NCO GROUP INC
EX10-1.TXT
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<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-1.txt
<DESCRIPTION>EX10-1.TXT
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                                                                    Exhibit 10.1


                           NINTH AMENDMENT AND CONSENT
                                       TO
                   FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         THIS NINTH AMENDMENT AND CONSENT dated as of October 31, 2002 (this
"Amendment"), is made by and among NCO GROUP, INC., CITIZENS BANK OF
PENNSYLVANIA (successor to Mellon Bank, N.A.), as Administrative Agent (this and
all other capitalized terms not defined herein shall have the meanings set forth
in the Credit Agreement described below), and the undersigned Lenders.

                                   Background

         The Borrower has previously entered into that certain Fifth Amended and
Restated Credit Agreement dated as of December 31, 1999, as previously amended
(as so amended, the "Credit Agreement"), with the Administrative Agent and the
Lenders identified therein.

         The Borrower has requested that the Lenders amend the Credit Agreement
in order to (i) exclude the Borrower's recent Permitted Acquisition of
substantially all of the assets of Great Lakes Collection Bureau from the
maximum annual amount of Permitted Acquisitions allowed under the Credit
Agreement, (ii) convert the basis for financial covenant calculations from a
current quarter annualized basis to a rolling four quarters (trailing twelve
months) basis, and (iii) clarify certain defined terms in the Credit Agreement.
In connection with such request, the Borrower has agreed to increase the
Applicable Margin and set a minimum Applicable Margin for the period from
October 1, 2002 to and including May 31, 2003. In addition, the Borrower has
requested that the Lenders consent to the amendment of the NCOP/NCOG Credit
Agreement in order to increase the permitted investments in Subsequent
Non-Surety Entities (as defined in the NCOP/NCOG Credit Agreement) by NCO
Portfolio Management, Inc.

         The Administrative Agent and the Lenders are willing to provide for the
amendments and consent requested by the Borrower on the terms and conditions set
forth below.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
agree as follows:

1. Amendments. The Credit Agreement is hereby amended as follows:

         (a) Sections 6.1(c) and 6.1(e). Each of Section 6.1(c) and Section
6.1(e) of the Credit Agreement is amended by:

                  (i) deleting the word "annualized" in the first sentence
thereof; and
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                  (ii) amending and restating the second and third sentences
thereof in their entirety as follows:

         "Consolidated EBITDA shall be calculated on a rolling four quarters
         basis, adjusted for any acquisition completed during the quarter most
         recently ended. For purposes of calculating pro forma compliance with
         this provision in analyzing a proposed acquisition, Consolidated EBITDA
         shall include the pre-acquisition EBITDA of the target calculated on a
         rolling four quarters basis and adjusted for unusual expense items."

         (b) Consolidated Interest Coverage Ratio. The definition of
"Consolidated Interest Coverage Ratio" set forth in Section 10.1 of the Credit
Agreement is amended by amending and restating such definition in its entirety
as follows:

         "Consolidated Interest Coverage Ratio" shall mean the ratio, calculated
         as at the end of each fiscal quarter for the 12-month period then
         ended, of Consolidated EBIT for such 12-month period to the
         Consolidated Interest Expense for such 12-month period."

         (c) Exhibit H and Exhibit I. Each of Exhibit H (Form of Certificate of
Pro Forma Covenant Compliance) and Exhibit I (Form of Quarterly Compliance
Certificate) to the Credit Agreement is amended to the extent necessary to
incorporate the amendments set forth in Sections 1(a) and 1(b) hereof.

         (d) Applicable Margin. The definition of "Applicable Margin" set forth
in Section 10.1 of the Credit Agreement is amended by:

                  (i) amending and restating Grid A in its entirety as follows:

                  "Grid A
<TABLE>
<CAPTION>


                      Consolidated Funded Debt/         Applicable Margin       Applicable Margin
         Level        Consolidated EBITDA Ratio         LIBO Rate Loans         Prime Rate Loans
         -----        -------------------------         ---------------         ----------------
<S>                   <C>                               <C>                       <C>
         1            below 1.50                              1.25%                     .25%
         2            > 1.50 < 2.00                           1.50%                     .25%
         3            > 2.00 < 2.50                           1.75%                     .25%
         4            > 2.50                                  2.25%                     .50%"
</TABLE>

                  (ii) adding the following sentence at the end of the first
paragraph immediately following such Grid A:

         "Notwithstanding anything above to the contrary, from October 1, 2002
         through May 31, 2003, the Applicable Margin for LIBO Rate Loans shall
         be 2.25% and the Applicable Margin for Prime Rate Loans shall be .50%."

                  (iii) deleting each of Grid B and the paragraph immediately
preceding such Grid B in its entirety, since the offering contemplated by such
paragraph did not take place.


                                        2
<PAGE>


         (e) Permitted Acquisition. The definition of "Permitted Acquisition"
set forth in Section 10.1 of the Credit Agreement is amended by amending and
restating clause (6) thereof in its entirety as follows:

         "(6) the cash consideration to be paid by such Obligor for all such
         acquisitions must not exceed an aggregate of $25,000,000 in any rolling
         twelve month period, excluding the acquisition by the Borrower of
         substantially all of the assets of Great Lakes Collection Bureau which
         closed on or about August 19, 2002."

         (f) Excluded Subsidiaries. The definition of "Excluded Subsidiaries"
set forth in Section 10.1 of the Credit Agreement is amended by adding the
following sentence at the end thereof:

         "For the sake of clarity, it is understood that the term "Excluded
         Subsidiaries" shall include any Subsidiary from time to time of those
         Persons listed on Schedule 5.16 hereof."

2. Consent. The Majority Lenders hereby (a) consent to the amendment of Section
6.5(g) of the NCOP/NCOG Credit Agreement to amend and restate such Section
substantially as set forth on Exhibit A attached hereto, in order to allow NCO
Portfolio Management, Inc. to make investments in Subsequent Non-Surety Entities
(this and all other capitalized terms hereafter used in this Section 2(a) and in
Exhibit A have the meanings set forth in the NCOP/NCOG Credit Agreement) that
acquire delinquent pools of Accounts in a Net Investment Amount not to exceed
$15,000,000; and (b) authorize the Administrative Agent to take any and all
actions which the Administrative Agent deems necessary or advisable to carry out
such amendment.

3. Representations and Warranties. The Borrower represents and warrants to the
Lenders as follows:

         (a) each of the representations and warranties contained in the Credit
Agreement is accurate in all material respects on and as of the date hereof; and

         (b) as of the date hereof, no Default or Event of Default exists.

4. Ratification; References. Except as amended hereby, the Credit Agreement and
each other Loan Document remains in full force and effect and is hereby
ratified. From and after the date that this Amendment becomes effective, any
reference in the Credit Agreement or any other related documents to the Credit
Agreement shall be and mean a reference to such agreement as amended hereby and
as the same may be further amended, modified or supplemented from time to time.

5. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the law of the Commonwealth of Pennsylvania without regard to
its conflict of laws principles.



                                       3
<PAGE>

6. Effectiveness. This Amendment shall be effective when the Majority Lenders,
the Administrative Agent, the Borrower and the Guarantors have executed a
counterpart hereto.

7. Counterparts. This Amendment may be executed in any number of counterparts
each of which shall be an original and all of which, when taken together, shall
constitute one instrument. Delivery of an executed signature page of this
Amendment by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.


                         [Signatures begin on next page]


                                       4
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         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.

                                 CITIZENS BANK OF PENNSYLVANIA,
                                 as Administrative Agent and a Lender



                                 By:
                                    -------------------------------
                                       Liam M. Brickley
                                        Vice President






                        Signature Page to Ninth Amendment



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                                 GENERAL ELECTRIC CAPITAL CORPORATION




                                 By:
                                    -------------------------------
                                    Name:
                                    Title:




























                        Signature Page to Ninth Amendment
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                                 BANK OF AMERICA




                                 By:
                                    -------------------------------
                                    Name:
                                    Title:






























                        Signature Page to Ninth Amendment
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                                 WACHOVIA BANK, NATIONAL ASSOCIATION




                                 By:
                                    -------------------------------
                                    Name:
                                    Title:



























                        Signature Page to Ninth Amendment
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                                 SUNTRUST BANK, ATLANTA



                                 By:
                                    -------------------------------
                                    Name:
                                    Title:





                                 By:
                                    -------------------------------
                                    Name:
                                    Title:






















                        Signature Page to Ninth Amendment
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                                 UNION BANK OF CALIFORNIA, N.A.




                                 By:
                                    -------------------------------
                                    Name:
                                    Title:




















                        Signature Page to Ninth Amendment
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                                 NATIONAL CITY BANK OF PENNSYLVANIA




                                 By:
                                    -------------------------------
                                    Name:
                                    Title:



















                        Signature Page to Ninth Amendment
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                                 SUMMIT BANK



                                 By:
                                    -------------------------------
                                    Name:
                                    Title:



























                        Signature Page to Ninth Amendment
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                                 PROVIDENT BANK OF MARYLAND



                                 By:
                                    -------------------------------
                                    Name:
                                    Title:


























                        Signature Page to Ninth Amendment
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                                 MANUFACTURERS AND TRADERS
                                 TRUST COMPANY



                                 By:
                                    -------------------------------
                                    Name:
                                    Title:




























                        Signature Page to Ninth Amendment
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                                 FLEET NATIONAL BANK


                                 By:
                                    -------------------------------
                                    Name:
                                    Title:




























                        Signature Page to Ninth Amendment
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                                 CHEVY CHASE BANK, F.S.B.



                                 By:
                                    -------------------------------
                                    Name:
                                    Title:

































                        Signature Page to Ninth Amendment
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                                 FIRSTAR BANK, N.A.


                                 By:
                                    -------------------------------
                                    Name:
                                    Title:































                        Signature Page to Ninth Amendment
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                                 IBM CREDIT CORPORATION



                                 By:
                                    -------------------------------
                                    Name:
                                    Title:































                        Signature Page to Ninth Amendment
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                                 BANK AUSTRIA CREDITANSTALDT
                                 CORPORATE FINANCE, INC.




                                 By:
                                    -------------------------------
                                    Name:
                                    Title:





                                 By:
                                    -------------------------------
                                    Name:
                                    Title:





















                        Signature Page to Ninth Amendment
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BORROWER:                        NCO GROUP, INC.


                                 By:
                                    -------------------------------
                                 Name:    Michael J. Barrist
                                 Title:   President


Each of the undersigned Guarantors confirms and agrees that the Guaranty
executed and delivered by it remains in full force and effect.

                                 NCO FINANCIAL SYSTEMS, INC.
                                 NCO TELESERVICES, INC.
                                 NCO HOLDINGS, INC.
                                 NCO FUNDING, INC.
                                 FCA FUNDING, INC.
                                 ASSETCARE, INC.
                                 JDR HOLDINGS, INC.
                                 COMPASS INTERNATIONAL SERVICES
                                    CORPORATION
                                 INTERNATIONAL ACCOUNT SYSTEMS, INC.
                                 COMPASS TELESERVICES, INC.
                                 NCO BENEFIT SYSTEMS, INC.
                                 MCA HOLDINGS, INC.
                                 NCO LAKES, LLC


                                 By:
                                    -------------------------------
                                 Name:   Michael J. Barrist
                                 Title:  President of each of the above entities


                                 FINANCIAL COLLECTION AGENCIES, INC.
                                 FCA LEASING, INC.


                                 By:
                                    -------------------------------
                                 Name:   Steven Winokur
                                 Title:  Treasurer of each of the above entities








                        Signature Page to Ninth Amendment
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                                    Exhibit A

                Section 6.5(g) of the NCOP/NCOG Credit Agreement


         (g) Investments (by way of cash investments, transfer of property,
loans, Guaranties or Guaranty Equivalents, or Permitted Designations) in
Subsequent Non-Surety Entities that acquire delinquent pools of Accounts, prior
to date on which the RC Commitment is terminated, in a Net Investment Amount not
to exceed Fifteen Million Dollars ($15,000,000); provided, however, that (i) no
investment under this clause (g) may be made so long as an Event of Default has
occurred and is continuing, and (ii) investments under this clause (g) by way of
transfer of property to a Subsequent Non-Surety Entity or by way of Permitted
Designation shall be subject to (A) Lender's prior consent (which such consent
shall not be unreasonably withheld, conditioned or delayed), and (B) Agent's
prior consent (which shall not be unreasonably withheld, conditioned or delayed)
pursuant to the terms of the NCOG Syndicated Credit Facility Documents. For
purposes of this Section 6.5(g), if, at Borrower's option, a Subsequent
Non-Surety Entity becomes a Subsidiary Obligor, then, upon such occurrence, the
Borrower shall receive a credit in an amount equal to the fair market value of
the assets of such Person at the time of such occurrence (as mutually agreed
among the Borrower, the Lender and the Agent) against the applicable investment
limitation set forth in the foregoing sentence.


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