Document:

Reimbursement Agreement, dated April 14, 2003

 
Exhibit 10.18

 
THIS REIMBURSEMENT AGREEMENT IS SUBJECT
TO THE TERMS OF THE SUBORDINATION AGREEMENT MORE PARTICULARLY DESCRIBED IN SECTION 1 OF THIS REIMBURSEMENT AGREEMENT AND ANY HOLDER HEREOF SHALL TAKE POSSESSION HEREOF WITH NOTICE OF THE SUBORDINATION AGREEMENT AND SUBJECT TO ITS TERMS.

 
REIMBURSEMENT AGREEMENT 
 
This Reimbursement Agreement (this “Agreement”),
dated as of April             , 2003, is made by GEO Specialty Chemicals, Inc., (the “Company”) in favor of Charter Oak Capital Partners, L.P. (“COCP”) and
Charter Oak Partners (“COP” and together with COCP, “Charter Oak”). 
 
WHEREAS, the Company, to secure certain of the Company’s obligations to the Revolving Lenders pursuant to the Amended and Restated Credit Agreement, dated as of May 31, 2001, among the Company,
Deutsche Bank Trust Company Americas f/k/a/ Bankers Trust Company, in its capacity as administrative agent (the “Agent”), U.S. Bank National Association in its capacity as documentation agent and certain financial institutions from time to
time party thereto (as amended to date and, as it may be further amended, restated or otherwise modified, the “Credit Agreement”), has requested Charter Oak to enter into a Support Agreement dated as of the date hereof (said agreement as
it may be amended, restated or otherwise modified from time to time, the “Support Agreement”); 
 
WHEREAS, pursuant to the Support Agreement, Charter Oak may be required to obtain one or more irrevocable letters of credit (“Letters
of Credit” and each a “Letter of Credit”) for the account of Charter Oak in favor of the Agent for the benefit of the Revolving Lenders to secure the obligations of the Company to the Revolving Lenders with respect to Revolving Loans
in excess of $5,000,000 to a maximum of $10,000,000, as more fully described in the Support Agreement. 
 
NOW, THEREFORE, in consideration of the premises and to induce Charter Oak to enter into the Support Agreement and obtain Letters of
Credit, the Company and Charter Oak hereby agree as follows, intending to be legally bound hereby: 
 
SECTION 1. Definitions. 
 
(a) Capitalized terms used herein but not otherwise defined herein shall have the respective meanings given to them in the
Credit Agreement. 
 
(b) In
addition to the terms heretofore defined, the following terms shall have the meaning provided below. 
 
“Drawing” shall mean a draw made by the Agent under any Letter of Credit as permitted by the terms of the Support
Agreement. 
 
“Event of Default”
shall mean the occurrence of any of the events specified in Section 7 hereof. 

 
“Issuing Bank” means any financial institution that issues a Letter of Credit and, initially, means JP Morgan Chase Bank, New York. 
 
“Letters of Credit” means one or more letters of credit issued by an Issuing Bank for the
account of Charter Oak as required by the Support Agreement. 
 
“Person” means an individual, corporation, partnership, joint venture, limited liability company, trust or unincorporated organization, or a government or any agency or political subdivision thereof. 
 
“Prime Rate” means that rate of interest
publicly announced, from time to time, in the Wall Street Journal. 
 
“Subordination Agreement” means the Subordination Agreement, dated as of the date hereof, executed and delivered by Charter Oak in favor of the Agent, as such agreement may be amended, restated or otherwise
modified from time to time in accordance with the terms thereof. 
 
The terms “hereof”, “hereby”, “hereto”, “hereunder” and similar terms mean this Agreement, and the term “heretofore” means before, and the term “hereafter” means after, the
effective date hereof. 
 
SECTION 2. Agreement
of Charter Oak. Subject to the terms and conditions of this Agreement, Charter Oak agrees to have issued one or more Letters of Credit in favor of the Agent, for the benefit of the Revolving Lenders, in such aggregate amounts as may be specified
in the Support Agreement. 
 
SECTION 3.
Reimbursement Obligation. 
 
(a) In the event of any Drawing by the Agent under any Letter of Credit, the Company shall pay to Charter Oak an amount equal to the amount of such Drawing as and when permitted by the terms of the Subordination Agreement.

 
(b) The Company hereby agrees to
pay to Charter Oak: 
 
(i) interest
on any and all unreimbursed Drawings from the date of each such Drawing until payment in full, such interest at a rate per annum equal to the Prime Rate to accrue but not be paid until permitted pursuant to the terms of the Subordination Agreement;

 
(ii) on demand, any and all
reasonable expenses, to the extent permitted by law, incurred by Charter Oak in enforcing their rights under this Agreement. 
 
(c) All payments by the Company to Charter Oak hereunder shall be made in lawful currency of the United States and in
immediately available funds at Charter Oak’s office at 10 Wright Street, Building B, Westport, Connecticut 06880. 
 

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(d) Notwithstanding the foregoing, no payment of any Drawing, interest thereon or any other amounts due hereunder may be made unless such payment is permitted under the terms of the Subordination Agreement. 
 
SECTION 4. Obligations Absolute. The obligations of the
Company under this Agreement shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the Subordination Agreement, under all circumstances whatsoever, including without
limitation the following circumstances: 
 
(a) any lack of validity or enforceability of this Agreement or any of the Credit Documents or any other document executed in connection with this Agreement or the Credit Documents; 
 
(b) any amendment or waiver of or any consent
to departure from all or any of the Credit Documents in the manner provided for or permitted in the Credit Documents; 
 
(c) the existence of any claim, set-off, defense or other rights which the Company or any other Person may have at any
time against the Agent, the Revolving Lenders, Charter Oak, or any successor, any beneficiary or any transferee of any Letter of Credit or any other Person, whether in connection with this Agreement or the Credit Documents or any unrelated
transaction; 
 
(d) any statement
or representation contained in any draft or certificate presented to an Issuing Bank, in connection with Charter Oak’s request that such Issuing Bank issue any Letter of Credit, which proves to be untrue or inaccurate in any material respect
whatsoever; or 
 
(e) payment by an
Issuing Bank under any Letter of Credit against presentation of a demand, sight draft or certificate which does not comply with the terms of such Letter of Credit, provided that such payment shall not have constituted gross negligence or willful
misconduct of such Issuing Bank. 
 
SECTION 5.
Representations and Warranties. The Company represents and warrants to Charter Oak as follows: 
 
(a) The Company is an Ohio corporation, organized and existing and in good standing under the laws of the State of Ohio
and has all requisite power and authority to conduct its businesses, to own its properties and to execute and deliver, and to perform all of its obligations under this Agreement. 
 
(b) The execution, delivery and performance by the Company of this Agreement have been duly
authorized by all necessary action and do not and will not (i) require any consent or approval of the Company which has not been obtained, (ii) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Company or of its organizational documents, including, but not limited to, its articles of incorporation 
 

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and code of
regulations or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Company is a party or by which it or its properties may be bound or affected.

 
(c) No authorization, consent,
approval or license of, or filing or registration with, any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any specifically granted exemption from any of the foregoing which has not
been obtained, is or will be necessary to the valid execution, delivery or performance by the Company of this Agreement. 
 
(d) This Agreement is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws in effect from time to time relating to or affecting the enforcement of creditors’ rights. 
 
SECTION 6. Affirmative Covenants. So long as any amount
is due and owing to Charter Oak hereunder, the Company will, unless Charter Oak otherwise consents in writing: 
 
(a) Preservation of Existence, Etc. Preserve and maintain its existence and its rights, franchises and privileges
under the laws of the State of Ohio. 
 
(b) Compliance with Laws, Etc. Comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, non-compliance with which would materially adversely
affect the ability of the Company to perform its obligations hereunder, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property,
except to the extent compliance with any of the foregoing is then being contested in good faith and any reserves required by generally accepted accounting principles are being maintained in connection therewith. 
 
(c) Keeping of Books. Keep proper books
of record and account, in which full and correct entries shall be made of financial transactions and the assets and business of the Company in accordance with generally accepted accounting principles consistently applied. 
 
(d) Reporting. The Company shall cause
its chief financial officer, or in his absence another individual designated by the Company, to give Charter Oak prompt written notice as soon as possible and in any event within five (5) Business Days after the Company learns of the occurrence of
an Event of Default (as defined in the Credit Agreement) under the Credit Agreement. 
 

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SECTION 7.
Events of Default. The occurrence of any of the following events shall be an “Event of Default” hereunder: 
 
(a) the Company shall fail to pay when due any amount specified in Section 3 hereof that is permitted by the terms of the
Subordination Agreement to be paid and such amount shall remain unpaid for five (5) Business Days after receipt of notice from Charter Oak; 
 
(b) the Company shall fail to perform or observe any other term, covenant or agreement contained herein and any such
failure which can be remedied shall remain unremedied for thirty (30) days after written notice thereof shall have been given to the Company by Charter Oak; or 
 
(c) the Company shall: (i) admit in writing its inability to pay its debts generally as they become due; (ii) have an
order for relief entered in any case commenced by it under the federal bankruptcy laws, as now or hereafter in effect; (iii) commence a proceeding under any federal or state bankruptcy, insolvency, reorganization or similar law, or have such a
proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for ninety (90) days; (iv) make an assignment for the benefit of creditors; (v) have a
receiver or trustee appointed for it or for the whole or any substantial part of its property; or (vi) suffer a material adverse change in the financial condition of the Company. The declaration of an Event of Default under this subsection and the
exercise of remedies upon any such declaration shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding such declaration of exercise during the pendency of or immediately following any bankruptcy, liquidation,
or reorganization proceedings. 
 
Upon the
occurrence of an Event of Default hereunder, subject to the terms of the Subordination Agreement, Charter Oak may, in its sole discretion, but shall not be obligated to (i) by notice to the Company, declare a default under this Agreement and (ii)
pursue any other remedy permitted to Charter Oak under this Agreement or otherwise. 
 
SECTION 8. Amendments, Etc. No amendment, waiver, modification or release of any provision of this Agreement nor consent to any departure by the Company therefrom shall in any event be
effective, irrespective of any course of dealing with any of the parties hereto, unless the same shall be in writing and signed by Charter Oak, and then such amendment, waiver, modification or release shall be effective only in the specific instance
and for the specific purpose for which given. So long as any Obligations (as defined in the Credit Agreement) owing by the Company under the Credit Agreement remain outstanding, this Agreement shall not be amended or modified without the consent of
the Agent, which consent shall not be unreasonably withheld or delayed. The Agent shall be a third party beneficiary of this Agreement solely for the purpose of enforcing this Section. 
 
SECTION 9. Addresses for Notices. All notices and other communications provided for hereunder shall be
in writing and, if to the Company, mailed or delivered to it registered or certified mail, return receipt requested, addressed to it at 401 South Earl Avenue, Suite 3A, 
 

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Lafayette, Indiana 47905,
Attention: CFO, or if to Charter Oak, mailed or delivered to it, addressed to it at 10 Wright Street, Building B, Westport, Connecticut, 06880, Attention: Robert Sarrazin, or such other address as shall be designated by one party in a written notice
to the other party. All such notices and other communications may also be hand delivered. 
 
SECTION 10. No Waiver; Remedies. No failure on the part of Charter Oak or the Company to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 
 
SECTION 11. Indemnification. To the extent permitted by
law and subject to the Subordination Agreement, the Company hereby indemnifies and holds harmless Charter Oak from and against any and all claims, damages, losses, liabilities, reasonable costs and expenses whatsoever (including reasonable
attorneys’ fees) which Charter Oak may incur (or which may be claimed against Charter Oak by any Person whatsoever) by reason of or in connection with the execution and delivery or transfer of, or payment or failure to pay under, this
Agreement, any Letter of Credit or the Support Agreement. 
 
SECTION 12. Continuing Obligation. This Agreement is a continuing obligation and shall (a) be binding upon Charter Oak and the Company and their respective successors and assigns, and (b) inure to the benefit of and be
enforceable by Charter Oak and the Company and their respective successors and, to the extent not limited herein, their assigns; provided, however, that the Company may not assign all or any part of this Agreement without the prior written
consent of Charter Oak. 
 
SECTION 13. Liability
of the Bank. The Company assumes all risks of the acts or omissions of the Agent and/or the Revolving Lenders and any transferee of any Letter of Credit with respect to its or their use of any Letter of Credit or proceeds of any Drawing
thereunder. 
 
SECTION 14. Costs, Expenses and
Taxes. The Company agrees to pay on demand, subject to the terms of the Subordination Agreement, all out-of-pocket costs and expenses, including but not limited to, the reasonable fees and expenses of counsel in connection with the enforcement
of this Agreement and such other documents which may be delivered in connection with this Agreement. In addition, the Company shall pay any and all taxes and fees payable or determined to be payable, to governmental third parties in connection with
the execution, delivery, filing and recording of this Agreement and such other documents which may be delivered in connection with this Agreement and agrees to save Charter Oak harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees. 
 
SECTION 15. Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Ohio. 
 
SECTION 16. Headings. Section headings in this
Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 
 

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

	 GEO SPECIALTY CHEMICALS, INC.

	
	 By:
	 	  

	 	 	 Name:
	 	  

	 	 	 Title:
	 	  

 

	 CHARTER OAK CAPITAL PARTNERS, L.P.
 By: North Fairfield, L.L.C., General Partner

	
	 By:
	 	  

	 	 	 Name:
	 	  

	 	 	 Title:
	 	  

 

	 CHARTER OAK PARTNERS
 By: Fine Partners, L.P., Managing Partner

	
	 By:
	 	  

	 	 	 Name:
	 	  

	 	 	 Title:
	 	  

 
[Signature page of Reimbursement Agreement] 
 

7CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT is entered into this 28th day of March, 2003,
by and between Lazarus Industries, Inc. ("Lazarus" or the "Company"), a
corporation with its headquarters in Salt Lake City, Utah, American Dairy
Holdings, Inc., a Delaware corporation ("American Dairy") and Danbury
Properties, L.L.C., a Utah limited liability company (hereinafter referred to
as "Consultant").

     NOW, THEREFORE, for and in consideration of the mutual promises and
covenants hereinafter set forth, the adequacy of which is hereby acknowledged,
it is hereby agreed as follows:

     1.     The Company has entered into a Stock Exchange Agreement (the
"Exchange Agreement") with American Dairy and its shareholders, under the
terms of which the Company has agreed to acquire all of the issued and
outstanding shares of American Dairy, in exchange for the issuance of a
controlling interest in the Company.  It is anticipated that this transaction
will close in February or March, 2003.

     2.     The Company and American Dairy hereby appoint and engage
Consultant, and Consultant accepts such appointment, upon the terms and
conditions set forth herein.

     3.     Consultant's appointment hereunder shall commence on the date of
closing of the Exchange Agreement, and shall continue thereafter for one full
year.

     4.     During the period of Consultant's engagement hereunder, Consultant
shall provide to the Company and American Dairy consulting services in the
areas of financial and management planning, financing assistance and capital
formation.  Consultant agrees to use its best efforts to assist Client in
providing the following:

            (a)  Assistance in structuring of debt and equity financings of
the Company;

            (b)  Development of public relations and broker relations
program(s), and communications with brokerage community and shareholder
community regarding business of the Company and American Dairy;

            (c)  Assistance and advice in various securities matters,
including secondary trading issues, broker-dealer compliance and other
matters; consultation regarding SEC and state regulatory filings, application
for Nasdaq or other listings and other securities matters; and

            (d)  Consultation in connection with acquisition or development
opportunities; and

            (e)  Other corporate and financing matters and advisory and
consulting services as may arise and be requested from time to time.

     Consultant agrees to provide such services with diligence and in good
faith to the best of its abilities.  The Company and American Dairy recognize
and acknowledge, however, that Consultant has numerous other business
endeavors in which he is engaged, and that Consultant's commitment herein is
limited in time and scope.

     5.     As compensation for its services, the Company and American Dairy
agree to compensate Consultant as follows:

          (a)  the sum of $60,000 in cash;

          (b)  the issuance of a total of 240,000 (post-split) shares of
restricted common stock of the Company, after giving effect to the reverse
split contemplated in the Exchange Agreement.

     6.   If at any time or from time to time, the Company shall determine to
register any of its securities, for its own account or the account of any of
its shareholders, other than a registration relating solely to employee
benefit plans, or any registration statement on Form S-8, or a registration
relating solely to an SEC Rule 145 transaction, a transaction relating solely
to the sale of debt or convertible debt instruments or a registration on any
form (other than Form S-1, S-2 or S-3, or their successor forms), which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of registrable
securities, the Company will:

          (a)   give to Consultant or its assignees written notice thereof as
soon as practicable prior to filing the registration statement; and

          (b)   include in such registration and in any underwriting involved
therein, all or any securities issued above specified in a written request or
requests, made within fifteen (15) days after receipt of such written notice
from the Company.  If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the Consultant or its
assignees as a part of the written notice given pursuant to subsection 6(a).
In such event, the right of Consultant or its assignees to registration
pursuant to Section 6 shall be conditioned upon such Consultant's
participation in such underwriting and the inclusion of such Consultant's
securities in the underwriting to the extent provided herein.

     7.     In addition to the compensation set forth in paragraph 5 above,
the Company and American Dairy agree that they will cover all expenses
reasonably incurred by Consultant in the course of providing consulting
services requested by the Company and American Dairy under the terms of this
Agreement, provided that any single expense in excess of $500, or any
aggregate expense in excess of $1,000 in any quarter, shall be approved by the
Company in advance in writing.

     8.     Consultant is retained and engaged by the Company and American
Dairy for the purposes and to the extent set forth in this Agreement, and its
relation to the Company and American Dairy shall, during the term hereof, or
any extension of such term, be that of an independent contractor.   It shall
be free to dispose of such portion of its entire time, energy, skill and
attention during regular business hours as it is not required to devote to the
Company and American Dairy hereunder in such manner as it sees fit.
Consultant shall not be considered under this provisions of this Agreement or
otherwise as being an employee of the Company and American Dairy.

     9.     The owners of Consultant, Jack Gertino and James C. Lewis, hold
options to purchase a total of 200,000 (pre-split) shares of common stock of
the Company.  In consideration of the payment by the Company of the sum of
$12,000, Consultant will cause such individuals to return such options to the
Company for cancellation, and such individuals consent to this paragraph of
the Agreement.

     10.     The Company shall supply and deliver to Consultant all
information as may be reasonably requested by Consultant to enable Consultant
to undertake the efforts contemplated by this Agreement, and to make an
investigation of the Client and its business prospects.  The Company shall
make available to Consultant names, addresses, and telephone numbers as
Consultant may need to verify or substantiate any such information provided.

     11.     Consultant agrees that it will at all times, to the best of its
experience, ability and talents, perform all the duties that may be required
of and from Consultant pursuant to the terms of this Agreement.  Consultant
does not guarantee that is efforts will have any impact on the Clients'
business or that any subsequent financial improvement will result from
Consultants' efforts.

     12.     Consultant is not a law firm; neither is it an accounting firm.
Consultant does, however, retain professionals in those capacities to better
enable Consultant to provide consulting services.  Client represents that they
have not nor will they construe any of the Consultants' representations to be
statements of law.  Client has and will continue to seek the independent
advice of legal and financial counsel regarding all material aspects of the
transactions contemplated by this Agreement, including the review of all
documents provided by Consultant to Client and all opportunities Consultant
introduces to Client.

     13.     The execution and performance of this Agreement has been duly
authorized by all requisite individual or corporate actions and approvals and
is free of conflict or violation of any other individual or corporate actions
and approvals entered into jointly and severally by the parties hereto.  This
Agreement represents the entire Agreement between the parties hereto, and
supersedes any prior agreements with regards to the subject matter hereof.
This Agreement may be executed in any number of facsimile counterparts with
the aggregate of the counterparts together constituting one and the same
instrument.  This Agreement constitutes a valid and binding obligation of the
parties hereto and their successors, heirs and assigns and may only be
assigned or amended by written consent from the other party.

     14.     In the event either party engages an attorney to enforce this
Agreement or to obtain relief from any default hereunder, the non-prevailing
party shall reimburse the prevailing party for all legal and other costs
incurred in connection therewith.

     15.     If Consultant dies during the term of this Agreement, the Company
and American Dairy shall have not further obligation under this Agreement.

     16.     Consultant agrees that during the term of this Agreement, or
extension thereto, Consultant will not, directly or indirectly, disclose to
any person not authorized by the Company and American Dairy to receive or use
such information, any of the Company and/or American Dairy's confidential and
proprietary data, information or techniques, or give to any person not
authorized by the Company and/or American Dairy to receive it any information
that is not generally known to anyone other than the Company and American
Dairy or its agents, or that is designated by the Company and American Dairy
as "limited," "confidential," or otherwise marked to indicate its confidential
nature.

     17.     This Agreement may not be assigned by either party without the
prior written consent of the other party.

     18.     This Agreement is the only agreement or understanding between the
parties hereto with respect to the advice and consulting services to be
provided by Consultant to the Company and American Dairy.  All negotiations,
commitments, and understandings of both parties have been incorporated herein.
This Agreement cannot be modified except by a written document signed by a
party to be charged therewith.

     19.     This Agreement shall be governed by and interpreted in accordance
with the laws of the state of Utah.

     20.     If, and to the extent that, any court of competent jurisdiction
holds any provision of this Agreement to be invalid or unenforceable, such
holding shall in no way affect the validity of the remainder of the Agreement.

     21.     No failure by any party to insist on the strict performance of
any covenant, duty, agreement, or condition of this Agreement, or to exercise
any right or remedy consequent on a breach thereof, shall constitute a waiver
of any such breach or any other covenant, agreement, term, or condition.

                   [Signature page to follow.]

DATED the day and year first above-written.

                              LAZARUS INDUSTRIES, INC.

                              By     /s/ Jack M. Gertino
                              Its:   President

                              AMERICAN DAIRY HOLDINGS, INC.

                              By     /s/ Leng You-Bin
                              Its:   President

                              DANBURY PROPERTIES, LLC

                              By     /s/ Jack M. Gertino
                              Its:   Managing Member

                             CONSENT

     The undersigned hereby consent to paragraph 9 above.

                              /s/ James C. Lewis
                              James C. Lewis

                              /s/ Jack M. Gertino
                              Jack M. Gertino

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