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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 1997
CRW Financial, Inc.
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(Exact Name of registrant as specified in its charter)
Delaware 0-26015
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(State or other jurisdiction of (Commission File Number)
incorporation)
23-2691986
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(I.R.S. Employer Identification No.)
443 South Gulph Road, King of Prussia, Pennsylvania 19406
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 878-7400
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(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Disposition of Assets
On February 2, 1997, CRW Financial, Inc. (the "Registrant")
sold all assets of its accounts receivable management and debt collection
division, including its wholly-owned subsidiaries Kaplan & Kaplan, Inc., CRW
Texas, Inc. and CRW California, Inc. (collectively, the "Division"), to NCO
Group, Inc. ("NCO") for a purchase price valued at approximately $12.8 million
and consisting of (i) $3,750,000 in cash, (ii) 345,178 shares of restricted NCO
common stock, (iii) warrants to purchase 250,000 additional shares of restricted
NCO common stock at an exercise price of $27.625 per share and (iv) assumption
by NCO of certain current liabilities of the Division. The purchase price for
the Division was determined as a result of arm's length negotiations between the
parties.
The cash portion of the purchase price for the Division will
be used by the Registrant to reduce its outstanding bank debt and to increase
working capital.
Subsequent to sale of the Division, the Registrant has three
principal assets: (i) 6,162,130 shares of TeleSpectrum Worldwide Inc.
("TeleSpectrum") common stock, (ii) 345,178 shares of restricted NCO common
stock and warrants to purchase 250,000 additional shares of restricted NCO
common stock acquired in the foregoing sale, with respect to which the Company
has certain registration rights, and which together represent approximately 8.1%
of the currently outstanding shares of common stock of NCO and (iii) the
Registrant's wholly-owned subsidiary, Casino Money Centers, Inc. ("CMC").
The Registrant currently anticipates that CMC may file a
registration statement with the Securities and Exchange Commission at some time
during the second calendar quarter of 1997 in order to permit the Registrant to
effect a distribution of all CMC shares currently held by the Registrant to the
Registrant's shareholders.
The sale of the Division and the planned distribution of CMC
common stock to the Registrant's shareholders are intended to facilitate the
Registrant's shareholders valuing their common stock in the Registrant based on
the value of the Registrant's TeleSpectrum common stock, the value realized from
the sale of the Division and the value which may be realized from the
distribution of the CMC common stock. There can be no assurance, however, that
the distribution of CMC common stock will occur, or even if it does occur, that
the Registrant's shareholders could not have realized greater value from their
shares of common stock in the Registrant if the sale of the Division and the
distribution of CMC common stock had not occurred.
The Registrant currently has 5,412,672 shares of common stock
outstanding. In addition, 3,043,049 shares of the Registrant's common stock are
currently issuable pursuant to vested stock options and warrants issued by the
Registrant. The exercise
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of currently vested stock options and warrants would result in cash proceeds to
the Registrant of approximately $5.6 million.
Item 7. Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
The following pro forma financial information is filed as a part of this
Report and is set forth in the pages attached hereto:
1. Basis of Presentation
2. Pro Forma Condensed Consolidated Statements of Operations for the year
ended December 31, 1995 and nine months ended September 30, 1996
3. Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996
4. Notes to Pro Forma Condensed Consolidated Financial Information
(c) Exhibits
Description Exhibit Number
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Asset Acquisition Agreement dated February 2, 1997 by 10.1
and among the Registrant, Kaplan & Kaplan, Inc., NCO,
CRWF Acquisition, Inc. and K & K Acquisition, Inc.
(without exhibits or schedules)
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<PAGE>
CRW FINANCIAL, INC.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Basis of Presentation
The attached unaudited pro forma condensed consolidated balance sheet
at September 30, 1996 and the unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1995 and for the nine
months ended September 30, 1996 give effect to the sale of the Registrants
accounts receivable management and debt collection division as if the sale
occurred on January 1, 1995. The pro forma financial data is presented for
informational purposes only and should not be construed to be indicative of the
actual results of operations of the Company for periods presented or future
results of operations of the Company. The pro forma adjustments are described in
the accompanying notes presented herein.
<PAGE>
CRW FINANCIAL,INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(in thousands, except per share data)
<TABLE>
<CAPTION>
CRW Pro forma CRW
historical adjustments Pro forma
---------- ----------- ---------
(unaudited)
<S> <C> <C> <C>
REVENUES $ 31,691 ($28,742)(a) $ 2,949
OPERATING EXPENSES, excluding 30,203 (26,746)(a) 3,457
non-cash charges
DEPRECIATION 766 (741)(a) 25
AMORTIZATION 709 (686)(a) 23
-------- -------- --------
OPERATING INCOME (LOSS) 13 (569) (556)
INTEREST EXPENSE (655) 210 (c) (445)
-------- -------- --------
Loss from continuing operations
before income taxes (642) (359) (1,001)
INCOME TAXES (BENEFIT) --
-------- -------- --------
Loss from continuing operations ($ 642) ($ 359) ($ 1,001)
======== ======== ========
Primary loss per share from continuing
operations ($ 0.55) ($ 0.30) ($ 0.85)
</TABLE>
<PAGE>
CRW FINANCIAL,INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
CRW Pro forma CRW
historical adjustments Pro forma
---------- ----------- ---------
(unaudited)
<S> <C> <C> <C>
REVENUES $ 23,069 ($20,444)(a) $ 2,625
OPERATING EXPENSES, excluding 23,144 (19,075)(a) 4,069
non-cash charges
SPECIAL COMPENSATION CHARGE 1,319 (690)(a) 629
DEPRECIATION 699 (669)(a) 30
AMORTIZATION 370 (350)(a) 20
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OPERATING INCOME (LOSS) (2,463) 340 (2,123)
GAIN ON SALE OF TWI STOCK 1,176 -0- 1,176
INTEREST EXPENSE (593) 158(c) (435)
Income (loss) from continuing
operations before income taxes (1,880) 498 (1,382)
-------- -------- --------
INCOME TAXES (BENEFIT) (639) (169) (470)
-------- -------- --------
Income (loss) from continuing
operations $ (1,241) $ 329 $ (912)
Primary loss per share from continuing
operations ($ 0.34) ($ 0.10) ($ 0.25)
</TABLE>
<PAGE>
CRW FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(in thousands)
<TABLE>
<CAPTION>
CRW Pro forma CRW
historical adjustments Pro forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
CASH $ 1,461 ($63)(b) $ 1,398
CASH HELD FOR CLIENTS 2,774 (2,774)(b) --
ACCOUNTS RECEIVABLE, NET 3,506 (3,408)(b) 98
OTHER CURRENT ASSETS 773 (401)(b) 372
-------- -------- --------
TOTAL CURRENT ASSETS 8,514 (6,646) 1,868
PROPERTY AND EQUIPMENT,NET 3,150 (3,055)(b) 95
INTANGIBLE ASSETS, NET 4,993 (4,658)(b) 335
INVESTMENT IN TELESPECTRUM WORLDWIDE INC 53,368 53,368
INVESTMENT IN NCO GROUP, INC. -- 12,800 (b) 12,800
OTHER ASSETS 666 (664)(b) 2
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY $ 70,691 ($ 2,223) $ 68,468
======== ======== ========
CURRENT LIABILITIES:
COLLECTIONS DUE TO CLIENTS $ 2,774 ($2,774)(b) $ 0
ACCOUNTS PAYABLE 2,390 (2,307)(b) 83
ACCRUED EXPENSES 2,015 (1,125)(b) 890
CURRENT PORTION OF LONG-TERM DEBT 7,886 (2,000)(b) 5,886
-------- -------- --------
TOTAL CURRENT LIABILITIES 15,065 (8,206) 6,859
LONG-TERM DEBT 427 -- 427
DEFERRED INCOME TAXES 19,475 -- 19,475
OTHER LONG-TERM LIABILITIES 414 (100)(b) 314
STOCKHOLDERS' EQUITY:
PREFERRED STOCK 2,382 -- 2,382
COMMON STOCK 39 -- 39
ADDITIONAL PAID IN CAPITAL 36,359 4,783(b) 41,142
ACCUMULATED DEFICIT (3,470) 1,300(b) (2,170)
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 35,310 6,083 41,393
-------- -------- --------
$ 70,691 ($ 2,223) $ 68,468
======== ======== ========
</TABLE>
<PAGE>
CRW FINANCIAL, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(A) To reclassify the accounts receivable management and debt
collection division as a discontinued operation.
(B) To record the sale of the accounts receivable management and debt
collection division. The Company used $2 million of the $3.75
million cash portion of the purchase price to reduce its bank debt.
In addition, $1 million of direct expenses for professional fees
and retention pay to key employees were paid by the Company. The
division cash balances were included in the sale. These cash
balances totaled approximately $687,000 at September 30, 1996.
(C) To reduce interest expense for the $2 million repayment of bank
debt made by the Company from the cash portion of the purchase
price.
<PAGE>
SIGNATURE
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.
CRW FINANCIAL, INC.
By: /s/ Jonathan P. Robinson
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Jonathan P. Robinson, Vice President
and Chief Financial Officer
Date: February 18, 1997
<PAGE>
ASSET ACQUISITION AGREEMENT
Parties: CRW Financial, Inc.
a Delaware corporation ("CRW")
443 S. Gulph Road
King of Prussia, PA 19406
Kaplan & Kaplan, Inc.
a Delaware corporation ("Kaplan")
443 S. Gulph Road
King of Prussia, PA 19406
NCO Group, Inc.
a Pennsylvania corporation ("NCO")
1740 Walton Road
Blue Bell, PA 19422
CRWF Acquisition, Inc.
a Pennsylvania corporation ("CRWF")
1740 Walton Road
Blue Bell, PA 19422
K&K Acquisition, Inc.
a Pennsylvania corporation ("K&K")
1740 Walton Road
Blue Bell, PA 19422
Date: February 2, 1997
Background: CRW, Kaplan (collectively, "Sellers") and the CRW Subsidiaries (as
defined in Section 4.1) (collectively, "Selling Companies") are in the business
of, among other things, accounts receivable collection and related services (the
"Accounts Receivable Collection Business"). Kaplan and the CRW Subsidiaries are
wholly owned subsidiaries of CRW. CRWF and K&K (collectively, "Buyers") are
wholly owned subsidiaries of NCO (Buyers and NCO are sometimes collectively
referred to herein as the "Buying Companies"). CRWF is buying substantially all
of the business and assets of the Accounts Receivable Collection Business owned
by CRW and K&K is buying substantially all of the business and assets of the
Accounts Receivable Collection Business owned by Kaplan. The parties desire that
Sellers sell and Buyers buy substantially all of the business and assets of
Sellers' Accounts Receivable Collection Business, and Buyers assume certain
liabilities of Sellers' Accounts Receivable Collection Business all on and
subject to the terms and conditions of this Agreement.
Intending to be legally bound, in consideration of the mutual agreements
contained herein, and subject to the satisfaction of the terms and conditions
set forth herein, the parties agree as follows:
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1. DEFINED TERMS Certain defined terms used in this Agreement and not
specifically defined in context are defined in this Section 1, as follows:
1.1. "Accounts Receivable" means (a) any right to payment for goods sold,
leased or licensed or for services rendered, whether or not it has been earned
by performance, whether billed or unbilled, and whether or not it is evidenced
by any Contract (as defined in Section 1.5); (b) any note receivable; or (c) any
other receivable or right to payment of any nature.
1.2. "Asset" means any real, personal, mixed, tangible or intangible
property of any nature, including, but not limited to, Cash Assets (as defined
in Section 1.3), prepayments, deposits, escrows, Accounts Receivable (as defined
in Section 1.1), Tangible Property (as defined in Section 1.23), Real Property
(as defined in Section 1.21), Software (as defined in Section 1.22), Contract
Rights (as defined in Section 1.6), Intangibles (as defined in Section 1.12) and
goodwill, and claims, causes of action and other legal rights and remedies.
1.3. "Cash Asset" means any cash on hand, cash in bank or other accounts,
readily marketable securities, and other cash-equivalent liquid assets of any
nature.
1.4. "Consent" means any consent, approval, order or authorization of, or
any declaration, filing or registration with, or any application or report to,
or any waiver by, or any other action (whether similar or dissimilar to any of
the foregoing) of, by or with, any Person (as defined in Section 1.19), which is
necessary in order to take a specified action or actions in a specified manner
and/or to achieve a specified result.
1.5. "Contract" means any written or oral contract, agreement, instrument,
order, arrangement, commitment or understanding of any nature, including, but
not limited to, sales orders, purchase orders, leases, subleases, data
processing agreements, maintenance agreements, license agreements, sublicense
agreements, loan agreements, promissory notes, security agreements, pledge
agreements, deeds, mortgages, guaranties, indemnities, warranties, employment
agreements, consulting agreements, sales representative agreements, joint
venture agreements, buy-sell agreements, options or warrants.
1.6. "Contract Right" means any right, power or remedy of any nature under
any Contract (as defined in Section 1.5) including, but not limited to, rights
to receive property or services or otherwise derive benefits from the payment,
satisfaction or performance of another party's Obligations (as defined in
Section 1.17), rights to demand that another party accept property or services
or take any other actions, and rights to pursue or exercise remedies or options.
1.7. "Employee Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any other plan, program, policy or arrangement for or regarding
bonuses, commissions, incentive compensation, severance, vacation, deferred
compensation, pensions, profit sharing, retirement, payroll savings, stock
options, stock purchases, stock awards, stock ownership, phantom stock, stock
appreciation rights, medical/dental expense payment or reimbursement, disability
income or protection, sick pay, group insurance, self insurance, death benefits,
employee welfare or fringe benefits of any nature; but not including employment
Contracts with individual employees.
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1.8. "Encumbrance" means any lien, security interest, pledge, mortgage,
easement, covenant, restriction, reservation, conditional sale, prior
assignment, or other encumbrance, claim, burden or charge of any nature.
1.9. "GAAP" means generally accepted accounting principles under United
States accounting rules and regulations, consistently applied, provided that, in
cases where such generally accepted accounting principles permit the use of two
or more accounting policies ("Accepted Policies") yielding different results,
the following Accepted Policy shall be used, regardless of materiality: (a) the
historical Accepted Policy used by Sellers, if one is applicable; (b) if none of
the historical Accepted Policies used by Sellers is applicable, the historical
Accepted Policy used by NCO, if one is applicable; or (c) if none of the
historical Accepted Policies used by Sellers or by NCO is applicable, the
preferred Accepted Policy under United States accounting rules and regulations.
In no event shall the consistent application of the historical accounting
policies used by Sellers have priority over GAAP, regardless of materiality.
1.10. "Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by any United States federal
government authority, or any state or local government authority having
jurisdiction over Sellers' Real Property, to be capable of posing a risk of
injury or damage to health, safety, property or the environment, including, but
not limited to, (a) all substances, wastes, contaminants, pollutants and
materials defined or designated as hazardous, dangerous or toxic pursuant to any
Law of any state in which any of Sellers' leased or owned Real Property is
located or any United States Law, and (b) asbestos, polychlorinated biphenyls
("PCBs") and petroleum.
1.11. "Insurance Policy" means any public liability, product liability,
general liability, comprehensive, property damage, vehicle, life, hospital,
medical, dental, disability, worker's compensation, key man, fidelity bond,
theft, forgery, errors and omissions, directors' and officers' liability, or
other insurance policy of any nature.
1.12. "Intangible" means any name, corporate name, fictitious name,
trademark, trademark application, service mark, service mark application, trade
name, brand name, product name, slogan, trade secret, know-how, patent, patent
application, copyright, copyright application, design, logo, formula, invention,
product right or other intangible asset of any nature, whether in use, under
development or design, or inactive and goodwill associated therewith.
1.13. "Judgment" means any order, writ, injunction, citation, award,
decree or other judgment of any nature of any foreign, federal, state or local
court, governmental body, administrative agency, regulatory authority or
arbitration tribunal.
1.14. "Knowledge" with reference to the phrases "to Selling Companies'
Knowledge" or "to the best of Selling Companies' Knowledge" or similar phrases
means that none of the officers or directors of any of the Selling Companies
have any actual knowledge or actual belief that the statement made is incorrect.
1.15. "Law" means any provision of any foreign, federal, state or local
law, statute, ordinance, charter, constitution, treaty, rule or regulation.
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1.16. "Material Adverse Effect" means any adverse effect on (a) the
financial condition, financial performance or business prospects of (a) the
Accounts Receivable Collection Business, or (b) any of the Specified Assets or
Specified Liabilities of the Accounts Receivable Collection Business, or (c) any
of the Assets of third parties which are used in the Accounts Receivable
Collection Business and are not readily replaceable; which adverse effect is or
will be material, under either GAAP or applicable legal principles, to the
Accounts Receivable Collection Business (as defined under the "Background
Section" on page one) taken as a whole or the Specified Assets taken as a whole
(as defined in Section 2.1.1).
1.17. "Obligation" means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown
or otherwise.
1.18. "Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved or
allowed by any foreign, federal, state or local governmental body,
administrative agency or regulatory authority.
1.19. "Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperative, trust, estate, governmental
body, administrative agency, regulatory authority or other entity of any nature.
1.20. "Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding of any
nature.
1.21. "Real Property" means any real estate, land, building, condominium,
town house, structure or other real property of any nature, all shares of stock
or other ownership interests in cooperative or condominium associations or other
forms of ownership interest through which interests in real estate may be held,
and all appurtenant and ancillary rights thereto, including, but not limited to,
easements, covenants, water rights, sewer rights and utility rights.
1.22. "Software" means any computer program, operating system,
applications system, firmware or software of any nature, whether operational,
under development or inactive, including all object code, source code, technical
manuals, user manuals and other documentation therefor, whether in
machine-readable form, programming language or any other language or symbols,
and whether stored, encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature.
1.23. "Tangible Property" means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other equipment,
machinery, tools, forms, supplies or other tangible personal property of any
nature.
1.24. "Tax" means (a) any foreign, federal, state or local income,
earnings, profits, gross receipts, franchise, capital stock, net worth, sales,
use, occupancy, general property, real property, personal property, intangible
property, transfer, fuel, excise, payroll, withholding, unemployment
compensation, social security or other tax of any nature; (b) any foreign,
federal, state or local organization fee, qualification fee, annual report fee,
filing fee, occupation fee, assessment, sewer rent or other fee or charge of any
nature; or (c) any deficiency, interest or penalty imposed with respect to any
of the foregoing.
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2. THE TRANSACTION
2.1. Sale and Purchase of Specified Assets. On the Closing Date (as
defined in Section 6.1), effective to the fullest extent possible at 5:00 p.m.
EST on the Effective Date (as defined in Section 6.1), and subject to the other
terms and conditions of this Agreement, the Sellers shall sell, transfer, assign
and convey to Buyers, and Buyers shall purchase, all right, title and interest
in and to all of the Specified Assets (as defined in Section 2.1.1), and Sellers
shall assign to Buyers, and Buyers shall assume, the Specified Liabilities of
Sellers (as defined in Section 2.1.2).
2.1.1 Specified Assets of Sellers. The "Specified Assets of Sellers"
means all Assets of Sellers (as defined in Section 1.2) used in or for Sellers'
Accounts Receivable Collection Business as of the Effective Date, wherever
located and whether or not reflected on Sellers' books and records, including,
but not limited to, the following Assets, but in each case excluding the Assets
specifically excepted below:
(A) All of Sellers' Cash Assets (as defined in Section 1.3),
Accounts Receivable (as defined in Section 1.1) and all other current assets
arising in connection with or relating to Sellers' Accounts Receivable
Collection Business including, but not limited to, prepaid expenses, security
deposits, rent escrows, and other prepayments, deposits and escrows.
(B) All of Sellers' Tangible Property (as defined in Section
1.23), Software (as defined in Section 1.22) and Intangibles (as defined in
Section 1.12) used in or for Sellers' Accounts Receivable Collection Business
including, but not limited to, all rights in and to the name "Kaplan & Kaplan",
and the right to use the name "CRW Financial" as provided in Section 8.2.
(C) All of Sellers' Contract Rights (as defined in Section 1.6)
under the Specified Contracts (as defined in Section 4.13), but excluding
Contract Rights under (1) this Agreement and any other Contracts entered into by
Sellers with Buyers in connection with the transactions contemplated by this
Agreement; (2) Contracts that constitute or evidence Employee Benefit Plans (as
defined in Section 1.7) of Sellers; (3) all Contracts relating to the
acquisition by Sellers' (or their predecessors) of Sellers' Accounts Receivable
Collection Business provided that the Specified Assets shall include the rights
of Sellers with respect to all noncompetition, nondisclosure and other
restrictive covenants made for the benefit of Sellers or their affiliates (or
their predecessors) in any such Contract; and (4) all Contract Rights under any
Specified Contracts requiring a material Consent that is not obtained on or
before the Closing Date ("Non-Assigned Contracts"), provided that the Specified
Assets shall include the rights of Sellers with respect to all noncompetition,
nondisclosure and other restrictive covenants made for the benefit of Sellers or
their affiliates (or any of their respective predecessors) in any such Contract;
and provided further that, once such material Consent is obtained, the Contract
Rights under such Specified Contract shall be deemed, automatically and without
further action by the parties, to be included in the Specified Assets as of the
Effective Date.
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(D) All of Sellers' Contract Rights (as defined in Section 1.6)
under any noncompetition, nondisclosure or other restrictive covenant made for
the benefit of Sellers or their affiliates (or any of their respective
predecessors) in any Contract with current or former employees of Sellers'
Accounts Receivable Collection Business, regardless of whether any such current
employee accepts Buyers's offer pursuant to Section 2.3.
(E) All rights under all Insurance Policies (as defined in
Section 1.11) owned, held or maintained by Sellers (including any of Sellers'
rights under any such Insurance Policies owned, held or maintained by any of
their predecessors) at any time since July 17, 1992 in connection with or for
the benefit of the business, assets or employees of Sellers' Accounts Receivable
Collection Business (including a certain health insurance contract for the
benefit of employees of Sellers' Accounts Receivable Collection Business in
Hawaii) (the "Hawaii Plan"), but excluding (1) all rights under Insurance
Policies that constitute group medical, dental, hospitalization, health,
disability and related Employee Benefit Plans of Sellers and all rights under
self-insured Employee Welfare Benefit Plans (as defined in ERISA) of Sellers
(collectively "Sellers' Group Plans") (other than the Hawaii Plan); and (2) the
rights of Sellers under its Insurance Policies pertaining exclusively to actual
or potential claims or losses that remain Sellers' responsibility after the
Effective Date.
(F) All transferable rights under all Permits (as defined in
Section [1.18]) granted or issued to Sellers or otherwise held by Sellers
relating to or for the benefit of Sellers' Accounts Receivable Collection
Business.
(G) All of Sellers' rights with respect to telephone numbers,
telephone directory listings and advertisements used in Sellers' Accounts
Receivable Collection Business, and all of Sellers' goodwill relating to or
arising in connection with Sellers' Accounts Receivable Collection Business.
(H) All of Sellers' customer lists, prospect lists, supplier
lists, data bases, computer media, sales and marketing materials, invoices,
correspondence, files, books and records relating to or arising in connection
with Sellers' Accounts Receivable Collection Business, and the corporate minute
books and stock books of the CRW Subsidiaries but excluding (1) Sellers'
corporate minute books and stock books; and (2) Sellers' files, books and
records relating exclusively to Sellers' Assets not included in the Specified
Assets or to Sellers' liabilities not included in the Specified Liabilities.
(I) All of Sellers' claims, causes of action and other legal
rights and remedies, whether or not known as of the Effective Date, relating to
Sellers' ownership of the Specified Assets and/or the operation of Sellers'
Accounts Receivable Collection Business, but excluding causes of action and
other legal rights and remedies of Sellers (1) against the Buying Companies with
respect to the transactions contemplated by this Agreement; or (2) relating
exclusively to Sellers' Assets not included in the Specified Assets or to
Sellers' liabilities not included in the Specified Liabilities.
(J) All of the outstanding capital stock of the CRW
Subsidiaries.
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2.1.2 Specified Liabilities of Sellers. The "Specified Liabilities of
Sellers" means the following specifically described liabilities of Sellers as of
the Effective Date incurred or arising in connection with Sellers' Accounts
Receivable Collection Business:
(A) The current liabilities of Sellers incurred or arising in
connection with Sellers' Accounts Receivable Collection Business, notes payable
in the aggregate principal amount of $210,000 payable to CNF California, L.P.
and CNF Texas, L.P. and the long term debt in the approximate amount of $80,000
payable to Ontario Systems Corporation for a software license agreement, all of
which shall be included on the Closing Balance Sheet (as defined in, and to be
prepared in accordance with, Section 3.2.1), but only to the extent that the
incurrence or existence of any such liability does not constitute a breach or
failure of, or a default under, any representation, warranty, covenant or other
provision of this Agreement (including, but not limited to, those of Section
4.8). Except as set forth above in this Section 2.12(A), the Specified
Liabilities shall not include (1) any liabilities for any Taxes; (2) any
long-term debt; (3) any notes payable; (4) any liabilities for overdrafts or any
other liabilities with respect to bank accounts; or (5) any intercompany
payables or any guarantees of indebtedness of any of the Selling Companies or
any subsidiary or affiliate.
(B) The liabilities of Sellers under those Specified Contracts
(as defined in Section 4.13) to which a Seller is a party (excluding the lease
for the Mall Boulevard facility), but only to the extent that such liabilities
are not due to any breach or default by any of the Selling Companies under any
such Specified Contract. Notwithstanding the foregoing, the Specified
Liabilities of Sellers shall not include the liabilities of the Selling
Companies under (1) this Agreement or any other Contracts entered into by the
Selling Companies with the Buying Companies in connection with the transactions
contemplated by this Agreement; (2) any Contracts that constitute or evidence
Employee Benefit Plans of Sellers; and (3) any Contracts relating to the
formation or acquisition of Sellers or any of the predecessors of Sellers'
Accounts Receivable Collection Business, except as set forth in Section
2.1.2(C).
(C) Sellers' Obligation to pay an earn-out, if any, pursuant to
the agreement with respect to the acquisition of the assets of PCC Credit, Inc.,
which Obligation shall not exceed $200,000 and any Obligations in excess of such
amount shall remain the Obligations of Sellers.
2.2. No Other Liabilities. Notwithstanding any other provisions of this
Agreement, Buyers shall not purchase the Specified Assets subject to, and Buyers
shall not in any manner assume or be liable or responsible for any Obligations
(as defined in Section 1.17) of Sellers other than the Specified Liabilities,
and all Obligations of Sellers other than the Specified Liabilities shall remain
the sole responsibility of Sellers. Without limiting the generality of the
foregoing, and in addition to the liabilities excluded from the Specified
Liabilities under Section 2.1.2, Buyers shall not in any manner assume or be
liable or responsible for any of the following Obligations of Sellers, whether
or not reflected on the Closing Balance Sheet:
2.2.1 Affiliates. Any Obligation to any of the Selling Companies or
any current or former shareholder, partner, director or controlling Person (as
defined in Section 1.19) of any of the Selling Companies, or to any other Person
affiliated with any of the Selling Companies, or their respective affiliates and
predecessors.
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2.2.2 Taxes. Any Obligation for any Tax, including but not limited
to, (a) any Tax payable by any of the Selling Companies with respect to Sellers'
business operations, including without limitation, the Sellers' Accounts
Receivable Collection Business; (b) any Tax payable by any of the Selling
Companies with respect to the ownership, possession, purchase, lease, sale,
disposition or use of any of the Selling Company's Assets at any time, including
without limitation, the Specified Assets; (c) any Tax resulting from the sale of
the Specified Assets to Buyers or otherwise resulting from the transactions
contemplated by this Agreement; (d) any Obligation for any Tax of any Person
under Treasury Regulation Section 1.1502-6 (or any similar provisions of Law),
as a transferee or successor, by Contract or otherwise, incurred or attributable
to any period ending prior to or including, the Closing Date; and (e) any
Obligation for any Tax incurred by either of the CRW Subsidiaries which is
properly attributable to any period ending on or prior to the Closing Date, or
with respect to which the Sellers are otherwise liable under Section 7.8.1
hereof.
2.2.3 Post-Closing. Any Obligation that is incurred or arises after
the Effective Date, or that relates to any Proceeding (as defined in Section
1.20) or other event that occurs or circumstances that exist after the Effective
Date.
2.2.4 Transaction Related. Any Obligation that was or is incurred in
connection with the negotiation, execution or performance of this Agreement,
including without limitation broker fees, legal fees and accounting fees (except
as provided in Section 3.3), and any other Contracts entered into between or
among Buying Companies and the Selling Companies, or among the Buying Companies,
Selling Companies and other parties, in connection with the transactions
contemplated by this Agreement.
2.2.5 Defaults. Any Obligation (other than Obligations under
Specified Contracts which are governed by Section 2.1.2(B)), the incurrence or
existence of which constitutes or will constitute a breach or failure of, or a
default under, any representation, warranty, covenant or other provision of this
Agreement, including, but not limited to, any Obligation, whether or not known
to the Selling Companies, that has not been disclosed to the Buying Companies in
writing in this Agreement or the Schedules and Exhibits hereto.
2.2.6 Employees. Except for the Employment Contracts listed on
Schedule 4.13, any Obligation to any or all employees of Selling Companies,
including, but not limited to, Obligations under Selling Companies' payroll
savings, profit sharing and/or other retirement plans ("Sellers' Retirement
Plans'"), Obligations under Sellers' Group Plans (as defined in Section 2.1.1),
and Obligations for severance pay and other termination benefits.
2.2.7 Infringement. Any Obligation arising in connection with or
related to Selling Companies' infringement or alleged infringement of any
Software or Intangible of any Person.
2.2.8 Encumbrances. Any Encumbrance (excluding leases which are
Specified Contracts, excluding use restrictions on commercially available
Software and Encumbrances set forth on Schedule 4.6) on or affecting Selling
Companies' Assets including, without limitation, the Specified Assets.
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2.2.9 Proceedings. Any Proceeding or Judgment listed or required to
be listed on Schedule 4.18.
2.3. Sellers' Employees. Subject to the condition that the Closing
hereunder occurs, Buyers shall offer to employ, as of the Effective Date, all of
the employees of Sellers engaged in Sellers' Accounts Receivable Collection
Business set forth on lists previously delivered to Buyers by Sellers. Such
employment will be on an "at will" basis for comparable salaries or wages and
(to the extent possible) with vacation and severance benefits, if any,
comparable to those provided by Buyers to employees at comparable levels and
with comparable responsibilities, based on the date each such employee,
respectively, was first employed by Sellers' Accounts Receivable Collection
Business or its predecessor. Any such employment by Buyers may, at some time,
require relocation by the employee to Buyers's currently occupied facilities.
Buyers does not assume, and Sellers shall be fully responsible for the payment
of, any severance or other benefits related to or payable upon the termination
of any of its employees, including, without limitation, any employees not
offered employment by Buyers and any employees offered employment by Buyers who
fail to accept such employment offer. Sellers shall cooperate with Buyers's
efforts to employ and retain any such employees. Within at least thirty (30)
days of the Closing Date, Sellers shall provide to Buyers accurate and complete
copies of the personnel records of Sellers' employees engaged in Sellers'
Accounts Receivable Collection Business. Sellers shall be responsible for
compliance with all Laws related to the termination by Sellers of Sellers'
employees.
3. PURCHASE PRICE AND CLOSING FINANCIAL STATEMENT
3.1. Purchase Price and Allocation. The total purchase price for the
Specified Assets, subject to the adjustment described in Section 3.4, ("Purchase
Price") shall consist of: (a) a cash payment ("Closing Payment") in the amount
of Three Million Seven Hundred and Fifty Thousand Dollars ($3,750,000) payable
at Closing by Buyers; (b) 345,178 shares (the "Closing Stock") of the common
stock, no par value of NCO ("NCO Common Stock") deliverable at Closing by Buyers
to Sellers; (c) a warrant in the form of Exhibit 6.2.10 attached hereto (the
"Warrant") to purchase 250,000 shares of NCO Common Stock at a purchase price of
$27.625 per share deliverable at Closing by Buyers to Sellers; and (d) the
assumption of the Specified Liabilities by Buyers in accordance with Section
2.1. As soon as practicable following the Closing Date, the Purchase Price shall
be valued based upon an appraisal of the Warrant and Closing Stock prepared by
Janney Montgomery Scott Inc. (the "Janney Appraisal") and allocated among each
Seller's Specified Assets, Specified Liabilities and the noncompetition
covenants set forth in Section 8.3 by the mutual good faith agreement of the
parties and evidenced in Exhibit 3.1 to be attached hereto. Sellers shall not
disclose or report a value for the Warrant and Closing Stock until the Janney
Appraisal is obtained and thereafter, shall not disclose or report a value for
the Warrant and Closing Stock as of the Effective Date in excess of that shown
in the Janney Appraisal.
3.2. Closing Financial Statements. The Sellers shall prepare or cause to
be prepared certain financial statements of Sellers' Accounts Receivable
Collection Business ("Closing Financial Statements"), and shall engage Arthur
Andersen & Co., Philadelphia, Pennsylvania ("Sellers' Accountants") to conduct
an audit ("Closing Audit") of the Closing Financial Statements, in accordance
with the following provisions:
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3.2.1 Type of Statements. The Closing Financial Statements shall
include balance sheets of the Sellers' Accounts Receivable Collection Business
as of December 31, 1994, 1995 and 1996 and as of the Effective Date ("Closing
Balance Sheet") and a statement of income and divisional equity and statement of
cash flows of the Accounts Receivable Collection Business for the years ended
December 31, 1994, 1995 and 1996 and for the period from January 1, 1997 to the
Effective Date (the "Interim Period"), and shall (a) be prepared in accordance
with GAAP (as defined in Section 1.9); (b) fairly present the financial
condition and results of operations of the Accounts Receivable Collection
Business as of the dates and for the periods indicated; and (c) be audited by
Sellers' Accountants whose reports thereon shall be without qualification.
3.2.2 Audit Requirements. All of the Closing Financial Statements
shall be prepared and audited in accordance with GAAP (as defined in Section
1.9). The Sellers shall fully cooperate with Sellers' Accountants in connection
with the Closing Audit including, but not limited to, agreeing to any required
adjustments and taking any other necessary actions to enable the audit report
issued by Sellers' Accountants with respect to the Closing Financial Statements
("Audit Report") to be completely unqualified without any explanatory
paragraphs. At the request of NCO, the Sellers shall instruct Sellers'
Accountants to review with NCO's employees or representatives and/or the
Philadelphia office of Coopers & Lybrand ("Buying Companies' Accountants") the
workpapers prepared by Sellers' Accountants in connection with the Closing Audit
("Audit Workpapers") before Sellers' Accountants finalize the Closing Financial
Statements and Audit Report.
3.2.3 Delivery of Documents. The Sellers shall instruct Sellers'
Accountants to deliver to Buying Companies, within forty five (45) days after
the Effective Date, the Closing Financial Statements, including at least one
original signed copy of the Audit Report and to allow Buying Companies to
examine and copy the Audit Workpapers. On or before the date that Sellers'
Accountants deliver the Closing Financial Statements and accompanying documents
to Buying Companies, the Sellers shall deliver to Buying Companies detailed
lists ("Closing Balance Sheet Lists") of all of the Assets (as defined in
Section 1.2) and Obligations (as defined in Section 1.17) of Selling Companies
reflected on the Closing Balance Sheet (including those Assets which have been
fully depreciated or fully amortized, and the related, accumulated depreciation
and amortization), by balance sheet account, and with aggregate net balances
equal to the balances on the Closing Balance Sheet. The Closing Balance Sheet
Lists shall include, but not necessarily be limited to, detailed lists of (a)
Cash Assets (as defined in Section 1.3), itemized by bank or other account,
showing cost and market value if different from cost; (b) Accounts Receivable
(as defined in Section 1.1), showing customer names, individual invoice dates,
individual invoice amounts and allowances for doubtful accounts, or, in the case
of earned but not billed receivables, customer names and individual dates on
which the receivables are billable ("Receivables Lists"); (c) other current
assets, itemized by category and with appropriate explanation; (d) Tangible
Property (as defined in Section 1.23), grouped as to type, showing cost,
accumulated depreciation and net book value; (e) Software (as defined in Section
1.22) and Intangibles (as defined in Section 1.12), showing cost or amount
capitalized, accumulated amortization and net book value; (f) accounts payable,
itemized by payee; (g) accrued expenses and reserves, itemized by category and
with appropriate explanation; (h) deferred revenues, itemized by customer and
time periods; and (i) other current and long-term liabilities, itemized by
payee. The Closing Financial Statements shall be accompanied by a certificate
("CFO Certificate") signed by the Chief Financial Officer of the Sellers in
which they represent and warrant to the Buying Companies that (v) the Closing
Financial Statements were prepared in
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accordance with GAAP and fairly present the financial condition and results of
operations of Sellers' Accounts Receivable Collection Business as of and for the
years ended December 31, 1994, 1995 and 1996 and as of the Effective Date and
for the Interim Period; and (w) the Closing Balance Sheet Lists are accurate and
complete.
3.3. Payment for Provision of Closing Financial Statements. The Sellers
shall bear and pay all of the cost charged by Sellers' Accountants for providing
the Closing Financial Statements (other than the Closing Balance Sheet), except
that Buying Companies shall pay the cost charged by Sellers' Accountants for
preparing the financial statements for the Interim Period and the Closing
Balance Sheet.
3.4. Purchase Price Adjustment. The Purchase Price shall be subject to
adjustment as follows:
3.4.1 Balance Sheet Adjustment. If the Actual TNW (as defined below)
is less than the Minimum TNW (as defined below), then the Purchase Price shall
be decreased by the amount by which Actual TNW is less than the Minimum TNW, and
if the Actual TNW is greater than the Minimum TNW, then the Purchase Price shall
be increased by the amount by which Actual TNW is greater than the Minimum TNW
(the adjustment provided for by this Section is referred to as the "TNW
Adjustment"); provided, however, that no TNW Adjustment shall be made with
respect to the first Fifty Thousand Dollars ($50,000) of any TNW Adjustment
otherwise required by this Section 3.4.1. The "Actual TNW" shall equal (a) the
net book value of the Specified Assets as of the Effective Date (including for
the purpose, the net book value of any purchased software and purchased
programming as of the Effective Date), as reflected on the Closing Balance Sheet
(excluding the book value of equipment purchased since December 31, 1996 not in
the ordinary course of business), minus the net book value of Intangibles
(including for this purpose, the net book value of any internally developed
Software) of Sellers' Accounts Receivable Collection Business as of the
Effective Date, as reflected on the Closing Balance Sheet minus (b) the
Specified Liabilities as of the Effective Date, as reflected on the Closing
Balance Sheet. The "Minimum TNW" shall equal Three Million Six Hundred Thousand
Dollars ($3,600,000).
3.4.2 Statement of Adjustments. The Sellers shall instruct Sellers'
Accountants to (a) prepare a statement ("Statement of Adjustments") showing a
clear and detailed calculation of the Actual TNW and the TNW Adjustment to the
Purchase Price described in this Section 3.4; and (b) deliver the Statement of
Adjustments to Buying Companies at the same time as the Closing Financial
Statements and related documents are delivered to Buying Companies under Section
3.2.3. Buying Companies shall notify the Sellers, in reasonable detail, of any
objections to the Statement of Adjustments (which may include objections to the
Closing Financial Statements and objections due to Obligations of Sellers which
were not reflected on the Closing Balance Sheet or the Statement of Adjustments)
within sixty (60) days after Buying Companies receive the Statement of
Adjustments and all of the documents required to be delivered to Buying
Companies under Section 3.2.3. If Buying Companies do not notify the Sellers of
any such objections by the end of that sixty-day period, then the Statement of
Adjustments, as prepared by the Sellers' Accountants, shall be considered final
on the last day of that sixty-day period. If Buying Companies do notify the
Sellers of any such objections by the end of that sixty-day period, and Buying
Companies and the Sellers are unable to resolve their differences within fifteen
(15) days thereafter, then the disputed items on the Statement of
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Adjustments shall be reviewed, as soon as possible, at Buying Companies'
expense, by the Buying Companies' Accountants. The Sellers and Buying Companies
shall instruct their respective Accountants to, in good faith, use their best
efforts to resolve such disputed items to their mutual satisfaction and to
deliver a final Statement of Adjustments to the Sellers and Buying Companies as
soon as possible. If Sellers' Accountants and the Buying Companies' Accountants
are unable to resolve any such disputed items within thirty (30) days after
receiving such instructions, then the remaining disputed items shall be
submitted to another of the "Big Six" certified public accounting firms selected
by the mutual agreement by Sellers' Accountants and Buying Companies'
Accountants ("Arbiter"), for resolution, with the costs thereof paid fifty
percent (50%) by the Selling Parties and fifty percent (50%) by Buying
Companies, and the Arbiter shall be instructed to deliver a final Statement of
Adjustments to the Selling Parties and Buying Companies as soon as possible.
3.4.3 Payment of TNW Adjustment. If the TNW Adjustment to the
Purchase Price constitutes a decrease in the Purchase Price, the Selling
Companies, jointly and severally, shall pay to Buyers an amount equal to the TNW
Adjustment. If the TNW Adjustment to the Purchase Price constitutes an increase
in the Purchase Price, the Buyers shall pay to Sellers an amount equal to the
TNW Adjustment. Any payment under this Section shall be made within fifteen (15)
business days after the Statement of Adjustments is finalized in accordance with
Section 3.4.2.
3.5. Currency and Method of Payment. All dollar amounts stated in this
Agreement are stated in United States currency, and all payments required under
this Agreement shall be paid in United States currency. All payments required
under this Agreement shall be made as follows: (a) any payment may be made by
wire transfer of immediately available United States federal funds; (b) any
payment exceeding $100,000 shall be made by wire transfer of immediately
available United States federal funds; (c) any payment exceeding $10,000, but
not exceeding $100,000, may be made by bank certified, treasurer's or cashier's
check; and (d) any payment not exceeding $10,000 may be made by ordinary check.
4. REPRESENTATIONS OF THE SELLERS
Knowing that the Buying Companies rely thereon, the Sellers, jointly and
severally, represent and warrant to the Buying Companies, and covenant with the
Buying Companies, as follows:
4.1. Organization. Each of the Selling Companies is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. Each of the Selling Companies possesses the full
corporate power and authority to own its Assets, conduct its business as and
where presently conducted, and enter into and perform this Agreement. Each
Selling Company is duly qualified to do business in each jurisdiction listed on
Schedule 4.1, and no Selling Company is required to be qualified in any other
jurisdiction except where the failure to be so qualified would not have, and
could not be reasonably be expected to have, a Material Adverse Effect (as
defined in Section 1.16). Schedule 4.1 states, for each Selling Company (a) its
exact legal name; (b) all foreign jurisdictions in which it is qualified or
registered to do business and has an office; and (c) all fictitious, assumed or
other names of any type that are registered or used by it or under which it has
done business at any time since July 17, 1992. Accurate and complete copies of
each Selling Company's articles or certificate
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of incorporation, bylaws and other organization and related documents, each as
amended to date, and all Contracts relating to the acquisition of Sellers'
Accounts Receivable Collection Business (or its affiliates or predecessors) have
been delivered to Buyers. CRW owns all of the issued and outstanding capital
stock of each of CRW Texas, Inc., a Texas corporation, and CRW California, Inc.,
a California corporation (collectively, the "CRW Subsidiaries"), and Kaplan.
Schedule 4.1 is an accurate and complete list of the authorized, issued and
outstanding shares of stock of each CRW Subsidiary and the names of all of the
directors and officers of each CRW Subsidiary. CRW is the legal and beneficial
owner of, and has good and valid title to, all of the outstanding capital stock
of each of the CRW Subsidiaries, free and clear of any Encumbrances. Except for
the shares of capital stock listed on Schedule 4.1, there are no other issued or
outstanding shares of capital stock of any CRW Subsidiary. All of the issued and
outstanding shares of capital stock of the CRW Subsidiaries have been duly
authorized and validly issued, and are fully paid and nonassessable, with no
liability attaching to the ownership thereof. There are no outstanding options,
puts, calls, warrants, subscriptions, stock appreciation rights, phantom stock,
or other Contracts or Contract Rights relating to the offering, sale, issuance,
redemption or disposition of any shares of capital stock or other securities in
any of the CRW Subsidiaries. No Selling Company owns any securities of any
corporation or any other interest in any Person engaged in the Accounts
Receivable Collection Business, except as set forth on Schedule 4.1. Selling
Companies do not have any predecessors other than as set forth on Schedule 4.1.
For the purposes of determining the applicability of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and regulations promulgated
thereunder (collectively, "HSR Act"), CRW is an "ultimate parent entity" within
the meaning of the HSR Act and the Selling Companies are not a "$100,000,000
person" within the meaning of the HSR Act.
4.2. Effect of Agreement. The execution, delivery and performance of this
Agreement by each of the Sellers and the consummation by each of the Sellers of
the transactions contemplated hereby, (a) have been, or shall have been by the
Closing Date, duly authorized by all necessary corporate actions by their
respective shareholders and boards of directors; (b) do not constitute a
violation of, a default under, or termination of the articles or certificate of
incorporation or other organizational documents of any Selling Company or;
(c) except as set forth on Schedule 4.2, do not constitute a default or breach
of (immediately after the giving of notice, passage of time or both), or
termination of any material Contract to which any of the Selling Companies is a
party or by which any of the Selling Companies is bound; (d) do not constitute a
violation of any Law applicable to any of the Selling Companies or to Sellers'
Accounts Receivable Collection Business or Assets except where the failure to
comply would not have a Material Adverse Effect (as defined in Section 1.16);
(e) except as stated on Schedule 4.2, do not require the Consent (as defined in
Section 1.4) of any Person (as defined in Section 1.19); (f) do not accelerate
or otherwise modify any Obligation (as defined in Section 1.17) of any Selling
Company; and (g) do not result in the creation of any Encumbrance (as defined in
Section 1.8) upon, or give to any other Person any interest in, any of Sellers'
Accounts Receivable Collection Business or Assets. There exists no rights of
first refusal or other preemptive rights with respect to Sellers' Accounts
Receivable Collection Business or Assets. This Agreement constitutes the valid
and legally binding agreement of each of the Sellers, enforceable against each
of the Sellers in accordance with its terms.
4.3. Financial and Corporate Records. Selling Companies' books and records
pertaining to the Sellers' Accounts Receivable Collection Business are and have
been properly prepared and maintained in form and substance adequate for
preparing audited financial
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statements in accordance with GAAP (as defined in Section 1.9), and fairly and
accurately reflect all Assets and Obligations of Sellers' Accounts Receivable
Collection Business and all Contracts and transactions to which any Selling
Company is or was a party or by which any Selling Company or any of its business
or Assets is or were affected and which relate or pertain to Sellers' Accounts
Receivable Collection Business. Selling Companies' corporate minute books that
have been made available to Buyers are accurate in all material respects.
4.4. Compliance with Law. The operation of Sellers' Accounts Receivable
Collection Business, the conduct of Sellers' Accounts Receivable Collection
Business as and where such business has been or presently is conducted, and the
ownership, possession and use of the Assets used in or for the Sellers' Accounts
Receivable Collection Business comply with all Laws (as defined in Section 1.15)
applicable to Selling Companies, their operations, business, Assets or
Obligations except where the failure to comply would not have a Material Adverse
Effect (as defined in Section 1.16). Except as set forth on Schedule 4.4,
Selling Companies have obtained and hold all Permits (as defined in Section
1.18) required for the lawful operation of Sellers' Accounts Receivable
Collection Business as and where such business is presently conducted except
where the failure to obtain and maintain such Permits would not have a Material
Adverse Effect. All Permits relating to the Sellers' Accounts Receivable
Collection Business held by any Selling Company are listed on Schedule 4.4, and
copies of such Permits have been delivered to Buyers.
4.5. Financial Statements. Schedule 4.5 includes accurate and complete
copies of the following financial statements ("Financial Statements"): (a) the
unaudited consolidated balance sheets and statements of income, equity, and
notes thereto of Sellers' Accounts Receivable Collection Business as of and for
the fiscal year ended December 31, 1995; and (b) unaudited consolidated balance
sheets and statements of income (the "Interim Financial Statements") of Sellers'
Accounts Receivable Collection Business as of and for the twelve months ended
December 31, 1996. All of the Financial Statements (a) were prepared in
accordance with GAAP provided, however, that the Interim Financial Statements
are subject to normal year-end adjustments and lack footnotes and other
presentation terms; (b) present fairly the financial condition of and result of
operation of the Sellers' Accounts Receivable Collection Business as of such
dates and for such periods; and (c) all adjustment that are necessary for a fair
presentation thereof (consisting only of normal recurring adjustments) have been
made.
4.6. Assets. Sellers have provided to Buyers detailed lists of all Assets
used in or for Sellers' Accounts Receivable Collection Business. Except as set
forth on Schedule 4.6, each Selling Company has good and marketable title to all
of its Assets used in Sellers' Accounts Receivable Collection Business and has
the right to transfer all right, title and interest in such Assets to Buyers,
free and clear of any Encumbrance (as defined in Section 1.8). Except for the
Specified Assets, no other Assets are necessary to operate the Sellers' Accounts
Receivable Collection Business.
4.7. Sellers' Obligations. All amounts due to customers for collections
made by Sellers as of the date hereof have either been remitted to the proper
customers or have been deposited in escrow accounts maintained by Sellers and
which are being transferred to Buyers on the date hereof. Selling Companies have
no Obligations to National Westminster Bank of New Jersey and any Obligations to
National WestMinster Bank of New Jersey which were secured by UCC-1 financing
statements which currently appear of record against any Specified
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Assets have been paid in full. Any UCC-1 financing statements which appear of
record against any Specified Assets evidence security interests held by vendors
of equipment for indebtedness which is set forth in Sellers' Interim Financial
Statements for the twelve months ended December 31, 1996 or evidence leases of
leased Tangible Property.
4.8. Operations Since December 31, 1996. Except as set forth on Schedule
4.8, from December 31, 1996 to the date of this Agreement:
4.8.1 Except in the ordinary course of its business consistent with
its past practices, no Selling Company has (a) created or assumed any
Encumbrance upon any of the Sellers' Accounts Receivable Collection Business or
Assets, (b) incurred any Obligation on behalf of or relating to Sellers'
Accounts Receivable Collection Business, (c) made any loan or advance to any
Person on behalf of or relating to Sellers' Accounts Receivable Collection
Business; (d) assumed, guaranteed or otherwise become liable for any Obligation
of any Person on behalf of or relating to Sellers' Accounts Receivable
Collection Business; (e) committed for any capital expenditure on behalf of or
relating to Sellers' Accounts Receivable Collection Business; (f) purchased,
leased, sold, abandoned or otherwise acquired or disposed of any part of the
Sellers' Accounts Receivable Collection Business or Assets; (g) waived any right
or canceled any debt or claim on behalf of or relating to Sellers' Accounts
Receivable Collection Business; (h) assumed or entered into any Contract on
behalf of or relating to Sellers' Accounts Receivable Collection Business other
than this Agreement; (i) increased, or authorized an increase in, the
compensation or benefits paid or provided to any of its directors, officers,
employees, salesmen, agents or representatives engaged in the Sellers' Accounts
Receivable Collection Business; or (j) done anything else outside the ordinary
course of business on behalf of or relating to Sellers' Accounts Receivable
Collection Business, whether or not specifically described in any of the
foregoing clauses.
4.8.2 Even in the ordinary course of its business consistent with its
past practices, no Selling Company has incurred any Obligation on behalf of or
relating to Sellers' Accounts Receivable Collection Business, made any loan to
any Person on behalf of or relating to Sellers' Accounts Receivable Collection
Business, acquired or disposed of any part of the Sellers' Accounts Receivable
Collection Business or Assets, entered into any Contract (other than customer
Contracts), or done any of the other things described in Section 4.8.1,
involving an amount exceeding $50,000 in any single case or $250,000 in the
aggregate.
4.8.3 There has been no material adverse change or material casualty
loss affecting the Selling Companies, the Sellers' Accounts Receivable
Collection Business or Assets, the financial condition of Selling Companies or
Sellers' Accounts Receivable Collection Business, and there has been no material
adverse change in the financial performance of Selling Companies or the Sellers'
Accounts Receivable Collection Business.
4.9. Accounts Receivable. All Accounts Receivable arose in the ordinary
course of business and are proper and valid accounts receivable. There are no
refunds, discounts, rights of setoff or assignment affecting any such Accounts
Receivable. Proper amounts of deferred revenues appear on Selling Companies'
books and records, in accordance with generally accepted accounting principles,
with respect to all of Selling Companies' (a) billed but unearned Accounts
Receivable; (b) previously billed and collected Accounts Receivable still
unearned; and (c) unearned customer deposits.
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4.10. Tangible Property. Except as set forth on Schedule 4.6, each Selling
Company has good and valid title to all of its Tangible Property used in or for
the Sellers' Accounts Receivable Collection Business, free and clear of any
Encumbrances. All of Selling Companies' Tangible Property used in or for the
Sellers' Accounts Receivable Collection Business is located at Sellers' Accounts
Receivable Collection Facilities (as defined in Section 4.11), and each Selling
Company has the full and unqualified right to require the immediate return of
any of its Tangible Property which is not located at Sellers' Accounts
Receivable Collection Facilities. All Tangible Property used by each Selling
Company or its customers in the Sellers' Accounts Receivable Collection Business
is in good condition, ordinary wear and tear excepted, and is sufficient for the
operation of Sellers' Accounts Receivable Collection Business as presently
conducted.
4.11. Real Property. No Selling Company owns any Real Property (as defined
in Section 1.21) used in or for the Sellers' Accounts Receivable Collection
Business. Schedule 4.11 is a detailed list of all Real Property leased by any
Selling Company used in or for Sellers' Accounts Receivable Collection Business
(the "Accounts Receivable Collection Facilities"), showing location, rental cost
and landlord. All Accounts Receivable Collection Facilities under lease to or
otherwise used by any Selling Company are in good condition, ordinary wear and
tear excepted, and are sufficient for the current operations of Sellers'
Accounts Receivable Collection Business. No Accounts Receivable Collection
Facilities, nor the occupancy, maintenance or use thereof, is in violation of,
or breach or default under, any Contract or Law, and no notice from any lessor,
governmental body or other Person has been received by any of the Selling
Companies or served upon any such Accounts Receivable Collection Facilities
claiming any violation of, or breach or default under, any Contract or Law, or
requiring or calling attention to the need for any work, repairs, construction,
alternation or installations. None of the Selling Companies has placed or caused
to be placed, and none of the Selling Companies has any knowledge or belief that
there were or are, any Hazardous Substances on or under any of Sellers' Accounts
Receivable Collection Facilities.
4.12.Software and Intangibles. Schedule 4.12 is an accurate and complete
list and description of all Intangibles (as defined in Section 1.12) owned,
marketed, licensed, used or under development by any Selling Company and used in
or for Sellers' Accounts Receivable Collection Business. Except as explained on
Schedule 4.12, each Selling Company has good and valid title to all of the
Intangibles listed on Schedule 4.12, and has the full right to use and transfer
to Buyers all of the Software used in the Accounts Receivable Collection
Business and all of the Intangibles listed on Schedule 4.12, free and clear of
any Encumbrance (as defined in Section 1.8) (except for use restrictions
contained in licensed commercially available Software). To the Knowledge of each
of the Selling Companies, none of the Software used in the Accounts Receivable
Collection Business and none of the Intangibles listed on Schedule 4.12, or
their respective past or current uses, has violated or infringed upon, or is
violating or infringing upon, any Software, patent, copyright, trade secret or
other Intangible of any Person. To the Knowledge of each of the Selling
Companies, no Person is violating or infringing upon, or has violated or
infringed upon at any time, any of the Software used in the Accounts Receivable
Collection Business or any of the Intangibles listed on Schedule 4.12. None of
the Software used in the Accounts Receivable Collection Business and none of the
Intangibles listed on Schedule 4.12 is owned by or registered in the name of any
current or former shareholder, partner, director, executive, officer, employee,
salesman, agent, customer, representative or contractor of any of
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the Selling Companies nor does any such Person have any interest therein or
right thereto, including but not limited to the right to royalty payments.
4.13. Contracts. For the purposes of this Agreement, "Specified Contracts"
means all of the Contracts to which any Selling Company is a party or by which
any Selling Company is bound relating to the Sellers' Accounts Receivable
Collection Business, excluding Contracts which constitute Employee Benefit Plans
listed on Schedule 4.15, oral Contracts with employees for "at will" employment,
Contracts which constitute Insurance Policies listed on Schedule 4.19, this
Agreement and all other Contracts entered into between Sellers and Buying
Companies, or among Sellers, Buying Companies and other parties in connection
herewith. Set forth on Schedule 4.13 is an accurate and complete list of all
Specified Contracts which involve future Obligations of $10,000 or more. Except
as set forth on Schedule 4.13, with respect to each of the Specified Contracts,
no Selling Company is in default thereunder in any material respect nor would be
in default thereunder in any material respect with the passage of time, the
giving of notice or both. Except as set forth on Schedule 4.13, to the Knowledge
of each Selling Company, none of the other parties to any Specified Contract is
in default thereunder in any material respect or would be in default thereunder
with the passage of time, the giving of notice or both. Except as set forth on
Schedule 4.13, no Selling Company has given or received any notice of default or
notice of termination with respect to any Specified Contract, and each Specified
Contract is in full force and effect in accordance with its terms in all
material respects. The Specified Contracts are all the Contracts necessary and
sufficient to operate Sellers' Accounts Receivable Collection Business. Except
as set forth on Schedule 4.13, there are no currently outstanding proposals or
offers submitted by any Selling Company to any customer, prospect, supplier or
other Person with respect to Sellers' Accounts Receivable Collection Business
which, if accepted, would result in a legally binding Contract of such Selling
Company involving an amount or commitment exceeding $50,000 in any single case
or an aggregate amount or commitment exceeding $250,000 in the aggregate.
4.14. Employees and Independent Contractors. Except as limited by any
employment Contracts listed on Schedule 4.13 and except for any limitations of
general application which may be imposed under applicable employment Laws, each
Selling Company has the right to terminate the employment of each of its
employees engaged in the Sellers' Accounts Receivable Collection Business at
will and to terminate the engagement of any of its independent contractors
engaged in the Sellers' Accounts Receivable Collection Business without payment
to such employee or independent contractor other than for services rendered
through termination and without incurring any penalty or liability other than
liability for severance pay in accordance with Sellers' disclosed severance pay
policy. Each Selling Company is in full compliance with all Laws respecting
employment practices, except where the failure to so comply would not have a
Material Adverse Effect. No Selling Company has been a party to or bound by any
union or collective bargaining Contract, nor is any such Contract currently in
effect or being negotiated by or on behalf of any Selling Company. No Selling
Company has experienced any labor problem that was or is material to Sellers'
Accounts Receivable Collection Business. To the Selling Companies' Knowledge (as
defined in Section 1.14), each Selling Company's relations with its employees
engaged in the Sellers' Accounts Receivable Collection Business are currently on
a good and normal basis. Except as indicated on Schedule 4.14A, since January 1,
1996, no officer or manager of any Selling Company engaged in the Sellers'
Accounts Receivable Collection Business has indicated an intention to terminate
his or her employment with such Selling Company. To the Selling Companies'
Knowledge (as defined in Section 1.14), the
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transactions contemplated by this Agreement will not adversely affect relations
with Selling Companies' officers or managers engaged in the Sellers' Accounts
Receivable Collection Business. Since November 1, 1996, Sellers have not had an
"employment loss" within the meaning of the Workers' Adjustment and Retraining
Notification Act ("WARN Act") and the regulations thereunder.
4.15. Employee Benefit Plans. Except as set forth on Schedule 4.15,
Selling Companies do not sponsor, maintain or contribute to, or have any ongoing
Obligations with respect to, any Employee Benefit Plan (as defined in Section
1.7), including, but not limited to, any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with respect to employees of the Sellers' Accounts Receivable
Collection Business. Schedule 4.15 includes a list of each of the Selling
Companies' Employee Benefit Plans covering employees of the Sellers' Accounts
Receivable Collection Business that is currently in effect or as to which any of
the Selling Companies have any ongoing Obligation. Copies of all Employee
Benefit Plans described on Schedule 4.15 and all written materials used by the
Selling Companies to describe its Employee Benefit Plans to employees of the
Securities Products Business have been delivered to Buying Companies. With
respect to each Employee Benefit Plan described on Schedule 4.15, the Selling
Companies have operated and currently operate such plan in compliance with the
plan documents and all applicable Laws, including without limitation ERISA and
the Internal Revenue Code of 1986, as amended (the "Code") (including, but not
limited to, Section 4980B thereof) and the regulations thereunder.
4.16. Customers, Prospects and Suppliers. Each of the ten largest
customers (measured by volume of placements) of Sellers' Accounts Receivable
Collection Business (the "Ten Largest Customers") have signed a Contract and are
listed in the list of customers previously delivered to Buying Companies.
Sellers have previously delivered to Buying Companies a list of prospects and
proposals of Sellers' Accounts Receivable Collection Business. All of the
proposals made to the prospects listed on Schedule 4.16 are still pending and
have not been rejected. Except as set forth on Schedule 4.16, since January 1,
1996, none of the Ten Largest Customers of Sellers' Accounts Receivable
Collection Business has given notice or otherwise indicated to any of the
Selling Companies that it will or intends to terminate or not renew its Contract
with any of the Selling Companies before the scheduled expiration date or
otherwise terminate its relationship with any of the Selling Companies. To the
Selling Companies' Knowledge, the relationship of each Selling Company with
customers and suppliers of Sellers' Accounts Receivable Collection Business are
currently on a good and normal basis. No Selling Company has received notice of
any threat of termination of the Contract with any of the Ten Largest Customers
since January 1, 1996. To the Selling Companies' Knowledge, the transactions
contemplated by this Agreement will not adversely affect relations with any of
the Ten Largest Customers. The President of CRW has had communication with the
California Student Aid Council ("CSAC"), and based on such communication,
Sellers understand that CSAC does not intend to terminate its contracts with
Sellers solely by reason of the consummation of the transactions contemplated
hereby but will consider consenting to the assignment of its Contract after it
has had the opportunity to evaluate Buyers.
4.17. Taxes. Each of the Selling Companies has timely filed all Tax
returns and reports required to be filed by it (including, without limitation,
all declarations, reports, estimates, information returns and statements
(referred to herein as "Tax Returns"), all of which were accurately prepared,
and, except as set forth in Schedule 4.17, each of the Selling Companies
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has timely paid all Taxes or withholdings required to be paid by it with respect
to such Tax Returns. Each of the Selling Companies has properly withheld from
payments to its employees, contractors, salesmen, agents, representatives,
vendors and other Persons engaged in the Sellers' Accounts Receivable Collection
Business all amounts required by Law to be withheld, and each of the Selling
Companies has timely filed all Tax Returns to be filed by it with respect to
such withholdings. Except as indicated on Schedule 4.17, (i) no audit or other
Proceeding is pending or threatened against any of the Selling Companies,
(ii) no notice of deficiency or adjustment has been received by any of the
Selling Companies, by or from any governmental taxing authority, with respect to
sales, use, excise, real property, payroll, withholding or similar Taxes,
(iii) there are no agreements or waivers in effect which provide for an
extension of time for the assessment of any such Tax against any of the Selling
Companies, (iv) each of the CRW Subsidiaries have established on their books and
records reserves in accordance with generally accepted accounting principles
that are adequate for the payment of all Taxes not yet due and payable, and
(v) there are no liens for Taxes upon the Specified Assets (including for these
purposes the both the stock and underlying assets of the CRW Subsidiaries) other
than any liens for Taxes not yet due and payable.
4.18. Proceedings and Judgments. Except as described on Schedule 4.18,
(a) no Proceeding (as defined in Section 1.20) involving or related to the
Sellers' Accounts Receivable Collection Business or Assets is currently pending
or to the Selling Companies' Knowledge threatened, nor has any Proceeding
occurred at any time since July 17, 1992, to which any Selling Company is or was
a party, or by which any Selling Company or the Sellers' Accounts Receivable
Collection Business or Assets is or was affected in any material respect; (b) no
Judgment (as defined in Section 1.13) involving or related to the Sellers'
Accounts Receivable Collection Business or Assets is currently outstanding, nor
has any Judgment been outstanding at any time since July 17, 1992, against any
Selling Company, or by which any Selling Company or the Sellers' Accounts
Receivable Collection Business or Assets is or was affected; and (c) no breach
of contract, material breach of warranty, tort, negligence, infringement,
product liability, discrimination, wrongful discharge or other material claim of
any nature involving or related to the Sellers' Accounts Receivable Collection
Business or Assets has been asserted or, to the Selling Companies' Knowledge,
threatened by or against any Selling Company at any time since July 17, 1992,
and there is no basis for any such claim. As to each matter described on
Schedule 4.18, accurate and complete copies of all pertinent pleadings,
judgments, orders, correspondence and other legal documents have been delivered
to Buyers.
4.19. Insurance. Schedule 4.19 is an accurate and complete list and
description of all Insurance Policies (as defined in Section 1.11) currently
owned or maintained by any of the Selling Companies (excluding Insurance
Policies that constitute Employee Benefit Plans described on Schedule 4.15) in
connection with or for the benefit of Sellers' Accounts Receivable Collection
Business and all liability and errors and omissions Insurance Policies owned or
maintained by any of the Selling Companies and/or any of their predecessors at
any time since July 17, 1992 in connection with or for the benefit of Sellers'
Accounts Receivable Collection Business. No Selling Company has received notice
of cancellation with respect to any such current Insurance Policy, and, to the
Knowledge of the Selling Companies, there is no basis for the insurer thereunder
to terminate any such current Insurance Policy. Each such Insurance Policy is or
was in full force and effect during the period(s) of coverage indicated on
Schedule 1.11. Except as described on Schedule 4.19, there are no claims that
are pending under any of the Insurance Policies described on Schedule 4.19.
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4.20. Questionable Payments. To the Knowledge of the Selling Companies,
none of the Selling Companies, nor any of the current or former partners,
shareholders, directors, executives, officers, representatives, agents or
employees of any of the Selling Companies (when acting in such capacity or
otherwise on behalf of any of the Selling Companies or any of their
predecessors), (a) has used or is using any corporate funds for any illegal
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government officials or
employees; (c) has violated or is violating any provision of the Foreign Corrupt
Practices Act of 1977, except for violations which, individually and in the
aggregate, would not have, and could not be reasonably be expected to have, a
Material Adverse Effect (as defined in Section 1.16); (d) has established or
maintained, or is maintaining, any unlawful or unrecorded fund of corporate
monies or other properties; (e) has made, at any time since July 17, 1992, any
false or fictitious entries on the books and records of any Selling Company;
(f) has made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature using corporate funds or otherwise on behalf of
any of the Selling Companies; or (g) made any material favor or gift that is not
deductible for federal income tax purposes using corporate funds or otherwise on
behalf of any of the Selling Companies.
4.21. Related Party Transactions. Except as described on Schedule 4.21 and
except for any employment Contracts listed on Schedule 4.13, there are no real
estate leases, personal property leases, loans, guarantees, Contracts or
transactions of any nature between any of the Selling Companies and any current
or former partners, shareholder, director, executive, officer or controlling
Person of any of the Selling Companies (or any of their respective predecessors)
or any other Person affiliated with any of the Selling Companies (or any of
their respective predecessors) with respect to the Sellers' Accounts Receivable
Collection Business or Assets.
4.22. Brokerage Fees. Except as set forth on Schedule 4.22, no Person
acting on behalf of any of the Selling Companies is or shall be entitled to any
brokerage or finder's fee in connection with the transactions contemplated by
this Agreement.
4.23. Investment Matters. The Closing Stock and Warrant to be issued to
Sellers hereunder and the shares of NCO Common Stock issuable upon exercise of
the Warrant (collectively, the "NCO Securities") are being acquired for Sellers'
own account and not on behalf of any other Person, for investment purposes only
and not with a view to, or for sale in connection with, any resale or
distribution of the NCO Securities. Sellers have received and examined NCO's
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on September 11, 1996, and all amendments thereto, and NCO's
Quarterly Report on Form 10-Q for the quarter ended October 31, 1996. Sellers
have had the opportunity to ask questions and receive answers from NCO
concerning NCO, and have been furnished with all other information about NCO
which they have requested. Sellers believe that they have been fully apprised of
all facts and circumstances necessary to permit them to make an informed
decision about acquiring the NCO Securities, that they have sufficient knowledge
and experience in business and financial matters, that they are capable of
evaluating the merits and risks of an investment in the NCO Securities, and that
they have the capacity to protect their own interests in connection with the
transactions contemplated hereby. Sellers have been advised by NCO and
understand that (a) the NCO Securities to be issued hereunder and under the
Warrant will not be registered under any securities Laws, including without
limitation, the securities Laws of
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the United States or the State of Pennsylvania, (b) the NCO Securities must be
held indefinitely unless and until they are subsequently registered or an
exemption from registration becomes available, (c) the NCO Securities shall bear
appropriate restrictive legends and (d) NCO shall have the right to place a stop
order against the NCO Securities.
4.24. Full Disclosure. No representation or warranty made by the Sellers
in this Agreement or pursuant hereto (a) contains any untrue statement of any
material fact; or (b) omits to state any fact that is necessary to make the
statements made, in the context in which made, not false or misleading in any
material respect. The copies of documents attached as Schedules to this
Agreement or otherwise delivered to Buyers in connection with the transactions
contemplated by this Agreement, are accurate and complete, and are not missing
any amendments, modifications, correspondence or other related papers which
would be pertinent to Buyers's understanding thereof in any respect.
5. REPRESENTATIONS OF BUYING COMPANIES
Knowing that the Sellers rely thereon, the Buying Companies, jointly and
severally, represent and warrant to the Sellers, and covenant with the Sellers,
as follows:
5.1. Organization. Each of the Buying Companies is a corporation that is
duly organized, validly existing and in good standing under the Law (as defined
in Section 1.15) of its jurisdiction of incorporation. Each of the Buying
Companies has the full corporate power and authority to own its Assets, conduct
its business as and where such business is presently conducted, and enter into
this Agreement. Buyers is a wholly owned subsidiary of NCO.
5.2. Agreement. For each of the Buying Companies, its execution, delivery
and performance of this Agreement, and its consummation of the transactions
contemplated by this Agreement, (a) have been duly authorized by all necessary
corporate actions by its board of directors; (b) do not constitute a violation
of or default under its charter or bylaws; (c) do not constitute a default or
breach (immediately or after the giving of notice, passage of time or both)
under any Contract to which it is a party or by which it is bound; (d) do not
constitute a violation of any Law (as defined in Section 1.15) or Judgment (as
defined in Section 1.13) that is applicable to it or to the business or Assets
of any of the Buying Companies, or to the transactions contemplated by this
Agreement; and (e) except as stated on Schedule 5.2, do not require the Consent
(as defined in Section 1.4) of any Person (as defined in Section 1.19). This
Agreement constitutes the valid and legally binding agreement of each of the
Buying Companies, enforceable against each of them in accordance with its terms.
5.3. NCO Common Stock. The shares of NCO Common Stock to be issued as the
Closing Stock and the shares of NCO Common Stock to be issued upon exercise of
the Warrant: (a) are validly authorized, and when issued, shall be validly
issued, fully paid and nonassessable; and (b) constitute part of the class of
securities that has been registered under the Securities Exchange Act of 1934,
as amended.
5.4. Brokerage Fees. No Person acting on behalf of any of the Buying
Companies is entitled to any brokerage, finder's or investment banking fee in
connection with the transactions contemplated by this Agreement.
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6. CLOSING
6.1. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held at 10:00 a.m. local time on the date
hereof (the "Closing Date"), at the offices of Blank Rome Comisky & McCauley,
Philadelphia, Pennsylvania or such other location as is mutually agreeable.
Except to the extent prohibited by Law, and regardless of the actual Closing
Date, the Closing shall be considered to have been effective at 5:00 p.m. (local
time) on the Closing Date ("Effective Date").
6.2. Obligations of Sellers at Closing. At the Closing, Sellers shall
deliver to the Buyers the following:
6.2.1 Specified Assets. Possession and control of the Accounts
Receivable Collection Business, the Accounts Receivable Collection Facilities
(as defined in Section 4.11), all of the Specified Assets and all of the leased
Tangible Property used in the Accounts Receivable Collection Business.
6.2.2 Documents of Transfer. Such bills of sale, assignments, deeds,
endorsements, affidavits, and other instruments and documents of sale, transfer,
assignment and conveyance as Buyers may reasonably require, in order to lawfully
and effectively sell, transfer, assign and convey to Buyers all right, title and
interest in and to all of the Specified Assets, in each case in form acceptable
to Sellers and Buyers, dated as of the Effective Date, and duly executed and, if
necessary, acknowledged by the Sellers.
6.2.3 CRW Subsidiaries Stock. Stock certificates representing all of
the outstanding stock of each CRW Subsidiary, together with assignments separate
from certificate in blank, dated the Effective Date and duly executed by the
appropriate Seller, and any stamps or other proper evidence of the payment of
any stock transfer or any similar Taxes due as a result of the transfer of the
stock of each CRW Subsidiary.
6.2.4 Incumbency Certificate. A certificate of the Secretary of each
of the Sellers as to the incumbency and signatures of the officers of the
Sellers executing this Agreement.
6.2.5 Resolutions. Copies of the resolutions duly adopted by the
respective boards of directors and, if applicable, shareholders of each of the
Sellers, authorizing the Sellers to enter into and perform this Agreement,
certified by proper officers as in full force and effect on and as of the
Closing Date.
6.2.6 Good Standing. Good standing certificates for each of the
Selling Companies from its jurisdiction of incorporation, and good standing
certificates for each Selling Company from every foreign jurisdiction where each
Selling Company is registered to do business, all dated no earlier than 15 days
before the Closing Date, except that Sellers may deliver any good standing
certificates with respect to foreign qualifications not received as of the
Closing Date by the close of business on February 7, 1997.
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6.2.7 Registration Rights Agreement. A Registration Rights Agreement,
in the form set forth on Exhibit 6.2.7 ("Registration Rights Agreement"),
between NCO and CRW, dated the Closing Date and duly executed by CRW.
6.2.8 Noncompetition and Standstill Agreement. A Nondisclosure,
Nonsolicitation, Noncompetition and Standstill Agreement in the form set forth
on Exhibit 6.2.8 ("Noncompetition and Standstill Agreement"), between Buying
Companies and each of J. Brian O'Neill and Jon Robinson (the "Restricted
Group"), dated the Closing Date and duly executed by the Restricted Group.
6.2.9 Name Change. A proper Amendment to the Kaplan Articles or
Certificate of Incorporation, dated the Closing Date and duly executed by the
Owners, in form acceptable for immediate filing with the Delaware Secretary of
State, changing Kaplan's corporate name to a name that is not similar to
Kaplan's current corporate name or any product or other name used by Selling
Companies and included in the Specified Assets, provided, however, that Sellers
may deliver such Amendment by the close of business on February 3, 1997.
6.2.10 Warrant. The Warrant in the form set forth on Exhibit 6.2.10,
dated the Closing Date and duly executed by CRW.
6.2.11 Corporate Records and Resignations. All of the original minute
books and stock books of each CRW Subsidiary and duly executed resignations,
dated the Effective Date, of all directors and officers of each CRW Subsidiary.
6.2.12 Consents. Consents to the assignment to Buyers of the leases
for the Accounts Receivable Collection Facilities dated as of the Effective Date
and duly executed by the lessors thereof together with such lessor and lender
estoppel certificates, non-disturbance agreements and related agreements
(collectively, "Lease Consent Documents") as Buyers may reasonably request, in
form acceptable to Buyers, duly executed by the other parties thereto, and the
other original signed copies of all Consents listed on Schedule 4.2. Any
Consents and Lease Consent Documents not obtained by the Closing Date shall be
delivered by Sellers to Buyer as soon as practicable after Closing.
6.2.13 Opinion of Counsel. The opinion of Morgan Lewis & Bockius, LLP
addressed to Buying Companies and dated the Closing Date, in form acceptable to
Buying Companies.
6.2.14 Lien Release. Payoff letters from holders of any debt of
Selling Companies with respect to which there are any Encumbrances upon any of
the Specified Assets; together with all documents reasonably requested by Buyers
to remove all such Encumbrances on the Specified Assets, including, but not
limited to, UCC-3 termination forms duly executed by the secured parties and
mortgage satisfaction and release forms duly executed by the mortgagees, and
UCC-3 termination forms duly executed by former secured parties for which UCC-1
financing statements remain of record, in each case in form acceptable for
immediate filing with the appropriate state or local governmental office.
6.2.15 Other Documents. All other agreements, certificates,
instruments and documents reasonably requested by the Buying Companies in order
to fully consummate the transactions contemplated by this Agreement and carry
out the purposes and intent of this Agreement.
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6.3. Obligations of Buying Companies at Closing. At the Closing, the
Buying Companies shall deliver to the Sellers the following:
6.3.1 Closing Payment. A wire transfer of immediately available
United States federal funds or a bank certified, treasurer's or cashier's check
in the amount of the Closing Payment (as defined in Section 3.1), in accordance
with Sellers' proper instructions as to payment.
6.3.2 Closing Stock. Duly issued certificates for the Closing Stock.
6.3.3 Warrant. The Warrant in the form set forth on Exhibit 6.2.10,
dated the Closing Date and duly executed by NCO.
6.3.4 Registration Rights Agreement. The Registration Rights
Agreement (in the form set forth as Exhibit 6.2.7), dated the Closing Date and
duly executed by NCO.
6.3.5 Assumption of Liabilities. An assumption of the Specified
Liabilities, in form acceptable to Buyers and Sellers, dated as of the Effective
Date, and duly executed by Buyers.
6.3.6 Incumbency Certificate. A certificate of Secretary of each of
the Buying Companies as to the incumbency and signatures of the officers of the
Buying Companies executing this Agreement.
6.3.7 Resolutions. Copies of the resolutions duly adopted by the
respective boards of directors of the Buying Companies, authorizing the Buying
Companies to enter into and perform this Agreement, certified by proper officers
as in full force and effect on and as of the Closing Date.
6.3.8 Good Standing. Good standing certificates for each of the
Buying Companies from its jurisdiction of incorporation, dated no earlier than
15 days before the Closing Date, except that Buying Companies may deliver any
certificates not received as of the Closing Date by the close of business on
February 7, 1997.
6.3.9 Other Documents. All other agreements, certificates,
instruments and documents reasonably requested by the Sellers in order to fully
consummate the transactions contemplated by this Agreement and carry out the
purposes and intent of this Agreement.
7. CERTAIN POST-CLOSING OBLIGATIONS
7.1. Transition and Cooperation. From and after the Closing Date, (a) the
Sellers shall fully cooperate to transfer to the Buyers the control and
enjoyment of the Accounts Receivable Collection Business and the Specified
Assets; (b) the Sellers shall not take any action, directly or indirectly, alone
or together with others, which obstructs or impairs the smooth assumption by
Buyers of the Accounts Receivable Collection Business and the Specified Assets;
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(c) the Sellers shall promptly deliver to Buyers all correspondence, papers,
documents and other items and materials received by any of the Sellers or found
to be in the possession of any of the Sellers which pertain to the Accounts
Receivable Collection Business or the Specified Assets; and (d) Sellers shall
provide Buyers access to Sellers' payroll records and systems.
7.2. Use of Names. Beginning immediately after the Closing Date, the
Sellers shall cease all use of all corporate names, fictitious names, product
names and other names used by Sellers in the Accounts Receivable Collection
Business at any time on or before the Closing Date and included in the Specified
Assets, except as may be necessary to perform their obligations hereunder and
except that CRW may continue to use the name "CRW Financial, Inc." as its
corporate name in its capacity as a holding company and in its communications
with securities and financial analysts and institutional investors provided that
CRW does not use or refer to such name (or any similar or derivative name) in
any operational capacity. Upon Buyers's request, Sellers shall promptly sign all
Consents and other documents that may be necessary to allow Buyers to use or
appropriate the use of any name used by any Selling Company in the Accounts
Receivable Collection Business at any time on or before the Closing Date. At all
times from and after the Closing Date, the NCO Companies (as defined in Section
8.1) shall have the full right to use the name "CRW Financial" or any similar or
derivative name in the Accounts Receivable Collection Business, including,
without limitation to (a) advise customers and prospects of the Accounts
Receivable Collection Business that the NCO Companies are the
successor-in-interest to Sellers' Accounts Receivable Collection Business and
that such business was formerly known as, or conducted by, "CRW Financial", (b)
use or refer to such name in sales, marketing or other publications to disclose
from whom the Specified Assets were purchased, and (c) use such name where
reasonably required to insure the orderly transition of the Accounts Receivable
Collection Business.
7.3. Contract Matters. After the Closing, each Contract ("Transferred
Contract") as to which (a) the Contract Rights of any Seller are included in the
Specified Assets, and (b) Consent to the assignment thereof from any Seller to
Buyers may be required under such Transferred Contract or applicable Law but was
not obtained on or before the Closing Date, shall be handled in accordance with
the following provisions:
7.3.1 Consent. The Sellers shall fully cooperate with Buyers in the
Buyers' efforts to obtain Consent to the assignment of such Transferred
Contract. If and when Consent to assignment of such Transferred Contract is
obtained, such Transferred Contract shall no longer be subject to the provisions
of this Section 7.3.
7.3.2 Subcontracting. Each Seller shall make available to Buyers all
Contract Rights and other benefits of such Transferred Contract, on a
subcontract or sublease basis or in some other appropriate manner to the fullest
extent possible, and Buyers shall be considered an independent subcontractor or
sublessee of such Seller, or an agent of such Seller, with respect to all
matters concerning such Transferred Contract. Without limiting the foregoing,
Buyers shall be considered such Sellers' agent for purposes of (a) collecting
all amounts that may be due from the other party or parties to such Transferred
Contract; and (b) negotiating or otherwise handling all disputes and issues that
may arise in connection with such Transferred Contract. Without Buyers' prior
written consent, no Seller shall agree to any amendment, modification,
extension, renewal, termination or other change in the terms of such Transferred
Contract, nor shall any Seller exercise any Contract Right under such
Transferred Contract.
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7.3.3 Buyers' Instructions. At Buyers' direction, each Seller shall
(a) notify the other party or parties to such Transferred Contract that Buyers
is such Seller's subcontractor, sublessee or agent with respect thereto and that
all further payments, notices and other communications with respect thereto
shall be directed to Buyers; (b) agree to such amendments, modifications,
extensions, renewals, terminations or other changes in the terms of such
Transferred Contract as Buyers determines, in its sole discretion, are
advisable; and (c) exercise any Contract Right under such Transferred Contract
at such time and in such manner as Buyers determines, in its sole discretion, to
be advisable.
7.3.4 Collateral Assignment. Effective as of the Closing Date, each
Seller hereby collaterally assigns to Buyers (except and only to the extent that
such collateral assignment is expressly prohibited by the terms of such
Transferred Contract), and grants to Buyers a security interest in, all of such
Seller's contract rights under such Transferred Contract and all cash and
non-cash proceeds thereof, as security for the prompt and timely satisfaction
and performance of such Seller's obligations under this Section 7.3. Buyers
shall have, and each Seller shall deliver to Buyers at the Closing, possession
of the original executed copy of such Transferred Contract. Effective as of the
Closing Date, each Seller hereby appoints Buyers as such Seller's attorney to
take such actions, in such Seller's name and on its behalf, as such attorney
determines, in its sole discretion, to be necessary or advisable to protect,
perfect and continue perfected the security interest granted hereunder,
including, but not limited to, the execution and filing of such financing
statements and other instruments and documents as such attorney determines, in
its sole discretion, to be necessary or advisable for such purposes.
7.4. Retirement and Group Plans. For as long as is required by Law or the
applicable plan after the Closing Date, each Seller shall maintain Sellers'
Group Plans in effect, with proper funding, for the purpose of covering all
claims of employees of the Accounts Receivable Collection Business ("Continuing
Claims") (a) that were incurred but not paid before the Effective Date; (b) for
hospitalizations that began before the Effective Date and continued after the
Effective Date; (c) by employees of Sellers that were not hired by Buyers; and
(d) for all medical expenses incurred before or after the Closing Date with
respect to a certain bone marrow condition of a certain employee of the Accounts
Receivable Collection Business. Sellers shall be responsible for any Obligations
under Section 4980(B) of the Internal Revenue Code of 1986, as amended, and
Sections 601-609 of ERISA with respect to Sellers' Group Plans (collectively,
"COBRA Obligations"). Each Seller may terminate its health plans after
expiration of all Continuing Claims and COBRA Obligations. Buyers shall have no
responsibility for the Continuing Claims or COBRA Obligations, but Buyers shall
be responsible for providing coverage, under the standard group insurance plans
of Buyers, for all medical, dental, disability and related claims incurred after
the Effective Date by employees of Sellers who are hired by Buyers. As soon as
practicable following the Closing Date, Sellers shall take all necessary actions
to cause their 401(k) retirement plan ("Sellers' Plan") to transfer an amount of
cash equal to the aggregate value of all of the assets, whether or not vested,
which are attributable to former employees of the Accounts Receivable Collection
Business who become employees of Buyers as of the Closing Date to the 401(k)
Retirement Plan sponsored by Buyers ("Buyers' Plan"). The amount transferred
shall be based upon the most recent valuation of the assets of Sellers' Plan
which shall not precede the actual date of transfer by more than thirty (30)
days. Sellers shall provide Buyers with all of the information requested by
Buyers, in the format requested by Buyers, which is necessary to determine the
correct aggregate amount that should be
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transferred, the amount attributable to each participant as well as all other
relevant participant data including vesting information.
7.5. Access to Accounting Information. For a period of five (5) years
after the Closing Date, the Sellers shall permit the Buying Companies and their
authorized representatives to have full access to, and use of, Selling
Companies' books and records, financial statements, opinions of independent
public accountants, and accounting information, workpapers, notes and related
materials, prepared, reviewed or compiled with respect to, or including, the
Accounts Receivable Collection Business (whether in the possession of the
Sellers or the Sellers' accountants) for the years ended December 31, 1994, 1995
and 1996 and for the period from January 1, 1997 through and including the
Effective Date, and any interim periods therein, for review, duplication,
analysis and any other legal use, including but not limited to, the preparation
of audited financial statements for the Accounts Receivable Collection Business
for use in connection with any public offering of securities pursuant to the
Securities Act of 1933, as amended or any reports filed pursuant to the
Securities Exchange Act of 1934, as amended or applicable state "blue sky" laws.
Sellers shall instruct their accountants to cooperate with and assist Buying
Companies and their authorized representatives to the extent reasonably
requested by them. All confidential business information disclosed to the Buying
Companies pursuant to this Section shall be treated as confidential information
of the Sellers (excluding any information pertaining to the Accounts Receivable
Collection Business and Assets which shall be considered the Buying Companies'
confidential information) unless it is or later becomes publicly available
through no fault of the Buying Companies or it was or later is rightfully
developed or obtained by the Buying Companies from independent sources free from
any duty of confidentiality. Such confidential information shall be held in
confidence by the Buying Companies and shall not be used or disclosed by the
Buying Companies for any purpose except as necessary to implement or perform
this Agreement, or except as required by Law provided that the Sellers are given
a reasonable opportunity to obtain a protective order.
7.6. Further Assurances. At any time and from time to time after the
Closing Date, at Buyers' request and expense, and without further consideration,
the Sellers shall promptly execute and deliver all such further agreements,
certificates, instruments and documents, and perform such further actions, as
Buyers may reasonably request in order to fully consummate the transactions
contemplated hereby and carry out the purposes and intent of this Agreement.
Without limiting the generality of the foregoing, each Seller shall timely file
all Tax returns and reports required to be filed with respect to the Accounts
Receivable Collection Business and Assets and operations for all periods ending
on or before the Closing Date.
7.7. Reconciliations and Allocations. At and after the Closing, all
payments received by Sellers on account of Accounts Receivable in existence as
of the Effective Date or arising after the Effective Date under any Specified
Contracts or Non-Assigned Contracts, and all other payments received by Sellers
which are properly allocable to the conduct of the Accounts Receivable
Collection Business with respect to periods after the Effective Date, shall be
held in trust for Buyers and shall be promptly paid to Buyers.
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7.8. Tax Matters.
7.8.1 Liability for Taxes.
(A) Taxable Periods Ending On or Before the Closing Date. The
Sellers shall be responsible for filing all Tax Returns required to be filed by
or with respect to each of the CRW Subsidiaries (and the other Specified Assets)
for any taxable year or taxable period ending on or before the Closing Date and
shall be liable for and shall jointly and severally indemnify and hold the
Buying Companies harmless against all Taxes for any taxable year or period
ending on or before the Closing Date which are due and payable by either of the
CRW Subsidiaries or with respect to the other Specified Assets.
(B) Taxable Periods Commencing On or After the Closing Date.
The Buying Companies shall be responsible for filing all Tax Returns required to
be filed by or with respect to the CRW Subsidiaries (and the other Specified
Assets) for any taxable year or period commencing after the Closing Date and
shall be jointly and severally liable for, and shall indemnify and hold the
Sellers harmless against, any and all Taxes for any taxable year or period
commencing on or after the Closing Date due or payable by CRW Subsidiaries or
the Buying Companies with respect to either of the CRW Subsidiaries (or with
respect to the other Specified Assets).
(C) Taxable Periods Commencing Before the Closing Date and
Ending After the Closing Date. In the case of any taxable year or period which
commences before and would otherwise end after the Closing Date (the "Closing
Period"), the Buying Companies and/or the Sellers shall, to the extent required
or permitted under applicable Law, cause the CRW Subsidiaries to end their
taxable year or period on the Closing Date. Any such taxable year or period
shall be governed by Paragraph (A) of this Section 7.8.1. With respect to such
taxable year or period which commences before and ends after the Closing Date
for which such an election is not required or permitted to be made under
applicable Law, the Buyers shall cause each of the CRW Subsidiaries to file all
Tax Returns and to pay all Taxes (hereinafter referred to as "Full Year Taxes")
due for any taxable year or taxable period commencing before and ending after
the Closing Date (the "Closing Period"). No later than 20 days before the due
date for the filing of any Tax Return for the Closing Period (including
extensions thereof) the Buying Companies shall notify the Sellers and within 15
days of receiving such notice, but in no event later than five days before the
due date of the Tax Return for the Closing Period (including extensions
thereof)(the "Due Date"), the Sellers shall pay to the Buying Companies an
amount equal to the amount of Taxes owed to the relevant taxing authority
attributable to the Closing Period (calculated as if the relevant taxable period
ended on the Closing Date), if any. For these purposes, the amount of Taxes for
the Closing Period allocable to the Sellers shall be equal to: (i) the total
amount of Taxes for the Closing Period multiplied by (ii) the fraction that the
number of days in the Closing Period up to and including the Closing Date is of
the total number of days in the Closing Period. The Sellers shall be jointly and
severally liable for any Taxes with respect to which such Sellers are
responsible or liable pursuant to this Section 7.8.1(C). Notwithstanding the
foregoing, Sellers shall include the CRW Subsidiaries in their consolidated
federal income tax return for the period from the beginning of their taxable
year in which the Closing Date occurs through the Closing Date, and Sellers
shall be responsible for all Taxes of the CRW Subsidiaries properly includible
on such consolidated federal income tax return.
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7.8.2 Mutual Cooperation. As soon as practicable, but in any event
within 30 days after a request by the either the Sellers or the Buying
Companies, the party to which such request is made shall deliver to the
requesting party such information and other data relating the Tax Returns and
Taxes of the CRW Subsidiaries and shall make available such knowledgeable
employees of the Sellers, Buying Companies, or CRW Subsidiaries, as may be
appropriate, as the requesting party may reasonably request, including providing
the information and other data customarily required by the requesting party to
cause the completion and filing of all Tax Returns for which the requesting
party has responsibility or liability under this Agreement, or to respond to
audits by any taxing authorities with respect to any Tax Returns or taxable
periods for which the requesting party has any responsibility or liability under
this Agreement or to otherwise enable the requesting party to satisfy its
accounting or tax requirements.
7.8.3 Resolution of Disagreements Among the Sellers and the Buying
Companies. If the Sellers and the Buying Companies disagree as to the amount of
Taxes for which each is liable under this Agreement, the Sellers and the Buying
Companies shall promptly consult each other in an effort to resolve such
dispute. If any such point of disagreement cannot be resolved within 15 days of
the initial date of consultation, the Sellers and the Buying Companies shall
consult an independent certified accounting firm which is acceptable to both
parties to act as an arbitrator to resolve all points of disagreement concerning
tax accounting matters with respect to this Agreement.
7.8.4 Section 338(h)(10) Election. Upon the mutual agreement of
Buyers and Sellers, Sellers will join with the Buyers in making an election
under Section 338(h)(10) of the Code (and any corresponding elections under
state, local, or foreign tax law) (collectively a "Section 338(h)(10) Election")
with respect to the purchase and sale of the stock of the CRW Subsidiaries
hereunder. The Sellers will pay any Tax attributable to them with respect to the
transactions contemplated by this Agreement and their Section 338(h)(10)
Election.
7.9. Bank Accounts. From and after the Closing Date, Sellers shall
cooperate with and assist Buyers in preparing all instruments or documents
requested by Buyers to change the names of the individuals who have access to or
are authorized to make withdrawals from or dispositions of all bank accounts,
other accounts, certificates of deposits, marketable securities, other
investments, safe deposit boxes, lock boxes and safes of the Sellers' Accounts
Receivable Collection Business and all keys and combinations to all safe deposit
boxes, lock boxes and safes of the Selling Companies and other depositories.
7.10. Sellers' Obligations. By the close of business on February 7, 1997,
Sellers shall provide Buyers a detailed list, as of December 31, 1996, of all
of each Selling Company's accounts payable, accrued expenses, deferred income,
and other current and long-term liabilities incurred or arising in Sellers'
Accounts Receivable Collection Business, grouped by balance sheet account,
excluding liabilities for Taxes, intercompany liabilities and notes payable.
7.11. UCC-3 Releases. Sellers shall fully cooperate with and assist Buying
Companies in obtaining UCC-3 termination statements from National WestMinster
Bank as soon as practicable following Closing.
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7.12. Sublease. Selling Companies shall sublease the Mall Boulevard
facility to Buyers on the same terms and conditions pursuant to which Sellers
are leasing such facility except that Buyers shall have the option of
terminating such sublease after August 1, 1997 by payment of an amount equal to
the then book value of the lessor's unamortized leasehold improvements
(originally $140,000) (the "Mall Boulevard Sublease"). By the close of business
on February 7, 1997, Sellers shall obtain the Consent of the lessor to the Mall
Boulevard Sublease.
8. RESTRICTIVE COVENANTS OF THE SELLERS
8.1. Certain Acknowledgements. Each of the Sellers expressly acknowledges
that:
8.1.1 NCO Business. The accounts receivable collection business
(collectively, "NCO's Business") conducted by NCO and certain subsidiaries of
NCO which now or in the future conduct any accounts receivable collection
business (Buying Companies and all such existing and future subsidiaries of NCO,
including the Accounts Receivable Collection Business and the CRW Subsidiaries
(after Closing), are referred to as the "NCO Companies") involve the provision
of accounts receivable collection business services using proprietary and
confidential systems and information.
8.1.2 Competitive Nature of Business. NCO's Business is highly
competitive, is marketed throughout the United States and requires long sales
"lead times" often exceeding one year. The NCO Companies expend substantial time
and money, on an ongoing basis, to train their employees, maintain and expand
their customer base, and improve and develop their products and services.
8.1.3 Access to Information. During the period that Sellers owned the
Accounts Receivable Collection Business, Sellers have had access to proprietary
and confidential property, knowledge and information of the Accounts Receivable
Collection Business which, after Closing, shall be proprietary and confidential
property, knowledge and information of the NCO Companies; such property,
knowledge and information must be kept in strict confidence to protect NCO's
Business and maintain the NCO Companies' competitive positions in the
marketplace; and such property, knowledge and information would be useful to
competitors of the NCO Companies for indefinite periods of time.
8.1.4 Basis for Covenants. The covenants of Sections 8.2, 8.3, 8.4
and 8.5 (the "Covenants") are a material part of this Agreement and are an
integral part of the obligations of the Sellers hereunder; the Covenants are
supported by good and adequate consideration; and the Covenants are reasonable
and necessary to protect the legitimate business interests of the NCO Companies.
8.2. Nondisclosure Covenants. At all times after the date of this
Agreement, for an indefinite period of time, except with NCO's prior written
consent, none of the Sellers shall, directly or indirectly, in any capacity,
communicate, publish or otherwise disclose to any Person, or use for the benefit
of any Person, any confidential or proprietary property, knowledge or
information of the NCO Companies, no matter when or how such knowledge or
information was obtained, including without limitation (a) any information
concerning the Specified Assets or the conduct and details of the Accounts
Receivable Collection Business; (b) the identity of customers and prospects,
their specific requirements, and the names, addresses and telephone numbers
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of individual contacts at customers and prospects; (c) prices, renewal dates and
other detailed terms of customer and supplier Contracts and proposals;
(d) pricing policies, marketing and sales strategies, methods of delivering
products and services, and products and service development projects and
strategies; (e) employment and payroll records; (f) forecasts, budgets and other
nonpublic financial information; and (g) expansion plans, management policies,
methods of operation, and other business strategies and policies.
8.3. Noncompetition Covenants. During the period beginning on the date of
this Agreement and ending on the third (3) anniversary of the Closing Date,
except with NCO's prior written consent, none of the Sellers shall, directly or
indirectly, in any capacity, at any location worldwide:
8.3.1 Solicitation Restrictions. Communicate with or solicit any
Person who is or during such period becomes a customer, prospect, supplier,
employee, salesman, agent or representative of, or a consultant to, the NCO
Companies, in any manner which interferes with such Person's relationship with
the NCO Companies, or in an effort to obtain any such Person as a customer,
employee, salesman, agent or representative of, or a consultant to, any other
Person that conducts a business competitive with or similar to all or any part
of NCO's Business.
8.3.2 Competing Business Restrictions. Establish, own, manage,
operate, finance or control, or participate in the establishment, ownership,
management, operation, financing or control of, or be a director, officer,
employee, salesman, agent or representative of, or be a consultant to, any
Person that conducts a business competitive with or similar to all or any part
of NCO's Business.
8.4. Standstill. At all times after the date of this Agreement and for so
long as the Restricted Group and their respective affiliates or associates (as
such terms are defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) individually or collectively have beneficial
ownership (determined in accordance with Rule 13d-3 under the Exchange Act) of
at least one percent (1%) of the outstanding securities of NCO entitled to vote
generally in the election of directors:
8.4.1 No Acquisition or Solicitation. Except with NCO's prior written
consent, no Seller shall: (a) purchase, offer to purchase, acquire, offer to
acquire, or agree to acquire by purchase, by joining a partnership, limited
partnership, syndicate or other "group" (as such term is used in Section
13(d)(3) of the Exchange Act) or otherwise (any such act, to "acquire"), any
securities of NCO entitled to vote generally in the election of directors, or
securities convertible into or exercisable or exchangeable for such securities
(collectively, "Restricted Securities") except upon exercise of the Warrant by
CRW or as a result of a stock split, stock dividend or similar recapitalization
by NCO; (b) participate in the formation, or encourage the formation, of any
"person" (as such term is used in Section 13(d)(3) of the Exchange Act), which
owns or seeks to acquire beneficial ownership or otherwise acts in respect of
Restricted Securities; (c) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are defined or used
in Regulation 14A under the Exchange Act) or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11 under the
Exchange Act) with respect to NCO, or execute any written consent in lieu of a
meeting of holders of Restricted Securities or any class thereof; (d) initiate,
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propose or otherwise solicit shareholders of NCO for the approval of one or more
shareholder proposals with respect to NCO or induce or attempt to induce any
other person to initiate any shareholder proposal; (e) seek election to or seek
to place a representative on the Board of Directors of NCO or seek the removal
of any member of the Board of Directors of NCO; (f) call or seek to have called
any meeting of the shareholders of NCO; (g) deposit any Restricted Securities in
a voting trust or subject them to a voting agreement or other agreement or
arrangement with respect to the voting of such Restricted Securities;
(h) otherwise act, directly or indirectly, alone or in concert with others, to
seek to control the management, Board of Directors, policies or affairs of NCO,
or solicit, propose, seek to effect or negotiate with any other person with
respect to any form of business combination transaction with NCO or any
affiliate thereof, or any restructuring, recapitalization or similar transaction
with respect to NCO or any affiliate thereof (solicit, make or propose or
encourage or negotiate with any other person with respect to, or announce an
intent to make, any tender offer or exchange offer for any Restricted
Securities, or disclose an intent, purpose, plan or proposal with respect to NCO
or any Restricted Securities inconsistent with the provisions of this Agreement,
including an intent, purpose, plan or proposal that is conditioned on or would
require NCO to waive the benefit of or amend any provision of this Section 8.4.
or assist, participate in, facilitate, encourage or solicit any effort or
attempt by any person to do or seek to do any of the foregoing; (i) request NCO
(or its directors, officers, employees or agents), directly or indirectly, to
amend or waive any provision of this Section 8.4 (including this clause 8.4(i))
or otherwise seek any modification to or waiver of any of the agreements or
obligations under this Section 8.4; and (j) encourage or render advice to or
make any recommendation or proposal to any person or other entity to engage in
any of the actions covered by this Section 8.4 (including this clause (j)).
8.4.2 Voting. Each Seller shall vote all Restricted Securities
beneficially owned by such Seller in connection with any action to be taken by
the shareholders of NCO in accordance with the recommendation of the Board of
Directors of NCO.
8.5. Nonsolicitation. During the period beginning on the date of this
Agreement and ending on August 1, 1997, no Seller or any of its subsidiaries
shall solicit or hire any of the employees of the NCO Companies or any of the
employees of the Accounts Receivable Collection Business who were employed by
such entities prior to the Closing Date to become employees or independent
contractors of any Seller or any of its subsidiaries.
8.6. Certain Exclusions. Confidential and proprietary property, knowledge
and information of the NCO Companies shall not include any information that is
now known by or readily available to the general public, nor shall it include
any information that in the future becomes known by or readily available to the
general public other than as a result of any breach of the Covenants of this
Agreement. The ownership by any of the Sellers of not more than one percent (1%)
of the outstanding securities of any public company shall not, by itself,
constitute a breach of the Covenants of Section 8.3, even if such public company
competes with the NCO Companies. Except as provided in Section 8.9, none of the
provisions of Section 8.3 or Section 8.4 shall apply to TeleSpectrum Worldwide
Inc.; provided nothing in this sentence shall limit the rights of the NCO
Companies pursuant to Section 8.7.
8.7. Enforcement of Covenants. Each of the Sellers expressly acknowledges
that it would be extremely difficult to measure the damages that might result
from any breach of the Covenants, and that any breach of the Covenants will
result in irreparable injury to the NCO
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Companies for which money damages could not adequately compensate. If a breach
of the Covenants occurs, then the NCO Companies shall be entitled, in addition
to all other rights and remedies that they may have at law or in equity, to have
an injunction issued by any competent court enjoining and restraining the
Sellers and all other Persons involved therein from continuing such breach. The
existence of any claim or cause of action that any of the Sellers or any such
other Person may have against any member of the NCO Companies shall not
constitute a defense or bar to the enforcement of any of the Covenants. If the
NCO Companies must resort to litigation to enforce any of the Covenants that has
a fixed term, then such term shall be extended for a period of time equal to the
period during which a breach of such Covenant was occurring, beginning on the
date of a final court order (without further right of appeal) holding that such
a breach occurred or, if later, the last day of the original fixed term of such
Covenant.
8.8. Scope of Covenants. If any Covenant, or any part thereof, or the
application thereof, is construed to be invalid, illegal or unenforceable, then
the other Covenants, or the other portions of such Covenant, or the application
thereof, shall not be affected thereby and shall be enforceable without regard
thereto. If any of the Covenants is determined to be unenforceable because of
its scope, duration, geographical area or other factor, then the court making
such determination shall have the power to reduce or limit such scope, duration,
area or other factor, and such Covenant shall then be enforceable in its reduced
or limited form.
8.9. Successors. The provisions of this Section 8 shall bind and be
enforceable against any Person which (i) acquires all or substantially all of
the Assets of any Selling Company, or (ii) merges or consolidates with any
Selling Company, or (iii) any Person which beneficially owns (within the meaning
of Rule 13d-3 under the Exchange Act) a majority of the outstanding stock
entitled to vote generally in the election of directors of any Selling Company
or any Person described in the preceding clauses (i) or (ii); provided, however,
that in no such event shall TeleSpectrum be bound by the provisions of Section
8.3.2.
9. INDEMNIFICATION
9.1. Sellers' Indemnification. From and after the Closing Date, the
Sellers, jointly and severally, shall indemnify and hold harmless the NCO
Companies, and their respective successors and assigns, and their respective
directors, officers, employees, agents and representatives, from and against any
and all actions, suits, claims, demands, debts, liabilities, obligations,
losses, damages, costs and expenses, including without limitation reasonable
attorney's fees and court costs, arising out of or caused by, directly or
indirectly, any of all of the following:
9.1.1 Misrepresentation. Any misrepresentation, breach or failure of
any warranty or representation made by any of the Sellers in or pursuant to this
Agreement.
9.1.2 Nonperformance. Any failure or refusal by any of the Sellers to
satisfy or perform any covenant, term or condition of this Agreement required to
be satisfied or performed by any or all of them.
9.1.3 Non-Assumed Obligations. Any Obligation (as defined in Section
1.17) of any of the Selling Companies (other than those expressly included in
the Specified Liabilities) including, but not limited to, (a) any of the types
of Obligations specifically excluded
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from the Specified Liabilities under Section 2.2; (b) any such Obligation that
may be imposed upon the NCO Companies as a result of the failure by any of the
Selling Companies to comply with any bulk sales, bulk transfer, fraudulent
conveyance or similar Law of any jurisdiction that may be applicable to some or
all of the transactions contemplated by this Agreement; and (c) any such
Obligation that may be imposed upon any of the NCO Companies or their affiliates
as a result of any Law under which any of the NCO Companies or their affiliates
may have successor liability for any Tax or other Obligations of any of the
Selling Companies (collectively, the "Non-Assumed Obligations").
9.1.4 Unasserted Claims. Any action, suit or claim arising out of,
caused by or based upon any act or omission of any of the Selling Companies or
any of their respective shareholders, partners, directors, executives, officers,
employees, agents or representatives at any time before the Closing.
9.1.5 Proceedings by Employees. Any Proceeding against any of the NCO
Companies by or on behalf of any employee of any Seller who is not hired by
Buyers.
9.1.6 Failure to Obtain Consents. Any Proceeding against any Buyer
due to the failure of Sellers to obtain any Consent to any Transferred Contract
or to the Mall Boulevard Sublease.
9.1.7 CRW Subsidiaries. Any breach of a representation or warranty as
to ownership of the stock of the CRW Subsidiaries.
9.1.8 HSR Act. Any Obligation of or Proceeding (including fines and
penalties) against the NCO Companies from any breach of a representation or
warranty of Selling Companies as to the HSR Act.
9.2. Buying Companies' Indemnification. From and after the Closing Date,
the Buying Companies, jointly and severally, shall indemnify and hold harmless
the Sellers and their respective successors and assigns, and their respective
directors, officers, employees, agents and representatives, from and against any
and all actions, suits, claims, demands, debts, liabilities, obligations,
losses, damages, costs and expenses, including without limitation reasonable
attorney's fees and court costs, arising out of or caused by, directly or
indirectly, any of the following:
9.2.1 Misrepresentation. Any misrepresentation, breach or failure of
any warranty or representation made by any of the Buying Companies in or
pursuant to this Agreement.
9.2.2 Nonperformance. Any failure or refusal by any of the Buying
Companies to satisfy or perform any covenant, term or condition of this
Agreement required to be satisfied or performed by either or both of them.
9.2.3 Specific Liabilities. Any failure or refusal of the Buyers to
satisfy or perform any of the Specific Liabilities; provided, however, that
Buyers shall have the right to negotiate the amount and terms of repayment of
any accounts payable constituting Specific Liabilities and pay and discharge
such accounts payable in accordance with the mutual agreement of Buyers and such
payees.
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9.2.4 Unasserted Claim. Any action, suit or claim arising out of,
caused by or based upon any act or omission of any of the Buying Companies or
any of their respective shareholders, partners, directors, executives, officers,
employees, agents, or representatives at any time after the Closing Date.
9.2.5 WARN. Any Obligation resulting from a violation of the WARN Act
to the extent due to the actions or omissions of Buyers.
9.3. Indemnification Procedures. With respect to each event, occurrence or
matter ("Indemnification Matter") as to which any member of the NCO Companies or
any of the Sellers (in either case, referred to collectively as, the
"Indemnitee") is entitled to indemnification from Sellers or the Buying
Companies, as the case may be (referred to collectively as, the "Indemnitor")
under this Section 9:
9.3.1 Notice. Within ten (10) days after the Indemnitee receives
written documents underlying the Indemnification Matter or, if the
Indemnification Matter does not involve a third-party action, suit, claim or
demand, promptly after the Indemnitee first has actual knowledge of the
Indemnification Matter, the Indemnitee shall give notice to the Indemnitor of
the nature of the Indemnification Matter and the amount demanded or claimed in
connection therewith ("Indemnification Notice"), together with copies of any
such written documents.
9.3.2 Defense. If a third-party action, suit, claim or demand is
involved, then, upon receipt of the Indemnification Notice, the Indemnitor
shall, at its expense and through counsel of its choice, promptly assume and
have sole control over the litigation, defense or settlement (the "Defense") of
the Indemnification Matter, except that (a) the Indemnitee may, at its option
and expense and through counsel of its choice, participate in (but not control)
the Defense; (b) if the Indemnitee reasonably believes that the handling of the
Defense by the Indemnitor may have a material adverse affect on the Indemnitee,
its business or financial condition, or its relationship with any customer,
prospect, supplier, employee, salesman, consultant, agent or representative,
then the Indemnitee may, at its option and expense and through counsel of its
choice, assume control of the Defense, provided that the Indemnitor shall be
entitled to participate in the Defense at its expense and through counsel of its
choice; (c) the Indemnitor shall not consent to any Judgment, or agree to any
settlement, without the Indemnitee's prior written consent; and (d) if the
Indemnitor does not promptly assume control over the Defense or, after doing so,
does not continue to prosecute the Defense in good faith, the Indemnitee may, at
its option and through counsel of its choice, but at the Indemnitor's expense,
assume control over the Defense. In any event, the Indemnitor and the Indemnitee
shall fully cooperate with each other in connection with the Defense, including
without limitation by furnishing all available documentary or other evidence as
is reasonably requested by the other.
9.3.3 Payments. All amounts owed by the Indemnitor to the Indemnitee
(if any) shall be paid in full within fifteen (15) business days after a final
Judgment (without further right of appeal) determining the amount owed is
rendered, or after a final settlement or agreement as to the amount owed is
executed.
9.4. Limits on Indemnification. Indemnitor's liability under this Section
9 shall be limited as follows:
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9.4.1 Deductible. No amount shall be payable by the Indemnitor under
this Section 9 unless and until the aggregate amount otherwise payable by the
Indemnitor under this Section 9 exceeds One Hundred Thousand Dollars ($100,000),
in which event the Indemnitor shall pay such excess amount and all future
amounts payable by the Indemnitor under this Section 9.
9.4.2 Ceiling. The Indemnitor's total liability under this Section 9
shall not exceed Five Million Dollars ($5,000,000).
9.4.3 Time Periods. The Indemnitor shall have no liability with
respect to any Indemnification Matter unless the Indemnitee gives an
Indemnification Notice with respect thereto within six (6) months after the
Closing Date.
9.5. Exceptions. None of the foregoing limitations in Section 9.4 shall
apply in the case of any Indemnification Matter involving (i) intentional
misrepresentation, fraud or criminal matters; (ii) title to the Specified
Assets; (iii) Taxes; (iv) covenants, agreements or Obligations to be performed
after Closing including, without limitation, the covenants, agreements and
Obligations set forth in Section 7, Section 8 and Section 9, (v) the Non-Assumed
Obligations, and (vi) the Indemnification Matters set forth in Section 9.1.6,
Section 9.1.7 or Section 9.1.8. In addition, none of the foregoing limitations
shall apply in the case of any Indemnification Matter as to which any Seller is
the Indemnitor if, and only to the extent that, Sellers are entitled to coverage
under any Insurance Policy maintained by or for the benefit of any of the
Sellers.
9.6. Setoff and Holdback. In addition to all other rights and remedies
that the Indemnitee may have, the Indemnitee shall have the right to setoff,
against any amounts due to the Indemnitor, whether due under this Agreement, any
of the other Contracts contemplated by this Agreement or otherwise, any sums for
which the Indemnitee is entitled to indemnification under this Section 9;
provided, however, that Buyers shall not have right of setoff with respect to
the Cash Payment Amount if NCO elects to exercise the Cash Payment Option (as
such terms are defined in the Warrant) pursuant to Section 1.2 of the Warrant.
The Indemnitee's rights to indemnification under this Section 9 shall not be in
any manner limited by or to this right of setoff. If any Indemnification Matters
are pending at a time when the Indemnitee is required to pay any amount due to
the Indemnitor, then the Indemnitee shall have the right, upon notice to the
Indemnitor, to withhold from such payment, until final determination of such
pending Indemnification Matters, the total amount for which the Indemnitor may
become liable as a result thereof, as determined by the Indemnitee reasonably
and in good faith.
9.7. No Consequential or Punitive Damages. Indemnitor shall not be liable
under this Section 9 to the Indemnitee for the Indemnitee's special or
consequential damages (including damages for a multiple of profits) or for
punitive damages; provided, however, that any special, consequential (including
damages for a multiple of profits) or punitive damages awarded to a third party
against Indemnitee shall be considered Indemnitee's actual damages for the
purpose of this Section 9.
9.8. Specified Liabilities on Closing Balance Sheet. Buying Companies
shall pay, and shall not be indemnified for, any Specified Liability if and to
the extent that such Specified Liability was set forth on the Closing Balance
Sheet and taken into consideration in determining the Actual TNW of Sellers'
Accounts Receivable Collection Business.
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9.9. Shareholder Suits. No party shall have any liability under this
Section 9 or otherwise for suits bought by the other party's shareholders.
10. OTHER PROVISIONS
10.1. Fees and Expenses. The Buying Companies shall pay all of the fees
and expenses incurred by them, and the Sellers shall pay all of the fees and
expenses incurred by Selling Companies, in negotiating and preparing this
Agreement (and all other Contracts executed in connection herewith or therewith)
and in consummating the transactions contemplated by this Agreement.
10.2. Notice. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered personally, (b) three business
days after being mailed by first class certified mail, return receipt requested,
postage prepaid, or (c) one business day after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, to the parties
at their respective addresses stated on the first page of this Agreement.
Notices may also be given by prepaid telegram or facsimile and shall be
effective on the date transmitted if confirmed within 24 hours thereafter by a
signed original sent in the manner provided in the preceding sentence. Notice to
CRW at the address specified on page one of this Agreement to the attention of
J. Brian O'Neill, Chief Executive Officer, shall suffice as notice to all of the
Sellers, provided that a copy thereof is simultaneously sent to Morgan Lewis &
Bockius LLP, 2000 One Logan Square, Philadelphia, PA 19103, attention: Stephen
M. Goodman, Esquire. Notice to NCO at the address specified on page one of this
Agreement to the attention of Michael J. Barrist, President, shall suffice as
notice to all of the NCO Companies, provided that a copy thereof is
simultaneously sent to Blank Rome Comisky & McCauley, Four Penn Center Plaza,
Philadelphia PA 19103, attention Joel C. Shapiro, Esquire. Any party may change
its address for notice and the address to which copies must be sent by giving
notice of the new addresses to the other parties in accordance with this Section
10.2, except that any such change of address notice shall not be effective
unless and until received.
10.3. Survival of Representations. All representations and warranties made
in this Agreement or pursuant hereto shall survive the date of this Agreement,
the Effective Date, the Closing Date and the consummation of the transactions
contemplated by this Agreement for a period of six (6) months after the Closing
Date (except as provided in Section 9.5). Buying Companies shall not bring an
action in law or equity pursuant to Section 9 or otherwise for breaches of
representations and warranties after August 1, 1997 except for any breaches of
representations or warranties as to which any of the exceptions of Section 9.5
applies.
10.4. Interpretation of Representations. Each representation and warranty
made in this Agreement or pursuant hereto is independent of all other
representations and warranties made by the same parties, whether or not covering
related or similar matters, and must be independently and separately satisfied.
Exceptions or qualifications to any such representation or warranty shall not be
construed as exceptions or qualifications to any other representation or
warranty.
10.5. Reliance by Buying Companies. Notwithstanding the right of the
Buying Companies to investigate the Accounts Receivable Collection Business and
Assets and financial
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condition of the Selling Companies, and notwithstanding any knowledge determined
or determinable by the Buying Companies as a result of such investigation, the
Buying Companies have the unqualified right to rely upon, and have relied upon,
each of the representations and warranties made by the Selling Companies in this
Agreement or pursuant hereto.
10.6. Entire Understanding. This Agreement, together with the Exhibits and
Schedules hereto, states the entire understanding among the parties with respect
to the subject matter hereof, and supersedes all prior oral and written
communications and agreements, and all contemporaneous oral communications and
agreements, with respect to the subject matter hereof, including without
limitation all confidentiality letter agreements and letters of intent
previously entered into among some or all of the parties hereto. No amendment or
modification of this Agreement shall be effective unless in writing and signed
by the party against whom enforcement is sought.
10.7. Publicity. All voluntary public announcements concerning the
transactions contemplated by this Agreement shall be mutually acceptable to both
Buyers and Sellers. Unless required by Law, the parties shall not make any
public announcement or issue any press release concerning the transactions
contemplated by this Agreement without the prior written consent of the other
parties. With respect to any announcement that any of the parties is required by
Law or stock exchange or The Nasdaq Stock Market regulation to issue, such party
shall, to the extent possible under the circumstances, review the necessity for
and the contents of the announcement with the other parties before issuing the
announcement.
10.8. Parties in Interest. None of the parties may assign this Agreement
or any rights or obligations under this Agreement without the prior written
consent of the other parties. This Agreement shall bind, benefit, and be
enforceable by and against the parties hereto, and their respective successors
and consented-to assigns.
10.9. Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Agreement shall be enforceable unless in writing and signed
by the party against whom enforcement is sought. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between or among any of the parties, shall constitute a waiver of, or
shall preclude any other or further exercise of, any right, power or remedy.
10.10. Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
10.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
10.12. Section Headings. The section and subsection headings in this
Agreement are used solely for convenience of reference, do not constitute a part
of this Agreement, and shall not affect its interpretation.
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10.13. References. All words used in this Agreement shall be construed to
be of such number and gender as the context requires or permits. Unless a
particular context clearly requires otherwise, the words "hereof" and
"hereunder" and similar references refer to this Agreement in its entirety and
not to any specific section or subsection of this Agreement.
10.14. Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
10.15. Jurisdiction and Process. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of Pennsylvania; (b) if any
such action is commenced in a state court, then, subject to applicable law, no
party shall object to the removal of such action to any federal court located in
the Commonwealth of Pennsylvania; (c) each of the parties irrevocably waives the
right to trial by jury; (d) each of the parties irrevocably consents to service
of process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 10.2; and (e) the prevailing parties shall be entitled to recover
their reasonable attorney's fees (including, if applicable, charges for in-house
counsel) and court costs from the other parties.
10.16. No Third-Party Beneficiaries. No provision of this Agreement is
intended to or shall be construed to grant or confer any right to enforce this
Agreement, or any remedy for breach of this Agreement, to or upon any Person
other than the parties hereto, including, but not limited to, any customer,
prospect, supplier, employee, contractor, salesman, agent or representative of
Sellers.
10.17. Neutral Construction. The parties have negotiated this Agreement
and all of the terms and conditions contained in this Agreement in good faith
and at arms' length, and each party has been represented by counsel during such
negotiations. No term, condition, or provision contained in this Agreement shall
be construed against any party or in favor of any party (i) because such party
or such party's counsel drafted, revised, commented upon, or did not comment
upon, such term, condition, or provision; or (ii) because of any presumption as
to any inequality of bargaining power between or among the parties. Furthermore,
all terms, conditions, and provisions contained in this Agreement shall be
construed and interpreted in a manner which is consistent with all other terms,
conditions, and provisions contained in this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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EACH PARTY HAS CAUSED THIS AGREEMENT TO BE EXECUTED ON ITS BEHALF BY A DULY
AUTHORIZED OFFICER, AS OF THE DATE FIRST STATED ABOVE.
SELLERS:
CRW Financial, Inc.
By: /s/ Jonathan P. Robinson
-------------------------
Title: Chief Financial Officer
Kaplan & Kaplan, Inc.
By: /s/ Jonathan P. Robinson
-------------------------
Title: Chief Financial Officer
BUYING COMPANIES
CRWF Acquisition, Inc. K&K Acquisition, Inc.
By: /s/ Michael Barrist By: /s/ Michael Barrist
------------------------- -------------------------
Title: President Title: President
NCO Group, Inc.
By: /s/ Michael Barrist
-------------------------
Title: President
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