<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RMH Teleservices, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
RMH TELESERVICES, INC.
40 MORRIS AVENUE
BRYN MAWR, PA 19010
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY
FEBRUARY 23, 1999
To the Shareholders:
The Annual Meeting of Shareholders of RMH Teleservices, Inc. (the "Company")
will be held at 10:00 A.M. on Tuesday, February 23, 1999 at the Company's
executive offices at 40 Morris Avenue, Bryn Mawr, Pennsylvania 19010 for the
following purposes:
1. To elect two Directors who shall hold office until the 2002 Annual
Meeting of Shareholders.
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending September 30, 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on January 19, 1999
will be entitled to notice of, and to vote at, the meeting and any adjournment
or adjournments thereof.
Information concerning the matters to be acted upon at the meeting is set
forth in the accompanying Proxy Statement.
All shareholders are cordially invited to attend the meeting in person.
HOWEVER, TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK,
SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. Any shareholder attending
the meeting may vote in person even if he or she returned a proxy. In any
event, you remain entitled to revoke your proxy at any time before it is
exercised. A copy of the Company's Annual Report is also enclosed.
Sincerely,
Michael J. Scharff
Secretary
Bryn Mawr, Pennsylvania
January 20, 1999
<PAGE>
[LOGO OF RMH TELESERVICES, INC.]
RMH TELESERVICES, INC.
40 MORRIS AVENUE
BRYN MAWR, PENNSYLVANIA 19010
----------------
PROXY STATEMENT
----------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of RMH
Teleservices, Inc., a Pennsylvania corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Meeting") to be held at the Company's
executive offices at 40 Morris Avenue, Bryn Mawr, Pennsylvania 19010 at 10:00
AM on Tuesday, February 23, 1999. Only shareholders of record on January 19,
1999 will be entitled to notice of, and to vote at, the Meeting. Each share of
the Company's Common Stock, without par value (the "Common Stock"),
outstanding on the record date is entitled to one vote on each matter to be
considered.
This Proxy Statement, the foregoing notice and the accompanying proxy are
first being mailed to shareholders on or about January 20, 1999.
The Board of Directors of the Company (the "Board") does not intend to bring
any matter before the Meeting except as specifically indicated in the notice
and does not know of anyone else who intends to do so. If any other matters
properly come before the Meeting, however, the persons named in the enclosed
proxy, or their duly constituted substitutes acting at the Meeting, will be
authorized to vote or otherwise act thereon in accordance with their judgment
on such matters. If the enclosed proxy is properly executed and returned prior
to voting at the Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. In the absence of
instructions, the shares will be voted "FOR" the nominees of the Board in the
election of two Directors each of whose term of office will extend until the
2002 Annual Meeting of Shareholders and until his or her successor is duly
elected and qualified, and "FOR" the ratification of the appointment of Arthur
Andersen LLP as the Company's independent auditors for the current fiscal year
ending September 30, 1999 ("Fiscal 1999").
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing, by delivering a duly executed proxy bearing a later date
or by attending the Meeting and voting in person.
QUORUM AND VOTING
At the close of business on January 19, 1999, the record date, the Company
had outstanding 8,120,000 shares of Common Stock.
The presence, in person or by proxy, of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled to cast on
each matter to be voted upon at the Meeting will constitute a quorum as to
1
<PAGE>
each such matter. In the event that the Meeting is adjourned for one or more
periods aggregating at least 15 days due to the absence of a quorum, those
shareholders entitled to vote who attend the adjourned Meeting, although less
than a quorum as described in the preceding sentence, shall constitute a
quorum for the purpose of acting upon any matter set forth in the foregoing
notice.
In the election of Directors, the two nominees receiving a plurality of the
votes cast at the Meeting shall be elected. Approval of all other proposals to
be submitted to shareholders in accordance with the foregoing notice of the
Meeting and as set forth in this Proxy Statement requires the affirmative vote
of a majority of the votes cast at the Meeting by holders of shares entitled
to vote thereon. For purposes of determining the number of votes cast with
respect to the proposal to ratify the selection of independent auditors, only
those cast "FOR" or "AGAINST" are included. Abstentions and broker non-votes
are counted only for purposes of determining whether a quorum is present at
the Meeting. In the election of Directors, shareholders shall not have
cumulative voting rights.
SOLICITATION
The Company will bear the entire cost of preparing, assembling, printing and
mailing this Proxy Statement, the accompanying proxy and any additional
material which may be furnished to shareholders. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries and custodians to
forward to beneficial owners of stock held in their names. The solicitation of
proxies will be made by the use of the mails and through direct communication
with certain shareholders or their representatives by officers, Directors and
employees of the Company, who will receive no additional compensation
therefor. The Company has engaged StockTrans, Inc., the registrar and transfer
agent for the Common Stock, to solicit proxies and distribute materials to
brokerage houses, banks, custodians and other nominee holders. The Company
will pay StockTrans, Inc. approximately $3,000 for these services.
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SECURITY OWNERSHIP
The following table shows information concerning the beneficial ownership of
the Common Stock as of January 19, 1999 by (i) each Director and nominee, (ii)
each Named Executive Officer (as defined below) of the Company, (iii) all
Directors and executive officers as a group, and (iv) each person who is known
to the Company to be the beneficial owner of more than 5% of the Common Stock.
The number of shares beneficially owned by each person is determined under the
rules of the Securities and Exchange Commission ("SEC") and the information is
not necessarily indicative of beneficial ownership for any other purpose.
Under such rules, beneficial ownership includes any shares as to which the
person has sole or shared voting power or investment power as well as any
shares which the person has the right to acquire within 60 days after January
19, 1999 through the exercise of any stock option or otherwise.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
EXECUTIVE OFFICERS, DIRECTORS AND OF COMMON STOCK COMMON STOCK
BENEFICIAL OWNERS BENEFICIALLY OWNED BENEFICIALLY OWNED
--------------------------------- ------------------ ------------------
<S> <C> <C>
Advanta Partners LP(1)................... 2,658,456 32.73%
Gary H. Neems(1)(2)...................... 2,658,456 32.73%
William A. Rosoff(1)(3).................. 2,658,456 32.73%
Herbert Kurtz............................ 4,750 *
Derek Lubner(4).......................... 1,250 *
David P. Madigan......................... 1,250 *
MarySue Lucci(5)......................... 2,010,000 24.75%
Raymond J. Hansell(5).................... 2,010,000 24.75%
John A. Fellows.......................... -0- --
Michael J. Scharff....................... 17,000 *
Robert Berwanger......................... 21,500 *
David H. Clautice........................ 6,250 *
Richard P. Keenan........................ -0- --
All Executive Officers and Directors as a
Group
(12 persons)(2)(3)(4)(5)................ 4,714,206 58.06%
</TABLE>
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* Less than 1%
(1) The address of Advanta Partners LP ("Advanta Partners") is Welsh & McKean
Roads, P.O. Box 844, Spring House, PA 19477-0844.
(2) Includes 2,658,456 shares of Common Stock owned by Advanta Partners, of
which Mr. Neems is a Managing Director. Mr. Neems disclaims beneficial
ownership of these shares.
(3) Includes 2,658,456 shares of Common Stock owned by Advanta Partners. Mr.
Rosoff is Vice Chairman of Advanta Corp. ("Advanta"), wholly-owned
subsidiaries of which are the sole general partner and a limited partner
of Advanta Partners. Mr. Rosoff disclaims beneficial ownership of these
shares.
(4) Mr. Lubner is the nominee of Glengar International Investments Limited
("Glengar") pursuant to a shareholder's agreement. As of January 19, 1999,
Glengar was the beneficial owner of 126,315 shares of Common Stock. Mr.
Lubner disclaims beneficial ownership of this shares.
(5) Mr. Hansell and Ms. Lucci are husband and wife. Includes 991,212 shares of
Common Stock owned directly by Mr. Hansell, 1,012,350 shares owned
directly by Ms. Lucci and 6,438 shares owned by the children of Mr.
Hansell and Ms. Lucci. Their address is 30 Darby Road, Paoli, Pennsylvania
19301.
3
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PROPOSAL 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS
The bylaws of the Company provide for the Board to consist of three classes,
with each class being as equal in number as possible. At each annual meeting
of shareholders, Directors are elected for a full term of three years to
succeed Directors whose terms are expiring. The Board has nominated John A.
Fellows and Derek Lubner to serve as Directors until their respective
successors in office have been duly qualified and elected. Messrs. Fellows and
Lubner currently serve as Directors and have indicated a willingness to
continue to serve as Directors. Mr. Fellows was elected a Director to fill the
unexpired term of Raymond J. Hansell, who resigned as Director of the Company
effective December 1998. Mr. Fellows replaced Mr. Hansell as Chief Executive
Officer of the Company in September 1998. In the event that Mr. Fellows and
Mr. Lubner become unavailable to accept nomination or election as a Director,
the persons named in the enclosed proxy will vote the shares which they
represent for the election of such other persons as the Board may recommend,
unless the Board reduces the number of Directors.
Proxies for holders of Common Stock executed on the enclosed form will be
voted, in the absence of other instructions, "FOR" the election of Mr. Fellows
and Mr. Lubner.
Set forth below, with respect to each nominee for Director and each Director
continuing in office, is the name and age of such nominee or Director, the
time period during which he or she has served as a Director of the Company and
his or her principal occupation or employment and business affiliations at
present and during the past five years.
NOMINEES FOR TERMS EXPIRING IN 2002
DEREK LUBNER, age 36, was elected to the Board in May 1996 as the nominee of
Glengar International Investments Limited. Since June 1995, Mr. Lubner has
managed the marketing operations of a leisure business and is based in
England. From June 1993 to June 1995, Mr. Lubner served as a Director of Two
Heads Publishing, a book publisher based in England. Prior to joining Two
Heads Publishing, Mr. Lubner served as marketing coordinator of Belron
International, a windshield replacement company headquartered in England.
JOHN A. FELLOWS, age 34, joined the Company as Chief Executive Officer in
September 1998 and was elected to the Board in December 1998 to fill the
unexpired term of Raymond J. Hansell, who resigned from the Board in December
1998. Prior to joining the Company, Mr. Fellows was President of Telequest
Teleservices ("Telequest"), an Arlington, Texas based teleservices company,
from April 1997 to August 1998. While President of Telequest, Mr. Fellows had
responsibility for a business with ten call centers and was involved in the
refocusing of Telequest's historical product offerings, including the inbound
portfolio of its teleservices business. From April 1993 to April 1997, Mr.
Fellows was employed by Paging Network, Inc. ("PageNet"). During his four-year
tenure with PageNet, Mr. Fellows served as Vice President and General Manager.
Before joining PageNet, Mr. Fellows held various management positions at
Pepsico, Inc.
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
DIRECTORS CONTINUING IN OFFICE
Term Expiring in 2001
HERBERT KURTZ, age 72, was elected a Director of the Company effective
September 1996. Since January 1997, Mr. Kurtz has held the position of
Administrator with Cynwyd Investments ("Cynwyd"), a real estate management and
development firm that has sold its principal assets. From July 1996 until
December 1996, he was an independent consultant. From 1984 until July 1996,
Mr. Kurtz was the Chief Operating Officer of Cynwyd. From 1983 until joining
Cynwyd in 1984, Mr. Kurtz was a partner in Asher & Company Ltd., the
4
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Company's independent auditors prior to its fiscal year ended September 30,
1996 ("Fiscal 1996"). Mr. Kurtz no longer has any affiliation with Asher &
Company Ltd. From 1981 to 1983, Mr. Kurtz was Chairman and Chief Executive
Officer of Ups "n Downs, a retail clothing firm and subsidiary of Tootal Ltd.,
a company listed on the London Stock Exchange. From 1961 to 1980, Mr. Kurtz
served in a number of executive positions, in latter years as Chief Operating
Officer and Director, with Rockower Brothers, Inc., a retail clothing firm
then listed on the New York Stock Exchange.
GARY H. NEEMS, age 45, was elected as a Director of the Company in September
1997. Mr. Neems has been Managing Director of Advanta Partners LP ("Advanta
Partners"), the venture capital affiliate of Advanta Corp. ("Advanta"), since
May 1995. From August 1993 until he joined Advanta Partners, Mr. Neems was
Managing Director of Clipper Capital Partners, LP, a private equity investment
firm. Prior to that time, Mr. Neems was a Managing Director at Equitable
Capital Management Corp., a financial services firm.
Term Expiring in 2000
WILLIAM A. ROSOFF, age 55, was elected as a Director and Chairman of the
Board in January 1997. Mr. Rosoff is Vice Chairman and a Director of Advanta,
a diversified financial services company. Prior to joining Advanta in January
1996, Mr. Rosoff was, for more than five years, a long-time partner of the law
firm of Wolf, Block, Schorr and Solis-Cohen LLP, which currently provides
legal services to the Company. While at Wolf, Block, Schorr and Solis-Cohen
LLP, Mr. Rosoff served as Chairman of its Executive Committee and, immediately
prior to joining Advanta, as member of its Executive Committee and Chairman of
its Tax Department. Mr. Rosoff is a trustee of Atlantic Realty Trust.
DAVID P. MADIGAN, age 59, was elected as a Director of the Company effective
September 1996. Mr. Madigan is Senior Vice President and Chief Operations
Officer of Personal Lines Direct Marketing Operations for CNA Insurance
Companies. From 1989 until he joined CNA in October 1994, Mr. Madigan served
as a Senior Vice President of Mutual Assurance Company, an underwriter of
property and casualty insurance. From March 1992 to October 1994, Mr. Madigan
also served as President and Chief Executive Officer of American Loyalty
Insurance Company, a wholly-owned subsidiary of Mutual Assurance Company.
VOTING AGREEMENT
Raymond J. Hansell, MarySue Lucci (collectively, the "Founders") and Advanta
Partners entered into a voting agreement in 1996 which became effective upon
the completion of the Company's initial public offering in September 1996 (the
"Voting Agreement"). The Voting Agreement provides that each of Advanta
Partners, on the one hand, and the Founders, on the other hand, agrees to vote
for two nominees of the other to the Board. Each party's rights under the
Voting Agreement terminate when such party's ownership of Common Stock of the
Company becomes less than 25% of such party's ownership upon the completion of
the initial public offering.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board held a total of four meetings during the fiscal year ended
September 30, 1998 ("Fiscal 1998"). In addition, the Board adopted resolutions
by unanimous consent twice during Fiscal 1998. Each member of the Board, with
the exception of Derek Lubner, attended at least 75% of the meetings of the
Board during Fiscal 1998. Mr. Lubner is not a member of any committees of the
Board.
The Board has an Audit Committee, a Compensation Committee and an
Administrative Committee.
The Audit Committee of the Board presently consists of Messrs. Neems, Kurtz
and Madigan. It held one meeting during Fiscal 1998. The Audit Committee
recommends the engagement of the Company's independent accountants and is
primarily responsible for approving the services performed by the Company's
independent accountants and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls.
5
<PAGE>
The Compensation Committee of the Board presently consists of Messrs.
Rosoff, Neems, Kurtz and Madigan. It held one meeting during Fiscal 1998. The
Compensation Committee reviews and recommends compensation and compensation
changes for executives of the Company and members of the Board.
The Administrative Committee of the Board is a subcommittee of the
Compensation Committee and is responsible for granting options to purchase
Common Stock under the 1996 Stock Incentive Plan (the "Stock Incentive Plan")
to all participants in the Stock Incentive Plan other than the members of the
Administrative Committee. It presently consists of Messrs. Madigan and Kurtz.
It held no meetings and adopted resolutions by unanimous consent twice during
Fiscal 1998.
There are no other committees of the Board.
COMPENSATION OF DIRECTORS
The Company's Directors, other than Messrs. Neems, Rosoff and Fellows, are
entitled to receive a fee of $2,500 for attendance at each quarterly meeting
and a fee of $750 for attendance at each special meeting of the Board. In
connection with the Company's Fiscal 1998 Stock Option Repricing Program (the
"Repricing Program"), options to acquire 3,000 shares of Common Stock
previously granted in Fiscal 1996 to each currently serving Director, other
than Messrs. Neems, Rosoff and Fellows, were canceled and new options to
acquire 3,000 shares of Common Stock were granted. Such options have an
exercise price equal to the market value of the Common Stock on the date of
grant, have a term of ten years and vest in equal amounts on the first four
anniversaries of the date of grant. In Fiscal 1998, each Director other than
Messrs. Neems, Rosoff and Fellows received additional options to purchase
2,000 shares of Common Stock, and while in office, will be awarded options to
purchase 2,000 shares of Common Stock each fiscal year thereafter.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected Arthur Andersen LLP, independent accountants, to
audit the consolidated financial statements of the Company for Fiscal 1999 and
recommends that the shareholders vote for ratification of such appointment. If
the shareholders do not ratify this appointment, the Board will reconsider its
selection. A representative of Arthur Andersen LLP is expected to be present
at the Meeting and will have the opportunity to make a statement if desired
and is expected to be available to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 2.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or accrued by the Company for Fiscal 1998 to: (i) each
person who served as Chief Executive Officer of the Company during Fiscal
1998; (ii) each other executive officer of the Company who was an executive
officer on the last day of Fiscal 1998 and whose salary, bonus and commission
for Fiscal 1998 exceeded $100,000 for all services rendered in all capacities
to the Company; and (iii) two additional persons who would have been listed
under section (ii) but for the fact that they were not executive officers of
the Company on the last day of Fiscal 1998 (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)(1)
------------------ ------ --------- --------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
John A. Fellows(2)...... 1998 14,808 5,769 170,000(3) 100,000(4) 11
Chief Executive Officer
Raymond J. Hansell(5)... 1998 203,404 0 -- -0- 7,542
Vice Chairman 1997 200,000 0 -- -0- 7,203
and Chief Executive 1996 364,871 3,000,000(6) -- -0- 7,203
Officer
MarySue Lucci(7)........ 1998 203,404 0 -- -0- 9,159
President 1997 200,000 0 -- -0- 8,820
and Chief Operating 1996 216,538 3,000,000(6) -- -0- 8,820
Officer
Michael J. Scharff...... 1998 144,269 12,000 -- 60,000 6,992
Executive Vice 1997 125,500 7,832 -- -0- 6,783
President and 1996 107,193 30,000 -- 20,000 6,695
acting Chief Financial
Officer
Robert Berwanger(8)..... 1998 167,870 8,000 -- 80,000 664
Executive Vice 1997 79,154 50,000 -- 10,000 0
President and
Chief Operating Officer
David H. Clautice....... 1998 108,078 6,000 -- 25,000 814
Vice President 1997 105,802 5,000 -- -0- 1,246
1996 89,077 1,313 -- 15,000 1,042
Richard P. Keenan(9).... 1998 135,452 6,000 -- 25,000 857
Vice President 1997 125,616 5,370 -0- 1,124
1996 54,600 0 15,000 615
</TABLE>
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(1) Represents the amount in premiums paid by the Company with respect to a
life insurance plan for the benefit of the referenced officer and the
amount contributed by the Company to the 401(k) account of the referenced
officer.
(2) John Fellows was hired as Chief Executive Officer of the Company and began
his employment with the Company on September 8, 1998.
(3) Consists of a reimbursement for relocation expenses and related Federal
income tax obligations.
(4) Mr. Fellows was granted options to purchase 100,000 shares of the
Company's Common Stock in connection with his joining the Company as Chief
Executive Officer in September 1998. Mr. Fellows' interest in such options
will vest at a rate of 25% per year he remains employed with the Company.
7
<PAGE>
(5) Raymond J. Hansell served as Chief Executive Officer of the Company until
September 8, 1998, when he resigned from this office.
(6) Represents a one-time lump sum payment made to the referenced officer in
connection with the successful completion of the Company's initial public
offering.
(7) MarySue Lucci served as President of the Company until September 8, 1998,
when she resigned from this office. Ms. Lucci also served as Chief
Operating Officer of the Company until March 18, 1998, when she resigned
from this office.
(8) Robert Berwanger was promoted to Chief Operating Officer of the Company on
March 18, 1998. Until March 18, 1998, Robert Berwanger served as an
Executive Vice President of the Company.
(9) Mr. Keenan served as a Vice President of the Company until July 31, 1998,
when he resigned.
STOCK OPTION EXERCISES AND HOLDINGS
The following table shows the number of options granted to the Company's
Named Executive Officers during Fiscal 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIALLY
REALIZABLE
VALUE AT
ASSUMED RATES
OF STOCK PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM(1)
--------------------------------------------- ---------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE AT 5% AT 10%
UNDERLYING GRANTED TO PRICE ANNUAL ANNUAL
OPTIONS EMPLOYEES IN PER EXPIRATION GROWTH GROWTH
NAME GRANTED FISCAL YEAR SHARE($) DATE RATE($) RATE($)
---- ---------- ------------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John A. Fellows......... 100,000(2) 13.0% 2.00 9/08/08 207,220 448,436
Robert Berwanger........ 80,000(3) 10.4% 3.6875 3/12/08 185,520 470,152
Michael J. Scharff...... 60,000(4) 7.8% 3.6875 3/12/08 139,140 352,614
David H. Clautice....... 25,000(5) 3.2% 3.6875 3/12/08 57,975 146,923
Richard P. Keenan....... 25,000(6) 3.2% 3.6875 3/12/08(7) 57,975 146,923
</TABLE>
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(1) The potential realizable values are based on an assumption that the stock
price of the shares of Common Stock appreciate at the annual rate shown
(compounded annually) from the date of grant until the end of the option
term. These values do not take into account amounts required to be paid as
income taxes under the Internal Revenue Code of 1986, as amended, and any
applicable state laws, or option provisions providing for termination of
an option following termination of employment, nontransferability, or
vesting over periods of up to five years. These amounts are calculated
based on the requirements promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future growth of
the price of the Common Stock.
(2) Mr. Fellows was granted options to purchase 100,000 shares of the
Company's Common Stock in connection with his joining the Company as Chief
Executive Officer in September 1998.
(3) Includes 10,000 options repriced in connection with the Repricing Program.
(4) Includes 20,000 options repriced in connection with the Repricing Program.
(5) Includes 15,000 options repriced in connection with the Repricing Program.
(6) Includes 15,000 options repriced in connection with the Repricing Program.
(7) Mr. Keenan left the Company on July 31, 1998. Pursuant to the terms of Mr.
Keenan's option grant, his right to exercise the above options terminated
three months after his employment with the Company terminated.
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The following table shows the number of exercised and unexercised options
and the value of exercised and unexercised in-the-money options held by Named
Executive Officers as of September 30, 1998:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AS OF MONEY OPTIONS AS OF SEPTEMBER
SEPTEMBER 30, 1998 30, 1998(1)
------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE($) UNEXERCISABLE($)
- ---- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
John A. Fellows...... 0 100,000 0 50,000
Robert Berwanger..... 0 80,000 0 0
Michael J. Scharff... 0 60,000 0 0
David H. Clautice.... 0 25,000 0 0
Richard P. Keenan.... 0 0 0 0
</TABLE>
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(1) The closing price of the Company's Common Stock on the Nasdaq Stock
Market's National Market ("Nasdaq") on September 30, 1998 was $2.50 per
share. This table reflects the repricing of options which took place in
March 1998.
OPTION REPRICING
In March 1998, the Administrative Committee of the Board, in order to retain
and create incentives for option holders in alignment with shareholder
interests, approved a stock option repricing program (the "Repricing
Program"). (See "Report of the Administrative Committee" below.) The repricing
was accomplished by means of canceling outstanding options and granting an
identical number of new options at an exercise price of $3.6875 per share, the
market price of the Common Stock on the date of the grants. Option holders
could accept or decline the repricing. At the same time, certain option
holders were also granted additional options to acquire shares of Common Stock
at an exercise price of $3.6875, the market price of the Common Stock on the
date of the grants. A total of 203,000 options were canceled and a total of
511,100 new options (including additional grants) to acquire shares of Common
Stock were granted. The newly granted options (including the additional
grants) vest in cumulative annual installments of 25% commencing one year from
the date of grant and terminate ten years from the date of grant.
9
<PAGE>
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT TIME PRICE AT NEW REMAINING
OPTIONS OF TIME OF EXERCISE AT DATE OF
NAME DATE REPRICED REPRICING($)(1) REPRICING($) PRICE($) REPRICING
---- ------- ---------- --------------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert Berwanger....... 3/12/98 10,000 3.6875 7.00 3.6875 9 yrs 1 mo
Executive Vice
President and
Chief Operating
Officer
Michael J. Scharff..... 3/12/98 20,000 3.6875 12.50 3.6875 8 yrs 6 mos
Executive Vice
President and
acting Chief Financial
Officer
David H. Clautice...... 3/12/98 15,000 3.6875 12.50 3.6875 8 yrs 6 mos
Vice President
Richard P. Keenan...... 3/12/98 15,000 3.6875 12.50 3.6875 8 yrs 6 mos
Vice President
Richard C. Altus....... 3/12/98 15,000 3.6875 12.50 3.6875 8 yrs 6 mos
Chief Financial
Officer(2)
</TABLE>
- --------
(1) Per The Wall Street Journal.
(2) Richard C. Altus resigned as Chief Financial Officer of the Company
effective April 24, 1998. Pursuant to the terms of Mr. Altus' option
grant, his right to exercise the above options terminated three months
after his employment with the Company terminated.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with John Fellows in
September 1998 providing for Mr. Fellows' employment as Chief Executive
Officer of the Company. Under the terms of the employment agreement, Mr.
Fellows is to be paid a base salary of $275,000 per annum for the first year
of his employment, $300,000 per annum for the second year of his employment
and $325,000 per annum for the third year of his employment with the Company.
Annual increases thereafter will be determined by the Board. The employment
agreement entitles Mr. Fellows to a $75,000 signing bonus, payable in 12
consecutive monthly installments provided Mr. Fellows remains employed with
the Company at the time each installment is to be paid, an annual bonus in the
range of $75,000 to $100,000 at the discretion of the Board and a relocation
expense reimbursement totaling $170,000. The employment agreement provides
that Mr. Fellows will be granted 100,000 shares of restricted Common Stock.
The restricted Common Stock will vest at a rate of 20,000 shares on each of
September 8, 1999, September 8, 2000, September 8, 2001, September 8, 2002 and
September 8, 2003, provided he remains employed with the Company on such
dates. The employment agreement also provided for a grant to Mr. Fellows of
options to acquire 100,000 shares of Common Stock which vests in four annual
installments of 25,000 each, commencing on September 8, 1999, provided Mr.
Fellows remains employed with the Company. In addition, in the event Mr.
Fellows' employment is terminated without cause (as defined in the employment
agreement), the Company is obligated to continue to pay Mr. Fellows' base
salary (at the then-applicable rate) for a period of 18 months following such
termination, so long as Mr. Fellows executes and does not revoke a separation
agreement and general release agreement acceptable to the Company. The
employment agreement also contains provisions regarding the protection of
confidential information from the date of the agreement and for a period of
five years following the cessation of Mr. Fellows' employment within the
Company. The employment agreement also contains a provision regarding the
assignment of inventions to the Company and a covenant not to compete from the
date of the agreement until the second anniversary of the termination of Mr.
Fellows' employment with the Company.
10
<PAGE>
In connection with the Recapitalization (as defined below under "Certain
Relationships and Related Transactions"), the Company entered into an
employment agreement with Raymond J. Hansell providing for Mr. Hansell's
employment as Chief Executive Officer of the Company which was to expire on
May 31, 1999 and was terminated September 8, 1998. Under the terms of the
employment agreement, Mr. Hansell was paid an annual salary of $200,000, which
was adjusted annually to reflect increases in the consumer price index. The
employment agreement also entitled Mr. Hansell to a discretionary annual bonus
and a one-time lump sum payment of $3.0 million subsequent to the Company's
completion of its initial public offering, which amount has been paid in full.
The employment agreement contained provisions regarding the protection of
confidential information and assignment of inventions to the Company. The
agreement also contained a covenant prohibiting Mr. Hansell from competing
with the Company for two years following the date of the termination of his
employment with the Company.
Concurrent with the termination of Mr. Hansell's employment as Chief
Executive Officer, the Company entered into a consultant agreement with Mr.
Hansell. The initial term of this agreement is to expire on May 31, 1999.
Under the terms of the consultant agreement, Mr. Hansell is to be paid base
compensation at the gross annual rate of $104,239. In addition, in the event
of a change in control of the Company, the Company is obligated to pay Mr.
Hansell the remaining balance due on the consultant agreement; however, if
such payment would prevent an acquirer of the Company from using the pooling
method of accounting or other desirable tax treatment in connection with such
acquisition, then the Company will not be obligated to make such lump sum
payment so long as the Company, or any successor entity, agrees to assume all
payment obligations under the consultant agreement. The consultant agreement
also contains provisions regarding the protection of confidential information
from the effective date of the agreement until the later to occur of the fifth
anniversary of the termination of Mr. Hansell's services under the consultant
agreement or May 31, 2004. The consultant agreement also contains a provision
regarding the assignment of inventions to the Company and a covenant not to
compete from the date of the agreement until the later to occur of the second
anniversary of the termination of Mr. Hansell's services under the consultant
agreement or May 24, 2002.
The Company also entered into an employment agreement with MarySue Lucci
providing for her employment with the Company as President and Chief Operating
Officer. The terms of Ms. Lucci's employment agreement were otherwise
substantially identical to those contained in Mr. Hansell's employment
agreement. Ms. Lucci's employment agreement was terminated on September 8,
1998, at which time the Company entered into a consultant agreement with Ms.
Lucci. The provisions of Ms. Lucci's consultant agreement are substantially
the same as those under Mr. Hansell's consultant agreement.
In March 1998, the Company entered into an employment agreement with Robert
Berwanger in connection with the selection of Mr. Berwanger as the Company's
Chief Operating Officer, which was subsequently amended in August 1998. The
initial term of the agreement is to expire on April 1, 2002; however, either
the Company or Mr. Berwanger can terminate this employment for any or no
reason upon 30 days' prior notice to the other. Under the terms of the
employment agreement, Mr. Berwanger is to be paid an annual salary of
$225,000, which will be adjusted annually to reflect an increase at least the
greater of 5% of his base compensation or the minimum of the percentage
increase of the Wage Increase for the metropolitan statistical area of
Philadelphia. The employment agreement also entitles Mr. Berwanger to receive
an annual bonus in an amount to be determined in the discretion of the Board.
If the Company terminates Mr. Berwanger's employment without cause (as defined
in his employment agreement), the Company is obligated to pay Mr. Berwanger
100% of his base compensation and fringe benefits for the 17 months following
termination. In addition, if Mr. Berwanger's employment is terminated within
three months before or six months after a change of control (as defined in his
employment agreement), the Company is obligated to pay Mr. Berwanger a lump
sum equal to 100% of the base salary otherwise payable during the 17 months
following termination (initially $318,750) and to continue to pay 100% of
fringe benefits for a period of 17 months following termination. If the
Company terminates Mr. Berwanger's employment for cause or upon his death or
disability, or if Mr. Berwanger voluntarily terminates his employment with the
Company, the Company will have no further obligation to pay Mr. Berwanger any
amounts in compensation other than amounts that accrued prior to such
termination.
11
<PAGE>
Mr. Berwanger's employment agreement also contains provisions regarding the
protection of confidential information and assignment of inventions to the
Company, a covenant not to compete from the effective date of the agreement
until the expiration of six months following his termination for any reason
and a covenant not to solicit any of the Company's employees, customers or
suppliers to terminate their relationships with the Company from the effective
date until the expiration of 24 months after his termination for any reason.
In August 1998, the Company entered into an employment agreement with
Michael Scharff providing for Mr. Scharff's employment as Executive Vice
President. The initial term of the agreement is to expire on August 31, 2002;
however, either the Company or Mr. Scharff can terminate this employment
agreement for any or no reason upon 30 days' prior notice to the other. Under
the terms of the employment agreement, Mr. Scharff is to be paid an annual
salary of $150,000, which will be adjusted annually to reflect an increase at
least the greater of 5% of his base compensation or the minimum of the
percentage increase of the Wage Increase for the metropolitan statistical area
of Philadelphia. The employment agreement also entitles Mr. Scharff to receive
an annual bonus, which amount is to be determined in the discretion of the
Board. If the Company terminates Mr. Scharff's employment without cause (as
defined in his employment agreement), the Company is obligated to pay Mr.
Scharff 100% of his base compensation and fringe benefits for the 17 months
following termination. In addition, if there is a change of control (as
defined in his employment agreement), the Company is obligated to pay Mr.
Scharff a lump sum bonus of $50,000 in addition to any salary, annual bonus
severance or other compensation he would otherwise be entitled to under his
employment agreement. If the Company terminates Mr. Scharff's employment for
cause or upon his death or disability, or if Mr. Scharff voluntarily
terminates his employment with the Company, the Company will have no further
obligation to pay Mr. Scharff any amounts in compensation other than amounts
that accrued prior to such termination. Mr. Scharff's employment agreement
also contains provisions regarding the protection of confidential information
and assignment of inventions to the Company, a covenant not to compete from
the effective date of the agreement until the expiration of six months
following his termination for any reason and a covenant not to solicit any of
the Company's employees, customers or suppliers to terminate their
relationships with the Company from the effective date until the expiration of
24 months after his termination for any reason.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Rosoff, a Director and a member of the Compensation Committee, is Vice
Chairman of Advanta. The Company has provided teleservices to Advanta, of
which Advanta Partners is a venture capital affiliate. These services
primarily were related to the marketing of insurance and credit card products.
Amounts billed by the Company to Advanta equaled $3,222,786 in Fiscal 1998.
Mr. Neems, a Director and a member of the Compensation Committee, is
Managing Director of Advanta Partners. Since the Company's recapitalization in
May 1996, Advanta Partners has provided consulting services to the Company
pursuant to a consulting agreement and will receive annual fees of $50,000
through May 24, 2001. Advanta Partners owns substantial equity interests in
two other teleservices companies.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board consists entirely of Directors who
are not employees of the Company. The Committee is currently comprised of
Messrs. Rosoff, Neems, Kurtz and Madigan. The Committee is responsible for
reviewing and approving the Company's compensation policies and the
compensation paid to executive officers. The Company's compensation policies
are and will continue to be structured to enable the Company to attract,
retain and motivate highly qualified executive officers to contribute to the
Company's goals and objectives and its overall financial success. In
determining executive compensation, the Compensation Committee will review and
evaluate information supplied by management and will base decisions both on
the Company's performance and on the individual's contribution and
performance. The compensation of executive officers includes salary and
incentive compensation.
SALARY
Prior to the Recapitalization, salaries of executive officers were
established by management with the goal of rewarding individual contributions
to the Company's success and attracting and retaining highly qualified
executives. Since May 1996, the salaries and bonuses paid to Mr. Hansell while
employed as the Company's Chief Executive Officer during Fiscal 1998, and to
Ms. Lucci, while employed as the Company's President and Chief Operating
Officer during Fiscal 1998, were governed by the terms of their employment
agreements. Payments to Mr. Hansell and Ms. Lucci during Fiscal 1999 will be
governed by the terms of their consultant agreements. See "Executive
Compensation--Employment Agreements" set forth above in this Proxy Statement.
Mr. Fellows' compensation for serving as Chief Executive Officer of the
Company, including salary, bonuses and benefits, will be governed by the terms
of his employment agreement with the Company. See "Executive Compensation--
Employment Agreements" set forth above in this Proxy Statement.
In addition to Mr. Fellows, salaries and bonuses paid to Mr. Scharff and Mr.
Berwanger were and will be governed by the terms of employment agreements with
the Company. See "Executive Compensation--Employment Agreements" set forth
above in this Proxy Statement. The Compensation Committee reviews the salary
of each other executive officer in relation to the previous salaries and with
regard to general industry conditions or trends. The salaries will continue to
be set at levels intended to reward achievement of individual and company
goals and to motivate and retain highly qualified executives whom the
Compensation Committee believes are important to the continued success of the
Company. While the Compensation Committee's decisions are primarily subjective
rather than based on formulas, the Compensation Committee considers various
measures of the financial condition of the Company in absolute terms and in
relation to internal performance goals.
INCENTIVE COMPENSATION
The Compensation Committee believes that incorporating annual incentive
compensation into the total compensation of executive officers encourages the
executives to have the common goal of achieving the Company's economic and
strategic objectives. As with salary considerations, the decisions regarding
incentive compensation, which may take the form of cash bonuses or grants of
stock options, are based on both corporate and individual performance.
Decisions are made on a subjective basis and are not based on formulas.
1997 EXECUTIVE BONUS PLAN
In February 1997, the Company adopted an executive compensation plan for the
purpose of fairly compensating all executives of the Company. The bonus plan
is based upon the Company meeting certain financial and operating performance
targets. The performance targets include billable hour levels, earnings per
share and net profits. Bonuses are calculated as a certain percentage of each
executive's base salary and range from 0% to 50% of an executive's base
salary. Seventy-five percent of each bonus award is based on meeting the
performance targets and the remaining 25% of each award is discretionary. In
Fiscal 1998, the Company paid $5,769 of the $75,000 signing bonus Mr. Fellows
is entitled to under his employment agreement. The annual
13
<PAGE>
bonus paid to each of Mr. Berwanger, Mr. Scharff, Mr. Keenan and Mr. Altus for
Fiscal 1998 ranged between 1% to 10% of the relevant officer's base salary. No
bonuses were paid to Mr. Hansell or Ms. Lucci during Fiscal 1998.
SUMMARY
As described above, the Compensation Committee believes that its policies
and actions have, and will continue to, motivate and reward the executive
officers who contribute to the Company's financial performance and increase
the Company's value to shareholders.
COMPENSATION COMMITTEE:
<TABLE>
<S> <C>
William A. Rosoff Herbert Kurtz
Gary H. Neems David P. Madigan
</TABLE>
January 19, 1999
REPORT OF THE ADMINISTRATIVE COMMITTEE OF THE BOARD OF DIRECTORS
INCENTIVE COMPENSATION
Decisions regarding incentive compensation, which may take the form of
grants of stock options, are based on both corporate and individual
performance. The Administrative Committee is responsible for granting options
to executive officers and other employees of the Company under the Stock
Incentive Plan. Incentive compensation paid to the executive officers during
Fiscal 1998 was in the form of both cash bonuses and grants of stock options.
During Fiscal 1998, the Administrative Committee granted to John Fellows
options to acquire 100,000 shares of Common Stock at $2.00 per share in
connection with the employment of Mr. Fellows as Chief Executive Officer of
the Company in September 1998. The Administrative Committee also repriced
certain outstanding options of executive officers and other employees of the
Company in March 1998 and made additional grants of options to executive
officers and other employees of the Company in March 1998. (See "Repricing
Program" below). The Administrative Committee believes that these actions will
provide certain stock incentives to these officers in future years.
REPRICING PROGRAM
During Fiscal 1998, the Administrative Committee determined that because
many of the options previously granted under the Stock Incentive Plan were at
exercise prices substantially above the recent market price of the Company's
Common Stock (i.e., "out-of-the-money" options), such options were no longer
providing employees with adequate incentive to improve performance. In
response, the Administrative Committee approved the Repricing Program. The
Repricing Program was accomplished by means of canceling outstanding options
and granting an identical number of new options to acquire Common Stock at an
exercise price of $3.6875 per share, the market price of the Common Stock on
the date of the grants. Option holders could accept or decline the repricing.
At the same time, certain option holders were also granted additional options
to acquire shares of Common Stock at an exercise price of $3.6875, the market
price of the Common Stock on the date of the grants. The number of additional
options issued to such option holders was determined in accordance with and
based upon each option holder's position and/or tenure with the Company. The
Repricing Program was approved to give option holders options with an exercise
price at the then-current market value in exchange for out-of-the-money
options and to encourage retention of employees by restarting the vesting
period. The Administrative Committee believes that the Repricing Program,
which gave option holders options with a lower exercise price in exchange for
the forfeiture of vested exercise rights, was in the best interests of both
the option holders and the Company's shareholders. The stock options granted
to executive officers and other employees of the Company pursuant to the
Repricing Program become exercisable in equal annual installments over a four-
14
<PAGE>
year period, have a term of ten years and terminate three months after
termination of employment. As a result, these executives have incentive to
remain in the employ of the Company for a substantial period of time and their
interests are aligned with those of the Company's outside shareholders.
ADMINISTRATIVE COMMITTEE:
<TABLE>
<S> <C>
Herbert Kurtz David P. Madigan
</TABLE>
January 19, 1999
STOCK PERFORMANCE GRAPH
The following performance graph compares the cumulative shareholder return
on the Company's Common Stock with the cumulative total return of the Standard
& Poor's 500 Index and an index of peer group companies consisting of
teleservices companies for the period from September 18, 1996 to September 30,
1998. This peer group is one with which the management believes the Company to
be most aligned. The graph assumes that $100 was invested in the Company's
Common Stock and each index on September 18, 1996 and that any dividends were
reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
FROM SEPTEMBER 16, 1996 TO SEPTEMBER 30, 1998 AMONG
RMH TELESERVICES, INC., STANDARD & POOR'S 500 INDEX
AND A PEER INDEX (1)
[COMPARISON GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
9/19/96 9/30/96 9/30/97 9/30/98
------- ------- ------- -------
<S> <C> <C> <C> <C>
RMH Teleservices, Inc. ......................... $100 $118 $ 73 $ 20
Peer Index...................................... $100 $ 95 $ 31 $ 18
S&P 500......................................... $100 $101 $141 $154
</TABLE>
- --------
(1) The Peer Index includes the common stock of the following companies: APAC
TeleServices, Inc.; ICT Group, Inc., Precision Response Corp.; SITEL
Corporation; Telespectrum Worldwide Inc.; Teletech Holdings Inc.; and West
Teleservices Corp.
15
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the regulations thereunder require the Company's
Directors and executive officers, and persons who own more than ten percent of
its outstanding Common Stock, to file with the SEC initial reports of
ownership and reports of changes in ownership of the Company's Common Stock.
Executive officers, Directors and ten percent shareholders are required by SEC
regulations to furnish the Company with a copy of all Section 16(a) forms
("Forms 3, 4, and 5") that they file. To the Company's knowledge, based solely
on a review of copies of the Forms 3, 4 and 5 furnished to the Company and
written representations as to all transactions in the Company's securities
effected during the period from October 1, 1997 through September 30, 1998,
all applicable Section 16(a) filing requirements were complied with, except
that: Derek Lubner, Herbert Kurtz and David Madigan did not include in their
reports on Form 3 in Fiscal 1996 options to acquire 3,000 shares of Common
Stock (such transactions have since been reported by way of amendment to such
reports on Form 3) or in their reports on Form 5 for Fiscal 1998 one
transaction relating to the cancellation of options to acquire 3,000 shares of
Common Stock (such transactions have since been reported by way of amendment
to such reports on Form 5).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Indemnification Obligations under the Recapitalization Agreement
On May 24, 1996, the Company completed its recapitalization (the
"Recapitalization") as provided under the terms of a Recapitalization and
Stock Purchase Agreement (the "Recapitalization Agreement"). In connection
with the Recapitalization, the Founders, on the one hand, and Advanta
Partners, Glengar and the Company, on the other hand, agreed to indemnify each
other against any loss suffered by the indemnified parties related to the
breach of any representation or warranty or non-fulfillment of any covenant or
agreement set forth in the Recapitalization Agreement. The indemnification
obligations apply only if the indemnifiable losses exceed $100,000 and are
limited to an aggregate of $4.6 million (except for losses resulting from
breaches by the Founders of representations, warranties and covenants with
respect to tax matters). The representations and warranties expired on May 24,
1998, except for those made by the Founders regarding taxes, which survive
until the expiration of applicable statutes of limitations.
GENERAL INFORMATION
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 1998. SUCH WRITTEN REQUESTS SHOULD BE
DIRECTED TO MICHAEL J. SCHARFF, EXECUTIVE VICE PRESIDENT, AT THE ADDRESS OF
THE COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
16
<PAGE>
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 2000 Annual of Meeting of Shareholders
must be received by the Company no later than September 22, 1999 and be
otherwise in compliance with applicable laws and regulations in order for such
proposals to be included in the Proxy Statement.
A shareholder of the Company may wish to have a proposal presented at the
2000 Annual Meeting of Shareholders, but not to have such proposal included in
the Company's Proxy Statement and Form of Proxy relating to that meeting. If
notice of any such proposal is not received by the Company at the address
appearing on the first page of this Proxy Statement by December 5, 1999, then
such proposal shall be deemed "untimely" for purposes of Rule 14a-4(c)
promulgated under the Exchange Act and, therefore, the Company will have the
right to exercise discretionary voting authority with respect to such
proposal.
By Order of the Board of Directors
Michael J. Scharff
Secretary
January 20, 1999
17
<PAGE>
RMH TELESERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of RMH Teleservices, Inc. (the "Company") hereby
appoints John A. Fellows, Gary Neems and William A. Rosoff, and each of them
acting individually, with full power of substitution, to act as attorneys and
proxies for the undersigned and to vote all shares of stock of the Company
which the undersigned would be entitled to vote if personally present at the
1999 Annual Meeting of Shareholders of the Company to be held at the Company's
executive offices at 40 Morris Avenue, Bryn Mawr, Pennsylvania 19010, on
Tuesday, February 23, 1999, at 10:00 a.m., and at any adjournment or
postponement thereof, provided that said proxies are authorized and directed to
vote as indicated with respect to the matters set forth on the opposite side of
this Proxy.
UNLESS OTHERWISE SPECIFIED, ALL SHARES WILL BE VOTED "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR OF THE BOARD OF DIRECTORS, AND "FOR" THE APPROVAL OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT
FISCAL YEAR ENDING SEPTEMBER 30, 1999. This Proxy also delegates discretionary
authority to vote with respect to any other business which may properly come
before the meeting and any adjournment or postponement thereof.
[_] MARK HERE FOR ADDRESS CHANGE AND
NOTE ON REVERSE.
(Please sign and date on reverse side)
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Election of Directors: John A. Fellows, Derek Lubner
INSTRUCTIONS: To withhold
authority to vote for any
FOR all AUTHORITY individual nominee, write
nominees [_] WITHHELD that nominee's name on the
(to vote all line provided below.
nominees) [_] --------------------------------------
2. Ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending September 30, 1999.
FOR [_] AGAINST [_] ABSTAIN [_]
The undersigned hereby revokes all
previous proxies for the meeting and
acknowledges receipt of the Notice of
Annual Meeting, Proxy Statement and
Annual Report of RMH Teleservices,
Inc.
------------------- ---------
Signature(s) Date
NOTE: Please sign this Proxy exactly
as name(s) appears in address. When
signing as attorney-in-fact,
executor, administrator, trustee or
guardian, please add your titles as
such and, if the signer is a
corporation, please sign with full
corporate name by duly authorized
officer or officers and affix the
corporate seal. Where stock is issued
in the name of two or more persons,
all such persons should sign.
IMPORTANT--PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
