-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KrI1xdScCmYeNEDz2QNJzc1X47VW40mOaI6XTmQvBWBLDclwxxcZwvPxDW1EC62e V4bBbkMsHPYEpi8EbtGa8Q== 0000010427-99-000038.txt : 19991018 0000010427-99-000038.hdr.sgml : 19991018 ACCESSION NUMBER: 0000010427-99-000038 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990925 ITEM INFORMATION: FILED AS OF DATE: 19991013 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAUSCH & LOMB INC CENTRAL INDEX KEY: 0000010427 STANDARD INDUSTRIAL CLASSIFICATION: OPHTHALMIC GOODS [3851] IRS NUMBER: 160345235 STATE OF INCORPORATION: NY FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04105 FILM NUMBER: 99727628 BUSINESS ADDRESS: STREET 1: BAUSCH & LOMB INCORPORATED STREET 2: ONE BAUSCH & LOMB PLACE CITY: ROCHESTER STATE: NY ZIP: 14604-2701 BUSINESS PHONE: 7163386000 MAIL ADDRESS: STREET 1: ONE BAUSCH & LAMB PLACE STREET 2: P O BOX 54 CITY: ROCHESTER STATE: NY ZIP: 14604-2701 8-K 1 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. BAUSCH & LOMB INCORPORATED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 26, 1999 DOLLAR AMOUNTS IN MILLIONS (UNAUDITED)
As Eyewear Healthcare Originally Pro Forma Pro Forma Filed Adjustments Adjustments Pro Forma ASSETS Current Assets 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.
BAUSCH & LOMB INCORPORATED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED JUNE 26, 1999 DOLLAR AMOUNTS IN MILLIONS (UNAUDITED)
As Eyewear Healthcare Originally Pro Forma Pro Forma Filed Adjustments Adjustments Pro Forma 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.
BAUSCH & LOMB INCORPORATED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED JUNE 27, 1998 DOLLAR AMOUNTS IN MILLIONS (UNAUDITED)
As Eyewear Healthcare Originally Pro Forma Pro Forma Filed Adjustments Adjustments Pro Forma 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.
BAUSCH & LOMB INCORPORATED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 26, 1998 DOLLAR AMOUNTS IN MILLIONS (UNAUDITED)
As Eyewear Healthcare Originally Pro Forma Pro Forma Filed Adjustments Adjustments Pro Forma 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.
BAUSCH & LOMB INCORPORATED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 27, 1997 DOLLAR AMOUNTS IN MILLIONS (UNAUDITED)
As Eyewear Healthcare Originally Pro Forma Pro Forma Filed Adjustments Adjustments Pro Forma 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
BAUSCH & LOMB INCORPORATED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 28, 1996 DOLLAR AMOUNTS IN MILLIONS (UNAUDITED)
As Eyewear Healthcare Originally Pro Forma Pro Forma Filed Adjustments Adjustments Pro Forma 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
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. EX-2.A 2 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 EX-2.B 3 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 EX-2.C 4 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 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. "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 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 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 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 (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 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) 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 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. 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 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 (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 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 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 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 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 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, 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: (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. (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); (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), 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; (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 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 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 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 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 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 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 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. 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 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. (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 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 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: 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. 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. 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: 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: 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 Dr. Christophe Berthoux Dr. Raj Bhalla Toshihide Kashiwagi EX-2.D 5 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) -----END PRIVACY-ENHANCED MESSAGE-----