EXHIBIT 10.11
EQUIPMENT LEASE AGREEMENT
No. 0554
THIS LEASE is made on the 25th day of August, 1997, by and
between Union Bank of California N.A., hereinafter called "Lessor," and The
Pathways Group, Inc., hereinafter called "Lessee." It is hereby mutually
agreed:
WITNESSETH:
1. Lease. Lessor hereby agrees to lease to Lessee and
Lessee hereby agrees to hire from Lessor the unit or units of equipment,
machinery or other personal property (hereinafter called "equipment")
described in the Equipment Lease Schedule or Schedules (hereinafter called
"Schedule") executed by the parties concurrently herewith or hereafter with
reference hereto. Each such Schedule shall be a separate lease upon the terms
contained herein and in the Schedule.
2. Term. The term of any lease hereunder for a unit or
units of equipment shall commence upon delivery to Lessee of the equipment
described on the Equipment Lease Order and shall end at the expiration of the
term stated in the Schedule.
3. Rent. The rent for equipment described in the Schedule
shall be the amount stated in the Schedule. Lessee shall pay Lessor the total
rental without demand in installments in advance, commencing the date of
actual delivery of the equipment, without deduction or offset, in the amounts
and at the times set forth in the Schedule. Rent shall be payable to Lessor
or its assignee (at such place a Lessor or its assignee may from time to time
designate in writing) and shall not xxxxx for any reason during the term.
4. Licensing, Registration and Taxes. Lessee shall obtain
such licensing and registration of the equipment as is required by law. In
addition to rent, Lessee shall pay and discharge when due all license,
registration and other fees, all assessments, sales, use, property, and other
taxes, together with any fines, penalties or interest applicable thereto, now
or hereafter imposed by any state, Federal or local government upon or on
account of the equipment, or the acquisition, purchase, leasing, use,
possession or operation thereof, whether or not measured by rental income
received by Lessor, (EXCLUDING, however, income taxes based on net income or
gross receipts or gross income of Lessor), and whether the same be payable by
or assessed to Lessor or Lessee; provided, however, if under local law or
custom such payments may be made only by Lessor, Lessee shall promptly notify
Lessor and shall reimburse Lessor, upon demand for all payments thereof made
by Lessor. If by law any such fee or tax is billed to Lessor, Lessee at its
expense will do any and all things required to be done by Lessor in
connection therewith and in payment thereof.
5. No Warranties by Lessor. Lessee acknowledges that Lessor
is not the manufacturer or vendor of the equipment, and that LESSOR MAKES NO
WARRANTY, REPRESENTATION, OR PROMISE, EXPRESS OR IMPLIED, AS TO THE
CONDITION, QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY
OTHER MATTER CONCERNING THE EQUIPMENT OR THE MATERIALS OR WORKMANSHIP IN THE
EQUIPMENT, OR THAT THE EQUIPMENT IS FREE OF DEFECTS OR WILL SATISFY ANY
REQUIREMENT FOR SPECIFIC MACHINERY OR CAPACITY OR SPECIAL METHODS, ALL
WARRANTIES BEING THEREBY EXPRESSLY DISCLAIMED. Lessor shall have no
obligation to install, erect, test, adjust or service the equipment.
Responsibility for all matters regarding the equipment is to be borne by
Lessee at its sole risk and expense. Lessee may obtain whatever installation
and service to the equipment the manufacturer or vendor customarily renders,
provided that no such installation or service be at the expense of Lessor.
Lessee hereby waives any claim it might have against Lessor for any loss,
damage, or expense caused by the equipment or by any defect therein, use or
maintenance thereof or servicing or adjustment thereto. During the period of
any lease hereunder in which Lessee renders faithful
performance of its obligations, Lessor hereby assigns to Lessee any factory
or dealer warranty Lessor may have on the equipment covered by any lease
hereunder. All such warranties are for the benefit of both parties. Lessee
shall make and enforce claims on any such warranty at Lessee's expense.
Lessor may but shall have no obligation whatsoever to claim on or enforce any
warranty. Any monetary recovery on any warranty shall be paid to Lessee and
Lessor. Proceeds of a warranty recovery shall be applied first to satisfy any
interest of Lessor and any remainder paid to Lessee.
6. Lessee's Inspection, Defects, and Indemnity. All
equipment leased will be selected by Lessee who shall select the manufacturer
and the vendor thereof. Lessee agrees Lessor shall have no duty or obligation
whatsoever to inspect any equipment. Promptly after delivery, prior to use,
and prior to executing the Equipment Lease Schedule, Lessee shall inspect for
defects and test the equipment at Lessee's expense. Lessee agrees to notify
Lessor in writing of any defect in or objection to the equipment. If Lessee
fails to make complaint, the equipment shall be deemed to be in good
condition and without defect. Lessee agrees to defend at its own cost and to
indemnify and hold harmless Lessor, its agents and employees, from and
against any and all loss, claims, costs, expenses (including attorneys fees
and legal expense), damages, and liabilities of every kind, for injury to or
death of any person or damage to any property, arising out of or connected
with any latent or other defect in the equipment or any part thereof,
irrespective of whether such losses, claims, costs, expenses, damages or
liabilities were actually or allegedly caused wholly or in part by any act,
failure to act, or negligence of Lessor or any of its agents or employees, or
whether responsibility therefor is based on strict liability imposed upon
Lessor.
"The equal employment opportunity clauses of Executive
Orders 11246 (as amended by Executive Order 11375 and including signers
certification hereby that its does not maintain segregated facilities), 11625
(relating to minority business enterprise). Section 503 of the Rehabilitation
Act of 1973 as amended, Section 402 of the Viet Nam Era Veterans Readjustment
Assistance Act of 1974, written Affirmative Action Compliance Program and all
subsequent orders related to equal employment opportunities and implementing
rules and regulations of the Secretary of Labor are incorporated herein by
reference to the extent such orders are applicable to signer in connection
with this lease."
7. Location, Use. All equipment shall be leased by Lessee
for use in Lessee's business and shall be permanently kept and maintained at
the location shown on the Schedule. Equipment may be re-located by Lessee
with Lessor's prior written consent. On demand, Lessee shall give Lessor
written notice of the exact location of any or all equipment. Lessee agrees
to use equipment only for the purposes for which it was manufactured.
Lessee shall not affix or attach any equipment to real
property or other personal property without the prior written consent of
Lessor. Lessee shall obtain written agreements, releases and waivers, in form
and substance acceptable to Lessor, from all parties interested in any such
realty or other personal property (whether as owner, lien holders, or
otherwise) providing that all equipment shall remain personal property of
Lessor and subject to the lease thereof even though so affixed or attached,
and that all or part of said equipment may be removed or at the Lessor's
option abandoned in place.
Lessee shall use due care in connection with and shall
comply with all laws, ordinances and regulations relating to the possession,
use, operation or maintenance of equipment, and shall make any modification
thereof or addition now or hereafter required by any law, ordinance or
regulation at Lessee's expense. Lessor may at any time during normal business
hours enter the premises where the equipment may be located, for the purpose
of examining the equipment to insure compliance by Lessee with its
obligations under any lease made hereunder.
8. Repairs, Alterations. Lessee, at its expense, shall keep
and maintain the equipment in good repair, condition and working order and
shall keep the equipment protected from the elements. Lessee shall not make
any alterations, additions or improvements to the equipment without
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the prior written consent of Lessor. All alterations, additions and
improvements shall be made at Lessee's expense and shall on installation
become part of the equipment and the property of Lessor.
9. Insurance. Lessee, at its expense, agrees to procure and
maintain insurance in the amounts and covering the risks as Lessor from time
to time requires, including but not limited to the insurance specified in the
Equipment Lease Schedule. Lessee shall comply with all requirements necessary
to maintain all such insurance in force during the entire term of the lease
and until Lessee returns the equipment to Lessor. All such insurance shall be
in the joint names of Lessor and Lessee and shall be in a form and with
companies acceptable to Lessor. All policies shall provide that insurance may
not be altered or canceled without ten (10) days prior written notice to
Lessor. Lessee shall furnish such evidence of insurance and terms and
conditions of policies as Lessor may require. Public liability and property
damage insurance maintained by Lessee shall inure first to the benefit of
Lessor to the full extent of its liability, if any, and the remainder to the
benefit of Lessee. The proceeds of any theft, fire, extended coverage,
collision or any other insurance providing coverage to risks to equipment
shall be payable solely to Lessor and shall be applied to Lessor in
accordance with the provisions of this lease. Lessee hereby irrevocably
appoints Lessor as Lessee's attorney-in-fact to make claim for, receive
payment, and in Lessee's name, execute and endorse all documents, checks and
drafts for loss, damage, or return premium, under any insurance.
10. Damage or Destruction. Commencing at the time such
risks pass to Lessor from the manufacturer or vendor of the equipment and
continuing during the term and until Lessee returns the equipment to Lessor,
Lessee assumes the entire risk of loss, theft or destruction of, and damage
to, all equipment leased hereunder, from every cause whatsoever, whether or
not covered by insurance, and no such event shall release or relieve Lessee
from its obligation to pay rent or to perform any of its lease obligations.
Lessee agrees to give Lessor written notice forthwith upon the occurrence of
any such event. Should one or more units of leased equipment suffer damage,
or be lost, stolen, or destroyed, for each such unit Lessee shall, at
Lessor's option, either:
(a) Repair each unit damaged at Lessee's expense and the
amount of insurance proceeds, if any, paid on policies of insurance
maintained by Lessee shall be applied to the cost of such repair; or
(b) Replace the equipment with similar equipment,
acceptable to Lessor, at Lessee's expense, in which event the lease shall
continue for such equipment, and the amount of insurance proceeds, if any,
received by Lessor for such unit on policies of insurance maintained buy
Lessee shall be paid to Lessee; or
(c) Pay Lessor the stipulated loss value specified in the
Schedule for the unit, and the lease of such unit of equipment and rental
therefor shall terminate with respect to the item of equipment for which
Lessee has paid. Lessee shall be entitled to receive any salvage value, and
the amount of insurance proceeds, if any, received by Lessor for such unit on
policies of insurance maintained by Lessee shall be paid to Lessee.
If the lease of any one or more but not all units of a lot
of multiple units leased pursuant to a single Schedule shall terminate
pursuant to the foregoing provisions, the lease of the remaining units of
equipment covered by such Schedule shall nevertheless continue in full force
and effect.
11. Indemnity. Lessee agrees to defend at its own cost and
to indemnify and hold harmless Lessor, its agents and employees, from and
against any and all loss, claims, costs, expenses (including attorneys fees
and legal expense), damages and liabilities of every kind, however arising or
caused, resulting directly or indirectly from or in any manner connected with
or pertaining to the equipment, or any part thereof, or ownership, shipment,
transportation, delivery, possession, use, condition (including without
limitation, latent or other defects, whether or not discoverable by Lessor),
location, maintenance or operation thereof (including, without limitation,
such loss, claims, costs,
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expenses, damages and liabilities due to the death of or injury to Lessee or
Lessor, their agents or employees or any third person or damage to the
property of Lessee or Lessor, their agents or employees or any third person),
irrespective of whether such losses, claims, costs, expenses, damages or
liabilities were actually or allegedly caused wholly or in part by any act,
failure to act, or negligence of Lessor or any of its agents or employees, or
whether responsibility therefore is based on strict liability imposed upon
Lessor.
12. Default. Time is of the essence. Non-payment or delay
by Lessee in the payment of any rental or any other sum payable hereunder or
under any lease for more than ten days, or non-performance or failure by
Lessee to fully perform any covenant, condition or obligation required of
Lessee hereunder or under any lease, or cancellation of coverage by any
carrier of insurance required hereunder or under any lease, shall constitute
a total breach and default by Lessee. If Lessee shall cease to do business or
become insolvent, or if an assignment for the benefit of creditors is made by
Lessee, or if Lessee commits any act of bankruptcy, or if any proceeding in
bankruptcy, insolvency, reorganization, arrangement, receivership, or
proceeding for the benefit of creditors is instituted by or against Lessee,
or if any levy or seizure is made on any unit of equipment, or if a receiver
or trustee is appointed to take possession of any unit of equipment, such
event shall constitute a total breach and default by Lessee. Acceptance of
payment shall not constitute a waiver of any default.
In the event of default by Lessee, to the extent permitted
by applicable law, Lessor may exercise part or all of any one or more of the
following rights and remedies at any time and in any order separately or
concurrently with respect to any or all leases hereunder:
(a) Declare immediately due and payable, and upon demand
Lessee will pay, all the rent then unpaid for the full remaining term on any
or all of the equipment leased to Lessee as Lessor may elect. Payment by
Lessee shall not terminate the lease of such equipment or Lessor's right to
recover possession of such equipment at the expiration of the term or sooner
if Lessee shall continue in default or suffer any subsequent default.
(b) Require Lessee to assemble and turn over to Lessor any
or all of the equipment leased to Lessee as Lessor may elect. On demand of
Lessor therefor, Lessee agrees to assemble and turn over such equipment to
Lessor and if Lessee fails to do so, Lessor shall have the right to recover
and Lessee will immediately pay Lessor, in addition to any other amount, an
amount equal to the stipulated loss value specified in the applicable
Schedules for the time period immediately following the last time period for
which rent has been paid.
(c) Take possession of any or all equipment leased, having
for such purpose the right to enter upon any premises where equipment may be
without any court order or other process of law and repossess and remove said
equipment, either with or without notice to Lessee, using all force permitted
by law so to do. Lessee waives all claims for damages because of entry or
taking possession, whether or not Lessee was in default at the time, if
Lessor reasonably believed that Lessee was in default. Taking possession of
equipment shall not terminate the lease thereof unless Lessee is given a
written notice electing such termination by Lessor. Absent such written
notice, the lease thereof shall remain in effect and Lessee shall remain
liable for all payments to be made thereunder.
(d) From time to time, with or without notice to Lessee and
without terminating the lease thereof, re-let all or part of the equipment to
any other person or persons at such rental and upon such covenants and
conditions as Lessor shall determine for a term or terms of any duration
which may extend beyond the expiration date of the term specified on the
applicable lease. If Lessor re-lets any of the equipment and the rentals
received therefrom be less than that agreed to be paid by Lessee on the
applicable lease, Lessee shall be liable for such deficiency which shall be
paid monthly or from time to time at Lessor's option. Notwithstanding any
such reletting of equipment without termination, Lessor may at any time
thereafter by written notice to Lessee elect to terminate Lessee's lease
thereof for such previous default and enforce its rights on termination.
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(e) Sell all or any part of the equipment at a public or
private sale held with or without notice to Lessee. Sale of a unit of
equipment shall constitute an election by Lessor to terminate the Lease as to
such unit and Lessor may enforce its rights on termination. If Lessor sells
any part of the equipment, the parties agree that the proceeds of sale, less
an allowance to Lessor on account of the residual value of the equipment
sold, shall be deemed to be the then reasonable rental value of such
equipment for the balance of the stated term.
(f) At any time and from time to time, terminate any or all
or any part of such leases as to such equipment as Lessor may elect. On
termination, in addition to its rights to recover any other amounts, Lessor
shall have the right to recover from Lessee, and Lessee will immediately pay
Lessor, the worth at the time of such termination, of the excess, if any, of
the amount of rent and charges equivalent to rent reserved in the lease for
the equipment concerned for the balance of the stated term thereof over the
then reasonable rental value of such equipment for the same period. If the
lease of any one or more but not all units of a lot of multiple units leased
pursuant to a single Schedule shall be terminated by Lessor pursuant to the
foregoing provisions, the lease of the remaining units of equipment covered
by such Schedule shall nevertheless continue in full force and effect.
(g) Pursue any other remedy which Lessor may have
hereunder, under any other agreement with Lessee, or under the law. Lessor's
rights and remedies are cumulative and not alternative and may be enforced
separately or concurrently. Partial exercise of any right or remedy shall not
preclude other or further exercise thereof or of any other right or remedy.
In addition to any other amounts, Lessee shall be liable for and shall pay
all costs and expenses of Lessor in repossessing, transporting, storing,
repairing, leasing, selling, or otherwise handling said equipment, and the
reasonable attorneys' fees and legal expenses actually incurred by Lessor in
exercising rights and remedies.
13. Non-Waiver. Any forbearance, failure or delay by Lessor
in exercising any right or remedy hereunder or under any lease shall not be
deemed to be a waiver of such right or remedy or of any default by Lessee,
and any single or partial exercise of any right or remedy shall not preclude
the further exercise thereof. No waiver of any of Lessee's obligations shall
occur and all rights and remedies of Lessor shall remain in full force and
effect unless specifically waived in writing signed by a duly authorized
officer of Lessor.
14. Assignment by Lessor. Lessor may assign, pledge or in
any other way transfer any lease hereunder or any interest therein, either in
whole or in part (all of the foregoing being herein referred to as
"assignment"), without notice to Lessee. In the event of such assignment, no
breach or default by Lessor of any lease hereunder or of any other agreement
between Lessee or Lessor shall excuse performance by Lessee of any lease
obligation to the assignee. No assignee shall be obligated to perform any
covenant, condition or obligation required to be performed by Lessor unless
the assignee assumes the Lessor's obligations in writing, except that if
Lessor has paid the amount of any advance rent or security deposit to an
assignee, such assignee shall be obligated to pay Lessee any amount thereof
remaining at the termination of the lease and Lessor shall have no liability
to Lessee for repayment thereof. The right of an assignee to receive the
rentals or to receive the equipment upon termination of any lease hereunder
shall be free of all defenses, setoffs and counterclaims which Lessee may be
entitled to assert against Lessor, but Lessee may separately assert such
claims against Lessor. No alteration or modification of any lease hereunder
may be made without the written consent of the assignee of such lease after
Lessee receives notice of the assignment thereof.
15. Assignment by Lessee. Lessee shall not sell, assign,
pledge, hypothecate, or in any other way transfer any lease hereunder, or any
interest therein, nor sublet, lend, hypothecate, or in any other way transfer
any equipment, or any interest therein, or part with possession or control of
any equipment without the prior written consent of Lessor. Consent to any of
the foregoing acts shall not constitute or be deemed to be consent to any
other or subsequent act.
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16. Ownership by Lessor. Title to the equipment shall at
all times remain in Lessor and the equipment shall at all times remain the
sole and exclusive property of Lessor. Lessor may grant third parties a
security interest in any equipment and in such event, Lessee agrees to
execute any document reasonably required by Lessor in connection therewith.
Lessee shall prominently affix to the equipment and maintain any labels,
plates or other markings from time to time provided by Lessor stating that
the equipment is owned and leased by Lessor and shall keep equipment free and
clear of all liens, claims, and charges incurred by Lessee.
17. Surrender, Holdover. Upon the expiration or termination
of any lease hereunder, Lessee shall return each item of equipment to Lessor,
free of all advertising or insignia placed thereon by Lessee, and in good
condition, repair and working order, ordinary wear and tear excepted. The
equipment shall be returned by Lessee at Lessee's expense, by delivering the
equipment to any location selected by Lessor within the State of California,
notwithstanding that the equipment may have been relocated with Lessor's
consent. If equipment is returned in condition other than as stated herein,
Lessee shall pay for the necessary repairs to place it in such condition. Any
holding of equipment by Lessee beyond the term of any lease hereunder, shall,
at Lessor's option, be deemed an extension of the original lease on a
month-to-month basis, and all obligations of Lessee shall continue during
such holding over. During any such holding over, Lessor may terminate such
lease upon thirty days written notice to Lessee.
18. Financial Reports. Lessee shall give Lessor a copy of
Lessee's annual financial and profit and loss statements as soon as available
and in any event within 120 days after the end of each fiscal year of Lessee,
and such other financial information, statements and reports as Lessor may
from time to time request.
19. Attorneys Fees. In the event any action or proceeding
is brought to enforce the rights or obligations of the parties hereunder, or
under any Equipment Lease Order, or under any lease, the prevailing party in
such action, in addition to any other relief, shall be entitled to recover
its reasonable attorneys fees and legal expense incurred.
20. Notices. All notices required or permitted under any
lease hereunder shall be sufficient if delivered personally or mailed to the
party at the address hereinafter set forth, or at such other address as
either party may designate in writing from time to time. Any such notice
shall be effective forty-eight (48) hours after it has been deposited in the
United States mail, duly addressed, and postage prepaid.
Union Bank of California, N.A. The Pathways Group, Inc.
Equipment Leasing Department
LESSOR LESSEE
21. Nature of Transaction. Lessor makes no representation,
express or implied, concerning the nature or effect of transactions hereunder
for tax or other purposes.
22. General Provisions. Lessor shall not be liable to
Lessee for any loss or damage of any kind by reason of delay or failure in
delivery of any equipment. Lessee shall pay all shipping charges and other
expenses incurred in connection with the delivery of the equipment to Lessee
not paid by the vendor.
Lessee shall give Lessor written notice forthwith in the
event any levy, lien, claim, or charge is imposed upon or asserted against
any leased equipment. Should Lessee fail to pay any sum or perform any act
required of Lessee, Lessor may, but shall not be obligated to, make such
payment or perform such act without thereby waiving the default. Lessee will
reimburse Lessor for any expense or
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liability incurred by Lessor in so doing, together with interest thereon at
the rate of 10% per annum, payable on demand. If any installment of rent is
not paid within ten days after it is due, Lessee agrees to pay Lessor a
delinquency charge in an amount equal to 5% of such installment. Lessor has
no obligation to accept late payment.
Lessee agrees to execute and deliver to Lessor such
notices, statements and other documents as Lessor may require to affirm or
give notice of the interest of Lessor in any lease or equipment. Lessor is
authorized to insert at any time in any Equipment Lease Order or any Schedule
any information, date or amount intended by the parties to be inserted
therein. No officer, employee or agent of Lessor shall have the power to
waive any of the terms or provisions hereof or to incur additional
obligations on behalf of Lessor unless such waiver or additional obligations
are evidenced by an agreement in writing signed by a duly authorized officer
of Lessor.
Default by Lessor under any lease shall not excuse
performance by Lessee under any other lease. When more than one party signs
as Lessee, they shall be jointly and severally liable to Lessor. All of
Lessee's covenants hereunder and under each lease shall survive the delivery
and return of the equipment leased.
Paragraph headings are not a part of this agreement.
The Equipment Lease and all Schedules hereunder and any
assignments thereof shall be governed by the laws of the State of California.
Lessee agrees to perform its obligations to Lessor and that Lessor may
enforce same in the County of Diego, State of California. If any provision of
this agreement or of any lease hereunder violates any law, such provisions
shall be considered annulled and deemed severable from the remaining
provisions which shall remain in full force and effect. The attached Addendum
A is incorporated herein.
IN WITNESS WHEREOF, the parties have executed this lease on
the day and year first written above.
LESSEE LESSOR
The Pathways Group, Inc. Union Bank Of California, N.A.
By /s/ Xxxx X. Xxxxxx By
------------------------------- ---------------------------
Xxxx X. Xxxxxx Xxxxx X. Xxxx
Treasurer Assistant Vice President
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THE PATHWAYS GROUP, INC.
CORPORATE XXXXXX
00000 XX 000xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Telephone(206) 000-0000 Facsimile(206) 485-4476
September 16, 1997 VIA AIRBORNE EXPRESS
Xx. Xxx Xxxx
Assistant Vice President, Equipment Leasing Department
UNION BANK OF CALIFORNIA 000 Xxxxx Xxxx Xx., 0xx Xxxxx Xxx Xxxxxxx, XX 00000
Dear Xxx:
Enclosed please find two signed originals of each of the following lease
documents:
1. Equipment Lease Agreement No. 0554
2. Addendum A to Equipment Lease Agreement No. 0554
3. Addendum B to Equipment Lease Agreement No. 0554
Please sign where indicated on all of the above, retain one executed set for
your files, and return one fully executed original set to my attention.
Thank you for your cooperation.
Yours very truly,
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Chief Financial Officer
Encl.
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ADDENDUM A
TO
EQUIPMENT LEASE AGREEMENT
NO. 0554
This Addendum is a part of the above described Equipment Lease Agreement,
dated August 25, 1997 between Union Bank of California, N.A. as Lessor and
The Pathways Group, Inc. as Lessee.
1. The following clause is inserted between the word "lease," and the word
"or" in the second sentence of Paragraph 12 of the lease:
or default by Lessee under any note or other agreement now
existing or hereafter made with Lessor or any affiliate of
Lessor
2. The phrase "affiliate of Lessor" as used in previous paragraph means
any entity which controls, is controlled by, or is under common control
with Lessor. In the previous sentence, an entity controls another if it
owns, directly or indirectly, 25 % or more of the voting stock or other
equity interest of the entity.
UNION BANK OF CALIFORNIA, N.A. THE PATHWAYS GROUP, INC.
By: By: /s/ Xxxx X. Xxxxxx
-------------------------- ---------------------------
Xxx Xxxx Xxxx X. Xxxxxx
Title: Assistant Vice President Title: Treasurer
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ADDENDUM B
TO
EQUIPMENT LEASE AGREEMENT
NO. 0554
This Addendum is a part of the above described Equipment Lease Agreement,
dated August 25, 1997 between Union Bank of California, N.A. as Lessor and
The Pathways Group, Inc. as Lessee.
Fair Market Value Purchase Option. Provided that the Equipment Lease
Agreement has not earlier been terminated and no Event of Default as defined
in the Equipment Lease Agreement, or other event of Default, has occurred and
is continuing, Lessee may, by giving written notice to Lessor not less than
180 days prior to the expiration of the lease term, purchase all, but not
than all, of the Equipment for the greater of the Equipment, s then Fair
Market Value or 16.67 % of the original Equipment cost as funded by Lessor.
Fair Market Value shall be determined on the basis of, and shall be equal in
amount to, the value which would be obtained in an arm's length transaction
between an informed and willing buyer-user (other than (i) a Lessee currently
in possession an (ii) a used equipment dealer) under no compulsion to sell.
UNION BANK OF CALIFORNIA, N.A. THE PATHWAYS GROUP, INC.
By: By: /s/ Xxxx X. Xxxxxx
-------------------------- ---------------------------
Xxx Xxxx Xxxx X. Xxxxxx
Title: Assistant Vice President Title: Treasurer
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September 8, 1997
Xxxx X. Xxxxxx, CFO
The Pathways Group Inc.
00000 XX 000xx Xx.
Xxxxxxxxxxx, XX 00000-0000
Dear Xx. Xxxxxx:
We are pleased to confirm the availability of a Conditional Sales Lease
(the "Lease") not to exceed Four Hundred Thousand Dollars ($400,000.00) to The
Pathways Groups Inc. ("Lessee"). The Lease is subject to the terms and
conditions detailed below:
TERMS:
Amount: $400,000.00
Maturity: September 1, 2000
Purpose: Leasing of office furniture and equipment.
CONDITIONS:
23. Lessee agrees to execute Bank's standard lease documentation. This letter
is supplemental to such documentation.
24. Promptly upon request, Lessee to provide any financial information
reasonably requested by Bank.
25. Lessee to provide Bank with a copy of Lessee's audited financial
statement within 120 days of each calendar/fiscal year end.
26. Lessee to provide Bank with a copy of Lessee's company prepared financial
statement within 60 days after each calendar/fiscal quarter end.
27. Lessee will maintain at all times unencumbered and unrestricted liquid
assets in an aggregate amount equal to at least $800,000.00. Liquid assets
shall mean immediately available: cash, bank deposits or accounts;
obligations of or guaranteed by the U.S. Government or an agency thereof
rated BBB or above; stocks, bonds and other debt instruments regularly traded
on the New York, American or NASDAQ stock exchange with a price per share not
less than $7.50 per share and which can be readily converted into cash. In
the event of violation of this requirement, Lessee shall have fifteen (15)
days from date of the default to provide additional cash collateral
sufficient to fully secure all direct outstanding obligations to Union Bank
of California.
28. Specific funding under each lease contemplated under this agreement will
require the concurance of the Bank's Equipment Leasing Department.
29. Lessee will give a written notice to Bank within fifteen (15) days after
occurrence of:
(a) Any substantial dispute between Lessee and any regulatory body
of law enforcement authority;
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(b) Any event of default under the Conditional Sales Lease or under any
other financing agreement with any other financial institution, or any
event which with the giving of notice or lapse of time or both, would
become an event of default;
(c) Any other matter which has resulted or might result in a material
adverse change in Lessee's financial condition or operation; and
(d) Any change in Lessee's name or principal place of business.
If the foregoing terms and conditions are satisfactory to you,
indicate your acceptance of this commitment by signing, dating, and returning
the enclosed copy of this letter to us no later than September 23, 1997.
Yours truly,
UNION BANK OF CALIFORNIA
/s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Vice President
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
Accepted on this 19th day of September , 1997
The Pathways Group, Inc.
/s/ Xxxx X. Xxxxxx
-------------------------------
Title: Chief Financial Officer
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February 25, 1998
Xxxx X. Xxxxxx, CFO
The Pathways Group, Inc.
00000 X. X. 000xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Dear Xxxx:
Please find enclosed an Authorization To Obtain Credit, Grant Security,
Guarantee Or Subordinate relating to your company's lease with Union Bank of
California. At your earlier convenience, please initial where indicated
confirming your role as both CFO and Treasurer of the company. This change
will bring the subject document into agreement with other lease documents.
Please also find enclosed a revised Covenant Agreement letter reflecting an
increase in your company's Minimum Liquidity Requirement. Please sign the
form where indicated and return to me as soon as convenient. Upon receipt, we
will immediately increase credit card limits for certain of your firm's
officers, per your request.
Thank you.
Sincerely,
/s/ Xxx Xxxxxxxxx
T. C. (Xxx) Xxxxxxxxx
Vice President
Enclosures
-1-
February 25, 1998
Xxxx X. Xxxxxx, CFO
The Pathways Group Inc.
00000 XX 000xx XX
Xxxxxxxxxxx, XX 00000-0000
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. 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 xxxxx tion 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 and obligation on Bank's part to
extend any credit to any party for 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.C. (Xxx) Xxxxxxxxx
Vice President
-1-
Page 2
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
Accepted and Agreed
The Pathways Group, Inc.("Borrower")
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx, CFO/Treasurer
-2-
