<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
-------------------
SCHEDULE 13D
(RULE 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1 and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
TeleSpectrum Worldwide Inc.
- --------------------------------------------------------------------------------
(Name of the Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
87951U 10 9
- --------------------------------------------------------------------------------
(CUSIP Number)
Jeffrey E. Stiefler
Chairman of the Board
and Chief Executive Officer
International Data Response Corporation
6041 La Flecha, Suite B
Rancho Santa Fe, CA 92067
(619) 759-3300
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 14, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
Page 1 of 14 Pages
<PAGE>
- ------------------------------------ -------------------------------------
CUSIP NO. 87951U 10 9 13D Page 2 of 14 Pages
- ------------------------------------ -------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
International Data Response Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e)
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF -0-
SHARES
BENEFICIALLY
OWNED BY
REPORTING
PERSON
WITH
--------------------------------------------------------------
8 SHARED VOTING POWER
9,894,727(1)
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,894,727
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
(1) Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as
amended.
(2) Percent based upon (i) 25,771,449 shares of Common Stock issued and
outstanding as of January 14, 1999.
Page 2 of 14 Pages
<PAGE>
Item 1. Security and Issuer
(a) Title of Security:
Common Stock, $.01 par value per share (the "Common Stock").
(b) Name of the Issuer:
TeleSpectrum Worldwide Inc., a Delaware corporation ("TeleSpectrum").
(c) The Issuer's principal executive office:
443 South Gulph Road
King of Prussia, Pennsylvania 19406
Item 2. Identity and Background
(a) This statement is filed by International Data Response
Corporation, a Delaware corporation ("IDRC"). IDRC is principally in
the business of providing outsourced telephone based sales, marketing
and customer management services.
(b) The address of the principal business offices of IDRC is 6041
La Flecha, Suite B, Rancho Santa Fe, California 92067.
(c) Set forth in Schedule I to this Schedule 13D is the name and
present principal occupation or employment of each of IDRC's
executive officers and directors and the name, principal business and
address of any corporation or other organization in which employment
is conducted.
(d) During the last five years, there have been no criminal
proceedings against IDRC, or, to the best knowledge of IDRC, any of
the other persons with respect to whom information is given in
response to this Item 2.
(e) During the last five years, neither IDRC nor, to the best
knowledge of IDRC, any of the other persons with respect to whom
information is given in response to this Item 2, has been a party to
any civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) To the best knowledge of IDRC, with the exception of David
Parkes, who is a Canadian citizen, and Vikas Kapoor, who is a citizen
of India, all of the directors and executive officers of IDRC named
in Schedule I to this Schedule 13D are citizens of the United States.
Page 3 of 14 Pages
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration
To facilitate the Merger (as defined in Item 4 below), certain
stockholders of the Issuer have agreed to vote shares of Issuer's
capital stock in favor of the Merger and have entered into voting
agreements with, and have granted irrevocable proxies to, IDRC to
that effect as more fully described in Item 4. Such voting agreements
do not contemplate a purchase of the Common Stock of the Issuer by
IDRC.
Item 4. Purpose of the Transaction
(a) - (b) Pursuant to that certain Agreement and Plan of Merger
dated as of January 14, 1999 (the "Merger Agreement"), among
TeleSpectrum, IDRC and certain stockholders of IDRC and, subject to
the conditions set forth therein (including the approval of the
respective stockholders of TeleSpectrum and IDRC), IDRC will be
merged with and into Issuer (the "Merger") and IDRC will cease to
exist. All of the shares of Common Stock and Class A Common Stock
(including the shares of Common Stock issuable upon exercise of stock
options and warrants to purchase Common Stock and Class A Common
Stock outstanding immediately prior to the effective date of the
Merger (the "Effective Time")) of IDRC outstanding immediately prior
to the Effective Time of the Merger will be converted into an
aggregate of 9,200,000 shares of Common Stock of TeleSpectrum and
Warrants to purchase 3,000,000 shares of Common Stock of
TeleSpectrum. In addition, all of the shares of Preferred Stock of
IDRC outstanding immediately prior to the Effective Time, plus all
accrued and unpaid dividends payable in Preferred Stock of IDRC, will
be redeemed for cash. Immediately following the Merger, the former
holders of IDRC Common Stock. Class A Common Stock and options and
Warrants to purchase IDRC capital stock will, in the aggregate, own
approximately 32.1% of the outstanding voting Common Stock of
TeleSpectrum (after giving effect to the exercise of all securities
issued in the Merger to such IDRC stockholders and optionholders).
TeleSpectrum will assume outstanding options to purchase Class A
Common Stock of IDRC and a certain Warrant to purchase Common Stock
of IDRC on the terms set forth in Section 1.5 of the Merger
Agreement.
The foregoing summary of the Merger is qualified in its entirety
by reference to the copy of the Merger Agreement included as Exhibit
99.1 to this Schedule 13D and incorporated herein in its entirety by
reference.
Certain of the directors, executive officers and stockholders of
the Issuer, which include Keith E. Alessi, Richard W. Virtue, and J.
Brian O'Neill, have entered into a TeleSpectrum Stockholder Support
Agreement dated as of January 14, 1999 in the form included as
Exhibit 99.2 to this Schedule 13D (the "Management Stockholder
Support Agreement"). In addition, CRW Financial, Inc., a stockholder
of the Issuer, has entered into a TeleSpectrum Stockholder Support
Agreement dated as of January 14, 1999 in the form included as
Exhibit 99.3 to this Schedule 13D (the "CRW Stockholder Support
Agreement") (the Management Stockholder Support Agreement and the CRW
Stockholder Support
Page 4 of 14 Pages
<PAGE>
Agreement shall collectively be referred to herein as the
"Stockholder Support Agreements"). Keith E. Alessi, Richard W.
Virtue, J. Brian O'Neill and CRW Financial, Inc. are referred to
herein collectively as the "Stockholder Support Agreement
Stockholders."
The number of shares of Common Stock of the Issuer beneficially
owned by each of the Stockholder Support Agreement Stockholders is
set forth on Schedule II to this Schedule 13D. Pursuant to the
Stockholder Support Agreements, the Stockholder Support Agreement
Stockholders have agreed to vote or direct the vote of all shares of
Common Stock of the Issuer over which such person has voting power or
control (the "Subject Shares") as follows:
(1) At the Issuer stockholders meeting to be held to vote on the
Merger and the Merger Agreement (or at any adjournment thereof) or in
any other circumstances upon which a vote, consent or other approval
with respect to the Merger or the Merger Agreement is sought, the
Stockholder Support Agreement Stockholders shall vote (or cause to be
voted) the Subject Shares in favor of the Merger, the adoption of the
Merger Agreement and the approval of the terms thereof and each of
the other transactions contemplated by the Merger Agreement.
(2) At any meeting of stockholders of Issuer or at any
adjournment thereof or in any other circumstances upon which the
Stockholder Support Agreement Stockholder vote, consent or other
approval is sought, the Stockholder Support Agreement Stockholders
shall vote (or cause to be voted) the Subject Shares against (i) any
merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding
up of or by Issuer or any subsidiary thereof or any other Acquisition
Proposal (as defined in the Merger Agreement) or (ii) any amendment
of Issuer's Certificate of Incorporation or Bylaws or other proposal
or transaction involving Issuer or any Issuer subsidiary, which
amendment or other proposal or transaction would in any manner
impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement or change in any manner the voting rights of any class of
capital stock of Issuer. The Stockholder Support Agreement
Stockholders further agree not to commit or agree to take any action
inconsistent with the foregoing.
(3) Contemporaneously with the execution of the Stockholder
Support Agreements the Stockholder Support Agreement Stockholders:
(i) delivered to IDRC a proxy which proxy is irrevocable to the
fullest extent permitted by law with respect to the Subject Shares
(the "Proxy"); and (ii) have agreed to cause to be delivered to IDRC
an additional proxy executed on behalf of the record owner of any
issued and
Page 5 of 14 Pages
<PAGE>
outstanding shares of Issuer Common Stock that are owned beneficially
(but are not owned of record) by the Stockholder Support Agreement
Stockholders.
(4) Except for 678,410 of the Subject Shares subject to
outstanding warrants granted by CRW Financial, Inc. (the "CRW Warrant
Shares"), the Stockholder Support Agreement Stockholders agree not to
(i) sell, transfer, pledge, assign or otherwise dispose of
(collectively, "Transfer"), or enter into any contract, option or
--------
other arrangement (including any profit-sharing arrangement) with
respect to the Transfer of the Subject Shares to any person or (ii)
enter into any voting arrangement, whether by proxy, voting
agreement, voting trust or otherwise, in relation to the Subject
Shares. The Stockholder Support Agreement Stockholders further agree
not to commit or agree to take any of the foregoing actions.
Notwithstanding the foregoing, CRW Financial, Inc. may Transfer all
of the CRW Warrant Shares upon exercise of the associated warrants.
In addition, the Stockholder Support Agreement Stockholders may
Transfer all or any portion of the Subject Shares held by such
Stockholder Support Agreement Stockholders by way of gift or for
estate planning purposes, provided that any such transferee shall
first be required to execute a joinder to the Stockholder Support
Agreement whereby such transferee agrees to be bound by all of the
terms and conditions thereof.
The foregoing summary of the voting aspects of the Stockholder
Support Agreements is qualified in its entirety by reference to the
forms of the TeleSpectrum Stockholder Support Agreements, included as
Exhibits 99.2 and 99.3, and incorporated herein in their entirety by
reference.
(c) Not applicable.
(d) As a result of the Merger, certain members of the board of
directors or executive officers of IDRC may be elected or appointed
to the board of directors or may serve as employees of the Issuer,
including Jeffrey Stiefler and Paul Grinberg. IDRC will cease to
exist and each member of the board of directors of IDRC will resign.
In addition, the executive officers of IDRC will be terminated,
provided, however, that certain executive officers of IDRC may serve
as employees of the Issuer.
(e) See Item 4(a) above.
(f) - (g) Upon consummation of the Merger, IDRC will merge with
and into the Issuer and IDRC will cease to exist.
(h) Not applicable
(i) Not applicable.
Page 6 of 14 Pages
<PAGE>
(j) Other than as described above, IDRC has no plan or proposal
which relates to, or may result in, any of the matters listed in
Items 4(a) - (i) of this Schedule 13D (although IDRC reserves the
right to develop such plans).
Item 5. Interest in Securities of the Issuer
(a) - (b) As a result of the Stockholder Support Agreements,
IDRC has shared power to vote an aggregate of 9,894,727 shares of
Common Stock (which includes 739,660 shares of Common Stock
underlying warrants and 824,167 shares of Common Stock underlining
options) of the Issuer for the limited purposes described in Item 4
above. Such shares constitute approximately 37.0% of the issued and
outstanding shares of capital stock of the Issuer on a fully-diluted
basis (after giving effect to the exercise of all outstanding options
and warrants described above) as of January 14, 1999.
To IDRC's knowledge, no shares of Common Stock of the Issuer are
beneficially owned by any of the persons named in Schedule I, except
for such beneficial ownership, if any, arising solely from the
Stockholder Support Agreements.
Set forth in Schedule III to this Schedule 13D is the name of and
certain information regarding each person or entity with whom IDRC
shares the power to vote or to direct the vote of Common Stock of the
Issuer.
During the past five years, to the best knowledge of IDRC, no
person named in Schedule III to this Schedule 13D, has been convicted
in a criminal proceeding.
During the past five years, to the best knowledge of IDRC, no
person named in Schedule III to this Schedule 13D was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
To the best knowledge of IDRC, all persons named in Schedule III
to this Schedule 13D are citizens of the United States.
(c) Neither IDRC nor, to IDRC's knowledge, any person named in
Schedule I, has effected any transaction in Common Stock of the
Issuer during the past 60 days, except as disclosed herein.
(d) Not applicable.
(e) Not applicable.
Page 7 of 14 Pages
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
In connection with the Merger Agreement, certain stockholders of
IDRC (the "IDRC Stockholder Support Agreement Stockholders") entered
into a Stockholder Support Agreement with the Issuer, dated as of
January 14, 1999. Under such agreement, each IDRC Stockholder Support
Agreement Stockholder has agreed that without the prior written
consent of the Issuer, the IDRC Stockholder Support Agreement
Stockholders will not offer, sell, pledge, contract to sell
(including any short sale), grant any option to purchase or otherwise
dispose of or engage in hedging transactions with respect to any
securities which are the subject of the IDRC Stockholder Support
Agreements for a period of one year after the consummation of the
Merger.
Attached hereto as Exhibit 99.4 is a copy of the form of IDRC
Stockholder Support Agreement entered into by and between
TeleSpectrum and each of the IDRC Stockholder Support Agreement
Stockholders.
Other than as described in the foregoing paragraph and in Item 4
above, to the best knowledge of IDRC, there are no contracts,
arrangements, understandings or relationships (legal or otherwise)
among the persons named in Item 2 and between such persons and any
person with respect to any securities of the Issuer, including but
not limited to transfer or voting of any securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits
99.1 Agreement and Plan of Merger dated as of January 14, 1999, by
and among TeleSpectrum Worldwide Inc., International Data
Response Corporation and certain stockholders of International
Data Response Corporation.
99.2 Form of TeleSpectrum Stockholder Support Agreement dated as of
January 14, 1999 entered into by and between IDRC, and each of
Keith E. Alessi, Richard W. Virtue and J. Brian O'Neill.
99.3 Form of TeleSpectrum Stockholder Support Agreement dated as of
January 14, 1999 entered into by and between International Data
Response Corporation and CRW Financial, Inc.
99.4 Form of IDRC Stockholder Support Agreement dated as of
January 14, 1999 entered into by and between TeleSpectrum and
each of the IDRC Stockholder Support Agreement Stockholders.
Page 8 of 14 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 14, 1999
----------------------------------------
(Date)
International Data Response Corporation,
a Delaware corporation
By: /s/ Jeffrey E. Stiefler
-------------------------------------
Jeffrey E. Stiefler
Chief Executive Officer
Page 9 of 14 Pages
<PAGE>
Schedule I
EXECUTIVE OFFICERS AND DIRECTORS OF INTERNATIONAL DATA RESPONSE CORPORATION
Jeffrey E. Stiefler is the Chief Executive Officer and Chairman of the
Board of Directors of IDRC. Mr. Stiefler is also a director of OSI Holdings,
Inc., of which he is Chairman, and is a limited partner of MDC Management
Company III, L.P.
John D. Weil is the Chief Executive Officer of IDRC United States, with its
principal place of business at 7272 E. Indian School Road, Suite 350,
Scottsdale, Arizona 85251. Mr. Weil also serves as a director of FiberMark,
Inc., DEC International Inc. and Sage Enterprises.
David B. Parkes is President and Chief Executive Officer of IDRC
International and President and Chief Executive Officer of S & P Data Corp., a
wholly-owned subsidiary of IDRC, with its principal place of business at One
Concorde Gate, 9th Floor, Don Mills, Ontario M3C 3N6. Mr. Parkes serves as
director of the Canadian Special Olympics.
Paul J. Grinberg is Chief Financial Officer of IDRC.
Jill Ward is President of IDRC US Inbound, with its principal place of
business at 5590 Morehouse Drive, San Diego, California 92121.
Robert B. Hellman, Jr. is the Secretary and a director of IDRC. Mr.
Hellman is also a general partner of McCown De Leeuw & Co., with an office at
3000 Sand Hill Road, Building 3, Suite 290, Menlo Park, California 94025. Mr.
Hellman currently serves as a director of Nimbus CD International, Inc. and
certain privately-held companies, including Distribution Dynamics, Inc. and
Pelican Companies, Inc.
Vikas Kapoor is a director of IDRC. Mr. Kapoor is also a partner of the
consulting firm of Mitchell Madison Group, with its principal place of business
at 520 Madison Avenue, New York, New York 10022.
David E. King is a director of IDRC. He is also a general partner of the
McCown De Leeuw & Co. entities, with an office at 65 East 55th Street, 36th
Floor, New York, New York 10022. Mr. King also serves as a director of Nimbus
CD International, Inc. and certain privately-held companies, including ASC
Corporation, DEC International, Inc., Fitness Holdings, Inc., OSI Holdings, Inc.
and Sarcom Corporation.
George E. McCown is a director of IDRC. Mr. McCown is also a managing
general partner of MDC Management Company III L.P., which is the general partner
of McCown De Leeuw & Co. III, L.P. and McCown De Leeuw & Co. Offshore (Europe)
III, L.P., a managing general partner of MDC Management Company III, L.P. which
is the general partner of McCown De Leeuw & Co. III (Asia), L.P. and a member of
The Gamma Fund, LLC, with an office at
Page 10 of 14 Pages
<PAGE>
3000 Sand Hill Road, Building 3, Suite 290, Menlo Park, California 94025. Mr.
McCown also serves as a director of Building Materials Holding Corporation,
FiberMark, Inc., Vans, Inc., Nimbus CD International, Inc., and a number of
McCown De Leeuw & Co. portfolio companies, including Home Asset Management Co.,
Pelican Companies, Inc., Fitness Holdings, Inc. and RSP Manufacturing Corp.
Glenn McKenzie is a director of IDRC. Mr. McKenzie is President of Alpha
Investments, Inc., with its principal place of business at 24 Beach Palm,
Hampton, New Hampshire 03842.
Bruce E. Rogoff is a director of IDRC. Mr. Rogoff is also Vice Chairman of
TransNational Group Services International, Inc., with its principal place of
business at 133 Federal Street, Boston, Massachussets 02210.
Unless otherwise described above, all individuals described in this
Schedule I are employed at, or retained as directors by, International Data
Response Corporation, 6041 La Flecha, Suite B, Rancho Santa Fe, California 92067
Page 11 of 14 Pages
<PAGE>
Schedule II
<TABLE>
<CAPTION>
Number of Shares of Percent of Outstanding
Issuer Common Stock Shares of Issuer
Stockholder Beneficially Owned Common Stock/1/
- ---------------------------- -------------------------- ----------------------
<S> <C> <C>
Keith E. Alessi 894,631/2/ 3.4 %
Richard W. Virtue 898,392/3/ 3.5 %
J. Brian O'Neill 1,765,281/4/ 6.7 %
CRW Financial, Inc. 6,336,423 24.6 %
------------ ------
Totals 9,894,727 37.0 %
</TABLE>
- ------------
* Less than one percent.
/1/ Calculated in accordance with Rule 13d-1 and based upon 25,771,449 shares
of Common Stock issued and outstanding as of January 14, 1999.
/2/ Includes 166,667 shares of Common Stock issuable pursuant to options
exercisable within 60 days of January 14, 1999.
/3/ Includes 129,500 shares of Common Stock issuable pursuant to warrants
exercisable within 60 days of January 14, 1999, and 5,000 shares of Common
Stock issuable pursuant to options exercisable within 60 days of January
14, 1999.
/4/ Includes 610,160 shares of Common Stock issuable pursuant to warrants
granted to Mr. O'Neill by CRW Financial, Inc. on shares of Common Stock of
the Issuer owned by CRW Financial, Inc., and 652,500 shares of Common Stock
issuable pursuant to options exercisable within 60 days of January 14,
1999.
/5/ Includes 68,250 shares of Common Stock of Issuer that CRW Financial, Inc.
is required to sell to certain persons upon the exercise of warrants to
purchase Common Stock of Issuer granted by CRW Financial, Inc. and excludes
610,160 shares of Common Stock that are issuable to J. Brian O'Neill upon
the exercise of certain warrants held by Mr. O'Neill, which are included in
the number of shares beneficially owned by Mr. O'Neill as set forth above.
Page 12 of 14 pages
<PAGE>
Schedule III
Keith E. Alessi is the Chief Executive Officer and Chairman of the Board of
Directors of the Issuer.
Richard W. Virtue is a director of the Issuer.
J. Brian O'Neill is a director of the Issuer and is President and Chief
Executive Officer of CRW Financial, Inc.
CRW Financial, Inc. is a Delaware corporation with its principal place of
business and principal offices at 200 Four Falls Corporate Center, Suite 415,
West Conshohocken, Pennsylvania 19428. As of October 7, 1998, CRW Financial,
Inc. ceased material operations as an ongoing business concern, in connection
with the sale of its wholly-owned subsidiary, Casino Money Centers, Inc.
Page 13 of 14 Pages
<PAGE>
Exhibit Index
- -------------
Exhibit Description of Document
- ------- -----------------------
99.1 Agreement and Plan of Merger dated as of January 14, 1999, by and
among TeleSpectrum Worldwide Inc., International Data Response
Corporation and certain stockholders of International Data Response
Corporation.
99.2 Form of TeleSpectrum Stockholder Support Agreement dated as of
January 14, 1999 by and between International Data Response
Corporation and each of Keith E. Alessi, Richard W. Virtue, and J.
Brian O'Neill.
99.3 Form of TeleSpectrum Stockholder Support Agreement dated as of
January 14, 1999 by and between International Data Response
Corporation and CRW Financial, Inc.
99.4 Form of IDRC Stockholder Support Agreement dated as of January 14,
1999 entered into by and between TeleSpectrum and each of the IDRC
Stockholder Support Agreement Stockholders.
Page 14 of 14 Pages
<PAGE>
EXHIBIT 99.1
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
TELESPECTRUM WORLDWIDE INC.,
INTERNATIONAL DATA RESPONSE CORPORATION
and
CERTAIN STOCKHOLDERS OF INTERNATIONAL DATA RESPONSE CORPORATION
Dated as of January 14, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
--------
<S> <C> <C>
W I T N E S S E T H..................................................................... 1
ARTICLE ITHE MERGER..................................................................... 2
Section 1.1 The Merger........................................................... 2
Section 1.2 Stockholder Meetings, Closing, Effective Time of the Merger.......... 2
Section 1.3 Conversion and Cancellation of Securities............................ 3
Section 1.4 Exchange of Certificates............................................. 4
Section 1.5 Options.............................................................. 6
Section 1.6 Escrow............................................................... 7
Section 2.1 Organization, Powers and Qualifications.............................. 8
Section 2.2 Subsidiaries......................................................... 8
Section 2.3 Capital Stock........................................................ 9
Section 2.4 Certificate of Incorporation, Bylaws, Minute Books and Records....... 10
Section 2.5 Authority; Binding Effect............................................ 10
Section 2.6 Conflict with Other Agreements; Approvals............................ 10
Section 2.7 Governmental Consents and Approvals.................................. 11
Section 2.8 Financial Statements................................................. 11
Section 2.9 Absence of Certain Changes........................................... 12
Section 2.10 Indebtedness; Absence of Undisclosed Liabilities..................... 12
Section 2.11 Assets............................................................... 12
Section 2.12 Contracts............................................................ 13
Section 2.13 Insurance............................................................ 13
Section 2.14 Authorizations; Compliance With Law.................................. 14
Section 2.15 Taxes................................................................ 14
Section 2.16 Absence of Litigation; Claims........................................ 15
Section 2.17 Employee Benefit Plans; Employment Agreements........................ 15
Section 2.18 Customers............................................................ 17
Section 2.19 Labor Matters........................................................ 17
Section 2.20 Environmental Matters................................................ 18
Section 2.21 Intellectual Property................................................ 18
Section 2.22 Registration Statement; Proxy Statement/Prospectus................... 18
Section 2.23 Tax Matters.......................................................... 19
Section 2.24 Affiliates........................................................... 19
Section 2.25 Board Action......................................................... 19
Section 2.26 Brokers and Finders.................................................. 19
Section 2.27 Adequacy of Disclosure............................................... 19
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF TELESPECTRUM............................... 19
Section 3.1 Organization and Powers.............................................. 20
Section 3.2 Subsidiaries......................................................... 20
Section 3.3 Capital Stock........................................................ 20
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3.4 Certificate of Incorporation, Bylaws, Minute Books and Records....... 21
Section 3.5 Authority; Binding Effect............................................ 21
Section 3.6 Conflict with Other Agreements; Approvals............................ 21
Section 3.7 Governmental Consents and Approvals.................................. 22
Section 3.8 SEC Reports.......................................................... 22
Section 3.9 Financial Statements................................................. 22
Section 3.10 Absence of Certain Changes........................................... 23
Section 3.11 Indebtedness; Absence of Undisclosed Liabilities..................... 23
Section 3.12 Contracts............................................................ 24
Section 3.13 Absence of Litigation; Claims........................................ 24
Section 3.14 Tax Matters.......................................................... 24
Section 3.15 Affiliates........................................................... 24
Section 3.16 Registration Statement; Proxy Statement/Prospectus................... 24
Section 3.17 State Takeover Statutes.............................................. 25
Section 3.18 Board Action......................................................... 25
Section 3.19 Brokers and Finders.................................................. 25
Section 3.20 Adequacy of Disclosure............................................... 25
ARTICLE IVCOVENANTS..................................................................... 25
Section 4.1 Conduct of IDRC's Business........................................... 25
Section 4.2 TeleSpectrum's Undertakings.......................................... 27
Section 4.3 Updating of Schedules................................................ 29
Section 4.4 Access to Information................................................ 29
Section 4.5 Stockholder Vote; Proxy Statement.................................... 30
Section 4.6 NMS Application...................................................... 31
Section 4.7 Reasonable Best Efforts.............................................. 31
Section 4.8 Public Announcements................................................. 31
Section 4.9 Subsequent Financial Statements...................................... 31
Section 4.10 Control of Operations................................................ 32
Section 4.11 Regulatory and Other Authorizations.................................. 32
Section 4.12 Takeover Statute..................................................... 32
Section 4.13 Indemnification of Directors and Officers............................ 32
Section 4.14 Tax-Free Reorganization.............................................. 33
Section 4.15 No Solicitation...................................................... 33
Section 4.16 Bank Negotiations.................................................... 34
Section 4.17 Consent Determinations............................................... 34
Section 4.18 Form S-3 Resale Registration......................................... 34
Section 4.19 CRW Developments..................................................... 35
Section 4.20 Covenant of the MDC Entities......................................... 35
Section 4.21 Agreement with Chairman.............................................. 35
Section 4.22 Section 2.17 Undertaking............................................. 35
ARTICLE VCONDITIONS TO CLOSING.......................................................... 35
Section 5.1 Conditions to the Obligations of IDRC and TeleSpectrum............... 35
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 5.2 Conditions to the Obligations of IDRC................................ 36
Section 5.3 Conditions to the Obligations of TeleSpectrum........................ 37
ARTICLE VITERMINATION, AMENDMENT AND WAIVER............................................. 39
Section 6.1 Termination.......................................................... 39
Section 6.2 Effect of Termination................................................ 40
Section 6.3 Amendment............................................................ 40
Section 6.4 Waiver............................................................... 40
ARTICLE VIIINDEMNIFICATION.............................................................. 40
Section 7.1 Survival of Representations and Warranties........................... 40
Section 7.2 General Indemnification by the Stockholders.......................... 41
Section 7.3 Specific Indemnification by the Stockholders of IDRC................. 41
Section 7.4 Indemnification by TeleSpectrum...................................... 41
Section 7.5 Procedure of Claims.................................................. 42
Section 7.6 Limitations on Indemnification....................................... 43
Section 7.7 Claims Period........................................................ 43
Section 7.8 Exclusive Remedy..................................................... 43
Section 7.9 Exception to Limitation.............................................. 44
Section 7.10 Effect of Investigation.............................................. 44
ARTICLE VIIIMISCELLANEOUS............................................................... 44
Section 8.1 Entire Agreement..................................................... 44
Section 8.2 Notices.............................................................. 44
Section 8.3 Governing Law........................................................ 45
Section 8.4 Descriptive Headings................................................. 45
Section 8.5 Parties in Interest.................................................. 45
Section 8.6 Counterparts......................................................... 46
Section 8.7 Expenses............................................................. 46
Section 8.8 Personal Liability................................................... 46
Section 8.9 Binding Effect; Assignment........................................... 46
Section 8.10 Interpretation....................................................... 46
Section 8.11 Severability......................................................... 46
</TABLE>
iii
<PAGE>
NOFOLIO
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
---------
January 14, 1999, is made by and among TELESPECTRUM WORLDWIDE INC., a Delaware
corporation ("TeleSpectrum"), INTERNATIONAL DATA RESPONSE CORPORATION, a
------------
Delaware corporation ("IDRC"), and the following stockholders of IDRC: McCown
----
De Leeuw & Co. III, L.P., McCown De Leeuw & Co. Offshore (Europe) III, L.P.,
McCown De Leeuw & Co. III, (Asia) L.P. and The Gamma Fund LLC (collectively, the
"MDC Entities").
------------
W I T N E S S E T H
-------------------
WHEREAS, the respective Boards of Directors of TeleSpectrum and IDRC have
each approved the business combination described herein in which IDRC will be
merged with and into TeleSpectrum upon the terms and subject to the conditions
hereinafter set forth (the "Merger"), pursuant to which, among other things, (i)
------
each outstanding share of Common Stock, par value $.001 per share, of IDRC
("Common Stock"), and each outstanding share of Class A Common Stock, par value
- --------------
$.001 per share, of IDRC ("Class A Common Stock" and together with the Common
--------------------
Stock, "IDRC Common Stock"), will be converted into the right to receive shares
-----------------
of Common Stock, par value $.001 per share, of TeleSpectrum ("TeleSpectrum
------------
Common Stock"), and warrants exercisable for TeleSpectrum Common Stock in the
- ------------
manner set forth herein and (ii) each outstanding share of Series A Preferred
Stock, par value $.001 per share, of IDRC ("Series A Preferred Stock"), and
------------------------
unpaid dividends with respect to such Series A Preferred Stock will be exchanged
or paid, as applicable, in cash;
WHEREAS, the Boards of Directors of TeleSpectrum and IDRC have each
unanimously determined that the Merger and the other transactions contemplated
hereby are consistent with, and in furtherance of, their respective business
strategies and goals and have each approved the Merger upon the terms and
conditions set forth herein;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to TeleSpectrum's willingness to enter into this
Agreement, certain stockholders of IDRC have entered into a Stockholder Support
Agreement with TeleSpectrum, dated as of the date of this Agreement and attached
as Exhibit A hereto (the "IDRC Stockholder Support Agreement"), pursuant to
----------------------------------
which such stockholders have agreed, among other things, to vote all voting
securities of IDRC beneficially owned by them in favor of approval and adoption
of this Agreement and to refrain, except as otherwise specified in the IDRC
Stockholder Support Agreement, for a one-year period, from transferring or
otherwise disposing of any economic interest in any securities of TeleSpectrum
which are obtained pursuant to the terms of this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to IDRC's willingness to enter into this
Agreement, certain stockholders of TeleSpectrum have entered into Stockholder
Support Agreements with IDRC, dated as of the date of this Agreement and
attached as Exhibit B hereto (the "TeleSpectrum Stockholder Support
--------------------------------
Agreements"), pursuant to which
- ----------
<PAGE>
such stockholders have agreed, among other things, to vote all voting securities
of TeleSpectrum beneficially owned by them in favor of approval and adoption of
this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"); and
----
WHEREAS, for accounting purposes, it is intended that the Merger will be
accounted for as a "purchase."
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements and conditions set forth below, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions hereof and
in accordance with the General Corporation Law of the State of Delaware, as
amended (the "DGCL"), at the Effective Time (hereinafter defined): (a) IDRC
----
shall be merged with and into TeleSpectrum and the separate existence of IDRC
shall cease; (b) TeleSpectrum, as the surviving corporation in the Merger (the
"Surviving Corporation"), (i) shall continue its corporate existence under the
- ----------------------
laws of the State of Delaware, (ii) shall retain its present name and (iii)
shall succeed to all rights, assets, liabilities and obligations of IDRC in
accordance with the DGCL; (c) the Certificate of Incorporation of TeleSpectrum,
as in effect immediately prior to the Effective Time, shall continue as the
Certificate of Incorporation of the Surviving Corporation; and (d) the Bylaws of
TeleSpectrum, as in effect immediately prior to the Effective Time, shall
continue as the Bylaws of the Surviving Corporation. From and after the
Effective Time, the Merger will have all the effects provided by applicable law
and as set forth in this Agreement.
Section 1.2 Stockholder Meetings, Closing, Effective Time of the Merger.
TeleSpectrum and IDRC shall each submit this Agreement to the holders of all of
their respective securities that are entitled to vote on this Agreement for
approval and adoption at meetings, or, in the case of IDRC, by consent in lieu
of a meeting, to be held as soon as practicable following the date of this
Agreement in accordance with Section 4.5 hereof. Subject to this Agreement
receiving all requisite stockholder approvals and subject to the other
provisions of this Agreement, the parties shall hold a closing (the "Closing")
-------
on the next business day (or such later date as the parties hereto may agree)
following the later of (a) the first business day on which the stockholders of
IDRC and TeleSpectrum have each approved the Merger Agreement, or (b) the first
business day on which the last of the conditions set forth in Article V hereof
is fulfilled or waived (such later date, the "Closing Date"), at 9:00 A.M.
------------
(Philadelphia time) at the offices of Morgan, Lewis & Bockius LLP, 1701 Market
Street, Philadelphia, Pennsylvania, or at such other time or place as the
parties agree. On the Closing Date, the parties shall cause the Merger to
become effective by filing a certificate of merger (the "Certificate of Merger")
---------------------
with the Secretary of State of the State of Delaware in such form as required
by, and executed in accordance with the relevant provisions of,
-2-
<PAGE>
the DGCL (the date and time of such filing, or such later date or time agreed
upon by TeleSpectrum and IDRC set forth therein, the "Effective Time.")
--------------
Section 1.3 Conversion and Cancellation of Securities.
(a) At the Effective Time and subject to Section 1.5 hereof, all (i)
shares of IDRC Common Stock and (ii) options, warrants and other rights (the
"Options") exercisable for, or providing the right to acquire, IDRC Common Stock
- --------
that are issued and outstanding immediately prior to the Effective Time (other
than any shares of IDRC Common Stock described in Section 1.3(c) hereof) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive an aggregate of 9,200,000 shares
(the "Merger Shares") of TeleSpectrum Common Stock and warrants (the "Warrants")
------------- --------
exercisable for an aggregate of 3,000,000 shares (the "Warrant Shares") of
--------------
TeleSpectrum Common Stock. The Warrants shall contain such other terms and
conditions set forth in the form attached as Exhibit C hereto. Notwithstanding
---------
the foregoing, (i) no fractional shares of TeleSpectrum Common Stock shall be
issued and, in lieu thereof, a cash payment shall be made pursuant to Section
1.4(g) hereof, and (ii) the number of Merger Shares and Warrants issuable
pursuant to Section 1.3(a) shall be reduced on a proportional basis in an
aggregate amount equal to the number of Merger Shares and Warrants that would
have been received by holders of any Appraisal Shares (as such term is defined
in Section 1.3(c) hereof). The effect of the foregoing means that (A) each
share of IDRC Common Stock that is issued and outstanding immediately prior to
the Effective Time (other than any shares of IDRC Common Stock described in
Section 1.3(c) hereof) will be convertible into (i) that number of Merger Shares
equal to 9,200,000 divided by the Total IDRC Shares Outstanding, the product
being rounded, if necessary, up or down, to the nearest whole share and (ii) a
Warrant exercisable for that number of Warrant Shares equal to 3,000,000 divided
by the Total IDRC Shares Outstanding, the product being rounded, if necessary,
up or down, to the nearest whole share, and (B), subject to Sections 1.5 and 1.6
hereto, a holder of Options will be entitled to receive, upon exercise, on
account of each share of IDRC Common Stock (i) that number of Merger Shares
equal to 9,200,000 divided by the Total IDRC Shares Outstanding, the product
being rounded, if necessary, up or down, to the nearest whole share and (ii) a
Warrant exercisable for that number of Warrant Shares equal to 3,000,000 divided
by the Total IDRC Shares Outstanding, the product being rounded, if necessary,
up or down, to the nearest whole share. As used herein, the term "Total IDRC
Shares Outstanding" means the total number of shares of IDRC Common Stock and
the total number of shares of IDRC Common Stock issuable upon exercise of
Options that are issued and outstanding immediately prior to the Effective Time.
(b) At the Effective Time, (i) each outstanding share of Series A
Preferred Stock, shall be exchanged for $20 in cash, and (ii) all accrued and
unpaid dividends then payable in Series A-1 Preferred Stock, par value $.001 per
share, of IDRC (the "Series A-1 Preferred Stock"), with respect to the
--------------------------
outstanding shares of Series A Preferred Stock, shall be paid in cash in the
manner set forth in Article IV, Section E.1 of IDRC's Amended and Restated
Certificate of Incorporation in effect as of the Effective Time.
(c) At the Effective Time, each share of IDRC Common Stock held in
the treasury of IDRC immediately prior to the Effective Time, shall by virtue of
the Merger and without any action on the
-3-
<PAGE>
part of the holder thereof, be automatically canceled and retired and cease to
exist, and no cash, securities or other property shall be payable in respect
thereof.
(d) The holders of shares of TeleSpectrum Common Stock shall not be
entitled to appraisal rights under the DGCL. The holders of shares of IDRC
Common Stock held by a holder who, pursuant to Section 262 of the DGCL or any
successor provision, has the right to demand and properly demands an appraisal
of such shares of IDRC Common Stock ("Appraisal Shares"), shall not be converted
----------------
into the right to receive the Merger Consideration (as defined in Section
1.3(e)), on account of each share of IDRC Common Stock held by such holder,
unless such holder fails to perfect or otherwise loses such holder's right to
such appraisal, if any. If, after the Effective Time, such holder fails to
perfect or loses any such right to appraisal, each such share of IDRC Common
Stock held by such holder shall be treated as a share of IDRC Common Stock that
had been converted as of the Effective Time into the right to receive the Merger
Consideration. At the Effective Time, any holder of Appraisal Shares shall
cease to have any rights with respect thereto, except the rights provided in
Section 262 of the DGCL or any successor provision and as provided in the
immediately preceding sentence. IDRC shall give prompt notice to TeleSpectrum
of any demands received by IDRC for appraisal of shares of IDRC Common Stock.
(e) The number of Merger Shares and Warrants to be issued pursuant to
this Agreement shall not be affected by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock shall be declared thereon with a record date within such period
involving the IDRC Common Stock or the Options. The number of Merger Shares and
Warrants to be issued pursuant to this Agreement shall not be affected by reason
of any reclassification, recapitalization, split-up, combination or exchange of
shares, or any dividend payable in stock shall be declared thereon with a record
date within such period involving the TeleSpectrum Common Stock or the Options.
The Merger Shares and Warrants issued on account of each share of IDRC Common
Stock and issuable on account of each share of IDRC Common Stock underlying the
Options as a result of the Merger shall be equal. The number of Merger Shares
and Warrants issuable in exchange for each share of IDRC Common Stock and each
share of IDRC Common Stock underlying the Options is sometimes referred to
herein as the "Merger Consideration."
--------------------
Section 1.4 Exchange of Certificates.
(a) Subject to Section 1.6 hereof, as soon as practicable after the
Effective Time, TeleSpectrum shall mail to each person who was, at the Effective
Time, a holder of record of a certificate or certificates that immediately prior
to the Effective Time evidenced outstanding shares of IDRC Common Stock or
shares of Series A Preferred Stock (the "Certificates") (i) a letter of
------------
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
TeleSpectrum, which shall be in a form and contain any other provisions as
TeleSpectrum and IDRC may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration receivable on account of each share of IDRC Common Stock
represented thereby or the cash receivable on account of each share of Series A
Preferred Stock represented thereby. Upon the proper surrender of Certificates
to TeleSpectrum, together with a properly completed and duly executed letter of
transmittal and such other documents as may be required by TeleSpectrum, the
holder of such Certificate shall be entitled to receive in exchange therefor, in
the
-4-
<PAGE>
case of holders of IDRC Common Stock, certificates representing the shares
of TeleSpectrum Common Stock and Warrants that such holder has the right to
receive pursuant to the terms hereof (together with any dividend or distribution
with respect thereto made after the Effective Time and any cash paid in lieu of
fractional shares pursuant to Section 1.4(g)), and, in the case of holders of
Series A Preferred Stock, cash in payment of the full exchange price and accrued
and unpaid dividends. Each Certificate so surrendered shall be canceled. If any
portion of the Merger Consideration on account of IDRC Common Stock or cash on
account of Series A Preferred Stock is to be paid to a person other than the
person who is the record holder of the IDRC Common Stock or Series A Preferred
Stock, as applicable, at the Effective Time, it shall be a condition to such
payment that the Certificate evidencing the IDRC Common Stock or Series A
Preferred Stock so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that it be accompanied by all documents required to
evidence and effect such transfer and by evidence reasonably satisfactory to the
TeleSpectrum and IDRC that any applicable stock transfer tax has been paid.
(b) After the Effective Time, each outstanding Certificate which
theretofore represented shares of IDRC Common Stock shall, until surrendered for
exchange in accordance with this Section 1.4, be deemed for all purposes to
evidence ownership of whole shares of TeleSpectrum Common Stock and Warrants
into which the shares of IDRC Common Stock (which, prior to the Effective Time,
were represented thereby) shall have been so converted. After the Effective
Time, each outstanding Certificate which theretofore represented shares of
Series A Preferred Stock shall be deemed for all purposes to have been converted
and to evidence only that cash amount payable upon conversion, without the right
to receive any interest from the Effective Time until the time received by the
holder.
(c) At the Effective Time, the stock transfer books of IDRC shall be
closed and no transfer of any securities of IDRC shall thereafter be made.
(d) Neither TeleSpectrum nor IDRC will be liable to any holder of
shares of IDRC Common Stock for any Merger Consideration or any dividends or
distributions with respect thereto or cash payable in lieu of fractional shares
pursuant to Section 1.4(g) hereof or to any holder of shares of Series A
Preferred Stock for any cash, in each case which is delivered to a state
abandoned property administrator or other public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) If any Certificates shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificates to be lost, stolen or destroyed, TeleSpectrum will deliver in
exchange for such lost, stolen or destroyed Certificates, the Merger
Consideration or cash, as applicable, for the shares represented thereby,
deliverable in respect thereof, as determined in accordance with the terms
hereof. When authorizing such payment in exchange for any lost, stolen or
destroyed Certificates, the person to whom the Merger Consideration or cash, as
applicable, is to be issued, as a condition precedent to such delivery, shall
give TeleSpectrum a bond or indemnity reasonably satisfactory to TeleSpectrum,
its transfer agent and their respective insurance carriers against any claim
that may be made against TeleSpectrum with respect to the Certificates alleged
to have been lost, stolen or destroyed.
-5-
<PAGE>
(f) No dividend or other distribution declared or made after the
Effective Time with respect to the Merger Consideration with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of TeleSpectrum Common Stock issuable upon surrender
thereof until the holder of such Certificate shall surrender such Certificate in
accordance with Section 1.4(a). Subject to the effect of applicable law,
following surrender of any such Certificate there shall be paid, without
interest, to the record holder of certificates representing whole shares of
TeleSpectrum Common Stock issued in exchange therefor: (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
TeleSpectrum Common Stock; and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to surrender of such Certificate and a payment date subsequent to such
surrender payable with respect to such whole shares of TeleSpectrum Common
Stock.
(g) No certificates or scrip evidencing fractional shares of
TeleSpectrum Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests shall not entitle the owner
thereof to any rights of a stockholder of TeleSpectrum. In lieu of any such
fractional shares, each holder of a Certificate previously evidencing IDRC
Common Stock, upon surrender of such Certificate for exchange pursuant to this
Article I, shall be paid an amount in cash (without interest), rounded to the
nearest cent, determined by multiplying (a) the closing price for a share of
TeleSpectrum Common Stock on the Nasdaq National Market System (the "NMS") on
---
the first business day immediately following the Effective Time, by (b) the
fractional interest to which such holder would otherwise be entitled (after
taking into account all shares of IDRC Common Stock held of record by such
holder at the Effective Time).
Section 1.5 Options.
(a) Except as set forth in Section 1.5(b), all Options outstanding
immediately prior to the Effective Time, shall terminate and neither IDRC nor
TeleSpectrum will have any obligation thereunder to the extent such Options are
not exercised prior to the Effective Time.
(b) Subject to the other terms and conditions in this Section 1.5, in
lieu of the termination of Options as set forth in Section 1.5(a), each holder
of outstanding Options may elect, prior to the Effective Time, to have any
Option held by such holder assumed by TeleSpectrum and become a new option (an
"Assumed Option") to purchase Merger Shares and Warrants and containing
substantially the same terms and conditions as are in effect for the original
Option outstanding immediately prior to the Effective Time only if such holder
(i) agrees to place in escrow in accordance with Section 1.6 of this Agreement,
a portion of the Assumed Option (an "Escrow Option") that is exercisable solely
for that number of shares of TeleSpectrum Common Stock equal to (A) the product
of (1) the total number of Shares of IDRC Common Stock underlying such Assumed
Option immediately prior to the Effective Time divided by the Total IDRC Shares
Outstanding, and (2) $12,000,000 divided by the "Trading Value" (as defined in
Section 1.6(b)), and (ii) completing and returning to IDRC prior to the
Effective Time a notice of election of assumption to be provided by IDRC (in
form and substance acceptable to TeleSpectrum) to each holder of Options as soon
as practicable after the date hereof. Each Assumed Option shall be evidenced by
two certificates, one representing the Escrow Option and one representing the
remaining portion of the Assumed Option (the "Non-Escrow Option").
-6-
<PAGE>
(c) At the Effective Time, each Assumed Option shall entitle the
holder thereof to that number of Merger Shares and Warrants as set forth below:
(i) the number of Merger Shares to be issuable upon exercise of
each Assumed Option shall be equal to the product of (A) the number of shares of
IDRC Common Stock subject to the corresponding original Option and (B) (1)
9,200,000 divided by (2) the Total IDRC Shares Outstanding, the product being
rounded, if necessary, up or down, to the nearest whole share; and
(ii) the number of Warrants Shares underlying the Warrants to be
issued upon the exercise of each Assumed Option shall be equal to the product of
(A) the number of shares of IDRC Common Stock subject to the corresponding
original Option and (B) (1) 3,000,000 divided by (2) the Total IDRC Shares
Outstanding, the product being rounded, if necessary, up or down, to the nearest
whole warrant.
(d) The exercise price per share of TeleSpectrum Common Stock under
each Assumed Option shall be equal to (i) the exercise price per share of the
IDRC Common Stock under the corresponding original Option divided by (ii) (A)
9,200,000 divided by (B) the Total IDRC Shares Outstanding, rounded, if
necessary, up or down, to the nearest cent. The exercise price for each Escrow
Option and each Non-Escrow Option shall be based solely on the number of Escrow
Shares represented thereby.
(e) The shares of TeleSpectrum Common Stock subject to each Warrant
underlying each Assumed Option are obtainable only after such Assumed Option and
Warrant are properly exercised in accordance with their respective terms.
(f) As soon as practicable after the Effective Time, TeleSpectrum
shall (i) deliver to holders of the original Options, agreements representing
the Escrow Options and Non-Escrow Options and (ii) file a registration statement
on Form S-8 (or any successor form thereto) registering the Merger Shares to be
issued to the holders of Escrow Options and Non-Escrow Options upon the exercise
of such Options and to maintain the effectiveness of such registration statement
(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as such options remain outstanding.
Section 1.6 Escrow.
(a) On the Closing Date, TeleSpectrum shall cause to be distributed
to the Indemnity Escrow Agent (as defined below) a certificate or certificates
and agreements representing the Escrow Securities (as defined below), which
shall be registered in the name of the Indemnity Escrow Agent as nominee for the
holders of IDRC Common Stock (the "IDRC Stockholders") and the holders of Escrow
Options (the "IDRC Optionholders") shall be held in accordance with the
provisions of this Section 1.6 and the Indemnity Escrow Agreement referred to
herein.
(b) At the Closing, as security for the payment of any
indemnification obligations of the IDRC Stockholders and the IDRC Optionholders
pursuant to Sections 7.2 or 7.3 hereof, the Escrow
-7-
<PAGE>
Shares and the Escrow Options shall be delivered to an indemnity escrow agent
that is mutually satisfactory to TeleSpectrum and IDRC (the "Indemnity Escrow
----------------
Agent"). The term "Escrow Shares" means that number of shares of TeleSpectrum
- -----
Common Stock issuable to IDRC Stockholders in the Merger (collectively, the
"Escrow Shares") that, together with the value of the Escrow Options, have an
-------------
aggregate "Trading Value" of $12,000,000, rounded up to the nearest whole share.
The Escrow Shares and Escrow Options are collectively referred to as the "Escrow
------
Securities." Of the Escrow Securities, securities having an aggregate Trading
- ----------
Value of $9,000,000 and $3,000,000 will be held as security for any
indemnification obligations under Sections 7.2 and 7.3 hereof, respectively. As
used herein, the term "Trading Value" means the average closing price of one
share of TeleSpectrum Common Stock as quoted on the NMS during the 25 trading
days immediately preceding the Closing Date. For purposes of calculating the
Trading Value of the Escrow Securities, no value shall be ascribed to the Escrow
Options other than the value of each share of TeleSpectrum Common Stock
underlying the Escrow Options, each of which shall be valued at the Trading
Value. The Escrow Securities, together with all cash and non-cash dividends and
other property at any time received or otherwise distributed on, in respect of
or in exchange for any or all of the Escrow Securities, all securities hereafter
issued in substitution for any of the foregoing, all certificates and
instruments representing or evidencing such securities, all cash and non-cash
proceeds of all of the foregoing property and all rights, titles, interests,
privileges and preferences appertaining or incident to the foregoing property
are referred to together as the "Escrow Property."
---------------
(c) The Escrow Property shall be held and disbursed by the Indemnity
Escrow Agent in accordance with the terms of an Indemnity Escrow Agreement
substantially in the form attached hereto as Exhibit D. The Indemnity Escrow
---------
Agent shall hold the Escrow Property pursuant to the Indemnity Escrow Agreement
until the later of: (a) the fifteen month anniversary of the Closing Date; or
(b) the resolution of any claim for indemnification or payment that is pending
on the fifteen month anniversary of the Closing Date.
(d) The IDRC Stockholders (and the IDRC Optionholders to the extent
such optionholders exercise Assumed Options prior to the expiration of the
Indemnity Escrow Agreement) shall be entitled to exercise all voting powers
incident to the Escrow Property held by the Indemnity Escrow Agent as their
nominee, but shall not be entitled to exercise any investment or dispositive
powers over such Escrow Property.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF IDRC
IDRC represents and warrants to TeleSpectrum that, except as set forth on a
Disclosure Schedule delivered by IDRC concurrently with the execution and
delivery of this Agreement (the "IDRC Schedule"):
-------------
Section 2.1 Organization, Powers and Qualifications. IDRC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. IDRC has all requisite corporate power and authority
to carry on its business as it has been and is now being conducted and to own,
lease and operate the properties and assets used in connection therewith. IDRC
is duly qualified as a foreign corporation authorized to do business and is in
good standing in every jurisdiction in
-8-
<PAGE>
which such qualification is required or good standing is recognized, all of
which jurisdictions are disclosed in the IDRC Schedule, except where the failure
to be so qualified would not have an IDRC Material Adverse Effect. As used in
this Agreement, "IDRC Material Adverse Effect" shall mean any fact, condition,
----------------------------
event, development or occurrence which, individually or when taken together with
all other such facts, conditions, events, developments or occurrences, would
reasonably be expected to have a material adverse effect on the financial
condition, operating results or business of IDRC and the IDRC Subsidiaries
(hereinafter defined), taken as a whole.
Section 2.2 Subsidiaries.
(a) "Subsidiary" means, with respect to any party, any corporation,
----------
limited liability company, partnership, joint venture, or other business
association or entity, at least a majority of the voting securities or economic
interests of which is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries. As used in this Agreement, "Joint
-----
Venture" means, with respect to any party, any corporation, limited liability
- -------
company, partnership, joint venture or other business association or entity in
which (i) such party or any one or more of its Subsidiaries, directly or
indirectly, owns or controls more than five percent and less than a majority of
any class of the outstanding voting securities or economic interests, or (ii)
such party or a Subsidiary of such party is a general partner.
(b) The IDRC Schedule lists each Subsidiary and Joint Venture of
IDRC, the jurisdiction of its organization and the amount of its securities
outstanding and the owners thereof. Each Subsidiary of IDRC (the "IDRC
----
Subsidiaries") is duly organized, validly existing and in good standing under
- ------------
the laws of the jurisdiction of its organization. Each IDRC Subsidiary has all
requisite power and authority to carry on its business as it has been and is now
being conducted and to own, lease and operate the assets and properties used in
connection therewith. Each IDRC Subsidiary is duly qualified as a foreign
corporation authorized to do business and is in good standing in every
jurisdiction in which such qualification is required or good standing is
recognized, all of which jurisdictions are disclosed in the IDRC Schedule,
except where the failure to be so qualified would not have an IDRC Material
Adverse Effect. All issued and outstanding shares of capital stock of each IDRC
Subsidiary are owned of record and beneficially by IDRC or another IDRC
Subsidiary, free and clear of all pledges, liens, claims, security interests,
encumbrances and other charges or defects in title of any nature whatsoever
("Liens"). There are no existing subscriptions, options, warrants, convertible
- -------
securities, calls, commitments, agreements, conversion rights or other rights of
any character (contingent or otherwise) calling for or requiring the issuance,
transfer, sale or other disposition of any shares of the capital stock of any
IDRC Subsidiary, or calling for or requiring the issuance of any securities or
rights convertible into or exchangeable for shares of capital stock of any IDRC
Subsidiary, nor is IDRC or any IDRC Subsidiary subject to any obligation
(contingent or otherwise) to repurchase, redeem or otherwise acquire shares of
capital stock of any IDRC Subsidiary, in any case except as set forth in the
IDRC Schedule. Except for the IDRC Subsidiaries and the Joint Ventures of IDRC
or as set forth in the IDRC Schedule, neither IDRC nor any IDRC Subsidiary
directly or indirectly (i) owns or controls any shares of any corporation nor
has any voting securities of, or economic interest in, either of record
beneficially or equitably, in any association, partnership, limited liability
company, joint venture or other legal entity, or (ii) is a general partner of
any partnership.
Section 2.3 Capital Stock. As of the date hereof, IDRC has authorized
capital stock consisting of 1,500,000 shares of Common Stock, 300,000 shares of
Class A Common Stock, and
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2,069,056 shares of Preferred Stock, par value $.001 per share (the "IDRC
----
Preferred Stock"), of which 600,000 shares have been designated Series A
- ---------------
Preferred Stock and 1,419,056 shares have been designated Series A-1 Preferred
Stock. As of the date hereof: (i) 476,100 shares of Common Stock are issued and
outstanding, (ii) 25,834 shares of Class A Common Stock are issued and
outstanding, (iii) 600,000 shares of Series A Preferred Stock are issued and
outstanding, (iv) no shares of Series A-1 Preferred Stock are issued and
outstanding, (v) no shares of IDRC Common Stock or IDRC Preferred Stock are held
as treasury shares, (vi) 224,242 shares of IDRC Common Stock are issuable upon
exercise of outstanding Options, of which 211,918 shares of IDRC Common Stock
are issuable upon exercise of outstanding stock options and 12,324 shares of
IDRC Common Stock are issuable upon the exercise of outstanding warrants, (vii)
600,000 shares of IDRC Common Stock are issuable upon the exercise of IDRC's
detachable Stock Purchase Warrants which were issued in tandem with the
outstanding Series A Preferred Stock ("Detachable Warrants"), and (viii) 152,166
-------------------
shares of IDRC Common Stock are reserved for future issuance under the IDRC 1996
Stock Option Plan. Other than the Options and the Detachable Warrants, there are
no existing subscriptions, options, warrants, convertible securities, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) calling for or requiring the issuance, transfer, sale
or other disposition of any capital stock of IDRC. All of the issued and
outstanding shares of IDRC Common Stock and IDRC Preferred Stock have been duly
authorized and are validly issued and outstanding, fully paid and nonassessable,
and were issued in compliance with all applicable Federal and state securities
laws. No shares of capital stock issued by IDRC are or were, at the time of
their issuance subject to preemptive rights. Other than the IDRC Stockholder
Support Agreement and the Stockholders' Agreement (as defined in Section 5.3(f))
there are no voting trusts or other agreements or understandings to which IDRC
is a party, nor, to the knowledge of IDRC, to which any stockholder of IDRC is a
party, with respect to the voting of capital stock of IDRC.
Section 2.4 Certificate of Incorporation, Bylaws, Minute Books and
Records. The copies of the Certificate of Incorporation and all amendments
thereto and of the Bylaws, as amended, of IDRC and the IDRC Subsidiaries which
have been delivered to TeleSpectrum by IDRC are true, correct and complete
copies thereof as in effect on the date hereof. The minute books of IDRC and
the IDRC Subsidiaries which have been made available for inspection contain
minutes, which are accurate and complete in all material respects, of all
meetings and consents in lieu of meetings of the Board of Directors (and any
committee thereof) and of the stockholders of IDRC and the IDRC Subsidiaries
since the respective dates of incorporation.
Section 2.5 Authority; Binding Effect. IDRC has all requisite
corporate power and authority to execute and deliver this Agreement and, subject
to approval and adoption of this Agreement by a majority of the (i) shares of
IDRC Common Stock outstanding on the record date for the IDRC Stockholders'
Meeting or the date of the IDRC Consent (as such terms are defined in Section
2.22) and, (ii) shares of IDRC Common Stock into which the warrants of IDRC that
are outstanding on the record date for the IDRC Stockholder's Meeting or the
date of the IDRC Consent is then convertible, all voting together as a single
class (the "Required IDRC Stockholder Approval"), to consummate the transactions
contemplated hereby. All necessary action, corporate or otherwise, required to
have been taken by or on behalf of IDRC by applicable law and by IDRC's
Certificate of Incorporation and Bylaws to authorize (i) the approval, execution
and delivery by IDRC of this Agreement and (ii) the performance of IDRC's
obligations under this Agreement and, subject to obtaining the Required IDRC
Stockholder Approval, the
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consummation of the transactions contemplated hereby has been taken or will have
been taken prior to the Closing. This Agreement constitutes a valid and binding
agreement of IDRC, enforceable against IDRC in accordance with its terms.
Section 2.6 Conflict with Other Agreements; Approvals. The execution
and delivery of this Agreement by IDRC does not, and the consummation of the
transactions contemplated hereby will not, (i) violate or conflict with the
Certificate of Incorporation or Bylaws of IDRC or the comparable organizational
documents of any IDRC Subsidiary, (ii) constitute a breach or default (or an
event that with notice or lapse of time or both would become a breach or
default) or give rise to any Lien, third party right of termination,
cancellation, material modification or acceleration, or loss of any benefit,
under any IDRC Contract (hereinafter defined) to which IDRC or any IDRC
Subsidiary is a party or by which it is bound, or (iii) subject to the consents,
approvals, orders, authorizations, filings, declarations and registrations
required to be obtained prior to the Effective Time specified in Section 2.7 or
in the IDRC Schedule in response thereto, conflict with or result in a violation
of any permit, concession, franchise or license or any law, rule or regulation
applicable to IDRC or any of the IDRC Subsidiaries or any of their properties or
assets, except, in the case of clauses (ii) and (iii), for any such breaches,
defaults, Liens, third party rights, cancellations, modifications, accelerations
or losses of benefits, conflicts or violations which would not have an IDRC
Material Adverse Effect and do not impair the ability of IDRC to perform its
obligations under this Agreement or prevent or delay the consummation of any of
the transactions contemplated hereby.
Section 2.7 Governmental Consents and Approvals. Except as set forth in
the IDRC Schedule, neither the execution and delivery of this Agreement by IDRC
nor the consummation by IDRC of the transactions contemplated hereby will
require any consent, approval, order, authorization, or permit of, or filing
with or notification to, any local, state, federal or foreign court,
administrative agency, commission or other governmental or regulatory authority,
agency or instrumentality ("Governmental Entity"), except (a) the filing of the
-------------------
Registration Statement (hereinafter defined) with the Securities and Exchange
Commission (the "SEC") in accordance with the Securities Act of 1933, as
---
amended, and the rules and regulations thereunder (collectively, the "Securities
----------
Act"), and the entry of an order by the SEC permitting such Registration
- ---
Statement to become effective, (b) compliance with applicable state securities
laws, (c) the filing of the Proxy Statement (hereinafter defined) and related
proxy materials with the SEC in accordance with the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (collectively, the
"Exchange Act"), (d) the filing of a premerger notification report form and
- -------------
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), (e) the filing of the Certificate of Merger with the
-------
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which IDRC is qualified to do business in
accordance with the DGCL, and (f) such other consents, approvals, orders,
authorizations, registrations, declarations and filings which if not made or
obtained, would not have an IDRC Material Adverse Effect.
Section 2.8 Financial Statements. The IDRC Schedule includes true and
complete copies of (a) the consolidated balance sheets of IDRC and the IDRC
Subsidiaries at December 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended, together with the notes thereto, audited by Deloitte & Touche LLP; and
(b) the unaudited
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consolidated balance sheets of IDRC and the IDRC Subsidiaries at November 30,
1998 and 1997 and related consolidated statements of operations, stockholders'
equity and cash flows for the 11-month periods then ended, all of which have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved (except as may be
----
indicated in the notes thereto). Such balance sheets, including the related
notes, fairly present in all material respects, the consolidated financial
position, assets and liabilities (whether accrued, absolute, contingent or
otherwise) of IDRC and the IDRC Subsidiaries at the dates indicated and such
consolidated statements of operations, stockholders' equity and cash flows
fairly present the consolidated results of operations, stockholders' equity and
cash flows of IDRC and the IDRC Subsidiaries for the periods indicated (except
for the absence of notes with respect to such unaudited financial statements).
Other than those year-end adjustments specified on the IDRC Schedule, the
unaudited consolidated financial statements as of and for the period ending
November 30, 1998, contain all adjustments, which are solely of a normal
recurring nature, necessary to present fairly the financial position at November
30, 1998 and the results of operations and changes in stockholders' equity and
cash flows for the 11-month period then ended. (The unaudited consolidated
balance sheet of IDRC and the IDRC Subsidiaries at November 30, 1998 described
above is referred to herein as the "IDRC Balance Sheet.") The accounts
------------------
receivable included on the IDRC Balance Sheet are bona fide accounts receivable
created in the ordinary course of business. Except as set forth on the IDRC
Schedule, the reserve for uncollectible accounts set forth on the IDRC Balance
Sheet is in accordance with GAAP and, to the Knowledge of the Designated IDRC
Officers, is reasonable in light of past accounts receivable collection history
and any known developments or trends. As used herein, the term "Knowledge of the
Designated IDRC Officers" means to the knowledge of either Jeffrey A. Stiefler
or Paul J. Grinberg after conducting such investigation as would be reasonably
be expected of the chief executive officer or chief financial officer, as
applicable, to determine the accuracy of their knowledge.
Section 2.9 Absence of Certain Changes. Except as described in the
IDRC Schedule, since November 30, 1998, IDRC and the IDRC Subsidiaries have
conducted their respective businesses solely in the ordinary course consistent
with past practice. Except as otherwise disclosed in the IDRC Schedule, since
November 30, 1998, IDRC and the IDRC Subsidiaries have not:
(a) suffered any IDRC Material Adverse Effect;
(b) been subject to any other events or conditions of any character
that would materially impair the ability of IDRC to perform its obligations
under this Agreement or prevent or delay the consummation of any of the
transactions contemplated hereby;
(c) made any material change to their respective accounting methods,
principles or practices;
(d) been subject to any revaluation of any assets of IDRC or any of
the IDRC Subsidiaries that, individually or in the aggregate has had, or would
reasonably be expected to have an IDRC Material Adverse Effect, including
writing down the value of capitalized software or inventory or writing off notes
or accounts receivable other than in the ordinary course of business consistent
with past practice;
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<PAGE>
(e) incurred or paid any material liabilities, other than liabilities
incurred or paid in the ordinary course of business consistent with past
practice, discharged or satisfied any material Lien, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or would reasonably be expected to cause an IDRC Material Adverse Effect;
or
(f) taken or been subject to any other action or event that would
have required the consent of TeleSpectrum pursuant to Section 4.1 hereof.
Section 2.10 Indebtedness; Absence of Undisclosed Liabilities. The
IDRC Schedule discloses as of the date hereof all indebtedness for money
borrowed by IDRC or any IDRC Subsidiary including the payee, the original
principal amount of the loan, the current unpaid balance of the loan, the
interest rate and the maturity date. To the Knowledge of the Designated IDRC
Officers, neither IDRC nor any IDRC Subsidiaries have any material indebtedness,
liability or obligation of any kind (whether accrued, absolute, asserted or
unasserted, contingent or otherwise) except (i) as and to the extent reflected,
reserved against or otherwise disclosed on the IDRC Balance Sheet or the IDRC
Schedule, (ii) for liabilities and obligations incurred subsequent to November
30, 1998 in the ordinary course of business, and (iii) liabilities under any
IDRC Contracts (as defined in Section 2.12 hereof) specifically disclosed in the
IDRC Schedule (or not required to be disclosed by the terms of Section 2.12).
Section 2.11 Assets. Except as described in the IDRC Schedule, IDRC
and the IDRC Subsidiaries have good and marketable title to, or in the case of
leased assets, valid leasehold interests in, all their real and personal
properties and assets, including those assets and properties reflected in the
IDRC Balance Sheet in the amounts and categories reflected therein, free and
clear of all Liens, except (a) the lien of current taxes not yet due and
payable, (b) properties, interests, and assets disposed of or converted by IDRC
or any IDRC Subsidiary since November 30, 1998 in the ordinary course of
business consistent with past practice, (c) such secured indebtedness as is
disclosed on the IDRC Balance Sheet covering the properties referred to therein,
and (d) Liens, if any, that do not materially detract from the value, or
interfere with the present or proposed use, of the properties subject thereto
("Permitted Liens"). All buildings, structures, facilities, equipment and other
- -----------------
items of tangible personal property reflected on the IDRC Balance Sheet or
acquired since the date thereof are in good operating condition and repair,
subject to normal wear and maintenance, are useable in the regular and ordinary
course of business of IDRC and the IDRC Subsidiaries and, except where the
failure to conform would not individually or in the aggregate result in an IDRC
Material Adverse Effect, conform to all applicable laws, statutes, ordinances,
codes, rules and regulations and Authorizations (hereinafter defined) relating
to their construction, use and operation.
Section 2.12 Contracts.
(a) The IDRC Schedule lists each written or oral contract, agreement,
arrangement, lease, instrument, mortgage or commitment ("Contract") to which
--------
IDRC or an IDRC Subsidiary is a party or may be bound or to which their
respective properties or assets may be subject ("IDRC Contract") (i) which is
-------------
for the sale of any goods or the provision of any services involving more than
$100,000 individually or in the aggregate with respect to any party or related
parties; (ii) which, if terminated, would
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<PAGE>
result in an IDRC Material Adverse Effect; (iii) which is with any present or
former employee, for the employment or retention as a consultant or independent
contractor of any person, in each case which (A) involves aggregate annual
compensation of more than $100,000 or (B) contains severance obligations; (iv)
which is a severance agreement, program or policy of IDRC or an IDRC Subsidiary
with or relating to its employees; (v) Contracts involving more than $100,000,
the terms of which any of the rights or obligations of a party thereto will be
modified or altered as a result of the transactions contemplated hereby or which
contain change in control provisions; (vi) Contracts involving more than
$100,000 individually or in the aggregate with respect to any party or related
parties and containing a commission, representative, franchise, distributorship,
or sales agency arrangement; (vii) which involves a license, or other
arrangement which relates in whole or in part to any software, patent,
trademark, trade name, service mark or copyright which, if terminated, would
result in an IDRC Material Adverse Effect; (viii) which is an arrangement
limiting or restraining IDRC or any IDRC Subsidiary or any successor thereto
from engaging or competing in any manner or in any business; or (ix) under which
IDRC or any IDRC Subsidiary guarantees the payment or performance by others or
in any way is or will be liable with respect to obligations of any other person,
which obligations individually or in the aggregate exceed $100,000.
(b) All IDRC Contracts are valid and binding and in full force and
effect as to IDRC on the date of this Agreement except to the extent they have
previously expired in accordance with their terms or except to the extent that
their invalidity would not have an IDRC Material Adverse Effect. None of IDRC,
the IDRC Subsidiaries nor, to IDRC's knowledge, any other parties, have violated
any provision of, or committed or failed to perform any act which with notice,
lapse of time or both would constitute a default under the provisions of, any
IDRC Contract, the termination or violation of which, or the default under
which, would reasonably be expected to have an IDRC Material Adverse Effect.
Section 2.13 Insurance. The IDRC Schedule accurately sets forth as of
the day preceding the date hereof all policies of insurance, other than title
insurance policies, held by or on behalf of IDRC and all outstanding claims
under such policies. All such policies of insurance are in full force and
effect, all premiums required to be paid as of the date hereof have been paid in
full, and no notice of cancellation has been received.
Section 2.14 Authorizations; Compliance With Law.
(a) IDRC and the IDRC Subsidiaries hold all licenses, franchises,
certificates, consents, permits, approvals, certificates of public convenience
and necessity, and authorizations ("Authorizations") from all Governmental
--------------
Entities and other persons which are necessary for the lawful conduct of their
respective businesses and their use and occupancy of their assets and properties
in the manner currently conducted, used and occupied, except where the failure
to hold any of the foregoing would not have an IDRC Material Adverse Effect.
All of such Authorizations are valid, in good standing and in full force and
effect and IDRC and the IDRC Subsidiaries have duly performed in all material
respects all of their respective obligations under such Authorizations. No
event has occurred with respect to the Authorizations which permits, or after
notice or lapse of time or both would permit, revocation or termination thereof
other than Authorizations, the termination or revocation of which would not have
an IDRC Material Adverse Effect or would result in any other material impairment
of the rights of the holder
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<PAGE>
of any of the Authorizations, and no terminations thereof have been, to the
knowledge of IDRC, threatened.
(b) IDRC and each IDRC Subsidiary is in compliance with all
applicable laws, statutes, ordinances, codes, rules and regulations of any
Governmental Entities, except where such non-compliance would not have an IDRC
Material Adverse Effect, and IDRC has not received any notice from a
Governmental Entity since March 1, 1996 of any such non-compliance.
Section 2.15 Taxes.
(a) All federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by IDRC or the IDRC
Subsidiaries (the "Tax Returns") on or prior to the date hereof or with respect
-----------
to taxable periods ending on or prior to the date hereof with respect to any
federal, state, local or foreign taxes, assessments, deficiencies, fees and
other governmental charges or impositions (including all income tax,
unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, transfer, franchise, license, school and any
other tax or similar governmental charge or imposition (including interest,
penalties or additions with respect thereto) under laws of the United States or
any state or municipal or political subdivision thereof or any foreign country
or political subdivision thereof ("Taxes") have been timely filed with the
-----
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns are true, correct and
complete in all material respects, to IDRC's knowledge.
(b) All Taxes, including those which are called for by the Tax
Returns, or heretofore or hereafter claimed to be due by any taxing authority
from IDRC and the IDRC Subsidiaries, have been fully paid or properly accrued.
The accruals for Taxes contained in the Balance Sheet are adequate to cover the
tax liabilities of IDRC and the IDRC Subsidiaries as of the Balance Sheet Date
and include adequate provision for all deferred taxes, and nothing has occurred
subsequent to that date to make any of such accruals inadequate with respect to
taxable periods (or partial periods) ending on or prior to the Closing Date.
(c) Neither IDRC nor the IDRC Subsidiaries have received any notice
of assessment or proposed assessment in connection with any Taxes or Tax Returns
and, to IDRC's knowledge, there are not pending tax examinations of or tax
claims asserted against IDRC or the IDRC Subsidiaries or any of their respective
assets or properties. Neither IDRC nor any IDRC Subsidiary has extended, or
waived the application of, any statute of limitations of any jurisdiction
regarding the assessment or collection of any Taxes with respect to taxable
periods (or partial periods) ending on or prior to the Closing Date.
(d) There are no tax liens (other than any lien for current taxes not
yet due and payable) on any of the assets or properties of IDRC or the IDRC
Subsidiaries. IDRC has no knowledge of any basis for any additional assessment
of any Taxes. IDRC and the IDRC Subsidiaries have made all deposits required by
law to be made with respect to employees' withholding and other employment
taxes, including the portion of such deposits relating to taxes imposed upon
IDRC or the IDRC Subsidiaries with respect to taxable periods (or partial
periods) ending on or prior to the Closing Date.
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<PAGE>
Section 2.16 Absence of Litigation; Claims. Except as set forth in
the IDRC Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of IDRC, threatened against IDRC or
any of the IDRC Subsidiaries, or any properties or rights of IDRC or any of the
IDRC Subsidiaries, or, to IDRC's knowledge, with respect to which any director,
officer, employee or agent is or may be entitled to claim indemnification from
IDRC or any IDRC Subsidiary pursuant to IDRC's Certificate of Incorporation or
Bylaws or pursuant to any similar organizational documents of any IDRC
Subsidiary or under any indemnification agreements to which IDRC or any IDRC
Subsidiary is a party before any Governmental Entity, nor is there any
judgement, decree, injunction, rule or order of any Governmental Entity
outstanding against IDRC or any of the IDRC Subsidiaries.
Section 2.17 Employee Benefit Plans; Employment Agreements.
(a) The IDRC Schedule lists all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and all bonus, stock option, stock purchase, incentive, deferred
-----
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements, written or otherwise, for the
benefit of, or relating to, any current or former employee of IDRC, any trade or
business (whether or not incorporated) which is a member of a controlled group
including IDRC or which is under common control with IDRC (an "ERISA Affiliate")
---------------
within the meaning of Section 414 of the Code, or any IDRC Subsidiary, as well
as each plan with respect to which IDRC, an ERISA Affiliate or an IDRC
Subsidiary could incur liability under Section 4069 (if such plan has been or
were terminated) or Section 4212(c) of ERISA (together, the "Employee Plans"),
--------------
excluding Employee Plans under which IDRC has no remaining obligations and any
of the foregoing that are maintained by IDRC under the laws of any foreign
jurisdiction. With respect to each Employee Plan, as applicable, a copy of (i)
each such written Employee Plan (other than those referred to in Section 4(b)(4)
of ERISA), together with all amendments, trust agreements, insurance policies
and service agreements; (ii) the three most recently filed Forms 5500 or 5500
C/R and any financial statements attached thereto; (iii) the most recent IRS
determination letter; (iv) the most recent summary plan description; (v) all
reports submitted within the preceding three years by third-party
administrators, actuaries, investment managers, consultants, or other
independent contractors, and (vi) all notices that were issued within the
preceding three years by the IRS, Department of Labor, the Pension Benefit
Guaranty Corporation, or any other Governmental Entity have been, or, pursuant
to Section (f), will be, provided to TeleSpectrum.
(b) Except as set forth in the IDRC Schedule, (i) none of the
Employee Plans promises or provides health or other benefits after an employee's
or former employee's retirement or other termination of employment except as
required by Section 4980B of the Code and none of the Employee Plans is a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
there has not been any breach of any fiduciary duty, as described in Section 404
of ERISA, or no "prohibited transaction", as such term is defined in Section 406
of ERISA or Section 4975 of the Code, with respect to any Employee Plan, which
could result in any material liability of IDRC, any ERISA Affiliate or any of
the IDRC Subsidiaries; (iii) all Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes
(including ERISA and the Code), orders, or governmental rules and regulations
currently in effect with respect thereto (including all applicable requirements
for notification to participants or the Department of Labor, IRS or Secretary of
the Treasury), all Employee Plans have in all
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material respects been operated at all times in accordance with their terms and
with ERISA and the Code, and IDRC and each of the ERISA Affiliates and the IDRC
Subsidiaries have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party to, any of
the Employee Plans; (iv) each Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the IRS, and
nothing has occurred which may reasonably be expected to impair such
determination; (v) all contributions required to be made by IDRC, an ERISA
Affiliate or an IDRC Subsidiary to any Employee Plan pursuant to Section 412 of
the Code, or the terms of the Employee Plan or any collective bargaining
agreement, have been made on or before their due dates and all benefits accrued
under a funded or unfunded Employee Plan will have been paid, accrued or
otherwise adequately reserved in accordance with GAAP as of the IDRC Balance
Sheet date and all monies withheld from employee paychecks with respect to the
Employee Plans have been transferred to the appropriate Employee Plan in a
timely manner as required by applicable law; (vi) with respect to each Employee
Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the 30 day notice requirement has been
waived under the regulations to Section 4043 of ERISA) nor any event described
in Section 4062, 4063, 4604 or 4041 of ERISA has occurred; and (vii) neither
IDRC nor any ERISA Affiliate has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than liability for premium payments to
the Pension Benefit Guaranty Corporation arising in the ordinary course); (viii)
neither IDRC nor any ERISA Affiliate has incurred any material liability for any
excise, income or other taxes or penalties with respect to any Employee Plan,
and no event has occurred and no circumstance exists that could give rise to any
such liability; (ix) there are no pending or threatened claims against any
Employee Plan (other than routine claims for benefits) or against any fiduciary
of an Employee Plan with respect to such plan, nor, to the knowledge of IDRC, is
there any basis for such a claim; (x) no Employee Plan is presently under audit
or examination (nor has notice been received of a potential audit or
examination) by any Governmental Entity, and no matters are pending with respect
to any Employee Plan under any governmental corrective or remedial program; (xi)
no Employee Plan contains any provision or is subject to any law that would
prohibit the transaction contemplated by this Agreement or that would give rise
to any vesting of benefits, severance, termination or other payments or
liabilities as a result of the transactions contemplated by this Agreement; and
(xii) IDRC has not made a plan or commitment, whether or not legally
enforceable, to create any additional Employee Plan or to modify or change any
existing Employee Plan and all Employee Plans may be amended or terminated
without penalty at any time on or after the Closing; provided that, for purposes
of Clause (xii), vesting under the IDRC 401(k) Plan and the IDRC 1996 Stock
Option Plan shall not be deemed a penalty.
(c) The IDRC Schedule sets forth, or IDRC has provided, a true and
complete list of each current or former employee, officer or director of IDRC or
any of the IDRC Subsidiaries who holds any option to purchase IDRC Common Stock
as of the date hereof, together with the number of shares of IDRC Common Stock
which are subject to such option, the date of grant of such option, the extent
to which such option is vested (or will become vested within six months from the
date hereof, or as a result of, the Merger), the option price of such option (to
the extent determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code (an "ISO"), and the expiration date of such option. The IDRC Schedule
---
also sets forth the total number of such ISOs and such nonqualified options.
-17
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(d) Any amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of IDRC or any of its
affiliates who is a "disqualified individual" (as such term is defined in
Proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Employee Plan
currently in effect would not be characterized as an "excess parachute payment"
(as such term is defined in Section 280G of the Code) and no bonus compensation
has been declared or paid in contemplation of the transactions contemplated by
this Agreement.
(e) Any person classified by IDRC, an ERISA Affiliate or an IDRC
Subsidiary as an independent contractor satisfies and has at all times satisfied
the requirements of applicable law to be so classified, each such person's
compensation has been fully and accurately reported on IRS Form 1099 and there
are no obligations to provide benefits with respect to such person or any other
person providing services through a leasing organization under the Employee
Plans or otherwise.
Section 2.18 Customers. To the knowledge of IDRC, IDRC currently has
good working relationships with all of its significant customers. The IDRC
Schedule contains, with respect to each of the years ended December 31, 1996 and
1997 and the eleven months ended November 30, 1998, a list of the names of the
ten customers that were the largest dollar volume customers of products or
services sold or provided by IDRC for each such year or period. Except as set
forth in the IDRC Schedule, none of such customers that are included in the list
of top ten customers for the 11-month period ended November 30, 1998 has given
IDRC notice terminating or canceling or, to the knowledge of IDRC, has
threatened to (i) terminate or cancel any Contract with IDRC or (ii)
substantially reduce the amount of business conducted with IDRC.
Section 2.19 Labor Matters. There are no controversies pending or, to
the knowledge of IDRC, threatened, between IDRC or any of the IDRC Subsidiaries
or any of their respective employees, which controversies if decided adversely
to IDRC would have an IDRC Material Adverse Effect. Neither IDRC nor any of the
IDRC Subsidiaries is party to any collective bargaining agreement or other labor
agreement with any union or labor organization and no union or labor
organization has been recognized by IDRC nor or any of the IDRC Subsidiaries as
a bargaining representative for employees of IDRC or any of the IDRC
Subsidiaries. To IDRC's knowledge, there are no activities or proceedings of
any labor organization (or representative thereof) or employee group to organize
any of IDRC's employees. In addition, there is no strike, picketing or work
stoppage by, or any lockout of, employees of IDRC or the IDRC Subsidiaries or
any material dispute, slowdown or labor disturbance pending or, to the knowledge
of IDRC, threatened, against or involving IDRC or any of the IDRC Subsidiaries.
Section 2.20 Environmental Matters. To IDRC's knowledge, as of the
date of this Agreement, neither IDRC nor any IDRC Subsidiary or any current or
prior owner of any property leased or controlled by IDRC has received any
written or oral notice from a Governmental Entity or any other person that
alleges that IDRC, any IDRC Subsidiary or such current or prior owner is not, or
has not been, in compliance with any Environmental Law. To IDRC's knowledge,
all property that is leased to, controlled by or used by IDRC or any IDRC
Subsidiary, is free of any material environmental
-18-
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contamination of any nature. For purposes of this Section 2.20: (i)
"Environmental Law" means any federal, state, local or foreign statute, law,
rule or regulation relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is now or hereafter regulated by
any Environmental Law or that is otherwise a danger to health, reproduction or
the environment.
Section 2.21 Intellectual Property. Except as set forth in the IDRC
Schedule, neither IDRC nor any IDRC Subsidiary has any registered copyrights,
patents, trademarks or applications for any registered copyrights, patents or
trademarks. IDRC possesses working copies of all software and firmware as are
necessary for or otherwise used in the current conduct of IDRC or any IDRC
Subsidiary, together with copies of all related manuals and other documentation.
All software, firmware, trademarks, trade secrets, and proprietary technologies,
know-how, and all other inventions, discoveries, improvements, processes and
formulas (secret or otherwise) related to IDRC's and any related documentation
thereto (the "Intellectual Properties") are owned or licensed by IDRC, and no
-----------------------
present or former employee of, or consultant to, IDRC has any proprietary,
commercial or other interest, direct or indirect, in the Intellectual Properties
owned or leased by IDRC, other than licensors of any such Intellectual
Properties. In conducting their respective business as presently conducted,
neither IDRC nor any IDRC Subsidiary is infringing upon or unlawfully or
wrongfully using any patent, trademark, trade name, service mark, copyright or
any other form of intellectual property or trade secret, owned or claimed by
another. Neither IDRC nor any IDRC Subsidiary is in default under, nor has it
received any notice of any claim of infringement or any other claim or
proceeding relating to, any such patent, trademark, trade name, service mark,
copyright, trade secret or any other form of intellectual property or any
agreement relating thereto.
Section 2.22 Registration Statement; Proxy Statement/Prospectus. The
information supplied by IDRC for inclusion in the registration statement of
TeleSpectrum on Form S-4 pursuant to which shares of TeleSpectrum Common Stock
will be registered with the SEC (the "Registration Statement") shall not
----------------------
contain, at the time the Registration Statement is declared effective by the
SEC, any untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary in order to
make the statements in the Registration Statement not misleading. The
information supplied by IDRC for inclusion in the proxy statement/prospectus
(the "Proxy Statement") to be sent to the stockholders of IDRC in connection
---------------
with the special meeting of IDRC's stockholders to consider this Agreement (the
"IDRC Stockholders Meeting"), or alternatively in connection with the
-------------------------
solicitation of consents by the stockholders of IDRC in lieu of a special
meeting (the "IDRC Consent"), and to the stockholders of TeleSpectrum in
------------
connection with the special meeting of TeleSpectrum's stockholders to consider
this Agreement (the "TeleSpectrum Stockholders Meeting"), shall not, at the time
---------------------------------
the Proxy Statement is first mailed to stockholders, at the time of the IDRC
Stockholders Meeting or the IDRC Consent, or at the time of TeleSpectrum
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the IDRC
-19-
<PAGE>
Stockholders Meeting or consents for the IDRC Consent which has become false or
misleading. If at any time prior to the IDRC Stockholders Meeting, the IDRC
Consent or the TeleSpectrum Stockholders Meeting, any event relating to IDRC or
any of its affiliates should be discovered by IDRC which should be set forth in
an amendment to the Registration Statement or a supplement to the Proxy
Statement, IDRC shall promptly inform TeleSpectrum.
Section 2.23 Tax Matters. Neither IDRC nor, to the knowledge of IDRC,
any of its affiliates has taken or agreed to take any action that would prevent
the Merger from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code or make untrue any representation or warranty
contained in IDRC Tax Certificate (as defined in Section 4.14 hereof).
Section 2.24 Affiliates. Except for the persons listed in the IDRC
Schedule there are no persons who, to the knowledge of IDRC, may be deemed to be
affiliates of IDRC under Rule 1-02 of Regulation S-X of the SEC and Rule 145
under the Securities Act.
Section 2.25 Board Action. The Board of Directors of IDRC has
unanimously determined that the transactions contemplated by this Agreement are
in the best interests of IDRC and its stockholders and has resolved to recommend
to such stockholders that they vote in favor thereof. IDRC has been advised by
each of its affiliates, directors and executive officers that each such person
intends to vote its or his shares of IDRC Common Stock in favor of the approval
and adoption of this Agreement.
Section 2.26 Brokers and Finders. Neither IDRC nor any IDRC Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated herein.
Section 2.27 Adequacy of Disclosure. IDRC has made available to
TeleSpectrum copies of all documents listed or referred to in the IDRC Schedule
hereto or referred to herein. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
thereunder. No representation or warranty by IDRC in this Agreement nor the
IDRC Schedule contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact required to be stated herein or
therein or necessary to make any statement herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TELESPECTRUM
TeleSpectrum represents and warrants to IDRC that, except as set forth on a
Disclosure Schedule delivered by TeleSpectrum concurrently with the execution
and delivery of this Agreement (the "TeleSpectrum Schedule"):
---------------------
Section 3.1 Organization and Powers. TeleSpectrum is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. TeleSpectrum has all requisite corporate power and
authority to carry on its business as it has been and is now being conducted and
to own, lease and operate the properties and assets used in connection
therewith. As used in this Agreement,
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<PAGE>
"TeleSpectrum Material Adverse Effect" shall mean any fact, condition, event,
------------------------------------
development or occurrence which, individually or when taken together with all
other such facts, conditions, events, developments or occurrences, would
reasonably be expected to have a material adverse effect on the financial
condition, operating results or business of TeleSpectrum and the TeleSpectrum
Subsidiaries (hereinafter defined), taken as a whole.
Section 3.2 Subsidiaries. The TeleSpectrum Schedule lists each
Subsidiary and Joint Venture of TeleSpectrum, the jurisdiction of its
organization and the amount of its securities outstanding and the owners
thereof. Each Subsidiary of TeleSpectrum (the "TeleSpectrum Subsidiaries") is
-------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each TeleSpectrum Subsidiary has all
requisite power and authority to carry on its business as it has been and is now
being conducted and to own, lease and operate the assets and properties used in
connection therewith. Each TeleSpectrum Subsidiary is duly qualified as a
foreign corporation authorized to do business and is in good standing in every
jurisdiction in which such qualification is required or good standing is
recognized, all of which jurisdictions are disclosed in the TeleSpectrum
Schedule, except where the failure to be so qualified would not have a
TeleSpectrum Material Adverse Effect. Except as set forth in the TeleSpectrum
Schedule, all issued and outstanding shares of capital stock of each
TeleSpectrum Subsidiary, are owned by TeleSpectrum free and clear of Liens.
There are no existing subscriptions, options, warrants, convertible securities,
calls, commitments, agreements, conversion rights or other rights of any
character (contingent or otherwise) calling for or requiring the issuance,
transfer, sale or other disposition of any shares of the capital stock of any
TeleSpectrum Subsidiary, or calling for or requiring the issuance of any
securities or rights convertible into or exchangeable for shares of capital
stock of any TeleSpectrum Subsidiary, nor is TeleSpectrum or any TeleSpectrum
Subsidiary subject to any obligation (contingent or otherwise) to repurchase,
redeem or otherwise acquire shares of capital stock of any TeleSpectrum
Subsidiary, in any case except as set forth in the TeleSpectrum Schedule.
Except for the TeleSpectrum Subsidiaries and the Joint Ventures of TeleSpectrum
or as set forth in the TeleSpectrum Schedule, neither TeleSpectrum nor any
TeleSpectrum Subsidiary directly or indirectly (i) owns or controls any shares
of any corporation nor has any voting securities of, or economic interest in,
either of record beneficially or equitably, in any association, partnership,
limited liability company, joint venture or other legal entity, or (ii) is a
general partner of any partnership.
Section 3.3 Capital Stock. As of the date hereof, TeleSpectrum has
authorized capital stock consisting of 200,000,000 shares of TeleSpectrum
Common Stock and 5,000,000 shares of Preferred Stock, par value $.01 per share
("TeleSpectrum Preferred Stock"). As of the date hereof: (i) 25,771,449 shares
----------------------------
of TeleSpectrum Common Stock are issued and outstanding, (ii) no shares of
TeleSpectrum Preferred Stock are issued and outstanding, (iii) no shares of
TeleSpectrum Common Stock or TeleSpectrum Preferred Stock are held as treasury
shares, (iv) 3,863,654 shares of the TeleSpectrum Common Stock are underlying
outstanding stock options granted under the TeleSpectrum's 1996 Equity
Compensation Plan (the "TeleSpectrum Stock Plan"), (v) 236,346 shares of the
-----------------------
TeleSpectrum Common Stock were reserved for future issuance of options to be
granted in the future under the TeleSpectrum Stock Plan, and (vi) 2,426,733
shares of TeleSpectrum Common Stock were reserved for issuance upon the exercise
of outstanding warrants and options not granted under the TeleSpectrum Stock
Plan. Since September 30, 1998, (i) no additional shares of capital stock have
been reserved for issuance by TeleSpectrum and (ii) the only issuances of shares
of capital stock of TeleSpectrum have been issuances of
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TeleSpectrum Common Stock upon the exercise of outstanding stock options or
warrants. All of the issued and outstanding shares have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable, and were
issued in compliance with all applicable Federal and state securities laws. No
shares of capital stock issued by TeleSpectrum are or were, at the time of their
issuance subject to preemptive rights. There are no existing subscriptions,
options, warrants, calls, commitments, agreements, conversion rights or other
rights of any character (contingent or otherwise) to purchase or otherwise
acquire from TeleSpectrum at any time, or upon the happening of any stated
event, any shares of the capital stock of TeleSpectrum whether or not presently
issued or outstanding, except as set forth in the TeleSpectrum Schedule or as
disclosed in this Section 3.3. All of the Merger Shares and Warrant Shares have
been duly authorized and, upon issuance in accordance with this Agreement and
the terms of the Warrants, will be validly issued, fully paid and nonassessable
and will be issued in compliance with all federal and state securities laws. All
of the Merger Shares and upon issuance, the Warrant Shares, will be freely
tradable except for restrictions that may be imposed on Affiliates (as such term
is defined in Rule 144 under the Securities Act) by Rules 144 or 145 of the
Securities Act or the IDRC Stockholder Support Agreement.
Section 3.4 Certificate of Incorporation, Bylaws, Minute Books and
Records. The copies of the Certificate of Incorporation and all amendments
thereto and of the Bylaws, as amended, of TeleSpectrum and the TeleSpectrum
Subsidiaries which have been delivered to IDRC are true, correct and complete
copies thereof as in effect on the date hereof. The minute books of
TeleSpectrum and the TeleSpectrum Subsidiaries which have been made available
for inspection contain minutes, which are accurate and complete in all material
respects, of all meetings and consents in lieu of meetings of the Board of
Directors (and any committee thereof) and of the stockholders of TeleSpectrum
and the TeleSpectrum Subsidiaries since the respective dates of incorporation.
Section 3.5 Authority; Binding Effect. TeleSpectrum has all requisite
corporate power and authority to execute and deliver this Agreement and, subject
to approval and adoption of this Agreement and approval of the Merger by a
majority of the shares of TeleSpectrum Common Stock of record outstanding on the
record date for the TeleSpectrum Stockholders' Meeting (the "Required
--------
TeleSpectrum Stockholder Approval"), to consummate the transactions contemplated
- ---------------------------------
hereby. All necessary action, corporate or otherwise, required to have been
taken by or on behalf of TeleSpectrum by applicable law and by TeleSpectrum's
Certificate of Incorporation and Bylaws to authorize (i) the approval, execution
and delivery by TeleSpectrum of this Agreement and (ii) the performance of
TeleSpectrum's obligations under this Agreement and, subject to obtaining the
Required TeleSpectrum Stockholder Approval, the consummation of the transactions
contemplated hereby has been taken or will have been taken prior to the Closing.
This Agreement constitutes a valid and binding agreement of TeleSpectrum,
enforceable against TeleSpectrum in accordance with its terms.
Section 3.6 Conflict with Other Agreements; Approvals. The execution
and delivery of this Agreement by TeleSpectrum does not, and the consummation of
the transactions contemplated hereby will not, (i) violate or conflict with the
Certificate of Incorporation or Bylaws of TeleSpectrum or the comparable
organizational documents of any TeleSpectrum Subsidiary, (ii) constitute a
breach or default (or an event that with notice or lapse of time or both would
become a breach or default) or give rise to any Lien, third party right of
termination, cancellation, material modification or acceleration, or loss of any
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<PAGE>
benefit, under any contract to which TeleSpectrum or any TeleSpectrum Subsidiary
is a party or by which it is bound, or (iii) subject to the consents, approvals,
orders, authorizations, filings, declarations and registrations specified in
Section 3.7 or in the TeleSpectrum Schedule in response thereto, conflict with
or result in a violation of any permit, concession, franchise or license or any
law, rule or regulation applicable to TeleSpectrum or any of the TeleSpectrum
Subsidiaries or any of their properties or assets, except, in the case of
clauses (ii) and (iii), for any such breaches, defaults, Liens, third party
rights, cancellations, modifications, accelerations or losses of benefits,
conflicts or violations which would not have a TeleSpectrum Material Adverse
Effect and do not impair the ability of the TeleSpectrum to perform its
obligations under this Agreement or prevent or delay the consummation of any of
the transactions contemplated hereby.
Section 3.7 Governmental Consents and Approvals. Except as set forth
in the TeleSpectrum Schedule, neither the execution and delivery of this
Agreement by TeleSpectrum nor the consummation by TeleSpectrum of the
transactions contemplated hereby will require any consent, approval, order,
authorization, or permit of, or filing with or notification to, any Governmental
Entity, except (a) the filing of the Registration Statement with the SEC in
accordance with the Securities Act and the entry of an order by the SEC
permitting such Registration Statement to become effective, and compliance with
applicable state securities laws, (b) compliance with applicable securities
laws, (c) the filing of the Proxy Statement and related proxy materials with the
SEC in accordance with the Exchange Act, (d) the filing of a premerger
notification report form and expiration or termination of the waiting period
under the HSR Act, (e) the filing and recording of the Certificate of Merger
with the Delaware Secretary of State in accordance with the DGCL, and (f) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings which if not made or obtained, would have a TeleSpectrum Material
Adverse Effect.
Section 3.8 SEC Reports. TeleSpectrum has filed all required forms,
reports and documents with the SEC since September 30, 1996 (collectively, the
"TeleSpectrum's SEC Reports"), including TeleSpectrum's Annual Report on Form
- ---------------------------
10-K for the year ended December 31, 1997 and TeleSpectrum's Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 31, 1998, June 30, 1998 and
September 30, 1998. TeleSpectrum's SEC Reports have complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act. As of their respective dates, none of TeleSpectrum's SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. TeleSpectrum has
heretofore delivered or made available to IDRC, in the form filed with the SEC,
all of TeleSpectrum's SEC Reports.
Section 3.9 Financial Statements. The (a) consolidated balance sheets
of TeleSpectrum and the TeleSpectrum Subsidiaries at December 31, 1997 and 1996
and the related consolidated statements of operations, stockholders' equity and
cash flows for the year ended December 31, 1997 and for the period from April
26, 1996 (Inception) to December 31, 1996, together with the notes thereto,
audited by Arthur Andersen LLP; and (b) unaudited consolidated balance sheets of
TeleSpectrum and the TeleSpectrum Subsidiaries at September 30, 1998 and 1997
and the related consolidated statements of operations, stockholders' equity and
cash flows for the nine-month periods ended September 30, 1998 and 1997, have
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been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as may be indicated in the notes therein). Such
balance sheets, including the related notes, fairly present, in all material
respects, the consolidated financial position, assets and liabilities (whether
accrued, absolute, contingent or otherwise) of TeleSpectrum and the TeleSpectrum
Subsidiaries at the dates indicated and such consolidated statements of
operations, stockholders' equity and cash flows fairly present the consolidated
results of operations, stockholders' equity and cash flows of TeleSpectrum and
the TeleSpectrum Subsidiaries for the periods indicated (except that for the
absence of notes with respect to the unaudited financial statements). The
unaudited consolidated financial statements as of and for the nine-month period
ending September 30, 1998 contain all adjustments, which are solely of a normal
recurring nature, necessary to present, in all material respects, fairly the
consolidated financial position at September 30, 1998, and the results of
operations, stockholders' equity and cash flows for the nine-month period then
ended. (The unaudited consolidated balance sheet of TeleSpectrum and the
TeleSpectrum Subsidiaries at September 30, 1998 described above is referred to
herein as the "TeleSpectrum Balance Sheet.")
--------------------------
Section 3.10 Absence of Certain Changes. Except as described in the
TeleSpectrum Schedule, since September 30, 1998, TeleSpectrum and the
TeleSpectrum Subsidiaries have conducted their business solely in the ordinary
course consistent with past practice. Except as otherwise disclosed in the
TeleSpectrum Schedule or in TeleSpectrum's SEC Reports, since September 30,
1998, TeleSpectrum and the TeleSpectrum Subsidiaries have not
(a) suffered any TeleSpectrum Material Adverse Effect;
(b) been subject to any other events or conditions of any character
that would materially impair the ability of TeleSpectrum to perform its
obligations under this Agreement or prevent or delay the consummation of any of
the transactions contemplated hereby;
(c) made any material change to their respective accounting methods,
principles or practices, except as required by subsequent changes in GAAP;
(d) been subject to any revaluation of any assets of TeleSpectrum or
any of the TeleSpectrum Subsidiaries that, individually or in the aggregate has
had, or would reasonably be expected to have a TeleSpectrum Material Adverse
Effect, including writing down the value of capitalized software or inventory or
writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practice;
(e) incurred or paid any material liabilities, other than liabilities
incurred or paid in the ordinary course of business consistent with past
practice, discharged or satisfied any material Lien, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or would reasonably be expected to cause a TeleSpectrum Material Adverse
Effect; or
(f) taken or been subject to any other action or event that would
have required the consent of IDRC pursuant to Section 4.2 hereof.
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<PAGE>
Section 3.11 Indebtedness; Absence of Undisclosed Liabilities. The
TeleSpectrum Schedule discloses as of the date hereof all indebtedness for money
borrowed of TeleSpectrum or any TeleSpectrum Subsidiary including the payee,
the original principal amount of the loan, the current unpaid balance of the
loan, the interest rate and the maturity date. Neither TeleSpectrum nor any
TeleSpectrum Subsidiaries have any material indebtedness, liability or
obligation of any kind (whether known or unknown, accrued, absolute, asserted or
unasserted, contingent or otherwise) except (i) as and to the extent reflected,
reserved against or otherwise disclosed on the TeleSpectrum Balance Sheet or the
TeleSpectrum Schedule, (ii) for liabilities and obligations incurred subsequent
to September 30, 1998 in the ordinary course of business, and (iii) liabilities
under any Contracts of TeleSpectrum.
Section 3.12 Contracts. All contracts, documents, instruments or
arrangements that are of a nature required to be filed as an exhibit to the
TeleSpectrum SEC Reports under the Exchange Act (the "TeleSpectrum SEC
----------------
Contracts") have been filed as an exhibit thereto. All TeleSpectrum SEC
Contracts are valid and binding obligations of TeleSpectrum enforceable against
TeleSpectrum in accordance with their terms. None of TeleSpectrum, the
TeleSpectrum Subsidiaries nor, to TeleSpectrum's knowledge, any other parties,
have violated any provisions of, or committed or failed to perform any act which
with notice, lapse of time or both would constitute a default under the
provisions of, any TeleSpectrum SEC Contract, the termination or violation of
which, or the default under which, would reasonably be expected to have a
TeleSpectrum Material Adverse Effect.
Section 3.13 Absence of Litigation; Claims. Except as set forth in
the TeleSpectrum Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of TeleSpectrum, threatened against
TeleSpectrum or any of the TeleSpectrum Subsidiaries, or any properties or
rights of TeleSpectrum or any of the TeleSpectrum Subsidiaries, or with respect
to which any director, officer, employee or agent is or may be entitled to claim
indemnification from TeleSpectrum or any TeleSpectrum Subsidiary pursuant to
TeleSpectrum's certificate of incorporation or Bylaws or pursuant to any similar
organizational documents of any TeleSpectrum Subsidiary or under any
indemnification agreements to which TeleSpectrum or any TeleSpectrum Subsidiary
is a party before any Governmental Entity, nor is there any judgement, decree,
injunction, rule or order of any Governmental Entity outstanding against
TeleSpectrum or any of the TeleSpectrum Subsidiaries.
Section 3.14 Tax Matters. The representations and warranties
contained in the TeleSpectrum Tax Certificate (as defined in Section 4.14
hereof) are true and correct in all material respects. Neither TeleSpectrum
nor, to the knowledge of TeleSpectrum, any of its affiliates has taken or agreed
to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code or
make untrue any presentation or warranty contained in the TeleSpectrum Tax
Certificate.
Section 3.15 Affiliates. Except for the persons listed in the
TeleSpectrum Schedule, there are no persons who, to the knowledge of
TeleSpectrum, may be deemed to be affiliates of TeleSpectrum under Rule 1-02 of
Regulation S-X of the SEC.
Section 3.16 Registration Statement; Proxy Statement/Prospectus. The
information supplied by TeleSpectrum for inclusion in the Registration Statement
shall not contain, at the time the Registration
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<PAGE>
Statement is declared effective by the SEC, any untrue statement of a material
fact or omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements in the
Registration Statement not misleading. The information supplied by TeleSpectrum
for inclusion in the Proxy Statement to be sent to the stockholders of
TeleSpectrum in connection with the TeleSpectrum Stockholders Meeting shall not,
at the time the Proxy Statement is first mailed to stockholders or at the time
of the TeleSpectrum Stockholders Meeting, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading or omit to state any material fact necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
TeleSpectrum Stockholders Meeting which has become false or misleading.
Section 3.17 State Takeover Statutes. The TeleSpectrum Board has
approved the Merger and this Agreement and such approval is sufficient to render
inapplicable to the Merger and this Agreement the provisions of Section 203 of
the DGCL to the extent, if any, that such section is applicable to the Merger
and this Agreement. To TeleSpectrum's knowledge, no other state takeover
statute or similar statute or regulation applies to or purports to apply to the
Merger or this Agreement.
Section 3.18 Board Action. The Board of Directors of TeleSpectrum,
has unanimously determined that the transactions contemplated by this Agreement
are in the best interests of TeleSpectrum and its stockholders and has resolved
to recommend to such stockholders that they vote in favor thereof. TeleSpectrum
represents and warrants that it has been advised by each of its directors and
executive officers that each such person intends to vote his shares of
TeleSpectrum Common Stock in favor of the approval and adoption of this
Agreement.
Section 3.19 Brokers and Finders. Neither TeleSpectrum nor any of its
respective officers, directors or employees has engaged any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated herein, except that TeleSpectrum
has retained J. P. Morgan Securities, Inc. as its financial advisor pursuant to
the terms of an engagement letter, a copy of which has previously been furnished
to IDRC.
Section 3.20 Adequacy of Disclosure. TeleSpectrum has made available
to IDRC copies of all documents listed or referred to in the TeleSpectrum
Schedule hereto or referred to herein. Such copies are true and complete and
include all amendments, supplements and modifications thereto or waivers
currently in effect thereunder. No representation or warranty by TeleSpectrum
in this Agreement nor the TeleSpectrum Schedule contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact required to be stated herein or therein or necessary to make any statement
herein or therein not misleading.
ARTICLE IV
COVENANTS
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Section 4.1 Conduct of IDRC's Business. IDRC covenants and agrees
that, between the date of this Agreement and the Effective Time, except to the
extent (i) TeleSpectrum shall otherwise consent in writing, (ii) as otherwise
expressly set forth in the IDRC Schedule, or (iii) as may be expressly
contemplated by this Agreement, the business of IDRC and the IDRC Subsidiaries
shall be conducted only in, and such entities shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and IDRC and the IDRC Subsidiaries will use their commercially
reasonable efforts to preserve substantially intact their business
organizations, to keep available the services of their present officers,
employees and consultants that are integral to the operation of their businesses
as presently conducted and to preserve their present relationships with
customers, suppliers and other persons with which IDRC and the IDRC Subsidiaries
have significant business relations. Without limiting the generality of the
foregoing, except to the extent (i) TeleSpectrum shall otherwise consent in
writing, (ii) as otherwise expressly set forth in the IDRC Schedule, or (iii) as
may be expressly contemplated by this Agreement, IDRC will not, and will not
permit any of the IDRC Subsidiaries, directly or indirectly, to:
(a) (i) amend or propose to amend its Certificate of Incorporation or
ByLaws; (ii) split, combine or reclassify any outstanding shares of its capital
stock, or declare, set aside or pay any dividend payable in cash, stock,
property or otherwise with respect to such shares; (iii) redeem, purchase,
acquire or offer to acquire any shares of its capital stock; (iv) issue, sell,
pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its capital
stock, or of any class or other property or assets whether pursuant to any
rights agreement, stock option plans described in the IDRC Schedule or
otherwise, provided that IDRC may issue shares of IDRC Common Stock pursuant to
options and warrants outstanding as of the date of this Agreement or issued
after the date of this Agreement and prior to the Effective Time upon the prior
written consent of TeleSpectrum, and grant additional stock options in the
ordinary course of business and consistent with past practice; (v) accelerate,
amend or change the period of exerciseability of options or restricted stock
granted under any IDRC Employee Plans or authorize cash payments in exchange for
any options granted under any of such plans except as required by the terms of
such plans or any related agreements in effect as of the date of this Agreement,
or (vi) enter into any contract, agreement, commitment or arrangement with
respect to any of the matters set forth in this paragraph (a);
(b) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership, limited liability company or other
business organization or division thereof or make any equity investments
therein; (ii) incur any indebtedness for borrowed money or issue any debt
securities except in the ordinary course of business and consistent with past
practice, (iii) make any commitments or agreements for capital expenditures or
capital additions except in the ordinary course of business and consistent with
past practice; (iv) enter into or modify any material IDRC Contract except in
the ordinary course of business and consistent with past practice provided that
such amendments shall not, individually or in the aggregate, have or result in
an IDRC Material Adverse Effect; (v) terminate, modify, assign, waive, release
or relinquish any material contract rights or amend any material rights or
claims not in the ordinary course of business, except as expressly provided
herein, or where such actions, individually or in the aggregate, will not have
or result in an IDRC Material Adverse Effect; or (vi) enter into any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this paragraph (b);
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(c) (i) initiate any litigation or arbitration proceeding, unless the
failure to initiate such litigation or arbitration proceeding would materially
prejudice the rights of IDRC to initiate such litigation or arbitration
proceeding in the future, (ii) revalue any of its assets, including writing off
notes or accounts receivable, other than in the ordinary course of business,
(iii) make any material change to their respective accounting methods,
principles or practices except in response to any changes in GAAP which are
adopted after the date of this Agreement, or (iv) settle or compromise any Tax
liability, or prepare or file any Tax Return inconsistent with past practice or,
on any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods;
(d) (i) grant any increase in the salary or other compensation of its
employees or grant any bonus to any employee, other than regularly scheduled
raises or bonuses consistent with past practice or as otherwise required
pursuant to existing employment agreements or other bonus practices or policies
of IDRC or any IDRC Subsidiary, or enter into any employment agreement or make
any loan to or enter into any material transaction of any other nature with any
officer or employee; (ii) take any action to institute any new severance or
termination pay practices with respect to any directors, officers or employees
or to increase the benefits payable under its severance or termination pay
practices; or (iii) adopt or amend, in any respect, except as may be required by
applicable law or regulation, any bonus, profit sharing, compensation, stock
option, restricted stock, pension, retirement, deferred compensation, employment
or other employee benefit plan, agreement, trust, fund, plan or arrangement for
the benefit or welfare of any directors, officers or employees;
(e) take any action which would cause its representations and
warranties contained herein, if made on and as of the date of such action,
untrue or incorrect in any respect such that the condition contained in Section
5.3(a) would not be satisfied as a result thereof; or
(f) take (and will use reasonable efforts to prevent any affiliate of
IDRC from taking) or agree in writing or otherwise to take, (i) any of the
actions described in this Section 4.l, (ii) any action which could prevent IDRC
from performing, or cause IDRC not to perform, its obligations under this
Agreement such that the condition contained in Section 5.3(b) would not be
satisfied as a result thereof, or (iii) any action that would cause the Merger
not to be treated as a reorganization within the meaning of Section 368(a) of
the Code.
Section 4.2 TeleSpectrum's Undertakings. TeleSpectrum covenants and
agrees that, between the date of this Agreement and the Effective Time, except
to the extent (i) IDRC shall otherwise consent in writing, (ii) as otherwise
expressly set forth in the TeleSpectrum Schedule, or (iii) as may be expressly
contemplated by this Agreement, the business of TeleSpectrum and the
TeleSpectrum Subsidiaries shall be conducted only in, and such entities shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and TeleSpectrum and the TeleSpectrum
Subsidiaries will use their commercially reasonable efforts to preserve
substantially intact their business organizations, to keep available the
services of their present officers, employees and consultants that are integral
to the operation of their businesses as presently conducted and to preserve
their present relationships with customers, suppliers and other persons with
which TeleSpectrum and the TeleSpectrum Subsidiaries have
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significant business relations. Without limiting the generality of the
foregoing, except to the extent (i) IDRC shall otherwise consent in writing,
(ii) as otherwise expressly set forth in the TeleSpectrum Schedule, or (iii) as
may be expressly contemplated by this Agreement, TeleSpectrum will not, and will
not permit any of the TeleSpectrum Subsidiaries, directly or indirectly, to:
(a) (i) amend or propose to amend its Certificate of Incorporation or
ByLaws; (ii) split, combine or reclassify any outstanding shares of its capital
stock, or declare, set aside or pay any dividend payable in cash, stock,
property or otherwise with respect to such shares; (iii) redeem, purchase,
acquire or offer to acquire any shares of its capital stock; provided that
TeleSpectrum may acquire shares of TeleSpectrum Common Stock upon the
consummation of its planned merger (the "CRW Merger"), through a TeleSpectrum
----------
Subsidiary, with CRW Financial, Inc., a Delaware corporation ("CRW"), pursuant
---
to the terms of that certain Agreement and Plan of Merger dated as of September
4, 1998 by and among TeleSpectrum, a TeleSpectrum Subsidiary and CRW (the "CRW
---
Agreement"); (iv) make any material amendments to, or waive any material
- ---------
conditions to closing under, the CRW Agreement; (v) issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any additional shares
of, or securities convertible or exchangeable for, or any options, warrants or
rights of any kind to acquire any shares of, its capital stock, or of any class
or other property or assets whether pursuant to any rights agreement, stock
option plans described in the TeleSpectrum Schedule or otherwise, provided that
TeleSpectrum may issue shares of TeleSpectrum Common Stock pursuant to options
and warrants outstanding as of the date of this Agreement or issued after the
date of this Agreement, grant additional stock options in the ordinary course of
business and issue shares of TeleSpectrum Common Stock in the CRW Merger; (vi)
accelerate, amend or change the period of exerciseability of options or
restricted stock granted under or outside of any of the TeleSpectrum Stock Plans
or authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements in
effect as of the date of this Agreement, or (vii) enter into any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this paragraph (a) other than the CRW Agreement;
(b) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation (other than CRW), partnership, limited liability company
or other business organization or division thereof; (ii) incur any indebtedness
for borrowed money or issue any debt securities except in the ordinary course of
business and consistent with past practice, (iii) make any commitments or
agreements for capital expenditures or capital additions except in the ordinary
course of business and consistent with past practice; (iv) enter into or modify
any TeleSpectrum Contract except in the ordinary course of business and
consistent with past practice provided that such amendments shall not,
individually or in the aggregate, have or result in a TeleSpectrum Material
Adverse Effect; (v) terminate, modify, assign, waive, release or relinquish any
material contract rights or amend any material rights or claims not in the
ordinary course of business, except as expressly provided herein, or where such
actions, individually or in the aggregate, will not have or result in a
TeleSpectrum Material Adverse Effect; or (vi) enter into any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this paragraph (b) other than the CRW Agreement;
(c) (i) initiate any litigation or arbitration proceeding, unless the
failure to initiate such litigation or arbitration proceeding would materially
prejudice the rights of TeleSpectrum to initiate
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such litigation or arbitration proceeding in the future, (ii) revalue any of its
assets, including writing off notes or accounts receivable, other than in the
ordinary course of business, or (iii) make any material change to their
respective accounting methods, principles or practices except in response to any
changes in GAAP which are adopted after the date of this Agreement;
(d) take any action which would cause its representations and
warranties contained herein, if made on and as of the date of such action,
untrue or incorrect in any respect such that the condition contained in Section
5.2(a) would not be satisfied as a result thereof; or
(e) take (and will use reasonable efforts to prevent any affiliate of
TeleSpectrum from taking) or agree in writing or otherwise to take, (i) any of
the actions described in this Section 4.2, (ii) any action which could prevent
TeleSpectrum from performing, or cause TeleSpectrum not to perform, its
obligations under this Agreement such that the condition contained in Section
5.2(b) would not be satisfied as a result thereof, or (iii) any action that
would cause the Merger not to be treated as a reorganization within the meaning
of Section 368(a) of the Code.
Section 4.3 Updating of Schedules.
(a) IDRC shall promptly disclose to TeleSpectrum any information
contained in its representations and warranties or in the IDRC Schedule which,
because of an event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the Closing Date;
provided, however, that none of such disclosures shall be deemed to modify,
amend or supplement the representations and warranties of IDRC or in the IDRC
Schedule hereto for the purposes of Articles V or VII hereof, unless
TeleSpectrum shall have consented thereto in writing.
(b) TeleSpectrum shall promptly disclose to IDRC any information
contained in its representations and warranties or in the TeleSpectrum Schedule
which, because of an event occurring after the date hereof, is incomplete or is
no longer correct as of all times after the date hereof until the Closing Date;
provided, however, that none of such disclosures shall be deemed to modify,
amend or supplement the representations and warranties of TeleSpectrum or in the
TeleSpectrum Schedule hereto for the purposes of Articles V or VII hereof,
unless IDRC shall have consented thereto in writing.
Section 4.4 Access to Information.
(a) Between the date of this Agreement and the Effective Time, IDRC
will (a) give TeleSpectrum and its authorized representatives reasonable access,
during regular business hours upon reasonable notice, to all offices, warehouses
and other facilities and to all of its books and records, (b) permit
TeleSpectrum to make such reasonable inspections as it may require, and (c)
cause its officers and those of its subsidiaries to furnish TeleSpectrum with
such financial and operating data and other information with respect to the
business and properties of IDRC, as TeleSpectrum may from time to time
reasonably request and as IDRC may have on hand or be able to produce without
hardship; provided, however, that (i) TeleSpectrum shall ensure that no
representative of TeleSpectrum interferes with or otherwise disrupts the
business or operations of IDRC while exercising the rights provided under this
Section 4.4(a), and (ii) IDRC shall not be required to permit any inspection, or
to disclose any information,
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<PAGE>
that in the reasonable judgment of IDRC, would (a) result in the disclosure of
trade secrets of third parties, (ii) violate any obligation of IDRC with respect
to confidentiality, (iii) jeopardize protections afforded IDRC under the
attorney-client privilege or the attorney work product doctrine, or (iv)
materially interfere with the conduct of IDRC's business. All information
obtained by TeleSpectrum and its representatives pursuant to this Section 4.4(a)
shall be treated as confidential pursuant to the existing confidentiality
agreement between the parties.
(b) Between the date of this Agreement and the Closing Date,
TeleSpectrum will (a) give IDRC and its authorized representatives reasonable
access, during regular business hours upon reasonable notice, to all offices,
warehouses and other facilities and to all of its books and records, (b) permit
IDRC to make such reasonable inspections as it may require, and (c) cause its
officers and those of its subsidiaries to furnish IDRC with such financial and
operating data and other information with respect to the business and properties
of TeleSpectrum, as IDRC may from time to time reasonably request and as
TeleSpectrum may have on hand or be able to produce without hardship; provided,
however, that (i) IDRC shall ensure that no representative of IDRC interferes
with or otherwise disrupts the business or operations of TeleSpectrum while
exercising the rights provided under this Section 4.4(b), and (ii) TeleSpectrum
shall not be required to permit any inspection, or to disclose any information,
that in the reasonable judgment of TeleSpectrum, would (a) result in the
disclosure of trade secrets of third parties, (ii) violate any obligation of
TeleSpectrum with respect to confidentiality, (iii) jeopardize protections
afforded TeleSpectrum under the attorney-client privilege or the attorney work
product doctrine, or (iv) materially interfere with the conduct of
TeleSpectrum's business. All information obtained by IDRC and its
representatives pursuant to this Section 4.4(b) shall be treated as confidential
pursuant to the existing confidentiality agreement between the parties.
Section 4.5 Stockholder Vote; Proxy Statement.
(a) As promptly as practicable after the date hereof, TeleSpectrum
shall take all action necessary in accordance with Rules 14a-1 et. seq. of the
Exchange Act, the DGCL, the rules of the NMS and its Certificate of
Incorporation and Bylaws to call, give notice of, convene and hold the
TeleSpectrum Stockholders' Meeting as promptly as practicable (unless such date
shall be delayed due to circumstances reasonably beyond the control of the
parties) to consider and vote upon the approval and adoption of this Agreement
and for such other purposes as may be necessary or desirable.
(b) As promptly as practicable after the date hereof, IDRC shall take
all action necessary in accordance with the DGCL and its Certificate of
Incorporation and Bylaws to call, give notice of, convene and hold the IDRC
Stockholders' Meeting or obtain the IDRC Consent as promptly as practicable
(unless such date shall be delayed due to circumstances reasonably beyond the
control of the parties) to consider and vote upon the approval and adoption of
this Agreement and for such other purposes as may be necessary or desirable.
(c) As promptly as practicable after the date hereof, IDRC and
TeleSpectrum shall jointly prepare and file with the SEC preliminary proxy
materials of TeleSpectrum under the Exchange Act with respect to the Merger, and
a preliminary prospectus of TeleSpectrum covering the Merger Shares, the
Warrants and the Warrant Shares to be issued in the Merger and will thereafter
use their respective best
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<PAGE>
efforts to respond to any comments of the SEC with respect thereto and to cause
the Registration Statement to become effective, and the Proxy Statement and
proxy to be mailed to TeleSpectrum's stockholders, as promptly as practicable.
The Proxy Statement shall include the unqualified recommendation of
TeleSpectrum's Board of Directors that TeleSpectrum's stockholders vote in favor
of the approval and adoption of this Agreement.
(d) As promptly as practicable after the date hereof, IDRC and
TeleSpectrum shall prepare and file any other filings required to be filed by
each under the Exchange Act or any other federal or state securities laws
relating to the Merger and the transactions contemplated hereby (collectively
"Other Filings") and will use their respective reasonable best efforts to
- --------------
respond to any comments of the SEC or any other appropriate government official
with respect thereto.
(e) IDRC and TeleSpectrum shall cooperate with each other and provide
to each other all information necessary in order to prepare, amend or
supplement, to the extent required by the Securities Act, the Registration
Statement, the Proxy Statement and the Other Filings (collectively, the "SEC
---
Transaction Filings").
- -------------------
(f) TeleSpectrum will notify IDRC promptly of the receipt of any
comments from the SEC or its staff or any other appropriate government official
and of any requests by the SEC or its staff or any other appropriate government
official for amendments or supplements to any of the SEC Transaction Filings or
for additional information and will supply IDRC with copies of all
correspondence between TeleSpectrum and any of its representatives and the SEC.
If at any time prior to the Effective Time, any event shall occur that should be
set forth in an amendment of, or a supplement to, any of the SEC Transaction
Filings, IDRC and TeleSpectrum agree promptly to prepare and file such amendment
or supplement and to distribute such amendment or supplement as required by
applicable law, including, in the case of an amendment or supplement to the
Proxy Statement, mailing such supplement or amendment to IDRC's and
TeleSpectrum's stockholders. TeleSpectrum will provide IDRC with a reasonable
opportunity to review and comment on any amendment or supplement to the
Registration Statement or the Proxy Statement proposed to be made by it prior to
filing such amendment or supplement with the SEC. No amendment or supplement to
the information supplied by IDRC for inclusion in the Proxy Statement shall be
made without the approval of IDRC, which approval shall not be unreasonably
withheld or delayed. TeleSpectrum shall not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale by
stockholders of IDRC who may be affiliates of IDRC or TeleSpectrum pursuant to
Rule 145 under the Securities Act.
(g) The information provided and to be provided by IDRC and
TeleSpectrum for inclusion or incorporation by reference in the SEC Transaction
Filings shall at the time such information was supplied be true and correct in
all material respects and shall not omit to state any material fact required to
be stated therein or necessary in order to make such information not false or
misleading, and IDRC and TeleSpectrum each agree to promptly correct any such
information provided by it for use in the SEC Transaction Filings that shall
have become false or misleading. The SEC Transaction Filings, when filed with
the SEC or any appropriate government official, shall comply as to form in all
material respects with all applicable requirements of law.
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Section 4.6 NMS Application. TeleSpectrum shall as promptly as
practicable following the date hereof apply for approval for listing of the
TeleSpectrum Common Stock to be issued (i) pursuant to the Merger, (ii) upon
exercise of the New Options and (iii) upon exercise of the Warrants on the NMS
upon official notice of issuance.
Section 4.7 Reasonable Best Efforts. Each of the parties hereto agrees
to use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws, statutes, ordinances, codes, rules and
regulations to consummate and make effective the transactions contemplated by
this Agreement in the most expeditious manner practicable, including the
satisfaction of all conditions to the Merger, and to consummate the Merger as
promptly as practicable, but in no event later than July 31, 1999.
Section 4.8 Public Announcements. No party hereto shall make any
public announcements or otherwise communicate with any news media with respect
to this Agreement or any of the transactions contemplated hereby without prior
consultation with the other parties as to the timing and contents of any such
announcement as may be reasonable under the circumstances; provided, that
nothing contained herein shall prevent any party from promptly making all
filings with Governmental Entities and all disclosure as may, in its good faith
judgment, be required or advisable in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby
(in which case the disclosing party, to the extent practicable, shall advise the
other parties and provide them with a copy of the proposed disclosure or filing
prior to making the disclosure or filing).
Section 4.9 Subsequent Financial Statements. Prior to the Effective
Time, TeleSpectrum will timely file with the SEC, each Annual Report on Form 10-
K, Quarterly Report on Form 10-Q and Current Report on Form 8-K required to be
filed by TeleSpectrum under the Exchange Act and the rules and regulations
promulgated thereunder and will promptly deliver to IDRC copies of each such
report as filed with the SEC, including any updates, amendments or supplements
thereto. Prior to the Effective Time, IDRC shall provide TeleSpectrum, as soon
as practicable but in any case within 30 days after the end of each month, with
its unaudited consolidated balance sheet and statement of operations as of and
for the month then ended, prepared on the same basis as the financial statements
for the eleven months ended November 30, 1998 included in the IDRC Schedule, and
certified as such by the chief financial officer of IDRC. In addition, IDRC
shall provide TeleSpectrum, as soon as practicable but in any event prior to
March 1, 1999, with its consolidated balance sheet and statements of operations
and cash flow as of and for the year ended December 31, 1998, as certified as
such by Deloitte & Touche LLP.
Section 4.10 Control of Operations. Nothing contained in this
Agreement shall give TeleSpectrum, directly or indirectly, the right to control
or direct IDRC's operations prior to the Effective Time. Nothing contained in
this Agreement shall give IDRC, directly or indirectly, the right to control or
direct TeleSpectrum's operations prior to the Effective Time. Prior to the
Effective Time, each of IDRC and TeleSpectrum shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
Section 4.11 Regulatory and Other Authorizations. Each party hereto
agrees to use commercially reasonable efforts to comply with all legal
requirements which may be imposed on such
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party with respect to the Merger and to obtain all Authorizations, consents,
orders and approvals of Governmental Entities and non-governmental third parties
that may be or become necessary for its respective execution and delivery of,
and the performance of its respective obligations pursuant to, this Agreement
and each party will cooperate fully with the other parties in promptly seeking
to obtain all such authorizations, consents, orders and approvals. As promptly
as practicable, but in any event within 20 days after the date hereof, IDRC and
TeleSpectrum shall each make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act and shall promptly respond to any request for
additional information with respect thereto. Each such filing shall request
early termination of the waiting period imposed by the HSR Act.
Section 4.12 Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, each of IDRC
and TeleSpectrum and the members of their respective Boards of Directors shall
use their reasonable best efforts to grant such approvals and take such actions
as are reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise use their reasonable best efforts to act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.
Section 4.13 Indemnification of Directors and Officers. For a period
of six years after the Effective Time, TeleSpectrum shall indemnify and hold
harmless the directors and officers of IDRC with respect to matters existing or
occurring at or prior to the Effective Time (including without limitation, the
Merger and other transactions contemplated hereby), whether asserted or claimed
prior to, at, or after the Effective Time, to the full extent to which IDRC is
permitted to indemnify and hold harmless such officers and directors under its
charter and bylaws and applicable law. TeleSpectrum shall provide each
individual who served as a director or officer of IDRC at any time prior to the
Effective Time with liability insurance for a period of three years after the
Effective Time no less favorable in coverage and amount than any applicable
insurance in effect immediately prior to the Effective Time, provided, however,
-------- -------
that TeleSpectrum shall only be obligated to obtain and provide such coverage
which is available at a cost of up to 150% of the cost of such coverage
immediately prior to the Effective Time. This Section 4.13 shall survive the
consummation of the Merger, is intended to benefit IDRC, TeleSpectrum and all
parties entitled to indemnification under this Section 4.13, and shall be
binding on and enforceable against all successors and assigns of TeleSpectrum.
Section 4.14 Tax-Free Reorganization.
(a) Each of TeleSpectrum and IDRC will use its best efforts to cause
the Merger to qualify as a "reorganization" within the meaning of Section 368(a)
of the Code, and to enable its respective counsel to render the opinions
contemplated by Section 4.14(c) and by Sections 5.2(d) and 5.3(h). Each party
shall make and shall use its best efforts to cause those of its respective
officers and stockholders that counsel to the parties shall reasonably request
to make, such representations and certifications as counsel to the parties shall
reasonably request to enable them to render such opinions, including the
representations of TeleSpectrum contained in a certificate of TeleSpectrum (the
"TeleSpectrum Tax Certificate") substantially in the form of the TeleSpectrum
----------------------------
Tax Certificate attached as Item 4.14 of the TeleSpectrum Schedule and
representations of IDRC contained in a certificate of IDRC
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(the "IDRC Tax Certificate") substantially in the form of IDRC Tax Certificate
--------------------
attached as Item 4.14 to IDRC Schedule.
(b) At or prior to the filing of the S-4 Registration Statement,
TeleSpectrum and IDRC shall, respectively, execute and deliver to Cooley Godward
LLP and to Morgan Lewis & Bockius LLP the TeleSpectrum Tax Certificate and the
IDRC Tax Certificate.
(c) TeleSpectrum and IDRC shall each confirm to Cooley Godward LLP
and to Morgan Lewis & Bockius LLP the accuracy and completeness as of the
Effective Time of the TeleSpectrum Tax Certificate and the IDRC Tax Certificate
delivered pursuant to Section 4.14(a).
(d) Following delivery of the TeleSpectrum Tax Certificate and the
IDRC Tax Certificate pursuant to Section 4.14(a), each of TeleSpectrum and IDRC
shall use its reasonable efforts to cause Cooley Godward LLP and Morgan Lewis &
Bockius LLP, respectively, to deliver promptly to it a legal opinion satisfying
the requirements of Item 601 of Regulation S-K promulgated under the Securities
Act. In rendering such opinions, each of such counsel shall be entitled to rely
on the TeleSpectrum Tax Certificate and the IDRC Tax Certificate delivered
pursuant to Section 4.14(a).
Section 4.15 No Solicitation.
(a) Without the prior written consent of TeleSpectrum, from and after
the date hereof, IDRC will not, and will not authorize or permit any of the IDRC
Subsidiaries or their officers, directors, employees, financial advisors and
agents ("Representatives") to, directly or indirectly, (i) knowingly solicit,
---------------
initiate or encourage (including by way of furnishing nonpublic or proprietary
information) or take any other action to facilitate knowingly any inquiries or
the making of any proposal which constitutes or may reasonably be expected to
lead to an Acquisition Proposal by a third party (other than TeleSpectrum)
involving IDRC or any IDRC Subsidiary, (ii) engage in any discussion or
negotiations relating to an Acquisition Proposal by a third party or (iii) enter
into any agreement with respect to, agree to, approve or recommend any
Acquisition Proposal by a third party. As used herein, "Acquisition Proposal"
--------------------
shall mean a proposal or offer for a tender or exchange offer, merger,
consolidation or other business combination involving or any proposal to acquire
in any manner a substantial equity interest in, or a substantial portion of the
assets of either IDRC, TeleSpectrum or any Subsidiary of either such party.
(b) IDRC shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any parties (other than TeleSpectrum) conducted heretofore by IDRC or its
Representatives with respect to an Acquisition Proposal. IDRC shall notify
TeleSpectrum orally and in writing of any such inquiries, offers or proposals
(including the terms and conditions of any such proposal and the identity of the
person making it), promptly after the receipt thereof.
(c) During the period from the date of this Agreement through the
Effective Time, IDRC shall not terminate, amend, modify or waive any provision
of any confidentiality or standstill agreement to which it or any of the IDRC
Subsidiaries is a party in a manner adverse to IDRC or any IDRC Subsidiary.
During such period, IDRC shall use commercially reasonable efforts to enforce
the
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provisions of any such agreement, including by obtaining injunctions to prevent
any breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States of America or of any state
having jurisdiction.
Section 4.16 Bank Negotiations. TeleSpectrum and IDRC shall each
negotiate in good faith with, and promptly communicate with each other
regarding, the negotiations with any lender contemplated by Section 5.3(g).
Neither TeleSpectrum nor IDRC shall communicate or negotiate with any such
lender in the absence of the other party, unless such other party consents in
writing to such communication or negotiation.
Section 4.17 Consent Determinations. Neither TeleSpectrum nor IDRC
shall unreasonably delay its determination regarding any written consent
requested by the other party under Sections 4.1 or 4.2.
Section 4.18 Form S-3 Resale Registration.
(a) If any of the persons listed on Schedule 4.18 hereto have their
-------------
employment with TeleSpectrum terminated by TeleSpectrum under the circumstances
described on Schedule 4.18, such person shall have the right to require
-------------
TeleSpectrum to register, at TeleSpectrum's expense, for resale all of their
Merger Shares and Warrant Shares received in the Merger on a resale registration
statement on Form S-3. Notwithstanding the foregoing, TeleSpectrum shall not be
required to effect any such registration if (i) the shares of TeleSpectrum
Common Stock would become saleable under Rule 144(k) within 90 days after
receipt of a request for registration and (ii) the shares of TeleSpectrum Common
Stock to be registered do not have an aggregate market value of at least
$100,000. TeleSpectrum shall as promptly as practicable after receiving any
request by any person listed on Schedule 4.18 use its reasonable commercial
-------------
efforts to file and have declared effective a registration statement and file
with the SEC such amendments and supplements to the registration statements and
the prospectuses incorporated therein referred to in this Section 4.18 as may be
necessary to keep such registration statements effective until the earlier to
occur of (i) the sale of all of the securities covered by any such registration
statement, and (ii) the date that all securities held by any person listed as a
selling stockholder on such registration statement may be sold under Rule 144
(or its successor) in any 90 day period.
(b) As promptly as practicable after the Closing, TeleSpectrum shall
file a post-effective amendment to the Registration Statement on a Form S-3
registration statement covering the issuance by TeleSpectrum of all of the
Warrant Shares and the Warrants underlying the Assumed Options, and TeleSpectrum
shall use its reasonable commercial efforts to maintain the effectiveness of
such Form S-3 Registration Statement as may be necessary to keep such
registration statement effective until the issuance of all of the Warrant Shares
and Warrants by the Company.
Section 4.19 CRW Developments. TeleSpectrum shall provide IDRC with
prompt notice of any material developments relating to the CRW Merger and CRW
Agreement.
Section 4.20 Covenant of the MDC Entities. Concurrent with the
execution and delivery of this Agreement, each of the MDC Entities shall execute
and deliver to TeleSpectrum the IDRC
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Stockholder Support Agreement in substantially the form attached hereto as
Exhibit A. The MDC Entities shall use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with TeleSpectrum in doing, all things necessary, proper or advisable
to consummate and make effective, on the most expeditious manner practical, the
transactions contemplated by this Agreement.
Section 4.21 Agreement with Chairman. On or prior to the Effective
Time, TeleSpectrum and Jeffrey A. Stiefler shall enter into a mutually
satisfactory agreement that terminates his current employment agreement with
IDRC and contains those terms contained on Exhibit 4.21 hereof.
------------
Section 4.22 Section 2.17 Undertaking. To the extent that IDRC has
not provided all of the information or documentation described in Section
2.17(a) as of the date hereof, IDRC shall use all commercially reasonable
efforts to disclose and provide such information and documentation to
TeleSpectrum as soon as practicable and, in any event, prior to the Closing.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Obligations of IDRC and TeleSpectrum. The
respective obligations of IDRC and TeleSpectrum to consummate the transactions
contemplated hereby are subject to the requirements that:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
and adopted by the requisite vote of the stockholders of each of TeleSpectrum
and IDRC in accordance with the DGCL and their respective Certificates of
Incorporation.
(b) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition shall have been issued and be in effect (i) restraining or
prohibiting the consummation of the Merger or any of the transactions
contemplated hereby or (ii) prohibiting or limiting the ownership, operation or
control by TeleSpectrum of any portion of the business or assets of IDRC or
compelling TeleSpectrum to dispose of, grant rights in respect of, or hold
separate any portion of the business or assets of IDRC or any IDRC Subsidiary in
each case, where the effect, individually or in the aggregate, would result in
an IDRC Material Adverse Effect; nor shall any action have been taken by a
Governmental Entity or any federal, state or foreign statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any Governmental Entity, which is in effect and has
the effect of making the Merger illegal or otherwise prohibiting the
consummation of the Merger.
(c) HSR Act. Any waiting period applicable to the consummation of
-------
the Merger under the HSR Act shall have expired or been terminated.
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(d) Registration Statement. The Registration Statement shall have
----------------------
been declared effective under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or be threatened by the
SEC.
(e) Nasdaq National Market. Approval for listing by the NMS upon
----------------------
official notice of issuance of TeleSpectrum Common Stock to be issued in the
Merger shall have been received by TeleSpectrum and remain in full force and
effect.
(f) Consents. All authorizations, consents, orders or approvals of,
--------
or declarations or filings with, and all expirations of waiting periods imposed
by, any governmental body, agency or official (all of the foregoing, "Consents")
--------
which are necessary for the consummation of the transactions contemplated
hereby, other than Consents the failure to obtain which would not have a
material adverse effect on the consummation of the transactions contemplated
hereby or an IDRC Material Adverse Effect, shall have been filed, have occurred
or have been obtained (all such permits, approvals, filings and consents and the
lapse of all such waiting periods being referred to as the "Requisite Regulatory
--------------------
Approvals") and all such Requisite Regulatory Approvals shall be in full force
- ---------
and effect, provided, however, that a Requisite Regulatory Approval shall not be
deemed to have been obtained if in connection with the grant thereof there shall
have been an imposition by any state or federal governmental body, agency or
official of any condition, requirement, restriction or change of regulation, or
any other action directly or indirectly related to such grant taken by such
governmental body, which would reasonably be expected to have an IDRC Material
Adverse Effect.
(g) Indemnity Escrow Agreement. The Indemnity Escrow Agreement shall
--------------------------
have been fully executed by, and delivered to, each of the respective parties
thereunder.
Section 5.2 Conditions to the Obligations of IDRC. The obligations of
IDRC to consummate the transactions contemplated hereby are subject to the
further requirements that:
(a) Representations and Warranties. The representations and
------------------------------
warranties of TeleSpectrum set forth in Article III of this Agreement shall be
true and correct as of the date of this Agreement (with respect solely to those
representations and warranties that speak as of the date of this Agreement or as
of an earlier date) and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier date) as though made on
and as of the Closing Date, except for (i) changes expressly contemplated by
this Agreement and (ii) inaccuracies which, individually or in the aggregate,
have not had and would not reasonably be expected to have an "Expanded
TeleSpectrum Material Adverse Effect." An Expanded TeleSpectrum Material
Adverse Effect means a TeleSpectrum Material Adverse Effect without including
the effect of any changes (i) resulting from general conditions applicable to
the industries in which TeleSpectrum operates and not specifically relating to
TeleSpectrum, or from general business or United States economic conditions
which do not have a disproportionate effect on TeleSpectrum, (ii) caused by the
transactions contemplated by this Agreement and the public announcement thereof,
or (iii) any actions taken or omissions by TeleSpectrum with the prior written
consent of IDRC.
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<PAGE>
(b) Performance of Obligations. Each of the obligations of
--------------------------
TeleSpectrum to be performed on or before the Closing Date pursuant to the terms
of this Agreement shall have been duly performed in all material respects on or
before the Closing Date and TeleSpectrum shall have delivered to IDRC a
certificate to that effect at the Closing.
(c) Absence of Material Adverse Effect. From the date of this
----------------------------------
Agreement through the Effective Time there shall not have occurred an Expanded
TeleSpectrum Material Adverse Effect that has not been cured in all material
respects and as of the Effective Time, there shall be no, and no fact or
circumstance shall exist which would reasonably be expected to have, a
TeleSpectrum Material Adverse Effect.
(d) Tax Opinion. IDRC shall have received the opinion of Cooley
-----------
Godward LLP, counsel to IDRC, based upon reasonably requested representation
letters and dated as of the Closing Date, to the effect that the Merger will be
treated as a reorganization described in Section 368(a) of the Code and such
opinion shall be in full force and effect and shall not have been withdrawn,
provided, however, that if Cooley Godward LLP does not render such opinion or
withdraws or modifies such opinion, this condition shall nonetheless be deemed
satisfied if Morgan, Lewis & Bockius LLP, counsel to TeleSpectrum, renders such
opinion to IDRC.
(e) Board Representation. The TeleSpectrum Board of Directors shall
--------------------
have adopted a resolution expanding its board by two members and, subject to the
consummation of the Merger, electing Robert Hellman and Jeffrey Stiefler to fill
the vacancies created thereby.
Section 5.3 Conditions to the Obligations of TeleSpectrum. The
obligations of TeleSpectrum to consummate the transactions contemplated hereby
are subject to the further requirements that:
(a) Representations and Warranties. The representations and
------------------------------
warranties of IDRC set forth in Article II of this Agreement shall be true and
correct as of the date of this Agreement (with respect solely to those
representations and warranties that speak as of the date of this Agreement or as
of an earlier date) and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier date) as though made on
and as of the Closing Date, except for (i) changes expressly contemplated by
this Agreement and (ii) inaccuracies which, individually or in the aggregate,
have not had and would not reasonably be expected to have an "Expanded IDRC
Material Adverse Effect." An Expanded IDRC Material Adverse Effect means an IDRC
Material Adverse Effect without including the effect of any changes (i)
resulting from general conditions applicable to the industries in which IDRC
operates and not specifically relating to IDRC, or from general business or
United States economic conditions which do not have a disproportionate effect on
IDRC, (ii) caused by the transactions contemplated by this Agreement and the
public announcement thereof, or (iii) any actions taken or omissions by IDRC
with the prior written consent of TeleSpectrum.
(b) Performance of Obligations. Each of the obligations of IDRC to
--------------------------
be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in
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<PAGE>
all material respects on or before the Closing Date and IDRC shall have
delivered to TeleSpectrum a certificate to that effect at the Closing.
(c) Absence of Material Adverse Effect. From the date of this
----------------------------------
Agreement through the Effective Time there shall not have occurred an Expanded
IDRC Material Adverse Effect that has not been cured in all material respects
and as of the Effective Time, there shall be no, and no fact or circumstance
shall exist which would reasonably be expected to have, an Expanded IDRC
Material Adverse Effect.
(d) Exercise of Warrants All of the outstanding Detachable Warrants
--------------------
shall have been exercised by the delivery of an aggregate of 300,000 shares of
Series A Preferred Stock in payment of the exercise price thereof.
(e) Appraisal Shares. The Appraisal Shares, if any, shall not
----------------
represent more than 3% of the aggregate outstanding shares of IDRC Common Stock.
(f) Termination of Stockholders' Agreement and Advisory Services
------------------------------------------------------------
Agreements. The International Data Corporation Second Amended and Restated
- ----------
Stockholders Agreement and Irrevocable Proxy dated as of May 28, 1998 (the
"Stockholders Agreement") shall have been terminated. In addition, the Advisory
- -----------------------
Services Agreement dated March 11, 1996 between IDRC and MDC Management Company
III and the Advisory Services Agreement dated March 11, 1996 between IDRC and
Trans National Group Services International, Inc. shall have been terminated
without any payment or other consideration paid by IDRC. IDRC shall have
delivered to TeleSpectrum a certificate regarding the foregoing terminations at
the Closing.
(g) Credit Facility. TeleSpectrum shall have received that certain
---------------
lender's commitment letter attached hereto as Exhibit 5.3, and the closing shall
-----------
have occurred or will occur contemporaneously with the Closing of the Merger
pursuant to the terms outlined in such commitment letter, which shall not have
been materially modified or withdrawn regardless of any right that such lender
may have to modify the terms of such commitment letter.
(h) Tax Opinion. TeleSpectrum shall have received the opinion of
-----------
Morgan, Lewis & Bockius LLP, counsel to TeleSpectrum, based upon reasonably
requested representation letters and dated as of the Closing Date, to the effect
that the Merger will be treated as a reorganization described in Section 368(a)
of the Code and such opinion shall be in full force and effect and shall not
have been withdrawn, provided, however, that if Morgan, Lewis & Bockius LLP does
not render such opinion or withdraws or modifies such opinion, this condition
shall nonetheless be deemed satisfied if Cooley Godward LLP, counsel to IDRC,
renders such opinion to TeleSpectrum.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
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Section 6.1 Termination. This Agreement may be terminated (by written
notice by the terminating party to the other party), and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) By mutual written consent of each of TeleSpectrum and IDRC;
(b) By either TeleSpectrum or IDRC if the Merger shall not have been
consummated on or before July 31, 1999 (the "Termination Date"); provided,
----------------
however, that the right to terminate this Agreement under this Section 6.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) By either TeleSpectrum or IDRC if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which order,
decree or ruling the parties shall use their commercially reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and nonappealable;
(d) By TeleSpectrum if (A) IDRC shall have breached, or failed to
comply with any of its obligations under this Agreement or any representation or
warranty made by IDRC shall have been incorrect when made or shall have since
ceased to be true and correct, and (B) after written notice, such breach,
failure or misrepresentation is not cured by April 30, 1999 and such breaches,
failures or misrepresentations, individually or in the aggregate, result or
would reasonably be expected to result in an IDRC Material Adverse Effect if, in
the case of (A) or (B), as a result of such breach or failure, the conditions
set forth in Sections 5.3(a) or 5.3(b) would not be satisfied, (it being
understood that TeleSpectrum may not terminate this Agreement pursuant to this
Section 6.1(d) if it shall have materially breached this Agreement);
(e) By IDRC if (A) TeleSpectrum shall have breached, or failed to
comply with any of its obligations under this Agreement or any representation or
warranty made by the TeleSpectrum shall have been incorrect when made or shall
have since ceased to be true and correct, and (B) after written notice, such
breach, failure or misrepresentation is not cured by April 30, 1999 and such
breaches, failures or misrepresentations, individually or in the aggregate,
result or would reasonably be expected to result in a TeleSpectrum Material
Adverse Effect if, in the case of (A) or (B), as a result of such breach or
failure, the conditions set forth in Sections 5.2(a) or 5.2(b) would not be
satisfied (it being understood that IDRC may not terminate this Agreement
pursuant to this Section 6.1(e) if it shall have materially breached this
Agreement);
(f) By TeleSpectrum at any time after April 30, 1999 if (i) from the
date of this Agreement through the Effective Time there shall have occurred an
Expanded IDRC Material Adverse Effect that has not been cured in all material
respects by April 30, 1999 or (ii) at any time after April 30, 1999 there shall
have occurred an Expanded IDRC Material Adverse Effect;
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<PAGE>
(g) By IDRC at any time after April 30, 1999 if (i) from the date of
this Agreement through the Effective Time there shall have occurred an Expanded
TeleSpectrum Material Adverse Effect that has not been cured in all material
respects by April 30, 1999, or (ii) at any time after April 30, 1999 there shall
have occurred an Expanded TeleSpectrum Material Adverse Effect;
(h) By TeleSpectrum or IDRC if approval of this Agreement has not
been obtained at the IDRC Stockholders' Meeting, including any adjournments
thereof, or in the event an IDRC Stockholders' Meeting is not to be held, the
IDRC Consent is not obtained within one business day after the date that the
TeleSpectrum Stockholders approve this Agreement at the TeleSpectrum
Stockholders' Meeting; or
(i) By IDRC or TeleSpectrum if approval of this Agreement has not
been obtained at the TeleSpectrum Stockholders, meeting, including any
adjournment thereof.
Section 6.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 6.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of any of
the parties, except (i) as set forth in the last sentences of each of Sections
4.4 (a) and (b) and in Section 4.8 hereof, and (ii) nothing herein shall relieve
any party from liability for any willful breach hereof.
Section 6.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of IDRC and TeleSpectrum which writing
makes express reference to this Section; provided, however, that, after approval
of this Agreement by the stockholders of each of IDRC and TeleSpectrum, no
amendment may be made which would by applicable law require the further vote of
the IDRC stockholders without first obtaining such further vote.
Section 6.4 Waiver. At any time before the Effective Time, any party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only as against such party and only if set
forth in an instrument in writing signed by such party.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Representations and Warranties. Except with
respect to the "IDRC Specified Representations" (as defined herein), all
representations and warranties of IDRC contained in this Agreement shall
terminate and expire as of the Closing Date, and all liability of the
stockholders of IDRC and the IDRC Optionholders with respect to such
representations and warranties shall thereupon be extinguished. The
representations and warranties of IDRC contained in Sections 2.1, 2.3, 2.5, 2.8,
2.10,
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2.15, 2.16, 2.17, 2.20 and 2.23 of this Agreement (collectively, the "IDRC
Specified Representations") shall survive until the fifteen month anniversary of
the Closing Date (the "Expiration Date"), at which time such representations and
warranties shall terminate and expire, and all liability of the stockholders of
IDRC and the IDRC Optionholders with respect to such representations and
warranties shall thereupon be extinguished. Except with respect to the
"TeleSpectrum Specified Representations" (as defined herein), all
representations and warranties of TeleSpectrum contained in this Agreement shall
terminate and expire as of the Closing Date, and all liability of TeleSpectrum
with respect to such representations and warranties shall thereupon be
extinguished. The representations and warranties of TeleSpectrum contained in
Sections 3.1, 3.3, 3.5, 3.8, 3.9, 3.11, 3.13, 3.14 and 3.16 of this Agreement
(collectively, the "TeleSpectrum Specified Representations") shall survive for
the period commencing on the Closing Date and ending on the Expiration Date, at
which time such representations and warranties shall terminate and expire, and
all liability of TeleSpectrum with respect to such representations and
warranties shall thereupon be extinguished. Notwithstanding the foregoing, in
the event an Indemnified TeleSpectrum Party (as defined below) delivers an
Indemnity Notice (as defined below) prior to the Expiration Date, such
Indemnified TeleSpectrum Party shall be entitled to pursue such claim beyond the
Expiration Date in accordance with the Indemnity Escrow Agreement.
Notwithstanding the foregoing, in the event an Indemnified IDRC Party (as
defined below) delivers a Claim Notice prior to the Expiration Date, such
Indemnified IDRC Party shall be entitled to pursue such claim beyond the
Expiration Date in accordance with Section 7.5 of this Agreement.
Section 7.2 General Indemnification by the Stockholders of IDRC. The
stockholders of IDRC and the IDRC Optionholders shall indemnify and hold
harmless TeleSpectrum and its stockholders, officers, directors, employees,
agents, successors and assigns (each, an "Indemnified TeleSpectrum Party"), from
------------------------------
and against any and all liabilities, claims, demands, judgments, settlement
payments, losses, costs, damages and expenses whatsoever (including reasonable
attorneys', consultants' and other professional fees and disbursement of every
kind, nature and description incurred by such Indemnified TeleSpectrum Party in
connection therewith) (collectively, "Damages") that such Indemnified
-------
TeleSpectrum Party may sustain, suffer or incur that result from or arise out of
any inaccuracy in any representation or warranty contained in the IDRC Specified
Representations including any breach of the obligation to indemnify hereunder or
failure to fulfill any covenant contained in Article IV.
Section 7.3 Specific Indemnification by the Stockholders of IDRC. The
stockholders of IDRC and the IDRC Optionholders shall indemnify and hold
harmless each Indemnified TeleSpectrum Party from and against any and all
Damages that such Indemnified TeleSpectrum Party may sustain, suffer or incur
that result from or arise out of any litigation matters listed on Schedule 7.3
hereof.
Section 7.4 Indemnification by TeleSpectrum. TeleSpectrum shall indemnify
and hold harmless the IDRC Stockholders and the IDRC Optionholders and their
successors, assigns, heirs and representatives (each an "Indemnified IDRC
----------------
Party") from and against any Damages that such Indemnified IDRC Party may
- -----
sustain, suffer or incur that result from or arise out of any breach of or
inaccuracy in any representation or warranty contained in the TeleSpectrum
Specified Representations including any breach of the obligation to indemnify
hereunder or failure to fulfill any covenant contained in Article IV.
Section 7.5 Procedure of Claims.
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<PAGE>
(a) Any Indemnified TeleSpectrum Party that desires to seek
indemnification under any part of this Article VII shall pursue the collection
of any damages suffered or incurred by such Indemnified TeleSpectrum Party in
accordance with the terms of the Indemnity Escrow Agreement.
(b) Any Indemnified IDRC Party that desires to seek indemnification
under any part of this Article VII shall give written notice (a "Claim Notice")
------------
to TeleSpectrum. Such Claim Notice shall contain such facts and information as
are then reasonably available, the specific basis for indemnification and
whether the claim has been liquidated. Unless TeleSpectrum gives written notice
to the Indemnified IDRC Party that it objects to any claim made in any Claim
Notice within 15 business days following the date on which it receives the Claim
Notice (the "Response Period"), TeleSpectrum shall be deemed not to dispute the
---------------
claim described in the Claim Notice and the Indemnified IDRC Party shall be
entitled to the full amount of the claim described in the Claim Notice. If
TeleSpectrum timely objects to a Claim Notice, then TeleSpectrum and the
Indemnified IDRC Party shall endeavor to settle and compromise the claims that
are the subject of the Claim Notice. If TeleSpectrum and the Indemnified IDRC
Party are unable to agree on any settlement or compromise, then such claim shall
be resolved in accordance with Section 7.5(d) hereof.
(c) If TeleSpectrum shall be obligated to indemnify an Indemnified
IDRC Party hereunder, TeleSpectrum shall pay to such Indemnified IDRC Party
within 5 business days after the amount to which such Indemnified IDRC Party
shall be entitled is finally determined.
(d) If there shall be a dispute as to any claim, cause of action or
dispute, the amount or manner of indemnification by TeleSpectrum under this
Article VII, TeleSpectrum and the Indemnified IDRC Party shall seek to resolve
such dispute through negotiations and, if such dispute is not resolved within
twenty days, the parties shall submit the resolution of any claim, cause of
action or dispute to expedited, binding arbitration pursuant to this Section.
Any claim, cause of action or dispute between the parties arising under this
Agreement submitted to arbitration under this Section ("Arbitrated Disputes")
-------------------
shall be resolved by binding arbitration administered by the American
Arbitration Association ("AAA") in Wilmington, Delaware, and, except as
---
expressly provided in this Agreement, shall be conducted in accordance with the
Expedited Procedures under the Commercial Arbitration Rules of the AAA, as such
rules may be amended from time to time (the "Rules"). The hearing locale shall
-----
be Wilmington, Delaware. The hearing shall be before a panel of three
arbitrators (the "Arbitrators"), one of whom shall be selected by the
Stockholders' Representative, one of whom shall be selected by TeleSpectrum, and
the third of whom shall be selected by the other two arbitrators. The
Arbitrators' decision (the "Decision") shall be binding, and the prevailing
--------
party may enforce the Decision in any court of competent jurisdiction. The
parties shall use their best efforts to cooperate with each other in causing the
arbitration to be held in as efficient and expeditious a manner as practicable,
including, but not limited to, providing such documents and making available
such of their personnel as the Arbitrators may request, so that the Decision may
be reached timely. The Arbitrators shall take into account the parties' stated
goal of expedited proceedings in determining whether to authorize discovery and,
if so, the scope of permissible discovery and other hearing and pre-hearing
procedures. The authority of the Arbitrators shall be limited to deciding
liability for, and the proper amount of, any such claim, cause of action or
dispute, and the Arbitrators shall have no authority to award punitive damages.
The Arbitrators shall have such powers and establish such procedures as are
provided for in the Rules, so long as such powers and procedures are consistent
with this Section and are
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<PAGE>
necessary to resolve the Arbitrated Dispute within the time periods specified in
this Agreement. The Arbitrators shall render a Decision within 30 business days
after being appointed to serve as Arbitrators unless the parties otherwise agree
in writing or the Arbitrators make a finding that a party has carried the burden
of showing good cause for a longer period. The IDRC Indemnified Parties, on the
one hand, and TeleSpectrum on the other hand, shall pay its own expenses of
arbitration and the expenses of the Arbitrators shall be equally shared;
provided, however, that if in the opinion of the Arbitrators any claim or
defense or objection thereto by either party is unreasonable, the Arbitrators
may assess, as part of the award, all or any part of the arbitration expenses
(including reasonable attorneys' fees) of the other party and of the Arbitrators
against the party raising such unreasonable claim, defense or objection.
Section VII.6 Limitations on Indemnification. Notwithstanding any other
provision of this Section 7, (i) no Indemnified Party shall be entitled to
indemnification hereunder for Damages arising out of or based upon any
inaccuracy in or breach of any representation or warranty or breach of covenant
made in or pursuant to this Agreement until the aggregate of all Damages
incurred by the Indemnified Parties in the group to which such Indemnified Party
belongs (either Indemnified TeleSpectrum Parties, as a group, or Indemnified
IDRC Parties, as a group) exceeds $250,000 (the "Deductible Amount"), and then
-----------------
such Indemnified Party shall be entitled to indemnification for its Damages in
excess of the Deductible Amount, (ii) the stockholders of IDRC and the IDRC
Optionholders, as a group, shall not be required to indemnify the TeleSpectrum
Indemnified Parties for an aggregate amount in excess of $9,000,000 under
Section 7.2 hereof, (iii) except as set forth in the Indemnity Escrow Agreement,
the stockholders of IDRC and the IDRC Optionholders, as a group, shall not be
required to indemnify the TeleSpectrum Indemnified Parties for an aggregate
amount in excess of $3,000,000 under Section 7.3 hereof, and (iv) TeleSpectrum
shall not be required to indemnify the IDRC Indemnified Parties for an aggregate
amount in excess of $9,000,000 under Section 7.4 hereof. Without limiting the
generality of the foregoing, any indemnification payments required to be made by
the stockholders of IDRC and the IDRC Optionholders hereunder shall be made
exclusively from the Escrow Securities held by the Escrow Agent under the
Indemnity Escrow Agreement, and TeleSpectrum shall have no recourse against any
stockholders of IDRC and the IDRC Optionholders in connection with any
indemnification claim hereunder. In addition, the calculation of the Deductible
Amount shall include any Damages incurred by an Indemnified Party for which the
Indemnified Party would have been entitled to claim indemnification under this
Article VII with respect to a breach of representation or warranty but for such
representation or warranty being qualified by materiality.
Section 7.7 Claims Period. Any claim for indemnification under this
Article VII for a breach of a representation, warranty or covenant (except for
these covenants which by their context cannot be performed in full prior to the
Expiration Date) shall be made by giving notice in accordance with the Indemnity
Escrow Agreement on or before the applicable "Expiration Date."
Section 7.8 Exclusive Remedy. The remedies provided by Article VII shall
constitute the exclusive remedies for the matters covered hereby. In addition,
except as provided in Section 7.9, the sole recourse of any Indemnified
TeleSpectrum Party for Damages under Sections 7.2 and 7.3 shall be under the
Indemnity Escrow Agreement, and by becoming parties to this Agreement for
purposes of Section 4.20, the MDC Entities shall not thereby assume
responsibility for the accuracy or breach of any representations, warranties or
covenants included elsewhere in this Agreement, nor shall the MDC entities
assume any liability in excess of their pro rata portion of the Escrow Property.
-45-
<PAGE>
Section 7.9 Exception to Limitation. Nothing herein shall be deemed
to limit or restrict in any manner any rights or remedies which any party has,
or might have, at law, in equity or otherwise, including the right to seek
general recourse, for any representation or warranty that was known to be untrue
by the maker when made with an actual intent to mislead or defraud.
Section 7.10 Effect of Investigation. Any claim for indemnification
shall not be invalid as a result of any investigation by or opportunity to
investigate afforded to any party, except where such party had actual current
awareness of such claim prior to the date hereof and did not provide notice to
the other party of such awareness.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior written and oral and all contemporaneous oral agreements
and understandings with respect to the subject matter hereof.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) or by overnight courier service to the respective
parties as follows:
if to TeleSpectrum:
TeleSpectrum Worldwide Inc.
443 S. Gulph Road
King of Prussia, PA 19406
Telecopy: (610) 878-7480
Attention: Mr. Keith E. Alessi
with copies to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Telecopy: (215) 963-5299
Attention: Stephen M. Goodman, Esq.
if to IDRC:
International Data Response Corporation
-46-
<PAGE>
PO Box 7130
Rancho Sante Fe, CA 92067-7130
Telecopy: (619) 759-3350
Attention: Mr. Jeffrey E. Stiefler and Mr. Paul Grinberg
with a copy to:
Cooley Godward LLP
4365 Executive Drive - Suite 100
San Diego, CA 92121
Telecopy: (619) 453-3555
Attention: Lance W. Bridges, Esq.
if to any MDC Entities:
McCown De Leeuw & Co., Inc.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
Telecopy: (650) 854-0853
Attention: Mr. Robert B. Hellman, Jr.
if to the Stockholders' Representative:
Mr. Glenn McKenzie
24 Beach Palm
Hampton, NH 03842
Telecopy: (603) 929-0876
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Any notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed
effective on the first business day at the place of which such notice or
communication is received following the day on which such notice or
communication was sent.
Section 8.3 Governing Law. This Agreement 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. In any action between or among any of the parties to this
Agreement: (i) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state courts located in
the State of Delaware; (ii) each of the parties irrevocably waives the right to
trial by jury; and (iii) each of the parties irrevocably consents to service of
process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 8.2.
-47-
<PAGE>
Section 8.4 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 8.5 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and except as set
forth in Section 4.13, nothing in this Agreement, express or implied, is
intended to confer upon any other person (including any employee of IDRC or any
IDRC Subsidiary) any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 8.6 Counterparts; Facsimile Signatures. This Agreement may
be executed in counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement. This Agreement may
be executed by facsimile signature which, for all purposes, shall be deemed to
be an original signature.
Section 8.7 Expenses. Except as otherwise provided herein, all costs
and expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses except that
TeleSpectrum and IDRC shall share equally (i) the filing fees payable with
respect to the required filings under the HSR Act, (ii) the registration fees
payable with respect to filing the Registration Statement, and (iii) all
printing expenses incurred with respect to the Proxy Statement and the
Registration Statement.
Section 8.8 Personal Liability. This Agreement shall not create or
be deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of any party hereto or any officer,
director, employee, agent, representative or investor of any party hereto.
Section 8.9 Binding Effect; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
legal representatives and successors. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties.
Section 8.10 Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, and the part the whole, (b) "or" has the inclusive
meaning frequently identified with the phrase "and/or" and (c) "including" has
the inclusive meaning frequently identified with the phrases "but not limited
to" or "without limitation." The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation thereof in any respect.
Section, subsection, schedule and exhibit references are to this Agreement
unless otherwise specified.
Section 8.11 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstance in any other jurisdiction or to
other persons or circumstances in any jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
-48-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
TELESPECTRUM WORLDWIDE INC.
By:_________________________________
Name: Keith E. Alessi
Title: Chairman, CEO & President
INTERNATIONAL DATA RESPONSE CORPORATION
By:_________________________________
Name:
Title:
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
-49-
<PAGE>
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
MCCOWN DE LEEUW & CO. III, L.P.*
_________________________________
By: Robert B. Hellman, Jr.
Its: General Partner
MCCOWN DE LEEUW & CO. OFFSHORE
(EUROPE) III, L.P.*
_________________________________
By: Robert B. Hellman, Jr.
Its: General Partner
MCCOWN DE LEEUW & CO. III, (ASIA) L.P. *
_________________________________
By: Robert B. Hellman, Jr.
Its: General Partner
THE GAMMA FUND LLC*
_________________________________
By: Robert B. Hellman, Jr.
Its: Managing Member
* Indicates an entity that is a party hereto solely with respect to Sections
4.20 and 7.8 of this Agreement.
-50-
<PAGE>
EXHIBIT 99.2
TELESPECTRUM STOCKHOLDER SUPPORT AGREEMENT
------------------------------------------
THIS STOCKHOLDER SUPPORT AGREEMENT, dated as of January 14, 1999 (this
"Agreement") is being executed by the undersigned stockholder (the
---------
"Stockholder") of TeleSpectrum Worldwide Inc., a Delaware corporation
-----------
("TeleSpectrum"), for the benefit of International Data Response Corporation, a
- --------------
Delaware corporation ("IDRC").
----
WHEREAS, TeleSpectrum and IDRC are entering into an Agreement and Plan
of Merger, dated as of January 14, 1999 (the "Merger Agreement"), whereby, upon
----------------
the terms and subject to the conditions set forth in the Merger Agreement, each
issued and outstanding share of the common stock, par value $.001 per share, of
IDRC ("IDRC Common Stock") not owned directly or indirectly by TeleSpectrum or
-----------------
IDRC, will be converted into shares of common stock, par value $.01 per share,
of TeleSpectrum ("TeleSpectrum Common Stock"), and warrants exercisable for
-------------------------
TeleSpectrum Common Stock ("Warrants"), the outstanding shares of the Series A
--------
Preferred Stock, par value $.001 per share, of IDRC as of the effective time of
the Merger will be redeemed for cash, and the outstanding options and warrants
of IDRC as of the effective time of the Merger will be converted into options
exercisable for TeleSpectrum Common Stock and Warrants;
WHEREAS, Stockholder owns ________ shares of TeleSpectrum Common Stock
(such shares of TeleSpectrum Common Stock, together with any other shares of
capital stock of TeleSpectrum acquired by such Stockholder after the date hereof
and during the term of this Agreement, being collectively referred to herein as
the "Subject Shares"); and
--------------
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, IDRC has required that the Stockholder agree, and in order to induce
IDRC to enter into the Merger Agreement the Stockholder has agreed, to enter
into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as follows:
1. Capitalized Terms. Capitalized terms used in this Agreement that
-----------------
are not defined herein shall have such meanings as set forth in the Merger
Agreement.
2. Covenants of Stockholder. Until the termination of this Agreement
------------------------
in accordance with Section 6, Stockholder agrees as follows:
<PAGE>
(a) At the TeleSpectrum Stockholders Meeting (or at any
adjournment thereof) or in any other circumstances upon which a vote,
consent (including the TeleSpectrum Consent) or other approval with respect
to the Merger or the Merger Agreement is sought, the Stockholder shall vote
(or cause to be voted) the Subject Shares in favor of the Merger, the
adoption of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement.
(b) At any meeting of stockholders of TeleSpectrum or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by
TeleSpectrum or any subsidiary thereof or any other Acquisition Proposal or
(ii) any amendment of TeleSpectrum's Certificate of Incorporation or Bylaws
or other proposal or transaction involving TeleSpectrum or any TeleSpectrum
Subsidiary, which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement or change in any manner the voting rights of any class of capital
stock of TeleSpectrum. The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
(c) Contemporaneously with the execution of this Agreement: (i)
Stockholder shall deliver to IDRC a proxy in the form attached hereto as
Exhibit A, which shall be irrevocable to the fullest extent permitted by
law, with respect to the Subject Shares (the "Proxy"); and (ii) Stockholder
-----
shall cause to be delivered to IDRC an additional proxy (in the form
attached hereto as Exhibit A) executed on behalf of the record owner of any
issued and outstanding shares of TeleSpectrum Common Stock that are owned
beneficially (but are not owned of record) by Stockholder.
(d) The Stockholder agrees not to (i) sell, transfer, pledge,
assign or otherwise dispose of (collectively, "Transfer"), or enter into
--------
any contract, option or other arrangement (including any profit-sharing
arrangement) with respect to the Transfer of the Subject Shares to any
person or (ii) enter into any voting arrangement, whether by proxy, voting
agreement or otherwise, in relation to the Subject Shares, and agrees not
to commit or agree to take any of the foregoing actions. Notwithstanding
the foregoing, the Stockholder may Transfer all or any portion of the
Subject Shares held by such Stockholder by way of gift or for estate
planning purposes, provided that any such transfer shall first be required
to execute a joinder to this Agreement whereby such transferee agrees to be
bound by all of the terms and conditions hereof.
-2-
<PAGE>
(e) The Stockholder shall not, nor shall the Stockholder permit
any affiliate, director, officer, employee, partner, investment banker,
attorney or other advisor or representative of the Stockholder to, (i)
directly or indirectly solicit, initiate or encourage the submission of,
any Acquisition Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any Acquisition Proposal.
(f) The Stockholder shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with IDRC in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by the
Merger Agreement.
(g) Immediately after the execution of this Agreement (and
from time to time prior to the termination of this Agreement), Stockholder
shall instruct TeleSpectrum to cause each certificate of Stockholder
evidencing any of the Subject Shares to bear a legend in the following
form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THE STOCKHOLDER SUPPORT AGREEMENT DATED AS OF
JANUARY 14, 1999, AS IT MAY BE AMENDED, A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
3. Representations and Warranties.
------------------------------
(a) The Stockholder has the requisite capacity and legal right to
execute and deliver this Agreement and the Merger Agreement and to
consummate the transactions contemplated hereby. Each of this Agreement
and the Merger Agreement is enforceable against the Stockholder in
accordance with its terms.
(b) The Stockholder represents and warrants to IDRC that (i) the
Stockholder is the record and beneficial owner of, and has good and
marketable title to, the Subject Shares, (ii) the Stockholder does not own,
of record or beneficially, any shares of capital stock of TeleSpectrum
other than the Subject Shares, and (iii) the Stockholder has the sole right
to vote, and the sole power of disposition with respect to, the Subject
Shares, and none of the Subject Shares is subject to any voting trust,
proxy or other agreement, arrangement or restriction with respect to the
voting or disposition of such Subject Shares as contemplated by this
Agreement.
-3-
<PAGE>
4. Termination. The obligations of the Stockholder hereunder shall
-----------
terminate upon the earlier of the termination of the Merger Agreement pursuant
to Section 6.1 thereof or the Effective Time.
5. Further Assurances. Stockholder will, from time to time, execute
------------------
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as IDRC may reasonably request for the
purpose of effectively carrying out the transactions contemplated by this
Agreement.
6. Successors, Assigns and Transferees Bound. Any successor,
-----------------------------------------
assignee or transferee (including a successor, assignee or transferee as a
result of the death of the Stockholder, such as an executor or heir) shall be
bound by the terms hereof, and the Stockholder shall take any and all actions
necessary to obtain the written confirmation from such successor, assignee or
transferee that it is bound by the terms hereof.
7. Remedies. The Stockholder acknowledges that money damages would
--------
be both incalculable and an insufficient remedy for any breach of this Agreement
by it, and that any such breach would cause IDRC irreparable harm. Accordingly,
the Stockholder agrees that in the event of any breach or threatened breach of
this Agreement, IDRC, in addition to any other remedies at law or in equity it
may have, shall be entitled, without the requirement of posting a bond or other
security, to equitable relief, including injunctive relief and specific
performance.
8. Severability. The invalidity or unenforceability of any provision
------------
of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
9. Amendment. This Agreement may be amended only by means of a
---------
written instrument executed and delivered by both the Stockholder and IDRC.
10. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
-4-
<PAGE>
11. Counterparts. For the convenience of the parties, this Agreement
------------
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
STOCKHOLDER
By:_________________________________________
Name: Keith E. Alessi
Accepted and Agreed to
as of the date noted above:
INTERNATIONAL DATA RESPONSE CORPORATION
By:___________________________
Name:
Title:
<PAGE>
Exhibit A
Form of Irrevocable Proxy
Irrevocable Proxy
The undersigned stockholder of TeleSpectrum Worldwide Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Robert B. Hellman, Jr., Jeffrey E. Stiefler and
International Data Response Corporation, a Delaware corporation ("IDRC"), and
each of them, the attorneys and proxies of the undersigned with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to (i) the issued and outstanding shares of capital stock of the
Company owned of record by the undersigned as of the date of this proxy, which
shares are specified on the final page of this proxy and (ii) any and all other
shares of capital stock of the Company which the undersigned may acquire after
the date hereof. (The shares of the capital stock of the Company referred to in
clauses (i) and (ii) of the immediately preceding sentence are collectively
referred to as the "Subject Shares") Upon the execution hereof, all prior
proxies given by the undersigned with respect to any of the Subject Shares are
hereby revoked, and no subsequent proxies will be given with respect to any of
the Subject Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with a Stockholder Support Agreement, dated as of the date hereof,
between IDRC and the undersigned (the "Stockholder Support Agreement"), and is
granted in consideration of IDRC entering into the Agreement and Plan of Merger,
dated as of the date hereof, among IDRC, the Company and certain stockholders of
IDRC (the "Merger Agreement"). Capitalized terms used but not otherwise defined
in this proxy have the meanings ascribed to such terms in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Subject Shares at any time until the earlier to occur of
the valid termination of the Merger Agreement or the Effective Time at any
meeting of the stockholders of the Company, however called, or in any written
action by consent of stockholders of the Company in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the adoption
and approval of the terms thereof and in favor of each of the other actions
contemplated by the Merger Agreement and any action required in furtherance
hereof and thereof.
The undersigned stockholder may vote the Subject Shares on all other
matters which would reasonably be expected to delay or otherwise interfere or
prevent the consummation of the Merger.
This proxy shall be binding upon the heirs, successors and assigns of the
undersigned (including any transferee of any of the Subject Shares).
Any term or provision of this proxy which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this proxy or affecting the validity or
enforceability of any of the terms or provisions of this proxy in any other
jurisdiction. If any
-6-
<PAGE>
provision of this proxy is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
This proxy shall terminate upon the earlier of the termination of the
Merger Agreement pursuant to Section 6.1 thereof or the Effective Time.
Dated: January 14, 1999
Name: Keith E. Alessi
Number of shares of Company Common Stock
owned of record as of the date of this proxy:
-7-
<PAGE>
EXHIBIT 99.3
TELESPECTRUM STOCKHOLDER SUPPORT AGREEMENT
------------------------------------------
THIS STOCKHOLDER SUPPORT AGREEMENT, dated as of January 14, 1999 (this
"Agreement") being executed by the undersigned stockholder (the "Stockholder")
--------- -----------
of TeleSpectrum Worldwide Inc., a Delaware corporation ("TeleSpectrum"), for the
------------
benefit of International Data Response Corporation, a Delaware corporation
("IDRC").
- ------
WHEREAS, TeleSpectrum and IDRC are entering into an Agreement and Plan
of Merger, dated as of January 14, 1999 (the "Merger Agreement"), whereby, upon
----------------
the terms and subject to the conditions set forth in the Merger Agreement, each
issued and outstanding share of the common stock, par value $.001 per share, of
IDRC ("IDRC Common Stock") not owned directly or indirectly by TeleSpectrum or
-----------------
IDRC, will be converted into shares of common stock, par value $.01 per share,
of TeleSpectrum ("Telespectrum Common Stock"), and warrants exercisable for
-------------------------
TeleSpectrum Common Stock ("Warrants"), the outstanding shares of the Series A
--------
Preferred Stock, par value $.001 per share, of IDRC as of the effective time of
the Merger will be redeemed for cash, and the outstanding options and warrants
of IDRC as of the effective time of the Merger will be converted into options
exercisable for TeleSpectrum Common Stock and Warrants;
WHEREAS, Stockholder owns 6,946,583 shares of TeleSpectrum Common
Stock (such shares of TeleSpectrum Common Stock, together with any other shares
of capital stock TeleSpectrum acquired by such Shareholder after the date hereof
and during the term of this Agreement, being collectively referred to herein as
the "Subject Shares"); and
--------------
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, IDRC has required that the Stockholder agree, and in order to induce
IDRC to enter into the Merger Agreement the Stockholder has agreed, to enter
into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as follows:
1. Capitalized Terms. Capitalized terms used in this Agreement that
-----------------
are not defined herein shall have such meanings as set forth in the Merger
Agreement.
2. Covenants of Stockholder. Until the termination of this Agreement
------------------------
in accordance with Section 6, Stockholder agrees as follows:
(a) At the TeleSpectrum Stockholders Meeting (or at any
adjournment thereof) or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger or the Merger Agreement is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the adoption of the Merger Agreement and
<PAGE>
approval of the terms thereof and each of the other transactions contemplated by
the Merger Agreement.
(b) At any meeting of stockholders of TeleSpectrum or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote, consent or other approval is sought, the Stockholder shall vote (or cause
to be voted) the Subject Shares against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by TeleSpectrum or any subsidiary thereof or any
other Acquisition Proposal or (ii) any amendment of TeleSpectrum's Certificate
of Incorporation or Bylaws or other proposal or transaction involving
TeleSpectrum or any TeleSpectrum Subsidiary, which amendment or other proposal
or transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement or change in any manner the voting rights of any class of
capital stock of TeleSpectrum. The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
(c) Contemporaneously with the execution of this Agreement: (i)
Stockholder shall deliver to IDRC a proxy in the form attached hereto as Exhibit
A, which shall be irrevocable to the fullest extent permitted by law, with
respect to the Subject Shares (the "Proxy"); and (ii) Stockholder shall cause
-----
to be delivered to IDRC an additional proxy (in the form attached hereto as
Exhibit A) executed on behalf of the record owner of any issued and outstanding
shares of TeleSpectrum Common Stock that are owned beneficially (but are not
owned of record) by Stockholder.
(d) Except for 678,410 of the Subject Shares (the "CRW Warrant
Shares") subject to outstanding warrants granted by the Stockholder, the
Stockholder agrees not to (i) sell, transfer, pledge, assign or otherwise
dispose of (collectively, "Transfer"), or enter into any contract, option or
--------
other arrangement (including any profit-sharing arrangement) with respect to the
Transfer of the Subject Shares to any person or (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust or otherwise, in
relation to the Subject Shares. The Stockholder further agrees not to commit or
agree to take any of the foregoing actions. Notwithstanding the foregoing, the
Stockholder may Transfer (i) all of the CRW Warrant Shares upon exercise of the
associated warrants or (ii) all or any portion of the Subject Shares held by
such Stockholder by way of gift or for estate planning purposes, provided that
any such transfer outlined in clause (ii) of the preceding sentence shall first
be required to execute a joinder to this Agreement whereby such transferee
agrees to be bound by all of the terms and conditions hereof.
(e) Immediately after the execution of this Agreement (and from
time to time prior to the termination of this Agreement), Stockholder shall
instruct TeleSpectrum to cause each certificate of Stockholder evidencing any of
the Subject Shares to bear a legend in the following form:
-2-
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THE STOCKHOLDER SUPPORT AGREEMENT DATED AS OF
JANUARY 14, 1999, AS IT MAY BE AMENDED, A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
3. Representations and Warranties.
------------------------------
(a) The Stockholder has the requisite power and authority to
execute and deliver this Agreement and the Merger Agreement and to consummate
the transactions contemplated hereby. Each of this Agreement and the Merger
Agreement is enforceable against the Stockholder in accordance with its terms.
(b) The Stockholder represents and warrants to IDRC that (i) the
Stockholder is the record and beneficial owner of, and has good and marketable
title to, the Subject Shares, (ii) the Stockholder does not own, of record or
beneficially, any issued and outstanding shares of capital stock of TeleSpectrum
other than the Subject Shares, and (iii) the Stockholder has the sole right to
vote, and, except for the CRW Warrant Shares, the sole power of disposition with
respect to, the Subject Shares, and none of the Subject Shares other than the
CRW Warrant Shares is subject to any voting trust, proxy or other agreement,
arrangement or restriction with respect to the voting or disposition of such
Subject Shares, except for this Agreement.
4. Termination. The obligations of the Stockholder hereunder shall
-----------
terminate upon the earlier of (a) August 1, 1999, (b) the termination of the
Merger Agreement pursuant to Section 6.1 thereof (other than subsection (b)
thereof), (c) any amendment or modification of the Merger Agreement which
increases any of the consideration to be received by any of the stockholders of
IDRC pursuant to or in connection with the Merger Agreement, which amendment or
modification is not approved in writing by the Stockholder, (d) any amendment or
modification of the Merger Agreement which changes the form of the consideration
to be received by the holders of shares of IDRC Common Stock pursuant to or in
connection with the Merger Agreement, which amendment or modification is not
approved in writing by the Stockholder, (e) the withdrawal of the opinion of
J.P. Morgan Securities, Inc. that the consideration to be paid by TeleSpectrum
in connection with the merger is fair, from a financial point of view (the
"Fairness Opinion"), or any amendment or modification of the Fairness Opinion in
any manner which is adverse to TeleSpectrum or its stockholders, or (e) the
Effective Time.
-3-
<PAGE>
5. Further Assurances. Stockholder will, from time to time at IDRC's
------------------
cost and expense, promptly execute and deliver such additional or further
consents, documents and other instruments as IDRC may reasonably request for the
purpose of effectively carrying out the transactions contemplated by this
Agreement in accordance with the terms and conditions hereof.
6. Successors, Assigns and Transferees Bound. Except as provided
-----------------------------------------
herein, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by either of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Any successor, assignee or transferee (including a successor, assignee
or transferee as a result of the death of the Stockholder, such as an executor
or heir) shall be bound by the terms hereof, and the Stockholder shall take any
and all actions necessary to obtain the written confirmation from such
successor, assignee or transferee that it is bound by the terms hereof.
7. Remedies. The Stockholder acknowledges that money damages would
--------
be both incalculable and an insufficient remedy for any breach of this Agreement
by it, and that any such breach would cause IDRC irreparable harm. Accordingly,
the Stockholder agrees that in the event of any breach or threatened breach of
this Agreement, IDRC, in addition to any other remedies at law or in equity it
may have, shall be entitled, without the requirement of posting a bond or other
security, to equitable relief, including injunctive relief and specific
performance.
8. Severability. The invalidity or unenforceability of any provision
------------
of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
9. Amendment. This Agreement may be amended only by means of a
---------
written instrument executed and delivered by both the Stockholder and IDRC.
10. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
11. Survival. None of the representations, warranties, covenants and
--------
agreements made by the Stockholder shall survive the termination of this
Agreement.
12. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed to have been duly given when delivered in person,
by telecopy or by overnight courier service to the respective parties as
follows:
-4-
<PAGE>
if to IDRC:
International Data Response Corporation
PO Box 7130
Rancho Sante Fe, CA 92067-7130
Telecopy: (619) 759-3350
Attention: Mr. Jeffrey E. Stiefler
with a copy to:
Cooley Godward LLP
4365 Executive Drive - Suite 1100
San Diego, CA 92121
Telecopy: (619) 453-3555
Attention: Lance W. Bridges, Esq.
If to the Stockholder:
CRW Financial, Inc.
200 Four Falls Corporate
Suite 415
W. Conshohocken, PA 19428
Telecopy: (610) 878-7466
Attention: Mr. Jonathan P. Robinson
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103
Telecopy: (215) 981-4750
Attention: Barry M. Abelson, Esq
-5-
<PAGE>
13. Counterparts; facsimile. For the convenience of the parties,
-----------------------
this Agreement may be executed in one or more counterparts, including by
facsimile signature, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
STOCKHOLDER:
CRW FINANCIAL, INC.
By:__________________________________________
Jonathan P. Robinson
Vice President and Chief Financial Officer
Accepted and Agreed to
as of the date noted above:
INTERNATIONAL DATA RESPONSE CORPORATION
By:______________________________
Name:
Title:
-6-
<PAGE>
Exhibit A
Form of Irrevocable Proxy
Irrevocable Proxy
The undersigned stockholder of TeleSpectrum Worldwide Inc., a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Robert B. Hellman, Jr., Jeffrey E. Stiefler and
International Data Response Corporation, a Delaware corporation ("IDRC"), and
each of them, the attorneys and proxies of the undersigned with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to (i) the issued and outstanding shares of capital stock of the
Company owned of record by the undersigned as of the date of this proxy, which
shares are specified on the final page of this proxy and (ii) any and all other
shares of capital stock of the Company which the undersigned may acquire after
the date hereof. (The shares of the capital stock of the Company referred to in
clauses (i) and (ii) of the immediately preceding sentence are collectively
referred to as the "Subject Shares.") Upon the execution hereof, all prior
proxies given by the undersigned with respect to any of the Subject Shares are
hereby revoked, and no subsequent proxies will be given with respect to any of
the Subject Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with a Stockholder Support Agreement, dated as of the date hereof,
between IDRC and the undersigned (the "Stockholder Support Agreement"), and is
granted in consideration of IDRC entering into the Agreement and Plan of Merger,
dated as of the date hereof, among IDRC, the Company and certain stockholders of
IDRC (the "Merger Agreement"). Capitalized terms used but not otherwise defined
in this proxy have the meanings ascribed to such terms in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Subject Shares at any time until the earlier to occur of
the valid termination of the Merger Agreement or the Effective Time at any
meeting of the stockholders of the Company, however called, or in any written
action by consent of stockholders of the Company in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the adoption
and approval of the terms thereof and in favor of each of the other actions
contemplated by the Merger Agreement and any action required in furtherance
hereof and thereof.
Notwithstanding anything to the contrary set forth in this proxy, the CRW
Warrant Shares (as defined in the Stockholder Support Agreement) shall not be
subject to the terms of this proxy upon the exercise of the warrant associated
with the CRW Warrant Shares.
The undersigned stockholder may vote the Subject Shares on all other
matters which would reasonably be expected to delay or otherwise interfere or
prevent the consummation of the Merger.
This proxy shall be binding upon the heirs, successors and assigns of the
undersigned (including any transferee of any of the Subject Shares).
-7-
<PAGE>
Any term or provision of this proxy which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this proxy or affecting the validity or
enforceability of any of the terms or provisions of this proxy in any other
jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
This proxy shall terminate immediately upon the terminate upon the earlier
of the termination of the Merger Agreement pursuant to Section 6.1 thereof or
the Effective Time.
Dated: January 14, 1999
Name: CRW Financial, Inc.
By:_________________________________________
Jonathan P. Robinson
Vice President and Chief Financial Officer
Number of shares of Company Common Stock
owned of record as of the date of this proxy: 6,946,583
-8-
<PAGE>
EXHIBIT 99.4
IDRC STOCKHOLDER SUPPORT AGREEMENT
----------------------------------
THIS STOCKHOLDER SUPPORT AGREEMENT, dated as of January 14, 1999 (this
"Agreement") is being executed by the undersigned stockholder (the
---------
"Stockholder") of International Data Response Corporation, a Delaware
-----------
corporation ("IDRC"), for the benefit of TeleSpectrum Worldwide Inc., a Delaware
----
corporation ("TeleSpectrum").
------------
WHEREAS, TeleSpectrum and IDRC are entering into an Agreement and Plan
of Merger, dated as of January __, 1999 (the "Merger Agreement"), whereby, upon
----------------
the terms and subject to the conditions set forth in the Merger Agreement, each
issued and outstanding share of the common stock, par value $.001 per share, of
IDRC ("IDRC Common Stock") not owned directly or indirectly by TeleSpectrum or
-----------------
IDRC, will be converted into shares of common stock, par value $.01 per share,
of TeleSpectrum ("TeleSpectrum Common Stock"), and warrants exercisable for
-------------------------
TeleSpectrum Common Stock ("Warrants"), the outstanding shares of the Series A
--------
preferred stock, par value $.001 per share, of IDRC ("IDRC Series A Preferred
-----------------------
Stock") as of the effective time of the Merger will be redeemed for cash, and
- -----
the outstanding options and warrants of IDRC as of the effective time of the
Merger will be converted into options exercisable for TeleSpectrum Common Stock
and Warrants;
WHEREAS, Stockholder owns _________ shares of IDRC Common Stock (such
shares of IDRC Common Stock, together with any shares of IDRC Common Stock
obtainable upon exercise of Detachable Warrants, any other shares of capital
stock of IDRC acquired by such Stockholder after the date hereof and during the
term of this Agreement, being collectively referred to herein as the "Subject
-------
Shares"); and
- ------
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, TeleSpectrum has required that the Stockholder agree, and in order to
induce TeleSpectrum to enter into the Merger Agreement the Stockholder has
agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as follows:
1. Capitalized Terms. Capitalized terms used in this Agreement that are
-----------------
not defined herein shall have such meanings as set forth in the Merger
Agreement.
2. Covenants of Stockholder. Until the termination of this Agreement in
------------------------
accordance with Section 6, Stockholder agrees as follows:
(1) At the IDRC Stockholders Meeting (or at any adjournment thereof)
or in
<PAGE>
any other circumstances upon which a vote, consent (including the
IDRC Consent) or other approval with respect to the Merger or the
Merger Agreement is sought, the Stockholder shall vote (or cause to be
voted) the Subject Shares in favor of the Merger, the adoption of the
Merger Agreement and the approval of the terms thereof and each of the
other transactions contemplated by the Merger Agreement.
(2) At any meeting of stockholders of IDRC or at any adjournment
thereof or in any other circumstances upon which the Stockholder's
vote, consent or other approval is sought, the Stockholder shall vote
(or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding
up of or by IDRC or any subsidiary thereof or any other Acquisition
Proposal or (ii) any amendment of IDRC's Certificate of Incorporation
or Bylaws or other proposal or transaction involving IDRC or any IDRC
Subsidiary, which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the
Merger Agreement or any of the other transactions contemplated by the
Merger Agreement or change in any manner the voting rights of any
class of capital stock of IDRC. The Stockholder further agrees not to
commit or agree to take any action inconsistent with the foregoing.
(a) Contemporaneously with the execution of this Agreement: (i)
Stockholder shall deliver to TeleSpectrum a proxy in the form attached
hereto as Exhibit A, which shall be irrevocable to the fullest extent
permitted by law, with respect to the Subject Shares (the "Proxy");
-----
and (ii) Stockholder shall cause to be delivered to TeleSpectrum an
additional proxy (in the form attached hereto as Exhibit A) executed
on behalf of the record owner of any issued and outstanding shares of
IDRC Common Stock that are owned beneficially (but are not owned of
record) by Stockholder.
(3) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of (collectively, "Transfer"), or enter into any
--------
contract, option or other arrangement (including any profit-sharing
arrangement) with respect to the Transfer of the Subject Shares to any
person or (ii) enter into any voting arrangement, whether by proxy,
voting agreement, voting trust or otherwise, in relation to the
Subject Shares. The Stockholder further agrees not to commit or agree
to take any of the foregoing actions. Notwithstanding the foregoing,
the Stockholder may Transfer all or any portion of the Subject Shares
held by such Stockholder by way of gift or for estate planning
purposes, provided that any such transferee shall first be required to
execute a joinder to this Agreement whereby
<PAGE>
such transferee agrees to be bound by all of the terms and conditions
hereof.
(4) The Stockholder shall not, nor shall the Stockholder permit any
affiliate, director, officer, employee, partner, investment banker,
attorney or other advisor, agent or representative of the Stockholder
to, (i) directly or indirectly solicit, initiate or encourage the
submission of, any Acquisition Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition
Proposal.
(5) The Stockholder shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with TeleSpectrum in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
(6) Immediately after the execution of this Agreement (and from time
to time prior to the termination of this Agreement), Stockholder shall
instruct IDRC to cause each certificate of Stockholder evidencing any
of the Subject Shares to bear a legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THE STOCKHOLDER SUPPORT AGREEMENT DATED AS OF
JANUARY __, 1999, AS IT MAY BE AMENDED, BETWEEN THE ISSUER AND IDRC, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER.
3. Representations and Warranties.
------------------------------
(1) The Stockholder has the requisite capacity and legal right to
execute and deliver this Agreement and the Merger Agreement and to
consummate the transactions contemplated hereby. Each of this
Agreement and the Merger Agreement is enforceable against the
Stockholder in accordance with its terms.
(2) The Stockholder represents and warrants to TeleSpectrum that (i)
the Stockholder is the record and beneficial owner of, and has good
and marketable title to, the Subject Shares, (ii) the Stockholder does
not own, of record or beneficially, any shares of capital stock of
IDRC other than the Subject Shares
<PAGE>
and shares of IDRC Series A Preferred Stock, and (iii) the Stockholder
has the sole right to vote, and the sole power of disposition with
respect to, the Subject Shares, and none of the Subject Shares is
subject to any voting trust, proxy or other agreement, arrangement or
restriction with respect to the voting or disposition of such Subject
Shares, except for this Agreement.
4. Lock-Up. In consideration and as an inducement of TeleSpectrum's
-------
willingness to enter into the Merger Agreement, the Stockholder agrees that,
without the prior written consent of TeleSpectrum (which consent may be withheld
for any reason), the Stockholder will not, directly or indirectly (a) offer,
sell, pledge, contract to sell (including any short sale), grant any option to
purchase or otherwise dispose of any shares of TeleSpectrum Common Stock, the
Warrants or Warrant Shares acquired by such Stockholder in connection with the
Merger or upon the exercise of any options acquired in connection with the
Merger, or (b) enter into any Hedging Transaction (as defined below) relating to
the foregoing securities (each of the foregoing classes (a) and (b) are
hereinafter referred to as a "Disposition") for a period of one year after the
-----------
Effective Time (the "Lock-Up Period"). The foregoing restriction is expressly
--------------
intended to preclude the Stockholder from engaging in any Hedging Transaction or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition by the Stockholder during the Lock-Up Period even if the
securities would be disposed of by someone other than the Stockholder. "Hedging
Transaction" means any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation, any put or
call option) with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the shares of TeleSpectrum Common Stock; provided that the
exercise of an option or warrant to purchase shares of TeleSpectrum Common Stock
or other securities issued by TeleSpectrum or the conversion of any convertible
securities into shares of TeleSpectrum Common Stock or other securities issued
by TeleSpectrum shall not be a Hedging Transaction. The restrictions on
Disposition of TeleSpectrum Common Stock shall not apply to any TeleSpectrum
Common Stock acquired by the Stockholder in the open market or otherwise than in
connection with the Merger.
Without limiting the restrictions herein, any Disposition by the
Stockholder shall remain at all times subject to applicable securities laws The
Stockholder also agrees that TeleSpectrum may cause its transfer agent to note
stop transfer instructions with respect to shares of TeleSpectrum Common Stock
beneficially owned by the Stockholder on the transfer books and records of
TeleSpectrum.
5. Termination. The obligations of the Stockholder hereunder shall
-----------
terminate upon the earlier of the termination of the Merger Agreement pursuant
to Section 6.1 thereof or the Effective Time; provided, however, that Section 4
-------- -------
shall survive for the Lock-Up Period.
6. Further Assurances. Stockholder will, from time to time, promptly
------------------
execute and
<PAGE>
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as TeleSpectrum may reasonably request
for the purpose of effectively carrying out the transactions contemplated by
this Agreement.
7. Successors, Assigns and Transferees Bound. Except as provided herein,
-----------------------------------------
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party. Any
successor, assignee or transferee (including a successor, assignee or transferee
as a result of the death of the Stockholder, such as an executor or heir) shall
be bound by the terms hereof, and the Stockholder shall take any and all actions
necessary to obtain the written confirmation from such successor, assignee or
transferee that it is bound by the terms hereof.
8. Remedies. The Stockholder acknowledges that money damages would be
--------
both incalculable and an insufficient remedy for any breach of this Agreement by
it, and that any such breach would cause TeleSpectrum irreparable harm.
Accordingly, the Stockholder agrees that in the event of any breach or
threatened breach of this Agreement, TeleSpectrum, in addition to any other
remedies at law or in equity it may have, shall be entitled, without the
requirement of posting a bond or other security, to equitable relief, including
injunctive relief and specific performance.
9. Severability. The invalidity or unenforceability of any provision of
------------
this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
10. Amendment. This Agreement may be amended only by means of a written
---------
instrument executed and delivered by both the Stockholder and TeleSpectrum.
11. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
<PAGE>
12. Counterparts. For the convenience of the parties, this Agreement may
------------
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
STOCKHOLDER
By:____________________________________
Name:
Title:
Accepted and Agreed to
as of the date noted above:
TELESPECTRUM WORLDWIDE INC.
By:______________________________
Name:
Title:
<PAGE>
Exhibit A
Form of Irrevocable Proxy
Irrevocable Proxy
The undersigned stockholder of IDRC, a Delaware corporation (the
"Company"), hereby irrevocably (to the fullest extent permitted by law) appoints
and constitutes Keith Alessi, Richard Schwenk and TeleSpectrum, a Delaware
corporation ("TeleSpectrum"), and each of them, the attorneys and proxies of the
undersigned with full power of substitution and resubstitution, to the full
extent of the undersigned's rights with respect to (i) the issued and
outstanding shares of capital stock of the Company owned of record by the
undersigned as of the date of this proxy, which shares are specified on the
final page of this proxy and (ii) any and all other shares of capital stock of
the Company which the undersigned may acquire after the date hereof. (The
shares of the capital stock of the Company referred to in clauses (i) and (ii)
of the immediately preceding sentence are collectively referred to as the
"Subject Shares") Upon the execution hereof, all prior proxies given by the
undersigned with respect to any of the Subject Shares are hereby revoked, and no
subsequent proxies will be given with respect to any of the Subject Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with a Stockholder Support Agreement, dated as of the date hereof,
between TeleSpectrum and the undersigned (the "Stockholder Support Agreement"),
and is granted in consideration of TeleSpectrum entering into the Agreement and
Plan of Merger, dated as of the date hereof, among TeleSpectrum, the Company and
certain stockholders of the Company (the "Merger Agreement"). Capitalized terms
used but not otherwise defined in this proxy have the meanings ascribed to such
terms in the Merger Agreement.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Subject Shares at any time until the earlier to occur of
the valid termination of the Merger Agreement or the Effective Time at any
meeting of the stockholders of the Company, however called, or in any written
action by consent of stockholders of the Company in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the adoption
and approval of the terms thereof and in favor of each of the other actions
contemplated by the Merger Agreement and any action required in furtherance
hereof and thereof.
The undersigned stockholder may vote the Subject Shares on all other
matters which would reasonably be expected to delay or otherwise interfere or
prevent the consummation of the Merger.
This proxy shall be binding upon the heirs, successors and assigns of the
undersigned (including any transferee of any of the Subject Shares).
Any term or provision of this proxy which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without
<PAGE>
rendering invalid or unenforceable the remaining terms and provisions of this
proxy or affecting the validity or enforceability of any of the terms or
provisions of this proxy in any other jurisdiction. If any provision of this
proxy is so broad as to be unenforceable, the provision shall be interpreted to
be only so broad as is enforceable.
This proxy shall terminate immediately upon the termination of the
Stockholder Support Agreement.
Dated: January __, 1999
Name:
Number of shares of Company Common Stock
owned of record as of the date of this proxy:
