Comerica Bank Five Palo Alto Square. Ste. 800
Comerica
Bank
Five
Palo
Alto Square. Ste. 800
0000
Xx
Xxxxxx Xxxx
Xxxx
Xxxx, XX 00000
Technology
& Life Sciences
May
11,
2006
Xxxx
Xxxx
Chief
Financial Officer
Pac-West
Telecomm, Inc.
0000
X.
Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
Xx 00000
Re:
Pac-West Telecomm, Inc.
Dear
Ravi:
Reference
is made to that certain Loan and Security Agreement between Pac-West Telecomm,
Inc. ("Borrower")
and Comerica Bank ("Bank") dated as of November 9, 2005, as amended by that
certain First Amendment to the Loan and Security Agreement, dated as of November
30,2005, as further amended by that certain Second Amendment to the Loan and
Security Agreement, dated as of February 17, 2006 (collectively, and together
with any agreements referred to therein, the "Agreement"). All initially
capitalized
terms used but not defined in this letter shall have the meanings assigned
to
such terms in the Agreement.
Borrower
has been notified that on or after April 1, 2006 certain Defaults or Events
of
Default have occurred
and continue to exist as a result ofa violation of the following provision(s)
of
the Agreement:
"Section
6.7: (a) Adjusted
Quick Ratio. A
ratio
of Cash plus eighty percent (80%) of net trade Accounts
receivable net ninety (90) days from invoice date, excluding contra accounts,
to
Current Liabilities plus (to the extent not already included therein) all
Indebtedness to Bank less Deferred Revenue of at least (i) .80 to 1.00 from
the
Closing Date through December 30,2006; and (ii) .90 to 1.00 thereafter; measured
monthly."
"Section
6.7: (d) Total
Liabilities to Effective Tangible Net Worth. A
ratio
of Total Liabilities less Subordinated Debt to Effective Tangible Net Worth
of
not more than 1.00:1.00, measured monthly."
Borrower
has requested and Bank hereby agrees to waive the above referenced default
for
the periods from April 1, 2006 through and including May 31, 2006.
This
waiver is limited to the violations and the periods described above. This waiver
does not constitute a waiver, amendment, or forbearance of any other Default
or
Event of Default that may now exist or may occur
after the period stated herein with respect to these violations or any other
term, condition, or covenant contained in the Agreement. Except as specifically
set forth herein, all of the terms and conditions of the Agreement remain
unchanged and in full force and effect.
Sincerely,
Comerica
By:
/s/
Xxxx Xxxxxxx
Xxxx
Xxxxxxx
Corporate
Banking Officer
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