Exhibit 4.1
NCO GROUP, INC.
4.75% Convertible Subordinated Notes due 2006
PURCHASE AGREEMENT
March 29, 2001
DEUTSCHE BANC ALEX. XXXXX INC.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
NCO Group, Inc. (the "Company"), a Pennsylvania corporation, confirms
its agreement with Deutsche Banc Alex. Xxxxx Inc. ("DBAB" or the "Initial
Purchaser," which term shall also include any initial purchaser substitute as
hereinafter provided), with respect to the issue and sale by the Company and the
purchase by the Initial Purchaser, of the $125,000,000 aggregate principal
amount of the Company's 4.75% Convertible Subordinated Notes due 2006 (the
"Notes"). The Notes are to be issued pursuant to an indenture to be entered into
as of April 4, 2001 (the "Indenture") between the Company and Bankers Trust
Company as trustee (the "Trustee"). The Notes will be registered in the name of
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a
letter of representations, to be entered into as of the Closing Date (as defined
below) (the "DTC Agreement") among the Company, the Trustee and DTC.
The Notes will be convertible into shares of the Company's Common
Stock, no par value per share (the "Common Stock"), in accordance with the terms
of the Notes and the Indenture, at the initial conversion rate specified in
Schedule I hereto.
The holders of Notes will be entitled to the benefits of a Registration
Rights Agreement, substantially in the form of Exhibit A with such changes as
shall be agreed to by the parties hereto (the "Registration Rights Agreement"),
pursuant to which the Company will file a registration statement with the
Securities and Exchange Commission (the "Commission") registering resales of the
Notes and the shares of Common Stock issuable upon conversion thereof (the
"Conversion Shares"), as referred to in the Registration Rights Agreement under
the Securities Act of 1933, as amended (the "Securities Act").
The Company understands that the Initial Purchaser proposes to make an
offering of the Notes on the terms and in the manner set forth herein and agrees
that the Initial Purchaser may resell, subject to the conditions set forth
herein, all or a portion of the Notes to purchasers ("Subsequent Purchasers") at
any time after the date of this Agreement. The Notes are to be offered and sold
through the Initial Purchaser without being registered under the Securities Act,
in reliance upon exemptions therefrom. Pursuant to the terms of the Notes and
the Indenture, investors that acquire Notes may only resell or otherwise
transfer such Notes if such Notes are hereinafter registered under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemption afforded by Rule 144A
("Rule 144A") of the rules and regulations promulgated under the Securities Act
(the "Securities Act Regulations") by the Commission and the exemption afforded
by Regulation S under the Securities Act ("Regulation S")).
The Company has prepared and delivered to the Initial Purchaser copies
of a preliminary offering memorandum dated March 26, 2001 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Initial Purchaser
on the date hereof or the next succeeding day, copies of a final offering
memorandum (the "Final Offering Memorandum") each for use by the Initial
Purchaser in connection with its solicitation of purchases of, or offering of,
the Notes. "Offering Memorandum" means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto and
the documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Notes.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include any document filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") which is incorporated by reference in the Offering
Memorandum.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company. The Company represents and
warrants to the Initial Purchaser as of the date hereof and as of the Closing
Date (as defined below) as follows:
(a) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Pennsylvania,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Offering Memorandum. Each of the subsidiaries
of the Company as listed in Exhibit B hereto (collectively, the "Subsidiaries")
has been duly organized and is validly existing as a corporation or limited
liability company in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its properties
and conduct its business as described in the Offering Memorandum. Except as set
forth on Exhibit B, the Subsidiaries are the only subsidiaries, direct or
indirect, of the Company. The Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the conduct of
their business requires such qualification and in which the failure to qualify
would have a material adverse effect upon the financial condition, results of
operations, business or prospects of the Company and the Subsidiaries taken as a
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whole (a "Material Adverse Effect"). The outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and to the extent shown in Exhibit B hereto are owned by
the Company or another Subsidiary free and clear of all liens, encumbrances and
claims, at law or in equity, except that the Company owns approximately 63% of
the outstanding common stock of NCO Portfolio Management, Inc. ("Portfolio");
and no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in the Subsidiaries are outstanding, except
that Portfolio has the authority to issue stock options to purchase 3,000,000
shares of its common stock.
(b) The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder in the Company. Upon issuance and delivery of the Notes in
accordance with this Agreement and the Indenture, the Notes will be convertible
at the option of the holder thereof into shares of Common Stock; the Conversion
Shares have been duly authorized and reserved for issuance upon such conversion
by all necessary corporate action and such Conversion Shares when issued upon
such conversion will be validly issued, full paid and non-assessable; no holder
of Common Stock will be subject to personal liability by reason of being such a
holder and the issuance of such Conversion Shares upon such conversion or
purchases will not be subject to the preemptive or similar rights of any
securityholder of the Company. No preemptive rights of stockholders exist with
respect to the issue and sale of any of the Notes or Conversion Shares. Neither
the offering nor sale of the Notes as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to the registration under the Securities Act of any shares of Common
Stock.
(c) The information set forth under the caption "Capitalization" in the
Offering Memorandum is true and correct. The Notes, the Indenture, the
Registration Rights Agreement and the Conversion Shares conform to the
descriptions thereof contained in the Offering Memorandum. The forms of
certificates for the Notes and Conversion Shares conform to the corporate law of
the jurisdiction of the Company's incorporation.
(d) The Preliminary Offering Memorandum and the Final Offering
Memorandum and any amendments and supplements thereto do not contain, and will
not contain as of the date of such Offering Memorandum, any untrue statement of
material fact, and do not omit, and will not omit as of the date of such
Offering Memorandum, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no representations or warranties as to information contained in or omitted
from the Offering Memorandum, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of the Initial Purchaser, specifically for use in the preparation
thereof. The Offering Memorandum as delivered from time to time shall
incorporate by reference the Company's most recent Annual Report on Form 10-K
filed with the Commission and each Quarterly Report on Form 10-Q and each
Current Report on Form 8-K filed by the Company with the Commission since the
end of the fiscal year to which such Annual Report relates. The documents
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incorporated or deemed to be incorporated by reference in the Offering
Memorandum at the time they were or hereafter are filed with the Commission
complied and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder (the
"Exchange Act Regulations"), and when read together with the other information
in the Offering Memorandum, at the time the Offering Memorandum was issued and
at the Closing Date, do not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) The consolidated financial statements of the Company and the
subsidiaries, together with related notes and schedules as set forth or
incorporated by reference in the Offering Memorandum, present fairly in all
material respects the financial position and the results of operations and cash
flows of the Company and the consolidated subsidiaries, at the indicated dates
and for the indicated periods. Such financial statements and related schedules
have been prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair presentation of
results for such periods have been made. The summary financial and statistical
data included or incorporated by reference in the Offering Memorandum presents
fairly in all material respects the information shown therein and such data has
been compiled on a basis consistent with the financial statements presented
therein and the books and records of the Company.
(f) Each of Ernst & Young LLP, PricewaterhouseCoopers LLP, and Xxxxxxx,
Xxxxxx & Xxxxxxxxx, who have certified certain of the financial statements
included as part of, or incorporated by reference in, the Offering Memorandum,
are independent public accountants as required by the Securities Act.
(g) Except as set forth in the Offering Memorandum, there is no action,
suit, claim or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of the Subsidiaries before any court or
administrative agency or otherwise which, if determined adversely to the Company
or any of its Subsidiaries, might result in any material adverse change in the
earnings, business, management, properties, assets, operations, condition
(financial or otherwise) or prospects of the Company and of the Subsidiaries
taken as a whole or to prevent the consummation of the transactions contemplated
hereby.
(h) The Company and the Subsidiaries have good and marketable title to
all of the properties and assets reflected in the financial statements (or as
described in the Offering Memorandum) hereinabove described, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those reflected in
such financial statements (or as described in the Offering Memorandum) or which
are not material in amount to the Company and the Subsidiaries taken as a whole.
The Company and the Subsidiaries occupy their leased properties under valid and
binding leases conforming in all material respects to the description thereof,
if any, set forth in the Offering Memorandum.
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(i) The Company and the Subsidiaries have filed all Federal, State,
local and foreign income tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are not
being contested in good faith. All tax liabilities have been adequately provided
for in the financial statements of the Company.
(j) Since the respective dates as of which information is given in the
Offering Memorandum, as it may be amended or supplemented, there has not been
any material adverse change or any development known to the Company involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, operations, condition (financial or otherwise),
or prospects of the Company and its Subsidiaries taken as a whole, whether or
not occurring in the ordinary course of business (a "Material Adverse Change"),
and there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of business and
changes and transactions described in the Offering Memorandum, as it may be
amended or supplemented. The Company and the Subsidiaries have no material
contingent obligations which are not disclosed in the Company's financial
statements which are set forth or incorporated by reference in the Offering
Memorandum.
(k) Neither the Company nor any of the Subsidiaries is or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under its Amended and Restated Certificate of Incorporation, as
currently in effect (the "Charter"), or its Amended and Restated Bylaws, as
currently in effect (the "By-Laws") (or in the case of an entity that is not a
corporation, such entity's governing documents) or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party or
by which it, or any of its properties, is bound and which default is of material
significance in respect of the business, management, properties, assets,
operations, condition (financial or otherwise) or prospects of the Company and
the Subsidiaries taken as a whole.
(l) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary to be made by or on behalf of the Company in
connection with the execution and delivery by the Company of this Agreement and
the consummation of the transactions herein contemplated (except such additional
steps as may be necessary to qualify the Notes under state securities or Blue
Sky laws) has been obtained or made and is in full force and effect.
(m) The Company and each of the Subsidiaries holds all licenses,
certificates and permits from governmental authorities which are necessary to
the conduct of their businesses, except where the failure to hold such license,
certificate or permit would not have a Material Adverse Effect. Except as
disclosed in the Offering Memorandum, the Company and each of the Subsidiaries
own or possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service xxxx
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective business,
except where the failure to own or possess such rights would not have a Material
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Adverse Effect, and the Company has no reasonable basis to believe that the
conduct of their businesses will conflict with any such rights of others which
would reasonably be expected to have a Material Adverse Effect, and other than
as described in the Offering Memorandum, neither the Company nor any Subsidiary
has received any notice of any claim of conflict with any such rights of others
which, if such assertion of conflict were sustained, would have a Material
Adverse Effect.
(n) Neither the Company, nor to the Company's best knowledge, any of
its affiliates (as defined in Rule 144 under the Act), has taken or will take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
manipulation or unlawful stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of the Notes or Conversion Shares. The
Company acknowledges that the Initial Purchaser may engage in passive market
making transactions in shares of the Common Stock on The Nasdaq National Market
in accordance with Rule 103 of Regulation M under the Exchange Act.
(o) Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended and the rules and regulations thereunder (the "1940 Act").
(p) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(q) The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar industries.
(r) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability which would have a Material Adverse Effect; the Company
has not incurred and does not expect to incur liability which would have a
Material Adverse Effect under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan" for
which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
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nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(s) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of doing Business with Cuba, and the Company further
agrees that if it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the Offering
Memorandum becomes or has become effective with the Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported or incorporated by reference in the
Offering Memorandum, if any, concerning the Company's business with Cuba or with
any person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(t) No labor disturbance by the employees of the Company or any of the
Subsidiaries exists or, to the best knowledge of the Company, is contemplated or
threatened.
(u) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of toxic
or other wastes or other hazardous substances by, due to or caused by the
Company or any of the Subsidiaries (or, to the best knowledge of the Company,
and other entity (including any predecessor) for whose acts or omissions the
Company or any of the Subsidiaries is or may reasonably be expected to be
liable) upon any of the property now or previously owned or leased by the
Company or any of the Subsidiaries, or upon any other property, in violation of
any statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule (including rule
of common law), regulation, order, judgment decree or permit, give rise to any
liability, except for any violation or liability which would not have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge, emission or
other release of any kind onto such property or into the environment surrounding
such property of any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge, except for any such disposal,
discharge, emission or other release of any kind which would not have,
singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
(v) Neither the Company nor, to the best knowledge of the Company, any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; or
(iii) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(w) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of capital
stock of or other equity or other ownership interest in the Company.
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(x) Neither the Company nor any of the Subsidiaries owns any "margin
securities" as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve System ( the "Federal Reserve Board"), and none
of the proceeds of the sale of the Notes will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might cause
any of the Notes to be considered a "purpose credit" within the meanings of
Regulation G, T, U or X of the Federal Reserve Board.
(y) The Company has full right, power and authority to execute and
deliver this Agreement, the Indenture, the Registration Rights Agreement, and
the Notes (collectively, the "Transaction Documents") and to perform its
obligations hereunder and thereunder.
(z) This Agreement has been duly authorized, executed and delivered by
the Company and when duly executed and delivered by each of the other parties
hereto will constitute a valid and legally binding agreement of the Company,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(aa) The Indenture has been duly authorized by the Company and, when
executed and delivered by the Company and the Trustee, will constitute a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") and the rules and
regulations of the Commission applicable to an indenture which is qualified
thereunder.
(bb) The Registration Rights Agreement has been duly authorized by the
Company and, when executed and delivered by the Company and the Initial
Purchaser, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(cc) The Notes have been duly authorized and at the Closing Date, will
have been duly executed by the Company and, when authenticated, issued and
delivered in the manner provided for in the Indenture and delivered against
payment of the purchase price therefor as provided in this Agreement, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms except as the enforcement thereof may be
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limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and will be in
the form contemplated by, and entitled to the benefits of, the Indenture and the
Registration Rights Agreement.
(dd) The execution, delivery and performance by the Company of each of
the Transaction Documents, the issuance, authentication, sale and delivery of
the Notes and the consummation of the transactions contemplated by the
Transaction Documents (i) (A) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of the Subsidiaries pursuant to,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is subject, (B)
will not result in any violation of the provisions of the Charter, By-laws, or
equivalent constituent documents of the Company or any of the Subsidiaries and
(C) will not result in the violation of the provisions of any statute or any
judgment, order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries or any of their respective properties or assets except, in the case
of clauses (i)(A) and (i)(C), for any such conflict, breach, violation, default,
lien, charge or encumbrance that would not have a Material Adverse Effect; and
(ii) no consent, approval, authorization or order of, or filing or registration
with, any such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the Notes and the
consummation of the transactions contemplated by the Transaction Documents,
except for such consents, approvals, authorizations, filings, registrations or
qualifications (i) which shall have been obtained or made prior to the Closing
Date and (ii) as may be required to be obtained or made under the Securities Act
and applicable state securities laws as provided in the Registration Rights
Agreement.
(ee) Neither the Company nor, to the Company's knowledge, any of its
affiliates, as such term is defined in Rule 501(b) under the Securities Act
(each an "Affiliate"), has directly or indirectly, solicited any offer to buy,
sold or offered to sell or otherwise negotiated in respect of, or will solicit
any offer to buy or offer to sell or otherwise negotiate in respect of, or will
solicit any offer to buy or offer to sell or otherwise negotiate in respect of
any security which is or would be integrated with the sale of the Notes in a
manner that would require the Notes or the Conversion Shares to be registered
under the Securities Act. None of the Company, and to the Company's knowledge,
none of its Affiliates or any person acting on its or any of their behalf (other
than the Initial Purchaser, as to whom the Company makes no representation) has
engaged or will engage in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act. Assuming
the accuracy of Initial Purchaser's representations and warranties set forth in
Section 2 and compliance with the procedures set forth in Section 6 hereof, it
is not necessary in connection with the offer, sale issuance and delivery of the
Notes to the Initial Purchaser and the offer, resale and delivery of the Notes
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by the Initial Purchaser in the manner contemplated by this Agreement and the
Offering Memorandum to register the Notes under the Securities Act or to qualify
the Indenture under the Trust Indenture Act. None of the Company, any of its
Affiliates or any person acting on its or their behalf has engaged or will
engage in any "directed selling efforts" (as such term is defined in Regulation
S), and all such persons have complied and will comply with the offering
restrictions requirement of Regulation S.
(ff) The Notes are eligible for resale pursuant to Rule 144A and will
not be, at the Closing Date, of the same class as securities listed on a
national securities exchange registered under Section 6 of the Exchange Act, or
quoted in a U.S. automated interdealer quotation system.
(gg) The Company has not been advised, and has no reason to believe,
that either it or any of the Subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, the federal
Fair Debt Collection Practices Act, the federal Fair Credit Reporting Act, the
federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, the
federal Telephone Consumer Protection Act of 1991, related state and local
statutes and regulations, except where failure to be so in compliance would not
have a Material Adverse Effect.
(hh) The merger of the Company's subsidiary, NCO Portfolio Management,
Inc. ("NCO Portfolio") with Creditrust Corporation ("Creditrust") has been
consummated pursuant to Creditrust's Plan of Reorganization, as amended, which
was confirmed by the United States Bankruptcy Court for the District of Maryland
on January 18, 2001, and, as a result, the Company, directly or indirectly, owns
or controls approximately 63% of the issued and outstanding capital stock of NCO
Portfolio free and clear of any security interest, mortgage, pledge, lien,
encumbrance (other than security interests and pledges held by the Company's
lenders) or to the best of the Company's knowledge, any pending or threatened
claim. The agreements necessary to effect the acquisition of Creditrust have
been duly authorized, executed and delivered by each of the parties thereto and
constitute the valid, legal and binding agreements of each such party.
2. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Initial Purchaser and the Initial Purchaser agrees to
purchase from the Company at the price set forth on Schedule I, the aggregate
principal amount of Notes plus accrued interest if any, subject to adjustments
in accordance with Section 8 hereof.
(b) Payment for the Notes to be sold hereunder is to be made in federal
(same day) funds via wire transfer to the order of the Company for the Notes to
be sold by it against delivery of certificates therefor to the Initial
Purchaser. Such delivery is to be made at the offices of Xxxxx & Xxxxxxx L.L.P.,
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, at 9:00 a.m., New York City
time, on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as you and the
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Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed.) Upon
delivery, the Notes shall be credited in such names and in such denominations as
the Initial Purchaser shall have requested in writing at least two full business
days prior to the Closing Date. The Company agrees to make one or more global
certificates evidencing the Notes available for inspection by the Initial
Purchaser in New York, New York at least 24 hours prior to the Closing Date.
(c) The Initial Purchaser represents and warrants to, and agrees with,
the Company that it is a "qualified institutional buyer" within the meaning of
Rule 144A (a "QIB") and an "accredited investor" within the meaning of Rule
501(a) under the Securities Act.
3. Covenants of the Company. The Company covenants and agrees with the Initial
Purchaser that:
(a) The Company will cooperate with the Initial Purchaser in
endeavoring to qualify the Notes for sale under the securities laws of such
jurisdictions as the Initial Purchaser may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Initial Purchaser may reasonably request for distribution of the Notes.
(b) The Company will deliver to, or upon the order of, the Initial
Purchaser, from time to time, as many copies of the Preliminary Offering
Memorandum, the Final Offering Memorandum and any amendment and supplements
thereto as the Initial Purchaser may reasonably request, including documents
incorporated by reference therein, and of all amendments thereto, as the Initial
Purchaser may reasonably request.
(c) The Company will immediately notify the Initial Purchaser, and
confirm such notice in writing, of (i) any filing made by the Company of
information with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (ii) prior to the completion of the
placement of the Notes by the Initial Purchaser as evidenced by a notice in
writing from the Initial Purchaser to the Company, any material changes in or
affecting the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries, considered as
one enterprise, which (x) make any statement in the Offering Memorandum false or
misleading or (y) are not disclosed in the Offering Memorandum. In such event or
if during such time any event shall occur as a result of which it is necessary
in the reasonable opinion of any of the Company, its counsel, the Initial
Purchaser or counsel for the Initial Purchaser, to amend or supplement the Final
Offering Memorandum in order that the Final Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
11
Final Offering Memorandum by preparing and furnishing to the Initial Purchaser
an amendment or amendments of, or a supplement or supplements to, the Final
Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel to the Initial Purchaser) so that, as so amended or
supplemented, the Final Offering Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the time
it is delivered to a Subsequent Purchaser, not misleading.
(d) The Company will advise the Initial Purchaser promptly of any
proposal to amend or supplement the Offering Memorandum and will not effect such
amendment or supplement without the consent of the Initial Purchaser. Neither
the consent of the Initial Purchaser nor the Initial Purchaser's delivery of any
such amendment or supplement, shall constitute a waiver of any of the conditions
set forth in Section 5 hereof.
(e) The Company will cooperate with the Initial Purchaser and use its
reasonable best efforts to permit the Notes to be eligible for clearance and
settlement through the facilities of DTC.
(f) The Company will use the net proceeds received by it from the sale
of the Notes in the manner specified in the Offering Memorandum under "Use of
Proceeds."
(g) For as long as the Notes are outstanding or a period of three years
from the Closing Date, whichever is shorter, the Company will deliver to the
Initial Purchaser copies of annual reports and copies of all other documents,
reports and information furnished by the Company to its stockholders generally
or filed with any securities exchange pursuant to the requirements of such
exchange or with the Commission pursuant to the Securities Act or the Exchange
Act. The Company will deliver to the Initial Purchaser similar reports with
respect to significant subsidiaries, as that term is defined in the Securities
Act, if any, which are not consolidated in the Company's financial statements.
(h) No offering, sale, short sale, issuance or other disposition of any
shares of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of 90 days after the
date of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of DBAB except for (i) options
granted under the Company's stock option plans, (ii) shares of Common Stock
issued upon exercise of such options, and (iii) issuance of the Conversion
Shares. In addition, during the 90-day period, the Company may offer to issue
(but may not issue) shares of Common Stock in connection with other
then-proposed acquisitions.
(i) The Company will use its reasonable best efforts to permit the
Notes to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to the PORTAL Market.
12
(j) The Company will reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to satisfy any obligations to issue Common Stock upon
conversion of the Notes.
(k) The Company will use its reasonable best efforts to cause all
shares of Common Stock issuable upon conversion of the Notes to be listed on The
Nasdaq National Market.
(l) The Company will file all documents required to be filed with the
Commission pursuant to the Exchange Act within the time periods required by the
Exchange Act and the Exchange Act Regulations.
(m) The Company has caused each executive officer and director of the
Company to furnish to you, on or prior to the date of this agreement, a letter
or letters, in form and substance satisfactory to the Initial Purchaser,
pursuant to which each such person shall agree not to make or cause any
offering, sale or other disposition, directly or indirectly, of any shares of
Common Stock of the Company owned of record or beneficially by such person (or
as to which such person has the right to direct the disposition of) for a period
of 90 days after the date of the Final Offering Memorandum, except with the
prior written consent of DBAB (the "Lockup Agreements").
(n) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Notes in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the 0000 Xxx.
(o) The Company will continue to maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(p) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the manipulation or unlawful stabilization of the price
of any securities of the Company.
4. Costs and Expenses. The Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Company under this
Agreement, including, without limiting the generality of the foregoing, the
following: (a) accounting fees of the Company; (b) the fees and disbursements of
counsel for the Company; (c) the cost of preparing, printing and delivering to,
or as requested by, the Initial Purchaser copies of the Preliminary Offering
Memorandum, the Final Offering Memorandum, this Agreement, the Indenture, the
Registration Rights Agreement and any other documents that may be required in
connection with the offering, purchase, sale, issuance or delivery of the Notes;
(d) the qualification of the Notes under securities laws in accordance with the
provisions of Section 3(a) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchaser in connection therewith
and in connection with the preparation of the Blue Sky Survey, any supplement
thereto and any Legal Investment Survey (which fees of counsel shall not exceed
$10,000); (e) the fees and expenses of the Trustee, including the reasonable
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Notes; (f) any fees payable in connection with the rating of
the Notes; (g) any fees payable in connection with the initial and continued
13
designation of the Notes as PORTAL securities under the PORTAL Market pursuant
to NASD Rule 5322; and (h) the listing fee of The Nasdaq National Market
relating to the Conversion Shares. Any transfer taxes imposed on the sale of the
Notes to the Initial Purchaser will be paid by the Company. The Company,
however, shall not be required to pay for any of the Initial Purchaser's
expenses (other than those related to clause (d) above) except that, if this
Agreement shall not be consummated because the conditions in Section 5, other
than those set forth in Section 5(b), (j), (l) or (n) hereof, are not satisfied,
or because this Agreement is terminated by the Initial Purchaser pursuant to
Section 9 hereof (other than due to the failure to satisfy the conditions set
forth in Section 5(b), (j), (l) or (n) hereof), or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on their part to be performed, unless such failure to satisfy said
condition or to comply with said terms be due to the default or omission of the
Initial Purchaser, then the Company shall reimburse the Initial Purchaser for
reasonable out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Notes or in contemplation of performing their obligations hereunder;
but the Company shall not in any event be liable to the Initial Purchaser for
damages on account of loss of anticipated profits from the sale by them of the
Notes.
5. Conditions of Obligations of the Initial Purchaser. The obligation of the
Initial Purchaser to purchase the Notes on the Closing Date is subject to the
accuracy as of the date hereof and as of the Closing Date of the representations
and warranties of the Company contained herein, and to the performance by the
Company of its respective covenants and obligations hereunder and to the
following additional conditions:
(a) The Initial Purchaser shall have received on the Closing Date the
opinion of Blank Rome Xxxxxxx & XxXxxxxx LLP, counsel for the Company, dated the
Closing Date, addressed to the Initial Purchaser (and stating that it may be
relied upon by counsel to the Initial Purchaser) to the effect that:
(i) The Company has been duly incorporated and is subsisting as a
corporation under the laws of the Commonwealth of Pennsylvania, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Offering Memorandum; each of the Subsidiaries designated on
Exhibit B attached hereto as a "Significant Subsidiary" has been duly organized
and is validly existing as a corporation or limited liability company in good
standing under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Offering Memorandum; the Company and each of the Significant
Subsidiaries are duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such qualification and in which the
failure to qualify would have a materially adverse effect upon the business of
the Company and the Significant Subsidiaries taken as a whole; and the
outstanding shares of capital stock of each of the Significant Subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable
and are owned by the Company or a Significant Subsidiary, except as described in
the Offering Memorandum or set forth in Exhibit B to this Agreement, and, to
such counsel's knowledge, the outstanding shares of capital stock of each of the
Subsidiaries is owned free and clear of all adverse claims (within the meaning
14
of the Uniform Commercial Code) and, to such counsel's knowledge, no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into any shares of capital stock or
of ownership interests in the Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Offering Memorandum; the
authorized shares of the Company's Common Stock have been duly authorized; the
outstanding shares of the Company's capital stock have been duly authorized and
validly issued and are fully paid and non-assessable; the Notes have been duly
authorized and issued by the Company; the capital stock of the Company, the
Notes and the Indenture conform in all material respects to the description
thereof contained in the Offering Memorandum; the certificates for the Notes and
Conversion Shares are in due and proper form required under the Indenture and
the Pennsylvania Business Corporation Law of 1988, respectively; the Conversion
Shares have been duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this Agreement; and
are not subject to any preemptive or other similar rights arising by operation
of law, under the Charter or By-Laws, under any resolution adopted by the board
of directors of the Company or any committee thereof or, to such counsel's
knowledge, otherwise.
(iii) Except as described in or contemplated by the Offering
Memorandum, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock. Except as described in the Offering
Memorandum, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Notes or Conversion Shares or the right to have any Common Stock or other
securities of the Company included in the shelf registration statement (the
"Registration Statement") contemplated by the Registration Rights Agreement or
the right, as a result of the filing of the Registration Statement, to require
registration under the Securities Act of any shares of Common Stock or other
securities of the Company.
(iv) The statements under the captions "Description of Notes," and
"Description of Capital Stock" in the Offering Memorandum, insofar as such
statements constitute a summary of documents referred to therein or matters of
law, accurately summarize in all material respects the information which would
have been required to be set forth thereunder pursuant to Regulation S-K under
the Securities Act with respect to such documents and matters, assuming such
regulation is applicable to the Offering Memorandum.
(v) The statements in the Offering Memorandum under the heading
"Certain United States Federal Income Tax Considerations" insofar as they
purport to summarize matters of U.S. federal tax law, fairly summarize such
matters in all material respects.
15
(vi) The Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
(vii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
except as set forth in the Offering Memorandum or which are not required to be
disclosed in the Offering Memorandum under Item 103 of Regulation S-K under the
Securities Act, assuming such regulation is applicable to the Offering
Memorandum.
(viii) The execution and delivery of each of the Transaction
Documents and the consummation of the transactions therein contemplated by the
Company do not and will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, the Charter or By-Laws of
the Company, or any agreement or instrument known to such counsel to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries may be bound and which is filed as an exhibit to or
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.
(ix) The execution, delivery and performance by the Company of the
Indenture and the consummation of the transactions contemplated by the Indenture
will not conflict with or result in a breach or violation of any Pennsylvania
law.
(x) The execution, delivery and performance by the Company of this
Agreement, the Registration Rights Agreement, and the Notes, and the
consummation of the transactions contemplated by this Agreement, the
Registration Rights Agreement, and the Notes will not conflict with or result in
a breach or violation of any Pennsylvania law.
(xi) Each of this Agreement, the Indenture and the Registration
Rights Agreement has been duly authorized, executed and delivered by the
Company.
(xii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary to have been made in connection with the
execution and delivery of the Transaction Documents and the consummation of the
transactions herein contemplated by the Company (other than as may be required
by State securities and Blue Sky laws as to which such counsel need express no
opinion) except such as have been obtained or made, specifying the same and
except as may be contemplated under the Registration Rights Agreement.
(xiii) Assuming due authorization, execution and delivery thereof
by the Trustee, the Indenture constitutes a valid and legally binding agreement
of the Company enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at law).
16
(xiv) Assuming due authentication thereof by the Trustee and upon
payment and delivery in accordance with this Agreement, the Notes will
constitute valid and legally binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity or at
law).
(xv) Assuming due authorization, execution and delivery thereof by
the Initial Purchaser, the Registration Rights Agreement constitutes a valid and
legally binding agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(xvi) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement, and application
of the net proceeds therefrom as described in the Offering Memorandum, required
to register as an investment company under the 0000 Xxx.
(xvii) Assuming the accuracy of the representations, warranties
and agreements of the Company and the Initial Purchaser contained in this
Agreement, no registration of the Notes under the Securities Act or
qualification of the Indenture under the Trust Indenture Act is required in
connection with the issuance and sale of the Notes by the Company and the offer,
initial resale and delivery of the securities by the Initial Purchaser in the
manner contemplated by this Agreement and the Offering Memorandum.
In rendering such opinion, Blank Rome Xxxxxxx & XxXxxxxx LLP may rely
as to matters governed by the laws of states or jurisdictions other than
Pennsylvania or Federal laws on local counsel in such jurisdictions, or the
Company may cause its counsel in such other jurisdictions to deliver such
opinions. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that the Final Offering Memorandum as of the
date of the Final Offering Memorandum or the Closing Date contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances under which they were made (except that such counsel
need express no view as to financial statements, including the notes thereto,
schedules or other financial or statistical information set forth or
incorporated by reference therein). With respect to such statement, Blank Rome
Xxxxxxx & XxXxxxxx LLP may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(b) The Initial Purchaser shall have received from Xxxxx & Xxxxxxx
L.L.P., counsel for the Initial Purchaser, an opinion dated the Closing Date,
substantially to the effect specified in subparagraphs (ii), (iii), (vi),
(viii), (xiii), (xiv), (xv) and (xvii) of Paragraph (a) of this Section 5, and
17
that the Company is a duly incorporated and validly existing corporation under
the laws of the Commonwealth of Pennsylvania. In rendering such opinion, Xxxxx &
Xxxxxxx L.L.P. may rely as to all matters governed other than by the laws of the
State of New York and the State of Delaware or Federal laws on the opinion of
counsel referred to in Paragraph (a) of this Section 5. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that the Offering Memorandum or any amendment thereto, as of the time
it became effective, as of the Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (except that such
counsel need express no view as to financial statements, including the notes
thereto, schedules or other financial or statistical information therein). With
respect to such statement, Xxxxx & Xxxxxxx L.L.P. may state that their belief is
based upon the procedures set forth therein, but is without independent check
and verification.
(c) You shall have received, on each of the date hereof and the Closing
Date (i) a letter dated the date hereof and the Closing Date, in form and
substance satisfactory to you, of Ernst & Young LLP confirming that they are
independent public accountants within the meaning of the Securities Act and
stating that in their opinion the financial statements and schedules examined by
them and included in the Offering Memorandum comply in form in all material
respects with the applicable accounting requirements of the Securities Act; and
containing such other statements and information as is ordinarily included in
accountants' "comfort letters" to Initial Purchasers with respect to the
financial statements and certain financial and statistical information contained
in the Offering Memorandum; and (ii) a letter dated the date hereof and the
Closing Date, in form and substance satisfactory to you, of
PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Securities Act and stating that in their
opinion the financial statements and schedules examined by them and included in
the Offering Memorandum comply in form in all material respects with the
applicable accounting requirements of the Securities Act; and containing such
other statements and information as is ordinarily included in accountants'
"comfort letters" to Initial Purchasers with respect to the financial statements
and certain financial and statistical information contained in the Offering
Memorandum.
(d) The Initial Purchaser shall have received on the Closing Date a
certificate or certificates of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that, as of the Closing Date,
each of them severally represents as follows:
(i) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date;
(ii) Since the respective dates as of which information is given
in the Offering Memorandum, there has not been any material adverse change or
any development known to him involving a prospective material adverse change in
or affecting the condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole or the earnings, business, management, properties,
assets, operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business; and
18
(iii) He has carefully examined the Offering Memorandum and, to
such officer's knowledge, as of the effective date, the statements contained in
the Offering Memorandum were true and correct in all material respects and such
Offering Memorandum did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and since the date of
the Offering Memorandum, no event has occurred which should have been set forth
in a supplement to or an amendment of the Offering Memorandum which has not been
so set forth in such supplement or amendment.
(e) The Company shall have furnished to the Initial Purchaser such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Initial Purchaser may reasonably have requested in writing.
(f) The Conversion Shares have been approved as additional shares of
Common Stock for listing upon notice of issuance on The Nasdaq National Market.
(g) The Lockup Agreements described in Section 3(m) are in full force
and effect.
(h) At the Closing Date, the Registration Rights Agreement in form and
substance reasonably satisfactory to the Initial Purchaser shall have been duly
executed and delivered by the Company and (assuming due execution, delivery and
performance by the Initial Purchaser) be in full force and effect.
(i) At the Closing Date, the Notes shall have been designated for
trading on PORTAL.
(j) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of any
rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable judgment of the Initial Purchaser would materially
impair the ability of the Initial Purchaser to purchase, hold or effect resales
of the Notes as contemplated.
(k) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering Memorandum
(exclusive of any amendment or supplement thereto), there shall not have been
any change in the capital stock or long-term debt or any change, or any
development involving a prospective change, in or affecting the financial
condition, results of operations, business or prospects of the Company and its
subsidiaries taken as a whole, the effect of which, in any such case described
above, is, in the reasonable judgment of the Initial Purchaser, after oral
notice to and consultation with (but not subject to the agreement of) the
Company, so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Notes on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive of any
amendment or supplement thereto).
19
(l) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body, foreign or domestic, which would, as of the Closing Date, prevent the
issuance or sale of the Notes; and no injunction, restraining order or order of
any other nature by any federal, state or foreign court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance or sale of the Notes.
(m) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded any of the Company's debt
securities by any "nationally recognized statistical rating organization", as
such term is defined by the Commission for purposes of Rule 436(g)(2) of the
rules and regulations of the Commission under the Securities Act and (ii) no
such organization shall have publicly announced that it has under surveillance
or review (other than an announcement with positive implications of a possible
upgrading), its rating of any of the Company's debt securities.
(n) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, The Nasdaq National Market, the
over-the-counter market, shall have been suspended or limited, or minimum prices
shall have been established on any such exchange or market by the Commission, by
any such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in any securities of the Company on any exchange
or in the over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by federal
or New York State authorities or (iii) trading in the Company's Common Stock on
The Nasdaq National Market shall have been suspended or (iv) an outbreak or
escalation of hostilities or a declaration by the United States of a national
emergency or war or (v) a material adverse change in general economic, political
or financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) the effect of which, in
the case of this clause (v), is, in the judgment of the Initial Purchaser, so
material and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Notes on the terms and in the manner
contemplated by this Agreement and in the Offering Memorandum (exclusive of any
amendment or supplement thereto).
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Initial Purchaser and to Xxxxx & Xxxxxxx
L.L.P., counsel for the Initial Purchaser.
If any of the conditions hereinabove provided for in this Section 5
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Initial Purchaser hereunder may be terminated
by the Initial Purchaser by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date.
In such event, the Company and the Initial Purchaser shall not be under
any obligation to each other (except to the extent provided in Sections 4 and 7
hereof).
20
6. Subsequent Offers and Resales of the Notes.
(a) Each of the Initial Purchaser and the Company hereby establish and
agree to observe the following procedures in connection with the offer and sale
of the Notes:
(i) Offers and sales of the Notes shall only be made to persons
whom the offeror or seller reasonably believes to be qualified institutional
buyers (as defined in Rule 144A under the Securities Act) or as an offshore
transaction to persons who are not U.S. persons (as such terms are defined in
Regulation S under the Securities Act) in accordance with Regulation S.
(ii) No general solicitation or general advertising (within the
meaning of Rule 502(c) under the Securities Act) will be used in the United
States in connection with the offering or sale of the Notes and neither the
Initial Purchaser, the Company or any of their respective affiliates will engage
in any directed selling efforts (as such term is defined in Regulation S under
the Securities Act).
(iii) In the case of a non-bank Subsequent Purchaser of a Note
acting as a fiduciary for one or more third parties, each third party shall, in
the judgment of the Initial Purchaser, be a QIB.
(iv) The Initial Purchaser will take reasonable steps to inform,
and cause each of its U.S. affiliates to take reasonable steps to inform,
persons acquiring Notes from the Initial Purchaser or affiliate, as the case may
be, in the United States that the Notes (A) have not been registered under the
Securities Act, (B) are being sold to them without registration under the
Securities Act in reliance on Rule 144A or in accordance with another exemption
from registration under the Securities Act, as the case may be, and (C) may not
be offered, sold or otherwise transferred except (1) to the Company, (2) outside
the United States to non-U.S. persons in accordance with Regulation S or (3) to
U.S. persons in accordance with (x) Rule 144A to a person whom the seller
reasonably believes is a QIB that is purchasing such Notes for its own account
or for the account of a QIB to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the Securities Act.
(v) The transfer restrictions and the other provisions set forth
in the Offering Memorandum under the heading "Notice to Investors; Transfer
Restrictions," including the legend required thereby, shall apply to the Notes
except as otherwise agreed by the Company and the Initial Purchaser.
(b) The Company covenants with the Initial Purchaser as follows:
(i) The Company agrees that it will not and will cause its
Affiliates under its control not to, directly or indirectly, solicit any offer
to buy or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the Notes by the
21
Company to the Initial Purchaser, (ii) the resale of the Notes by the Initial
Purchaser to Subsequent Purchasers or (iii) the resale of the Notes by such
Subsequent Purchasers to others) the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof, by Rule
144A thereunder, by Regulation S thereunder or otherwise.
(ii) The Company agrees that, in order to render the Notes
eligible for resale pursuant to Rule 144A under the Securities Act, while any of
the Notes remain outstanding, it will make available, upon request, to any
holder of Notes or prospective purchasers of Notes the information specified in
Rule 144A(d)(4), unless the Company furnishes information to the Commission
pursuant to Section 13 or 15(d) of the Exchange Act (such information, whether
made available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(iii) During the period beginning on the last date of original
issuance of the Notes and ending on the date that is two years from such date,
the Company will not, and will use all reasonable efforts not to permit any of
its "affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) which are under its control, to, resell (x) any
Notes which constitute "restricted securities" under Rule 144 or (y) any
securities into which the Notes have been converted which constitute "restricted
securities" under Rule 144, that in either case have been reacquired by any of
them, except pursuant to an effective registration statement under the
Securities Act or an applicable exemption therefrom.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser and each person, if any, who controls the Initial Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities to which the Initial Purchaser or any such controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Preliminary Offering Memorandum,
Final Offering Memorandum or any amendment or supplement thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made; and will reimburse the
Initial Purchaser and each such controlling person upon demand for any legal or
other expenses reasonably incurred by the Initial Purchaser or such controlling
person in connection with investigating or defending any such loss, claim,
damage or liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Notes, whether or not the
Initial Purchaser or controlling person is a party to any action or proceeding;
provided, however, that (i) the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Preliminary Offering Memorandum, Final Offering
Memorandum, or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by or through the Initial
Purchaser specifically for use in the preparation thereof or (ii) with respect
to any untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Offering Memorandum, such indemnity in this
22
subsection (a) shall not inure to the benefit of the Initial Purchaser (or to
the benefit of any persons controlling such Initial Purchaser) if the person
asserting any such loss, claim, damage or liability who purchased the Notes
which are the subject thereof did not receive a copy of an amended Preliminary
Offering Memorandum or the Final Offering Memorandum (or the Final Offering
Memorandum as amended or supplemented) at or prior to the written confirmation
of the sale of such Notes to such person and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact made in such
Preliminary Offering Memorandum was corrected in the amended Preliminary
Offering Memorandum or the Final Offering Memorandum (or the Final Offering
Memorandum as amended and supplemented). This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) The Initial Purchaser will indemnify and hold harmless the Company,
and each person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages or liabilities to which the
Company or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Preliminary Offering Memorandum, Final Offering Memorandum or any amendment or
supplement thereto, (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made; and will reimburse any legal or other expenses reasonably incurred by the
Company or controlling person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding or (iii) the failure
of the Initial Purchaser at or prior to the written confirmation of the sale of
the Notes to send or deliver a copy of an amended Preliminary Offering
Memorandum or the Final Offering Memorandum (or the Final Offering Memorandum as
amended or supplemented) to the person asserting any such losses, claims,
damages, liabilities or expenses who purchased the Notes which is the subject
thereof and the untrue statement or omission of a material fact contained in
such Preliminary Offering Memorandum was corrected in the amended Preliminary
Offering Memorandum or Final Offering Memorandum (or the Final Offering
Memorandum as amended or supplemented); provided, however, that the Initial
Purchaser will be liable in each case to the extent, but only to the extent, in
the case of clauses (i) and (ii), that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Preliminary
Offering Memorandum, Final Offering Memorandum or such amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Company by or through the Initial Purchaser specifically for use in the
preparation thereof; and in the case of clause (iii) of this Section 7(b), the
Initial Purchaser failed to send or deliver a copy of an amended Preliminary
Offering Memorandum or the Final Offering Memorandum (or the Final Offering
Memorandum as amended or supplemented). This indemnity agreement will be in
addition to any liability which the Initial Purchaser may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 7, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
23
7(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 7(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 7(a) and by the Company in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
except by reason of the exceptions set forth in Section 7(a) hereof or the
failure of the indemnified party to give notice as required in Section 7(c)
hereof (provided that the indemnifying party was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to give
such notice), then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) in such proportion
24
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchaser on the other from the offering of the
Notes. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Initial Purchaser on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Initial Purchaser on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total discounts received by the Initial Purchaser, in each case as set forth
in this Agreement and in the Final Offering Memorandum. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Initial Purchaser on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Initial Purchaser agree that it would not be just
and equitable if contributions pursuant to this Section 7(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 7(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) the Initial Purchaser shall not be
required to contribute any amount in excess of the underwriting discounts
applicable to the Notes purchased by the Initial Purchaser, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) In any proceeding relating to the Preliminary Offering Memorandum,
Offering Memorandum or any supplement or amendment thereto, each party against
whom contribution may be sought under this Section 7 hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him or it by any
other contributing party and consents to the service of such process and agrees
that any other contributing party may join him or it as an additional defendant
in any such proceeding in which such other contributing party is a party.
(f) Except as otherwise provided above in this Section 7, any losses,
claims, damages, liabilities or expenses for which an indemnified party is
entitled to indemnification or contribution under this Section 7 shall be paid
by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred (or within 30 days of
presentation). The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Initial Purchaser or any
25
person controlling the Initial Purchaser, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
the Initial Purchaser, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 7.
8. Notices.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows:
if to the Underwriters, to:
Deutsche Banc Alex. Xxxxx Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
if to the Company to:
NCO Group, Inc.
000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
with a copy to:
Blank Rome Comisky & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
26
9. Termination. This Agreement may be terminated by you in your absolute
discretion by notice to the Company as follows:
(a) at any time prior to the Closing Date if any of the events
described in Section 5(j), (k), (l), (m) or (n) shall have occurred and be
continuing; or
(b) as provided in Section 4 of this Agreement.
10. Successors. This Agreement has been and is made solely for the benefit of
the Initial Purchaser and the Company and their respective successors,
executors, administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any right
or obligation hereunder. No purchaser of any of the Notes from the Initial
Purchaser shall be deemed a successor or assign merely because of such purchase.
11. Information Provided by Initial Purchaser. The Company and the Initial
Purchaser acknowledge and agree that the only information furnished or to be
furnished by the Initial Purchaser to the Company for inclusion in any Offering
Memorandum consists of the information set forth in the last paragraph on the
front cover page (insofar as such information relates to the Initial Purchaser)
and the information set forth in the seventh paragraph under the caption "Plan
of Distribution" of the Offering Memorandum.
12. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of the Initial Purchaser or any controlling person thereof, or by or on
behalf of the Company or its directors or officers and (c) delivery of, and
payment for, the Notes under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
[Rest of Page Intentionally Left Blank]
27
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the Initial
Purchaser in accordance with its terms.
Very truly yours,
NCO GROUP, INC.
By:____________________________
Name:
Title:
The foregoing Purchase Agreement
is hereby confirmed and accepted as
of the date first above written.
DEUTSCHE BANC ALEX. XXXXX INC.
By: Deutsche Banc Alex. Xxxxx Inc.
By: _____________________
Authorized Officer
By: _____________________
Authorized Officer
28
SCHEDULE I
NCO Group, Inc.
$125,000,000
4.75% Convertible Subordinated Notes due 2006
1. The Notes shall bear interest at a rate of 4.75% per annum.
2. The Notes shall be convertible into shares of common stock, no par
value per share, of the Company (the "Common Stock") at an initial rate of
30.3767 shares of Common Stock per $1,000 principal amount of Notes.
3. The purchase price to be paid by the Initial Purchaser for the Notes
shall be $121,250,000, being an amount equal to 97.0% of the aggregate principal
amount of Notes purchased by the Initial Purchaser.
4. The redemption prices to be supplied on page 44 of the Preliminary
Offering Memorandum (and correspondingly in the Indenture) shall be:
April 22, 2004 through April 14, 2005.........................102.0%
April 15, 2005 through April 14, 2006.........................101.0%
