<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11580
PHARMAKINETICS LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-1067519
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 West Fayette Street
Baltimore, Maryland 21201
(Address of principal executive offices)
(410) 385-4500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. 12,197,391
common shares were outstanding as of February 9, 1998.
</PAGE>
<PAGE>2
PHARMAKINETICS LABORATORIES, INC.
FORM 10-Q
INDEX
Page No.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations for the three 3
and six months ended December 31, 1997
and 1996 (unaudited)
Balance Sheets at December 31, 1997 4
(unaudited) and June 30, 1997
Statements of Cash Flows for the 5
six months ended December 31, 1997
and 1996 (unaudited)
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 11
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 16
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PHARMAKINETICS LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $3,372,372 $2,362,834 $6,787,020 $4,692,260
Cost of contracts 2,388,184 1,800,757 4,711,944 3,410,861
---------- ---------- ---------- ----------
Gross profit 984,188 562,077 2,075,076 1,281,399
Selling, general and
administrative expenses 721,240 531,120 1,230,780 1,064,179
Research and
development expenses 124,217 110,893 242,290 214,640
---------- ---------- ---------- ----------
Earnings (loss) from operations 138,731 (79,936) 602,006 2,580
Interest expense 45,380 44,844 90,787 97,352
Interest income 22,536 5,756 33,154 16,493
---------- ---------- ---------- ----------
Earnings (loss)
before income taxes 115,887 (119,024) 544,373 (78,279)
Income taxes - - - -
---------- ---------- ---------- ----------
Net earnings (loss) 115,887 (119,024) 544,373 (78,279)
Accretion of
preferred stock dividend (1,020,793) - (1,020,793) -
---------- ---------- ---------- ----------
Net loss applicable
to common stockholders ($904,906) ($119,024) ($476,420) ($78,279)
========== ========== ========== ==========
Basic loss per share ($0.07) ($0.01) ($0.04) ($0.01)
========== ========== ========== ==========
Diluted loss per share ($0.07) ($0.01) ($0.04) ($0.01)
========== ========== ========== ==========
Basic and diluted weighted
average shares outstanding 12,195,891 12,195,891 12,195,891 12,195,891
========== ========== ========== ==========
</TABLE>
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<PAGE>4
PHARMAKINETICS LABORATORIES, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
December 31, June 30,
1997 1997
------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 5,484,645 $ 556,040
Accounts receivable, net 1,556,128 1,014,538
Contracts in process 611,287 503,163
Prepaid expenses 292,717 190,343
------------ ------------
Total Current Assets 7,944,777 2,264,084
Property, plant and equipment, net 3,815,373 3,654,132
Other assets 92,730 40,516
------------ ------------
Total Assets $ 11,852,880 $ 5,958,732
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 364,890 $ 206,588
Accounts payable and accrued expenses 1,060,811 912,686
Deposits on contracts in process 1,141,066 862,272
------------ ------------
Total Current Liabilities 2,566,767 1,981,546
Other liabilities 288,139 38,714
Long-term debt 1,269,473 1,500,231
------------ ------------
Total Liabilities 4,124,379 3,520,491
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Class A Convertible Preferred stock, no
par value; authorized 1,500,000 shares;
issued and outstanding 833,300 shares 4,937,500 -
Common stock. $.001 par value; authorized,
25,000,000 shares; issued and
outstanding, 12,195,891 shares 12,196 12,196
Additional paid-in capital 11,822,088 12,013,701
Accumulated deficit (9,043,283) (9,587,656)
------------ ------------
Total Stockholders' Equity 7,728,501 2,438,241
------------ ------------
Total Liabilities and Stockholders' Equity $ 11,852,880 $ 5,958,732
============ ============
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</TABLE>
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<PAGE>5
PHARMAKINETICS LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Six Months Ended
December 31,
-------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 544,373 $ (78,279)
Adjustments to reconcile net earnings (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 266,191 222,947
Changes in operating assets and liabilities:
Accounts receivable, net (541,590) 135,691
Contracts in process (108,124) (291,210)
Prepaid expenses and other assets (154,588) (34,705)
Accounts payable and accrued expenses 114,330 (177,364)
Deposits on contracts in process 278,794 (139,033)
------------ -----------
Net cash provided (used) by operating activities 399,386 (361,953)
------------ -----------
Cash flows from investing activities:
Purchase of property and equipment (87,267) (130,302)
------------ -----------
Net cash used by investing activities (87,267) (130,302)
------------ -----------
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net 4,683,387 -
Proceeds from issuance of warrants 62,500 -
Payment for capital lease obligations (56,945) (198,464)
Payment on long-term debt (72,456) (68,806)
------------ -----------
Net cash provided (used) by financing activities 4,616,486 (267,270)
------------ -----------
Increase (decrease) in cash and equivalents 4,928,605 (759,525)
Cash and equivalents, beginning of period 556,040 990,401
------------ -----------
Cash and equivalents, end of period $ 5,484,645 $ 230,876
============ ===========
Supplemental Cash Flow Information:
Non-Cash Transactions:
Fixed assets acquired through capital leases $ 340,165 $ -
Accretion of preferred stock dividend $ 1,020,793 $ -
Cash Paid for Interest: $ 90,463 $ 93,117
Cash Paid for Income Taxes: $ - $ 5,000
</TABLE> -5-
</PAGE>
<PAGE>6
PHARMAKINETICS LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The statements of operations for the three and six months ended
December 31, 1997 and 1996, the balance sheet as of December 31, 1997,
and the statements of cash flows for the six months ended December 31,
1997 and 1996, have been prepared by the Company without audit. In the
opinion of management, all adjustments necessary to present fairly the
financial position, results of operations and cash flows at December 31,
1997, and for all periods presented, have been made. The balance sheet
at June 30, 1997 has been derived from the audited financial statements
as of that date.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's fiscal 1997 report
on Form 10-K.
The Company operates principally in one industry segment, the
testing of pharmaceutical products and related services. Revenues
include contract revenue and revenue from license fees under special
agreements whereby the Company receives license fees based upon the
clients' actual product sales.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts could differ from these
estimates.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 regarding the
computation of earnings per share. This Statement requires the Company
to present basic and diluted earnings per share in the financial
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<PAGE>7
statements. The Company adopted the requirements of this Standard in the
financial statements for the quarter ended December 31, 1997. The
Company's Class A Convertible Preferred Stock, outstanding stock options
granted under the Company's stock option plans and other grants outside
of the Company's plans are considered common stock equivalents for the
purpose of the diluted earnings (loss) per share data; however, they are
excluded from the calculations for the three and six month periods ended
December 31, 1997 and 1996 because the effect of their inclusion would be
anti-dilutive. All periods presented have been restated to conform to
the new standard.
STOCKHOLDERS' EQUITY
On December 23, 1997, the Company received the proceeds from the
sale to investors, including certain affiliates of Aster.Cephac and CAI
Advisors & Co. (collectively, the "Purchasers"), of 833,300 shares of a
newly created Class A Convertible Preferred Stock and warrants to
purchase 6,250,000 shares of the Company's Common Stock and entered into
a Registration Rights Agreement and Technology Sharing Agreement in
connection therewith. The securities were sold for an aggregate purchase
price of $5,000,000 in a private placement pursuant to a Preferred Share
and Warrant Purchase Agreement dated as of December 4, 1997. The
Purchasers beneficially own approximately 41% of the Company's voting
securities without giving effect to the possible exercise of the
warrants, or approximately 54% of the Company's voting securities if all
the warrants are exercised.
The Agreement provided for the sale to the Purchasers of a total of
833,300 shares of Class A Convertible Preferred Stock for $4,937,500, or
$5.925 per share (the "Preferred Stock"). The Preferred Stock is
convertible at any time into shares of Common Stock at a conversion ratio
of one share of Preferred Stock for ten shares of Common Stock. The
conversion ratio is subject to adjustment under certain circumstances to
prevent dilution. In the event of the liquidation of the Company, the
holders of the shares of Preferred Stock who do not convert their shares
into Common Stock are entitled to receive $5.925 per share, prior to any
distributions being made to the holders of any other class or series of
the Company's capital stock.
In addition, the Agreement provided for the sale to the Purchasers,
for $62,500, of warrants to purchase 6,250,000 shares of Common Stock.
The warrants are fully exercisable at $1.20 per share and expire on
December 23, 2000. The warrants shall not be exercisable until the
Company shall have filed with the Maryland State Department of
Assessments and Taxation an amendment of the Company's charter increasing
the number of shares of common stock that are authorized to at least
35,000,000 shares.
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<PAGE>8
Net earnings have been adjusted for the accretion of a preferred
stock dividend to the Purchasers, resulting in a net loss applicable to
common stockholders. The dividend was computed based on the excess of
the fair market value of the Company's Common Stock, into which the
Preferred Stock is convertible, over the purchase price of the Preferred
Stock. The dividend was recorded for financial reporting purposes only
and was not paid to the Preferred Stockholders.
PART I.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's revenues of $3,372,372 and $6,787,020 for the three
and six month periods ended December 31, 1997 increased 42.7% and 44.6%,
respectively, from $2,362,834 and $4,692,260 for the same periods in the
prior year. Included in the Company's revenue is license fee income of
$226,877 and $514,059, for the three and six month periods ended December
31, 1997, compared to $255,653 and $372,913, respectively, for the same
periods of the prior year. License fee income, based on clients' sales
of approved drugs, will continue through the expiration of the license
fee agreements, one of which expired in October 1997, and another of
which will expire in fiscal 2000. In addition, the Company began
receiving license fees in November 1996 under a third agreement with
another of its clients which received approval from the FDA to
manufacture and market Sucralfate Tablets. The client received approval
to market its drug in April 1996 and commenced sales in November 1996.
The Company expects to receive payments for a minimum of eight years from
the date of approval. License fee income from sales of this third
product accounted for the increase in license fee income during the six
month period ended December 31, 1997, notwithstanding a decline in
license fee income from the other two license fee arrangements. The
Company believes it is unlikely that its clients will wish to utilize
license fee arrangements in the future as compensation for work
performed. As a result of this trend, contract revenues, rather than
licensing income, will continue to be the primary source of revenues.
The increase in the Company's revenues for the three and six month
periods ended December 31, 1997, compared to the same periods in 1996,
resulted from the Company's progress in accomplishing its goals to
increase the amount of revenue generated from innovator pharmaceutical
and biotechnology companies, in addition to revenue generated from
contracts with generic companies, the initiation of new clinical trial
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</PAGE>
<PAGE>9
management contracts, the impact of the availability of the Company's new
LC/MS/MS technology and strong license fee revenues from Sucralfate.
The Company's gross profit increased 75.1% and 61.9% for the three
and six month periods ended December 31, 1997, to $984,188 and
$2,075,076, compared to $562,077 and $1,281,399, respectively, for the
same periods of the prior year. Gross profit as a percentage of revenue
increased to 29.2% and 30.6% for the three and six month periods ended
December 31, 1997, compared to 23.8% and 27.3%, respectively, for the
same periods of the prior year. The increase in gross margin for the
periods presented reflects the increase in the use of the Company's
LC/MS/MS instrumentation and the overall increase in the level of
business and diversification of services which culminated in the
realization of certain economies of scale. While license fee revenues
were down 11.3% for the three month period ended December 31, 1997, due
to the cessation of the Company's first license fee agreement in October
1997, license fee revenue for the six month period ended December 31,
1997, increased 37.9% due to the continued strong market activity for the
Sucralfate product.
Selling, general and administrative expenses of $721,240 and
$1,230,780 for the three and six month periods ended December 31, 1997,
increased 35.8% and 15.7%, respectively, compared to $531,120 and
$1,064,179, for the same periods of the prior year. The increase is
primarily attributable to the establishing of an allowance for doubtful
accounts, which had the effect of increasing selling, general and
administrative expenses for the three and six month periods ended
December 31, 1997, by $300,000, notwithstanding a decrease in
expenditures associated with certain vacancies for which the Company is
actively recruiting personnel.
Research and development expenses of $124,217 and $242,290 for the
three and six month periods ended December 31, 1997, increased 12.0% and
12.9%, respectively, compared to $110,893 and $214,640 for the same
periods of the prior year due to increased efforts in the Company's
research and development group related to its LC/MS/MS instrumentation.
In September 1997, the Company acquired its second LC/MS/MS instrument
for its laboratory and has invested in research and development to bring
the instrument on-line and to develop methods for utilization in future
studies. The Company believes that these investments will result in the
generation of new business and an improvement in its competitive
position.
Net earnings have been adjusted for the accretion of a preferred
stock dividend to the Purchasers, resulting in a net loss applicable to
common stockholders. The dividend was computed based on the excess of
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<PAGE>10
the fair market value of the Company's Common Stock, into which the
Preferred Stock is convertible, over the purchase price of the Preferred
Stock. The dividend was recorded for financial reporting purposes only
and was not paid to the Preferred Stockholders.
No provision for income taxes has been recorded. The Company has
available unused operating loss and business tax credit carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of funds has historically been funds
generated from operations. However, on December 23, 1997, the Company
concluded a transaction in which it sold Class A Convertible Preferred
Stock and Warrants to purchase Common Stock for $5,000,000 cash, less
$254,113 in transaction costs. The increase in the cash balances of the
Company of $4,928,605 at December 31, 1997, is attributable to the sale
of Preferred Stock and Warrants and the generation of funds from
operations, offset by payments on long-term debt and lease obligations
and funds used to acquire equipment.
At December 31, 1997, the Company had available $5,484,645 in
current operating cash to meet the needs of its business. The Company
also continues to have available a $500,000 line of credit through its
primary secured lender, which was unused as of December 31, 1997. Terms
of the Company's line of credit include advances against eligible
receivables and interest at the Bank's prime rate of interest.
The Company's term note payable to the bank has certain financial
ratio and cash flow covenants with which the Company was in compliance as
of December 31, 1997. On February 5, 1998, the Company elected to pay
the remaining principal balance on its term note payable to the bank in
the amount of $1,622,381, thereby eliminating its bank debt.
At December 31, 1997, the Company reported an increase in its
contracts in process account which represents costs incurred for studies
for which revenues have not been recognized and which are currently
underway. Deposits on contracts in process have also increased
indicating an increase in prepayments on contracted studies. Changes in
these account balances affect the Company's operating cash flow.
The Company has arranged a capital lease for its second state-of-
the-art laboratory instrument, a LC/MS/MS, which was delivered to the
Company in September 1997. Terms of the lease include an original
instrument cost of $340,165, 44 monthly payments of approximately $8,200
and an end-of-lease term option to retain or return the instrument.
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<PAGE>11
CAUTIONARY STATEMENT
In addition to the historical information contained herein, the
discussion in this report contains certain forward-looking statements
that involve risks and uncertainties, such as statements of the Company's
plans, objectives, expectations and intentions. The cautionary
statements made in this report should be read as being applicable to all
related forward-looking statements wherever they appear in this report.
The Company's actual results could differ materially from those discussed
herein. Factors that could cause or contribute to such differences
include, but are not limited to, general economic conditions, conditions
affecting the pharmaceutical industry and the generic drug industry in
particular, and consolidation resulting in increased competition within
the Company's market.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(A) Not applicable.
(B) The rights of holders of the Company's Common Stock
have been qualified by the issuance of shares of the Company's
Class A Convertible Preferred Stock (the "Preferred Stock").
Holders of the Preferred Stock are entitled to the
number of votes equal to the number of shares of Common Stock
into which the shares of Preferred Stock could be converted.
Currently, each share of Preferred Stock is convertible into ten
shares of Common Stock; therefore each holder of Preferred Stock
is entitled to ten votes per share. Holders of Common Stock are
entitled to one vote per share.
Holders of Preferred Stock, collectively, are entitled
to elect that number of directors that bears the same proportion
to the total number of directors as the Conversion Shares
(hereinafter defined) bear to the Total Shares Outstanding
(hereinafter defined); provided, however, that so long as the
Conversion Shares constitute at least 35% of the Total Shares
Outstanding, the holders of the Preferred Stock shall have the
right to elect at least 50% of the directors. Therefore, holders
of Preferred Stock have rights to elect directors that are not
held by holders of Common Stock. "Conversion Shares" means the
sum of (A) the number of whole shares of Common Stock into which
the outstanding shares of Preferred Stock are convertible, plus
(B) the number of shares of Common Stock owned of record by CAI
Advisors & Co., Aster.Cephac S.A., any affiliate of either of
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<PAGE>12
those entities or any holder of Preferred Stock or warrants to
purchase Common Stock that obtained such Preferred Stock or
warrants by assignment from either of those entities as provided
in the Preferred Stock and Warrant Purchase Agreement dated as of
December 4, 1997 among the Company, CAI Advisors & Co., and
Aster.Cephac S.A. "Total Shares Outstanding" means the sum of
(A) the total number of shares of Common Stock outstanding and
(B) the number of whole shares of Common Stock into which the
outstanding shares of Preferred Stock are convertible.
If the Company declares a dividend, each holder of
Preferred Stock is entitled to participate in such dividend as if
the holder was the holder of the number of whole shares of Common
Stock into which the Preferred Stock is convertible. No dividend
may be declared unless approved by all directors elected by the
holders of Preferred Stock. Therefore, holders of Preferred
Stock have a greater degree of control over the issuance of
dividends than the holders of Common Stock have.
Upon the dissolution, liquidation, or winding-up of the
Company, whether voluntary or involuntary, before payment or
distribution is made to any holders of Common Stock or any other
class or series of capital stock of the Company designated to be
junior to the Preferred Stock, the holders of the Preferred Stock
shall be entitled to payment of an amount per share equal to
$5.925. Upon a merger, consolidation or other corporate
reorganization or combination to which the Company is a non-
surviving party other than a merger into a wholly-owned
subsidiary of the Company, or upon any sale of all or
substantially all of the assets of the company, the holders of
the Preferred Stock that have not converted their shares to
Common Stock shall be entitled to received the cash, securities
or other property in the amount of $5.925 per share. Therefore,
holders of Preferred Stock are entitled to a liquidation and
transaction payment preference to which holders of Common Stock
are not entitled.
The approval by vote of the holders of at least a
majority of the outstanding shares of Preferred Stock, voting as
a single class, shall be required for any action by the Company
or any amendment to the Company's charter if such action or
amendment would (i) change or limit any of the rights,
preferences or privileges of the Preferred Stock, or (ii)
authorize, create, or issue, or obligate the Corporation to
authorize, create or issue, additional shares of Preferred Stock
or shares of any other class or series of stock having rights,
preferences or privileges senior to or on a parity with those of
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<PAGE>13
the holders of Preferred Stock. Each share of Preferred Stock
is entitled to one vote in such instance. Holders of Common
Stock have no such special voting rights.
(C) As stated elsewhere in this Report, pursuant to a
Preferred Stock and Warrant Purchase Agreement dated as of
December 4, 1997 among the Company, CAI Advisors & Co. and
Aster.Cephac S.A. (the "Agreement"), the Company issued to
assignees of CAI Advisors & Co. and Aster.Cephac S.A. 833,300
shares of its Class A Convertible Preferred Stock and warrants to
purchase 6,250,000 shares of its Common Stock as of December 23,
1997. The aggregate offering price was $5,000,000. No
underwriter or selling agent was involved in the transaction, and
no remuneration was paid to any party in connection with the sale
of the securities. The securities were sold in reliance upon an
exemption from registration under the Securities Act of 1933, as
amended, pursuant to Rule 506 of Regulation D promulgated under
that Act. The securities were sold to less than 35 purchasers
who were not "accredited investors" within the meaning set forth
in Rule 501 of Regulation D. The Company believes, based upon
representations made by the purchasers prior the sale of the
securities, that each purchaser who was not an accredited
investor had such knowledge and experience in financial and
business matters that he was capable of evaluating the merits and
risks of the investment. The Company, which is subject to the
reporting requirements of Section 13 of the Securities Exchange
Act of 1934, as amended, furnished to each purchaser the
information specified in Rule 502(b)(ii) of Regulation D, and
obtained representations from purchasers regarding access to
information and the opportunity to ask questions and receive
answers from the Company. The Company advised each purchaser
that the securities were not registered and of the transfer
restrictions relating to the securities offered. The Company
obtained representations from each purchaser that the purchaser
was purchasing the securities for himself and not for other
persons. The Company placed a legend on the certificates for the
Class A Convertible Preferred Stock and for the warrants which
states that the securities have not been registered and which
refers to restrictions on transaferability and sale of such
securities. The Company did not engage in any general
advertising or solicitation in connection with the offering and
obtained an opinion of counsel of the purchasers that the
assignment by CAI Advisors & Co. and Aster.Cephac S.A. of their
purchase rights under the Agreement did not adversely affect or
limit the Company's right to rely on Rule 506.
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<PAGE>14
Each share of Class A Convertible Preferred Stock is
convertible into ten shares of Common Stock, subject to
adjustment for the sale of additional shares of Common Stock at a
price less than $0.5925, the issuance of certain rights, warrants
or options or convertible securities with an exercise or
conversion price less than $0.5925, the issuance of Common Stock
dividends, or the subdivision by stock split, stock dividend,
recapitalization or otherwise of outstanding shares of Common
Stock. The warrants are exercisable only after the approval by
the Company's stockholders of an amendment to the Company's
charter to increase the number of authorized shares of Common
Stock by at least 10,000,000 shares. The exercise period expires
December 23, 2000. The exercise price is $1.20 per share.
(D) Not applicable.
ITEM 5. OTHER INFORMATION
On January 29, 1998, the Company announced the appointment of Melany
Adamcio as Vice President, Business Development. Ms. Adamcio will be
responsible for the management of all of the Company's marketing, sales
and sales support functions.
Ms. Adamcio comes to the Company with 17 years of experience in the
pharmaceutical and contract research industries. She joined the Company
seven months ago as Executive Director of Clinical Trials Management.
Prior to her return to PharmaKinetics, she spent seven years with a large
international CRO as Director of Clinical Trials Management. In addition
to business development, she was responsible for the overall operation of
the firm's Columbia, Maryland office. During the 1980's Ms. Adamcio held
a number of increasingly responsible positions with a major European
pharmaceutical firm, in France and the United States, in the areas of
drug development and clinical trial management.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 3(b): Amended and Restated By-laws
Exhibit 10(d): PharmaKinetics Laboratories, Inc.
Amended and Restated 1996
Non-employee Directors' Stock
Option Plan
Exhibit 10(q): Fifth Amendment to Loan Agreement
(r) Third Note Modification Agreement
(s) Third Commercial Promissory Note
Modification Agreement
Exhibit 11: Computation of Earnings per Share
Exhibit 27: Financial Data Schedule
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<PAGE>15
(b) Reports on Form 8-K
On November 7, 1997, the Company filed a Report on Form 8-K stating
that on October 24, 1997, the Company entered into an agreement in
principle with Aster.Cephac, CAI Capital Corporation and Leslie B.
Daniels, which contemplated, among other things, a transaction in which
the Company would raise $5,000,000 in cash through the sale in a private
placement of (i) 833,300 shares of a newly created class of convertible
preferred stock and (ii) warrants to purchase 6.25 million shares of the
Company's common stock, $0.001 par value per share, at an exercise price
of $1.20 per share. In addition, the agreement in principle provided for
(1) the execution of an agreement between the Company and Aster.Cephac
relating to an exchange of certain bioanalytical methods and shared
development of software for laboratory information management, (2) the
execution of a registration rights agreement, and (3) the investors'
representation on the Company's Board of Directors.
-15-
</PAGE>
<PAGE>16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHARMAKINETICS LABORATORIES, INC.
Registrant
February 17, 1998 /s/James K. Leslie
- ----------------- ------------------
Date James K. Leslie
Chief Executive Officer
and President
February 17, 1998 /s/Taryn L. Kunkel
- ----------------- ------------------
Date Taryn L. Kunkel
Vice-President and
Chief Financial Officer
-16-
</PAGE>
Exhibit 11
Statement re: Computation of Earnings per Share
<TABLE>
<CAPTION>
For the Three Months Ended December 31,
1997 1996
---------------------- ----------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic and diluted weighted
average shares outstanding:
Common stock 12,195,891 12,195,891 12,195,891 12,195,891
Common stock equivalents (1) - - - -
---------- ---------- ---------- ----------
Basic and diluted weighted
average common and common
equivalent shares outstanding 12,195,891 12,195,891 12,195,891 12,195,891
========== ========== ========== ==========
Net loss applicable to
common stockholders ($904,906) ($904,906) ($119,024) ($119,024)
========== ========== ========== ==========
Net loss per share ($0.07) ($0.07) ($0.01) ($0.01)
========== ========== ========== ==========
For the Six Months Ended December 31,
1997 1996
---------------------- ----------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ----------
Basic and diluted weighted
average shares outstanding:
Common stock 12,195,891 12,195,891 12,195,891 12,195,891
Common stock equivalents (1) - - - -
---------- ---------- ---------- ----------
Basic and diluted weighted
average common and common
equivalent shares outstanding 12,195,891 12,195,891 12,195,891 12,195,891
========== ========== ========== ==========
Net loss applicable to
common stockholders ($476,420) ($476,420) ($78,279) ($78,279)
========== ========== ========== ==========
Net loss per share ($0.04) ($0.04) ($0.01) ($0.01)
========== ========== ========== ==========
(1) Convertible preferred stock, outstanding stock options granted under the
Company's stock option plans and other grants outside of the Company's plans
are considered common stock equivalents for the purpose of earnings per share
data; however, they are excluded from the 1997 and 1996 computations because
the effect of their inclusion would be anti-dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 5,484,645
<SECURITIES> 0
<RECEIVABLES> 1,856,128
<ALLOWANCES> 300,000
<INVENTORY> 611,287
<CURRENT-ASSETS> 7,944,777
<PP&E> 5,791,653
<DEPRECIATION> 1,976,280
<TOTAL-ASSETS> 11,852,880
<CURRENT-LIABILITIES> 2,566,767
<BONDS> 0
<COMMON> 12,196
0
4,937,500
<OTHER-SE> 2,778,805
<TOTAL-LIABILITY-AND-EQUITY> 11,852,880
<SALES> 6,787,020
<TOTAL-REVENUES> 6,820,174
<CGS> 4,711,944
<TOTAL-COSTS> 6,185,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,787
<INCOME-PRETAX> 544,373
<INCOME-TAX> 0
<INCOME-CONTINUING> 544,373
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (476,420)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
<PAGE>1
Exhibit 3(b)
AMENDED AND RESTATED
BY-LAWS
OF
PHARMAKINETICS LABORATORIES, INC.
Amended and Restated: January 20, 1998
ARTICLE I
OFFICES
Section 1. The principal office shall be in the City of
Baltimore, State of Maryland.
Section 2. The corporation may also have offices at such
other places both within and without the State of Maryland as the
board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders shall be held at the
office of the corporation in the City of Baltimore, State of
Maryland, or at any other place within the United States as shall
be designated from time to time by the board of directors and
stated in the notice of meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual meetings of stockholders shall be held on
a date fixed from time to time by the board of directors no later
than the last day of the fifth month following the end of the
fiscal year, provided notice of the date is duly set forth in the
notice of the meeting. The annual meeting of stockholders shall
be held for the purposes of electing a board of directors and for
transacting such other business as may be properly brought before
the meeting. Any business of the corporation may be transacted
at the annual meeting without being specially designated in the
notice, except such business as is specifically required by law
to be stated in the notice. [As amended September 9, 1985 and
January 20, 1998].
Section 3. At any time in the interval between annual
meetings, special meetings of the stockholders may be called by
the board of directors or by the president.
-1-
</PAGE>
<PAGE>2
Section 4. Special meetings of stockholders shall be called
by the secretary upon the written request of the holders of
shares entitled to not less than twenty-five per cent of all the
votes entitled to be cast at such meeting. Such request shall
state the purpose or purposes of such meeting and the matters
proposed to be acted on thereat. The secretary shall inform such
stockholders of the reasonably estimated cost of preparing and
mailing such notice of the meeting, and upon payment to the
corporation of such costs the secretary shall give notice stating
the purpose or purposes of the meeting to all stockholders
entitled to notice at such meeting. No special meeting need be
called upon the request of the holders of shares entitled to cast
less than a majority of all votes entitled to be cast at such
meeting, to consider any matter which is substantially the same
as a matter voted upon at any special meeting of the stockholders
held during the preceding twelve months.
Section 5. Not less than ten nor more than ninety days
before the date of every stockholders' meeting, the secretary
shall give to each stockholder entitled to vote at such meeting,
and to each stockholder not entitled to vote who is entitled by
statute to notice, written or printed notice stating the time and
place of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, either by
mail or by presenting it to him personally or by leaving it at
his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States
mail addressed to the stockholder at his post-office address as
it appears on the records of the corporation with postage thereon
prepaid.
Section 6. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
Section 7. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute a quorum; but this section
shall not affect any requirement under the statute or under the
charter for the vote necessary for the adoption of any measure.
If, however, such quorum shall not be present or represented at
any meeting or the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at
which a quorum shall be present or represented, any business may
be transacted which might have been transacted at the meeting as
originally notified.
-2-
</PAGE>
<PAGE>3
Section 8. A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall
be sufficient to take or authorize action upon any matter which
may properly come before the meeting, unless more than a majority
of the votes cast is required by the statute or by the charter.
Section 9. Unless the charter provides otherwise, each
outstanding share of stock having voting power shall be entitled
to one vote on each matter submitted to a vote at a meeting of
stockholders; but no share shall be entitled to vote if any
installment payable thereon is overdue and unpaid. A stockholder
may vote the shares owned of record by him either in person or by
his duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in
the proxy. At all meetings of stockholders, unless the voting is
conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman
of the meeting. [As amended October 11, 1985].
Section 10. Any action required or permitted to be taken at
any meeting of stockholders may be taken without a meeting if a
consent in writing setting forth such action is signed by all the
stockholders entitled to vote on the subject matter thereof and
any other stockholders entitled to notice of a meeting of
stockholders but not to vote thereat have waived in writing any
rights which they may have to dissent from such action, and such
consent and waiver are filed with the records of stockholders
meetings.
ARTICLE III
DIRECTORS
Section 1. The number of directors of the corporation shall
be fixed from time to time by resolution of the board of
directors adopted by a majority of the entire board of directors
then in office; provided, however, that the number of directors
shall in no event be fewer than three except that the number of
directors may be less than three if there are less than three
stockholders and the number of directors is not less than the
number of stockholders. The tenure of office of a director shall
not be affected by any decrease in the number of directors so
made by the board. At the first annual meeting of stockholders
and at each annual meeting thereafter, the stockholders shall
elect directors to hold office until the next annual meeting or
until their successors are elected and qualify. Directors need
-3-
</PAGE>
<PAGE>4
not be stockholders in the corporation. [As amended September 9,
1985 and January 20, 1998.]
Section 2. Any vacancy occurring in the board of directors
for any cause other than by reason of an increase in the number
of directors may be filled by a majority of the remaining members
of the board of directors, although such majority is less than a
quorum. Any vacancy occurring by reason of an increase in the
number of directors may be filled by action of a majority of the
entire board of directors. A director elected by the board of
directors to fill a vacancy shall be elected to hold office until
the next annual meeting of stockholders or until his successor is
elected and qualifies.
Section 3. The business and affairs of the corporation
shall be managed under the direction of its board of directors,
which may exercise all of the powers of the corporation, except
such as are by law or by the charter or by these bylaws conferred
upon or reserved to the stockholders.
Section 4. At any meeting of stockholders, duly called and
at which a quorum is present, the stockholders may, by the
affirmative vote of the holders of a majority of the votes
entitled to be cast thereon, remove any director or directors
from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. Meetings of the board of directors, regular or
special, may be held at any place in or out of the State of
Maryland as the board may from time to time determine.
Section 6. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed
by the vote of the stockholders at the annual meeting, and no
notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of
the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 7. Regular meetings of the board of directors may
be held without notice at such time and place as shall from time
-4-
</PAGE>
<PAGE>5
to time be determined by the board of directors.
Section 8. Special meetings of the board of directors may
be called at any time by the board of directors or the executive
committee if one be constituted, by vote at a meeting, or by the
president or by a majority of the directors or a majority of the
members of the executive committee in writing with or without a
meeting. Special meetings may be held at such place or places
within or without Maryland as may be designated from time to time
by the board of directors; in the absence of such designation
such meetings shall be held at such places as may be designated
in the call.
Section 9. Notice of the place and time of every special
meeting of the board of directors shall be served on each
director or sent to him by mail, telegram, facsimile
telecommunication or other reliable electronic means capable of
producing a writing or by leaving the same at his residence or
usual place of business at least two days before the date of the
meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the director at
his post-office address as it appears on the records of the
corporation, with postage thereon prepaid. [As amended January
20, 1998.]
Section 10. At all meetings of the board, a majority of the
entire board of directors shall constitute a quorum for the
transaction of business and the action of a majority of the
directors present at any meeting at which a quorum is present
shall be the action of the board of directors unless the
concurrence of a greater proportion is required for such action
by statute, the articles of incorporation or these bylaws. If a
quorum shall not be present at any meeting of directors, the
directors present thereat may by a majority vote adjourn the
meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
Section 11. Any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if a written consent to such
action is signed by all members of the board or of such
committee, as the case may be, and such written consent is filed
with the minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 12. The board of directors may appoint from among
its members an executive committee and other committees composed
of two or more directors, and may delegate to such committees,
-5-
</PAGE>
<PAGE>6
any of the powers of the board of directors except the power to
declare dividends or distributions on stock, recommend to the
stockholders any action which requires stockholder approval,
amend the bylaws, approve any merger or share exchange which does
not require stockholder approval or issue stock. However, if the
board of directors has given general authorization for the
issuance of stock, a committee of the board, in accordance with a
general formula or method specified by the board of directors by
resolution or by adoption of a stock option plan, may fix the
terms of stock subject to classification or reclassification and
the terms on which any stock may be issued. In the absence of
any member of any such committee, the members thereof present at
any meeting, whether or not they constitute a quorum, may appoint
a member of the board of directors to act in the place of
such absent members.
Section 13. The committees shall keep minutes of their
proceedings and shall report the same to the board of directors
at the meeting next succeeding, and any action by the committees
shall be subject to revision and alteration by the board of
directors, provided that no rights of third persons shall be
affected by any such revision or alteration.
COMPENSATION OF DIRECTORS
Section 14. Directors, as such, shall not receive any
stated salary for their services but, by resolution of the board,
a fixed sum, and expenses of attendance, if any, may be allowed
to directors for attendance at each regular or special meeting of
the board of directors, or of any committee thereof, but nothing
herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be
in writing and delivered personally or mailed to the directors or
stockholders at their addresses appearing on the books of the
corporation. Notice may also be left at the residence or usual
place of business of a director or stockholder. Notice by mail
shall be deemed to be given at the time when the same shall be
mailed. Notice to directors and stockholders may also be given,
to the extent permitted by applicable law, by telegram, facsimile
telecommunication or other reliable electronic means capable of
producing a writing. [As amended January 20, 1998.]
-6-
</PAGE>
<PAGE>7
Section 2. Whenever any notice of the time, place or
purpose of any meeting of stockholders, directors or committee is
required to be given under the provisions of the statute or under
the provisions of the charter or, these bylaws, a waiver thereof
in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before
or after the holding thereof, or actual attendance at the meeting
of stockholders in person or by proxy, or at the meeting of
directors or committee in person, shall be deemed equivalent to
the giving of such notice to such persons.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen
by the board of directors and shall be a president, a chairman of
the board, a vice-president, a secretary and a treasurer. The
president and chairman of the board shall be selected from among
the directors. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and
assistant treasurers. Two or more offices, except those of
president and vice-president, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law,
the charter or these bylaws to be executed, acknowledged or
verified by two or more officers. [As amended September 9,
1985].
Section 2. The board of directors at its first meeting
after each annual meeting of stockholders shall choose a
president and a chairman of the board from among the directors,
and shall choose one or more vice-presidents, a secretary and a
treasurer, none of whom need be a member of the board. [As
amended September 9, 1985].
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary, who shall hold
their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by
the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall serve for
one year and until their successors are chosen and qualify. Any
officer or agent may be removed by the board of directors
whenever, in its judgment, the best interests of the corporation
-7-
</PAGE>
<PAGE>8
will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so
removed. If the office of any officer becomes vacant for any
reason, the vacancy shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive
officer of the corporation; he shall preside at all meetings of
the stockholders and directors, shall have general and active
management of the business of the corporation, and shall see that
all orders and resolutions of the board are carried into effect.
Section 7. He shall execute in the corporate name all
authorized deeds, mortgages, bonds, contracts or other
instruments requiring a seal, under the seal of the corporation,
except in cases in which the signing or execution thereof shall
be expressly delegated by the board of directors to some other
officer or agent of the corporation.
THE CHAIRMAN OF THE BOARD
Section 8. The chairman of the board, in the absence or
disability of the president, shall preside at all meetings of the
stockholders and directors and shall see that all orders and
resolutions of the board are carried into effect. [As adopted
September 9, 1985].
Section 9. He shall, in the absence or disability of the
president, when authorized by resolution of the board of
directors, perform the duties and exercise the powers of the
president, and shall perform such other duties and have such
other powers as the board of directors may from time to time
prescribe. [As adopted September 9, 1985].
VICE-PRESIDENTS
Section 10. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the
board of directors, shall, in the absence or disability of the
president and the chairman of the board, perform the duties and
exercise the powers of the president and the chairman of the
board, and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
[As amended September 9, 1985].
THE SECRETARY AND ASSISTANT SECRETARIES
Section 11. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and
-8-
</PAGE>
<PAGE>9
record all the proceedings of the meetings of the corporation and
of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be
prescribed by the board of directors or president or chairman of
the board, under whose supervision he shall be. He shall keep in
safe custody the seal of the corporation and, when authorized by
the board of directors, affix the same to any instrument
requiring it and, when so affixed, it shall be attested by his
signature or by the signature of an assistant secretary. [As
amended September 9, 1985].
Section 12. The assistant secretary, or if there be more
than one, the assistant secretaries in the order determined by
the board of directors, shall, in the absence or disability of
the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 14. He shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the
president and the board of directors, at its regular meetings, or
when the board of directors or the president so requires, an
account of all his transactions as treasurer and of the financial
condition of the corporation.
Section 15. If required by the board of directors, he shall
give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board for the faithful
performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the corporation.
Section 16. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined
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</PAGE>
<PAGE>10
by the board of directors, shall, in the absence or disability of
the treasurer, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the
number and kind and class of shares owned by him in the
corporation. Each certificate shall be signed by the president or
a vice-president and countersigned by the secretary or an
assistant secretary or the treasurer or an assistant treasurer
and may be sealed with the corporate seal.
Section 2. The signatures may be either manual or facsimile
signatures and the seal may be either facsimile or any other form
of seal. In case any officer who has signed any certificate
ceases to be an officer of the corporation before the certificate
is issued, the certificate may nevertheless be issued by the
corporation with the same effect as if the officer had not ceased
to be such officer as of the date of its issue. Each stock
certificate shall include on its face the name of the
corporation, the name of the stockholder and the class of stock
and number of shares represented by the certificate. If the
corporation has authority to issue stock of more than one class,
the stock certificate shall contain on its face or back a full
statement or summary of the designations and any preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption of the stock of each class which the
corporation is authorized to issue and if the corporation is
authorized to issue any preferred or special class in series, the
differences in the relative rights and preferences between the
shares of each series to the extent they have been set, and the
authority of the board of directors to set the relative rights
and preferences of subsequent series. In lieu of such full
statement or summary, there may be set forth upon the face or
back of the certificate a statement that the corporation will
furnish to any stockholder upon request and without charge, a
full statement of such required information. Every stock
certificate representing shares of stock which are restricted as
to transferability by the corporation shall contain a full
statement of the restriction or state that the corporation will
furnish information about the restriction to the stockholder on
request and without charge. A stock certificate may not be
-10-
</PAGE>
<PAGE>11
issued until the stock represented by it is fully paid except to
the extent permitted by Section 2-206 or successor provisions of
the Maryland General Corporation Law. [As amended January 20,
1998.]
LOST CERTIFICATES
Section 3. The board of directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been stolen, lost or destroyed, upon the making
of an affidavit of that fact by the person claiming the
certificate of stock to be stolen, lost or destroyed. When
authorizing such issue of a new certificate or certificates, the
board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
stolen, lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it
shall require and to give the corporation a bond, with sufficient
surety, to the corporation to indemnify it against any loss or
claim which may arise by reason of the issuance of a new
certificate.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books.
RECORD DATE; CLOSING OF TRANSFER BOOKS
Section 5. The board of directors may fix, in advance, a
date as the record date for the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive payment of any
dividend or the allotment of any rights, or in order to make a
determination of stockholders for any other proper purpose. Such
date, in any case, shall be not more than sixty days, and in the
case of a meeting of stockholders not less than ten days, prior
to the date on which the particular action requiring such
determination of stockholders is to be taken. In lieu of fixing
a record date, the board of directors may provide that the stock
transfer books shall be closed for a stated period but not to
exceed, in any case, twenty days. If the stock transfer books
-11-
</PAGE>
<PAGE>12
are closed for the purpose of determining stockholders entitled
to notice of or to vote at a meeting of stockholders, such books
shall be closed for at least ten days immediately preceding such
meeting. [As amended September 19, 1988].
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE VII
INDEMNIFICATION
The corporation shall indemnify a director and/or officer of
the corporation in connection with any proceeding to the fullest
extent permitted by and in accordance with Section 2-418 of the
Corporations and Associations Article of the Annotated Code of
Maryland as amended from time to time (as adopted November 4,
1983).
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the charter, if any,
may be declared by the board of directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in its own shares, subject to the provisions of
the statute and of the charter.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests
of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
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Section 3. Intentionally left blank. [Repealed on January
20, 1998].
CHECKS
Section 4. All checks, drafts, and orders for the payment
of money, notes and other evidences of indebtedness, issued in
the name of the corporation shall be signed by such officer or
officers as the board of directors may from time to time
designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Maryland." The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
STOCK LEDGER
Section 7. The corporation shall maintain at its principal
office or at the offices of the transfer agent of the
corporation, appointed by the board of directors from time to
time, an original stock ledger or a duplicate thereof containing
the names and addresses of all stockholders and the number of
shares of each class held by each stockholder. Such stock ledger
may be in written form or any other form capable of being
converted into written form within a reasonable time for visual
inspection. [As amended January 20, 1998.]
NON-DISCRIMINATION
Section 8. The corporation shall not discriminate against
any person on account of race, color, religion, sex, ancestry,
national origin, age, physical or mental disability, sexual
orientation or status as a Vietnam era or special disabled
veteran. [As adopted December 15, 1986 and amended January 20,
1998.]
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ARTICLE IX
AMENDMENTS
Section 1. The board of directors shall have the power, at
any regular meeting or at any special meeting if notice thereof
be included in the notice of such special meeting, to alter or
repeal any bylaws of the corporation and to make new bylaws,
except that the board of directors shall not alter or repeal any
bylaws made by the stockholders subsequent to December 4, 1981.
Section 2. The stockholders shall have the power, at any
annual meeting or at any special meeting if notice thereof be
included in the notice of such special meeting, to alter or
repeal any bylaws of the corporation and to make new bylaws.
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Exhibit 10(d)
PHARMAKINETICS LABORATORIES, INC.
1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(Amended as of January 20, 1998)
PHARMAKINETICS LABORATORIES, INC. (the "Corporation") sets
forth herein the terms of this 1996 Non-Employee Directors Stock
Option Plan (the "Plan") as follows:
1. Purpose
The Board of Directors (the "Board") believes that the
success of the Corporation depends in part on its ability to
attract and retain directors with relevant beneficial experience
who are motivated to exert their best efforts on behalf of the
Corporation. The Board believes that a program that permits the
grant of stock options to Non-Employee Directors, as defined
below in this Section, promotes the long-term financial success
of the Corporation by further aligning the interests of the Non-
Employee Directors with the interests of the Corporation and its
stockholders. The Plan is intended to promote the interests of
the Corporation by providing Non-Employee Directors with a
program to acquire or increase a proprietary interest in the
Corporation. Each stock option granted under the Plan (an
"Option") is intended to be granted to directors of the
Corporation who are not officers or other salaried employees (the
"Non-Employee Directors" or "Optionees") of the Corporation or
any "subsidiary corporation" (a "Subsidiary") thereof within the
meaning of Section 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Administration
(a) Administration. The Plan shall be administered by
the Board or the Compensation Committee established by the Board
(the "Committee"), if the Board duly resolves to delegate
administration to the Committee, which shall have full power and
authority to take all actions, and to make all determinations
required or provided for under the Plan or any Option granted or
Option Agreement (as defined in Section 7 below) entered into
hereunder and all such actions and determinations not
inconsistent with the specific terms and provisions of the Plan
deemed by the Board or Committee to be necessary or appropriate
to the administration of the Plan or any Option granted or Option
Agreement entered into hereunder. The interpretation and
construction by the Board or Committee of any provision of the
Plan or of any Option granted or Option Agreement entered into
hereunder shall be final and conclusive. The Board or Committee
shall cause a copy of this Plan to be delivered to each
participant in the Plan.
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<PAGE>2
(b) No Liability. No member of the Board or of the
Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
(c) Delegation to the Committee. In the event that the
Plan or any Option granted or Option Agreement entered into
hereunder provides for any action to be taken by or determination
to be made by the Board, such action may be taken by or such
determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the
Board as provided for in Section 2(a) above. Unless otherwise
expressly determined by the Board, any such action or
determination by the Committee shall be final and conclusive.
3. Stock.
The stock that may be issued pursuant to Options granted
under the Plan shall be shares of Common Stock, part value $.001
per share, of the Corporation (the "Stock"), which shares may be
authorized but unissued shares or shares that may be purchased by
the Corporation in the open market or in private transactions.
The number of shares of Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate
1,000,000 shares, which number of shares is subject to adjustment
as hereinafter provided in Section 16 below. If any Option
expires, terminates, or is terminated or canceled for any reason
prior to exercise in full, the shares of Stock that were subject
to the unexercised portion of such Option shall be available for
future Options granted under the Plan.
4. Eligibility.
Only those directors of the Company who are
Non-Employee Directors of the Corporation and who are not
holders, directly or indirectly, of ten percent (10%) or more of
the combined voting power of the Corporation are eligible to
participate in the Plan.
5. Effective Date and term of the Plan.
(a) Effective Date. The Plan shall be effective as of
November 25, 1996 (the "Effective Date"), the date of adoption by
the Board.
(b) Term. The Plan shall terminate on the 10th
anniversary of the Effective Date.
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<PAGE>3
6. Grant of Options.
(a) Non-Employee Directors Serving on the Effective Date.
Each Non-Employee Director who is serving on the Board on the
Effective Date ("Serving Director"), shall be granted on the
Effective Date options to purchase One Hundred and Twenty
Thousand (120,000) shares of the Stock (the "Grant") which shall
vest in four equal installments of one-quarter (1/4) over four
(4) years. The first installment shall vest on the Effective
Date of the Grant. Thereafter, on the date of each of the next
three (3) annual meetings of stockholders at which elections to
the Board are conducted (each, an "Annual Meeting"), an
installment of one-quarter (1/4) of the Grant shall vest in each
Serving Director who is reelected to the Board.
(b) Non-Employee Directors Elected or Appointed After the
Effective Date. Each Non-Employee Director who is elected or
appointed to the Board after the Effective Date ("Subsequent
Director") shall be granted on the date of his or her election or
appointment an option to purchase One Hundred and Twenty Thousand
(120,000) shares of the Stock (adjusted, if applicable, as
provided in subparagraph (ii) below) which shall vest in four
installments as follows:
(i) if the Subsequent Director is elected on the
date of an Annual Meeting, one-quarter (1/4) of the Grant shall
vest on the date of the Subsequent Director's election to the
board. Thereafter, on the date of each of the next three (3)
Annual Meetings at which elections to the Board are conducted, an
installment of one-quarter (1/4) of the Grant shall vest in each
Subsequent Director who is reelected to the Board; and
(ii) if the Subsequent Director is appointed on a
date other than the date of an Annual Meeting, then the first
installment of the Grant shall be prorated to equal an amount
equal to the product of 30,000 times a fraction, the numerator of
which shall be the number of calendar months during which the
Subsequent Director will serve on the Board prior to the next
succeeding Annual Meeting and the denominator of which shall be
the number twelve (12). Notwithstanding this formula, in no case
shall the first installment be less than fifteen thousand
(15,000) shares and the amount of such installment shall be
rounded to the nearest whole share. Thereafter, on the date of
each of the next three (3) Annual Meetings an installment of
one-quarter (1/4) of the Grant shall vest in each Subsequent
Director who is reelected to the Board.
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7. Option Agreement.
All Options granted pursuant to the Plan shall be
evidenced by written agreements ("Option Agreements"), to be
executed by the Corporation and by the Optionee, in such form or
forms as the Board or Committee shall from time to time
determine. Option Agreements covering Options granted from time
to time or at the same time need not contain similar provisions;
provided, however, that all such Option Agreements shall comply
with all terms of the Plan.
8. Option Price.
The purchase price of each share of the Stock subject to
an Option (the "Option Price") shall be fixed by the Board or
Committee and stated in each Option Agreement, and shall be equal
to 100% of the fair market value of the Stock which is deemed to
be the mean of the bid and asked prices as determined by trading
over-the-counter or on an interdealer quotation system, as the
case may be, on the date the Option is granted pursuant to the
terms and conditions of Section 6 herein, or, if no sale of the
Stock has been made on such day, on the next preceding day on
which any such sale has been made.
9. Term and Exercise of Options.
(a) Term. Each Option granted under the Plan shall
terminate, and all rights to purchase shares thereunder shall
cease, upon the expiration of ten (10) years from the date such
Option is granted, unless otherwise provided in this Plan.
(b) Option Period and Limitations on Exercise. Except as
otherwise provided in an Option Agreement, each Option granted
may be exercised in whole or in part at any time after the date
of vesting provided, however, that a period of six months must
elapse between the date of grant of an Option and the date of
disposition of the Stock purchased upon the exercise of such
Option. Notwithstanding the foregoing, the Board or Committee,
subject to the terms and conditions of the Plan, may in its sole
discretion provide other time periods during which an Option may
be exercised in whole or in part while such Option is
outstanding. Any limitation on the exercise of an Option may be
rescinded, modified or waived by the Board or Committee, in its
sole discretion, at any time and from time to time after the date
of grant of such Option, so as to accelerate the time at which
the Option may be exercised.
(c) Method of Exercise. An Option that is exercisable
hereunder may be exercised by delivery to the Corporation on any
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<PAGE>5
business day, at its principal office, addressed to the attention
of the Board, of a written notice of exercise, which notice
shall specify the number of shares with respect to which the
Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the
maximum number of shares available for purchase under the Option
at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option
shall be made (i) in cash or in cash equivalents; (ii) through
the tender to the Corporation of shares of Stock which shares
shall be valued, for purposes of determining the extent to which
the Option Price has been paid thereby, at their fair market
value (determined in the manner described in Section 8 above) on
the date of exercise; (iii) through the tender to the Corporation
of Options, to the extent of the difference between the Option
Price and the fair market value of the shares of Stock subject to
such Option (determined in the manner described in Section 8
above) on the exercise date; or (iv) by combination of the
methods described in (i), (ii), (iii) above. Payment in full of
the Option Price need not accompany the written notice of
exercise provided the notice of exercise directs that the Stock
certificate or certificates for the shares for which the Option
is exercised by delivered to a licensed broker applicable to the
Corporation as the agent for the individual exercising the Option
and, at the time such Stock certificate or certificates are
delivered, the broker tenders to the Corporation cash (or cash
equivalents acceptable to the Corporation) equal to the Option
Price for the shares of stock purchased pursuant to the exercise
of the Option plus the amount (if any) of taxes and/or charges
which the Corporation may, in its judgment, be required to
withhold with respect to the exercise of the Option. An attempt
to exercise any Option granted hereunder other than as set forth
above shall be invalid and of no force and effect. Promptly
after the exercise of an Option and the payment in full of the
Option Price of the shares of Stock covered thereby, the
individual exercising the Option shall be entitled to the
issuance of a stock certificate or certificates evidencing his
ownership of such shares; provided however, that the Corporation
shall have the right to withhold and deduct from the number of
shares of Stock deliverable upon exercise of an Option, a number
of shares having an aggregate fair market value (determined in
the manner described in Section 8 above) equal to the amount of
any taxes and other charges the Corporation or any Subsidiary is
obligated to withhold or deduct from amounts payable to such
individual. An individual holding or exercising an Option shall
have none of the rights of a shareholder until the shares of
Stock covered thereby are fully paid and issued to him, and
except as provided in Section 16 below, no adjustment shall be
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<PAGE>6
made for dividends or other rights, if any, for which the record
date is prior to the date of such issuance.
10. Transferability of Options.
During the lifetime of an Optionee to whom an Option is
granted, any such Optionee (or, in the event of legal incapacity
or incompetency, the Optionee's guardian or legal representative)
may exercise the Option. No Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by
will or the laws of the descent and distribution.
11. Termination of Service.
Any Option granted to a Non-Employee Director shall
terminate upon the expiration of ninety (90) days following the
date on which the Non-Employee Director ceases to be a member of
the Board other than because of death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code)
of such Optionee. All Options that have not vested on the date
the Non-Employee Director ceases to be a member of the Board
other than by death or permanent and total disability shall
expire immediately upon said date.
12. Rights in the Event of Death or Disability.
Any Option granted to a Non-Employee Director shall
terminate upon the expiration of one year following the date on
which the Non-Employee Director ceases to be a member of the
Board by reason of death or "permanent and total disability" as
defined above or, if earlier, upon the expiration of ten years
following grant of the Option.
13. Use of Proceeds.
The proceeds received by the Corporation from the sale of
Stock pursuant to Options granted under the Plan shall constitute
general funds of the Corporation.
14. Requirements of Law.
(a) Violations of Law. The Corporation shall not be
required to sell or issue any shares of stock under any Option if
the sale or issuance of such shares would constitute a violation
by the individual exercising the Option or the Corporation of any
provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws
or regulations. Specifically in connection with the Securities
Act of 1933 (as then in effect with respect to the shares of
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Stock covered by such Option), the Corporation shall not be
required to sell or issue such shares unless the Corporation has
received evidence satisfactory to it that the holder of such
Option may acquire such shares pursuant to an exemption from
registration under such Act, and the shares of Stock to be issued
upon the exercise of all or any portion of any Option granted
under the Plan shall be issued on the condition that the Optionee
represents that the purchase of Stock upon such exercise shall be
for investment purposes and not with a view to resale,
distribution, offering, transferring, mortgaging, pledging,
hypothecating, or otherwise disposing of any such Stock under the
circumstances which would constitute a public offering or
distribution under the Securities Act of 1933 or the securities
laws of any state. No shares of stock shall be issued upon the
exercise of any Option unless the Corporation shall have received
from the Optionee a written statement satisfactory or legal to
counsel for the Corporation containing the above representations,
stating that certificates representing such shares may bear a
legend restricting their transfer and stating that the
Corporation's transfer agent or agents may be given instructions
to stop transfer of any certificate bearing such legend. Such
representation and restrictions provided for herein shall not be
required if (i) an effective registration statement for such
shares under the Securities Act of 1933 and any applicable state
laws has been filed with the Securities and Exchange Commission
and with the appropriate agency or commission of any state whose
laws apply to the transaction, or (ii) an opinion of counsel
satisfactory to the Corporation has been delivered to the
Corporation to the effect that the registration is not required
under the Securities Act of 1933 or under the applicable
securities laws of any state. Any determination by the Board or
Committee regarding the foregoing shall be final, binding, and
conclusive. The Corporation shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or
the issuance of shares pursuant thereto to comply with any law or
regulation or any governmental authority.
(b) Restriction on Transfer of Stock. The certificate or
certificates for Stock issued upon the exercise of an Option
shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED PURSUANT TO AN INVESTMENT REPRESENTATION
ON THE PART OF THE HOLDER THEREOF AND SHALL NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED,
WHETHER OR NOT FOR CONSIDERATION EXCEPT UPON THE ISSUANCE
TO THE ISSUER OF A FAVORABLE OPINION OF ITS COUNSEL
AND/OR DELIVERY OF OTHER EVIDENCE SATISFACTORY TO COUNSEL
TO THE ISSUER, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL
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NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
15. Amendment and Termination of the Plan.
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to
which Options have not been granted. Except as permitted under
Section 16 hereof, no amendment, suspension or termination of
the Plan shall, without the consent of the holder of the Option,
alter or impair rights or obligations under any Option
theretofore granted under the Plan.
16. Effect of Changes in Capitalization.
(a) Changes in Stock. If the outstanding shares of Stock
are increased or decreased or changed into or exchanged for a
different number or kind or shares or other securities of the
Corporation by reason of any recapitalization, reclassification,
stock split-up, combination of shares, exchange of shares, stock
dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of
consideration by the Corporation, occurring after the effective
date of the Plan, the number and kinds of shares for the purchase
of which Options may be granted under the Plan shall be adjusted
proportionately and accordingly by the Corporation. In addition,
the number and kind of shares for which Options are outstanding
shall be adjusted proportionately and accordingly so that the
proportionate interest of the holder of the Option immediately
following such event shall, to the extent practicable, be the
same as immediately prior to such event. Any such adjustment in
outstanding Options shall not change the aggregate Option Price
payable with respect to shares subject to the unexercised portion
in the Option outstanding but shall include a corresponding
proportionate adjustment in the Option Price per share.
(b) Reorganization in which the Corporation is the
Surviving Corporation. Subject to Subsection (d) hereof, if the
Corporation shall be the surviving corporation in any
reorganization, merger, share exchange or consolidation of the
Corporation with one or more other corporation, any Option
theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares
of Stock subject to such Option would have been entitled
immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of
the Option Price per share so that the aggregate Option Price
thereafter shall be the same as the aggregate Option Price of the
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shares remaining subject to the Option immediately prior to such
reorganization, merger, or consolidation.
(c) Reorganization in which the Corporation is not the
Surviving Corporation or Sale of Assets or Stock. In the event
of the commencement of a tender offer (other than by the
Corporation) for any shares of the Corporation or a sale or
transfer, in one or a series of transactions, of assets having a
fair market value of 50% or more of the fair market value of all
assets of the Corporation, or a merger, consolidation or share
exchange pursuant to which shares of the Corporation may be
exchanged for or converted into cash, property, or securities of
another issuer, or the liquidation of the Corporation (an
"Extraordinary Event"), then regardless of whether or not any
Option granted pursuant to the Plan shall have vested or become
fully exercisable, all Options granted pursuant to the Plan shall
immediately vest and become fully exercisable for the full number
of shares subject to any such Options on and at all times after
the "Event Date" of the Extraordinary Event.
(i) The "Event Date" is the date of the commencement
of the tender offer, if the Extraordinary Event is a tender
offer, and in the case of any other Extraordinary Event, the day
preceding the date as of which shareholders of record become
entitled to the consideration payable in respect of such
Extraordinary Event.
(ii) In the case of an Extraordinary Event other than
a tender offer, the exercise of an Option pursuant to this
Section prior to the Event Date shall be effective on and as of
the Event Date. Upon the exercise of an Option upon the
occurrence of an Extraordinary Event, the Corporation shall
issue, on and as of the effective date of such exercise, all
shares with respect to which the Option shall have been
exercised.
(iii) In the event of the exercise pursuant to this
Section of any Option the Option Price for which shall to have
been fixed as of the Event Date, the Option Price in respect of
such Option shall be equal to the average fair market value
(determined in the manner described in Section 8 above) for the
30 days preceding the announcement or other publication of the
Extraordinary Event.
(iv) In the event that an Optionee fails to exercise
his or her Option, in whole or in part, pursuant to this Section
upon an Extraordinary Event, the Corporation shall take such
action as may be necessary to enable each Optionee to receive
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upon any subsequent exercise of his or her Option, in whole or in
part, in lieu of shares of the Corporation, securities or other
assets as were issuable or payable upon such Extraordinary Event
in respect of, or in exchange for, such shares.
(d) Adjustments. Adjustments under this Section 16
related to stock or securities of the Corporation shall be made
by the Board or Committee, whose determination in that respect
shall be final, binding, and conclusive. No fractional shares of
Stock or units of other securities shall be issued pursuant to
any such adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding downward
to the nearest whole share or unit.
(e) No Limitations on Corporation. The grant of an
Option pursuant to the Plan shall not affect or limit in any way
the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve, or
liquidate, or sell or transfer all of any part of its business or
assets.
17. Disclaimer of Rights.
No provision in the Plan or in any Option granted or
Option Agreement entered into pursuant to the Plan shall be
construed to confer upon any individual the right to remain in
the service of the Corporation or any Subsidiary, or to interfere
in any way with the right and authority of the Corporation or any
Subsidiary either to increase or decrease the compensation of any
individual at any time, or to terminate any relationship between
any individual and the Corporation or any Subsidiary.
18. Non-Exclusivity of the Plan.
The adoption of the Plan shall not be construed as
creating any limitations upon the right and authority of the
Board to adopt such other incentive compensation arrangements
(which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting
of stock options otherwise than under the Plan.
19. Governing Law.
This Plan shall be construed and governed under the laws
of the State of Maryland.
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Exhibit 10(q)
FIFTH AMENDMENT
TO
LOAN AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AGREEMENT (this "Agreement") is
made as of the 31st day of December, 1997, By PHARMAKINETICS
LABORATORIES, INC., a corporation organized and existing under
the laws of the State of Maryland (the "Obligor"), and
NATIONSBANK, N.A., a national banking association (formerly known
as "NationsBank, N.A. (Carolinas)" and successor by merger to
NationsBank, N.A., which was formerly known as "NationsBank of
Virginia, N.A.," NationsBank of Virginia, N.A., being the
successor by merger to NationsBank, N.A. which was formerly known
as "NationsBank of Maryland N.A." and was the successor by merger
to Maryland National Bank) (the "Bank").
RECITALS
A. The Obligor and the Bank entered into a Loan Agreement
dated May 13, 1993 (the same, as modified by First Amendment to
Loan Agreement dated May 11, 1995 (the "First Amendment"), by
Second Amendment to Loan Agreement dated July 31, 1996, by Third
Amendment to Loan Agreement dated November 30, 1996, by Fourth
Amendment to Loan Agreement dated August 1, 1997, and as amended,
modified, substituted, extended, and renewed from time to time,
the "Loan Agreement"). The Loan Agreement provides for some of
the agreements between the Obligor and the Bank with respect to
the "Loans" (as defined in the Loan Agreement), including
revolving credit facility in an amount not to exceed $500,000 and
term facilities in an original principal amount of $2,400,000.
B. The Obligor has requested that the Bank extend the
Revolving Credit Termination Date (as that is defined in the Loan
Agreement) and, upon funding of the Borrower's issuance of
convertible preferred stock in an amount of not less than
$5,000,000, drop the requirement that advances evidenced by the
Revolving Credit Note (as that term is defined in the Financing
Agreement) by secured by cash collateral.
C. The Bank is willing to agree to the Obligor's requests
on the condition, among others, that this Agreement be executed.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, receipt of which is hereby
acknowledged, the Obligor and the Bank agree as follows:
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1. The Obligor and the Bank agree that the Recitals above
are a part of this Agreement. Unless otherwise expressly defined
in this Agreement, terms defined in the Loan Agreement shall have
the same meaning under this Agreement.
2. The Obligor and the Bank agree that on the date hereof
the aggregate outstanding principal balance under the Revolving
Credit Note (subject to change for returned items and other
adjustments made in the ordinary course of business) is $ 0. The
Obligor agrees that the Bank shall not be obligated to make any
further advances under the Revolving Credit Note unless all
obligations with respect thereto are fully secured by a
perfected, unavoidable, first lien pledge of cash deposits held
by the Bank; provided, however, upon funding of the Borrower's
issuance of convertible preferred stock in an amount of not less
that $5,000,000, no later than December 31, 1997, the Bank shall
no longer require such a pledge.
3. The section "The Revolving Loan" (which section was
added in the First Amendment) is hereby amended by changing the
Revolving Credit Termination Date from November 30, 1997 to
November 30, 1998. The Borrower and the Lender shall execute and
deliver a Third Commercial Promissory Note Modification Agreement
(the "Third Revolving Credit Note Amendment") at the time this
Agreement is executed and delivered which reflects that change.
4. It is a condition of the Bank's agreements under this
Agreement, under the Third Revolving Credit Note Amendment and
under the Third Note Modification dated the same date as this
Agreement (the "Third Term Note Modification") that Maryland
Industrial Development Financing Authority in writing consent to
the execution and delivery of the Third Revolving Credit Note
Amendment, the Third Term Note Modification and this Agreement .
5. The Obligor hereby issues, ratifies and confirms the
representations, warranties and covenants contained in the Loan
Agreement, as amended hereby. The Obligor agrees that this
Agreement is not intended to and shall not cause a novation with
respect to any or all of the Obligations.
6. The Obligor acknowledges and warrants that the Bank has
acted in good faith and has conducted in a commercially
reasonable manner its relationships with the Obligor in
connection with this Agreement and generally in connection with
the Loan Agreement and the Obligations, the Obligor hereby
waiving and releasing any claims to the contrary.
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<PAGE>3
7. This Agreement may be executed in any number of
duplicate originals or counterparts, each of such duplicate
originals or counterparts shall be deemed to be an original and
all taken together shall constitute but one and the same
instrument. The Obligor agrees that the Bank may rely on a
telecopy of any signature of any Obligor. The Bank agrees that
the Obligor may rely on a telecopy of this Agreement executed by
the Bank.
IN WITNESS WHEREOF, the Obligor and the Bank have executed
this Agreement under seal as of the date and year first written
above.
WITNESS or ATTEST: PHARMAKINETICS LABORATORIES, INC.
/s/ Taryn L. Kunkel By: /s/ James K. Leslie (SEAL)
- ------------------- ---------------------
James K. Leslie
President and
Chief Executive Officer
WITNESS: NATIONSBANK, N.A.
/s/ Taryn L. Kunkel By: /s/ James K. Kirschner (SEAL)
- ------------------- ------------------------
James W. Kirschner
Vice President
AGREEMENT OF GUARANTOR
The undersigned is the "Guarantor" under a Guaranty of
Payment Agreement, dated May 13, 1993 (as amended, modified,
substituted, extended and renewed from time to time, the
"Guaranty"), in favor of the foregoing Bank. In order to induce
the Bank to enter into the foregoing Agreement, the undersigned
(a) consents to the transactions contemplated by, and agreements
made by the Obligor under, the foregoing Agreement, and (b)
ratifies, confirms and reissues the terms, conditions, promises,
covenants, grants, assignments, security agreements, agreements,
representations, warranties and provisions contained in the
Guaranty. Without limiting the foregoing, the undersigned
acknowledges and agrees that the Obligations (defined in the Loan
Agreement) include, without limitation, the amendments described
in the foregoing Agreement and that the Obligations are covered
by the Guaranty.
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<PAGE>4
WITNESS signature and seal of the undersigned as of the date
of the Agreement.
WITNESS: PKLB LIMITED PARTNERSHIP
By: PharmaKinetics Laboratories, Inc.
General Partner
/s/ Taryn L. Kunkel By: /s/ James K. Leslie (SEAL)
- ------------------- ---------------------
James K. Leslie
President and
Chief Executive Officer
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</PAGE>
<PAGE>1
Exhibit 10(r)
THIRD NOTE MODIFICATION AGREEMENT
THIS THIRD NOTE MODIFICATION AGREEMENT is made as of the
30th day of November, 1997, by and between PHARMAKINETICS
LABORATORIES, INC., a corporation organized under the laws of the
State of Maryland (the "Borrower") and NATIONSBANK, N.A.
(formerly known as "NationsBank, N.A. (Carolinas)" and successor
by merger to NationsBank, N.A, which was formerly known as
"NationsBank of Virginia, N.A.," NationsBank of Virginia, N.A.
being the successor by merger to NationsBank, N.A. which was
formerly known as "NationsBank of Maryland N.A." and was the
successor by merger to Maryland National Bank), a national
banking association (the "Lender").
WHEREAS, by that certain Note dated May 13, 1993 (as
modified by First Note Modification Agreement dated May 11, 1995,
and by Second Note Modification Agreement dated August 1, 1997,
and as amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Note") the
Borrower became indebted to the Lender in an amount not to exceed
$2,400,000 (the "Term Loan Amount") under a credit facility made
by the Lender to the Borrower pursuant to that certain Loan
Agreement dated May 13, 1993 (as amended, modified, substituted,
extended, and renewed from time to time, the "Loan Agreement");
and
WHEREAS, the Lender and the Borrower have agreed to amend
the per annum rate of interest as hereinafter more fully set
forth.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Lender and the Borrower covenant and
agree as follows:
1. The Borrower acknowledges that the present principal
balance of the Note is due and owing, subject to the terms of
repayment hereinafter set forth, without defense, recoupment,
counterclaim or offset.
2. The Note is hereby amended at the section headed
"Interest Rate" by decreasing the rate of interest under that
section from the Bank's Prime Rate (as that term is defined in
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</PAGE>
<PAGE>2
the Note) plus three-quarters percent (3/4%) to the Bank's Prime
Rate plus one-half percent (1/2%). The Prime Rate does not
necessarily represent the lowest rate of interest charged by the
Bank to borrowers.
3. The terms, provisions and covenants of the Note are in
all other respects hereby ratified and confirmed and remain in
full force and effect.
4. It is expressly agreed that the indebtedness evidenced
by the Note has not been extinguished or discharged hereby. The
Borrower and the Lender agree that the execution of this
Agreement is not intended to and shall not cause or result in a
novation with regard to the Note.
WITNESS the signatures and seals of the Borrower and the
Lender the day and year first above written.
WITNESS or ATTEST: PHARMAKINETICS LABORATORIES, INC.
/s/ Taryn L. Kunkel By:/s/James K. Leslie (SEAL)
- ------------------- -------------------
James K. Leslie
President and
Chief Executive Officer
WITNESS: NATIONSBANK, N.A.
/s/ Taryn L. Kunkel By:/s/ James K. Kirschner (SEAL)
- ------------------- -----------------------
James W. Kirschner
Vice President
GUARANTOR ACKNOWLEDGMENT AND AGREEMENT
The undersigned guaranteed to the Lender all of the
Obligations (as defined in the Loan Agreement), including without
limitation, the per annum rate of interest (as defined in the
annexed Third Note Modification Agreement) and hereby covenants
and agrees with the Lender that the execution of the foregoing
Third Note Modification Agreement of even date herewith and the
transactions described therein and contemplated thereby do not
and shall not in any manner affect its obligations and
liabilities under its guaranty dated May 13, 1993 (the
"Guaranty"), and that the Guaranty is hereby ratified and
confirmed and remains in full force and effect.
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<PAGE>3
Dated effective as of November 30, 1997.
WITNESS: PKLB Limited Partnership
By: PharmaKinetics Laboratories, Inc.
General Partner
/s/ Taryn L. Kunkel By:/s/ James K. Leslie (SEAL)
- ------------------- --------------------
James K. Leslie
President and
Chief Executive Officer
-3-
</PAGE>
<PAGE>1
Exhibit 10(s)
THIRD COMMERCIAL PROMISSORY NOTE MODIFICATION AGREEMENT
THIS THIRD COMMERCIAL PROMISSORY NOTE MODIFICATION AGREEMENT
is made this 30th day of November, 1997, by and between
PHARMAKINETICS LABORATORIES, INC., a corporation organized under
the laws of the State of Maryland (the "Borrower") and
NATIONSBANK, N.A., formerly known as NATIONSBANK OF MARYLAND,
N.A., successor by mergers to MARYLAND NATIONAL BANK, a national
banking association (the "Lender").
WHEREAS, by that certain Commercial Promissory Note dated
May 13, 1993 (as amended, modified, restated, substituted,
extended and renewed at any time and from time to time, the
"Note") the Borrower became indebted to the Lender in an amount
not to exceed $500,000 (the "Revolving Credit Committed Amount")
under a revolving line of credit made by the Lender to the
Borrower pursuant to that certain Loan Agreement dated May 13,
1993 (as amended, modified, substituted, extended, and renewed
from time to time, the "Loan Agreement"); and
WHEREAS, the Note matures on the date hereof and the
Borrower and the Lender wish to provide for the extension of the
Note's maturity and the other changes as herein set forth.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Lender and the Borrower covenant and
agree as follows:
1. The Borrower acknowledges that the present principal
balance of the Note is due and owing, subject to the terms of
repayment hereinafter set forth, without defense, recoupment,
counterclaim or offset.
2. The Borrower and Lender agree that the maturity date in
the Note is hereby changed November 30, 1997 to the November 30,
1998.
3. The terms, provisions and covenants of the Note are in
all other respects hereby ratified and confirmed and remain in
full force and effect.
4. It is expressly agreed that the indebtedness evidenced
by the Note has not been extinguished or discharged hereby. The
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<PAGE>2
Borrower and the Lender agree that the execution of this
Agreement is not intended to and shall not cause or result in a
novation with regard to the Note.
WITNESS the signatures and seals of the Borrower and the
Lender the day and year first above written.
WITNESS or ATTEST: PHARMAKINETICS LABORATORIES, INC.
/s/ Taryn L. Kunkel By: /s/ James K. Leslie (SEAL)
- ------------------- --------------------
James K. Leslie
President and
Chief Executive Officer
WITNESS: NATIONSBANK, N.A.
/s/ Taryn L. Kunkel By: /s/ James W. Kirschner (SEAL)
- ------------------- -----------------------
James W. Kirschner
Vice President
GUARANTOR ACKNOWLEDGMENT AND AGREEMENT
The undersigned respectively guaranteed to the Lender all of
the Obligations (as defined in the Loan Agreement), including
without limitation, the per annum rate of interest (as defined in
the annexed Third Commercial Promissory Note Modification
Agreement) and hereby covenants and agrees with the Lender that
the execution of the foregoing Third Commercial Promissory Note
Modification Agreement of even date herewith and the transactions
described therein and contemplated thereby do not and shall not
in any manner affect its obligations and liabilities under its
guaranty dated May 13, 1993 (the "Guaranty"), and that the
Guaranty is hereby ratified and confirmed and remains in full
force and effect.
Dated effective as of this 30th day of November, 1997.
WITNESS: PKLB Limited Partnership
By: PharmaKinetics Laboratories, Inc.
General Partner
/s/ Taryn L. Kunkel By: /s/ James K. Leslie (SEAL)
- ------------------- ---------------------
James K. Leslie
President and
Chief Executive Officer
-2-
</PAGE>
