SUBSCRIPTION AGREEMENT
This Subscription Agreement is dated as of March 18, 1998 between
TeleSpectrum Worldwide Inc., a Delaware corporation (the "Company") and Xxxxx X.
Xxxxxx (the "Subscriber").
BACKGROUND
Concurrent with the execution and delivery of this Agreement, the Company
and Subscriber have entered into the Employment Agreement attached as Exhibit A
hereto providing for the employment by the Subscriber as the Chairman, Chief
Executive Officer and President. In connection with such employment of the
Subscriber, the Company desires to sell to Subscriber, and the Subscriber
desires to purchase from the Company shares of common stock, par value $0.01 per
share (the "Common Stock"), and the Company and the Subscriber desire to provide
for such other matters related to the shares of Common Stock purchased by the
Subscriber, pursuant to the terms and conditions of this Agreement.
WITNESSETH
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
SECTION 1.1 ISSUANCE AND SALE OF COMMON STOCK. The Company hereby sells
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to Subscriber, and Subscriber hereby purchases from the Company, 227,964 shares
of Common Stock (the "Purchased Shares"), for an aggregate purchase price of
$500,000 or $2.1933 per Purchased Share (the "Purchase Price").
SECTION 1.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANIES. The
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Company represents and warrants to Subscriber that:
(a) The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.
(b) The Company has all requisite power and authority to execute and
deliver this Agreement and to carry out the transactions contemplated hereby.
The execution and delivery and performance of this Agreement by the Company have
been duly authorized by all requisite corporate action. This Agreement
constitutes a valid and binding agreement of the Company enforceable against it
in accordance with its terms.
(c) The total authorized capital stock of the Company consists of
200,000,000 shares of Common Stock (of which approximately 25,500,000 shares are
issued and outstanding) and 5,000,000 shares of preferred stock, par value $.01
per share (of which no shares are outstanding). All of the outstanding shares
of Common Stock are duly and validly authorized and issued, fully paid and non-
assessable. None of the Purchased Shares are subject to any preemptive rights.
The Purchased Shares, when issued and delivered against payment thereof in
accordance with this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable
(d) The Company has heretofore delivered or made available to the
Subscriber, in the form filed with the U.S. Securities and Exchange Commission,
its (i) Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
(ii) its proxy statement and annual review relating to its May 28, 1997 meeting
of stockholders, and (iii) its Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996 (collectively, the "SEC Reports"). The SEC
Reports were prepared substantially in accordance with the requirements of the
Securities Exchange Act of 1934, as amended, as the case may be, and the rules
and regulations promulgated under such act, and did not at the time they were
filed contained any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 1.3 REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. Subscriber
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hereby represents, warrants and acknowledges to the Company that:
(a) The Purchased Shares subscribed for hereunder are being acquired
for investment and not with a view to the distribution or resale thereof, the
effect of which is that such Shares must be held indefinitely unless
subsequently registered under the Securities Act of 1933, as amended (the
"Act"), or an exemption from such registration is available.
(b) The Subscriber is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D promulgated under the Act. The
Subscriber's present and anticipated financial position permits him to purchase
and hold the Purchased Shares indefinitely for investment purposes. Subscriber
acknowledges that he is thoroughly familiar with the business of the Companies
and has made all investigations which he deems necessary or desirable in
connection with the acquisition of the Purchased Shares.
(c) The Company have informed Subscriber that:
(i) the Purchased Shares are not registered under the Act or
under any applicable state securities law and must be held by him
indefinitely unless they are subsequently so registered or unless an
exemption from such registration is available;
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(ii) the Company is under no obligation to register the
Purchased Shares under any circumstances; and
(iii) if, at a time when registration is required, it is
legally permissible for him to sell the Purchased Shares privately
without registration, any Securities so sold will be restricted in the
hands of the purchaser.
(d) Subscriber will not make any sale or other transfer of the
Purchased Shares in violation of the Act or any state securities laws.
(e) The Purchased Shares subscribed for hereunder may be deemed a
"security" within the meaning of the act of December 5, 1972 (P.L. 1280, No.
284), known as the Pennsylvania Securities Act of 1972 (the "Pa. Securities
Act"), and will be issued to him on the basis of an exemption from registration
afforded by Section 203(f) of the Pa. Securities Act. Section 207(m) of the Pa.
Securities Act provides that "[e]ach person who accepts an offer to purchase
securities exempted from registration by Section 203(f) . . . directly from an
issuer . . . shall have the right to withdraw his acceptance without incurring
any liability to the seller, underwriter (if any) or any other person, within
two business days from the date of receipt by the issuer of his written binding
contract of purchase or, in the case of a transaction in which there is no
written binding contract of purchase . . . within two business days after he
makes the initial payment for the securities being offered." If Subscriber
desires to withdraw in accordance with the foregoing, he must:
(i) cause a written notice of his intention to withdraw to be
received by the Companies at 000 X. Xxxxx Xxxx, Xxxx xx Xxxxxxx, XX
00000 or
(ii) deliver such notice of intention to withdraw to a
telegraph office or other message service for transmittal to the
Company at the foregoing address, or
(iii) deposit such notice to withdraw in the United States
mails (either registered or certified mail) addressed to the Company
at the foregoing address,
within two business days from the date this Subscription Agreement as executed
by the undersigned is accepted by the Company. All telegraph, postage or other
transmittal fees shall be paid by the undersigned.
(f) The certificates representing shares subscribed for hereunder may
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS
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AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES
LAW. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, UNLESS, IN THE OPINION
(WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY
TO THE CORPORATION) OF COUNSEL SATISFACTORY TO THE
CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.
SECTION 1.4 PAYMENT OBLIGATION UPON TERMINATION OF EMPLOYMENT FOR
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CAUSE OR UPON RESIGNATION. In the event that, prior to the first anniversary
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of this Agreement, the Company terminates Subscriber's employment pursuant to
Section 4(c) of the Employment Agreement (a "Cause Termination") or Subscriber
resigns from full-time employment with the Company pursuant to Section 4(d) of
the Employment Agreement (a "Resignation"), on or prior to the 60th calendar day
following such date of termination (the "Payment Date"), the Employee shall pay
the Company an amount equal to $250,000 (the "Differential Amount"), which
amount represents the difference between the fair market value of the Purchased
Shares on the date hereof (which fair market value has been calculated by
reference to the average closing sale price of the Common Stock on the Nasdaq
National Market for the 30 trading days preceding the date hereof) and the
Purchase Price. The obligation of Subscriber to pay any Differential Amount
shall also be evidenced by the Promissory Note delivered by the Subscriber to
the Company on the date hereof, a copy of which is attached as Exhibit B hereto.
SECTION 1.5 CONTENTS OF AGREEMENT. This Agreement sets forth the
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entire understanding of the parties hereto with respect to the matters contained
herein and supersedes all prior agreements or understandings among the parties
regarding those matters.
SECTION 1.6 SEVERABILITY; GOVERNING LAW. If any provisions of this
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Agreement shall be determined to be illegal or unenforceable by any court of
law, the remaining provisions shall be severable and enforceable to the maximum
extent possible in accordance with their terms. This Agreement shall be
construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania, without regard to its provisions concerning conflict of laws.
SECTION 1.7 COUNTERPARTS. This Agreement may be executed in one or
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more counterparts each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument. Each such
copy shall be deemed an original, and it
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shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be executed as of the date first above written.
TELESPECTRUM WORLDWIDE INC.
By:______________________________
Title:
SUBSCRIBER
_________________________________
Xxxxx X. Xxxxxx
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