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EXHIBIT 10
COMMITTED LINE OF CREDIT NOTE PNCBANK
$4,000,000.00 March 21, 1997
FOR VALUE RECEIVED, RMH Teleservices, Inc. (the "BORROWER"), with an address at
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, promises to pay to the order of
PNC BANK, NATIONAL ASSOCIATION (the "BANK"), in lawful money of the United
States of America in immediately available funds at its offices located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as
the Bank may designate from time to time, the principal sum of FOUR MILLION
DOLLARS ($4,000,000.00) (the "FACILITY") or such lesser amount as may be
advanced to or for the benefit of the Borrower under the Letter Agreement
referred to in Section 6 hereof together with interest accruing on the
outstanding principal balance from the date hereof, as provided below:
1. INTEREST RATES AND CALCULATION OF INTEREST. Amounts outstanding
hereunder shall accrue interest as set forth in the Letter Agreement.
2. ADVANCES. The Borrower may borrow, repay and reborrow hereunder until the
Expiration Date, subject to the terms and conditions of this Note and the Loan
Documents (as defined herein). The "EXPIRATION DATE" shall mean April 1, 1998,
or such later date as may be designated by the Bank by written notice from the
Bank to the Borrower. The Borrower acknowledges and agrees that in no event will
the Bank be under any obligation to extend or renew the Facility or this Note
beyond the initial Expiration Date. In no event shall the aggregate unpaid
principal amount of advances under this Note exceed the face amount of this
Note. A request for advance made by telephone must be promptly confirmed in
writing by such method as the Bank may require. The Borrower authorizes the Bank
to accept telephonic requests for advances, and the Bank shall be entitled to
rely upon the authority of any person providing such instructions. The Borrower
hereby indemnifies and holds the Bank harmless from and against any and all
damages, losses, liabilities, costs and expenses (including reasonable
attorneys' fees and expenses) which may arise or be created by the acceptance of
such telephone requests or making such advances. The Bank will enter on its
books and records, which entry when made will be presumed correct, the date and
amount of each advance, as well as the date and amount of each payment made by
the Borrower.
3. PAYMENT TERMS. Borrower shall pay accrued interest on the unpaid principal
balance of the Loans in arrears: (a) monthly on the first day of each month with
respect to interest accruing at other than the Euro-Rate Option (as defined in
the Letter Agreement), (b) on the last day of the related Euro-Rate Interest
Period (as defined in the Letter Agreement) with respect to interest accruing at
the Euro-Rate Option, and (c) for all Loans, at maturity (including by reason of
acceleration) of this Note, and after maturity, on demand until paid in full.
The outstanding principal balance and any accrued but unpaid interest shall be
due and payable on the Expiration Date.
If any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State where the Bank's office indicated above is
located, such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. The Borrower hereby authorizes the Bank to charge the Borrower's
deposit account at the Bank for any payment when due hereunder. Payments
received will be applied to charges, fees and expenses (including attorneys'
fees), accrued interest and principal in any order the Bank may choose, in its
sole discretion.
4. DEFAULT RATE. Upon maturity, whether by acceleration, demand or otherwise,
and at the option of the Bank upon the occurrence of any Event of Default (as
hereinafter defined) and during the continuance thereof, this Note shall bear
interest at a rate per annum (based on a year of 360 days and actual days
elapsed) which shall be two (2) percentage points in excess of the interest rate
in effect from time to time under this Note but not more than the maximum rate
allowed by law (the "DEFAULT RATE"). The Default Rate shall continue to apply
whether or not judgment shall be entered on this Note.
5. PREPAYMENT. The indebtedness evidenced by this Note may be prepaid in whole
or in part at any time without penalty.
6. OTHER LOAN DOCUMENTS. This Note is issued in connection with Letter Agreement
(the "Letter Agreement") of even date between Bank and Borrower, the terms of
which are incorporated herein by reference (the "LOAN DOCUMENTS"), and is
secured by the property described in the Loan Documents (if any) and by such
other collateral as previously may have been or may in the future be granted to
the Bank to secure this Note.
7. EVENTS OF DEFAULT. The occurrence of any of the following events will be
deemed to be an "EVENT OF DEFAULT" under this Note: (i) the nonpayment of any
principal, interest or other indebtedness under this Note within 3 days after
notice is given by Bank that the same is due; (ii) the occurrence of any event
of default or default and the lapse of any notice or cure period under any Loan
Document or any other debt, liability or obligation to the Bank of any Obligor;
(iii) the filing by or against any Obligor of any proceeding in bankruptcy,
receivership, insolvency, reorganization, liquidation, conservatorship or
similar proceeding (and, in the case of any such proceeding instituted against
any Obligor, such proceeding is not dismissed or stayed within 60 days of the
commencement thereof, provided that the Bank shall not be obligated to advance
additional funds during such period); (iv) any assignment by any Obligor for the
benefit of creditors, or any levy, garnishment, attachment or similar proceeding
is instituted against any property of any Obligor held by or deposited with the
Bank; (v) a default with respect to any other indebtedness of any Obligor for
borrowed money, if the effect of such default is to cause or permit the
acceleration of such debt; (vi) the commencement of any foreclosure or
forfeiture proceeding, execution or attachment against any collateral securing
the obligations of any Obligor to the Bank; (vii) the entry of a final judgment
against any Obligor and, unless any lien shall attach on any Obligor's property
by reason of such judgment or any levy or execution thereon, the failure of such
Obligor to discharge the judgment within 60 days of the entry thereof; (viii)
any material adverse change in the business, assets, operations, financial
condition or results of operations of any Obligor; (ix) the Borrower ceases
doing business as a going concern; (x) the revocation or attempted revocation,
in whole or in part, of any guarantee by any Guarantor; (xi) the death or legal
incompetency of any individual Obligor or, if any Obligor is a partnership, the
death or legal incompetency of any individual general partner; (xii) any
representation or warranty made by any Obligor to the Bank in any Loan Document,
or any other documents now or in the future securing the obligations of any
Obligor to the Bank, is false, erroneous or misleading in any material respect;
or (xiii) the failure of any Obligor to observe or perform any covenant or other
agreement with the Bank contained in any Loan Document or any other documents
now or in the future securing the obligations of any Obligor to the Bank,
subject to any applicable notice or grace periods. As used herein, the term
"OBLIGOR" means any Borrower and any Guarantor, and the term "GUARANTOR" means
any guarantor of the obligations of the Borrower to the Bank existing on the
date of this Note or arising in the future.
Upon the occurrence of an Event of Default: (a) the Bank shall be under no
further obligation to make advances hereunder; (b) if an Event of Default
specified in clause (iii) or (iv) above shall occur, the outstanding principal
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balance and accrued interest hereunder together with any additional amounts
payable hereunder shall be immediately due and payable without demand or notice
of any kind; (c) if any other Event of Default shall occur, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the option of the Bank and without demand or
notice of any kind, may be accelerated and become immediately due and payable;
(d) at the option of the Bank, this Note will bear interest at the Default Rate
from the date of the occurrence of the Event of Default; and (e) the Bank may
exercise from time to time any of the rights and remedies available to the Bank
under the Loan Documents or under applicable law.
8. POWER TO CONFESS JUDGMENT. THE BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO
APPEAR FOR THE BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT,
OR A SERIES OF JUDGMENTS, AGAINST THE BORROWER IN FAVOR OF THE BANK OR ANY
HOLDER HEREOF FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED
INTEREST AND ALL OTHER AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND
REASONABLE ATTORNEYS' FEES, AND FOR DOING SO THIS NOTE OR A COPY VERIFIED BY
AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE BORROWER HEREBY FOREVER WAIVES AND
RELEASES ALL ERRORS IN SAID PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF
FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE
OR HEREAFTER ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT
RATE.
NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH
EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE
POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS
OFTEN AS THE BANK SHALL ELECT UNTIL SUCH TIME AS THE BANK SHALL HAVE RECEIVED
PAYMENT IN FULL OF THE DEBT, INTEREST AND COSTS.
9. RIGHT OF SETOFF. In addition to all liens upon and rights of setoff against
the money, securities or other property of the Borrower given to the Bank by
law, the Bank shall have, with respect to the Borrower's obligations to the Bank
under this Note and to the extent permitted by law, a contractual possessory
security interest in and a contractual right of setoff against, and the Borrower
hereby assigns, conveys, delivers, pledges and transfers to the Bank all of the
Borrower's right, title and interest in and to, all deposits, moneys, securities
and other property of the Borrower now or hereafter in the possession of or on
deposit with, or in transit to, the Bank whether held in a general or special
account or deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding, however, all IRA, ▇▇▇▇▇, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to the Borrower. Every such right of setoff shall
be deemed to have been exercised immediately upon the occurrence of an Event of
Default hereunder without any action of the Bank, although the Bank may enter
such setoff on its books and records at a later time.
10. MISCELLANEOUS. No delay or omission of the Bank to exercise any right or
power arising hereunder shall impair any such right or power or be considered to
be a waiver of any such right or power, nor shall the Bank's action or inaction
impair any such right or power. The Borrower agrees to pay on demand, to the
extent permitted by law, all costs and expenses incurred by the Bank in the
enforcement of its rights in this Note and in any security therefor, including
without limitation reasonable fees and expenses of the Bank's counsel. If any
provision of this Note is found to be invalid by a court, all the other
provisions of this Note will remain in full force and effect. The Borrower and
all other makers and indorsers of this Note hereby forever waive presentment,
protest, notice of dishonor and notice of non-payment. The Borrower also waives
all defenses based on suretyship or impairment of collateral. If this Note is
executed by more than one Borrower, the obligations of such persons or entities
hereunder will be joint and several. This Note shall bind the Borrower and its
heirs, executors, administrators, successors and assigns, and the benefits
hereof shall inure to the benefit of the Bank and its successors and assigns.
This Note has been delivered to and accepted by the Bank and will be deemed to
be made in the State where the Bank's office indicated above is located. THIS
NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE
BORROWER DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S
OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court for the county or judicial district where the Bank's office
indicated above is located, and consents that all service of process be sent by
nationally recognized overnight courier service directed to the Borrower at the
Borrower's address set forth herein and service so made will be deemed to be
completed on the business day after deposit with such courier; provided that
nothing contained in this Note will prevent the Bank from bringing any action,
enforcing any award or judgment or exercising any rights against the Borrower
individually, against any security or against any property of the Borrower
within any other county, state or other foreign or domestic jurisdiction. The
Borrower acknowledges and agrees that the venue provided above is the most
convenient forum for both the Bank and the Borrower. The Borrower waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Note.
11. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE
BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
THE BORROWER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE CONFESSION OF JUDGMENT AND WAIVER OF JURY TRIAL, AND
HAS BEEN ADVISED BY COUNSEL AS NECESSARY OR APPROPRIATE.
WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.
RMH TELESERVICES, INC.
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Exec. Assist. Title: CFO
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March 21, 1997
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
RMH Teleservices, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: $4,000,000.00 COMMITTED LINE OF CREDIT; LETTER OF CREDIT
Dear ▇▇. ▇▇▇▇▇:
We are pleased to inform you that PNC Bank, National Association (the "Bank")
has approved your request for the credit facilities described herein for RMH
Teleservices, Inc. (the "Borrower"). We look forward to this opportunity to help
you meet the financing needs of your business. As your primary bank, we want to
supply all your banking needs. All the details regarding these credit facilities
are outlined in the following sections of this letter.
1. Line of Credit and Use of Proceeds. The first credit
facility is a committed revolving line of credit under which
the Borrower may request and the Bank, subject to the terms
and conditions of this letter, will make advances to the
Borrower from time to time until the Expiration Date, in an
amount in the aggregate at any time outstanding not to
exceed $4,000,000.00 (the "Line of Credit"). The
"Expiration Date" means April 1, 1998, or such later date as
may be designated by the Bank by written notice to the
Borrower. Advances may be used for working capital or other
general business purposes of the Borrower.
2. Interest Rate Options for the Line of Credit. Principal
outstanding under the Line of Credit shall bear interest at
a rate per annum selected by Borrower from the interest rate
options set forth below (each, an "Option"), it being
understood that Borrower may select different Options to
apply simultaneously to different portions of principal of
the Line of Credit and may select up to eight (8) different
interest periods to apply simultaneously to different
portions of principal of the Line of Credit bearing interest
under the Euro-Rate Option as set forth below. There are no
required interest periods for principal bearing interest
under the Base Rate Option:
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RMH Teleservices, Inc.
March 21, 1997
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i. Base Rate Option. A rate of interest per annum
(computed on the basis of a year of 360 days and the actual
number of days elapsed) equal to rate of interest announced
from time to time by Bank at its principal office as its prime
rate, which rate may not be the lowest interest rate then
being charged commercial borrowers by Bank (the "Prime Rate")
minus one-half of one (.5) percentage point. If and when the
Prime Rate changes, the rate of interest on principal of the
Line of Credit bearing interest under the Base Rate Option
will change automatically without notice to Borrower,
effective on the date of any such change.
ii. Euro-Rate Option. For the Euro-Rate Interest
Period selected and the amount of principal of the Line of
Credit selected, a rate of interest per annum (computed on the
basis of a year of 360 days and the actual number of days
elapsed) equal to the sum of (a) the Euro-Rate plus (b)
ninety-five (95) basis points. For the purpose hereof, the
following terms shall have the following meanings:
"Euro-Rate" shall mean, with respect to the principal
of any amount of the Facility bearing interest under
the Euro-Rate Option for any Euro-Rate Interest
Period, the interest rate per annum determined by
Bank at or about 11:00 a.m. (eastern time) two (2)
Business Days prior to the commencement of a
Euro-Rate Interest Period by dividing (the resulting
quotient rounded upward to the nearest 1/16th of 1%
per annum) (i) the rate of interest determined by
Bank in accordance with its usual procedures (which
determination shall be conclusive absent manifest
error) to be the eurodollar rate two (2) Business
Days prior to the first day of such Euro-Rate
Interest Period for an amount comparable to such
principal amount and having a borrowing date and a
maturity comparable to such Euro-Rate Interest Period
by (ii) a number equal to 1.00 minus the Euro-Rate
Reserve Percentage.
"Euro-Rate Interest Period" shall mean the period
one, two, three, four or six months selected by
Borrower commencing on the date on which a Euro-Rate
Option is elected to commence; provided, that if a
Euro-Rate Interest Period would end on a day which is
not a Business Day, it shall end on the next
succeeding Business Day, unless such day falls in the
succeeding calendar month in which case the Euro-Rate
Interest Period shall end on the next preceding
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RMH Teleservices, Inc.
March 21, 1997
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Business Day. In no event shall any Euro-Rate
Interest Period end on a day after the Expiration
Date.
"Euro-Rate Reserve Percentage" shall mean the maximum
effective percentage in effect on such day which is
applicable to Bank as prescribed by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements
(including, without limitation, supplemental,
marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred
to as "Eurocurrency liabilities").
"Business Day" shall mean a day, other than a
Saturday or Sunday, on which Bank is open for
business.
If Bank reasonably determines (which determination shall be final and
conclusive) that, by reason of circumstances affecting the interbank
eurodollar market generally, deposits in dollars (in the applicable
amounts) are not being offered to banks in the interbank eurodollar
market for the selected term, or adequate means do not exist for
ascertaining the Euro- Rate, then Bank shall give notice thereof to
Borrower. Thereafter, until Bank notifies Borrower that the
circumstances giving rise to such suspension no longer exist (which
notice Bank agrees to promptly provide after such circumstances no
longer exist), (a) the availability of the Euro-Rate Option shall be
suspended, and (b) the interest rate for all principal then bearing
interest under the Euro-Rate Option shall be converted to the Base Rate
Option at the expiration of the then current Euro-Rate Interest
Period(s).
In addition, if, after the date of this Agreement, Bank shall determine
(which determination shall be final and conclusive) that any enactment,
promulgation or adoption of or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration
thereof by a governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by Bank with any guideline, request or directive (whether or
not having the force of law) of any such authority, central bank or
comparable agency, which, in each case, occurs after the date hereof,
shall make it unlawful or impossible for Bank to make or maintain or
fund loans under the Euro-Rate Option, Bank shall notify Borrower. Upon
receipt of such notice, until Bank notifies Borrower that the
circumstances giving rise to such determination no longer apply, (a)
the availability of the Euro-Rate Option shall be suspended, and (b)
the interest rate on all principal then bearing interest under the
Euro-Rate
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Option shall be converted to the Base Rate Option either (i) on the
last day of the then current Euro-Rate Interest Period(s) if Bank may
lawfully continue to maintain principal under the Euro-Rate Option to
such day, or (ii) immediately if Bank may not lawfully continue to
maintain principal under the Euro-Rate Option.
Subject to the other terms and conditions of this Agreement, at the end
of each interest period Borrower may renew the Option applicable to
such principal or convert such principal to a different Option. If no
notice of conversion or renewal is received by Bank, Borrower shall be
deemed to have converted such principal to the Base Rate Option.
Borrower shall notify Bank of each election of an interest rate Option,
each conversion from one interest rate Option to another, the amount of
principal then outstanding to be allocated to each interest rate Option
and the relevant interest periods. Any such election shall be promptly
confirmed in writing by such method as Bank may require. Borrower shall
indemnify Bank against all liabilities, losses or expenses (including
loss of margin, any loss or expense incurred in liquidating or
employing deposits from third parties and any loss or expense incurred
in connection with funds acquired by Bank to fund or maintain principal
of the Line of Credit bearing interest under the Euro-Rate Option)
which Bank sustains or incurs as a consequence of any attempt by
Borrower to revoke (expressly, by later inconsistent notices or
otherwise) in whole or in part any notice given to Bank to request,
convert, renew or prepay any such principal. If Bank sustains or incurs
any such loss, it shall notify Borrower of the amount determined by
Bank to be necessary to indemnify Bank for such loss or expense (which
determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as Bank deems
appropriate). Such amount shall be due and payable by Borrower ten (10)
days after such notice is given.
3. Repayment of Line of Credit. Subject to the terms and conditions of
this letter, the Borrower may borrow, repay and reborrow under the Line
of Credit until the Expiration Date, on which date the outstanding
principal balance and any accrued but unpaid interest shall be due and
payable. Interest will be due and payable as set forth in the Note.
4. Note. The obligation of the Borrower to repay loans under
the Line of Credit shall be evidenced by a promissory note
(the "Note") in form and content satisfactory to the Bank.
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March 21, 1997
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5. Letter of Credit. Bank has heretofore issued for ▇▇▇▇▇▇▇▇'s
account an Irrevocable Standby Letter of Credit, a copy of
which is attached hereto as Exhibit "B" (the "Letter of
Credit"), and, in connection therewith, has executed and
delivered to Bank a Reimbursement Agreement dated March ___,
1997 (the "Reimbursement Agreement"). Borrower hereby
confirms all of its obligations to Bank in connection
therewith and, in addition to the terms of the Reimbursement
Agreement, agrees to comply with the provisions hereof which
are applicable to the Letter of Credit.
6. Covenants. Unless compliance is waived in writing by the
Bank or until payment in full and termination of the Line of
Credit and surrender and/or expiration of the Letter of
Credit and payment in full of all reimbursement obligations
as set forth in the Reimbursement Agreement:
(a) The Borrower will promptly submit to the Bank such information
relating to the Borrower's affairs, including budgets and
forecasts as requested, as the Bank may reasonably request.
(b) The Borrower will not make, suffer or permit any change
in the nature of its business as carried on as of the
date of this letter.
(c) The Borrower will comply with the financial, reporting
and other covenants included in Exhibit "A" hereto.
All financial covenants will be calculated on a
consolidated basis for the Borrower and its
consolidated Subsidiaries (herein, the "Consolidated
Group"), and all financial statements shall be
consolidated financial statements for the Consolidated
Group. Borrower represents to Bank that ▇▇▇▇▇▇▇▇'s
fiscal year is October 1 - September 30.
7. Representations and Warranties. To induce the Bank to
extend the Line of Credit and the Letter of Credit and upon
the making of any advance to the Borrower under the Line of
Credit, the Borrower represents and warrants as follows:
(a) The Borrower's latest financial statements provided to
the Bank are true, complete and accurate in all
material respects and fairly present the financial
condition, assets and liabilities, whether accrued,
absolute, contingent or otherwise, of the Consolidated
Group, and the results of the Consolidated Group's
operations for the period specified therein. The
Borrower's financial statements have been prepared in
accordance with generally accepted accounting
principles consistently applied from period to period
subject in the case of interim statements to normal
year-end adjustments. Since the date of the latest
financial statements provided
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March 21, 1997
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to the Bank, neither the Borrower nor any Subsidiary (as
defined in Section 7(h) hereof) has suffered any damage,
destruction or loss which has materially adversely affected
its business, assets, operations, financial condition or
results of operations.
(b) There are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of the Borrower,
threatened against the Borrower or any Subsidiary which could
reasonably be expected to result in a material adverse change
in its business, assets, operations, financial condition or
results of operations and there is no basis known to the
Borrower or its executive officers or directors for any such
action, suit, proceedings or investigation.
(c) The Borrower and each Subsidiary has filed all returns
and reports that are required to be filed by it in
connection with any federal, state or local tax, duty
or charge levied, assessed or imposed upon it or its
property, including unemployment, social security and
similar taxes and all of such taxes have been either
paid or adequate reserve or other provision has been
made therefor.
(d) Borrower and each Subsidiary is duly organized, validly
existing and in good standing under the laws of the
state of its incorporation or organization and has the
power and authority to own and operate its assets and
to conduct its business as now or proposed to be
carried on, and is duly qualified, licensed and in good
standing to do business in all jurisdictions where its
ownership of property or the nature of its business
requires such qualification or licensing and the
failure to be so qualified would have a material
adverse effect on the Borrower's or such Subsidiary's
financial condition.
(e) The Borrower has full power and authority to enter into
the transactions provided for in this Letter Agreement
and has been duly authorized to do so by all necessary
and appropriate action and when executed and delivered
by the Borrower, this Letter Agreement and the other
loan documents executed and delivered pursuant hereto
will constitute the legal, valid and binding
obligations of, the Borrower enforceable in accordance
with their terms, except as may be limited by
bankruptcy or similar laws or equitable principles
affecting the enforcement of creditors' rights
generally.
(f) There does not exist any default or violation by the
Borrower or any Subsidiary of or under any of the
terms, conditions or obligations of: (i) its
organizational documents; (ii) any indenture, mortgage,
deed of trust, franchise, permit, contract, agreement,
or other instrument to which it is a party or by which
it is bound; or
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RMH Teleservices, Inc.
March 21, 1997
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(iii) any law, regulation, ruling, order, injunction, decree,
condition or other requirement applicable to or imposed upon
the Borrower or such Subsidiary by any law or by any
governmental authority, court or agency where the failure to
comply with which would have a material adverse effect on
Borrower's or such Subsidiary's financial condition.
(g) Except for Permitted Liens identified in Exhibit "A" hereto,
there re no liens or security interests in any of Borrower's
or any Subsidiary's assets or properties.
(h) Borrower has no subsidiaries (meaning an entity 50% or more of
the capital stock of which is owned by Borrower directly or
indirectly through one or more other subsidiaries) other than
Teleservices Management Company and Teleservices Technology
Company (the "Subsidiaries") and that Borrower is not a
subsidiary of any other entity.
8. Fees and Expenses. (a) Borrower shall, concurrently with
the execution hereof, pay to the Bank a non-refundable
Commitment Fee for the Line of Credit of $11,000.00. In the
event that the Bank in its discretion agrees to renew the
Line of Credit for an additional one (1) year period past
April 1, 1998 on the identical terms hereof, including
without limitation as to rate of interest, financial and
other covenants, the maximum loan amount and the security
designated herein, Bank agrees that no additional Commitment
Fee will be assessed by it in connection with such renewal.
(b) The Borrower will reimburse the Bank for the
Bank's out-of-pocket expenses incurred or to be incurred in conducting
UCC, title and other public record searches. The Borrower shall also
reimburse the Bank for the Bank's expenses in documenting and closing
this transaction, including Bank's attorneys' fees in an amount not to
exceed $3,000 plus out-of-pocket costs and expenses.
9. Depository. The Borrower will establish and maintain at the
Bank the Borrower's primary depository accounts.
10. Additional Provisions. Before the first advance under the Line of
Credit, the Borrower agrees to sign and deliver to the Bank the Note
and other required documents and such other instruments and documents
as the Bank may reasonably request, such as certified resolutions,
incumbency certificates or other evidence of authority. In addition,
▇▇▇▇▇▇▇▇▇' Counsel shall deliver a written opinion addressed to the
Bank in a form satisfactory to the Bank. The Bank will not be obligated
to make any advance under the Line of Credit if any Event of Default
(as defined in the Note) or event which with
10
RMH Teleservices, Inc.
March 21, 1997
Page 8
the passage of time, provision of notice or both would constitute an
Event of Default under the Note shall have occurred. Upon any Event of
Default, Borrower will pay to Bank, in addition to all principal,
interest and other amounts owing, cash in an amount equal to the face
amount of the Letter of Credit, to be held by Bank as security for
▇▇▇▇▇▇▇▇'s reimbursement obligations in connection therewith.
Prior to execution of the final documents, the Bank may terminate this letter if
a material adverse change occurs with respect to the Borrower, or any other
person or entity connected in any way with the Line of Credit or the Letter of
Credit, or if the Borrower fails to comply with any of the terms and conditions
of this letter, or if the Bank reasonably determines that any of the conditions
cannot be met.
This letter is governed by the laws of Commonwealth of Pennsylvania. No
modification or waiver of any of the terms of this letter will be valid and
binding unless agreed to in writing by the Bank. When accepted, this letter and
the other documents described herein, including the Reimbursement Agreement,
will constitute the entire agreement between the Bank and the Borrower
concerning the Line of Credit and the Letter of Credit, and shall replace all
prior understandings, statements, negotiations and written materials relating to
the Line of Credit and the Letter of Credit.
Thank you for giving PNC Bank this opportunity to work with your business. We
look forward to other ways in which we may be of service to your business or to
you personally.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Signature
----------------------------------
Title: Vice President
-------------------------------
11
RMH Teleservices, Inc.
March 21, 1997
Page 9
ACCEPTANCE
With the intent to be legally bound hereby, the above terms and conditions are
hereby agreed to and accepted this 21st day of March, 1997.
BORROWER:
RMH Teleservices, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
12
EXHIBIT "A"
ADDITIONAL COVENANTS:
I. Reporting.
The Borrower will deliver to the Bank:
(a) Financial Statements for each fiscal year, commencing with fiscal
year ending September 30, 1997, within 120 days after fiscal year end, audited
and certified without qualification as to scope of audit or going concern
matters by an independent certified public accountant acceptable to the Bank.
"Financial Statements" means the consolidated and consolidating balance sheet
and statements of income and cash flows for the Consolidated Group prepared in
accordance with generally accepted accounting principles in effect from time to
time ("GAAP") applied on a consistent basis (subject in the case of interim
statements to normal year-end adjustments).
(b) Within five (5) days after the filing thereof, a copy of ▇▇▇▇▇▇▇▇'s
quarterly 10-Q filing with the Securities and Exchange Commission.
II. Financial Covenants.
(a) The Borrower shall have and maintain, on a consolidated basis for
the Consolidated Group, a tangible net worth equal to or greater than
$17,000,000.00 as of September 30, 1996. As of September 30, 1997, and as of the
end of each fiscal year thereafter, Borrower will have and maintain a tangible
net worth of not less than the sum of the then prior fiscal year end minimum
tangible net worth plus fifty (50%) percent of net income for the fiscal year
then ended plus 100% of the proceeds, net of costs of issuance, of new equity
issues for the fiscal year then ended. "Tangible Net Worth" means stockholders'
equity in the Borrower less any advances to third parties and all items properly
classified as intangibles, in accordance with GAAP.
(b) The Borrower shall maintain at the end of each fiscal quarter, on a
consolidated basis for the Consolidated Group, a Fixed Charge Coverage Ratio of
at least 1.10 to 1. "Fixed Charge Coverage Ratio" means net income plus
depreciation plus amortization plus Unfunded Capital Expenditures minus
dividends, divided by the sum of Current Maturities of long term debt plus
interest expense, all for the four (4) fiscal quarters then ended. "Current
Maturities" means the current principal maturities of all indebtedness for
borrowed money (including but not limited to capitalized lease obligations)
having an original term of one year or more, but excluding the Line of Credit.
"Unfunded Capital Expenditures" means
13
capital expenditures made from the Borrower's funds other than borrowed funds
(other than from advances under the Line of Credit).
III. Negative Covenants.
(a) The Borrower will not, nor suffer or permit any Subsidiary to,
create, assume, incur or suffer to exist any mortgage, pledge, encumbrance,
security interest, lien or charge of any kind upon any of its property, now
owned or hereafter acquired, or acquire or agree to acquire any kind of property
under conditional sales or other title retention agreements; provided, however,
that the foregoing restrictions shall not prevent the Borrower or any Subsidiary
from (herein, "Permitted Liens"):
(i) incurring liens for taxes, assessments or governmental
charges or levies which shall not at the time be due and
payable or can thereafter be paid without penalty or are being
contested in good faith by appropriate proceedings diligently
conducted and with respect to which it has created adequate
reserves;
(ii) making pledges or deposits to secure obligations
under workers' compensation laws or similar
legislation;
(iii) granting liens or security interests in favor
of the Bank;
(iv) granting purchase money liens in the assets acquired with
the proceeds of, and as security for, purchase money
indebtedness permitted to be incurred pursuant to subpart
(b)(iv) hereof; or
(v) maintaining that certain lease dated November 29, 1996
heretofore entered into with Chase Equipment Leasing, Inc.
relative to Borrower's lease of specific equipment pursuant
thereto.
(b) The Borrower will not, nor suffer or permit any Subsidiary to,
create, incur, guarantee, endorse (except endorsements in the course of
collection), assume or suffer to exist any indebtedness, except (i) indebtedness
to the Bank, (ii) open account trade debt incurred in the ordinary course of
business, (iii) other indebtedness disclosed on the Borrower's latest Financial
Statements which have been provided to the Bank prior to the date of this
letter, or (iv) purchase money indebtedness (including capitalized lease
obligations) incurred for the acquisition of fixed assets, limited in amount to
$250,000 at any time outstanding in the aggregate for Borrower and all
Subsidiaries.
(c) The Borrower will not, nor suffer or permit any Subsidiary to,
liquidate, merge or consolidate with any person, firm, corporation or other
entity other than a merger of one or both Subsidiaries into Borrower or into
each other, or sell, lease, transfer or otherwise dispose of all or any part of
its property or assets, whether now owned or hereafter acquired, other than
sales of inventory in the ordinary course of business and disposition of
equipment
14
which in Borrower's reasonable judgment are no longer used or useable in the
operation of ▇▇▇▇▇▇▇▇'s or such Subsidiary's business in the ordinary course
thereof.
(d) The Borrower will not, nor suffer or permit any Subsidiary to, make
acquisitions of all or substantially all of the property or assets of any
person, firm, corporation or other entity.
(e) The Borrower will not, nor suffer or permit any Subsidiary to, make
or have outstanding any loans or advances to or otherwise extend credit to any
person, firm or corporation, except accounts receivable in the ordinary course
of business and other than advances by the Subsidiaries to Borrower. Borrower
specifically agrees, without limitation, that Borrower will not make or suffer
or permit to exist or be outstanding any loans or advances to any Subsidiary,
and Borrower hereby represents to Bank that there are no outstanding loans or
advances to any Subsidiary as of the date hereof.
