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REIMBURSEMENT AGREEMENT
This Reimbursement Agreement (the "Agreement") is made and
entered into as of November 5, 1998 by and between XXXXXX-XXXXXXX COMPANY
("X-X"), a Delaware corporation, and DURAMED PHARMACEUTICALS, INC., a Delaware
corporation ("Duramed").
A. Duramed has requested that Xxxxxxx Xxxxx Business Financial
Services, Inc. ("Lender"), a Delaware corporation, make a loan to Duramed in the
original principal amount of $8,500,000 (the "Loan");
B. The Lender has agreed to make the Loan provided that X-X
guarantees the repayment of the Loan;
C. As a condition to X-X guaranteeing to Lender the repayment
of the Loan by Duramed, X-X is requiring that Duramed reimburse X-X the full
amount of any payment made by X-X to Lender pursuant to its guaranty of the
obligation of Duramed to repay the Loan to Lender;
D. In consideration of Duramed's agreement to reimburse X-X
for any payment made by X-X to Lender pursuant to its guaranty of the obligation
of Duramed to repay the Loan to Lender, X-X and Duramed desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the premises, of the
agreements of X-X and Duramed contained herein, and of the making of the Loan by
Lender to Duramed, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms, as used
herein, have the following meaning:
"Agreement" means this Reimbursement Agreement, as the same
may from time to time be amended, supplemented, or extended, including all
exhibits hereto and any other documents executed and delivered as a part hereof.
"Business Day" means a day of the year, other than (i) a
Saturday, Sunday or legal holiday on which banking institutions in the State of
Ohio are authorized or required by law to close or (ii) a day on which The New
York Stock Exchange is closed.
"Default Rate of Interest" means a rate per annum equal to the
sum of the Prime Rate plus four (4) percentage points (computed on the basis of
a year of 360 days and the actual number of days elapsed).
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"Dollars" and the sign "$" mean freely transferable money of
the United States of America.
"Event of Default" shall mean any of the events specified in
Article VI of this Agreement, provided that any requirement for the giving of
notice or for the lapse of time has been satisfied in connection with such
event.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"Guaranty" shall mean a certain Guaranty Agreement executed by
X-X in favor of Lender of even date herewith.
"Guaranteed Documents" is defined in Section 2.01 of this
Agreement.
"Loan" is defined in paragraph A of the preamble hereof.
"Obligations" is defined in Section 2.01 of this Agreement.
"Other Loan Documents" means the Security Documents, and any
other instrument, document, agreement or certificate related to any of the
foregoing.
"Person" means an individual, a corporation, a partnership, an
association, a trust or trustee thereof or any other entity, fiduciary or
organization, including a government or political subdivision thereof.
"Prime Rate" means such rate of interest as publicly announced
from time to time by ________ as its prime rate, which may not be __________'s
lowest rate of interest charged to borrowers, such rate changing automatically
and immediately from time to time effective as of the effective date of each
such announced change.
"Security Documents" means a certain Open-end Mortgage of even
date herewith given by Duramed to X-X and any other document from time to time
evidencing, guaranteeing or securing the obligations of Duramed to X-X under
this Agreement.
ARTICLE II
GUARANTY
Section 2.01. Guaranty.
X-X has executed in favor of Lender the Guaranty of even date
herewith pursuant to which X-X guarantees the prompt and punctual payment and
performance, as the case may be, of the
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Obligations (as defined in the Guaranty) of Duramed to Lender under the
Guaranteed Documents (as defined in the Guaranty) as more particularly provided
in the Guaranty.
Section 2.02. Reimbursement and Other Payments.
(a) Demand for Payment. If (i) X-X makes any payment to Lender
pursuant to the Guaranty in order to satisfy an Obligation of Duramed to Lender
then due and unpaid or (ii) X-X pays any third party in order to cause the
performance of any Obligation of Duramed to Lender then due and unperformed, X-X
shall, unless prohibited by any law, regulation or judicial or administrative
order, notify Duramed, and in the case of payments to third parties, shall
provide to Duramed reasonable evidence of the payment of such expense and the
purpose of the expenditure. Within five (5) days following the receipt of such
notice, Duramed shall pay, and unconditionally promises to pay, without offset,
statement, withholding or other reduction whatsoever, X-X the amount of such
payment, together with interest on such amount at the Default Rate of Interest
accruing from and after the date of receipt of such notice.
Section 2.03. Payment on Non-Business Days. Whenever any
payment to be made hereunder by Duramed shall be stated to be due on a day which
is not a Business Day, such payment shall be made on or before the preceding
Business Day.
Section 2.04. Security Documents. As security for all of
Duramed's obligations to X-X under this Agreement, Duramed shall execute and
deliver on the date hereof the Security Documents.
ARTICLE III
CONDITIONS OF ISSUANCE
Section 3.01. Conditions Precedent to this Agreement. The
obligation of X-X to enter into this Agreement is subject to the condition
precedent that X-X shall have received on or before the date hereof the
following addressed to X-X, in form and substance reasonably satisfactory to
X-X:
(a) A certificate of the Secretary or Assistant Secretary of
Duramed, certifying the accuracy and completeness of copies of the resolutions
or actions by unanimous written consent of the board of directors of Duramed
authorizing or ratifying the execution, delivery and performance of this
Agreement and the Other Loan Documents.
(b) A certificate of the Secretary or Assistant Secretary of
Duramed certifying the names and true signatures of the officers or other
representatives of Duramed authorized to sign this Agreement and the Other Loan
Documents.
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(c) Opinion of counsel for Duramed, addressed to X-X, in
substantially the form of Exhibit A hereto.
(d) Executed copies of this Agreement and all Other Loan
Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of Duramed.
Duramed hereby represents and warrants to X-X as follows:
(a) Except as previously disclosed to X-X in writing, Duramed
has filed all Federal, state and local tax returns required to be filed and has
paid all taxes shown to be due on such returns, and has made provision for all
liabilities not so paid or accrued under returns not yet due. Except as
previously disclosed to X-X in writing, Duramed has no knowledge of any pending
assessments or adjustments to its taxes payable with respect to any year.
(b) Duramed's obligations under this Agreement and the Other
Loan Documents are not subordinate in any manner to any other obligation of
Duramed.
(c) There is no claim, action, temporary restraining order,
injunction, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any judicial or administrative court, governmental agency, public
board or body, pending or, to the best of Duramed's knowledge, threatened
against or affecting, or involving the properties or businesses, or any
securities of, Duramed nor, to the best of Duramed's knowledge, is there any
basis therefor, (i) contesting the existence or powers of Duramed or the
authority of its directors, officers, or partners, as the case may be, or (ii)
wherein an unfavorable decision, ruling or finding would in any way adversely
affect Duramed's ability to carry out its obligations under this Agreement or
the Other Loan Documents.
(d) The transactions contemplated by this Agreement, and the
transactions contemplated by the Other Loan Documents have not been entered into
by Duramed in contemplation of Duramed's insolvency and neither have such
transactions been entered into with the intent of Duramed to hinder, delay or
defraud the equityholders or the creditors of Duramed.
(e) Duramed is not regularly engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System).
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ARTICLE V
COVENANTS OF Duramed
Section 5.01. Financial Statements. (a) Duramed shall furnish
to X-X as soon as practical after the end of each calendar quarter, and in any
event within 30 days thereafter, (i) a balance sheet of Duramed as at the end of
such calendar quarter, (ii) an income statement and a reconciliation of retained
earnings for Duramed for such calendar quarter, and (iii) a statement of cash
flows for Duramed for such calendar quarter. All financial statements required
to be furnished to X-X pursuant to this Section 5.01(a) shall be in consolidated
form, if applicable, and shall be in reasonable detail and certified by the
chief financial officer of Duramed as having been prepared in accordance with
GAAP, as being true, complete and correct in all material respects, and as
presenting fairly the financial position, of Duramed as of the respective dates
of such balance sheet and the results of its operations for the respective
periods covered. On each occasion on which Duramed is required to furnish a
financial statement to X-X pursuant to this Section 5.01(a), Duramed shall also
furnish to X-X a certificate of Duramed's chief executive officer or chief
financial officer that such officer has caused the provisions of this Agreement
to be reviewed and, after reasonable investigation, has no knowledge of the
occurrence of any event or condition which either constitutes or with the lapse
of time or giving of notice or both would constitute an Event of Default, or if
such officer has such knowledge, specifying such event or condition and what
action Duramed has taken, is taking or proposes to take with respect thereto.
(b) Within ninety (90) days after the last day of each fiscal
year, Duramed shall furnish to X-X a copy of its financial statements, reviewed
by independent certified public accountants, including statements of financial
condition as of the end of such fiscal year, and related statements of income
and cash flows, a reconciliation of retained earnings and changes in financial
condition for the fiscal year then ended, setting forth in comparative form the
corresponding figures as of the end of or for the previous fiscal year, all in
reasonable detail and all in conformity with GAAP. Duramed shall also furnish
promptly to X-X such other information respecting the business, properties,
condition or operations, financial or otherwise, of Duramed as X-X may
reasonably request. If an Event of Default shall have occurred and be
continuing, X-X may require any financial statements required by this subsection
to be audited and certified by independent certified public accountants.
Section 5.02. Deliver Notice. Forthwith upon learning of any
of the following, Duramed shall deliver written notice thereof to X-X,
describing the same and the steps being taken by Duramed with respect thereto:
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(a) the occurrence of an Event of Default or an event or
circumstance which would constitute an Event of Default, but for the requirement
that notice be given or time elapse or both;
(b) any action, suit or proceeding, by it or against it at law
or in equity, or before any governmental instrumentality or agency, or any of
the same which may be threatened, and which, if adversely determined, would
materially impair the right or ability of Duramed to carry on its business or
would materially impair the right or ability of Duramed to perform its
obligations under this Agreement and the Other Loan Documents, or would
materially and adversely affect its business, operations, properties, assets or
condition;
(c) any change in the name, address, identity or structure of
Duramed; or
(d) any uninsured or partially uninsured loss through fire,
theft, liability or property damage which may have an adverse material effect on
Duramed's financial condition or operations.
Section 5.03. Keep Books. Duramed shall keep true and proper
books of records and accounts in which full and correct entries are made of all
business transactions, and reflect in its financial statements adequate accruals
and appropriations to reserves, all in accordance with GAAP.
Section 5.04. Continued Existence. Duramed will remain in good
standing and qualified to do business under all applicable state and Federal
laws. Without the prior written consent of X-X, Duramed will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
voluntarily consolidate with or merge into any other entity or permit one or
more entities to consolidate with or merge into it.
Section 5.05. Amendment of Other Documents. Without the prior
written consent of X-X, Duramed shall not enter into or consent to any amendment
or modification of the Guaranteed Documents or any Other Loan Document. Duramed
shall not enter into any agreement containing any provision which would be
violated or breached by the performance of its obligations hereunder or under
any Other Loan Document or under any instrument or document delivered or to be
delivered by it hereunder or in connection herewith.
Section 5.06. Affirmative Covenants. Unless the prior written
consent of X-X is first received, Duramed shall comply with all of the
affirmative covenants contained on Exhibit B hereto, which are hereby
incorporated herein by reference. If and to the extent that the terms and
provisions of any of the Security Documents conflict with the terms of such
affirmative
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covenants in Exhibit B, the terms and provisions of the Security Documents shall
govern and have precedence.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. The occurrence of any of the
following events shall be an "Event of Default" hereunder:
(a) Duramed shall fail to pay when due any amount payable
pursuant to Section 2.02 hereof; or
(b) Duramed shall fail to furnish any financial statements
required by Section 5.01 when required by Section 5.01 and such failure shall
continue for fifteen (15) days after notice thereof given as provided herein; or
(c) Duramed shall fail to perform or observe any of the terms,
covenants or agreements to be performed or observed by Duramed as set forth in
this Agreement (other than the failures described in subsections (a), (b) and
(c) of this Section 6.01), and any such failure shall continue for thirty days
after notice given as provided herein; or
(d) Any default shall have occurred under any of the Other
Loan Documents, including the Security Documents and the applicable grace or
cure period shall have expired; or
(e) Any representation or warranty made by Duramed herein or
in any Other Loan Document or in any other document delivered in connection with
this Agreement or any representation or warranty of any guarantor of the
obligations of Duramed under this Agreement or the Other Loan Documents shall
prove to have been incorrect in any material respect when made.
Section 6.02. Remedies Upon an Event of Default. If any Event
of Default shall have occurred and be continuing and shall not have been
specifically waived pursuant to Section 7.03 hereof, X-X may do any one or more
of the following:
(a) Declare the principal of all amounts owing under the
Guaranteed Documents, together with interest thereon, to be forthwith due and
payable, regardless of any other specified maturity or due date, without notice
of default, presentment or demand for payment, protest or notice of nonpayment
or dishonor, or other notices or demands of any kind or character, and without
the necessity of prior recourse to any security; and
(b) Exercise any and all of its rights under the Other Loan
Documents (including the Security Documents), or otherwise as a secured
creditor, including, without limitation, foreclosing
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on any security, and exercising any other rights with respect to security
whether under the Security Documents or any other agreement or as provided by
law, all in such order and in such manner as X-X in its sole discretion may
determine.
The rights and remedies of X-X under the terms and provisions
of this Agreement, each of the Other Loan Documents, and at law or in equity,
shall be separate, distinct and cumulative, none of them shall be exclusive of
the others, and X-X may exercise all or any one of them successively or
concurrently. No act of X-X shall be deemed to be an election to proceed under
any one provision herein or any of the Other Loan Documents to the exclusion of
any other provision, anything herein or otherwise to the contrary
notwithstanding.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments; Waivers. No amendment or waiver of
any provision of this Agreement, and no consent to any departure by Duramed
therefrom, shall in any event be effective unless the same shall be in writing
and signed by X-X, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 7.02. Notices. Except as otherwise provided herein,
whenever notice is required to be given pursuant to the provisions hereof, such
notice shall be in writing (including facsimile transmission) and shall be given
as follows:
(a) if to Duramed: 0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
(b) if to X-X: 000 Xxxxx Xxxx
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Vice President,
Pharmaceuticals Manufacturing
with copies to: Attention: President and CEO
and
Attention: Vice President and
General Counsel
or to such other address as any Person listed in this Section may hereafter
specify for the purpose by written notice to each other Person listed in this
Section. Each such notice shall be effective and conclusively deemed received
(i) if given by certified or registered U.S. mail, when confirmation of delivery
is received or when notice of refusal to accept delivery is received, (ii) if
given by recognized overnight delivery service
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that in the ordinary course of its business maintains a record of receipts of
each of its deliveries, when delivery is received or refused, or (iii) if hand
delivered, when delivered at the address specified in this Section.
Section 7.03. No Waiver; Remedies. No failure on the part of
X-X to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof, unless as permitted under Section 7.03 hereof; neither
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 7.04. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.
Section 7.05. Computations. Where the character or amount of
any asset, liability or item of income or expense is required to be determined,
or any consolidation or other accounting computation is required to be made, for
the purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP.
Section 7.06. Further Assurances. Duramed shall do such
further acts and things and execute and deliver to X-X such additional
assignments, agreements, powers and instruments, as X-X may reasonably require
or deem advisable to carry into effect the purposes of this Agreement or to
better assure and confirm unto X-X its rights, powers and remedies hereunder.
Section 7.07. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
Section 7.08. Binding Effect. This Agreement shall become
effective when it shall have been executed by Duramed and X-X and thereafter
shall be binding upon and inure to the benefit of Duramed and X-X and their
respective successors and assigns. X-X may assign to any financial institution
all or any part of, or any interest (undivided or divided) in, its rights and
benefits under this Agreement, and to the extent of that assignment such
assignee shall have the same rights and benefits against Duramed hereunder as it
would have had if such assignee were X-X.
Section 7.09. Severability. The parties hereto intend and
believe that each provision in this Agreement comports with all applicable
local, state and Federal laws and judicial
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decisions. However, if any provision or provisions, or if any portion of any
provision or provisions, in this Agreement are found by a court of law to be in
violation of any applicable local, state or Federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Agreement to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
the parties hereto that such portion, provision or provisions shall be given
force and effect to the fullest possible extent, that the remainder of this
Agreement shall be construed as if such provision or provisions were not
contained herein and that the rights, obligations and interests of the parties
under the remainder of this Agreement shall continue in full force and effect.
Section 7.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Ohio, except to
the extent that such laws would direct the application of the laws of a
different state.
Section 7.11. Heading. Section headings and captions in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose and are not to be
considered as defining or limiting in any way the scope or intent of the
provisions of this Agreement.
Section 17.12. X-X's Attorney Fees. As of the date of this
Agreement, Duramed shall pay the reasonable fees of counsel hired by X-X to
negotiate this Agreement and the Other Loan Documents in connection with such
negotiation by wire transfer to such counsel in accordance with wiring
instructions furnished by such counsel.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective representatives
thereunto duly authorized as of the date first above written.
X-X: Duramed:
XXXXXX-XXXXXXX COMPANY DURAMED PHARMACEUTICALS, INC.
By /s/ Xxxx Xxxxxxxx By /s/ Xxxxxxx X. Xxxx
---------------------------------- -----------------------------------
Name Xxxx Xxxxxxxx Name Xxxxxxx X. Xxxx
-------------------------------- ---------------------------------
Title Vice President - Manufacturing Title Senior Vice President
-------------------------------- --------------------------------
Finance
--------------------------------
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EXHIBIT A
FORM OF DURAMED COUNSEL OPINION
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EXHIBIT B
AFFIRMATIVE COVENANTS
Affirmative Covenants
The following affirmative covenants are incorporated in the
Reimbursement Agreement as if fully set forth therein:
INSURANCE. Duramed shall maintain insurance upon all of its
assets and business properties subject to the Security
Documents (the "Property") and product liability insurance
with responsible and reputable insurers of such character and
amounts as are usually maintained by companies engaged in like
business. All insurance policies shall be written for the
benefit of Duramed and X-X as their interests may appear and
shall contain a provision requiring the insurance company to
provide X-X not less than thirty days' written notice prior to
cancellation of any such policy. All insurance policies or
certificates evidencing the same shall be furnished to X-X.
PAYMENT OF TAXES AND CLAIMS. Duramed shall pay all taxes,
assessments and other governmental charges imposed upon its
properties or assets or in respect of any of its franchises,
business, income or profits before any penalty or interest
accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which
by law have or might become a lien or charge upon any of its
properties or assets, provided that (unless any material item
of property would be lost, forfeited or materially damaged as
a result thereof) no such charge or claim need be paid if the
amount, applicability or validity thereof is currently being
contested in good faith and if such reserve or other
appropriate provision, if any, as shall be required by GAAP
shall have been made therefor.
COMPLIANCE WITH LAWS. Duramed shall comply in all substantial
respects with all applicable statutes, laws, ordinances and
governmental rules, regulations and orders to which they are
subject or which are applicable to its business, properties
and assets if noncompliance therewith would materially
adversely affect such businesses; provided that (unless such
contest or noncompliance would materially adversely affect
such businesses) Duramed need not so comply if any such
statute, law, ordinance, or governmental rule, regulation or
order is currently being contested in good faith.
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