EXHIBIT 10.5
[GRAPHIC OMITTED]
GE Healthcare Financial Services Financial Covenants Agreement
--------------------------------------------------------------------------------
This Financial Covenants Agreement (the "Agreement") is entered into among The
Sagemark Companies LTD., ("Lessee") and General Electric Capital Corporation
("Lessor") with offices at 00000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxxx 00000. Lessee and Lessor have entered into, or are about to enter into
a lease or security agreement (the "Financing Agreement") whereby Lessor has
acquired or will acquire an ownership or security interest in certain equipment
or other property (the "Collateral") as further described in the Financing
Agreement or in schedules thereto. To induce Lessor to enter into the Financing
Agreement and extend a loan, lease, or other financial accommodation to Lessee
against such ownership or security interest in the Collateral and for other
valuable consideration, Lessee hereby agrees with Lessor as follows:
Maximum Debt to Tangible Net Worth
----------------------------------
Lessee, at all times, will not permit the ratio of Debt to Tangible Net Worth
exceed those ratios set forth in the table below:
3.0:1.0 for months 1 to 12
3.0:1.0 for months 13 to 24
3:0:1.0 thereafter
"Debt" shall mean, at any date, Lessee's total liabilities
as determined in accordance with generally accepted
accounting principles in the United States of America, in
effect from time to time, consistently applied and
maintained ("GAAP")
"Tangible Net Worth" shall mean, with respect to Lessee at
any date, owner's equity less goodwill, non-compete
agreements, organization costs, and any other assets of
Lessee that would be treated as intangible assets on
Lessee's consolidated balance sheet prepared in accordance
with GAAP.
Minimum Cash Balance
--------------------
Lessee, at all times, will maintain a minimum cash balance of no less than Five
Hundred Thousand and 00/100 US Dollars ($500,000) on Lessee's balance sheet.
This agreement is executed in connection with the Financing Agreement. A failure
by Lessee to comply with the terms and provisions of this Agreement shall, at
Lessor's option, constitute a default under the Financing Agreement, and upon
the occurrence of such default, Lessor may exercise any and all remedies
available to Lessor under the Financing Agreement or otherwise.
Dated this 6th day of March, 2006
Lessor: Lessee:
General Electric Capital Corporation The Sagemark Companies LTD.
By: ________________________________ By: /s/ XXXXXXXX X. XXXXXXX
Name: ______________________________ Name: Xxxxxxxx X. Xxxxxxx
Title: Duly Authorized Signatory Title: President and Chief Executive
Officer
(Rev. 5/20/05)
