THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY
NOT BE OFFERED, SOLD, OR TRANSFERRED EXCEPT IN COMPLIANCE
THEREWITH.
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED
TO ALL SENIOR INDEBTEDNESS (AS DEFINED HEREIN).
XXXXXXX RIVER LABORATORIES HOLDINGS, INC.
Subordinated Discount Note Due 2010
Xxxxxxx River Laboratories Holdings, Inc., a Delaware corporation
(together with its successors, transferees and assigns, the
"Issuer"), for value received hereby promises to pay, subject to
the terms and conditions set forth herein, to B&L CRL, Inc., a
Delaware corporation (together with its successors, transferees
and assigns, the "Holder"), the principal sum of ONE HUNDRED
SEVENTY FIVE MILLION, TWO HUNDRED AND EIGHTY-FIVE THOUSAND, THREE
HUNDRED AND FORTY SIX dollars ($175,285,346) by wire transfer of
immediately available funds to the Holder's account (the "Bank
Account") at a bank in the United States specified by the Holder
from time to time, on September 29, 2010, (the "Payment Date") in
such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public
and private debts.
This Note is referred to as the Recap Co Sub Note in the
Recapitalization Agreement dated as of July 25, 1999 among Bausch
& Lomb Incorporated, the Issuer, Xxxxxxx River Laboratories,
Inc., the Xxxxxx, Xxxxxxx River SPAFAS, Inc., Bausch & Lomb
International, Inc., Wilmington Partners, L.P., Bausch & Lomb
Canada, Inc., CRL Acquisition LLC and DLJ Merchant Banking
Partners II, L.P.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Terms Defined. (a) The following terms for
all purposes of this Note shall have the respective meanings
specified below.
"Accreted Value" means, as of any date of determination prior to
the Payment Date, the sum of (a) the Original Issue Price and (b)
the portion of the excess of the principal amount of this Note
over the Original Issue Price which shall have been accreted
thereon through the preceding September 29, such amount to be so
accreted at the rate of 12% per annum of the Original Issue Price
prior to September 29, 2004 and thereafter at the rate of 15% per
annum of the Original Issue Price, compounded annually from the
date hereof, provided that in the event of an actual Default or
Redemption the amount referred to in (b) shall be calculated by
including accretion to the actual date of determination, using a
year of 360 days. Exhibit A hereto sets forth a schedule of
Accreted Values as of each September 29 through and including the
Payment Date.
"Adverse Person" means any individual or entity whom the Board of
Directors of the Issuer reasonably determines is a competitor or
potential competitor of the Issuer or its subsidiaries in a
business that is material to the Issuer and its subsidiaries,
taken as a whole.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in the City of New York are
authorized by law to close.
"Capitalized Lease Liabilities" means, without duplication, all
monetary obligations at any time outstanding of the Issuer or any
of its Subsidiaries under any leasing or similar arrangement that
are required to be capitalized for financial reporting purposes
in accordance with GAAP, and, for purposes of this Note the
amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last scheduled payment
of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Common Stock" shall mean the common stock, par value $0.01 per
share, of the Issuer.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment,
to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or
both would, unless cured or waived, become an Event of Default.
"DLJMB" means DLJ Merchant Banking II, Inc.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements,
and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency
exchange rates.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money (excluding
purchase money and similar borrowings) and all obligations of
such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn,
banker's acceptances and similar instruments issued for the
account of such Person;
(c) net liabilities of such Person under all Hedging Obligations;
and
(d) all Contingent Liabilities of such Person in respect of any
of the foregoing.
For all purposes of this Note, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint
venture in which such person is a general partner or a joint
venturer (to the extent such Person is liable for such
Indebtedness whether by contract or otherwise).
"Investors' Agreement" means the Investors' Agreement dated as of
September 29,1999 among the Issuer and the several Stockholders
from time to time parties thereto.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property,
or any filing or recording of any instrument or document in
respect of the foregoing, to secure payment of a debt or
performance of an obligation or any other priority or
preferential treatment of any kind or nature whatsoever that has
the practical effect of creating a security interest in property.
"Net Income" means, for any period, the net income (loss) of the
Issuer and its Subsidiaries for such period on a consolidated
basis, excluding extraordinary gains, as determined in accordance
with GAAP.
"Operating Lease Liabilities" means, without duplication, all
monetary obligations at any time outstanding of the Issuer or any
of its Subsidiaries under any leasing or similar arrangement that
are not required to be capitalized for financial reporting
purposes in accordance with GAAP, and, for purposes of this Note
the amount of such obligations shall be the capitalized amount
thereof, determined pursuant to GAAP as it applies to Capitalized
Lease Liabilities, and the stated maturity thereof shall be the
date of the last scheduled payment of rent or any other amount
due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a
penalty.
"Original Issue Price" means $43,000,000.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Restricted Payment" means (i) any dividend or other distribution
on any shares of the Issuer's capital stock (except dividends
payable solely in shares of its capital stock other than
mandatorily redeemable preferred stock) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of
(a) any shares of the Issuer's capital stock or (b) any option,
warrant or other right to acquire shares of the Issuer's capital
stock (but not including payments of principal, premium (if any)
or interest made pursuant to the terms of convertible debt
securities prior to conversion).
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" means all Indebtedness of the Issuer or any
of its Subsidiaries (other than this Note) outstanding on the
date of execution of this instrument or created, incurred or
assumed thereafter (except any such Indebtedness that by the
terms of the instrument or instruments by which such Indebtedness
was created or incurred expressly provides that it (i) is junior
in right of payment to this Note or (ii) ranks pari passu in
right of payment with this Note) and any amendments,
modifications or supplements to, or any renewals, extensions,
deferrals, refinancings and refundings of, any of the foregoing.
"Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by
the Issuer.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
Acceptance Notice 6.02
Acceptance Period 6.02
Bank Account Preamble
Change of Control 4.02
DLJ Entities 4.02
Event of Default 2.01
Holder Preamble
Issuer Preamble
Offer Notice 6.02
Redemption Notice 4.02
Subordinated Obligations 5.01
Third Party Sale 6.02
ARTICLE 2
DEFAULT
SECTION 2.01. Events of Default Defined; Acceleration of
Maturity. In case one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Issuer shall fail to pay the principal amount of this
Note within 10 days of the due date thereof;
(b) the Issuer shall fail to observe the covenant under Section
3.02 hereof and such failure shall remain unremedied for a period
of 30 days after the Issuer shall have received notice of such
failure from the Holder;
(c) the Issuer shall permit or suffer to exist the entrance of a
decree or order for relief, entered by a court of competent
jurisdiction, in respect of the Issuer in an involuntary case
under any applicable bankruptcy, insolvency or other similar law
relating to or affecting creditors' rights generally now or
hereafter in effect, or appointing a receiver, liquidator,
custodian, trustee, sequestrator (or similar official) of the
Issuer or for any substantial part of the property of the Issuer
or ordering the winding up or liquidation of the affairs of the
Issuer and such decree or order shall remain unstayed and in
effect for a period of 60 days;
or
(d) the Issuer shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law relating
to or affecting creditors' rights generally now or hereafter in
effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the
appointment or taking possession by a receiver, liquidator,
custodian, trustee, sequestrator (or similar official) of the
Issuer or for any substantial part of the property of the Issuer
or the Issuer shall make any general assignment for the benefit
of creditors;
then, subject to Article 5 hereof, the Holder may, in each and
every such case, by notice to the Issuer declare the principal
amount of this Note, determined as set forth below, to be, and
such principal amount shall thereupon become, immediately due and
payable. The principal amount so due and payable shall be deemed
for this purpose to be equal to the Accreted Value on the date
such declaration is made.
SECTION 2.02. Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default. No right or remedy herein conferred upon
or reserved to the Holder is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Holder to exercise any right or power
accruing upon any Default or Event of Default occurring and
continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Default or Event of
Default or an acquiescence therein; and every power and remedy
given by this Note or by law may be exercised from time to time,
and as often as shall be deemed expedient, by the Holder.
Any term or provision of this Note (including this Section 2.02)
to the contrary notwithstanding, the Holder shall have no right
(directly or indirectly) to exercise, nor shall the Holder in
fact exercise (directly or indirectly), any rights or remedies
against the Issuer, any of its Subsidiaries or any of their
respective assets in respect of any breach hereunder or
otherwise, nor shall the Holder commence (directly or indirectly)
any litigation, action or other proceeding against any of the
foregoing in respect of any breach hereunder or otherwise, unless
(but only unless) an Event of Default has occurred and is
continuing, and, in such event, the exercise of any such right or
remedy shall be subject to Article 5 hereof.
SECTION 2.03. Waiver of Past Defaults. The Holder may, but has no
obligation to, waive in writing, any past Default hereunder and
its consequences. In the case of any such waiver, the Issuer and
the Holder shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any
Default arising therefrom shall be deemed to have been cured, and
not to have occurred for every purpose of the Note; but no such
waiver shall extend to any subsequent or other Default or impair
any right consequent thereon.
ARTICLE 3
COVENANTS
The Issuer agrees that, so long as any amount payable under this
Note remains unpaid:
SECTION 3.01. Information. The Issuer shall deliver to the
Holder:
(a) within five days after any officer of the Issuer obtains
actual knowledge of any Default, a certificate of the chief
financial officer or the chief accounting officer of the Issuer
setting forth the details thereof and the action which the Issuer
is taking or proposes to take with respect thereto;
(b) as soon as available and in any event within 60 days after
the end of each of the first three fiscal quarters of each fiscal
year of the Issuer (or, if the Issuer or any of its Subsidiaries
is required to file such information on a Form 10-Q with the SEC,
promptly following such filing), a consolidated balance sheet of
the Issuer and its Subsidiaries as of the end of such fiscal
quarter, together with the related consolidated statement of
profit and loss and cash flow of the Issuer and its Subsidiaries
for such fiscal quarter and for the period commencing at the end
of the previous fiscal year and ending with the end of the fiscal
quarter (it being understood that the foregoing requirement may
be satisfied by delivery of the Issuer's report to the SEC on
Form 10-Q, if any), certified by the chief financial officer of
the Issuer, and a copy of a Form 10-Q, if any, for such period
that is filed with the SEC by any of the Issuer's Subsidiaries;
and
(c) as soon as available and in any event within 90 days after
the end of each fiscal year of the Issuer (or, if the Issuer or
any of its Subsidiaries is required to file such information on
Form 10-K with the SEC, promptly following such filing), a copy
of the annual audit report for such fiscal year for the Issuer
and its Subsidiaries including therein a consolidated balance
sheet for the Issuer and its Subsidiaries as of the end of such
fiscal year, together with the related consolidated statement of
profit and loss and cash flow of the Issuer and its Subsidiaries
for such fiscal year (it being understood that the foregoing
requirement may be satisfied by delivery of the Issuer's report
to the SEC on Form 10-K, if any), in each case certified (without
qualification) by the Issuer's independent public accountants,
and a copy of a Form 10-K, if any, for such period that is filed
with the SEC by any of the Issuer's Subsidiaries.
SECTION 3.02. Restriction on Certain Payments. The Issuer shall
not declare or make a Restricted Payment, except that the Issuer
may declare or make at any time (a) any Restricted Payment
consisting of a repurchase of the Issuer's capital stock or of
any then currently exercisable option, warrant or other
obligation to acquire shares of the Issuer's capital stock from
any director, officer or employee of the Issuer or any of its
subsidiaries upon the death, disability, retirement or other
termination of employment of any such person, (b) any Restricted
Payment if at such time such Restricted Payment is permitted to
be made under any instrument governing debt for borrowed money of
the Issuer or any guaranty by the Issuer of any other Person's
debt for borrowed money then outstanding (or if a restricted
payment is permitted to be made under any instrument governing
debt for borrowed money of any subsidiary of the Issuer then
outstanding) and (c) any other Restricted Payment if, after
giving effect thereto, the aggregate amount of Restricted
Payments made by the Issuer in reliance on this clause (c) does
not exceed the sum, without duplication of:
(i) 50% of the Consolidated Net Income of the Issuer for the
period (taken as one accounting period) commencing June 27, 1999
to the end of the Issuer's most recently ended fiscal quarter for
which internal financial statements are available at the time of
that Restricted Payment (or, if Consolidated Net Income for that
period is a deficit, less 100% of the deficit); plus
(ii) 100% of the Qualified Proceeds received by the Issuer on or
after the date hereof from contributions to the Issuer's capital
or from the issue or sale on or after the date hereof of Equity
Interests of the Issuer or of Disqualified Stock or convertible
debt securities of the Issuer to the extent that they have been
converted into those Equity Interests, other than
Equity Interests, Disqualified Stock or convertible debt
securities sold to a Subsidiary of the Issuer and
Disqualified Stock or convertible debt securities that have
been converted into Disqualified Stock; plus
(iii) $25 million.
The terms, "Consolidated Net Income," "Qualified Proceeds,"
"Equity Interests," "Disqualified Stock" and "Subsidiary" used in
this Section 3.02 each have the meanings given them in the
Indenture relating to the Senior Subordinated Notes due 2009 of
Xxxxxxx River Laboratories, Inc., as in effect on the date
hereof. Exclusively for purposes of the foregoing clauses (i),
(ii) and (iii) of this Section 3.02(c) (and not for purposes of
any other part of Section 3.02 or this Note), references to the
"Issuer" shall mean the Issuer together with Xxxxxxx River
Laboratories, Inc., and the Subsidiaries of Xxxxxxx River
Laboratories, Inc.
ARTICLE 4
REDEMPTION
SECTION 4.01. Redemption at Issuer's Option. (a) The Issuer at
its option may, upon twenty Business Days' written notice to the
Holder, at any time redeem all of this Note at a price equal to
the Accreted Value on the date of redemption.
(b) The notice shall state: (i) the redemption date, which shall
be a date not more than thirty Business Days after the date of
the notice of redemption; (ii) the redemption price; and (iii)
the place or places where the Note is to be surrendered for
payment of the redemption price, which may be at either the
principal place of business of the Issuer or a location in the
City of New York, State of New York.
(c) Notice having been mailed as aforesaid, from and after the
redemption date (provided that the Issuer shall have tendered the
redemption price against delivery of the Note), interest on the
Note shall cease to accrue, and all rights of the Holder (except
the right to receive from the Issuer the redemption price) shall
cease. Upon surrender of the Note in accordance with said notice
(properly endorsed or assigned for transfer, if the Board of
Directors of the Issuer shall so require and the notice shall so
state), the Note shall be redeemed by the Issuer at the aforesaid
redemption price.
SECTION 4.02. Redemption upon Change of Control. (a) If there
shall occur a Change in Control (as defined below), the Holder
shall have the right, at its option, to require the Issuer to
redeem, and upon the exercise of such right the Issuer shall
redeem, the Note at a price equal to the Accreted Value thereof
on the date of redemption. Such right of the Holder shall (i) be
subordinated and junior in right of payment to the prior payment
in full in cash of all Senior Indebtedness, the holders of which
have (and exercise) the right to receive such payment either
prior to or in connection with such Change of Control, and (ii)
except as set forth in the preceding clause (i), not be subject
to Article 5 hereof. For purposes of this Section 4.02, "Change
of Control" means (i) a "person" or "group" (within the meaning
of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended), other than the DLJ Entities (as defined in the
Investors' Agreement), (A) becoming the beneficial owner, by way
of merger, consolidation or otherwise, of 51% or more of the
voting power of all classes of voting securities of the Issuer or
(B) acquiring the right to elect a majority of the Board of
Directors of the Issuer, or (ii) the sale or transfer of all or
substantially all of the assets of the Issuer and its
subsidiaries taken as a whole (other than to one or more directly
or indirectly wholly-owned subsidiaries of the Issuer).
(b) On or before the tenth day after the occurrence of any Change
of Control, the Issuer shall send the Holder a notice (a
"Redemption Notice") advising the Holder of its rights hereunder
and specifying the date, not less than 20 nor more than 60 days
after the date such notice is delivered to the Holder, on which
the Issuer proposes to redeem the Note if the Holder requests
redemption pursuant to Section 4.02; provided that no failure of
the Issuer to give such notice shall limit the rights of the
Holder hereunder. If the Holder wishes to exercise its rights
hereunder it shall deliver to the Issuer, on or before the
fifteenth day after receipt of the Redemption Notice, written
notice (which shall be irrevocable) of the exercise of such
right.
(c) From and after the redemption date set forth in the
Redemption Notice (provided that the Issuer shall have tendered
the redemption price against delivery of the Note), interest on
the Note shall cease to accrue, and all rights of the Holder with
respect to the Note (except the right to receive from the Issuer
the redemption price) shall cease. Upon surrender in accordance
with said notice of the Note (properly endorsed or assigned for
transfer, if the Board of Directors of the Issuer shall so
require and the Redemption Notice shall so state), the Note shall
be redeemed by the Issuer at the aforesaid redemption price.
ARTICLE 5
SUBORDINATION
SECTION 5.01. Note Subordinated to Senior Indebtedness. The
Issuer covenants and agrees and the Holder, by its acceptance
hereof, likewise covenants and agrees, in each case
notwithstanding any other provisions of this Note or any other
agreement, document or instrument (it being the express agreement
of the Holder that the provisions of this Article 5 shall govern
in the event of any conflicting terms or provisions herein or
otherwise), that the Note shall be subject to the provisions of
this Article 5; and each person holding the Note, whether upon
original issue or upon transfer, assignment or exchange thereof
accepts and agrees that the payment of the principal of, or any
other amounts or obligations (monetary or otherwise) on, under or
in respect of the Note by or on behalf of the Issuer
(collectively, the "Subordinated Obligations") shall, to the
extent and in the manner herein set forth, be subordinated and
junior in right of payment, to the prior payment in full in cash
of all Senior Indebtedness.
SECTION 5.02. No Payment on Note So Long As Senior Indebtedness
Remains Outstanding. (a) No payment shall be made by or on behalf
of the Issuer with respect to all or any portion of the
Subordinated Obligations, nor may the Issuer directly or
indirectly acquire the Note or Subordinated Obligations for cash,
property, securities or otherwise, so long as any obligations on,
under or in respect of any Senior Indebtedness (or any commitment
to extend Senior Indebtedness) remain outstanding.
(b) In the event that any payment shall be received by the Holder
when such payment is prohibited by Section 5.02(a), such payment
shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under
any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear,
in the form in which received (except for any necessary
endorsements).
SECTION 5.03. Payment over of Proceeds upon Dissolution, etc. (a)
Upon any payment or distribution of cash, securities or other
assets, of the Issuer of any kind or character, whether in cash,
property, securities or otherwise, to creditors upon any
dissolution or winding-up or total or partial liquidation or
reorganization of the Issuer, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall
first be paid in full in cash, before any payment is made on
account of any Subordinated Obligations or to acquire the Note
for cash or property. Upon any such dissolution, winding-up,
liquidation or reorganization, any payment or distribution of
assets of the Issuer of any kind or character, whether in cash,
property or securities, to which the Holder would be entitled,
except for the provisions hereof, shall be paid by the Issuer or
by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, or by
the Holder if received by it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders)
or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid
in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders
of Senior Indebtedness.
(b) In the event that any payment or distribution of assets of
the Issuer of any kind or character, whether in cash, property or
securities, shall be received by the Holder when such payment or
distribution is prohibited by Section 5.03(a), such payment or
distribution shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness
(pro rata to such holders on the basis of the respective amount
of Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, in
the form in which received (except for any necessary
endorsements), for application to the payment of Senior
Indebtedness remaining unpaid until all such Senior Indebtedness
has been paid in full in cash, after giving effect to any
concurrent payment, distribution or provision therefor to or for
the holders of such Senior Indebtedness.
SECTION 5.04. Limitation on Remedies. So long as any obligations
on, under or in respect of any Senior Indebtedness (or any
commitment to extend Senior Indebtedness) remain outstanding, the
Holder may not declare, or join in the declaration of, any
Subordinated Obligations to be due and payable prior to the
maturity thereof or otherwise accelerate the maturity of the
principal of the Note or other amounts due on, under or in
respect thereof. At no time may the Holder commence any
administrative, legal or equitable action against the Issuer, any
of its Subsidiaries or any of their respective properties in
respect of the foregoing or in order to collect any amount
payable with respect to this Note upon maturity, including
filing, or joining in the filing of, any bankruptcy or insolvency
petition against the Issuer, provided that the Holder may file a
proof of claim in any such proceeding so long as such proof of
claim acknowledges the subordination of the Note on the terms set
forth herein.
SECTION 5.05. Subrogation. Upon, and subject to, the payment in
full in cash of all principal of, interest on and other amounts
and obligations on, under or in respect of Senior Indebtedness,
the Holder shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Issuer applicable to the Senior
Indebtedness until all such principal and other amounts and
obligations on the Note shall be paid in full in cash; and, for
the purposes of such subrogation, (a) no payments or
distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be
entitled except for the provisions of this Article 5, and no
payment over pursuant to the provisions of this Article 5 to the
holders of Senior Indebtedness by the Holder shall, as between
the Issuer, its creditors other than holders of Senior
Indebtedness, and the Holder, be deemed to be a payment by the
Issuer to or on account of principal of, interest on and other
amounts and obligations owing on, under or in respect of Senior
Indebtedness, and (b) no payment or distributions of cash,
property or securities to or for the benefit of the Holder
pursuant to this Section 5.05, which would otherwise have been
paid to the holders of Senior Indebtedness shall be deemed to be
a payment by the Issuer to or for the account of the Note.
If any payment or distribution to which the Holder would
otherwise have been entitled but for the provisions of this
Article 5 shall have been applied, pursuant to the provisions of
this Article 5, to the payment of all amounts payable under or in
respect of Senior Indebtedness, then and in such case, the Holder
shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions actually received by
such holders of Senior Indebtedness in excess of the amount
required to make payment in full in cash of such Senior
Indebtedness.
SECTION 5.06. Obligations of Issuer Unconditional. It is
understood that the provisions of this Article 5 are intended
solely for the purpose of defining the relative rights of the
Holder, on the one hand, and the holders of the Senior
Indebtedness, on the other hand. Nothing contained in Article 5
or elsewhere in this Note is intended to or shall impair, as
between the Issuer and the Holder, the obligation of the Issuer,
which is absolute and unconditional, to pay to the Holder the
principal amount of this Note as and when the same shall become
due and payable in accordance with its terms, or is intended to
or shall affect the relative rights of the Holder and creditors
of the Issuer other than the holders of the Senior Indebtedness,
nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under
this Note, subject to the rights, if any, under Article 5 of the
holders of the Senior Indebtedness in respect of cash, property
or securities of the Issuer received upon the exercise of any
such remedy.
SECTION 5.07. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of
the Issuer referred to in Article 5, the Holder shall be entitled
to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings (as to which the
holders of Senior Indebtedness are, or had the opportunity to
become, parties) are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Holder, for
the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to Article 5 of this Note.
SECTION 5.08. Subordination Rights Not Impaired by Acts or
Omissions of the Issuer or holders of Senior Indebtedness. No
right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein will at any time in
any way be prejudiced or impaired by any act or failure to act on
the part of the Issuer or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Issuer
with the terms of this Note, regardless of any knowledge thereof
which any such holder may have or otherwise be charged with. The
holders of Senior Indebtedness may extend, renew, amend, amend
and restate, supplement or otherwise modify the terms of the
Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Issuer,
all without affecting the liabilities and obligations of the
Holder.
ARTICLE 6
LIMITATIONS ON TRANSFERS
SECTION 6.01. No Transfer to Adverse Person. Neither this Note
nor any interest therein shall be transferrable to an Adverse
Person.
SECTION 6.02. Right of First Refusal. (a) The Holder may transfer
the Note or any interest therein to a third party who is not an
Adverse Person, in a bona fide sale (a "Third Party Sale"),
provided that the Holder shall have complied with the conditions
specified in paragraph (b) of this Section 6.02.
(b) Prior to effecting any Third Party Sale, the Holder will
deliver to DLJMB a written notice specifying the terms and
conditions of the proposed Third Party Sale, together with a copy
of the proposal, letter of intent or agreement negotiated with
the third party (the "Offer Notice"). If DLJMB delivers to the
Holder a written notice (an "Acceptance Notice") within 10 days
following the delivery of the Offer Notice (the "Acceptance
Period") stating that one or more of the DLJ Entities is willing
to purchase the Note or the interest therein on the terms set
forth in the Offer Notice, the Holder will sell the Note or the
interest therein to such DLJ Entity or Entities on the terms set
forth in the Offer Notice. If no Acceptance Notice is delivered
to the Holder prior to the expiration of the Acceptance Period,
the Holder may consummate the proposed Third Party Sale during
the 30-day period immediately following the expiration of the
Acceptance Period.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants to the Holder that:
SECTION 7.01. Corporate Existence and Power. The Issuer is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all
corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business
as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a material adverse effect
on the Issuer. The Issuer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a material adverse effect on
the Issuer.
SECTION 7.02. Corporate Authorization; Binding Effect. (a) The
execution, delivery and performance by the Issuer of this Note
are within the Issuer's corporate powers and have been duly
authorized by all necessary corporate action on the part of the
Issuer. This Note constitutes a valid and binding agreement of
the Issuer, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. Modification of Note. The Note may be modified with
the written consent of the Issuer and the Holder. The Holder may
waive compliance by the Issuer of any provision of the Note.
SECTION 8.02. Miscellaneous. THIS NOTE SHALL BE GOVERNED BY AND
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SUCH STATE. The
Issuer hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically provided herein, and assents to extensions of the
time of payment, or forbearance or other indulgence without
notice. The Holder by acceptance of this Note agrees to be bound
by the provisions of this Note. The Section headings herein are
for convenience only and shall not affect the construction
hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
duly executed as of this 29th day of September, 1999.
XXXXXXX RIVER LABORATORIES
HOLDINGS, INC.
By:
Name:
Title:
Accepted and agreed:
B&L CRL, INC.
By:
Name:
Title:
EXHIBIT A
Accreted Value (in $) Implied Interest Rate
At Issue Date 43,000,000
End of Year 1 48,160,000 12.00%
End of Year 2 53,939,200 12.00%
End of Year 3 60,411,904 12.00%
End of Year 4 67,661,332 12.00%
End of Year 5 75,780,692 12.00%
End of Year 6 87,147,796 15.00%
End of Year 7 100,219,966 15.00%
End of Year 8 115,252,961 15.00%
End of Year 9 132,540,905 15.00%
End of Year 10 152,422,040 15.00%
End of year 11 175,285,346 15.00%
(maturity)
