<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TELETECH HOLDINGS, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
TELETECH HOLDINGS, INC.
1700 LINCOLN STREET, SUITE 1400
DENVER, COLORADO 80203
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of TeleTech Holdings, Inc., a Delaware
corporation, will be held at One Norwest Center, John D. Hershner Conference
Room, located at 1700 Lincoln Street, Denver, Colorado 80203 on Wednesday,
May 3, 2000, at 10:00 a.m., local time, for the following purposes:
1. to elect seven directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and qualified
(see page 5);
2. to ratify the appointment of Arthur Andersen LLP as our independent
auditors for 2000 (see page 17);
3. to amend the TeleTech Holdings, Inc. 1999 Stock Option and Incentive
Plan (see page 17);
4. to amend the TeleTech Holdings, Inc. Employee Stock Purchase Plan (see
page 20); and
5. to transact such other business as may properly come before the annual
meeting.
The record date for the annual meeting is March 24, 2000. Only shareholders
of record at the close of business on that date are entitled to vote at the
annual meeting.
By Order of the Board of Directors,
[LOGO]
James B. Kaufman
SECRETARY
Denver, Colorado
April 12, 2000
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE, SIGN AND RETURN YOUR PROXY CARD PROMPTLY.
<PAGE>
[LOGO]
TELETECH HOLDINGS, INC.
1700 LINCOLN STREET, SUITE 1400 DENVER, COLORADO 80203
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
---------------------
The Board of Directors of TeleTech Holdings, Inc., a Delaware corporation
("TeleTech," the "Company," "we," "us," or "our,") is soliciting proxies to be
used at our annual meeting of stockholders to be held at 10:00 a.m. on May 3,
2000, at One Norwest Center, John D. Hershner Conference Room, located at 1700
Lincoln Street, Denver, Colorado 80203. This proxy statement and the
accompanying proxy are first being mailed to stockholders on or about April 12,
2000.
WHO CAN VOTE
Stockholders of record at the close of business on March 24, 2000 may vote
at the annual meeting. On March 24, 2000, we had approximately 62,338,826 issued
and outstanding shares of common stock, which were held by approximately 125
record holders. If you hold shares in a stock brokerage account or by a nominee,
you are considered the beneficial owner of shares held in street name and these
proxy materials are being forwarded to you by your broker or nominee, who is
considered the record holder with respect to those shares. As the beneficial
owner, you have the right to direct your broker or nominee on how to vote and
you are also invited to attend the annual meeting. However, since you are not
the stockholder of record, you may not vote these shares in person at the
meeting. Your broker or nominee has enclosed a voting instruction card for you
to use. YOU ARE URGED TO VOTE BY PROXY REGARDLESS OF WHETHER YOU ATTEND THE
ANNUAL MEETING.
HOW YOU CAN VOTE
You can vote your shares if you are represented by proxy or present in
person at the annual meeting. If you hold your shares through your broker in
"street name," you may direct your broker or nominee to vote by proxy, but you
may not vote in person at the meeting unless you first obtain from your broker
or nominee a letter recognizing you as the beneficial owner of your shares. If
you return a properly signed proxy card, we will vote your shares as you direct.
If your proxy card does not specify how you want to vote your shares, we will
vote your shares "FOR" the election of all nominees for director according to
Company Proposal 1 and "FOR" Company Proposals 2, 3 and 4. Proxies marked
"ABSTAIN" with respect to any proposal, or "WITHHOLD AUTHORITY" with respect to
the election of one or more directors, will be treated as shares that are
present for purposes of determining the presence of a quorum, but as unvoted for
purposes of determining the approval of any matter submitted for a vote of the
stockholders or as unvoted for the election of one or more directors indicated
thereon, respectively. If a broker indicates on a proxy that he or she does not
have discretionary authority to vote on a particular matter as to certain
shares, those shares will be counted for quorum purposes but will not be
considered as present and entitled to vote with respect to that matter.
1
<PAGE>
REVOCATION OF PROXIES
You can revoke your proxy at any time before it is voted at the annual
meeting by any of the following three methods:
- by voting in person at the annual meeting;
- by delivering to the Company's Secretary a written notice of revocation
dated after the proxy; or
- by delivering another proxy dated after the previous proxy.
REQUIRED VOTES
Each share of common stock has one vote on all matters properly brought
before the annual meeting. In order to conduct business at the annual meeting, a
quorum of a majority of the outstanding shares of common stock must be present
in person or represented by proxy. The affirmative vote of a plurality of the
shares represented at the meeting, in person or by proxy, will be necessary for
the election of directors. The affirmative vote of a majority of the shares
represented at the meeting, in person or by proxy, will be necessary for
approval of all other Company proposals.
Kenneth D. Tuchman, the beneficial owner of approximately 59.5% of the
issued and outstanding shares of common stock, has indicated that he intends to
vote for all persons nominated by the Board of Directors for election to the
Company's Board of Directors and for each Company proposal that is submitted by
the Board of Directors for a vote of the stockholders.
COSTS OF PROXY SOLICITATION
The Company will bear the costs of soliciting proxies from its shareholders.
Certain directors, officers and other employees of the Company, not specially
employed for this purpose, may solicit proxies, without additional remuneration
therefor, by personal interview, mail, telephone or other means of
communication. The Company will request brokers and other fiduciaries to forward
proxy soliciting material to the beneficial owners of shares of common stock
that are held of record by such brokers and fiduciaries and will reimburse such
persons for their reasonable out-of-pocket expenses.
ADMISSION TO THE ANNUAL MEETING
If you plan to attend the annual meeting, please mark the appropriate box on
the proxy card and return the proxy card promptly. If you are a shareholder of
record and arrive at the annual meeting without an admission ticket, you will
only be admitted once we verify your share ownership at the shareholders'
admission counter. If you are a beneficial owner, you will only be admitted upon
presentation of evidence of your beneficial holdings, such as a bank or
brokerage firm account statement.
SHAREHOLDER LIST
A complete list of shareholders entitled to vote at the annual meeting will
be available for examination by any shareholder, for any purpose germane to the
meeting, at the annual meeting and at the Company's principal offices located at
1700 Lincoln, Suite 1400, Denver, Colorado 80203 during normal business hours
for a period of at least 10 days prior to the annual meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 31, 1999, information with
respect to each person who was known by TeleTech (based upon a review of
schedules and reports filed with the Securities and Exchange Commission ("SEC"))
to be the beneficial owner of more than 5% of TeleTech's common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES APPROXIMATE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- ------------------------------------ ------------------ ----------------
<S> <C> <C>
Kenneth D. Tuchman ......................................... 36,526,150(1) 59.5%
1700 Lincoln Street, Suite 1400
Denver, Colorado 80203
Lord, Abbett & Co. ......................................... 3,318,290 5.41%
90 Hudson Street
Jersey City, NJ 07302
Kern Capital Management, LLC ............................... 3,083,500 5.0%
114 West 47(th) Street, Suite 1926
New York, NY 10036
</TABLE>
- ------------------------
(1) Includes (i) 306,895 shares of common stock held by the Tuchman Family LLLP,
of which Mr. Tuchman is the managing general partner; (ii) 100,000 shares
owned by the Kenra Family LLP, a Colorado limited liability partnership in
which Mr. Tuchman and his spouse own direct or indirect controlling
partnership interests; (iii) 300,000 shares owned by the Tuchman Family
Foundation, which was established for the benefit of entities that have been
granted exempt status under Section 501(c)(3) of the Internal Revenue Code;
and (iv) 8,500 shares owned by a trust for the benefit of Mr. Tuchman's
nephews and nieces, of which Mr. Tuchman's spouse is the trustee.
Mr. Tuchman disclaims beneficial ownership of the shares held by the Tuchman
Family Foundation and the trust for the benefit of Mr. Tuchman's nieces and
nephews.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning shares of common stock
beneficially owned by each director and named executive officer of TeleTech as
of December 31, 1999 and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES SUBJECT TO
TOTAL NUMBER OF SHARES OPTIONS *** APPROXIMATE
NAME BENEFICIALLY OWNED ** (INCLUDED IN TOTAL) PERCENT OF CLASS
- ---- ---------------------- ------------------- ----------------
<S> <C> <C> <C>
Kenneth D. Tuchman......................... 36,526,150(1) 59.5%
Scott D. Thompson.......................... 250,000 250,000 *
James E. Barlett........................... *
Rod Dammeyer............................... 68,750 68,750 *
George H. Heilmeier........................ 68,000(2) 65,000 *
John T. McLennan........................... 43,750 38,750 *
Morton H. Meyerson......................... 693,703 249,353 1.1%
Alan Silverman............................. 329,630(3) 150,000 *
Vincent Cipolla............................ 47,022 *
Steven B. Coburn........................... 48,426(4) 46,667 *
Richard S. Erickson........................ 25,000 25,000 *
Deborah C. Gentry.......................... 12,000(5) 10,000 *
Joseph D. Livingston....................... 812,700 812,700 1.3%
All directors and executive officers as a
group (13 persons)....................... 38,925,131 1,716,220 61.9%
</TABLE>
- ------------------------
* Less than 1%.
** Includes shares subject to acquisition through exercise of stock options
within 60 days.
*** Shares subject to acquisition through exercise of stock options within
60 days.
(1) Includes 408,500 shares subject to shared voting and investment power.
(2) Includes 3,000 shares subject to shared voting and investment power.
(3) Includes 11,300 shares subject to shared voting and investment power.
(4) Includes 1,000 shares subject to shared voting and investment power.
(5) Includes 2,000 shares subject to shared voting and investment power.
4
<PAGE>
PROPOSAL 1:
ELECTION OF DIRECTORS
At the annual meeting, seven persons will be elected to the Board of
Directors of the Company to hold office until the next annual meeting of
stockholders and until their respective successors are duly elected and
qualified. The Board of Directors has nominated each of the persons named below
and it is the intention of the persons named in the enclosed proxy to vote FOR
the election of all such nominees. Each of the nominees is currently serving as
a director of the Company and has consented to continue to serve as a director
if elected.
In the event any of the nominees named below becomes unable or unwilling to
serve as a director, shares represented by valid proxies will be voted FOR the
election of such other person as the Board of Directors may nominate, or the
number of directors that constitutes the full Board may be reduced to eliminate
the vacancy.
INFORMATION CONCERNING THE NOMINEES FOR ELECTION AS DIRECTORS
Information concerning the seven nominees proposed for election to the Board
of Directors is set forth below. John McLennan will not seek re-election at the
annual meeting because he wishes to pursue other business interests, and the
Board will reduce its size from 8 directors to 7 directors, with no vacancies to
be filled at the annual meeting. The Board would like to thank Mr. McLennan for
his service to the Company and wish him success with his new endeavors.
KENNETH D. TUCHMAN, 40, founded TeleTech and has served as the Chairman of
the Board of Directors since its formation in December 1994. Mr. Tuchman served
as the Company's President and Chief Executive Officer from the Company's
inception until the appointment of Scott Thompson as Chief Executive Officer and
President in October of 1999. Mr. Tuchman also founded and served as the
President and Chief Executive Officer of TeleTech Customer Care Management
(California), Inc. and TeleTech Customer Care (Colorado), Inc., the two
predecessors of TeleTech, since their formation in October 1982 and
November 1992, respectively. Mr. Tuchman also serves as a director of the Boy
Scouts of America, Ocean Journey, and Colorado Concern, and he is a member of
the Advisory Board for Octane Software, Inc.
SCOTT D. THOMPSON, 43, has served as a director of TeleTech since
December 1999. Mr. Thompson has been the Chief Executive Officer and President
of TeleTech since October 1999. Prior to joining TeleTech, Mr. Thompson served
as President of the Netcare Professional Services Division of Lucent
Technologies. Prior to Lucent, Mr. Thompson was Executive Vice President of
Global Integration Services for Ascend Communications, which was acquired by
Lucent. Prior to Ascend, Mr. Thompson was Vice President of Global Service and
Solutions for Compaq Computer Corporation, President of Tandem's Global Services
Division and President and General Manager of Tandem's Asia/Pacific operations.
JAMES E. BARLETT, 56, was elected to the Company's Board of Directors in
February of 2000. Mr. Barlett has served as the President and Chief Executive
Officer of Galileo International, Inc. since 1994 and was elected Chairman in
1997. Prior to joining Galileo, Mr. Barlett served as Executive Vice President
of Worldwide Operations and Systems for MasterCard International Corporation,
where he was also a member of the MasterCard International Operations Committee.
Previously, Mr. Barlett was Executive Vice President of operations for NBD
Bancorp, Vice Chairman of Cirrus, Inc., and a partner with Touche Ross and Co.,
currently known as Deloitte and Touche. Mr. Barlett also serves on the board of
Korn/Ferry International.
ROD DAMMEYER, 59, was elected to the Board of Directors of TeleTech in
September 1996. Mr. Dammeyer is managing partner of Equity Group Investments,
LLC, which owns, among other things, investments in approximately 20 companies,
several of which are publicly held. Mr. Dammeyer is a director and Vice Chairman
of Anixter International Inc., a communication products distribution company,
where
5
<PAGE>
he has been employed since 1985 and previously served as President.
Mr. Dammeyer is also a director of Allied Riser Communications Corporation, a
provider of high-speed data, voice and fax communications; Antec Corporation, an
international communications technology company; CNA Surety Corp., Inc., an
insurance holding company; GATX Corporation, a provider of financing, asset and
logistics solutions; Grupo Azucarero Mexico, S.A. de C.V., a company that
processes, refines and markets cane sugar and non-crystallizing molasses; IMC
Global Inc., a leading provider and supplier of agricultural products and salt;
Matria Healthcare, Inc., a leading provider of comprehensive disease management
services; Stericycle, Inc., a provider of regulated medical waste management
services; and Transmedia Network, Inc., a company that owns and markets
specialized members-only charge cards. Mr. Dammeyer is also a trustee of Van
Kampen Investments, Inc. closed-end funds.
GEORGE H. HEILMEIER, 63, was elected to the Board of Directors of TeleTech
in November 1998. Dr. Heilmeier is Chairman emeritus of Telcordia Technologies,
formerly Bell Communications Research, Inc., a provider of communications
software and engineering, consulting and training services ("Bellcore"), and he
served as Bellcore's President and Chief Executive Officer from 1991 to 1997 and
Chairman and Chief Executive Officer from 1997 until his retirement. He was
Senior Vice President and Chief Technical Officer of Texas Instruments, Inc.
from 1983 to 1991. He is a member of the Defense Science Board and the National
Academy of Engineering. Dr. Heilmeier also serves as a director of Compaq
Computer Corporation, Automatic Data Processing Inc. and TRW, Inc. He also is a
trustee of the Mitre Corporation.
MORTON H. MEYERSON, 61, has served as a director of TeleTech since
March 1998. Mr. Meyerson served, from 1992 to 1997, as Chairman and Chief
Executive Officer of Perot Systems Corporation, a computer and information
services provider. From 1979 to 1986, he served as President and from May to
December 1986, as Vice Chairman of the Board of Electronic Data Systems, a
computer and information services provider. Mr. Meyerson is also the founder,
Chairman and Chief Executive Officer of 2M Companies, Inc., a private investment
firm, and has extensive experience in the computer service industry, running
large technology companies and investing in, growing and capitalizing emerging
technology companies. Mr. Meyerson is a director of Crescent Real Estate
Equities, Inc., a real estate investment trust; Energy Services Company
International, Inc., an offshore drilling company; and Chairman of the advisory
committee of Lante Corp., an Internet services company.
ALAN SILVERMAN, 56, has served as a director of TeleTech since
January 1995. Mr. Silverman is a partner in Essaness Partners, a family
investment firm that has wide ranging investment interests in Internet service
companies, technology and consumer businesses, biotechnology and companies that
service the rapidly growing Hispanic market in the United States. Mr. Silverman
is a director of Bodega Latina, Keystone Biomedical, Inc., Legal Research
Network, PeopleScape, Inc., StreetZebra.com, BridgePath.com, Silicon Light
Machines, Video 44, a partnership with Telemundo Broadcasting, and Lymphoma
Research Foundation of America.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL OF THE NOMINEES
FOR ELECTION AS DIRECTORS.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
Directors are elected at each annual meeting of the Company's stockholders
to serve for one-year terms. During 1999, the Board of Directors held four
meetings and took all other actions pursuant to unanimous written consents in
lieu of meetings. Each of the current directors attended at least 75% of all
meetings of the Board of Directors called during the time he served as a
director and at least 75% of all meetings of each committee of the Board of
Directors on which he served.
The Board of Directors has standing Audit and Compensation committees, which
assist the Board in the discharge of its responsibilities. Members of each
committee are elected by the Board at its first
6
<PAGE>
meeting following the annual meeting of stockholders and serve for one-year
terms. The Company does not have a nominating committee.
The Audit Committee reports to the Board regarding the appointment of the
independent public accountants of TeleTech, the scope and fees of the
prospective annual audit and the results thereof, compliance with TeleTech's
accounting and financial policies and management's procedures and policies
relative to the adequacy of TeleTech's internal accounting controls. The current
members of the Audit Committee are Rod Dammeyer, John McLennan and Alan
Silverman, each of whom is a non-employee director of the Company. During 1999,
the Audit Committee held three meetings and took all other actions pursuant to
unanimous written consents in lieu of meetings. Mr. McLennan plans to retire
from the Board and Audit Committee as of the annual meeting. The Board will
elect new Audit Committee members at the Board meeting following the annual
meeting.
The Compensation Committee reviews performance goals and determines or
approves the annual salary and bonus for each executive officer (consistent with
the terms of any applicable employment agreement); reviews, approves and
recommends terms and conditions for all employee benefit plans (and changes
thereto); and administers the TeleTech Holdings, Inc. 1999 Stock Option and
Incentive Plan ("1999 Plan"), the TeleTech Holdings, Inc. 1995 Stock Plan ("1995
Plan"), the Directors Option Plan, the TeleTech Holdings, Inc. Employee Stock
Purchase Plan ("ESPP") and such other employee benefit plans as may be adopted
by TeleTech from time to time. See "Report of the Compensation Committee on
Executive Compensation." The current members of the Compensation Committee are
John McLennan and Alan Silverman, each of whom is a non-employee director of the
Company. During 1999, the Compensation Committee held two meetings and took all
other actions pursuant to unanimous written consents in lieu of meetings.
Mr. McLennan plans to retire from the Board and Compensation Committee as of the
annual meeting. The Board will elect new compensation committee members at the
Board meeting following the annual meeting.
COMPENSATION OF DIRECTORS
Except for the Chairman of the Board, Kenneth Tuchman, who receives an
annual fee of $250,000, TeleTech's directors do not receive a fee for their
services as such; however, all directors are reimbursed for travel expenses
incurred in attending Board and committee meetings. In addition, each director
who is neither an employee of the Company nor the beneficial owner of 5% or more
of the outstanding common stock is entitled to participate in the Directors
Option Plan.
The Directors Option Plan provides that each eligible director automatically
will be granted options to acquire (i) 12,500 shares of common stock upon such
director's initial election to the Board of Directors and (ii) on the date of
each annual meeting of stockholders held each year thereafter at which such
director is re-elected, 12,500 shares of common stock for services to be
rendered as a director and 6,250 for services to be rendered as a member of each
committee of the Board of Directors to which such director is appointed. The
exercise price of each option granted under the Directors Option Plan equals the
fair market value of the common stock on the date of grant. Options granted
under the Directors Option Plan (a) vest immediately, (b) are not exercisable
until six months after the date of grant and (c) expire on the earliest to occur
of the 10th anniversary of the date of grant, one year following the director's
death or immediately upon the director's termination of membership on the Board
of Directors for cause (as defined in the Directors Option Plan).
Subject to shareholder approval of Proposal 3: Approval of Amendments to the
TeleTech Holdings, Inc. 1999 Stock Option and Incentive Plan, each director
elected at the annual meeting who is neither an employee of the Company nor the
beneficial owner of 5% or more of the Company's common stock will receive an
annual grant of options to purchase 15,000 shares of common stock and each
committee member will receive an annual grant of options to purchase 8,000
shares of common stock for each committee on which such member has been
appointed to serve. In the event that the shareholders
7
<PAGE>
approve Proposal 3, the Directors Option Plan will be terminated and annual
grants to directors will be made in accordance with the amendments to the 1999
Plan.
The Company entered into an employment agreement in February 1998 with
Morton H. Meyerson, a director of the Company, pursuant to which Mr. Meyerson
agreed to render certain advisory and consulting services to the Company. As
compensation for such services, the Company granted to Mr. Meyerson an option to
purchase up to 200,000 shares of common stock with an exercise price of $9.50
per share, the closing sales price of the common stock as reported by the Nasdaq
Stock Market on the date of the employment agreement. The option vests over five
years and is subject to accelerated vesting if and to the extent that the
closing sales price of the common stock during any 15 consecutive trading days
equals or exceeds certain target levels. Under the terms of the option, the
exercise price is required to be paid by delivery of shares of common stock of
the Company that have a fair market value equal to the exercise price.
Accordingly, Mr. Meyerson will receive no more than 200,000 shares of common
stock pursuant to the option, net of shares received by the Company for exercise
consideration.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act")
requires the Company's directors, executive officers and beneficial owners of
more than 10% of the outstanding common stock (collectively, "insiders") to file
reports with the SEC disclosing their ownership of common stock and changes in
such ownership. The rules of the SEC require insiders to provide the Company
with copies of all Section 16(a) reports that the insiders file with the SEC.
Based solely upon the Company's review of copies of Section 16(a) reports
received by it, and written representations that no such reports were required
to be filed with the SEC, the Company believes that all of its insiders complied
with all Section 16(a) filing requirements applicable to them during 1999;
except that Joseph Livingston was a few weeks late in reporting, on Form 5, a
transaction effected in December 1999.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation
earned by Scott Thompson and Kenneth Tuchman, both of whom served as the Chief
Executive Officer during 1999, the next four most highly compensated executive
officers who were serving as executive officers at the end of 1999, and one
additional executive officer, Steven Coburn, for whom disclosure would have been
required but for the fact that Mr. Coburn was not serving as an executive
officer of TeleTech at the end of 1999 (collectively, the "named executive
officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------ SECURITIES ALL OTHER
YEAR SALARY BONUS OTHER ANNUAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION ($) ($) ($) COMPENSATION OPTIONS (#) ($)(1)
- --------------------------- -------- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. Tuchman ......... 1999 $786,292 $ -- $ 60,698(2) -- $71,744(10)
Chief Executive Officer 1998 786,292 -- 54,243(2) -- --
until October 1999 1997 786,292 -- 31,509(2) -- --
Scott D. Thompson .......... 1999 73,558 -- 255,182(3) 1,000,000 --
Chief Executive Officer
and President since
October 1999
Joseph D. Livingston ....... 1999 428,415 209,748(4) 57,308(7) 230,000 37,171
Executive Vice President-- 1998 370,877 270,534(5) 18,000 -- 35,406
Office of the Chief 1997 336,501 317,929(6) 15,461 -- 4,500
Executive Officer and
President
Steven B. Coburn ........... 1999 202,739 100,000 -- 154,285 --
Senior Vice President and 1998 200,000 100,000 -- -- --
Chief Financial Officer 1997 160,000 80,000 -- -- --
until August 1999; Senior
Vice President of Finance
until December 31, 1999
Deborah C. Gentry .......... 1999 202,308 55,500 101,389(9) 72,464 --
Senior Vice President of 1998 135,192(8) 55,000 73,902(9) 100,000 --
Global Human Resources
until February 29, 2000
Richard S. Erickson ........ 1999 200,178 50,000 -- 132,464 --
Senior Vice President and 1998 169,000 75,000 -- 100,000 --
General Manager of 1997 82,038 75,000 -- -- --
Customer Interaction
Management
Vincent Cipolla ............ 1999 222,115 -- -- 300,000 --
Chief Marketing Officer
from March 16, 1999 until
December 31, 1999
</TABLE>
- ------------------------
(1) Represents the full dollar value of premiums paid by the Company with
respect to life insurance for the benefit of Mssrs. Tuchman and Livingston
and their respective beneficiaries.
9
<PAGE>
(2) Includes amounts paid as a car allowance and other perquisites paid by the
Company to or on behalf of Mr. Tuchman, as well as rental payments on a
condominium used primarily by the Company.
(3) Includes relocation costs paid or reimbursed by TeleTech and debt
forgiveness in connection with a $900,000 promissory note (See Certain
Relationships and Related Party Transactions).
(4) Includes $180,000 annual performance bonus and $29,748 of commissions.
(5) Includes a $150,000 annual performance bonus and $90,534 of commissions.
(6) Includes a $150,000 annual performance bonus and $167,929 of commissions.
(7) Includes amounts paid as a car allowance and other perquisites paid by the
Company to or on behalf of Mr. Livingston, as well as compensation for
unused vacation.
(8) Consists of compensation from April 1998 through year-end.
(9) Consists of relocation costs paid or reimbursed by TeleTech.
(10) Includes tax gross-up.
OPTION GRANTS IN 1999
The following table sets forth information with respect to options to
purchase shares of the Company's common stock that were granted in fiscal 1999
to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SECURITIES % OF TOTAL OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(7)
OPTIONS GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- --------------- --------------- ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. Tuchman........ -- -- -- -- -- --
Scott D. Thompson......... 1,000,000(2) 15.7% $ 13.125 10/18/09 $8,254,242 $20,917,870
Joseph D. Livingston...... 180,000(3) 2.8% $ 6.125 3/29/09 $ 693,356 $ 1,757,101
50,000(4) 0.7% $ 6.125 4/13/09 $ 192,599 $ 488,084
Steven B. Coburn.......... 120,000(5)(8) 1.9% $ 6.00 2/25/09 $ 452,804 $ 1,147,495
34,285(4)(8) 0.5% $ 6.25 4/12/09 $ 134,760 $ 341,509
Deborah C. Gentry......... 32,464(4) 0.5% $ 6.25 4/12/09 $ 127,603 $ 323,370
40,000 0.6% $11.8125 11/09/09 $ 297,153 $ 753,043
Richard S. Erickson....... 100,000 1.6% $ 6.50 2/23/09 $ 408,782 $ 1,035,933
32,464(4) 0.5% $ 6.25 4/12/09 $ 127,603 $ 323,370
Vincent Cipolla........... 300,000(6)(8) 4.7% $ 6.625 3/16/09 $1,249,928 $ 3,167,563
</TABLE>
- ------------------------
(1) Except as otherwise noted, these stock options become exercisable in 25%
increments on the first, second, third, and fourth anniversaries of the date
of grant.
(2) This option vests in 20% increments on the first, second, third, fourth, and
fifth anniversaries of the date of grant; however, vesting for this option
will be accelerated as indicated if the Company's average stock price for
120 consecutive days is equal to, or exceeds, the following per share
prices: (i) $25.00 (25%); (ii) $30.00 (50%); (iii) $40.00 (75%); and
(iv) $50.00 (100%).
(3) This option vests in one-third increments on March 29, 1999; January 1,
2000; and January 1, 2001.
(4) This option vests in 25% increments on May 1, 2000, 2001, 2002, and 2003.
(5) This option vests in one-third increments on February 25, 2000, 2001, and
2002.
10
<PAGE>
(6) This option vests in 20% increments on the first, second, third, fourth, and
fifth anniversaries of the date of grant.
(7) The potential realizable value is calculated assuming that the fair market
value on the date of grant, which equals the exercise price, appreciates at
the indicated annual rate (set by the SEC), compounded annually, for the
10-year term of the option.
(8) These options terminated on December 31, 1999.
AGGREGATE OPTION EXERCISES IN 1999 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to options exercised
during 1999, and the aggregate number and value of shares underlying unexercised
options held as of December 31, 1999, by each of the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AS OF IN-THE-MONEY OPTIONS AS OF
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999
ACQUIRED VALUE (#) ($)(1)
ON EXERCISE REALIZED -------------------------- ---------------------------
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ---------- -------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. Tuchman..... -- -- -- -- -- --
Scott D. Thompson...... -- -- -- 1,000,000 -- $ 20,578,100
Joseph D. Livingston... 50,000 $1,269,830 752,700 170,000 $23,618,752 $ 4,688,277
Steven B. Coburn....... 125,000 $1,371,407 46,667 -- $ 1,372,821 --
Deborah C. Gentry...... 10,000 $ 124,293 10,000 152,464 $ 242,031 $3,707,167.44
Richard S. Erickson.... 40,000 $ 350,721 -- 192,464 -- $4,763,733.44
Vincent Cipolla........ -- -- -- -- -- --
</TABLE>
- ------------------------
(1) The value of each option is based on $33.7031, the last reported sales price
of the common stock as reported on the Nasdaq Stock Market on December 31,
1999, less the exercise price payable for such shares.
EMPLOYMENT AGREEMENTS
AGREEMENT WITH KENNETH D. TUCHMAN. The Company entered into an employment
agreement with Kenneth Tuchman, effective January 1, 1998, whereby Mr. Tuchman
served as Chief Executive Officer of the Company. Mr. Tuchman, who is also the
Company's founder, Chairman of the Board, and holder of approximately 59.5% of
the Company's common stock, stepped down from his role as Chief Executive
Officer in October of 1999 when Scott Thompson joined the Company as Chief
Executive Officer and President, and Mr. Tuchman ceased to be an employee of the
Company effective December 31, 1999. Mr. Tuchman currently receives an annual
fee of $250,000 for service as Chairman of the Board of Directors. (See Proposal
1: Election of Directors--Compensation of Directors).
AGREEMENT WITH SCOTT D. THOMPSON. The Company entered into an employment
agreement with Scott Thompson, the Company's Chief Executive Officer and
President, effective October 18, 1999. Pursuant to his employment agreement,
Mr. Thompson is entitled to receive an annual base salary of $450,000, a
guaranteed bonus for 2000 of not less than $340,000 payable by March 31, 2001,
and subsequent annual bonuses targeted between 80% and 150% of Mr. Thompson's
base salary, based on achievement of goals set by Mr. Thompson and the Board of
Directors. Mr. Thompson's employment agreement also provided for the grant of
1,000,000 stock options and a $900,000 loan, which was made pursuant to a
promissory note (See Certain Relationships and Related Party Transactions).
11
<PAGE>
AGREEMENT WITH JOSEPH D. LIVINGSTON. The Company entered into an employment
agreement with Joseph Livingston whereby Mr. Livingston is entitled to receive
an annual base salary of $380,000 and an annual bonus of $150,000. The agreement
prohibits Mr. Livingston from disclosing any confidential information or trade
secrets of TeleTech and, for one year after termination of his employment with
TeleTech, from engaging in any business or becoming employed or otherwise
rendering services to any company engaging in inbound or outbound customer
management services or other businesses that are competitive with TeleTech.
AGREEMENT WITH STEVEN B. COBURN. The Company entered into an employment
agreement with Mr. Coburn pursuant to which Mr. Coburn was entitled to receive
an annual base salary of $250,000 and an annual bonus of up to 50% of his base
salary. The Company's employment agreement with Mr. Coburn was revised in
August 1999 when Mr. Coburn began to transition from his position as Senior Vice
President and Chief Financial Officer to the Company's Senior Vice President of
Finance, a position he held until December 31, 1999.
AGREEMENT WITH DEBORAH C. GENTRY. TeleTech executed a letter agreement with
Deborah Gentry in 1998 whereby Dr. Gentry was entitled to receive an annual
salary of $185,000, a guaranteed bonus for her first year of employment equal to
30% of her annual salary and an annual performance bonus (commencing in her
second year and thereafter) of up to 30% of her annual salary based upon her
achievement of mutually agreed management objectives. Dr. Gentry served as
Senior Vice President--Global Human Resources until February 29, 2000.
AGREEMENT WITH RICHARD S. ERICKSON. The Company entered into a letter
agreement with Richard Erickson in 1997 whereby Mr. Erickson is entitled to
receive an annual base salary of $158,000, an initial bonus of $75,000 to offset
lost revenue opportunity, a first year bonus of $50,000, and ongoing annual
performance based bonuses.
AGREEMENT WITH VINCENT CIPOLLA. The Company entered into an employment
agreement with Vincent Cipolla on March 16, 1999 in connection with the
Company's acquisition of Pamet River, Inc., a global marketing company. Pursuant
to his employment agreement, Mr. Cipolla was entitled to receive an annual base
salary of $350,000, as well as certain performance based bonuses. Mr. Cipolla
served as the Company's Chief Marketing Officer until December 31, 1999.
EXECUTIVE CHANGE OF CONTROL AND TERMINATION ARRANGEMENTS
The Company's standard option agreement for employees who are employed at
the director level or higher contains, with respect to options granted during
the latter half of 1999 and for future option grants, a provision whereby the
vesting of such options (which typically have 5 or 4 year vesting periods) would
accelerate by a period of 2 years immediately upon the occurrence of a change of
control. In addition, Scott Thompson's option agreements provide for accelerated
vesting of options scheduled to vest on October 18, 2000, and Mr. Thompson's
Employment Agreement provides for eighteen months base salary severance
compensation, in the event that Mr. Thompson's employment with TeleTech is
terminated by TeleTech for any reason other than for cause during the first year
of Mr. Thompson's employment with the Company.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company has entered into agreements pursuant to which the Company uses
aircraft services in which Kenneth D. Tuchman, Chairman of the Company, has a
direct or indirect beneficial interest. During 1999, the Company paid an
aggregate of $440,000 for use of the aircraft services.
On October 18, 1999, the Company loaned Scott Thompson, Chief Executive
Officer and President of the Company, $900,000. Principal and interest at 6% are
payable monthly; provided, however, that the
12
<PAGE>
Company has agreed to forgive each payment as it becomes due and payable if
Mr. Thompson continues to be employed as the Chief Executive Officer of the
Company as of each of the payment dates.
On October 19, 1998, a wholly-owned subsidiary of the Company made a
$400,000 interest-free loan to Joseph D. Livingston, an Executive Vice President
of the Company. The loan matures no later than December 31, 2000, and is secured
by all amounts due and payable by the Company at any time to Mr. Livingston, and
the proceeds from sales by Mr. Livingston, if any, of shares of common stock
issued to him upon his exercise of TeleTech stock options.
On March 16, 1999, Pamet River, Inc., a global marketing company, was merged
into a wholly-owned subsidiary of TeleTech. In connection with the merger,
Vincent Cipolla became Chief Marketing Officer of TeleTech, a position he held
until December 31, 1999. Morton H. Meyerson, a director of TeleTech, had
purchased shares of Series A Preferred Stock of Pamet River in April 1998 as a
personal investment. As consideration for the merger and in their capacities as
stockholders of Pamet River, Mr. Cipolla received $344,500 and 47,022 shares of
TeleTech common stock and Mr. Meyerson received 94,350 shares of TeleTech common
stock. For purposes of the merger, the TeleTech common stock was valued at $7
per share.
The Company has an employment agreement with Morton H. Meyerson, a director
of the Company, pursuant to which Mr. Meyerson renders certain advisory and
consulting services to the Company. (See "Proposal 1: Election of
Directors--Compensation of Directors.")
TeleTech believes that all transactions disclosed above have been, and
TeleTech's Board of Directors intends that any future transactions with its
officers, directors, affiliates or principal stockholders will be, on terms that
are no less favorable to TeleTech than those that are obtainable in arm's length
transactions with unaffiliated third parties.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 ("SECURITIES ACT") OR THE
EXCHANGE ACT THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE REPORT PRESENTED BELOW AND THE PERFORMANCE
GRAPH FOLLOWING THE REPORT SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
REPORT OF THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") approves and oversees the Company's compensation
policy, approves salaries and annual bonuses for executive management of the
Company, including the named executive officers, and administers the 1999 Plan,
the 1995 Plan, the Directors Option Plan, and the ESPP. In fulfilling its
responsibilities, the Compensation Committee receives significant input from the
Company's Chief Executive Officer and other members of senior management. The
Compensation Committee is composed of non-employee directors.
COMPENSATION POLICY
COMPONENTS OF COMPENSATION. The Company's compensation policy for executive
management is designed to recruit, motivate and retain highly qualified
individuals by (i) rewarding individual achievement, (ii) enabling individuals
to share in the risks and rewards of the Company's overall performance and
(iii) paying compensation that is competitive with industry compensation levels.
The Company's compensation policy is based, in part, on certain recommendations
made by an independent compensation consulting firm previously retained by the
Company. The key components of the Company's current compensation policy, which
is designed to balance short-term and long-term considerations, are competitive
salaries, annual cash performance bonuses and long-term equity incentives. With
respect to 1999 compensation, the Compensation Committee did not use a specific
formula to evaluate performance,
13
<PAGE>
determine the specific amount of compensation payable to any individual or
allocate each individual's total compensation among salary, bonus and stock
options; however, the Compensation Committee believes that the compensation paid
by the Company to its executive management is commensurate with the services
they rendered to the Company.
ANNUAL OPTION GRANT PROGRAM. The Company has implemented an annual option
grant program pursuant to which the Company grants stock options to certain
members of management. Awards are granted on a discretionary basis based upon
performance evaluations of eligible employees. Management believes that the
annual option grant program is in the best interests of the Company because
(i) the equity-based awards, which will vest over a four-year period after
grant, will provide the recipients with an incentive to remain in the Company's
employ and (ii) broader stock ownership among middle and senior management level
employees will more closely align their interests with the interests of the
Company's stockholders.
1999 COMPENSATION
ANNUAL SALARIES. Scott D. Thompson, Chief Executive Officer and President
of the Company, has authority to hire all members of executive management of the
Company, subject to the Compensation Committee's approval of the compensation to
be paid to such executives. Subject to the approval of the Compensation
Committee, Mr. Thompson also determines the compensation payable to persons
offered executive level employment with the Company and annual salary increases
for members of the Company's executive management. The Board, at the
recommendation of the Compensation Committee, determines annual adjustments to
Mr. Thompson's salary and bonus compensation, which is subject to the terms of
Mr. Thompson's employment agreement. In determining and approving the amount of
annual salary and salary increases for executive management, Mr. Thompson and
the Compensation Committee consider factors such as the executive's contribution
to the Company's overall operating effectiveness, strategic success and
profitability; the executive's role in developing and maintaining key client
relationships; the level of responsibility, scope and complexity of such
executive's position relative to other executive management; and the executive's
leadership growth and management development over the past year. The salaries of
the Company's named executive officers, which are listed in the Summary
Compensation Table located elsewhere in this proxy statement, are governed
primarily by written employment agreements with the Company.
PERFORMANCE BONUSES. Cash performance bonuses for executives are determined
and approved annually by the Compensation Committee based on a subjective
evaluation of each executive's actual performance relative to predetermined
performance goals, which are based upon factors over which each executive has
significant control. The performance goals for executives who are responsible
for a particular business unit or functional department, for example, generally
are based upon gross revenue or net income targets for such strategic business
unit or functional department. Performance goals may take into account the
extent to which predetermined strategic goals and business plans are met and
whether special projects and tasks undertaken by the executive during the
preceding year have been successfully completed. In addition, the Compensation
Committee generally considers the Company's overall financial performance,
including the achievement of gross revenue and net income goals.
LONG-TERM INCENTIVES. Stock-based compensation is also an important element
of the Company's compensation policy. Stock options are generally offered to
induce an executive to accept employment with the Company. The Compensation
Committee believes that stock options, which vest over time and are subject to
forfeiture, align the interests of executive management with the interests of
the Company's stockholders. The Compensation Committee also believes that
substantial equity ownership by individuals in leadership positions within the
Company ensure that such individuals will remain focused on building stockholder
value. Mr. Thompson generally recommends, for approval by the Compensation
Committee, the size, vesting schedule and other key elements of a particular
stock option grant based upon his
14
<PAGE>
subjective assessment of the same factors that are considered in determining and
approving annual salaries and salary increases. Senior executives who oversee
departmental and functional units within the Company also make recommendations
regarding employee stock option awards.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The compensation paid to Scott
D. Thompson, the Company's Chief Executive Officer and President, is governed by
his employment agreement. (See "Executive Officers--Employment Agreements.")
Pursuant to his employment agreement, Mr. Thompson is entitled to receive an
annual base salary of $450,000, a guaranteed bonus for 2000 of not less than
$340,000 payable by March 31, 2001, and subsequent annual bonuses targeted
between 80% and 150% of Mr. Thompson's base salary, based on achievement of
goals established by the Board of Directors, at the recommendation of the
Compensation Committee of Board of Directors. Mr. Thompson's employment
agreement also provided for the grant of 1,000,000 stock options and a $900,000
loan, which will be forgiven in the event that Mr. Thompson remains employed as
the Chief Executive Officer of the Company for at least one year from the date
of his employment agreement (see Certain Relationships and Related Party
Transactions). The Compensation Committee will review Mr. Thompson's performance
each year to (i) review and approve adjustments to Mr. Thompson's annual salary
and bonus, and (ii) determine the performance objectives upon which
Mr. Thompson's bonus compensation for the next fiscal year will be based,
subject to approval by the Board of Directors.
LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION. Under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
Treasury regulations, no tax deduction is allowed for annual compensation in
excess of $1 million paid to the five most highly compensated executive
officers. Performance-based compensation that has been approved by stockholders,
however, is excluded from the $1 million limit if, among other requirements, the
compensation is payable only upon attainment of pre-established, objective
performance goals and the board committee that establishes such goals consists
only of "outside directors" as defined for purposes of Section 162(m). All of
the members of the Compensation Committee qualify as "outside directors." The
Compensation Committee intends to maximize the extent of tax deductibility of
executive compensation under the provisions of Section 162(m) so long as doing
so is compatible with its determinations as to the most appropriate methods and
approaches for the design and delivery of compensation to executive officers of
the Company.
<TABLE>
<S> <C>
March 31, 2000
SUBMITTED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
Alan Silverman
John T. McLennan
</TABLE>
15
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Company's common stock since consummation of the Company's initial public
offering in August 1996 with the cumulative total return of the Nasdaq Stock
Market (U.S.) Index; the Russell 2000 Index; and a customized peer group (the
"Peer Group"). The performance graph shows the return of $100 invested in the
Company's common stock, the Nasdaq Stock Market (U.S.) Index, the Russell 2000
Index, and the Peer Group on August 1, 1996. The Peer Group is composed of APAC
Customer Services Inc., Convergys Corporation, Precision Response Corporation,
Sitel Corporation, Sykes Enterprises Inc. and Telespectrum Worldwide Inc. Stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
COMPARISON OF 41 MONTH CUMULATIVE TOTAL RETURN*
AMONG TELETECH HOLDINGS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX,
THE RUSSELL 2000 INDEX AND A PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TELETECH HOLDINGS, INC. PEER GROUP NASDAQ STOCK MARKET (U.S.) RUSSELL 2000
<S> <C> <C> <C> <C>
8/1/96 100.00 100.00 100.00 100.00
12/96 179.31 111.33 119.30 117.97
12/97 78.45 51.38 146.18 155.47
12/98 70.69 42.09 205.99 145.44
12/99 158.62 59.05 372.14 143.28
</TABLE>
* $100 invested on 8/1/96 in stock or on 7/31/96 in index--including
reinvestment of dividends. Fiscal year ending December 31.
16
<PAGE>
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company has engaged Arthur Andersen LLP to audit the Company's financial
statements for fiscal 2000. Arthur Andersen LLP audited the Company's financial
statements for fiscal 1999 and the decision to retain Arthur Andersen LLP has
been approved by the Board of Directors. A representative of Arthur Andersen LLP
is expected to attend the annual meeting of stockholders and will have the
opportunity to make a statement, if he or she so desires, and will be available
to respond to appropriate questions of stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.
PROPOSAL 3:
APPROVAL OF AMENDMENTS TO
THE TELETECH HOLDINGS, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
Shareholders are being asked to consider and approve this proposal to amend
the 1999 Plan to (i) increase the number of shares that may be granted under the
1999 Plan by 5 million shares to a total of 10 million shares, (ii) provide for
an annual grant to non-employee directors of options to purchase 15,000 shares
of the Company's common stock, and (iii) provide for an annual grant of options
to purchase 8,000 shares of the Company's common stock to each member of a
committee of the Board of Directors. The Board of Directors has approved these
amendments to the 1999 Plan (as amended and restated, the "Amended 1999 Plan")
and believes that the amendments are in the best interests of the Company and
its shareholders. If Proposal 3 is adopted, the Director Option Plan will be
terminated.
The following summary describes the Amended 1999 Plan, but is qualified in
its entirety by reference to the Amended 1999 Plan which is attached as
Exhibit A to this Proxy Statement.
PURPOSE
The Amended 1999 Plan enables the Company to (i) attract and retain high
quality directors, officers, employees and potential employees, consultants and
independent contractors of the Company or any of its subsidiaries,
(ii) motivate such persons to promote the long-term success of the business of
the Company and its subsidiaries and (iii) induce employees of companies that
are acquired by TeleTech to accept employment with TeleTech following such
acquisition.
TYPES OF AWARDS
The following types of awards may be made under the Amended 1999 Plan:
(i) incentive stock options ("ISOs") within the meaning of Section 422 of the
Code, (ii) stock options that are not intended to qualify under Section 422 of
the Code ("NSOs" and together with ISOs, "Options") and (iii) shares of
restricted common stock ("Restricted Stock"). The Amended 1999 Plan also
authorizes the award of phantom stock and stock appreciation rights ("SARs").
SHARES AVAILABLE
Not more than 10 million shares of common stock may be issued pursuant to
awards granted under the Amended 1999 Plan. No participant in the Amended 1999
Plan may be granted awards in any calendar year in respect of more than 300,000
shares of common stock. Common stock issued under the Amended 1999 Plan may be
authorized but unissued shares of common stock, or shares that have been
reacquired by the Company and held in treasury. Upon the expiration or
termination of options or other awards granted
17
<PAGE>
under the Amended 1999 Plan, the shares of common stock that were subject to
such awards will be available for awards subsequently granted under the Amended
1999 Plan.
ELIGIBLE INDIVIDUALS
Awards under the Amended 1999 Plan may be granted to officers, employees,
non-employee directors, independent contractors or consultants of the Company or
any subsidiary, and to persons who, at the time an award is granted, are not yet
employees of the Company or any subsidiary but to whom an offer of employment
has been extended.
DIRECTOR GRANTS
Each director elected at the annual meeting who is neither an employee of
the Company nor the beneficial owner of more than 5% of the Company's common
stock, will receive an annual grant of Options to purchase 15,000 shares of
common stock and each committee member will receive an annual grant of Options
to purchase 8,000 shares of common stock for each committee on which such member
has been appointed to serve. Director grants will vest immediately but will not
be exercisable until six months after the date of grant.
ADMINISTRATION OF THE 1999 PLAN
The Amended 1999 Plan is administered by the Compensation Committee. Each
member of the Compensation Committee qualifies as an outside director and a
non-employee director as defined by Section 162(m) of the Code and the Exchange
Act to the extent such qualification is deemed necessary for the grant of awards
under the Amended 1999 Plan to qualify for favorable tax or securities treatment
under applicable law. The members of the Compensation Committee are appointed by
the Board of Directors and currently consist of Alan Silverman and John T.
McLennan. Subject to the express provisions of the Amended 1999 Plan, the
Compensation Committee has sole discretion to select, from time to time,
(i) which individuals are eligible to participate in the Amended 1999 Plan,
(ii) those eligible individuals who will receive awards under the Amended 1999
Plan and (iii) the form and vesting schedule of awards and the number of shares,
exercise price, manner of payment and expiration date applicable to each award.
The Compensation Committee also has authority to construe and interpret the
Amended 1999 Plan and to establish, amend and rescind rules and regulations
relating to the Amended 1999 Plan.
TERMS AND CONDITIONS OF AWARDS
The exercise price for each award under the Amended 1999 Option Plan will be
determined by the Compensation Committee at the time the award is granted and
will be specified in an option or other applicable agreement. The exercise price
of an ISO may not be less than the fair market value of the common stock on the
date the ISO is granted; however, the exercise price of an NSO may be less than,
equal to or greater than the fair market value of the common stock on the date
the NSO is granted. "Fair market value" under the Amended 1999 Option Plan is
determined by the Compensation Committee, in good faith, taking into account the
price of the common stock as reported on the Nasdaq Stock Market. The exercise
price of Options granted under the Amended 1999 Plan will be payable in cash, by
the participant's delivery to the Company of shares of common stock that have a
fair market value equal to the aggregate exercise price, pursuant to a cashless
exercise arrangement with a broker or in such other form of consideration as the
Compensation Committee may approve. Stock option agreements for employees who
are director level or above contain an accelerated vesting provision in the
event of a change of control.
Unless otherwise determined by the Compensation Committee, awards under the
Amended 1999 Plan will be (i) exercisable for 10 years after the date of grant,
and (ii) terminate on the earliest of (a) the participant's termination of
employment with the Company for "cause," (b) 90 days after the participant's
termination of employment with the Company for any other reason, other than
death and (c) six months
18
<PAGE>
following the participant's death. Unless otherwise permitted by the
Compensation Committee in its discretion, Options, SARs and phantom stock
granted under the Amended 1999 Plan will be transferable only by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined in Section 414(p) of the Code.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Following is a brief summary of the principal federal income tax
consequences of awards under the Amended 1999 Plan. This summary is not an
exhaustive description and does not describe all applicable federal, state or
local tax laws. Each recipient of an award under the Amended 1999 Plan is
encouraged to consult with a qualified tax advisor regarding the tax
consequences of a particular grant.
INCENTIVE STOCK OPTIONS. Recipients of ISOs granted under the Amended 1999
Plan are not subject to federal income tax at the time of either the grant or
the exercise of an ISO. In the year in which an ISO is exercised, however, the
amount by which the fair market value of the shares of common stock received
upon the exercise of an ISO exceeds the exercise price will constitute an
adjustment to the optionholder's income in computing alternative minimum taxable
income. Such adjustment could result in the imposition of, or increase the
amount of, the optionholder's "alternative minimum tax" under the Code. If an
optionholder does not dispose of such shares of common stock within two years
after the ISO was granted, or one year after the ISO was exercised, whichever is
later (any such disposition, a "disqualifying event"), then any gain or loss
recognized upon such disposition generally will be treated as long-term capital
gain or loss. In such event, the Company will not receive a tax deduction on
either the exercise of the ISO or on the sale of the underlying common stock.
If an optionholder makes a "disqualifying disposition," the optionholder
will realize ordinary income in an amount equal to the lesser of (i) the fair
market value of the common stock underlying an ISO on the date the ISO is
exercised minus the exercise price or (ii) the sales price received by the
optionholder on the disposition of the common stock underlying ISO minus the
exercise price. In such event, the Company will be entitled to a deduction in an
amount equal to the ordinary income realized by the optionholder. If a sale is a
disqualifying disposition, the optionholder also may realize short-term or
long-term capital gain or loss, if such shares constitute capital assets in an
optionholder's hands. The gain or loss will be measured by the difference
between the fair market value of the shares on the date of exercise of the ISO
and the sales price of the shares.
NON-QUALIFIED STOCK OPTIONS. No income is realized by an optionholder upon
the grant of an NSO. Upon the exercise of an NSO, however, the amount by which
the fair market value of the common stock on the date of exercise exceeds the
exercise price will be taxed as ordinary income to an optionholder and the
Company will be entitled to a deduction in an equal amount. Such amount will not
be an adjustment to income in computing alternative minimum taxable income. Upon
subsequent sales of the common stock underlying an NSO, an optionholder may
realize short-term or long-term capital gain or loss, depending upon the holding
period of the shares, if such shares constitute capital assets in an
optionholder's hands. The gain or loss will be measured by the difference
between the sales price and the tax basis of the shares sold. The tax basis for
this purpose will be the sum of the exercise price and the amount of ordinary
income realized by the optionholder as a result of such exercise.
OTHER AWARDS. No income is realized by a holder of a SAR or phantom stock
at the time the SAR or phantom stock is granted; however, upon exercise, the
amount of cash or the fair market value of the shares of common stock received
will be taxable as ordinary income to the holder thereof and the Company will be
entitled to a deduction in an equal amount.
SECTION 162(M). Section 162(m) of the Code limits the deductibility (under
certain circumstances) of compensation that exceeds $1,000,000 annually that is
paid by the Company to its five most highly compensated officers determined at
the end of the Company's taxable year. Section 162(m) and the
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proposed regulations thereunder provide certain exclusions from the amounts
included in the $1,000,000 limitation, including compensation that is "qualified
performance-based compensation" within the meaning of the proposed regulations.
The Amended 1999 Plan generally is intended to satisfy the requirements set
forth in the proposed regulations with respect to "qualified performance-based
compensation" with respect to Options that are exercisable at an exercise price
of not less than 100% of the fair market value of a share of common stock on the
date of grant. However, if an option is exercisable at a price less than 100% of
the price of a share of common stock on the date of grant, such option will not
constitute "qualified performance-based compensation."
MISCELLANEOUS. The 1999 Plan is not qualified under Section 401 of the Code
and is not subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
VOTE REQUIRED
The amendments to the 1999 Plan will be approved by the stockholders of the
Company if Proposal 3 receives the affirmative vote of a majority of the shares
of common stock present, by person or by proxy, and entitled to vote on the
proposal. Any proxy card that is marked as abstaining from voting on Proposal 3
will be counted for purposes of determining a quorum and, although such shares
will be counted as unvoted for purposes of the proposal, will have the effect of
a vote against the proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3.
PROPOSAL 4:
APPROVAL OF AMENDMENTS TO
THE TELETECH HOLDINGS, INC.
EMPLOYEE STOCK PURCHASE PLAN
Shareholders are being asked to consider and approve this proposal to amend
and restate the Company's ESPP (as amended and restated, the "Amended ESPP").
The Board of Directors has adopted the Amended ESPP, subject to shareholder
approval, and the Amended ESPP will become effective when shareholder approval
is obtained. The material terms of the Amended ESPP are summarized below and are
qualified in their entirety by the terms of the Amended ESPP, which is included
as Exhibit B to this Proxy Statement.
GENERAL
The Amended ESPP is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Code. A total of 400,000 shares of common stock are
being reserved for issuance under the Amended ESPP. Because benefits under the
Amended ESPP will vary depending on participants' elections and the fair market
value of the common stock at various future dates, it is not possible to
determine exactly what benefits might be received by the Company's employees
following the adoption of the Amended ESPP.
PURPOSE
The purpose of the Amended ESPP is to provide a means for employees to share
in the ownership of the Company through payroll deductions, and to provide an
incentive for continued employment. The Amended ESPP enables employees to buy
small amounts of common stock without incurring transaction costs and gives them
the additional advantage of dollar cost averaging in their purchases of common
stock. Increased loyalty, productivity, and shareholder value often result from
employee stock ownership.
ADMINISTRATION
The Amended ESPP is administered by the Compensation Committee of the Board
of Directors.
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ELIGIBILITY
All employees of the Company and its subsidiaries are eligible to
participate in the Amended ESPP except (i) employees who have not worked for the
Company for at least three months; (ii) five percent or greater shareholders of
the Company, (iii) employees who do not work more than 20 hours per week; and
(iv) employees who do not work more than five months per year.
GRANT OF PURCHASE RIGHTS
Eligible employees may participate by executing and submitting a
subscription agreement authorizing specific regular payroll deductions of not
less than $50 per month and not more than 15% of the employee's compensation.
All eligible employees have the same rights and privileges with respect to the
purchase of shares under the Amended ESPP. In no event, however, may an employee
be granted an option in any one calendar year to purchase stock with a value of
more than $25,000.
OFFERING PERIODS
The offering periods are semi-annual, with the first period beginning on
October 1 and ending on March 31 and the second period beginning on April 1 and
ending on September 30.
PURCHASE PRICE
The purchase price per share of each purchase right granted under the
Amended ESPP shall be the lesser of the fair market value of a share of common
stock on the first or last day of each offering period, less 15%.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary as of the date of this proxy statement of
the U.S. federal income tax considerations associated with the purchase of
shares of common stock under the Amended ESPP. The U.S. federal tax laws may
change and the U.S. federal, state, and local tax consequences for any
participating employee will depend upon his or her individual circumstances.
Each participating employee is encouraged to seek the advice of a qualified tax
advisor regarding the tax consequences of participation in the Amended ESPP.
GENERAL. The Amended ESPP is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code.
TAX TREATMENT OF THE EMPLOYEE. Participating employees will not recognize
income for U.S. federal income tax purposes either upon enrollment in the
Amended ESPP or upon the purchase of shares of common stock under the Amended
ESPP. All tax consequences are deferred until a participating employee sells the
shares, disposes of shares by gift, or dies. Payroll deductions used to purchase
shares of common stock, however, remain fully taxable as ordinary income at the
time the deduction is taken, and there is no deferral of the ordinary income tax
assessed on these amounts.
If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable purchase period or if
the employee dies while owning the shares, the employee realizes ordinary income
on a sale (or a disposition by way of gift or upon death) to the extent of the
lesser of: (i) 15% of the fair market value of the shares at the beginning of
the purchase period, or (ii) the actual gain (the amount by which the market
value of the shares on the date of sale, gift or death exceeds the purchase
price). All additional gain upon the sale of shares is treated as long-term
capital gain. If the shares are sold and the sale price is less than the
purchase price, there is no ordinary income, and the employee has long-term
capital loss for the difference between the sale price and the purchase price
depending upon the amount of time the shares are held.
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If the shares are sold or are otherwise disposed of including by way of gift
(but not death, bequest or inheritance) within either the one-year or the
two-year holding periods described above (in any case, a disqualifying
disposition), the employee realizes ordinary income at the time of sale or other
disposition equal to 15% of the fair market value of the shares at the date of
purchase. This amount will constitute ordinary income in the year of the sale or
other disposition even if no gain is realized on the sale or if a gratuitous
transfer is made. The difference, if any, between the proceeds of sale and the
fair market value of the shares at the date of purchase is a long-term or
short-term capital gain or loss, depending on how long the shares have been
held.
TAX TREATMENT OF THE COMPANY. The Company will be entitled to a deduction
in connection with the disposition of shares acquired under the Plan only to the
extent that the employee recognizes ordinary income on a disqualifying
disposition of the shares (but not if an employee satisfies the holding period
requirements).
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4.
GENERAL INFORMATION
2000 ANNUAL MEETING OF STOCKHOLDERS
Notice of any stockholder proposal that is intended to be included in the
Company's proxy statement and form of proxy for its next annual meeting of
stockholders must be received by the Secretary of the Company no later than
December 13, 2000. Such notice must be in writing and must comply with the other
provisions of Rule 14a-8 under the Exchange Act. In addition, the persons named
in the proxy for the next annual meeting will have discretionary authority to
vote with respect to any matter that is brought by any stockholder during the
meeting and that is not described in the proxy statement for such meeting if the
Company does not receive written notice, on or before February 26, 2000, that
such matters would be raised at the meeting. Any notices regarding stockholder
proposals must be received by the Company at its principal executive offices at
1700 Lincoln Street, Suite 1400, Denver, Colorado, 80203, Attention: Secretary.
ANNUAL REPORTS
The Company's 1999 Annual Report to Stockholders is being mailed to the
stockholders together with this proxy statement; however, the report is not part
of the proxy solicitation materials. A copy of the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 may be obtained without charge
upon request made to TeleTech Holdings, Inc., 1700 Lincoln Street, Suite 1400,
Denver, Colorado, 80203, Attention: Investor Relations.
By Order of the Board of Directors,
[LOGO]
James B. Kaufman
SECRETARY
Denver, Colorado
April 12, 2000
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EXHIBIT A
AMENDED AND RESTATED
TELETECH HOLDINGS, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
1. PREAMBLE.
TeleTech Holdings, Inc., a Delaware corporation (the "COMPANY"), hereby
establishes the Amended and Restated TeleTech Holdings, Inc. 1999 Stock Option
and Incentive Plan (the "PLAN") as a means whereby the Company may, through
awards of (i) incentive stock options within the meaning of section 422 of the
Code (as herein defined), (ii) stock appreciation rights, (iii) non-qualified
stock options, (iv) restricted stock, and (v) phantom stock:
(a) provide employees of the Company and its subsidiaries with
additional incentive to promote the success of the Company's and its
subsidiaries' businesses and encourage such employees to remain in the
employ of the Company and its subsidiaries;
(b) provide incentive for potential employees to accept employment with
the Company; and
(c) provide directors of the Company who are not otherwise employees of
the Company, and consultants and other independent contractors who provide
services to the Company, with additional incentive to promote the success of
the Company's business.
The provisions of this Plan do not apply to or affect any option, stock
appreciation right, or stock heretofore or hereafter granted under any other
stock plan of the Company or any subsidiary, and all such options, stock
appreciation right or stock continue to be governed by and subject to the
applicable provisions of the plan or agreement under which they were granted.
2. DEFINITIONS.
2.01 "BOARD" or "BOARD OF DIRECTORS" means the board of directors of the
Company.
2.02 "CAUSE" means, as determined in the sole discretion of the Board, a
Participant's (a) commission of a felony or the commission of any crime
involving moral turpitude, theft, embezzlement, fraud, misappropriation of
funds, breach of fiduciary duty, abuse of trust or the violation of any other
law or ethical rule relating to the Company; (b) material or repeated dishonesty
or misrepresentation involving the Company or any Subsidiary; (c) material or
repeated misconduct in the performance or non-performance of Participant's
responsibilities as an employee, officer, Director, consultant or independent
contractor; (d) violation of a material condition of employment; (e)
unauthorized use of trade secrets or confidential information (or the Company's
reasonable belief that a Participant has or has attempted to do so); or (f)
aiding a competitor of the Company or any Subsidiary.
2.03 "CODE" means the Internal Revenue Code of 1986, as it exists now and
as it may be amended from time to time.
2.04 "COMMITTEE" means the committee comprised of two or more Directors
appointed by the Board to administer the Plan.
2.05 "COMMON STOCK" means the common stock of the Company, $.01 par value
per share.
2.06 "COMPANY" means TeleTech Holdings, Inc., a Delaware corporation, and
any successor thereto.
2.07 "DIRECTOR" means a member of the Board.
2.08 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as it
exists now or from time to time may hereafter be amended.
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2.09 "FAIR MARKET VALUE" means for the relevant day:
(a) If shares of Common Stock are listed or admitted to unlisted trading
privileges on any national or regional securities exchange, the last
reported sale price, regular way, on the composite tape of that exchange on
the day Fair Market Value is to be determined;
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges as provided in paragraph (a), and if sales prices for shares of
Common Stock are reported by the National Association of Securities
Dealers, Inc. Automated Quotations, Inc. National Market System ("NASDAQ
SYSTEM"), then the last sale price for Common Stock reported as of the close
of business on the day Fair Market Value is to be determined, or if no such
sale takes place on that day, the average of the high bid and low asked
prices so reported and, if Common Stock is not traded on that day, the next
preceding day on which such stock was traded; or
(c) If trading of the Common Stock is not reported by the Nasdaq System
or on a stock exchange, Fair Market Value will be determined by the
Committee in its discretion based upon the best available data.
2.10 "ISO" means incentive stock options within the meaning of
Section 422 of the Code.
2.11 "NAKED SAR" means a SAR issued not in connection with an ISO or NSO.
2.12 "NSO" means non-qualified stock options, which are not intended to
qualify under Section 422 of the Code.
2.13 "OPTION" means the right of a Participant, whether granted as an ISO
or an NSO, to purchase a specified number of shares of Common Stock, subject to
the terms and conditions of the Plan.
2.14 "OPTION DATE" means the date upon which an Option, SAR, Restricted
Stock or Phantom Stock is awarded to a Participant under the Plan.
2.15 "OPTION PRICE" means the price per share at which an Option may be
exercised.
2.16 "OUTSIDE DIRECTOR" means a Non-Employee Director as defined in
Section 16b-3(b)(3)(i) of the Exchange Act.
2.167 "PARTICIPANT" means an individual to whom an Option, SAR, Phantom
Stock or Restricted Stock has been granted under the Plan.
2.178 "PHANTOM STOCK" means a hypothetical share of Common Stock issued as
phantom stock under the Plan.
2.189 "PLAN" means the Amended and Restated TeleTech Holdings, Inc. 1999
Stock Option and Incentive Plan, as set forth herein and as from time to time
amended.
2.20 "RESTRICTED STOCK" means Common Stock awarded to a Participant
pursuant to this Plan and subject to the restrictions contained in Section 9.
2.191 "SAR" means a stock appreciation right. A SAR may be a Naked SAR or
a Tandem SAR.
2.202 "SECURITIES ACT" means the Securities Act of 1933, as it exists now
or from time to time may hereinafter be amended.
2.213 "SUBSIDIARY" means any corporation or other entity of which the
majority voting power or equity interest is owned directly or indirectly by the
Company.
2.224 "TANDEM SAR" means a SAR associated with and issued in connection
with an ISO or NSO.
2.235 RULES OF CONSTRUCTION.
(a) GOVERNING LAW. The construction and operation of this Plan are
governed by the laws of the State of Delaware.
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(b) UNDEFINED TERMS. Unless the context requires another meaning, any
term not specifically defined in this Plan has the meaning given to it by
the Code.
(c) HEADINGS. All headings in this Plan are for reference only and are
not to be utilized in construing the Plan.
(d) GENDER. Unless clearly appropriate, all nouns of whatever gender
refer indifferently to persons of any gender.
(e) SINGULAR AND PLURAL. Unless clearly inappropriate, singular terms
refer also to the plural and VICE VERSA.
(f) SEVERABILITY. If any provision of this Plan is determined to be
illegal or invalid for any reason, the remaining provisions shall continue
in full force and effect and shall be construed and enforced as if the
illegal or invalid provision did not exist, unless the continuance of the
Plan in such circumstances is not consistent with its purposes.
(g) TERMINATION OF EMPLOYMENT. For all purposes of this Plan, an
employee will have terminated employment with the Company when the
employee's employment relationship with the Company and all of its
subsidiaries is terminated. Additionally, for all purposes of the Plan, (i)
a consultant's or independent contractor's "employment with the Company"
shall be considered terminated upon the termination of any consulting or
independent contractor agreement, or when the consultant or independent
contractor no longer performs any services for the Company, and (ii) a
non-employee Director's "employment with the Company" shall be considered
terminated at the time such Director ceases to serve on the Board.
3. STOCK SUBJECT TO THE PLAN.
Except as otherwise provided in Section 13, the aggregate number of shares
of Common Stock that may be issued under Options or as Restricted Stock under
this Plan may not exceed 10,000,000 shares of Common Stock. Reserved shares may
be either authorized but unissued shares or treasury shares, in the Board's
discretion. If any awards hereunder shall terminate or expire, as to any number
of shares, new Options, and Restricted Stock may thereafter be awarded with
respect to such shares. Except as otherwise provided in Section 13, no
Participant may be granted awards under the Plan in any calendar year in respect
of more than 300,000 shares of Common Stock.
4. ADMINISTRATION.
The Plan shall be administered by the Committee. In addition to any other
powers set forth in this Plan, the Committee has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any ambiguities or
inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive awards of Options, Restricted Stock, Phantom
Stock and/or SARs, the times when they will receive them, the number of
shares to be subject to each award and the Option Price, payment terms,
payment method, and expiration date applicable to each award;
(d) to contest on behalf of the Company or Participants, at the expense
of the Company, any ruling or decision on any matter relating to the Plan or
to any awards of ISOs, NSOs, Restricted Stock, Phantom Stock and/or SARs;
(e) generally, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and the awards of
ISOs, NSOs, Restricted Stock, Phantom Stock and/or SARs granted thereunder
as it may deem necessary or advisable;
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(f) to determine the form in which payment of a SAR or a Phantom Stock
award granted hereunder will be made (i.e., cash, Common Stock or a
combination thereof) or to approve a participant's election to receive cash
in whole or in part in settlement of the SAR or Phantom Stock award;
(g) to determine the form in which tax withholding under Section 16 of
this Plan will be made; and
(h) to amend the Plan or any Option, Restricted Stock, Phantom Stock or
SAR granted or awarded hereunder as may be necessary in order for any
business combination involving the Company to qualify for
pooling-of-interest treatment under APB No. 16.
5. ELIGIBLE PARTICIPANTS.
Subject to the provisions of the Plan, the Committee shall determine from
time to time (a) those employees, officers, Directors, consultants and
independent contractors of the Company or a Subsidiary, and non-employees and
non-officers to whom the Company or any Subsidiary has extended an offer of
employment, who shall be designated as Participants, and (b) the number of
Options, SARs, Restricted Stock, and Phantom Stock, or any combination thereof,
to be awarded to each such Participant; PROVIDED, HOWEVER, that no ISOs or
Tandem SARs granted with respect to ISOs shall be awarded under the Plan more
than ten years after the date this Plan is adopted by the Board. In addition, no
ISOs may be awarded to a Participant who is not an employee of the Company or a
Subsidiary.
6. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.
The Committee, in its discretion, may grant ISOs to any Participant under
the Plan; PROVIDED, HOWEVER, that no ISOs may be granted to a Director or other
Participant who is not an employee of the Company or a Subsidiary. Each ISO
shall be evidenced by an agreement between the Company and the Participant in a
form approved by the Committee. Unless the Committee, in its discretion,
determines otherwise, each ISO agreement shall be subject to the following terms
and conditions and to such other terms and conditions as the Committee may deem
appropriate;
(a) OPTION PERIOD. Each ISO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 12;
(ii) 10 years (or five years as specified in Section 6(e)) from the
Option Date;
(iii) three months after the Participant's termination of employment
with the Company for any reason other than death; or
(iv) six months after the Participant's death.
(b) OPTION PRICE. Subject to the provisions of Section 6(e), the Option
Price per share shall be determined by the Committee at the time any ISO is
granted, and shall not be less than the Fair Market Value of the Common
Stock subject to the ISO on the Option Date.
(c) OTHER OPTION PROVISIONS. The form of ISO authorized by the Plan may
contain such other provisions as the Committee may, from time to time,
determine; PROVIDED, HOWEVER, that such other provisions may not be
inconsistent with any requirements imposed on qualified stock options under
Section 422 of the Code.
(d) LIMITATIONS ON AWARDS. The aggregate Fair Market Value, determined
as of the Option Date, of Common Stock with respect to which ISOs are
exercisable by a Participant for the first time during any calendar year
under all ISO plans of the Company and any Subsidiary shall not exceed
$100,000.
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(e) AWARDS TO CERTAIN STOCKHOLDERS. Notwithstanding Sections 6(a) and
6(b) hereof, if an ISO is granted to a Participant who owns stock
representing more than 10% of the voting power of all classes of stock of
the Company or a Subsidiary (as determined under the Code), the exercise
period specified in the ISO agreement for which the ISO thereunder is
granted shall not exceed five years from the Option Date and the Option
Price shall be at least 110% of the Fair Market Value (as of the Option
Date) of the Common Stock subject to the ISO.
7. TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION.
The Committee, in its discretion, may grant NSOs to any Participant under
the Plan. Each NSO shall be evidenced by an agreement between the Company and
the Participant in a form approved by the Committee. Unless the Committee, in
its discretion, determines otherwise, each NSO agreement shall be subject to the
following terms and conditions and to such other terms and conditions as the
Committee may deem appropriate:
(a) OPTION PERIOD. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 12;
(ii) the date three months after the Participant's termination of
employment with the Company for any reason other than death; or
(iii) the date six months after the Participant's death.
(b) OPTION PRICE. At the time when the NSO is granted, the Committee
will fix the Option Price. The Option Price may be greater than, less than,
or equal to Fair Market Value on the Option Date, as determined in the sole
discretion of the Committee.
(c) OTHER OPTION PROVISIONS. The form of NSO authorized by the Plan may
contain such other provisions as the Committee may from time to time
determine.
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
The Committee may, in its discretion, grant a SAR to any Participant under
the Plan. Each SAR shall be evidenced by an agreement between the Company and
the Participant, in a form approved by the Committee, and may be a Naked SAR or
a Tandem SAR. Unless the Committee, in its discretion, determines otherwise,
each SAR awarded to Participants under the Plan shall be subject to the
following terms and conditions and to such other terms and conditions as the
Committee may deem appropriate:
(a) TANDEM SARS. Tandem SARs shall terminate on the same date as the
related ISO or NSO. A Tandem SAR shall be exercisable only if the Fair
Market Value of a share of Common Stock on the date of surrender exceeds the
Option Price for the related Option, and then shall be exercisable to the
extent, and only to the extent, that the related Option is exercisable. A
Tandem SAR shall entitle the Participant to whom it is granted the right to
elect, so long as such Tandem SAR is exercisable and subject to such
limitations as the Committee shall have imposed, to surrender any then
exercisable portion of his related Option, in whole or in part, and receive
from the Company in exchange, without any payment of cash (except for
applicable employee withholding taxes), that number of shares of Common
Stock having an aggregate Fair Market Value on the date of surrender equal
to the product of (i) the excess of the Fair Market Value of a share of
Common Stock on the date of surrender over the per share Option Price, and
(ii) the number of shares of Common Stock subject to such Option or portion
thereof which is surrendered. Any Option or portion thereof which is
surrendered shall no longer be exercisable. The Committee, in its sole
discretion, may allow the Company to settle all or part of the Company's
obligation arising out of the exercise of a Tandem SAR by the payment of
cash equal to the aggregate Fair Market Value of the shares of Common Stock
which the Company would otherwise be obligated to deliver.
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(b) NAKED SARS. Naked SARs shall terminate as provided in the
Participant's SAR agreement. The Committee may at the time of granting any
Naked SAR add such conditions and limitations to the Naked SAR as it shall
deem advisable, including but not limited to, limitations on the period
within which the Naked SAR shall be exercisable and the maximum amount of
appreciation to be recognized with regard to such Naked SAR.
(c) OTHER CONDITIONS. If a Participant is subject to Section 16(a) and
Section 16(b) of the Exchange Act, the Committee may at any time add such
additional conditions and limitations to such SAR which the Committee, in
its discretion, deems necessary or desirable in order to comply with
Section 16(a) or Section 16(b) of the Exchange Act and the rules and
regulations issued thereunder, or in order to obtain any exemption
therefrom.
9. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
The Committee, in its discretion, may grant Restricted Stock to any
Participant under the Plan. Each grant of Restricted Stock shall be evidenced by
an agreement between the Company and the Participant in a form approved by the
Committee. Unless the Committee, in its discretion, determines otherwise, all
shares of Common Stock awarded to Participants under the Plan as Restricted
Stock shall be subject to the following terms and conditions and to such other
terms and conditions as the Committee may deem appropriate:
(a) RESTRICTED PERIOD. Shares of Restricted Stock awarded to
Participants may not be sold, transferred, pledged or otherwise encumbered
before they vest. Subject to the provisions of subparagraphs (b) and (c)
below and any other restrictions imposed by law, certificates evidencing
shares of Restricted Stock that vest will be transferred to the Participant
or, in the event of his death, to the beneficiary or beneficiaries
designated by writing filed by the Participant with the Committee for such
purpose or, if none, to his estate.
(b) FORFEITURES. A Participant shall forfeit all unpaid accumulated
dividends and all shares of Restricted Stock which have not vested prior to
the date that his employment with the Company is terminated for any reason.
(c) CERTIFICATES DEPOSITED WITH COMPANY. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the Company.
Each such certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) relating to Restricted Stock contained in the TeleTech
Holdings, Inc. 1999 Stock Option and Incentive Plan and an agreement
entered into between the registered owner and TeleTech Holdings, Inc.
Copies of such Plan and agreement are on file at the principal office of
TeleTech Holdings, Inc."
(d) STOCKHOLDER RIGHTS. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect to his
shares of Restricted Stock including, but not limited to, the right to vote
such shares.
(e) DIVIDENDS. On each Common Stock dividend payment date, each
Participant shall receive an amount equal to the dividend paid on that date
on a share of Common Stock, multiplied by his number of shares of Restricted
Stock.
10. TERMS AND CONDITIONS OF PHANTOM STOCK.
The Committee may, in its discretion, award Phantom Stock to any Participant
under the Plan. Each award of Phantom Stock shall be evidenced by an agreement
between the Company and the Participant. The Committee may at the time of
awarding any Phantom Stock add such additional conditions and limitations to the
Phantom Stock as it shall deem advisable, including, but not limited to, the
right for
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Participants to receive dividends equivalent to those paid on Common Stock,
limitations on the period or periods within which the Phantom Stock may be
surrendered, and the maximum amount of appreciation to be recognized with regard
to such Phantom Stock. An award of Phantom Stock shall entitle the Participant
to whom it is awarded the right to elect, so long as such Phantom Stock is
vested and subject to such limitations as the Committee shall have imposed, to
surrender any then vested portion of the Phantom Stock, in whole or in part, and
receive from the Company in exchange therefor the Fair Market Value on the date
of surrender of the Common Stock to which the surrendered Phantom Stock relates
in cash or in shares of Common Stock as the Committee may determine. If a
Participant is subject to Section 16(a) and Section 16(b) of the Exchange Act,
the Committee may at any time add such additional conditions and limitations to
such Phantom Stock which, in its discretion, the Committee deems necessary or
desirable in order to comply with Section 16(a) or Section 16(b) of the Exchange
Act and the rules and regulations promulgated thereunder, or in order to obtain
any exemption therefrom.
11. MANNER OF EXERCISE OF OPTIONS.
To exercise an Option in whole or in part, a Participant, any permitted
transferee of a Participant or, after a Participant's death, a Participant's
executor or administrator, must give written notice to the Committee, stating
the number of shares to which he intends to exercise the Option. The Company
will issue the shares with respect to which the Option is exercised upon payment
in full of the Option Price. The Option Price may be paid (i) in cash, (ii) in
shares of Common Stock having an aggregate Fair Market Value, as determined on
the date of delivery, equal to the Option Price, or (iii) by delivery of
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay for all Common Stock acquired
through such exercise and any tax withholding obligations resulting from such
exercise. The Option Price may be paid in shares of Common Stock which were
received by the Participant upon the exercise of one or more Options. The Option
Price may be paid in shares of Common Stock which were received by the
Participant as an award of Restricted Stock under the Plan. The Option Price may
be paid by surrender of Tandem SARs equal to the Option Price.
12. VESTING.
(a) A Participant may not exercise an Option, surrender a SAR or Phantom
Stock or transfer, pledge or dispose of any Restricted Stock until it has become
vested. The portion of an Option, SAR or Phantom Stock award or Restricted Stock
that is vested depends upon the period that has elapsed since the Option Date.
Unless the Committee establishes a different vesting schedule at the time an
Option is granted or the Restricted Stock, SAR or Phantom Stock is awarded, all
Options granted under this Plan, Restricted Stock, SARs and Phantom Stock
awarded under this Plan shall vest according to the following schedule:
<TABLE>
<CAPTION>
CUMULATIVE
PERIOD ELAPSED VESTED PERCENTAGE
- -------------- -----------------
<S> <C>
First Anniversary of Option Date............................ 20%
Second Anniversary of Option Date........................... 40%
Third Anniversary of Option Date............................ 60%
Fourth Anniversary of Option Date........................... 80%
Fifth Anniversary of Option Date............................ 100%
</TABLE>
Except as provided below, if a Participant's employment with the Company or its
Subsidiaries is terminated, for any reason, such Participant automatically
forfeits any Options, Restricted Stock, SARs and/or Phantom Stock that are not
yet vested. A transfer of employment from the Company to a Subsidiary or
affiliate, or VICE VERSA, is not a termination of employment for purposes of
this Plan. Unless the Committee in its sole discretion specifically waives the
application of this sentence, then notwithstanding the vesting schedule
contained herein or in the Participant's agreement, if the Participant's
employment, or if a Director, his membership on the Board, is terminated for
Cause, all Options, SARs, Restricted Stock and/
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<PAGE>
or Phantom Stock granted or awarded to the Participant will be immediately
cancelled and forfeited by the Participant upon delivery to him of notice of
such termination.
(b) If it determines that special circumstances exist, the Committee, in its
sole discretion, may accelerate the time in which an award under the Plan vests,
even if, under its existing terms, such award would not then be exercisable.
13. ADJUSTMENTS TO REFLECT CHANGES IN CAPITAL STRUCTURE.
If there is any change in the corporate structure or shares of the Company,
the Board of Directors may, in its discretion, make any adjustments necessary to
prevent accretion, or to protect against dilution, in the number and kind of
shares authorized by the Plan and, with respect to outstanding Options,
Restricted Stock, Phantom Stock and/or SARs, in the number and kind of shares
covered thereby and in the applicable Option Price; PROVIDED, HOWEVER, no
adjustment will be made for the issuance of preferred stock or the conversion of
convertible preferred stock. For the purpose of this Section 13, a change in the
corporate structure or shares of the Company includes, without limitation, any
change resulting from a recapitalization, stock split, stock dividend,
consolidation, rights offering, spin-off, reorganization, or liquidation and any
transaction in which shares of Common Stock are changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or another corporation.
14. NON-TRANSFERABILITY OF OPTIONS, SARS AND PHANTOM STOCK.
The Options and SARs granted or Phantom Stock awarded under the Plan are not
transferable, voluntarily or involuntarily, other than by will or the laws of
descent and distribution, or to the extent permissible under Section 422 of the
Code, pursuant to a qualified domestic relations order as defined in Section
414(p) of the Code; PROVIDED, HOWEVER, that the Compensation Committee, in its
discretion, may permit Options to be transferrable by a Participant to members
of such Participant's immediate family or to family trusts, partnerships and
other entities comprised solely of the Participant or members of the
Participant's immediate family.
15. RIGHTS AS STOCKHOLDER.
No Common Stock may be delivered upon the exercise of any Option until full
payment of the Option Price has been made and all income tax withholding
requirements thereon have been satisfied. A Participant has no rights whatsoever
as a stockholder with respect to any shares covered by an Option until the date
of the issuance of a stock certificate for the shares. A Participant who has
been granted SARs or Phantom Stock shall have no rights whatsoever as a
stockholder with respect to such SARs or Phantom Stock.
16. WITHHOLDING TAX.
The Company shall have the right to withhold or to require a Participant to
remit to the Company, in cash or shares of Common Stock, with respect to any
payments made to Participants under the Plan, any taxes required by law to be
withheld because of such payments. Subject to the consent of the Committee with
respect to (a) the exercise of an NSO, (b) the lapse of restrictions on
Restricted Stock, (c) a "disqualifying disposition" of an ISO, as determined
pursuant to the Code, or (d) the issuance of any other stock award under the
Plan, a Participant may make an irrevocable election (an "ELECTION") to
(i) have shares of Common Stock otherwise issuable withheld, or (ii) tender back
to the Company shares of Common Stock received pursuant to (a), (b), or (d), or
(iii) deliver back to the Company pursuant to (a), (b), or (d) previously
acquired shares of Common Stock having a Fair Market Value sufficient to satisfy
all or part of the Participant's estimated tax obligations. Such Election must
be made by a Participant prior to the date on which the relevant tax obligation
arises. The Committee may disapprove of any Election, may suspend or terminate
the right to make Elections, or may provide with respect to any award under this
Plan that the right to make Elections shall not apply to such award.
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<PAGE>
17. NO RIGHT TO EMPLOYMENT.
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company or any subsidiary, or any right or claim
to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
18. AMENDMENT OF THE PLAN.
The Committee may from time to time amend or revise the terms of this Plan
in whole or in part and may without limitation, adopt any amendment deemed
necessary, subject only to applicable laws, regulations and the rules and
regulations of the Nasdaq Stock Exchange or any national stock exchange upon
which the Common Stock may be listed; PROVIDED, HOWEVER, that (a) except as
provided in Section 4(h), no change in any award previously granted to a
Participant may be made that would impair the rights of the Participant without
the Participant's consent, or (b) no amendment may extend the period during
which a Participant may exercise an ISO beyond the period set forth in Section
6(a)(ii) or 6(e). Any approval required or desired from the Company's
stockholders to any amendment shall require a vote of the majority of the shares
of the Company's Common Stock and preferred stock voting together as one class,
present in person or by proxy at a duly held stockholders meeting or by written
consent. All amendments shall be in writing and consented to by a majority of
the members of the Committee.
19. CONDITIONS UPON ISSUANCE OF SHARES.
An Option shall not be exercisable, a share of Common Stock shall not be
issued pursuant to the exercise of an Option, and Restricted Stock shall not be
awarded until such time as the Plan has been approved by the Stockholders of the
Company and unless the award of Restricted Stock, exercise of such Option and
the issuance and delivery of such share pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares of Common stock may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Common Stock is being
purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
20. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) EFFECTIVE DATE. This Plan is effective as of the later of the date of
its adoption by the Board or, if approval of the Company's stockholders is
sought, the date the Plan is approved by the stockholders of the Company.
(b) TERMINATION OF THE PLAN. The Committee may terminate the Plan at any
time with respect to any shares that are not then subject to Options or
Restricted Stock. Termination of the Plan will not affect the rights and
obligations of any Participant with respect to Options, SARs, Phantom Stock or
Restricted Stock awarded before termination.
21. ANNUAL OPTION GRANTS TO OUTSIDE DIRECTORS.
On the date of each annual meeting of stockholders, each Outside Director
who does not own, directly or indirectly, over 5% of the issued and outstanding
Common Stock shall be granted an Option to purchase 15,000 shares of Common
Stock and, for each committee on which such director has been appointed to
serve, such committee member shall be granted an option to purchase 8,000 shares
of Common Stock.
9
<PAGE>
EXHIBIT B
TELETECH HOLDINGS, INC.
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The purpose of the Plan (as defined herein) is to assist TeleTech
Holdings, Inc., a Delaware corporation (the "Company"), and its Affiliates (as
defined herein) in retaining the employment of qualified employees by offering
them a greater stake in and a closer identity with the Company's success, and to
aid in obtaining the services of individuals whose employment would be helpful
to the Company and would contribute to its success. This is to be accomplished
by providing employees a continuing opportunity to purchase Shares (as defined
herein) from the Company through periodic offerings.
The Plan is intended to comply with the provisions of section 423 of the
Code (as defined herein), and the Plan shall be administered, interpreted and
construed accordingly. The Plan became effective on October 1, 1996 and was
amended and restated effective April 1, 2000, subject to approval by the
stockholders of the Company within 12 months of the date of the Plan's
amendment.
2. DEFINITIONS.
For purposes of the Plan:
(a) "ACCOUNT" means the non-interest bearing account that the Company (or
the Affiliate which employs the Participant) shall establish for Participants to
which Participants' payroll deductions pursuant to the Plan shall be credited.
(b) "AFFILIATE" means any corporation that, at the time in question, is a
"parent" of the Company within the meaning of section 424(e) of the Code, or is
a "subsidiary" of the Company within the meaning of section 424(f) of the Code.
(c) "AGENT" means the person or persons appointed by the Board in
accordance with Paragraph 3(d).
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means the committee described in Paragraph 3(a).
(g) "COMPANY" means TeleTech Holdings, Inc.
(h) "COMPENSATION" means the total amount of compensation for services
paid to a Participant for an Offering Period by the Company and the Affiliates
that would be reportable on Internal Revenue Service Form W-2, including without
limitation commissions and bonus paid to the Participant under the TeleTech
Holdings, Inc. Management Incentive Plan or otherwise, plus amounts that are not
includible in income for federal income tax purposes that a Participant elects
to contribute pursuant to an arrangement described in section 125 or
section 401(k) of the Code.
(i) "DATE OF GRANT" means the first business day of an Offering Period.
(j) "ELIGIBLE EMPLOYEE" means any employee of the Company or any Affiliate
who meets the eligibility requirements of Paragraph 4.
(k) "FAIR MARKET VALUE" means, on any given date, the closing price of the
Shares on the principal national securities exchange on which the Shares are
listed on such date, or, if the Shares are not listed on any national securities
exchange, the closing price of the Shares as reported on the Nasdaq on such
date, or if the Shares are not so reported, the fair market value of the Shares
as determined by the Committee in good faith. If there are no sales reports or
bid or ask quotations, as the case may be, for a given date, the closest
preceding date on which there were sales reports shall be used.
<PAGE>
(l) "INVESTMENT ACCOUNT" means the account established for a Participant
pursuant to Paragraph 9(a) to hold Shares acquired for a Participant pursuant to
the Plan.
(m) "NASDAQ" means The Nasdaq Stock Market, Inc.
(n) "OFFERING PERIOD" means each semi-annual period ending on March 31 and
September 30 unless otherwise terminated earlier pursuant to paragraph 16. The
first Offering Period commenced on October 1, 1996 and ended on March 31, 1997.
(o) "PARTICIPANT" means an Eligible Employee who makes an election to
participate in the Plan in accordance with Paragraph 5.
(p) "PLAN" means the TeleTech Holdings, Inc. Amended and Restated Employee
Stock Purchase Plan as set forth in this document, and as may be amended from
time to time.
(q) "PURCHASE DATE" means the last business day of an Offering Period.
(r) "PURCHASE PRICE" means, with respect to any Offering Period, the
lesser of:
(i) eighty-five percent (85%) of the Fair Market Value of a Share on the
Date of Grant of such Offering Period; or
(ii) eighty-five percent (85%) of the Fair Market Value of a Share on
the Purchase Date of such Offering Period.
(s) "SHARE" or "SHARES" means a share or shares of Common Stock, $.01 par
value, of the Company.
(t) "SUBSCRIPTION AGREEMENT" means the agreement between the Participant
and the Company or Affiliate pursuant to which the Participant authorizes
payroll deductions to the Account.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Compensation Committee of the
Board (the "Committee"), or such other committee as may be designated by the
Board to serve as the administrative committee for the Plan. All Committee
members shall serve, and may be removed, in accordance with the general rules
applicable to the Committee.
(b) For purposes of administration of the Plan, a majority of the members of
the Committee (but not less than two) shall constitute a quorum, and any action
taken by a majority of such members of the Committee present at any meeting at
which a quorum is present, or any action approved in writing by all members of
the Committee, shall be the action of the Committee.
(c) Subject to the express provisions of the Plan, the Committee shall have
full discretionary authority to interpret the Plan, to issue rules for
administering the Plan, to change, alter, amend or rescind such rules, and to
make all other determinations necessary or appropriate for the administration of
the Plan. The Committee shall have the discretion at its election to impose a
holding period during which the sale of Shares acquired under the Plan is
restricted for a period of time after purchase; provided that reasonable advance
notice is given to Participants. All determinations, interpretations and
constructions made by the Committee with respect to the Plan shall be final and
conclusive. No member of the Board of Directors or the Committee shall be liable
for any action, determination or omission taken or made in good faith with
respect to the Plan or any right granted thereunder.
(d) The Committee or its delegatee under Section 3(e) may engage an Agent to
perform custodial and record keeping functions for the Plan, such as holding
record title to the Participants' Share certificates, maintaining an individual
Investment Account for each such Participant and providing periodic account
status reports to such Participants.
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<PAGE>
(e) The Committee shall have full discretionary authority to delegate
ministerial functions to the management of the Company.
4. ELIGIBILITY.
All employees of the Company and its Affiliates shall be eligible to
participate in the Plan, except (a) an employee who has not worked for the
Company or an Affiliate for at least three months, beginning at least three
months prior to an Offering Period and ending on the first day of an Offering
Period, (b) any employee who owns stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company or an
Affiliate, (c) any employee whose customary employment does not exceed 20 hours
per week, and (d) any employee whose customary employment does not exceed five
months in any calendar year. In determining whether an employee owns 5% or more
of the stock of the Company or an Affiliate, the rules of section 424(d) of the
Code shall apply and stock which the employee may purchase under outstanding
options, including rights to purchase stock under the Plan, shall be treated as
stock owned by the employee.
For purposes of this Paragraph 4, the term "employment" shall be interpreted
in accordance with the provisions of Treasury Regulation Section1.421-7(h) (or
any successor thereto).
5. ELECTION TO PARTICIPATE.
(a) SUBSCRIPTION AGREEMENTS. Each Eligible Employee may become a
Participant by executing and submitting a Subscription Agreement to the Company
at least seven (7) days prior to the beginning of the Offering Period in which
payroll deductions will be made, authorizing specified regular payroll
deductions. Subscription Agreements may not be retroactive. Subject to the
limits of Paragraph 5(b), payroll deductions may be in any whole dollar amount,
but not less than a rate of $50 per month, and shall be made on an after-tax
basis. All payroll deductions shall be recorded in the Accounts. All funds
recorded in Accounts may be used by the Company and its Affiliates for any
corporate purpose, subject to the Participant's right to withdraw at any time an
amount equal to the balance accumulated in his or her Account as described in
Paragraph 8. Funds credited to Accounts shall not be required to be segregated
from the general funds of the Company or any Affiliate.
(b) CONTRIBUTION LIMIT. The sum of all regular payroll deductions
authorized under Paragraph 5(a) shall not exceed the lesser of (i) the maximum
amount permitted by Section 423 of the Code, and (ii) 15% of the Participant's
Compensation.
(c) NO INTEREST ON FUNDS IN ACCOUNTS. No interest shall accrue for the
benefit of or be paid to any Participant with respect to funds held in any
Account for such Participant.
6. DEDUCTION CHANGES.
A Participant may increase or decrease his or her payroll deduction by
executing and submitting to the Company a new Subscription Agreement, subject to
the minimum and maximum contribution limits set forth in Section 5 above. The
change will become effective as soon as practicable following the receipt of
such new Subscription Agreement by the Committee or its delegatee.
7. LIMIT ON PURCHASE OF SHARES.
(a) No Eligible Employee may be granted a right to purchase Shares under the
Plan to the extent that, immediately following such grant, such Eligible
Employee would have rights to purchase equity securities of the Company, under
all plans of the Company and Affiliates that are intended to meet the
requirements of section 423 of the Code, that accrue at a rate which exceeds
$25,000 of Fair Market Value
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<PAGE>
(determined at the time the rights are granted) for each calendar year in which
such rights to purchase equity securities of the Company are outstanding at any
time. For purposes of this Paragraph 7:
(i) The right to purchase Shares accrues when the right (or any portion
thereof) first becomes exercisable during the calendar year;
(ii) A right to purchase Shares that has accrued under one grant of
rights under the Plan may not be carried over to any other grant of rights
under the Plan or any other plan; and
(iii) The limits of this Paragraph 7 shall be interpreted by the
Committee in accordance with applicable rules and regulations issued under
section 423 of the Code.
(b) No Eligible Employee may be granted a right to purchase Shares under the
Plan if, immediately following such grant, such Eligible Employee would own
stock possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or an Affiliate. In determining stock ownership
for purposes of the preceding sentence, the rules of section 425(d) of the Code
shall apply and stock that the Eligible Employee may purchase under outstanding
options, including rights to purchase stock under the Plan, shall be treated as
stock owned by the Participant.
8. WITHDRAWAL OF FUNDS.
Notwithstanding anything contained herein to the contrary, a Participant may
at any time prior to a Purchase Date and for any reason withdraw from
participation in the Plan for an Offering Period, in which case the entire
balance accumulated in his or her Account shall be paid to such Participant as
soon as practicable thereafter. Partial withdrawals shall not be permitted. Any
such withdrawing Participant may again commence participation in the Plan in a
subsequent Offering Period by executing and submitting to the Company a
Subscription Agreement at least seven (7) business days prior to the beginning
of such Offering Period.
9. METHOD OF PURCHASE AND INVESTMENT ACCOUNTS.
(a) EXERCISE OF OPTION FOR SHARES. Each Participant having funds credited
to an Account on a Purchase Date shall be deemed, without any further action, to
have exercised on such Purchase Date the option to purchase from the Company the
number of whole Shares that the funds in such Account would purchase at the
Purchase Price, subject to the limit:
(i) on the aggregate number of Shares that may be made available for
purchase to all Participants under the Plan; and
(ii) on the number of Shares that may be made available for purchase to
any individual Participant, as set forth in Paragraphs 5(b) and 7.
Such option shall be deemed exercised if the Participant does not withdraw such
funds before the Purchase Date. All Shares so purchased shall be credited to a
separate Investment Account established by the Agent for each Participant. The
Agent shall hold in its name or the name of its nominee all certificates for
Shares purchased until such Shares are withdrawn by a Participant pursuant to
Paragraph 11. Fractional Shares may not be purchased under the Plan. Any funds
remaining in the Account of a Participant after a Purchase Date shall be
retained in the Account for the purchase of additional Shares in subsequent
Offering Periods.
(b) DIVIDENDS ON SHARES HELD IN INVESTMENT ACCOUNTS. All cash dividends,
if any, paid with respect to the Shares credited to a Participant's Investment
Account shall, unless otherwise directed by the Committee, be credited to his or
her Account and used, in the same manner as other funds credited to Accounts, to
purchase additional Shares under the Plan on the next Purchase Date, subject to
Participants' withdrawal rights against Accounts and the other limits of the
Plan.
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<PAGE>
(c) ADJUSTMENT OF SHARES ON APPLICATION OF AGGREGATE LIMITS. If the total
number of Shares that would he purchased pursuant to Paragraph 9(a) but for the
limits described in Paragraph 9(a)(i) or Paragraph 10 exceeds the number of
Shares available for purchase under the Plan for a particular Offering Period,
then the number of available Shares shall be allocated among the Investment
Accounts of Participants in the ratio that the amount credited to a
Participant's Account as of the Purchase Date bears to the total amount credited
to all Participants' Accounts as of the Purchase Date. The cash balance not
applied to the purchase of Shares shall be held in Participants' Accounts
subject to the terms and conditions of the Plan.
10. STOCK SUBJECT TO PLAN.
The maximum number of Shares that may be issued pursuant to the Plan is
400,000, subject to adjustment in accordance with Section 19. The Shares
delivered pursuant to the Plan may, at the option of the Company, be Shares
purchased specifically for purposes of the Plan, shares otherwise held in
treasury or Shares originally issued by the Company for such purposes. In
addition, the Committee may impose such limitations as it deems appropriate on
the number of Shares that shall be made available for purchase under the Plan
during any Offering Period.
11. WITHDRAWAL OF CERTIFICATES.
A Participant shall have the right at any time to receive a certificate or
certificates for all or a portion of the Shares credited to his or her
Investment Account by giving written notice to the Company; PROVIDED, HOWEVER,
that no such request may be made more frequently than once per Offering Period.
12. REGISTRATION OF CERTIFICATES.
Each certificate for Shares withdrawn by a Participant may be registered
only in the name of the Participant, or, if the Participant has so indicated in
the manner designated by the Committee, in the Participant's name jointly with a
member of the Participant's family, with right of survivorship. A Participant
who is a resident of a jurisdiction which does not recognize such a joint
tenancy may have certificates registered in the Participant's name as tenant in
common or as community property with a member of the Participant's family
without right of survivorship.
13. VOTING.
The Agent shall vote all Shares held in an Investment Account in accordance
with the Participant's instructions.
14. TERMINATION OF EMPLOYMENT.
Any Participant (a) whose employment by the Company and all Affiliates is
terminated for any reason (except death) or (b) who shall cease to be an
Eligible Employee, in either case during an Offering Period, shall cease being a
Participant as of the date of such termination of employment or cessation of
eligibility. Upon such event, the entire cash balance in such Participant's
Account shall be refunded as soon as practicable.
15. DEATH OF A PARTICIPANT.
If a Participant shall die during an Offering Period, no further payroll
deductions shall be taken on behalf of the deceased Participant. The executor or
administrator of the deceased Participant's estate may elect to withdraw the
balance in said Participant's Account by notifying the Company in writing prior
to the Purchase Date in respect of such Offering Period. In the event no
election to withdraw has been made, the balance accumulated in the deceased
Participant's Account shall be used to purchase Shares in accordance with the
provisions of the Plan.
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<PAGE>
16. MERGER, REORGANIZATION, CONSOLIDATION OR LIQUIDATION.
In the event of a merger, reorganization or consolidation (regardless of
whether the Company is the surviving entity) that results in any person or
entity other than Kenneth Tuchman owning more than 50% of the combined voting
power of all classes of stock then outstanding or the liquidation of all of the
assets of the Company, the Committee in its sole discretion may either
(a) require that the surviving entity provide to each Participant rights which
are equivalent to such Participant's rights under the Plan, or (b) cause the
Offering Period to end on the date immediately prior to the consummation of such
merger or other transaction.
17. GOVERNING LAW; COMPLIANCE WITH LAW.
This Plan shall be construed in accordance with the laws of the State of
Delaware. The Company's obligation to sell and deliver shares of Common Stock
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency as
may, in the opinion of counsel for the Company, be required.
18. ASSIGNMENT.
The purchase rights granted hereunder are not assignable or transferable by
the Participants, other than by will or the laws of descent and distribution.
Any attempted assignment, transfer or alienation not in compliance with the
terms of this Plan shall be null and void for all purposes and respects.
19. NO RIGHTS AS STOCKHOLDER.
No Eligible Employee or Participant shall by reason of participation in this
Plan have any rights of a stockholder of the Company until he or she acquires
Shares on a Purchase Date as herein provided.
20. NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the Plan nor any right granted under the Plan shall confer upon any
Participant any right to continuance of employment with the Company or any
Affiliate, or interfere in any way with the right of the Company or Affiliate to
terminate the employment of such Participant.
21. ADJUSTMENTS IN CASE OF CHANGES AFFECTING SHARES.
In the event of a subdivision of outstanding Shares, or the payment of a
stock dividend, the Share limit set forth in Paragraph 10 shall be adjusted
proportionately, and such other adjustments shall be made as may be deemed
equitable by the Committee. In the event of any other change affecting Shares
(including any event described in section 424(a) of the Code), such adjustment,
if any, shall be made as may be deemed equitable by the Committee to give proper
effect to such event, subject to the limitations of section 424 of the Code.
22. AMENDMENT OF THE PLAN.
The Committee may at any time, or from time to time, amend this Plan in any
respect; PROVIDED, HOWEVER, that any amendment to the Plan that is treated for
purposes of section 423 of the Code and regulations issued pursuant thereto as
the adoption of a new plan shall be effective only if such amendment is approved
by the stockholders of the Company within 12 months of the adoption of such
amendment in a manner that meets the requirements for stockholder approval under
such Code section and regulations.
23. TERMINATION OF THE PLAN.
The Plan and all rights of employees under any offering hereunder shall
terminate at such time as the Committee, at its discretion, chooses to terminate
the Plan. Upon termination of this Plan, all amounts in
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<PAGE>
the Accounts of Participants shall be carried forward into the Participant's
Account under a successor plan, if any, or shall be promptly refunded and
certificates for all Shares credited to a Participant's Investment Account shall
be forwarded to him or her.
24. GOVERNMENTAL REGULATIONS.
(a) Anything contained in this Plan to the contrary notwithstanding, the
Company shall not be obligated to sell or deliver any Share certificates under
this Plan unless and until the Company is satisfied that such sale or delivery
complies with (i) all applicable requirements of the governing body of the
principal market in which such Shares are traded, (ii) all applicable provisions
of the Securities Act of 1933, as amended, (the "Act") and the rules and
regulations thereunder and (iii) all other laws or regulations by which the
Company is bound or to which the Company is subject.
(b) The Company (or an Affiliate) may make such provisions as it may deem
appropriate for the withholding of any taxes or payment of any taxes which it
determines it may be required to withhold or pay in connection with any Shares.
The obligation of the Company to deliver certificates under this Plan is
conditioned upon the satisfaction of the provisions set forth in the preceding
sentence.
25. REPURCHASE OF SHARES.
The Company shall not be required to repurchase from any Participant any
Shares which such Participant acquires under the Plan.
7
<PAGE>
ADMISSION TICKET
ANNUAL MEETING OF STOCKHOLDERS
TELETECH HOLDINGS, INC.
WEDNESDAY, MAY 3, 2000
ONE NORWEST CENTER
JOHN D. HERSHNER CONFERENCE ROOM
1700 LINCOLN STREET
DENVER, CO 80203
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
<PAGE>
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
A /X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE USING DARK
INK ONLY.
FOR ALL NOMINEES
(except as indicated WITHHOLD AUTHORITY
below) to vote for all nominees
1. Election of / / / /
Directors
(Instruction: To withhold authority to vote for an individual
nominee, strike a line through the nominee's name at right)
- ------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR PROPOSALS
2, 3, AND 4.
NOMINEES: KENNETH TUCHMAN
SCOTT THOMPSON
JAMES BARLETT
ROD DAMMEYER
GEORGE HEILMEIER
MORTON MEYERSON
ALAN SILVERMAN
FOR AGAINST ABSTAIN
2. Ratification of the appointment of Arthur Andersen / / / / / /
LLP as the Company's independent auditors.
3. Approval of Amendments to the TeleTech Holdings, / / / / / /
Inc. 1999 Stock Option and Incentive Plan.
4. Approval of Amendments to the TeleTech Holdings, / / / / / /
Inc. Employee Stock Purchase Plan.
Do you plan to attend the Annual Meeting? / / / /
Yes No
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL OF THE
BOARD OF DIRECTORS NOMINEES AND "FOR" PROPOSALS 2, 3, AND 4.
SIGNATURE(S) DATE
--------------------------------------------------- -----------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
<PAGE>
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TELETECH HOLDINGS, INC.
The undersigned, having received Notice of Annual Meeting and Proxy
Statement, hereby appoints SCOTT THOMPSON AND JAMES KAUFMAN, and each of
them, proxies with full power of substitution for and in the name of the
undersigned, to vote all shares of Common Stock of TELETECH HOLDINGS, INC
owned of record by the undersigned at the 2000 Annual Meeting of Stockholders
to be held at One Norwest Center, John D. Hershner Conference Room, located
at 1700 Lincoln Street, Denver, Colorado 80203, on May 3, 2000 at 10:00 a.m.,
local time, and any adjournments or postponements thereof in accordance with
the directions marked on the reverse side hereof. The proxies, or each of
them, in their or his sole discretion are authorized to vote for the election
of a person nominated to the Board of Directors if any nominee named herein
becomes unable to serve or if for any reason whatsoever, another nominee is
required, and the proxies, or each of them, in their or his sole discretion
are further authorized to vote on other matters which may properly come
before the 2000 Annual Meeting and any adjournments or postponements thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(PLEASE SIGN ON OTHER SIDE)
