonably determines is a competitor or a potential
competitor of the Company or its subsidiaries in a business that
is material to the Company and its subsidiaries, taken as a
whole.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under
common control with such Person; provided that no stockholder of
the Company shall be deemed an Affiliate of any other stockholder
of the Company solely by reason of any investment in the Company.
For the purpose of this definition, the term "control" (including
with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), when used with respect to
any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Affiliated Employee Benefit Trust" means any trust that is a
successor to the assets held by a trust established under an
employee benefit plan subject to ERISA or any other trust
established directly or indirectly under such plan or any other
such plan having the same sponsor.
<Page 2>
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by
law to close.
"Bylaws" means the Bylaws of the Company, as amended from time to
time.
"Charter" means the Certificate of Incorporation of the Company,
as amended from time to time.
"Closing Date" means September 29, 1999.
"Common Stock" means the common stock, par value $0.01 per share,
of the Company and any stock into which such Common Stock may
thereafter be converted or changed, and "Common Shares" means
shares of Common Stock.
"Company Securities" means the Common Stock and securities
convertible into or exchangeable for Common Stock and options,
warrants (including the Warrants) or other rights to acquire
Common Stock or any other equity security issued by the Company,
provided that notwithstanding the foregoing, the term "Company
Securities" shall not include the High Yield Warrants.
"Drag-Along Portion" means, with respect to any Other Stockholder
and any class of Company Securities, the number of such class of
Company Securities beneficially owned by such Other Stockholder
on a Fully Diluted basis (but without duplication) multiplied by
a fraction, the numerator of which is the number of such class of
Company Securities proposed to be sold by the LLC on behalf of
the LLC and the Other Stockholders and the denominator of which
is the total number of such class of Company Securities on a
Fully Diluted basis beneficially owned by the Stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fully Diluted" means, with respect to Common Stock and without
duplication, all outstanding Shares and all Shares issuable in
respect of securities convertible into or exchangeable for
Shares, options, warrants (including the Warrants) and other
rights to purchase or subscribe for Shares or securities
convertible into or exchangeable for Common Stock; provided that,
to the extent any of the foregoing options, warrants or other
rights to purchase or subscribe for Shares are subject to
vesting, the Shares subject to vesting shall be included in the
definition of "Fully Diluted" only upon and to the extent of such
vesting; and
<Page 3>
provided further that any Shares that vest upon and as a result
of a certain transaction shall be included in the definition of
"Fully Diluted" for purposes of such transaction.
"High Yield Warrants" means the warrants that are issued to
purchasers of the Senior Subordinated Notes of Charles River
Laboratories, Inc. on or around the Closing Date for the purchase
of shares of Common Stock constituting not more than 6% of the
fully diluted equity of the Company.
"Initial Ownership" means, with respect to any Stockholder and
any class of Company Securities, the number of shares of such
class of Company Securities beneficially owned (and without
duplication) which such Persons have the right to acquire as of
the date hereof, or in the case of any Person that shall become a
party to this Agreement on a later date, as of such date, taking
into account any stock split, stock dividend, reverse stock split
or similar event.
"Initial Public Offering" means the first sale after the date
hereof of Common Stock pursuant to an effective registration
statement under the Securities Act (other than (1) a registration
statement on Form S-8 or any successor form and (2) a shelf
registration statement filed with respect to the High Yield
Warrants and / or Warrants).
"Other Stockholders" means all Stockholders other than the LLC
and its Permitted Transferees; provided that DLJIP, BB, TW, and
Carlyle shall be considered for purposes of this Agreement to be
Other Stockholders.
"Permitted Transferee" means:
(i) in the case of the LLC: (A) any of: DLJ Merchant Banking
Partners II, L.P., a Delaware limited partnership, DLJ Offshore
Partners II, C.V. a Netherlands Antilles limited partnership, DLJ
Merchant Banking Partners II-A, L.P., a Delaware limited
partnership, DLJ Diversified Partners, L.P., a Delaware limited
partnership, DLJ Diversified Partners-A, L.P., a Delaware limited
partnership, DLJ EAB Partners, L.P., a Delaware limited
partnership, DLJ Millennium Partners, L.P., a Delaware limited
partnership, DLJ Millennium Partners-A, L.P., a Delaware limited
partnership, DLJMB Funding II, Inc., a Delaware corporation, UK
Investment Plan 1997 Partners, a Delaware partnership, DLJ First
ESC, L.P., a Delaware limited partnership and DLJ ESC II, L.P., a
Delaware limited partnership, (each of the foregoing, a "DLJ
Entity", and collectively, the "DLJ Entities"), (B) any general
or limited partner of any DLJ Entity (a "DLJ Partner"), and any
<Page 4>
corporation, partnership, Affiliated Employee Benefit Trust or
other entity that is an Affiliate of any DLJ Partner
(collectively, the "DLJ Affiliates"), (C) any managing director,
general partner, director, limited partner, officer or employee
of any DLJ Entity or of any DLJ Affiliate, or the heirs,
executors, administrators, testamentary trustees, legatees or
beneficiaries of any of the foregoing persons referred to in this
clause (C) (collectively, "DLJ Associates"), (D) a trust, the
beneficiaries of which, or a corporation, limited liability
company or partnership, the stockholders, members or general or
limited partners of which, include only DLJ Entities, DLJ
Affiliates, DLJ Associates, their spouses or their lineal
descendants, or (E) a voting trustee for one or more DLJ
Entities, DLJ Affiliates or DLJ Associates; provided that
notwithstanding the foregoing, no Other Stockholder shall be a
Permitted Transferee of the LLC;
(ii) in the case of CRL, Bausch & Lomb Incorporated ("B&L"), or
any wholly-owned subsidiary of B&L; and
(iii) in the case of any Management Stockholder: (A) a Person to
whom Shares are transferred from such Other Stockholder (1) by
will or the laws of descent and distribution or (2) by gift
without consideration of any kind; provided that, in the case of
clause (2), such transferee is the issue or spouse of such
Management Stockholder, (B) a trust that is for the exclusive
benefit of such Management Stockholder or its Permitted
Transferees under (A) above, or a custodian or guardian for the
exclusive benefit of the same, or (C) the Company, in a transfer
approved by the Board; and
(iv) in the case of DLJIP, BB, TW, and Carlyle: any Affiliate of
such Person.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Pro Rata Portion" means the number of Shares a Stockholder holds
multiplied by a fraction, the numerator of which is the number of
Shares to be sold by the LLC and its Permitted Transferees in a
Public Offering and the denominator of which is the total number
of Shares, on a Fully Diluted basis, held in the aggregate by the
LLC and its Permitted Transferees prior to such Public
<Page 5>
Offering (excluding any Shares acquired or acquirable upon the
exercise of High Yield Warrants).
"Public Offering" means an underwritten public offering of
Registrable Securities of the Company pursuant to an effective
registration statement under the Securities Act.
"Registrable Securities" means any Shares or Warrants until (i) a
registration statement covering such Shares or Warrants has been
declared effective by the SEC and such Shares or Warrants have
been disposed of pursuant to such effective registration
statement, (ii) such Shares or Warrants are sold under
circumstances in which all of the applicable conditions of Rule
144 are met, or (iii) such Shares or Warrants are otherwise
transferred, the Company has delivered a new certificate or other
evidence of ownership for such Shares or Warrants not bearing the
legend required pursuant to this Agreement and such Shares or
Warrants may be resold without subsequent registration under the
Securities Act, provided that the term "Registrable Securities"
shall not apply to any Shares received upon exercise of any High
Yield Warrants.
"Registration Expenses" means (i) all registration and filing
fees, (ii) fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Shares
or Warrants), (iii) printing expenses, (iv) internal expenses of
the Company (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), (v) reasonable fees and disbursements of
counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company
(including the expenses of any comfort letters or costs
associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested
pursuant to Section 5.04(h)), (vi) the reasonable fees and
expenses of any special experts retained by the Company in
connection with such registration, (vii) reasonable fees and
expenses of one counsel for the Stockholders participating in the
offering selected (A) by the LLC, in the case of any offering in
which the LLC or any Permitted Transferee of the LLC
participates, or (B) in any other case, by the Other Stockholders
holding the majority of Shares to be sold for the account of all
Other Stockholders in the offering, (viii) fees and expenses in
connection with any review of underwriting arrangements by the
National Association of Securities Dealers, Inc. (the "NASD")
including fees and expenses of any "qualified independent
underwriter" and (ix) fees and disbursements of underwriters
customarily paid by issuers or sellers of securities; but shall
not include any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities, or any out-of-
pocket expenses (except as set forth in clause
<Page 6>
(vii) above) of the Stockholders (or the agents who manage their
accounts) or any fees and expenses of underwriter's counsel.
"Restriction Termination Date" means the earlier to occur of (a)
the second anniversary of the Initial Public Offering and (b) the
fifth anniversary of the Closing Date.
"Rule 144" means Rule 144 and Rule 144A (or any successor
provisions) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of Common Stock.
"Stockholder" means each Person (other than the Company) who
shall be a party to or bound by this Agreement, whether in
connection with the execution and delivery hereof as of the date
hereof, pursuant to Section 6.06, or otherwise, so long as such
Person shall (i) beneficially own (directly or indirectly) any
Company Securities, or (ii) have any stock appreciation rights,
options, warrants (other than High Yield Warrants) or other
rights to purchase or subscribe for Company Securities.
"Subject Securities" means any Company Securities beneficially
owned by the Other Stockholders.
"Tag-Along Portion" means the number of shares of Common Stock
held (or, without duplication, acquirable under the Warrants)
(excluding any shares of Common Stock acquired or acquirable
under the High Yield Warrants) by the Tagging Person or the
Selling Person, as the case may be, multiplied by a fraction, the
numerator of which is the number of shares of Common Stock
proposed to be sold in the Tag-Along Sale pursuant to Section
4.01, and the denominator of which is the aggregate number of
shares of Common Stock on a Fully Diluted basis owned by all
Stockholders (excluding any shares of Common Stock acquired or
acquirable under the High Yield Warrants).
"Third Party" means a prospective purchaser of Shares in an arm's-
length transaction from a Stockholder where such purchaser is not
a Permitted Transferee of such Stockholder.
"Warrants" means the warrants issued by the Company to the DLJ
Entities for the purchase of shares of Common Stock constituting
not more than
<Page 7>
10% (the "Agreed Percentage") of the fully diluted equity of the
Company, provided that the Agreed Percentage shall be subject to
adjustment in the event of any disruption or adverse change in
current financial or capital markets generally or in the market
for new issuances of high yield securities.
"Warrant Shares" means shares of Common Stock issuable by the
Company upon exercise of the Warrants.
(b) The term "LLC", to the extent the LLC shall have transferred
any of its Shares to "Permitted Transferees", shall mean the LLC
and the Permitted Transferees of the LLC, taken together, and any
right or action that may be taken at the election of the LLC may
be taken at the election of the holders of a majority of the
Shares then held by the LLC and such Permitted Transferees.
(c) The term "Other Stockholders", to the extent such
stockholders shall have transferred any of their Shares to
"Permitted Transferees", shall mean the Other Stockholders and
the Permitted Transferees of the Other Stockholders, taken
together, and any right or action that may be taken at the
election of the Other Stockholders may be taken at the election
of the Other Stockholders and such Permitted Transferees.
(d) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
Applicable Holdback Period 5.03
beneficially own 1.01(a)
Demand Registration 5.01(e)
DLJSC 6.03
Drag-Along Rights 4.02(a)
Exercise Period 6.04
Holders 5.01(a)
Incidental Registration 5.01(e)
Indemnified Party 5.07
Indemnifying Party 5.07
Inspectors 5.04(g)
Maximum Offering Size 5.01(e)
Nominee 2.03(a)
Put 6.04
Records 5.04(g)
Section 4.01 Response Notice 4.01(a)
<Page 8>
Section 4.02 Notice 4.02(a)
Section 4.02 Notice Period 4.02(a)
Section 4.02 Sale 4.02(a)
Section 4.02 Sale Price 4.02(a)
Selling Person 4.01(a)
Selling Stockholder 5.01(e)
Tag-Along Notice 4.01(a)
Tag-Along Notice Period 4.01(a)
Tag-Along Offer 4.01(a)
Tag-Along Right 4.01(a)
Tag-Along Sale 4.01(a)
Tagging Person 4.01(a)
Transfer 3.01(a)
ARTICLE 2
CORPORATE GOVERNANCE
SECTION 2.01. Composition of the Board. (a) The Board shall
consist initially of nine directors, (i) seven of whom (including
the Chairman) will be designated by DLJ Merchant Banking Partners
II, L.P., (ii) one of whom will be designated by CRL, and (iii)
one of whom will be the Chief Executive Officer appointed by the
Board. DLJIP shall be entitled to designate [two] observer[s] to
the Board, who shall be entitled to receive a copy of any
materials distributed to all members of the Board, until the date
on which DLJIP owns (directly or indirectly) less than 50% of the
equity interest in the Company which it owned (indirectly) as of
the Closing Date.
(b) Each Stockholder (other than CRL) entitled to vote for the
election of directors to the Board agrees that it will vote its
Shares or execute written consents, as the case may be, and take
all other necessary action (including causing the Company to call
a special meeting of stockholders) in order to ensure that the
composition of the Board is as set forth in this Section 2.01;
provided that no Other Stockholder shall be required to vote for
the board-designees of DLJ Merchant Banking Partners II, L.P. if
the aggregate number of Common Shares held by the LLC is less
than 10% of its Initial Ownership of Common Shares, and provided
further that no party hereto shall be required to vote for the
board-designee of CRL if the aggregate number of Common Shares
held by CRL is less than 40% of the Initial Ownership of CRL.
SECTION 2.02. Removal. Each Stockholder (other than CRL) agrees
that if, at any time, it is then entitled to vote for the removal
of directors of the Company, it will not vote any of its Shares
in favor of the removal of any director
<Page 9>
who shall have been designated or nominated pursuant to Section
2.01 unless such removal shall be for cause or the Persons
entitled to designate or nominate such director shall have
consented to such removal in writing.
SECTION 2.03. Vacancies. If, as a result of death, disability,
retirement, resignation, removal (with or without cause) or
otherwise, there shall exist or occur any vacancy of the Board:
(a) the Person or Persons entitled under Section 2.01 to
designate or nominate such director whose death, disability,
retirement, resignation or removal resulted in such vacancy may
designate another individual (the "Nominee") to fill such
capacity and serve as a director of the Company; and
(b) each Stockholder (other than CRL) then entitled to vote for
the election of the Nominee as a director of the Company agrees
that it will vote its Shares, or execute a written consent, as
the case may be, in order to ensure that the Nominee is elected
to the Board.
SECTION 2.04. Meetings. The Board shall hold a regularly
scheduled meeting at least once every calendar quarter, and
notice of each meeting shall be given to all directors at least
five Business Days prior to such meeting.
SECTION 2.05. Action by the Board. (a) A quorum of the Board
shall consist of four directors, of whom at least three must be
designees of DLJ Merchant Banking Partners II, L.P.; provided
that the LLC shall have the right at any time to change the
number of directors necessary to constitute a quorum of the
Board. All actions of the Board shall require the affirmative
vote of at least a majority of the directors present at a duly
convened meeting of the Board at which a quorum is present or the
unanimous written consent of the Board; provided that, in the
event there is a vacancy on the Board and an individual has been
nominated to fill such vacancy, the first order of business shall
be to fill such vacancy.
(b) CRL shall have the right to send an observer who is an
employee of B&L or an Affiliate of B&L to any meeting of the
Board that the director who is designated by CRL is unable to
attend. The observer shall have the privilege of voice but no
vote with respect to any matter and shall be given a copy of any
materials distributed to the Board members for such meeting.
(c) The Board may create executive, compensation and audit
committees, as well as such other committees as it may determine.
DLJ Merchant Banking Partners II, L.P. shall be entitled to
designate a majority of the directors on any committee created by
the Board.
<Page 10>
SECTION 2.06. Conflicting Charter or Bylaw Provisions. Each
Stockholder shall vote its Shares or execute written consents, as
the case may be, and take all other actions necessary, to ensure
that the Company's Charter and Bylaws facilitate and do not at
any time conflict with any provision of this Agreement.
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. General. (a) Each Stockholder understands and
agrees that the Company Securities purchased pursuant to the
applicable subscription agreement have not been registered under
the Securities Act and are restricted securities. Each
Stockholder agrees that it will not, directly or indirectly,
sell, assign, transfer, grant a participation in, pledge or
otherwise dispose of ("transfer") any Company Securities (or
solicit any offers to buy or otherwise acquire, or take a pledge
of any Company Securities) except in compliance with the
Securities Act and the terms and conditions of this Agreement.
Any attempt to transfer any Company Securities not in compliance
with this Agreement shall be null and void and the Company shall
not, and shall cause any transfer agent not to, give any effect
in the Company's stock records to such attempted transfer.
No transferee other than a Permitted Transferee or a party hereto
shall be required or permitted to become a party to this
Agreement or have the benefit of any rights hereunder or the
burden of any obligations hereunder.
Except as set forth in the first paragraph of this Section 3.01,
transfers by the LLC are not subject to any restrictions.
SECTION 3.02. Legends. In addition to any other legend that may
be required, each certificate for shares of Common Stock and each
Warrant that is issued to any Stockholder shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTORS'
AGREEMENT DATED AS OF SEPTEMBER 29, 1999, COPIES OF WHICH
<Page 11>
MAY BE OBTAINED UPON REQUEST FROM CHARLES RIVER
LABORATORIES HOLDINGS, INC. OR ANY SUCCESSOR THERETO."
If any Company Securities shall cease to be Registrable
Securities under clause (i) or clause (ii) of the definition
thereof, the Company shall, upon the written request of the
holder thereof, issue to such holder a new certificate evidencing
such securities without the first sentence of the legend required
by this Section endorsed thereon. If any Company Securities cease
to be subject to any and all restrictions on transfer set forth
in this Agreement, the Company shall, upon the written request of
the holder thereof, issue to such holder a new certificate
evidencing such Company Securities without the second sentence of
the legend required by this Section endorsed thereon.
SECTION 3.03. Permitted Transferees. Notwithstanding anything in
this Agreement to the contrary, any Stockholder may at any time
transfer any or all of its Company Securities to one or more of
its Permitted Transferees without the consent of the Board or any
other Stockholder or group of Stockholders and without compliance
with Sections 3.04, 3.05, 3.06 and 4.01 so long as (a) such
Permitted Transferee shall have agreed in writing to be bound by
the terms of this Agreement and (b) the transfer to such
Permitted Transferee is not in violation of applicable federal or
state securities laws.
SECTION 3.04. Restrictions on Transfers by Management
Stockholders.
(a) Each Management Stockholder and each Permitted Transferee of
such Management Stockholder may transfer its Company Securities
only as follows:
(i) in a transfer made in compliance with Section 4.01 or 4.02;
(ii) subject to the Public Offering Limitations, in a Public
Offering in connection with the exercise of its rights under
Article 5 hereof;
(iii) after the Initial Public Offering, pursuant to the
exemption from registration provided under Rule 144, provided
that until the later of (A) the third anniversary of the IPO and
(B) the Restriction Termination Date, such sales cannot reduce
the Stockholder's ownership to (or occur at a time when such
Stockholder's ownership is otherwise) below the greater of (X)
50% of his or her Initial Ownership and (Y) that percentage of
his or her Initial Ownership as equals the percentage of the
LLC's Initial Ownership remaining after previous dispositions by
the LLC; or
<Page 12>
(iv) following the Restriction Termination Date, to (A) any Third
Party other than an Adverse Person or any person deemed
inappropriate by the Board or (B) any Third Party through a
national securities exchange, in each case for consideration
consisting solely of cash, provided, however, that the amount
sold in any 12-month period may not exceed 20% of the Management
Stockholder's Initial Ownership.
For purposes of this Agreement, "Public Offering Limitations"
means (A) no Management Stockholder shall be permitted to sell
any Shares in the Initial Public Offering, (B) in the first
public offering following the Initial Public Offering, no
Management Stockholder may sell more than the lesser of (x) 50%
of his or her Pro Rata Portion and (y) 20% of his or her holdings
prior to the offering and (C) in each public offering thereafter,
each Management Stockholder may sell no more than the lesser of
(x) his or her Pro Rata Portion and (y) 50% of his or her
holdings prior to the offering.
(b) The provisions of Section 3.04(a) shall terminate upon the
earliest to occur of (i) the tenth anniversary of the Closing
Date and (ii) the date upon which the shareholdings of the LLC
fall below 10% of its Initial Ownership.
Notwithstanding the foregoing sentence, the provisions of Section
3.04(a) shall not terminate with respect to any Management
Stockholder's Shares which shall have been pledged to the Company
as security in connection with any indebtedness for borrowed
money owed by such Management Stockholder to the Company unless
the proceeds from the sale of such Shares are applied to repay
such indebtedness in full.
SECTION 3.05. Restrictions on Transfers by CRL.
(a) CRL may transfer its Company Securities only as follows:
(i) in a transfer made in compliance with Section 4.01 or 4.02;
(ii) in a Public Offering in connection with the exercise of its
rights under Article 5 hereof;
(iii) after the Initial Public Offering, pursuant to the
exemption from registration provided under Rule 144, provided,
however, that the amount sold in any 12-month period pursuant to
this clause (iii) may not exceed 25% of CRL's Initial Ownership.
(iv) following the Restriction Termination Date, to (A) any Third
Party other than an Adverse Person or any person deemed
inappropriate by
<Page 13>
the Board or (B) any Third Party through a national securities
exchange, in each case for consideration consisting solely of
cash.
(b) The provisions of Section 3.05(a) shall terminate upon the
earliest to occur of (i) the tenth anniversary of the Closing
Date and (ii) the date upon which the shareholdings of the LLC
fall below 10% of its Initial Ownership.
SECTION 3.06. Restrictions on Transfers by New Minority
Shareholders; Right of First Refusal.
(a) Each of DLJIP, BB, TW, and Carlyle (a "New Minority
Shareholder") may transfer its Company Securities only as
follows:
(i) in a transfer made in compliance with Section 4.01 or 4.02;
(ii) in a Public Offering in connection with the exercise of its
rights under Article 5 hereof;
(iii) after the Initial Public Offering, pursuant to the
exemption from registration provided under Rule 144; or
(iv) after the earlier of (A) [3] years from the Closing Date or
(B) the Initial Public Offering, to any Third Party other than an
Adverse Person or any person deemed inappropriate by the Board,
for consideration consisting solely of cash, provided that the
transferor shall first have complied with Section 3.06(b).
(b) Right of First Refusal.
(i) If a New Minority Shareholder proposes to transfer Company
Securities owned by such New Minority Shareholder in a
transaction pursuant to Section 3.06(a)(iv), such New Minority
Shareholder shall provide DLJ Merchant Banking II, Inc. and the
Company written notice of such proposed transfer. The notice
shall identify the number of Company Securities proposed to be
transferred, the cash price at which a transfer is proposed to be
made and all other material terms and conditions of the offer.
(ii) The receipt of a such notice by DLJ Merchant Banking II,
Inc. and the Company from a New Minority Shareholder shall
constitute an offer by such New Minority Shareholder to sell
first, to the DLJ Entities and, if not accepted or only accepted
in part by the DLJ Entities, second to the Company, for cash, the
Company Securities at the price and on the
<Page 14>
other terms and conditions set forth in such notice. Such offer
shall be irrevocable for 10 Business Days after receipt of such
notice by the DLJ Entities and the Company. During such period,
any of the DLJ Entities and the Company shall have the right to
accept such offer as to all or a portion of the Company
Securities (provided that first priority of the right to accept
is given to the DLJ Entities; and provided further that the
aggregate number of Company Securities accepted by the DLJ
Entities and the Company together equals the total number of
Company Securities subject to the offer) by giving a written
notice of acceptance to such Ne Minority Shareholder prior to the
expiration of the offer period.
(iii) Any Person who has accepted the offer shall purchase and
pay for all Company Securities accepted within 30 days after such
acceptance.
(iv) Upon the failure to accept the offer in full prior to the
expiration of the offer period or the failure to consummate the
purchase within 30 days after the acceptance of the offer, there
shall commence a 60-day period during which the New Minority
Shareholder that gave the notice shall have the right to transfer
to a third party any or all of the Company Securities subject to
such offer at a price in cash not less than 90% of the price
indicated in the applicable notice to DLJ Merchant Banking II,
Inc. and the Company, and on the other terms and conditions set
forth therein, provided that the transfer to such third party is
not in violation of applicable federal or state or foreign
securities laws. If such New Minority Shareholder does not
consummate the sale in accordance with the foregoing time
limitations, such New Minority Shareholder may not thereafter
transfer any Company Securities in a transaction pursuant to
Section 3.06(a)(iv) without repeating the foregoing procedures.
(c) The provisions of Section 3.06(a) shall terminate upon the
earliest to occur of (i) the tenth anniversary of the Closing
Date and (ii) the date upon which the shareholdings of the LLC
fall below 10% of its Initial Ownership.
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
SECTION 4.01. Rights to Participate in Transfer. (a) If the LLC
(the "Selling Person") proposes to transfer a number of Shares
equal to or exceeding 25% of the outstanding Shares in a single
transaction or in a series of related transactions on the date of
the proposed sale (a "Tag-Along Sale"), the Other
<Page 15>
Stockholders may, at their option, elect to exercise their rights
under this Section 4.01 (each such Stockholder, a "Tagging
Person"), provided that no such rights shall apply to transfers
of Shares (i) in a Public Offering or pursuant to Rule 144
(defined for these purposes to exclude Rule 144A under the
Securities Act), (ii) to any Permitted Transferee of the LLC
(defined for these purposes to exclude, except in the case of a
general distribution to DLJ Partners, any Permitted Transferee
who is a Permitted Transferee solely by reason of being an
Affiliate of a DLJ Partner), or (iii) to holders of limited
liability company units in the LLC ("Units"). In the event of
such a proposed transfer, the Selling Person shall provide each
Other Stockholder written notice of the terms and conditions of
such proposed transfer ("Tag-Along Notice") and offer each
Tagging Person the opportunity to participate in such sale. The
Tag-Along Notice shall identify the number and type of Company
Securities subject to the offer ("Tag-Along Offer"), the cash
price at which the transfer is proposed to be made, and all other
material terms and conditions of the Tag-Along Offer, including
the form of the proposed agreement, if any. From the date of the
Tag-Along Notice, each Tagging Person shall have the right (a
"Tag-Along Right"), exercisable by written notice ("Section 4.01
Response Notice") given to the Selling Person within 15 Business
Days (the "Tag-Along Notice Period"), to request that the Selling
Person include in the proposed transfer the number of Company
Securities held by such Tagging Person as is specified in such
notice; provided that if the aggregate number of Company
Securities proposed to be sold by the Selling Person and all
Tagging Persons in such transaction exceeds the number of Company
Securities which can be sold on the terms and conditions set
forth in the Tag-Along Notice, then only the Tag-Along Portion of
Company Securities of each Tagging Person shall be sold pursuant
to the Tag-Along Offer and the Selling Person shall sell its Tag-
Along Portion of Company Securities and such additional Company
Securities as permitted by Section 4.01(d). If the Tagging
Persons exercise their Tag-Along Rights hereunder, each Tagging
Person shall deliver, together with its Section 4.01 Response
Notice, to the Selling Person the certificate or certificates
representing the Company Securities of such Tagging Person to be
included in the transfer, together with a limited power-of-
attorney authorizing the Selling Person to transfer such
Securities on the terms set forth in the Tag-Along Notice.
Delivery of such certificate or certificates representing the
Company Securities to be transferred and the limited power-of-
attorney authorizing the Selling Person to transfer such Company
Securities shall constitute an irrevocable acceptance of the Tag-
Along Offer by such Tagging Persons. If, at the end of a 120 day
period after such delivery, the Selling Person has not completed
the transfer of all such Company Securities on substantially the
same terms and conditions set forth in the Tag-Along Notice
(provided, however, that the cash price payable in any such sale
may exceed the cash price specified in the Tag-Along Notice by up
to 10%), the Selling Person shall return to each Tagging Person
the limited power-of-attorney (and all copies thereof) together
<Page 16>
with all certificates representing the Company Securities which
such Tagging
Person delivered for transfer pursuant to this Section 4.01.
(b) Concurrently with the consummation of the Tag-Along Sale, the
Selling Person shall notify the Tagging Persons thereof, shall
remit to the Tagging Persons the total consideration (by bank or
certified check) for the Company Securities of the Tagging
Persons transferred pursuant thereto, and shall, promptly after
the consummation of such Tag-Along Sale, furnish such other
evidence of the completion and time of completion of such
transfer and the terms thereof as may be reasonably requested by
the Tagging Persons.
(c) If at the termination of the Tag-Along Notice Period any
Tagging Person shall not have elected to participate in the Tag-
Along Sale, such Tagging Person will be deemed to have waived its
rights under Section 4.01(a) with respect to the transfer of its
securities pursuant to such Tag-Along Sale, but not with respect
to any future sales.
(d) If any Stockholder declines to exercise its Tag-Along Rights
or elects to exercise its Tag-Along Rights with respect to less
than such Tagging Person's Tag-Along Portion, the Tagging Persons
who do respond and the LLC shall be entitled to transfer,
pursuant to the Tag-Along Offer, an additional number of Company
Securities equal to the number of Company Securities constituting
their pro rata portion of such Tagging Person's Tag-Along Portion
with respect to which Tag-Along Rights were not exercised.
(e) The LLC and any Tagging Person who exercises the Tag-Along
Rights pursuant to this Section 4.01 may sell the Company
Securities subject to the Tag-Along Offer on the terms and
conditions set forth in the Tag-Along Notice (provided, however,
that the cash price payable in any such sale may exceed the cash
price specified in the Tag-Along Notice by up to 10%) within 120
days of the date on which Tag-Along Rights shall have been
waived, exercised or expire.
(f) In the event that the DLJ Entities propose to transfer a
number of Units equal to or exceeding 40% of the outstanding
Units in a single transaction or in a series of related
transactions on the date of the proposed sale, other than
transfers of Units (i) in a Public Offering or pursuant to Rule
144 (defined for these purposes to exclude Rule 144A under the
Securities Act) or (ii) to any Permitted Transferee of the LLC
(defined for these purposes to exclude, except in the case of a
general distribution to DLJ Partners, any Permitted Transferee
who is a Permitted Transferee solely by reason of being an
Affiliate of a DLJ Partner), the Board of Directors shall in good
faith determine an appropriate procedure which shall mutatis
mutandis reflect the procedures of this Section 4.01 to allow
<Page 17>
Company Securities to be sold proportionally by Other
Stockholders as part of such sale, and shall in good faith
determine an appropriate valuation for such Company Securities
reflecting the price per Unit at which the DLJ Entities propose
to sell the Units.
(g) This Section 4.01 shall terminate upon the Initial Public
Offering.
SECTION 4.02. Right to Compel Participation in Certain Transfers.
(a) If (i) the LLC proposes to transfer not less than 50% of its
Initial Ownership of Common Stock to a Third Party in a bona fide
sale or (ii) the LLC proposes an arms-length transfer in which
the shares of Common Stock to be transferred by the LLC and its
Permitted Transferees constitute more than 50% of the outstanding
shares of Common Stock (a "Section 4.02 Sale"), the LLC may at
its option require all Other Stockholders to sell the Drag-Along
Portion of the Subject Securities ("Drag-Along Rights") then held
by every Other Stockholder, and (subject to and at the closing of
the Section 4.02 Sale) to exercise all, but not less than all, of
the options held by every Other Stockholder and to sell all of
the shares of Common Stock received upon such exercise to such
Third Party, for the same consideration per share of Common Stock
and otherwise on the same terms and conditions as the LLC;
provided that any Other Stockholder who holds options the
exercise price per share of which is greater than the per share
price at which the Shares are to be sold to the Third Party may,
if required by the LLC to exercise such options, in place of such
exercise, submit to irrevocable cancellation thereof without any
liability for payment of any exercise price with respect thereto.
In the event the Section 4.02 Sale is not consummated with
respect to any shares acquired upon exercise of such options, or
the Section 4.02 Sale is not consummated, such options shall be
deemed not to have been exercised or canceled, as applicable. The
LLC shall provide written notice of such Section 4.02 Sale to the
Other Stockholders (a "Section 4.02 Notice") not later than the
15th Business Day prior to the proposed Section 4.02 Sale. The
Section 4.02 Notice shall identify the transferee, the number of
Subject Securities, the consideration for which a transfer is
proposed to be made (the "Section 4.02 Sale Price") and all other
material terms and conditions of the Section 4.02 Sale. The
number of shares of Common Stock to be sold by each Other
Stockholder will be the Drag-Along Portion of the shares of
Common Stock that such Other Stockholder owns. Each Other
Stockholder shall be required to participate in the Section 4.02
Sale on the terms and conditions set forth in the Section 4.02
Notice and to tender all its Subject Securities as set forth
below. The price payable in such transfer shall be the Section
4.02 Sale Price. Not later than the 10th Business Day following
the date of the Section 4.02 Notice (the "Section 4.02 Notice
Period"), each of the Other Stockholders shall deliver to a
representative of the LLC designated in the Section 4.02 Notice
certificates representing all Subject Securities representing the
Drag Along Portion held by such Other Stockholder,
<Page 18>
duly endorsed, together with all other documents required to be
executed in connection with such Section 4.02 Sale. If an Other
Stockholder should fail to deliver such certificates to the
representative of the LLC, the Company shall cause the books and
records of the Company to show that such Subject Securities are
bound by the provisions of this Section 4.02 and that such
Subject Securities shall be transferred to the purchaser of the
Subject Securities immediately upon surrender for transfer by the
holder thereof.
(b) The LLC shall have a period of 45 days from the date of
receipt of the Section 4.02 Notice to consummate the Section 4.02
Sale on the terms and conditions set forth in such Section 4.02
Sale Notice. If the Section 4.02 Sale shall not have been
consummated during such period, the LLC shall return to each of
the Other Stockholders all certificates representing Subject
Securities that such Other Stockholder delivered for transfer
pursuant hereto, together with any documents in the possession of
the LLC executed by the Other Stockholder in connection with such
proposed transfer, and all the restrictions on transfer contained
in this Agreement or otherwise applicable at such time with
respect to Common Stock owned by the Other Stockholders shall
again be in effect.
(c) Concurrently with the consummation of the transfer of Company
Securities pursuant to this Section 4.02, the LLC shall give
notice thereof to all Stockholders, shall remit to each of the
Stockholders who have surrendered their certificates the total
consideration (by bank or certified check) for the Subject
Securities transferred pursuant hereto and shall furnish such
other evidence of the completion and time of completion of such
transfer and the terms thereof as may be reasonably requested by
such Stockholders.
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Demand Registration. (a) If the Company shall
receive a written request by the LLC or its Permitted Transferees
or DLJIP (any such requesting Person, a "Selling Stockholder")
that the Company effect the registration under the Securities Act
of all or a portion of such Selling Stockholder's Registrable
Securities, and specifying the intended method of disposition
thereof, then the Company shall promptly give written notice of
such requested registration (a "Demand Registration") at least 30
days prior to the anticipated filing date of the registration
statement relating to such Demand Registration to the Other
Stockholders and thereupon will use its best efforts to effect,
as expeditiously as possible, the registration under the
Securities Act of:
<Page 19>
(i) the Registrable Securities which the Company has been so
requested to register by the Selling Stockholders, then held by
the Selling Stockholders; and
(ii) subject to the restrictions set forth in Section 5.01(e),
all other Registrable Securities of the same type as that to
which the request by the Selling Stockholders relates which any
Other Stockholder entitled to request the Company to effect an
Incidental Registration (as such term is defined in Section 5.02)
pursuant to Section 5.02 (all such Stockholders, together with
the Selling Stockholders, the "Holders") has requested the
Company to register by written request received by the Company
within 15 days after the receipt by such Holders of such written
notice given by the Company,
all to the extent necessary to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered; provided that,
subject to Section 5.01(d) hereof, the Company shall not be
obligated to effect (A) more than six Demand Registrations for
the LLC and its Permitted Transferees or (B) one Demand
Registration for DLJIP (which Demand Registration right may not
be exercised prior to the date that is 180 days after an Initial
Public Offering); and provided further that the Company shall not
be obligated to effect a Demand Registration unless the aggregate
proceeds expected to be received from the sale of the Common
Stock to be included in such Demand Registration, in the
reasonable opinion of DLJ Merchant Banking II, Inc. exercised in
good faith, equals or exceeds (Y) $10,000,000 if such Demand
Registration would constitute the Initial Public Offering, or (Z)
$5,000,000 in all other cases. In no event will the Company be
required to effect more than one Demand Registration within any
four-month period.
(b) Promptly after the expiration of the 15-day period referred
to in Section 5.01(a)(ii) hereof, the Company will notify all the
Holders to be included in the Demand Registration of the other
Holders and the number of Registrable Securities requested to be
included therein. The Selling Stockholders requesting a
registration under this Section may, at any time prior to the
effective date of the registration statement relating to such
registration, revoke such request, without liability to any of
the other Holders, by providing a written notice to the Company
revoking such request, in which case such request, so revoked,
shall be considered a Demand Registration unless the
participating Stockholders reimburse the Company for all costs
incurred by the Company in connection with such registration, or
unless such revocation arose out of the fault of the Company, in
which case such request shall not be considered a Demand
Registration.
<Page 20>
(c) The Company will pay all Registration Expenses in connection
with any Demand Registration.
(d) A registration requested pursuant to this Section shall not
be deemed to have been effected (i) unless the registration
statement relating thereto (A) has become effective under the
Securities Act and (B) has remained effective for a period of at
least 180 days (or such shorter period in which all Registrable
Securities of the Holders included in such registration have
actually been sold thereunder); provided that if after any
registration statement requested pursuant to this Section becomes
effective (x) such registration statement is interfered with by
any stop order, injunction or other order or requirement of the
SEC or other governmental agency or court and (y) less than 75%
of the Registrable Securities included in such registration
statement has been sold thereunder, such registration statement
shall not be considered a Demand Registration or (ii) if the
Maximum Offering Size (as defined below) is reduced in accordance
with Section 5.01(e) or 5.01(f) such that less than 66 2/3% of
the Registrable Securities of the Selling Stockholders sought to
be included in such registration are included.
(e) If a Demand Registration involves an Underwritten Public
Offering and the managing underwriter shall advise the Company
and the Selling Stockholders that, in its view, (i) the number of
Registrable Securities requested to be included in such
registration (including any securities which the Company proposes
to be included which are not Registrable Securities) or (ii) the
inclusion of some or all of the Registrable Securities owned by
the Holders, in any such case, exceeds the largest number of
securities which can be sold without having an adverse effect on
such offering, including the price at which such securities can
be sold (the "Maximum Offering Size"), the Company will include
in such registration, in the priority listed below, up to the
Maximum Offering Size:
(A) first: (1) in the case of a Demand by the LLC and its
Permitted Transferees, all Securities requested to be registered
by the Selling Stockholder and by all of its Permitted
Transferees and CRL, DLJIP, BB, TW and Carlyle (allocated, if
necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such Persons on the basis of the relative
number of shares of Registrable Securities requested to be
registered), or (2) in the case of a Demand by DLJIP, all
Securities requested to be registered by the Selling Stockholder
and by all of its Permitted Transferees and BB, TW and Carlyle
(allocated, if necessary for the offering not to exceed the
Maximum Offering Size, pro rata among such Persons on the basis
of the relative number of shares of Registrable Securities
requested to be registered);
<Page 21>
(B) second: (1) in the case of a Demand by the LLC and its
Permitted Transferees, all Registrable Securities requested to be
included in such registration by any other Holder (allocated, if
necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such other Holders on the basis of the
relative number of shares of Registrable Securities requested to
be included in such registration), or (2) in the case of a Demand
by DLJIP, all Registrable Securities requested to be included in
such registration by the LLC and its Permitted Transferees and by
CRL (allocated, if necessary for the offering not to exceed the
Maximum Offering Size, pro rata among such other Holders on the
basis of the relative number of shares of Registrable Securities
requested to be included in such registration);
(C) third: (1) in the case of a Demand by the LLC and its
Permitted Transferees, any securities proposed to be registered
by the Company, or (2) in the case of a Demand by DLJIP, all
Registrable Securities requested to be included in such
registration by any other Holder (allocated, if necessary for the
offering not to exceed the Maximum Offering Size, pro rata among
such other Holders on the basis of the relative number of shares
of Registrable Securities requested to be included in such
registration); and
(D) fourth: in the case of a Demand by DLJIP, any securities
proposed to be registered by the Company.
(f) If the Company files a shelf registration statement with
respect to the High Yield Warrants, the Company shall notify the
holders of the Warrants at least 20 days prior to such filing.
The holders of the Warrants shall have the right (which shall not
be deemed to be a use of a Demand Registration right), by notice
to the Company, to include the Warrants in such shelf
registration statement.
Notwithstanding anything in this Agreement to the contrary, this
Agreement shall
not be construed to confer on any Stockholder (other than holders
of Warrants in their capacity as such, together with any Persons
entitled to indemnification hereunder in connection therewith)
any rights in connection with such shelf registration statement.
SECTION 5.02. Incidental Registration. (a) If the Company
proposes to register any Company Securities under the Securities
Act (other than a registration (A) on Form S-8 or S-4 or any
successor or similar forms, (B) relating to Common Stock issuable
upon exercise of employee stock options or in connection with any
employee benefit or similar plan of the Company or (C) in
connection with a direct or indirect acquisition by the Company
of another company),
<Page 22>
whether or not for sale for its own account, it will each such
time, subject to the provisions of Section 5.02(b), give prompt
written notice at least 30 days prior to the anticipated filing
date of the registration statement relating to such registration
to the LLC and each Other Stockholder, which notice shall set
forth such Stockholder's rights under this Section 5.02 and shall
offer such Stockholders the opportunity to include in such
registration statement such number of Registrable Securities of
the same type as are proposed to be registered as each such
Stockholder may request (an "Incidental Registration"). Upon the
written request of any such Stockholder made within 15 days after
the receipt of notice from the Company (which request shall
specify the number of Registrable Securities intended to be
disposed of by such Stockholder), the Company will use its best
efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so
requested to register by such Stockholders, to the extent
requisite to permit the disposition of the Registrable Securities
so to be registered; provided that (I) if such registration
involves a Public Offering, all such Stockholders requesting to
be included in the Company's registration must sell their
Registrable Securities to the underwriters selected as provided
in Section 5.04(f) on the same terms and conditions as apply to
the Company and (II) if, at any time after giving written notice
of its intention to register any stock pursuant to this Section
5.02(a) and prior to the effective date of the registration
statement filed in connection with such registration, the Company
shall determine for any reason not to register such securities,
the Company shall give written notice to all such Stockholders
and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration
(without prejudice, however, to rights of the LLC under Section
5.01). No registration effected under this Section 5.02 shall
relieve the Company of its obligations to effect a Demand
Registration to the extent required by Section 5.01.
The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to
this Section 5.02.
(b) If a registration pursuant to this Section 5.02 involves a
Public Offering (other than in the case of a Public Offering
requested by the LLC or any of its Permitted Transferees or the
Other Stockholders in a Demand Registration, in which case the
provisions with respect to priority of inclusion in such offering
set forth in Section 5.01(e) shall apply) and the managing
underwriter advises the Company that, in its view, the number of
Shares that the Company and such Stockholders intend to include
in such registration exceeds the Maximum Offering Size, the
Company will include in such registration, in the following
priority, up to the Maximum Offering Size:
(i) first, so much of the securities proposed to be registered by
the Company as would not cause the offering to exceed the Maximum
Offering Size;
<Page 23>
(ii) second, all Registrable Securities requested to be included
in such registration by the LLC and its Permitted Transferees or
any Other Stockholder pursuant to this Section 5.02 (allocated,
if necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such Stockholders on the basis of the
relative number of shares of Registrable Securities so requested
to be included in such registration).
SECTION 5.03. Holdback Agreements. If any registration of
Registrable Securities shall be in connection with a Public
Offering, the LLC and its Permitted Transferees and each Other
Stockholder agrees not to effect any public sale or distribution,
including any sale pursuant to Rule 144, or any successor
provision, under the Securities Act, of any Registrable
Securities, and not to effect any such public sale or
distribution of any other Common Stock of the Company or of any
stock convertible into or exchangeable or exercisable for any
Common Stock of the Company (in each case, other than as part of
such Public Offering) during the 14 days prior to the effective
date of such registration statement (except as part of such
registration) or during the period after such effective date
equal to the lesser of (i) such period of time as agreed between
such managing underwriter and the Company and (ii) 180 days (such
lesser period, the "Applicable Holdback Period").
SECTION 5.04. Registration Procedures. Whenever Stockholders
request that any Registrable Securities be registered pursuant to
Section 5.01 or 5.02, the Company will, subject to the provisions
of such Sections, use its best efforts to effect the registration
and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof as quickly as
practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and
file with the SEC a registration statement on any form for which
the Company then qualifies or which counsel for the Company shall
deem appropriate and which form shall be available for the sale
of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement
to become and remain effective for a period of not less than 180
days.
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or
supplement thereto, furnish to participating Stockholder and each
underwriter, if any, of the Registrable Securities covered by
such registration statement copies of such registration statement
as proposed to be filed, and thereafter the Company will furnish
to such Stockholder and underwriter, if any, such number of
copies of such registration
<Page 24>
statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by
reference therein), the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such Stockholder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by such Stockholder.
(c) After the filing of the registration statement, the Company
will promptly notify each Stockholder holding Registrable
Securities covered by such registration statement of any stop
order issued or threatened by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to
remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions in the United States as any Stockholder holding
such Registrable Securities reasonably (in light of such
Stockholder's intended plan of distribution) requests and (ii)
cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities as
may be necessary by virtue of the business and operations of the
Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Stockholder to
consummate the disposition of the Registrable Securities owned by
such Stockholder; provided that the Company will not be required
to (A) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any
such jurisdiction.
(e) The Company will immediately notify each Stockholder holding
such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading and promptly prepare and make available to each such
Stockholder any such supplement or amendment.
(f) The LLC will have the right, in its sole discretion, to
select an underwriter or underwriters in connection with any
Public Offering, which underwriter or underwriters may include
any Affiliate of any DLJ Entity. In connection with any Public
Offering, the Company will enter into customary agreements
(including an underwriting agreement in customary form) and take
<Page 25>
such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities
in any such Public Offering, including the engagement of a
"qualified independent underwriter" in connection with the
qualification of the underwriting arrangements with the NASD.
(g) Upon the execution of confidentiality agreements in form and
substance satisfactory to the Company, the Company will make
available for inspection by any Stockholder and any underwriter
participating in any disposition pursuant to a registration
statement being filed by the Company pursuant to this Section
5.04 and any attorney, accountant or other professional retained
by any such Stockholder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively,
the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any Inspectors in connection
with such registration statement. Records that the Company
determines, in good faith, to be confidential and that it
notifies the Inspectors are confidential shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such
registration statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Stockholder agrees that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any
market transactions in the Company Securities or its Affiliates
unless and until such is made generally available to the public.
Each Stockholder further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(h) The Company will furnish to each such Stockholder and to each
such underwriter, if any, a signed counterpart, addressed to such
underwriter, of (i) an opinion or opinions of counsel to the
Company and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form
and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as a majority of
such Stockholders or the managing underwriter therefor reasonably
requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC, and make
available to its stockholders, as soon as reasonably practicable,
an earnings statement covering a period of 12 months, beginning
within three months after the effective date of the
<Page 26>
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act.
The Company may require each such Stockholder to promptly furnish
in writing to the Company such information regarding the
distribution of the Registrable Securities as the Company may
from time to time reasonably request and such other information
as may be legally required in connection with such registration.
Each such Stockholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind
described in Section 5.04(e), such Stockholder will forthwith
discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until
such Stockholder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5.04(e), and, if so
directed by the Company, such Stockholder will deliver to the
Company all copies, other than any permanent file copies then in
such Stockholder's possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt of
such notice. In the event that the Company shall give such
notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including
the period referred to in Section 5.04(a)) by the number of days
during the period from and including the date of the giving of
notice pursuant to Section 5.04(e) to the date when the Company
shall make available to such Stockholder a prospectus
supplemented or amended to conform with the requirements of
Section 5.04(e).
SECTION 5.05. Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Stockholder holding
Registrable Securities covered by a registration statement, its
officers, directors and agents, and each person, if any, who
controls such Stockholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the
Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission
or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Stockholder or on
such Stockholder's behalf expressly for use therein; provided
that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus,
or in any
<Page 27>
prospectus, as the case may be, the indemnity agreement contained
in this paragraph shall not apply to the extent that any such
loss, claim, damage, liability or expense results from the fact
that a current copy of the prospectus (or, in the case of a
prospectus, the prospectus as amended or supplemented) was not
sent or given to the person asserting any such loss, claim,
damage, liability or expense at or prior to the written
confirmation of the sale of the Registrable Securities concerned
to such person if it is determined that the Company has provided
such prospectus and it was the responsibility of such Stockholder
to provide such person with a current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) and
such current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the
defect giving rise to such loss, claim, damage, liability or
expense. The Company also agrees to indemnify any underwriters of
the Registrable Securities, their officers and directors and each
person who controls such underwriters on substantially the same
basis as that of the indemnification of the Stockholders provided
in this Section 5.05.
SECTION 5.06. Indemnification by Participating Stockholders. Each
Stockholder holding Registrable Securities included in any
registration statement agrees, severally but not jointly, to
indemnify and hold harmless the Company, its officers, directors
and agents and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Stockholder, but
only (i) with respect to information furnished in writing by such
Stockholder or on such Stockholder's behalf expressly for use in
any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus or (ii) to the extent that any
loss, claim, damage, liability or expense described in Section
5.05 results from the fact that a current copy of the prospectus
(or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the person asserting any
such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Securities
concerned to such person if it is determined that it was the
responsibility of such Stockholder to provide such person with a
current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the
case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. Each such Stockholder
also agrees to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each
person who controls such underwriters on substantially the same
basis as that of the indemnification of the Company provided in
this Section 5.06. As a condition to including Registrable
Securities in any registration statement filed in accordance with
Article 5 hereof, the Company may require that it shall have
<Page 28>
received an undertaking reasonably satisfactory to it from any
underwriter to indemnify and hold it harmless to the extent
customarily provided by underwriters with respect to similar
securities.
SECTION 5.07. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may
be sought pursuant to this Article 5, such person (an
"Indemnified Party") shall promptly notify the person against
whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall
not relieve the Indemnifying Party of its obligations hereunder
except to the extent that the Indemnifying Party is materially
prejudiced by such failure to notify. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and
the Indemnified Party shall have mutually agreed to the retention
of such counsel or (ii) in the reasonable judgment of such
Indemnified Party representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be
designated in writing by the Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled
with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against any loss or
liability (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of
which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability arising out of such
proceeding.
SECTION 5.08. Contribution. If the indemnification provided for
in this Article 5 is unavailable to the Indemnified Parties in
respect of any losses, claims, damages or liabilities referred to
herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the
amount paid
<Page 29>
or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) as between the Company and the
Stockholders holding Registrable Securities covered by a
registration statement on the one hand and the underwriters on
the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and such Stockholders
on the one hand and the underwriters on the other, from the
offering of the Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such Stockholders on the
one hand and of such underwriters on the other in connection with
the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations and (ii) as between the Company on the
one hand and each such Stockholder on the other, in such
proportion as is appropriate to reflect the relative fault of the
Company and of each such Stockholder in connection with such
statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and
such Stockholders on the one hand and such underwriters on the
other shall be deemed to be in the same proportion as the total
proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the
Company and such Stockholders bear to the total underwriting
discounts and commissions received by such underwriters, in each
case as set forth in the table on the cover page of the
prospectus. The relative fault of the Company and such
Stockholders on the one hand and of such underwriters on the
other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
relates to information supplied by the Company and such
Stockholders or by such underwriters. The relative fault of the
Company on the one hand and of each such Stockholder on the other
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Stockholders agree that it would not be just
and equitable if contribution pursuant to this Section 5.08 were
determined by pro rata allocation (even if the underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as
a result of the losses, claims, damages or liabilities referred
to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this
<Page 30>
Section 5.08, no underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which
the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any
damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Stockholder shall be required to
contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Stockholder
were offered to the public exceeds the amount of any damages
which such Stockholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Each
such Stockholder's obligation to contribute pursuant to this
Section 5.08 is several in the proportion that the proceeds of
the offering received by such Stockholder bears to the total
proceeds of the offering received by all such Stockholders and
not joint.
SECTION 5.09. Participation in Public Offering. No Person may
participate in any Public Offering hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided
in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably and
customarily required under the terms of such underwriting
arrangements and the provisions of this Agreement in respect of
registration rights.
SECTION 5.10. Other Indemnification. Indemnification similar to
that specified herein (with appropriate modifications) shall be
given by the Company and each Stockholder participating therein
with respect to any required registration or other qualification
of securities under any federal or state law or regulation or
governmental authority other than the Securities Act.
SECTION 5.11. Cooperation by the Company. In the event any
Stockholder shall transfer any Registrable Securities pursuant to
Rule 144A under the Securities Act, the Company shall cooperate
with such Stockholder (which shall include, without limitation,
making registration rights with respect to the Registrable
Securities to be sold (or securities issuable or to be issued in
exchange therefor) available to the ultimate purchasers thereof)
and shall provide to such Stockholder such information as such
Stockholder shall reasonably request, provided that any
registration rights made available pursuant hereto shall not be
on terms substantially more favorable to the possessors thereof
than the registration rights granted herein to the LLC.
<Page 31>
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto and supersede all prior
agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
SECTION 6.02. Binding Effect; Benefit. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and
their respective heirs, successors, legal representatives and
permitted assigns. Nothing in this Agreement, expressed or
implied, shall confer on any Person other than the parties
hereto, their respective heirs, successors, legal representatives
and permitted assigns, the DLJ Entities, and DLJ Merchant Banking
II, Inc., any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 6.03. Exclusive Financial and Investment Banking Advisor.
During the period from and including the date hereof through and
including the fifth anniversary of the date hereof, Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC"), or any
Affiliate of DLJSC that the LLC may choose in its sole
discretion, shall be engaged as the exclusive financial and
investment banking advisor of the Company.
SECTION 6.04. Put Right. (a) During the period, if any, beginning
on (i) the earlier of (A) the date that all of the Indebtedness
(as defined in, and for the purposes hereof such term shall
include, the Subordinated Discount Note Due 2010 issued by the
Company to CRL Holdings, Inc.) of the Company and its
subsidiaries incurred on or prior to the Closing Date has been
repaid in full (including any refinancings or replacements of
such Indebtedness) or (B) the date that (1) all of the
Indebtedness of the Company and its subsidiaries incurred on or
prior to the Closing Date has been repaid in full, refinanced or
replaced and (2) the documentation relating to all of the
refinanced or replacement Indebtedness referred to in the
preceding clause (A) permits the Put (as defined below) to be
exercised, provided that in connection with any refinancing or
replacement referred to in the preceding clause (A) the Company
shall make a good faith effort to obtain such permission in the
documentation thereof, and ending on (ii) the earliest of (X) the
date of the Initial Public Offering, (Y) the date on which the
LLC shall own less than 50% of the outstanding Common Stock, and
(Z) twelve years from the Closing Date, CRL shall have the right
to sell (the "Put") all, but not less than all, of the Common
Stock owned by it (excluding any Common Stock acquired by it
after the Closing Date) to the Company. The price per share for
the Common Stock purchased pursuant to the Put shall be the fair
market value thereof as determined by an investment bank of
nationally recognized
<Page 32>
standing selected by the Board, which shall not be an affiliate
of the LLC or the DLJ Entities.
(b) In the event that CRL proposes to exercise its rights under
this section, it shall provide the Company with written notice
thereof (the "Section 6.04 Notice"). The Company shall then have
75 days from the date of its receipt of the Section 6.04 Notice
in which to obtain the determination of the price per share set
forth in clause (a) above, and to provide written notice to CRL
of such price per share (the "Value Notice"). CRL shall then have
10 Business Days from the date of its receipt of the Value Notice
in which it may provide written notice to the Company of its
intention to exercise the Put (the "Put Notice"). If CRL does not
provide the Put Notice to the Company within such 10 day period,
it shall forfeit all its rights under this Section 6.04. If CRL
does provide the Put Notice to the Company within such 10 day
period: (i) the Company shall deliver to CRL the price per share
set forth in the Value Notice for the Common Stock to be sold by
CRL, and (ii) CRL shall simultaneously deliver to the Company
certificates representing such Common Stock, together with duly
executed stock powers, on a date to be determined by mutual
agreement (but not less than 10 days after the date of the
Company's receipt of the Put Notice).
SECTION 6.05. Pre-emptive Rights. (a) If the Company proposes to
issue any Company Securities (other than (i) to employees of the
Company or any subsidiary pursuant to employee benefit plans or
arrangements approved by the Board (including upon the exercise
of employee stock options), (ii) in connection with any bona
fide, arm's length direct or indirect merger, acquisition or
similar transaction, (iii) pursuant to a Public Offering, (iv)
upon the exercise of Warrants or High Yield Warrants, or (v) on
or prior to the Closing Date), each Other Stockholder shall have
the pre-emptive right to acquire its pre-emptive portion of such
Company Securities, at the same price per Company Security at
which such Company Securities are sold in such issuance. For
these purposes, "pre-emptive portion" shall mean a fraction, the
numerator of which is the Initial Ownership of such Stockholder
and the denominator of which is the Initial Ownership of all
Stockholders.
(b) The Company shall provide written notice to each Other
Stockholder at least twenty days prior to any issuance of Company
Securities with respect to which such Other Stockholder would
have pre-emptive rights pursuant to clause (a) above. Each Other
Stockholder shall then have ten days from its receipt of such
notice in which to provide written notice to the Company of its
exercise of its rights pursuant to this Section 6.05.
<Page 33>
(c) The rights of any Other Stockholder under this Section 6.05
shall expire at such time as such Other Stockholder owns less
than 40% of its Initial Ownership of Common Stock.
(d) The Company shall not be under any obligation to consummate
any proposed issuance of Company Securities, regardless of
whether it shall have delivered a written notice in respect of
such issuance.
SECTION 6.06. Assignability. This Agreement shall not be
assignable by any party hereto, except that any Person acquiring
Shares who is required by the terms of this Agreement or any
employment agreement or stock purchase, option, stock option or
other compensation plan of the Company or any Subsidiary to
become a party hereto shall (unless already bound hereby) execute
and deliver to the Company an agreement to be bound by this
Agreement and shall thenceforth be a "Stockholder". Any
Stockholder who ceases to own beneficially any Shares shall cease
to be bound by the terms hereof (other than the provisions of
Sections 5.05, 5.06, 5.07, 5.08, and 5.10 applicable to such
Stockholder with respect to any offering of Registrable
Securities completed before the date such Stockholder ceased to
own any Shares).
SECTION 6.07. Amendment; Waiver; Termination. No provision of
this Agreement may be waived except by an instrument in writing
executed by the party against whom the waiver is to be effective.
No provision of this Agreement may be amended or otherwise
modified except by an instrument in writing executed by (i) the
Company with the approval of the Board, (ii) DLJMB, and (iii)
CRL, until such time as CRL is no longer entitled to nominate a
director to the Board; provided that if any such amendment or
modification has an adverse effect on any Stockholder that is
materially disproportionate to the effect of such amendment or
modification on Stockholders generally, the approval of such
Stockholder shall also be required.
SECTION 6.08. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including facsimile transmissions and shall be given,
if to the Company or the Management Stockholders, to:
Charles River Laboratories Holdings, Inc.
251 Ballardvale Street
Wilmington, MA 01887
Attention: Dennis R. Shaughnessy
Fax: (978) 988-5665
<Page 34>
with a copy to:
Attention:
Fax:
and a copy to the LLC at its address listed below;
if to the LLC, to:
CRL Acquisition LLC
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Thompson Dean
Fax: (212) 892-7272
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
if to CRL, to:
Attention:
Fax:
with a copy to:
Nixon Peabody LLP
Clinton Square
Rochester, NY 14603
Attention: Deborah McLean Quinn
Fax: (716) 263-1600
if to DLJ Investment Partners, L.P., to:
DLJ Investment Partners, L.P.
277 Park Avenue
New York, NY 10172
<Page 35>
Attention: John Moriarty
Fax: 212-892-7555
if to DLJ Investment Funding, Inc., to:
DLJ Investment Funding, Inc.
277 Park Avenue
New York, NY 10172
Attention: John Moriarty
Fax: 212-892-7555
if to DLJ ESC II, L.P., to:
DLJ ESC II L.P.
c/o DLJ LBO Plans
Management Corporation
277 Park Avenue
New York, NY 10172
Attention: John Moriarty
Fax: 212-892-7555
if to BB, to:
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
Attention: Joseph P. Donlan
Fax: 212-493-8429
with a copy to:
Paul Weiss Rifkind Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Marilyn Sobel
Fax: 212-757-3990
if to TW, to:
Attention:
<Page 36>
Fax:
with a copy to:
Attention:
Fax:
if to Carlyle, to:
Attention:
Fax:
with a copy to:
Attention:
Fax:
All notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if
received prior to 5 p.m. in the place of receipt and such day is
a business day in the place of receipt. Otherwise, any such
notice, request or communication shall be deemed not to have been
received until the next succeeding business day in the place of
receipt. Any notice, request or other written communication sent
by facsimile transmission shall be confirmed by certified mail,
return receipt requested, posted within one Business Day, or by
personal delivery, whether courier or otherwise, made within two
Business Days after the date of such facsimile transmission.
Any Person who becomes a Stockholder shall provide its address
and fax number to the Company, which shall promptly provide such
information to each other Stockholder.
SECTION 6.09. Headings. The headings contained in this Agreement
are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
SECTION 6.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and
the same instrument.
<Page 37>
SECTION 6.11. Applicable Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES OF SUCH STATE.
SECTION 6.12. Specific Enforcement. Each party hereto
acknowledges that the remedies at law of the other parties for a
breach or threatened breach of this Agreement would be inadequate
and, in recognition of this fact, any party to this Agreement,
without posting any bond, and in addition to all other remedies
which may be available, shall be entitled to obtain equitable
relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any
other equitable remedy which may then be available.
SECTION 6.13. Consent to Jurisdiction. Any suit, action or
proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought in the United
States District Court for the Southern District of New York or
any other New York State court sitting in New York City, and each
of the parties hereby consents to the non-exclusive jurisdiction
of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of
any such suit, action or proceeding in any such court or that any
such suit, action or proceeding which is brought in any such
court has been brought in an inconvenient forum. Process in any
such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in
Section 6.08 shall be deemed effective service of process on such
party.
<Page 38>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
CHARLES RIVER LABORATORIES
HOLDINGS, INC.
By:
Name:
Title:
CRL ACQUISITION LLC
By:
Name:
Title:
CRL HOLDINGS, INC.
By: ____________________
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
Name:
Title:
<Page 39>
DLJ ESC II L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION,
General Partner
By:
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
Name:
Title:
THE 1818 MEZZANINE FUND, L.P.
By: BROWN BROTHERS HARRIMAN & CO.
General Partner
By:
Name:
Title:
[TRUST COMPANY OF THE WEST]
By:
Name:
Title:
[CARLYLE]
By:
Name:
Title:
<Page 40>
MANAGEMENT STOCKHOLDERS
James C. Foster
Henry L. Foster
Thomas F. Ackerman
Dennis R. Shaughnessy
Julia D. Palm
Real H. Renaud
Gilbert M. Slater
David P. Johst
Dr. Charn Sun Lee
Dr. Jorg M. Geller
<Page 41>
Dr. Christophe Berthoux
Dr. Raj Bhalla
Toshihide Kashiwagi
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY
NOT BE OFFERED, SOLD, OR TRANSFERRED EXCEPT IN COMPLIANCE
THEREWITH.
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED
TO ALL SENIOR INDEBTEDNESS (AS DEFINED HEREIN).
CHARLES RIVER LABORATORIES HOLDINGS, INC.
Subordinated Discount Note Due 2010
Charles River Laboratories Holdings, Inc., a Delaware corporation
(together with its successors, transferees and assigns, the
"Issuer"), for value received hereby promises to pay, subject to
the terms and conditions set forth herein, to B&L CRL, Inc., a
Delaware corporation (together with its successors, transferees
and assigns, the "Holder"), the principal sum of ONE HUNDRED
SEVENTY FIVE MILLION, TWO HUNDRED AND EIGHTY-FIVE THOUSAND, THREE
HUNDRED AND FORTY SIX dollars ($175,285,346) by wire transfer of
immediately available funds to the Holder's account (the "Bank
Account") at a bank in the United States specified by the Holder
from time to time, on September 29, 2010, (the "Payment Date") in
such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public
and private debts.
This Note is referred to as the Recap Co Sub Note in the
Recapitalization Agreement dated as of July 25, 1999 among Bausch
& Lomb Incorporated, the Issuer, Charles River Laboratories,
Inc., the Holder, Charles River SPAFAS, Inc., Bausch & Lomb
International, Inc., Wilmington Partners, L.P., Bausch & Lomb
Canada, Inc., CRL Acquisition LLC and DLJ Merchant Banking
Partners II, L.P.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Terms Defined. (a) The following terms for
all purposes of this Note shall have the respective meanings
specified below.
"Accreted Value" means, as of any date of determination prior to
the Payment Date, the sum of (a) the Original Issue Price and (b)
the portion of the excess of the principal amount of this Note
over the Original Issue Price which shall have been accreted
thereon through the preceding September 29, such amount to be so
accreted at the rate of 12% per annum of the Original Issue Price
prior to September 29, 2004 and thereafter at the rate of 15% per
annum of the Original Issue Price, compounded annually from the
date hereof, provided that in the event of an actual Default or
Redemption the amount referred to in (b) shall be calculated by
including accretion to the actual date of determination, using a
year of 360 days. Exhibit A hereto sets forth a schedule of
Accreted Values as of each September 29 through and including the
Payment Date.
"Adverse Person" means any individual or entity whom the Board of
Directors of the Issuer reasonably determines is a competitor or
potential competitor of the Issuer or its subsidiaries in a
business that is material to the Issuer and its subsidiaries,
taken as a whole.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in the City of New York are
authorized by law to close.
"Capitalized Lease Liabilities" means, without duplication, all
monetary obligations at any time outstanding of the Issuer or any
of its Subsidiaries under any leasing or similar arrangement that
are required to be capitalized for financial reporting purposes
in accordance with GAAP, and, for purposes of this Note the
amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last scheduled payment
of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Common Stock" shall mean the common stock, par value $0.01 per
share, of the Issuer.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment,
to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or
both would, unless cured or waived, become an Event of Default.
"DLJMB" means DLJ Merchant Banking II, Inc.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements,
and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency
exchange rates.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money (excluding
purchase money and similar borrowings) and all obligations of
such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn,
banker's acceptances and similar instruments issued for the
account of such Person;
(c) net liabilities of such Person under all Hedging Obligations;
and
(d) all Contingent Liabilities of such Person in respect of any
of the foregoing.
For all purposes of this Note, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint
venture in which such person is a general partner or a joint
venturer (to the extent such Person is liable for such
Indebtedness whether by contract or otherwise).
"Investors' Agreement" means the Investors' Agreement dated as of
September 29,1999 among the Issuer and the several Stockholders
from time to time parties thereto.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property,
or any filing or recording of any instrument or document in
respect of the foregoing, to secure payment of a debt or
performance of an obligation or any other priority or
preferential treatment of any kind or nature whatsoever that has
the practical effect of creating a security interest in property.
"Net Income" means, for any period, the net income (loss) of the
Issuer and its Subsidiaries for such period on a consolidated
basis, excluding extraordinary gains, as determined in accordance
with GAAP.
"Operating Lease Liabilities" means, without duplication, all
monetary obligations at any time outstanding of the Issuer or any
of its Subsidiaries under any leasing or similar arrangement that
are not required to be capitalized for financial reporting
purposes in accordance with GAAP, and, for purposes of this Note
the amount of such obligations shall be the capitalized amount
thereof, determined pursuant to GAAP as it applies to Capitalized
Lease Liabilities, and the stated maturity thereof shall be the
date of the last scheduled payment of rent or any other amount
due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a
penalty.
"Original Issue Price" means $43,000,000.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Restricted Payment" means (i) any dividend or other distribution
on any shares of the Issuer's capital stock (except dividends
payable solely in shares of its capital stock other than
mandatorily redeemable preferred stock) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of
(a) any shares of the Issuer's capital stock or (b) any option,
warrant or other right to acquire shares of the Issuer's capital
stock (but not including payments of principal, premium (if any)
or interest made pursuant to the terms of convertible debt
securities prior to conversion).
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" means all Indebtedness of the Issuer or any
of its Subsidiaries (other than this Note) outstanding on the
date of execution of this instrument or created, incurred or
assumed thereafter (except any such Indebtedness that by the
terms of the instrument or instruments by which such Indebtedness
was created or incurred expressly provides that it (i) is junior
in right of payment to this Note or (ii) ranks pari passu in
right of payment with this Note) and any amendments,
modifications or supplements to, or any renewals, extensions,
deferrals, refinancings and refundings of, any of the foregoing.
"Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by
the Issuer.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
Acceptance Notice 6.02
Acceptance Period 6.02
Bank Account Preamble
Change of Control 4.02
DLJ Entities 4.02
Event of Default 2.01
Holder Preamble
Issuer Preamble
Offer Notice 6.02
Redemption Notice 4.02
Subordinated Obligations 5.01
Third Party Sale 6.02
ARTICLE 2
DEFAULT
SECTION 2.01. Events of Default Defined; Acceleration of
Maturity. In case one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Issuer shall fail to pay the principal amount of this
Note within 10 days of the due date thereof;
(b) the Issuer shall fail to observe the covenant under Section
3.02 hereof and such failure shall remain unremedied for a period
of 30 days after the Issuer shall have received notice of such
failure from the Holder;
(c) the Issuer shall permit or suffer to exist the entrance of a
decree or order for relief, entered by a court of competent
jurisdiction, in respect of the Issuer in an involuntary case
under any applicable bankruptcy, insolvency or other similar law
relating to or affecting creditors' rights generally now or
hereafter in effect, or appointing a receiver, liquidator,
custodian, trustee, sequestrator (or similar official) of the
Issuer or for any substantial part of the property of the Issuer
or ordering the winding up or liquidation of the affairs of the
Issuer and such decree or order shall remain unstayed and in
effect for a period of 60 days;
or
(d) the Issuer shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law relating
to or affecting creditors' rights generally now or hereafter in
effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the
appointment or taking possession by a receiver, liquidator,
custodian, trustee, sequestrator (or similar official) of the
Issuer or for any substantial part of the property of the Issuer
or the Issuer shall make any general assignment for the benefit
of creditors;
then, subject to Article 5 hereof, the Holder may, in each and
every such case, by notice to the Issuer declare the principal
amount of this Note, determined as set forth below, to be, and
such principal amount shall thereupon become, immediately due and
payable. The principal amount so due and payable shall be deemed
for this purpose to be equal to the Accreted Value on the date
such declaration is made.
SECTION 2.02. Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default. No right or remedy herein conferred upon
or reserved to the Holder is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Holder to exercise any right or power
accruing upon any Default or Event of Default occurring and
continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Default or Event of
Default or an acquiescence therein; and every power and remedy
given by this Note or by law may be exercised from time to time,
and as often as shall be deemed expedient, by the Holder.
Any term or provision of this Note (including this Section 2.02)
to the contrary notwithstanding, the Holder shall have no right
(directly or indirectly) to exercise, nor shall the Holder in
fact exercise (directly or indirectly), any rights or remedies
against the Issuer, any of its Subsidiaries or any of their
respective assets in respect of any breach hereunder or
otherwise, nor shall the Holder commence (directly or indirectly)
any litigation, action or other proceeding against any of the
foregoing in respect of any breach hereunder or otherwise, unless
(but only unless) an Event of Default has occurred and is
continuing, and, in such event, the exercise of any such right or
remedy shall be subject to Article 5 hereof.
SECTION 2.03. Waiver of Past Defaults. The Holder may, but has no
obligation to, waive in writing, any past Default hereunder and
its consequences. In the case of any such waiver, the Issuer and
the Holder shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any
Default arising therefrom shall be deemed to have been cured, and
not to have occurred for every purpose of the Note; but no such
waiver shall extend to any subsequent or other Default or impair
any right consequent thereon.
ARTICLE 3
COVENANTS
The Issuer agrees that, so long as any amount payable under this
Note remains unpaid:
SECTION 3.01. Information. The Issuer shall deliver to the
Holder:
(a) within five days after any officer of the Issuer obtains
actual knowledge of any Default, a certificate of the chief
financial officer or the chief accounting officer of the Issuer
setting forth the details thereof and the action which the Issuer
is taking or proposes to take with respect thereto;
(b) as soon as available and in any event within 60 days after
the end of each of the first three fiscal quarters of each fiscal
year of the Issuer (or, if the Issuer or any of its Subsidiaries
is required to file such information on a Form 10-Q with the SEC,
promptly following such filing), a consolidated balance sheet of
the Issuer and its Subsidiaries as of the end of such fiscal
quarter, together with the related consolidated statement of
profit and loss and cash flow of the Issuer and its Subsidiaries
for such fiscal quarter and for the period commencing at the end
of the previous fiscal year and ending with the end of the fiscal
quarter (it being understood that the foregoing requirement may
be satisfied by delivery of the Issuer's report to the SEC on
Form 10-Q, if any), certified by the chief financial officer of
the Issuer, and a copy of a Form 10-Q, if any, for such period
that is filed with the SEC by any of the Issuer's Subsidiaries;
and
(c) as soon as available and in any event within 90 days after
the end of each fiscal year of the Issuer (or, if the Issuer or
any of its Subsidiaries is required to file such information on
Form 10-K with the SEC, promptly following such filing), a copy
of the annual audit report for such fiscal year for the Issuer
and its Subsidiaries including therein a consolidated balance
sheet for the Issuer and its Subsidiaries as of the end of such
fiscal year, together with the related consolidated statement of
profit and loss and cash flow of the Issuer and its Subsidiaries
for such fiscal year (it being understood that the foregoing
requirement may be satisfied by delivery of the Issuer's report
to the SEC on Form 10-K, if any), in each case certified (without
qualification) by the Issuer's independent public accountants,
and a copy of a Form 10-K, if any, for such period that is filed
with the SEC by any of the Issuer's Subsidiaries.
SECTION 3.02. Restriction on Certain Payments. The Issuer shall
not declare or make a Restricted Payment, except that the Issuer
may declare or make at any time (a) any Restricted Payment
consisting of a repurchase of the Issuer's capital stock or of
any then currently exercisable option, warrant or other
obligation to acquire shares of the Issuer's capital stock from
any director, officer or employee of the Issuer or any of its
subsidiaries upon the death, disability, retirement or other
termination of employment of any such person, (b) any Restricted
Payment if at such time such Restricted Payment is permitted to
be made under any instrument governing debt for borrowed money of
the Issuer or any guaranty by the Issuer of any other Person's
debt for borrowed money then outstanding (or if a restricted
payment is permitted to be made under any instrument governing
debt for borrowed money of any subsidiary of the Issuer then
outstanding) and (c) any other Restricted Payment if, after
giving effect thereto, the aggregate amount of Restricted
Payments made by the Issuer in reliance on this clause (c) does
not exceed the sum, without duplication of:
(i) 50% of the Consolidated Net Income of the Issuer for the
period (taken as one accounting period) commencing June 27, 1999
to the end of the Issuer's most recently ended fiscal quarter for
which internal financial statements are available at the time of
that Restricted Payment (or, if Consolidated Net Income for that
period is a deficit, less 100% of the deficit); plus
(ii) 100% of the Qualified Proceeds received by the Issuer on or
after the date hereof from contributions to the Issuer's capital
or from the issue or sale on or after the date hereof of Equity
Interests of the Issuer or of Disqualified Stock or convertible
debt securities of the Issuer to the extent that they have been
converted into those Equity Interests, other than
Equity Interests, Disqualified Stock or convertible debt
securities sold to a Subsidiary of the Issuer and
Disqualified Stock or convertible debt securities that have
been converted into Disqualified Stock; plus
(iii) $25 million.
The terms, "Consolidated Net Income," "Qualified Proceeds,"
"Equity Interests," "Disqualified Stock" and "Subsidiary" used in
this Section 3.02 each have the meanings given them in the
Indenture relating to the Senior Subordinated Notes due 2009 of
Charles River Laboratories, Inc., as in effect on the date
hereof. Exclusively for purposes of the foregoing clauses (i),
(ii) and (iii) of this Section 3.02(c) (and not for purposes of
any other part of Section 3.02 or this Note), references to the
"Issuer" shall mean the Issuer together with Charles River
Laboratories, Inc., and the Subsidiaries of Charles River
Laboratories, Inc.
ARTICLE 4
REDEMPTION
SECTION 4.01. Redemption at Issuer's Option. (a) The Issuer at
its option may, upon twenty Business Days' written notice to the
Holder, at any time redeem all of this Note at a price equal to
the Accreted Value on the date of redemption.
(b) The notice shall state: (i) the redemption date, which shall
be a date not more than thirty Business Days after the date of
the notice of redemption; (ii) the redemption price; and (iii)
the place or places where the Note is to be surrendered for
payment of the redemption price, which may be at either the
principal place of business of the Issuer or a location in the
City of New York, State of New York.
(c) Notice having been mailed as aforesaid, from and after the
redemption date (provided that the Issuer shall have tendered the
redemption price against delivery of the Note), interest on the
Note shall cease to accrue, and all rights of the Holder (except
the right to receive from the Issuer the redemption price) shall
cease. Upon surrender of the Note in accordance with said notice
(properly endorsed or assigned for transfer, if the Board of
Directors of the Issuer shall so require and the notice shall so
state), the Note shall be redeemed by the Issuer at the aforesaid
redemption price.
SECTION 4.02. Redemption upon Change of Control. (a) If there
shall occur a Change in Control (as defined below), the Holder
shall have the right, at its option, to require the Issuer to
redeem, and upon the exercise of such right the Issuer shall
redeem, the Note at a price equal to the Accreted Value thereof
on the date of redemption. Such right of the Holder shall (i) be
subordinated and junior in right of payment to the prior payment
in full in cash of all Senior Indebtedness, the holders of which
have (and exercise) the right to receive such payment either
prior to or in connection with such Change of Control, and (ii)
except as set forth in the preceding clause (i), not be subject
to Article 5 hereof. For purposes of this Section 4.02, "Change
of Control" means (i) a "person" or "group" (within the meaning
of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended), other than the DLJ Entities (as defined in the
Investors' Agreement), (A) becoming the beneficial owner, by way
of merger, consolidation or otherwise, of 51% or more of the
voting power of all classes of voting securities of the Issuer or
(B) acquiring the right to elect a majority of the Board of
Directors of the Issuer, or (ii) the sale or transfer of all or
substantially all of the assets of the Issuer and its
subsidiaries taken as a whole (other than to one or more directly
or indirectly wholly-owned subsidiaries of the Issuer).
(b) On or before the tenth day after the occurrence of any Change
of Control, the Issuer shall send the Holder a notice (a
"Redemption Notice") advising the Holder of its rights hereunder
and specifying the date, not less than 20 nor more than 60 days
after the date such notice is delivered to the Holder, on which
the Issuer proposes to redeem the Note if the Holder requests
redemption pursuant to Section 4.02; provided that no failure of
the Issuer to give such notice shall limit the rights of the
Holder hereunder. If the Holder wishes to exercise its rights
hereunder it shall deliver to the Issuer, on or before the
fifteenth day after receipt of the Redemption Notice, written
notice (which shall be irrevocable) of the exercise of such
right.
(c) From and after the redemption date set forth in the
Redemption Notice (provided that the Issuer shall have tendered
the redemption price against delivery of the Note), interest on
the Note shall cease to accrue, and all rights of the Holder with
respect to the Note (except the right to receive from the Issuer
the redemption price) shall cease. Upon surrender in accordance
with said notice of the Note (properly endorsed or assigned for
transfer, if the Board of Directors of the Issuer shall so
require and the Redemption Notice shall so state), the Note shall
be redeemed by the Issuer at the aforesaid redemption price.
ARTICLE 5
SUBORDINATION
SECTION 5.01. Note Subordinated to Senior Indebtedness. The
Issuer covenants and agrees and the Holder, by its acceptance
hereof, likewise covenants and agrees, in each case
notwithstanding any other provisions of this Note or any other
agreement, document or instrument (it being the express agreement
of the Holder that the provisions of this Article 5 shall govern
in the event of any conflicting terms or provisions herein or
otherwise), that the Note shall be subject to the provisions of
this Article 5; and each person holding the Note, whether upon
original issue or upon transfer, assignment or exchange thereof
accepts and agrees that the payment of the principal of, or any
other amounts or obligations (monetary or otherwise) on, under or
in respect of the Note by or on behalf of the Issuer
(collectively, the "Subordinated Obligations") shall, to the
extent and in the manner herein set forth, be subordinated and
junior in right of payment, to the prior payment in full in cash
of all Senior Indebtedness.
SECTION 5.02. No Payment on Note So Long As Senior Indebtedness
Remains Outstanding. (a) No payment shall be made by or on behalf
of the Issuer with respect to all or any portion of the
Subordinated Obligations, nor may the Issuer directly or
indirectly acquire the Note or Subordinated Obligations for cash,
property, securities or otherwise, so long as any obligations on,
under or in respect of any Senior Indebtedness (or any commitment
to extend Senior Indebtedness) remain outstanding.
(b) In the event that any payment shall be received by the Holder
when such payment is prohibited by Section 5.02(a), such payment
shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under
any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear,
in the form in which received (except for any necessary
endorsements).
SECTION 5.03. Payment over of Proceeds upon Dissolution, etc. (a)
Upon any payment or distribution of cash, securities or other
assets, of the Issuer of any kind or character, whether in cash,
property, securities or otherwise, to creditors upon any
dissolution or winding-up or total or partial liquidation or
reorganization of the Issuer, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall
first be paid in full in cash, before any payment is made on
account of any Subordinated Obligations or to acquire the Note
for cash or property. Upon any such dissolution, winding-up,
liquidation or reorganization, any payment or distribution of
assets of the Issuer of any kind or character, whether in cash,
property or securities, to which the Holder would be entitled,
except for the provisions hereof, shall be paid by the Issuer or
by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, or by
the Holder if received by it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders)
or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid
in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders
of Senior Indebtedness.
(b) In the event that any payment or distribution of assets of
the Issuer of any kind or character, whether in cash, property or
securities, shall be received by the Holder when such payment or
distribution is prohibited by Section 5.03(a), such payment or
distribution shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness
(pro rata to such holders on the basis of the respective amount
of Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, in
the form in which received (except for any necessary
endorsements), for application to the payment of Senior
Indebtedness remaining unpaid until all such Senior Indebtedness
has been paid in full in cash, after giving effect to any
concurrent payment, distribution or provision therefor to or for
the holders of such Senior Indebtedness.
SECTION 5.04. Limitation on Remedies. So long as any obligations
on, under or in respect of any Senior Indebtedness (or any
commitment to extend Senior Indebtedness) remain outstanding, the
Holder may not declare, or join in the declaration of, any
Subordinated Obligations to be due and payable prior to the
maturity thereof or otherwise accelerate the maturity of the
principal of the Note or other amounts due on, under or in
respect thereof. At no time may the Holder commence any
administrative, legal or equitable action against the Issuer, any
of its Subsidiaries or any of their respective properties in
respect of the foregoing or in order to collect any amount
payable with respect to this Note upon maturity, including
filing, or joining in the filing of, any bankruptcy or insolvency
petition against the Issuer, provided that the Holder may file a
proof of claim in any such proceeding so long as such proof of
claim acknowledges the subordination of the Note on the terms set
forth herein.
SECTION 5.05. Subrogation. Upon, and subject to, the payment in
full in cash of all principal of, interest on and other amounts
and obligations on, under or in respect of Senior Indebtedness,
the Holder shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Issuer applicable to the Senior
Indebtedness until all such principal and other amounts and
obligations on the Note shall be paid in full in cash; and, for
the purposes of such subrogation, (a) no payments or
distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be
entitled except for the provisions of this Article 5, and no
payment over pursuant to the provisions of this Article 5 to the
holders of Senior Indebtedness by the Holder shall, as between
the Issuer, its creditors other than holders of Senior
Indebtedness, and the Holder, be deemed to be a payment by the
Issuer to or on account of principal of, interest on and other
amounts and obligations owing on, under or in respect of Senior
Indebtedness, and (b) no payment or distributions of cash,
property or securities to or for the benefit of the Holder
pursuant to this Section 5.05, which would otherwise have been
paid to the holders of Senior Indebtedness shall be deemed to be
a payment by the Issuer to or for the account of the Note.
If any payment or distribution to which the Holder would
otherwise have been entitled but for the provisions of this
Article 5 shall have been applied, pursuant to the provisions of
this Article 5, to the payment of all amounts payable under or in
respect of Senior Indebtedness, then and in such case, the Holder
shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions actually received by
such holders of Senior Indebtedness in excess of the amount
required to make payment in full in cash of such Senior
Indebtedness.
SECTION 5.06. Obligations of Issuer Unconditional. It is
understood that the provisions of this Article 5 are intended
solely for the purpose of defining the relative rights of the
Holder, on the one hand, and the holders of the Senior
Indebtedness, on the other hand. Nothing contained in Article 5
or elsewhere in this Note is intended to or shall impair, as
between the Issuer and the Holder, the obligation of the Issuer,
which is absolute and unconditional, to pay to the Holder the
principal amount of this Note as and when the same shall become
due and payable in accordance with its terms, or is intended to
or shall affect the relative rights of the Holder and creditors
of the Issuer other than the holders of the Senior Indebtedness,
nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under
this Note, subject to the rights, if any, under Article 5 of the
holders of the Senior Indebtedness in respect of cash, property
or securities of the Issuer received upon the exercise of any
such remedy.
SECTION 5.07. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of
the Issuer referred to in Article 5, the Holder shall be entitled
to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings (as to which the
holders of Senior Indebtedness are, or had the opportunity to
become, parties) are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Holder, for
the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to Article 5 of this Note.
SECTION 5.08. Subordination Rights Not Impaired by Acts or
Omissions of the Issuer or holders of Senior Indebtedness. No
right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein will at any time in
any way be prejudiced or impaired by any act or failure to act on
the part of the Issuer or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Issuer
with the terms of this Note, regardless of any knowledge thereof
which any such holder may have or otherwise be charged with. The
holders of Senior Indebtedness may extend, renew, amend, amend
and restate, supplement or otherwise modify the terms of the
Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Issuer,
all without affecting the liabilities and obligations of the
Holder.
ARTICLE 6
LIMITATIONS ON TRANSFERS
SECTION 6.01. No Transfer to Adverse Person. Neither this Note
nor any interest therein shall be transferrable to an Adverse
Person.
SECTION 6.02. Right of First Refusal. (a) The Holder may transfer
the Note or any interest therein to a third party who is not an
Adverse Person, in a bona fide sale (a "Third Party Sale"),
provided that the Holder shall have complied with the conditions
specified in paragraph (b) of this Section 6.02.
(b) Prior to effecting any Third Party Sale, the Holder will
deliver to DLJMB a written notice specifying the terms and
conditions of the proposed Third Party Sale, together with a copy
of the proposal, letter of intent or agreement negotiated with
the third party (the "Offer Notice"). If DLJMB delivers to the
Holder a written notice (an "Acceptance Notice") within 10 days
following the delivery of the Offer Notice (the "Acceptance
Period") stating that one or more of the DLJ Entities is willing
to purchase the Note or the interest therein on the terms set
forth in the Offer Notice, the Holder will sell the Note or the
interest therein to such DLJ Entity or Entities on the terms set
forth in the Offer Notice. If no Acceptance Notice is delivered
to the Holder prior to the expiration of the Acceptance Period,
the Holder may consummate the proposed Third Party Sale during
the 30-day period immediately following the expiration of the
Acceptance Period.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants to the Holder that:
SECTION 7.01. Corporate Existence and Power. The Issuer is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all
corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business
as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a material adverse effect
on the Issuer. The Issuer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a material adverse effect on
the Issuer.
SECTION 7.02. Corporate Authorization; Binding Effect. (a) The
execution, delivery and performance by the Issuer of this Note
are within the Issuer's corporate powers and have been duly
authorized by all necessary corporate action on the part of the
Issuer. This Note constitutes a valid and binding agreement of
the Issuer, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. Modification of Note. The Note may be modified with
the written consent of the Issuer and the Holder. The Holder may
waive compliance by the Issuer of any provision of the Note.
SECTION 8.02. Miscellaneous. THIS NOTE SHALL BE GOVERNED BY AND
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SUCH STATE. The
Issuer hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically provided herein, and assents to extensions of the
time of payment, or forbearance or other indulgence without
notice. The Holder by acceptance of this Note agrees to be bound
by the provisions of this Note. The Section headings herein are
for convenience only and shall not affect the construction
hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
duly executed as of this 29th day of September, 1999.
CHARLES RIVER LABORATORIES
HOLDINGS, INC.
By:
Name:
Title:
Accepted and agreed:
B&L CRL, INC.
By:
Name:
Title:
EXHIBIT A
Accreted Value (in $) Implied Interest Rate
At Issue Date 43,000,000
End of Year 1 48,160,000 12.00%
End of Year 2 53,939,200 12.00%
End of Year 3 60,411,904 12.00%
End of Year 4 67,661,332 12.00%
End of Year 5 75,780,692 12.00%
End of Year 6 87,147,796 15.00%
End of Year 7 100,219,966 15.00%
End of Year 8 115,252,961 15.00%
End of Year 9 132,540,905 15.00%
End of Year 10 152,422,040 15.00%
End of year 11 175,285,346 15.00%
(maturity)
