F I N 0", o0A'
FINANCIAL INNOVATORS
Via: FEDERAL EXPRESS
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February 8, 2001
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
President & Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
FINOVA CAPITAL CORPORATION COMMERCIAL SERVICES
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TEL 213253 1600 FAX ▇▇▇ ▇▇▇ ▇▇▇▇
Re: FORBEARANCE LETTER AGREEMENT RE EVENTS OF DEFAULT UNDER LOAN AND SECURITY
AGREEMENT DATED AUGUST 31, 1999 (AS AMENDED FROM TIME TO TIME, THE
"LOAN AGREEMENT"; CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS
GIVEN IN THE LOAN AGREEMENT UNLESS OTHERWISE DEFINED) BETWEEN TELCO
BILLING, INC. ("BORROWER") AND FINOVA CAPITAL CORPORATION ("FINOVA") AS
SUCCESSOR BY MERGER TO FREMONT FINANCIAL CORPORATION
Dear ▇▇. ▇▇▇▇▇:
This Amendment to Forbearance Letter Agreement (this "Agreement") is being
entered into by and between FINOVA and Borrower with reference to the following:
A. On or about August 31, 1999, ▇▇▇▇▇▇▇▇ and FINOVA entered into a
$3,000,000 credit facility (the "Credit Facility"), as evidenced by the Loan
Agreement, consisting of a revolving credit line up to a maximum amount of
$3,000,000. In connection with the Credit Facility, YP. Net, Inc., formerly
known as RIGL Corporation, ("Guarantor") executed a Continuing Guaranty
("Guaranty") dated August 31, 1999, in favor of FINOVA, guarantying all
Obligations.
B. The Loan Agreement, the Guaranty and all other Loan Documents are
collectively referred to herein as the "Loan Documents".
C. Certain Events of Default occurred under the Loan Agreement and FINOVA
agreed to forbear from exercising its rights and remedies in exchange for
certain concessions from Borrower as more fully described in that certain Letter
Agreement dated August 4, 2000 between FINOVA and Borrower ("Forbearance
Agreement").
D. Pursuant to the Forbearance Agreement, FINOVA agreed to forbear from
exercising its rights and remedies, subject to the conditions set forth in the
Forbearance Agreement, until October 3, 2000. Such forbearance period was
subsequently amended by various letter amendments until February 7, 2001.
TELCO BILLING, INC.
2/8/01
Page 2
▇. ▇▇▇▇▇▇▇▇ has requested FINOVA to further extend the forbearance period
for an additional period of time to allow Borrower additional time to obtain
financing sufficient to fully repay the Obligations. FINOVA is willing to extend
the forbearance period under the terms of this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, FINOVA and Borrower agree as follows:
1. Acknowledszement of FactualRecitals. The parties acknowledge the truth,
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accuracy and validity of the foregoing factual recitals and incorporate the same
into this Agreement.
Acknowledgment of Validity and Enforceabilily of Loan Documents and
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Obligations. Borrower acknowledges and agrees that the Loan Agreement and other
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Loan Documents are valid and enforceable according to their terms. As of
February 07, 200 1, the total amount of the outstanding principal balance of the
Revolving Advances is approximately $747,529.03 plus all accrued but unpaid
interest, fees and charges.
3. Acknowledgment of Validily of Security Interest.Borrower acknowledges the
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validity of FINOVA's security interest in the Collateral and acknowledges that
the Collateral continues to secure all of the Obligations.
4. Acknowledgment of Defaults.Borrower acknowledges that Events of Default
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exist under the Loan Documents and that, but for this Agreement, FINOVA could
exercise all of its rights available thereunder or at law or in equity.
5. No Defenses. Borrower acknowledges that it has no valid offset or defense
to the Obligations now or hereafter owing under the Loan Agreement, nor does
Borrower have any valid claim against FINOVA and, thbrefore, admits and confirms
that it does not have any legal right or theory on which to invoke or obtain any
legal or equitable relief to ▇▇▇▇▇, postpone or terminate FINOVA's enforcement
of its rights to repayment of Obligations now or hereafter owing under the Loan
Agreement and specifically waives and relinquishes any such right to legal or
equitable relief to cause any abatement, postponement or termination of any
enforcement proceedings commenced by FINOVA.
6. Reaffirmation of Loan Documents. Borrower and, where applicable,
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Guarantor, each reaffirms and ratifies the terms of the Loan Documents in all
respects. Except as specifically provided herein, Borrower acknowledges that
nothing in this Agreement shall (a) be construed to limit or restrict FINOVA
from exercising its rights and remedies under the Loan Documents with respect to
any other defaults thereunder or with respect to any default by Borrower in the
performance of its obligations hereunder, or (b) relieve or release Borrower
from any of the obligations, covenants or provisions required to be performed or
observed under the Loan Documents or hereunder.
TELCO BILLING, INC.
2/8/01
Page 3
7. Forbearance.
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(a) Forbearance Period. Provided Borrower performs all terms and conditions
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in this Agreement, and no Events of Default other than those referenced in the
Default Letters (as defined in the Forbearance Agreement) shall have occurred
under the Loan Agreement, FINOVA shall forbear from exercising its rights and
remedies under the Loan Documents until March 9, 2001 (the "Forbearance
Termination Date"). Upon the earliest to occur of (i) the Forbearance
Termination Date, (ii) the occurrence of an Event of Default or (iii) a breach
by Borrower of the terms and conditions of this Agreement, all Obligations shall
be immediately due and payable and FINOVA may resort to all rights and remedies
available under the Loan Documents, at law and/or in equity.
(b) Forbearance Terms. During the period this Agreement is in effect, the
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following terms shall apply:
(i) Section 2.1A of the Loan Agreement shall be deleted in its entirety and
replaced with the following:
A. REVOLVING ADVANCES. Upon request of ▇▇▇▇▇▇▇▇ made at any time during the
term hereof and so long as no Event of Default exists, FINOVA shall, at its sole
discretion, make advances (Revolving Advances) to Borrower in an amount equal to
(a) fifty percent (50%) of the aggregate outstanding amount of Eligible
Accounts; provided, however, that in no event shall the aggregate amount of the
outstanding Revolving Advances be greater than the sum of Seven Hundred Fifty
Thousand Dollars ($750,000) (the Revolving Advance Limit). FINOVA may reduce its
advance rates on Eligible Accounts, reduce the Revolving Advance Limit, or
establish resetves with respect to borrowing availability if FINOVA determines,
in its sole discretion, that there has occurred, or is likely to occur, an
impairment of the prospect of repayment of all or any portion of the
Obligations, the value of the Collateral or the validity or priority of FINOVA's
security interests in the Collateral.
(ii) No less than one week before the beginning of each month, Borrower
shall provide FINOVA with a monthly budget for the next month setting forth in
detail, on a week by week basis, all of the expenses to be paid by Borrower
during the next month and such other information as FINOVA shall request.
Revolving Advances will only be made by FINOVA to Borrower to the extent
necessary to fund the items on such budgets which are permitted to be paid
pursuant to the Loan Agreement and which FINOVA is satisfied are necessary for
Borrower to conduct its daily operations.
(iii) Interest on the outstanding Obligations shall continue to accrue at
the default rate as provided in Section 2.5A of the Loan Agreement.
TELCO BILLING, INC.
2/8/01
Page 4
8. Conditions Precedent. FINOVA's agreement to enter into this Agreement and
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grant the forbearance provided herein is expressly conditioned on Borrower
executing and delivering this Agreement to FINOVA and causing Guarantor to
execute and deliver an acknowledgment and reaffirmation of the Guaranty and the
release provided herein, on or before 5:00 p.m. California time on February 8,
2000.
9. Default. Failure by Borrower to comply with all terins and conditions of
this Agreement shall constitute a default hereunder, following which FINOVA may,
without notice to Borrower, resort to all rights and remedies available under
the Loan Documents, at law and/or in equity, including without limitation the
liquidation of all Collateral. ▇▇▇▇▇▇▇▇ agrees that, upon such event of default,
▇▇▇▇▇▇▇▇ shall cooperate with FINOVA in orderly liquidating the Collateral and
in the exercise of all of FINOVA's rights as a secured lender.
10. No Further Forbearance. Borrower acknowledges FINOVA is not obligated to
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grant further extensions beyond the Forbearance Termination Date and that no
such commitment has been communicated.
11. RELEASE. BORROWER AND GUARANTOR, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
REPRESENTATIVES, EMPLOYEES, PREDECESSORS, SUCCESSORS, AGENTS AND ASSIGNS
(COLLECTIVELY, "RELEASING PARTIES") EACH HEREBY RELEASE, REMISE AND FOREVER
DISCHARGE FINOVA, AND ITS OFFICERS, DIRECTORS, EMPLOYEES, PREDECESSORS,
SUCCESSORS, AGENTS AND ASSIGNS (COLLECTIVELY "RELEASED PARTIES"), FROM ANY AND
ALL CLAIMS, DEMANDS, ACTIONS, CAUSE OR CAUSES OF ACTION HERETOFORE ARISING OUT
OF, OR CONNECTED WITH OR INCIDENTAL TO THE LOAN AGREEMENT OR ANY LOAN DOCUMENTS.
THIS GENERAL RELEASE IS INTENDED TO BE A FUN AND COMPLETE RELEASE OF ANY SUCH
CLAIMS, DEMANDS, ACTIONS, CAUSE OR CAUSES OF ACTION CONNECTED IN ANY WAY TO THE
LOAN AGREEMENT AND WHICH HAVE HERETOFORE ARISEN.
RELEASING PARTIES EACH ACKNOWLEDGE AND AGREE THAT THEY ARE AWARE THAT THEY MAY
HEREAFTER DISCOVER CLAIMS PRESENTLY UNKNOWN OR UNSUSPECTED, OR FACTS IN ADDITION
TO OR DIFFERENT FROM THOSE WHICH THEY NOW KNOW OR BELIEVE TO BE TRUE.
NEVERTHELESS, IT IS THE INTENTION OF THE RELEASING PARTIES, AND EACH OF THEM,
THROUGH THIS AGREEMENT, TO FULLY, FINALLY AND FOREVER RELEASE ALL SUCH MATTERS
AND CLAIMS RELATIVE THERETO, WHICH DO NOW EXIST, MAY EXIST, OR HERETOFORE HAVE
EXISTED. IN THIS REGARD, RELEASING PARTIES SPECIFICALLY WAIVE THE BENEFIT OF THE
PROVISIONS OF SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA, WHICH
PROVIDES: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM' MUSTHAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Borrower's Initials Guarantor's Initials
TELCO BILLING, INC.
2/8/01
Page 5
12. Fee. In consideration of the extension to the forbearance period granted
hereby, Borrower shall pay to FINOVA a fee of shall be fully earned
and due and payable on the date hereof.
13. Representations and Warranties of Borrower and ▇▇▇▇▇▇▇▇▇.▇▇ induce FINOVA to
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execute and deliver this Agreement, each of Borrower and Guarantor represent and
warrant that:
(a) The execution, delivery and performance by ▇▇▇▇▇▇▇▇ and Guarantor, as the
case may be, of this Agreement, and all documents and instruments delivered in
connection herewith and therewith have been duly authorized; and
(b) Neither the execution, delivery or performance of this Agreement or any of
the documents or instruments delivered in connection herewith or therewith nor
the consummation of the transactions contemplated hereby or thereby does or
shall contravene, result in a breach of, or violate (i) any provision of
Borrower's or Guarantor's corporate charter or bylaws or other governing
documents, (ii) any law or regulation or any order or decree of any court or any
governmental instrumentality or (iii) any indenture, mortgage, deed of trust,
lease agreement or other instrument to which Borrower or Guarantor is a party or
by which any of their property is bound.
14. Miscellaneous.
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(a) This Agreement, the Forbearance Agreement and the Loan Documents constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supercedes any prior oral or written agreements concerning the same.
Except as expressly amended hereby, all of the terms of the Loan Agreement, the
Forbearance Agreement and other Loan Documents remain in full force and effect.
(b) In the event any legal action is commenced to enforce or interpret any
provision of this Agreement, the prevailing party in such legal action, as
determined by a court of competent jurisdiction, shall be entitled to receive
from the other party the prevailing party's reasonable attorneys' fees and court
costs.
(c) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which, when taken together, shall constitute one
and the same document.
(d) The parties have retained, or have had the opportunity to retain, counsel to
represent them in the transactions contemplated in this Agreement, have read and
understand this Agreement and, therefore, the principle of construction against
draftsmen shall have no application in the interpretation of this Agreement.
(e) GOVERNING LAW; WAIVERS. THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
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ENFORCEMENT OF THE OBLIGATIONS, SHALL BE
TELCO BILLING, INC.
2/8/01
Page 6
INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS
RULES) OF THE STATE OF CALIFORNIA GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE. BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF LOS ANGELES IN THE STATE OF
CALIFORNIA OR, AT THE SOLE OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER WAIVES ANY OBJECTION OF
FORUM NON CONVENIENS AND VENUE. BORROWER FURTHER WAIVES ANY RIGHT IT MAY
OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT.
(f) MUTUAL WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND BORROWER EACH HEREBY
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WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; (ii) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN FINOVA AND BORROWER; OR (iii)
ANY CONDUCT, ACTS OR OMISSIONS OF FINOVA OR BORROWER OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
FINOVA OR BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.
(g) The invalidity, illegality, or unenforceability of any provision in or
obligation under this Agreement in any jurisdiction shall not affect or impair
the validity, legality, or enforceability of the remaining provisions or
obligations under this Agreement or of such provision or obligation in any other
jurisdiction.
(h) Each of the Borrower and ▇▇▇▇▇▇▇▇▇ agrees to take all further actions and
execute all further documents as FINOVA may from time to time reasonably request
to carry out the transactions contemplated by this Agreement.
THEREFORE, the parties have entered into this Agreement on the date first
written above.
TELCO BILLING, INC.
By
Name:
Title:
FINOVA CAPITAL CORPORATION
TELCO BILLING, INC.
2/8/01
Page 7
By:
Name:
Title:
TELCO BILLING, INC.
2/8/01
Page 8
Guarantor's Acknowledgment
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The undersigned Guarantor consents and agrees to the terms of this Agreement and
reaffirms and restates in all respects the Continuing Guaranty executed in
connection with the Loan Agreement and agrees that it remains unconditionally
liable for the prompt payment and performance of all of the Liabilities (as
defined in such Continuing Guaranty), without defense, claim, counterclaim or
setoff of any nature.
YP. NET, INC.
By:
Name:
Title:
