<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-11(c) or Section 240.14a-12
TeleSpectrum Worldwide Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TeleSpectrum Worldwide Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
-------------------------------------------------------------------------
Notes:
<PAGE>
TELESPECTRUM WORLDWIDE INC.
443 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1997
----------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of TeleSpectrum Worldwide Inc. (the "Company") will be held on May
28, 1997 at 10:00 a.m., local time, at the Ritz Carlton Hotel, 17th and
Chestnut Streets, Philadelphia, Pennsylvania for the following purposes:
(1) To elect six directors to the Board of Directors;
(2) To approve an amendment to the Company's 1996 Equity Compensation Plan
to increase the number of shares reserved for issuance under such Plan;
and
(3) To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 17, 1997 are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting and
any adjournments thereof. A complete list of such stockholders will be
available at the Company's headquarters, 443 South Gulph Road, King of
Prussia, Pennsylvania, ten days prior to the meeting.
By Order of the Board of Directors,
/s/ J. Brian O'Neill
J. Brian O'Neill
Chairman and Chief Executive Officer
May 8, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR
REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE URGED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE-PREPAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
<PAGE>
TELESPECTRUM WORLDWIDE INC.
443 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1997
----------------
This Proxy Statement is being furnished to the stockholders of TeleSpectrum
Worldwide Inc. (the "Company") in connection with the Annual Meeting of
Stockholders of the Company to be held on May 28, 1997 and any adjournments
thereof (the "Annual Meeting"). This Proxy Statement and the enclosed Proxy
Card are being mailed to stockholders on or about May 8, 1997.
Execution and return of the enclosed Proxy Card is being solicited by and on
behalf of the Board of Directors of the Company for the purposes set forth in
the foregoing notice of meeting. The costs incidental to the solicitation and
obtaining of proxies, including the cost of reimbursing banks and brokers for
forwarding proxy materials to their principals, will be borne by the Company.
In addition, the Company has retained ChaseMellon Shareholder Services LLC
("Chase Mellon") to assist in the solicitation of proxies from brokers, bank
nominees and other institutional holders, as well as individual holders of
record. The fee to ChaseMellon, which is estimated at $5,000 plus expenses,
will be paid by the Company. Proxies may also be solicited, without extra
compensation, by officers and employees of the Company by mail, telephone,
telefax, personal interviews and other methods of communication.
An Annual Review to Stockholders and the Company's Form 10-K, each for the
fiscal year ended December 31, 1996, are being mailed to stockholders with
this Proxy Statement. The Annual Review is not part of this Proxy Statement.
VOTING AT THE MEETING
RECORD DATE; VOTE REQUIRED; PROXIES
Only stockholders of record at the close of business on April 17, 1997 are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting. As
of that date, the Company had outstanding 25,210,984 shares of Common Stock,
par value $.01 per share ("Common Stock"). The holders of a majority of such
shares, represented in person or by proxy, shall constitute a quorum at the
Annual Meeting. A quorum is necessary before business may be transacted at the
Annual Meeting except that, even if a quorum is not present, the stockholders
present in person or by proxy shall have the power to adjourn the meeting from
time to time until a quorum is present. Each stockholder entitled to vote
shall have the right to one vote for each share of Common Stock outstanding in
such stockholder's name.
The shares of Common Stock represented by each properly executed Proxy Card
will be voted at the Annual Meeting in the manner directed therein by the
stockholder signing such Proxy Card. The Proxy Card provides spaces for a
stockholder to withhold authority to vote for the nominees for the Board of
Directors. The nominees are to be elected by a plurality of the votes cast at
the Annual Meeting. With respect to any other matter that may properly be
brought before the Annual Meeting, the affirmative vote of a majority of the
shares represented in person or by proxy at the Annual Meeting and entitled to
vote is required to take action, unless a greater percentage is required
either by law or by the Company's Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws.
<PAGE>
With regard to the election of directors, votes may be cast in favor of or
withheld from any or all nominees. Votes that are withheld will be excluded
entirely from the vote and will have no effect, other than for purposes of
determining the presence of a quorum. Brokers who hold shares in street name
for customers have the authority under the rules of the various stock
exchanges to vote on certain items when they have not received instructions
from beneficial owners. The Company believes that brokers that do not receive
instructions are entitled to vote those shares with respect to the election of
directors.
If a signed Proxy Card is returned and the stockholder has given no
direction with respect to a voting matter, the shares will be voted with
respect to that matter by the proxy agents as recommended by the Board of
Directors. Execution and return of the enclosed Proxy Card will not affect a
stockholder's right to attend the Annual Meeting and vote in person. Any
stockholder giving a proxy has the right to revoke it by giving notice of
revocation to the Secretary of the Company at any time before the proxy is
voted.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Board of Directors currently consists of six directors. Each director
elected at the Annual Meeting will serve until the 1998 annual meeting of
stockholders and until such director's successor has been elected and
qualified, except in the event of such director's earlier death, resignation
or removal.
The Board of Directors has nominated Mr. J. Brian O'Neill, Mr. Michael C.
Boyd, Mr. Joseph V. DelRaso, Mr. William F. Rhatigan, Mr. Richard W. Virtue
and Mr. Kevin W. Walsh for election to the Board of Directors.
The persons named as proxy agents in the enclosed Proxy Card intend (unless
instructed otherwise by a shareholder) to vote for the election of Messrs.
O'Neill, Boyd, DelRaso, Rhatigan, Virtue and Walsh as directors. In the event
that nominee should become unable to accept nomination or election (a
circumstance which the Board of Directors does not expect), the proxy agents
intend to vote for any alternate nominee designated by the Board of Directors,
or the Board may decided to reduce the number of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH NOMINEE.
2
<PAGE>
Set forth below is certain information with respect to each nominee for
director and each other person currently serving as a director of the Company
whose term of office will continue after the Annual Meeting, including the
class and term of office of each such person. This information has been
provided by each director at the request of the Company.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING
NAME OF DIRECTOR AGE PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
---------------- --- -----------------------------------------
<S> <C> <C>
J. Brian O'Neill......... 37 J. Brian O'Neill has been Chairman of the Board
and Chief Executive Officer since the formation of
Company in April 1996. Mr. O'Neill is also
Chairman of the Board of Directors and Chief
Executive Officer of CRW Financial, Inc. From July
1992 to May 1995, Mr. O'Neill was Chairman and
Chief Executive Officer of Casino and Credit
Services, Inc. From May 1988 to July 1992, Mr.
O'Neill was Chairman of O'Neill Properties, Inc.,
a real estate development company.
Michael C. Boyd.......... 55 Michael C. Boyd has been President and Chief
Operating Officer of the Company since its
formation in April 1996 and a director since May
1996. Mr. Boyd was a co-founder of QVC Network,
Inc., a home shopping television company, in 1986,
and served as its President and Chief Operating
Officer until 1994. From 1994 to 1996, Mr. Boyd
was an independent consultant.
Joseph V. DelRaso........ 44 Joseph V. DelRaso has been a partner at the law
firm of Stradley Ronon Stevens & Young since 1992.
From 1988 to 1992 he was a partner at the law firm
of Holland and Knight in Ft. Lauderdale, Florida.
He has been a director of the Company since
February 1997.
William F. Rhatigan...... 52 William F. Rhatigan served as President of the
Company's Direct Marketing Group from August 8,
1996 through his retirement from the Company,
which was effective as of February 20, 1997. Mr.
Rhatigan has served as a director of the Company
since August 8, 1996. Mr. Rhatigan was Chairman
and Chief Executive Officer of NBG Services, Inc.,
a predecessor of the Company, from 1991 until
August 8, 1996.
Richard W. Virtue........ 52 Richard W. Virtue has served as a director of the
Company since August 8, 1996. Mr. Virtue served as
Chief Executive Officer of SOMAR, Inc., a
predecessor of the Company, from 1982 until August
8, 1996.
Kevin W. Walsh........... 42 Kevin W. Walsh has been a director of the Company
since August 8, 1996. Mr. Walsh has been a partner
of the law firm Adelman Lavine Gold and Levin, a
professional corporation, since 1988.
</TABLE>
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee and an Audit Committee.
During fiscal year 1996, the Board of Directors held four meetings and the
Compensation Committee held one meeting. The Audit Committee did not meet in
1996. Each director attended at least 75% of the aggregate of the meetings of
the Board of Directors held during 1996 and of the committees on which he
served during the year.
3
<PAGE>
The Compensation Committee makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company, and
the Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent auditors.
The current members of both the Compensation Committee and the Audit
Committee are Messrs. DelRaso and Walsh.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors who are not currently receiving compensation as officers,
employees or consultants of the Company are entitled to receive an annual
retainer fee of $7,500, plus $500 and reimbursement of expenses for each
meeting of the Board of Directors and each committee meeting that they attend
in person.
Non-employee directors are entitled to receive Non-Qualified Stock Options
("NQSO") pursuant to the formula grants under the Company's 1996 Equity
Compensation Plan (the "Plan"). According to the formula grants, each non-
employee director who was a member of the Board of Directors as of the
effective date of the Plan received a grant of an NQSO to purchase 2,500
shares of Common Stock at a price equal to the initial public offering price.
Subsequently, on each date on which the Company holds it annual meeting of
stockholders, each non-employee director in office immediately before and
after the annual election of directors will receive a grant of an NQSO to
purchase 2,500 of Common Stock at an exercise price equal to the closing price
per share on The Nasdaq National Market on the date of grant. Each non-
employee director who first becomes a member of the Board of Directors after
the effective date of the Plan will receive a grant of an NQSO to purchase
2,500 shares of Common Stock on the date he or she becomes a member of the
Board of Directors, at an exercise price equal to the closing price of the
Common Stock on The Nasdaq National Market on the date of grant. The term of
each such option shall be ten years and each such option shall be fully and
immediately exercisable upon the date of grant.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or earned during the fiscal year ended December 31, 1996 to
the Company's chief executive officer and the four other most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1)
-------------------------------
LONG-TERM
COMPENSATION
NAME AND POSITION YEAR SALARY($) BONUS($) AWARDS(#)(2)
- ----------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
J. Brian O'Neill.......................... 1996 $ 50,900 -- 500,000
Chairman of the Board and
Chief Executive Officer
Michael C. Boyd........................... 1996 178,194 -- 300,000
President and Chief Operating Officer
William F. Rhatigan (4)................... 1996 72,916 150,000 --
Former President of the Company's
Direct Marketing Group
Richard C. Schwenk, Jr. .................. 1996 122,000 -- 100,000
Executive Vice President and
Chief Financial Officer
Morton M. Reich (3)....................... 1996 103,846 -- --
Former President of the Company's Reich
Division
</TABLE>
- --------
(1) Excludes perquisites and other personal benefits, securities or property
which are, in the aggregate, less than 10% of the total annual salary and
bonus.
(2) Represent shares of Common Stock underlying stock options granted by the
Company in 1996.
(3) Mr. Reich resigned from his position with the Company and became a
consultant to the Company effective March 21, 1997.
(4) Mr. Rhatigan retired from his position and became a consultant to the
Company effective as of February 20, 1997.
EMPLOYMENT AGREEMENTS
Each of Messrs. O'Neill, Boyd and Schwenk has an employment agreement with
the Company. Mr. O'Neill's agreement (the "O'Neill Agreement") provides that
Mr. O'Neill is to be employed by the Company through May 20, 2000 at an annual
salary of $130,000, plus an annual bonus of up to $400,000, the terms and
amount of which is determined annually by the Compensation Committee. Pursuant
to the O'Neill Agreement, Mr. O'Neill was granted a stock option exercisable
for 500,000 shares of Common Stock at an exercise price of $15.00 per share,
of which 125,000 shares vested on May 21, 1996 and 125,000 shares vest on the
first, second and third anniversaries of such date provided Mr. O'Neill is
employed by the Company on such dates. If Mr. O'Neill is terminated without
cause or if Mr. O'Neill terminates his employment for good reason, Mr. O'Neill
is entitled to receive compensation at the annual rate of $330,000 for the
remainder of the term of his agreement.
Mr. Boyd's employment agreement (the "Boyd Agreement") provides that he is
to be employed by the Company through April 21, 2000 at an annual salary of
$275,000, plus an annual bonus of up to $281,250 based in part on his
performance and in part upon the operating performance of the Company.
Pursuant to the Boyd Agreement, Mr. Boyd was granted a stock option
exercisable for 300,000 shares of Common Stock at an exercise price of $15.00
per share, of which 75,000 shares vested on each of April 22, 1996 and April
22, 1997 and 75,000 shares vest on each of April 22, 1998 and April 22, 1999
provided Mr. Boyd remains employed by the Company on such dates. If Mr. Boyd
is terminated without cause or if he terminates his employment for good
reason, Mr. Boyd is entitled to receive $387,500 payable over a one-year
period.
5
<PAGE>
Mr. Schwenk's employment agreement (the "Schwenk Agreement") provides that he
is to be employed by the Company through May 5, 2000 at an annual salary of
$200,000, plus an annual bonus of up to $187,500 based in part on his
performance and in part upon the operating performance of the Company. Pursuant
to the Schwenk Agreement, Mr. Schwenk was granted a stock option exercisable
for 100,000 shares of Common Stock at an exercise price of $15.00 per share, of
which 25,000 shares vested on each of May 6, 1996 and May 6, 1997 and 25,000
shares vest on each of May 6, 1998 and May 6, 1999 provided Mr. Schwenk remains
employed by the Company on such dates. If Mr. Schwenk is terminated without
cause or if he terminates his employment for good reason, Mr. Schwenk is
entitled to receive $275,000 payable over a one-year period.
Each of Messrs. Rhatigan and Virtue have consulting agreements with the
Company which provide for the payment of annual consulting fees of $150,000.
Mr. Rhatigan's agreement (the "Rhatigan Consulting Agreement") expires on
December 31, 1999. Mr. Virtue's agreement (the "Virtue Consulting Agreement")
expires on August 13, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
NUMBER OF STOCK PRICE APPRECIATION FOR
SECURITIES PERCENTAGE OF OPTION TERM(3)
UNDERLYING TOTAL OPTIONS EXERCISE EXPIRATION ----------------------------
NAME OPTIONS GRANTED(1) AVAILABLE (2) PRICE DATE 5% 10%
---- ------------------ ------------- -------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
J. Brian O'Neill........ 500,000 21.7% $15.00 8/13/06 $ 4,715,000 $ 11,955,000
Michael C. Boyd......... 300,000 13.0 15.00 8/13/06 2,829,000 7,173,000
Richard C. Schwenk...... 100,000 4.3 15.00 8/13/06 943,000 2,391,000
</TABLE>
- --------
(1) Twenty-five percent of the shares underlying each option are currently
exercisable and an additional twenty-five percent of the shares underlying
each option become exercisable on the second, third and fourth
anniversaries of the respective date of grant.
(2) Based on an aggregate of 2,300,000 options currently available under the
Plan.
(3) Represents the hypothetical gains or "option spreads" that would exist for
the options at the end of their ten year term. These gains are based on
assumed rates of annual compound stock price appreciation of 5% and 10%
from the date the option was granted to the end of the option term and are
calculated based on the exercise price per share on the date of grant. Such
5% and 10% assumed annual compound rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the future Common Stock
price.
The following table sets forth certain information concerning the number and
value of unexercised options held by each of the Named Executive Officers on
December 31, 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS(#) IN-THE-MONEY OPTIONS ($)
------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
---- ----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C>
J. Brian O'Neill......... 125,000 375,000 $109,375 $328,125
Michael C. Boyd.......... 75,000 225,000 65,625 196,875
Richard C. Schwenk....... 25,000 75,000 21,875 65,625
</TABLE>
- --------
(1) Based on the difference between $15.875, which was the closing price per
share of the Company's Common Stock as listed on the Nasdaq National Market
System on December 31, 1996, and the exercise price of each option
($15.00).
6
<PAGE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOLLOWING REPORT OF THE
COMPENSATION AND HUMAN RESOURCES COMMITTEE AND THE PERFORMANCE GRAPH ON PAGE 8
SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
composed of two non-employee directors. The Committee is generally responsible
for the establishment and administration of the policies which govern annual
executive compensation and stock ownership programs. The Committee evaluates
the performance and determines the compensation of the Chief Executive Officer
and the other executive officers of the Company based upon the written
employment agreements such persons have with the Company as well as such other
factors including the achievement of certain Company goals (including financial
goals), achievement of certain individual goals and comparisons with other
publicly-traded organizations.
The policy of the Committee with respect to executive officers is to offer
compensation opportunities which will enable the Company to attract, motivate
and retain individuals of outstanding ability capable of enhancing stockholder
value. Accordingly, in determining executive compensation, the Committee relies
on a combination of salary, bonus and stock options. Each of the Company's
named officers are parties to an employment agreement with the Company which
establishes their annual base salary and, except for the Chief Executive
Officer, baseline bonus opportunities. Each of these employment agreements were
either negotiated as a condition to such officer's employment with the Company
or were negotiated as part of the Company's acquisition of the business
previously managed by such officer. None of the named officers who were
executive officers of the Company as of the date of this report were awarded
any additional bonuses for 1996. The stock options granted to each of the named
officers who received options in 1996 were granted as a condition to their
employment.
The committee intends to consider the awarding of additional bonuses and the
issuance of additional stock options in order to emphasize the link between
executive incentives and the creation of stockholder value. In considering
these awards, the Committee intends to consider individual performance, overall
contribution to the Company, the number of non-vested stock options and the
total number of stock options to be awarded.
Section 162(m) of the Internal Revenue Code generally denies a federal income
tax deduction for certain compensation exceeding $1,000,000 paid to the Chief
Executive Officer or any of the four other highest paid executive officers,
excluding (among other things) certain performance-based compensation. Through
December 31, 1996, this provision has not affected the Company's tax
deductions, but the Committee will continue to monitor the potential impact of
Section 162(m) on the Company's ability to deduct executive compensation.
COMPENSATION COMMITTEE--April 25,
1997.
Joseph V. DelRaso
Kevin W. Walsh
7
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the percentage change in the cumulative
total stockholder return on the Common Stock since the Common Stock first
started trading on the Nasdaq National Market on August 13, 1996, with the
cumulative total return of the Nasdaq Market Index (the "Nasdaq Market Index")
and a peer industry group described more fully below (the "Other Direct
Marketers"). Dividend reinvestment has been assumed.
LOGO
<TABLE>
<CAPTION>
INDEX(1) 8/13/96 9/30/96 10/31/96 11/29/96 12/31/96
-------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
TeleSpectrum........................ $100.00 $119.54 $104.98 $108.81 $ 97.32
Other Direct Marketers.............. $100.00 $139.92 $122.86 $123.61 $100.10
NASDAQ Mkt. Index................... $100.00 $112.52 $111.22 $118.14 $117.87
</TABLE>
- --------
(1)Assumes $100 invested on August 13, 1996.
The Other Direct Marketers group is comprised of APAC TELESERVICES INC., ICT
GROUP INC., SITEL CORP. and TELETECH HOLDINGS INC., which like the Company,
provide direct marketing services. The Company was incorporated on April 26,
1996 and its direct marketing operations commenced on August 13, 1996, the
date on which it completed the acquisition of its operating businesses. The
chart above presents a comparison between the Company, the Other Direct
Marketers (the Company's peer group) and the NASDAQ Market Index from the date
of these acquisitions to December 31, 1996.
8
<PAGE>
AMENDMENT OF THE 1996 EQUITY COMPENSATION PLAN
At the Annual Meeting, a proposal will be presented to the stockholders to
approve the adoption of an amendment (the "Amendment") to increase the number
of shares of Common Stock reserved for issuance under the Plan from 2,300,000
to 5,000,000. On February 17, 1997, the Board of Directors adopted the
Amendment, subject to stockholder approval at the Annual Meeting. The
Amendment will not be effective unless or until stockholder approval is
obtained.
VOTE REQUIRED FOR APPROVAL
The proposal to amend the Plan requires the affirmative vote of a majority
of the shares present in person or represented by proxy at the Annual Meeting
for its approval. Abstentions may be specified on the proposal and will be
considered present at the Annual Meeting, but will not be counted as
affirmative votes. Abstentions, therefore, will have the practical effect of
voting against the proposal because the affirmative vote of a majority of the
shares present at the Annual Meeting is required to approve the proposal.
Broker non-votes are considered not present at the Annual Meeting and,
therefore, will not be voted or have any effect on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL.
DESCRIPTION OF THE PLAN
On May 17, 1996, the stockholders of the Company approved the Plan. The Plan
provides for (i) grants of stock options ("Stock Options"), stock appreciation
rights ("SARs"), grants of restricted stock ("Restricted Stock") and grants of
performance units ("Performance Units") to employees of the Company and its
subsidiaries and certain consultants and independent contractors
("Consultants"), and (ii) formula grants ("Formula Grants") of stock options
to non-employee members of the Board of Directors of the Company ("Non-
employee Directors"). The Plan permits the grant of stock options and stock
awards of up to a maximum amount of 2,300,000 shares of Common Stock, of which
options to purchase 1,409,490 shares of Common Stock have been previously
granted.
The Compensation Committee may select the employees to receive grants under
the Plan (the "Grantees"), the amount of Common Stock to be optioned to each
such employee and the terms of each grant. As of December 31, 1996, the
Company and its subsidiaries employed approximately 7,400 individuals who were
eligible to participate in the Plan. As of December 31, 1996, under the Plan,
no stock options have been exercised and stock options exercisable for
1,409,490 shares of Common Stock were outstanding and held by all employees as
a group.
The Plan provides that all Non-Employee Directors (there are currently four
Non-Employee Directors) will automatically receive on the date of the Annual
Meeting, grants of NQSOs to purchase 2,500 shares of Common Stock for each
fiscal year beginning on January 1, 1997. The exercise price of a NQSO granted
to a Non-Employee Director is equal to the fair market value of the Common
Stock on the date it is granted.
The exercise price of Common Stock subject to an ISO or NQSO granted to an
employee may not be less than the fair market value of a share of stock on the
date of grant. On December 31, 1996, the fair market value of the Company's
Common Stock was $15.875 per share. The exercise period for stock options may
not exceed ten years from the date of grant.
GRANTS OF OPTIONS, APPRECIATION RIGHTS, RESTRICTED STOCK AND PERFORMANCE UNITS
The following table summarizes the number of Stock Options that were granted
in February 1997 (other than 10,000 shares of Common Stock underlying stock
options to be issued to the Non-Executive Directors which grant date will be
May 28, 1997 assuming reelection to the Board of Directors) to the following
persons:
9
<PAGE>
<TABLE>
<CAPTION>
RECIPIENT NUMBER OF OPTION SHARES
--------- -----------------------
<S> <C>
J. Brian O'Neill.................................. 100,000
Michael C. Boyd................................... 60,000
Richard C. Schwenk................................ 20,000
Patrick M. Baldasare.............................. 100,000
Executive Officers as a Group (4 persons)......... 280,000
Non-Executive Directors as a (4 persons).......... 87,500
Non-Executive Officer Employee Group
(52 persons)..................................... 537,500
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 1, 1997, except as otherwise
indicated in the relevant footnote, by (i) each person or group who is known
by the Company to own beneficially more than 5% of the Common Stock, (ii) each
of the Company's directors, (iii) each of the executive officers and (iv) all
current executive officers and directors as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
---------------- --------------------- ---------------------
<S> <C> <C>
J. Brian O'Neill (2)................ 7,876,263 30.9%
443 South Gulph Road
King of Prussia, PA 19406
CRW Financial, Inc. ................ 7,198,642 28.6
443 South Gulph Road
King of Prussia, PA 19406
Richard W. Virtue (3)............... 2,836,840 11.0
0132 Divide Drive
Snow Mass, CO 81615
SOMAR, Inc. (4)..................... 2,707,340 10.5
118 South Main Street
Salisbury, NC 28144
FMR Corp. (5)....................... 2,028,400 8.1
82 Devonshire Street
Boston, MA 02109
Putnam Investments, Inc. (6)........ 1,794,600 7.1
One Post Office Square
Boston, MA 02109
The Equitable Companies (7)......... 1,400,800 5.6
7876 Seventh Avenue
New York, NY 10019
William F. Rhatigan (8)............. 449,362 1.8
1 Broadway
12th Floor
Cambridge, MA 02142
Patrick M. Baldasare (9)............ 313,882 1.2
Michael C. Boyd (10)................ 301,514 1.2
Richard C. Schwenk (11)............. 178,877 *
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
---------------- --------------------- ---------------------
<S> <C> <C>
Joseph DelRaso (12)............... 2,500 *
2600 One Commerce Square
Philadelphia, PA 19103
Kevin W. Walsh (12)............... 2,500 *
1900 Two Penn Center Plaza
Philadelphia, PA 19102
All directors and executive 11,953,738 45.4
officers as a group (8 persons)..
</TABLE>
- --------
* Less than one percent.
(1) Based on 25,210,984 shares of Common Stock outstanding as of April 1,
1997. In accordance with the rules of the Securities and Exchange
Commission, shares underlying options or warrants to purchase Common
Stock that are exercisable as of April 1, 1997 or within 60 days
thereafter are deemed outstanding and to be beneficially owned by the
person holding such option or warrant for purposes of computing such
person's percentage ownership, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
(2) Includes 7,198,642 shares of Common Stock held by CRW Financial, Inc.
("CRW Financial"). Mr. O'Neill is Chairman of the Board and Chief
Executive Officer, and a principal stockholder of CRW Financial, and may
be deemed to have shared voting and investment power over the shares held
by CRW Financial. Mr. O'Neill disclaims beneficial ownership of all such
shares. Includes 610,160 shares of Common Stock owned by CRW Financial
which are obtainable by Mr. O'Neill upon the exercise of a warrant and
275,000 shares of Common Stock issuable upon the exercise of vested stock
options or options which are scheduled to vest within 60 days. Excludes
325,000 shares of Common Stock issuable upon the exercise of non-vested
stock options.
(3) Mr. Virtue is a principal shareholder of SOMAR, Inc. Mr. Virtue shares
voting and investment power with the other shareholders of SOMAR, Inc.
and disclaims beneficial ownership of shares in which he has no pecuniary
interest. Includes 129,500 shares of Common Stock issuable upon the
exercise of a warrant. Includes 500,000 shares of Common Stock issuable
to SOMAR, Inc. upon the exercise of the vested portion of a stock option.
Excludes 1,000,000 shares of Common Stock issuable to SOMAR, Inc. upon
the exercise of a non-vested portion of a stock option.
(4) Includes 500,000 shares of Common Stock issuable upon the exercise of the
vested portion of a stock option. Excludes 1,000,000 shares of Common
Stock issuable upon the exercise of a non-vested portion of a stock
option.
(5) Based solely on a Schedule 13G dated February 14, 1997.
(6) Based solely on a Schedule 13G dated January 27, 1997 and includes
1,330,100 and 464,500 shares of Common Stock which such beneficial owner
shares dispositive power with Putnam Investment Management, Inc., and
Putnam Advisory Company, Inc., respectively.
(7) Based solely on a Schedule 13G dated February 12, 1997.
(8) Includes 56,250 shares of Common Stock issuable upon the exercise of a
warrant. Excludes 75,000 shares of Common Stock issuable upon the
exercise of non-vested options.
(9) Includes 229,216 shares of Common Stock held by The Response Center, Inc.
and the Tab House, Inc., each of which Mr. Baldasare is the principal
stockholder, and 84,666 shares of Common Stock issuable upon the exercise
of stock options and warrants. Excludes 75,000 shares of Common Stock
issuable upon the exercise of non-vested stock options.
(10) Includes 165,000 shares of Common Stock issuable upon the exercise of
vested stock options or options which are scheduled to vest within 60
days. Excludes 195,000 shares of Common Stock issuable upon the exercise
of non-vested stock options.
(11) Includes 55,000 shares of Common Stock issuable upon the exercise of
vested stock options or options which are scheduled to vest within 60
days. Excludes 65,000 shares of Common Stock issuable upon the exercise
of non-vested stock options.
(12) Represents 2,500 shares of Common Stock issuable upon the exercise of
stock options.
11
<PAGE>
CERTAIN TRANSACTIONS
TRANSACTIONS WITH MR. VIRTUE
In August 1996 the Company consummated its acquisition of substantially all
of the assets and the assumption of substantially all of the balance sheet
liabilities of SOMAR, Inc. ("SOMAR") pursuant to the terms of the Asset
Purchase Agreement dated April 26, 1996, as amended and restated on May 21,
1996 (the "SOMAR Agreement") by and among the Company, SOMAR, CRW Financial,
and Richard W. Virtue. Upon such consummation and pursuant to the SOMAR
Agreement, (i) SOMAR received $25,000,000 in cash and 2,207,340 shares of
Common Stock, (ii) Mr. Virtue received a warrant exercisable for 129,500
shares of Common Stock at an exercise price of $15.00 per share, and (iii) Mr.
Virtue and the Company became parties to the Virtue Consulting Agreement.
Effective April 14, 1997, the SOMAR Agreement was amended to, among other
things, eliminate any requirement that the Company pay any additional purchase
price to SOMAR and SOMAR was issued an option to acquire up to 1,500,000
shares of Common Stock at an exercise price of $12.385, the closing price of
the Common Stock on April 14, 1997 on the Nasdaq National Market System. Such
option is presently exercisable for 500,000 shares of Common Stock and the
remaining shares underlying such option are subject to a vesting schedule
consisting of 50,000 share increments for each cent that the Company's fully-
diluted earnings-per-share for 1997 exceeds $.63 per share. Any shares which
do not vest in accordance with such schedule will automatically lapse. Mr.
Virtue, a nominee for director of the Company, is a principal stockholder of
SOMAR.
TRANSACTIONS WITH MR. RHATIGAN
In August 1996, the Company consummated its acquisition of substantially all
of the assets and the assumption of substantially all of the balance sheet
liabilities of NBG Services, Inc. ("NBG") pursuant to the terms of an Asset
Purchase Agreement dated May 3, 1996, as amended and restated on May 21, 1996
(the "NBG Agreement"), by and among the Company, NBG, CRW Financial, Michael
J. Gallant, and William F. Rhatigan. Upon such consummation and pursuant to
the NBG Agreement, (i) NBG received $14,100,000 in cash and 1,120,255 shares
of Common Stock, (ii) Mr. Rhatigan received a warrant exercisable for 56,250
shares of Common Stock at an exercise price of $15.00 per share, and (iii) Mr.
Rhatigan and the Company became parties to the Rhatigan Employment Agreement.
Mr. Rhatigan, a nominee for director, retired from his employment with the
Company which retirement was effective as of February 20, 1997 and became an
advisor and consultant to the Company pursuant to the terms of the Rhatigan
Consulting Agreement. The Rhatigan Employment Agreement was terminated
effective upon the execution of the Rhatigan Consulting Agreement.
HEADQUARTERS LEASE
The Company subleases its headquarters, representing an aggregate of
approximately 21,000 square feet, from CRW Financial, which has subleased the
facility from HFS, Inc., which in turn, leases this space from CRW Building
Limited Partnership, a partnership of which the general partner is controlled
by J. Brian O'Neill, the Chairman and Chief Executive Officer of the Company.
Under this sublease, the Company is required to pay annual rental payments of
approximately $420,000.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent public
accountants and auditors since the Company's inception. Arthur Andersen LLP
has been selected to continue in such capacity for the current year. A
representative of that firm is expected to be present at the Annual Meeting
with the opportunity to make a statement if he or she desires to do so and to
be available to respond to appropriate questions.
12
<PAGE>
STOCKHOLDER PROPOSALS--1998 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for shareholder
action at annual meetings in accordance with regulations adopted by the
Securities and Exchange Commission. Any proposal which an eligible stockholder
desires to have presented at the 1998 annual meeting of stockholders concerning
a proper subject for inclusion in the proxy statement and for consideration at
the annual meeting, will be included in the Company's proxy statement and
related proxy card if it is received by the Company no later than January 8,
1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that directors and certain officers of the Company, and persons who own more
than ten percent of the Company's Common Stock, file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of such Common Stock. Such directors, officers and more than ten
percent shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all fiscal year 1996 Section 16(a) filing requirements
applicable to its directors, officers and more than ten percent shareholders
were complied with except Messrs. Boyd, O'Neill, Schwenk and Walsh each filed
their respective Form 5 approximately 45 days late.
OTHER MATTERS
The Board of Directors of the Company does not intend to bring any other
matters before the Annual Meeting and has no reason to believe any other
matters will be presented. If, however, other matters properly do come before
the meeting, it is the intention of the persons named as proxy agents in the
enclosed Proxy Card to vote upon such matters in accordance with their
judgment.
By Order of the Board of Directors,
/s/ J. Brian O'Neill
J. Brian O'Neill
Chairman and Chief Executive Officer
May 8, 1997
13
<PAGE>
EXHIBIT A
Section 3(a) of the Plan is hereby amended by replacing the word "2,300,000"
in the first sentence of such Section with "5,000,000."
14
<PAGE>
PROXY TELESPECTRUM WORLDWIDE INC. PROXY
This proxy is solicited on behalf of the Board of Directors
The undersigned stockholder of Telespectrum Worldwide Inc. (the "Company")
hereby appoints J. Brian O'Neill, Michael C. Boyd and Richard C. Schwenk, Jr.,
or any of them (with full power to act alone in the absence of the other and
with full power of substitution in each), the proxy or proxies of the
undersigned, and hereby authorizes any of them to represent and to vote as
designated on the reverse, all Shares of Common Stock of the Company held of
record by the undersigned at the close of business on April 17, 1997, at the
Annual Meeting of Stockholders to be held on May 28, 1997, and at any adjourment
thereof
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
.FOLD AND DETACH HERE.
<PAGE>
This proxy, when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR Proposals 1 and 2.
Please mark your votes as indicated in this example [X]
1. Election of Directors
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
[ ] [ ]
(Instructions: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list of nominees.)
Nominees: J. Brian O'Neill, Michael C. Boyd, Joseph DelRaso, William F.
Rhatigan,Richard W. Virtue, Kevin W. Walsh
FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Approval of an amendment to the Company's
1996 Equity Compensation Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjoumments
thereof.
CHECK HERE FOR ADDRESS CHANGE [ ]
CHECK HERE IF YOU PLAN TO ATTEND [ ]
THE MEETING
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
Signature Signature Date
-------------------- --------------------- ----------------
Note: Please sign exactly as name appears hereon. When shares are held by joint
tenants, all joint tenants should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give the full title as such. If a
corporation, please sign in the full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
- -------------------------------------------------------------------------------
.FOLD AND DETACH HERE.
