Exhibit 10.13
Union Bank of California
August 13, 1998
Xxxx X. Xxxxxx, CFO
The Pathways Group Inc.
00000 XX 000xx Xxxxxx
Xxxxxxxxxxx, XX 00000-00000
Dear Xx. Xxxxxx:
This Covenant Agreement (this "Agreement") is entered into as of the date set
forth below between Union Bank of California, N.A. ("Bank") and the undersigned
("Borrower") with respect to each and every extension of credit (whether one or
more and to include extensions of credit under Conditional Sales Leases,
collectively referred to as the "Loan") from Bank to Borrower.
The Loan is evidenced by one or more Loan or Conditional Sales Lease agreements
or other evidences of indebtedness, including each amendment, extension, renewal
or replacement thereof, which are incorporated herein by this reference (whether
one or more, collectively referred to as the "Loan"). Any financial statement
required by this Agreement must be prepared in accordance with generally
accepted accounting principles and in a form satisfactory to the Bank. In
consideration of the Loan, Bank and Borrower agree to the following terms and
conditions:
Liquidity Requirement
Borrower will maintain at all times unencumbered and unrestricted liquid assets
in an aggregate amount equal to at least $850,000.00, with the exception of the
period ending 6/30/98 in which the aggregate amount will be equal to at least
$550,000.00. Liquid assets shall mean immediately available: cash, bank deposits
or accounts, obligations of or guaranteed by the U.S. Government or an agency
thereof; stocks, bonds and other debt instruments regularly traded on the New
York or American stock exchanges or NASDAQ with a price per share not less than
$7.50 and which can be readily converted into cash. In the event of violation of
this liquidity maintenance provision, Borrower shall have fifteen days from the
event of default to provide additional cash collateral sufficient to fully
secure all outstanding obligations to the Bank.
Financial Statements and Tax Returns
Borrower to provide Bank with a copy of Borrower's self-prepared financial
statement, including balance sheet and income statement, within 30 days of each
quarter end. Borrower to provide Bank with a copy of Borrower's CPA audited
financial statement within 120 days after each fiscal year end.
This requirement does not express or imply any obligation on Bank's part to
extend any credit to any party of any duration whatsoever.
This Covenant Agreement supersedes and replaces in its entirety that certain
letter from Bank to Borrower dated September 8, 1997.
Sincerely,
/s/ Xxx Xxxxxxxxx
--------------------
T.D. (Xxx) Xxxxxxxxx
Vice President
