NOTICE OF CLASS ACTION AND PROPOSED SETTLEMENT

TO: All persons who were sent, at an Illinois address, a notice from NCO Financial Systems, Inc. (“NCO”) similar to Exhibit A regarding a student loan, on or after February 10, 1998 (one year prior to the filing of this action), which notice was not returned by the Postal Service.

PLEASE READ THIS NOTICE CAREFULLY.

THIS IS NOT A NOTICE OF A LAWSUIT AGAINST YOU.
YOU MAY BENEFIT FROM READING THIS NOTICE.

WHAT THIS LAWSUIT IS ABOUT

Ms. Johnson filed an action on February 10, 1999, in the United States District Court for the Northern District of Illinois. The complaint alleges that the form collection letter which she received from defendant violated the federal Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”).

On September 20, 1999, Judge Kocoras of the United States District Court for the Northern District of Illinois, Eastern Division, granted preliminary approval of the settlement, subject to a fairness hearing which will take place on January 18, 2000 at 9:30 a.m., in Room 2503, of the United States District Court, 219 South Dearborn Street, Chicago, IL 60604.

You are being sent this notice because you appear to be a member of the class. This notice explains the nature of the lawsuit and the terms of the settlement, and informs you of your legal rights and obligations.
NO ADMISSION OF LIABILITY

By settling this lawsuit, defendant is not admitting that it did anything wrong.

THE PROPOSED SETTLEMENT

The attorneys for the class believe that this settlement is fair, reasonable, and in the best interests of the class members. The defendant has represented that there are approximately 6,154 class members. The principal terms of the settlement are summarized as follows:

A. Class Recovery: Pursuant to the Settlement Agreement, defendant will pay $18,000 to the class on a pro rata basis. Defendant will pay costs of giving notice, sending the settlement checks and administrative expenses out of this fund. Each class member who can be located and does not exclude themselves from the settlement shall receive a pro rata share of the class award which will be divided equally.

B. Class Representative: In addition, the named plaintiff shall receive the total sum of $1,000, her maximum statutory award.

C. Attorneys’ Fees and Costs: Counsel for plaintiff and the class have requested that the Court award their costs and reasonable attorneys’ fees. Defendant has agreed to plaintiff’s counsels’ request for costs and reasonable attorneys’ fees in the amount of $10,000.

D. Release: The named Plaintiffs and each class member not opting out shall, as of the Effective Date, be deemed to release and discharge forever each of Defendants and their respective heirs, their current and former officers, directors, successors, predecessors, executors, administrators, assigns, shareholders, affiliated companies, attorneys and employees (“Released Parties”), from all claims, controversies, actions, causes of actions, demands, torts, damages, costs, attorneys’ fees, moneys due on account, obligations, judgments, alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. and/or liabilities of any kind whatsoever in law or equity, arising out of agreement or imposed by federal or state statute, common law or otherwise, from the beginning of time to the Effective Date of this Agreement, whether or not known now, anticipated, unanticipated, suspected or claimed, fixed or contingent, whether yet accrued or not and whether damage has resulted from such or not. This release is conditioned upon the performance by defendant of its obligation toward the class members set forth in this settlement agreement.

OPINION OF CLASS COUNSEL
CONCERNING THE VALUE OF THE SETTLEMENT

The claim asserted on behalf of the class against defendant is under the Fair Debt Collection Practices Act (“FDCPA”).

The FDCPA provides for both individual actions and class actions. In a class action, the maximum possible recovery is (i) any actual damages suffered by the class members and (ii) statutory damages determined by the court, based on the culpability of the defendant’s conduct and the amount of harm caused by the defendant. The penalty cannot exceed the smaller of $500,000 or 1% of the defendant’s net worth.

The defendant has agreed to pay the class members full statutory damages in the amount of $18,000, to be divided among the class members.

In an individual action, the person bringing the suit may recover (i) any actual damages suffered and (ii) statutory damages determined by the court, but not more than $1,000. There is no minimum. In either an individual or class action, the person bringing the suit can also recover attorneys’ fees and the expenses of prosecuting the suit, if it is successful.

While the theoretical maximum statutory damages recoverable in an individual action is $1,000, there is no minimum, and no assurance that if any significant number of persons attempt to recover $1,000 each, that they will receive anything.

The court has the discretion to award anything between the maximum amount and zero, depending on the egregiousness of the violation.

Class counsel believes that this settlement is fair and reasonable and that the class members should accept this settlement.

FAIRNESS HEARING

A hearing will be held on the fairness of the proposed settlement. At the hearing, the Court will be available to hear any objections and arguments concerning the fairness of the proposed settlement, including the amount of the award to plaintiff’s counsel of costs and attorneys’ fees. The hearing will take place on January 18, 2000 at 9:30 a.m. before Judge Kocoras in Room 2503 of the United States District Court, 219 South Dearborn Street, Chicago, Illinois 60604.

WHAT YOU CAN DO

1. You have the right to exclude yourself from both the class action and the settlement by filing a request for exclusion with the Clerk of the United States District Court for the Northern District of Illinois, Eastern Division, 219 South Dearborn Street, Chicago, Illinois 60604. The request for exclusion must be received by the Clerk of the Court on or before December 30, 1999 and must refer to your name, address, and the name and number of the case. You must also serve copies of the request for exclusion on each of the attorneys for the plaintiff and for the defendant listed below in the section entitled “Correct Address” by the same date.

2. If you object to the settlement, and wish to submit an objection rather than simply exclude yourself from the class action, you must submit your objection in writing to the Clerk of the United States District Court for the Northern District of Illinois, Eastern Division, 219 South Dearborn Street, Chicago, Illinois 60604. The objection must be received by the Clerk of the Court on or before December 30, 1999, and must refer to the name and number of the case. You must also serve copies of your objection on each of the attorneys for the plaintiff and for the defendant listed below in the section entitled “Correct Address” by the same date. Any objection must include your name and address and the name and number of the case and a statement of the reasons why you believe that the Court should find that the proposed settlement is not in the best interests of the class. If you do file an objection and wish it to be considered, you must also appear at the hearing before Judge Kocoras on January 18, 2000 at 9:30 a.m. Please note that it is not sufficient to simply state that you object. You must state reasons why the settlement should not be approved.

3. In order to obtain the benefits of the settlement, you do not need to take any action in order to remain in the class.

IMPORTANT: THE COURT REQUIRES THAT ANY REQUESTS FOR EXCLUSION OR OBJECTIONS BE RECEIVED BY THE CLERK BY DECEMBER 30, 1999. IF YOU MAIL A REQUEST FOR EXCLUSION OR OBJECTION, YOU BEAR THE RISK OF THE REQUEST FOR EXCLUSION OR OBJECTION NOT BEING RECEIVED BY THE CLERK BY THE DEADLINE.

If the settlement is not approved, the case will proceed as if no settlement had been attempted. In that event, defendant retains the right to contest whether this case should continue to be maintained as a class action and to contest the merits of the claims being asserted against them in this action. There can be no assurance that if the settlement is not approved, the class will recover more than is provided in the settlement, or indeed, anything.

This description of the case is general and does not cover all of the issues and proceedings thus far. In order to see the complete file, including a copy of the settlement agreement, you should visit the office of the Clerk of the United States District Court for the Northern District of Illinois, Eastern Division, 219 South Dearborn Street, Chicago, Illinois 60604. The Clerk will make the files relating to this lawsuit available to you for inspection and copying at your own expense.

WHAT YOU SHOULD DO NOW

IN ORDER TO RECEIVE THE BENEFITS TO WHICH YOU ARE ENTITLED UNDER THE SETTLEMENT AGREEMENT OUTLINED ABOVE, YOU DO NOT NEED TO TAKE ANY ACTION. You may also consult with an attorney (at your expense), exclude yourself from the case, or file objections, as described above. You also have the right to file an appearance in the case if you wish.

CORRECT ADDRESS

If this notice was forwarded by the Postal Service, or if it was otherwise sent to you at an address which is not current, you should immediately send a letter to each of the attorneys for the plaintiff and for the defendant listed below, stating your past and current addresses. Be sure to include the case name and number in your letter.

ATTORNEYS FOR PLAINTIFF: ATTORNEYS FOR DEFENDANT:
Daniel A. Edelman John M. Hynes
Cathleen M. Combs Edward S. Harmening
James O. Latturner CLAUSEN MILLER, PC
Ignacio D. Maramba 10 S. LaSalle
EDELMAN, COMBS & LATTURNER Chicago, IL 60603
120 S. LaSalle St., 18th Floor
Chicago, IL 60603
312-739-4200
http://members.aol.com/edcombs/index.htm

DO NOT CALL THE JUDGE. He is not permitted to answer questions in that manner.

Dated: November 24, 1999 Michael W. Dobbins, Clerk of the Court