SECOND AMENDMENT TO FINANCING AGREEMENT

SECOND AMENDMENT, dated as of November 30, 2007 (this "Amendment"), to the
Financing Agreement, dated as of March 1, 2006, as amended by the First
Amendment, dated as of August 1, 2007 (as so amended, the "Financing
Agreement"), by and among Life Sciences Research, Inc., a Maryland corporation
(the "Parent"), Huntingdon Life Sciences Limited, a company incorporated under
the laws of England and Wales ("Huntingdon UK"), each subsidiary of the Parent
from time to time joined to the Financing Agreement as a "Borrower" (together
with Huntingdon UK, each a "Borrower" and collectively, the "Borrowers"), each
subsidiary of the Parent listed as a "Guarantor" on the signature pages thereto
(together with the Parent, each a "Guarantor" and collectively, the
"Guarantors"), the lenders from time to time party hereto (each a "Lender" and
collectively, the "Lenders"), and _________, a ___________________ formed under
the laws of __________ ("_____"), as agent for the Lenders (in such capacity,
together with its successors and assigns, the "Agent").

WHEREAS, the Loan Parties have advised the Agent and the Lenders that the Loan
Parties desire to form a wholly-owned Subsidiary (the "Newco") of the Parent to
acquire (the "_________________ Acquisition") the Capital Stock of an
unaffiliated third party regulatory affairs company (the "Target") substantially
on the terms and conditions set forth in a draft letter of intent (the "Letter
of Intent") delivered to the Agent prior to the date of this Amendment;

WHEREAS, the Loan Parties have requested that the Agent and the Lenders (a)
waive the mandatory prepayment requirement under Section 2.05(c)(i) of the
Financing Agreement for the Excess Cash Flow of the Parent and its Subsidiaries
for the Fiscal Year ended December 31, 2007, (b) modify the financial covenants
contained in Section 7.03 of the Financing Agreement, and (c) consent to the
_________________ Acquisition. The Lenders are willing to agree to such changes,
in each case subject to the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
agreements and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

1.   Definitions. Any capitalized term used herein and not defined herein shall
have the meaning assigned to it in the Financing Agreement.

 

2.

Amendments to the Financing Agreement.

(a) Definitions. Section 1.01 of the Financing Agreement is hereby amended by
adding the following new definitions, in appropriate alphabetical order:

" '______________________Acquisition' has the meaning set forth in the Second
Amendment."

" 'Second Amendment' means the Second Amendment to Financing Agreement, dated as
of November 30, 2007, among the Borrowers, the Guarantors, the Lenders and the
Agent."

" 'Second Amendment Effective Date' means the date on which the Second Amendment
shall become effective in accordance with its terms."

(b) Excess Cash Flow Mandatory Prepayment for 2007. Section 2.05(c)(i) of the
Financing Agreement is hereby amended by adding the following prior to the
period at the end thereof:

"; provided, however, that no such payment shall be required for any Excess Cash
Flow of the Parent and its Subsidiaries for the Fiscal Year ended December 31,
2007"

 

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(c) Subordinated Indebtedness. Section 7.02 is hereby amended by adding a new
Section 7.02(t), to read as follows:

"(t)       Subordinated Indebtedness. Make any payment of Subordinated
Indebtedness unless, (i) with respect to earnout amounts under the _____________
Acquisition, at least 15 days before the date of such payment (but not more than
25 days before the date of such payment), the Agent shall have received a
certificate from an Authorized Officer of the Parent, certifying that no Event
of Default has occurred and is continuing or is expected to occur and be
continuing on the date for such payment, and (ii) on the date of such payment,
no Event of Default shall have occurred and be continuing or would result from
the making of any such payment."

(d) Leverage Ratios. Section 7.03(a) of the Financing Agreement is hereby
amended and restated in its entirety to read as follows:

"(a) Leverage Ratio. Permit the ratio of Consolidated Funded Indebtedness to
Consolidated EBITDA of the Parent and its Subsidiaries as of the end of each
period of four (4) consecutive fiscal quarters of the Parent and its
Subsidiaries for which the last quarter ends on a date set forth below to be
greater than the applicable ratio set forth below:

 

Fiscal Quarter End

Leverage Ratio

March 31, 2006

2.55:1.00

June 30, 2006

2.49:1.00

September 30, 2006

2.35:1.00

December 31, 2006

2.04:1.00

March 31, 2007

1.99:1:00

June 30, 2007

1.94:1:00

September 30, 2007

1.89:1:00

December 31, 2007

1.54:1:00

March 31, 2008

1.34:1.00

June 30, 2008

1.21:1.00

September 30, 2008

1.09:1.00

December 31, 2008

0.92:1.00

March 31, 2009

0.89:1.00

June 30, 2009

0.86:1.00

September 30, 2009

0.84:1.00

December 31, 2009

0.70:1.00

March 31, 2010

0.70:1.00

June 30, 2010

0.70:1.00

September 30, 2010

0.70:1.00

December 31, 2010

0.70:1.00"

 

 

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(e) Consolidated EBITDA. Section 7.03(b) of the Financing Agreement is hereby
amended and restated in its entirety to read as follows:

"(b) Consolidated EBITDA. Permit Consolidated EBITDA of the Parent and its
Subsidiaries at the end of each fiscal quarter of the Parent and its
Subsidiaries to be less than the applicable amount set forth below:

 

Fiscal Quarter End

Consolidated EBITDA

March 31, 2006

$25,500,000

June 30, 2006

$25,800,000

September 30, 2006

$26,400,000

December 31, 2006

$28,400,000

March 31, 2007

$28,800,000

June 30, 2007

$29,200,000

September 30, 2007

$29,700,000

December 31, 2007

$34,500,000

March 31, 2008

$36,900,000

June 30, 2008

$37,600,000

September 30, 2008

$38,300,000

December 31, 2008

$41,600,000

March 31, 2009

$42,200,000

June 30, 2009

$42,900,000

September 30, 2009

$43,700,000

December 31, 2009

$44,600,000

March 31, 2010

$45,300,000

June 30, 2010

$46,100,000

September 30, 2010

$46,900,000

December 31, 2010

$47,900,000"

 

(f)  Capital Expenditures. Section 7.03(c) of the Financing Agreement is hereby
amended and restated in its entirety to read as follows:

"(c)      Capital Expenditures. Make or commit or agree to make, or permit any
of its Subsidiaries to make or commit or agree to make, any Capital Expenditure
(by purchase or Capitalized Lease) that would cause the aggregate amount of all
Capital Expenditures made by the Loan Parties and their Subsidiaries to exceed
the amount of Capital Expenditures set forth for any period specified below :

(i)        for the Fiscal Year ended December 31, 2006, the aggregate amount of
such Capital Expenditures shall not exceed $15,000,000;

 

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(ii)       for the Fiscal Year ended December 31, 2007, the aggregate amount of
such Capital Expenditures shall not exceed $20,000,000; and

(iii)      for each Fiscal Year ending after December 31, 2007, the aggregate
amount of such Capital Expenditures shall not exceed $25,000,000."

(g) Minimum Qualified Cash. Section 7.03(d) of the Financing Agreement is hereby
amended and restated in its entirety to read as follows :

"(d)      Minimum Qualified Cash. Permit Qualified Cash of the Loan Parties at
the end of any fiscal month to be less than $15,000,000."

3.   Consent. Pursuant to the request of the Loan Parties and in accordance with
Section 12.02 of the Financing Agreement, and in reliance upon the
representations and warranties of the Loan Parties set forth herein, effective
as of the Amendment Effective Date (as defined below), the Agent and the
Required Lenders hereby consent to the ______________ Acquisition on
substantially the same terms and conditions set forth in the Letter of Intent
previously delivered to the Agent, provided that the consent set forth above
shall be subject to the following conditions:

(a) the Loan Parties shall have furnished to the Agent at least 4 days prior to
the consummation of the Project Acorn Acquisition (i) an executed Letter of
Intent and such other information and documents that the Agent may request,
including, without limitation, executed counterparts of the respective
agreements, instruments or other documents pursuant to which the
________________ Acquisition is to be consummated (collectively, the
"Acquisition Documents"), any schedules to such agreements, instruments or other
documents, all organizational documents of the Newco and the Target and all
other material ancillary agreements, instruments or other documents to be
executed or delivered in connection therewith, certified by an Authorized
Officer of the Parent, (ii) financial statements of the Target and pro forma
financial statements of the Parent and its Subsidiaries after giving effect to
the consummation of the ________________ Acquisition, and (iii) a certificate of
the chief financial officer of the Parent, demonstrating on a pro forma basis
compliance with all covenants set forth in Section 7.03 of the Financing
Agreement immediately before and after the consummation of the Project Acorn
Acquisition;

(b) the Acquisition Documents shall be in form and substance reasonably
satisfactory to the Agent;

(c) the organizational structure of Newco and the Target shall be as described
to the Agent prior to the Amendment Effective Date, and each of Newco and the
Target will be wholly-owned Subsidiaries of a Loan Party;

(d) (i)Newco shall become a Loan Party under the Financing Agreement by signing
a joinder agreement or Guaranty in form and substance reasonably satisfactory to
the Agent, (ii) the Agent shall have received a valid, first priority lien on,
and security interest in, the equity of Newco pursuant to such agreements,
instruments and documents, in each form and substance reasonably satisfactory to
the Agent, as the Agent may reasonably request, and (iii) Newco (and its
equityholders) shall execute and deliver the agreements, instruments and other
documents required by Section 7.01(b) of the Financing Agreement (except in the
case of this clause (iii) to the extent the execution and delivery of any such
agreement, instrument or document shall be waived by the Agent in its
discretion, provided that, (A) Newco shall not conduct, transact or otherwise
engage in, or commit to conduct, transact or otherwise engage in, any
transaction, business or operation, other than the ownership of all of the
issued and outstanding equity of the Target, and Target shall not conduct,
transact or otherwise engage in, or commit to conduct, transact or otherwise
engage in, any transaction, business or operation, other

 

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than the business it has engaged in prior to the date hereof and any business
substantially related thereto, (B) Newco shall not own at any time any assets or
properties other than the equity of Target, and the Target shall not own at any
time any assets or properties other than the assets and properties related to
the conduct of the Target's business in the ordinary course, (C) Newco shall not
create, incur or suffer to exist any Indebtedness, any liability or any other
obligation except for liabilities under in respect of taxes, its legal
registered office and auditing fees, (D) Newco shall not sell, assign, convey,
transfer, lease or otherwise dispose of any of its assets or property, (E)
neither Newco nor the Target shall create, incur, assume or suffer to exist any
Lien on any of its assets or properties, and (F) the Target shall not create,
incur or suffer to exist any Indebtedness other than Indebtedness to a Loan
Party permitted by Section 7.02(e) and other unsecured Indebtedness in an
aggregate principal amount not to exceed $100,000 at any time outstanding);

(e) the aggregate purchase price shall not exceed the amounts set forth in the
Letter of Intent;

(f)  the Agent shall be satisfied that earnout amounts under the _____________
Acquisition are subordinated in right of payment to all Indebtedness of the Loan
Party under the Loan Documents (i) by the execution and delivery of a
subordination agreement or by subordination terms contained in an Acquisition
Document, in each case in form and substance reasonably satisfactory to the
Agent, or (ii) otherwise on terms and conditions reasonably satisfactory to the
Agent;

(g) all property to be acquired in connection with the _________________
Acquisition shall be free and clear of any and all Liens, except for Permitted
Liens;

(h) no Default or Event of Default shall have occurred or be continuing on the
date of the consummation of the _________________ Acquisition or shall result
from the consummation thereof;

(i)  the Loan Parties shall have executed and delivered to the Agent a
collateral assignment of Acquisition Documents, in form and substance reasonably
satisfactory to the Agent;

(j)  the representations and warranties contained in Article VI of the Financing
Agreement and in each other Loan Document and certificate or other writing
delivered to the Agent and the Lenders pursuant hereto on or prior to the date
of the consummation of the _____________ Acquisition shall be correct and
accurate on and as of such date as though made on and as of such date (except to
the extent such representations and warranties expressly relate to an earlier
date in which case such representations and warranties shall be correct and
accurate as of such earlier date);

(k) no authorization or approval or other action by, and no notice to filing
with or license from, any Governmental Authority is required for the
_________________ Acquisition other than such as have been obtained; and

(l)  at the time of consummation of the _________________ Acquisition, there
shall be no claim, action, suit, investigation, litigation or proceeding pending
or threatened against any Loan Party or the seller under the _________________
Acquisition with respect to, or any judgment, order or injunction prohibiting or
imposing any material adverse condition upon the consummation of, the
_________________ Acquisition.

The consent provided for in this Section shall be effective only in the specific
instance and for the specific purpose set forth herein (and does not constitute
a waiver of any Default or Event of Default existing on

 

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the date hereof) and does not allow for any other or further departure from the
terms and conditions of the Financing Agreement or any other Loan Document,
which terms and conditions shall continue in full force and effect. The Required
Lenders' granting of such consent shall not be construed as an indication that
any future consent or waiver of the Financing Agreement or any other provision
of the Loan Documents will be granted, it being understood that the grant or
denial of any waiver or consent which may hereafter be requested by the Loan
Parties remains in the sole and absolute discretion of the Required Lenders or
the Lenders, as the case may be.

4.   Conditions to Effectiveness. The effectiveness of this Amendment is subject
to the fulfillment, in a manner satisfactory to the Agent, of each of the
following conditions precedent (the date such conditions are fulfilled or waived
by the Agent is hereinafter referred to as the "Amendment Effective Date"):

(a) Representations and Warranties; No Event of Default. The representations and
warranties herein, in Article VI of the Financing Agreement and in each other
Loan Document and certificate or other writing delivered to the Agent and the
Lenders pursuant hereto on or prior to the Amendment Effective Date shall be
correct and accurate on and as of the Amendment Effective Date as though made on
and as of such date (except to the extent such representations and warranties
expressly relate to an earlier date in which case such representations and
warranties shall be correct and accurate as of such earlier date); and no
Default or Event of Default shall have occurred and be continuing on the
Amendment Effective Date or would result from this Amendment becoming effective
in accordance with its terms.

(b) Execution of Amendment. The Agent shall have executed this Amendment and
shall have received a counterpart to this Amendment, duly executed by each
Lender, each Borrower and each Guarantor.

(c) Payments from the Borrowers. The Borrowers shall have paid to the Agent (for
the ratable benefit of the Lenders) a non-refundable amendment fee in the amount
of $203,600 in immediately available funds, which amendment fee shall be fully
earned by the Agent and due and payable on the date hereof.

(d) Legal Matters. All legal matters incident to this Amendment shall be
satisfactory to the Agent and its counsel.

5.   Representations and Warranties. Each Loan Party represents and warrants to
the Agent and the Lenders as follows:

(a) Authorization, Etc. (i) The execution, delivery and performance by such Loan
Party of this Amendment and the performance by such Loan Party of the Financing
Agreement as amended hereby, (A) have been duly authorized by all necessary
action on the part of such Loan Party, (B) do not and will not violate any
provision of applicable Law, the Governing Documents of such Loan Party, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Loan Party, (C) do not and will not result in or require the creation of
any Lien (other than pursuant to any Loan Document) upon or with respect to any
of its properties, and (D) do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to its operations or
any of its properties, and (ii) such Loan Party has all requisite power,
authority and legal right to execute, deliver and perform this Amendment and to
perform the Financing Agreement as amended hereby.

(b) Enforceability of Loan Documents. This Amendment and the Financing Agreement
as amended hereby, are the legal, valid and binding obligations of such Loan
Party, enforceable against such Loan Party in accordance with the terms thereof.

 

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(c) Representations and Warranties. The representations and warranties contained
in Article VI of the Financing Agreement and other Loan Documents are correct on
and as of the Amendment Effective Date as though made on and as of the Amendment
Effective Date (except to the extent such representations and warranties
expressly relate to an earlier date in which case such representations and
warranties shall be true and correct as of such earlier date), and no Default or
Event of Default has occurred and is continuing on and as of the Amendment
Effective Date, or would result from this Amendment becoming effective in
accordance with its terms.

(d) Governmental Approvals. No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or other regulatory body
is required in connection with the due execution, delivery and performance by
such Loan Party of this Amendment or any other Loan Document to which it is a
party being executed in connection with this Amendment, or for the performance
of the Financing Agreement as amended hereby.

 

6.

Miscellaneous.

(a) Continued Effectiveness of the Financing Agreement. Except as otherwise
expressly provided herein, the Financing Agreement and the other Loan Documents
are, and shall continue to be, in full force and effect and are hereby ratified
and confirmed in all respects, except that on and after the Amendment Effective
Date (i) all references in the Financing Agreement to "this Agreement",
"hereto", "hereof", "hereunder" or words of like import referring to the
Financing Agreement shall mean the Financing Agreement as amended by this
Amendment, and (ii) all references in the other Loan Documents to the "Financing
Agreement", "thereto", "thereof", "thereunder" or words of like import referring
to the Financing Agreement shall mean the Financing Agreement as amended by this
Amendment. To the extent that any Loan Document purports to assign or pledge to
the Agent, or to grant to the Agent, for the benefit of the Lenders, a security
interest in or lien on, any collateral as security for its obligations from time
to time existing in respect of the Loan Documents, such pledge, assignment
and/or grant of a security interest or lien is hereby ratified and confirmed in
all respects as security for all of its obligations, whether now existing or
hereafter arising. Except as expressly provided herein, the execution, delivery
and effectiveness of this Amendment shall not operate as an amendment or waiver
of any right, power or remedy of the Agent or any Lender under the Financing
Agreement or any other Loan Document, nor constitute an amendment or waiver of
any provision of the Financing Agreement or any other Loan Document.

(b) Counterparts. This Amendment may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Amendment by facsimile or electronic mail shall be equally effective as
delivery of an original executed counterpart.

(c) Headings. Section and paragraph headings herein are included for convenience
of reference only and shall not constitute a part of this Amendment for any
other purpose.

(d) Governing Law. The Financing Agreement and this Amendment shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within such state.

(e) Amendment as Loan Document. The Loan Parties hereby acknowledge and agree
that this Amendment constitutes a "Loan Document" under the Financing Agreement.
Accordingly, it shall be an Event of Default under the Financing Agreement if
(i) any representation or warranty made by the Loan Parties under or in
connection with this Amendment shall have been untrue, false or misleading in
any material respect when made, or (ii) the Loan Parties shall fail to perform
or observe any term, covenant or agreement contained in this Amendment.

 

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(f)  Costs and Expenses. The Loan Parties agree to pay on demand all costs and
expenses of the Agent in connection with the preparation, execution and delivery
of this Amendment and the other related agreements, instruments and documents.

(g) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AMENDMENT OR THE REVISIONS CONTEMPLATED HEREIN.

(h) No Offsets or Defenses. No defense, set-off, offset, abatement, deduction,
counterclaim or charge exists in favor of any Loan Party with respect to any of
the obligations of such Loan Party under the Loan Documents, and each Loan Party
hereby represents, warrants and certifies that it unconditionally, irrevocably
and absolutely agrees to pay its obligations under the Loan Documents as and
when due and payable.

(i)  Release. As of the date hereof, each Borrower (on behalf of itself and its
Subsidiaries and Affiliates) and each Guarantor (on behalf of itself and its
Subsidiaries and Affiliates), their successors-in-title, legal representatives
and assignees and, to the extent the same is claimed by right of, through or
under any Borrower or any Guarantor, for their past, present and future
employees, agents, representatives, officers, directors, shareholders, and
trustees, do hereby and shall be deemed to have forever remised, released and
discharged the Agent, the Lenders and their respective successors-in-title,
legal representatives and assignees, past, present and future officers,
directors, shareholders, trustees, agents, employees, consultants, experts,
advisors, attorneys and other professionals and all other persons and entities
to whom the Agent or any Lender would be liable if such persons or entities were
found to be liable to any Borrower or any Guarantor, or any of them
(collectively hereinafter the "Lender Parties"), from any and all manner of
action and actions, cause and causes of action, claims, charges, demands,
counterclaims, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, damages, judgments,
expenses, executions, liens, claims of liens, claims of costs, penalties,
attorneys' fees, or any other compensation, recovery or relief on account of any
liability, obligation, demand or cause of action of whatever nature, whether in
law, equity or otherwise (including without limitation those arising under 11
U.S.C. §§ 541-550 and interest or other carrying costs, penalties, legal,
accounting and other professional fees and expenses, and incidental,
consequential and punitive damages payable to third parties), whether known or
unknown, fixed or contingent, joint and/or several, secured or unsecured, due or
not due, primary or secondary, liquidated or unliquidated, contractual or
tortious, direct, indirect, or derivative, asserted or unasserted, foreseen or
unforeseen, suspected or unsuspected, now existing, heretofore existing or which
may heretofore accrue against any of the Lender Parties, whether held in a
personal or representative capacity, and which are based on any act, fact, event
or omission or other matter, cause or thing occurring at or from any time prior
to and including the date hereof in any way, directly or indirectly arising out
of, connected with or relating to this Amendment, the Financing Agreement or any
other Loan Document and the transactions contemplated hereby and thereby, and
all other agreements, certificates, instruments and other documents and
statements (whether written or oral) related to any of the foregoing.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered as of the date first above written.

 

 

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BORROWER:

 

HUNTINGDON LIFE SCIENCES LIMITED

 

 

 

By: ___________________________________

 

Name:
Title:

 

 

 

GUARANTORS:

 

By: ____________________________________

 

Name:
Title:

 

 

 

By: ____________________________________

 

Name:
Title:

 

 

 

LENDERS:

 

__________________, as Agent and as a Lender

 

By:

 

By: ___________________________________

 

Name:
Title:

 

By: ___________________________________

 

Name:
Title:

 

__________________________, as a Lender

 

By: __________________________________

 

Name:
Title: