-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wj4/vAiL9Yt+cCUvg+ve9Xzo3LpME7HDQ/GUheByHNlEMyit55P6fPnIAG7dvYB+ ng+FWrSt11tf13K7kBFZbA== 0000950115-96-001204.txt : 19960823 0000950115-96-001204.hdr.sgml : 19960823 ACCESSION NUMBER: 0000950115-96-001204 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960813 ITEM INFORMATION: Other events FILED AS OF DATE: 19960822 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRW FINANCIAL INC /DE CENTRAL INDEX KEY: 0000943809 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320] IRS NUMBER: 232691986 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26014 FILM NUMBER: 96619000 BUSINESS ADDRESS: STREET 1: 443 S GULPH RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6109625100 MAIL ADDRESS: STREET 1: 443 S GULPH RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 13, 1996 CRW Financial, Inc. -------------------------------------------------------------------- (Exact Name of registrant as specified in its charter) Delaware 0-26015 23-2691986 - --------------------------------- ------------------------ ----------------------------------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.) incorporation)
443 South Gulph Road, King of Prussia, Pennsylvania 19406 -------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 962-5100 ---------------- -------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events On August 13, 1996, TeleSpectrum Worldwide, Inc. ("TeleSpectrum") completed an initial public offering of 10,656,000 shares of its common stock, par value $.01 per share (the "Common Stock"), at a public offering price of $15 per share (the "IPO"). CRW Financial, Inc. ("CRW") currently owns 8,510,137 shares of TeleSpectrum Common Stock, subject to reduction upon the exercise of certain Lender Warrants, Waiver Warrant and Management Warrants described below. The underwriters for the IPO have been granted an over-allotment option to purchase up to an additional 1,598,400 shares of TeleSpectrum shares of Common Stock at the initial public offering price. TeleSpectrum intends to employ net proceeds from the IPO to acquire, repay certain indebtedness of and to purchase capital equipment for six businesses involved in various aspects of the teleservices, market research and direct mail and fulfillment industries (the "Acquired Businesses"), as well as for working capital and general corporate purposes of TeleSpectrum and the Acquired Businesses. Prior to the IPO, CRW caused the formation of TeleSpectrum and received 8,510,137 shares of TeleSpectrum's Common Stock in consideration of a capital contribution to TeleSpectrum of $1.6 million in cash and the assignment to TeleSpectrum of a promissory note in the amount of $500,000 from one of the Acquired Businesses. The capital contribution represented proceeds of borrowings by CRW under subordinated notes (the "Subordinated Notes") issued to eight individuals, one partnership and one corporation (the "Lenders") on May 22, 1996. The capital contribution was used by TeleSpectrum for professional and other costs associated with the IPO. Amounts outstanding under the Subordinated Notes bear interest at 12% per annum. Principal and interest under the Subordinated Notes are due and payable in full immediately upon repayment in full by CRW of all amounts owing to Mellon Bank, N.A. ("Mellon"), CRW's primary lender, or in quarterly installments of 12.5% of the principal amount plus accrued but unpaid interest beginning January 1, 1997 if the repayment of all amounts owing to Mellon has not been effected on or before any such quarterly repayment date. As part of the consideration for the Subordinated Notes, CRW issued to the Lenders warrants (the "Lender Warrants") to purchase a total of 1,433,454 shares of TeleSpectrum's Common Stock held by CRW. The Lender Warrants are exercisable at any time during a 10 year term at a price of $1.50 per share. In connection with TeleSpectrum's initial capitalization by CRW, TeleSpectrum granted the Lenders the right to have TeleSpectrum shares of Common Stock subject to the Lender Warrants registered under the Securities Act of 1933, as amended (the "Securities Act") along with the registration of any other shares of TeleSpectrum Common Stock and also the right to certain demand registrations subject to the Lenders' agreement not to sell any Common Stock underlying the Lender Warrants during the 180 days after consummation of the IPO by TeleSpectrum. The Lenders who represent officers, directors, employees or significant stockholders of CRW, their respective relationships with CRW and TeleSpectrum and their respective loan and share amounts are as follows:
Subordinated TeleSpectrum Shares of Common Lender Notes Amount Stock Subject to Lender Warrants - ------ ------------ -------------------------------- Technology Leaders II, L.P. $362,250 247,270 Stockholder of CRW TL Ventures Third Corp. 287,750 196,423 Stockholder of CRW J. Brian O'Neill 650,000 443,693 Chairman and CEO of CRW and TeleSpectrum Michael C. Boyd 200,000 136,514 President and Chief Operating Officer of TeleSpectrum Richard C. Schwenk, Jr. 200,000 136,514 Senior Vice President and Chief Financial Officer of TeleSpectrum Bernard Morgan 100,000 68,250 Director of CRW Robert N. Verratti 100,000 68,250 Director of CRW Arthur R. Spector 100,000 68,250 Consultant to CRW Jonathan P. Robinson 50,000 34,145 CFO of CRW and Director of Acquisitions of TeleSpectrum Kevin E. Mullin 50,000 34,145 Director of Acquisitions of CRW ---------- --------- $2,100,000 1,433,454 ========== =========
In consideration of the grant by Mellon of a waiver of a restrictive covenant in the agreement covering CRW's loan facility with Mellon, which waiver permitted CRW to issue the Notes and effect the initial capitalization of TeleSpectrum, CRW granted APT Holdings Corporation, an affiliate of Mellon, a warrant to purchase 75,445 shares of TeleSpectrum Common Stock held by CRW (the "Waiver Warrant"). This Waiver Warrant is exercisable at any time during a 10 year term at a price of $1.50 per share. CRW also granted warrants (the "Management Warrants") to four individuals related to CRW (the "Managers") in consideration for the performance of their services on behalf of CRW in connection with TeleSpectrum's IPO and the acquisition of the Acquired Businesses. The Management Warrants entitle the Managers to purchase a total of 839,108 shares of Telespectrum Common Stock held by CRW and are exercisable immediately for a 10 year term at a price of $1.50 per share. TeleSpectrum has granted the Managers the right to have the Common Stock subject to the Management Warrants registered under the Securities Act along with the registration of any other shares of TeleSpectrum Common Stock and also the right to certain demand registrations, subject to the agreement by the Managers not to sell any Common Stock underlying the Management Warrants during the 180 days after consummation of the IPO by TeleSpectrum. The Managers (whose relationships to CRW and TeleSpectrum are set forth in the table above) and the respective share amounts subject to their Management Warrants are as follows: J. Brian O'Neill - 610,160 shares; Arthur R. Spector - 76,316 shares; Jonathan P. Robinson - 76,316 shares; and Kevin E. Mullin - 76,316 shares. CRW obtained an appraisal which indicated that the Management Warrants had a fair value of $0.75 per warrant on the date of grant. Accordingly, CRW recorded a non-cash compensation charge of $629,000 as of such date of grant. If all of the Lender Warrants, Waiver Warrant and Management Warrants are exercised, CRW will receive approximately $3,500,000 in cash and would own 6,162,130 shares of TeleSpectrum. J. Brian O'Neill has agreed to serve as Chairman of the Board and Chief Executive Officer of TeleSpectrum, in addition to his duties as Chairman of the Board and Chief Executive Officer of CRW. TeleSpectrum and Mr. O'Neill have entered into an Employment Agreement which provides that he will be employed by TeleSpectrum through May 20, 2000. Jonathan P. Robinson, the Chief Financial Officer of CRW, serves as Director of Acquisitions of TeleSpectrum. On August 13, 1996, CRW terminated the operations of the market research business ("CRWMR") it has conducted since January 1996, and made the employees of CRWMR available to be hired by TeleSpectrum or TeleSpectrum's market research division on or after the closing of the acquisitions of the Acquired Businesses. Neither TeleSpectrum nor its market research division, however, have any obligation to hire any former CRWMR employees. CRW is retaining the accounts receivable and all accounts payable and other obligations associated with the CRWMR business. TeleSpectrum subleases an aggregate of approximately 3,000 square feet of office space in King of Prussia, Pennsylvania from CRW. The space is used by TeleSpectrum as its headquarters and comprises approximately 14.2% of the space formerly occupied by CRW at this location. CRW leases this space from CRW Building Limited Partnership, which is controlled by J. Brian O'Neill. The sublease commenced on May 9, 1996, and expires on September 30, 2004. Under the sublease, TeleSpectrum performs and pays 14.2% all obligations of CRW under its lease with CRW Building Limited Partnership. Monthly base rent payments under the sublease are approximately $4,100. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CRW FINANCIAL, INC. By:______________________________________ Jonathan P. Robinson Vice President and Chief Financial Officer Date: August 21, 1996 EXHIBIT INDEX
Exhibit No. Description Page No. - ----------- ----------- -------- 99.1 Form of Subordinated Note 7 99.2 Form of Management and Lender Warrants 10
EX-99.1 2 SUBORDINATED PROMISSORY NOTE THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH NOTE UNDER THE 1933 ACT, UNLESS, IN THE OPINION (WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE MAKER) OF COUNSEL SATISFACTORY TO THE MAKER, SUCH REGISTRATION IS NOT REQUIRED. CRW FINANCIAL, INC. Subordinated Promissory Note Philadelphia, Pennsylvania May 16, 1996 FOR VALUE RECEIVED, CRW Financial, Inc., a Delaware corporation ("Maker"), hereby promises to pay to _________________, ("Payee"), at __________________ or such other place as Payee may from time to time designate in writing, the Principal Amount (as defined herein) together with interest thereon from the Closing Date, at the rate of 12% per annum, all as provided herein. All interest hereunder shall be computed on the basis of a 365 day year. A. GENERAL TERMS 1. Definitions. For purposes hereof: "Common Stock" shall mean the common stock, par value $.01 per share, of CRW Acquisition Corp. ("CRW"). "Notes" shall mean the notes (including this Note) issued by the Maker on the date hereof in the aggregate amount of $2,100,000. "Overalotment Sale" shall mean the sale, if any, of Common Stock by the Maker pursuant to the overalotment option granted by the underwriters of the registered initial public offering by CRW of the Common Stock. "Principal Amount" shall be ____________ Dollars. 1 "Pro-Rata Amount" shall mean the amount equal to product of (x) the net proceeds received by the Maker from the Overalotment Sale and (y) _____ [fraction will be the Principal Amount divided by $2.1MM]. "Security Agreement" means the Security Agreement between Maker and the Payee, dated the date hereof. "Senior Event of Default" shall mean an occurrence of a default under the terms of any Senior Indebtedness, which default shall not have been cured or waived or shall not have ceased to exist. "Senior Indebtedness" means all obligations of any type or nature, currently owing or hereafter created by the Maker for money borrowed from any bank or other institutional financing organization, including obligations pursuant to any modification, refinancing or extension thereof, and all principal, interest, premiums, charges, and other sums related to any of such obligations. or the guarantee of any of such obligations; provided, however, that Senior Indebtedness shall not include any obligations to an Affiliate. "Subordinated Creditor" means the holder of this Note, including the Payee. "Subordinated Indebtedness" means all obligations of any type or nature currently owing or hereafter due from the Maker under this Note, together will all interest and other charges or expenses incidental thereto. 2. Payment of Principal and Interest. (a) The unpaid Principal Amount of this Note and the unpaid interest accrued thereon shall be due and payable as follows: (i) In whole upon the closing of the Overalotment Sale if the net proceeds received by the Maker from the Overalotment Sale equal or exceed the sum of $2,100,000 plus all accrued and unpaid interest on all of the Notes through the date of the consummation of the Overalotment Sale; (ii) The Pro-Rata Amount upon the closing of the Overalotment Sale if the net proceeds received by the Maker from the Overalotment Sale is less than the sum of (x) $2,100,000 and (y) the accrued and unpaid interest on all of the Notes through the date of the consummation of the Overalotment Sale; and the balance of the Principal Amount in quarterly installments as nearly equal as possible together with accrued interest beginning on January 1, 1997 (and on each April 1, July 1, October and January 1 thereafter through October 1, 1998); (iii) In quarterly installments of 12.5% of the Principal Amount each plus all accrued and unpaid interest hereunder beginning on January 1, 1997 (and on each April 1, July 1, October and January 1 thereafter through October 1, 1998) if the Overalotment Sale has not been 2 consummated on or before that date. (b) All sums payable hereunder shall be payable in lawful money of the United States of America and shall be applied first to accrued and unpaid interest and then in reduction of the Principal Amount. Subject to Section 6 hereto, this Note may be prepaid at any time after the first scheduled payment of the Principal Amount without payment of premium or penalty, upon 10 days' prior written notice to Payee. 3. Presentment. (a) Maker hereby waives diligence, demand, presentment for payment, protest and notice of protest, notice of acceleration, and all other notices or demands of any kind except as expressly provided herein. (b) Maker may treat Payee as the holder and owner of this Note (notwithstanding any notations of ownership or writing hereon made by anyone other than Maker) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Note to Maker for registration of transfer. (c) By acceptance of this Note, Payee agrees that prior to any transfer of this Note or any transfer of the related shares issued upon conversion hereof, such holder will give written notice to Maker, together with a copy of the opinion of such holder's counsel as to the non-necessity for registration under all applicable securities laws in connection with any such transfer (which opinion shall be reasonably satisfactory to counsel for Maker). 4. Default. (a) If any one or more of the following events shall occur and be continuing: (i) default shall be made in any scheduled payment of the Principal Amount or accrued interest when and as the same shall become due and payable, either at maturity or at a date fixed for prepayment or by acceleration or otherwise; or (ii) Maker shall (A) apply for or consent to the appointment of a receiver, trustee or liquidator of Maker or any of its property, (B) admit in writing its inability to pay its debts as they mature, (C) make a general assignment for the benefit of creditors, (D) commence a voluntary case under the federal bankruptcy laws or file a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any other bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or file an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (E) take corporate action for the purpose of effecting any of the foregoing; or an order, judgment or decree shall be entered, without the application, approval or consent of the Maker, by any court of competent jurisdiction, approving a petition seeking 3 reorganization of Maker or of all or a substantial part of the assets of Maker and such order, judgment or decree shall continue unstayed and in effect for a period of 60 days; then Payee may by notice in writing to the Maker declare the unpaid principal of this Note, with accrued interest, to be forthwith due and payable. Maker shall also be obligated to pay, as part of the indebtedness evidenced by this Note, all costs of collection, whether or not a suit is brought, including any reasonable attorneys' fees that may be incurred in the collection or enforcement hereof. 5. No Comparable Obligations. Maker shall not take any steps to create or encourage the making of a market in this Note, to register this Note or otherwise to render this Note readily tradable in an established securities market. Maker represents and warrants to Payee that it has not issued any other obligations which are of a comparable character to this Note and which are readily tradable on an established securities market. 6. Subordination. (a) Any right of the Payee, its representatives, successors or assigns, to payment under or in respect of the Subordinated Indebtedness is hereby expressly subordinated, to the extent and in the manner set forth in the Subordination Agreement dated the date hereof by and among Payee, Maker and Mellon Bank N.A. attached hereto as Exhibit A. B. OTHER 1. Notice. All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by mail, facsimile message or Federal Express or other delivery service. Any notices shall be deemed given upon the earlier of the date when received at, or the third day after the date when sent by registered or certified mail or the day after the date when sent by Federal Express to, the address or fax number set forth below, unless such address or fax number is changed by notice to the other party hereto given in accordance with the foregoing notice procedures: If to Maker: CRW Financial, Inc. 443 S. Gulph Road King of Prussia, PA 19406 FAX: 610-962-5109 Attention: Chief Financial Officer with a required copy to: 4 Morgan, Lewis & Bockius LLP 2000 One Logan Square Philadelphia, PA 19103 FAX: 215-963-5299 Attention: Stephen M. Goodman, Esquire If to Payee: with a required copy to: 2. Governing Law. This Note shall be governed by, construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, this Note has been executed as of the date first written above. CRW FINANCIAL, INC. By: ------------------------------------- Name: ------------------------------------- Title: ------------------------------------- 5 EX-99.2 3 WARRANT TO PURCHASE THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW. Warrant to Purchase ________ Shares of Common Stock Dated as of May 22, 1996 WARRANT TO PURCHASE COMMON STOCK OF TELESPECTRUM WORLDWIDE INC. THIS CERTIFIES that _______________ (the "Holder") is entitled to purchase from CRW Financial, Inc. (herein called "CRW"), a corporation organized and existing under the laws of Delaware, at any time, and from time to time, after the date hereof and until 5:00 P.M. (Eastern Time) on the tenth anniversary hereof, ________ shares (the "Warrant Shares") of common stock, $.01 par value per share (the "Common Stock"), of TeleSpectrum Worldwide, Inc., a Delaware corporation (the "Company"), subject to adjustment as provided herein, at a purchase price of $1.50 per share (the "Warrant Price"). 1. Definitions. As used in this Warrant, the following terms have the respective meanings set forth below: "Appraised Value" means, in respect of any share of Common Stock on any date herein specified, the value attributable to such share of Common Stock if all of the assets of the Company and its subsidiaries were sold for the appraised value thereof as of the last day of a fiscal month to end within 60 days prior to such date specified, and thereafter liquidated in accordance with the terms of the Company's Certificate of Incorporation, as determined in good faith by the Board of Directors of the Company. "Book Value" means, in respect of any share of Common Stock on any date herein specified, the value attributable to such share of Common Stock if all of the assets of the Company and its subsidiaries were sold for the consolidated book value thereof as of the last day of any month immediately preceding such date, and thereafter liquidated in accordance with the Company's Certificate of Incorporation, as determined in accordance with generally accepted accounting principles in the United States. "Business Day" means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York. "Current Market Price" means, in respect of the Common Stock on any date herein specified, the higher of (a) the Book Value per share of Common Stock at such date and (b) the Appraised Value per share of Common Stock as at such date, or if there shall then be a public market for the Stock, the higher of (x) the amount set forth in clause (a) above and (y) the average of the daily market prices for 30 consecutive Business Days commencing 45 days before such date. The daily market price for each such Business Day shall be (i) the last sale price on such date on the principal stock exchange on which the Common Stock is then listed or admitted to trading, (ii) if no sale takes place on such day on any such exchange, the average of the last reported closing bid and asked prices on such day as officially quoted on any such exchange, (iii) if the Common Stock is not then listed or admitted to trading on any stock exchange, the average of the last reported closing bid and asked prices on such day in the over-the-counter market, as furnished by the National Association of Securities Dealers Automatic Quotation System or the national Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged in the business of reporting such prices, as furnished by any similar firm then engaged in such business, or (v) if there is no such firm, as furnished by any member of the National Association of Securities Dealers, Inc. ("NASD") selected by the Company. "Expiration Date" means the date which is the tenth anniversary of the date of this Warrant. "Outstanding" means, when used with reference to Common Stock or any class thereof, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock or of the relevant class, except shares then owned or held by or for the account of the Company or any subsidiary thereof, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock or of the relevant class. "Registrable Securities" means (i) the shares of Common Stock of the Company issued upon the exercise of this Warrant and (ii) any securities issued or to be issued with respect to such securities by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities will cease to be Registrable Securities when they have been (A) effectively registered under the 1933 Act and disposed of in accordance with the registration statement covering them, or (B) transferred pursuant to Rule 144 promulgated under such Act (or any similar provision then in force). "Registration Expenses" means all expenses incident to the Company's performance of or compliance with this Warrant, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, expenses and fees for listing the securities to be registered on exchanges or electronic quotation systems on which similar securities issued or proposed to be issued by the Company are then listed, and fees and disbursements of counsel for the Company and of all independent certified 2 public accountants, underwriters (other than underwriting commissions) and other persons retained by the Company. "Selling Stockholders" means registered holders of Registrable Securities who request inclusion of all or a portion of their shares of Registrable Securities in a Piggyback Registration pursuant to Section 11 hereof. 2. Exercise of Warrant. This Warrant shall be exercisable at any time, and from time to time, after the Closing Date until the expiration of the Warrant as provided in Section 3 hereof, in the manner set forth in Section 4 hereof. 3. Expiration of Warrant. This Warrant, to the extent not exercised, shall expire and cease to be of force and effect at 5:00 P.M. (Eastern Time) on the Expiration Date. 4. Method of Exercise. This Warrant may be exercised in whole or in part (but not as to fractional shares) by the surrender of the Warrant, with the Purchase Agreement attached hereto as Annex A properly completed and duly executed, at the principal office of CRW at 443 S. Gulph Road, King of Prussia, Pennsylvania 19406, or such other location which at that time shall be the principal office of CRW (the "Principal Office"), and upon payment to it of the Warrant Price for each Warrant Share to be purchased upon such exercise (the aggregate of the Warrant Price for all shares to be exercised being referred to herein as the "Purchase Price"). The Purchase Price shall be paid by delivering either: (i) a certified check, bank draft or wire transfer of immediately available funds to the order of CRW or (ii) this Warrant with instructions that such number of Warrant Shares be retained by CRW as payment of the Purchase Price (a "Cashless Exercise"). In the event of a Cashless Exercise, the Holder shall receive that number of Warrant Shares determined by multiplying the number of Warrant Shares for which the Cashless Exercise is made by a fraction, the numerator of which shall be the difference between the then Current Market Price per Warrant Share and the Warrant Price, and the denominator of which shall be the then Current Market Price per share of Common Stock. The remaining Warrant Shares for which Cashless Exercise has been made shall be deemed to have been paid to CRW as the Purchase Price. The Holder shall be treated for all purposes as the holder of the Warrant Shares as of the close of business on the date of exercise, and certificates for the Warrant Shares so purchased shall be delivered to the person so entitled, properly endorsed for transfer or accompanied by appropriate stock powers, within a reasonable time, not exceeding five days, after such exercise. Unless this Warrant shall have expired, a new Warrant of like tenor and for such number of Warrant Shares as the Holder shall direct, representing in the aggregate the right to purchase that number of Warrant Shares with respect to which this Warrant shall not have been exercised, shall also be issued to the Holder within such time. 5. Certain Covenants. (a) The Company shall cause all Warrant Shares to be listed on each national securities exchange or securities quotation system, if any, on which the other outstanding shares of Common Stock of the Company are then listed or quoted. 3 (b) The Company shall (i) use its best efforts to comply with the current public information requirements of Rule 144 ("Rule 144") under the 1933 Act and (ii) at all times Rule 144 is available for use by Holder, furnish the Holder upon request with all information within the possession of the Company required for the preparation and filing of Rule 144. (c) CRW shall not sell, assign, transfer, give, donate, pledge, hypothecate, create a security interest in, place in trust or otherwise voluntarily or involuntarily dispose or otherwise encumber any of the Warrant Shares. (d) The Company and CRW shall add a legend to the certificates representing the Warrant Shares as follows: THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT CERTAIN WARRANT DATED MAY 22, 1996 AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, GIVEN, DONATED, PLEDGED, HYPOTHECATED, PLACED IN TRUST OR OTHERWISE VOLUNTARILY OR INVOLUNTARILY DISPOSED OF OR OTHERWISE ENCUMBERED EXCEPT PURSUANT TO THE TERMS OF SUCH WARRANT. (e) The Company shall cause its transfer agent to remove the legend set forth in Section 5(d) upon delivery to the Holder of the certificates representing the Warrant Shares pursuant to Section 4. 6. Adjustment of Purchase Price and Number of Shares. The number of shares of Common Stock purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the happening of certain events as follows: 6.1 Stock Dividends, Subdivisions or Combinations. If the Company at any time while the Warrant remains outstanding and unexpired shall: (a) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, (b) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (c) pay a dividend or make a distribution in shares of its Common Stock, then the number of shares of Common Stock purchasable upon the exercise of this Warrant immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock that a record holder of the same number of shares of Common Stock represented by this Warrant immediately prior to the occurrence of such event would 4 own or be entitled to receive after the happening of such event and the Warrant Price shall be proportionately reduced. 6.2 Certain Other Distributions. If at any time the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive any dividend or other distribution of: (a) cash (other than a cash distribution or dividend payable out of earnings or earned surplus legally available for the payment of dividends under the laws of the jurisdiction of incorporation of the Company), (b) any evidences of its indebtedness, any shares of its stock or any other securities or property of any nature whatsoever (other than cash), or (c) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of its stock or any other securities or property of any nature whatsoever (other than cash). then the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted to equal the product of the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment by a fraction (i) the numerator of which shall be the Current Market Price per share of Common Stock at the date of taking such record and (ii) the denominator of which shall be such Current Market Price per share of Common Stock minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Company) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 6.2 and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 6.1. 6.3 Reclassification, Consolidation or Merger. At any time while this Warrant remains outstanding and unexpired, in case of any reclassification or change of outstanding securities issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value or as a result of an event described in Sections 6.1(A) or (B) above) or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change, other than a change in par value, or from par value to no par value, 5 or from no par value to par value), or in the case of any sale or transfer to another corporation of the property of the Company as an entirety or substantially as an entirety, CRW shall, without payment of any additional consideration therefor, execute a new Warrant providing that the Holder shall have the right to exercise such new Warrant (upon terms not less favorable to the Holder than those then applicable to this Warrant) and to receive upon such exercise, in lieu of each share of Common Stock of the Company theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money or property receivable upon such reclassification, change, consolidation, merger, sale or transfer by the Holder of one share of Common Stock issuable upon exercise of this Warrant had this Warrant been exercised immediately prior to such reclassification, change, consolidation, merger, sale or transfer. Such new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 6. The provisions of this Section 6.3 shall similarly apply to successive reclassification, changes, consolidations, mergers, sales and transfers. 6.4 Liquidating Dividends, Etc. If the Company at any time while this Warrant remains outstanding and unexpired makes a distribution of its assets to the holders of its Common Stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets (other than under the circumstances otherwise provided for in this Section 6), the holder of this Warrant shall be entitled to receive upon the exercise hereof, in addition to the shares of Common Stock receivable upon such exercise, and without payment of any consideration other than the Warrant Price, an amount in cash equal to the value of such distribution per share of Common Stock multiplied by the number of shares of Common Stock which, on the record date for such distribution, are issuable upon exercise of this Warrant (with no further adjustment being made following any event which causes a subsequent adjustment in the number of shares of Common Stock issuable upon the exercise hereof), and an appropriate provision therefor should be made a part of any such distribution. The value of a distribution which is paid in other than cash shall be determined in good faith by CRW's Board of Directors. 6.5 Other Action Affecting Common Stock. If after the date hereof the Company shall take any action affecting the outstanding number of shares of Common Stock, other than an action described in any of the foregoing subsections of Section 6 hereof, inclusive, that would have a materially adverse effect upon the rights of the Holder, the Warrant Shares and the Warrant Price shall be adjusted in such manner and at such time as CRW's Board of Directors on the advice of the CRW's independent public accountants may in good faith determine to be equitable in the circumstances. 6.6 Other Provisions Applicable to Adjustment under this Section. The following provisions shall be applicable to the making of adjustment of the number of shares of Common Stock issuable upon exercise of this Warrant provided for in this Section 6: 6 (a) When Adjustments to Be Made. The adjustments required by this Section 6 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock issuable upon exercise of the Warrant that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 6.1) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% of the shares of Common Stock issuable upon exercise of the Warrant immediately prior to the making of such adjustment. Any adjustment representing a change less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 6 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (b) Fractional Interest. In computing adjustments under this Section 6, fractional interests in Common Stock shall be taken into account to the nearest 1/10th of a share. (c) When Adjustment Not Required. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (d) Escrow of Warrant Stock. If after any property becomes distributable pursuant to this Section 6 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exercises this Warrant, any additional shares of Common Stock obtainable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by CRW to be transferred to the Holder upon and to the extent that the event actually takes place, upon payment of the Warrant Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such 7 escrowed shares shall be cancelled by the Company and escrowed property returned. 7. Legend. Each certificate for shares obtained upon exercise of this Warrant shall bear the following legend: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "1933 Act"). Such securities have been acquired for investment and may not be sold or transferred in the absence of an effective registration statement for such securities under the 1933 Act, 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." In addition, the certificate shall bear such additional legend with respect to state securities or blue sky laws as reasonably determined by counsel to CRW or the Company. 8. Notice of Adjustments. Whenever the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted pursuant to Section 6 hereof, CRW shall promptly notify the Holder in writing of such adjustment, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which CRW's Board of Directors made any determination hereunder), and the number of shares of Common Stock obtainable upon exercise of this Warrant after giving effect to such adjustment. Such notice shall be mailed (by first class and postage prepaid) to the Holder. 9. Voting. CRW shall maintain all voting rights with respect to the Warrant Shares until the exercise of this Warrant, and thereafter, the Holder shall have all voting rights with respect to the Warrant Shares for which exercise is made hereunder. 10. Representations and Warranties of CRW. CRW hereby represents and warrants to the Holder as follows: (a) This Warrant has been duly authorized by all necessary corporate action on the part of CRW and has been duly executed by a duly authorized officer of CRW and constitutes a valid and binding obligation of CRW. (b) Neither the execution and delivery of this Warrant, nor the consummation of the transactions contemplated hereby, will violate or result in any violation of or be in conflict with or constitute a default under any term of the charter or bylaws of CRW or of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to CRW. (c) Upon exercise of this Warrant and payment of the Warrant Price by the Holder (i) the Warrant Shares will be duly issued, fully paid and nonassessable shares of Common Stock and free from all taxes, liens and changes with respect to the issuance thereof and (ii) the Holder shall 8 receive valid title to all of the Warrant Shares in all cases free and clear of all liens, mortgages, security interests, pledges, defects of title or other claims, charges or encumbrances of any nature. 11. Piggyback Rights. (a) Right to Piggyback. At any time after the Company's initial public offering, whenever the Company proposes to register any Common Stock of the Company under the 1933 Act, as amended, and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company will give prompt written notice to all holders of Registrable Securities and will include in such Piggyback Registration, subject to the allocation provisions below, all Registrable Securities with respect to which the Company has received written requests for inclusion within 20 days after the Company's mailing of such notice. (b) Registration on Form S-3. The Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has so qualified, in addition to the rights contained in the foregoing provisions of this Agreement, each holder of Registrable Securities shall have the right to require registration of its Registrable Securities on Form S-3 at the Company's expense, provided that (a) the Registrable Securities to be registered shall have a market value of at least $1,000,000 and (b) each holder shall be entitled to only one such registration during any 12-month period. When the Company receives notice of any holder's request for a registration on Form S-3, it shall send notice of such proposed registration to all other holders of Registrable Securities. (c) Registration Expenses. In all Registrations, the Company will pay the Registration Expenses related to the Registrable Securities of the Selling Stockholders, but the Selling Stockholders will pay the underwriting commissions related to their Registrable Securities. (d) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number that can be sold in such offering, at a price reasonably related to fair value, the Company will allocate the securities to be included as follows: first, the securities the Company proposes to sell on its own behalf; and second, Registrable Securities requested to be included in such registration by the Selling Stockholders, pro rata on the basis of the respective Registrable Securities owned among the Selling Stockholders. (e) Priority on Secondary Registrations. If a Piggyback Registration is initiated as an underwritten secondary registration on behalf of holders of the Company's securities and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number that can be sold in such offering, at a price reasonably related to fair value, the Company will allocate the securities to be included on a pro rata basis, based on the number of Registrable Securities owned among the Selling Stockholders. 9 (f) Selection of Underwriters. In any registration, the selection of investment banker(s) and manager(s) and the other decisions regarding the underwriting arrangements for the offering will be made by the Company. (g) Indemnification. The Company shall indemnify, to the extent permitted by law, each Selling Stockholder against all losses, claims, damages, liabilities and expenses arising out of or resulting from any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or associated term sheet or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the state ments therein not misleading except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Selling Stockholder expressly for use therein or by such Selling Stockholder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such Selling Stockholder with a sufficient number of copies of the same. (h) Information. In connection with any registration statement in which a Selling Stockholder is participating, each such holder will furnish to the Company in writing such information as is reasonably requested by the Company for use in any such registration statement or prospectus and will indemnify, to the extent permitted by law, the Company, its directors and officers and each person who controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact or any omission or alleged omission of a material fact required to be stated in the registration statement or prospectus or any amendment thereof or supplement thereto or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in information so furnished in writing by such holder specifically for use in preparing the registration statement. 12. Loss, Theft, Destruction or Mutilation. Upon receipt by the Company of evidence reasonably satisfactory to it that this Warrant has been mutilated, destroyed, lost or stolen, and in the case of any destroyed, lost or stolen Warrant, a bond of indemnity reasonably satisfactory to the Company, or in the case of a mutilated Warrant, upon surrender and cancellation thereof, the Company will execute and deliver in the Holder's name, in exchange and substitution for the Warrant so mutilated, destroyed, lost or stolen, a new Warrant of like tenor substantially in the form thereof with appropriate insertions and variations. 13. Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the Holder. 14. Amendment. This Warrant may be modified with the written consent of the Company and the Holder. 15. Transferability. This Warrant, and any Warrant Shares issued upon exercise of this Warrant, may be sold, pledged or otherwise transferred or encumbered by the Holder. 10 16. Injunctive Relief. It is acknowledged that it will be impossible to measure the damages that would be suffered by a party if another party fails to comply with the provisions hereof and that in the event of any such failure, each non-breaching party may not have an adequate remedy at law. Therefore, any party shall be entitled to obtain specific performance of another party's obligations hereunder and to obtain injunctive relief. No party shall argue, as a defense to any proceeding for such specific performance or injunctive relief, that another party has no adequate remedy at law. 17. Headings. The descriptive headings of the several sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. 18. Governing Law. This Warrant shall be governed by the laws of the State of Delaware without regard to the provisions thereof relating to conflict of laws. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer, attested by its duly authorized officer, on the date of this Warrant. CRW FINANCIAL, INC. By: /s/ J. Brian O'Neill ----------------------------- J. Brian O'Neill Chief Executive Officer TELESPECTRUM WORLDWIDE INC. By: /s/ J. Brian O'Neill ------------------------------ J. Brian O'Neill Chief Executive Officer 11 Annex A PURCHASE AGREEMENT Date: TO: TeleSpectrum Worldwide Inc. (1) The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby irrevocably agrees to purchase __________ shares of Common Stock covered by such Warrant, and makes payment herewith in full therefor at the price per share of $__________ provided by this Warrant. (2) The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby irrevocably elects to make a Cashless Exercise, as provided for in Section 4 of such Warrant, with respect to _________ Warrant Shares, _________ Warrant Shares of which shall be retained by CRW in payment of the Purchase Price (as defined in the Warrant). Signature: ______________ Address: ______________ 1 -----END PRIVACY-ENHANCED MESSAGE-----