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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): January 22, 1997
NCO GROUP, INC.
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(Exact name of Registrant as specified in its charter)
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Pennsylvania 0-21639 23-2858652
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<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
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1740 Walton Road
Blue Bell, Pennsylvania 19422-0987
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (610) 832-1440
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Item 2. Acquisition or Disposition of Assets.
On January 22, 1997 (the "Closing Date"), NCO Financial Systems of NC,
Inc., a North Carolina corporation ("NCO/NC") which is a wholly-owned subsidiary
of NCO Group, Inc., a Pennsylvania corporation ("NCO"), acquired all of the
issued and outstanding stock of Goodyear & Associates, Inc., a North Carolina
corporation ("Goodyear"), pursuant to the terms of: (i) a certain Stock Purchase
Agreement, dated January 22, 1997 (the "Stock Purchase Agreement"), by and
between NCO and George S. Goodyear, III, Richard Clayton Goodyear, Kelly
Goodyear Burch, Bryan Scott Goodyear, and certain other shareholders, all of
whom together owned a majority of the Capital Stock of Goodyear (collectively,
the "Majority Shareholders"); and (ii) a certain Stock Purchase Agreement, dated
January 22, 1997 (the "Second Agreement") by and between NCO and certain
shareholders who owned a minority of the Capital Stock of Goodyear
(collectively, the "Minority Shareholders").
Goodyear is an accounts receivable management company located in
Charlotte, North Carolina, with a geographic presence in the Southeastern United
States and a strong base of commercial accounts.
NCO/NC acquired the outstanding stock held by the Majority Shareholders
for a purchase price of $5,247,612, which was comprised of: (i) $4,347,612 in
cash paid on the Closing Date; and (ii) $900,000 in the form of a convertible
note (the "Note"). The Note bears interest at the rate of 8% per annum, with
monthly payments of interest only during a term of five (5) years. The Note is
convertible by the Majority Shareholders, during the term of the Note, in whole
or in part, to up to 42,503 shares of NCO common stock at a conversion price of
$21.175 per share (the average published closing price of a share of NCO common
stock over the five (5) trading days immediately preceding the Closing Date).
Under the terms of the Note, whenever NCO proposes to register any of its
securities under the Securities Act of 1933 and the registration form to be used
may be used for the registration of securities of the type held by the Majority
Shareholders upon conversion, NCO shall give prompt written notice to the
Majority Shareholders of its intention to effect such a registration and the
Majority Shareholders shall, at their sole expense, have the right, subject to
certain exceptions, to include in such registration statement the common stock
of NCO issuable upon conversion of the note.
Under the terms of the Second Agreement, the purchase for all of the
stock of the Minority Shareholders was $152,388, paid by NCO/NC in cash on the
Closing Date.
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Item 7. Financial Statements and Exhibits.
The following exhibits are being filed as part of this report:
(a) Financial Statements of business acquired.
It is impracticable to provide the required financial
statements for the acquired business at this time.
The required financial statements will be filed as an
amendment to this Form 8-K as soon as practicable,
but not later than April 7, 1997.
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma
financial information for the acquired business at
this time. The required pro forma financial
information will be filed as an amendment to this
Form 8-K as soon as practicable, but not later than
April 7, 1997.
(c) Exhibits.
Number Title
1. Stock Purchase Agreement, dated January 22,
1997, by and among NCO and the Majority
Shareholders. NCO will furnish to the
Securities and Exchange Commission a copy of
any omitted schedule upon request.
2. Stock Purchase Agreement, dated January 22,
1997, by and among NCO and the Minority
Shareholders. NCO will furnish to the
Securities and Exchange Commission a copy of
any omitted schedule upon request.
3. Non-negotiable Subordinated Convertible Promissory Note.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NCO GROUP, INC.
By: /s/ Steven L. Winokur
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Vice President, Finance and Chief Financial Officer
Date: February 6, 1997
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into this 22nd day of
January, 1997, to be effective as of January 1, 1997, by and among NCO GROUP,
INC., a Pennsylvania corporation or its assignee or nominee ("Buyer") and GEORGE
S.GOODYEAR,III, RICHARD CLAYTON GOODYEAR, KELLY GOODYEAR BURCH, BRYAN SCOTT
GOODYEAR, individually, JOHN D. RICHARDS, as Trustee of the Zachary T. Goodyear
Irrevocable Trust UAD 12/24/96 and GEOPUD, L.L.C., a Delaware limited liability
company, owners of the capital stock (as hereinafter defined) (collectively
"Seller") who owns a majority of the capital stock of GOODYEAR & ASSOCIATES,
INC., a North Carolina corporation("Goodyear")
WITNESSETH:
A. Goodyear is engaged in the accounts collection business and
related businesses (the "Business").
B. Buyer and Seller desire to enter into an agreement with
each other providing that Seller will sell, assign, transfer and deliver to
Buyer all of the issued and outstanding capital stock of Goodyear ("Capital
Stock"), except for the Capital Stock owned by Carmel Baptist Church, Charlotte
Country Day School, Covenant Day School, Appalachian State University and North
Carolina Baptist Men which is being sold to Buyer pursuant to a certain Stock
Purchase Agreement of even date herewith (the "Second Agreement"), in exchange
for the consideration hereinafter set forth.
NOW THEREFORE, Buyer and Seller, in consideration of the
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mutual covenants and agreements hereinafter set forth, and intending to be
legally bound, hereby agree as follows:
1. Transaction.
1.1 Upon payment of the Purchase Price (as
hereinafter defined) and upon satisfaction of the provisions of Section 10 of
this Agreement, on the Closing Date (as hereinafter defined), Seller shall
transfer and deliver Capital Stock to Buyer. The certificates representing
Capital Stock shall be duly endorsed in blank (or accompanied by appropriate
instruments of transfer satisfactory in form and substance to counsel to Buyer)
and shall have affixed thereto all applicable security transfer tax stamps (if
such are required).
1.2 Upon delivery of Capital Stock in compliance with
the terms and conditions of this Agreement, and upon the satisfaction of the
provisions of Section 9 hereof, on the Closing Date, Buyer shall deliver the
Purchase Price (as hereinafter defined) to Seller or his designee.
2. Purchase Price and Payment.
The purchase price (the "Purchase Price") for the
Capital Stock shall be $5,247,612.
The Purchase Price shall be paid by Buyer as follows:
(a) $4,347,612 shall be paid at Closing by wire
transfer (Federal Funds) or certified or bank cashier's check, at Seller's
option.
(b) $900,000 in the form of a convertible note (the
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"Note"). The Note shall bear interest at the rate of 8% per annum, with monthly
payments of interest only during a term of five (5) years. The Note shall,
during the term of the Note, be convertible by Seller, in whole or in part, to
stock of Buyer at such stock's fair market value at the time of Closing. The
"fair market value" of the stock shall be the average published closing price of
a share of stock over the five (5) trading days immediately preceding the
Closing Date. The Note shall be in form reasonably satisfactory to Seller and
Buyer.
(c) Schedule 2(d) sets forth the allocation of the
Purchase Price as negotiated by Buyer and Seller. Seller and Buyer each agree to
respect the allocation set forth in said Schedule for tax purposes and to cause
all tax returns and other documents filed with the Internal Revenue Service or
any other tax collection agency to be consistent with such allocations.
3. Representations and Warranties of Goodyear and Seller,
George S. Goodyear, III and Seller, Geopud, L.L.C. Goodyear and Seller, George
S. Goodyear, III and Seller, Geopud, L.L.C., for themselves and for all
individuals and entities who are deemed as Seller hereunder and pursuant to the
Second Agreement, hereby represent and warrant to Buyer that:
3.1 Goodyear is a corporation duly organized, validly
existing and in good standing under the laws of the State of North Carolina.
Schedule 3.1 sets forth the jurisdictions in which Goodyear is registered to do
business and in good standing as a foreign corporation. Goodyear has the
corporate power to and is
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authorized to own and lease its properties and to carry on the Business in the
places where such properties are now owned, leased or operated or the Business
is now conducted.
3.2 The authorized capital of Goodyear, and the
issued and outstanding shares of Capital Stock of Goodyear and their respective
owners are set forth on Schedule 3.2. All of the issued shares are fully paid
for and non-assessable. There are no outstanding options, rights, warrants or
agreements to purchase or acquire shares of Capital Stock or securities
convertible into Capital Stock.
3.3 The Articles of Incorporation of Goodyear,
certified by the Secretary of the State of North Carolina, and the copy of the
By-laws of Goodyear certified as correct by its Secretary, to be delivered to
Buyer on or before the Closing Date, are true and complete and they have not
been modified, rescinded or repealed.
3.4 Except for the shares of Capital Stock covered by
the Second Agreement, Seller is the sole legal and beneficial owner of all of
the issued and outstanding shares of Capital Stock, free and clear of all liens,
charges, security interests and encumbrances. This Agreement is valid and
binding on Seller in accordance with its terms, except as such enforcement may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereinafter in effect relating to creditor's rights and (ii) the
discretion of the appropriate court with respect to specific performance,
injunctive relief or other forms
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of equitable remedies, and Seller has full power to convey clear and marketable
title to Capital Stock free of any liens, charges, pledges, security interests,
encumbrances or agreements of any nature whatsoever. Seller has not entered
into, nor is he bound by, any agreement or understanding pursuant to which he
has agreed to sell Capital Stock, or any portion thereof, or any interest
therein, or pursuant to which any third party has any present or future right to
acquire Capital Stock or any part thereof or any interest therein.
3.5 On the day of Closing, Seller shall deliver to
Buyers a true and correct list and description of all of the Goodyear's
customers, and to the knowledge of Seller, all contracts, agreements or
understandings pursuant to which Goodyear has agreed to render services,
including, but not limited to collection and related services to its clients,
businesses or individuals (collectively the "Contracts"). The customer lists
will include all customers of Goodyear as of the Closing Date. Originals or
executed copies of the Contracts with Goodyear's ten (10) largest customers
which are available will be delivered to Buyer or its counsel at Goodyear's
offices on the day of Closing. Each of the Contracts is, to the knowledge of
Seller, valid, binding and in full force and effect; and to the knowledge of
Seller and Goodyear, each other party thereto has performed all of the
provisions thereof required to be performed by each; and to the knowledge of
Seller or Goodyear, neither Goodyear nor any other party thereto is or will
simply with the passage of time, by giving
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notice or otherwise, be in default in any respect under the terms
thereof.
3.6 To the knowledge of Seller and Goodyear, and
except as set forth on Schedule 3.6 is a true and complete list as of the date
hereof of all computer equipment used in the conduct of the Business including,
but not limited to, hardware, software and related items and accessories, of
every type (the "Computer Equipment") and the original cost, depreciation and
book value of each item of the Computer Equipment. The Computer Equipment listed
on Schedule 3.6 consists of items of a quality, taken as a whole, are adequate
for the use which they are being put in connection with the Business by
Goodyear, the whole or partial loss of or damage to which is covered by
insurance, subject to applicable deductibles and coverage limits.
3.6.1 Except as et forth on Schedule 3.6.1,
all of the Computer Equipment is owned by Goodyear free and clear of all liens,
encumbrances, security interests, pledges or agreements of any nature
whatsoever. To the extent that any of the Computer Equipment is leased or held
by Goodyear pursuant to other arrangements, originals or executed copies of all
contracts, agreements or other documents regarding such leases or other
arrangements will be delivered to counsel to Buyer at Closing. Each of such
contracts, agreements and understandings, is, to the knowledge of Seller and
Goodyear, valid, binding and in full force and effect and is not subject to any
pending right of set off or counterclaim and Goodyear and, to the knowledge of
Seller and
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Goodyear, each other party thereto has performed all of the provisions thereof
required to be performed by each; and neither Goodyear nor, to the knowledge of
Seller and Goodyear, any other party thereto is or will simply with the passage
of time, by giving notice or otherwise, be in material default in any respect
under the terms thereof.
3.6.2 To the knowledge of Seller, set forth
on Schedule 3.6.2 is a true and correct list of all material insurance policies,
contracts, agreements and understandings regarding the maintenance and repair of
the Computer Equipment. An original or a copy of each such insurance policies,
contract, agreement and understanding will be delivered to counsel to Buyer at
Closing. Each of such contracts, agreements and understandings is in full force
and effect and, to the knowledge of Seller and Goodyear, is not subject to any
pending right of set off or counterclaim; and Goodyear and, to the knowledge of
Seller and Goodyear, each other party thereto has performed in all material
respects all of the provisions thereof required to be performed by each.
3.7 To the knowledge of Seller and Goodyear, set
forth on Schedule 3.7 is a true and complete list as of the date hereof of all
furniture, fixtures, equipment (excluding the Computer Equipment), and all other
personal property of every type, the value of which exceed $500.00, used or held
for use in the Business (the "Personal Property"), together with the original
cost, depreciation and book value of the Personal Property. To the knowledge of
Seller, the Personal Property listed on Schedule 3.7
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consists of items of a quality, taken as a whole, adequate for the uses to which
they are being put by Goodyear in the operation of the Business, the whole or
partial loss of or damage to which is covered by insurance subject to applicable
deductibles and coverage limits.
Except as set forth on Schedule 3.7 all of the Personal
Property is owned by Goodyear free and clear of all liens, encumbrances,
security interests, pledges or agreements of any nature whatsoever. To the
extent that any of the Personal Property is leased or held by Goodyear pursuant
to other arrangements, originals or executed copies of all contracts, agreements
or other documents regarding such leases or other arrangements as well as
written summaries of such oral leases or agreements will be delivered to Buyer
at Closing. Each of such contracts, agreements and understandings is valid,
binding and in full force and effect and, to the knowledge of Seller and
Goodyear, is not subject to any pending right of set off or counterclaim; and
Goodyear and, to the knowledge of Seller and Goodyear, each other party thereto
has performed in all material respects, all of the provisions thereof required
to be performed by each.
3.8 To the knowledge of Seller and Goodyear, set
forth on Schedule 3.8 is a true and correct list of all material (consideration
in excess of $1,000 per annum) contracts, agreements or understandings by and
between Goodyear and any other party thereto and not otherwise set forth on any
Schedule to this Agreement. Originals or executed copies of each such written
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agreement, as well as written summaries of each such oral agreement will be
delivered to counsel to Buyer or to Buyer at Closing. To the knowledge of Seller
and Goodyear, each of such contracts, agreements and understandings is valid,
binding and in full force and effect and, to the knowledge of Seller and
Goodyear, is not subject to any pending right of set off or counterclaim; and
Goodyear and, to the knowledge of Seller and Goodyear, each other party thereto
has performed in all material respects all of the provisions thereof required to
be performed by each and neither Goodyear nor, to the knowledge of Seller and
Goodyear, any other party thereto, is or will simply with the passage of time,
by giving notice or otherwise, be in material default in any respect under the
terms thereof.
3.9 Attached to Schedule 3.9 is a true and correct
copy of all real estate leases between Goodyear and its respective landlords
including, but not limited to its office leases in Charlotte, North Carolina.
Such leases are valid, and enforceable in accordance with their terms, except as
may be limited by enforceability limitations. To the knowledge of Seller, the
property covered by said leases, taken as a whole, is in a state of reasonable
maintenance and repair. Except as provided herein, Seller or Goodyear have not
been served with documents relating to any actions, claims, proceedings or
hearings presently regarding such leases, and Goodyear has not received notice
of any such actions, claims, proceedings or hearings. Goodyear does not occupy
any other office or other space.
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3.10 Goodyear does not have any equity or other
interest in any entity, corporate or otherwise, or any warrant or
option to acquire any such interest.
3.11 Goodyear has delivered to Buyer (i) its
audited balance sheet for the years 1994 and audited financial statements for
1995 and 1996 (the "Audited Statements"). The Audited Statements (i) are in
accordance with the books and records of Goodyear and; (ii) present fairly the
combined financial results of operations for the periods indicated. To the
knowledge of Seller and Goodyear, the Audited Statements have been prepared in
accordance with generally accepted accounting principals consistently applied,
except as set forth therein.
3.12 All of Goodyear's accounts receivable arose in
the ordinary course of business, are current (due for less than ninety (90)
days) and are not subject to any pending right of set off or counterclaim, and
to the knowledge of Seller, Goodyear has rendered all services giving rise to
each such account receivable.
3.13 To the knowledge of Seller and Goodyear, except
as set forth on Schedule 3.13 and Schedule 3.23 and except as to matters arising
in the ordinary course of business, Goodyear has no liability or obligation of
any nature, including, without limitation, contingent liabilities, potential
liabilities, obligations to employees (with respect to vacation, vacation pay
and other fringe benefits) other than (i) liabilities and obligations reflected
or reserved for in the Audited Statements, or (ii) liabilities and obligations
disclosed or exempt from
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disclosure due to its immateriality in this Agreement.
3.14 Since January 1, 1997 Goodyear's business has
been operated in the ordinary course and there has not been and Seller has not
caused, to the knowledge of Seller, except as set forth on Schedule 3.14, and
except in the ordinary course of business: (i) any material adverse change in
the financial condition, results of operations, liabilities or assets including,
but not limited to, accounts receivable, of the Business of Goodyear from that
shown on the 1996 audited financial statement of Goodyear; (ii) any damage,
destruction or loss, whether covered by insurance or not, materially and
adversely affecting the properties or business or assets of Goodyear; (iii) any
capital expenditure by Goodyear exceeding $25,000 (iv) any change in accounting
methods or principles (including, without limitation, any change in depreciation
or amortization policies or rates used by Seller or Goodyear with respect to the
Business or any of Goodyear's assets; (v) no write-up or write-down by Seller or
Goodyear of assets of Goodyear on the financial statements of Goodyear other
than the split dollar life insurance policy; (vi) any declaration, setting aside
or payment of any dividend or distribution in respect of Capital Stock or any
indirect redemption, purchase or other acquisition of any Capital Stock; (vii)
any material increase in any loan from any party or in the compensation payable
or to become payable by Goodyear to its officers, key employees or agents or any
increase in any bonus, insurance, pension or other beneficial plan, payment or
arrangements made to, for or with any of such officers,
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key employees or agents; (viii) any material commitment made or entered into;
(ix) sale or transfer of Goodyear's assets; (x) any amendment or voluntary
termination by Goodyear of any major contract to which Goodyear is a party and
which relates to or affects the Business or its assets; (xi) waiver or release
of any material right or claim of Goodyear relating to or affecting the Business
or any of Goodyear's assets; (xii) mortgage, pledge, grant of a lien, security
interest or other encumbrance of any Goodyear asset; (xiii) discharge or
satisfaction of any lien or encumbrance or payment of any liability or
obligation (absolute or contingent) other than current liabilities or the
current portion of long term liabilities either shown on the Audited Statements
or incurred in the ordinary course of business of the Business since January 1,
1997; and (xiv) any other event or condition of any character pertaining to and
materially and adversely affecting the assets or the Business of Goodyear. The
foregoing notwithstanding, Seller shall be permitted to cash in a split-dollar
life insurance policy which is not being carried as an asset on Goodyear's
books, without such act being a violation of the above representations.
3.15 All Federal, North Carolina State and any
other state Income Tax Returns, Employer's Quarterly Federal Income Tax Return,
Employer's General Federal Unemployment Tax Return, of Goodyear and any and all
other federal and state unemployment insurance returns, state and city personal
income tax withholding returns, city corporation income tax returns, business
personal property tax returns state and/or city sales tax returns relating
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to the Business or any of Goodyear's assets to the knowledge of Seller and
Goodyear are required by law to be filed under the laws of any jurisdiction,
domestic or foreign, have been duly and timely (giving effect to allowable
extensions) filed (except as to these returns for assets, taxes and fees
provided for in Goodyear's financial statements and which are unpaid) and fairly
represent the tax position of Goodyear relating to the Business and Goodyear's
assets, and all taxes, fees or other governmental charges of any nature required
to be paid by Goodyear due for all periods prior to and including December 31,
1996 have been paid or provided for in the Audited Statements of Goodyear.
Complete and correct copies of income tax returns filed with any taxing
authority by Goodyear relating to the Business or its assets for its last three
(3) fiscal years will be delivered to Buyer by
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Goodyear at Closing, and for all prior years, on Buyer's request. Seller and
Goodyear have no knowledge of any taxes or any assessment of deficiency or
additional tax or other governmental charge with respect to Goodyear relating to
the Business or Goodyear's assets, or any knowledge of any completed, pending or
threatened tax audit or investigation with respect to any thereof, by any taxing
or other authority. In addition, Goodyear shall make available to Buyer payroll
and earnings records of all employees of Goodyear.
3.16 To the knowledge of Seller, Schedule 3.16
contains a list of the trademarks, service marks and trade names (whether
registered, common law or registration applied for) owned by Goodyear or any
other persons with respect to the Business and of the assignments, licenses or
agreements of any kind relating to such trademarks, service marks or trade names
to which Goodyear is a party and which relate to and/or encumber such
trademarks, service marks or trade names. To the extent that any of the
trademarks, service marks or trade names are owned by any person other than
Goodyear, to the knowledge of Seller, there does not exist any restriction or
any limitation on such other person's right to transfer any of such trademarks,
service marks or trade names to Buyer hereunder. Goodyear, and to the knowledge
of Goodyear any such other person own such trademarks, service marks and trade
names free and clear of all liens, charges, security interests and encumbrances
and pay no royalty to anyone relating thereto. To the knowledge of Seller,
Goodyear owns or possesses
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all trademarks, service marks and trade names which are necessary for the
conduct of the Business as it is presently conducted. Neither Seller nor
Goodyear has any knowledge of, and neither Seller nor Goodyear has received any
notice of, any conflict with the asserted rights of with respect to any of such
trademarks, service marks, trade names or other intangible property owned by
Goodyear or by any other person related or affiliated to Goodyear. Upon
completion of Closing, to the knowledge of Seller and Goodyear, Buyer shall,
subject to rights of other parties holding rights to the same or similar names
in states other than North Carolina, have sole and exclusive right to use the
name "Goodyear & Associates".
3.17 To the knowledge of Seller and Goodyear,
Schedule 3.17 describes all material intangible property, other than that set
forth on Schedule 3.16 used or held for use in the Business.
3.18 Except as disclosed on Schedule 3.18, to the
knowledge of Seller and Goodyear, with respect to the Business, Goodyear is not
in material violation of any statute, law, ordinance, rule, regulation, order,
writ, injunction, decree or judgment of any court or other governmental body,
department, instrumentality, agency or subdivision; to the knowledge of Seller
and Goodyear, except as disclosed on Schedule 3.18, Goodyear holds and has at
all times held all material licenses, permits, authorizations, consents,
approvals, orders, registrations and qualifications necessary for the lawful
conduct of the Business
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pursuant to all applicable statutes, laws, ordinances rules and regulations of
all governmental bodies, departments, instrumentalities, agencies and
subdivisions having, asserting or claiming jurisdiction over Goodyear or any
part of the Business. To the knowledge of Seller, and except as otherwise
disclosed in this Agreement and Schedule 3.18 constitutes a true and complete
list of all material licenses, permits, authorizations, consents, approvals,
orders, registrations and qualifications related to conduct of the Business held
by Goodyear. Except as set forth on Schedule 3.18, to the knowledge of Seller
and Goodyear, the execution, delivery and performance of this Agreement by
Seller and Goodyear will not conflict with, constitute a default under, permit
any party to accelerate any right under, require consent, approval or waiver by
any party under, or result in the creation of any lien upon any of the
properties or assets of Goodyear pursuant to the certificate of incorporation or
by-laws of Goodyear or any indenture, mortgage, lease, agreement or other
instrument to which Goodyear is a party or by which any of its properties or
assets may be bound (except that consent may be required under certain of the
agreements, leases or under certain business licenses), or any statute, law,
ordinance, rule or regulation, or any order, writ, injunction, decree or
judgment now in effect of any court or other governmental body, department,
instrumentality, agency or subdivision having asserting or claiming
jurisdiction.
3.19 The assets of Goodyear, generally or as
specifically referred to in this Agreement, on the Closing Date
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(collectively referred to herein as the "Assets") will constitute all the
assets, property, property rights and contractual rights which Goodyear has
found necessary to conduct the Business as presently being conducted by
Goodyear. Except as set forth on Schedule 3.19 or other Schedules to this
Agreement, Goodyear has good and marketable title to the Assets free and clear
of all claims, liens, charges, security interests and encumbrances.
3.20 Except as disclosed on Schedule 3.20 or other
Schedules to this Agreement, provided for or specifically set forth in this
Agreement, the other Schedules hereto or the Statements of Goodyear, Goodyear is
not obligated for, nor are any of the Assets subject to, any material
liabilities or adverse obligations, absolute or contingent, asserted or
unasserted.
3.21 Except as set forth on Schedule 3.21 and other
Schedules hereto, Goodyear is not indebted to Seller or to any of its officers,
directors or to the knowledge of Goodyear employees,(or to members of their
immediate families) or to any of their affiliates in any amount whatsoever.
3.22 To the knowledge of Seller and Goodyear,
Schedule 3.22 sets forth a brief description of all employment and labor union
contracts, executive employment contracts, executive compensation agreements,
agency agreements, consulting agreements, management agreements, bonus or profit
sharing plans, group insurance or other employee benefit plans of Goodyear. Each
of such contracts, agreements, understandings and commitments is valid and
binding in accordance with its terms except as may be limited
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by enforceability limitations, if any, and is in full force and effect and, to
the knowledge of Seller and Goodyear, is not subject to any pending right of set
off or counterclaim; and Goodyear and, to the knowledge of Seller and Goodyear,
each other party thereto has performed in all material respect, all obligations
required to be performed thereunder by each, and neither Goodyear nor, to the
knowledge of Seller and Goodyear, any other party thereto is or will simply with
the passage of time, by giving notice, or otherwise, be default in any material
respect under the terms thereof. Originals or executed copies of each of such
contracts, agreements or understandings will be delivered to Buyer at Closing.
3.23 Schedule 3.23 contains a brief description of
all claims, litigation, arbitration, legal or other proceedings in which Seller,
Goodyear or any of its officers, directors, or employees is now engaged or to
their knowledge threatened in connection with the Business and the affairs,
properties or the Assets of Goodyear;
3.24 Except as set forth in other Schedules to this
Agreement, Schedule 3.24 is a true and correct copy of all insurance policies in
force and effect in respect of the Business, properties, or the Assets of
Goodyear.
3.25 Schedule 3.25 is a true and complete list as the
date hereof of: (i) all banks, trust companies and savings and loan associations
in which Goodyear maintains an account or safe deposit vault and (ii) the names
of all persons authorized to draw thereon.
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3.26 With respect to any contract, agreement, plan or
arrangement which is an Employee Benefit Plan as described by Section 3(3) of
the Employee Retirement Income Security Act of 1974 as amended ("ERISA"),
maintained by Goodyear or to which Goodyear contributes:
3.26.1 As to each such plan which is a
"Pension Plan" within the meaning of ERISA Section 3(2), to the knowledge of
Seller and Goodyear, each such Pension Plan is in full force and effect and
Seller and Goodyear have not received notice of any violations related thereto.
3.26.2 As to all such Employee Benefit Plans, to the
knowledge of Seller and Goodyear, all disclosures to participants in such plans,
and all filings respecting such plans required by ERISA to have been provided or
filed have been so provided or filed; and such plans have been administered in
accordance with their terms.
3.26.3 Goodyear is not a party to or bound by any
multi-employer pension plan or multi-employer profit sharing plan.
3.27 Schedule 3.27 sets forth the names of the
officers, directors and other key personnel of Goodyear
3.28 References on any Schedule or to any document,
instrument, contract or agreement which Seller or Goodyear shall not have
provided to Buyer a copy of or, if oral a written summary thereof, shall not be
deemed for any purposes of this Agreement to
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be a disclosure of any term, provision or statement of fact of, or relating to,
such document, instrument, contract or agreement unless and until a copy of such
document, instrument, contract or agreement has been provided to Buyer.
3.29 No representations or warranties made by Seller
in this Agreement or in any final financial document, written certificate or
Schedule prepared by Seller or Goodyear to be furnished to Buyer pursuant
hereto, or in connection with the transactions contemplated hereby, to the
knowledge of Seller or Goodyear, intentionally contains or will contain any
untrue statement of a material fact, or intentionally omits or will omit to
state a material fact necessary to make the statements or facts contained
therein not misleading.
3.30 The foregoing representations and warranties
shall survive the consummation on the Closing Date of the transactions
contemplated by this Agreement for a period of twelve (12) months following the
Closing Date.
4. Representations, Warranties and Obligations of Buyer.
Buyer represents and warrants to Seller that:
4.1 Buyer is a corporation duly organized and in
good standing under the laws of the Commonwealth of Pennsylvania and has full
power to execute and deliver this Agreement and the agreements to be executed
and delivered in connection with this Agreement (including, without limitation,
the Note) and to consummate the transactions contemplated herein and therein.
This Agreement and the agreements to be executed and delivered in
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connection with this Agreement (including, without limitation, the Note) have
been duly authorized, executed and delivered by Buyer and constitute legal,
valid and binding obligations of Buyer enforceable, in accordance with its and
their terms. Copies of the resolutions of the Board of Directors of Buyer
authorizing the execution and delivery of this Agreement and the agreements to
be executed and delivered in connection with this Agreement (including, without
limitation, the Note) will be delivered to Seller upon the execution and
delivery of this Agreement.
4.2 The execution, delivery and performance of this
Agreement and the agreements to be executed and delivered in connection with
this Agreement (including, without limitation, the Note) by Buyer will not
materially conflict with, constitute a default under, require consent, approval
or waiver by any other party under, or result in the creation of any lien upon
any of the properties or assets of Buyer pursuant to the certificate of
incorporation, other charter document or by-law of Buyer or any indenture,
mortgage, lease, agreement or other instrument to which Buyer is a party or by
which any of its properties or assets may be bound, or any statute, law,
ordinance, rule or regulation, or any order, writ, injunction, decree or
judgment now in effect of any court or other governmental body, department,
instrumentality, agency or subdivision having, asserting or claiming
jurisdiction. Buyer is not aware of any fact which could prevent Buyer from
concluding its purchase of Capital Stock or its payment therefor as described in
Section 1.
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4.3 No representations or warranties made by Buyer in
this Agreement or in any written document prepared by Buyer and furnished to
Seller pursuant hereto, or in connection with the transaction contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
4.4 The representations and warranties of Buyer
herein contained shall be true on the Closing Date with the same force and
effect as if made on and as of that date. The foregoing representations and
warranties shall survive the consummation on the Closing Date of the
transactions contemplated by this Agreement for a period of twenty-four (24)
months following the Closing Date.
5. Information and Documents. Seller will cooperate with Buyer
at Buyer's reasonable request and expense, subject to Buyer's prior approval, on
and after the Closing Date in furnishing information, evidence, testimony and
other assistance in connection with any actions, proceedings, arrangements or
disputes relating to adjustment of federal income and other taxes of Goodyear
for all periods prior to the Closing Date and in connection with any other
actions, proceedings, arrangements or disputes involving Goodyear or based upon
or arising out of any of its contracts, assets commitments, acts or omissions
which were in effect or occurred on or prior to the Closing Date. Seller shall
have the right to participate in any such proceedings and, if he so chooses, to
assume and control the defense of such proceedings at his sole
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expense. In addition, Seller shall be available to Buyer, as Buyer may
reasonably require from time-to-time, during the ninety (90) day period
following Closing for consulting services and general assistance in the transfer
of the Business to Buyer. Buyer shall pay Seller $1,000 per week plus reasonable
benefits and expenses during said period.
6. Closing Date. "Closing" referred to in this Agreement
shall be at 10:00 a.m., on or before January 22, 1997 (the "Closing
Date"). Closing shall be at such location as Seller and Buyer
shall agree.
7. Covenants of Seller. Seller covenants and agrees
that, without the prior written consent of Buyer first having been
obtained, from the date hereof to the Closing Date:
7.1 Goodyear will not:
7.1.1 Take any action or step or engage in
any transaction or incur any liability or obligation (absolute or contingent)
except in the ordinary course of business and consistent with current practices
and procedures of Goodyear.
7.1.2 Increase the annual rate of compensation
payable or to become payable to any officer or employee; make any advances,
l9oans, pensions, severance pay, death benefits, distributions (Sub "S" bonus,
special or out of its ordinary practice) or other payment or arrangement with
respect to any present or former shareholder, officer, director or employee.
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7.1.3 Amend its corporate charter or by-laws
or any agreement listed on any Schedule hereto except in the ordinary course of
business and consistent with current practices and procedures of Goodyear.
7.1.4 Intentionally do any act, or omit to
do any act, or permit any act or omission to act which will cause a breach or
default of any right, contract, commitment or obligation of Goodyear.
7.1.5 Issue, sell, retire or redeem any
shares of Capital Stock or grant any option, warrant or right to any person,
firm or corporation to purchase or otherwise acquire any Capital Stock or any
interest therein.
7.1.6 Except for the split dollars life
insurance policy which Goodyear is permitted to withdraw, Make or declare any
dividend, distribution or payment in respect of its Capital Stock.
7.1.7 Amend, modify or change the Contracts,
leases, client agreements, vendor agreements or any other obligation, contract
or agreement by which it is bound and obligated, including, but not limited to
any payment terms thereunder except for any non-material amendments or
modifications in the ordinary course of business consistent with current
practices and procedures of Goodyear.
7.1.8 Make any changes in or to the Assets,
the Personal Property and the Computer Equipment except in the ordinary course
of business.
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7.2 Goodyear will:
7.2.1 Use its best efforts to maintain all
contracts, agreements and understandings listed on all Schedules hereto
including, but not limited to the Contracts, in good standing and shall not by
any act or omission to act, except as Goodyear reasonably determines is in the
best interest of the Business, intentionally surrender, modify adversely,
forfeit or fail to comply with the conditions of or renew the regular terms of
any of them or cause or give reason to any other party thereto to institute any
proceedings for the cancellation or modification thereof.
7.2.2 Use its best efforts to maintain the
Assets, the Personal Property and the Computer Equipment in good working order
and repair and maintain and pay all premiums under all insurance policies
relating thereto.
7.2.3 Use its best efforts to preserve its
business organization intact, to keep available to Buyer the services of its
present employees, and to preserve for Buyer the present goodwill and
advantageous relationships of Goodyear with all persons or entities having
business dealings with Goodyear.
7.2.4 Maintain its books, accounts and
records in the usual, regular and ordinary manner and on a basis consistent with
prior years.
8. Covenants of George Goodyear and Anne Goodyear.
8.1 George Goodyear, Chief Executive Officer
of Goodyear and his wife, Anne Goodyear, an employee of Goodyear, acknowledge
that the Business of Goodyear is national in character and that it is presently
conducted throughout the United States and
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that Buyer intends after the Closing Date to continue to conduct the Business
throughout the United States. In order that Buyer may have and enjoy the full
benefit of ownership of Capital Stock and the assets of Goodyear, including the
good will of the Business, George Goodyear and Anne Goodyear, in consideration
of an allocated portion of the Purchase Price being paid to them, covenant and
agree with and for the benefit of Buyer, its successors and assigns and its
affiliates, that they shall not, for a period of five (5) years from the Closing
Date (the "Covenant Term"), directly or indirectly, and no person, corporation,
firm, partnership or other entity related to them, except for Richard Clayton
Goodyear, who shall be subject to certain restrictions as contained in his
employment agreement with Buyer, and over which they exercise voting, operating
or management control (whether as a stockholder, affiliate, holder of debt or
equity securities, consultant, partner or otherwise) or with which they are
affiliated, anywhere in the United States, conduct business involving or
connected with the business engaged in by Goodyear including, without limitation
an accounts collection business or any business related thereto; or any business
competitive with any of the foregoing. For purposes of this Section 8 each of
the following activities, without limitation, shall be deemed to constitute
conducting business: to engage in, work with, have an interest in (other than
interests of less than 5% in companies with securities traded either on the New
York Stock Exchange or the American Stock Exchange or traded over-the-counter
and quoted on NASDAQ), advise, manage, operate,
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lend money to (other than interests of less than 5% in companies with securities
traded either on the New York Stock Exchange or the American Stock Exchange or
traded over-the-counter and quoted on NASDAQ), guarantee the debts or
obligations of, or permit one's name or any part thereof to be used in
connection with an enterprise or endeavor, either individually, in partnership
or in conjunction with any person or persons firm, association, company or
corporation, whether as principal, director, agent, shareholder, partner,
employee, consultant or in any other manner whatsoever. The foregoing
notwithstanding, during the Covenant Term, Seller shall, subject to Buyer's
prior written approval which shall not be unreasonably withheld, be permitted to
act as an operations consultant (taking no active part in marketing or
management) from time to time for competitors of Buyer, so long as such
consulting services do not interfere with the business operation or its
relationship with its customers.
8.2 George Goodyear and Anne Goodyear covenant and
agree that, during the Covenant Term and for a period of two (2) years
thereafter, they will not directly or indirectly, and no person corporation,
firm, partnership or other entity over which they exercise voting, operating or
management control (whether as a stockholder, affiliate, holder of debt or
equity securities, consultant, partner or otherwise) or with which they are
affiliated except for Richard Clayton Goodyear, who shall be subject to certain
restrictions as contained in his employment agreement with Buyer, will (a) enter
into any agreement or understanding, written or oral, relating to the services
of any
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person who is known or should be known to be then employed by Buyer, unless such
services are not similar in nature to any business activity of Buyer, or (b)
solicit the business of, enter into any written or oral agreement with or
otherwise transact competing business with any customers of Goodyear and/or
Buyer.
8.3 The scope and effect of the covenants contained
in this Section 8 shall be as broad as may be permitted pursuant to the
provisions of applicable law. To the extent that the language of said covenants
may restrict competition in a larger area or for a longer time, or both, than
permitted-by applicable law, that portion thereof shall be ineffective, but the
provisions of said covenants shall nevertheless remain effective with respect to
the largest area and for the longest period of time as shall be permitted by
applicable law.
8.4 Section 8 shall be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania applicable to
contracts as though this Agreement was entered into and is entirely to be
performed in the Commonwealth of Pennsylvania.
8.5 The parties acknowledge and agree that the extent
of damages to Buyer in the event of a breach by George Goodyear and Anne
Goodyear of the covenants and agreements contained in Section 8 would be
impossible to ascertain and that there is and will be available to Buyer no
adequate monetary damages or other remedy at law to compensate it in the event
of any such breach; consequently, George Goodyear and Anne Goodyear agree that
in the event of a breach of any such covenant, in addition to any other relief
to which Buyer is or may be entitled, Buyer shall be entitled to enforce any or
all of such
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covenants by injunctive or other equitable relief, including the remedy of
specific performance, ordered by any court of competent jurisdiction.
8.6 The parties hereto acknowledge that George
Goodyear and Anne Goodyear operate a personnel placement business and that such
business shall not be included in the restriction of Section 8.1 hereof.
9. Conditions Precedent to Buyer's Obligation to Close. The
obligation of Buyer to consummate the transaction contemplated by this Agreement
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions:
9.1 The representations and warranties of Seller and
Goodyear contained in this Agreement or in any Schedule annexed to this
Agreement shall, considered as a whole, be true in all material respects on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, except to the extent that the
facts and conditions upon which such representations and warranties are based
are expressly required or permitted to be changed by the terms of this
Agreement, and Seller and Goodyear shall deliver to Buyer a certificate to that
effect on the Closing Date.
9.2 Seller and Goodyear shall have duly performed all
obligations, covenants and agreements undertaken by them herein and complied
with all terms and conditions applicable to them, respectively, hereunder to be
performed and complied with at or prior to the Closing Date.
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9.3 Seller and Goodyear, at their expense, shall
furnish to Buyer a favorable opinion of its counsel, addressed to Buyer, dated
as of the Closing Date, to the effect that:
9.3.1 This Agreement has been duly executed
and delivered by Seller and Goodyear and is enforceable against Seller and
Goodyear in accordance with its terms.
9.3.2 Goodyear is a corporation duly
organized and in good standing under the laws of the State of North Carolina and
is duly qualified to do business in the jurisdictions set forth on Schedule 3.1.
9.3.3 The authorized capital of Goodyear is
as set forth in Section 3.2 hereof and Seller owns all Capital Stock of record
and that Capital Stock has been validly issued and is fully paid and
non-assessable.
9.3.4 The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
violate any provision of Goodyear's Articles of Incorporation or By-laws.
9.3.5 To the knowledge of such counsel,
there is no litigation, arbitration, legal or other proceeding in which Seller,
Goodyear or any of its officers or directors is now engaged or threatened which
would affect its ability to complete this transaction.
9.4 There shall have been delivered to Buyer at or
prior to the Closing Date: (i) certificates of good standing with respect to
Goodyear issued by the Secretary of the State of North Carolina and any
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other state in which Goodyear is registered to do business; and (ii) the
documents required to be delivered pursuant to the provisions of Sections 3.3,
3.6.2, 3.8, 3.9, 3.11, 3.15, 3.22 and 3.24.
9.5 There shall be no effective injunction or
restraining order of any nature issued by any court of competent jurisdiction
which shall direct that this Agreement or the transactions contemplated herein
not be consummated.
9.6 Goodyear shall have delivered to Buyer all of its
corporate books and records, including, without limitation, stock certificate
and ledger books, minute books, corporate seal, contracts, agreements, leases
and insurance policies.
9.7 The resignations, dated the Closing Date, of all
of the officers and directors of Goodyear shall have been delivered to Buyer.
9.8 Richard Clayton Goodyear shall have entered into
an employment agreement (the "Employment Agreement") with Buyer. The Employment
Agreement shall have a term of three (3) years with the Buyer having an option
to extend such employment for two (2) additional one (1) year periods. The
Employment Agreement shall provide for a base salary of $85,000 during the
initial two (2) years and $89,250 in the third year and a monthly bonus of up to
$2,000 per month based on certain revenue goals to be agreed upon by the
parties. Furthermore, Richard Clayton Goodyear may receive an additional bonus
based on revenue goals achieved by the Business based on a schedule determined
by the Buyer. Richard Clayton Goodyear shall also receive an option for 5,000
shares of Buyer at the fair market value (as defined in
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Section 2(b) of this Agreement) of Buyer's stock on the date of Closing. The
option for 2,500 shares shall vest at the end of the second (2nd) year of
employment and the balance at the end of the third (3rd) year of employment. If
Richard Clayton Goodyear's employment is terminated for cause, the option rights
or any unvested portion thereof shall be terminated. Among other customary terms
and conditions, the Employment Agreement shall contain a restriction against
competition with the Buyer. In addition to the above, Clay Richard Clayton
Goodyear shall, at Closing, assuming that he has executed the Employment
Agreement, receive $5,000 as a signing bonus.
9.9 Goodyear shall deliver to Buyer, at or prior to
Closing, the audited financial statement for 1996.
9.10 Goodyear shall deliver its written certification
to Buyer, certifying and warranting that, except as disclosed on the Audited
Statements, (i) all payments due to clients and vendors of the Business as of
the Closing Date have been remitted to such clients and vendors except in the
ordinary course of business; (ii) all clients of the Business have been paid in
full and are not owed any money as of the Closing Date except in the ordinary
course of business; and (iii) to its knowledge, all liabilities of Goodyear have
been disclosed to Buyer.
9.11 A general release of all claims Seller may have
up to the Closing Date against Goodyear and its directors, officers, agents and
employees, in form and substance satisfactory to Buyer's counsel.
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9.12 Buyer shall obtain Uniform Commercial Code
searches from the State of North Carolina and Mecklenburg County, confirming
that except as has been previously disclosed to Buyer, Goodyear's property,
including the Personal Property, the Computer Equipment and the Assets are free
and clear of all liens and encumbrances.
9.13 All bank documentation necessary to transfer
control over all bank accounts and safety deposit boxes of Goodyear to a named
representative of Buyer.
10. Conditions Precedent to Seller's Obligation to Close. The
obligation of Seller to consummate the transaction contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of the following conditions:
10.1 The representations and warranties of Buyer
contained in this Agreement shall be true in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Buyer shall deliver to
Seller a certificate to that effect on the Closing Date.
10.2 Buyer shall have duly performed all obligations,
covenants and agreements required by it herein and complied with all terms and
conditions applicable to it, hereunder to be performed and complied with at or
prior to the Closing Date.
10.3 Buyer, at its expense, shall furnish to
Seller a favorable opinion of its counsel, addressed to Seller, dated as of the
Closing Date, to the effect that:
10.3.1 This Agreement and the agreements to
be executed and delivered by Buyer in connection with this Agreement have
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been duly authorized by the Directors of Buyer and are duly and properly
executed by its officers and are a valid and enforceable against Buyer in
accordance with their terms.
10.3.2 Buyer is a corporation duly organized
and in good standing under the laws of the Commonwealth of Pennsylvania.
10.3.3 The execution and delivery of this
Agreement and the agreements to be executed and delivered in connection with
this Agreement (including, without limitation, the Note) and the consummation of
the transactions contemplated hereby do not violate any provision of Buyer's
Articles of Incorporation or By-laws or any agreement or other restriction to
which Buyer is a party or by which it is bound.
10.3.4 To the knowledge of such counsel,
there is no litigation, arbitration, legal or other proceeding in which Buyer or
any of its officers or directors is now engaged or threatened which would affect
its ability to complete this transaction.
10.4 There shall be no effective injunction or
restraining order of any nature issued by any court of competent jurisdiction
which shall direct that this Agreement or the transactions contemplated herein
not be consummated.
10.5 Subject to the provisions of this Agreement, a
general release of all claims Goodyear may have up to the Closing Date against
Seller.
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11. Indemnifications.
11.1 Seller's Indemnification of Buyer. At all times
after the Closing Date, but not to exceed the twelve (12) month period herein
provided, Seller shall indemnify Buyer and its successors and assigns, and hold
each such person or entity harmless from and against any and all losses, costs,
expenses, liabilities, claims, demands, damages, settlements, and judgments of
every nature (including the defense or investigation thereof and reasonable
attorneys' fees incurred) ("Loss" or "Losses") resulting from or arising out of
or in connection with: (a) the material inaccuracy of the warranty or
representations made by Seller and Goodyear pursuant to this Agreement; (b) the
material non-performance, partial or total, of any covenant of Seller or
Goodyear hereunder or under any agreement contract or understanding entered into
by Goodyear and referred to herein including, but not limited to those referred
to in Sections 3.5, 3.6.2 and 3.22,; and (c) any and all federal and state
income and all other tax liabilities, including all disallowed deductions or
expenses taken in connection with the Business and for any other taxes which may
become due in connection with the Business arising prior to Closing. Seller may
assume the defense of any such matter provided that Buyer may be represented by
its own counsel, selected by Buyer, at Buyer's expense. Any settlement or
compromise related to the foregoing shall require the consent of George S.
Goodyear, III, which consent shall not be unreasonably withheld. With respect to
Seller, George S. Goodyear, III, and Seller, Geopud, L.L.C., each such Seller's
obligation and liability hereunder shall be on a pro rata basis in accordance
with his
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or its respective share of the Purchase Price and the parties shall not have
joint and several liability.
11.2 Buyer's Indemnification of Seller. At all times
after the date hereof, but in any event not to exceed the twelve (12) month
limitation set forth below, Buyer shall indemnify Seller and Seller's heirs,
successors and assigns, and hold each such person harmless from and against any
and all losses, costs, expenses, liabilities, claims, demands, damages,
settlements and judgments of every nature (including the defense or
investigation thereof and reasonable attorneys' fees incurred) resulting from or
arising out of or in connection with: (a) the inaccuracy of any warranty or
representation made by Buyer pursuant to this Agreement; (b) the
non-performance, partial or total, of any covenant of Buyer in this Agreement,
and the agreements to be executed and delivered by Buyer in connection with this
Agreement (including, without limitation, the Note); and (c) operation of the
Business and/or the use of the Assets after the Closing Date. Buyer may assume
the defense of any such matters provided that Seller may be represented by
Seller's own counsel, selected by Seller, at Seller's expense.
11.3 In the event that Buyer, as the indemnified
party, has a claim against Seller for a Loss or Losses under Section 11.1 above,
then Buyer shall be entitled to indemnification from Seller for only the portion
of Loss or Losses in excess of Twenty Five Thousand Dollars ($25,000.00) (the
"Basket"). In any event, the maximum aggregate obligation of Seller and Goodyear
to Buyer with respect to all matters for which Buyer may seek indemnification
under this
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Agreement shall not exceed the Purchase Price set forth herein. The
indemnification provisions set forth above shall survive Closing for a period of
twelve (12) months. Each party shall give the other notice of any claim for
indemnification as such claim or potential claim arises.
12. Agreements of Seller and Buyer to be Performed After the
Closing Date. Seller and Buyer agree that after the Closing Date hereunder:
12.1 From time to time, upon request of the other,
each will execute and deliver such additional instruments of transfer,
assignment and further assurance and do such other things as are necessary or
desirable to consummate the transactions contemplated hereby.
12.2 Seller shall cause delivery to Buyer, within
fifteen (15) days following Closing, an internal final financial statement of
Goodyear for the applicable period of 1997.
13. Brokers. Each party represents to the other that such
party has not employed or retained any broker or finder in connection with the
transactions contemplated herein.
14. Directors' Approval. On or before January 22, 1997, Buyer
shall obtain the approval of its Board of Directors to enter and consummate the
transaction contemplated by this Agreement as a result of this Agreement.
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15. Miscellaneous.
15.1 This Agreement and the confidentiality
agreements signed by the parties or their respective agents or representatives
constitute the entire understanding and agreement between the parties hereto
with respect to the transaction contemplated herein and supersedes all prior or
contemporaneous agreements with respect to such subject matter. This Agreement
may be modified or amended only in writing signed by each of the parties hereto.
15.2 Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by Certified Mail, Return Receipt Requested, postage prepaid, or by facsimile,
or delivered by overnight delivery service, to the party to receive such notice
addressed as follows:
If to Buyer: 1740 Walton Road
Blue Bell, PA 19422
With copy to: Joshua Gindin, Esquire
Kessler & Gindin
Twentieth Floor
230 South Broad Street
Philadelphia, PA 19102
If to Seller: 4930 Derbyshire Drive
Charlotte, NC 02270
With copy to: William R. Culp, Jr., Esq.
Culp, Elliott & Carpenter
227 W. Trade Street
Charlotte, NC 28202
or to such other address as either party shall by notice give to the
other.
15.3 This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
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applicable to contracts entered into entirely to be performed in the
Commonwealth of Pennsylvania. Venue shall be in Philadelphia or Montgomery
Counties of Pennsylvania.
15.4 No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
remedy give hereunder or now or hereafter existing, at law or inequity by
statute or otherwise. The election of any one or more remedies by either party
shall not constitute a waiver of the right to pursue other available remedies.
15.5 This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
assigns.
15.6 This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
15.7 The parties hereto agree that this Agreement may
be executed and delivered via facsimile with original documents being executed
and delivered subsequently.
15.8 Captions and section headings used herein are
for convenience only and are not a part of this Agreement and shall not be used
in construing it.
15.9 If any provision of this Agreement is held to be
unenforceable for any reason it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the
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extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the fullest extent possible.
15.10 Whenever used in this Agreement, the phrases
"to the knowledge of Seller," "to the knowledge of Goodyear," or other words of
similar meaning qualify and limit the statement or opinion in question to the
present actual awareness and recollection, without independent investigation of
Seller or the present directors and executive officers of Goodyear who are
presently responsible for providing services related to, or are familiar with
the subject matter of, that statement or opinion, respectively.
15.11 Buyer shall have the right to disclose the
transaction contemplated by this Agreement in connection with any Securities and
Exchange Commission filing that is required to be made by the Buyer.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Attest: BUYER:
NCO GROUP, INC.
By:__________________[SEAL] By: /s/ Bernard Miller
-----------------------------------
Witness: Seller:
/s/ George S. Goodyear, III
- --------------------- -----------------------------------
GEORGE S. GOODYEAR, III
Witness:
/s/ Kelly Goodyear Burch
- --------------------- ----------------------------------
KELLY GOODYEAR BURCH
Witness:
/s/ Bryan Scott Goodyear
- --------------------- -----------------------------------
BRYAN SCOTT GOODYEAR
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Witness:
/s/ John D. Richards
- --------------------- -----------------------------------
JOHN D. RICHARDS, TRUSTEE
OF THE ZACHARY T. GOODYEAR
IRREVOCABLE TRUST UAD 12/24/96
Witness:
/s/ Anne Goodyear
- ------------------------ -----------------------------------
ANNE GOODYEAR, As to the Restrictive
Covenant contained in this Agreement
Attest: GOODYEAR & ASSOCIATES, INC.
By:_________________(SEAL) By: /s/ George Goodyear
---------------------------------
GEORGE GOODYEAR, President
As to its Obligations, Warranties
and Representations contained in
this Agreement
41
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into on January 22,
1997 to be effective as of January 1, 1997, by and among NCO GROUP, INC., a
Pennsylvania corporation or its assignees or nominees, ("Buyer") and CARMEL
BAPTIST CHURCH, CHARLOTTE COUNTRY DAY SCHOOL, COVENANT DAY SCHOOL, APPALACHIAN
STATE UNIVERSITY FOUNDATION, INC. and NORTH CAROLINA BAPTIST MEN (collectively
"Sellers").
Buyer and Sellers desire to enter into an agreement with each other
providing that Sellers will sell, assign, transfer and deliver to Buyer all of
the issued and outstanding capital stock of Goodyear & Associates, Inc. owned by
Sellers (the "Capital Stock") in exchange for the consideration hereinafter set
forth:
NOW THEREFORE, Buyer and Sellers, in consideration of the mutual
covenants and agreements hereinafter set forth, and intending to be legally
bound, hereby agree as follows:
1. Transaction.
Upon payment of the Purchase Price (as hereinafter defined)
and upon satisfaction of the provisions of this Agreement, on the Closing Date
(as hereinafter defined), Sellers shall transfer and deliver the Capital Stock
to Buyer. The certificates representing the Capital Stock shall be duly endorsed
in blank (or accompanied by appropriate instruments of transfer satisfactory in
form and substance to counsel to Buyer). Upon delivery of Capital Stock in
compliance with the terms and conditions of this Agreement, and upon the
satisfaction of the other provisions of this Agreement, on the Closing Date,
Buyer shall deliver the Purchase Price (as hereinafter defined) to Sellers.
2. Purchase Price and Payment.
The purchase price (the "Purchase Price") and Purchase Price
allocation for the Capital Stock shall be as set forth on Schedule 2 hereto. The
Purchase Price shall be paid by Buyer at Closing by wire transfer (Federal
Funds) and/or certified or bank cashier's check(s). The Buyer may pay the
Purchase Price directly to Culp Elliott & Carpenter, P.L.L.C., to hold the
Purchase Price funds in trust and for disbursement to the Sellers within a
reasonable time thereafter.
3. Closing. "Closing" referred to in this Agreement shall be at 2:00
p.m., on or before January 22, 1997 (the "Closing Date"), unless otherwise
agreed. Closing shall be at such location as Seller and Buyer shall agree.
4. Representations and Warranties of Sellers. Sellers hereby
respectively represent and warrant to Buyer that (a) Sellers are the sole legal
and beneficial owners of the issued and outstanding shares of Capital Stock
listed on Schedule 2, respectively, free and clear of all liens, charges,
security interests and encumbrances, and (b) Sellers, and each of them, have the
power to and is authorized to sell the Capital Stock in accordance herewith.
5. Agreements of Seller and Buyer to be Performed After the Closing
Date. Seller and Buyer agree that after the Closing Date hereunder from time to
time, upon request of the other,
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each will execute and deliver such additional instruments of transfer,
assignment and further assurance and do such other things as are necessary or
desirable to consummate the transactions contemplated hereby.
6. Authority to George S. Goodyear, III. Each of Sellers hereby
authorizes George S. Goodyear, III to execute such documents as may be required
in order to complete this transaction and to make representations and warranties
regarding the sale of 100% of the stock of Goodyear & Associates, Inc. to NCO
Group, Inc.
7. Miscellaneous.
7.1 This Agreement constitutes the entire understanding and
agreement between the parties hereto with respect to the transaction
contemplated herein and supersedes all prior or contemporaneous agreements with
respect to such subject matter.
7.2 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
contracts entered into entirely to be performed in the Commonwealth of
Pennsylvania.
7.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
7.4 This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. The parties hereto agree
that this Agreement may be executed and delivered via facsimile with original
documents being executed and delivered subsequently.
7.5 Captions and section headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing it.
IN WITNESS WHEREOF, the Buyer has executed this Agreement by signing
below and the Sellers have executed this Agreement pursuant to separate
certified signature pages affixed hereto as of the day and year first above
written.
BUYER:
NCO GROUP, INC., a Pennsylvania corporation
ATTEST
____________________________ By: ______________________________________
____________________________ Name: ____________________________________
Secretary
Title: ___________________________________
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<PAGE>
GOODYEAR & ASSOCIATES, INC. - NCO GROUP, INC.
STOCK PURCHASE AGREEMENT
CERTIFIED SIGNATURE PAGE
TO BE EXECUTED BY EACH
SHAREHOLDER OF GOODYEAR & ASSOCIATES, INC.
The undersigned hereby executes this Certified Signature Page to that
certain Goodyear & Associates, Inc. - NCO Group, Inc. Stock Purchase Agreement
to which the undersigned is listed as a party (the "Agreement"), documenting the
terms and conditions of the sale of a certain number of shares stated therein of
the issued and outstanding stock of Goodyear & Associates, Inc. to the NCO
Group, Inc. dated and effective on a certain date in January 1997. The
undersigned does further hereby acknowledge that the undersigned has read the
Agreement, and does further hereby adopt, accept, ratify, confirm and agree to
be bound by all of the terms, conditions and provisions of the Agreement.
SHAREHOLDER
Carmel Baptist Church
____________________________________________________ (SEAL)
Signature of Shareholder
____________________________________________________ (SEAL)
(To Be Used Where Shares are Jointly Owned
By: ________________________________________________ (SEAL)
Title:_______________________________________________
(To Be Used Where Shares Held By An Entity)
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<PAGE>
SCHEDULE 2
Sellers Shares Owned Purchase Price/Consideration
- ----------------------- ------------------ -------------------------------
Carmel Baptist Church 10.38 $112,104.00
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<PAGE>
GOODYEAR & ASSOCIATES, INC. - NCO GROUP, INC.
STOCK PURCHASE AGREEMENT
CERTIFIED SIGNATURE PAGE
TO BE EXECUTED BY EACH
SHAREHOLDER OF GOODYEAR & ASSOCIATES, INC.
The undersigned hereby executes this Certified Signature Page to that
certain Goodyear & Associates, Inc. - NCO Group, Inc. Stock Purchase Agreement
to which the undersigned is listed as a party (the "Agreement"), documenting the
terms and conditions of the sale of a certain number of shares stated therein of
the issued and outstanding stock of Goodyear & Associates, Inc. to the NCO
Group, Inc. dated and effective on a certain date in January 1997. The
undersigned does further hereby acknowledge that the undersigned has read the
Agreement, and does further hereby adopt, accept, ratify, confirm and agree to
be bound by all of the terms, conditions and provisions of the Agreement.
SHAREHOLDER
Charlotte Country Day School
____________________________________________________ (SEAL)
Signature of Shareholder
____________________________________________________ (SEAL)
(To Be Used Where Shares are Jointly Owned
By: ________________________________________________ (SEAL)
Title:_______________________________________________
(To Be Used Where Shares Held By An Entity)
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<PAGE>
SCHEDULE 2
Sellers Shares Owned Purchase Price/Consideration
- ---------------------------- ------------------ ----------------------------
Charlotte Country Day School .93 $10,044.00
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<PAGE>
GOODYEAR & ASSOCIATES, INC. - NCO GROUP, INC.
STOCK PURCHASE AGREEMENT
CERTIFIED SIGNATURE PAGE
TO BE EXECUTED BY EACH
SHAREHOLDER OF GOODYEAR & ASSOCIATES, INC.
The undersigned hereby executes this Certified Signature Page to that
certain Goodyear & Associates, Inc. - NCO Group, Inc. Stock Purchase Agreement
to which the undersigned is listed as a party (the "Agreement"), documenting the
terms and conditions of the sale of a certain number of shares stated therein of
the issued and outstanding stock of Goodyear & Associates, Inc. to the NCO
Group, Inc. dated and effective on a certain date in January 1997. The
undersigned does further hereby acknowledge that the undersigned has read the
Agreement, and does further hereby adopt, accept, ratify, confirm and agree to
be bound by all of the terms, conditions and provisions of the Agreement.
SHAREHOLDER
Covenant Day School
____________________________________________________ (SEAL)
Signature of Shareholder
____________________________________________________ (SEAL)
(To Be Used Where Shares are Jointly Owned
By: ________________________________________________ (SEAL)
Title:_______________________________________________
(To Be Used Where Shares Held By An Entity)
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<PAGE>
SCHEDULE 2
Sellers Shares Owned Purchase Price/Consideration
- ---------------------------- ------------------ ----------------------------
Covenant Day School .47 $ 5,076.00
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<PAGE>
GOODYEAR & ASSOCIATES, INC. - NCO GROUP, INC.
STOCK PURCHASE AGREEMENT
CERTIFIED SIGNATURE PAGE
TO BE EXECUTED BY EACH
SHAREHOLDER OF GOODYEAR & ASSOCIATES, INC.
The undersigned hereby executes this Certified Signature Page to that
certain Goodyear & Associates, Inc. - NCO Group, Inc. Stock Purchase Agreement
to which the undersigned is listed as a party (the "Agreement"), documenting the
terms and conditions of the sale of a certain number of shares stated therein of
the issued and outstanding stock of Goodyear & Associates, Inc. to the NCO
Group, Inc. dated and effective on a certain date in January 1997. The
undersigned does further hereby acknowledge that the undersigned has read the
Agreement, and does further hereby adopt, accept, ratify, confirm and agree to
be bound by all of the terms, conditions and provisions of the Agreement.
SHAREHOLDER
Appalachian State University Foundation, Inc.
____________________________________________________ (SEAL)
Signature of Shareholder
____________________________________________________ (SEAL)
(To Be Used Where Shares are Jointly Owned
By: ________________________________________________ (SEAL)
Title:_______________________________________________
(To Be Used Where Shares Held By An Entity)
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<PAGE>
SCHEDULE 2
Sellers Shares Owned Purchase Price/Consideration
- ---------------------------- ------------------ ----------------------------
Appalachian State University 1.86 $ 20,088.00
Foundation, Inc.
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<PAGE>
GOODYEAR & ASSOCIATES, INC. - NCO GROUP, INC.
STOCK PURCHASE AGREEMENT
CERTIFIED SIGNATURE PAGE
TO BE EXECUTED BY EACH
SHAREHOLDER OF GOODYEAR & ASSOCIATES, INC.
The undersigned hereby executes this Certified Signature Page to that
certain Goodyear & Associates, Inc. - NCO Group, Inc. Stock Purchase Agreement
to which the undersigned is listed as a party (the "Agreement"), documenting the
terms and conditions of the sale of a certain number of shares stated therein of
the issued and outstanding stock of Goodyear & Associates, Inc. to the NCO
Group, Inc. dated and effective on a certain date in January 1997. The
undersigned does further hereby acknowledge that the undersigned has read the
Agreement, and does further hereby adopt, accept, ratify, confirm and agree to
be bound by all of the terms, conditions and provisions of the Agreement.
SHAREHOLDER
North Carolina Baptist Men
Appalachian State University Foundation, Inc.
____________________________________________________ (SEAL)
Signature of Shareholder
____________________________________________________ (SEAL)
(To Be Used Where Shares are Jointly Owned
By: ________________________________________________ (SEAL)
Title:_______________________________________________
(To Be Used Where Shares Held By An Entity)
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<PAGE>
SCHEDULE 2
Sellers Shares Owned Purchase Price/Consideration
- ---------------------------- ------------------ ----------------------------
North Carolina Baptist Men .47 $ 5,076.00
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<PAGE>
THIS NOTE AND THE SHARES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND ANY APPLICABLE STATE SECURITIES LAWS COVERING SUCH SECURITIES
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (SATISFACTORY TO THE
COMPANY AND ITS COUNSEL) FOR THE HOLDER OF THESE SECURITIES, OR AN
OPINION OF THE COMPANY'S COUNSEL, STATING THAT SUCH SALE, TRANSFER OR
ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
NON-NEGOTIABLE SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$900,000 January 22, 1997
FOR VALUE RECEIVED, NCO GROUP, INC., a Pennsylvania corporation (the
"Company"), hereby promises to pay to __________________________________ (the
"Holder"), the principal sum of Nine Hundred Thousand Dollars ($900,000)
together with interest on the unpaid principal balance hereof from the date of
this Note and for a term of five (5) years therefrom (the "Term").
1. The unpaid balance of principal shall bear interest at the rate of
eight percent (8%) per annum computed on a daily basis upon the unpaid balance
with each day representing 1/365th of a year.
2. During the Term, payments of interest only shall be payable on the
first (1st) day of each month, commencing March 1, 1997. Notwithstanding the
foregoing, if the date of execution of this Note is other than the first day of
a month, the first monthly installment hereunder shall include interest from the
date this Note has been execute
3. The terms and provisions of this Note are subject to and subordinate
to any obligations of the Company to its senior lender, Mellon Bank, N.A. (The
"Bank") in connection with the Company's borrowings from time-to-time from the
Bank.
<PAGE>
4. This Note has been issued pursuant to and in accordance with the
terms and conditions of a certain Stock Purchase Agreement dated January 22,
1997 (the "Agreement"), the Company and the Holder being parties thereto. The
Company's obligation to render payment hereunder shall be subject to the terms
and conditions of the Agreement, including, but not limited to, the Holder's
obligation to complete Closing, and may be subject to diminution by set-off,
counterclaim, abatement or otherwise pursuant to the Company's rights to
indemnification under the Agreement.
5. All payments hereon are to be made to the Holder, at the address of
the Holder as set forth in Section 15 of this Note (or such other address as may
be specified by written notice to the Company in accordance with the notice
provisions as set forth in this Note) in lawful money of the United States of
America.
6. In the event that (a) any payment of interest due hereunder shall
not be paid when due, and such nonpayment shall continue for a period of more
than 15 days after receipt by the Company of written notice from the Holder, or
(b) the Company shall cease doing or conducting business, or (c) any proceeding
in bankruptcy shall be commenced by or against the Company, which proceeding
shall not be stayed or dismissed within 90 days from the date such proceeding is
commenced, or (d) a receiver shall be appointed for the Company's assets, or (e)
the Company shall make an assignment for the benefit of creditors, or (f) if the
Holder is required to give the Company notice pursuant to section (a) above more
than five (5) times in any twelve (12) month period then, the entire principal
amount outstanding and accrued interest thereon shall, at the option of the
Holder, become immediately due and payable regardless of any prior forbearance.
Upon the occurrence of a default hereunder due to the foregoing, the following
shall apply:
(a) The interest rate hereunder shall immediately increase to
Prime Rate (as announced in the Wall Street Journal from time to time) plus two
percent (2%) until such time as the default is cured or this Note is repaid; or
(b) The Company shall have ninety (90) days to cure such
default by:
(i) paying to the Holder all amounts of interest and
principal due and payable up to the date the Company cures the default; or
(ii) repaying the entire outstanding principal
hereunder and all accrued interest. Upon such repayment, the right of Conversion
as herein set forth shall become a right, for a period of ninety (90) days from
repayment, to purchase the Common Stock pursuant to the same terms and
conditions as a Conversion, and for such purpose, this Note shall serve as a
Warrant to
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<PAGE>
purchase the Common Stock.
7. At the election of the Holder, in his sole discretion, at any time
and from time during the Term, but before all amounts due hereunder by the
Company are repaid to the Holder or the end of the Term, whichever is first to
occur, all or any part of the outstanding principal amount of this Note and any
accrued but unpaid interest thereon up to and including the date determined by
the Holder on which a conversion ("Conversion") is to be effective (the
"Conversion Date") and all other amounts due and owing hereunder (if any)
(collectively, the "Conversion Amount"), as designated by the Holder, shall be
converted into an amount of common stock of the Company (the "Common Stock")
equal to the Conversion Amount divided by $ provided, however, that an
appropriate adjustment shall be made in the event of any change to the Common
Stock by reason of a stock dividend,(stock split, combination of shares,
reclassification, recapitalization, merger, consolidation, transfer of assets,
reorganization or other similar circumstances (except that no adjustment shall
be made on account of cash dividends paid out of consolidated current or
retained earnings of the Company). The number of shares issuable upon Conversion
shall be rounded to the nearest 1/100th of a share. Fractional shares shall be
settled in cash based on the price per share set forth above.
8. If the Holder desires to exercise his elective right of Conversion
hereunder, the Holder shall give written notice (the "Conversion Notice") to the
Company, at least 30 days prior to the Conversion Date stating his intention to
convert this Note, at the Company's offices, on the Conversion Date and stating
the Conversion Amount. On or prior to the Conversion Date, the Holder shall
surrender this Note for cancellation to the Company in exchange for (a) a
certificate evidencing the number of shares of Common Stock into which this Note
is being converted, and (b) if the principal amount of this Note is being
converted in part only, a replacement Note of like tenor and date executed by
the Company evidencing the balance due. The Conversion shall be deemed to have
occurred immediately prior to the close of business on the Conversion Date (the
"Effective Time"). With respect to the Conversion Amount to be converted, until
the Effective Time, nothing herein shall be construed as conferring on the
Holder the right to receive notice as a stockholder in respect of the meetings
of stockholders or the election of directors of the Company or any other matter,
to vote or to consent to actions, to receive dividends, distributions or other
amounts payable to holders of record of Common Stock or to any other rights
whatsoever as a stockholder of the Company.
9. With respect to any Conversion of this Note by the Holder:
(a) Anything in this Note to the contrary notwithstanding, if
the Holder exercises his right of Conversion by
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<PAGE>
sending the Conversion Notice as required pursuant to Section 7, then,
regardless of whether the Holder surrenders this Note as required on or prior to
the Conversion Date, the Conversion Amount designated by the Holder shall be
deemed "satisfied in full" as of the Effective Time and, thereafter, the Holder
shall be treated for all purposes as the record holders of the Common Stock into
which the Conversion Amount has been converted.
(b) The Company shall not be obligated to issue any
certificates representing the Common Stock into which the Conversion Amount has
been converted, or any replacement Note for any amount not converted, until this
Note is delivered to the Company or the Holder notifies the Company that this
Note has been lost, stolen or destroyed and executes an agreement satisfactory
to the Company to indemnify the Company from any loss incurred by it in
connection therewith. Until the Note or such agreement is received, the Company
may withhold all dividends, distributions and other amounts otherwise payable to
the Holder on account of the Common Stock into which the Conversion Amount has
been converted and any principal and interest payment otherwise payable to the
Holder on account of any replacement Note.
(c) All certificates representing shares of the Common Stock
to be issued to the Holder hereunder on any Conversion of this Note shall bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES
LAWS COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL (SATISFACTORY TO THE COMPANY AND ITS
COUNSEL) FOR THE HOLDER OF THESE SECURITIES, OR AN OPINION OF
THE COMPANY'S COUNSEL, STATING THAT SUCH SALE, TRANSFER OR
ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS."
(d) Subject to rules and regulations of the Securities and
Exchange Commission, whenever the Company proposes to register any of its
securities under the Securities Act of 1933 and the registration form to be used
may be used for the registration of securities of the type held by the Holder
upon Conversion (a "Piggyback Registration"), the Company shall given prompt
written notice to the Holder of its intention to effect such a registration and
the Holder shall, at his sole expense, have the right to a Piggyback
Registration of his Common Stock.
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<PAGE>
(e) The shares of the Common Stock issued pursuant to the
Holder's right of Conversion hereunder shall be deemed fully paid and not liable
to any further call or assessment. The Holder shall have and possess all rights
appertaining to owners of the Common Stock of the Company.
(f) The Holder shall pay any and all franchise, transfer, and
filing fees and taxes which may be imposed by any governmental agency with
respect to the issuance and delivery of the Common Stock upon any Conversion of
this Note.
10. The Company does hereby waive presentment, demand for payment,
notice of dishonor, notice of protest and all other notices or demands in
connection with the delivery, acceptance, performance of or default on this
Note, except as otherwise provided herein.
11. All of the terms and provisions of this Note shall be binding upon,
inure to the benefit of and be enforceable by each of the parties hereto, and
their respective heirs, executors, administrators, successors and permitted
assigns. This Note or any part hereof may not be transferred or assigned by the
Holder except with the written consent of the Company.
12. The Company represents and warrants to the Holder that it has filed
a registration statement on Form S-1 (Reg. No. 333- 11745)(the "Form S-1") with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933 (the "Securities Act"), a registration statement on Form 8-A (the "Form
8-A") under the Securities Exchange Act of 1934 (the "Exchange Act") and all
forms, reports and documents required to be filed with the SEC since the
effective date of the Form 8-A (collectively, the "SEC Documents"), and the
Company has made available to the Holder copies of the SEC Documents. To the
knowledge of the Company, the SEC Documents were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, in
all material respects and to the knowledge of the Company, did not at the time
they were filed contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of the date of such SEC Documents, the financial
statements contained therein, if any, fairly presented the financial position,
results of operations and cash flows of the Company in accordance with generally
accepted accounting principles. The Company shall cause adequate current public
information with respect to the Company to be available in accordance with Rule
144(c)of the SEC for so long as any public sale by the Holder of shares of
Common Stock of the Company acquired upon conversion of the Note is required to
be effected in accordance with Rule 144.
The Company further represents and warrants to the Holder that
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<PAGE>
it has reserved sufficient shares of Common Stock in order to enable the Company
to issue to the Holder shares of Common Stock upon Conversion of the Note.
13. No failure to exercise, delay in exercising, or single or partial
exercise by the Holder of any right, power or remedy with respect to this Note
shall constitute a waiver thereof, preclude any other or further exercise
thereof, or preclude the exercise of any other right, power or remedy.
14. If any part of this Note is adjudged illegal, invalid or
unenforceable, then the remainder hereof shall not be affected thereby.
15. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by
Certified Mail, Return Receipt Requested, postage prepaid, or by facsimile, or
delivered by overnight delivery service, to the party to receive such notice
addressed as follows:
If to Company: 1740 Walton Road
Blue Bell, PA 19422
With copy to: Joshua Gindin, Esquire
Twentieth Floor
230 South Broad Street
Philadelphia, PA 19102
If to Holder: 4930 Derbyshire Drive
Charlotte, NC 02270
With copy to: William R. Culp, Jr., Esquire
Culp Elliott & Carpenter
227 W. Trade Street
Suite 1500
Charlotte, NC 28202
or to such other address as either party shall designate by notice given to the
other.
16. This Note shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Pennsylvania. This Note may not be varied,
amended or modified except in writing signed by the Company and the Holder.
IN WITNESS WHEREOF, this Note has been executed by the Company as of
the date and year first above written.
Attest: NCO GROUP, INC.
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<PAGE>
________________________ By: _______________________________
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