Exhibit 10.44
 
EXECUTION COPY
 

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LOAN AND SECURITY AGREEMENT
 
by and between
 
RMH TELESERVICES, INC.
 
as Borrower,
 
and
 
FOOTHILL CAPITAL CORPORATION
 
as Lender
 
Dated as of September 4, 2002
 

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TABLE OF CONTENTS
 
1.
  
DEFINITIONS AND CONSTRUCTION
  
1
    
  1.1
  
Definitions
  
1
    
  1.2
  
Accounting Terms
  
26
    
  1.3
  
Code
  
26
    
  1.4
  
Construction
  
26
    
  1.5
  
Schedules and Exhibits
  
26
2.
  
LOAN AND TERMS OF PAYMENT
  
27
    
  2.1
  
Revolver Advances
  
27
    
  2.2
  
[Intentionally Omitted]
  
28
    
  2.3
  
Borrowing Procedures and Settlements
  
29
    
  2.4
  
Payments
  
29
    
  2.5
  
Overadvances
  
30
    
  2.6
  
Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations
  
30
    
  2.7
  
Cash Management
  
32
    
  2.8
  
Crediting Payments; Float Charge
  
33
    
  2.9
  
Designated Account
  
33
    
  2.10
  
Maintenance of Loan Account; Statements of Obligations
  
34
    
  2.11
  
Fees
  
34
    
  2.12
  
Letters of Credit
  
35
    
  2.13
  
LIBOR Option
  
37
    
  2.14
  
Capital Requirements
  
40
3.
  
CONDITIONS; TERM OF AGREEMENT
  
41
    
  3.1
  
Conditions Precedent to the Initial Extension of Credit
  
41
    
  3.2
  
Conditions Subsequent to the Initial Extension of Credit
  
44
    
  3.3
  
Conditions Precedent to all Extensions of Credit
  
46
    
  3.4
  
Term
  
46
    
  3.5
  
Effect of Termination
  
46
    
  3.6
  
Early Termination by Borrower
  
47
4.
  
CREATION OF SECURITY INTEREST
  
48
    
  4.1
  
Grant of Security Interest
  
48
    
  4.2
  
Negotiable Collateral
  
48
    
  4.3
  
Collection of Accounts, General Intangibles, and Negotiable Collateral
  
48
    
  4.4
  
Delivery of Additional Documentation Required
  
48
    
  4.5
  
Power of Attorney
  
49
    
  4.6
  
Right to Inspect
  
49
    
  4.7
  
Control Agreements
  
49
    
  4.8
  
Commercial Tort Claims
  
50

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5.
  
REPRESENTATIONS AND WARRANTIES
  
50
    
  5.1
  
No Encumbrances
  
50
    
  5.2
  
Eligible Accounts
  
50
    
  5.3
  
[Intentionally Omitted]
  
50
    
  5.4
  
Equipment
  
50
    
  5.5
  
Location of Inventory and Equipment
  
50
    
  5.6
  
Inventory Records
  
51
    
  5.7
  
Location of Chief Executive Office; FEIN
  
51
    
  5.8
  
Due Organization and Qualification; Subsidiaries
  
51
    
  5.9
  
Due Authorization; No Conflict
  
51
    
  5.10
  
Litigation
  
53
    
  5.11
  
No Material Adverse Change
  
53
    
  5.12
  
Fraudulent Transfer
  
53
    
  5.13
  
Employee Benefits
  
53
    
  5.14
  
Environmental Condition
  
53
    
  5.15
  
Brokerage Fees
  
54
    
  5.16
  
Intellectual Property
  
54
    
  5.17
  
Leases
  
55
    
  5.18
  
DDAs
  
55
    
  5.19
  
Complete Disclosure
  
55
    
  5.20
  
Indebtedness
  
56
    
  5.21
  
Taxes and Payments
  
56
    
  5.22
  
MCI Agreement
  
56
6.
  
AFFIRMATIVE COVENANTS
  
57
    
  6.1
  
Accounting System
  
57
    
  6.2
  
Collateral Reporting
  
57
    
  6.3
  
Financial Statements, Reports, Certificates
  
58
    
  6.4
  
Guarantor Reports
  
60
    
  6.5
  
Return
  
61
    
  6.6
  
Maintenance of Properties
  
61
    
  6.7
  
Taxes
  
61
    
  6.8
  
Insurance
  
61
    
  6.9
  
Location of Inventory and Equipment
  
62
    
  6.10
  
Compliance with Laws
  
62
    
  6.11
  
Leases
  
62
    
  6.12
  
Brokerage Commissions
  
63
    
  6.13
  
Existence
  
63
    
  6.14
  
Environmental
  
63
    
  6.15
  
Disclosure Updates
  
63
    
  6.16
  
Intellectual Property Rights
  
63
    
  6.17
  
Minimum Outstanding Advance
  
65
    
  6.18
  
MCI Agreement
  
65

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  6.19
  
Formation of Subsidiaries
  
65
7.
  
NEGATIVE COVENANTS
  
66
    
  7.1
  
Indebtedness
  
66
    
  7.2
  
Liens
  
67
    
  7.3
  
Restrictions on Fundamental Changes
  
67
    
  7.4
  
Disposal of Assets
  
67
    
  7.5
  
Change Name
  
67
    
  7.6
  
Guarantee
  
68
    
  7.7
  
Nature of Business
  
68
    
  7.8
  
Prepayments and Amendments
  
68
    
  7.9
  
[Intentionally Omitted]
  
68
    
  7.10
  
Consignments
  
68
    
  7.11
  
Distributions
  
68
    
  7.12
  
Accounting Methods
  
68
    
  7.13
  
Investments
  
69
    
  7.14
  
Transactions with Affiliates
  
69
    
  7.15
  
Suspension
  
69
    
  7.16
  
Compensation
  
69
    
  7.17
  
Use of Proceeds
  
69
    
  7.18
  
Change in Location of Chief Executive Office; Inventory and Equipment with
Bailees
  
69
    
  7.19
  
Securities Accounts
  
70
    
  7.20
  
Financial Covenants
  
70
    
  7.21
  
MCI Agreement
  
71
8.
  
EVENTS OF DEFAULT
  
71
9.
  
LENDER’S RIGHTS AND REMEDIES
  
73
    
  9.1
  
Rights and Remedies
  
73
    
  9.2
  
Remedies Cumulative
  
76
10.
  
TAXES AND EXPENSES
  
76
11.
  
WAIVERS; INDEMNIFICATION
  
76
    
11.1
  
Demand; Protest
  
76
    
11.2
  
Lender’s Liability for Collateral
  
77
    
11.3
  
Indemnification
  
77

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12.
  
NOTICES
  
77
13.
  
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
  
79
14.
  
ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS
  
79
    
14.1
  
Assignments and Participations
  
79
    
14.2
  
Successors
  
81
15.
  
AMENDMENTS; WAIVERS.
  
82
    
15.1
  
Amendments and Waivers
  
82
    
15.2
  
No Waivers; Cumulative Remedies
  
82
16.
  
GENERAL PROVISIONS
  
82
    
16.1
  
Effectiveness
  
82
    
16.2
  
Section Headings
  
82
    
16.3
  
Interpretation
  
82
    
16.4
  
Severability of Provisions
  
82
    
16.5
  
Withholding Taxes
  
83
    
16.6
  
Amendments in Writing
  
83
    
16.7
  
Counterparts; Telefacsimile Execution
  
83
    
16.8
  
Revival and Reinstatement of Obligations
  
83
    
16.9
  
Integration
  
84
    
16.10
  
Confidentiality
  
84

 

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EXHIBITS AND SCHEDULES
 
Exhibit B-1
  
Form of Borrowing Base Certificate
Exhibit C-1
  
Form of Compliance Certificate
Exhibit L-1
  
Form of LIBOR Notice
Schedule C-1
  
Commercial Tort Claims
Schedule C-2
  
Operating Leases to be Converted to Capital Leases
Schedule D-1
  
Designated Account
Schedule L-1
  
Lender’s Account
Schedule P-1
  
Permitted Liens
Schedule 2.7(a)
  
Cash Management Banks
Schedule 5.5
  
Locations of Inventory and Equipment
Schedule 5.7
  
Chief Executive Office; FEIN
Schedule 5.8(b)
  
Capitalization of Borrower
Schedule 5.8(c)
  
Capitalization of Borrower’s Subsidiaries
Schedule 5.10
  
Litigation
Schedule 5.14
  
Environmental Matters
Schedule 5.16(a)
  
Intellectual Property
Schedule 5.16(b)
  
Source Code Licenses
Schedule 5.18
  
Demand Deposit Accounts
Schedule 5.20
  
Permitted Indebtedness

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LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT (this “Agreement”), is entered into as of
September 4, 2002, between FOOTHILL CAPITAL CORPORATION, a California
corporation (“Lender”) and RMH TELESERVICES, INC., a Pennsylvania corporation
(“Borrower”).
 
The parties agree as follows:
 
1.    DEFINITIONS AND CONSTRUCTION.
 
1.1    Definitions.    As used in this Agreement, the following terms shall have
the following definitions:
 
“Account Debtor” means any Person who is or who may become obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
 
“Accounts” means all of Borrower’s now owned or hereafter acquired right, title,
and interest with respect to “accounts” (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.
 
“ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic funds transfers through the
direct Federal Reserve Fedline system) provided by Wells Fargo or its Affiliates
for the account of Borrower or its Subsidiaries.
 
“Additional Documents” has the meaning set forth in Section 4.4.
 
“Additional Subsidiary” has the meaning set forth in Section 6.19.
 
“Advances” has the meaning set forth in Section 2.1(a).
 
“Affiliate” means, as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, “control” means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Billed
Accounts, Eligible Unbilled Accounts and Section 7.14 hereof: (a) any Person
which owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed to
control such Person, (b) each director (or comparable

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manager) of a Person shall be deemed to be an Affiliate of such Person, and (c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person; provided, further,
however, that, notwithstanding the foregoing, for purposes of clause (c) of the
definition of both Eligible Billed Accounts and Eligible Unbilled Accounts, with
respect to the following entities, the 10% threshold in the immediately
preceding proviso shall be deemed to be 15%: Safeco Asset Management, RS
Investments, Wellington Management and any other entities subsequently agreed to
in writing by Lender in its Permitted Discretion.
 
“Agreement” has the meaning set forth in the preamble hereto.
 
“Applicable Prepayment Premium” means, as of any date of determination, an
amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to but not including the date that
is the first anniversary of the Closing Date, 3.00% times the Maximum Revolver
Amount, (b) during the period of time from and including the date that is the
first anniversary of the Closing Date up to but not including the date that is
the second anniversary of the Closing Date, 2.00% times of the Maximum Revolver
Amount, and (c) during the period of time from and including the date that is
the second anniversary of the Closing Date up to but not including the Maturity
Date, 1.00% times the Maximum Revolver Amount.
 
“Assignee” has the meaning set forth in Section 14.1(a).
 
“Authorized Person” means any officer or other employee of Borrower.
 
“Availability” means, as of any date of determination (if such date is a
Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day) the
amount that Borrower is entitled to borrow as Advances under Section 2.1 (after
giving effect to all then outstanding Obligations (other than Bank Products
Obligations) and all sublimits and reserves applicable hereunder).
 
“Bank Product Agreements” means those agreements entered into from time to time
by Borrower or its Subsidiaries in connection with any of the Bank Products.
 
“Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Borrower or its
Subsidiaries to Wells Fargo or its Affiliates pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower is
obligated to reimburse to Lender as a result of Lender purchasing participations
or executing indemnities or reimbursement obligations with respect to the Bank
Products provided to Borrower or its Subsidiaries pursuant to the Bank Product
Agreements.

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“Bank Products” means any service or facility extended to Borrower or its
Subsidiaries by Wells Fargo or any Affiliate of Wells Fargo including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) Hedge Agreements.
 
“Bank Product Reserves” means, as of any date of determination, the amount of
reserves that Lender has established (based upon Wells Fargo’s or its
Affiliate’s reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.
 
“Bankruptcy Code” means the United States Bankruptcy Code, as in effect from
time to time.
 
“Base LIBOR Rate” means the rate per annum, determined by Lender in accordance
with its customary procedures, as published by Bloomberg, L.P. or, if the
Bloomberg, L.P. service is not then used by Lender, utilizing such other
electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits are offered to major banks in the London interbank market on or
about 2:00 p.m. (New York time) two (2) Business Days prior to the commencement
of the applicable Interest Period, for a term and in amounts comparable to the
Interest Period and amount of the LIBOR Rate Loan requested by Borrower in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.
 
“Base Rate” means, the rate of interest announced within Wells Fargo at its
principal office in San Francisco as its “prime rate”, with the understanding
that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Wells Fargo may designate.
 
“Base Rate Loan” means each portion of an Advance that bears interest at a rate
determined by reference to the Base Rate.
 
“Base Rate Margin” means 1.50 percentage points; provided, however, that if, as
of any fiscal year of Borrower commencing with Borrower’s fiscal year ended
September 30, 2002, EBITDA for such fiscal year equals or exceeds the amounts
set forth in the following table, then commencing on the first day of the month
immediately following the receipt of the applicable Section 6.3 financial
statements, “Base Rate Margin” shall have the meaning as set forth in the
following table. The determination of EBITDA for purposes of this definition
shall be based upon the fiscal year-end audited financial statements delivered
to Lender pursuant to Section 6.3(b). Notwithstanding the foregoing, if Borrower
fails to deliver to Lender the financial statements required under Section 6.3,
then the “Base

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Rate Margin” shall mean 1.50 percentage points, until such time as Borrower
delivers such financial statements.
 

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Prior Fiscal Year EBITDA
 
Base Rate Margin means:

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at least $10,000,000 but
less than $25,000,000
 
0.50 percentage points

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$25,000,000 or greater
 
0.00 percentage points

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“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six (6)
years.
 
“Board of Directors” means the board of directors (or comparable managers) of
Borrower or any committee thereof duly authorized to act on behalf of the board.
 
“Books” means Borrower’s and its Subsidiaries’ now owned or hereafter acquired
books and records (including all of its Records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of
Borrower’s or its Subsidiaries’ Records relating to its or their business
operations or financial condition, and all of its or their goods or General
Intangibles related to such information).
 
“Borrower” has the meaning set forth in the preamble to this Agreement.
 
“Borrower Intellectual Property Right” means any Intellectual Property Right
owned, held, licensed, used or held for use by Borrower or any of its
Subsidiaries.
 
“Borrowing” means a borrowing hereunder of an Advance.
 
“Borrowing Base” has the meaning set forth in Section 2.1.
 
“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.
 
“Business Day” means any day that is not a Saturday, Sunday, or other day on
which national banks are authorized or required to close, except that, if a
determination of a Business Day shall relate to a LIBOR Rate Loan, the term
“Business Day” also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.
 
“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
 
“Capitalized Lease Obligation” means any Indebtedness represented by obligations
under a Capital Lease.

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“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within one (1) year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within one (1) year from the date of acquisition thereof and, at the
time of acquisition, having the highest rating obtainable from either S&P or
Moody’s, (c) commercial paper maturing no more than 270 days from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-1 or
P-1, or better, from S&P or Moody’s, and (d) certificates of deposit or bankers’
acceptances maturing within one (1) year from the date of acquisition thereof
that are (i) issued by any bank organized under the laws of the United States or
any state thereof which bank has a rating of A or A2, or better, from S&P or
Moody’s, or (ii) in an amount less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.
 
“Cash Management Bank” has the meaning set forth in Section 2.7(a).
 
“Cash Management Account” has the meaning set forth in Section 2.7(a).
 
“Cash Management Agreements” means those certain cash management service
agreements, in form and substance satisfactory to Lender, each of which is among
Borrower, Lender, and one of the Cash Management Banks.
 
“Change of Control” means (a) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders,
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 25% or more of the Stock of Borrower having the right
to vote for the election of members of the Board of Directors; provided,
however, that if, as of the time of determination, the Jensen Family Group owns
less than 25% of the Stock of Borrower having the right to vote for the election
of members of the Board of Directors, then the 25% threshold in this clause (a)
shall be reduced to 15%, or (b) a majority of the members of the Board of
Directors do not constitute Continuing Directors, or (c) Borrower ceases to
directly own and control 100% of the outstanding capital Stock of each of its
Subsidiaries extant as of the Closing Date.
 
“Closing Date” means the date of the making of the initial Advance (or other
extension of credit) hereunder or the date on which Lender sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
either have been satisfied or have been waived.
 
“Closing Date Business Plan” means the set of Projections of Borrower for the
three (3) year period following the Closing Date (on a year by year basis, and
for the one (1) year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Lender.

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“Code” means the Uniform Commercial Code, as in effect from time to time in the
State of New York.
 
“Collateral” means all of Borrower’s now owned or hereafter acquired right,
title, and interest in and to each of the following:
 
(a)  Accounts,
 
(b)  Books,
 
(c)  Equipment,
 
(d)  General Intangibles,
 
(e)  Inventory,
 
(f)  Investment Property,
 
(g)  Negotiable Collateral,
 
(h)  any “commercial tort claims” as that term is defined in the Code, as set
forth on Schedule C-1 hereto,
 
(i)  money or other assets of Borrower that now or hereafter come into the
possession, custody, or control of Lender, and
 
(j)  the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all Accounts, Books, Equipment, General Intangibles, Inventory,
Investment Property, Negotiable Collateral, “commercial tort claims,” money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
 
“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Equipment or Inventory, in each case, in form and substance satisfactory
to Lender.
 
“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds) of Borrower.
 
“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Borrower to Lender.

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“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Borrower on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower (as such terms are used in Rule 14a-11 under the Exchange Act) and
whose initial assumption of office resulted from such contest or the settlement
thereof.
 
“Control Agreement” means a control agreement, in form and substance
satisfactory to Lender, executed and delivered by Borrower, Lender, and the
applicable securities intermediary with respect to a Securities Account or the
applicable bank with respect to a deposit account.
 
“Copyrights” means all unregistered and registered copyrights owned or licensed
by Borrower or its Subsidiaries in any and all schematics, technology, know-how,
computer software programs or applications (in both source code and object form
code), documents, items, materials and all other works that are protectable
under copyright law, and all registrations, applications for registrations,
renewals and extensions thereof, whether now existing or acquired in the future.
 
“Copyright Security Agreement” means a copyright security agreement executed and
delivered by Borrower, Guarantors and Lender, the form and substance of which is
satisfactory to Lender.
 
“Daily Balance” means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
 
“DDA” means any checking or other demand deposit account maintained by Borrower.
 
“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.
 
“Designated Account” means that certain DDA of Borrower identified on Schedule
D-1.
 
“Designated Account Bank” means PNC Bank, National Association, whose office is
located at 1600 Market Street, Philadelphia, PA 19103, and whose ABA number is
031000053.
 
“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 360 days, that is the result of dividing the
Dollar

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amount of (a) bad debt write-downs, discounts, advertising allowances, credits,
or other dilutive items with respect to the Accounts during such period, by (b)
Borrower’s billings with respect to Accounts during such period (excluding
extraordinary items).
 
“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by one percentage point for
each percentage point by which Dilution is in excess of 5%.
 
“Disbursement Letter” means an instructional letter executed and delivered by
Borrower to Lender regarding the extensions of credit to be made on the Closing
Date, the form and substance of which is satisfactory to Lender.
 
“Dollars” or “$” means United States dollars.
 
“Due Diligence Letter” means the due diligence letter sent by Lender’s counsel
to Borrower, together with Borrower’s completed responses to the inquiries set
forth therein, the form and substance of such responses to be satisfactory to
Lender.
 
“EBITDA” means, with respect to any fiscal period, Borrower’s and its
Subsidiaries’ consolidated net earnings (or loss), minus extraordinary gains,
plus extraordinary non-cash losses in an aggregate amount not to exceed
$5,000,000, interest expense, income taxes, and depreciation and amortization
for such period, as determined in accordance with GAAP; provided, however, that
if the assets subject to the operating leases listed on Schedule C-2 become
subject to Capital Leases, then the principal portion of the payments under such
Capital Leases shall be deducted in determining EBITDA.
 
“Eligible Accounts” means, collectively, Eligible Billed Accounts and Eligible
Unbilled Accounts.
 
“Eligible Billed Accounts” means those Accounts created by Borrower in the
ordinary course of its business, that arise out of Borrower’s rendition of
services (such services having been fully performed and rendered), with respect
to which the relevant Account Debtors have been invoiced in writing by Borrower,
that comply with each of the representations and warranties respecting Eligible
Accounts made by Borrower in the Loan Documents, and that are not excluded as
ineligible by virtue of one or more of the criteria set forth below; provided,
however, that such criteria may be fixed and revised from time to time by Lender
in Lender’s Permitted Discretion to address the results of any audit performed
by Lender from time to time after the Closing Date. In determining the amount to
be included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash remitted to Borrower. Eligible Billed Accounts shall not include
the following:
 
(a)  Accounts that the Account Debtor has failed to pay within 60 days of the
original due date or Accounts with selling terms of more than 45 days (provided,
however, that Accounts for which Nextel Communications, Inc. is the Account

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Debtor shall be excluded from Eligible Billed Accounts unless they (i) contain
selling terms of 30 days or less and (ii) have been paid within 30 days of the
original due date),
 
(b)  Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,
 
(c)  Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of Borrower,
 
(d)  Accounts arising in a transaction wherein goods are placed on consignment
or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval,
a bill and hold, or any other terms by reason of which the payment by the
Account Debtor may be conditional,
 
(e)  Accounts that are not payable in Dollars (other than Eligible Canadian
Accounts),
 
(f)  Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States (other than Eligible
Canadian Accounts), or (ii) is not organized under the laws of the United States
or any state thereof (other than Eligible Canadian Accounts), or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless (y) the
Account is supported by an irrevocable letter of credit satisfactory to Lender
(as to form, substance, and issuer or domestic confirming bank) that has been
delivered to Lender and is directly drawable by Lender, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Lender,
 
(g)  Accounts with respect to which the Account Debtor is either (i) the United
States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which Borrower has complied, to
the reasonable satisfaction of Lender, with the Assignment of Claims Act, 31 USC
§ 3727), or (ii) any state of the United States (exclusive, however, of (y)
Accounts owed by any state that does not have a statutory counterpart to the
Assignment of Claims Act, or (z) Accounts owed by any state that does have a
statutory counterpart to the Assignment of Claims Act as to which Borrower has
complied to Lender’s satisfaction),
 
(h)  Accounts with respect to which the Account Debtor is a creditor of
Borrower, has or has asserted a right of setoff (except to the extent that the
Account Debtor has executed a “no offset” letter in form and substance
acceptable to Lender and its counsel), has disputed its liability, or has made
any claim with respect to its obligation to pay the Account, to the extent of
such claim, right of setoff, or dispute,

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(i)  Accounts with respect to an Account Debtor whose total obligations owing to
Borrower exceed 10% (such percentage as applied to a particular Account Debtor
being subject to reduction by Lender in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that subject to Lender’s ability to adjust such
percentage limitations in its Permitted Discretion, (a) as to the following
Account Debtors, the percentage limitation of 15% (in lieu of 10%) shall apply
for purposes hereof: Citicorp, Inc., Nextel Communications and Aegon USA, Inc.,
and (b) as to the following Account Debtors, the percentage limitation of 20%
(in lieu of 10%) shall apply for purposes hereof: Microsoft Corporation and AT&T
Corp.,
 
(j)  Accounts with respect to which an Account Debtor (including but not limited
to MCI and its Affiliates) is subject to an Insolvency Proceeding, is not
Solvent, has gone out of business, or as to which Borrower has received notice
of an imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
 
(k)  Accounts with respect to which the Account Debtor is located in the states
of New Jersey, Minnesota, or West Virginia (or any other state that requires a
creditor to file a business activity report or similar document in order to
bring suit or otherwise enforce its remedies against such Account Debtor in the
courts or through any judicial process of such state), unless Borrower has
qualified to do business in New Jersey, Minnesota, West Virginia, or such other
states, or has filed a business activities report with the applicable division
of taxation, the department of revenue, or with such other state offices, as
appropriate, for the then-current year, or is exempt from such filing
requirement,
 
(l)  Accounts, the collection of which, Lender, in its Permitted Discretion,
believes to be doubtful by reason of the Account Debtor’s financial condition,
 
(m)  Accounts that are not subject to a valid and perfected first priority
Lender’s Lien,
 
(n)  Accounts with respect to which the services giving rise to such Account
have not been performed and billed to the Account Debtor, or
 
(o)  Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by Borrower
of the subject contract for goods or services, or
 
(p)  Accounts that represent goods sold or services rendered to MCI or its
Affiliates.
 
“Eligible Canadian Accounts” means those Accounts created by Borrower that are
denominated in Canadian dollars, in an aggregate amount not to exceed
U.S.$1,500,000

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at any time, with respect to which the Account Debtor either (i) maintains its
chief executive office in Canada or (ii) is organized under the laws of Canada
or any political subdivision thereof; provided that such Accounts (x) are not
otherwise ineligible in accordance with the definition of “Eligible Billed
Accounts” or “Eligible Unbilled Accounts,” as the case may be, and (y) are
otherwise acceptable to Lender in all respects.
 
“Eligible Unbilled Accounts” means those Accounts created by Borrower in the
ordinary course of its business that arise out of Borrower’s rendition of
services (such services having been fully performed and rendered), with respect
to which the relevant Account Debtors have not been invoiced in writing by
Borrower, that comply with each of the representations and warranties respecting
Eligible Accounts made by Borrower in the Loan Documents, and that are not
excluded as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Lender in Lender’s Permitted Discretion to address the results of any audit
performed by Lender from time to time after the Closing Date. In determining the
amount to be included, Eligible Accounts shall be calculated net of customer
deposits and unapplied cash remitted to Borrower. Eligible Unbilled Accounts
shall not include the following:
 
(a)  Accounts that remain outstanding after the fifteenth (15th) day of the
month following the month in which the relevant services which were actually
rendered,
 
(b)  Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,
 
(c)  Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of Borrower,
 
(d)  Accounts arising in a transaction wherein goods are placed on consignment
or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval,
a bill and hold, or any other terms by reason of which the payment by the
Account Debtor may be conditional,
 
(e)  Accounts that are not payable in Dollars (other than Eligible Canadian
Accounts),
 
(f)  Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States (other than Eligible
Canadian Accounts), or (ii) is not organized under the laws of the United States
or any state thereof (other than Eligible Canadian Accounts), or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless (y) the
Account is supported by an irrevocable letter of credit

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satisfactory to Lender (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Lender and is directly drawable by Lender, or
(z) the Account is covered by credit insurance in form, substance, and amount,
and by an insurer, satisfactory to Lender,
 
(g)  Accounts with respect to which the Account Debtor is either (i) the United
States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which Borrower has complied, to
the reasonable satisfaction of Lender, with the Assignment of Claims Act, 31 USC
§ 3727), or (ii) any state of the United States (exclusive, however, of (y)
Accounts owed by any state that does not have a statutory counterpart to the
Assignment of Claims Act, or (z) Accounts owed by any state that does have a
statutory counterpart to the Assignment of Claims Act as to which Borrower has
complied to Lender’s satisfaction),
 
(h)  Accounts with respect to which the Account Debtor is a creditor of
Borrower, has or has asserted a right of setoff (except to the extent that the
Account Debtor has executed a “no offset” letter in form and substance
acceptable to Lender and its counsel), has disputed its liability, or has made
any claim with respect to its obligation to pay the Account, to the extent of
such claim, right of setoff, or dispute,
 
(i)  Accounts with respect to an Account Debtor whose total obligations owing to
Borrower exceed 10% (such percentage as applied to a particular Account Debtor
being subject to reduction by Lender in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that subject to Lender’s ability to adjust such
percentage limitations in its Permitted Discretion, (a) as to the following
Account Debtors, the percentage limitation of 15% (in lieu of 10%) shall apply
for purposes hereof: Citicorp, Inc., Nextel Communications and Aegon USA, Inc.,
and (b) as to the following Account Debtors, the percentage limitation of 20%
(in lieu of 10%) shall apply for purposes hereof: Microsoft Corporation and AT&T
Corp.,
 
(j)  Accounts with respect to which an Account Debtor (including but not limited
to MCI and its Affiliates) is subject to an Insolvency Proceeding, is not
Solvent, has gone out of business, or as to which Borrower has received notice
of an imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
 
(k)  Accounts with respect to which the Account Debtor is located in the states
of New Jersey, Minnesota, or West Virginia (or any other state that requires a
creditor to file a business activity report or similar document in order to
bring suit or otherwise enforce its remedies against such Account Debtor in the
courts or through any judicial process of such state), unless Borrower has
qualified to do business in New Jersey, Minnesota, West Virginia, or such other
states, or has filed a business activities report with

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the applicable division of taxation, the department of revenue, or with such
other state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement,
 
(l)  Accounts, the collection of which, Lender, in its Permitted Discretion,
believes to be doubtful by reason of the Account Debtor’s financial condition,
 
(m)  Accounts that are not subject to a valid and perfected first priority
Lender’s Lien,
 
(n)  Accounts with respect to which the services giving rise to such Account
have not been performed for the Account Debtor,
 
(o)  Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by Borrower
of the subject contract for goods or services, or
 
(p)  Accounts that represent goods sold or services rendered to MCI or its
Affiliates.
 
“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by Borrower or any predecessor in interest.
 
“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrower, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251
et seq.; the Toxic Substances Control Act, 15 USC § 2601 et seq.; the Clean Air
Act, 42 USC § 7401 et seq.; the Safe Drinking Water Act, 42 USC § 3803 et seq.;
the Oil Pollution Act of 1990, 33 USC § 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 USC § 11001 et seq.; the Hazardous
Material Transportation Act, 49 USC § 1801 et seq.; and the Occupational Safety
and Health Act, 29 USC §651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
 
“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages,

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treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand by any Governmental Authority or any third party,
and which relate to any Environmental Action.
 
“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.
 
“Equipment” means all of Borrower’s now owned or hereafter acquired right,
title, and interest with respect to equipment, machinery, machine tools, motors,
furniture, furnishings, fixtures, vehicles (including motor vehicles), tools,
parts, goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.
 
“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower under IRC
Section 414(b), (b) any trade or business subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which Borrower is a member under IRC Section 414(m), or (d)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
Person subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section
414(o).
 
“Event of Default” has the meaning set forth in Section 8.
 
“Excess Availability” means the amount, as of the date any determination thereof
is to be made, equal to Availability minus the aggregate amount, if any, of all
trade payables of Borrower aged in excess of historical levels with respect
thereto and all book overdrafts in excess of historical practices with respect
thereto, in each case as determined by Lender in its Permitted Discretion.
 
“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.
 
“Existing Lender” means PNC Bank, N.A., a national banking association.

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“Fee Letter” means that certain fee letter, dated as of even date herewith,
between Borrower and Lender, in form and substance satisfactory to Lender.
 
“FEIN” means Federal Employer Identification Number.
 
“Funding Date” means the date on which a Borrowing occurs.
 
“Funding Losses” has the meaning set forth in Section 2.13(b)(ii).
 
“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.
 
“General Intangibles” means all of Borrower’s or its Subsidiaries’ now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights (excluding contracts
with respect to which the valid grant of a security interest or lien therein to
Lender is prohibited and such prohibition has not been or is not waived or the
consent of the other party to such contract has not been or is not otherwise
obtained or under applicable law such prohibition cannot be waived; provided,
that the foregoing exclusion shall in no way be construed to apply if any such
prohibition is unenforceable under the Code or other applicable law or construed
so as to limit, impair or otherwise affect Lender’s unconditional continuing
security interests in and liens upon any rights or interests of Borrower and its
Subsidiaries in or to the proceeds thereof, including monies due or to become
due under any such contract (including any Accounts)), rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
 
“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
 
“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
 
“Guarantors” mean each of Teleservices Management Company, a Delaware
corporation; Teleservices Technology Company, a Delaware corporation; RMH
Interactive Technologies Company, a Delaware corporation; RMH Teleservices
International, Inc., a

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corporation organized under the laws of New Brunswick, Canada; 515963 N.B. Inc.,
a corporation organized under the laws of New Brunswick, Canada; 516131 N.B.
Inc., a corporation organized under the laws of New Brunswick, Canada; and any
and all Additional Subsidiaries.
 
“Guarantor Security Agreement” means a security agreement executed and delivered
by Guarantors and Lender, the form and substance of which is satisfactory to
Lender.
 
“Guaranty” means that certain general continuing guaranty executed and delivered
by each Guarantor in favor of Lender, in form and substance satisfactory to
Lender.
 
“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
 
“Hedge Agreement” means any and all transactions, agreements, or documents now
existing or hereafter entered into between Borrower or its Subsidiaries and
Wells Fargo or its Affiliates, which provide for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging Borrower’s or its Subsidiaries’ exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
 
“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of Borrower or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person.

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“Indemnified Liabilities” has the meaning set forth in Section 11.3.
 
“Indemnified Person” has the meaning set forth in Section 11.3.
 
“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
 
“Intangible Assets” means, with respect to any Person, that portion of the book
value of all of such Person’s assets that would be treated as intangibles under
GAAP.
 
“Intellectual Property Right” means any trademark, copyright, service mark,
trade name, patent (including any registrations or applications for registration
of any of the foregoing), license, or trade secret including, but not limited
to, any such legal rights included in any schematics, technology, know-how,
computer software programs or applications (in both source code and object code
form) or in other tangible or intangible information or material.
 
“Intercompany Subordination Agreement” means a subordination agreement executed
and delivered by Borrower, its Subsidiaries and Lender, the form and substance
of which is satisfactory to Lender.
 
“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending one (1),
two (2), or three (3) months thereafter; provided, however, that (a) interest
shall accrue at the applicable rate based upon the LIBOR Rate from and including
the first day of each Interest Period to, but excluding, the day on which such
Interest Period expires, (b) if any Interest Period that would end on a day that
is not a Business Day shall be extended to the next succeeding Business Day,
unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (c) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is one (1), two (2), or three (3)
months after the date on which the Interest Period began, as applicable, and (d)
Borrower may not elect an Interest Period which will end after the Maturity
Date.
 
“Inventory” means all Borrower’s now owned or hereafter acquired right, title,
and interest with respect to inventory, including goods held for sale or lease
or to be furnished under a contract of service, goods that are leased by
Borrower as lessor, goods that are furnished by Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in
Borrower’s business.

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“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers and employees of such Person made in the ordinary
course of business, and (b) bona fide Accounts arising in the ordinary course of
business consistent with past practices), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
 
“Investment Property” means all of Borrower’s now owned or hereafter acquired
right, title, and interest with respect to “investment property” as that term is
defined in the Code, and any and all supporting obligations in respect thereof.
 
“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.
 
“Jensen Family Group” means (a) Jeff Jensen, who currently resides at 7802
Leesburg Drive, Colleyville, TX 76034, (b) any member of Jeff Jensen’s immediate
family (determined in accordance with Rule l6a-1(e) of the Exchange Act) either
during Jeff Jensen’s lifetime or by will or the laws of descent and
distribution, (c) any trust as to which Jeff Jensen or a member of (or members)
of his immediate family is the sole beneficiary, (d) any trust as to which Jeff
Jensen or a member of (or members) of his immediate family is the settlor(s) and
the sole trustee(s) with sole power to revoke, (e) any entity of which Jeff
Jensen or a member of (or members) of his immediate family “beneficially owns”
(as defined in Rules 13d-3 under the Exchange Act), directly or indirectly, 100%
of the voting equity interests thereof and/or (f) any charitable trust,
foundation or corporation under Section 501(c)(3) of the IRC that is funded and
controlled (as defined in the definition of “Affiliate” hereunder) by Jeff
Jensen or a member of (or members) of his immediate family.
 
“L/C” has the meaning set forth in Section 2.12(a).
 
“L/C Disbursement” means a payment made by Lender pursuant to a Letter of
Credit.
 
“L/C Undertaking” has the meaning set forth in Section 2.12(a).
 
“Lender” has the meaning set forth in the preamble to this Agreement.
 
“Lender Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower under any of the Loan
Documents that are paid or incurred by Lender, (b) fees or charges paid or
incurred by Lender in connection with Lender’s transactions with Borrower,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording,

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publication, appraisal (including periodic Collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Lender in the disbursement of funds to Borrower (by wire transfer or
otherwise), (d) charges paid or incurred by Lender resulting from the dishonor
of checks, (e) reasonable costs and expenses paid or incurred by Lender to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Lender related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by Lender in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or Lender’s relationship with Borrower or any guarantor of the
Obligations, (h) Lender’s reasonable fees and expenses (including reasonable
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, or amending the Loan Documents, and (i) Lender’s reasonable fees
and expenses (including reasonable attorneys fees) incurred in terminating,
enforcing (including reasonable attorneys fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
 
“Lender-Related Person” means Lender, Lender’s Affiliates, and the officers,
directors, employees, and agents of Lender.
 
“Lender’s Account” means the account identified on Schedule L-1.
 
“Lender’s Liens” means the Liens granted by Borrower to Lender under this
Agreement or the other Loan Documents.
 
“Letter of Credit” means an L/C or an L/C Undertaking, as the context requires.
 
“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus 100% of the amount of
outstanding time drafts accepted by an Underlying Issuer as a result of drawings
under Underlying Letters of Credit.
 
“LIBOR Deadline” has the meaning set forth in Section 2.13(b)(i).
 
“LIBOR Notice” means a written notice in the form of Exhibit L-1.

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“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Lender (rounded upwards, if necessary, to the next
1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
 
“LIBOR Rate Loan” means each portion of an Advance that bears interest at a rate
determined by reference to the LIBOR Rate.
 
“LIBOR Rate Margin” means 2.75 percentage points.
 
“Lien” means any interest in an asset securing an obligation owed to, or a claim
by, any Person other than the owner of the asset, whether such interest shall be
based on the common law, statute, or contract, whether such interest shall be
recorded or perfected, and whether such interest shall be contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances, including the lien or security interest arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, security agreement, conditional sale or trust receipt, or
from a lease, consignment, or bailment for security purposes and also including
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
 
“Loan Account” has the meaning set forth in Section 2.10.
 
“Loan Documents” means this Agreement, the Bank Product Agreements, the Cash
Management Agreements, the Control Agreements, the Copyright Security Agreement,
the Disbursement Letter, the Due Diligence Letter, the Fee Letter, the Guarantor
Security Agreement, the Guaranty, the Intercompany Subordination Agreement, the
Letters of Credit, the Officers’ Certificate, the Patent Security Agreement, the
Securities Pledge Agreement, the Trademark Security Agreement, any note or notes
executed by Borrower in connection with this Agreement and payable to Lender,
and any other agreement entered into, now or in the future, by Borrower and
Lender in connection with this Agreement.
 
“Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of Borrower and the Guarantors, taken as a whole, (b) a material
impairment of Borrower’s ability to perform its obligations under the Loan
Documents to which it is a party or of Lender’s ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Lender’s Liens with respect to the Collateral
as a result of an action or failure to act on the part of Borrower.
 
“Maturity Date” has the meaning set forth in Section 3.4.
 
“Maximum Revolver Amount” means $25,000,000.

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“MCI” means, as applicable, MCI Communications Corporation, MCI Worldcom
Communications, Inc. and/or MCI Worldcom Network Services, Inc., each a
subsidiary of Worldcom, Inc.
 
“MCI Agreement” means, collectively, the Amended and Restated Agreement for
Independent Verification of Telemarketing Sales dated as of July 8, 1999 by and
between MCI Worldcom Network Services, Inc. and Borrower, as amended, the Call
Center Services Agreement dated as of March 16, 2001 by and between MCI Worldcom
Communications, Inc. and Borrower, as amended, and the letter agreement dated
August 1, 2002 by and between Borrower and MCI Worldcom Communications, Inc.
 
“MCI Bankruptcy” means the cases under the Bankruptcy Code that have been filed
by MCI, Worldcom, Inc. and their Affiliates.
 
“Negotiable Collateral” means all of Borrower’s now owned and hereafter acquired
right, title, and interest with respect to letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
 
“Obligations” means (a) all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations with respect to
outstanding letters of credit, premiums, liabilities (including all amounts
charged to Borrower’s Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Expenses (including any fees or expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), lease payments, guaranties, covenants, and
duties of any kind and description owing by Borrower to Lender pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Expenses that Borrower is required to pay or reimburse by the
Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
 
“Officers’ Certificate” means the representations and warranties of officers
form submitted by Lender to Borrower, together with Borrower’s completed
responses to the inquiries set forth therein, the form and substance of such
responses to be satisfactory to Lender.
 
“Overadvance” has the meaning set forth in Section 2.5.

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“Participant” has the meaning set forth in Section 14.1(d).
 
“Patent Security Agreement” means a patent security agreement executed and
delivered by Borrower, Guarantors and Lender, the form and substance of which is
satisfactory to Lender.
 
“Pay-Off Letter” means a letter, in form and substance satisfactory to Lender,
from Existing Lender to Lender respecting the amount necessary to repay in full
all of the obligations of Borrower owing to Existing Lender and obtain a release
of all of the Liens existing in favor of Existing Lender in and to the assets of
Borrower.
 
“Payroll Reserve” means, as of any date of determination, a reserve in an amount
equal to Borrower’s payroll for a two-week period, as determined by Lender.
 
“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
 
“Permitted Dispositions” means (a) sales or other dispositions by Borrower or
its Subsidiaries of Equipment that is substantially worn, damaged, or obsolete
in the ordinary course of business, (b) sales by Borrower or its Subsidiaries of
Inventory to buyers in the ordinary course of business, (c) the use or transfer
of money or Cash Equivalents by Borrower or its Subsidiaries in a manner that is
not prohibited by the terms of this Agreement or the other Loan Documents, (d)
the licensing by Borrower or its Subsidiaries, on a non-exclusive basis, of
patents, trademarks, copyrights, and other Intellectual Property Rights in the
ordinary course of business, (e) the sale or assignment of the contract dated as
of April 15, 1999, as amended, between Borrower and MCI relating to third party
verification of accounts in Canada, or sale or lease of assets used in
connection with such contract, so long as the proceeds of any such sale,
assignment or lease are immediately applied in accordance with Section 2.4(b),
and (f) sales, leases or other dispositions by Borrower or its Subsidiaries of
other assets having a fair market value not to exceed $500,000 in the aggregate
during the term of this Agreement.
 
“Permitted Holders” means (a) the Jensen Family Group and (b) Safeco Asset
Management, RS Investments and Wellington Management.
 
“Permitted Investments” means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, and (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) so long as no Default or Event of Default would result from the
extension thereof, loans to executive officers of Borrower to the extent
permitted by applicable law and in an aggregate outstanding amount not to exceed
$650,000 at any one time, and (e) investments in Additional Subsidiaries in an
aggregate amount not to exceed $2,000,000 during the term of this Agreement,
subject to (i) no Default or Event of Default resulting therefrom,

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(ii) compliance with Section 6.19 and (iii) Lender being satisfied, in its sole
discretion, that any such investment would not materially impair the prospects
of repayment of the Obligations by Borrower, materially impair the Lender’s
Liens or materially impair Borrower’s creditworthiness.
 
“Permitted Liens” means (a) Liens held by Lender, (b) Liens for unpaid taxes
that either (i) are not yet delinquent, or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) Liens set forth
on Schedule P-1, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as such Lien attaches only to the asset purchased or acquired and
the proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising
from deposits made in connection with obtaining worker’s compensation or other
unemployment insurance, (h) Liens or deposits to secure performance of bids,
tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, and (j) Liens resulting from any judgment or award that is not an
Event of Default hereunder.
 
“Permitted Protest” means the right of Borrower or any of its Subsidiaries, as
applicable, to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Borrower or any of its Subsidiaries, as applicable, in good faith,
and (c) Lender is satisfied that, while any such protest is pending, there will
be no impairment of the enforceability, validity, or priority of any of the
Lender’s Liens.
 
“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date.
 
“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
 
“Personal Property Collateral” means all Collateral other than Real Property.
 
“Pledged Notes” means the note dated as of October 16, 1997, evidencing the
indebtedness of Borrower to Teleservices Technology Company in the maximum
principal amount of $1,010,000 and the note dated as of September 27, 2001,
evidencing the

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indebtedness of Borrower to Teleservices Management Company in the maximum
principal amount of $200,000,000.
 
“PNC Forbearance” means the letter dated as of September 4, 2002 executed by PNC
Leasing, LLC (successor of PNC Leasing Corp.), pursuant to which, among other
things, PNC Leasing, LLC has agreed not to enforce its rights arising from
Borrower’s default under Section 21 of the PNC Lease until March 1, 2003, in
form and substance satisfactory to Lender.
 
“PNC Lease” means that certain Master Lease Agreement, dated March 3, 1997, as
amended, by and between PNC Leasing Corp. (predecessor of PNC Leasing, LLC) and
Borrower, together with all exhibits and schedules thereto.
 
“PNC Lease Reserve” means, commencing on the date that is 30 days prior to the
expiration of the PNC Forbearance, $500,000; provided that such reserve shall be
reduced to $0 by Lender if and when the PNC Lease is refinanced or replaced in a
manner satisfactory in all respects to Lender.
 
“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
 
“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
20 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.
 
“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Borrower and the improvements thereto.
 
“Record” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.
 
“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (d) conduct any other
actions authorized by 42 USC § 9601.
 
“Required Availability” means Excess Availability and unrestricted cash and Cash
Equivalents in an amount of not less than $5,000,000.

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“Reserve Percentage” means, on any day, for Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as “eurocurrency liabilities”) of Lender, but so long as Lender is not required
or directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.
 
“Revolver Usage” means, as of any date of determination, the sum of (a) the then
extant amount of outstanding Advances, plus (b) the then extant amount of the
Letter of Credit Usage.
 
“SEC” means the United States Securities and Exchange Commission and any
successor thereto.
 
“Securities Account” means a “securities account” as that term is defined in the
Code.
 
“Securities Pledge Agreement” means a securities pledge agreement, in form and
substance satisfactory to Lender, executed and delivered by Borrower,
Teleservices Technology Company and Teleservices Management Company (and, if
required pursuant to Section 6.19, an Additional Subsidiary) to Lender with
respect to the pledge of the Stock owned by Borrower and the Pledged Notes.
 
“Solvent” means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
 
“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).
 
“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.
 
“Taxes” has the meaning set forth in Section 16.5.
 
“Trademark Security Agreement” means a trademark security agreement executed and
delivered by Borrower, Guarantors and Lender, the form and substance of which is
satisfactory to Lender.

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“Underlying Issuer” means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of Lender for
the benefit of Borrower.
 
“Underlying Letter of Credit” means a letter of credit that has been issued by
an Underlying Issuer.
 
“Voidable Transfer” has the meaning set forth in Section 16.8.
 
“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.
 
1.2 Accounting Terms.  All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
“financial statements” shall include the notes and schedules thereto. Whenever
the term “Borrower” is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
 
1.3 Code.  Any terms used in this Agreement that are defined in the Code shall
be construed and defined as set forth in the Code unless otherwise defined
herein.
 
1.4 Construction.  Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term “including” is
not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.” The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person’s successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
 
1.5 Schedules and Exhibits.  All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

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2.    LOAN AND TERMS OF PAYMENT.
 
2.1 Revolver Advances
 
(a)    Subject to the terms and conditions of this Agreement, and during the
term of this Agreement, Lender agrees to make advances (“Advances”) to Borrower
in an amount at any one time outstanding not to exceed an amount equal to the
lesser of (i) the Maximum Revolver Amount less the Letter of Credit Usage, or
(ii) the Borrowing Base less the Letter of Credit Usage. For purposes of this
Agreement, “Borrowing Base,” as of any date of determination, shall mean the
result of:
 
(x)    the lesser of
 
(i)    the sum of
 
(A)    85% of the amount of Eligible Billed Accounts, less the amount, if any,
of the Dilution Reserve allocable to Eligible Billed Accounts, plus
 
(B)    the lesser of
 
(I)    75% of the amount of Eligible Unbilled Accounts less the amount, if any,
of the Dilution Reserve allocable to Eligible Unbilled Accounts, and
 
(II)   50% of the aggregate amount of credit availability created by the
foregoing clauses (x)(i)(A) and (x)(i)(B)(I), and
 
(ii)   an amount equal to Borrower’s Collections with respect to Accounts for
the immediately preceding 60 day period, minus
 
(y)    the sum of (i) the Payroll Reserve, (ii) the Bank Products Reserve, (iii)
the PNC Lease Reserve, and (iv) the aggregate amount of reserves, if any,
established by Lender under Section 2.1(b).
 
(b)    Anything to the contrary in this Section 2.1 notwithstanding, Lender
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Lender in its Permitted Discretion shall deem necessary or
appropriate, against the Borrowing Base, including reserves with respect to (i)
sums that Borrower is required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay under any Section of this Agreement or any
other Loan Document, and (ii) amounts owing by Borrower to any Person

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to the extent secured by a Lien on, or trust over, any of the Collateral (other
than any existing Permitted Lien set forth on Schedule P-1 which is specifically
identified thereon as entitled to have priority over the Lender’s Liens, or any
Permitted Lien described in clauses (a), (b), (c), (d) or (e) of the definition
of “Permitted Liens” in this Agreement), which Lien or trust, in the Permitted
Discretion of Lender likely would have a priority superior to the Lender’s Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral.
 
(c)    Lender shall have no obligation to make additional Advances hereunder to
the extent such additional Advances would cause the Revolver Usage to exceed the
Maximum Revolver Amount.
 
(d)    Amounts borrowed pursuant to this Section may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement.
 
2.2    [Intentionally Omitted]
 
2.3    Borrowing Procedures and Settlements
 
(a)    Procedure for Borrowing.  Each Borrowing shall be made by a request by an
Authorized Person delivered to Lender (which notice must be received by Lender
no later than 1:00 p.m. (New York time) on the Business Day that is the
requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day. At either Borrower’s or
Lender’s election, in lieu of delivering the above-described request in writing,
any Authorized Person may give Lender telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
 
(b)    Making of Advances.  If Lender has received a timely request for a
Borrowing in accordance with the provisions hereof, then, subject to the
satisfaction of the applicable terms and conditions set forth herein, Lender
shall make the proceeds of such Advance available to Borrower on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
to Borrower’s Designated Account.
 
2.4 Payments
 
(a)    Payments by Borrower.
 
(i)    Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Lender’s Account and shall be made in immediately available
funds, no later than 2:00 p.m. (New York time) on the date specified herein. Any
payment received by Lender later than 2:00 p.m.

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(New York time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until such
following Business Day.
 
(b)      Application and Reversal of Payments.
 
(i)       All payments shall be remitted to Lender and all such payments (other
than payments received while no Event of Default has occurred and is continuing
and which relate to the payment of principal or interest of specific Obligations
or which relate to the payment of specific fees), and all proceeds of Accounts
or other Collateral received by Lender, shall be applied as follows:
 
(A)  first, to pay any Lender Expenses then due to Lender under the Loan
Documents, until paid in full,
 
(B)  second, to pay any fees then due to Lender under the Loan Documents until
paid in full,
 
(C)  third, ratably to pay interest due in respect of the Advances until paid in
full,
 
(D)  fourth, so long as no Event of Default has occurred and is continuing, and
at Lender’s election, to pay amounts then due and owing by Borrower or its
Subsidiaries in respect of Bank Products, until paid in full,
 
(E)  fifth, so long as no Event of Default has occurred and is continuing, to
pay the principal of all Advances until paid in full,
 
(F)  sixth, if an Event of Default has occurred and is continuing, ratably (i)
to pay the principal of all Advances until paid in full, and (ii) to Lender, to
be held by Lender, for the benefit of Wells Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to the amount of the Bank
Products Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default until Borrower’s and its
Subsidiaries’ obligations in respect of the then extant Bank Products have been
paid in full or the cash collateral amount has been exhausted,
 
(G)  seventh, if an Event of Default has occurred and is continuing, to be held
by Lender as cash collateral in an amount up to 105% of the then extant Letter
of Credit Usage until paid in full,

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(H)  eighth, to pay any other Obligations until paid in full, and
 
(I)    ninth, to Borrower (to be wired to the Designated Account) or such other
Person entitled thereto under applicable law.
 
(ii)    In each instance, so long as no Event of Default has occurred and is
continuing, Section 2.4(b)(i) shall not be deemed to apply to any payment by
Borrower specified by Borrower to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement.
 
(iii)   For purposes of the foregoing, “paid in full” means payment of all
amounts owing under the Loan Documents according to the terms thereof, including
loan fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or not the
same would be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
 
(iv)    In the event of a direct conflict between the priority provisions of
this Section 2.4 and other provisions contained in any other Loan Document, it
is the intention of the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest extent possible,
to be in concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
 
2.5    Overadvances.  If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to Lender
pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Sections 2.1 or 2.12 (an “Overadvance”),
Borrower immediately shall pay to Lender, in cash, the amount of such excess,
which amount shall be used by Lender to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to Lender as and when due and payable under the
terms of this Agreement and the other Loan Documents.
 
2.6    Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
.
(a)     Interest Rates. Except as provided in clause (c) below, all Obligations
(except for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof as
follows: (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan,
at a per

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annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii)
otherwise, at a per annum rate equal to the Base Rate plus the applicable Base
Rate Margin.
 
(b)    Letter of Credit Fee.  Borrower shall pay Lender a Letter of Credit fee
(in addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 2.00% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
 
  (c)    [Intentionally Omitted].
 
  (d)    Default Rate.  Upon the occurrence and during the continuation of an
Event of Default,
 
(i)    all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to 4.00 percentage points above the per annum rate otherwise
applicable hereunder, and
 
(ii)    the Letter of Credit fee provided for above shall be increased to 4.00
percentage points above the per annum rate otherwise applicable hereunder.
 
(e)    Payment.  Except as provided in Section 2.13(a), interest, Letter of
Credit fees and all other fees payable hereunder shall be due and payable, in
arrears, on the first day of each month at any time that Obligations or
obligation to extend credit hereunder are outstanding. Borrower hereby
authorizes Lender, from time to time without prior notice to Borrower, to charge
such interest and fees, all Lender Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in Section 2.12(e) (as and when
accrued or incurred), the fees and costs provided for in Section 2.11 (as and
when accrued or incurred), and all other payments as and when due and payable
under any Loan Document (including any amounts due and payable to Wells Fargo or
its Affiliates in respect of Bank Products up to the amount of the then extant
Bank Products Reserve) to Borrower’s Loan Account, which amounts thereafter
shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to Borrower’s Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
 
(f)    Computation.  All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360-day year for the actual number of days
elapsed. In the event the Base Rate is changed from time to time hereafter, the
rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.

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(g)    Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and Lender, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the
date of this Agreement, Borrower is and shall be liable only for the payment of
such maximum as allowed by law, and payment received from Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
 
2.7   Cash Management.
 
(a)    Borrower shall (i) establish and maintain cash management services of a
type and on terms satisfactory to Lender at one or more of the banks set forth
on Schedule 2.7(a) (each, a “Cash Management Bank”), and shall request in
writing and otherwise take such reasonable steps to ensure that all of its
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank) into a bank account in Lender’s name (a “Cash Management
Account”) at one of the Cash Management Banks.
 
(b)    Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Lender and Borrower, in form and substance acceptable to Lender.
Each such Cash Management Agreement shall provide, among other things, that (i)
all items of payment deposited in such Cash Management Account and proceeds
thereof are held by such Cash Management Bank as agent or bailee-in-possession
for Lender, (ii) the Cash Management Bank has no rights of setoff or recoupment
or any other claim against the applicable Cash Management Account other than for
payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Lender’s Account.
 
(c)    So long as no Default or Event of Default has occurred and is continuing,
Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or
Cash Management Account; provided, however, that (i) such prospective Cash
Management Bank shall be satisfactory to Lender and Lender shall have consented
in writing in advance to the opening of such Cash Management Account with the
prospective Cash Management Bank, and (ii) prior to the time of the opening of
such Cash Management Account, Borrower and such prospective Cash Management Bank
shall have executed and

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delivered to Lender a Cash Management Agreement. Borrower shall close any of its
Cash Management Accounts (and establish replacement cash management accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
of notice from Lender that the creditworthiness of any Cash Management Bank is
no longer acceptable in Lender’s reasonable judgment, or as promptly as
practicable and in any event within 60 days of notice from Lender that the
operating performance, funds transfer, or availability procedures or performance
of the Cash Management Bank with respect to Cash Management Accounts or Lender’s
liability under any Cash Management Agreement with such Cash Management Bank is
no longer acceptable in Lender’s reasonable judgment.
 
(d)    The Cash Management Accounts shall be cash collateral accounts, with all
cash, checks and similar items of payment in such accounts securing payment of
the Obligations, and in which Borrower is hereby deemed to have granted a Lien
to Lender.
 
2.8  Crediting Payments; Float Charge. The receipt of any payment item by Lender
(whether from transfers to Lender by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Lender’s Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Lender only if it is received into the Lender’s Account on a Business Day on or
before 2:00 p.m. (New York time). If any payment item is received into the
Lender’s Account on a non-Business Day or after 2:00 p.m. (New York time) on a
Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Lender shall be entitled to charge Borrower for one (1)
Business Day of ‘clearance’ or ‘float’ at the rate applicable to Base Rate Loans
under Section 2.6 on all Collections that are received by Borrower (regardless
of whether forwarded by the Cash Management Banks to Lender). This
across-the-board one (1) Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrower and shall apply irrespective of whether
or not there are any outstanding monetary Obligations; the effect of such
clearance or float charge being the equivalent of charging one (1) Business Day
of interest on such Collections. Such clearance or float charge shall have no
effect with respect to the application of Collections to pay principal of the
Advances for purposes of determining Availability.
 
2.9  Designated Account. Lender is authorized to make the Advances, and Lender
is authorized to issue the Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to Section 2.6(d).
Borrower agrees to establish and maintain the

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Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Lender hereunder.
Unless otherwise agreed by Lender and Borrower, any Advance requested by
Borrower and made by Lender hereunder shall be made to the Designated Account.
 
2.10  Maintenance of Loan Account; Statements of Obligations.  Lender shall
maintain an account on its books in the name of Borrower (the “Loan Account”) on
which Borrower will be charged with all Advances made by Lender to Borrower or
for Borrower’s account, the Letters of Credit issued by Lender for Borrower’s
account, and with all other payment Obligations hereunder or under the other
Loan Documents (except for Bank Product Obligations), including accrued
interest, fees and expenses, and Lender Expenses. In accordance with Section
2.8, the Loan Account will be credited with all payments received by Lender from
Borrower or for Borrower’s account, including all amounts received in the
Lender’s Account from any Cash Management Bank. Lender shall render monthly
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Expenses owing, and such statements shall be presumed to be
correct and accurate absent manifest error unless, within 30 days after receipt
thereof by Borrower, Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
 
2.11  Fees.  Borrower shall pay to Lender the following fees and charges, which
fees and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter):
 
(a)    Unused Line Fee.  On the first day of each month during the term of this
Agreement, an unused line fee in an amount equal to 0.50% per annum times the
result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the average
Daily Balance of Advances that were outstanding during the immediately preceding
month, plus (ii) the average Daily Balance of the Letter of Credit Usage during
the immediately preceding month,
 
(b)    Fee Letter Fees.  As and when due and payable under the terms of the Fee
Letter, Borrower shall pay to Lender the fees set forth in the Fee Letter, and
 
(c)    Audit, Appraisal, and Valuation Charges.  Audit, appraisal, and valuation
fees and charges as follows: (i) a fee of $850 per day, per auditor, plus
out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Lender, (ii) if implemented, a one time charge of $5,000
plus out-of-pocket expenses for expenses for the establishment of electronic
collateral reporting systems, (iii) the actual charges paid or incurred by
Lender for each appraisal of the Collateral performed by personnel employed by
Lender, and (iv) the actual charges paid or incurred by Lender if it elects to
employ the services of one or more third Persons to perform financial audits of
Borrower, to appraise the Collateral, or any portion thereof, or to assess
Borrower’s business valuation; provided, that, notwithstanding the foregoing, so
long as no Default or Event of

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Default shall have occurred, Borrower shall not be responsible for the fees and
charges incurred in connection with financial audits to the extent that such
financial audits are done more frequently than four (4) times each calendar year
(it being understood and agreed that the foregoing shall not prohibit Lender in
any way from performing, or causing the performance of, such financial audits
more frequently than four (4) times each calendar year).
 
2.12    Letters of Credit
 
(a)    Subject to the terms and conditions of this Agreement, Lender agrees to
issue letters of credit for the account of Borrower (each, an “L/C”) or to
purchase participations or execute indemnities or reimbursement obligations
(each such undertaking, an “L/C Undertaking”) with respect to letters of credit
issued by an Underlying Issuer (as of the Closing Date, such issuing bank to be
Wells Fargo) for the account of Borrower. To request the issuance of an L/C or
an L/C Undertaking (or the amendment, renewal, or extension of an outstanding
L/C or L/C Undertaking), Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by
Lender) to Lender and Lender (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance of
an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by Lender, Borrower also shall
be an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C Undertaking. Lender shall have no
obligation to issue a Letter of Credit if any of the following would result
after giving effect to the requested Letter of Credit:
 
(i)     the Letter of Credit Usage would exceed the Borrowing Base less the
amount of outstanding Advances, or
 
(ii)    the Letter of Credit Usage would exceed $1,500,000, or
 
(iii)    the Letter of Credit Usage would exceed the Maximum Revolver Amount
less the then extant amount of outstanding Advances.
 
Borrower and Lender acknowledge and agree that certain Underlying Letters of
Credit may be issued to support letters of credit that already are outstanding
as of the Closing Date. Each Letter of Credit (and corresponding Underlying
Letter of Credit) shall be in form and substance acceptable to Lender (in the
exercise of its Permitted Discretion), including the requirement that the
amounts payable thereunder must be payable in Dollars. If Lender is obligated to
advance funds under a Letter of Credit, Borrower immediately shall

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reimburse such L/C Disbursement to Lender by paying to Lender an amount equal to
such L/C Disbursement not later than 2:00 p.m., New York time, on the date that
such L/C Disbursement is made, if Borrower shall have received written or
telephonic notice of such L/C Disbursement prior to 1:00 p.m., New York time, on
such date, or, if such notice has not been received by Borrower prior to such
time on such date, then not later than 2:00 p.m., New York time, on the Business
Day that Borrower receives such notice, if such notice is received prior to 1:00
p.m., New York time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6. To
the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrower’s
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance.
 
(b)    Borrower hereby agrees to indemnify, save, defend, and hold Lender
harmless from any loss, cost, expense, or liability, and reasonable attorneys
fees incurred by Lender arising out of or in connection with any Letter of
Credit; provided, however, that Borrower shall not be obligated hereunder to
indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of Lender. Borrower agrees to be bound by the
Underlying Issuer’s regulations and interpretations of any Underlying Letter of
Credit or by Lender’s interpretations of any L/C issued by Lender to or for
Borrower’s account, even though this interpretation may be different from
Borrower’s own, and Borrower understands and agrees that Lender shall not be
liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrower’s instructions or those contained in the Letter of Credit
or any modifications, amendments, or supplements thereto. Borrower understands
that the L/C Undertakings may require Lender to indemnify the Underlying Issuer
for certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by Lender under any L/C Undertaking as a
result of Lender’s indemnification of any Underlying Issuer; provided, however,
that Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability that is caused by the gross negligence or willful
misconduct of Lender.
 
(c)    Borrower hereby authorizes and directs any Underlying Issuer to deliver
to Lender all instruments, documents, and other writings and property received
by such Underlying Issuer pursuant to such Underlying Letter of Credit and to
accept and rely upon Lender’s instructions with respect to all matters arising
in connection with such Underlying Letter of Credit and the related application.
 
(d)    Any and all charges, commissions, fees, and costs incurred by Lender
relating to Underlying Letters of Credit shall be Lender Expenses for purposes
of this Agreement and immediately shall be reimbursable by Borrower to Lender
for the account of Lender; it being acknowledged and agreed by Borrower that, as
of the Closing Date, the

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issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
 
(e)    If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or Lender
with any direction, request, or requirement (irrespective of whether having the
force of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):
 
(i)    any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or
 
(ii)    there shall be imposed on the Underlying Issuer or Lender any other
condition regarding any Underlying Letter of Credit or any Letter of Credit
issued pursuant hereto,
 
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as Lender may specify to be
necessary to compensate Lender for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Lender of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
 
2.13    LIBOR Option.
 
(a)    Interest and Interest Payment Dates.    In lieu of having interest
charged at the rate based upon the Base Rate, if and only if EBITDA for the
immediately preceding fiscal year exceeded $25,000,000 (based on the audited
financial statements delivered to Lender in accordance with Section 6.3(b)),
Borrower shall have the option (the “LIBOR Option”) to have interest on all or a
portion of the Advances be charged at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the
last day of the Interest Period applicable thereto, (ii) the occurrence of an
Event of Default in consequence of which Lender has elected to accelerate the
maturity of all or any portion of the Obligations, or (iii) termination of this
Agreement pursuant to the terms hereof. On the last day of each applicable
Interest Period, unless Borrower properly has exercised the LIBOR Option with
respect thereto, the interest rate

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applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances bear interest at the LIBOR Rate
and Lender shall have the right to convert the interest rate on all outstanding
LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.
 
(b)    LIBOR Election.
 
(i)    Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Lender prior to 2:00 p.m. (New York time) at least three (3) Business
Days prior to the commencement of the proposed Interest Period (the “LIBOR
Deadline”). Notice of Borrower’s election of the LIBOR Option for a permitted
portion of the Advances and an Interest Period pursuant to this Section shall be
made by delivery to Lender of a LIBOR Notice received by Lender before the LIBOR
Deadline, or by telephonic notice received by Lender before the LIBOR Deadline
(to be confirmed by delivery to Lender of a LIBOR Notice received by Lender
prior to 8:00 p.m. (New York time) on the same day.
 
(ii)    Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Lender harmless against any loss, cost, or expense (other than indirect or
consequential losses, costs or expenses) incurred by Lender as a result of (a)
the payment of any principal of any LIBOR Rate Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, “Funding Losses”). Funding Losses shall be deemed to equal the
amount determined by Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such LIBOR Rate Loan
had such event not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert, or continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate which Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A certificate of
Lender delivered to

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Borrower setting forth any amount or amounts that Lender is entitled to receive
pursuant to this Section shall be presumptively correct absent manifest error.
 
(iii)    Borrower shall have not more than five (5) LIBOR Rate Loans in effect
at any given time. Borrower only may exercise the LIBOR Option for LIBOR Rate
Loans of at least $1,000,000 and integral multiples of $500,000 in excess
thereof.
 
(c)      Prepayments.  Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Lender of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrower shall indemnify, defend, and hold Lender and its
Participants harmless against any and all Funding Losses in accordance with
clause (b)(ii) above.
 
(d)    Special Provisions Applicable to LIBOR Rate.
 
(i)    The LIBOR Rate may be adjusted by Lender on a prospective basis to take
into account any additional or increased costs to Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes in
applicable law occurring subsequent to the commencement of the then applicable
Interest Period, including changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System (or
any successor), excluding the Reserve Percentage, which additional or increased
costs would increase the cost of funding loans bearing interest at the LIBOR
Rate. In any such event, Lender shall give Borrower notice of such a
determination and adjustment (such notice to be delivered by Lender within 90
days after Lender becomes aware of an event described above in this clause
(d)(i)); provided that if there are no LIBOR Rate Loans then outstanding, such
notice shall be delivered by the later of (x) 90 days after Lender becomes aware
of an event described in this clause (d)(i) and (y) the date that Borrower
notifies Lender in accordance with this Section 2.13 that it intends to exercise
the LIBOR Option) and, upon its receipt of the notice from Lender, Borrower may,
by notice to Lender (y) require Lender to furnish to Borrower a statement
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under clause (b)(ii) above).

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(ii)    In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the interpretation
of application thereof, shall at any time after the date hereof, in the
reasonable opinion of Lender, make it unlawful or impractical for Lender to fund
or maintain LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, Lender shall give notice
of such changed circumstances to Borrower and (y) in the case of any LIBOR Rate
Loans that are outstanding, the date specified in Lender’s notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and
interest upon the LIBOR Rate Loans thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrower shall not be entitled to
elect the LIBOR Option until Lender determines that it would no longer be
unlawful or impractical to do so.
 
(e)    No Requirement of Matched Funding.  Anything to the contrary contained
herein notwithstanding, neither Lender, nor any of its Participants, is required
actually to acquire eurodollar deposits to fund or otherwise match fund any
Obligation as to which interest accrues at the LIBOR Rate. The provisions of
this Section shall apply as if Lender or its Participants had match funded any
Obligation as to which interest is accruing at the LIBOR Rate by acquiring
eurodollar deposits for each Interest Period in the amount of the LIBOR Rate
Loans.
 
2.14    Capital Requirements.  If, after the date hereof, Lender determines that
(i) the adoption of or change in any generally applicable law, rule, regulation
or guideline regarding capital requirements for banks or bank holding companies,
or any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any generally applicable guideline,
request, or directive of any such entity regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return on Lender’s
or such holding company’s capital as a consequence of Lender’s obligations
hereunder to a level below that which Lender or such holding company could have
achieved but for such adoption, change, or compliance (taking into consideration
Lender’s or such holding company’s then existing policies with respect to
capital adequacy and assuming the full utilization of such entity’s capital) by
any amount deemed by Lender to be material, then Lender may notify Borrower
thereof (such notice to be delivered by Lender within 90 days after Lender
becomes aware of an event described in clause (i) or (ii) of this Section 2.14).
Following receipt of such notice, Borrower agrees to pay Lender on demand the
amount of such reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by Lender of a statement
in the amount and setting forth in reasonable detail Lender’s calculation
thereof and the assumptions upon which such calculation was based (which
statement shall be presumptively true and correct absent manifest error). In
determining such amount, Lender may use any reasonable averaging and attribution
methods.

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3.
 
CONDITIONS; TERM OF AGREEMENT.

 
3.1    Conditions Precedent to the Initial Extension of Credit.    The
obligation of Lender to make the initial Advance (or otherwise to extend any
credit provided for hereunder), is subject to the fulfillment, to the
satisfaction of Lender, of each of the conditions precedent set forth below:
 
(a)    the Closing Date shall occur on or before September 4, 2002;
 
(b)    Lender shall have received all financing statements required by Lender,
duly authorized by Borrower, and Lender shall have received searches reflecting
the filing of all such financing statements;
 
(c)    Lender shall have received each of the following documents, in form and
substance satisfactory to Lender, duly executed, and each such document shall be
in full force and effect:
 
(i)  the Cash Management Agreements,
 
(ii)  the Control Agreements,
 
(iii)  the Copyright Security Agreement,
 
(iv)  the Disbursement Letter,
 
(v)  the Due Diligence Letter,
 
(vi)  the Fee Letter,
 
(vii)  the Guaranty,
 
(viii)  the Guarantor Security Agreement,
 
(ix)  the Intercompany Subordination Agreement,
 
(x)  the Officers’ Certificate,
 
(xi)  the Patent Security Agreement,
 
(xii)  the Pay-Off Letter, together with UCC termination statements and other
documentation evidencing the termination by Existing Lender of its Liens in and
to the properties and assets of Borrower,
 
(xiii)  the Securities Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder, as well as Stock powers
with respect thereto endorsed in blank, and the Pledged Notes,

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(xiv)  the Trademark Security Agreement,
 
(xv)  the MCI Agreement, and
 
(xvi)  the PNC Forbearance;
 
(d)     Lender shall have received a certificate from the Secretary of Borrower
(i) attesting to the resolutions of Borrower’s Board of Directors authorizing
its execution, delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party and authorizing specific officers of
Borrower to execute the same and (ii) certifying the names and true signatures
of the officers of Borrower authorized to sign each such Loan Document;
 
(e)     Lender shall have received copies of Borrower’s Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of Borrower;
 
(f)     Lender shall have received a certificate of status with respect to
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
 
(g)     Lender shall have received certificates of status with respect to
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
 
(h)     Lender shall have received a certificate from the Secretary of each
Guarantor (i) attesting to the resolutions of such Guarantor’s board of
directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same and (ii) certifying the names and true
signatures of the officers of such Guarantor authorized to sign each such Loan
Document;
 
(i)     Lender shall have received copies of each Guarantor’s Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
 
(j)     Lender shall have received a certificate of status with respect to each
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;

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(k)    Lender shall have received certificates of status with respect to each
Guarantor, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
 
(l)    Lender shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Lender;
 
(m)    Lender shall have received a Collateral Access Agreement with respect to
the following location: 15 Campus Boulevard, Newtown Square, Pennsylvania 19073;
 
(n)    Lender shall have received an opinion of Borrower’s counsel in form and
substance satisfactory to Lender;
 
(o)    Lender shall have received satisfactory evidence (including a certificate
of the chief financial officer of Borrower) that all tax returns required to be
filed by Borrower have been timely filed and all taxes upon Borrower or its
properties, assets, income, and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
 
(p)    Borrower shall have the Required Availability after giving effect to the
initial extensions of credit hereunder;
 
(q)    Lender shall have completed its business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrower’s books and
records and verification of Borrower’s representations and warranties to Lender,
(ii) an inspection of each of the locations where Borrower’s Inventory is
located, and (iii) review of Borrower’s customer contracts, the results of each
of which shall be satisfactory to Lender;
 
(r)    Lender shall have received completed reference checks with respect to
Borrower’s senior management, the results of which are satisfactory to Lender in
its sole discretion;
 
(s)    Lender shall have received Borrower’s Closing Date Business Plan;
 
(t)    Borrower shall pay all Lender Expenses incurred in connection with the
transactions evidenced by this Agreement;

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(u)    Borrower shall have received all licenses, approvals or evidence of other
actions required by any Governmental Authority in connection with the execution
and delivery by Borrower of this Agreement or any other Loan Document or with
the consummation of the transactions contemplated hereby and thereby;
 
(v)    Lender shall have received Borrower’s quarterly report on Form 10-Q as
filed with the SEC for the period ended June 30, 2002, and such report shall be
consistent with the pro forma quarterly report Borrower previously provided to
Lender, except for such adjustments as have been previously disclosed to Lender;
 
(w)    Lender shall be satisfied with the takeover audit, which shall include
but shall not be limited to: (i) a review of outstanding check detail, in
particular the determination of any held checks, and (ii) verification that
payroll taxes are current;
 
(x)    Borrower shall have on the Closing Date remitted by wire transfer to
Lender’s Account all cash (and delivered all Cash Equivalents in such manner as
directed by Lender) of Borrower utilized to calculate the Required Availability;
 
(y)    Borrower shall have delivered to Lender evidence, satisfactory to Lender
in its sole discretion, that Borrower provided notice to AT&T Corp. in
connection with the agreement dated as of August 1, 2000, as amended, between
Borrower and AT&T Corp;
 
(z)    Borrower shall have on the Closing Date requested and borrowed an Advance
in an amount equal to at least $5,000,000; and
 
(aa)  all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance reasonably satisfactory to Lender.
 
3.2 Conditions Subsequent to the Initial Extension of Credit.    The obligation
of Lender to continue to make Advances (or otherwise extend credit hereunder) is
subject to the fulfillment, on or before the date applicable thereto, of each of
the conditions subsequent set forth below (the failure by Borrower to so perform
or cause to be performed constituting an Event of Default):
 
(a)    within 30 days of the Closing Date, deliver to Lender certified copies of
the policies of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Lender and its counsel;
 
(b)    use its best efforts to deliver to Lender, within 60 days after the
Closing Date, duly executed Collateral Access Agreements with respect to the
following locations (unless such locations are no longer leased by Borrower by
the end of such 60-day period); provided that if Borrower shall have failed to
deliver to Lender a Collateral Access

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Agreement with respect to any such location within such 60-day period, then
Lender shall have the right, in its sole discretion, to implement reserves in
respect of the lease payments owed by Borrower (or any of Borrower’s
Subsidiaries) in respect of each such location:
 

 
(i)
 
2901 Hamilton Blvd. Allentown, PA, Lehigh County

 
(ii)
 
10 East Athens Avenue Ardmore, PA 19003, Montgomery County

 
(iii)
 
Atrium at English Creek Bldg. Unit D, Space No. 207 (Ste 7, 8, 9) and Space No.
205 English Creek Shopping Center Pleasantville, NJ, Atlantic County

 
(iv)
 
Area A and B / Level 2 Market Square, Brantford, Ontario, Canada

 
(v)
 
501 Delran Parkway Delran, NJ, Burlington County

 
(vi)
 
Capital Plaza Shopping Center, North Olden & Princeton Avenue, Ewing Township,
Mercer County, NJ

 
(vii)
 
Suite 401, 6801 Gaylord Parkway, Frisco, TX 75034

 
(viii)
 
Suite 400, 6801 Gaylord Parkway, Frisco, TX 75034

 
(ix)
 
2809 East Grimes Avenue, Harlingen, Texas 78550, Cameron County

 
(x)
 
3200 FM 1960 East Houston, TX Harris County

 
(xi)
 
Spectrum Technology Park Building C, 1st floor, 8550 Ulmerton Road, Largo, FL
33779, Pinnellas County

 
(xii)
 
Country Club Mall, 3200 Island Highway, Nanaimo, B.C., Canada V9T 1W1

 
(xiii)
 
281 Restigouche Road, Oromocto Business Complex, Oromocto, NB, Canada E2V 2H2

 
(xiv)
 
1st / 2nd Floors, Bldg. No. 1020, 1st Floor, Bldg. No. 1040, 2nd Floor, Bldg.
No. 1010. Modeland Centre, 1086 Modeland Road Sarnia, Ontario, Canada

 
(xv)
 
Queensbay Esplanade, 345 Queen St. East, Sault Ste Marie, Ontario, Canada

 
(xvi)
 
2nd Level, 900 James Avenue, Scranton, PA 18510, Lackawanna County

 
(xvii)
 
180 Crown St., 2nd Level, Saint John, New Brunswick, Canada

 
(xviii)
 
250 Park Avenue, Eaton Building, Thunder Bay, Ontario, Canada P7B 1R2

 
(xix)
 
11125-124th Street Surrey, British Columbia, Canada V3V 4V2

 
(xx)
 
29 Beekman Street, Wilkes Barre, PA 18702, Luzerne County

 
(xxi)
 
1600 Pennsylvania Avenue, York, PA 17404, York County

 
(xxii)
 
RMH Building, 1801 West 32nd Street, Yuma, AZ 85364, Yuma County;

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(c)  Within 30 days after the Closing Date, Borrower shall deliver to Lender
certificates of status from the appropriate officers of the States of New Jersey
and Florida, which certificates shall indicate that Borrower is in good standing
in such jurisdictions; and
 
(d)  On or prior to September 9, 2002, Borrower shall have delivered to Lender
originals of (i) the Pledged Notes and (ii) the stock certificates representing
the shares of 515963 N.B. Inc. and 516131 N.B. Inc.
 
3.3  Conditions Precedent to all Extensions of Credit.    The obligation of
Lender to make all Advances (or to extend any other credit hereunder) shall be
subject to the following conditions precedent:
 
(a)  the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date),
 
(b)  no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof,
 
(c)  no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any Governmental Authority against Borrower,
Lender, or any of their Affiliates.
(d)  no Material Adverse Change shall have occurred and be continuing.
 
3.4  Term.  This Agreement shall become effective in accordance with Section
16.1 and shall continue in full force and effect for a term ending on the third
anniversary of the Closing Date (the “Maturity Date”). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
 
3.5  Effect of Termination.    On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Lender in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to Lender, (b) providing cash
collateral to be held by Lender for the benefit of Wells Fargo or its Affiliates
with respect to the then extant Bank Products Obligations). No termination of
this Agreement,

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however, shall relieve or discharge Borrower of its duties, Obligations, or
covenants hereunder and the Lender’s Liens in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged (or with
respect to outstanding Bank Product Obligations in respect of swap agreements,
such agreements may be assigned to another financial institution, provided that
such assignment shall provide for appropriate indemnification by such financial
institution in favor of Wells Fargo and such assignment shall be otherwise
satisfactory to Wells Fargo in all respects) and Lender’s obligations to provide
additional credit hereunder have been terminated. When this Agreement has been
terminated and all of the Obligations have been fully and finally discharged and
Lender’s obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Lender will, at Borrower’s sole expense, execute
and deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Lender’s Liens and all
notices of security interests and liens previously filed by Lender with respect
to the Obligations.
 
3.6  Early Termination by Borrower.    Borrower has the option, at any time upon
60 days prior written notice to Lender, to terminate this Agreement by paying to
Lender, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Lender in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to Lender, and (b) providing cash collateral to be held by Lender for
the benefit of Wells Fargo or its Affiliates with respect to the then extant
Bank Products Obligations), in full, together with the Applicable Prepayment
Premium. If Borrower has sent a notice of termination pursuant to the provisions
of this Section, then Lender’s obligations to extend credit hereunder shall
terminate and Borrower shall be obligated to repay the Obligations (including
(a) either (i) providing cash collateral to be held by Lender in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to Lender, and (b) providing cash collateral to
be held by Lender for the benefit of Wells Fargo or its Affiliates with respect
to the then extant Bank Products Obligations), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of
Lender to terminate after the occurrence of an Event of Default, (b) foreclosure
and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding,
or (iv) restructure, or compromise of the Obligations by the confirmation of a
plan of reorganization or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to Lender or
profits lost by Lender as a result of such early termination, and by mutual
agreement of the parties as to a reasonable estimation and calculation of the
lost profits or damages of Lender, Borrower shall pay the Applicable Prepayment
Premium to Lender, measured as of the date of such termination.

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4.
 
CREATION OF SECURITY INTEREST.

 
4.1  Grant of Security Interest.    Borrower hereby grants to Lender (and with
respect to Bank Product Obligations, Wells Fargo and its Affiliates) a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrower of each of its covenants and duties
under the Loan Documents. The Lender’s Liens in and to the Personal Property
Collateral shall attach to all Personal Property Collateral without further act
on the part of Lender or Borrower. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrower has no authority, express or implied, to dispose of any
item or portion of the Collateral.
 
4.2  Negotiable Collateral.    In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection of priority of Lender’s security interest is
dependent on or enhanced by possession, Borrower, immediately upon the request
of Lender, shall endorse and deliver physical possession of such Negotiable
Collateral to Lender.
 
4.3  Collection of Accounts, General Intangibles, and Negotiable
Collateral.    At any time after the occurrence and during the continuation of
an Event of Default, Lender or Lender’s designee may (a) notify Account Debtors
of Borrower that the Accounts, chattel paper, or General Intangibles have been
assigned to Lender or that Lender has a security interest therein, or (b)
collect the Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account. Borrower agrees that it
will hold in trust for Lender, as Lender’s trustee, any Collections that it
receives and immediately will deliver said Collections to Lender or a Cash
Management Bank in their original form as received by Borrower.
 
4.4  Delivery of Additional Documentation Required.    At any time upon the
request of Lender, Borrower shall execute and deliver to Lender, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, mortgages, surveys,
assignments, endorsements of certificates of title, and all other documents (the
“Additional Documents”) that Lender may request in its Permitted Discretion, in
form and substance satisfactory to Lender, to perfect and continue perfected or
better perfect the Lender’s Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Lender
in any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Borrower
authorizes Lender to execute any such Additional Documents in Borrower’s name
and authorizes Lender to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as

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Lender shall require, Borrower shall (a) provide Lender with a report of all new
patentable, copyrightable, or trademarkable materials acquired or generated by
Borrower during the prior period, (b) cause all patents, copyrights, and
trademarks acquired or generated by Borrower that are not already the subject of
a registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrower’s ownership thereof,
and (c) cause to be prepared, executed, and delivered to Lender supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
 
4.5  Power of Attorney.    Borrower hereby irrevocably makes, constitutes, and
appoints Lender (and any of Lender’s officers, employees, or agents designated
by Lender) as Borrower’s true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower’s name on any invoice or bill of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower’s name on any Collection item that may come into Lender’s possession,
(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under Borrower’s policies of insurance and make
all determinations and decisions with respect to such policies of insurance, and
(f) at any time that an Event of Default has occurred and is continuing, settle
and adjust disputes and claims respecting the Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as Borrower’s attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and Lender’s
obligations to extend credit hereunder are terminated.
 
4.6  Right to Inspect.    Lender and its officers, employees, or agents shall
have the right, from time to time hereafter, to inspect the Books and to check,
test, and appraise the Collateral in order to verify Borrower’s financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral; provided that, so long as no Default or Event of
Default shall have occurred and be continuing, Lender shall conduct the
foregoing activities during normal business hours.
 
4.7  Control Agreements.    Borrower agrees that it will not transfer assets out
of any Securities Accounts other than as permitted under Section 7.19 and, if to
another securities intermediary, unless each of Borrower, Lender, and the
substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrower
without the prior written consent of Lender. Upon the occurrence

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and during the continuance of an Event of Default, Lender may notify any
securities intermediary to liquidate the applicable Securities Account or any
related Investment Property maintained or held thereby and remit the proceeds
thereof to the Lender’s Account.
 
4.8  Commercial Tort Claims.    Borrower shall promptly notify Lender in writing
upon incurring or otherwise obtaining a commercial tort claim (as that term is
defined in the Code), claiming an amount in excess of $100,000, after the date
hereof against any third party and, upon request of Lender, promptly amend
Schedule C-1 to this Agreement, authorize the filing of additional or amendments
to existing financing statements and do such other acts or things deemed
necessary or desirable by Lender to give Lender a security interest in any such
commercial tort claim.
 
5.
 
REPRESENTATIONS AND WARRANTIES.

 
In order to induce Lender to enter into this Agreement, Borrower makes the
following representations and warranties to Lender with respect to itself and,
as applicable, its Subsidiaries, each of which shall be true, correct, and
complete, in all material respects, as of the date hereof, and shall be true,
correct, and complete, in all material respects, as of the Closing Date, and at
and as of the date of the making of each Advance (or other extension of credit)
made thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
 
5.1  No Encumbrances.    Borrower has good and indefeasible title to the
Collateral and the Real Property, if any, free and clear of Liens except for
Permitted Liens.
 
5.2  Eligible Accounts.    The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the rendition of services to such
Account Debtors in the ordinary course of Borrower’s business, owed to Borrower
without defenses, disputes, offsets, counterclaims, or rights of return or
cancellation. As to each Account that is identified by Borrower as an Eligible
Account in a borrowing base report submitted to Lender, such Account is not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Accounts.
 
5.3  [Intentionally Omitted]
.
5.4  Equipment.    All of the Equipment is used or held for use in Borrower’s
business and is fit for such purposes.
 
5.5  Location of Inventory and Equipment.    The Inventory, if any, and
Equipment are not stored with a bailee, warehouseman, or similar party and are
located only at the locations identified on Schedule 5.5.

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5.6 Inventory Records.   If Borrower has Inventory, it shall keep correct and
accurate records itemizing and describing the type, quality, and quantity of
such Inventory, and the book value thereof.
 
5.7 Location of Chief Executive Office; FEIN.  The chief executive office of
Borrower is located at the address indicated in Schedule 5.7 and Borrower’s FEIN
is identified in Schedule 5.7.
 
5.8 Due Organization nd Qualification; Subsidiaries.
 
(a)    Borrower is duly organized and existing and in good standing under the
laws of the jurisdiction of its organization and qualified to do business in any
state where the failure to be so qualified reasonably could be expected to
result in a Material Adverse Change.
 
(b)    Set forth on Schedule 5.8(b) is a complete and accurate description of
the authorized capital Stock of Borrower, by class, and, as of the Closing Date,
a description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower’s
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
 
(c)    Set forth on Schedule 5.8(c) is a complete and accurate list of
Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
 
(d)    Except as set forth on Schedule 5.8(c), there are no subscriptions,
options, warrants, or calls relating to any shares of Borrower’s Subsidiaries’
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower’s Subsidiaries’
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
 
5.9 Due Authorization; No Conflict.    The execution, delivery, and performance
by Borrower of this Agreement and the Loan Documents to which it is a party have
been duly authorized by all necessary action on the part of Borrower.

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(a)    The execution, delivery, and performance by Borrower of this Agreement
and the Loan Documents to which it is a party do not and will not (i) violate
any provision of federal, state, or local law or regulation applicable to
Borrower, the Governing Documents of Borrower, or any order, judgment, or decree
of any court or other Governmental Authority binding on Borrower, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of Borrower, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than Permitted
Liens, or (iv) require any approval of Borrower’s interestholders or any
approval or consent of any Person under any material contractual obligation of
Borrower.
 
(b)    Other than the filing of financing statements, the execution, delivery,
and performance by Borrower of this Agreement and the Loan Documents to which
Borrower is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any Governmental
Authority or other Person.
 
(c)    This Agreement and the other Loan Documents to which Borrower is a party,
and all other documents contemplated hereby and thereby to which Borrower is a
party, when executed and delivered by Borrower will be the legally valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally.
 
(d)    The Lender’s Liens are validly created, perfected, and first priority
Liens, subject only to Permitted Liens.
 
(e)    The execution, delivery, and performance by each Guarantor of the Loan
Documents to which such Guarantor is a party have been duly authorized by all
necessary action on the part of such Guarantor.
 
(f)    The execution, delivery, and performance by each Guarantor of the Loan
Documents to which such Guarantor is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
Guarantor, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of such Guarantor, other
than Permitted Liens, or (iv) require any approval of such Guarantor’s
interestholders or any approval or consent of any Person under any material
contractual obligation of such Guarantor.

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(g)    The execution, delivery, and performance by each Guarantor of the Loan
Documents to which such Guarantor is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
 
(h)    The Loan Documents to which each Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Guarantor will be the legally valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.
 
5.10    Litigation.  Other than those matters disclosed on Schedule 5.10, there
are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrower, or any of its Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
 
5.11    No Material Adverse Change.  All financial statements relating to
Borrower or any Guarantor that have been delivered by Borrower to Lender have
been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, such Borrower’s
or Guarantor’s, as applicable, financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrower or any Guarantor, as applicable since
the date of the latest financial statements submitted to Lender on or before the
Closing Date.
 
5.12    Fraudulent Transfer.
 
(a)    Borrower is Solvent.
 
(b)    No transfer of property is being made by Borrower and no obligation is
being incurred by Borrower in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrower.
 
5.13    Employee Benefits.  None of Borrower, any of its Subsidiaries, or any of
their ERISA Affiliates has maintained or contributed to, or currently maintains
or contributes to, any Benefit Plan.
 
5.14    Environmental Condition.  Except as set forth on Schedule 5.14, (a) to
Borrower’s knowledge, none of Borrower’s assets has ever been used by Borrower
or by previous owners or operators in the disposal of, or to produce, store,
handle, treat, release, or

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transport, any Hazardous Materials, where such production, storage, handling,
treatment, release or transport was in violation, in any material respect, of
applicable Environmental Law, (b) to Borrower’s knowledge, none of Borrower’s
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) Borrower has not received notice that a Lien arising under
any Environmental Law has attached to any revenues or to any Real Property owned
or operated by Borrower, and (d) Borrower has not received a summons, citation,
notice, or directive from the Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by
Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment.
 
5.15    Brokerage Fees.  Borrower has not utilized the services of any broker or
finder in connection with Borrower’s obtaining financing from Lender under this
Agreement and no brokerage commission or finders fee is payable by Borrower in
connection herewith.
 
5.16    Intellectual Property.
 
(a)    Borrower and each of its Subsidiaries owns, or holds licenses in, all
Intellectual Property Rights (in the case of software, limited to object code
rights) that are necessary to the conduct of its business as currently
conducted. Attached hereto as Schedule 5.16(a) is a true, correct and complete
listing of all material patents, patent applications, trademarks, trademark
applications, material copyrights and copyright registrations and applications
as to which Borrower or any of its Subsidiaries is the owner or is an exclusive
licensee.
 
(b)    Borrower represents and warrants that it has taken, and has caused its
Subsidiaries to take, all action to protect the Borrower Intellectual Property
Rights, the failure of which would result in a Material Adverse Change,
including, without limitation, (i) protecting the secrecy and confidentiality of
Borrower’s and its Subsidiaries’ confidential information and trade secrets by
having and enforcing a policy requiring all current and former employees,
consultants, licensees, vendors and contractors to execute appropriate
confidentiality and invention assignment agreements; (ii) ensuring that no trade
secret of Borrower or any of its Subsidiaries falls or has fallen into the
public domain; and (iii) protecting the secrecy and confidentiality of the
source code of all computer software programs and applications of which Borrower
or any of its Subsidiaries is the owner or licensee by having and enforcing a
policy requiring any licensees of such source code to enter into license
agreements with appropriate use and non-disclosure restrictions. The only
material source code licenses to which Borrower or any of its Subsidiaries is a
party are set forth in Schedule 5.16(b).
 
(c)    To the best of Borrower’s knowledge, no past or present employee or
contractor of Borrower or any of its Subsidiaries has any ownership interest,
license, permission or other Intellectual Property Right in or to any material
Borrower Intellectual Property Rights.

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(d)    Borrower has made, and has caused its Subsidiaries to make, all necessary
payments, filings and recordations to protect and maintain its interest in
material Borrower Intellectual Property Rights in the United States or any other
jurisdiction, including, without limitation, (i) making all necessary
registration, maintenance, and renewal fee payments; and (ii) filing all
necessary documents, including, without limitation, all applications for
registration of copyrights, trademarks, and patents, except to the extent that
(x) Borrower has determined that such filings, recordations or registrations are
not desirable in the conduct of the Borrower’s business and (y) the failure to
take such action would not result in a Material Adverse Change.
 
(e)    No claim has been made and is continuing or threatened that the use by
Borrower or any of its Subsidiaries of any item of General Intangibles is
invalid or unenforceable or that the use by Borrower or any of its Subsidiaries
of any General Intangibles does or may violate the rights of any Person, other
than any such claim which would not cause a Material Adverse Change. To the best
of Borrower’s knowledge, there is currently no infringement or unauthorized use
of any item of Intellectual Property Rights contained on Schedule 5.16(a).
 
(f)    Borrower has filed, and has caused its Subsidiaries to file, applications
and taken any and all other actions reasonably necessary to register all
Copyrights material to Borrower and any such Subsidiary, if any, in good faith
in accordance with the procedures and regulations of the U.S. Copyright Office
(or any similar office of any other jurisdiction in which any such Copyrights
are used).
 
5.17    Leases.  Borrower enjoys peaceful and undisturbed possession under all
leases material to the business of Borrower and to which it is a party or under
which it is operating. All of such leases are valid and subsisting and, except
with respect to the PNC Lease (such exception subject to the execution and
continued effectiveness and enforceability of the PNC Forbearance), no material
default by Borrower exists under any of them.
 
5.18    DDAs.  Set forth on Schedule 5.18 are all of Borrower’s DDAs, including,
with respect to each depository, (i) the name and address of such depository,
and (ii) the account numbers of the accounts maintained with such depository.
 
5.19    Complete Disclosure.  All factual information (taken as a whole)
furnished by or on behalf of Borrower in writing to Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents,
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrower
in writing to Lender will be, true and accurate, in all material respects, on
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date,
the Closing Date Projections represent, and as of the date on

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which any other Projections are delivered to Lender, such additional Projections
represent Borrower’s good faith best estimate of its future performance for the
periods covered thereby.
 
5.20    Indebtedness. Set forth on Schedule 5.20 is a true and complete list of
all Indebtedness of Borrower outstanding immediately prior to the Closing Date
that is to remain outstanding after the Closing Date and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness and the
principal terms thereof.
 
5.21    Taxes and Payments.    Borrower and each of its Subsidiaries have filed
all federal, state and provincial income tax returns and all other material tax
returns, domestic and foreign, required to be filed by them and have paid all
taxes and assessments payable by them which have become due, except for those
contested in good faith and adequately disclosed and fully provided for on the
financial statements of Borrower and its Subsidiaries, in accordance with GAAP
and for which Borrower and its Subsidiaries, as applicable, have provided
adequate reserves. Borrower has provided adequate reserves for the payment of
all federal, state, province, local and foreign income taxes applicable for the
current fiscal year to date. There is no action, suit, proceeding,
investigation, audit, or claim now pending or, to the knowledge of Borrower,
threatened by any authority regarding any taxes relating to Borrower or any of
its Subsidiaries that could reasonably be expected to result in a material
liability to Borrower or any of its Subsidiaries. As of the Closing Date,
neither the Borrower nor any of its Subsidiaries has entered into an agreement
or waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of taxes of the
Borrower or any of its Subsidiaries, or is aware of any circumstances that would
cause the taxable years or other taxable periods of Borrower or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations.
 
5.22    MCI Agreement.    Borrower has delivered to Lender a true, correct and
complete copy of the MCI Agreement. All of the representations and warranties of
the Borrower in the MCI Agreement are true and correct in all respects.
 
5.23    Payments from MCI.    Other than as disclosed in writing to Lender, if
any, all payments received by Borrower from MCI during the 90-day period prior
to the commencement of the MCI Bankruptcy were:
 
(a)    in payment of a debt incurred by MCI in the ordinary course of business
or financial affairs of MCI and Borrower;
 
(b)    made in the ordinary course of business or financial affairs of MCI and
Borrower; and
 
(c)    made according to ordinary business terms.

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6.    AFFIRMATIVE COVENANTS.
 
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, Borrower shall
and shall cause each of its Subsidiaries (including any and all Additional
Subsidiaries) to do all of the following:
 
6.1    Accounting System.    Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender. Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
 
6.2    Collateral Reporting.    Provide Lender with the following documents at
the following times in form satisfactory to Lender:
 
No Less
Frequently than
Weekly
  
(a) a sales journal, collection journal, and credit register since the last such
schedule and a calculation of the Borrowing Base as of such date, and
 
(b) notice of all returns, disputes, or claims.
 
Weekly

  
(c) a detailed aging of Eligible Billed Accounts,
 
(d) a detailed accounting of Eligible Unbilled Accounts,
 
(e) a reconciliation of Eligible Billed Accounts and Eligible Unbilled Accounts
to avoid redundancy of such Accounts in calculating the Borrowing Base,
 
(f) a detailed calculation of the Borrowing Base (including detail regarding
those Accounts that are not Eligible Accounts),
 
(g) a cash forecast for the immediately succeeding 12 week-period,
 
(h) a detailed aging, by total, of the Accounts, together with a reconciliation
to the detailed calculation of the Borrowing Base previously provided to Lender,
and
 
(i) a summary aging, by vendor, of Borrower's accounts payable and any book
overdraft.
 
(i) a summary aging, by vendor, of Borrower’s accounts payable and any book
overdraft.
 
Monthly (not
later than the 10th
day of each
  
(j) a detailed calculation of monthly payroll tax with evidence of payment
thereof,

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month)

  
(k) a detailed calculation of monthly rental payments with evidence of such
payments, and
 
(l) a calculation of Dilution for the prior month.
Quarterly
  
(m) a report regarding Borrower’s accrued, but unpaid, ad valorem taxes
Upon request by
Lender

  
(n) a detailed list of Borrower's customers,
 
(o) copies of invoices in connection with the Accounts, credit memos, remittance
advices, deposit slips, shipping and delivery documents in connection with the
Accounts and, for Inventory and Equipment acquired by Borrower, purchase orders
and invoices, and
 
(p) such other reports as to the Collateral, or the financial condition of
Borrower, as Lender may request.

 
In addition, Borrower agrees to cooperate fully with Lender to facilitate and
implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth above.
 
6.3    Financial Statements, Reports, Certificates. Deliver to Lender:
 
(a)     as soon as available, but in any event within 30 days (45 days in the
case of a month that is the end of one of the first three (3) fiscal quarters in
a fiscal year) after the end of each month during each of Borrower’s fiscal
years,
 
(i)     a company prepared consolidated balance sheet, income statement, and
statement of cash flow covering Borrower’s and its Subsidiaries’ operations
during such period,
 
(ii)    a certificate signed by the chief financial officer of Borrower to the
effect that:
 
(A) the financial statements delivered hereunder have been prepared in
accordance with GAAP (except for the lack of footnotes and being subject to
year-end audit adjustments) and fairly present in all material respects the
financial condition of Borrower and its Subsidiaries,
 
(B) the representations and warranties of Borrower contained in this Agreement
and the other Loan Documents are true and correct in all material respects on
and as of the date of such certificate, as though

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made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date), and
 
(C)  there does not exist any condition or event that constitutes a Default or
Event of Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action Borrower
has taken, is taking, or proposes to take with respect thereto), and
 
(iii)  for each month that is the date on which a financial covenant in Section
7.20 is to be tested, a Compliance Certificate demonstrating, in reasonable
detail, compliance at the end of such period with the applicable financial
covenants contained in Section 7.20, and
 
(b)  as soon as available, but in any event within 90 days after the end of each
of Borrower’s fiscal years,
 
(i)  financial statements of Borrower and its Subsidiaries for each such fiscal
year, audited by independent certified public accountants reasonably acceptable
to Lender and certified, without any qualifications, by such accountants to have
been prepared in accordance with GAAP (such audited financial statements to
include a balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants’ letter to management),
 
(ii)  a certificate of such accountants addressed to Lender stating that such
accountants do not have knowledge of the existence of any Default or Event of
Default under Section 7.20,
 
(c)  as soon as available, but in any event within 30 days prior to the start of
each of Borrower’s fiscal years,
 
(i)  copies of Borrower’s Projections, in form and substance (including as to
scope and underlying assumptions) satisfactory to Lender, in its sole
discretion, for the forthcoming three (3) years, year by year, and for the
forthcoming fiscal year, month by month, certified by the chief financial
officer of Borrower as being such officer’s good faith best estimate of the
financial performance of Borrower during the period covered thereby,
 
(d)  if and when filed by Borrower,
 
(i)  Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports,

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(ii)  any other filings made by Borrower with the SEC,
 
(iii)  copies of Borrower’s federal income tax returns, and any amendments
thereto, filed with the Internal Revenue Service, and
 
(iv)  any other information that is provided by Borrower to its shareholders
generally,
 
(e)  if and when filed by Borrower and as requested by Lender, satisfactory
evidence of payment of applicable excise taxes in each jurisdictions in which
(i) Borrower conducts business or is required to pay any such excise tax, (ii)
where Borrower’s failure to pay any such applicable excise tax would result in a
Lien on the properties or assets of Borrower, or (iii) where Borrower’s failure
to pay any such applicable excise tax reasonably could be expected to result in
a Material Adverse Change,
 
(f)  within 5 days after the end of each month, evidence satisfactory to Lender
that all amounts owed by Borrower under the PNC Lease for the immediately
preceding month shall have been paid in full by Borrower,
 
(g)  as soon as Borrower has knowledge of any event or condition that
constitutes a Default or an Event of Default, notice thereof and a statement of
the curative action that Borrower proposes to take with respect thereto, and
 
(h)  upon the request of Lender, any other report reasonably requested relating
to the financial condition of Borrower.
 
In addition to the financial statements referred to above, Borrower agrees to
deliver financial statements prepared on both a consolidated and consolidating
basis and agrees that no Subsidiary of Borrower will have a fiscal year
different from that of Borrower. Borrower agrees that its independent certified
public accountants are authorized to communicate with Lender and to release to
Lender whatever financial information concerning Borrower Lender reasonably may
request. Borrower waives the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any information requested by Lender pursuant to or in accordance with this
Agreement, and agrees that Lender may contact directly any such accounting firm
or service bureau in order to obtain such information.
 
6.4    Guarantor Reports.    Cause each Guarantor to deliver its annual
financial statements at the time when Borrower provides its audited financial
statements to Lender and copies of all federal income tax returns as soon as the
same are available and in any event no later than 30 days after the same are
required to be filed by law (subject to any permitted extensions with respect
thereto).

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6.5    Return.  Cause returns and allowances, as between Borrower and its
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of Default has occurred
and is continuing, any Account Debtor returns any Inventory to Borrower,
Borrower promptly shall determine the reason for such return and, if Borrower
accepts such return, issue a credit memorandum (with a copy to be sent to
Lender) in the appropriate amount to such Account Debtor. If, at a time when an
Event of Default has occurred and is continuing, any Account Debtor returns any
Inventory to Borrower, Borrower promptly shall determine the reason for such
return and, if Lender consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Lender) in the
appropriate amount to such Account Debtor.
 
6.6    Maintenance of Properties.  Maintain and preserve all of its properties
which are necessary in the proper conduct to its business in good working order
and condition, ordinary wear and tear excepted, and comply at all times with the
provisions of all leases to which it is a party as lessee so as to prevent any
loss or forfeiture thereof or thereunder.
 
6.7    Taxes.  Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrower
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Lender with proof satisfactory to Lender indicating
that Borrower has made such payments or deposits. Borrower shall deliver
satisfactory evidence of payment of applicable excise taxes in each jurisdiction
in which Borrower is required to pay any such excise tax.
 
6.8    Insurance.
 
(a)    At Borrower’s expense, maintain insurance respecting its assets wherever
located, covering loss or damage by fire, theft, explosion, and all other
hazards and risks as ordinarily are insured against by other Persons engaged in
the same or similar businesses. Borrower also shall maintain “extra expense,”
public liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Lender. Borrower shall deliver copies of all such
policies to Lender with a satisfactory lender’s loss payable endorsement naming
Lender as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever.
 
(b)    Borrower shall give Lender prompt notice of any loss covered by such
insurance. Lender shall have the exclusive right to adjust any losses payable
under

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any such insurance policies in excess of $250,000, without any liability to
Borrower whatsoever in respect of such adjustments. Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Lender to be
applied at the option of Lender either to the prepayment of the Obligations or
shall be disbursed to Borrower under staged payment terms reasonably
satisfactory to Lender for application to the cost of repairs, replacements, or
restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items of property destroyed prior to such damage or destruction.
 
(c)    Borrower will not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.8, unless Lender is included thereon as named insured with the loss
payable to Lender under a lender’s loss payable endorsement or its equivalent.
Borrower immediately shall notify Lender whenever such separate insurance is
taken out, specifying the insurer thereunder and full particulars as to the
policies evidencing the same, and copies of such policies promptly shall be
provided to Lender.
 
(d)    Within 30 days after the Closing Date, Borrower shall furnish Lender with
an “Absolute Assignment” of each key man life insurance policy maintained by
Borrower, shall record each such “Absolute Assignment” with the issuer of the
respective policy, and shall furnish proof of such issuer’s acceptance of such
assignment. All proceeds payable under such key man life insurance policies
shall be payable to Lender to be applied on account of the Obligations in
accordance with Section 2.4(b).
 
6.9    Location of Inventory and Equipment.  Keep the Inventory, if any, and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Borrower may amend Schedule 5.5 so long as such amendment occurs by written
notice to Lender not less than 30 days prior to the date on which Inventory or
Equipment is moved to such new location, so long as such new location is within
the continental United States or Canada, and so long as, at the time of such
written notification, Borrower provides any financing statements or fixture
filings necessary to perfect and continue perfected the Lender’s Liens on such
assets and also provides to Lender a Collateral Access Agreement.
 
6.10    Compliance with Laws.  Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
 
6.11    Leases.  Pay when due all rents and other amounts payable under any
leases to which Borrower is a party or by which Borrower’s properties and assets
are bound, unless such payments are the subject of a Permitted Protest.

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6.12    Brokerage Commissions.  Pay any and all brokerage commission or finders
fees incurred in connection with or as a result of Borrower’s obtaining
financing from Lender under this Agreement. Borrower agrees and acknowledges
that payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrower, and Borrower agrees to indemnify, defend, and hold
Lender harmless from and against any claim of any broker or finder arising out
of Borrower’s obtaining financing from Lender under this Agreement.
 
6.13    Existence.  At all times preserve and keep in full force and effect
Borrower’s valid existence and good standing and any rights and franchises
material to Borrower’s businesses.
 
6.14    Environmental.  Keep any property either owned or operated by Borrower
free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability secured by such Environmental
Liens, (b) comply, in all material respects, with Environmental Laws and provide
to Lender documentation of such compliance which Lender reasonably requests, (c)
promptly notify Lender of any release of a Hazardous Material in any reportable
quantity from or onto property owned or operated by Borrower and take any
Remedial Actions required to abate said release or otherwise to come into
compliance with applicable Environmental Law, and (d) promptly provide Lender
with written notice within 10 days of the receipt of any of the following: (i)
notice that an Environmental Lien has been filed against any of the real or
personal property of Borrower, (ii) commencement of any Environmental Action or
notice that an Environmental Action will be filed against Borrower, and (iii)
notice of a violation, citation, or other administrative order which reasonably
could be expected to result in a Material Adverse Change.
 
6.15    Disclosure Updates.  Promptly and in no event later than five (5)
Business Days after obtaining knowledge thereof, (a) notify Lender if any
written information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
 
6.16    Intellectual Property Rights.
 
(a)    Should Borrower (or any of its Subsidiaries) obtain an ownership interest
in any Intellectual Property Right which is not now a part of the Collateral,
Borrower agrees that (i) any such Intellectual Property Right shall
automatically become Collateral and (ii) Borrower shall give prompt written
notice thereof to Lender in accordance with Section 12 hereof. Borrower
authorizes Lender to modify this Agreement by amending Schedule 5.16(a) (and
will cooperate reasonably with Lender in effecting any such amendment) to
include any Intellectual Property Right which becomes part of the Collateral
under this Section.

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(b)    Subject to the last sentence of this subsection, to take, and to cause
any of its Subsidiaries to take, all necessary steps, including, without
limitation, making all necessary payments and filings in connection with
registration, maintenance, and renewal of copyrights, trademarks, and patents in
the U.S. Copyright Office, the U.S. Patent and Trademark Office, any other
appropriate government agencies in foreign jurisdictions or in any court, to
maintain each material Borrower Intellectual Property Right. Borrower agrees to
take, and to cause its Subsidiaries to take, corresponding steps with respect to
each new or acquired material Intellectual Property Right to which it is now or
later becomes entitled. Any expenses incurred in connection with such activities
shall be borne solely by Borrower. Borrower shall not, and shall not allow its
Subsidiaries to, discontinue use of or otherwise abandon, or fail to register,
any Intellectual Property Right without the written consent of Lender, unless
Borrower shall have previously determined that such use or the pursuit or
maintenance of such registration is not desirable in the conduct of Borrower’s
business and that the loss thereof will not cause a Material Adverse Change, in
which case, Borrower will give notice of any such abandonment or failure to
register same to Lender pursuant to the terms of Section 12 hereof.
 
(c)    Continue to take, and cause its Subsidiaries to continue to take, all
actions reasonably necessary to protect such Borrower’s Intellectual Property
Rights, including, without limitation, such steps as are set forth in Sections
5.16(a) and (b) above. Borrower further agrees to give Lender prompt written
notice in accordance with Section 12 hereof if Borrower or any of its
Subsidiaries enters into any agreements after the Closing Date pursuant to which
it grants any right to a third party to use or access the source code of any
computer software programs or applications of which such Borrower or any of its
Subsidiaries is the owner or licensee. Borrower authorizes Lender to modify this
Agreement by amending Schedule 5.16(b) (and will cooperate reasonably with
Lender in effecting any such amendment) to include any such additional license
grant(s).
 
(d)    Notify Lender promptly and in writing if it learns (i) that any item of
the Intellectual Property Rights contained on Schedule 5.16(a) may be determined
to have become abandoned or (ii) of any adverse determination or the institution
of any proceeding (including, without limitation, the institution of any
proceeding in the U.S. Copyright Office, U.S. Patent and Trademark Office and
any other appropriate government agencies in foreign jurisdictions, or any
court) regarding any item of the Intellectual Property Rights that would cause a
Material Adverse Change.
 
(e)    In the event that Borrower becomes aware that any item of the General
Intangibles is infringed or misappropriated by a third party, Borrower shall
promptly notify Lender and shall take such actions as Borrower or Lender deems
appropriate under the circumstances to protect such General Intangibles,
including, without limitation, suing for infringement or misappropriation and
for an injunction against such infringement or misappropriation, unless any such
infringement or misappropriation would not cause a

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Material Adverse Change. Any expense incurred in connection with such activities
shall be borne solely by Borrower.
 
(f)    Should Borrower obtain an ownership interest in, or license of, material
Copyrights after the Closing Date, it shall, promptly after such acquisition,
file applications and take any and all other actions reasonably necessary to
register all such Copyrights in good faith in accordance with the procedures and
regulations of the U.S. Copyright Office (or any similar office of any other
jurisdiction in which any such Copyrights are used).
 
6.17    Minimum Outstanding Advance. During the 90-day period immediately
succeeding the Closing Date, maintain outstanding Advances in an amount equal to
the lesser of (a) $5,000,000 and (b) Availability.
 
6.18    MCI Agreement. Promptly provide Lender with true and complete copies of
any and all material documents or other written information delivered to
Borrower or MCI pursuant to, or in connection with, the MCI Agreement.
 
6.19    Additional Subsidiaries. If a Subsidiary of Borrower is formed after the
Closing Date (an “Additional Subsidiary”), then (a) Borrower shall notify Lender
thereof promptly, and in any event within two (2) Business Days, after such
formation, (b) the direct parent of such Additional Subsidiary shall promptly,
and in any event, within five (5) Business Days of request by Lender and
delivery to Borrower of a form of Securities Pledge Agreement, execute and
deliver to Lender such Securities Pledge Agreement, appropriately completed,
providing that all of the outstanding shares of Stock of such Additional
Subsidiary be pledged to Lender as collateral security for the Obligations, and
deliver to Lender the certificate(s) representing such Stock, together with
stock powers and instruments of assignment and transfer in such form as Lender
may request, (c) such Additional Subsidiary shall promptly, and in any event,
within five (5) Business Days of request by Lender and delivery to Borrower of
form documentation, execute and deliver (i) the Guaranty in respect of the
Obligations, (ii) the Guarantor Security Agreement granting to Lender a security
interest in all of such Additional Subsidiary’s assets as security for the
Additional Subsidiary’s obligations under the Guaranty, (iii) the Intercompany
Subordination Agreement and (iv) proof of corporate action, incumbency of
officers, opinions of counsel and other documents as Lender may reasonably
request, and (d) promptly, and in any event, within five (5) Business Days of
such Person becoming an Additional Subsidiary, make representations and
warranties (of the nature made hereunder by Borrower) to Lender and undertake
such obligations as Lender may reasonably request.

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7.    NEGATIVE COVENANTS.
 
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, Borrower will not
and will not permit any of its Subsidiaries (including any and all Additional
Subsidiaries) to do any of the following:
 
7.1  Indebtedness.  Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
 
(a)  Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit;
 
(b)  Indebtedness set forth on Schedule 5.20;
 
(c)  Permitted Purchase Money Indebtedness;
 
(d)  refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Lender’s Permitted
Discretion, materially impair the prospects of repayment of the Obligations by
Borrower or materially impair Borrower’s creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive
to Borrower, and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to
Lender as those that were applicable to the refinanced, renewed, or extended
Indebtedness;
 
(e)  Indebtedness comprising Permitted Investments;
 
(f)  Indebtedness of Borrower owed to any of its Subsidiaries or Indebtedness of
a Subsidiary of Borrower owed to Borrower so long as, in each such case, such
Indebtedness is (i) not secured by any of the assets or properties of Borrower
or any Subsidiary of Borrower and (ii) subject to the terms and provisions of
the Intercompany Subordination Agreement; and

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(g) Indebtedness in respect of obligations under currency swaps (with respect to
payments received in Canadian dollars) and interest rate swaps, in each case
entered into by Borrower solely for hedging purposes.
 
7.2  Liens.  Create, incur, assume, or permit to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced, renewed, or extended under
Section 7.1(d) and so long as the replacement Liens only encumber those assets
that secured the refinanced, renewed, or extended Indebtedness).
 
7.3  Restrictions on Fundamental Changes.
 
(a)  Enter into any merger, consolidation or reorganization.
 
(b)  Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
 
(c)  Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
assets; provided, however, that so long as no Default or Event of Default exists
or would result therefrom:
 
(1)  any Guarantor may merge or consolidate with Borrower or any other
Guarantor;
 
(2)  any of the Guarantors may sell, lease, transfer or otherwise dispose of any
of its assets to Borrower or any other Guarantor; and
 
(3)  any Guarantor may be dissolved or liquidated, so long as such dissolution
or liquidation results in all assets of such Guarantor being owned by Borrower
or another Guarantor.
 
7.4  Disposal of Assets.  Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Borrower’s
assets.
 
7.5  Change Name.  Change Borrower’s name, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that Borrower may
change its name or add a new fictitious name upon at least 30 days’ prior
written notice to Lender of such change or addition and so long as, at the time
of such written notification, Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected the Lender’s Liens.

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7.6  Guarantee.  Guarantee or otherwise become in any way liable with respect to
the obligations of any third Person except by endorsement of instruments or
items of payment for deposit to the account of Borrower or which are transmitted
or turned over to Lender; provided, that Borrower may guarantee obligations of
its Subsidiaries under leases to which any such Subsidiary is party, so long as
such guaranty is (a) not secured by any of the assets or properties of Borrower
or any of its Subsidiaries that are not otherwise subject to such lease and (b)
otherwise permitted under Section 7.20(b) assuming the underlying obligations
under such leases are treated as capital expenditures for purposes thereof.
 
7.7  Nature of Business.  Make any change in the principal nature of its
business.
 
7.8  Prepayments and Amendments.
 
(a) Except in connection with a refinancing permitted by Section 7.1(d), prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of Borrower,
other than the Obligations in accordance with this Agreement, and
 
(b) Except in connection with a refinancing permitted by Section 7.1(d),
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Sections 7.1(b) or
7.1(c), except that Borrower may amend, modify, alter, increase or change any of
the terms or conditions of any agreement, instrument, document, indenture or
other writing evidencing or concerning Indebtedness permitted under Section
7.1(b) or 7.1(c) in order to (i) cure ambiguities, (ii) correct inconsistencies,
(iii) extend maturities, (iv) change conversion features or (v) waive or amend
covenants or other provisions, which waivers or amendments would not adversely
affect Lender (provided, however, that Borrower shall immediately following the
execution of any such amendment, modification, alteration or change, provide
Lender with a copy thereof).
 
7.9  [Intentionally Omitted].
 
7.10  Consignments.  Consign any Inventory or sell any Inventory on bill and
hold, sale or return, sale on approval, or other conditional terms of sale.
 
7.11  Distributions.  Make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower’s Stock, of any class, whether now or
hereafter outstanding, except dividends paid by Borrower’s Subsidiaries to
Borrower.
 
7.12  Accounting Methods.  Modify or change its method of accounting (other than
as may be required to conform to GAAP) or enter into, modify, or terminate any
agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrower’s accounting records without

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said accounting firm or service bureau agreeing to provide Lender information
regarding the Collateral or Borrower’s financial condition.
 
7.13  Investments.  Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrower and its Subsidiaries shall not have Permitted Investments (other than
in the Cash Management Accounts) in deposit accounts or Securities Accounts in
excess of $100,000 outstanding at any one time unless Borrower or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements governing such Permitted Investments, as
Lender shall determine in its Permitted Discretion, to perfect (and further
establish) the Lender’s Liens in such Permitted Investments; provided, further,
however, that, with respect to the Permitted Investments held in Borrower’s
deposit account with CIBC Bank (Account number 7240-02-02312), Borrower shall
have until 60 days after the Closing Date to enter into, and deliver to Lender,
a Control Agreement with CIBC Bank governing such Permitted Investments, as
Lender shall determine in its Permitted Discretion, to perfect (and further
establish) the Lender’s Liens in such Permitted Investments.
 
7.14  Transactions with Affiliates.  Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of Borrower except for transactions
that are in the ordinary course of Borrower’s business, upon fair and reasonable
terms, that are fully disclosed to Lender, and that are no less favorable to
Borrower than would be obtained in an arm’s length transaction with a
non-Affiliate.
 
7.15  Suspension.  Suspend or go out of a substantial portion of its business.
 
7.16  Compensation.  Pay excessive or unreasonable salaries or bonuses to its
officers or senior managers.
 
7.17  Use of Proceeds.  Use the proceeds of the Advances for any purpose other
than (a) on the Closing Date, (i) to repay, in full, the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lender, and
(ii) to pay transactional fees, costs, and expenses incurred in connection with
this Agreement, the other Loan Documents, and the transactions contemplated
hereby and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
 
7.18  Change in Location of Chief Executive Office; Inventory and Equipment with
Bailees.  Relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to Lender and so long as,
at the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Lender’s Liens and also provides to Lender a Collateral Access Agreement with
respect to such new location. The Inventory and Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Lender’s prior written consent.

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7.19  Securities Accounts.  Establish or maintain any Securities Account unless
Lender shall have received a Control Agreement in respect of such Securities
Account. Borrower shall not transfer assets out of any Securities Account;
provided, however, that, so long as no Event of Default has occurred and is
continuing or would result therefrom, Borrower may use such assets (and the
proceeds thereof) to the extent not prohibited by this Agreement.
 
7.20  Financial Covenants.
 
(a)  Fail to maintain:
 
(i)  Minimum EBITDA. EBITDA, measured on a fiscal quarter-end basis, of not less
than the required amount set forth in the following table for the applicable
period set forth opposite thereto;
 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Applicable Amount
 
Applicable Period

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$3,680,000
 
For the 3 month period
ending September 30, 2002

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$8,048,000
 
For the 6 month period
ending December 31, 2002

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$12,779,000
 
For the 9 month period
ending March 31, 2003

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$17,695,000
 
For the 12 month period
ending June 30, 2003

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$19,402,000
 
For the 12 month period
ending each fiscal quarter thereafter

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
(b)  Make:
 
(i)  Capital Expenditures.  Capital expenditures in any fiscal period in excess
of the amount set forth in the following table for the applicable period (it
being understood and agreed by the parties that, for purposes of this Section
7.20(b)(i), capital expenditures shall not include payments made in respect of
Capital Leases of equipment that are currently subject to the operating leases
set forth on Schedule C-2 (subject to the aggregate limitations set forth on
such Schedule C-2) to the extent that the conversion of any such operating lease
to a Capital Lease did not require, and

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was not accompanied by, the expenditure of moneys of Borrower or any of its
Subsidiaries).
 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Applicable Amount
 
Applicable Period

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$5,998,000.00
 
For the 6 month period
ending December 31, 2002

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$14,475,000.00
 
For the 12 month period
ending December 31, 2003

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$14,700,000.00
 
For the 12 month period
ending December 31, 2004

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

$9,188,000.00
 
For the 8 month period
ending August 30, 2005

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
7.21    MCI Agreement.    Directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of the MCI Agreement, except
that Borrower may amend, modify, alter, increase or change any of the terms or
conditions of the MCI Agreement, provided that such amendments, modifications,
alterations, increases or changes would not materially adversely affect Borrower
or Lender (provided, however, that Borrower shall immediately following the
execution of any such amendment, modification, alteration or change, provide
Lender with a copy thereof).
 
8.    EVENTS OF DEFAULT.
 
Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:
 
8.1 If Borrower fails to pay when due and payable, or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Lender, reimbursement
of Lender Expenses, or other amounts constituting Obligations);
 
8.2 If (a) Borrower fails to perform, keep, or observe any term, provision,
condition, covenant, or agreement contained in Sections 6.1, 6.2, 6.3, 6.4, 6.5
or 6.11 and such failure or neglect continues for a period of five (5) days
after the date on which such failure or neglect first occurs, or (b) Borrower
fails to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in any other section of this Agreement or in any of the
other Loan Documents; provided, however, that, during any period of time that
any

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such failure or neglect of Borrower referred to in this Section 8.2 exists, even
if such failure or neglect is not yet an Event of Default by virtue of the
existence of a grace period or the pre-condition of the giving of a notice, the
Lenders shall be relieved of their obligations to extend any credit under this
Agreement;
 
8.3 If any material portion of Borrower’s or any of its Subsidiaries’ assets is
attached, seized, subjected to a writ or distress warrant, levied upon, or comes
into the possession of any third Person;
 
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
 
8.5 If an Insolvency Proceeding is commenced against Borrower, or any of its
Subsidiaries, and any of the following events occur: (a) Borrower or the
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Lender shall be relieved of
its obligations to extend credit hereunder, (d) an interim trustee is appointed
to take possession of all or any substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Borrower or
any of its Subsidiaries, or (e) an order for relief shall have been entered
therein;
 
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs;
 
8.7 If a notice of Lien, levy, or assessment is filed of record with respect to
any of Borrower’s or any of its Subsidiaries’ assets by the United States, or
any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or
otherwise, upon any of Borrower’s or any of its Subsidiaries’ assets and the
same is not paid before such payment is delinquent;
 
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any material
portion of Borrower’s or any of its Subsidiaries’ assets, unless (a) any such
judgment or claim is stayed, released or discharged within 30 days or (b) all
such judgments and claims, in the aggregate do not exceed $100,000;
 
8.9 If there is a default in any material agreement to which Borrower or any of
its Subsidiaries is a party and such default (a) occurs at the final maturity of
the obligations thereunder, or (b) results in a right by the other party
thereto, irrespective of whether exercised, to accelerate the maturity of
Borrower’s or its Subsidiaries’ obligations thereunder, to terminate such
agreement, or to refuse to renew such agreement pursuant to an automatic renewal
right therein;

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8.10  If Borrower or any of its Subsidiaries makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
 
8.11  If any material misstatement or misrepresentation exists now or hereafter
in any warranty, representation, statement, or Record made to Lender by
Borrower, its Subsidiaries, or any officer, employee, agent, or director of
Borrower or any of its Subsidiaries;
 
8.12  If the obligation of Guarantor under the Guaranty is limited or terminated
by operation of law or by Guarantor thereunder;
 
8.13  If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby;
 
8.14  Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower, or a proceeding shall be commenced by Borrower, or by any
Governmental Authority having jurisdiction over Borrower, seeking to establish
the invalidity or unenforceability thereof, or Borrower shall deny that Borrower
has any liability or obligation purported to be created under any Loan Document;
 
8.15  If the MCI Agreement is for any reason declared to be null and void, or
the validity or enforceability thereof contested by the parties, or the MCI
Agreement is terminated or amended (except in accordance with Section 7.21), or
there is a default or material breach of the MCI Agreement by any party thereto,
or
 
8.16  If Borrower causes, permits or suffers, directly or indirectly, any Change
of Control.
 
9. LENDER’S RIGHTS AND REMEDIES.
 
9.1 Rights and Remedies.    Upon the occurrence, and during the continuation, of
an Event of Default, Lender (at its election but without notice of its election
and without demand) may do any one or more of the following, all of which are
authorized by Borrower:
 
(a)    Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;

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(b)    Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and Lender;
 
(c)    Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of Lender, but without affecting any of the
Lender’s Liens in the Collateral and without affecting the Obligations;
 
(d)    Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Lender considers advisable, and in such cases,
Lender will credit Borrower’s Loan Account with only the net amounts received by
Lender in payment of such disputed Accounts after deducting all Lender Expenses
incurred or expended in connection therewith;
 
(e)    Cause Borrower to hold all returned Inventory in trust for Lender,
segregate all returned Inventory from all other assets of Borrower or in
Borrower’s possession and conspicuously label said returned Inventory as the
property of Lender;
 
(f)    Without notice to or demand upon Borrower or Guarantor, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral. Borrower agrees to assemble the
Personal Property Collateral if Lender so requires, and to make the Personal
Property Collateral available to Lender at a place that Lender may designate
which is reasonably convenient to both parties. Borrower authorizes Lender to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Lender’s
determination appears to conflict with the Lender’s Liens and to pay all
expenses incurred in connection therewith and to charge Borrower’s Loan Account
therefor. With respect to any of Borrower’s owned or leased premises, Borrower
hereby grants Lender a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Lender’s rights or
remedies provided herein, at law, in equity, or otherwise;
 
(g)    Without notice to Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Lender
(including any amounts received in the Cash Management Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by Lender;
 
(h)    Hold, as cash collateral, any and all balances and deposits of Borrower
held by Lender, and any amounts received in the Cash Management Accounts, to
secure the full and final repayment of all of the Obligations;

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(i)    Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. Borrower hereby grants to Lender a license or
other right to use, without charge, Borrower’s labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Personal Property
Collateral, in completing production of, advertising for sale, and selling any
Personal Property Collateral and Borrower’s rights under all licenses and all
franchise agreements shall inure to Lender’s benefit;
 
(j)    Sell the Personal Property Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower’s premises) as Lender
determines is commercially reasonable. It is not necessary that the Personal
Property Collateral be present at any such sale;
 
(k)    Lender shall give notice of the disposition of the Personal Property
Collateral as follows:
 
(i)    Lender shall give Borrower a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other disposition other
than a public sale is to be made of the Personal Property Collateral, then the
time on or after which the private sale or other disposition is to be made; and
 
(ii)    The notice shall be personally delivered or mailed, postage prepaid, to
Borrower as provided in Section 12, at least 10 days before the earliest time of
disposition set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
 
(l)    Lender may credit bid and purchase at any public sale; and
 
(m)    Lender may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;
 
(n)    Lender shall have all other rights and remedies available at law or in
equity or pursuant to any other Loan Document; and
 
(o)    Any deficiency that exists after disposition of the Personal Property
Collateral as provided above will be paid immediately by Borrower. Any excess

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will be returned, without interest and subject to the rights of third Persons,
by Lender to Borrower.
 
9.2     Remedies Cumulative. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
 
10. TAXES AND EXPENSES.
 
If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Lender, in its sole discretion and without prior
notice to Borrower, may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves in Borrower’s Loan Account as
Lender deems necessary to protect Lender from the exposure created by such
failure, or (c) in the case of the failure to comply with Section 6.7 hereof,
obtain and maintain insurance policies of the type described in Section 6.8 and
take any action with respect to such policies as Lender deems prudent. Any such
amounts paid by Lender shall constitute Lender Expenses and any such payments
shall not constitute an agreement by Lender to make similar payments in the
future or a waiver by Lender of any Event of Default under this Agreement.
Lender need not inquire as to, or contest the validity of, any such expense,
tax, or Lien and the receipt of the usual official notice for the payment
thereof shall be conclusive evidence that the same was validly due and owing.
 
11. WAIVERS; INDEMNIFICATION.
 
11.1    Demand; Protest. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by Lender on which
Borrower may in any way be liable.

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11.2    Lender’s Liability for Collateral. Borrower hereby agrees that: (a) so
long as Lender complies with its obligations, if any, under the Code, Lender
shall not in any way or manner be liable or responsible for: (i) the safekeeping
of the Collateral, (ii) any loss or damage thereto occurring or arising in any
manner or fashion from any cause, (iii) any diminution in the value thereof, or
(iv) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person, and (b) all risk of loss, damage, or destruction of the
Collateral shall be borne by Borrower.
 
11.3    Indemnification. Borrower shall pay, indemnify, defend, and hold the
Lender-Related Persons and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an “Indemnified Person”)
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
 
12.
 
NOTICES.

 
Unless otherwise provided in this Agreement, all notices or demands by Borrower
or Lender to the other relating to this Agreement or any other Loan Document
shall be in writing and (except for financial statements and other informational
documents

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which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, electronic mail (at such email addresses
as Borrower or Lender, as applicable, may designate to each other in accordance
herewith), or telefacsimile to Borrower or Lender, as the case may be, at its
address set forth below:
 
                    If to Borrower:
 
RMH TELESERVICES, INC.
       
15 Campus Blvd.
       
Newtown Square, Pennsylvania 19073
       
Attn: James Perry
       
Fax No. (610) 492-0042
             
                    with copies to:
 
WOLF,BLOCK, SCHORR AND
SOLIS-COHENLLP
       
1650 Arch Street
       
Philadelphia, Pennsylvania 19103-2097
       
Attn: Bruce R. Lesser, Esq.
       
Fax No. (215) 977-2334
             
                    If to Lender:
 
FOOTHILL CAPITAL CORPORATION
       
One Boston Place, 18th Floor
       
Boston, Massachusetts 02108
       
Attn: Business Finance Division Manager
       
Fax No.: (617) 523-5839
             
                    with copies to:
 
MORRISON & FOERSTER LLP
       
1290 Avenue of the Americas
       
New York, New York 10104
       
Attn: Mark B. Joachim, Esq.
       
Fax No. (212) 468-7900
   

 
  Lender and Borrower may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Lender in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or three (3) Business Days after the
deposit thereof in the mail. Borrower acknowledges and agrees that notices sent
by Lender in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.

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13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
 
(a)     THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
 
(b)    THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF
NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND LENDER WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
 
(c)    BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
 
14.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
 
14.1 Assignments and Participations.
.

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(a)    Lender may assign and delegate to one or more assignees (each, an
“Assignee”) all, or any ratable part of all, of the Obligations and the other
rights and obligations of Lender hereunder and under the other Loan Documents;
provided, however, that Borrower may continue to deal solely and directly with
Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Borrower by Lender and the Assignee, and (ii) Lender and its Assignee have
delivered to Borrower an appropriate assignment and acceptance agreement.
 
(b)    From and after the date that Lender provides Borrower with such written
notice and executed assignment and acceptance agreement, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment and
acceptance agreement, shall have the assigned and delegated rights and
obligations of Lender under the Loan Documents, and (ii) Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned and delegated by it pursuant to such assignment and
acceptance agreement, relinquish its rights (except with respect to Section
11.3) and be released from its obligations under this Agreement (and in the case
of an indemnification, assignment and acceptance covering all or the remaining
portion of Lender’s rights and obligations under this Agreement and the other
Loan Documents, Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between Borrower and the Assignee.
 
(c)    Immediately upon Borrower’s receipt of such fully executed assignment and
acceptance agreement, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender arising
therefrom.
 
(d)    Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons not Affiliates of such Lender (a “Participant”)
participating interests in the Obligations and the other rights and interests of
Lender hereunder and under the other Loan Documents; provided, however, that (i)
Lender shall remain the “Lender” for all purposes of this Agreement and the
other Loan Documents and the Participant receiving the participating interest in
the Obligations and the other rights and interests of Lender shall not
constitute a “Lender” hereunder or under the other Loan Documents and Lender’s
obligations under this Agreement shall remain unchanged, (ii) Lender shall
remain solely responsible for the performance of such obligations, (iii)
Borrower and Lender shall continue to deal solely and directly with each other
in connection with Lender’s rights and obligations under this Agreement and the
other Loan Documents, (iv) Lender shall not transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would

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(A) extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as Lender under this Agreement.
The rights of any Participant only shall be derivative through Lender and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to Borrower, the Collections, the Collateral,
or otherwise in respect of the Obligations. No Participant shall have the right
to participate directly in the making of decisions by Lender.
 
(e)  In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to Borrower or Borrower’s business,
provided that the prospective assignee or participant has agreed in writing to
comply with the provisions of Section 16.10.
 
(f)  Any other provision in this Agreement notwithstanding, Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.
 
14.2  Successors.    This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without Lender’s prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Lender shall release
Borrower from its Obligations. Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 14.1 hereof and, except as expressly required pursuant to Section 14.1
hereof, no consent or approval by Borrower is required in connection with any
such assignment.

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15.  AMENDMENTS; WAIVERS.
 
15.1  Amendments and Waivers.    No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by Lender and Borrower and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
 
15.2  No Waivers; Cumulative Remedies.    No failure by Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender’s rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Lender’s rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
 
16.  GENERAL PROVISIONS.
 
16.1  Effectiveness.    This Agreement shall be binding and deemed effective
when executed by Borrower and Lender.
 
16.2  Section Headings.    Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
 
16.3  Interpretation.    Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against Lender or Borrower, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to accomplish fairly the purposes and intentions
of all parties hereto.
 
16.4  Severability of Provisions.    Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
 
16.5  Withholding Taxes.    All payments made by Borrower hereunder or under any
note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such

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payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of Lender, or (ii) to the extent that such tax
results from a change in the circumstances of Lender, including a change in the
residence, place of organization, or principal place of business of Lender, or a
change in the branch or lending office of Lender participating in the
transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
“Taxes”). If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.5 after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrower shall not be required to
increase any such amounts payable to Lender if the increase in such amount
payable results from Lender’s own willful misconduct or gross negligence.
Borrower will furnish to Lender as promptly as possible after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by Borrower.
 
16.6    Amendments in Writing.    This Agreement only can be amended by a
writing signed by Lender and Borrower.
 
16.7    Counterparts; Telefacsimile Execution.    This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
 
16.8    Revival and Reinstatement of Obligations.    If the incurrence or
payment of the Obligations by Borrower or Guarantor or the transfer to Lender of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrower or Guarantor

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automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
 
16.9    Integration.    This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
 
16.10    Confidentiality.    Lender agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to Lender’s directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement and their directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (f) subject to Section 14.1(e), to any
participant or prospective participant of Lender or to any assignee of, or any
prospective assignee of, any of its rights or obligations under this Agreement,
(g) with the consent of Borrower or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to Lender on a nonconfidential basis from a source other
than Borrower. For the purposes of this Section, “Information” means all
information received from Borrower or any of its Subsidiaries relating to
Borrower or any of its Subsidiaries or their respective businesses, other than
any such information that is available to the Lender on a nonconfidential basis
prior to disclosure by Borrower.
 
[Signature page to follow.]
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.
 
RMH TELESERVICES, INC.
a Pennsylvania corporation
By:
 
/s/    J. Scot Brunke

--------------------------------------------------------------------------------

Title:
 
Executive Vice President

 
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:
 
/s/    Garrick E. Tan

--------------------------------------------------------------------------------

Title:
 
Vice President

 
SIGNATURE PAGE FOR LOAN AND SECURITY AGREEMENT

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SCHEDULE D-1
DESIGNATED ACCOUNT
 
Account number 861-142-2858 of Borrower maintained with Borrower’s Designated
Account Bank, or such other deposit account of Borrower (located within the
United States) that has been designated as such, in writing, by Borrower to
Lender.
 
“Designated Account Bank” means PNC Bank, National Association, whose office is
located at 1600 Market Street, Philadelphia, PA 19103, and whose ABA number is
031000053.

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SCHEDULE L-1
LENDER’S ACCOUNT
 
An account at a bank designated by Lender from time to time as the account into
which Borrower shall make all payments to Lender under this Agreement and the
other Loan Documents; unless and until Lender notifies Borrower to the contrary,
Lender’s Account shall be that certain deposit account bearing account number
323-266193 and maintained by Lender with JPMorgan Chase Bank, 4 New York Plaza,
15th Floor, New York, New York 10004, ABA #021000021.