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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 12, 1998
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TELESPECTRUM WORLDWIDE INC.
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(Exact Name of Registrant Specified in Charter)
Delaware 0-21107 23-2845501
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(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
443 South Gulph Road
King of Prussia, Pennsylvania 19406
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 878-7400
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit Number Description
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99.1 Press Release issued by the Registrant on June 12, 1998
announcing the proposed merger with CRW Financial, Inc.
99.2 Memorandum of terms executed on June 11, 1998 by the
Registrant and CRW Financial, Inc. regarding the proposed
merger.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELESPECTRUM WORLDWIDE INC.
(Registrant)
By /s/ Richard C. Schwenk, Jr.
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Richard C. Schwenk, Jr.
Executive Vice President and
Chief Financial Officer
Dated: June 12, 1998
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EXHIBIT 99.1
NEWS
FOR IMMEDIATE RELEASE Contact: Richard C. Schwenk, Jr., CFO
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(610) 878-7470
TELESPECTRUM WORLDWIDE INC.
AGREES TO MERGE WITH CRW FINANCIAL, INC.
KING OF PRUSSIA, PA - JUNE 12, 1998 - TeleSpectrum Worldwide Inc. (NASDAQ:TLSP)
today announced that it has reached a non-binding memorandum of terms to merge
with CRW Financial, Inc., its largest shareholder. It is expected that CRW's
only principal assets at the time of the merger will be approximately 6.9
million shares of TeleSpectrum's common stock and approximately $1.5 million in
cash. TeleSpectrum and CRW have begun to negotiate a definitive agreement and
expect to obtain any required shareholder approval for the merger within ninety
days.
Under the proposed merger, TeleSpectrum would issue 4.6 million new shares of
TeleSpectrum common stock in exchange for all outstanding CRW common stock at an
exchange rate of .709. TeleSpectrum would also grant options to purchase an
additional 2.1 million new shares of TeleSpectrum common stock with aggregate
exercise proceeds of approximately $5.7 million. In addition, TeleSpectrum
would distribute to CRW shareholders a cash payment aggregating an amount equal
to the cash received upon the merger.
At the closing market price on June 11, 1998, of approximately $8.50 per share
for TeleSpectrum's common stock, this merger will result in a reduction in the
number of shares used in calculating diluted earnings per share for TeleSpectrum
of approximately 890,000 shares. Since TeleSpectrum and CRW have not reached a
definitive agreement as of this date, no assurance can be given that such an
agreement will ultimately be completed.
"This transaction is beneficial to our shareholders in that it reduces
outstanding shares, it uncomplicates our capital structure, and it increases the
float in our stock," said Keith E. Alessi, Chairman, President and CEO of
TeleSpectrum Worldwide.
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TeleSpectrum Worldwide Inc./Page 2
THE COMPANY
Headquartered in King of Prussia, PA, TeleSpectrum Worldwide Inc. provides
direct marketing and customer care services to Fortune 500 companies in a wide
range of industries, including financial services, telecommunications, high
tech, insurance, utilities, consumer products, health care/pharmaceutical, and
government. TeleSpectrum Worldwide is a premier provider of inbound and
outbound telemarketing, inbound customer service, interactive voice response,
customer care consulting, and call center management. To learn more about
TeleSpectrum Worldwide and its capabilities, please reference the Company's web
site at www.telespectrum.com.
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FORWARD-LOOKING STATEMENTS
The statements contained herein regarding the proposed merger and TeleSpectrum
Worldwide's financial performance are forward-looking statements that involve
substantial risk and uncertainty. In accordance with the Private Securities
Litigation Reform Act of 1995, the following are factors that could cause
TeleSpectrum Worldwide Inc.'s actual results to differ materially from those
expressed or implied by such forward-looking statements: agreements with its
existing clients generally do not assure a specific level or duration of
revenue, revenue assumptions may not be realized, the growth and profitability
assumptions assume the addition of new clients not currently identified,
contracts may not be realized, capacity utilization rates may be adversely
affected due to competitors' actions or customers' needs, and cost cutting
measures may have varying degrees of success. Since TeleSpectrum and CRW have
not reached a definitive agreement as of this date, no assurance can be given
that such an agreement will ultimately be completed. Investors are encouraged
to review TeleSpectrum Worldwide's SEC filings for more information about the
factors affecting the Company's business.
# # #
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TELESPECTRUM WORLDWIDE INC.
443 S. GULPH ROAD
KING OF PRUSSIA, PA 19428
June 11, 1998
HIGHLY CONFIDENTIAL
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CRW Financial, Inc.
200 Four Falls Corporate Center
Suite 415
West Conshohocken, PA 19428
Attention: Mr. Jonathan P. Robinson
Re: Principal Terms of Possible Merger
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Dear Jon:
This letter is intended to summarize the principal terms of a proposal being
considered by TeleSpectrum Worldwide Inc. (the "Buyer") and CRW Financial, Inc.
(the "Company") regarding the possible merger (the "Possible Merger") of a
wholly-owned subsidiary of Buyer (the "Buyer Sub") with the Company. In this
letter, the Buyer and the Company are sometimes called the "Parties," and the
possible merger of the Buyer Sub with the Company is sometimes called the
"Possible Merger."
PART 1.
The Parties wish to commence negotiating a definitive written merger agreement
providing for the Possible Merger (a "Definitive Agreement"). The execution of
any such Definitive Agreement would be subject to satisfactory completion of the
Parties investigation of the other's business and liabilities, approval by the
Special Committees of the both the Buyer's and the Company's board of directors,
and approval by the respective boards of directors of both the Buyer and the
Company.
Based on the information currently known to the Buyer and the Company, it is
proposed that the Definitive Agreement include the following terms:
1.1. BASIC TRANSACTION
At the time of the Possible Merger, each outstanding share of common stock, par
value $.01 per share, of the Company (the "Company Common Stock") would
automatically convert into the right to receive (i) .709 shares of the common
stock, par value $.01 per share, of the Buyer (the "Buyer Common Stock") and
(ii) a pro rata portion of the amount obtained, if any, by subtracting from
Company's cash on hand at the time of the merger the amount of any liabilities
(other than the existing convertible note owing to J. Brian O'Neill) of the
Company at the time of the Possible Merger The foregoing is premised upon the
understanding that there are currently 6,473,853 outstanding shares of Company
Common Stock. The Possible Merger is expected to be tax-free to the Company's
shareholders and to the holders of Derivative Instruments and the TLSP/CRW
Warrants (as each is defined below). Upon the execution of
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the definitive agreement, the parties will begin the preparation of a joint
proxy statement/prospectus to be included in a Registration Statement on Form S-
4 (the "Registration Statement").
1.2. OPTIONS AND WARRANTS
All outstanding options, warrants and convertible notes (collectively, the
"Derivative Instruments") of CRW (other than the TLSP/CRW Warrants (as defined
below)) would, as a result of the Possible Merger, become exercisable or
convertible, as applicable, for shares of Buyer Common Stock. Upon exercise or
conversion of any such instrument, and the payment of the consideration called
for by such instrument, the holder would receive .709 shares of Buyer Common
Stock, plus their pro rata share of cash described in clause (ii) of Section 1.1
above, for each one share of Company Common Stock to which he would otherwise
have been entitled. Each of these shares of Buyer Common Stock would also have
been registered on a Registration Statement on Form S-4 under the Securities Act
of 1933, as amended. Notwithstanding the foregoing, those certain warrants
jointly issued by the Company and the Buyer (the "TLSP/CRW Warrants") will
remain outstanding after the Possible Merger and will be unaffected by the
Possible Merger. The foregoing is premised on the understanding that there are
1,980,101 shares of Company Common Stock underlying the Derivative Instruments
and that 678,410 shares of Buyer Common Stock are owned by the Company are
underlying the TLSP/CRW Warrants.
1.3. OTHER TERMS
The Company and the Buyer each would be expected to make comprehensive
representations and warranties to the other, and would provide comprehensive
covenants and other protections for the benefit of the other. The consummation
of the contemplated transactions by the Parties would be subject to the
satisfaction of various conditions customary in transactions involving the
merger of two publicly traded companies, including, approval of the shareholders
of the Company, approval of the shareholders of the Buyer if required by
applicable law or regulations of the National Association of Securities Dealers,
Inc., lack of any material litigation involving the Parties, absence of any
employment agreements between the Company and any of its employees, absence of
any material adverse changes in the Parties' financial condition, receipt of all
required regulatory approvals, accuracy of representations and warranties,
performance of all obligations set forth in the Merger Agreement, effectiveness
of the Registration Statement and the listing of the shares of Buyer Common
Stock issuable upon or as a result of the Possible Merger on the Nasdaq National
Market. In addition, the consummation of the Possible Merger would be subject
to the sale by the Company of all of the outstanding capital stock of Casino
Money Centers, Inc. ("CMC") and with no indemnification requirements surviving
any such sale.
PART 2.
The following paragraphs of this letter set forth in this Part 2 (the "Binding
Provisions") are the legally binding and enforceable agreements of the Parties,
and are the only legally binding and enforceable agreements of the Parties set
forth in this letter.
2.1. CONFIDENTIALITY AGREEMENT
Each of the Buyer and the Company acknowledge that the Confidentiality Agreement
between the Buyer and the Company, a copy of which is attached as Exhibit A
hereto, remains a binding obligation of each such party.
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2.2. EXCLUSIVE DEALING
Until 30 days after the date hereof (the "Signing Date"):
(a) subject to its fiduciary obligations under applicable law, the Company will
not, directly or indirectly, through any representative or otherwise, solicit or
entertain offers from, negotiate with or in any manner encourage, discuss,
accept, or consider any proposal of any other person relating to the acquisition
of the shares of stock of the Company or the Company, its assets or business, in
whole or in part, whether directly or indirectly, through purchase, merger,
consolidation, or otherwise, except that the foregoing shall not relate to the
Company's proposed sale of CMC, directly or indirectly, whether through
purchase, merger, or consolidation; and
(b) the Company will immediately notify the Buyer regarding any contact between
the Company or its respective representatives and any other person regarding any
such offer or proposal or any related inquiry.
2.3. CONDUCT OF BUSINESS
During the period from the Signing Date until the date which is 30 days after
the Signing Date, the Company shall operate its business in the ordinary course,
refrain from any extraordinary transactions, and not make any dividends or
distributions to its shareholders.
2.4. DISCLOSURE
Except as and to the extent required by law, without the prior written consent
of the other Party, no Party will, and each will direct its officers, directors,
shareholders, employees, agents and representatives not to, make, directly or
indirectly, any public comment, statement, or communication with respect to, or
otherwise disclose or permit the disclosure of the existence of discussions
regarding, a possible transaction between the Parties or any of the terms,
conditions, or other aspects of the transaction proposed in this letter. If a
Party is required by law to make any such disclosure, it must first provide to
the other Party the content of the proposed disclosure, the reasons that such
disclosure is required by law, and the time and place that the disclosure will
be made.
2.5. COSTS
The Buyer will be responsible for and bear all of its own costs and expenses
(including any broker's or finder's fees and the expenses of its
representatives) incurred at any time in connection with pursuing or
consummating the Possible Merger.
2.6. ENTIRE AGREEMENT
The Binding Provisions constitute the entire agreement between the parties, and
supersede all prior oral or written agreements, understandings, representations
and warranties, and courses of conduct and dealing between the parties on the
subject matter hereof. Except as otherwise provided herein, the Binding
Provisions may be amended or modified only by a writing executed by all of the
Parties.
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2.7. TERMINATION
The Binding Provisions will automatically terminate on the date which is 30 days
after the Signing Date; provided, however, that the termination of the Binding
Provisions will not affect the liability of a party for breach of any of the
Binding Provisions prior to the termination. Notwithstanding the foregoing, the
Confidentiality Agreement shall remain a binding obligation of the parties for a
period ending November 30, 1999.
2.8. COUNTERPARTS AND FACSIMILE SIGNATURES
This Letter may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Letter and all of which, when taken
together, will be deemed to constitute one and the same agreement. This Letter
may be executed by facsimile signature which shall be deemed, for all purposes,
to be an original signature.
2.9. NO LIABILITY
The paragraphs and provisions of Part 1 of this Letter do not constitute and
will not give rise to any legally binding obligation on the part of any of the
Parties. Moreover, except as expressly provided in the Binding Provisions (or
as expressly provided in any binding written agreement that the Parties may
enter into in the future), no past or future action, course of conduct, or
failure to act relating to the Possible Merger, or relating to the negotiation
of the terms of the Possible Merger or any Definitive Agreement, will give rise
to or serve as a basis for any obligation or other liability on the part of the
Parties.
2.10. GOVERNING LAW
This Letter shall be governed by and construed in accordance with the laws of
the State of Delaware regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto.
If you are in agreement with the foregoing, please sign and return one copy of
this Letter, which thereupon will constitute our agreement with respect to its
subject matter.
Very truly yours,
TELESPECTRUM WORLDWIDE INC.
By: /s/ Keith E. Alessi
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Keith E. Alessi
President, Chief Executive Officer
and Chairman
CRW FINANCIAL, INC.
By: /s/ Jonathan P. Robinson
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Jonathan P. Robinson
Chief Financial Officer
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