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Exhibit 10(c)
First National Bank of Maryland Financial Covenants
Addendum
THIS FINANCIAL COVENANTS ADDENDUM ("Addendum") is dated as of the
30th day of September, 1998, by and between PharmaKinetics
Laboratories, Inc. ("Borrower"), a corporation of the State of
Maryland and THE FIRST NATIONAL BANK OF MARYLAND ("Bank"), a
national banking association, of Baltimore, Maryland. This
Addendum is given to supplement one or more of the following
documents between Bank and Borrower: [X] Loan Agreement dated
09/30/98, 1998 ("Loan Agreement") or [ ] Security Agreement dated
________, 1998 ("Security Agreement").
I. DEFINITIONS
The following terms have the following definitions (each
definition is equally applicable to the singular and plural forms
of the terms used, as the context requires):
A. Capital Expenditures. The term "Capital Expenditures" means,
for any period, the aggregate of all expenditures (whether paid
in cash or accrued as liabilities, and including expenditures for
obligations under any lease with respect to which Borrower's
obligations thereunder should, in accordance with G.A.A.P., be
capitalized and reflected as a liability on the balance sheet of
Borrower) by Borrower during such period that are required by
G.A.A.P. to be included in or reflected by the property, plant or
equipment or similar fixed asset accounts on the balance sheet of
Borrower.
B. Cash Flow. The term "Cash Flow" means the sum of (i) the net
income of Borrower after tax, plus (ii) depreciation expense and
amortization, plus (iii) Interest Expense, (iv) plus non-cash
charges, (v) less distributions, all determined in accordance
with G.A.A.P.
C. Cash Flow Coverage. The term "Cash Flow Coverage" means the
ratio of Cash Flow to the sum of (i) the current portion of all
Long Term Debt, plus (ii) Interest Expense, all determined in
accordance with G.A.A.P.
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D. Collateral. The term "Collateral" means all of the now owned
and hereafter acquired assets, properties and property rights of
Borrower with respect to which Borrower has at any time granted a
security interest or lien to Bank or has at any time otherwise
assigned or pledged to Bank.
E. Current Assets. The term "Current Assets" means, at any
time, the aggregate amount of all current assets, including, but
not limited to, cash, cash equivalents, marketable securities,
receivables maturing within twelve (12) months from such time,
and inventory (net of LIFO Reserve), but excluding prepaid
expenses and officer, stockholder and employee advances and
receivables, all as determined in accordance with G.A.A.P.
F. Current Liabilities. The term "Current Liabilities" means,
at any time, the aggregate amount of all liabilities and
obligations which are due and payable on demand or within twelve
(12) months from such time, or should be properly reflected as
attributable to such twelve (12) month period in accordance with
G.A.A.P. Current Liabilities shall not include deferred income
tax liabilities.
G. Current Ratio. The term "Current Ratio" means the ratio of
Current Assets to Current Liabilities.
H. G.A.A.P. The Term "G.A.A.P." means, with respect to any date
of determination, generally accepted accounting principles as
used by the Financial Accounting Standards Board and/or the
American Institute of Certified Public Accountants consistently
applied and maintained throughout the periods indicated.
I. Indebtedness. The term "Indebtedness" means: (I) the
Obligations; (ii) indebtedness for borrowed money or for the
deferred purchase price of property or services in respect of
which Borrower is liable, contingently or otherwise, as obligor
or otherwise, or any commitment by which Borrower assures a
creditor against loss, including contingent reimbursement
obligations with respect to letters of credit; (iii) indebtedness
guaranteed in any manner by Borrower, including guarantees in the
form of agreements to repurchase or reimburse; (iv) obligations
under leases which shall have been or should be, in accordance
with G.A.A.P., recorded as capital leases, in respect of which
obligations Borrower is liable, contingently or otherwise, as
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obligor, guarantor, or otherwise, or in respect of which
obligations Borrower assures a creditor against loss; and (v) any
unfunded obligation of Borrower to any "Employee Benefit Plan,"
as defined in the Employee Retirement Income Security Act of
1974, as amended.
J. Interest Coverage. The term "Interest Coverage" means the
ratio of Cash Flow to Interest Expense.
K. Interest Expense. The term "Interest Expense" means all
finance charges reflected on the income statement as interest
expense for all obligations of Borrower to any person, including,
but not limited to, Bank, as shown on the balance sheet in
accordance with G.A.A.P.
L. LIFO Reserve. The term "LIFO Reserve" means the difference
between the value of inventory at cost and the value of inventory
on a Last In First Out basis, all determined in accordance with
G.A.A.P.
M. Long Term Debt. The term "Long Term Debt" means all
obligations of Borrower to any person, including, but not limited
to, the Obligations, payable more than twelve (12) months from
the date of their creation, which in accordance with G.A.A.P. are
shown on the balance sheet as a liability (excluding reserves for
deferred income taxes).
N. Obligations. The term "Obligations" means the "Obligations,"
as defined in the Loan Agreement or the Security Agreement to
which this Addendum is attached.
O. Quick Ratio. The term "Quick Ratio" means the ratio of
Current Assets less inventory (net of LIFO Reserve), to Current
Liabilities.
P. Tangible Net Worth. The term "Tangible Net Worth" means the
aggregate assets of Borrower excluding all intangible assets,
including, but not limited to, goodwill, licenses, trademarks,
patents, copyrights, organization costs, appraisal surplus,
officer, stockholder, related entity and employee advances or
receivables, mineral rights and the like, less liabilities, all
determined in accordance with G.A.A.P. (except to the extent that
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under G.A.A.P. "tangible net worth" excludes leasehold
improvements which are included in "Tangible Net Worth" as
defined herein).
Q. Working Capital. The term "Working Capital" means that
amount which is equal to the excess of Current Assets over
Current Liabilities.
II. FINANCIAL COVENANTS
Borrower shall at all times remain in compliance with each of the
covenants set forth in the Paragraphs below which have been
marked.
Borrower's Initials:
/s/ JKL [X] A. Borrower shall maintain Tangible Net Worth of
TLK not less than $6,500,000.00 as of 06/30/98 with
------- annual $200,000.00 increases.
/s/ JKL [X] B. Borrower shall maintain a ratio of Indebtedness
TLK to Tangible Net Worth of not greater than
------- 1.00:1.00.
/s/ JKL [X] C. Borrower shall maintain a Current Ratio of not
TLK less than 1.50:1.00.
-------
/s/ JKL [X] D. Borrower shall maintain a Quick Ratio of not
TLK less than 1.25:1.00.
-------
[ ] E. Borrower shall maintain Working Capital of not
------- less than $______.
[ ] F. Borrower shall maintain Cash Flow Coverage of
------- not less than ___:___.
[ ] G. Borrower shall maintain Interest Coverage of not
------- less than ___:___.
[ ] H. Without the prior written consent of Bank,
------- Borrower shall not make any Capital Expenditures
in excess of $_____ in the aggregate during any
fiscal year of Borrower.
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[ ] I. Borrower shall not pay total compensation,
------- including salaries, withdrawals, fees, bonuses,
management fees, consulting fees, commissions,
perquisites, loans or other payments, whether
directly or indirectly, in money or otherwise to
_____ in excess of the aggregate annual amount
of $_______during any fiscal year of Borrower,
in addition to any distribution allowed under
Paragraph II.J hereof.
[ ] J. Without the prior written consent of Bank,
------- Borrower shall not make distributions, including
loans, dividends or other withdrawals of any
kind to any officers, employees, shareholders or
other persons or entities in excess of:
_____percent ( %) of pre-tax income (if Borrower
is an "S Corporation," as defined in Section
1361 of the Internal Revenue Code of 1986, as
amended); or_____percent ( %) of after-tax
income (if Borrower is a "C Corporation," as
defined in Section 1361 of the Internal Revenue
Code of 1986, as amended).
III. GENERAL PROVISIONS. This Addendum is hereby made a part of
the Loan Agreement or Security Agreement to which it is attached.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
Borrower has executed this Addendum under seal as of the day and
year first above written at _____________.
WITNESS OR ATTEST*:
*Note: Attestation of a corporate officer's capacity to sign by
another corporate officer is required in all corporate
transactions.
/s/ Xxxx X. Xxxxx PharmaKinetics Laboratories, Inc.
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Signature (Name of Organization)
By: /s/ Xxxxx X. Xxxxxx (Seal)
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(Authorized Signature)
Xxxxx X. Xxxxxx, President and CEO
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(Print Name and Title)
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By:/s/ Xxxxx X. Xxxxxx (Seal)
----------------------
(Authorized Signature)
Xxxxx X. Xxxxxx, VP and CFO
---------------------------
(Print Name and Title)
000 Xxxx Xxxxxxx Xxxxxx
-----------------------
(Street Address)
Xxxxxxxxx, Xxxxxxxx 00000
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(City-State-Zip)
000-000-0000 000-000-0000
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(Telephone) (Facsimile)
00-0000000
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(Federal Tax ID Number)
ACCEPTED AT BALTIMORE, MARYLAND AS
OF THE DATE THEREOF:
THE FIRST NATIONAL BANK OF MARYLAND
By:/s/ Xxxx X. Xxxxx (Seal)
--------------------
(Authorized Signature)
Xxxx X. Xxxxx, Vice President
-----------------------------
(Print Name and Title)
