Document:

Exhibit 10.12(f)

 

AMENDMENT NO. 3 TO

COMMITMENT LETTER

 

This AMENDMENT NO. 3 TO
COMMITMENT LETTER (the “Amendment”) is made and entered into as of March 9,
2006 by and between Countrywide Warehouse Lending (“Lender”) and Aames Capital
Corporation, Aames Funding Corporation, Aames Investment Corporation, and Aames
Financial Corporation (jointly, the “Borrower”). This Amendment amends that
certain Commitment Letter by and between Lender and Borrower dated as of March
25, 2005 (the “Commitment Letter”), which supplements that certain Revolving
Credit and Security Agreement by and between Lender and Borrower dated as of
July 1, 2003 (as may be amended from time to time, the “Credit Agreement”).

 

R E C I T A L S

 

Lender and Borrower have previously entered into the
Commitment Letter and Credit Agreement pursuant to which Lender may, from time
to time, provide Borrower credit in the form of a warehouse line secured by
residential mortgage loans. Lender and Borrower hereby agree that the
Commitment Letter shall be amended as provided herein.

 

In consideration of the mutual promises
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Lender and Borrower hereby
agree as follows:

 

1.                                       Financial Covenants. Section (b).
Lender and Borrower agree that effective as of the date of the Amendment
Financial Covenants Sections (b), (c) and (d) shall be deleted in their
entirety and replaced as follows:

 

“(b)                           Adjusted
Leverage Ratio: 7:1

 

(c)                              Maximum
ratio of Total Liabilities (including outstanding balances on warehouse lines,
repurchase facilities, off balance sheet financing and outstanding debt related
to the REIT) to Tangible Net Worth: 20:1

 

(d)                             Minimum
Liquidity: Borrower shall maintain at all times cash or Cash Equivalents of
$38,000,000.”

 

2.                                       Waiver. Upon execution of the Amendment,
Borrower and Lender agree that any non-compliance or violation of the Adjusted
Leverage Ratio (Financial Covenant (b) of the Commitment), the Maximum Ratio of
Total Liabilities to Tangible Net Worth (Financial Covenant (c) of the
Commitment Letter) or Maximum Liquidity (Financial Covenant (d) of the
Commitment Letter) on or after December 31, 2005 and up to the date of the
Amendment are hereby waived.

 

3.                                       No Other Amendments; Conflicts
with Previous Amendments.
Other than as expressly modified and amended herein, the Commitment Letter
shall remain in full force and effect and nothing herein shall affect the
rights and remedies of Lender as provided under the Commitment Letter and
Credit Agreement. To the extent any amendments to the Commitment Letter
contained herein conflict with any previous amendments to the Commitment
Letter, the amendments contained herein shall control.

 

4.                                       Capitalized Terms. Any capitalized
term used herein and not otherwise defined herein shall have the meaning
ascribed to such term in the Credit Agreement.

 

4.                                       Facsimiles. Facsimile signatures
shall be deemed valid and binding to the same extent as the original.

 

 

IN WITNESS WHEREOF, Lender and
Borrower have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the date first written above.

 

 

	
  COUNTRYWIDE WAREHOUSE LENDING

  	
   

  	
  AAMES CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
  Jon D. Van Deuren

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:  Executive Vice President – Finance
  and

  Chief Financial Officer

  
								

 

 

(SIGNATURES CONTINUE ON PAGE 2)

 

 

	
  AAMES FUNDING CORPORATION

  	
   

  	
  AAMES INVESTMENT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jon D. Van Deuren

  	
   

  	
  Name:

  	
  Jon D. Van Deuren

  
	
   

  	
   

  	
   

  
	
  Title:  Executive Vice President – Finance
  and

  Chief Financial Officer

  	
   

  	
  Title:  Executive Vice President – Finance
  and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AAMES FINANCIAL CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jon D. Van Deuren

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:  Executive Vice President – Finance
  and

  Chief Financial Officer

  	
   

  	
   

  

 

2Exhibit 10.1

 

EXECUTION
COPY

 

 

STOCK
PURCHASE AGREEMENT

dated as of

May 9, 2006

between

KENDLE INTERNATIONAL INC.

and

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

relating to the purchase and sale

of

The Companies Comprising

the Phase II-IV Clinical Services
Business

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
   

  
	
  Section 1.01. Definitions

  	
   

  	
  1

  
	
  Section 1.02. Other Definitional and Interpretative Provisions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
   

  
	
  PURCHASE AND SALE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01. Purchase and Sale

  	
   

  	
  7

  
	
  Section 2.02. Closing

  	
   

  	
  8

  
	
  Section 2.03. Estimated Working Capital

  	
   

  	
  8

  
	
  Section 2.04. Closing Statement

  	
   

  	
  8

  
	
  Section 2.05. Adjustment of Purchase Price

  	
   

  	
  9

  
	
  Section 2.06. Allocation of Purchase Price

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01. Corporate Existence and Power

  	
   

  	
  10

  
	
  Section 3.02. Corporate Authorization

  	
   

  	
  11

  
	
  Section 3.03. Governmental Authorization

  	
   

  	
  11

  
	
  Section 3.04. Noncontravention

  	
   

  	
  11

  
	
  Section 3.05. Capitalization

  	
   

  	
  11

  
	
  Section 3.06. Ownership of Shares

  	
   

  	
  12

  
	
  Section 3.07. Subsidiaries

  	
   

  	
  12

  
	
  Section 3.08. Financial Statements

  	
   

  	
  13

  
	
  Section 3.09. Absence of Certain Changes

  	
   

  	
  13

  
	
  Section 3.10. No Undisclosed Material Liabilities

  	
   

  	
  14

  
	
  Section 3.11. Material Contracts

  	
   

  	
  15

  
	
  Section 3.12. Litigation

  	
   

  	
  16

  
	
  Section 3.13. Compliance with Laws

  	
   

  	
  16

  
	
  Section 3.14. Government Contracts

  	
   

  	
  17

  
	
  Section 3.15. Properties

  	
   

  	
  17

  
	
  Section 3.16. Intellectual Property

  	
   

  	
  18

  
	
  Section 3.17. Finders’ Fees

  	
   

  	
  18

  
	
  Section 3.18. Employee Benefit Plans

  	
   

  	
  18

  
	
  Section 3.19. Environmental Matters

  	
   

  	
  21

  
	
  Section 3.20. Significant Customers; Backlog

  	
   

  	
  21

  
	
  Section 3.21. Employees And Labor Controversies

  	
   

  	
  22

  
	
  Section 3.22. Tupe Transferring Employees

  	
   

  	
  25

  
	
  Section 3.23. Euro

  	
   

  	
  25

  
	
  Section 3.24. Disclosure

  	
   

  	
  26

  

 

i

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01. Corporate Existence and Power

  	
   

  	
  26

  
	
  Section 4.02. Corporate Authorization

  	
   

  	
  26

  
	
  Section 4.03. Governmental Authorization

  	
   

  	
  26

  
	
  Section 4.04. Noncontravention

  	
   

  	
  26

  
	
  Section 4.05. Financing

  	
   

  	
  27

  
	
  Section 4.06. Solvency of the Companies

  	
   

  	
  27

  
	
  Section 4.07. Purchase for Investment

  	
   

  	
  28

  
	
  Section 4.08. Litigation

  	
   

  	
  28

  
	
  Section 4.09. Finders’ Fees

  	
   

  	
  28

  
	
  Section 4.10. Inspections; No Other Representations

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
   

  
	
  COVENANTS OF SELLER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01. Conduct of the Business

  	
   

  	
  28

  
	
  Section 5.02. Access to Information

  	
   

  	
  30

  
	
  Section 5.03. Notices of Certain Events

  	
   

  	
  31

  
	
  Section 5.04. Resignations

  	
   

  	
  31

  
	
  Section 5.05. Financial Statements

  	
   

  	
  31

  
	
  Section 5.06. Exclusivity

  	
   

  	
  32

  
	
  Section 5.07. Software Matters

  	
   

  	
  32

  
	
  Section 5.08. Registration

  	
   

  	
  32

  
	
  Section 5.09. Assignment Of Confidentiality Agreements

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
   

  
	
  COVENANTS OF BUYER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01. Confidentiality

  	
   

  	
  32

  
	
  Section 6.02. Access

  	
   

  	
  33

  
	
  Section 6.03. Trademarks; Tradenames

  	
   

  	
  33

  
	
  Section 6.04. Financing Matters

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
   

  
	
  COVENANTS OF BUYER AND SELLER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01. Reasonable Best Efforts; Further Assurances

  	
   

  	
  34

  
	
  Section 7.02. Certain Filings

  	
   

  	
  35

  
	
  Section 7.03. Public Announcements

  	
   

  	
  36

  
	
  Section 7.04. Intercompany Accounts

  	
   

  	
  36

  
	
  Section 7.05. Preparation Of Financial Statements

  	
   

  	
  36

  

 

ii

 

	
   

  	
   

  	
  PAGE

  
	
   

  
	
  ARTICLE 8

  
	
  TAX MATTERS

  
	
   

  	
   

  	
   

  
	
  Section 8.01. Definitions

  	
   

  	
  36

  
	
  Section 8.02. Tax Representations

  	
   

  	
  37

  
	
  Section 8.03. Tax Covenants

  	
   

  	
  38

  
	
  Section 8.04. Tax Sharing

  	
   

  	
  40

  
	
  Section 8.05. Cooperation on Tax Matters

  	
   

  	
  40

  
	
  Section 8.06. Indemnification by Seller

  	
   

  	
  41

  
	
  Section 8.07. Purchase Price Adjustment and Interest

  	
   

  	
  43

  
	
  Section 8.08. Exclusivity; Survival

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
  EMPLOYEE BENEFITS

  
	
   

  	
   

  	
   

  
	
  Section 9.01. Transfer of Certain Employees

  	
   

  	
  44

  
	
  Section 9.02. Application Of TUPE And Related Matters

  	
   

  	
  44

  
	
  Section 9.03. Comparability of Benefits

  	
   

  	
  45

  
	
  Section 9.04. Service

  	
   

  	
  45

  
	
  Section 9.05. Preexisting Conditions and Deductibles

  	
   

  	
  46

  
	
  Section 9.06. US Defined Contribution Plan

  	
   

  	
  46

  
	
  Section 9.07. UK Retirement Plans

  	
   

  	
  47

  
	
  Section 9.08. FUTA; FICA

  	
   

  	
  48

  
	
  Section 9.09. Vacation

  	
   

  	
  48

  
	
  Section 9.10. Flexible Spending Reimbursement Accounts

  	
   

  	
  48

  
	
  Section 9.11. Allocation Of Employment Related Liabilities

  	
   

  	
  49

  
	
  Section 9.12. Foreign Law Obligations

  	
   

  	
  49

  
	
  Section 9.13. Employees On Leave

  	
   

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
  CONDITIONS TO CLOSING

  
	
   

  	
   

  	
   

  
	
  Section 10.01. Conditions to Obligations of Buyer and Seller

  	
   

  	
  50

  
	
  Section 10.02. Conditions to Obligation of Buyer

  	
   

  	
  50

  
	
  Section 10.03. Conditions to Obligation of Seller

  	
   

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  
	
  SURVIVAL; INDEMNIFICATION

  
	
   

  	
   

  	
   

  
	
  Section 11.01. Survival

  	
   

  	
  52

  
	
  Section 11.02. Indemnification

  	
   

  	
  52

  
	
  Section 11.03. Procedures

  	
   

  	
  53

  
	
  Section 11.04. Calculation of Damages

  	
   

  	
  54

  
	
  Section 11.05. Assignment of Claims

  	
   

  	
  55

  
	
  Section 11.06. Exclusivity

  	
   

  	
  55

  

 

iii

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  
	
  Section 12.01. Grounds for Termination

  	
   

  	
  55

  
	
  Section 12.02. Effect of Termination

  	
   

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 13.01. Notices

  	
   

  	
  56

  
	
  Section 13.02. Amendments and Waivers

  	
   

  	
  57

  
	
  Section 13.03. Expenses

  	
   

  	
  57

  
	
  Section 13.04. Successors and Assigns

  	
   

  	
  57

  
	
  Section 13.05. Governing Law

  	
   

  	
  57

  
	
  Section 13.06. Jurisdiction

  	
   

  	
  57

  
	
  Section 13.07. WAIVER OF JURY TRIAL

  	
   

  	
  58

  
	
  Section 13.08. Counterparts; Effectiveness; Third Party
  Beneficiaries

  	
   

  	
  58

  
	
  Section 13.09. Entire Agreement

  	
   

  	
  58

  
	
  Section 13.10. Severability

  	
   

  	
  58

  
	
  Section 13.11. Disclosure Schedules

  	
   

  	
  59

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Disclosure Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A -

  	
  Form of Transition
  Services Agreement

  	
   

  	
   

  
				

 

iv

 

STOCK PURCHASE
AGREEMENT

 

AGREEMENT (this
“Agreement”) dated as of May 9,
2006 between Kendle International Inc., an Ohio corporation (“Buyer”), and Charles River Laboratories
International, Inc., a Delaware corporation (“Seller”).

 

W  I 
T  N  E 
S  S  E 
T  H :

 

WHEREAS, Seller
owns, directly or indirectly, the Shares; and

 

WHEREAS, Seller
desires to sell the Shares to Buyer, and Buyer desires to purchase the Shares
from Seller, upon the terms and subject to the conditions hereinafter set forth.

 

NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.01. Definitions. (a) As used herein, the following terms
have the following meanings:

 

“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 neither the Companies nor any Subsidiaries shall be considered an
Affiliate of Seller.

 

“Antitrust Law” means the Sherman Act, as amended, the
Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other applicable federal, state and foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict, regulate or control actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.

 

“Applicable Law” means, with respect to any Person, any
federal, state, local or foreign law (statutory, common or otherwise),
constitution, treaty, convention, ordinance, code, rule, regulation, order,
injunction, judgment, decree, ruling or other similar requirement enacted,
adopted, promulgated or applied by a Governmental Authority that is binding
upon or applicable to such Person or its assets, as amended unless expressly
specified otherwise.

 

 

“Balance Sheet” means the unaudited interim consolidated
balance sheet of the Business as of April 1, 2006.

 

“Balance Sheet Date” means April 1,
2006.

 

“Base Working Capital” means $2,000,000.

 

“Business”
means the business of providing Phase II-IV clinical trials monitoring and management
services to the pharmaceuticals and biotechnology industries as currently
conducted by the Companies and Subsidiaries.

 

“Business Day” means a day, other than Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by Applicable Law to close.

 

“Business Intellectual Property Rights”
means all Intellectual Property Rights owned by the Companies or any
Subsidiaries.

 

“Closing Date” means the date of the
Closing.

 

“Closing Working Capital” means the difference between
Current Assets and Current Liabilities as of the Closing Date and determined in
accordance with GAAP using the accounting policies, principles, practices and
methodologies used in the preparation of the Balance Sheet, as adjusted in
accordance with Schedule 2.04 and excluding the effect of any act, event
or transaction after the Closing.

 

“Code” means the United States Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.

 

“Company” means each of Inveresk Research
Inc., a Delaware corporation and Charles River Laboratories Clinical Services
GmbH, a German limited liability company, and “Companies”
means both such entities.

 

“Company Employees” means (i) as of the date of this
Agreement those persons employed by Seller, any Affiliate, any Company or any
Subsidiary who work on a full-time or part-time basis for the Business; and (ii) as
of the Closing Date, (A) those persons employed by any Company or any
Subsidiary, (B) TUPE Transferring Employees and (C) those persons
listed on Part I of Schedule 9.01(b) to be transferred into the
Companies or the Subsidiaries by Seller or any of its Affiliates on or prior to
the Closing Date; provided that “Company Employees” excludes those persons listed on Part II
of Schedule 9.01(b) to be transferred out of the Companies or the
Subsidiaries to Seller or its Affiliates prior to the Closing Date.

 

“Current Assets” means on a consolidated basis for the
Business, the sum of (A) book cash (unrestricted), (B) book
restricted cash held in escrow relating to

 

2

 

specific
customer studies, (C) trade accounts receivable both billed and unbilled
(excluding intercompany balances and net of allowance for doubtful accounts)
and (D) prepaid expenses, in each case as determined with respect to the
Business in accordance with Schedule 2.04.

 

“Current Liabilities” means on a consolidated basis for the
Business, the sum of (A) trade accounts payable (excluding intercompany
balances), (B) current accrued expenses, including accrued compensation
for Company Employees, and (C) current liabilities for customer advances and
deferred revenue (including amounts to be paid to investigators), in each case as
determined with respect to the Business in accordance with Schedule 2.04.

 

“Disclosure Schedules” means the Disclosure Schedules to this
Agreement dated the date hereof prepared by Seller and appended to, and forming
part of, this Agreement.

 

“Environmental Laws” means any Applicable
Law that has as its principal purpose the protection of the environment.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended and the rules and regulations promulgated
thereunder.

 

“ERISA Affiliate” of any entity means any
other entity which, together with such entity, would be treated as a single
employer under Section 414 of the Code.

 

“FDA” means the United States Food and Drug Administration.

 

“GAAP” means generally accepted accounting principles in the
United States.

 

“Governmental Authority” means any transnational, domestic or
foreign federal, state or local, governmental authority, department, court,
agency or official, including any political subdivision thereof.

 

“HSR Act” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.

 

“Intellectual Property Right” means any
trademark, service mark, trade name, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property
right.

 

“knowledge of Seller”, “Seller’s knowledge” or any other similar
knowledge qualification in this Agreement means to the actual knowledge, after
reasonable inquiry, of the individuals named on Schedule 1.01.

 

3

 

“Lien” means, with respect to any property
or asset, any mortgage, lien, pledge, charge, security interest or encumbrance
in respect of such property or asset.

 

“Material Adverse Effect” means a material
adverse effect on the financial condition, business operations or results of
operations of the Business, except any such effect resulting from or arising in
connection with (i) this Agreement or the transactions contemplated
hereby, including the taking of any action contemplated by this Agreement,
compliance by Seller with its covenants hereunder, or the announcement or
consummation of this Agreement or such transactions, (ii) changes or
conditions affecting the industry in which the Business operates generally not
disproportionately affecting the Business, (iii) changes in economic,
regulatory or political conditions generally, (iv) the announcement,
declaration, commencement, occurrence, continuation or threat of any war or
armed hostilities, any act or acts of terrorism or any public health or other
public emergency or crisis, (v) changes in Applicable Law or GAAP
generally not disproportionately affecting the Business or (vi) actions or
omissions of Buyer or any of its Affiliates.

 

“1934 Act” means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Permitted Liens” means, with respect to any property:

 

(i)             Liens
disclosed on the Balance Sheet or notes thereto or securing liabilities
reflected on the Balance Sheet or notes thereto;

 

(ii)          Liens
for taxes, assessments and similar charges that are not yet due or are being
contested in good faith;

 

(iii)       Liens
incurred in the ordinary, usual and regular course of business since the
Balance Sheet Date; or

 

(iv)      other
Liens which, individually or in the aggregate, do not materially impair the
value or materially interfere with the current use of such property in the
Business.

 

“Person” means an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including a Governmental Authority.

 

“Shares” means (i) all of the outstanding shares of
capital stock or other equity securities or ownership interests of the
Companies and (ii) shares of capital stock or other equity securities or
ownership interests of certain Subsidiaries of the Companies held by Seller or
its Affiliates as set forth on Schedule 3.06.

 

4

 

“Subsidiary” means, with respect to any
Person, 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 any Company.

 

“Transaction Documents” means this Agreement and the Transition
Services Agreement.

 

“Transition Services Agreement” means a Transition Services
Agreement substantially in the form of Exhibit A hereto.

 

“TUPE” means the Transfer of Undertaking (Protection of
Employment) Regulations 2006.

 

“TUPE Transferring Employees” means those UK Company
Employees who are wholly or mainly employed in the Business in the UK, whose
details are set out in Schedule 9.01(c) pursuant to TUPE and the
terms of this Agreement, which Schedule 9.01(c) shall be updated at
the Closing.

 

“UK Company Employees” means those Company Employees in
respect of whom the employment laws of England and Wales, or Scotland apply to
govern the terms of their employment.

 

“US Company Employees” means Company Employees who are
located in the United States.

 

(b)                                 Each
of the following terms is defined in the Section set forth opposite such
term:

 

	
  Term

  	
   

  	
  Section

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Audited Financial Statements

  	
   

  	
  3.08

  	
  (b)

  
	
  Authorization

  	
   

  	
  3.13

  	
  (b)(ii)

  
	
  Business Registered Intellectual Property
  Rights

  	
   

  	
  3.16

  	
  (a)

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer’s FSA

  	
   

  	
  9.10

  	
   

  
	
  Buyer’s Plan

  	
   

  	
  9.06

  	
  (c)

  
	
  Claim

  	
   

  	
  11.03

  	
   

  
	
  Closing

  	
   

  	
  2.02

  	
   

  
	
  Closing Purchase Price

  	
   

  	
  2.01

  	
   

  
	
  Closing Statement

  	
   

  	
  2.04

  	
   

  
	
  Commitment Letters

  	
   

  	
  4.05

  	
   

  
	
  Company Securities

  	
   

  	
  3.05

  	
   

  
	
  Confidentiality Agreement

  	
   

  	
  6.01

  	
   

  
	
  CRL Clinical

  	
   

  	
  3.22

  	
   

  
	
  CRL Pre-Clinical

  	
   

  	
  3.22

  	
   

  

 

5

 

	
  Term

  	
   

  	
  Section

  
	
  Current Representation

  	
   

  	
  6.03

  	
   

  
	
  Damages

  	
   

  	
  11.02

  	
   

  
	
  Debt Financing

  	
   

  	
  4.05

  	
   

  
	
  Designated Employees

  	
   

  	
  9.01

  	
   

  
	
  Estimated Closing Working Capital

  	
   

  	
  2.03

  	
   

  
	
  Estimated Closing Certificate

  	
   

  	
  2.03

  	
   

  
	
  Euro

  	
   

  	
  3.23

  	
   

  
	
  FFDCA

  	
   

  	
  3.13

  	
  (b)(i)

  
	
  FICA

  	
   

  	
  9.08

  	
   

  
	
  Final Working Capital

  	
   

  	
  2.05

  	
   

  
	
  Financing

  	
   

  	
  4.05

  	
   

  
	
  FUTA

  	
   

  	
  9.08

  	
   

  
	
  Health Care Laws

  	
   

  	
  3.13

  	
  (b)(i)

  
	
  Indemnified Party

  	
   

  	
  11.03

  	
   

  
	
  Indemnifying Party

  	
   

  	
  11.03

  	
   

  
	
  International Employees

  	
   

  	
  3.18

  	
  (c)

  
	
  International Plan

  	
   

  	
  3.18

  	
  (d)

  
	
  Loss

  	
   

  	
  8.06

  	
  (a)(iii)

  
	
  Material Contract

  	
   

  	
  3.11

  	
  (a)

  
	
  On Leave Employee

  	
   

  	
  9.13

  	
   

  
	
  Post-Closing Representation

  	
   

  	
  6.03

  	
   

  
	
  Post-Closing Tax Period

  	
   

  	
  8.01

  	
   

  
	
  Potential Contributor

  	
   

  	
  11.05

  	
   

  
	
  Pre-Closing Tax Period

  	
   

  	
  8.01

  	
   

  
	
  Purchase Price

  	
   

  	
  2.01

  	
   

  
	
  Quarterly Financial Statements

  	
   

  	
  5.05

  	
  (a)(ii)

  
	
  Returns

  	
   

  	
  8.02

  	
   

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller Group

  	
   

  	
  8.01

  	
   

  
	
  Seller’s FSA

  	
   

  	
  9.10

  	
   

  
	
  Seller’s 401(k) Plan

  	
   

  	
  9.06

  	
  (a)

  
	
  Seller Trademarks and Tradenames

  	
   

  	
  6.03

  	
   

  
	
  Separate Returns

  	
   

  	
  8.01

  	
   

  
	
  Subjects of Disagreement

  	
   

  	
  2.04

  	
  (b)

  
	
  Subsidiary Securities

  	
   

  	
  3.07

  	
   

  
	
  Tax

  	
   

  	
  8.01

  	
   

  
	
  Tax Asset

  	
   

  	
  8.01

  	
   

  
	
  Tax Benefit

  	
   

  	
  8.06

  	
  (c)

  
	
  Tax Claim

  	
   

  	
  8.06

  	
  (e)

  
	
  Taxing Authority

  	
   

  	
  8.01

  	
   

  
	
  Third Party Claim

  	
   

  	
  11.03

  	
   

  
	
  Third Party Payor Program

  	
   

  	
  3.13

  	
  (b)(iii)

  
	
  382 Allocation Amount

  	
   

  	
  8.03

  	
  (f)

  
	
  Transferred Accounts

  	
   

  	
  9.06

  	
  (c)

  

 

6

 

	
  Term

  	
   

  	
  Section

  
	
  TUPE Employers

  	
   

  	
  3.22

  	
   

  
	
  UK Pension Plans

  	
   

  	
  9.07

  	
  (b)

  
	
  UK Plan

  	
   

  	
  3.18

  	
  (a)(ii)

  
	
  US Plans

  	
   

  	
  3.18

  	
  (a)(i)

  
	
  Warranty Breach

  	
   

  	
  11.02

  	
   

  

 

Section 1.02. Other
Definitional and Interpretative Provisions. The words “hereof”, “herein”
and “hereunder” and words of like import used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement.
The captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof. References to Articles,
Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and
Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any
capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words
of like import. “Writing”, “written” and comparable terms refer to printing,
typing and other means of reproducing words (including electronic media) in a
visible form. References from or through any date mean, unless otherwise
specified, from and including or through and including, respectively. References
to “law”, “laws” or to a particular statute or law shall be deemed also to
include any and all Applicable Law. Except for amounts set forth in any
financial statements described in, or provided pursuant to, this Agreement, foreign
currencies shall be converted into US Dollars by reference to the “Exchange
Rates” published in the Eastern Edition of the Wall Street Journal on the date
of this Agreement.

 

ARTICLE 2

PURCHASE AND SALE

 

Section 2.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell, or cause its Affiliates to
sell, to Buyer or to Buyer’s designee (which designee shall be a direct or
indirect wholly owned subsidiary of Buyer), and Buyer agrees to purchase,
either itself or through such designee, from Seller and its Affiliates, the Shares
at the Closing. The aggregate purchase price for the Shares (the “Purchase Price”) is $215,000,000 in cash,
subject to adjustment as provided in Section 2.05. The amount payable in
cash to Seller at Closing (the “Closing Purchase Price”)
is equal to the Purchase Price, plus (i) if
Estimated Working Capital exceeds Base Working Capital, the

 

7

 

amount of such excess, or minus (ii) if Base Working Capital exceeds Estimated
Working Capital, the amount of such excess. The Closing Purchase Price shall be
paid as provided in Section 2.02.

 

Section 2.02. Closing. The closing (the “Closing”)
of the purchase and sale of the Shares hereunder shall take place at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New
York, as soon as possible, but in no event later than five Business Days, after
satisfaction of the conditions set forth in Article 10, or at such other
time or place as Buyer and Seller may agree. At the Closing:

 

(a)                    Buyer
shall deliver to Seller the Closing Purchase Price in immediately available
funds by wire transfer to an account of Seller designated by Seller, by notice
to Buyer, which notice shall be delivered not later than two Business Days
prior to the Closing Date (or if not so designated, then by certified or
official bank check payable in immediately available funds to the order of Seller
in such amount).

 

(b)                   Seller
shall deliver, or cause to be delivered, to Buyer certificates for the Shares
duly endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto.

 

(c)                    Buyer
and Seller shall execute and deliver the Transition Services Agreement.

 

Section 2.03. Estimated
Working Capital. Not less than five Business Days prior to the
Closing Date, Seller shall deliver to Buyer a certificate of an authorized
officer of Seller (the “Estimated Closing
Certificate”) setting forth Seller’s good faith estimate of Closing
Working Capital as of the Closing Date (the “Estimated
Closing Working Capital”). The Estimated Closing Certificate shall
be accompanied by appropriate information and documentation in reasonable
detail supporting Seller’s estimate. The amounts set forth on the Estimated
Closing Certificate shall be conclusive for the purposes of calculating the
Closing Purchase Price, but the actual Closing Working Capital and any
resulting adjustment to the Purchase Price shall be determined in accordance
with the provisions of Section 2.04.

 

Section 2.04. Closing Statement.
(a) As promptly as practicable, but no later than 60 days,
after the Closing Date, Seller will cause to be prepared and delivered to Buyer
a closing statement (the “Closing Statement”)
setting forth Seller’s calculation of Closing Working Capital as of the Closing
Date. The Closing Statement shall be accompanied by appropriate information and
documentation in reasonable detail in support of Seller’s calculation.

 

(b)                   If Buyer disagrees with Seller’s
calculation of Closing Working Capital delivered pursuant to Section 2.04(a),
Buyer may, within 30 days after

 

8

 

delivery of the documents referred to in Section 2.04(a), deliver
a notice to Seller disagreeing with such calculation and setting forth Buyer’s
calculation of such amount. Any such notice of disagreement shall specify those
items or amounts as to which Buyer disagrees (the “Subjects of
Disagreement”), and Buyer shall be deemed to have agreed for
purposes of this Section 2.04 with all items and amounts contained in the
Closing Statement and the calculation of Closing Working Capital delivered
pursuant to Section 2.04(a) other than the Subjects of Disagreement.

 

(c)                    If a notice of disagreement shall
be delivered pursuant to Section 2.04(b), Buyer and Seller shall, during
the 20 days following such delivery, use their best efforts to reach agreement
on the Subjects of Disagreement in order to determine, as may be required,
the amount of Closing Working Capital. If, during such period, Buyer and Seller
are unable to reach such agreement on the Subjects of Disagreement, they shall
promptly thereafter cause a firm of independent accountants of nationally
recognized standing reasonably satisfactory to Buyer and Seller (who shall not
have any material relationship with Buyer or Seller), promptly to review the
Closing Statement, Buyer’s notice of disagreement and the Subjects of
Disagreement for the purpose of calculating Closing Working Capital. In making
such calculation, such independent accountants shall consider only the Subjects
of Disagreement and the determination of such independent accountants with
respect to each such Subject of Disagreement shall be an amount within the
range established with respect to such item by Seller’s calculation delivered
pursuant to Section 2.04(a) and Buyer’s calculation delivered
pursuant to Section 2.04(b). Such independent accountants shall deliver to
Buyer and Seller, as promptly as practicable, a report setting forth such calculation.
Such report shall be final and binding upon Buyer and Seller. The cost of such
review and report shall be borne by Buyer and Seller pro rata
based upon the proportion by which their respective determinations of Closing
Working Capital differs from Final Closing Working Capital.

 

(d)                   Buyer and Seller agree that they
will, and agree to cause the independent accountants and each Company and each
Subsidiary to, cooperate and assist in the preparation of the Closing Statement
and the calculation of Closing Working Capital and in the conduct of the
reviews referred to in this Section, including the making available to the
extent necessary of books, records, work papers and personnel.

 

Section 2.05. Adjustment
of Purchase Price. (a) If Estimated Closing Working Capital
exceeds Final Working Capital, Seller shall pay to Buyer, as an adjustment to
the Purchase Price, in the manner and with interest as provided in Section 2.05(b),
the amount of such excess. If Final Working Capital exceeds Estimated Closing Working
Capital, Buyer shall pay to Seller, as an adjustment to the Purchase Price, in
the manner and with interest as provided in Section 2.05(b), the amount of
such excess. “Final Working Capital”
means Closing Working Capital as shown in Seller’s calculation delivered
pursuant to Section 2.04(a), if

 

9

 

no notice of disagreement with respect
thereto is duly delivered pursuant to Section 2.04(b); or if such a notice
of disagreement is delivered, as agreed by Buyer and Seller pursuant to Section 2.04(c) or
in the absence of such agreement, as shown in the independent accountant’s
calculation delivered pursuant to Section 2.04(c); provided
that, in no event shall Final Working Capital be more than Seller’s calculation
of Closing Working Capital delivered pursuant to Section 2.04(a) or less
than Buyer’s calculation of Closing Working Capital delivered pursuant to Section 2.04(b).

 

(b)                   Any payment pursuant to Section 2.05(a) shall
be made at a mutually convenient time and place within ten days after the Final
Working Capital has been determined by causing such payments to be credited to
such account of such other party as may be designated by such other party.
The amount of any payment to be made pursuant to this Section shall bear
interest from and including the Closing Date to but excluding the date of
payment at a rate per annum equal to the Prime Rate as published in the Wall Street Journal, Eastern Edition in
effect from time to time during the period from the Closing Date to the date of
payment. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of 365
days and the actual number of days elapsed.

 

Section 2.06. Allocation
of Purchase Price. Buyer and Seller agree that the Purchase Price
shall be allocated for Tax purposes as set forth on Schedule 2.06. Buyer,
the Companies and the Subsidiaries and Seller shall file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation. Buyer and Seller agree that, in the
event of any payment that is treated as an adjustment to the Purchase Price is
made pursuant to Section 2.05, the allocation set forth on Schedule 2.06
shall be adjusted accordingly to take account of such adjustment, based on the
extent to which the adjustment relates to each Company.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as set
forth in the Disclosure Schedules, Seller represents and warrants to Buyer as
of the date hereof and, unless otherwise indicated, as of the Closing Date
that:

 

Section 3.01. Corporate Existence and Power. Seller and each Company is a
corporation or limited liability company, as applicable, duly incorporated or
organized, validly existing and in good standing (or the local law equivalent) under
the laws of its jurisdiction of incorporation or organization and has all
corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted. Each

 

10

 

Company is duly qualified to do business as a
foreign or alien corporation and is in good standing (or the local law equivalent)
in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect.

 

Section 3.02. Corporate Authorization. The execution, delivery and performance
by Seller of the Transaction Documents and the consummation of the transactions
contemplated hereby are within Seller’s corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement constitutes a valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms, and each other Transaction
Document, when executed and delivered by Seller will constitute the valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms.

 

Section 3.03. Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Authority other than (i) compliance with any
applicable requirements of the HSR Act and the 1934 Act; (ii) compliance
with any applicable requirements of non-United States Antitrust Laws; and (iii) any
such action or filing as to which the failure to make or obtain would not have
a Material Adverse Effect.

 

Section 3.04. Noncontravention. The execution, delivery and performance by
Seller of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) violate the
certificate of incorporation or bylaws of Seller or either of the Companies, (ii) assuming
compliance with the matters referred to in Section 3.03, violate in any
material respect any Applicable Law, (iii) except as disclosed in Schedule 3.04,
require any consent or other action by any Person under, constitute a material default
under, or give rise to any right of termination, cancellation or acceleration
of any right or obligation of Seller, any Company or any Subsidiary under any
provision of any Material Contract or (iv) result in the creation or
imposition of any Lien on any material asset of any Company or any Subsidiary,
except for any Permitted Liens.

 

Section 3.05. Capitalization. (a) Schedule 3.05(a) sets forth
the authorized capital stock and, as of the date hereof, the outstanding
capital stock of each Company.

 

(b)                                 All outstanding shares
of capital stock of each Company have been duly authorized and validly issued
and are fully paid and non-assessable. Except as set forth in this Section 3.05,
there are no outstanding (i) shares of capital stock or voting securities
of any Company, (ii) securities of any Company convertible into or
exchangeable for shares of capital stock or voting securities of such

 

11

 

Company or (iii) options or other rights to acquire from any Company,
or other obligation of any Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of any such Company (the items in clauses 3.05(b)(i), 3.05(b)(ii) and
3.05(b)(iii) being referred to collectively as the “Company Securities”). There are no
outstanding obligations of any such Company or any Subsidiary to repurchase,
redeem or otherwise acquire any Company Securities. There are no “phantom”
stock or equity rights outstanding pursuant to which either Company or any of
the Subsidiaries could be required to issue Company Securities or make payments
measured by or with respect to Company Securities.

 

Section 3.06. Ownership of Shares. Each of Seller or its Affiliate named
on Schedule 3.06 is the record and beneficial owner of the Shares set
forth opposite the name of Seller or any such named Affiliate on Schedule 3.06,
free and clear of any Lien, and Seller will transfer and deliver, or cause to
be transferred and delivered, to Buyer at the Closing valid title to the Shares
free and clear of any Lien.

 

Section 3.07. Subsidiaries. (a) Each Subsidiary is a corporation or
limited liability entity duly incorporated or organized, validly existing and
in good standing (or the local law equivalent) under the laws of its
jurisdiction or organization of incorporation and has all material corporate or
limited liability entity powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted. All Subsidiaries and their respective jurisdictions
of incorporation or organization are identified on Schedule 3.07.

 

(b)                                 All of the outstanding
capital stock or other voting securities or ownership interests of each
Subsidiary is owned by one of the Companies or an Affiliate of Seller as set
forth on Schedule 3.06, directly or indirectly, free and clear of any Lien.
After giving effect to the transactions contemplated by this Agreement, all of
the outstanding capital stock or other voting securities or ownership interests
of each Subsidiary shall be owned by Buyer or its designee. There are no
outstanding (i) securities or ownership interests of any Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or
voting securities of any Subsidiary or (ii) options or other rights to
acquire from any Company or any Subsidiary, or other obligation of any Company
or any Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any
Subsidiary (the items in clauses 3.07(b)(i) and 3.07(b)(ii) being
referred to collectively as the “Subsidiary
Securities”). There are no outstanding obligations of any Company or
any Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities. There are no “phantom” stock or equity rights outstanding
pursuant to which either Company or any Subsidiary could be required to issue
Subsidiary Securities or make payments measured by or with respect to
Subsidiary Securities.

 

12

 

Section 3.08. Financial Statements. (a) The unaudited consolidated balance
sheet as of December 31, 2005 and the related unaudited consolidated statements
of income and cash flows for the year ended December 31, 2005 and the Balance
Sheet and the related unaudited interim consolidated statements of income and
cash flows for the quarter ended April 1, 2006 of the Business, true and
complete copies of which are set forth in Schedule 3.08, fairly present,
in conformity with GAAP, consistently applied (except as otherwise indicated in
such statements), the financial position of the Business as of the dates
thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
interim financial statements and the absence of notes).

 

(b)                                 The audited
consolidated balance sheet as of December 31, 2005 and the related
consolidated statements of income and cash flows for the year ended December 31,
2005 of the Business (together, the “Audited Financial
Statements”) when delivered to the Buyer shall fairly present, in
conformity with GAAP, consistently applied (except as otherwise indicated in
the notes thereto), the combined financial position of the Business as of the
dates thereof and its consolidated results of operations and cash flows for the
period then ended.

 

Section 3.09. Absence of Certain Changes. Except as set forth on Schedule 3.09,
since the Balance Sheet Date, the Business has been conducted in the ordinary
course consistent with past practices and there has not been:

 

(a)                    any
event, occurrence or development which has had, individually or in the
aggregate, a Material Adverse Effect;

 

(b)                   any
amendment of any term of the constituent documents or any outstanding security
of any Company or any Subsidiary;

 

(c)                    any
incurrence, assumption or guarantee by any Company or any Subsidiary of any
indebtedness for borrowed money other than in the ordinary course of business
consistent with past practices, but not in any event (other than accounts
payable in the ordinary course of business) exceeding $250,000 in the aggregate
outstanding at any time;

 

(d)                   any
making of any loan, advance or capital contributions to or investment in any
Person other than loans, advances or capital contributions to or investments
made in a Subsidiary and loans and advances to employees in the ordinary course
of business consistent with past practices (including with respect to quantity
and frequency);

 

(e)                    any
transaction or commitment made, or any contract or agreement entered into, by any
Company or any Subsidiary relating to its assets or business, in either case,
material to the Companies and the Subsidiaries, taken as a whole, other than
transactions and commitments in

 

13

 

the ordinary
course of business consistent with past practices and those contemplated by
this Agreement  (including with respect
to quantity and frequency);

 

(f)                      any
acquisition of property other than (i) inventory, capital expenditures and
accounts receivable in the ordinary course of business consistent with past
practice or (ii) in an aggregate amount not exceeding $250,000;

 

(g)                   any
disposition of property other than (i) merchandise or inventory, each in
the ordinary course of business consistent with past practice, (ii) obsolete,
inoperative or replaced equipment or (iii) in an aggregate amount not
exceeding $250,000;

 

(h)                   any
material change in any method of accounting or accounting practice by any Company
or any Subsidiary except for any such change required by reason of a concurrent
change in GAAP; or

 

(i)                       any
(i) employment, deferred compensation, severance, retirement or other
similar agreement entered into with any senior manager of any Company or any
Subsidiary (or any amendment to any such existing agreement), (ii) grant
of any severance or termination pay to any senior manager of any Company or any
Subsidiary, or (iii) change in compensation or other benefits payable to
any senior manager of any Company or any Subsidiary pursuant to any severance
or retirement plans or policies thereof, in each case other than in the
ordinary course of business consistent with past practices.

 

Section 3.10. No Undisclosed Material Liabilities. There are no
liabilities of any Company or any Subsidiary of any kind, other than:

 

(a)                    liabilities
provided for in the Balance Sheet or disclosed in the notes thereto;

 

(b)                   liabilities
not required under GAAP to be shown on the Balance Sheet for reasons other than
the contingent nature thereof or the difficulty of determining the amount thereof;

 

(c)                    liabilities
disclosed in the Disclosure Schedules;

 

(d)                   liabilities
arising under this Agreement or any other agreement or instrument between the
parties hereto;

 

(e)                    liabilities
incurred in the ordinary course of business since the Balance Sheet Date; or

 

14

 

(f)                      other
undisclosed liabilities which, individually or in the aggregate, do not have a
Material Adverse Effect.

 

Section 3.11.
Material Contracts. (a) Except
as set forth on Schedule 3.11 (each listed item, a “Material
Contract”), none of the Companies or any Subsidiaries is a party to
or bound by:

 

(i)                       any
lease (whether of real or personal property) providing for annual rentals of $250,000
or more that cannot be terminated on not more than 60 days’ notice without
payment by any Company or any Subsidiary of a penalty or termination fee;

 

(ii)                    any
agreement for the purchase of materials, supplies, goods, services or equipment
providing for annual payments by any Company or any Subsidiary of $250,000 or
more or that cannot be terminated on not more than 60 days’ notice without
payment by any such Company or any Subsidiary of a penalty or termination fee;

 

(iii)                 any
agreement for the provision of clinical trials monitoring and management services
by any Company or any Subsidiary that provides for payments in the aggregate to
any such Company or Subsidiary of $2,500,000 or more, except for any such
agreement having a term of 180 days or less or that can be terminated by the
other party thereto on not more than 180 days’ notice;

 

(iv)                any
partnership, joint venture or other similar agreement or arrangement pursuant
to which any of the Companies or any Subsidiary has unlimited liability or any
other material partnership, joint venture or other similar agreement or
arrangement;

 

(v)                   any
agreement relating to the acquisition or disposition of any business (whether
by merger, sale of stock, sale of assets or otherwise);

 

(vi)                any
agreement relating to indebtedness for borrowed money or the deferred purchase
price of property (in either case, whether incurred, assumed, guaranteed or
secured by any asset), except any such agreement (A) with an aggregate
outstanding principal amount not exceeding $250,000 or (B) entered into
subsequent to the date of this Agreement as permitted by Section 3.09(c);

 

(vii)             any
agreement that limits in any material respect the freedom of any Company or any
Subsidiary to compete in any line of business or with any Person or in any
area; or

 

15

 

(viii)          any
agreement with Seller or any of its Affiliates or any director or officer of
Seller or any of its Affiliates.

 

(b)                                 Each agreement,
contract, plan, lease, arrangement or commitment required to be disclosed
pursuant to this Section is a valid and binding agreement of a Company or
Subsidiary, as the case may be, and is in full force and effect, and none
of the Companies, any Subsidiaries or, to the knowledge of Seller, any other
party thereto is in default or breach in any material respect under the terms
of any such agreement, contract, plan, lease, arrangement or commitment.

 

Section 3.12. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Seller, threatened against
or affecting, any Company or any Subsidiary or any of their respective
properties or involving any TUPE Transferring Employee before any arbitrator or
any Governmental Authority which is reasonably likely to result in damages,
fines or penalties exceeding $250,000 or otherwise have a Material Adverse
Effect.

 

Section 3.13. Compliance with Laws. (a) None of any Companies or any
Subsidiaries is in violation in any material respect of any Applicable Law.

 

(b)                                 Without limiting the
generality of clause (a):

 

(i)             The
Companies and the Subsidiaries are, and at all times have been, in material
compliance with all relevant federal, state or foreign civil or criminal health
care laws applicable to the Company, any of the Subsidiaries or their
respective businesses, including, to the extent applicable, the federal Food,
Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) (“FFDCA”)
and the Controlled Substances Act (21 U.S.C. § 801 et seq.) and the
regulations promulgated pursuant to such laws, and comparable state laws,
accreditation standards and all other state, federal and foreign federal laws
and regulations relating to the regulation of the business of the Company or
any of its Subsidiaries (collectively, “Health Care Laws”).

 

(ii)          The
Companies and the Subsidiaries have (i) all material licenses, consents,
certificates, permits, authorizations, approvals, registrations and
qualifications from, and has made all declarations and filings with, all
applicable Governmental Authorities (each, an “Authorization”)
necessary to engage in the business conducted by it, and (ii) not received
notice and has no knowledge that any Governmental Authority is considering
suspending, adversely amending or revoking any such Authorization. All such
Authorizations are valid and in full force and effect and each Company and its
Subsidiaries is in material compliance with the terms and conditions of all
such Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect to such Authorizations.

 

16

 

(iii)       None
of the Companies or the Subsidiaries bills, receives payment from or otherwise
participates as a healthcare provider or supplier in any Third Party Payor
Program. For purposes of this Agreement, “Third Party Payor Program”
means any private, state or federal government program that pays or reimburses
healthcare providers and suppliers for health care services rendered to individuals,
including, without limitation, Medicare, Medicaid, commercial health insurance,
a health maintenance organization, an employer-sponsored health benefits plan
and a similar healthcare reimbursement or payment program.

 

(iv)      The
Companies and the Subsidiaries have received and maintain accreditation in good
standing and without limitation or impairment by all applicable accrediting
organizations, to the extent required by Law (including any foreign law or
equivalent regulation).

 

(v)         All
analyses, studies, tests and clinical trials conducted by each of the Companies
and the Subsidiaries are being and were, if completed, conducted in material
compliance with experimental protocols, procedures and controls pursuant to
accepted professional scientific standards and applicable local, state,
provincial and federal laws, rules, regulations, policies, directives and
guidance (such as Good Clinical Practice), including, but not limited to, the
FFDCA and its implementing regulations at 21 C.F.R. Parts 11, 50, 54, 56, 312
and 314 and the CSA and its implementing regulations, to the extent applicable
to the Companies and Subsidiaries based on the obligations assumed by each of
them pursuant to their contracts or subcontracts with the sponsors of such
analyses, studies, tests and clinical trials. None of the Companies or the
Subsidiaries have received any notices, correspondence or other communication
from the FDA or other Governmental Authority requiring the termination,
suspension or material modification of any study, test or clinical trial
currently being conducted by the Companies and the Subsidiaries.

 

Section 3.14. Government
Contracts. Except as set forth on Schedule 3.14, none of the
Companies or any Subsidiaries are party to any contract or agreement with the
United States federal government.

 

Section 3.15. Properties. (a) The Companies and the Subsidiaries have
good title to, or in the case of leased property and assets have valid
leasehold interests in, all material personal property and assets (whether
tangible or intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, free of any Liens other than Permitted Liens, except for
property and assets sold since the Balance Sheet Date in the ordinary course of
business consistent with past practices.

 

(b)                                 The Companies and the
Subsidiaries do not own any real property.

 

17

 

Section 3.16. Intellectual Property. (a) Schedule 3.16(a) contains
a list of all registrations and applications for registration included in the Business
Intellectual Property Rights (the “Business Registered Intellectual Property Rights”).

 

(b)                                 Schedule 3.16(b) sets
forth a list of all material agreements (excluding licenses for commercial
off-the-shelf computer software that are generally available on
non-discriminatory pricing terms) to which any Company or any Subsidiary is a
party and pursuant to which (i) any Person is authorized to use any Business
Intellectual Property Right or (ii) any Company or any Subsidiary is
licensed to use any Intellectual Property Right of any other Person.

 

(c)                                  No Business Intellectual
Property Right is subject to any outstanding judgment, injunction, order,
decree or agreement restricting in any material respect the use thereof by the
Companies or any Subsidiaries or restricting in any material respect the
licensing thereof by the Companies or any Subsidiaries to any Person.

 

(d)                                 The Companies and
Subsidiaries own and possess or have the right to use pursuant to a valid and
enforceable written license, sublicense, agreement, or permission all the
Business Intellectual Property Rights necessary for the operation of the
Business as presently conducted. Except as set forth on Schedule 3.16(d),
each Business Intellectual Property Right currently used by the Company or any
of the Subsidiaries immediately prior to the Closing will be owned or available
for use by the Companies or the Subsidiaries immediately subsequent to the
Closing.

 

(e)                                  To the knowledge of
Seller, neither the Companies nor any of the Subsidiaries has infringed upon or
misappropriated any Intellectual Property Rights of any other Person, and
Seller has not received any written claim, demand or notice alleging any such
infringement or misappropriation from using any Intellectual Property Rights of
any other Person. To the knowledge of Seller, no third party has infringed upon
or misappropriated any Business Intellectual Property Rights of the Companies
or any of the Subsidiaries.

 

Section 3.17. Finders’ Fees. Except for Credit Suisse Securities (USA) LLC
whose fees will be paid by Seller, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Seller or any Company or any Subsidiary who might be entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement.

 

Section 3.18. Employee Benefit Plans. (a) In relation to the US
Company Employees:

 

18

 

(i)             Schedule 3.18(a)(i) sets
forth a list of each “employee benefit plan”, as defined in Section 3(3) of
ERISA, each employment, severance or similar material contract, plan
arrangement or policy and each other material plan or arrangement (written or
oral) providing for compensation, bonuses, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program,
disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by any Company or
any Affiliate and covers any US Company Employee or former US Company Employee of
the plans (and, if applicable, related trust or funding agreements or insurance
policies) and all amendments thereto and written interpretations thereof have
been furnished to Buyer together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) and Form 990, if
applicable, prepared in connection with any such plan or trust. Such plans are
referred to collectively herein as the “US
Plans”.

 

(ii)          None
of the Companies who employ US Company Employees nor any ERISA Affiliate of any
such Company has (i) engaged in, or is a successor or parent corporation
to an entity that has engaged in, a transaction described in Sections 4069 or
4212(c) of ERISA or (ii) incurred, or reasonably expects to incur
prior to the Closing Date, any liability under Title IV of ERISA arising in
connection with the termination of, or a complete or partial withdrawal from,
any plan covered or previously covered by Title IV of ERISA.

 

(iii)       None
of the Companies who employ US Company Employees, any ERISA Affiliate of such
Companies and any predecessor thereof contributes to, or has in the past
contributed to, any multiemployer plan, as defined in Section 3(37) of
ERISA.

 

(iv)      Each
US Plan which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter, or has pending or has time
remaining in which to file, an application for such determination from the
Internal Revenue Service, and Seller is not aware of any reason why any such
determination letter should be revoked or not be reissued. The Seller has made
available to Buyer copies of the most recent Internal Revenue Service
determination letters with respect to each such US Plan. Each US Plan has been
maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations,
including ERISA and the Code, which are applicable to such US Plan. Full
payment has been made

 

19

 

of all amounts
that are required under the terms of Seller’s 401(k) Plan to be paid as
contributions or premiums with respect to all periods prior to and including
the last day of the most recent fiscal year of such plan on or before the date
of this agreement, and all periods thereafter prior to the Closing Date. All material
filings required by ERISA and the Code as to each US Plan have been timely
filed, and all material notices and disclosures to participants required by
either ERISA or the Code have been timely provided. Other than routine
individual material claims for benefits submitted by participants or
beneficiaries, no material claim against or legal proceeding involving any US
Plan is pending or to the knowledge of the Seller, is threatened. No
corrections have been made under any voluntary compliance program or
self-correction program with the Internal Revenue Service or the Department of
Labor. No material events have occurred with respect to any US Plan that could
result in payment or assessment by or against the Company of any material
excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D,
4980E or 5000 of the Code.

 

(v)         Neither
the Companies nor any Subsidiaries has any current or projected liability in
respect of post-employment or post-retirement health or medical or life
insurance benefits for retired, former or current employees of the Companies or
any Subsidiaries, except as required to avoid excise tax under Section 4980B
of the Code.

 

(b)                                 In relation to UK
Company Employees, Seller has made available to the Buyer particulars of the
terms of employment (including all emoluments) together with copies of the
standard terms and conditions of employment, staff handbooks and other
applicable policies, any collective agreements, agreements with trade unions,
staff associations and other representative bodies and elected representatives
of UK Company Employees, details of any profit sharing, bonus arrangements,
share schemes or other incentive arrangements and details of any benefits that
are payable on retirement (including participation in the UK Pension Plans), on
death or in the event of disability, accident or sickness (including any
medical expenses scheme or loss of earnings indemnity) (each, a “UK Plan”) and Seller has at all relevant times been in
material compliance with all of its obligations arising out of or in connection
with a UK Plan.

 

(c)                                  In relation to Company
Employees who are not US Company Employees or UK Company Employees (“International Employees”), Seller has made available to
Buyer summaries of material employment and benefit arrangements (each such
arrangement, an “International Plan”) for such International
Employees who are located in countries with more than 25 International Employees.
Each International Plan has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations (including any special provisions relating
to qualified plans where such International Plan was intended

 

20

 

to so qualify) and has been maintained in good standing with applicable
regulatory authorities.

 

(d)                                 Except as set forth in
Schedule 3.18(d), no Company Employee will become entitled as a result of
a contract with Seller to any bonus, severance, or similar benefit, or any
acceleration or vesting of any such benefit as a result of the transactions
contemplated hereby.

 

Section 3.19. Environmental Matters. (a) Except as to matters that
would not reasonably be expected to have a Material Adverse Effect:

 

(i)             (x)
no written notice, order, request for information, complaint or penalty has
been received by Seller, any Company or any Subsidiary, and (y) there are no
judicial, administrative or other actions, suits or proceedings pending or, to
the knowledge of Seller, threatened, in the case of each of (x) and (y), which
allege a violation of any Environmental Law and relate to the Business;

 

(ii)          each
Company and each Subsidiary have all environmental permits necessary for their
operations to comply with all applicable Environmental Laws and are in
compliance with the terms of such permits and with all other applicable
Environmental Laws;

 

(iii)       (x)
no real property currently and no real property formerly owned or operated by
any Company or Subsidiary is listed or, to the knowledge of Seller, proposed
for listing on the National Priority List established by CERCLA, or any other
similar state hazardous site list and (y) no Company or Subsidiary nor any
Person on behalf of any Company or Subsidiary has transported, disposed of, or
arranged for disposal of any Hazardous Substance to or at any such site; and

 

(iv)      to
the knowledge of Seller, there is no obligation of any Company or Subsidiary
under Environmental Laws to investigate, remove, remediate or cleanup any
Hazardous Substance from the soil, groundwater or surface water at, on or under
any real property currently or formerly owned or operated by any Company or
Subsidiary.

 

(b)                                 Except as set forth in
this Section 3.19, no representations or warranties are being made with
respect to environmental matters.

 

Section 3.20. Significant
Customers; Backlog. (a) Except as set forth on Schedule 3.20,
none of the customers listed on Schedule 3.20 of either Company or of any
of the Subsidiaries has delivered any written notice to either Company or any
of the Subsidiaries that any such customer has terminated or intends to terminate
any contract or agreement with either Company or any of the Subsidiaries.

 

21

 

(b)                                 Schedule 3.20(b) sets
forth the backlog of the Companies and the Subsidiaries as of April 1,
2006, as determined by Seller in good faith based, with respect only to studies
and projects included in the backlog that are in process but that have not been
completed, on Seller’s revenue recognition policies (which comply with GAAP)
and, with respect to all studies and projects included in the backlog, based on
assumptions that Seller believes to be reasonable and using the methodologies,
practices and principles consistent with those used by Seller in its
determination of its backlog as disclosed in its filings pursuant to the 1934
Act.

 

(c)                                  Except as set forth
in Schedule 3.20(c), to the knowledge of Seller, as of April 1, 2006
there were no material ongoing customer projects with respect to the Business
for which the projected completion costs would reasonably be expected to exceed
the budgeted costs for such projects by amounts that, individually or in the
aggregate, would have a material effect on the backlog amount set forth on Schedule 3.20(b),
as determined by Seller in the exercise of its reasonable judgment applying the
principles, practices and methodologies referred to above and taking into
account expected changes in scope of such projects in the ordinary course of
business.

 

Section 3.21. Employees
And Labor Controversies. (a) In relation to the UK Company
Employees:

 

(i)             Other
than (A) PAYE and National Insurance contributions in respect of the
current payroll period, (B) accrued but untaken holiday leave, (C) benefits,
commission or fees accrued but not yet payable and (D) the reimbursement
of expenses, no material amount due to any present or former UK Company
Employees or director is in arrears or is owing and there are no outstanding
loans or advances from any Company or Subsidiary to any present or former UK
Company Employee or director (whether of money or any other asset). None of the
Companies, Subsidiaries or TUPE Employers are under any obligation to increase
the rates of remuneration or increase bonuses with respect to UK Company
Employees other than in the ordinary course consistent with past practice.

 

(ii)          All
the UK Company Employees  employed under
contracts of service can be terminated on six months’ notice or less without
payment of compensation or damages (other than UK statutory rights to payments
of compensation), and there is no policy, arrangement or agreement (whether
legally binding or not) in relation to which any of the UK Company Employees is
or may be entitled to any payment or benefit in addition to his or her
statutory entitlements to redundancy pay on termination of employment by reason
of redundancy or redeployment.

 

(iii)       Schedule 9.01(c) includes
the following details for each TUPE Transferring Employee: name, job title or
description, age, date of commencement of continuous employment, employing
company, location,

 

22

 

full time or part time
status, notice entitlement, salaries/rates of remuneration, and benefits
(whether financial or otherwise) actually provided or which the applicable
employer has agreed to provide whether now or in the future.

 

(iv)      Seller
has provided particulars of the terms of the contracts of service for all
directors, including name, position, date appointed, fees, remuneration,
benefits (whether financial or otherwise) which the Companies or Subsidiaries
are obliged to pay or provide, amount of time devoted to the relevant Companies
or Subsidiaries and notice entitlement (of the Companies or Subsidiaries and
the director) and/or expiry date of the appointment. No person is a shadow
director of the Company. There have been no changes to these terms in the 6
months preceding this Agreement and there are no obligations on the Companies
or Subsidiaries to make any changes.

 

(v)         During
the three years preceding the date of this Agreement, there has been no trade
dispute (as defined in section 218 of TULR(C)A 1992) or industrial action
involving any UK Company Employee, former UK Company Employee trade union
(whether recognized or not), staff association, worker representatives or any
other body representing employees, and the Companies and Subsidiaries are not
involved in any such dispute and there are no present circumstances or facts to
Seller’s knowledge which are likely to give rise to any such dispute and no
industrial action involving the UK Company Employees (official or unofficial
and including but not limited to strike, slowdown, work stoppage or
lockout) is now occurring or threatened nor has any industrial relations or
employment matter been referred by the Companies or Subsidiaries, any of the UK
Company Employee or by any trade union, staff association or any other body
representing employees to ACAS for advice, conciliation or arbitration.

 

(vi)      The
Company and Subsidiaries have not received and do not anticipate receiving any
request for statutory recognition under the Trade Union and Labour Relations
(Consolidation) Act 1992 or any request to negotiate an agreement in respect of
information and consultation under the Information and Consultation of
Employees Regulations 2004.

 

(vii)   The
only bonus, incentive and commission arrangements covering UK Company Employees
are those set forth in Schedule 3.21(a)(vii).

 

(viii)  As of the date of this Agreement, (A) no more
than 20 outstanding offers of employment or consultancy have been made to work
in the Business in the United Kingdom which have not been accepted, and

 

23

 

(B) there
are no more than 20 UK Company Employees working out their notice or who are
receiving or are entitled to receive pay in lieu of notice or on garden leave
(in both cases where the basic annual salary or fees payable to such person by any
Company or any Subsidiary exceeds £25,000).

 

(ix)        As
of the date of this Agreement, no UK Company Employee is subject to a current
disciplinary final written warning and there is no pending, anticipated or
ongoing action under any of the grievance procedures of any Company or any
Subsidiary.

 

(x)           Neither
the Companies nor any Subsidiary is subject to any existing, threatened or
pending claims by present or former UK Company Employees, directors,
consultants or third parties, nor any outstanding orders, awards or rulings in
relation to present, former or prospective UK Company Employees, directors or
consultants, and there are no circumstances which can be reasonably foreseen,
to Seller’s knowledge, as likely to give rise to any such claims or disputes.

 

(b)                                 Except as set forth on
Schedule 3.21(b), (i) without limiting the generality of Section 3.13,
the Companies and each of the Subsidiaries have complied in all material
respects with all Applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and neither the
Companies nor any Subsidiary is liable for any arrears of wages or any taxes or
penalties for failure to comply with any such laws, rules or regulations; (ii) there
are no material controversies pending or, to the knowledge of Seller,
threatened between the Companies or any of the Subsidiaries and any of their
respective employees; (iii) neither the Companies nor any Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to US Company Employees or UK Company Employees, nor are there any
activities or proceedings of any labor union to organize any such employees,
except in the case of either of the foregoing as would not result in a material
liability to either Company; (iv) there are no unfair labor practice
complaints pending or, to the knowledge of Seller, threatened against the
Companies or any Subsidiary before the National Labor Relations Board or
similar body in the UK or any current union representation questions involving US
Company Employees or UK Company Employees; (v) there is no strike
slowdown, work stoppage or lockout existing, or, to the knowledge of
Seller, threatened, by or with respect to any employees of the Companies or any
Subsidiary; (vi) no charges are pending or, to the knowledge of Seller,
threatened before the Equal Employment Opportunity Commission or any state,
local or foreign agency responsible for the prevention of unlawful employment
practices with respect to the Companies or any Subsidiary; (vii) there are
no material claims pending against the Companies or any Subsidiary before any
workers’ compensation board in the US; (viii) neither the Companies nor
any Subsidiary has received notice that any federal, state, local or foreign
agency responsible for the enforcement of labor or

 

24

 

employment laws in the US or UK intends to conduct an investigation of
or relating to the Companies or any Subsidiary and no such investigation is in
progress; and (ix) neither the Companies nor any Subsidiary has received
notice that any foreign agency responsible for the enforcement of labor or
employment laws in jurisdictions other than the US or UK intends to conduct an
investigation of or relating to the Companies or any Subsidiary and no such
investigation is in progress, except in the case of either of the foregoing as
would not result in a material liability to any Company or any Subsidiary.

 

(c)                                  Neither the Companies
nor any Subsidiary have any obligation to provide those Persons who have been
treated as consultants or contractors or have otherwise performed services for
the Companies or any Subsidiary other than in an employment capacity with
benefits under any Plan, nor do the Companies or any Subsidiary have any
obligation to provide such Persons with any life insurance or medical benefits
except as required under applicable law, or any additional compensation,
whether pursuant to a Plan or otherwise.

 

(d)                                 The Companies and each
Subsidiary have properly classified for all purposes (including, without
limitation, for all Tax purposes and for purposes of determining eligibility to
participate in any employee benefit plan) all employees, leased employees,
consultants and independent contractors, and has withheld and paid all
applicable Taxes and made all appropriate filings in connection with services
provided by such persons to the Companies and each Subsidiary.

 

Section 3.22. Tupe
Transferring Employees. Seller warrants that each of Charles River
Laboratories Pre-Clinical Services Edinburgh Limited (“CRL
Pre-Clinical”) and Charles River Laboratories Clinical Services
Limited (“CRL Clinical” and together with CRL
Pre-Clinical, the “TUPE Employers”)
is in material compliance with all applicable legal requirements and terms of
employment, including pursuant to contracts of employment, with respect to the
TUPE Transferring Employees. Prior to and until the Closing Date, each of the
TUPE Employers will comply with the obligations set forth in the preceding
sentence and its obligations under TUPE. Specifically, each of the TUPE
Employers will comply in all material respects with the Information and
Consultation requirements under Regulations 13-16 of TUPE in connection with the
transfer and/or assignment to and/or employment of the TUPE Transferring
Employees by Charles River Laboratories Clinical Services International Limited
and any transfer of such employees to Buyer, as applicable.

 

Section 3.23. Euro. The
computer financial systems that are used or relied on by the Companies or the
Subsidiaries (i) are capable of performing all appropriate functions
necessary to process more than one currency and any common currency adopted by
one or more of the European Union (the “Euro”), (ii) comply
with all legal requirements applicable to the Euro in any jurisdiction,
including the rules on conversion and rounding set out in applicable
European Community regulations, and (iii) are capable of displaying and
printing, and

 

25

 

incorporate in all relevant screen layouts, all symbols and codes
adopted by any government or any other European Union body in relation to the
Euro.

 

Section 3.24. Disclosure.
To the knowledge of Seller, as of the date of this Agreement, the
documents made available to Buyer in the electronic data site relating to the
transactions contemplated hereby do not contain any misstatement of fact that
is material to the Business taken as a whole, taking into account any supplementary,
modifying or otherwise reasonably related information made available to Buyer
in connection with the transactions contemplated hereby; provided
that the foregoing representation shall not apply to (i) any
forward-looking information such as forecasts or projections or (ii) any
item the subject matter of which is addressed by the Disclosure Schedules or
any other provisions of this Agreement.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer
represents and warrants to Seller as of the date hereof and as of the Closing
Date that:

 

Section 4.01. Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of Ohio and
has all corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted.

 

Section 4.02. Corporate Authorization. The execution, delivery and
performance by Buyer of the Transaction Documents and the consummation of the
transactions contemplated hereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement constitutes a valid and binding agreement of Buyer, and
the other Transaction Documents when executed and delivered by Buyer will
constitute, valid and binding agreements of Buyer.

 

Section 4.03. Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby require no material action by or in respect of, or material
filing with, any Governmental Authority other than compliance with any
applicable requirements of the HSR Act and compliance with any applicable
requirements of non-United States Antitrust Laws.

 

Section 4.04. Noncontravention. Except as set forth on Schedule 4.04,
the execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i) violate
the articles of incorporation or regulations of Buyer, (ii) assuming

 

26

 

compliance with the matters referred to in Section 4.03,
violate any Applicable Law, (iii) require any consent or other action by
any Person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of Buyer
or to a loss of any benefit to which Buyer is entitled under any provision of
any agreement or other instrument binding upon Buyer or (iv) result in the
creation or imposition of any material Lien on any asset of Buyer.

 

Section 4.05. Financing. True and correct copies of commitment letters from
UBS Loan Finance LLC and UBS Securities LLC and the related term sheets and
conditions precedent are attached hereto as Schedule 4.05 (all such
documents, the “Commitment Letters”) (such
financing, the “Debt Financing”). The Commitment
Letters have been duly executed by all parties thereto, and are in full force
and effect. As of the date hereof, the Commitment Letters have not been amended
or terminated, and there is no breach existing thereunder. Buyer, as of the
date hereof, does not have knowledge of any existing fact, occurrence or
condition that would cause the commitments provided in such Commitment Letters
to be terminated or ineffective, any of the conditions contained therein not to
be met or the financing contemplated by the Commitment Letters not to be
consummated. Except for the conditions described in the Commitment Letters, there
are no other conditions precedent to the Debt Financing. Buyer has fully paid
any and all commitment or other fees required by the Commitment Letters to be
paid on or before the date hereof. The Debt Financing, when funded in
accordance with, and subject to the terms and conditions of, the Commitment
Letters will provide Buyer with funds which, together with Buyer’s cash on
hand, will be sufficient to pay the Purchase Price and any other amounts to be
paid by it in connection with the transactions contemplated hereby.

 

Section 4.06. Solvency
of the Companies. Immediately after giving effect to the
transactions contemplated by this Agreement (including the financings to be
undertaken in connection therewith), assuming the truth and accuracy of the
representations and warranties set forth in Sections 3.08, 3.09 and 3.10 of
this Agreement, (i) no Company or Subsidiary will have incurred debts
beyond its ability to pay such debts as they mature or become due, (ii) the
then present fair salable value of the assets of each Company and Subsidiary
will exceed the amount that will be required to pay its probable liabilities
(including the probable amount of all contingent liabilities) and its debts as
they become absolute and matured, (iii) the assets of each Company and
Subsidiary, in each case at a fair valuation, will exceed its respective debts
(including the probable amount of all contingent liabilities) and (iv) none
of the Companies or Subsidiaries will have unreasonably small capital to carry
on its business as presently conducted or as proposed to be conducted. No
transfer of property is being made and no obligation is being incurred in
connection with the transactions contemplated by this Agreement with the intent
to hinder, delay or defraud either present or future creditors of any Company
or Subsidiary.

 

27

 

Section 4.07. Purchase for
Investment. Buyer is purchasing the Shares for investment for its
own account and not with a view to, or for sale in connection with, any
distribution thereof. Buyer (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the Shares
and is capable of bearing the economic risks of such investment.

 

Section 4.08. Litigation.
There is no action, suit, investigation or proceeding pending against, or to
the knowledge of Buyer threatened against or affecting, Buyer before any
arbitrator or any Governmental Authority which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement.

 

Section 4.09. Finders’ Fees.
Except for UBS Securities LLC whose fees and expenses will be paid by Buyer,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Buyer who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.

 

Section 4.10. Inspections; No Other
Representations. Buyer has undertaken such investigation and has been
provided with and has evaluated such documents and information as it has deemed
necessary to enable it to make an informed decision with respect to the
execution, delivery and performance of this Agreement. Buyer acknowledges that
Seller has given Buyer access to key employees and documents of the Companies
and the Subsidiaries. Buyer will undertake prior to Closing such further
investigation and request such additional documents and information as it deems
necessary. Buyer acknowledges that Seller makes no representation or warranty
with respect to any information or documents made available to Buyer or its
counsel, accountants or advisors with respect to the Companies, the
Subsidiaries or the Business, except as expressly set forth in this Agreement.

 

ARTICLE 5

COVENANTS OF SELLER

 

Seller agrees that:

 

Section 5.01. Conduct of the Business.
From the date hereof until the Closing Date, except as set forth on Schedule 5.01,
Seller shall cause the Companies and the Subsidiaries to conduct the Business
in the ordinary course consistent with past practice and to use its reasonable
efforts to preserve intact its business organizations and relationships with
third parties and to keep available the services of its present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, except as disclosed

 

28

 

on Schedule 5.01
or as contemplated by any of the Transaction Documents, Seller will not permit
the Companies or any Subsidiaries to:

 

(a)       adopt or propose any change in its
certificate of incorporation or bylaws or other organizational documents;

 

(b)      merge or consolidate with any other Person
or acquire a material amount of assets from any other Person;

 

(c)       sell, lease, license or otherwise dispose
of any material assets or property except (i) pursuant to existing contracts or
commitments or (ii) otherwise in the ordinary course consistent with past
practice;

 

(d)      take any action that would make any representation
or warranty of Seller in Sections 3.06, 3.07 and 3.09 inaccurate in any
material respect at the Closing Date;

 

(e)       amend, modify, extend, renew or terminate
any existing lease in any material respect for the use or occupancy of any real
property, or enter into any new lease, sublease, license or other agreement for
the use or occupancy of any real property;

 

(f)       take any action that would result in a
knowing and material violation of Applicable Law;

 

(g)      knowingly enter into any customer contract
that, if in existence at the date hereof, would be required to be disclosed
pursuant to Section 3.20(c);

 

(h)      with respect to any Tax with respect to
which a Company or Subsidiary files a Separate Return, make or change any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Tax return, enter into any closing agreement, settle
any Tax claim or assessment relating to the Companies or any of the
Subsidiaries, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Companies or any of the Subsidiaries, or take any
other similar action relating to the filing of any Tax return or the payment of
any Tax, if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing the Tax
liability of the Companies or any of the Subsidiaries for any period ending
after the Closing Date; or

 

(i)        agree or commit to do any of the
foregoing.

 

29

 

Section 5.02. Access to Information.
(a) From the date hereof until the Closing Date, Seller will (i) give, and will
cause each Company and each Subsidiary to give, Buyer, its counsel, financial
advisors, auditors and other authorized representatives reasonable access to
the offices, properties, books and records of Seller, each Company and each Subsidiary
relating to the Business, (ii) furnish, and will cause each Company and each
Subsidiary to furnish, to Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information relating to the Business as such Persons may reasonably request and
(iii) instruct the employees, counsel and financial advisors of Seller or any Company
or any Subsidiary to cooperate with Buyer in its investigation of the Business,
including (without limitation) any Phase I environmental investigations
relating to properties used in the Business. Any investigation pursuant to this
Section shall be conducted in such manner as not to interfere unreasonably with
the conduct of the business of Seller or the Business. Notwithstanding the
foregoing, unless required by TUPE, Buyer shall not have access prior to the
Closing Date to personnel records of any Company or any Subsidiary relating to
individual performance or evaluation records, medical histories or other
information which in Seller’s good faith opinion is sensitive or the disclosure
of which could subject any Company or any Subsidiary to risk of liability.

 

(b)           On and after the
Closing Date, Seller will afford promptly to Buyer and its agents reasonable
access to its books of account, financial and other records (including
accountant’s work papers), information, employees and auditors to the extent
necessary or useful for Buyer in connection with any audit, investigation,
dispute or litigation or any other reasonable business purpose relating to the Business;
provided that any such access by
Buyer shall not unreasonably interfere with the conduct of the business of
Seller. Buyer shall bear all of the out-of-pocket costs and expenses (including
attorneys’ fees, but excluding reimbursement for general overhead, salaries and
employee benefits) actually and reasonably incurred in connection with the
foregoing.

 

(c)           Sellers and the
Companies agree to provide such cooperation as may be reasonably requested by
Buyer in timely obtaining the Debt Financings contemplated by the Commitment
Letters, including, without limitation, (A) assisting in the preparation of
offering circulars,  confidential
information memoranda and rating agency presentations with respect to the Debt
Financings, (B) using reasonable efforts to prepare and deliver such financial
and statistical information relating to the Business as may be reasonably
requested in connection with the Debt Financings, (C) making appropriate
employees, accountants and advisors of the Companies available for due
diligence meetings and for participation in meetings with rating agencies and
prospective lenders and investors, (D) providing timely access to diligence
materials and appropriate personnel to allow lenders and their representatives
to complete all reasonably required diligence and (E) providing reasonable assistance
with respect to the

 

30

 

review and granting of security interests in
collateral for the Debt Financings. All reasonable out-of-pocket expenses
incurred by Seller, the Companies or any Subsidiaries in connection with the
foregoing shall be paid or reimbursed promptly following demand therefor, by
Buyer.

 

Section 5.03. Notices of Certain
Events. Seller shall promptly notify Buyer of:

 

(a)       any notice or other communication from
any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;

 

(b)      any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement;

 

(c)       any actions, suits, claims,
investigations or proceedings commenced relating to Seller or any Company or
any Subsidiary that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.12 or Section 3.19; and

 

(d)      any notice from any customer listed on
Schedule 3.20 that, if pending on the date of this Agreement, would have been required
to be disclosed pursuant to Section 3.20.

 

Section 5.04. Resignations.
Seller will deliver to Buyer the resignations of all officers and directors of each
Company and each Subsidiary who will be officers, directors or employees of
Seller or any of its Affiliates (other than the Companies and Subsidiaries) after
the Closing Date from their positions with each such Company or Subsidiary at
or prior to the Closing Date.

 

Section 5.05. Financial Statements. (a)
Seller will use its reasonable efforts to prepare, or cause to be prepared, and
to deliver to Buyer:  (i) as promptly as
practicable, but in no event later than June 15, 2006, the Audited Financial
Statements; and (ii) promptly upon completion, but in any event no later than 40
days after the end of the applicable fiscal quarter, financial statements of
the Business for each fiscal quarter ending on or after June 30, 2006,
consisting of a consolidated balance sheet and related statements of income and
cash flows (the “Quarterly Financial Statements”).

 

(b)           Seller shall also
use its reasonable efforts to prepare, or assist Buyer in causing to be
prepared, as promptly as practicable and at Buyer’s expense, and in any event
no later than 65 days following the Closing Date, any financial statements that
Buyer is required to file pursuant to Rule 3-05 or Article 11 of Regulation S-X
under the 1934 Act.

 

31

 

Section 5.06. Exclusivity. Seller
will not (and will not cause or permit the Companies or any of the Subsidiaries
to) (i) solicit, initiate, or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the assets, of the Companies
or any of the Subsidiaries (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing.

 

Section 5.07. Software Matters. Prior
to the Closing, Seller shall use reasonable efforts to assist Buyer, at Buyer’s
expense, in obtaining any computer software or information systems, including
entering into new or supplemental license agreements to be effective as of the
Closing, as Buyer may reasonably request and in form and substance reasonably
satisfactory to Buyer, to ensure that, after the Closing, the Companies and the
Subsidiaries have full use of all computer software and information systems used
by the Companies and the Subsidiaries prior to the Closing.

 

Section 5.08. Registration. To
the extent that Seller is unable to cause all of the ownership interests held
by Charles River Laboratories, Inc. in each of Charles River Laboratories
Servicos Clinicos Ltda. and Charles River Laboratories Clinical Services
Argentina SRL to be transferred at or prior to Closing to a designee identified
by Buyer, Seller shall take such actions to effectuate such transfers as soon
as practicable after the Closing.

 

Section 5.09. Assignment Of
Confidentiality Agreements. At Closing, Seller shall assign to Buyer
all of Seller’s right, title and interest in and to the confidentiality and
non-disclosure agreements entered into by Seller and Seller’s representatives
with the several parties that expressed interest in acquiring the Business.

 

ARTICLE 6

COVENANTS OF BUYER

 

Buyer agrees that:

 

Section 6.01. Confidentiality.
Prior to the Closing Date and after any termination of this Agreement, Buyer
and its Affiliates will hold, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, pursuant and to the terms of the
Confidentiality Agreement dated as of March 31, 2006, between Buyer and Seller
(the “Confidentiality Agreement”), all
confidential documents and information concerning the Companies, any Subsidiary
or the Business furnished to Buyer or its Affiliates in connection with

 

32

 

the
transactions contemplated by this Agreement. If this Agreement is terminated,
Buyer and its Affiliates will, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to Seller, upon request, all
documents and other materials, and all copies thereof, obtained by Buyer or its
Affiliates or on their behalf from Seller or the Companies or any Subsidiary in
connection with this Agreement that are subject to such confidence to the
extent required by the Confidentiality Agreement. For a period of three years
following the Closing Date, Buyer will cause the Company Employees to keep
confidential and not use or disclose to any third party or to any other
employee of  Buyer or any Affiliate of
Buyer all non-public or proprietary information of Seller or its Affiliates
that is unrelated to the Business and is known by such individuals at the
Closing Date, including any financial, operational or strategic information and
any information regarding potential acquisitions or dispositions outside the
scope of the Business.

 

Section 6.02. Access. Buyer
will cause each Company and Subsidiary, on and after the Closing Date, to
afford promptly to Seller and its agents reasonable access to their properties,
books, records, employees and auditors to the extent necessary to permit Seller
to determine any matter relating to their rights and obligations hereunder or
to any period ending on or before the Closing Date; provided that any such access by Seller shall not
unreasonably interfere with the conduct of the business of Buyer. Seller will
hold, and will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of Applicable Law, all confidential documents and information
concerning the Companies or any Subsidiaries provided to it pursuant to this
Section.

 

Section 6.03. Trademarks; Tradenames.
Buyer shall be permitted to use existing stocks of supplies, advertising and
marketing materials, technical data sheets and any similar materials of the
Business bearing any of the trademarks and tradenames set forth on Schedule 6.03
(the “Seller Trademarks and Tradenames”)
until the earlier of three months after the Closing Date and the date existing
stocks are exhausted; provided that
Buyer complies with all Applicable Laws in any use of all supplies, advertising
and marketing materials, technical data sheets or any other materials of the
Business containing any of the Seller Trademarks and Tradenames. From and after
such date, Buyer shall not use any such materials for any purpose and shall
destroy such supplies, advertising materials, technical data sheets and other
materials of the Business upon Seller’s request. Buyer shall use its reasonable
efforts to cease using the Seller Trademarks and Tradenames on buildings, cars,
trucks and other fixed assets as soon as possible, and in any event, within a
period not to exceed three months after the Closing Date. Except as set forth
in this Section 6.03, after the Closing, Buyer shall not use any of the Seller
Trademarks and Tradenames. As soon as reasonably practicable following the
Closing, Buyer shall change the

 

33

 

name of each
Company and Subsidiary so that it does not include any of the Seller Trademarks
and Tradenames.

 

Section 6.04. Financing Matters. Buyer
shall comply with its obligations under the Commitment Letters and shall use
its reasonable efforts to consummate the Debt Financing on the terms and
conditions described in the Commitment Letters, including using its reasonable
efforts to (i) negotiate definitive agreements with respect to the Debt
Financing on the terms and conditions contained in the Commitment Letters and
(ii) satisfy all conditions to the Debt Financing to the extent the
satisfaction of such conditions is within the control of Buyer. If any portion
of the Debt Financing becomes unavailable on the terms and conditions
contemplated in the Commitment Letters, Buyer will seek in good faith to
arrange to obtain such portion from alternative sources on terms and conditions
that are equivalent or more favorable to Buyer as promptly as practicable. Buyer
will give Seller prompt notice of any material breach by any party of the
Commitment Letters or any termination of the Commitment Letters. To the extent
reasonably requested by Seller, Buyer will keep Seller informed on a current
basis in reasonable detail of the status of its efforts to consummate the Debt
Financing. Buyer will not agree to any material amendment or modification to,
or grant or seek any waiver under, the Commitment Letters without first
consulting with Seller and, if such amendment, modification or waiver would or
would reasonably be expected to adversely affect or delay in any material
respect Buyer’s ability to consummate the Debt Financing or the Closing, receiving
Seller’s prior written consent.

 

ARTICLE 7

COVENANTS OF BUYER AND SELLER

 

Buyer and Seller agree that:

 

Section 7.01. Reasonable Best
Efforts; Further Assurances. (a) Subject to the terms and
conditions of this Agreement, Buyer and Seller will use their respective reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary or desirable under Applicable Law to consummate
the transactions contemplated by this Agreement. Seller and Buyer agree, and
Seller, prior to the Closing, and Buyer, after the Closing, agree to cause each
Company and Subsidiary, to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Agreement.

 

(b)           In furtherance and
not in limitation of the foregoing, each of Buyer and Seller shall make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as

 

34

 

promptly as practicable and, in the case of
such Notification and Report Form pursuant to the HSR Act,  in any event within ten Business Days of the
date hereof. Each of Buyer and Seller shall supply as promptly as practicable
any additional information and documentary material that may be requested
pursuant to the HSR Act and any other Applicable Law, including any non-United
States Antitrust Law, to take all other actions necessary to cause the
expiration or termination of the applicable waiting periods under the HSR Act and
any other Applicable Law, including any non-United States Antitrust Law, as
soon as practicable.

 

(c)           If any objections are
asserted with respect to the transactions contemplated hereby under any
Antitrust Law or if any action, suit or other proceeding is instituted or
threatened by any Governmental Authority or any private party challenging any
of the transactions contemplated hereby as violative of any Antitrust Law,
Buyer and Seller shall use their respective reasonable best efforts promptly to
resolve such objections. Without limiting the generality of the foregoing,
Buyer shall agree to hold separate or to divest any of the businesses or
properties or assets of Buyer or any of its Affiliates (including, following
the Closing, any of the Companies and/or Subsidiaries), as may be required (i)
by the applicable Governmental Authority in order to resolve such objections as
such Governmental Authority may have to such transactions under any Antitrust
Law, or (ii) by any domestic or foreign court or other tribunal, in any action,
suit or other proceeding brought by a private party or Governmental Authority
challenging such transactions as violative of any Antitrust Law, in order to
avoid the entry of, or to effect the dissolution, vacating, lifting, altering
or reversal of, any order that has the effect of restricting, preventing or
prohibiting the consummation of the transactions contemplated by this Agreement;
provided that Buyer shall not be
required to take any action in respect of the foregoing if such action would have
a Material Adverse Effect  in the
aggregate on the Buyer or the Business.

 

(d)           Buyer and Seller shall
use their respective reasonable best efforts to keep the other parties informed
in all material respects with respect to any communication given or received in
connection with any filing, submission, investigation or proceeding relating to
the transactions contemplated hereby.

 

Section 7.02. Certain Filings.
Seller and Buyer shall cooperate with one another (i) in determining whether
any action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.

 

35

 

Section 7.03. Public Announcements.
The content and timing of any initial press release with respect to this
Agreement or the transactions contemplated hereby (whether issued as a joint
press release or as individual press releases by each of Seller and Buyer)
shall be agreed to by each of Seller and Buyer and thereafter Seller and Buyer agree
to consult with each other before issuing any press release or making any
public statement with respect to this Agreement or the transactions
contemplated hereby and, except for any press releases and public announcements
the making of which may be required by Applicable Law or any listing agreement
with any national securities exchange, will not issue any such press release or
make any such public statement prior to such consultation.

 

Section 7.04. Intercompany Accounts. All
intercompany accounts between Seller or its Affiliates, on the one hand, and any
Company or any Subsidiary, on the other hand, as of the Closing shall be
settled (irrespective of the terms of payment of such intercompany accounts) in
the manner provided in this Section. At least five Business Days prior to the
Closing, Seller shall prepare and deliver to Buyer a statement setting out in
reasonable detail the calculation of all such intercompany account balances
based upon the latest available financial information as of such date and, to
the extent requested by Buyer, provide Buyer with supporting documentation to
verify the underlying intercompany charges and transactions. All such
intercompany account balances shall be settled in full on or prior to the
Closing.

 

Section 7.05. Preparation Of Financial
Statements. The parties shall cooperate fully and use reasonable
efforts to cause the condition in Section 10.02(f) to be satisfied, including
providing the auditors selected by Seller to prepare the financial statements
described in Section 5.05(b) all reasonably necessary resources, including
appropriate personnel, to complete such financial statements in a timely
manner.

 

ARTICLE 8

TAX MATTERS

 

Section 8.01. Definitions. The
following terms, as used herein, have the following meanings:

 

“Post-Closing Tax Period”
means any Tax period beginning after the Closing Date; and, with respect to a
Tax period that begins on or before the Closing Date and ends thereafter, the
portion of such Tax period beginning after the Closing Date.

 

“Pre-Closing Tax Period”
means any Tax period ending on or before the Closing Date; and, with respect to
a Tax period that begins on or before the

 

36

 

Closing Date and ends thereafter, the portion
of such Tax period ending on the Closing Date.

 

“Seller Group”
means, with respect to federal income Taxes, the affiliated group of
corporations (as defined in Section 1504(a) of the Code) of which Seller is a
member and, with respect to state, local or foreign income or franchise Taxes,
the consolidated, combined, unitary or other group of which Seller or any of
its Affiliates is a member.

 

“Tax” means (i)
any tax, governmental fee or other like assessment or charge of any kind
whatsoever (including, but not limited to, withholding on amounts paid to or by
any Person), together with any interest, penalty, addition to tax or additional
amount imposed by any governmental authority (domestic or foreign) responsible
for the imposition of any such tax (a “Taxing Authority”)
and (ii) any liability for the payment of any amount of the type described in
the immediately preceding clause (i) as a result of any Company being a member
of an affiliated, consolidated, combined or other group with any other
corporation at any time on or prior to the Closing Date.

 

“Tax Asset”
means any net operating loss, net capital loss, investment tax credit, research
and development tax credit, foreign tax credit, charitable deduction or any
other loss, relief, credit, right to repayment of Tax or Tax attribute that
could be used (including being carried forward or back) to reduce Taxes
(including, without limitation, deductions and credits related to alternative
minimum Taxes) and losses or deductions deferred by the Code or other
applicable law.

 

“Separate Returns”
means, separate Returns required to be filed by any Company or any Subsidiary,
or by any combined, consolidated, affiliated, unitary or other group the
members of which include only the Companies and the Subsidiaries.

 

Section 8.02. Tax Representations. Seller
represents and warrants to Buyer as of the date hereof and as of the Closing
Date that, except as set forth in the Balance Sheet (including the notes
thereto) or on Schedule 8.02, (i) all Tax returns, statements, reports and
forms  that are material and required to
be filed with any Taxing Authority on or before the Closing Date with respect
to any Pre-Closing Tax Period by, or with respect to, any Company or any
Subsidiary (collectively, the “Returns”) have
been, or will be, timely filed on or before the Closing Date; (ii) the
Companies and the Subsidiaries have timely paid, or will timely pay, all Taxes
shown as due and payable on the Returns that have been or will be filed on or
before the Closing Date; (iii) the Returns that have been or will be filed on
or before the Closing Date are true, correct and complete in all material
respects, (iv) the charges, accruals and reserves for Taxes with respect to the
Companies and Subsidiaries reflected on the books of the Companies and its
Subsidiaries (including, but not limited to, the Quarterly Financial
Statements) are

 

37

 

adequate to
cover material Tax liabilities accruing through the end of the last period for
which the Companies and the Subsidiaries ordinarily record items on their
respective books; (v) there is no action, suit, proceeding, investigation,
audit or claim now proposed or pending against or with respect to any Company
or any Subsidiary in respect of any material Tax; (vi) neither the Companies
nor any of the Subsidiaries is a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any “excess parachute payment” within the meaning of Code § 280G
(or any corresponding provision of state, local or foreign Tax law); and (vii)
to Seller’s knowledge, neither the Companies nor any of the Subsidiaries have
any liability for the Taxes of any Person other than the Seller Group or any
other Company or Subsidiary under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign Tax law), as a transferee or
successor, by contract, or otherwise..

 

Section 8.03. Tax Covenants. (a)
For all Pre-Closing Tax Periods, Seller shall include the income of the
Companies and the Subsidiaries (including any deferred items triggered into
income by Treasury Regulations Section 1.1502-13 and any excess loss account
taken into income under Treasury Regulations Section 1.1502-19) in Seller’s
income Tax returns for Pre-Closing Tax Periods filed on a consolidated,
combined or unitary group basis to the extent eligible under Applicable Law and
file such returns and  pay any Taxes
attributable to such income in a timely manner (taking into account any
extensions of a required filing date). For all Pre-Closing Tax Periods, Buyer
shall cause the Companies and the Subsidiaries to join in Seller’s income Tax
returns filed on a consolidated, combined or unitary group basis to the extent
eligible to do so under Applicable Law and, in jurisdictions requiring separate
reporting from any Company or Subsidiary, to file Separate Returns in a timely
manner (taking into account any extensions of a required filing date). All such
Tax returns shall be prepared and filed in a manner consistent with prior
practice, except as required by changes in Applicable Law. Buyer shall cause
the Companies and the Subsidiaries to furnish information to Seller as
reasonably requested by Seller to satisfy its obligations under this Section
and shall submit to Seller each Separate Return with respect to a Pre-Closing
Tax Period of any Company or Subsidiary (together with schedules, statements
and, to the extent requested by Seller, supporting documentation) at least 30
days prior to the due date (including extensions) of any such Separate Return. Seller
shall have the right to review all work papers and procedures used to prepare
any such Separate Return. Buyer shall reflect on such Separate Return all
reasonable comments made by any Seller, to the extent such comments relate to
or affect the Pre-Closing Tax Period. To the extent Seller’s comments are
reflected on such Separate Returns, Seller’s obligation to indemnify Buyer
under Section 8.06 shall be determined without regard to the last provisio of Section
8.06(a). Buyer shall include the Companies and the Subsidiaries in its
consolidated federal income Tax returns for all Post-Closing Tax Periods to the
extent eligible to do so for federal income tax purposes.

 

38

 

(b)           Buyer covenants that,
except as otherwise expressly provided herein or as agreed by Seller in
writing, it will not cause or permit any Affiliate of Buyer, or, effective upon
the Closing, any Company or any Subsidiary (i) to take any action on or after the
Closing Date other than in the ordinary course of business, including but not
limited to the distribution of any dividend or the effectuation of any
redemption, that could give rise to any Tax liability or reduce any Tax Asset
of the Seller Group or give rise to any loss of the Seller or the Seller Group
under this Agreement, (ii) to make any election or deemed election under
Section 338 of the Code or any comparable provision under applicable law, or
(iii) to make or change any Tax election, amend any Return or take any Tax
position on any Return, take any action, omit to take any action or enter into
any transaction, merger or restructuring that results in any increased Tax
liability or reduction of any Tax Asset of any Seller or the Seller Group.

 

(c)           Buyer shall promptly
pay or cause to be paid to Seller all refunds of Taxes and interest thereon
received by Buyer, any Affiliate of Buyer, any Company, or any Subsidiary
attributable to Taxes paid by Seller, any Company or any Subsidiary (or any
predecessor or Affiliate of Seller) with respect to any Pre-Closing Tax Period,
except to the extent that such refund is reflected in the Closing Statement and
taken into account in the determination of Final Working Capital. If, in lieu of
receiving any such refund, any Company or any Subsidiary reduces a Tax
liability with respect to a Post-Closing Tax Period or increases a Tax Asset
that can be carried forward to a Post-Closing Tax Period, Buyer shall promptly
pay or cause to be paid to Seller the amount of such reduction in Tax liability
or the amount of any benefit resulting from such increase in Tax Assets, as the
case may be. The benefit resulting from an increase in a Tax Asset shall be
calculated on the same basis as applicable to Tax Benefits pursuant to Section
8.06.

 

(d)           All transfer,
documentary, sales, use, stamp, registration and other such Taxes and fees
(including any penalties and interest) incurred in connection with transactions
contemplated by this Agreement (including any real property transfer Tax and
any similar Tax but excluding any income Tax and any similar Tax) shall be
borne and paid one half (1⁄2) by Seller and one half (1⁄2) by Buyer, and Buyer
will, at its own expense, file all necessary Returns and other documentation with
respect to all such Taxes and fees, and, if required by applicable law, Seller
will, and will cause its Affiliates to, join in the execution of any such
Returns and other documentation.

 

(e)           Notwithstanding Section
8.06(a), Buyer agrees that Seller is to have no liability for any Tax resulting
from any action, referred to in Section 8.03(b), of any Company or Buyer or any
of its subsidiaries or any Affiliate of Buyer, and agrees to indemnify and hold
harmless Seller and its Affiliates against (i) any such Tax (together with any
interest, penalty, addition to Tax or additional amount), (ii) any Tax or
Damages incurred or suffered by Seller or any of its Affiliates, arising out of
a breach of any other covenant or agreement contained in 

 

39

 

this Article 8, (iii) any Tax imposed on the
Company or any Subsidiary that is not subject to Seller’s indemnification
obligation under Section 8.06(a) and (iv) any liabilities, costs, expenses
(including, without limitation, reasonable expenses of investigation and
attorney’s fees and expenses), losses, damages, assessments, settlements or
judgments arising out of or incident to the imposition, assessment or assertion
of any Tax described in clause (i), (ii) or (iii) above. Seller agrees to give
prompt notice to Buyer of the assertion of any claim, or the commencement of
any action or proceeding, in respect of which indemnity may be sought under
this Section 8.03(e). Buyer may participate in any such suit, action or proceeding
at its own expense and the parties hereto shall cooperate in the defense or
prosecution thereof.

 

(f)            Seller shall file a
timely election under Treasury Regulations Section 1.1502-95(c) and
1.1502-95(f) to allocate a portion of the Seller Group’s Code Section 382
limitation from prior ownership changes to the Companies and the Subsidiaries (“382 Allocation Amount”). Prior to the Closing, Seller and
Buyer shall cooperate in the determination of the 382 Allocation Amount, which
shall be a fair and equitable allocation from the Seller Group to the Companies
and Subsidiaries. At Seller’s request, Buyer shall cause any of the Companies
or Subsidiaries to join with Seller in making any election required under Treasury
Regulations Section 1.1502-95(f).

 

(g)           Buyer shall elect to
waive carry-back to any Pre-Closing Tax Period of a Tax Asset of any Company or
Subsidiary arising in a Post-Closing Tax Period. Notwithstanding the preceding
sentence, with respect to any Tax Asset of any Company or Subsidiary arising in
a Post-Closing Tax Period that is required to be carried back to a Pre-Closing
Tax Period or with respect to which no election to waive carry-back is
possible, Seller shall promptly pay to Buyer the amount of any tax refund (or
reduction in tax liability) resulting from carry-back of such Tax Asset into
the Seller Group consolidated tax return for a Pre-Closing Tax Period, net of
any tax incurred as a result of such refund, when such refund (or reduction) is
received or realized, as the case may be, by the Seller Group.

 

Section 8.04. Tax Sharing. Seller
represents and warrants to Buyer that neither Company nor any Subsidiary is a
party to any Tax sharing agreements or Tax groupings between any Company or any
Subsidiary and any member of the Seller Group. This Agreement shall be the sole
Tax sharing agreement relating to any Company or any Subsidiary for all
Pre-Closing Tax Periods.

 

Section 8.05. Cooperation on Tax
Matters. Buyer and Seller agree to furnish or cause to be furnished
to each other, upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating to each Company
as is reasonably necessary for the filing of any return, for the preparation
for any audit, and for the prosecution or defense of any claim, suit or
proceeding relating to any proposed adjustment. Buyer and Seller agree (i) to
retain or cause to be retained all books and records pertinent to

 

40

 

each Company
and Subsidiary until the applicable period for assessment under applicable law
(giving effect to any and all extensions or waivers) has expired, and to abide
by or cause the abidance with all record retention agreements entered into with
any Taxing Authority and (ii) to give the other party reasonable notice prior
to transferring, discarding or destroying any such books and records relating
to Tax matters and, if the other party so requests, Buyer and Company, or
Seller, as the case may be, shall allow the other party to take possession of
such books and records. Buyer and Seller shall cooperate with each other in the
conduct of any audit or other proceedings involving any Company for any Tax
purposes and each shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this subsection.

 

Section 8.06. Indemnification by
Seller. (a) Seller hereby indemnifies Buyer, its Affiliates and,
effective upon the Closing, any Company or any Subsidiary, against and agrees
to hold them harmless from any (i) Tax of Seller (or any predecessors), any of
its Affiliates (or any predecessors), or any Company or any Subsidiary relating
to a Pre-Closing Tax Period, (ii) any loss or damage actually incurred or
suffered by Buyer or any of its Affiliates and, effective upon the Closing, any
Company or any Subsidiary, arising out of a breach of any covenant or agreement
made or to be performed by Seller pursuant to this Article 8 and (iii) liabilities,
costs, expenses (including, without limitation, reasonable expenses of
investigation and attorneys’ fees and expenses), arising out of or incident to
the imposition, assessment or assertion of any such Tax loss or damage
described in clause (i) and (ii) above, including those incurred in the contest
in good faith in appropriate proceedings relating to the imposition, assessment
or assertion of any such Tax described in clause (i) above, in each case
incurred or suffered by Buyer, any of its Affiliates or, effective upon the
Closing, any Company, or any Subsidiary (the sum of (i), (ii) and (iii) being
referred to as a “Loss”); provided, however, that
Seller shall have no liability for the payment of any Loss attributable to or
resulting from any action described in Section 8.03(b) hereof, including, but
not limited to, an election made or deemed made by Buyer under Section 338 of
the Code or any comparable provision of applicable law; provided,
further, that Seller shall have no
obligation to make any payment pursuant to this Section 8.06 if at the time the
Loss is incurred or suffered by any Company or any Subsidiary, as the case may
be, Buyer no longer owns, directly or indirectly, such Company or such
Subsidiary, as the case may be; and provided, further, that Seller shall be obligated to make payments to
Buyer pursuant to this Section 8.06 only to the extent that the cumulative
amount that would otherwise be payable by Seller pursuant to this Section
8.06(a) (notwithstanding this proviso and the succeeding proviso) exceeds the
aggregate amount of the provisions for Tax liabilities reflected in the Closing
Statement and taken into account in the determination of Final Working Capital;
and provided, further, that the amount of
any Loss determined for purposes of this Section 8.06(a) shall be determined
without regard to any Tax Asset of the Buyer or any of its Affiliates other
than any Company or any Subsidiary attributable to a Pre-Closing

 

41

 

Tax Period; and
provided, further, that Seller shall not
be obligated to make any payment to Buyer pursuant to this Section 8.06(a) in
respect of a Loss arising from any adjustment to Taxes if the amount of such
individual adjustment is less than or equal to $50,000.

 

(b)           For purposes of this
Section 8.06, in the case of any Taxes that are imposed on a periodic basis and
are payable for a Taxable period that includes (but does not end on) the
Closing Date, the portion of such Tax related to the portion of such Taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income, be deemed to be the amount of such Tax
for the entire Taxable period multiplied by a fraction the numerator of which
is the number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable period, and
(y) in the case of any Tax based upon or related to income, be deemed equal to
the amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits, reliefs and rights to repayment of Tax relating to a
Taxable period that begins before and ends after the Closing Date shall be
taken into account as though the relevant Taxable period ended on the Closing
Date. All determinations necessary to give effect to the foregoing allocations
shall be made in a manner consistent with prior practice of the Companies and
the Subsidiaries.

 

(c)           If Seller’s
indemnification obligation under this Section 8.06 arises in respect of an
adjustment which makes allowable to Buyer, any of its Affiliates or, effective
upon the Closing, any Company or any Subsidiary any deduction, amortization,
exclusion from income or other allowance (a “Tax Benefit”)
which would not, but for such adjustment, be allowable, then any payment by Seller
to Buyer shall be an amount equal to (x) the amount otherwise due but for this
subsection (c), minus (y) the present value of the Tax Benefit multiplied by
the maximum federal, state or other as the case may be, corporate Tax rate in
effect at the time the relevant adjustment is made or, in the case of a credit,
by 100 percent. The present value referred to in the preceding sentence shall
be determined using a discount rate equal to the mid-term applicable federal
rate in effect at the time the relevant adjustment is made and assuming that
the Tax Benefit will be used at the earliest date or dates allowable by
applicable law.

 

(d)           Any payment by
Seller pursuant to this Section 8.06 shall be made not later than 30 days after
receipt by Seller of written notice from Buyer stating that any Loss has been
paid by Buyer, any of its Affiliates or, effective upon the Closing, any
Company or any Subsidiary and the amount thereof and of the indemnity payment
requested.

 

(e)           If any audit, claim,
action, demand, litigation or proceeding (including any Tax audit) with respect
of Taxes (a “Tax Claim”) in respect of which
indemnity may be sought pursuant to this Section 8.06 is commenced or asserted
in writing against Buyer, any of its Affiliates or, effective upon the

 

42

 

Closing, any Company or any Subsidiary, Buyer
shall notify Seller of such Tax Claim promptly, and shall give Seller such
information with respect thereto as Seller may reasonably request. Seller may
discharge, at any time, its indemnification obligation under this Section 8.06
by paying to Buyer the amount payable pursuant to this Section 8.06, calculated
on the date of such payment. Whether or not any party hereto chooses to defend
or prosecute any Tax Claim pursuant to this Section 8.06(e), all of the parties
hereto shall cooperate in the defense or prosecution thereof. With respect to
any Tax Claim relating to a Pre-Closing Tax Period, Seller may, at its own
expense, participate in and, upon notice to Buyer, assume the defense of such
Tax Claim; provided, however, Seller shall not,
without Buyer’s consent (which shall not be unreasonably withheld, delayed or
conditioned), agree to any settlement with respect to any Tax Claim if such
settlement could adversely affect the Tax liability of Buyer, any of its
Affiliates or, upon the Closing, the Company or any Subsidiary. If Seller
assumes such defense, Seller shall have the sole discretion as to the conduct
of such defense and Buyer shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by Seller. With respect to any Tax Claim
relating to a tax period beginning prior to the Closing Date and ending after
the Closing Date, Seller may, at its own expense, participate in and, upon
notice to Buyer, assume joint control with the Buyer of the defense of such Tax
Claim.

 

(f)            Seller shall not be
liable under this Section 8.06 for (i) any Tax the payment of which was made
without Seller’s prior written consent, which consent shall not be unreasonably
withheld, or delayed or conditioned, or (ii) any settlements effected without
the consent of Seller, which consent shall not be unreasonably withheld, or
delayed or conditioned, or resulting from any claim, suit, action, litigation
or proceeding with respect to which Seller was not notified pursuant to Section
8.06(e).

 

Section 8.07. Purchase Price
Adjustment and Interest. Any amount paid by Seller or Buyer under Article
8 or Article 11 will be treated as an adjustment to the Purchase Price.

 

Section 8.08. Exclusivity; Survival. The
provisions of this Article 8 shall be the exclusive provisions of this
Agreement with respect to indemnification involving Taxes and none of the provisions
of Article 11 shall apply to a claim for indemnification involving Taxes. Notwithstanding
anything in this Agreement to the contrary, the covenants and agreements
contained in Article 8 shall survive for the full period of all statutes of
limitations (giving effect to any waiver, mitigation or extension thereof).

 

43

 

ARTICLE 9

EMPLOYEE BENEFITS

 

Section 9.01. Transfer of Certain
Employees. (a) All Company Employees will become employees of Buyer
or one of its Affiliates as of the Closing Date, as a result of the
transactions contemplated hereby or pursuant to an offer of employment by
Buyer, as applicable.

 

(b)           Schedule 9.01(b)
sets forth the list of employees who shall be transferred in or out of the Companies
and the Subsidiaries prior to the Closing Date (the “Designated
Employees”). The list set forth in Schedule 9.01(b) may be modified
upon the mutual agreement of Buyer and Seller between the date hereof and the
Closing Date.

 

(c)           Seller agrees to use
commercially reasonable efforts to give effect to the recruitment and hiring efforts
listed in Schedule 5.01, consistent with the current budget for such efforts.

 

Section 9.02. Application Of TUPE And
Related Matters. (a) It is the parties intention that the TUPE
Transferring Employees will be assigned to the Business and become employees of
Charles Rivers Laboratories Clinical Services International Limited on or
before Closing, and Seller undertakes to use its reasonable efforts to effect
such assignment and employment; provided that reasonable efforts shall not
require Seller to make payments to such employees to effect the transfer. In
the event that such employment is not effected, the parties acknowledge and
agree that the sale of the Business will constitute a transfer for the purposes
of TUPE and accordingly any of the contracts of employment of the TUPE
Transferring Employees shall be transferred to the Buyer pursuant to TUPE with
effect from the Closing Date which shall be the time of transfer under TUPE.

 

(b)           From the date hereof
until the Closing Date, Seller shall cause each of the TUPE Employers to use
its reasonable efforts to keep available the services of the TUPE Transferring
Employees. Specifically, Seller shall cause each of the TUPE Employers to
refrain from, without Buyer’s consent which consent shall not be unreasonably
withheld, (i) making any material changes to the terms of employment of the
TUPE Transferring Employees, other than in ordinary course or as set forth in Section
9.02(a) or (ii) terminating, transferring or redeploying any of the TUPE
Transferring Employees, other than for cause or for reasonable business
purposes or as set forth in Section 9.02(a).

 

(c)           Seller shall
indemnify Buyer, on the terms set forth in Article 11, for any action,
proceeding, costs, claim, expenses, demands and liabilities becoming payable or
arising with respect to any of the following:

 

44

 

(i)    the breach of its obligations under this Section
9.02 or its representation in Section 3.22,

 

(ii)   any claim by or on behalf of a TUPE
Transferring Employee arising from his or her employment or termination of
employment prior to the Closing Date, and

 

(iii)  the employment or termination of employment of
any employee other than a TUPE Transferring Employee whose employment is
transferred to Buyer pursuant to TUPE.

 

(d)           Buyer shall assume
responsibility for the performance of all employment-related obligations,
including obligations under TUPE, with respect to the TUPE Transferring
Employees with effect from the Closing Date. Buyer shall indemnify Seller, on
the terms set forth in Article 11, with respect to any and all actions,
proceedings, costs, claims, expenses, demands and liabilities becoming payable
or arising with respect to (i) the employment and termination of employment of
any TUPE Transferring Employee following the Closing Date and (ii) any breach
by Buyer of its obligations under TUPE, following the Closing Date or arising
out of Buyer’s failure to comply with its obligations under Regulation 13(4) of
TUPE.

 

Section 9.03. Comparability of
Benefits. (a) For a period of at least one year following the
Closing Date or as otherwise required by Applicable Law or contract, Buyer
shall, or shall cause the applicable Company to, provide Company Employees:

 

(i)    salary or wage and benefits (specifically
excluding bonuses and other incentive compensation) that are substantially
comparable in the aggregate to those they received immediately prior to the
Closing Date; and

 

(ii)   severance benefits to Company Employees no
less favorable than those provided by Seller, any of its Affiliates, any
Company or any Subsidiary, as applicable to any such Company Employee, immediately
prior to the Closing Date.

 

(b)           Buyer shall provide
bonus opportunities to Company Employees for the year ending December 31, 2006 that
are comparable to the bonus opportunities provided to such Company Employees
immediately prior to the Closing Date.

 

Section 9.04. Service. Each
Company Employee will receive service credit for all periods of employment with
Seller, any of its Affiliates, any Company or any Subsidiary or any predecessor
thereof prior to the Closing for purposes of vesting, eligibility and benefit
levels with respect to vacation, paid

 

45

 

time-off and
severance (including accrual of benefits) with respect to any employee benefits
which such Company Employee receives after the Closing, to the extent that such
service was recognized for purposes of any analogous employee benefits offered
by Seller, any of its Affiliates, any Company or any Subsidiary in effect
immediately prior to the Closing; provided that
no such service credit shall be given if it would result in a duplication of
benefits.

 

Section 9.05. Preexisting Conditions
and Deductibles. Buyer shall cause all pre-existing condition
exclusions under any medical and dental plans made available to Company
Employees to be waived in respect of such employees. Buyer will use its reasonable
efforts to take into account expenses incurred by Company Employees under
Seller’s medical and dental plans during the year that includes the Closing
Date for purposes of satisfying deductible provisions of Buyer’s medical and
dental plans, to the extent applicable, in which Company Employees participate
for such year.

 

Section 9.06. US Defined Contribution
Plan. (a) Effective as of the Closing Date, Seller shall cause the
active participation of US Company Employees in the defined contribution plan in
which such employees participate (the “Seller’s 401(k) Plan”)
to cease as of the Closing Date.

 

(b)           On the Closing Date
or as soon as practicable after the Closing Date, Seller shall (A) cause the
trustee of Seller’s 401(k) Plan to segregate the assets of the plan
representing the full account balances of US Company Employees as of the
Closing Date, (B) make any and all filings and submissions to the appropriate
governmental agencies arising in connection with such segregation of assets and
(C) make all necessary amendments to Seller’s 401(k) Plan and related trust
agreement to provide for such segregation of assets and the transfer of assets
as described below. The manner in which the account balances of US Company
Employees under the Seller’s 401(k) Plan are invested shall not be affected by
such segregation of assets.

 

(c)           As soon as
practicable after the Closing Date, Buyer shall establish or designate an
individual account plan for the benefit of US Company Employees (the “Buyer’s Plan”), shall take all necessary action, if any, to
qualify such plan under the applicable provisions of the Code including without
limitation, Sections 401(a) and 401(k) of the Code, and shall make any and all
filings and submissions to the appropriate governmental agencies required to be
made in connection with the transfer of assets described below. As soon as
practicable following the delivery to Buyer of a favorable determination letter
from the Internal Revenue Service regarding the qualified status of the Buyer’s
Plan, Seller shall cause the trustee of Seller’s 401(k) Plan to transfer in the
form of cash (or such other form as may be agreed between Buyer and Seller) the
aggregate fair market value (as of the transfer date) of the account balances
of US Company Employees under the Seller’s 401(k) Plan as appropriate (the “Transferred Accounts”), to the appropriate trustee as
designated by Buyer

 

46

 

under the trust agreement forming a part of the
Buyer’s Plan. Moreover, with respect to such Transferred Accounts, where
appropriate, Buyer shall cause its plan to preserve all optional forms of
benefit protected under Section 411(d)(6) of the Code and all benefits, rights
and features to the extent required by Treasury Regulation 1.401(a)(4)-4(d)(1).

 

(d)           In consideration for
the transfer of assets described herein, the Buyer’s Plan shall, effective as
of the transfer date, assume and be solely liable for all of the payment
obligations of the Seller’s 401(k) Plan related to the Transferred Accounts,
subject to Seller’s compliance with paragraph (c) of this Section 9.06. Neither
Buyer nor any of its Affiliates shall assume any other obligations or
liabilities arising under or attributable to the Seller’s 401(k) Plan.

 

Section 9.07. UK Retirement Plans. (a)
Buyer shall comply with the requirements of the Pensions Act 2004 and the
Transfer of Employment (Pension Protection) Regulations 2005 in relation to the
provision of retirement benefits for UK Company Employees on and after the
Closing Date.

 

(b)           With respect to each
defined contribution plan and defined benefit plan in which certain UK Company
Employees participate (the “UK Pension Plans”),
as soon as practicable after the Closing Date, and in any event within 3 months
from the Closing Date, subject to the election of the relevant UK Company
Employee, either,

 

(i)        transfer values will be calculated in
respect of the applicable UK Company Employee in accordance with the current
rules of the applicable UK Pension Plan and transferred in accordance with such
rules into an alternative retirement benefits scheme or arrangement;

 

(ii)       Seller shall cause accrued benefits to be
paid in respect of the applicable UK Company Employee and such employee will
become a deferred member of such UK Pension Plan; or

 

(iii)      in the case of UK Company Employees who
have less than 2 years pensionable service in the applicable UK Pension Plan, Seller
shall cause such employee’s contributions will be refunded by Seller to such
employee, after deduction of appropriate tax, as provided for in accordance
with the current rules of such defined contribution plan.

 

(c)       Seller will take all
necessary steps to comply with the election of the UK Company Employees in so
far its controls and directs the “UK Pension Plans”.
Seller will indemnify Buyer for all claims, costs, expenses, damages and
liabilities arising or becoming payable in respect of the UK Pension Plans in
respect of the UK Company Employees with respect to their accrued benefits up
to the Closing Date and underfunding associated with the UK Pension Plans 

 

47

 

consistent with the terms of Article 11,
other than Section 11.01 and clause (ii) of Section 11.02(a).

 

(d)           Buyer undertakes to
Seller that Buyer shall establish, at its election a defined contribution
scheme or arrangement for the benefit of UK Company Employees, or shall admit
such employees into preexisting plans of Buyer, so that each UK Company
Employee can participate in a defined contribution plan.

 

Section 9.08. FUTA; FICA. Subject
to Buyer determining in good faith that it is legally permitted to do so,
Seller and Buyer shall treat Buyer as a “successor employer” and each Seller as
a “predecessor” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the
Code with respect to US Company Employees for purposes of Taxes imposed under
the United States Federal Unemployment Tax Act (“FUTA”)
or the United States Federal Insurance Contributions Act (“FICA”).

 

Section 9.09. Vacation. Buyer
shall, or shall cause the applicable Company to, assume vacation and other paid
time off liabilities accrued but unpaid as of the Closing Date with respect to Company
Employees, and shall, with respect to accrued vacation, honor the terms of
Seller’s vacation policy with respect to such accrued vacation. For the year
ending December 31, 2006, Buyer shall honor the terms of Seller’s vacation
policy for future accrual of benefits. Buyer will permit Company Employees to
carry over accrued vacation consistent with the terms of Buyer’s plans.

 

Section 9.10. Flexible Spending
Reimbursement Accounts. Buyer shall, or shall cause its subsidiaries
to, assume flexible spending reimbursement account balances on behalf of US
Company Employees (with any associated assets). As of the Closing, Buyer shall,
or shall cause its subsidiaries to, establish flexible spending reimbursement
accounts for medical and dependent care expenses under a new or existing plan (“Buyer’s FSA”) for each US Company Employee who, on or prior
to the Closing Date, is a participant in a flexible spending reimbursement
account for medical and dependent care expenses under a US Plan (“Seller’s FSA”) and who elects to participate in Buyer’s FSA.
Subject to Buyer being provided all information reasonably necessary to permit
the administrator of Buyer’s FSA to accommodate the inclusion of the Company
Employees in Buyer’s FSA on the basis described herein, Buyer shall, or cause
each Company to, credit or debit, as applicable, effective as of the Closing
Date, the applicable account of each US Company Employee under Buyer’s FSA with
an amount equal to the balance of each such Company Employee’s account under
Seller’s FSA as of immediately prior to the Closing Date. As soon as
practicable after the Closing Date, each Seller shall pay to Buyer or the
Company the net aggregate amount of the account balances credited under Seller’s
FSA, if such amount is positive, and Buyer shall pay to any such Seller the net
aggregate amount of the account balances credited under Buyer’s FSA, if such
amount is negative.

 

48

 

Section 9.11. Allocation Of Employment
Related Liabilities. (a) Buyer agrees that all liabilities and
obligations that arise out of or relate to the Company Employees to the extent
attributable to the Company Employees’ employment after the Closing Date shall
be the liability of the Buyer, and not the Seller. Buyer shall be responsible
for all workers’ compensation claims related to employment after the Closing
Date by Company Employees under the terms of the workers’ compensation program
of Buyer and its Affiliates, and Seller shall be responsible for all workers’
compensation claims relating to employment on or prior to the Closing Date by Company
Employees that are payable under the terms of the workers’ compensation program
of Seller and its Affiliates. For purposes of the preceding sentence, a claim
shall be deemed to be incurred on the date the event giving rise to the claim
occurs, provided that in the case of a claim where the event giving rise to the
claim occurs over a period both prior to and following the Closing, the claim
shall be allocated in accordance with applicable law; provided,
however, that to the extent that
applicable law does not specify a methodology to allocate any such claim, such
claim shall be the joint responsibility and liability of Seller and Buyer and
shall be equitably apportioned between Seller and Buyer based upon the relevant
periods of time that such event transpired prior to and following the Closing.

 

(b)           Notwithstanding any
other provision of this Agreement to the contrary, Buyer shall be solely
responsible for paying any liabilities that arise under (i) the Retention
Letters referred to on Schedule 3.18(d) and (ii) the Stay Bonus Programs
referred to on Schedule 5.01; provided, however,
the maximum amount of all obligations and liabilities for which Buyer is
responsible under clauses (i) and (ii) above, including all related costs and
expenses, shall not exceed $2,300,000.

 

Section 9.12. Foreign Law Obligations.
Buyer agrees that it will abide by any Applicable Law regarding the
assumption of liabilities or the maintenance or transfer of employee benefits
as it pertains to any Company Employees who are not located in the US.

 

Section 9.13. Employees On Leave. Schedule
9.13 contains a list of each Company Employee who is on short-term disability
leave, long-term disability leave, authorized leave of absence or military
service and has been on such leave for a period of less than two (2) years (“On Leave Employee”) as of the date hereof. Seller shall
update Schedule 9.13 five (5) Business Days prior to the Closing Date. Each On
Leave Employee as of the Closing Date shall remain eligible to participate in US
Plans, UK Plans or International Plans, to the extent such On Leave Employee was
so eligible prior to the Closing Date and as permitted by Applicable Law and
the terms of the plan, until such authorized leave terminates; provided, however, that Buyer shall reimburse Seller for any
costs it incurs in this regard after the Closing Date with respect to such On
Leave Employee, as such Company Employees shall become employees of Buyer or
one of its Affiliates as of the Closing Date as provided in Section 9.01(a); provided,

 

49

 

further,
no On Leave Employee shall have the right to continue employment if such On
Leave Employee fails to return from such leave of absence or military service
within two (2) years of the Closing Date except if otherwise required by
Applicable Law.

 

ARTICLE 10

CONDITIONS TO CLOSING

 

Section 10.01. Conditions to
Obligations of Buyer and Seller. The obligations of Buyer and Seller
to consummate the Closing are subject to the satisfaction of the following
conditions:

 

(a)       Any applicable waiting period under the
HSR Act or any non-United States Antitrust Law relating to the transactions
contemplated hereby shall have expired or been terminated.

 

(b)      No provision of any Applicable Law shall
prohibit the consummation of the Closing.

 

(c)       The consents, waivers and notices with
respect to the agreements set forth on Schedule 10.01(c) shall have been, in
the case of consents and waivers, obtained from, and in the case of notices,
given to the counterparties to such agreements, in each case in form and
substance reasonably satisfactory to Buyer and Seller.

 

Section 10.02. Conditions to
Obligation of Buyer. The obligation of Buyer to consummate the
Closing is subject to the satisfaction of the following further conditions:

 

(a)       (i) Seller shall have performed in all
material respects all of its obligations hereunder required to be performed by
it on or prior to the Closing Date, (ii) the representations and warranties of
Seller contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto (disregarding all materiality and Material
Adverse Effect qualifications therein) shall be true at and as of the Closing
Date, as if made at and as of such date (except for any representation or
warranty made as of a specific date, which representation and warranty shall be
true at and as of such specific date), with only such exceptions as would not
in the aggregate reasonably be expected to have a Material Adverse Effect and (iii)
Buyer shall have received a certificate signed by an appropriate officer of
Seller to the foregoing effect.

 

(b)      Buyer shall have received all documents it
may reasonably request relating to the existence of Seller and the authority of
Seller for this Agreement, all in form and substance satisfactory to Buyer.

 

50

 

(c)       Buyer shall have received the
resignations, effective as of the Closing, of each director of the Companies
and the Subsidiaries who will remain an employee of the Seller or its Affiliates
after the Closing.

 

(d)      Immediately prior to the Closing, Seller
shall have caused Charles River Laboratories Clinical Services International
Ltd. to have become a direct wholly owned subsidiary of CRL Clinical Services
Inc.

 

(e)       The parties shall have entered into a
mutually acceptable agreement providing that for a period of up to five years
following the Closing Date, Buyer will be the preferred outsource provider to
Seller’s Edinburgh, Scotland operations of MDS and other data management services,
provided in each case that (A) such services will be provided only to the
extent required based on the demands therefor by customers of Seller in
relation to specific customer projects, (B) 
the provider of services, which shall be in the Edinburgh region, shall
provide the requisite level of service and expertise for the project in
question in accordance with good industry practices, (C) the prices offered by
the service provider for such services are consistent with commercially
reasonable rates, and (D) such agreement shall be terminable based on customary
breaches and failure to perform, provided such
agreement shall provide for a reasonable cure period for such breaches and
failure.

 

(f)       The financial statements described in
Section 5.05(b) are reasonably likely in Buyer’s reasonable judgment to be
delivered within 60 days following the Closing Date, based upon the information
provided by the auditors preparing such financial statements as to the status
thereof.

 

Section 10.03. Conditions to Obligation
of Seller. The obligation of Seller to consummate the Closing is
subject to the satisfaction of the following further conditions:

 

(a)       (i) Buyer shall have performed in all
material respects all of its obligations hereunder required to be performed by it
at or prior to the Closing Date, (ii) the representations and warranties of
Buyer contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto shall be true in all material respects at
and as of the Closing Date, as if made at and as of such date (except for any
representation or warranty made as of a specific date, which representation and
warranty shall be true at and as of such specific date) and (iii) Seller shall
have received a certificate signed by an appropriate officer of Buyer to the
foregoing effect.

 

(b)      Seller shall have received all documents they
may reasonably request relating to the existence of Buyer and the authority of

 

51

 

Buyer for this Agreement, all in form and
substance reasonably satisfactory to Seller.

 

ARTICLE 11

SURVIVAL; INDEMNIFICATION

 

Section 11.01. Survival. The
representations and warranties of the parties hereto contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive the Closing until the date that is
eighteen months after the Closing Date; provided
that (i) the representations and warranties contained in Sections 3.02
(Corporate Authorization), 3.05 (Capitalization), 3.06 (Ownership of Shares), 3.17
(Finders Fees), 4.02 (Corporate Authorization) and 4.09 (Finders Fees) shall
survive indefinitely or until the latest date permitted by law and (ii) the
representations and warranties set forth in Article 8 (Tax Matters) shall not
survive the Closing. The covenants and agreements of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing
indefinitely or for the shorter period explicitly specified therein, except
that for such covenants and agreements that survive for such shorter period,
breaches thereof shall survive indefinitely or until the latest date permitted
by law. Notwithstanding the preceding sentences, any inaccuracy or breach of
representation, warranty, covenant or agreement in respect of which indemnity
may be sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentences, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.

 

Section 11.02. Indemnification.
(a) Effective at and after the Closing, Seller hereby indemnifies Buyer and its
Affiliates against and agrees to hold each of them harmless from any and all
damage, loss and expense (including reasonable expenses of investigation and
reasonable attorneys’ fees and expenses in connection with any action, suit or
proceeding whether involving a third party claim or a claim solely between the
parties hereto) (“Damages”) actually
suffered by Buyer or any of its Affiliates arising out of any misrepresentation,
inaccuracy or breach of warranty (except representations and warranties
contained in Article 8 of this Agreement) (each such misrepresentation and
breach of warranty a “Warranty Breach”)
or breach of covenant or agreement made or to be performed by Seller pursuant
to this Agreement (except covenants or agreements contained in Article 8 of
this Agreement as to which the provisions of Article 8 shall govern); provided that with respect to
indemnification by Seller for Warranty Breaches pursuant to this Section
11.02(a), (i) Seller shall not be liable unless the aggregate amount of Damages
with respect to such Warranty Breaches exceeds 1% of Purchase Price and then
only to the extent of such excess and (ii) Seller’s maximum liability for all
such Warranty Breaches shall not exceed 20%

 

52

 

of Purchase
Price; and (iii) no individual Warranty Breach (considering separate Warranty
Breaches arising out of the same facts as one individual Warranty Breach for
purposes of this clause (iii)) shall be deemed to have occurred if the actual
Damages incurred as a result thereof are less than $50,000 and no such Warranty
Breach shall be taken into account for purposes of determining whether the
threshold set forth in clause (i) above has been reached . Any such maximum
liability of Seller (as specified in clause (ii)  above) shall not apply to the Seller’s
indemnification of Buyer in respect of Section 9.07 of this Agreement.

 

(b)           Effective at and
after the Closing, Buyer hereby indemnifies Seller and its Affiliates against
and agrees to hold each of them harmless from any and all Damages actually suffered
by Seller or any of its Affiliates arising out of any Warranty Breach or breach
of covenant or agreement made or to be performed by Buyer pursuant to this
Agreement; provided that with respect to
indemnification by Buyer for Warranty Breaches pursuant to this Section
11.02(b), (i) Buyer shall not be liable unless the aggregate amount of Damages
with respect to such Warranty Breaches exceeds 1% of Purchase Price and then
only to the extent of such excess and (ii) Buyer’s maximum liability for all
such Warranty Breaches shall not exceed 20% of Purchase Price; and (iii) no
individual Warranty Breach shall be deemed to have occurred if the actual
Damages incurred as a result thereof are less than $50,000 and no such Warranty
Breach shall be taken into account for purposes of determining whether the
threshold set forth in clause (i) above has been reached..

 

Section 11.03. Procedures.
(a) The party seeking indemnification under Section 11.02 (the “Indemnified Party”) agrees to give prompt
notice to the party against whom indemnity is sought (the “Indemnifying Party”) of the assertion of
any claim, or the commencement of any suit, action or proceeding (“Claim”) in respect of which indemnity may
be sought under such Section and will provide the Indemnifying Party such
information with respect thereto that the Indemnifying Party may reasonably
request. The failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent such
failure shall have materially prejudiced the Indemnifying Party.

 

(b)           The Indemnifying
Party shall be entitled to participate in the defense of any Claim asserted by
any third party (“Third Party Claim”)
and, subject to the limitations set forth in this Section, shall be entitled to
control and appoint lead counsel for such defense, in each case at its expense.

 

(c)           If the Indemnifying
Party shall assume the control of the defense of any Third Party Claim in
accordance with the provisions of this Section 11.03,  (i) the Indemnifying Party shall obtain the
prior written consent of the Indemnified Party (which shall not be unreasonably
withheld) before entering into any settlement of such Third Party Claim, if the
settlement does not release the Indemnified Party from all liabilities and
obligations with respect to such Third Party Claim or the settlement imposes
injunctive or other equitable relief against the Indemnified Party and (ii) the
Indemnified Party shall be entitled to participate in the defense of such Third

 

53

 

Party Claim and to employ separate counsel of
its choice for such purpose. The fees and expenses of such separate counsel
shall be paid by the Indemnified Party.

 

(d)           Each party shall
cooperate, and cause their respective Affiliates to cooperate, in the defense
or prosecution of any Third Party Claim and shall furnish or cause to be
furnished such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials or appeals, as may be reasonably
requested in connection therewith.

 

(e)           Each Indemnified
Party shall mitigate in accordance with Applicable Law any loss for which such
Indemnified Party seeks indemnification under this Agreement. If such
Indemnified Party mitigates its loss after the Indemnifying Party has paid the
Indemnified Party under any indemnification provision of this Agreement in
respect of that loss, the Indemnified Party must notify the Indemnifying Party
and pay to the Indemnifying Party the extent of the value of the benefit to the
Indemnified Party of that mitigation (less the Indemnified Party’s reasonable
costs of mitigation) within two Business Days after the benefit is received.

 

(f)            Each Indemnified
Party shall use reasonable efforts to collect any amounts available under
insurance coverage, or from any other Person alleged to be responsible, for any
Damages payable under Section 11.02.

 

Section 11.04. Calculation of
Damages. (a) The amount of any Damages payable under Section 11.02
by the Indemnifying Party shall be net of any (i) amounts recovered or
recoverable by the Indemnified Party under applicable insurance policies or
from any other Person alleged to be responsible therefor, and (ii) Tax benefit
realized by the Indemnified Party arising from the incurrence or payment of any
such Damages. In computing the amount of any such Tax benefit, the Indemnified
Party shall be deemed to fully utilize, at the highest marginal tax rate then
in effect, all Tax items arising from the incurrence or payment of any
indemnified Damages. If the Indemnified Party receives any amounts under
applicable insurance policies, or from any other Person alleged to be
responsible for any Damages, subsequent to an indemnification payment by the
Indemnifying Party, then such Indemnified Party shall promptly reimburse the
Indemnifying Party for any payment made or expense incurred by such
Indemnifying Party in connection with providing such indemnification payment up
to the amount received by the Indemnified Party, net of any expenses incurred
by such Indemnified Party in collecting such amount.

 

(b)           The Indemnifying
Party shall not be liable under Section 11.02 for any (i) Damages relating to
any matter to the extent that (A) there is reflected in the Closing Statement a
liability or reserve relating to such matter or (B) the 

 

54

 

Indemnified Party is otherwise compensated
for such matter pursuant to the Purchase Price adjustment under Section 2.05, (ii)
indirect, consequential, special or punitive Damages or (iii) Damages for lost
profits.

 

Section 11.05. Assignment of Claims.
If the Indemnified Party receives any payment from an Indemnifying Party in
respect of any Damages pursuant to Section 11.02 and the Indemnified Party
could have recovered all or a part of such Damages from a third party (a “Potential Contributor”) based on the
underlying Claim asserted against the Indemnifying Party, the Indemnified Party
shall assign such of its rights to proceed against the Potential Contributor as
are necessary to permit the Indemnifying Party to recover from the Potential
Contributor the amount of such payment.

 

Section 11.06. Exclusivity.
Except as specifically set forth in this Agreement, effective as of the Closing
Buyer waives any rights and claims Buyer may have against Seller whether in law
or in equity, relating to any Company or any Subsidiary or the Shares or the
transactions contemplated hereby. The rights and claims waived by Buyer include
claims for contribution or other rights of recovery arising out of or relating
to any Environmental Law (whether now or hereinafter in effect), claims for
breach of contract, breach of representation or warranty, negligent misrepresentation
and all other claims for breach of duty. After the Closing, Article 8 and Section
11.02 will provide the exclusive remedy for any misrepresentation, breach of
warranty, covenant or other agreement (other than those contained in Section 2.05)
or other claim arising out of this Agreement or the transactions contemplated
hereby; provided that this Section shall not
apply to claims of fraud.

 

ARTICLE 12

TERMINATION

 

Section 12.01. Grounds for
Termination. This Agreement may be terminated at any time prior to
the Closing:

 

(a)       by mutual written agreement of Seller and
Buyer;

 

(b)      by either Seller or Buyer if the Closing
shall not have been consummated on or before August 31, 2006; or

 

(c)       by either Seller or Buyer if consummation
of the transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any Governmental Authority having competent
jurisdiction.

 

The party
desiring to terminate this Agreement pursuant to clauses 12.01(b) or 12.01(c)
shall give notice of such termination to the other party.

 

55

 

Section 12.02. Effect of Termination.
If this Agreement is terminated as permitted by Section 12.01, such termination
shall be without liability of either party (or any stockholder, director,
officer, employee, agent, consultant or representative of such party) to the
other party to this Agreement; provided
that if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (ii) failure to perform a covenant of this Agreement or (iii) breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all Damages incurred or
suffered by the other party as a result of such failure or breach. The
provisions of Sections 6.01, 13.03, 13.05, 13.06 and 13.07 shall survive any
termination hereof pursuant to Section 12.01.

 

ARTICLE 13

MISCELLANEOUS

 

Section 13.01. Notices. All
notices, requests and other communications to any party hereunder shall be in
writing (including facsimile transmission) and shall be given,

 

if to Buyer, to:

 

Kendle
International Inc.

700 Carew Tower

441 Vine Street

Cincinnati,
Ohio  45202-2816

Attention:                                         Anthony
L. Forcellini

Vice President, Strategic Development & Treasurer

Facsimile
No.:  (513) 763-7762

 

with a copy to:

 

Keating Muething
& Klekamp PLL

One East Fourth
Street

Suite 1400

Cincinnati,
Ohio  45202

Attention:                                         Edward
E. Steiner, Esq.

Facsimile
No.:  (513) 579-6578

 

if to Seller, to:

 

Charles River Laboratories International,
Inc.

251 Ballardvale Street

Wilmington, MA  01887

Attention: Jody Acford, General Counsel

Facsimile No.: (978) 988-5665

 

56

 

with a copy to:

 

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York  10017

Attention: Paul R. Kingsley

Facsimile No.: (212) 450-3800

 

or such other
address or facsimile number as such party may hereafter specify for the purpose
by notice to the other parties hereto. All such 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.

 

Section 13.02. Amendments and
Waivers. (a) Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed,
in the case of an amendment, by each party to this Agreement, or in the case of
a waiver, by the party against whom the waiver is to be effective.

 

(b)           No failure or delay
by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.

 

Section 13.03. Expenses. Except
as otherwise expressly provided herein, all costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.

 

Section 13.04. Successors and
Assigns. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of each other party hereto; provided, however, that notwithstanding the foregoing, Buyer
and Company may pledge or assign this Agreement and the benefits hereunder to
the lenders in connection with the Financings.

 

Section 13.05. Governing Law.
This Agreement shall be governed by and construed in accordance with the law of
the State of Delaware, without regard to the conflicts of law rules of such
state.

 

Section 13.06. Jurisdiction.
The parties hereto agree that any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising

 

57

 

out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought
in the United States District Court for the District of Delaware or any Delaware
State court, so long as one of such courts shall have subject matter
jurisdiction over such suit, action or proceeding, and that any cause of action
arising out of this Agreement shall be deemed to have arisen from a transaction
of business in the State of Delaware, and each of the parties hereby
irrevocably consents to the 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 that
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 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 13.01 shall be deemed effective
service of process on such party.

 

Section 13.07. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 13.08. Counterparts; Effectiveness;
Third Party Beneficiaries. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto. Until and unless each
party has received a counterpart hereof signed by the other party hereto, this
Agreement shall have no effect and no party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication). No provision of this Agreement is intended to confer any
rights, benefits, remedies, obligations, or liabilities hereunder upon any
Person other than the parties hereto and their respective successors and
assigns.

 

Section 13.09. Entire Agreement.
This Agreement and the other Transaction Documents constitute the entire
agreement between the parties with respect to the subject matter of hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.

 

Section 13.10. Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other Governmental Authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in

 

58

 

full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a determination,
the parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.

 

Section 13.11. Disclosure Schedules.
Seller has set forth information on the Disclosure Schedule in a section
thereof that corresponds to the section of this Agreement to which it relates.
A matter set forth in one section of a Schedule need not be set forth in any
other section so long as its relevance to such other section of the Schedule or
section of the Agreement is reasonably apparent on the face of the information
disclosed therein to the Person to which such disclosure is being made. The
parties acknowledge and agree that (a) the Schedules to this Agreement may
include certain items and information solely for informational purposes for the
convenience of Buyer and (b) the disclosure by any Seller of any matter in the
Schedules shall not be deemed to constitute an acknowledgment by such Seller
that the matter is required to be disclosed by the terms of this Agreement or
that the matter is material.

 

59

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

 

 

	
   

  	
  KENDLE INTERNATIONAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Karl Brenkert III

  	
   

  
	
   

  	
  Name:

  	
  Karl Brenkert III

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President -

  Chief Financial Officer and

  Secretary

  
						

 

 

	
   

  	
  CHARLES RIVER LABORATORIES

  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ James C. Foster

  	
   

  
	
   

  	
  Name:

  	
  James C. Foster

  
	
   

  	
   

  	
  Title:

  	
  Chairman, President and

  Chief Executive Officer

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