<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TMP WORLDWIDE INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3906555
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
</TABLE>
--------------------------
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 977-4200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
ANDREW J. MCKELVEY
CHAIRMAN OF THE BOARD AND CEO
TMP WORLDWIDE INC.
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 977-4200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
GREGG BERMAN, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- ----------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ----------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par value per share 1,853,868 $29.99 $55,597,501 $16,401.26
</TABLE>
(1) The price is estimated in accordance with Rule 457(c) under the Securities
Act of 1933, as amended, solely for the purpose of calculating the
registration fee and is $29.99, the average of the high and low prices of
the Common Stock of TMP Worldwide Inc. as reported by The Nasdaq Stock
Market on September 11, 1998.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 16, 1998
TMP WORLDWIDE INC.
1,853,868 Shares of Common Stock
------------------------
This Prospectus relates to (A) the resale of 150,000 shares of Common Stock,
$.001 par value per share (the "Common Stock"), of TMP Worldwide Inc. ("TMP" or
the "Company") from time to time for the account of Gary Knisely ("Knisely") and
(B)(i) the resale of 44,839 shares of Common Stock from time to time for the
account of Pierre Aussure, (ii) the resale of 51,244 shares of Common Stock from
time to time for the account of Gerhard Bartels, (iii) the resale of 6,405
shares of Common Stock from time to time for the account of David Kenneth Bray,
(iv) the resale of 35,230 shares of Common Stock from time to time for the
account of The TASA Ltd. Self Administered Pension Plan F/B/O David Kenneth
Bray, (v) the resale of 9,608 shares of Common Stock from time to time for the
account of Charles Marie Brusselmans, (vi) the resale of 12,811 shares of Common
Stock from time to time for the account of Neil Campbell Callie, (vii) the
resale of 3,202 shares of Common Stock from time to time for the account of
Remtor Nominees Pty. Ltd. F/B/O Trevor Morton Clark, (viii) the resale of 9,608
shares of Common Stock from time to time for the account of Jo Carol Conover,
(ix) the resale of 64,056 shares of Common Stock from time to time for the
account of Manuel Gutierrez Cortines, (x) the resale of 32,028 shares of Common
Stock from time to time for the account of Edgar S.K. Dammroff, (xi) the resale
of 48,042 shares of Common Stock from time to time for the account of Victor
Carlos Dana, (xii) the resale of 38,433 shares of Common Stock from time to time
for the account of The TASA Ltd. Self Administered Pension Plan F/B/O Fiona Mary
Hilton Darby, (xiii) the resale of 51,244 shares of Common Stock from time to
time for the account of Herman DeKesel, (xiv) the resale of 41,636 shares of
Common Stock from time to time for the account of James P. Demchak, (xv) the
resale of 6,405 shares of Common Stock from time to time for the account of
Trevor M. Dunn, (xvi) the resale of 32,028 shares of Common Stock from time to
time for the account of Luis Escudero Ygartua, (xvii) the resale of 54,447
shares of Common Stock from time to time for the account of Joaquim Espriu
Malagelada, (xviii) the resale of 25,622 shares of Common Stock from time to
time for the account of Juan Manuel Farias Gutierrez, (xix) the resale of 41,636
shares of Common Stock from time to time for the account of The TASA Ltd. Self
Administered Pension Plan F/B/O Patrick John Michael Fearon, (xx) the resale of
3,202 shares of Common Stock from time to time for the account of Richard L.
Fleming, (xxi) the resale of 44,839 shares of Common Stock from time to time for
the account of Michael Franzino, (xxii) the resale of 54,447 shares of Common
Stock from time to time for the account of Vito Gioia, (xxiii) the resale of
41,636 shares of Common Stock from time to time for the account of Duane R.
Goar, (xxiv) the resale of 6,405 shares of Common Stock from time to time for
the account of Frans Jacob Gosses, (xxv) the resale of 9,608 shares of Common
Stock from time to time for the account of Christian A.F. Groh, (xxvi) the
resale of 9,608 shares of Common Stock from time to time for the account of
Luminoz Staff Superannuation Fund F/B/O R. Neil Hatherly, (xxvii) the resale of
19,216 shares of Common Stock from time to time for the account of RJ & SG
Ingersoll Superannuation Fund F/B/O Russel J. Ingersoll, (xxviii) the resale of
16,014 shares of Common Stock from time to time for the account of Phoenix
Holdings Pty. Ltd. F/B/O Russel J. Ingersoll, (xxix) the resale of 64,056 shares
of Common Stock from time to time for the account of Klaus Jacobs, (xxx) the
resale of 41,636 shares of Common Stock from time to time for the account of
Thomas R. Keller, (xxxi) the resale of 9,608 shares of Common Stock from time to
time for the account of Dag Einhard Kremer-Nehring, (xxxii) the resale of 6,405
shares of Common Stock from time to time for the account of Michel LeGuillou,
(xxxiii) the resale of 16,014 shares of Common Stock from time to time for the
account of Harvey D. Letcher, (xxxiv) the resale of 12,811 shares of Common
Stock from time to time for the account of Claudia K. Liebesny, (xxxv) the
resale of 35,230 shares of Common Stock from time to time for the account of
David W.H. Lowry, (xxxvi) the resale of 64,056 shares of Common Stock from time
to time for the account of Peter Magnet, (xxxvii) the resale of 9,608 shares of
Common Stock from time to time for the account of Bernhard Mahlo, (xxxviii) the
resale of 32,028 shares of Common Stock from time to time for the account of
Warren L. McGregor, (xxxix) the resale of 70,461 shares of Common Stock from
time to time for the account of John McLaughlin, (xl) the resale of 16,014
shares of Common Stock from time to time for the account of Massimo Misticoni,
(xli) the resale of 6,405 shares of Common Stock from time to time for the
account of Maria Elena Quijada Cordero, (xlii) the resale of 6,405 shares of
Common Stock from time to time for the account of Terteducon Pty. Ltd. F/B/O
Gregor A. Ramsey, (xliii) the resale of 76,867 shares of Common Stock from time
to time for the account of Reinhard Fritz Rijke, (xliv) the resale of 32,028
shares of Common Stock from time to time for the account of Herbert Schmaderer,
(xlv) the resale of 41,636 shares of Common Stock from time to time for the
account of The TASA Ltd. Self Administered Pension Plan F/B/O Andrew R.F.
Simpson, (xlvi) the resale of 64,056 shares of Common Stock from time to time
for the account of Michael T.D. Squires, (xlvii) the resale of 51,244 shares of
Common Stock from time to time for the account of John Barrett Strickland,
(xlviii) the resale of 32,028 shares of Common Stock from time to time for the
account of Hans Uher, (xlix) the resale of 12,811 shares of Common Stock from
time to time for the account of Van Es Superannuation Fund, (l) the resale of
19,216 shares of Common Stock from time to time for the account of Strathwood
Unit Trust F/B/O Alan R. Van Es, (li) the resale of 12,811 shares of Common
Stock from time to time for the account of Victoriano Vila Vilar, (lii) the
resale of 9,608 shares of Common Stock from time to time for the account of
Robert Bruce Whaley, (liii) the resale of 6,405 shares of Common Stock from time
to time for the account of Jeffery C. Wierichs, (liv) the resale of 57,650
shares of Common Stock from time to time for the account of Gabriele D.E.
Willner-Lange, (lv) the resale of 57,650 shares of Common Stock from time to
time for the account of Andrea M. Wine, (lvi) the resale of 16,014 shares of
Common Stock from time to time for the account of J. Herbert Wise, and (lvii)
the resale of 9,608 shares of Common Stock from time to time for the account of
Heinz Henning Witt (collectively, the "TASA Stockholders" and together with
Knisely the "Selling Stockholders"). The Common Stock offered hereby by Knisely
was issued to Knisely by the Company on May 6, 1998 pursuant to a private
placement in connection with the acquisition by the Company of all the
outstanding capital stock of Johnson, Smith & Knisely, Inc. The Common Stock
offered hereby by the TASA Stockholders was issued to the TASA Stockholders by
the Company on August 31, 1998 pursuant to a private placement in connection
with the acquisition by the Company of all the outstanding capital stock of TASA
Holding AG. See "Recent Developments." The Company will not receive any of the
proceeds from the sale of the Common Stock by the Selling Stockholders.
(CONTINUED ON NEXT PAGE)
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9
FOR A DISCUSSION OF CERTAIN INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is September , 1998
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The distribution of the Common Stock by the Selling Stockholders (and their
respective donees and pledgees) may be effected from time to time in one or more
transactions (which may involve block transactions) in the over-the-counter
market (including the Nasdaq National Market) or any exchange on which the
Common Stock may then be listed, in negotiated transactions, through the writing
of options on shares (whether such options are listed on an options exchange or
otherwise), or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders (and their respective
donees and pledgees) may effect such transactions by selling shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Stockholders and/or purchasers of shares for whom they may act as agent (which
compensation may be in excess of customary commissions). The Selling
Stockholders may also sell the shares of Common Stock pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or may pledge shares as collateral for margin accounts and such shares could be
resold pursuant to the terms of such accounts. The Selling Stockholders and any
broker-dealers that act in connection with the sale of Common Stock might be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commissions received by them and any profit on the resale
of the shares might be deemed to be underwriting discounts or commissions under
the Securities Act. The Selling Stockholders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
Common Stock against certain liabilities, including liabilities arising under
the Securities Act.
The Common Stock trades on the Nasdaq National Market under the symbol
"TWPW." On September 11, 1998, the closing sale price of the Common Stock was
$29.75 per share.
All expenses of the registration of securities covered by this Prospectus
are to be borne by the Company, except that the Selling Stockholders will pay
underwriting discounts, selling commissions, and fees and the expenses, if any,
of counsel or other advisers to the Selling Stockholders.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR A SUPPLEMENT TO THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. NEITHER THIS PROSPECTUS NOR ANY
SUPPLEMENT TO THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN
ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR A SUPPLEMENT TO THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................................................... 3
Incorporation of Certain Documents by Reference............................................................ 4
The Company................................................................................................ 5
Recent Developments........................................................................................ 8
Risk Factors............................................................................................... 9
Pro Forma Condensed Consolidated Financial Information..................................................... 15
Use of Proceeds............................................................................................ 21
Dividend Policy............................................................................................ 21
Price Range of Common Stock................................................................................ 21
Selling Stockholders....................................................................................... 22
Plan of Distribution....................................................................................... 23
Legal Matters.............................................................................................. 24
Experts.................................................................................................... 25
Index to Consolidated Financial Statements................................................................. F-1
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the regional offices
of the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048, and 500 West Madison Street, Chicago, Illinois 60661, and copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois, at prescribed
rates. Copies of such information may also be inspected at the reading room of
the library of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding the Company and other
registrants that file electronically with the Commission.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement. Statements contained herein
concerning the
3
<PAGE>
provisions of any contract, agreement or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract,
agreement or other document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. Copies of the Registration Statement together with
exhibits may be inspected at the offices of the Commission as indicated above
without charge and copies thereof may be obtained therefrom upon payment of a
prescribed fee.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT. This
Prospectus (including the documents incorporated by reference herein) contains
certain forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) and information relating to TMP that
are based on the beliefs of the management of TMP, as well as assumptions made
by and information currently available to the management of TMP. When used in
this Prospectus, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect" and similar expressions are intended to identify forward-
looking statements. Such statements reflect the current views of TMP with
respect to future events and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward-looking statements, including those discussed under "Risk Factors."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. TMP does not undertake any
obligation to publicly release any revisions to these forward looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission (File No.
000-21571) pursuant to the Exchange Act are incorporated by reference and made a
part hereof:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
(ii) The Company's Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1998.
(iii) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998.
(iv) The description of the Company's Common Stock contained in Item 1
of the Company's Registration Statement on Form 8-A, dated October 16, 1996.
(v) The Company's Periodic Report on Form 8-K dated August 26, 1997.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed incorporated by reference into this Prospectus
and to be a part hereof from the date of the filing of such documents or
reports. The information relating to the Company in this Prospectus should be
read together with the information in the documents incorporated by reference.
Any statement contained in a document incorporated by reference herein,
unless otherwise indicated therein, speaks as of the date of the document. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this Prospectus modifies or replaces such statement.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the documents
described above, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents. Requests should be
addressed to: TMP Worldwide Inc., 1633 Broadway, New York, New York 10019,
Attention: Myron F. Olesnyckyj, Esq., Vice President-General Counsel, (Tel. No.
(212) 977-4200). The Company furnishes its stockholders with an annual report
containing audited financial statements. In addition, the Company may furnish
such other reports as may be authorized, from time to time, by the Board of
Directors.
4
<PAGE>
THE COMPANY
AS USED IN THIS PROSPECTUS, "GROSS BILLINGS" REFERS TO BILLINGS FOR
ADVERTISING PLACED IN TELEPHONE DIRECTORIES, NEWSPAPERS, NEW MEDIA AND OTHER
MEDIA, AND ASSOCIATED FEES FOR RELATED SERVICES. WHILE GROSS BILLINGS ARE NOT
INCLUDED IN THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS, THE TRENDS IN GROSS
BILLINGS DIRECTLY IMPACT THE COMMISSIONS AND FEES EARNED BY THE COMPANY. THE
COMPANY, WHICH OPERATES IN ONE BUSINESS SEGMENT, EARNS COMMISSIONS BASED ON A
PERCENTAGE OF THE MEDIA ADVERTISING PURCHASED AT A RATE ESTABLISHED BY THE
RELATED PUBLISHER, AND ASSOCIATED FEES FOR RELATED SERVICES. IN ADDITION, THE
COMPANY EARNS FEES FOR THE PLACEMENT OF ADVERTISEMENTS ON THE INTERNET,
INCLUDING ITS CAREER WEB SITES, AND THROUGH EXECUTIVE SEARCH SERVICES. EARNINGS
BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") IS
PRESENTED TO PROVIDE ADDITIONAL INFORMATION ABOUT THE COMPANY'S ABILITY TO MEET
ITS FUTURE DEBT SERVICE, CAPITAL EXPENDITURES AND WORKING CAPITAL REQUIREMENTS
AND IS ONE OF THE MEASURES WHICH DETERMINES THE COMPANY'S ABILITY TO BORROW
UNDER ITS CREDIT FACILITY. EBITDA SHOULD NOT BE CONSIDERED IN ISOLATION OR AS A
SUBSTITUTE FOR OPERATING ACTIVITIES AND OTHER INCOME OR CASH FLOW STATEMENT DATA
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR AS A
MEASURE OF THE COMPANY'S PROFITABILITY OR LIQUIDITY. GROSS BILLINGS WITH RESPECT
TO COMPANIES ACQUIRED BY THE COMPANY REFER TO THE COMPANY'S ESTIMATE OF THE
ACQUIRED COMPANIES' ANNUAL GROSS BILLINGS.
TMP Worldwide Inc. ("TMP" or the "Company") is a marketing services,
communications, executive search and technology company that provides
comprehensive, individually tailored advertising services, including development
of creative content, media planning, production and placement of corporate
advertising, market research, direct marketing, executive search and other
ancillary services and products. The Company is one of the world's largest
recruitment advertising agencies and the world's largest yellow page advertising
agency as well as a leader in the use of the Internet for recruiting.
The Company offers advertising programs to more than 17,000 clients,
including more than 70 of the Fortune 100 and more than 285 of the Fortune 500
companies. The Company's growth strategy is to continue to pursue consolidation
opportunities in its core advertising business and to leverage its client base
and its approximately 2,200 sales, marketing and customer service personnel to
expand its Internet-based businesses. For the year ended December 31, 1997, the
Company's gross billings were $1.1 billion, commissions and fees were $237.4
million, net income was $9.6 million and EBITDA was $41.0 million.
TMP is the world's largest yellow page advertising agency, generating
approximately $457.5 million in yellow page gross billings for the year ended
December 31, 1997. TMP is one of the world's largest recruitment advertising
agencies, generating approximately $573.2 million in recruitment advertising
gross billings for the same period. With approximately 30% of the national
accounts segment of the U.S. yellow page advertising market, TMP is
approximately three times larger than its nearest competitor, based on yellow
page gross billings. A substantial part of the Company's growth in each of its
targeted markets has been achieved through acquisitions. From January 1, 1993
through August 31, 1998, TMP completed 61 acquisitions including, in August
1998, the acquisition of all the outstanding capital stock of TASA Holding A.G.
("TASA"), an international executive search firm. See "Recent Developments." The
Company believes additional acquisition opportunities exist, particularly in the
recruitment advertising, executive search and Internet markets, and intends to
continue its strategy of making acquisitions which relate to its core
businesses.
TMP has created innovative solutions to assist its clients in capitalizing
on the growing awareness and acceptance of the Internet. For its recruitment
advertising clients, TMP has developed interactive career sites which can be
accessed by individuals seeking employment via the Internet on a global basis.
The Company has several career sites, including The Monster
Board-Registered Trademark-, Online Career Center-SM- ("OCC"), Be the Boss-SM-
and MedSearch-SM-, which as of August 31, 1998 collectively contain
approximately 167,000 paid job listings from 34,000 clients, and 560,000
resumes. In addition, in May 1998, the Company expanded its suite of online
career products and services, adding new content and community with the
acquisition of About Work (www.aboutwork.com) and the largest online internship
database, with the acquisition of Student Center (www.studentcenter.com).
5
<PAGE>
YELLOW PAGE ADVERTISING. TMP develops yellow page marketing programs for
national accounts, clients which sell products or services in multiple markets.
The national segment of the yellow page advertising market was an approximately
$1.7 billion market in the U.S. for the year ended December 31, 1997. The
national yellow page market has grown each year since 1981. During the period of
1990 through 1997, the market grew at a compound annual growth rate of
approximately 6.2%. Yellow page advertising is a complex process involving the
creation of effective imagery and message and the development of media plans
which evaluate approximately 7,000 yellow page directories of which TMP's larger
accounts utilize over 2,000. Coordinating the placement of advertisements in
this number of directories requires an extensive effort at the local level, and
TMP's yellow page sales, marketing and customer service staff of approximately
680 people provides an important competitive advantage in marketing and
executing yellow page advertising programs. TMP earns commissions from yellow
page advertising paid by directory publishers which result in an effective
commission rate to the Company of approximately 20% of yellow page gross
billings.
TMP takes a proactive approach to yellow page advertising by undertaking
original research on the efficacy of the medium, in many cases quantifying the
effectiveness of a given advertising campaign. The Company also has a rigorous
quality assurance program designed to ensure client satisfaction. The Company
believes that this program has enabled it to maintain a yellow page client
retention rate, year to year, in excess of 90%.
RECRUITMENT ADVERTISING. For the year ended December 31, 1997, total
spending on advertisements globally in the recruitment classified advertisement
section of newspapers was approximately $12 billion. While the recruitment
advertising market has historically been cyclical, during the period of 1990
through 1997, the U.S. market grew at a compound annual growth rate of
approximately 12%. In the U.S., the Company receives commissions generally equal
to 15% of recruitment advertising gross billings. Outside of the U.S., where,
collectively, the Company derives the majority of its recruitment advertising
commissions and fees, TMP's commission rates for recruitment advertising vary,
ranging from approximately 10% in Australia to 15% in Canada and the United
Kingdom. The Company also earns fees from value-added services such as design,
research and other creative and administrative services which resulted in
aggregate commissions and fees equal to approximately 21% of recruitment
advertising gross billings for the year ended December 31, 1997.
The services provided by recruitment advertising agencies can be complex and
range from the design and placement of classified advertisements to the creation
of comprehensive image campaigns which internationally "brand" a client as a
quality employer. Further, shortages of qualified employees in many industries,
particularly in the technology area, have increased the need for recruitment
advertising agencies to expand the breadth of their service offerings to effect
national and sometimes global recruitment campaigns. For these reasons, the
Company believes that over time, the proportion of overall recruitment
advertising placed through recruitment advertising agencies will grow. Given the
scale of its recruitment advertising operations and the scope of its service
offerings, the Company believes it is well positioned to participate in this
market growth.
The Company has decided to expand the scope of its recruitment business to
assist its clients in recruiting executives. Accordingly, in May 1998, the
Company acquired Johnson, Smith & Knisely, Inc., the twelfth largest executive
search firm in the United States. This acquisition, coupled with the acquisition
of TASA, provided the Company with 32 executive search offices in 17 countries.
INTERNET SERVICES. The Company's Internet-based services complement its
traditional advertising businesses. In recruitment, the Company has several
career sites, including The Monster Board-Registered Trademark-, Online Career
Center-SM-, Be the Boss-SM- and MedSearch-SM- which provide continuously
available databases of career opportunities. Users of these sites can search for
employment opportunities by location, type of job and other criteria. Resumes
can be sent to prospective employers electronically and submitted on-line or via
mail. Users can also access other value-added services such as discussion forums
and on-line career advice.
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Based on its experience with its clients, TMP believes that only 20% to 30% of
open job positions are advertised using traditional print media and that on-line
solutions, which are significantly less expensive than traditional recruitment
methods, will significantly expand the recruitment advertising market. More than
55 of the Fortune 100 companies are utilizing the Company's career sites.
Dealer Locator, which is marketed to yellow page accounts, allows clients to
offer World Wide Web ("Web") pages for local offices, dealers or franchise
locations which are linked to the client's corporate Web site. These pages are
designed to generate additional customer flow while reinforcing brand imagery
contained in other advertising programs. Dealer Locator home pages will
typically include address, directions, hours of operation and potentially other
information such as sale items.
TMP believes its pre-existing relationships with yellow page and recruitment
advertising clients and its sales, marketing and customer service staff of over
2,200 people provide an important competitive advantage in pursuing the market
for Internet clients. Further, the Company believes its innovative Internet
products will provide an opportunity to enhance its ability to market both
traditional advertising and Internet services to non-TMP clients.
The Company is the successor to the businesses formerly conducted by TMP
Worldwide Inc. and subsidiaries ("Old TMP"), Worldwide Classified Inc. and
subsidiaries ("WCI") and McKelvey Enterprises, Inc. and subsidiaries, the chief
executive officer of which was Andrew J. McKelvey (the "Principal Stockholder").
McKelvey Enterprises, Inc. was formed in 1967 by Mr. McKelvey. On December 9,
1996, Old TMP merged into McKelvey Enterprises, Inc. Thereafter, WCI merged into
McKelvey Enterprises, Inc. McKelvey Enterprises, Inc. then merged into Telephone
Marketing Programs Incorporated. Such mergers are collectively referred to as
the "Mergers." In addition, Mr. McKelvey sold or contributed his interest in
five other entities to the Company. Following the Mergers, Telephone Marketing
Programs Incorporated changed its name to TMP Worldwide Inc. All historical
financial data contained herein for periods ended prior to December 9, 1996
reflects the historical financial data of Old TMP, WCI, McKelvey Enterprises,
Inc. and the other entities. The Company was incorporated in Delaware in August
1996. Its executive offices are located at 1633 Broadway, 33rd Floor, New York,
New York 10019, and its telephone number at that location is (212) 977-4200.
7
<PAGE>
RECENT DEVELOPMENTS
Subsequent to June 30, 1998, TMP completed the acquisition of TASA, an
executive search firm based in Switzerland, and announced the probable
acquisition of Morgan & Banks Limited ("M&B"), a search and selection firm based
in Australia. A brief description of TASA and M&B follows:
TASA HOLDING AG ACQUISITION
On August 31, 1998, the Company acquired all of the outstanding capital
stock of TASA Holding AG ("TASA"), a Swiss corporation. In connection with the
acquisition of TASA, the Company issued to the TASA Stockholders an aggregate of
1,703,868 shares of TMP Common Stock in a private placement transaction. The
acquisition will be accounted for as a pooling-of-interests.
TASA, an international executive search firm based in Zurich, has offices in
Europe, North America and the Pacific Rim. For the year ended December 31, 1997,
TASA generated revenue of approximately $39 million and had net income of
approximately $600,000.
M&B PROBABLE ACQUISITION
On August 17, 1998, the Company announced an agreement in principle to
acquire all of the outstanding capital stock of M&B, an Australian corporation.
The acquisition, which is expected to be completed by the end of the fourth
quarter of 1998, is expected to be accounted for as a pooling-of-interests.
M&B, one of the largest temporary contracting and search and selection firms
in Australasia, has offices in Australia, New Zealand, the UK, Hong Kong and
Singapore. For the year ended March 31, 1998, M&B generated revenue of
approximately $235.8 million and had net income of approximately $7.9 million.
8
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS PROSPECTUS CONTAINS, IN
ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS
PROSPECTUS.
UNCERTAIN ABILITY TO MANAGE GROWTH
The Company's business has grown rapidly in recent periods. The growth of
the Company's business has placed a significant strain on the Company's
management and operations. The Company's expansion has resulted, and is expected
in the future to result, in substantial growth in the number of its employees
and in increased responsibility for both existing and new management personnel
and incremental strain on the Company's existing operations, financial and
management information systems. The Company's success depends to a significant
extent on the ability of its executive officers and other members of senior
management to operate effectively both independently and as a group. If the
Company is not able to manage existing or anticipated growth, the Company's
business, financial condition and operating results would be materially
adversely affected.
RISKS ASSOCIATED WITH ACQUISITIONS
The Company expects that it will continue to grow, in part, by acquiring
businesses. The success of this strategy depends upon several factors, including
the continued availability of financing and the Company's ability to identify
and acquire businesses on a cost-effective basis, as well as its continued
ability to integrate acquired personnel, operations, products and technologies
into its organization effectively, to retain and motivate key personnel and to
retain the clients of acquired firms. There can be no assurance that financing
for acquisitions will be available on terms acceptable to the Company, or that
the Company will be able to identify or consummate new acquisitions, or manage
and integrate its recent or future expansions successfully, and any inability to
do so would have a material adverse effect on the Company's business, financial
condition and operating results. There also can be no assurance that the Company
will be able to sustain the rates of growth that it has experienced in the past.
UNCERTAIN VIABILITY OF TRADITIONAL MEDIA
The Company derives a substantial portion of its commissions and fees from
designing and placing recruitment advertisements in traditional media such as
newspapers and trade publications. This business constituted approximately 51.8%
of total commissions and fees for the year ended December 31, 1997. The Company
also derives a substantial portion of its commissions and fees from placing
advertising in yellow page directories. This business constituted approximately
40.3% of total commissions and fees for the year ended December 31, 1997. There
can be no assurance that the commissions received by the Company in the future
will be equal to the commissions which it has historically received. To the
extent that new media, such as the Internet, cause yellow page directories and
other forms of traditional media to be less desirable forms of advertising media
without at least a proportionate fee increase generated from advertising on the
Internet, of which there can be no assurance, the Company's business, financial
condition and operating results will be materially adversely affected.
UNCERTAIN ACCEPTANCE OF THE INTERNET
Use of the Internet by consumers is at a very early stage of development,
and market acceptance of the Internet as a medium for information,
entertainment, commerce and advertising is subject to a high level of
uncertainty. The Company's clients have only limited experience with the
Internet as an advertising medium and such clients have not devoted a
significant portion of their advertising budgets to Internet-
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based advertising in the past. In addition, a significant portion of the
Company's potential clients have no experience with the Internet as an
advertising medium and have not devoted any portion of their advertising budgets
to Internet-based advertising in the past. There can be no assurance that
advertisers will be persuaded to allocate or continue to allocate portions of
their budgets to Internet-based advertising. If Internet-based advertising is
not widely accepted by advertisers and advertising agencies, the Company's
business, financial condition and operating results, including its expected rate
of commissions and fees growth, would be materially adversely affected. Although
the Company generated Internet revenue of $18.6 million for the year ended
December 31, 1997, there can be no assurance that the Company will continue to
generate substantial Internet-based revenue in the future.
UNCERTAIN ACCEPTANCE OF THE COMPANY'S INTERNET CONTENT
The Company's future growth depends in part upon its ability to deliver
original and compelling services in order to attract users valuable to the
Company's advertising clients. There can be no assurance that the Company's
content will be attractive to a sufficient number of Internet users to generate
material advertising revenues. There also can be no assurance that the Company
will be able to anticipate, monitor and successfully respond to rapidly changing
consumer tastes and preferences so as to attract a sufficient number of users to
its Web sites. Internet users can freely navigate and instantly switch among a
large number of Web sites, many of which offer original content, making it
difficult for the Company to distinguish its content and attract users. In
addition, many other Web sites offer very specific, highly targeted content that
could have greater appeal than the Company's sites to particular subsets of the
Company's target audience.
COMPETITION; LOW BARRIERS TO ENTRY
The markets for the Company's services are highly competitive and are
characterized by pressures to reduce prices, incorporate new capabilities and
technologies and accelerate job completion schedules.
The Company faces competition from a number of sources. These sources
include national and regional advertising agencies, specialized and integrated
marketing communication firms and traditional media companies as well as
executive search firms. In addition, with respect to new media, many advertising
agencies and publications have started either to internally develop or acquire
new media capabilities. Some established companies that provide integrated
specialized services (such as advertising services or Web site design) and are
technologically proficient, especially in the new media area, are also competing
with the Company. Many of the Company's competitors or potential competitors
have long operating histories, and some may have greater financial, management,
technological development, sales, marketing and other resources than the
Company. In addition, the Company's ability to maintain its existing clients and
attract new clients depends to a significant degree on the quality of its
services and its reputation among its clients and potential clients.
The Company has no significant proprietary technology that would preclude or
inhibit competitors from entering the yellow page, recruitment or on-line
advertising markets or executive search business. There can be no assurance that
existing or future competitors will not develop or offer services and products
that provide significant performance, price, creative or other advantages over
those offered by the Company, which could have a material adverse effect on the
Company's business, financial condition and operating results.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY AND CYCLICALITY OF
BUSINESS
The Company's quarterly operating results have fluctuated in the past and
may fluctuate in the future as a result of a variety of factors, including the
timing of acquisitions, the timing of yellow page directory closings, the
largest number of which currently occur in the third quarter, and the receipt of
additional commissions, if earned, from yellow page publishers for achieving a
specified volume of advertising, which
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commissions are typically reported in the fourth quarter. The Company's
quarterly commissions and fees earned from recruitment advertising are typically
highest in the first quarter and lowest in the fourth quarter. For the year
ended December 31, 1997, the Company's commissions and fees from recruitment
advertising were 51.8% of the Company's total commissions and fees. Recruitment
advertising commissions and fees tend to be more cyclical than yellow page
commissions and fees, and, therefore, to the extent that a significant
percentage of the Company's commissions and fees are derived from recruitment
advertising, the Company's operating results may be subject to increased
cyclicality.
TECHNOLOGICAL RISKS
The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging character of these products and services and
their rapid evolution will require that the Company continually improve the
performance, features and reliability of its Internet content, particularly in
response to competitive offerings. There can be no assurance that the Company
will be successful in responding quickly, cost effectively and sufficiently to
these developments. In addition, the widespread adoption of new Internet
technologies or standards could require substantial expenditures by the Company
to modify or adapt its Web sites and services and could affect that Company's
financial condition or operating results. In addition, new Internet services or
enhancements which are or may be offered by the Company may contain design flaws
or other defects that could require costly modifications or result in a loss of
client confidence, either of which could have a material adverse effect on the
Company's business, financial condition or operating results. The Monster
Board-Registered Trademark- connects to the Internet through GTE
Internetworking. OCC connects to the Internet directly through its own on-site
servers. Any disruption in Internet access or in the Internet generally could
affect the Company's financial condition or operating results.
DEPENDENCE ON ATTRACTING AND RETAINING QUALIFIED CONSULTANTS
The success of TMP's executive search business depends upon its ability to
attract and retain consultants who possess the skills and experience necessary
to fulfill its clients' executive search needs. TMP believes it has been able to
attract and retain highly qualified, effective consultants as a result of its
reputation, and performance-based compensation system. Consultants have the
potential to earn substantial bonuses based on the amount of revenue generated
by obtaining executive search assignments and executing search assignments and
by assisting other consultants to obtain or complete executive search
assignments. Bonuses represent a significant proportion of consultants' total
compensation. Any diminution of TMP's reputation could impair its ability to
retain existing or attract additional qualified consultants. Any such inability
to attract and retain qualified consultants could have a material adverse effect
on TMP's executive search business, results of operations and financial
condition.
PORTABLE CLIENT RELATIONSHIPS
The success of TMP's executive search business depends upon the ability of
its consultants to develop and maintain strong, long-term relationships with
clients. Usually, one or two consultants have primary responsibility for a
client relationship. When a consultant leaves one executive search firm and
joins another one, clients that have established relationships with the
departing consultant may move their business to the consultant's new employer.
The loss of one or more clients is more likely to occur if the departing
consultant enjoys a widespread name recognition or has developed a reputation as
a specialist in executing searches in a specific industry or management
function. Although client portability for yellow page and recruitment
advertising historically has not caused significant problems for TMP, the
failure to retain its most effective consultants or maintain the quality of
service to which its clients are accustomed, and the ability of a departing
consultant to move business to his or her new employer, could have a material
adverse effect on TMP's executive search business, results of operations and
financial condition.
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MAINTENANCE OF PROFESSIONAL REPUTATION AND BRAND NAME
TMP's ability to secure new executive search engagements and hire qualified
professionals is highly dependent upon its overall reputation and brand name
recognition, including the names Johnson Smith & Knisely and TASA, as well as
the individual reputations of its professionals. Because TMP obtains a majority
of its new engagements from existing clients, or from referrals by those
clients, the dissatisfaction of any such client could have a disproportionate,
adverse impact on its ability to secure new engagements. Any factor that
diminishes the reputation of TMP or any of its personnel, including poor
performance, could make it substantially more difficult for them to compete
successfully for both new engagements and qualified consultants, and could have
an adverse effect on TMP's executive search business, results of operations and
financial condition.
RESTRICTIONS IMPOSED BY BLOCKING ARRANGEMENTS
Either by agreement with clients or for marketing or client relationship
purposes, executive search firms frequently refrain, for a specified period of
time, from recruiting certain employees of a client, and possibly other entities
affiliated with such client, when conducting executive searches on behalf of
other clients (a "blocking" arrangement). Blocking arrangements generally remain
in effect for one or two years following completion of an assignment. However,
the duration and scope of the blocking arrangement or "off limits" period,
including whether it covers all operations of a client and its affiliates or
only certain divisions of a client, generally depends on such factors as the
length of the client relationship, the frequency with which the executive search
firm has been engaged to perform executive searches for the client and the
number of assignments the executive search firm has generated or expects to
generate from the client. Some of TMP's executive search clients are recognized
as industry leaders and/or employ a significant number of qualified executives
who are potential candidates for other companies in that client's industry.
Blocking arrangements with such a client or awareness by a client's competitors
of such an arrangement may make it difficult for TMP to obtain executive search
assignments from, or to fulfill executive search assignments for, competitors
while employees of that client may not be solicited. As TMP's client base grows,
particularly in its targeted business sectors, blocking arrangements
increasingly may impede their growth or their ability to attract and serve new
clients, which could have an adverse effect on TMP's executive search business,
results of operations and financial condition.
CONTROL BY PRINCIPAL STOCKHOLDER
Andrew J. McKelvey beneficially owns all of the outstanding Class B Common
Stock and 11,206,541 shares of Common Stock which together represent
approximately 69.8% of the combined voting power of all classes of voting stock
of the Company. Mr. McKelvey is, therefore, able to direct the election of all
of the members of the Company's Board of Directors and exercise a controlling
influence over the business and affairs of the Company, including any
determinations with respect to mergers or other business combinations involving
the Company, the acquisition or disposition of assets of the Company, the
incurrence of indebtedness by the Company, the issuance of any additional Common
Stock or other equity securities and the payment of dividends with respect to
the Common Stock. Similarly, Mr. McKelvey has the power to determine matters
submitted to a vote of the Company's stockholders without the consent of the
Company's other stockholders and has the power to prevent a change of control of
the Company.
ANTITAKEOVER EFFECT OF CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION,
BYLAWS AND DELAWARE LAW
The Company's Board of Directors has the authority to issue up to 800,000
shares of undesignated preferred stock and to determine the price, rights,
preferences, privileges and restrictions, including voting and conversion rights
of such shares, without any further vote or action by the Company's
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred stock
that may be issued in the future. The issuance of preferred stock could have the
effect of making it more difficult for a third party to acquire a majority of
the outstanding
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voting stock of the Company. The Company has no current plans to issue shares of
preferred stock following this offering. Further, certain provisions of the
Company's Certificate of Incorporation and By-Laws and of Delaware law could
delay, prevent or make more difficult a merger, tender offer or proxy content
involving the Company. Among other things, these provisions specify advance
notice requirements for stockholder proposals and director nominations. In
addition, Mr. McKelvey controls approximately 69.8% of the combined voting power
of all classes of voting stock of the Company.
FOREIGN OPERATIONS AND RELATED RISKS
The Company conducts operations in various foreign countries, including
Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, Indonesia,
Italy, Japan, Mexico, the Netherlands, New Zealand, Panama, Singapore, South
Africa, Spain, Switzerland and the United Kingdom. For the year ended December
31, 1997, approximately 33.8% of the Company's commissions and fees were earned
outside of the U.S. and collected in local currency. In addition, the Company
generally pays operating expenses with the corresponding local currency and is
at risk for exchange rate fluctuations between such local currencies and the
dollar. The Company does not conduct any significant hedging activities.
The Company is also subject to taxation in foreign jurisdictions. In
addition, transactions between the Company and its foreign subsidiaries may be
subject to U.S. and foreign withholding taxes. Applicable tax rates in foreign
jurisdictions differ from those of the U.S., and are subject to periodic change.
The extent, if any, to which the Company will receive credit in the U.S. for
taxes paid in foreign jurisdictions will depend upon the application of
limitations set forth in the Internal Revenue Code, as well as the provisions of
any tax treaties which may exist between the U.S. and such foreign
jurisdictions.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has, from time to time, experienced extreme price and
volume fluctuations. Factors such as announcements by the Company of variations
in its quarterly financial results and fluctuations in advertising commissions
and fees, including the percentage of the Company's commissions and fees derived
from Internet-based services and products could cause the market price of the
Common Stock to fluctuate significantly. Further, due to the volatility of the
stock market generally, the price of the Common Stock could fluctuate for
reasons unrelated to the operating performance of the Company.
GOVERNMENT REGULATION
As an advertising agency which creates and places print and Internet
advertisements, the Company is subject to Sections 5 and 12 of the Federal Trade
Commission Act (the "FTC Act") which regulate advertising in all media,
including the Internet, and require advertisers and advertising agencies to have
substantiation for advertising claims before disseminating advertisements. The
FTC Act prohibits the dissemination of false, deceptive, misleading, and unfair
advertising, and grants the Federal Trade Commission ("FTC") enforcement powers
to impose and seek civil penalties, consumer redress, injunctive relief and
other remedies upon advertisers and advertising agencies which disseminate
prohibited advertisements. Advertising agencies such as TMP are subject to
liability under the FTC Act if the agency actively participates in creating the
advertisement, and knew or had reason to know that the advertising was false or
deceptive.
In the event that any advertising created by TMP was found to be false,
deceptive or misleading, the FTC Act could potentially subject the Company to
liability. The fact that the FTC has recently brought several actions charging
deceptive advertising via the Internet, and is actively seeking new cases
involving advertising via the Internet, indicates that the FTC Act could pose a
somewhat higher risk of liability to the advertising distributed via the
Internet. The FTC has never brought any actions against the Company.
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Further, there can be no assurance that other current or new government laws
and regulations, or the application of existing laws and regulations will not
subject the Company to significant liabilities, significantly dampen growth in
Internet usage, prevent the Company from offering certain Internet content or
services or otherwise cause a material adverse effect on the Company's business,
financial condition or operating results.
DIVIDEND POLICY
The Company currently intends to retain earnings, if any, to support its
growth strategy and does not anticipate paying dividends on its Common Stock and
Class B Common Stock in the foreseeable future. Payment of dividends on Common
Stock and Class B Common Stock is prohibited by the Company's financing
agreement. See "Dividend Policy."
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PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
The Pro Forma Condensed Consolidated Financial Information reflects
financial information which gives effect to the Company's probable acquisition
of all the outstanding stock of M&B and the assumed exercise of all options to
acquire M&B stock in exchange for the issuance of approximately 6,161,000 shares
of the Company's Common Stock. The approximately 6,161,000 shares was calculated
using an exchange formula based upon a per share price for M&B shares of 4.65
Australian dollars translated at 0.57 US dollars per Australian dollar and
approximately 74.4 million M&B shares outstanding after the assumed exercise of
all options to purchase M&B shares. The Pro Forma Statements included herein
reflect the anticipated use of the pooling-of-interests method of accounting,
after giving effect to the pro forma adjustments discussed in the accompanying
notes. Such financial information has been prepared from, and should be read in
conjunction with, the historical consolidated financial statements and notes
thereto of TMP incorporated by reference in this Prospectus and of M&B included
in this Prospectus.
The Pro Forma Condensed Consolidated Financial Information (i) gives effect
to the acquisition of M&B, (ii) gives effect, in the Consolidated Statement of
Operations for the year ended December 31, 1997, to the acquisition, in August
1997, of all the outstanding stock of Austin Knight Limited, ("Austin Knight"),
for a purchase price of approximately $47.2 million, and (iii) includes the
adjustments described in the notes hereto.
The Pro Forma Condensed Consolidated Balance Sheet gives effect to the
merger with M&B as if it had occurred on June 30, 1998, combining the balance
sheets of TMP at June 30, 1998 with that of M&B as of March 31, 1998. The Pro
Forma Condensed Consolidated Statements of Operations give effect to the merger
with M&B as if it had occurred at the beginning of the earliest period
presented, combining the results of TMP for the six months ended June 30, 1998
and each year in the three-year period ended December 31, 1997 with those of M&B
for the six months ended March 31, 1998 and each year in the three-year period
ended March 31, 1998, respectively. In addition, the Pro Forma Condensed
Consolidated Statement of Operations for the year ended December 31, 1997
includes the results of Austin Knight for the period prior to acquisition.
The consolidated financial statements of M&B included in the Pro Forma
Condensed Consolidated Financial Information utilizes Australian GAAP (which
substantially conforms to US GAAP) and were translated at the following exchange
rates: Australian dollars were translated to US dollars at the rate of 0.6613,
0.6762, 0.7137, 0.7874 and 0.7455, respectively, with respect to the June 30,
1998 Balance Sheet, the June 30, 1998 Statement of Operations and the December
31, 1997, 1996 and 1995 Statements of Operations. The Statement of Operations of
Austin Knight Limited included in the December 31, 1997 Pro Forma Condensed
Consolidated Statement of Operations was translated from British Pounds Sterling
to US dollars at the rate of 1.634 US dollars per British Pound Sterling.
The Pro Forma Condensed Consolidated Statements of Operations presented do
not include any potential cost savings. The Company believes that it may be able
to reduce salaries and related costs and office and general expenses as it
eliminates duplication of overhead. However, there can be no assurance that the
Company will be successful in effecting any such cost savings.
The Pro Forma Condensed Consolidated Financial Information is unaudited and
is not necessarily indicative of the consolidated results which actually would
have occurred if the above transactions had been consummated at the beginning of
the periods presented, nor does it purport to present the future financial
position and results of operations for future periods.
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TMP WORLDWIDE INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED ADJUSTMENTS COMBINED
-------------- ---------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 5,927 $ 9,581 $ -- $ 15,508
Accounts receivable, net....................... 283,409 25,401 -- 308,810
Work-in-process................................ 17,243 -- -- 17,243
Deferred income taxes.......................... -- 1,446 -- 1,446
Prepaid and other.............................. 18,037 2,243 -- 20,280
-------------- ------- ------ -----------
Total current assets....................... 324,616 38,671 -- 363,287
Property and equipment, net...................... 44,837 9,359 -- 54,196
Deferred income taxes............................ 6,238 135 -- 6,373
Intangibles, net................................. 164,064 6,155 -- 170,219
Other assets..................................... 12,619 30 -- 12,649
-------------- ------- ------ -----------
$ 552,374 $ 54,350 $ -- $ 606,724
-------------- ------- ------ -----------
-------------- ------- ------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 238,027 $ 4,419 $ -- $ 242,446
Accrued expenses and other liabilities......... 34,782 28,446 4,500(a) 67,728
Accrued restructuring costs.................... 14,242 -- -- 14,242
Deferred revenue............................... 12,335 -- -- 12,335
Deferred income taxes.......................... 11,082 9 -- 11,091
Current portion of long-term debt.............. 6,398 318 -- 6,716
-------------- ------- ------ -----------
Total current liabilities.................. 316,866 33,192 4,500 354,558
Long-term debt, less current portion 124,939 5,370 -- 130,309
Other liabilities 4,254 659 -- 4,913
Minority interests -- 431 -- 431
Stockholders' equity:
Common stock................................... 25 -- 6(b) 31
Class B common stock........................... 2 -- -- 2
Common stock of Morgan & Banks Limited......... -- 1,526 (1,526) (c) --
Additional paid-in capital..................... 166,478 2,780 1,520 (b,c 170,778
Foreign currency translation adjustment........ (789) (204) -- (993)
Retained earnings (deficit).................... (59,401) 10,596 (4,500) (a) (53,305)
-------------- ------- ------ -----------
Total stockholders' equity................. 106,315 14,698 (4,500) 116,513
-------------- ------- ------ -----------
$ 552,374 $ 54,350 $ -- $ 606,724
-------------- ------- ------ -----------
-------------- ------- ------ -----------
</TABLE>
- ------------------------
(a) To accrue for costs to be incurred in connection with the acquisition of
M&B.
(b) Represents par value of the 6,161 shares to be issued in connection with the
acquisition of M&B in a pooling-of-interests transaction.
(c) Par value of the common stock of Morgan & Banks Limited is reclassified as
additional paid-in capital net of the par value of the newly issued TMP
shares.
16
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED COMBINED
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue:
Commissions and fees.............................................. $ 159,275 $ 32,424 $ 191,699
Temporary contracting............................................. -- 82,679 82,679
-------------- -------- -----------
Total revenue................................................. 159,275 115,103 274,378
-------------- -------- -----------
Operating expenses:
Salaries and related costs........................................ 81,839 29,858 111,697
Temporary contracting costs....................................... -- 68,880 68,880
Office and general................................................ 54,056 11,046 65,102
Merger costs...................................................... 2,487 -- 2,487
Amortization of intangibles....................................... 4,625 246 4,871
-------------- -------- -----------
Total operating expenses...................................... 143,007 110,030 253,037
-------------- -------- -----------
Operating income.................................................... 16,268 5,073 21,341
Interest expense, net............................................... (4,858) (127) (4,985)
Other expense, net.................................................. (93) (7) (100)
-------------- -------- -----------
Income before provision for income taxes, minority interests and
equity in losses of affiliates.................................... 11,317 4,939 16,256
Provision for income taxes.......................................... 5,346 2,029 7,375
Minority interests.................................................. -- (32) (32)
Equity in losses of affiliates...................................... (174) -- (174)
-------------- -------- -----------
Net income.......................................................... $ 5,797 $ 2,942 $ 8,739
-------------- -------- -----------
-------------- -------- -----------
Net income per common and Class B common share:
Basic............................................................. $ 0.22 $ 0.27
Diluted........................................................... $ 0.21 $ 0.26
Weighted average shares outstanding:
Basic............................................................. 26,519 32,680(a)
Diluted........................................................... 27,229 33,390(a)
</TABLE>
- ------------------------
(a) Gives effect to the 6,161 additional shares expected to be issued in
connection with the proposed transaction.
17
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SUPPLEMENTAL
TMP MORGAN & BANKS PRO FORMA AUSTIN KNIGHT PRO FORMA
WORLDWIDE INC. LIMITED COMBINED LIMITED(A) ADJUSTMENTS COMBINED
-------------- ---------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Commissions and fees............... $ 237,417 $ 71,950 $ 309,367 $ 46,386 $ -- $ 355,753
Temporary contracting.............. -- 163,831 163,831 -- -- 163,831
-------------- -------- ----------- ------------- ----------- ------------
Total revenue.................. 237,417 235,781 473,198 46,386 -- 519,584
-------------- -------- ----------- ------------- ----------- ------------
Operating expenses:
Salaries and related costs......... 121,313 60,342 181,655 30,633 -- 212,288
Temporary contracting costs........ -- 136,185 136,185 -- -- 136,185
Office and general................. 82,712 25,258 107,970 15,188 -- 123,158
Amortization of intangibles........ 6,160 558 6,718 -- 1,323(b) 8,041
-------------- -------- ----------- ------------- ----------- ------------
Total operating expenses....... 210,185 222,343 432,528 45,821 1,323 479,672
-------------- -------- ----------- ------------- ----------- ------------
Operating income..................... 27,232 13,438 40,670 565 (1,323) 39,912
Interest expense, net................ (8,772) (247) (9,019) (407) (2,896)(c) (12,322)
Other income (expense), net.......... (90) (22) (112) 1,436 -- 1,324
-------------- -------- ----------- ------------- ----------- ------------
Income before provision for income
taxes, minority interests and
equity in losses of affiliates..... 18,370 13,169 31,539 1,594 (4,219) 28,914
Provision for income taxes........... 8,571 5,153 13,724 1,417 (1,158)(d) 13,983
Minority interests................... 143 153 296 -- -- 296
Equity in losses of affiliates....... (33) -- (33) -- -- (33)
-------------- -------- ----------- ------------- ----------- ------------
Net income........................... 9,623 7,863 17,486 177 (3,061) 14,602
Preferred stock dividends............ (123) -- (123) -- -- (123)
-------------- -------- ----------- ------------- ----------- ------------
Net income applicable to common and
Class B common stockholders........ $ 9,500 $ 7,863 $ 17,363 $ 177 $ (3,061) $ 14,479
-------------- -------- ----------- ------------- ----------- ------------
-------------- -------- ----------- ------------- ----------- ------------
Net income per common and Class B
common share:
Basic.............................. $ 0.39 $ 0.57 $ 0.48
Diluted............................ $ 0.38 $ 0.56 $ 0.47
Weighted average shares outstanding:
Basic.............................. 24,243 30.404(e) 30,404(e)
Diluted............................ 24,735 30,896(e) 30,896(e)
</TABLE>
- ------------------------
(a) For the period January 1, 1997 through date of acquisition, August 26, 1997.
(b) To record amortization of intangibles arising from the acquisition of Austin
Knight, as if such acquisition occurred on January 1, 1997. Such
amortization is based on a 30 year life and is computed on an intangible
asset of $59,523, amortized for eight months.
(c) To record interest expense on borrowings in connection with the acquisition
of Austin Knight, as if such acquisition occurred on January 1, 1997. Debt
of $47,208 at 9.2% for eight months.
(d) To record the tax benefit on interest expense of $2,896 on borrowings for
the acquisition of Austin Knight, at an estimated tax rate of 40%.
(e) Gives effect to the 6,161 additional shares expected to be issued in
connection with the proposed transaction.
18
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED COMBINED
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue:
Commissions and fees.............................................. $ 162,631 $ 61,084 $ 223,715
Temporary contracting............................................. -- 113,299 113,299
-------------- -------- -----------
Total revenue................................................. 162,631 174,383 337,014
-------------- -------- -----------
Operating expenses:
Salaries and related costs........................................ 80,291 45,507 125,798
Temporary contracting costs....................................... -- 93,585 93,585
Office and general................................................ 60,101 21,944 82,045
Special compensation.............................................. 52,019 -- 52,019
Amortization of intangibles....................................... 4,440 292 4,732
-------------- -------- -----------
Total operating expenses...................................... 196,851 161,328 358,179
-------------- -------- -----------
Operating income (loss)............................................. (34,220) 13,055 (21,165)
Interest expense, net............................................... (14,265) (27) (14,292)
Other income (expense), net......................................... (164) 141 (23)
-------------- -------- -----------
Income (loss) before provision for income taxes, minority interests
and equity in earnings of affiliates.............................. (48,649) 13,169 (35,480)
Provision for income taxes.......................................... 3,270 4,812 8,082
Minority interests.................................................. 434 583 1,017
Equity in earnings of affiliates.................................... 114 -- 114
-------------- -------- -----------
Net income (loss)................................................... (52,239) 7,774 (44,465)
Preferred stock dividends........................................... (210) -- (210)
-------------- -------- -----------
Net income (loss) applicable to common and Class B common
stockholders...................................................... $ (52,449) $ 7,774 $ (44,675)
-------------- -------- -----------
-------------- -------- -----------
Net income (loss) per common and Class B common share:
Basic............................................................. $ (2.72) $ (1.75)
Diluted........................................................... $ (2.72) $ (1.75)
Weighted average shares outstanding:
Basic............................................................. 19,299 25,460(a)
Diluted........................................................... 19,299 25,460(a)
Pro forma:
Historical net loss applicable to common and Class B common
stockholders.................................................... $ (52,449) $ 7,774 $ (44,675)
Pro forma adjustment for special compensation..................... 52,019 -- 52,019
Pro forma adjustment for interest................................. 2,603 -- 2,603
-------------- -------- -----------
Pro forma net income applicable to common and Class B common
stockholders...................................................... $ 2,173 $ 7,774 $ 9,947
-------------- -------- -----------
-------------- -------- -----------
Pro forma net income per common and Class B common share:
Basic............................................................. $ 0.11 $ 0.39
Diluted........................................................... $ 0.11 $ 0.38
Weighted average shares outstanding:
Basic............................................................. 19,299 25,460(a)
Diluted........................................................... 19,732 25,893(a)
</TABLE>
- ------------------------
(a) Gives effect to the 6,161 additional shares expected to be issued in
connection with the proposed transaction.
19
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED COMBINED
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue:
Commissions and fees.............................................. $ 123,907 $ 44,881 $ 168,788
Temporary contracting............................................. -- 61,768 61,768
-------------- -------- -----------
Total revenue................................................. 123,907 106,649 230,556
-------------- -------- -----------
Operating expenses:
Salaries and related costs........................................ 58,329 31,701 90,030
Temporary contracting costs....................................... -- 49,503 49,503
Office and general................................................ 43,432 17,032 60,464
Amortization of intangibles....................................... 3,237 118 3,355
-------------- -------- -----------
Total operating expenses...................................... 104,998 98,354 203,352
-------------- -------- -----------
Operating income.................................................... 18,909 8,295 27,204
Interest income (expense), net...................................... (10,894) 77 (10,817)
Other income, net................................................... 150 123 273
-------------- -------- -----------
Income before provision for income taxes, minority interests and
equity in losses of affiliates.................................... 8,165 8,495 16,660
Provision for income taxes.......................................... 4,222 3,136 7,358
Minority interests.................................................. 435 326 761
Equity in losses of affiliates...................................... (279) -- (279)
-------------- -------- -----------
Net income.......................................................... 3,229 5,033 8,262
Preferred stock dividends........................................... (210) -- (210)
-------------- -------- -----------
Net income applicable to common and Class B common stockholders..... $ 3,019 $ 5,033 $ 8,052
-------------- -------- -----------
-------------- -------- -----------
Net income per common and Class B common share:
Basic............................................................. $ 0.16 $ 0.32
Diluted........................................................... $ 0.15 $ 0.31
Weighted average shares outstanding:
Basic............................................................. 19,064 25,225(a)
Diluted........................................................... 19,355 25,516(a)
</TABLE>
- ------------------------
(a) Gives effect to the 6,161 additional shares expected to be issued in
connection with the proposed transaction.
20
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
DIVIDEND POLICY
TMP has never declared or paid any cash dividends on its Common Stock. The
Company currently anticipates that all future earnings will be retained by the
Company to support its growth strategy. Accordingly, TMP does not anticipate
paying cash dividends on the Common Stock for the foreseeable future. The
payment of any future dividends will be at the discretion of the Company's Board
of Directors and will depend upon, among other things, future earnings,
operations, capital requirements, the general financial condition of the
Company, contractual restrictions and general business conditions. The Company's
financing agreement prohibits the payment of dividends on Common Stock.
PRICE RANGE OF COMMON STOCK
The Common Stock is quoted on the Nasdaq National Market under the symbol
"TMPW." The Common Stock was initially offered to the public on December 12,
1996 at $14.00 per share. The following table sets forth for the periods
indicated the high and low reported sale prices per share for the Common Stock
as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 HIGH LOW
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
First Quarter.............................................................. $ 32.62 $ 21.62
Second Quarter............................................................. $ 34.88 $ 24.75
Third Quarter (through September 11, 1998)................................. $ 39.19 $ 28.50
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 HIGH LOW
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
First Quarter.............................................................. $ 22.00 $ 12.88
Second Quarter............................................................. $ 24.25 $ 17.00
Third Quarter.............................................................. $ 25.62 $ 19.00
Fourth Quarter............................................................. $ 28.75 $ 15.00
</TABLE>
The number of stockholders of record of Common Stock on September 4, 1998
was 379. On September 11, 1998, the last reported sale price of the Common Stock
as reported by the Nasdaq National Market was $29.75.
21
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information as of September 1, 1998, except
as otherwise noted, with respect to the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders. All of the shares
offered hereby were acquired by the Selling Stockholders from the Company
pursuant to the acquisition of Johnson, Smith & Knisely, Inc. and TASA. See
"Recent Developments." Except for Gary Knisely, who currently owns 2.7% of the
Common Stock and who will own 2.2% of the Common Stock after his sale of 150,000
shares of Common Stock hereby, no other Selling Stockholder owns more than one
percent of the outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OF COMMON STOCK BENEFICIALLY
OWNED PRIOR TO REGISTERED OWNED AFTER
SELLING STOCKHOLDER OFFERING HEREIN OFFERING(2)
- ---------------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Gary Knisely (1).......................................... 771,353 150,000 621,353
Pierre Aussure............................................ 44,839 44,839 0
Gerhard Bartels........................................... 51,244 51,244 0
David Kenneth Bray........................................ 6,405 6,405 0
The TASA Ltd. Self Administered Pension Plan
F/B/O David Kenneth Bray................................ 35,230 35,230 0
Charles Marie Brusselmans................................. 9,608 9,608 0
Neil Campbell Callie...................................... 12,811 12,811 0
Remtor Nominees Pty. Ltd.
F/B/O Trevor Morton Clark............................... 3,202 3,202 0
Jo Carol Conover 9,608 9,608 0
Manuel Gutierrez Cortines................................. 64,056 64,056 0
Edgar S.K. Dammroff....................................... 32,028 32,028 0
Victor Carlos Dana........................................ 48,042 48,042 0
The TASA Ltd. Self Administered Pension Plan
F/B/O Fiona Mary Hilton Darby........................... 38,433 38,433 0
Herman DeKesel............................................ 51,244 51,244 0
James P. Demchak.......................................... 41,636 41,636 0
Trevor M. Dunn............................................ 6,405 6,405 0
Luis Escudero Ygartua..................................... 32,028 32,028 0
Joaquim Espriu Malagelada................................. 54,447 54,447 0
Juan Manuel Farias Gutierrez.............................. 25,622 25,622 0
The TASA Ltd. Self Administered Pension Plan
F/B/O Patrick John Michael Fearon....................... 41,636 41,636 0
Richard L. Fleming........................................ 3,202 3,202 0
Michael Franzino.......................................... 44,839 44,839 0
Vito Gioia................................................ 54,447 54,447 0
Duane R. Goar............................................. 41,636 41,636 0
Frans Jacob Gosses........................................ 6,405 6,405 0
Christian A.F. Groh....................................... 9,608 9,608 0
Luminoz Staff Superannuation Fund
F/B/O R. Neil Hatherly.................................. 9,608 9,608 0
RJ & SG Ingersoll Superannuation Fund
F/B/O Russel J. Ingersoll............................... 19,216 19,216 0
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OF COMMON STOCK BENEFICIALLY
OWNED PRIOR TO REGISTERED OWNED AFTER
SELLING STOCKHOLDER OFFERING HEREIN OFFERING(2)
- ---------------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Phoenix Holdings Pty. Ltd.
F/B/O Russel J. Ingersoll............................... 16,014 16,014 0
Klaus Jacobs.............................................. 64,056 64,056 0
Thomas R. Keller.......................................... 41,636 41,636 0
Dag Einhard Kremer-Nehring................................ 9,608 9,608 0
Michel LeGuillou.......................................... 6,405 6,405 0
Harvey D. Letcher......................................... 16,014 16,014 0
Claudia K. Liebesny....................................... 12,811 12,811 0
David H. W. Lowry......................................... 35,230 35,230 0
Peter Magnet.............................................. 64,056 64,056 0
Bernhard Mahlo............................................ 9,608 9,608 0
Warren L. McGregor........................................ 32,028 32,028 0
John McLaughlin........................................... 70,461 70,461 0
Massimo Misticoni......................................... 16,014 16,014 0
Maria Elena Quijada Cordero............................... 6,405 6,405 0
Terteducon Pty. Ltd.
F/B/O Gregor A. Ramsey.................................. 6,405 6,405 0
Reinhard Fritz Rijke...................................... 76,867 76,867 0
Herbert Schmaderer........................................ 32,028 32,028 0
The TASA Self Administered Pension Plan
F/B/O Andrew R.F. Simpson............................... 41,636 41,636 0
Michael T.D. Squires...................................... 64,056 64,056 0
John Barrett Strickland................................... 51,244 51,244 0
Hans Uher................................................. 32,028 32,028 0
Van Es Superannuation Fund................................ 12,811 12,811 0
Strathwood Unit Trust
F/B/O Alan R. Van Es.................................... 19,216 19,216 0
Victoriano Vila Vilar..................................... 12,811 12,811 0
Robert Bruce Whaley....................................... 9,608 9,608 0
Jeffrey C. Wierichs....................................... 6,405 6,405 0
Gabriele D.E. Willner-Lange............................... 57,650 57,650 0
Andrea M. Wine............................................ 57,650 57,650 0
J. Herbert Wise........................................... 16,014 16,014 0
Heinz Henning Witt........................................ 9,608 9,608 0
</TABLE>
- ------------------------
(1) Gary Knisely is CEO of the Company's executive search division.
(2) Assumes that all shares offered by each Selling Stockholder are sold in this
offering.
PLAN OF DISTRIBUTION
The Company is registering the shares of Common Stock offered hereby on
behalf of the Selling Stockholders. All expenses of the registration of the
shares offered hereby are to be borne by the
23
<PAGE>
Company, except that the Selling Stockholders will pay underwriting discounts,
selling commissions, and fees and expenses, if any, of counsel or other advisers
to the Selling Stockholders.
The distribution of the shares of Common Stock by the Selling Stockholders
(or their respective donees and pledgees) may be effected from time to time in
one or more transactions (which may involve block transactions) in the
over-the-counter market (including the Nasdaq National Market) or any exchange
on which the Common Stock may then be listed, in negotiated transactions,
through the writing of options on shares (whether such options are listed on an
options exchange or otherwise), or a combination of such methods of sale, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders (or
their respective donees and pledgees) may effect such transactions by selling
shares to or through broker-dealers, and such broker-dealer may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or purchasers of shares for whom they may act
as agent (which compensation may be in excess of customary commissions). The
Selling Stockholders (or their respective donees and pledgees) may also sell
such shares of Common Stock pursuant to Rule 144 promulgated under the
Securities Act, or may pledge shares as collateral for margin accounts and such
shares could be resold pursuant to the terms of such accounts. The Selling
Stockholders and any broker-dealers that act in connection with the sale of the
Common Stock might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commission received by them and any profit
on the resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
Because the Selling Stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Stockholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of the shares, such Selling
Stockholders, any selling broker or dealer and any "affiliated purchasers" may
be subject to Regulation M under the Exchange Act, which Regulation prohibits,
with certain exceptions, any such person from bidding for or purchasing any
security which is the subject of such distribution until his participation in
that distribution is completed. In addition, Regulation M under the Exchange Act
prohibits, with certain exceptions, any "stabilizing bid" or "stabilizing
purchase" for the purpose of pegging, fixing or stabilizing the price of Common
Stock in connection with this offering.
The Selling Stockholders have agreed with the Company not to effect any sale
or distribution of Common Stock during any period that is designated by TMP as
"restricted" under TMP's normal policies governing sales of Common Stock by its
directors, officers and employees. The TASA Stockholders have agreed with the
Company not to effect any sale or distribution of Common Stock until after
financial results covering at least thirty (30) days of combined operations of
TMP and TASA Holding AG after August 31, 1998 are published, and otherwise
during any period of time or in a manner which would call into question the
accounting treatment of TMP's acquisition of TASA Holding AG as a "pooling-of-
interests."
In order to comply with certain state securities laws, if applicable, the
Common Stock will not be sold in a particular state unless the Common Stock has
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
LEGAL MATTERS
Legal matters relating to the Common Stock have been passed upon for the
Company by Fulbright & Jaworski L.L.P., New York, New York 10103.
24
<PAGE>
EXPERTS
The consolidated financial statements and schedule included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, which are
incorporated by reference in this Prospectus, have been audited by BDO Seidman,
LLP, independent certified public accountants, to the extent and for the periods
set forth in their reports incorporated herein by reference, and are
incorporated herein in reliance upon the authority of said firm as experts in
accounting and auditing. The audited consolidated financial statements of M&B
included in this Prospectus and elsewhere in the Registration Statement have
been audited by Pannell Kerr Forster, independent chartered accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing.
25
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
MORGAN & BANKS LIMITED
REPORT OF INDEPENDENT AUDITORS............................................................................. F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated profit and loss accounts for the years ended 31 March 1998, 1997 and 1996................... F-3
Consolidated balance sheets as at 31 March 1998 and 1997................................................. F-4
Consolidated cash flow statements for the years ended 31 March 1998, 1997 and 1996....................... F-5
Notes to and forming part of the consolidated financial statements for the years ended 31 March, 1998,
1997 and 1996.......................................................................................... F-6
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT TO MEMBERS
SCOPE
We have audited the financial statements of Morgan & Banks Limited for the
financial years ended 31 March 1998, 1997 and 1996 as set out on pages F-3 to
F-26. The financial statements include the consolidated accounts of the economic
entity comprising the company and the entities it controlled at each year's end
or from time to time during the financial year. The company's directors are
responsible for the preparation and presentation of the financial statements and
the information they contain. We have conducted an independent audit of these
financial statements in order to express an opinion on them to the members of
the company.
Our audit has been conducted in accordance with Australian Auditing
Standards which do not differ in any material respects from generally accepted
auditing standards in the United States of America to provide reasonable
assurance as to whether the financial statements are free of material
misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial statements, and
the evaluation of accounting policies and significant accounting estimates.
These procedures have been undertaken to form an opinion as to whether, in all
material respects, the financial statements are presented fairly in accordance
with Australian Accounting Standards and other mandatory professional reporting
requirements (Urgent Issues Group Consensus Views) and statutory requirements so
as to present a view which is consistent with our understanding of the company's
and the economic entity's financial position, and the results of their
operations and their cash flows.
The names of the entities controlled during all or part of, or at the end
of, the financial year, but of which we have not acted as auditors are set out
in Note 32 to the financial statements. We have, however, received sufficient
information and explanations concerning these controlled entities to enable us
to form an opinion on the consolidated accounts. The audit opinion expressed in
this report has been formed on the above basis.
AUDIT OPINION
In our opinion, the financial statements of Morgan & Banks Limited are
properly drawn up:
(a) so as to give a true and fair view of
- the state of affairs as at 31 March 1998 and 1997 and the profit and cash
flows for the financial years ended 31 March 1998, 1997 and 1996 of the
company and the economic entity; and
- the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the
Corporations Law to be dealt with in the financial statements;
(b) in accordance with the provisions of the Corporations Law; and
(c) in accordance with applicable Australian Accounting Standards and other
mandatory professional reporting requirements.
<TABLE>
<S> <C>
/s/ A.P. WHITING
[LOGO] ----------------------------
A.P. Whiting
- ---------------------------- Partner
Pannell Kerr Forster
Chartered Accountants
New South Wales Partnership
Sydney, 16 June 1998, except for Note 2 of
Notes to and Forming Part of the Consolidated
Financial Statements, for which the date is
16 September 1998.
</TABLE>
F-2
<PAGE>
MORGAN & BANKS LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(IN AUSTRALIAN DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
1998 1997 1996
NOTES $000 $000 $000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales revenue.......................................................... 4 330,364 221,467 143,057
--------- --------- ---------
Operating profit before depreciation, amortisation, interest and income
tax.................................................................. 25,466 20,002 13,440
Depreciation, amortisation and interest................................ 6,312 3,276 2,046
--------- --------- ---------
Operating profit before abnormal items and income tax.................. 3 19,154 16,726 11,394
Abnormal loss before income tax........................................ 5 703 -- --
--------- --------- ---------
Operating profit before income tax..................................... 18,451 16,726 11,394
Income tax attributable to operating profit............................ 6 7,220 6,118 4,200
--------- --------- ---------
Operating profit after income tax...................................... 11,231 10,608 7,194
Outside equity interests in operating profit after income tax.......... 214 741 437
--------- --------- ---------
Operating profit after income tax attributable to members of Morgan &
Banks Limited........................................................ 11,017 9,867 6,757
Retained profits at the beginning of the financial year................ 8,699 4,848 2,499
Retrospective adjustments for the introduction of AASB 1028............ -- -- (123)
--------- --------- ---------
Total available for appropriation...................................... 19,716 14,715 9,133
Dividends provided for or paid......................................... 7,190 6,016 4,285
--------- --------- ---------
Retained profits at the end of the financial year...................... 12,526 8,699 4,848
--------- --------- ---------
--------- --------- ---------
</TABLE>
The above Profit and Loss Accounts are to be read in conjunction with the
attached Notes.
F-3
<PAGE>
MORGAN & BANKS LIMITED
CONSOLIDATED BALANCE SHEETS
(IN AUSTRALIAN DOLLARS)
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
NOTES $000 $000
----------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
Cash................................................................................... 22 14,488 11,067
Receivables............................................................................ 9 39,446 30,175
Other.................................................................................. 10 2,357 1,844
--------- ---------
TOTAL CURRENT ASSETS................................................................... 56,291 43,086
--------- ---------
NON-CURRENT ASSETS
Receivables............................................................................ 11 46 42
Plant and equipment.................................................................... 12 14,152 10,385
Intangibles............................................................................ 13 9,308 10,147
Other.................................................................................. 14 2,993 2,339
--------- ---------
TOTAL NON-CURRENT ASSETS............................................................... 26,499 22,913
--------- ---------
TOTAL ASSETS........................................................................... 82,790 65,999
--------- ---------
CURRENT LIABILITIES
Accounts payable....................................................................... 15 43,665 34,029
Borrowings............................................................................. 16 481 665
Provisions............................................................................. 17 9,530 8,230
--------- ---------
TOTAL CURRENT LIABILITIES.............................................................. 53,676 42,924
--------- ---------
NON-CURRENT LIABILITIES
Borrowings............................................................................. 18 8,121 5,915
Provisions............................................................................. 19 1,613 1,719
--------- ---------
TOTAL NON-CURRENT LIABILITIES.......................................................... 9,734 7,634
--------- ---------
TOTAL LIABILITIES...................................................................... 63,410 50,558
--------- ---------
NET ASSETS............................................................................. 19,380 15,441
--------- ---------
--------- ---------
Shareholders' Equity
Issued capital......................................................................... 21 2,308 2,283
Reserves............................................................................... 8 3,895 3,664
Retained profits....................................................................... 12,526 8,699
--------- ---------
Shareholders' equity attributable to members
of Morgan & Banks Limited............................................................ 18,729 14,646
Outside equity interests in controlled entities........................................ 31 651 795
--------- ---------
TOTAL SHAREHOLDERS' EQUITY............................................................. 19,380 15,441
--------- ---------
--------- ---------
</TABLE>
The above Balance Sheets are to be read in conjunction with the attached Notes.
F-4
<PAGE>
MORGAN & BANKS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN AUSTRALIAN DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
----------------------------------
1998 1997 1996
NOTES $000 $000 $000
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers............................................... 322,055 216,454 135,179
Payments to suppliers and employees................................... (296,859) (192,397) (122,187)
Interest received..................................................... 188 220 259
Borrowing costs including interest and cost of finance paid........... (472) (99) (165)
Dividends received.................................................... -- 151 --
Income taxes paid..................................................... (7,217) (6,577) (4,025)
---------- ---------- ----------
Net cash provided by operating activities............................. 23(a) 17,695 17,752 9,061
---------- ---------- ----------
CASH FLOWS TO INVESTING ACTIVITIES
Payments for businesses acquired 23(b) -- -- (102)
Payments for investments in controlled entities....................... 23(b) -- (6,647) --
Payments for additional shares in controlled entities................. (665) (1,075) --
Payment for investments -- -- (1,491)
Payment for plant and equipment....................................... (9,407) (4,558) (4,324)
Proceeds from sale of plant and equipment............................. 155 104 --
Long-term loans to related bodies corporate........................... (4) -- (61)
---------- ---------- ----------
Net cash used in investing activities................................. (9,921) (12,176) (5,978)
---------- ---------- ----------
CASH FLOWS TO FINANCING ACTIVITIES
Proceeds from borrowings.............................................. 2,900 6,815 --
Repayments of borrowings.............................................. (179) (1,500) --
Payments under hire purchase contracts................................ (608) (608) (359)
Proceeds from exercise of options..................................... 420 -- --
Dividends paid........................................................ (7,148) (5,325) (4,060)
---------- ---------- ----------
Net cash used in financing activities................................. (4,615) (618) (4,419)
---------- ---------- ----------
Net increase (decrease) in cash held.................................. 3,159 4,958 (1,336)
Cash at the beginning of the year..................................... 11,067 6,141 7,514
Effects of exchange rate changes on the balances of cash held in
foreign currencies at the beginning of the year..................... 262 (32) (37)
---------- ---------- ----------
Cash at the end of the year........................................... 22 14,488 11,067 6,141
---------- ---------- ----------
---------- ---------- ----------
Non-cash financing and investing activities........................... 23(c)
Financing arrangements................................................ 23(d)
</TABLE>
The above Statements of Cash Flows are to be read in conjunction with the
attached Notes.
F-5
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(IN AUSTRALIAN DOLLARS)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted by the economic entity comprising
the chief entity Morgan & Banks Limited and its controlled entities are stated
in order to assist in a general understanding of the financial statements. These
policies have been consistently applied except as otherwise indicated.
The financial statements, which constitute a general purpose financial
report, have been drawn up in accordance with applicable Accounting Standards
and other mandatory professional requirements, and comply with other
requirements of the law.
ACCOUNTS PAYABLE
Accounts payable represent the principal amounts outstanding at balance
date. The carrying amounts of accounts payable approximate net fair values.
NON-CURRENT ASSETS
The carrying amounts of non-current assets do not exceed the net amounts
that are expected to be recovered through the cash inflows and outflows arising
from their continued use and subsequent disposal. The expected net cash flows
included in determining the recoverable amount have not been discounted to their
present values.
DEPRECIATION AND AMORTISATION OF PLANT AND EQUIPMENT
Items of plant and equipment are depreciated over their estimated useful
lives using the straight line method. Leasehold improvements are amortised over
the period of the lease.
GOODWILL
Goodwill, representing the excess of the cost of acquisition over the fair
values of the net assets acquired, is being amortised over the period of time
during which benefits are expected to arise. The period over which goodwill is
being amortised is reviewed annually and does not exceed 20 years.
RECEIVABLES
Trade accounts receivable, amounts due from related parties and other
receivables represent the principal amounts due at balance date less any
provisions for doubtful debts and approximate net fair value.
EMPLOYEE ENTITLEMENTS
AASB 1028 Accounting for Employee Entitlements was adopted as at 1 April
1995. The net effect of the adoption was accounted for against profits at that
date. The adjustment to retained profits net of the tax effect of $69,000 was
$123,000.
REVENUE RECOGNITION
Income from contracting activities is brought to account when earned. All
other fee income is brought to account when billed.
F-6
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SUPERANNUATION
The economic entity contributes to superannuation funds which provide
benefits to employees and contractors and their dependants on retirement, total
and permanent disability or death. The economic entity's commitment in respect
of these accumulation funds is limited to making the specified contributions as
required by the relevant award and legislation. The economic entity's
contributions to the superannuation funds are expensed in the profit and loss
accounts as incurred.
TRANSLATION OF FOREIGN CURRENCY TRANSACTION
Transactions in foreign currencies are initially measured and brought to
account at the rate of exchange in affect at the date of each transaction.
As foreign controlled entities are self sustaining, the assets and
liabilities are translated into Australian currency at rates of exchange current
at balance date, while its revenue and expenses are translated at the average of
rates ruling during the year. Exchange differences arising on translation are
taken to the foreign currency translation reserve.
Foreign currency monetary items outstanding at balance date have been
translated at the spot rates current at balance date.
Exchange differences arising on the translation of foreign currency
borrowings designated as hedges of investments in controlled foreign entities
are taken to the foreign currency translation reserve.
BORROWINGS
Bank loans are recognised in the financial statements on the basis of the
nominal amounts outstanding at balance date plus accrued interest. The carrying
amounts of borrowings approximate net fair values.
F-7
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 2. RECONCILIATIONS FROM AUSTRALIAN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES TO US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Reconciliation of operating profit after income tax for the year ended 31 March,
<TABLE>
<CAPTION>
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
Operating profit after income tax attributable to members of
Morgan & Banks Limited.......................................................... 11,017 9,867 6,757
Deferred income taxes............................................................. -- 7 (7)
--------- --------- ---------
Net income in accordance with US Generally
Accepted Accounting Principles.................................................. 11,017 9,874 6,750
--------- --------- ---------
--------- --------- ---------
Reconciliation of shareholders' equity at 31 March,
<CAPTION>
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
Shareholders' equity attributable to members of
Morgan & Banks Limited.......................................................... 18,729 14,646 9,495
Deferred income taxes............................................................. -- -- 7
--------- --------- ---------
Shareholders' equity in accordance with US Generally
Accepted Accounting Principles.................................................. 18,729 14,646 9,502
--------- --------- ---------
--------- --------- ---------
</TABLE>
Generally accepted accounting principles in Australia ("Australian GAAP") as
utilized by the Company differ in certain respects from generally accepted
accounting principles in the United States ("US GAAP"). With respect to the
Company's financial statements, these differences primarily relate to accounting
for income taxes. Australian GAAP stipulates that an announcement of the
Government's intention to change the rate of company income tax in advance of
the periods in which the change will apply is adequate evidence for deferred tax
balances to be restated. US GAAP requires the adjustment in the year that a
change in tax rate is effective.
The provision for employee entitlements prepared in accordance with AASB
1028 "Accounting for Employee Entitlements" substantially approximates the
required provision under US GAAP. As such the provision for employee
entitlements for 1996, 1997 and 1998 as prepared under Australian GAAP require
no adjustment. In order to reflect the adoption of AASB 1028 in 1996, and
therefore US GAAP in preceding years, the adjustment booked through opening
retained profits in 1996 has been reversed and effected through net income in
1994 and 1995.
Under Australian GAAP, companies were not allowed to use the equity method
of accounting for investments in associates in the consolidated profit and loss
statement or balance sheet. Instead companies record the investment at cost and
bring to account dividend income. US GAAP requires investments in associates to
be accounted for under the equity method after elimination of unrealised profits
on transactions with associates. The adjustment was not material and therefore
not included in the summary of differences.
Under Australian GAAP, no cost attributable to executive options has been
recognised in the profit and loss statement. Under US GAAP the compensation cost
is zero for each year ended to date.
F-8
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 3. OPERATING PROFIT
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
$000 $000 $000
--------- --------- ---------
Operating profit before income tax has been determined after:
(A) CREDITING AS REVENUE:
Dividends received/receivable
Associated entities............................................................ -- 151 189
--------- --------- ---------
--------- --------- ---------
Interest:
Others......................................................................... 188 229 259
--------- --------- ---------
--------- --------- ---------
(B) CHARGING AS EXPENSE:
Net expenses resulting from movements in provision for:
Amortisation of goodwill....................................................... 782 274 158
Amortisation of leasehold improvements......................................... 1,318 565 299
Depreciation of plant and equipment............................................ 3,866 2,402 1,692
Employee entitlements.......................................................... 204 748 278
--------- --------- ---------
6,170 3,989 2,427
--------- --------- ---------
--------- --------- ---------
Borrowing Costs:
Interest expense other persons................................................. 440 116 --
Hire purchase interest charges................................................. 94 147 156
--------- --------- ---------
534 263 156
--------- --------- ---------
--------- --------- ---------
Other:
Net bad and doubtful debts expense............................................. 814 671 781
Goodwill written off........................................................... -- 97 --
(Gain) loss on sales/write-off of plant & equipment............................ (1) (11) 24
Operating lease rental expense................................................. 7,293 5,493 3,769
--------- --------- ---------
8,106 6,250 4,574
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 4. OPERATING REVENUE
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
$000 $000 $000
--------- --------- ---------
Sales revenue.................................................................... 330,364 221,467 143,057
Interest......................................................................... 188 229 259
Dividends........................................................................ -- 151 189
Proceeds from sales of non-current assets........................................ 155 104 --
--------- --------- ---------
Total operating revenue.......................................................... 330,707 221,951 143,505
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-9
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 5. ABNORMAL ITEM
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
$000 $000 $000
--------- --------- ---------
INDONESIAN OPERATION
Set-up of operations............................................................. 494 -- --
Office closure costs............................................................. 209 -- --
--------- --------- ---------
703 -- --
Income tax expense............................................................... 8 -- --
Outside equity interest.......................................................... (2) -- --
--------- --------- ---------
709 -- --
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 6. INCOME TAX
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
$000 $000 $000
--------- --------- ---------
The amount provided in respect of income tax differs from the amount prima facie
payable on operating profit. The difference is reconciled as follows:
Prima facie tax on operating profit at 36%....................................... 6,642 6,021 4,102
Add tax effect of:
(Over)/Under provision in prior years.......................................... (35) 95 --
Entertainment not allowable.................................................... 181 174 194
Goodwill amortisation.......................................................... 266 93 57
Non-deductible expenses........................................................ 30 114 23
Abnormal item not allowable (Note 5)........................................... 8 -- --
Deduct tax effect of:
Overseas income tax differential............................................... 128 (334) (78)
Non-assessable profit of overseas subsidiaries................................. -- -- (30)
Exempt income.................................................................. -- (45) (68)
--------- --------- ---------
Income tax attributable to operating profit...................................... 7,220 6,118 4,200
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 7. EVENTS SUBSEQUENT TO BALANCE DATE
No matter or circumstance has arisen since the end of the financial year
that has significantly affected or may significantly affect the operations of
the economic entity, the results of those operations, or the state of affairs of
the economic entity, in subsequent financial years.
F-10
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 8. RESERVES
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Share premium account.......................................................................... 4,204 3,809
Foreign currency translation reserve........................................................... (309) (145)
--------- ---------
3,895 3,664
--------- ---------
--------- ---------
MOVEMENTS IN RESERVES
Share premium account:
Balance at beginning of the financial year................................................... 3,809 2,399
Exercise of 250,000 options at a premium of $1.58 per share.................................. 395 --
Issue of 275,170 ordinary shares at a premium of $5.124 per share............................ -- 1,410
--------- ---------
Balance at end of the financial year......................................................... 4,204 3,809
--------- ---------
--------- ---------
Foreign currency translation reserve:
Balance at beginning of the financial year................................................... (145) (7)
Exchange differences arising from the translation of the net assets of self-sustaining
foreign operations......................................................................... (164) (138)
--------- ---------
Balance at end of the financial year........................................................... (309) (145)
--------- ---------
--------- ---------
</TABLE>
NOTE 9. CURRENT RECEIVABLES
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Trade accounts receivable...................................................................... 40,422 31,374
Provision for doubtful debts................................................................... (2,012) (1,837)
--------- ---------
38,410 29,537
Non-trade accounts receivable from:
Other debtors................................................................................ 1,036 638
--------- ---------
39,446 30,175
--------- ---------
--------- ---------
Amounts receivable in foreign currencies
New Zealand dollars.......................................................................... 6,137 4,789
British pounds............................................................................... 1,980 1,814
Singapore dollars............................................................................ 568 1,447
Hong Kong dollars............................................................................ 1,352 1,736
Trade accounts receivable are subject to normal terms of trade which provide for settlement
within seven to fourteen days. Non-trade accounts receivable are due within various periods of
less than 12 months.
</TABLE>
NOTE 10. OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Prepayments.................................................................................... 2,357 1,844
--------- ---------
--------- ---------
</TABLE>
F-11
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 11. NON-CURRENT RECEIVABLES
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Loans to related bodies corporate.............................................................. 46 42
--------- ---------
--------- ---------
</TABLE>
NOTE 12. PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Leasehold improvements
At cost...................................................................................... 6,992 3,421
Provision for amortisation................................................................... 2,535 1,172
--------- ---------
4,457 2,249
--------- ---------
Plant and equipment
At cost...................................................................................... 19,882 14,364
Provision for depreciation................................................................... 10,187 6,228
--------- ---------
9,695 8,136
--------- ---------
Total plant and equipment at cost.............................................................. 26,874 17,785
Provision for depreciation and amortisation.................................................... 12,722 7,400
--------- ---------
14,152 10,385
--------- ---------
--------- ---------
</TABLE>
NOTE 13. INTANGIBLES
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Goodwill--at cost.............................................................................. 10,551 10,608
Accumulated amortisation....................................................................... 1,243 461
--------- ---------
9,308 10,147
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 14. OTHER NON-CURRENT ASSETS
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
Future income tax benefits -- timing differences.............................................. 2,684 2,339
-- tax losses.......................................................... 309 --
----------- -----------
2,993 2,339
----------- -----------
----------- -----------
</TABLE>
NOTE 15. CURRENT ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
Trade accounts payable........................................................................ 6,683 4,264
Other creditors:
Commissions/bonus accrual................................................................... 13,108 10,392
On hire contractors, wages.................................................................. 11,412 9,876
Employee related taxes accrued.............................................................. 3,190 1,370
Other general accruals...................................................................... 9,272 8,127
----------- -----------
43,665 34,029
----------- -----------
----------- -----------
Amounts payable in foreign currencies:
New Zealand dollars......................................................................... 7,089 6,032
British pounds.............................................................................. 3,589 2,898
Singapore dollars........................................................................... 746 548
Hong Kong dollars........................................................................... 740 848
</TABLE>
NOTE 16. CURRENT BORROWINGS
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
Hire purchase creditors (Note 24)--secured*................................................... 481 486
Bank loan--secured............................................................................ -- 179
----------- -----------
481 665
----------- -----------
----------- -----------
</TABLE>
- ------------------------
* Partly secured by a first ranking fixed charge over the book debts of the
chief entity to an amount of $1 million, and also secured by the assets
acquired.
NOTE 17. CURRENT PROVISIONS
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
Dividends..................................................................................... 3,497 3,196
Taxation...................................................................................... 4,581 3,772
Employee entitlements......................................................................... 1,452 1,262
----------- -----------
9,530 8,230
----------- -----------
----------- -----------
</TABLE>
F-13
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 18. NON-CURRENT BORROWINGS
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
Hire purchase creditors (Note 24)--secured*................................................... 91 600
Commercial bills--unsecured (Note 23(d))...................................................... 8,030 5,315
----------- -----------
8,121 5,915
----------- -----------
----------- -----------
</TABLE>
- ------------------------
* Partly secured by a first ranking fixed charge over the book debts of the
chief entity to an amount of $1 million, and also secured by the assets
acquired.
NOTE 19. NON-CURRENT PROVISIONS
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
Employee entitlements......................................................................... 996 983
Deferred income taxation...................................................................... 617 736
----------- -----------
1,613 1,719
----------- -----------
----------- -----------
</TABLE>
NOTE 20. FOREIGN CURRENCY MONETARY ITEMS
Current and non-current assets and liabilities not effectively hedged to a
date at least 12 months after balance date:
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
British pounds:
Current assets.............................................................................. 1,029 577
Non-current assets.......................................................................... 729 636
----------- -----------
1,758 1,213
----------- -----------
----------- -----------
New Zealand dollars:
Non-current assets.......................................................................... 8,658 10,629
Current liabilities......................................................................... (7,139) (7,452)
----------- -----------
1,519 3,177
----------- -----------
----------- -----------
Hong Kong dollars:
Current assets.............................................................................. 1,433 930
Non-current assets.......................................................................... 345 441
----------- -----------
1,778 1,371
----------- -----------
----------- -----------
Singapore dollars:
Current assets.............................................................................. 256 966
Non-current assets.......................................................................... 389 216
----------- -----------
645 1,182
----------- -----------
----------- -----------
</TABLE>
F-14
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 21. ISSUED CAPITAL
The Shareholders of the company approved a capital reconstruction of
three-new-shares-for-one-old at a General Shareholders' Meeting on 25 February
1998.
<TABLE>
<CAPTION>
AS AT 31 MARCH
------------------------
<S> <C> <C>
1998 1997
$000 $000
----------- -----------
ISSUED
Ordinary shares:
69,239,148 (1997: 22,829,716) ordinary shares of 3.33 cents (1997: 10 cents) each fully
paid...................................................................................... 2,308 2,283
----------- -----------
----------- -----------
Shares issued (all issued prior to capital reconstruction):
During the current year 250,000 ordinary shares of $0.10 each were issued at a premium of
$1.58 per share following the exercise of options......................................... 25 --
----------- -----------
----------- -----------
During the prior year 275,170 ordinary shares of $0.10 each were issued at a premium of
$5.124 per share as partial consideration for the acquisition of 64.5% of Morgan & Banks
Limited, New Zealand...................................................................... -- 28
----------- -----------
----------- -----------
</TABLE>
OPTIONS
Prior to the capital reconstruction and during the year 788,750 options were
issued under the Morgan & Banks Employee Share Option Scheme and 530,000 options
were issued under the new Morgan & Banks Executive Option Plan. Of such amounts,
188,500 options (1997: 212,250) were forfeited under the Morgan & Banks Employee
Share Option Scheme and 50,000 were forfeited under the Morgan & Banks Executive
Option Plan. During the year ended March 31, 1998, 250,000 options were
exercised. As at 31 March 1998, unissued shares, following the capital
reconstruction, under all option plans were as follows:
<TABLE>
<CAPTION>
SHARES UNDER EXERCISE EXERCISE
ISSUE DATE OPTION PRICE PERIOD
- ------------ ------------- --------- ------------------------
<S> <C> <C> <C>
10/11/1994 600,000 $ 0.5600 10/11/1997-09/11/1999
21/04/1995 769,875 $ 0.5233 21/04/1998-20/04/2000
19/08/1996 1,863,000 $ 1.2167 19/08/1999-17/08/2001
17/10/1997 1,440,000 $ 3.4733 17/10/2000-17/10/2002
</TABLE>
F-15
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 22. CASH
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Cash........................................................................................... 7,671 8,076
Short-term deposits............................................................................ 6,817 2,991
--------- ---------
14,488 11,067
--------- ---------
--------- ---------
</TABLE>
For the purposes of the statements of cash flows, cash includes cash on hand
and in banks and investments in money market instruments, net of outstanding
bank overdrafts.
The average floating interest rate for short-term deposits is 5.39%.
NOTE 23. NOTES TO THE STATEMENTS OF CASH FLOWS
(A) RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO OPERATING
PROFIT AFTER INCOME TAX:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
Operating profit after income tax.................................................... 11,231 10,608 7,194
Depreciation and amortisation...................................................... 5,184 2,967 1,991
Amortisation of goodwill........................................................... 782 274 158
Goodwill written-off............................................................... -- 97 --
Hire purchase interest charges..................................................... 94 146 --
(Gain) loss on sales/write-off of non-current assets............................... (1) (11) 24
Provision for doubtful debts....................................................... 175 216 550
Abnormal item...................................................................... 198 -- --
Changes in assets and liabilities net of effects of
purchases of new businesses:
Increase/(decrease) in income taxes payable........................................ 787 (124) 771
(Decrease)/increase in provision for deferred income tax........................... (120) 254 (135)
(Increase) in future income tax benefit............................................ (664) (590) (461)
(Increase) in trade debtors........................................................ (8,675) (5,013) (7,878)
(Increase) in other debtors and prepayments........................................ (910) (684) (375)
Increase in trade creditors........................................................ 2,482 1,487 1,111
Increase in other creditors........................................................ 6,928 7,377 5,857
Decrease in lease liabilities -- -- (24)
Increase in employee entitlements.................................................. 204 748 278
--------- --------- ---------
Net cash provided by operating activities............................................ 17,695 17,752 9,061
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) ENTITIES ACQUIRED
During the 1997 financial year the economic entity acquired the remaining
71.38% interest in Morgan & Banks, New Zealand in a number of stages. These
acquisitions were financed through the issue of shares and cash as detailed
below. As a result of the issue of shares, the chief entity became the
beneficial owner of 16.1% of the issued capital of Morgan & Banks, New Zealand.
This beneficial ownership was on-sold at
F-16
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 23. NOTES TO THE STATEMENTS OF CASH FLOWS (CONTINUED)
cost to Maldon Holdings Limited, a wholly owned controlled entity, and therefore
not reflected in the statements of cash flows.
During the 1996 financial year, the economic entity acquired the trading
operations of Westside Employment (Aust) Pty Limited.
Details of the acquisitions are as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
---------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- -----
<S> <C> <C> <C>
Consideration
275,170 ordinary shares of Morgan & Banks Limited issued at
$5.224 per share............................................................... -- 1,437 --
Cash............................................................................. -- 7,557 102
--------- --------- ---
-- 8,994 102
Equity interest at date of acquisition............................................. -- 1,491 --
--------- --------- ---
-- 10,485 102
--------- --------- ---
--------- --------- ---
Fair value of net assets acquired
Current Assets
Cash........................................................................... -- 910 --
Trade debtors.................................................................. -- 3,947 --
Sundry debtors and prepayments................................................. -- 264 --
Non-Current Assets
Plant and equipment............................................................ -- 1,792 --
Intangible assets.............................................................. -- 929 --
Investments.................................................................... -- 68 --
Future income tax benefit...................................................... -- 346 --
Current Liabilities
Trade creditors................................................................ -- (1,194) --
Provisions and accruals........................................................ -- (3,816) --
Related party payable.......................................................... -- (19) --
Bank loan--secured............................................................. -- (179) --
--------- --------- ---
Net assets acquired.............................................................. -- 3,048 --
Goodwill on acquisition.......................................................... -- 7,437 102
--------- --------- ---
-- 10,485 102
--------- --------- ---
Cash consideration................................................................. -- 7,557 102
Less: Cash balances acquired....................................................... -- 910 --
--------- --------- ---
Cash outflow....................................................................... -- 6,647 102
--------- --------- ---
--------- --------- ---
</TABLE>
On 1 April 1997, an additional 7.5% of the ordinary shares of Morgan & Banks
(Hong Kong) Limited was acquired.
On 24 January 1997, an additional 16.5% of the ordinary shares of Morgan &
Banks (Hong Kong) Limited was also acquired.
F-17
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 23. NOTES TO THE STATEMENTS OF CASH FLOWS (CONTINUED)
(C) NON-CASH FINANCING AND INVESTING ACTIVITIES
During the 1997 financial year the chief entity acquired plant and equipment
with an aggregate fair value of $72,315 (1996: $814,440) by means of hire
purchase contracts. During the 1997 financial year the chief entity issued
275,170 ordinary shares as part consideration of the acquisition of 64.5% of the
ordinary shares of Morgan & Banks Limited, New Zealand (refer to Note 23(b)).
These transactions are not reflected in the statements of cash flows.
(D) FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
FACILITIES SUMMARY
Bank loan facilities............................................................... -- 179 --
Fixed rate commercial bill facility................................................ 2,500 -- --
Fixed and variable rate commercial bill acceptance/discount facility............... 2,630 5,675 --
Interchangeable overdraft or fixed and variable rate commercial bill
acceptance/discount facility..................................................... 8,196 1,992 --
Overdraft facilities............................................................... -- 447 2,000
--------- --------- ---------
13,326 8,293 2,000
--------- --------- ---------
--------- --------- ---------
USED AT BALANCE DATE
Bank loan facilities............................................................... -- 179 --
Fixed rate commercial bill facility................................................ 2,500 -- --
Fixed and variable rate commercial bill acceptance/discount facility............... 2,630 5,315 --
Interchangeable overdraft or fixed and variable rate commercial bill
acceptance/discount facility..................................................... 2,900 -- --
--------- --------- ---------
8,030 5,494 --
--------- --------- ---------
--------- --------- ---------
UNUSED AT BALANCE DATE
Fixed and variable rate commercial bill acceptance/discount facility............... -- 360 --
Interchangeable overdraft or fixed and variable rate commercial bill
acceptance/discount facility..................................................... 5,296 1,992 --
Overdraft facilities............................................................... -- 447 2,000
--------- --------- ---------
5,296 2,799 2,000
--------- --------- ---------
--------- --------- ---------
</TABLE>
The bank loan facility was repaid in August 1997.
The fixed rate commercial bill facility matures in August 2001 with a fixed
interest rate of 5.74%.
The fixed and variable rate commercial bill acceptance/discount facility and
the interchangeable facility are subject to annual review, with the exception of
$2,630,000 of the commercial bill facility which matures in 2000. The commercial
bill facility of $2,630,000 and an additional amount of $796,000 of the
interchangeable facility may only be drawn in New Zealand dollars.
F-18
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 23. NOTES TO THE STATEMENTS OF CASH FLOWS (CONTINUED)
An interest rate option was taken out on the fixed and variable commercial
bill acceptance/discount facility drawn in New Zealand dollars until 15
September 1998. The interest rate cap is 8.50%.
Interest rates on the interchangeable overdraft and fixed and variable rate
commercial bill acceptance/ discount facility are determined by reference to the
prevailing bank bill or overdraft rate as applicable.
NOTE 24. COMMITMENTS FOR EXPENDITURE
<TABLE>
<CAPTION>
AS AT 31 MARCH
-------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
CAPITAL EXPENDITURE CONTRACTED FOR
AT 31 MARCH BUT NOT PROVIDED FOR:
Payable:
Not later than 1 year.............................................................. 76 426 179
--------- --------- ---------
--------- --------- ---------
NON-CANCELLABLE OPERATING LEASES WITH A TERM OF
MORE THAN ONE YEAR--COMMITMENTS NOT PROVIDED FOR:
Payable:
Not later than 1 year.............................................................. 7,056 5,892 3,894
Later than 1 year but not later than 2 years....................................... 6,332 5,193 3,500
Later than 2 years but not later than 5 years...................................... 13,742 12,757 7,091
Later than 5 years................................................................. 867 3,866 2,501
--------- --------- ---------
27,997 27,708 16,986
--------- --------- ---------
--------- --------- ---------
HIRE PURCHASE AGREEMENTS--ANALYSIS OF COMMITMENTS:
Payable:
Not later than 1 year.............................................................. 516 608 586
Later than 1 year but not later than 2 years....................................... 94 516 586
Later than 2 years but not later than 5 years...................................... -- 94 552
--------- --------- ---------
Total minimum lease payments......................................................... 610 1,218 1,724
Future finance charges............................................................... (38) (132) (249)
--------- --------- ---------
572 1,086 1,475
--------- --------- ---------
--------- --------- ---------
Current liability (Note 16).......................................................... 481 486 445
Non-current liability (Note 18)...................................................... 91 600 1,030
--------- --------- ---------
572 1,086 1,475
--------- --------- ---------
--------- --------- ---------
</TABLE>
The average interest rate for hire purchase liabilities is 10.776%.
NOTE 25. SUPERANNUATION COMMITMENTS
The economic entity contributes to accumulation plans to provide benefits to
permanent employees and contractors as required by Superannuation Guarantee
legislation. The economic entity does not guarantee the performance of these
funds.
The economic entity's commitment in respect of these accumulation plans is
limited to making the specified contributions as required by the relevant award
and legislation.
F-19
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 25. SUPERANNUATION COMMITMENTS (CONTINUED)
Funds are available for the purposes of the fund to satisfy all benefits
that would have been vested under the fund in the event of the termination of
the fund or the voluntary or compulsory termination of employment of each
employee member.
NOTE 26. CONTINGENT LIABILITIES
MORGAN & BANKS LIMITED
Particulars and estimated maximum amounts of contingent liabilities arising
in respect of:
Morgan & Banks New Zealand Limited has had proceedings issued against the
company for an amount of NZ$5.9 million. These proceedings are in relation to
the acquisition of the claimant's business in New Zealand prior to Morgan &
Banks New Zealand Limited becoming a controlled entity of the Group. The
directors of Morgan & Banks Limited are of the opinion that the claim is without
substance and accordingly the action will be vigorously defended.
Bank guarantees provided to third parties at 31 March 1998 amount to
$1,402,987 (1997: $1,286,391, 1996: $1,286,391).
In order to secure certain financing facilities, a deed of cross guarantee
and indemnity has been signed between Morgan & Banks Limited, Morgan & Banks New
Zealand Limited, and Maldon Holdings Limited to guarantee payment and indemnify
against losses.
F-20
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 27. REMUNERATION OF AUDITORS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
Total of all remuneration received or due and receivable for the audit and review of
financial reports by:
Auditors of the chief entity........................................................... 95 82 67
Other auditors......................................................................... 85 56 27
--------- --------- ---------
180 138 94
--------- --------- ---------
--------- --------- ---------
Total of all remuneration received or due and receivable for other services by:
Auditors of the chief entity........................................................... 71 124 68
Other auditors......................................................................... 35 3 8
--------- --------- ---------
106 127 76
--------- --------- ---------
286 265 170
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 28. DIRECTORS' INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
Aggregate of income paid or payable or otherwise made available from entities within the
economic entity and any related parties:............................................... 5,545 5,298 3,452
--------- --------- ---------
--------- --------- ---------
</TABLE>
The total income reported above excludes income of directors of wholly-owned
controlled corporations who are executives but not directors of the chief entity
and who are required as part of their executive duties to be directors of
controlled entities.
Directors of the chief entity in office at any time during the financial
years 1998, 1997 and 1996 were:
<TABLE>
<S> <C> <C>
W S Cutbush I G Burns A A Cox
G K Morgan M Hinves A W Whatmore
A R Banks P S Laidlaw
</TABLE>
NOTE 29. EXECUTIVES' INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------
1998 1997 1996
$000 $000 $000
--------- --------- ---------
<S> <C> <C> <C>
Total income received, or receivable by executive officers (including income received or
receivable from related parties) whose total income exceeds $100,000................... 7,624 6,997 6,442
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-21
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 29. EXECUTIVES' INCOME (CONTINUED)
Number of executive officers whose total income exceeds $100,000:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
-------------------------------------------
1998 1997 1996
NUMBER NUMBER NUMBER
------------- ------------- -------------
<S> <C> <C> <C>
$100,000-$109,899................................................................... -- -- 1
$110,000-$119,999................................................................... 1 -- 1
$120,000-$129,999................................................................... 1 -- --
$130,000-$139,999................................................................... -- 1 3
$140,000-$149,999................................................................... 1 1 1
$150,000-$159,999................................................................... -- 1 --
$160,000-$169,999................................................................... 1 1 1
$180,000-$189,999................................................................... 2 -- --
$190,000-$199,999................................................................... -- -- 1
$200,000-$209,999................................................................... -- 1 --
$210,000-$219,999................................................................... -- 1 1
$220,000-$229,999................................................................... 1 1 2
$240,000-$249,999................................................................... 1 -- 1
$250,000-$259,999................................................................... 1 1 1
$260,000-$269,999................................................................... -- 1 --
$270,000-$279,999................................................................... -- 1 --
$290,000-$299,999................................................................... 1 1 1
$300,000-$309,999................................................................... 2 2 --
$320,000-$329,999................................................................... -- -- 2
$340,000-$349,999................................................................... -- 1 --
$350,000-$359,999................................................................... 1 1 --
$370,000-$379,999................................................................... 1 1 --
$390,000-$399,999................................................................... 1 -- --
$430,000-$439,999................................................................... 1 -- --
$450,000-$459,999................................................................... 1 -- --
$470,000-$479,999................................................................... -- -- 1
$500,000-$509,999................................................................... -- -- 2
$550,000-$559,999................................................................... 1 3 --
$560,000-$569,999................................................................... 1 -- --
$570,000-$579,999................................................................... 1 -- --
$590,000-$599,999................................................................... -- -- 2
$670,000-$679,999................................................................... -- 2 --
$690,000-$699,999................................................................... 2 -- --
</TABLE>
The total income reported above includes the income of executive directors. This
is also included in the income of all directors reported in Note 28.
NOTE 30. SEGMENT INFORMATION
INDUSTRY SEGMENTS
The economic entity operates in the field of human resource services.
F-22
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 30. SEGMENT INFORMATION (CONTINUED)
GEOGRAPHICAL SEGMENTS
The economic entity operated in the following geographic segments during the
year--Australia, the United Kingdom, New Zealand and Asia.
A statement of operations of geographical segments are as follows:
<TABLE>
<CAPTION>
TOTAL REVENUE TOTAL ASSETS AS AT
------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED 31 MARCH
------------------------------- 31 MARCH 31 MARCH 31 MARCH
(A$ THOUSAND) 1998 1997 1996 1998 1997 1996
- ----------------------------------------------- --------- --------- --------- ----------- ----------- -----------
Australia...................................... 235,738 179,952 122,645 53,913 38,803 35,512
United Kingdom................................. 37,091 23,951 15,504 5,190 3,941 2,221
Asia........................................... 11,092 9,144 5,356 6,203 6,083 2,470
New Zealand*................................... 46,786 8,904 -- 17,484 17,172 --
--------- --------- --------- ----------- ----------- -----------
Consolidated................................... 330,707 221,951 143,505 82,790 65,999 40,203
--------- --------- --------- ----------- ----------- -----------
--------- --------- --------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT
BEFORE TAX AND GOODWILL OPERATING PROFIT
GOODWILL AMORTISATION AMORTISATION BEFORE TAX
YEAR ENDED 31 MARCH ------------------------------- ------------------------------- -------------------------------
(A$ THOUSAND) 1998 1997 1996 1998 1997 1996 1998 1997 1996
- --------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Australia............ 17,753 14,259 10,163 (9) (106) (19) 17,744 14,153 10,144
United Kingdom....... 526 531 239 -- -- -- 526 531 239
Asia................. 839 1,934 1,150 (262) (153) (139) 577 1,781 1,011
Asia (abnormal
loss).............. (703) -- -- -- -- -- (703) -- --
New Zealand*......... 818 373 -- (511) (112) -- 307 261 --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Consolidated......... 19,233 17,097 11,552 (782) (371) (158) 18,451 16,726 11,394
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
- ------------------------
There were no material intersegment sales.
* The results for New Zealand for 1997 are for the period 1 February to 31 March
1997.
NOTE 31. OUTSIDE EQUITY INTEREST
<TABLE>
<CAPTION>
AS AT 31 MARCH
--------------------
1998 1997
$000 $000
--------- ---------
<S> <C> <C>
Outside equity interest in controlled entities comprises:
Share capital..................................................................................... 25 33
Foreign currency translation reserve.............................................................. 60 (31)
Retained profits.................................................................................. 566 793
--------- ---------
651 795
--------- ---------
--------- ---------
</TABLE>
F-23
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 32. CONTROLLED ENTITIES
<TABLE>
<CAPTION>
PERCENTAGE
OF SHARES HELD
--------------------
AS AT 31 MARCH
COUNTRY OF --------------------
FORMATION/ 1998 1997
CONTROLLED ENTITY INCORPORATION % %
- ------------------------------------------------------------------------------- --------------- --------- ---------
<S> <C> <C> <C>
SHARES HELD BY MORGAN & BANKS LIMITED
Morgan & Banks Management Services Pty Ltd..................................... Australia 100 100
Credential Check Pty Ltd....................................................... Australia 100 100
Labour LinQ Pty Ltd............................................................ Australia 100 100
Alectus Personnel Pty Ltd...................................................... Australia 100 100
Tristram Investments Limited................................................... Australia 100 100
The Labour LinQ Business Solution Pty Ltd j.................................... Australia 100 100
Morgan & Banks Reward Consulting Pty Ltd....................................... Australia 100 100
Morgan & Banks Investor No. 1 Pty Ltd.......................................... Australia 100 100
H. Neumann International Pty Ltd............................................... Australia 67.5 67.5
S.B.N. Convenience Pty Limited................................................. Australia 100 100
M&B Search Pte Ltd bd.......................................................... Singapore 75 67.5
Maldon Holdings Limited a...................................................... New Zealand 100 100
Morgan & Banks Holdings Ltd a.................................................. UK 100 100
Morgan & Banks Recruitment Ltd a............................................... Hong Kong 100 100
Health Resources International Pty Limited k................................... Australia 100 --
H. Neumann International Limited a............................................. New Zealand 47.5 47.5
PT Morgan Nusantara ac......................................................... Indonesia 99 --
SHARES HELD BY MALDON HOLDINGS LIMITED
Morgan & Banks New Zealand Limited ag.......................................... New Zealand 100 100
SHARES HELD BY MORGAN & BANKS NEW ZEALAND LIMITED
Compuforce Recruitment Limited ae.............................................. New Zealand 100 100
Alectus Recruitment Consultants Ltd a.......................................... New Zealand 100 100
H. Neumann International Limited a............................................. New Zealand 47.5 47.5
Sibson & Company Limited ae.................................................... New Zealand 100 100
Compubank Limited e............................................................ New Zealand -- 100
Executive Leasing & Consulting Ltd a........................................... New Zealand 100 100
Job Bank (NZ) Ltd e............................................................ New Zealand -- 100
Labour Linq Limited a.......................................................... New Zealand 100 100
MB Management Systems Ltd e.................................................... New Zealand -- 100
Job Index Limited af........................................................... New Zealand 100 --
H. Neumann International Limited............................................... Australia 27.5 27.5
</TABLE>
F-24
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 32. CONTROLLED ENTITIES (CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF SHARES HELD
--------------------
AS AT 31 MARCH
COUNTRY OF --------------------
FORMATION/ 1998 1997
CONTROLLED ENTITY INCORPORATION % %
- ------------------------------------------------------------------------------- --------------- --------- ---------
<S> <C> <C> <C>
SHARES HELD BY MORGAN & BANKS HOLDINGS LTD
Morgan & Banks PLC a........................................................... UK 100 100
Morgan & Banks Payroll Services Ltd al......................................... UK 100 100
SHARES HELD BY MORGAN & BANKS RECRUITMENT LTD
Morgan & Banks (Hong Kong) Ltd ad.............................................. Hong Kong 75 67.5
SHARES HELD BY MORGAN & BANKS (HONG KONG) LTD
The Wright Company (S) Pte Ltd b............................................... Singapore 100 100
The Wright Company (Beijing) Ltd a............................................. Hong Kong 100 100
The Wright Company (Guangzhou) Ltd a........................................... Hong Kong 100 100
H. Neumann International (Asia) Ltd ah......................................... Hong Kong 95 100
The Wright Company (M) Sdn Bhd a............................................... Malaysia 100 100
Maston Development Limited a................................................... Hong Kong 100 100
PT Morgan Nusantara ac......................................................... Indonesia 1 --
</TABLE>
- ------------------------
All controlled entities carried on business in their countries of incorporation.
a Controlled entities audited by other member firms of the Pannell Kerr
Forster worldwide association.
b Controlled entities audited by firms other than Pannell Kerr Forster
worldwide association.
c Incorporated on 26 February 1997.
d Acquired an additional 16.5% effective 24 January 1997 and an additional 7.5%
effective 1 April 1997.
e Controlled entity wound up.
f Incorporated 12 June 1997.
g Name changed from Morgan & Banks Limited on 5 March 1998.
h Name changed from The Wright Company (Shanghai) Ltd. on 12 December 1997.
j Name changed from Inform International Pty Ltd on 1 August 1997.
k Incorporated on 20 May 1997.
l Name changed from Morgan & Banks Executive Leasing Ltd on 7 March 1997.
On 24 January 1997, the economic entity acquired an additional 16.5% of the
share capital of Morgan & Banks (Hong Kong) Ltd for $1,075,635 and the
additional percentage of the operating results were included in Profit and Loss
Accounts from that date. During the 1998 financial year the economic entity
F-25
<PAGE>
MORGAN & BANKS LIMITED
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN AUSTRALIAN DOLLARS)
NOTE 32. CONTROLLED ENTITIES (CONTINUED)
acquired a further 7.5% of the share capital of Morgan & Banks (Hong Kong) Ltd
for an amount of $664,778. The acquisition took place on 1 April 1997 and the
operating results of the increased ownership interest was included in the profit
and loss account from that date.
NOTE 33. EARNINGS PER SHARE
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 MARCH
----------------------------------------
<S> <C> <C> <C>
1998 1997 1996
$ $ $
------------ ------------ ------------
Basic earnings per share--before abnormal items......................... 0.169 0.144 0.10
Basic earnings per share--after abnormal items.......................... 0.159 0.144 0.10
<CAPTION>
NUMBER NUMBER NUMBER
------------ ------------ ------------
<S> <C> <C> <C>
Weighted average number of ordinary shares outstanding during the year
used in the calculation of basic earnings per share................... 69,239,148 68,489,148 67,663,638
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Diluted earnings per share is not materially different from basic earnings
per share and is therefore not disclosed in the accounts.
The prior year numbers have been adjusted to reflect the capital
reconstruction for the purposes of comparability.
NOTE 34. RELATED PARTY TRANSACTIONS
During the financial period to 31 March 1998 the following transactions took
place with related parties:
Dividends totalling $1,555,334 (1997: $1,501,253, 1996: $1,522,260) were
paid during the year to entities associated with directors, this being in
accordance with normal shareholder entitlements.
An amount of $20,000 (1997: $20,000, 1996: $20,000) was paid under a
sponsorship agreement to Geoff Morgan Motor Sports, a director related entity of
Mr G K Morgan.
Director related entities of non-executive directors, Mr W S Cutbush, Mr A A
Cox, Mr A W Whatmore and joint managing directors, Mr G K Morgan and Mr A R
Banks, have from time to time utilised the services of the economic entity, this
being in the normal course of business and on standard terms and conditions.
F-26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered (other than underwriting
accounts and commissions) are estimated to be as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................... $16,401.26
Accountants' Fees and Expenses................................. 75,000.00
Legal Fees and Expenses........................................ 20,000.00
Miscellaneous.................................................. 3,598.74
----------
Total.......................................................... $115,000.00
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware permits
indemnification of directors, officers and employees of a corporation under
certain conditions and subject to certain limitations. Article VI of the By-Laws
of the Registrant contains provision for the indemnification of directors,
officers and employees within the limitations permitted by Section 145. In
addition, the Company has entered into Indemnity Agreements with its directors
and officers which provide the maximum indemnification allowed by Section 145.
The Company's officers and directors are insured against losses arising from any
claim against them as such for wrongful acts or omissions, subject to certain
limitations.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
2.1 Scheme Implementation Agreement by and between Morgan & Banks Limited and TMP
Worldwide Inc. dated August 17, 1998.
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality.
10.1 Agreement dated as of August 31, 1998, by and among TMP Worldwide Inc., TASA Holding
A.G. and the Shareholders named therein.
23.1 (a) Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1).
(b) Consent of BDO Seidman, LLP
(c) Consent of Pannell Kerr Forster
(d) Consent of KPMG
24 Power of Attorney (on signature page).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
II-1
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person of the Registrant in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on September 14, 1998.
<TABLE>
<S> <C> <C>
TMP WORLDWIDE INC.
By: /s/ ANDREW J. MCKELVEY
-----------------------------------------
Andrew J. McKelvey
CHAIRMAN AND CEO
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each individual whose signature appears
below constitutes and appoints ANDREW J. MCKELVEY and THOMAS G. COLLISON, or
either of them, his true and lawful attorney-in-fact and agent with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same with all
exhibits thereto and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ ANDREW J. MCKELVEY Chairman, CEO and Director
- ------------------------------ (PRINCIPAL EXECUTIVE September 14, 1998
Andrew J. McKelvey OFFICER)
/s/ THOMAS G. COLLISON
- ------------------------------ Vice Chairman (PRINCIPAL September 14, 1998
Thomas G. Collison FINANCIAL OFFICER)
/s/ ROXANE PREVITY Chief Financial Officer
- ------------------------------ (PRINCIPAL ACCOUNTING September 14, 1998
Roxane Previty OFFICER)
/s/ GEORGE R. EISELE
- ------------------------------ Director September 14, 1998
(George R. Eisele)
/s/ JOHN R. GAULDING
- ------------------------------ Director September 14, 1998
(John R. Gaulding)
/s/ MICHAEL KAUFMAN
- ------------------------------ Director September 14, 1998
(Michael Kaufman)
/s/ JOHN SWANN
- ------------------------------ Director September 14, 1998
(John Swann)
</TABLE>
II-4
<PAGE>
Exhibit 2
SCHEME IMPLEMENTATION
AGREEMENT
MORGAN & BANKS LIMITED
ACN 002 888 762
TMP WORLDWIDE INC
<PAGE>
CONTENTS
1. THE SCHEMES OF ARRANGEMENT 1
2. SCHEME OF ARRANGEMENT DOCUMENTATION 2
3. M&B'S OBLIGATIONS 4
4. TMP'S OBLIGATIONS 5
5. MEETINGS AND COURT APPROVALS GENERALLY 6
6. CONDITIONS PRECEDENT 7
7. RECOMMENDED SCHEME 9
8. TMP'S RIGHT TO SEPARATE REPRESENTATION 9
9. CONDUCT OF BUSINESS 9
10. REPRESENTATIONS AND WARRANTIES 10
11. TERMINATION RIGHTS 10
12. M&B INFORMATION 13
13. TMP GUARANTEE 13
14. PUBLIC ANNOUNCEMENTS 14
15. STAMP DUTY 14
16. NOTICES 14
17. GENERAL 16
18. COUNTERPARTS 17
19. GOVERNING LAW AND JURISDICTION 17
20. ASSIGNMENT 20
ATTACHMENT A - DICTIONARY
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DATE
PARTIES
1. MORGAN & BANKS LIMITED (M&B) ACN 002 888 762 of Level 11, Grosvenor Place,
225 George Street, Sydney, New South Wales, 2000
2. TMP WORLDWIDE INC (TMP) of 1633 Broadway, 33rd Floor, New York, New York,
10019
BACKGROUND
A. At the request of TMP, M&B intends to propose the Schemes of Arrangement.
B. The Schemes of Arrangement can only be implemented if TMP is bound to
implement such steps as are required to be implemented by TMP in accordance
with the Schemes of Arrangement.
C. M&B and TMP have agreed by executing and delivering this agreement to
implement the terms of the Schemes of Arrangement and all steps
contemplated to follow the implementation thereof insofar as the same are
required to be implemented by them, subject to the terms and conditions set
out in this agreement.
THE PARTIES AGREE
1. THE SCHEMES OF ARRANGEMENT
1.1 GENERAL OBLIGATIONS OF M&B
Subject to satisfaction of the Conditions Precedent, M&B agrees to do all those
things and execute all those deeds, agreements and other documents as may be
necessary or expedient on its part to implement the Schemes of Arrangement.
1.2 GENERAL OBLIGATIONS OF TMP
Subject to satisfaction of the Conditions Precedent, TMP agrees to do all those
things and execute all those deeds, agreements and other documents as may be
necessary or expedient on its part to implement the Schemes of Arrangement.
<PAGE>
1.3 DEED POLL - SCHEMES OF ARRANGEMENT
(a) TMP agrees to execute a deed poll in favour of the holders of Scheme
Shareholders and Scheme Optionholders undertaking to perform the acts
required by it under this agreement and the Schemes of Arrangement,
including without limitation, the provision of the Scheme Consideration in
accordance with the Schemes of Arrangement.
(b) TMP agrees to execute a deed poll in favour of the directors of M&B
undertaking to perform the acts required by it under this agreement.
1.4 MUTUAL FURTHER ASSURANCES
Each party must do all things necessary or expedient to be done by it in
connection with the matters referred to in clauses 1.1 and 1.2 subject to the
terms and conditions of this agreement.
2. SCHEME OF ARRANGEMENT DOCUMENTATION
2.1 SCHEME AND ASSOCIATED DOCUMENTS
(a) Subject to paragraph (b), M&B must prepare a draft of the Share Scheme
Booklet and the Options Scheme Booklet, which must include a copy of the
scheme of arrangement, the explanatory statement (as required by and in
compliance with section 412 of the Corporations Law) and such other
documents as may by law or practice be required in connection with the
Schemes of Arrangement, and drafts of all documents which are required to
be filed with the Court in connection with the orders proposed to be sought
pursuant to sections 411(1) and (4) of the Corporations Law and must
consult with TMP in relation to all such drafts and make such amendments to
such drafts as TMP reasonably requires. The schemes of arrangement which
are to be included in the Scheme Booklets must incorporate the basis for
determining the Scheme Consideration which has been agreed between the
parties and is set out in the definition of Scheme Consideration and must
include the features of the Schemes of Arrangement referred to in exhibits
"A" and "B" to this agreement.
(b) (1) TMP agrees with M&B, such agreement to be for the benefit of M&B
and separately for the benefit of each director of M&B and each
Scheme Shareholder and each Scheme Optionholder that it must
supply to M&B
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<PAGE>
all information about TMP and TMP Shares required to be included
in the Scheme Booklets and must provide such assistance in
relation to the drafting of sections of the Scheme Booklets which
relate to TMP and TMP Shares, as M&B reasonably requires.
(2) Without limiting the generality of paragraph (1) TMP must provide
the following information about TMP and TMP Shares which must be
accurate and complete and not misleading (whether by omission or
otherwise) as at the date the explanatory statement for the Share
Scheme is registered by the ASIC pursuant to section 412(6) of
the Corporations Law:
- all such information as members of M&B and their
professional advisers would reasonably require and
reasonably expect to find in the explanatory statement for
the purpose of making an informed assessment of:
- the assets and liabilities, financial position, profits
and losses and prospects of TMP; and
- the rights attaching to TMP Shares;
- all such information which is required to be included in the
explanatory statement relating to the Share Scheme by virtue
of Part 3 of Schedule 8 to the Corporations Regulations;
- all such information which is required to be included in the
explanatory statement relating to the Options Scheme by
virtue of Part 2 of Schedule 8 to the Corporations
Regulations; and
- all such information which would be required to be included
in a Part A statement for a takeover scheme constituted in
accordance with chapter 6 of the Corporations Law where TMP
Shares were offered as consideration for the acquisition of
shares under the takeover scheme and, in particular, such
information as required by Section 750, Part A of the
Corporations Law.
(3) TMP must provide any specific information about TMP and TMP
Shares which M&B reasonably requests.
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<PAGE>
(4) TMP is solely responsible for ensuring that the information it
provides to M&B about TMP and TMP Shares for inclusion in the
Scheme Booklet is in compliance with legal requirements and is
not misleading or deceptive and there are no material omissions
from that information.
2.2 UPDATE INFORMATION
If prior to the Court Approval Date there is a material change in relation to
TMP and TMP Shares which a reasonable person would reasonably expect to affect
the price or value of TMP Shares or the prospects of TMP then, as soon as
practicable after that change has occurred, TMP must provide all material
details of the change to M&B.
2.3 ASSISTANCE OF OFFICERS AND ADVISORS
Each party must procure that its officers and advisors work (including by
attending meetings and by providing information) in good faith and in a timely
and co-operative fashion with the other parties to implement the Schemes of
Arrangement and to prepare all documents required relating to the Schemes of
Arrangement.
2.4 ACKNOWLEDGEMENT
TMP and M&B acknowledge that M&B will hold the benefit of the agreements set out
in clauses 2.1 and 2.2 on trust for M&B and for each director of M&B, each
Scheme Shareholder and each Scheme Optionholder.
3. M&B'S OBLIGATIONS
3.1 M&B'S OBLIGATIONS IN RELATION TO SCHEMES OF ARRANGEMENT
Without in any way limiting the generality of clause 1.1, M&B must:
(a) apply to the Court for Orders under section 411(1) of the Corporations Law
convening meetings of holders of M&B Shares to consider the Share Scheme
and holders of M&B Options to consider the Options Scheme;
(b) convene the scheme meetings in accordance with any orders which are made by
the Court pursuant to section 411(1) of the Corporations Law;
4
<PAGE>
(c) use its best endeavours to obtain the approval of the holders of M&B Shares
to the Share Scheme by the requisite majority at the meeting, referred to
in paragraph (b);
(d) use its best endeavours to obtain the approval of the holders of M&B
Options to the Options Scheme by the requisite majority at the meeting
referred to in paragraph (b);
(e) if the holders of the M&B Shares approve the Share Scheme and the holders
of the M&B Options approve the Options Scheme, apply to the Court for its
approval of the Schemes of Arrangement under section 411(4) of the
Corporations Law;
(f) if the Court makes orders under section 411(4) of the Corporations Law
approving the Schemes of Arrangement lodge, as soon as practicable
thereafter, with the ASIC an office copy of the orders of the Court
approving the Schemes of Arrangement;
(g) subject to the Schemes of Arrangement, provide all necessary information
about the Scheme Shareholders and Scheme Optionholders to TMP which TMP
requires in order to facilitate the distribution by TMP of the Scheme
Consideration;
(h) use its best endeavours to satisfy the Conditions Precedent,
in each case, so far as reasonably practicable, in accordance with the
Timetable.
3.2 SHARE REGISTRY DETAILS
M&B must direct the M&B Share Registry to promptly provide any information that
TMP reasonably requests in relation to M&B's share register including any CHESS
sub-register and any issuer sponsored sub-register and, where requested by TMP,
M&B must procure for such information to be provided on a floppy disk (or in
such other electronic form as is reasonably requested by TMP).
4. TMP'S OBLIGATIONS
4.1 TMP'S OBLIGATIONS IN RELATION TO SCHEMES OF ARRANGEMENT
Without in any way limiting the generality of clause 1.2, TMP must:
5
<PAGE>
(a) make application to ASX to be admitted to the Official list of ASX as an
exempt foreign entity;
(b) register or cause to be registered the Scheme Shareholders (or the Nominee,
as the case may be) as the holders of the TMP Shares to which Scheme
Shareholders become entitled under the Share Scheme, as soon as practicable
following the Close of Registers;
(c) provide the Scheme Consideration in accordance with the Share Scheme;
(d) subject to the Share Scheme, issue share certificates or statements of
holdings of TMP Shares to the Scheme Shareholders (or to the Nominee, as
the case may be) who become entitled to TMP Shares under the Share Scheme
in the time required by the Share Scheme;
(e) pay any stamp duty which is payable in relation to the Schemes of
Arrangement or any transaction or step contemplated thereunder and on the
issue and allotment of the TMP Shares in accordance with the Schemes of
Arrangement;
(f) provide the consideration in accordance with the Options Scheme;
(g) use its best endeavours to satisfy the Conditions Precedent including
without limitation convening the meeting of holders of TMP Shares to obtain
their approval to the issue of TMP Shares pursuant to the Schemes of
Arrangement; and
(h) apply to the SEC for a declaration that the Registration Statement is
effective,
in each case, as far as reasonably practicable, in accordance with the
Timetable.
5. MEETINGS AND COURT APPROVALS GENERALLY
5.1 COURT REFUSES TO MAKE ORDERS
(a) If the Court refuses to make an order pursuant to section 411(1) of the
Corporations Law convening the meetings of holders of M&B Shares to
consider the Share Scheme and holders of M&B Options to consider the
Options Scheme, M&B must appeal the Court's decision to the fullest extent
possible except where the parties agree otherwise or M&B and TMP are each
advised by their legal counsel that an appeal would have no reasonable
prospect of success or there is a
6
<PAGE>
bona fide alternative offer which in the view of the directors of M&B must
be recommended in preference to the Schemes of Arrangement.
(b) The costs of any appeal shall be borne by M&B unless M&B's directors bona
fide determine that in their view it is not in M&B's best interests to
bring the appeal, in which case if TMP still requires that the appeal
should be brought, TMP must bear the costs thereof.
6. CONDITIONS PRECEDENT
6.1 CONDITIONAL OBLIGATION
TMP's obligations under the Schemes of Arrangement are subject to the
satisfaction of the following conditions, on or prior to the Court Approval
Date:
(a) the TMP Shares being approved for quotation and trading on a deferred
settlement basis from the Business Day next following the Effective Date by
the ASX, subject only to the Schemes of Arrangement being approved by the
Court pursuant to section 411(4) of the Corporations Law and taking effect
and to such other conditions as are acceptable to M&B and to TMP;
(b) the Treasurer of the Commonwealth of Australia (Treasurer) unconditionally
consenting to, or stating that he has no objection to the acquisition of
M&B Shares under the Share Scheme under the Commonwealth Government's
foreign investment policy or to similar effect or the Treasurer ceases to
be entitled to make orders under part II of the Foreign Acquisition and
Takeovers Act, 1975 in respect of the acquisition of M&B Shares by TMP
under the Share Scheme;
(c) the Shareholders of TMP, by the requisite vote, approve the issue by TMP of
TMP Shares in accordance with the Schemes of Arrangement;
(d) the Affiliates of M&B executing an undertaking in the form of Exhibit "C";
and
(e) the SEC not objecting to TMP's treatment of the transaction as a pooling of
interests and declaring the Registration Statement effective.
7
<PAGE>
6.2 FAIRNESS OPINION
(a) TMP's obligations under the Schemes of Arrangement are also subject to TMP
receiving, on or prior to 24 September 1998 (or such later date agreed to
in writing by the parties), a fairness opinion from an expert in relation
to the transaction.
(b) In addition to the rights to termination set out in clause 11, but subject
to this clause, TMP may terminate this agreement and any further
obligations it has under this agreement if TMP has not received the
fairness opinion, referred to in paragraph (a), by 24 September 1998.
(c) TMP will be deemed for all purposes either to have received the fairness
opinion referred to in paragraph (a) or to have waived its right to
terminate this agreement in accordance with paragraph (b) if it does not
deliver written notice of termination of this agreement to M&B by 10.00 pm
Sydney Time on 24 September 1998.
6.3 BEST ENDEAVOURS
(a) The parties must use their respective best endeavours to satisfy the
Conditions Precedent prior to the Court Approval Date.
(b) TMP must use its best endeavours to ensure that the condition in clause
6.2(a) is satisfied on or before 24 September 1998.
6.4 ACTION OF PARTIES - GOVERNMENT AGENCIES
Without limiting the generality of clause 6.2, the parties must consult with
each other in relation to all communications (whether written or oral) proposed
to be made by or on their behalf to any Governmental Agency relating to the
Schemes of Arrangement and, without limiting the generality of the foregoing,
each party must:
(a) provide to the other party drafts of any written document proposed to be
sent to a Governmental Agency in Australia; and
(b) provide to the other party copies of any documents received from a
Governmental Agency in Australia, as soon as practicable after it is
received.
8
<PAGE>
6.5 ASSISTANCE OF OFFICERS AND ADVISORS
Each party must procure that its officers and advisors work (including by
attending meetings and by providing information) in good faith and in a timely
and co-operative fashion with the other parties to satisfy the Conditions
Precedent.
6.6 SUNSET DATE
If the Conditions Precedent are not satisfied before 14 December 1998 this
agreement will automatically terminate unless the parties otherwise agree and,
if relevant, the Court consents to the extended date.
7. RECOMMENDED SCHEME
The directors of M&B have resolved, in the absence either of a bona fide
alternative offer which in the view of the M&B directors must be recommended in
preference to the Schemes of Arrangement or for other reason which in law
requires the directors to alter their recommendation, that they will:
(i) recommend to the holders of M&B Shares that they approve the Share
Scheme;
(ii) recommend to the holders of the M&B Options that they approve the
Options Scheme; and
(iii) not make any public statement or take any other action which would
suggest that the merger proposal is not recommended by the directors.
8. TMP'S RIGHT TO SEPARATE REPRESENTATION
TMP is entitled to separate representation at all Court proceedings affecting
the Schemes of Arrangement. Nothing in this agreement shall be taken to give
M&B any right or power to make or give undertakings to the Court for or on
behalf of TMP.
9. CONDUCT OF BUSINESS
(a) From the date of this agreement to the Effective Date (inclusive), each
party and its subsidiaries must conduct their businesses in the ordinary
course.
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<PAGE>
(b) From the date of this agreement until the Court Approval Date each party
must, as soon as practicable but in any event within 2 Business Days after
the occurrence of such an event, advise the other party of the occurrence
in relation to that party of an event to which clause 11.1(e) applies, the
acquisition or disposal of an asset for an amount in excess of $5,000,000
or the declaration or payment of a dividend.
10. REPRESENTATIONS AND WARRANTIES
10.1 MUTUAL WARRANTIES
M&B and TMP each represent and warrant to the other that:
(a) it is a corporation validly existing under the laws of its place of
incorporation;
(b) it has the corporate power to enter into and perform its obligations under
this agreement and to carry out the transactions contemplated by this
agreement;
(c) it has taken all necessary corporate action to authorise the entry into of
this agreement and has taken or will take all necessary corporate action to
authorise the performance of this agreement and to carry out the
transactions contemplated by this agreement; and
(d) this agreement is valid and binding upon it.
11. TERMINATION RIGHTS
11.1 TERMINATION EVENTS
A party (the terminating party) may terminate this agreement in accordance with
clause 11.2 if any of the following events occur:
(a) the Effective Date has not occurred by the Sunset Date (referred to in
clause 6.6);
(b) the representations and warranties given or made by the other party in this
agreement are not all materially true and correct at every time throughout
the period from the date of this agreement to the Court Approval Date as if
made at and by reference to the facts and circumstances subsisting at each
such time;
10
<PAGE>
(c) the other party is in breach of a material term of this agreement at any
time from the date of this agreement to the Court Approval Date;
(d) the Scheme Booklets disclose any information regarding M&B or TMP, which is
materially different from or materially contradicts (or contains material
information additional to) information regarding M&B or TMP or their
businesses which is in the public domain as at the date of this agreement;
(e) any material event occurs before the Court Approval Date which would
constitute either a "prescribed occurrence" as defined in section 603 of
the Corporations Law if the other party were a "target company" for the
purpose of that section (except as required or contemplated by this
agreement or the Schemes of Arrangement) or the other party acquires or
disposes of an asset for an amount in excess of $5,000,000 or the declares
or pays a dividend;
(f) the required majority of holders of M&B Shares fail to approve the Share
Scheme at the meeting convened by order of the Court pursuant to Section
411(1) of the Corporation Law;
(g) the required majority of holders of M&B Options fail to approve the Options
Scheme at the meeting convened by order of the Court pursuant to Section
411(1) of the Corporation Law;
(h) the Court fails to approve either the Share Scheme or the Options Scheme in
accordance with section 411(4) of the Corporations Law;
(i) the Court fails to make orders in accordance with section 411(1) of the
Corporations Law to convene the meeting of either holders of M&B Shares or
M&B Options and either an appeal from such failure is unsuccessful or the
parties, in accordance with this agreement, determine not to initiate an
appeal;
(j) the average of the last quoted sell price of TMP Shares at the close of
trading on NASDAQ on the 20 Business Days, during which TMP Shares were
traded on NASDAQ immediately before the Court Approval Date, is less than
US$25.00 per TMP Shares;
(k) the SEC fails by the date the Scheme Meetings are held to declare effective
the Registration Statement or objects to TMP's treatment of the transaction
as a pooling of interests; or
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<PAGE>
(l) the other party becomes subject of an Insolvency Event prior to the Court
Approval Date.
11.2 RIGHT OF TERMINATION
(a) The terminating party may, in its absolute discretion, terminate this
agreement, by notice in writing to the other party, at any time prior to
the Court Approval Date but only within 5 Business Days of the right to
give a termination notice arising in accordance with this clause, in the
circumstances referred to in clauses 11.1(a), (f), (g), (h), (i), (k) and
(l);
(b) At any time prior to the Court Approval Date in the circumstances referred
to in clauses 11.1(b), (c), (d) and (e) the terminating party may give
notice to the other party setting out the relevant circumstances and
stating an intention to terminate and, if the relevant circumstances
continue to exist after five Business Days from the time such notice is
given, the terminating party may, in its absolute discretion but only
within the next following 5 Business Days, terminate this agreement by a
further notice in writing to the other party;
(c) TMP may terminate this agreement at any time prior to 10.00 a.m Sydney Time
on the Court Approval Date in the circumstances referred to in clause
11.1(j) by giving written notice to the other party stating that it
terminates this agreement and giving full and complete details of the
circumstances giving rise to the right to terminate;
(d) Any right to terminate this agreement pursuant to this clause 11.2 shall
cease at the time the Court makes orders pursuant to section 411(4) of the
Corporations Law approving the Schemes of Arrangement on the Court Approval
Date.
(e) In the event that a party terminates this agreement all further obligations
of the parties under this agreement shall immediately be terminated and
cease to be of further force and effect without further liability of any
party to the other, provided that nothing in this clause shall release any
party from liability for any pre-termination breach of this agreement.
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<PAGE>
11.3 SURVIVAL OF AGREEMENTS
Unless this agreement is lawfully terminated in accordance with its terms it
shall survive the performance by the parties of their respective obligations
hereunder, but always subject to its terms.
12. M&B INFORMATION
12.1 TMP - REGISTRATION STATEMENT
(a) M&B must supply to TMP such information about M&B as TMP reasonably
requests so as to enable TMP to prepare the Registration Statement or any
other filing required to be made with the SEC.
(b) When providing information to TMP in accordance with paragraph (a), M&B
must ensure that the information is materially complete and accurate and is
not misleading whether by omission or otherwise.
(c) If requested to do so by TMP, M&B must procure that a director of M&B
certify at the time the information is supplied to TMP in accordance with
paragraph (a) that, to the best of the director's knowledge and belief, the
information which is being supplied by M&B to TMP conforms with paragraph
(b).
12.2 AUDITOR INFORMATION
M&B will (on or prior to the Court Approval Date) provide TMP a certificate
signed by a director of M&B stating that, to the best of the knowledge and
belief of that director, the information which has been provided to the auditor
of M&B (or which is known to the auditor of M&B through the conduct of audits of
M&B from time to time) to enable the auditor to provide an opinion to TMP on the
transactions contemplated by the Schemes of Arrangement qualifying for treatment
as a pooling of interests is materially complete and accurate and is not
misleading whether by omission or otherwise.
13. TMP GUARANTEE
(a) TMP is aware that, pursuant to a resolution of the shareholders of M&B
passed at the annual general meeting of M&B held on 7 August 1998, M&B was
authorised to enter into Deeds of Access and Indemnity with the directors
of M&B and
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<PAGE>
further that M&B has, or within 7 days of the date of this agreement,
proposes to enter into such deeds with each director of M&B.
(b) TMP agrees with M&B, such agreement to be for the benefit of M&B and
separately for the benefit of each director of M&B and each Scheme
Shareholder and each Scheme Optionholder that, subject to the Schemes of
Arrangement taking effect, it unconditionally and irrevocably guarantees
(such guarantee to be a continuing guarantee) the due and punctual
performance of all the obligations and undertakings and provisions of M&B
under each such Deed of Access and Indemnity.
14. PUBLIC ANNOUNCEMENTS
(a) All press releases and other public announcements and presentations by M&B
or TMP relating to the transactions dealt with by this agreement must be in
terms agreed between the parties, provided, however, that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this agreement or to comply with or satisfy legal
requirements or legal obligations imposed on the parties or the obligations
of NASDAQ.
(b) Subject to paragraph (a) as soon as practicable after this agreement is
executed M&B will lodge with the ASX a stock exchange announcement in
substantially the form of Exhibit "A" to this agreement and TMP will lodge
with NASDAQ a stock exchange announcement in substantially the form of
Exhibit "B".
15. STAMP DUTY
TMP will bear all stamp duty payable in respect of this agreement and the
Schemes of Arrangement.
NOTICES
16.1 A notice, consent, request or any other communication under this agreement
must be in writing and must be left at the address of the addressee, or
sent by prepaid post (airmail if posted to or from a place outside
Australia) to the address of the addressee or sent by facsimile to the
facsimile number of the addressee specified below or any other address or
facsimile number the addressee requests.
14
<PAGE>
M&B:
Attention: Andrew Banks
Address: C/- Morgan & Banks Limited
Level 11
Grosvenor Place
225 George Street
SYDNEY NSW 2000
Facsimile: (02) 9252 1358
TMP:
Attention: Myron Olesnyckyj
Address: C/- TMP Worldwide Inc
1633 Broadway
33rd Floor
New York
NEW YORK 10019
Facsimile: 0019 1 212 940 3908
16.2 A notice, consent, request or any other communication is taken to be
received:
(a) if by delivery, when it is delivered unless it is delivered on a day other
than a Business Day in which case it is taken to be received at 9.00am on
the next Business Day;
(b) if a letter, three days after posting (seven, if posted to or from a place
outside Australia); and
(c) if a facsimile, at the time of dispatch if the sender receives a
transmission report which confirms that the facsimile was sent in its
entirety to the facsimile number of the recipient.
15
<PAGE>
17. GENERAL
17.1 CUMULATIVE RIGHTS
The rights, powers and remedies of a party under this agreement are cumulative
with the rights, powers or remedies provided by law independently of this
agreement.
17.2 WAIVER AND VARIATION
A provision or a right under this agreement may not be waived except in writing
signed by the party granting the waiver, or varied except in writing signed by
the parties.
17.3 APPROVALS AND CONSENTS
A party may give or withhold its approval or consent conditionally or
unconditionally in its discretion unless this agreement states otherwise. Any
approved consent or agreement required pursuant to this agreement must be in
writing.
17.4 SPECIFIC PERFORMANCE
The parties acknowledge that monetary damages alone would not be adequate
compensation for a breach by any party of an obligation under this agreement and
that specific performance of that obligation is an appropriate remedy.
17.5 EFFECT OF AGREEMENT
This agreement supersedes any previous understandings or agreements between the
parties concerning the subject matter of this agreement.
17.6 COSTS
(a) If the condition set out in clause 6.1(c) is not satisfied by the date
referred to in clause 6.6 and this agreement terminates or if TMP
terminates this agreement in accordance with clause 11.1(j), TMP will
forthwith pay M&B the Cost Amount;
(b) If this agreement is terminated by reason that there occurs a termination
event under clauses 11.1(f) or (g) then M&B will forthwith pay TMP the Cost
Amount.
16
<PAGE>
18. COUNTERPARTS
This agreement may be executed in any number of counterparts and all those
counterparts taken together will constitute one instrument.
19. GOVERNING LAW AND JURISDICTION
19.1 NEW SOUTH WALES LAW
This agreement is governed by the laws of New South Wales.
19.2 SUBMISSION
For the exclusive benefit of M&B, the directors of M&B, Scheme Optionholders and
Scheme Shareholders, TMP irrevocably agrees that the courts of New South Wales
are to have non-exclusive jurisdiction to settle any disputes which may arise
out of or in connection with this agreement or the Schemes of Arrangement and
that accordingly any suit, action or proceeding (together in this clause
referred to as Proceedings) arising out of or in connection with this agreement
may, subject to this agreement, be brought in such Courts.
19.3 WAIVER
TMP irrevocably waives any objection which it may have now or in the future to:
(a) the laying of the venue of any Proceedings in any such Courts; and
(b) any claim that any such Proceedings have been brought in an inconvenient
forum, and further irrevocably agrees that a judgment in any Proceedings
brought in the Courts of New South Wales will be conclusive and binding
upon TMP and may be enforced in the courts of any other jurisdiction.
19.4 NO LIMITATION
Nothing contained in this clause 19 limits the right of M&B, the directors of
M&B, the Scheme Optionholders and the Scheme Shareholders to take Proceedings
against TMP in any other court of competent jurisdiction, nor will the taking of
Proceedings in one or more jurisdictions preclude the taking of Proceedings in
any other jurisdiction, whether concurrently or not.
17
<PAGE>
19.5 NOTICES
TMP irrevocably agrees that any notice, writ, judgment, notice of process or
other notice in connection with any Proceedings shall be sufficiently and
effectively served on it:
(a) if delivered to Dunhill Madden Butler solicitors of 16 Barrack Street,
Sydney Australia in the case of any writ, judgment notice of process or
other notice in connection with Proceedings in New South Wales; or
(b) whether in the case of Proceedings other than New South Wales, if a copy
thereof is mailed by registered or certified air mail, postage prepaid, to
the address for the time being for the services of notices on it at its
last known business address in the United States of America.
19.6 CONSENT
TMP consents generally in respect of any Proceedings arising out of or in
connection with this agreement to the giving of any relief and the issue of any
process in connection with such Proceedings including, without limitation, the
making, enforcement or execution against any property whatsoever of any order or
judgment which may be made or given in such Proceedings.
19.7 IMMUNITY
To the extent that TMP may be entitled in any jurisdiction to claim for itself
or its assets immunity from suit, execution, attachment (whether in aid or
execution, before judgment or otherwise) or legal process or to the extent that
in any such jurisdiction there may be attributed to them or their assets such
immunity (whether or not claimed) TMP among other things irrevocably agrees not
to claim and irrevocably waives such immunity to the fullest extent permitted by
the laws of such jurisdiction with the intent that the above waivers of immunity
have irrevocable effect.
19.8 LIMITATION ON WARRANTIES
(a) All of the representations and warranties set forth in clause 10.1 of this
agreement (which are the only representations and warranties set out in
this agreement) or in any of the Transaction Documents shall survive the
execution, delivery and performance of this agreement and the consummation
of the transactions contemplated hereby, regardless of any investigation,
inquiry or examination made
18
<PAGE>
for on behalf of or any knowledge of TMP, M&B or any of their respective
Affiliates, officers, directors, employees, agents, or representatives for
the applicable period of time set forth in the next sentences. Any such
representations, warranties or portions thereof the breach of or
misrepresentation with respect to which would be expected to be encountered
or discerned in TMP's audit of the financial statements containing combined
operations of TMP and M&B for the fiscal year in which closing occurs,
shall survive until the date TMP's independent certified public accountants
issue their final report and opinion on such audit. Any other such
representations, warranties or portions thereof shall survive for a period
of one year after the Effective Date.
It is understood and agreed that no claim for recovery of damages may be
asserted based on such a representation, warranty or applicable portion
thereof set forth in clause 10.1 of this agreement or in any of the
Transaction Documents after it has been extinguished in accordance with
this clause 19.8(a) hereof, except as to any matters with respect to which
a bona fide written claim shall have been made or an action at law or in
equity shall have commenced before such date, in which event survival shall
continue (but only with respect to and to the extent of, such claim or
action) until the earlier of resolution of such claim or action or the
resolution of such claim or action by the arbitrators as contemplated by
clause 19.8(b).
(b) In order to ensure that the transactions contemplated by the Schemes of
Arrangement qualify for treatment as a pooling of interests, the parties
agree that any dispute, disagreement or controversy between any party
relating to a warranty or representation hereunder that is not resolved by
the applicable Expiration Date shall promptly be submitted to the
Australian Commercial Disputes Centre Limited to be resolved by binding
arbitration in accordance with their rules. The place of arbitration shall
be Sydney, Australia. The arbitration tribunal shall be composed of three
arbitrators, one of whom shall be appointed by TMP within 10 business days
of the applicable Expiration Date and one of whom shall be appointed by the
other party or parties to the dispute, disagreement or controversy within
10 business days of the applicable Expiration Date and one of whom shall be
appointed by such two arbitrators within 15 business days of the applicable
Expiration Date. The arbitrators will be directed to resolve such dispute,
disagreement or controversy on the basis of the information provided to
them or soon as practicable and, in any event, within 60 days of the
applicable Expiration Date.
19
<PAGE>
20. ASSIGNMENT
The rights and obligations of each party under this agreement are personal.
They cannot be assigned, charged or otherwise dealt with, and no party shall
attempt or purport to do so, without the prior written consent of the other
party.
20
<PAGE>
SIGNED as an agreement.
THE COMMON SEAL of MORGAN & BANKS
LIMITED is affixed in accordance with its
articles of association in the presence of:
/s/ P. Lardlaw /s/ Andrew Banks
- ----------------------------------- -------------------------------
Secretary Director
SIGNED for and on behalf of TMP
WORLDWIDE INC by its authorised
representative
/s/ Myron Olesnyckyj
- -----------------------------------
Authorised Representative
21
<PAGE>
ATTACHMENT A
DICTIONARY
PART 1 - DOCUMENTS
The documents to which this Dictionary has application are:
SCHEME IMPLEMENTATION AGREEMENT being the Agreement dated 17 August 1998 between
M&B and TMP which relates to the Schemes of Arrangement.
TRANSACTION DOCUMENTS being:
(a) the Scheme Implementation Agreement;
(b) the Deed Polls to be entered into by TMP in accordance with the Scheme
Implementation Agreement; and
(c) any document which is included in the Scheme Booklets.
PART 2 - DEFINED TERMS
AFFILIATES means directors of M&B and shareholders of M&B who have a beneficial
interest in not less than 10% of the entire issued share capital of M&B.
ASIC means the Australian Securities and Investments Commission.
ASX means Australian Stock Exchange Limited.
BUSINESS DAY means Monday to Friday inclusive except New Year's Day, Good
Friday, Easter Monday, Christmas Day, Boxing Day and any other day that ASX
declares is not a business day.
CLOSE OF REGISTERS means 5.00pm Sydney time on the Record Date.
CONDITIONS PRECEDENT means the conditions set out in clause 6.1 of the Scheme
Implementation Agreement.
COST AMOUNT means US$250,000.00.
<PAGE>
COURT means the Supreme Court of New South Wales.
COURT APPROVAL DATE means the date when the Court grants its approval to the
Scheme under Section 411(4) of the Corporations Law.
EFFECTIVE DATE means the date when the Schemes of Arrangement take effect.
EXPIRATION DATE means the applicable survival period described in clause 19.8(b)
of the Scheme Implementation Agreement.
EXPLANATORY STATEMENT means the statement pursuant to section 412 of the
Corporations Law which has been, or will be, registered by the ASIC, a copy of
which will be included in the Share Scheme Booklet.
GOVERNMENTAL AGENCY means a government or governmental, semi-governmental,
administrative, fiscal or judicial body, department, commission, authority,
tribunal, agency or entity whether foreign, federal, state, territorial or
local.
INSOLVENCY EVENT means in relation to a party:
- - the party becomes unable to pay its debts as and when they fall due;
- - the making of any order, or the passing of any resolution, for the winding
up, liquidation or bankruptcy of the party;
- - the appointment of a provisional liquidator, liquidator, receiver or a
receiver and manager to the party;
- - the appointment of an administrator to the party;
- - the entry by a party into any compromise or arrangement with creditors.
LISTING RULES means the official listing rules of ASX.
M&B means Morgan & Banks Limited ACN 002 888 762.
M&B OPTIONS means options to acquire shares in the capital of M&B which have
been granted by M&B and remain unexercised as at the date of the Scheme
Meetings.
<PAGE>
M&B SHARES means ordinary shares issued in the capital of M&B at the date of the
Scheme Meetings, which have been fully paid and such other M&B Shares (if any)
agreed to by the parties as approved (if required) by the Court.
M&B SHARE REGISTRY means Registries Limited of PO Box R67, Royal Exchange,
Sydney, New South Wales.
NASDAQ means National Association of Securities Dealers Inc. National Market
System.
NOMINEE means the person so described in the Share Scheme.
OPTIONS REGISTER means any register of M&B Options which is maintained by M&B in
accordance with the Corporations Law.
OPTIONS SCHEME means the scheme of arrangement pursuant to Part 5.1 of the
Corporations Law proposed between M&B and the holders of M&B Options, a copy of
which will be included in the Options Scheme Booklet together with any
alteration or condition made or required pursuant to sub-section 411(6) of the
Corporations Law.
OPTIONS SCHEME BOOKLET means the booklet containing information about the
Options Scheme proposed to be sent to the holders of M&B Options, of which the
Options Scheme forms part.
PERSON includes bodies corporate or unincorporate.
RECORD DATE means seven Business Days after the Effective Date (or such other
period as may from time to time be provided for under the Listing Rules).
REGISTRATION STATEMENT means a form S-4 Registration Statement to be filed by
TMP with the SEC in relation to the TMP Shares.
SCHEME BOOKLETS means the Share Scheme Booklet and the Options Scheme Booklet.
SCHEME CONSIDERATION means:
(a) in relation to the Share Scheme:
(i) The effective consideration for each M&B Share being A$4.65, to be
satisfied by the issue of TMP Shares.
<PAGE>
(ii) To calculate the number of TMP Shares to be issued to every Scheme
Shareholder apply the following formula (rounded up or down to the
nearest whole number):
M&BS X 4.65 X ER
----------------
HSP
Where:
- M&BS is the number of M&B Shares held by the Scheme Shareholder.
- ER is the rate at which Westpac Banking Corporation Sydney,
Australia will buy US$ for A$, ruling at 10.00am Sydney Time on
the Effective Date; and
- HSP means the lesser of:
- 40.00; and
- the average of the last quoted sell price of TMP Shares at
the close of trading on NASDAQ on the 20 Business Days
during which TMP Shares were traded on NASDAQ immediately
preceding the Court Approval Date.
(b) in relation to the Option Scheme means the same consideration as applies
under the Share Scheme (referred to in paragraph (a)) for each M&B Share
which, but for the operation of the Options Scheme, the holder of M&B
Options would be entitled to be issued on the exercise of the M&B Options
making appropriate adjustments for any capital reconstructions in M&B or
TMP between the Effective Date and the date the relevant M&B Option is
exercised.
SCHEME IMPLEMENTATION AGREEMENT means the agreement referred to in part 1 of
this Dictionary.
SCHEME MEETING means the meetings convened by the Court pursuant to Section
411(1) of the Corporations Law to consider the Share Scheme.
SCHEMES OF ARRANGEMENT means the Share Scheme and the Options Scheme.
<PAGE>
SCHEME OPTIONHOLDER means a person registered in the Options Register at the
Effective Date as the holder of M&B Options.
SCHEME SHAREHOLDER means a person registered in the Share Register at the Close
of Registers as the holder of M&B Shares, after the registration by M&B of
transfers and transmissions in accordance with the Share Scheme.
SCHEME SHARES means M&B Shares held by Scheme Shareholders.
SEC means the Securities Exchange Commission of the United States of America.
SHARE REGISTER means any register of members of M&B kept pursuant to the
Corporations Law.
SHARE SCHEME means the scheme of arrangement pursuant to Part 5.1 of the
Corporations Law proposed between M&B and the holders of M&B Shares, a copy of
which will be included in the Share Scheme Booklet together with any alterations
or conditions made or required pursuant to sub-section 411(6) of the
Corporations Law.
SHARE SCHEME BOOKLET means the booklet containing information about the Share
Scheme proposed to be sent to the holders of M&B Shares, of which the Share
Scheme forms part.
TAKES EFFECT OR TAKING EFFECT means on and from the time when an office copy of
the Court Order approving the Share Scheme, pursuant to sub-sections 411(6) of
the Corporations Law are lodged with the ASIC.
TIMETABLE means the indicative timetable which will be included in the Scheme
Booklets a draft copy of which is Exhibit "D" to this agreement.
TMP means TMP Worldwide Inc.
TMP SHARES means shares in the capital of TMP to be allotted and issued to
Scheme Shareholders in accordance with the Share Scheme.
PART 3 - INTERPRETATION
(a) In this agreement unless the context otherwise requires:
(i) words importing the singular include the plural and vice versa;
<PAGE>
(ii) words which are gender neutral or gender specific include each
gender;
(iii) other parts of speech and grammatical forms of a word or phrase
defined in this agreement have a corresponding meaning;
(iv) an expression importing a natural person includes a company,
partnership, joint venture, association, corporation or other
body corporate and a Government Agency;
(v) a reference to a thing (including, but not limited to, a
chose-in-action or other right) includes a part of that thing;
(vi) a reference to a clause, party, schedule or attachment is a
reference to a clause of this agreement, and a party, schedule or
attachment to, this agreement;
(vii) a reference to this agreement includes this Dictionary;
(viii) a reference to a law includes a constitutional provision, treaty,
decree, convention, statute, regulation, ordinance, by-law
judgment, rule of common law or equity or a rule of an applicable
stock exchange and is a reference to that law as amended,
consolidated or replaced;
(ix) a reference to a document includes all amendments or supplements
to that document, or replacements or novations of it;
(x) a reference to a party to a document includes that party's
successors and permitted assigns;
(xi) an agreement on the part of two or more persons binds them
severally; and
(b) Where the day on or by which something must be done is not a Business
Day, that thing must be done on or by the following Business Day.
(c) Headings are for convenience only and do not affect the interpretation
of a this agreement.
(d) This agreement may not be construed adversely to a party just because
that party prepared it.
<PAGE>
(e) A term or expression starting with a capital letter:
(i) which is defined in this Dictionary, has the meaning given to it
in this Dictionary;
(ii) which is defined in the CORPORATIONS LAW but is not defined in
this Dictionary, has the same meaning as in the CORPORATIONS LAW;
and
(iii) which is defined in the Listing Rules of ASX or the SCH Business
Rules but is not defined in this Dictionary or the CORPORATIONS
LAW, has the same meaning as the same meaning as in the Listing
Rules of ASX or the SCH Business Rules.
Initialled by the parties.
- ----------------------------- -----------------------------
- -----------------------------
Date:
<PAGE>
EXHIBIT 5.1
September 10, 1998
TMP Worldwide Inc.
1633 Broadway
New York, New York 10019
Re: TMP Worldwide Inc. Registration Statement on Form S-3
Dear Sirs:
In connection with the Registration Statement on Form S-3 (the "Registration
Statement") to be filed by TMP Worldwide Inc., a Delaware corporation (the
"Company"), under the Securities Act of 1933, as amended, relating to the resale
by certain stockholders of the Company of up to an aggregate of 1,853,868 shares
(the "Shares") of Common Stock, par value $.001 per share, of the Company, we as
counsel for the Company, have examined such corporate records, other documents
and questions of law as we have deemed necessary or appropriate for the purposes
of this opinion.
Upon the basis of such examination, we advise you that in our opinion the
Shares have been duly and validly authorized, legally issued, fully paid and
non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this firm under the caption "Legal Matters" in
the Prospectus contained therein and elsewhere in the Registration Statement and
Prospectus. This consent is not to be construed as an admission that we are a
party whose consent is required to be filed with the Registration Statement
under the provisions of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
<PAGE>
Exhibit 10
AGREEMENT
DATED AS OF
AUGUST 31, 1998
BY AND AMONG
TMP WORLDWIDE INC.,
TASA HOLDING AG
AND THE
SHAREHOLDERS OF
TASA HOLDING AG NAMED HEREIN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE. . . . . . . . . . . . . 1
Section 1.01. Purchase and Sale. . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Release of Escrowed Shares . . . . . . . . . . . . . . . 2
Section 1.03. Closing. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.04. Adjustments to the Stock Consideration . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
TASA AND THE SHAREHOLDERS. . . . . . . . . . . 3
Section 2.01. Organization, Etc. . . . . . . . . . . . . . . . . . . . 3
Section 2.02. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.03. Capitalization . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04. Authorization. . . . . . . . . . . . . . . . . . . . . . 5
Section 2.05. No Violation . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.06. Approvals. . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.07. Financial Statements and Other Information . . . . . . . 6
Section 2.08. Accounting Matters . . . . . . . . . . . . . . . . . . . 7
Section 2.09. No Undisclosed Liabilities . . . . . . . . . . . . . . . 8
Section 2.10. Corporate Action . . . . . . . . . . . . . . . . . . . . 8
Section 2.11. Events Subsequent to the Balance Sheet Date. . . . . . . 8
Section 2.12. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.13. Litigation . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.14. Compliance with Laws . . . . . . . . . . . . . . . . . . 12
Section 2.15. Title to Property. . . . . . . . . . . . . . . . . . . . 13
Section 2.16. Condition of Property and Related Matters. . . . . . . . 14
Section 2.17. Contracts. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.18. Employee and Labor Matters and Plans . . . . . . . . . . 15
Section 2.19. Insurance Policies . . . . . . . . . . . . . . . . . . . 17
Section 2.20. Records. . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.21. Brokerage Fees . . . . . . . . . . . . . . . . . . . . . 18
Section 2.22. Customers. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.23. Intellectual Properties. . . . . . . . . . . . . . . . . 18
Section 2.24. Licenses . . . . . . . . . . . . . . . . . . . . . . . . 19
-i-
<PAGE>
Section 2.25. No Illegal or Improper Transactions. . . . . . . . . . . 19
Section 2.26. Ownership of TMP Common Stock. . . . . . . . . . . . . . 19
Section 2.27. Restrictive Documents and Territorial Restrictions . . . 20
Section 2.28. Securities Act Matters . . . . . . . . . . . . . . . . . 20
Section 2.29. No Misleading Statements . . . . . . . . . . . . . . . . 22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TMP. . . . . . . . 22
Section 3.01. Organization, Etc. . . . . . . . . . . . . . . . . . . . 23
Section 3.02. Capitalization . . . . . . . . . . . . . . . . . . . . . 23
Section 3.03. Authorization. . . . . . . . . . . . . . . . . . . . . . 23
Section 3.04. No Violation . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.05. Approvals. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.06. SEC Filings. . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.07. No Misleading Statements . . . . . . . . . . . . . . . . 24
Section 3.08. Sufficient Financial Resources . . . . . . . . . . . . . 25
ARTICLE IV
COVENANTS OF TASA
AND THE SHAREHOLDERS. . . . . . . . . . . . 25
Section 4.01. Conduct of TASA and the TASA Subsidiaries. . . . . . . . 25
Section 4.02. Access to Records. . . . . . . . . . . . . . . . . . . . 27
Section 4.03. No Other Bids. . . . . . . . . . . . . . . . . . . . . . 28
Section 4.04. Maintenance of Business. . . . . . . . . . . . . . . . . 28
Section 4.05. Compliance with Obligations. . . . . . . . . . . . . . . 28
Section 4.06. Pretax Operating Profit. . . . . . . . . . . . . . . . . 29
Section 4.07. Shareholders . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V
COVENANTS OF TMP. . . . . . . . . . . . . 29
Section 5.01. Access to Records. . . . . . . . . . . . . . . . . . . . 29
Section 5.02. Treasury Shares. . . . . . . . . . . . . . . . . . . . . 29
Section 5.03. General Meeting of Shareholders of TASA. . . . . . . . . 30
ARTICLE VI
COVENANTS OF TASA, THE SHAREHOLDERS AND TMP . . . . . . 30
Section 6.01. Joint Transition Committee . . . . . . . . . . . . . . . 30
-ii-
<PAGE>
Section 6.02. Advice of Changes. . . . . . . . . . . . . . . . . . . . 30
Section 6.03. Regulatory Approvals . . . . . . . . . . . . . . . . . . 31
Section 6.04. Actions Contrary to Stated Intent. . . . . . . . . . . . 31
Section 6.05. Certain Filings. . . . . . . . . . . . . . . . . . . . . 31
Section 6.06. Public Announcements . . . . . . . . . . . . . . . . . . 32
Section 6.07. Satisfaction of Conditions Precedent . . . . . . . . . . 32
Section 6.08. Confidentiality. . . . . . . . . . . . . . . . . . . . . 32
Section 6.09. Trading Prohibition. . . . . . . . . . . . . . . . . . . 32
Section 6.10 Registration of Stock Consideration. . . . . . . . . . . 33
Section 6.11. Extraordinary General Meeting of Shareholders. . . . . . 34
ARTICLE VII
CONDITIONS OF CLOSING. . . . . . . . . . . . 34
Section 7.01. Conditions to All Parties' Obligations. . . . . . . . . 34
Section 7.02. Conditions to the Obligations of TMP to Effect the
Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Accuracy of Representations and Warranties. . . . . . . . . . 35
(b) Covenants and Agreements. . . . . . . . . . . . . . . . . . . 35
(c) Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(d) Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 35
(e) Certificates of TASA. . . . . . . . . . . . . . . . . . . . . 35
(f) No Adverse Decision . . . . . . . . . . . . . . . . . . . . . 35
(g) Proceedings; Receipt of Documents . . . . . . . . . . . . . . 36
(h) Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . 36
(i) Letters from Accountants. . . . . . . . . . . . . . . . . . . 36
(j) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 36
(k) Non-Compete/Non-Solicitation Agreements . . . . . . . . . . . 36
(l) Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.03. Conditions to the Obligations of TASA and the
Shareholders to Effect the Acquisition . . . . . . . . . . . . . . 37
(a) Accuracy of Representations and Warranties. . . . . . . . . . 37
(b) Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Certificate of TMP. . . . . . . . . . . . . . . . . . . . . . 37
(d) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 37
(e) Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . 37
(f) Non-Compete/Non-Solicitation Agreements . . . . . . . . . . . 37
(g) Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . 37
(h) Reorganization Representations. . . . . . . . . . . . . . . . 38
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ARTICLE VIII
TERMINATION, AMENDMENTS AND WAIVERS . . . . . . . . 38
Section 8.01. Termination. . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.02. Effect of Termination. . . . . . . . . . . . . . . . . . 39
Section 8.03. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
INDEMNIFICATION . . . . . . . . . . . . . 39
Section 9.01. Indemnification by the Shareholders. . . . . . . . . . . 39
Section 9.02. Indemnification by TMP . . . . . . . . . . . . . . . . . 40
Section 9.03. Brokerage Fees . . . . . . . . . . . . . . . . . . . . . 40
Section 9.04. Limitations. . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.05 Notice and Defense of Claims . . . . . . . . . . . . . . 41
Section 9.06. Non-Exclusive Remedy . . . . . . . . . . . . . . . . . . 42
Section 9.07. Survival of Representations and Warranties . . . . . . . 42
Section 9.08 Reimbursement. . . . . . . . . . . . . . . . . . . . . . 42
Section 9.09. Offset . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.10. Arbitration. . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
DEFINITIONS . . . . . . . . . . . . . . 43
ARTICLE XI
GENERAL PROVISIONS . . . . . . . . . . . . 49
Section 11.01. Taking of Necessary Action; Specific Performance . . . . 49
Section 11.02. Effect of Due Diligence. . . . . . . . . . . . . . . . . 49
Section 11.03. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.04. Successors and Assigns . . . . . . . . . . . . . . . . . 49
Section 11.05. Entire Agreement . . . . . . . . . . . . . . . . . . . . 49
Section 11.06. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.07. Applicable Law. . . . . . . . . . . . . . . . . . . . . 50
Section 11.08. Counterparts . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.09. Headings . . . . . . . . . . . . . . . . . . . . . . . . 50
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AGREEMENT
AGREEMENT, dated as of August 31, 1998 (this "AGREEMENT"), by and among TMP
Worldwide Inc., a Delaware corporation ("TMP"), TASA HOLDING AG, a Swiss
corporation ("TASA"), and the shareholders of TASA set forth on Schedule A
attached hereto (the "SHAREHOLDERS"). Capitalized terms used in this Agreement
are defined in Article X.
R E C I T A L S:
A. The respective Boards of Directors of TMP and TASA and the
respective individual Shareholders have each determined to engage in the
transactions contemplated hereby, pursuant to which TMP will purchase from the
Shareholders set forth on Exhibit A hereto, all of the outstanding capital stock
of TASA, in consideration for the issuance to the Shareholders of an aggregate
of 1,703,894 unregistered shares of Common Stock, par value $.001 per share, of
TMP ("TMP COMMON STOCK"), subject to the terms and conditions set forth herein
(the "ACQUISITION").
B. The Boards of Directors of TMP and TASA and the Shareholders have
each approved the Acquisition.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the conditions set forth herein, TMP and TASA and the Shareholders
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.01. PURCHASE AND SALE. At the Closing and subject to and upon
the terms and conditions of this Agreement, the Shareholders shall sell,
transfer and deliver to TMP, and TMP shall purchase and acquire from the
Shareholders set forth on Exhibit A hereto, all of their respective right, title
and
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interest in and to all of the outstanding shares of capital stock of TASA, free
and clear of all Liens (other than restrictions imposed by United States, state
and foreign securities laws), all in consideration for the sale, transfer and
delivery by TMP to the Shareholders of 1,703,894 unregistered shares of TMP
Common Stock (the "Stock Consideration"), 1,668,179 of such shares (the "Closing
Shares") to be issued at Closing (as defined herein) and the remaining 35,715
shares (the "Escrowed Shares") to be held in an escrow account until the Escrow
Release Date (as defined herein). In the event that at any time Andrew J.
McKelvey, his immediate family and/or his or their respective beneficiaries
cease to own at least 30% in the aggregate of the combined voting power of TMP's
outstanding capital stock, voting as a single class, prior to the Escrow Release
Date, the Escrowed Shares shall immediately become released from escrow.
SECTION 1.02. RELEASE OF ESCROWED SHARES. The Escrowed Shares shall be
held pursuant to an Escrow Agreement between TMP, Janvey, Gordon, Herlands,
Randolph, Rosenberg & Cox LLP, and the Shareholders, substantially in the form
of Exhibit 1.02 hereto (the "Escrow Agreement"). The Escrowed Shares shall be
released to the Shareholders in accordance with the terms of the Escrow
Agreement at such time as the obligations of TASA and the Shareholders pursuant
to Article IX shall terminate (the "Escrow Release Date").
SECTION 1.03. CLOSING.
(a) Subject to the provisions of Article VII hereof, the closing (the
"CLOSING") of the Acquisition shall take place at 10:00 a.m., New York time, at
the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103, no later than the second Business Day after satisfaction of the latest to
occur of the conditions set forth in Article VII hereof (other than the delivery
of the officers' certificates and opinions referred to therein and other than
any conditions which are waived in accordance with said Article) or such other
time, place or date as TMP and TASA may mutually agree. Failure to consummate
the transactions provided for in this Agreement on the date and time selected
pursuant to this Section 1.03(a) shall not, except as permitted by Article VIII
hereof, result in the termination of this Agreement and shall not relieve any
party to this Agreement of any obligation hereunder.
(b) At the Closing, each Shareholder shall deliver to TMP a certificate in
the form of Exhibit 1.03(b) hereto, evidencing the assignment and transfer to
TMP of the shares of TASA held by each such Shareholder.
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(c) At the Closing, TMP shall deliver to the Shareholders the Closing
Shares and to the escrow agent, the Escrowed Shares. The proportion of the
Closing Shares to be allocated to each Shareholder at the Closing and the
proportion of the Escrowed Shares to be allocated to each Shareholder on the
Escrow Release Date is set forth on Schedule A hereto. The certificates
representing the Closing Shares will be delivered to each Shareholder at its
address set forth in Section 11.06 or to such other address as the Shareholder
shall advise TMP in writing. TMP Holdings shall not be required to issue
fractional shares of TMP Common Stock, but cash shall be paid in lieu thereof on
the basis of the ratio that the applicable fraction bears to $28.00.
SECTION 1.04. ADJUSTMENTS TO THE STOCK CONSIDERATION.
Notwithstanding anything to the contrary contained herein, as soon as
practicable and in any event no later than five days prior to the Closing, TASA
shall deliver to TMP an unaudited balance sheet for TASA as of July 31, 1998
(the "CLOSING BALANCE SHEET"). The Closing Balance Sheet shall be prepared on
the same basis as the TASA Balance Sheet, and include all normal and recurring
adjustments necessary for a fair presentation of the information set forth
therein. The value of the Stock Consideration shall be adjusted downward, on a
dollar for dollar basis, if the shareholders' equity, as shown on the Closing
Balance Sheet, is less than the shareholders' equity as shown on the TASA
Balance Sheet.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
TASA AND THE SHAREHOLDERS
Except as set forth (by reference to the applicable Section of this
Agreement) in the disclosure schedule previously delivered to TMP (the "TASA
DISCLOSURE SCHEDULE"), TASA and each Shareholder, jointly and severally, hereby
represent and warrant to TMP as follows:
SECTION 2.01. ORGANIZATION, ETC. TASA is a corporation duly organized,
validly existing and in good standing under the laws of Switzerland and has full
corporate power and authority to conduct its business as it is now being
conducted and to own, operate or lease the properties and assets it currently
owns, operates or holds under lease. TASA is duly qualified or licensed to do
business and is in good standing as a foreign corporation in each jurisdiction
where the character of its business or the nature of its properties makes such
qualification or licensing
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necessary, except where the failure to so qualify or be licensed would not have
a Material Adverse Effect, all of which jurisdictions are set forth on the TASA
Disclosure Schedule. TASA has heretofore delivered to TMP true and correct
copies of its Memorandum and Articles of Association (or analogous
organizational documents) as in effect on the date hereof. TASA has all
requisite corporate power and authority to enter into this Agreement and each of
the other agreements contemplated hereby, to carry out its obligations under
this Agreement and each of the other agreements contemplated hereby and to
consummate the transactions contemplated hereby and thereby.
SECTION 2.02. SUBSIDIARIES. The TASA Disclosure Schedule contains a list
of all TASA Subsidiaries and indicates for each TASA Subsidiary: (a) the
percentage and type of equity securities of or other interest in the TASA
Subsidiary owned or controlled by TASA; (b) the identity of any other beneficial
or record owner of any such TASA Subsidiary and the percentage and type of such
ownership; (c) the jurisdiction of incorporation or organization; (d) each
jurisdiction in which it is qualified or licensed to conduct its business; and
(e) in the case of any joint venture, the identity of each other joint venture
partner. TASA is the direct or indirect owner, beneficially and of record, of
all such equity securities or other interests listed as being owned by it, free
and clear of all Liens. The TASA Subsidiaries constitute all of the
Subsidiaries of TASA. All the outstanding shares of stock of each such TASA
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable. Except as set forth in the Tasa Disclosure Schedule, there are
no options, warrants, calls, rights, commitments, preemptive rights or
agreements of any character to which any such TASA Subsidiary, any of the
Shareholders or TASA is a party or by which any such party is bound obligating
it to issue, deliver or sell, or cause to be issued, delivered or sold,
contingently or otherwise, additional equity or other ownership interests of
such TASA Subsidiary or any securities or obligations convertible into or
exchangeable for such interests, or to grant, extend or enter into any such
option, warrant, call, right, commitment, preemptive right or agreement. Each
TASA Subsidiary that is a corporation is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct its business as it is now being conducted. Each TASA Subsidiary
that is not a corporation is duly organized under the laws of the jurisdiction
of its organization and has all requisite power and authority to own, lease and
operate its properties and to conduct its business as it is now being conducted.
A true and correct copy of the Memorandum and Articles of Association (or
analogous organizational documents) of each Significant TASA Subsidiary as in
effect on the date hereof have been provided to TMP. Each of the TASA
Subsidiaries is duly qualified or licensed to conduct its business and is in
good standing in each jurisdiction where
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the character of its business or the nature of its properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect. The TASA Disclosure
Schedule contains a list of all Subsidiaries (other than the TASA Subsidiaries),
partnerships, joint ventures and other entities in which TASA has, directly or
indirectly, any legal or beneficial interest, specifying in detail the amount
and nature of such interest.
SECTION 2.03. CAPITALIZATION. The issued and outstanding capital stock of
TASA is as set forth on the TASA Disclosure Schedule. All of the issued and
outstanding shares of TASA are owned, of record and beneficially, by the
Shareholders as set forth in the TASA Disclosure Schedule. No Person other than
the Shareholders is or will be entitled to receive any payment with respect to
the capital stock of TASA. Except as set forth on the TASA Disclosure Schedule,
there are no shares of common stock of TASA held as treasury shares. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
TASA are as set forth in TASA's Memorandum of Association (or analogous
organizational documents), and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable laws. All outstanding shares
of capital stock of TASA, all of which are uncertificated, have been duly
authorized and validly issued and are fully paid and non-assessable. All of the
outstanding securities of TASA were issued in compliance with all applicable
securities laws. None of the outstanding securities has been issued in
violation of any pre-emptive rights, rights of first refusal or similar rights.
There are no outstanding options, warrants, convertible securities, calls,
rights, commitments, preemptive rights or agreements or instruments or
understandings of any character to which TASA is a party or by which TASA or any
of the Shareholders is bound, obligating any of them to issue, deliver or sell,
or cause to be issued, delivered or sold, contingently or otherwise, additional
shares of TASA's capital stock or any securities or obligations convertible into
or exchangeable for such shares or to grant, extend or enter into any such
option, warrant, convertible security, call, right, commitment, preemptive right
or agreement. There are no outstanding obligations, contingent or other, of
TASA to purchase, redeem or otherwise acquire any shares of its capital stock.
There are no voting trust agreements or other contracts, agreements,
arrangements, commitments, plans or understandings restricting or otherwise
relating to voting, dividend or other rights with respect to any of TASA's
capital stock. There are no outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights or agreements or
instruments or understandings of any character to which TASA is a party or by
which TASA is bound, obligating TASA to issue, deliver or sell, or cause to be
issued, delivered or sold, contingently or otherwise, any shares of the TASA
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Subsidiaries' Common Stock owned by it or any securities or obligations
convertible into or exchangeable for such shares or to grant, extend or enter
into any such option, warrant, convertible security, call, right, commitment,
preemptive right or agreement. The Shareholders have, and upon transfer of the
shares of Common Stock of TASA at the Closing, TMP will have, good and
marketable title to all of the issued and outstanding shares of the Common Stock
of TASA except as set forth in the TASA Disclosure Schedule, free and clear of
any Liens (other than restrictions imposed by United States, state and foreign
securities laws).
SECTION 2.04. AUTHORIZATION. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and the
performance by TASA of its obligations hereunder have been duly authorized by
all necessary corporate action on the part of TASA. This Agreement has been
duly executed and delivered by TASA and each of the Shareholders and constitutes
the legal, valid and binding obligation of each of them enforceable against each
of them in accordance with its terms. TASA and each TASA Subsidiary are in
compliance with all applicable laws, rules or regulations relating to or
affecting the operation, conduct or ownership of their respective property or
business, other than violations that individually or in the aggregate would not,
and insofar as may reasonably be foreseen in the future will not, have a
Material Adverse Effect.
SECTION 2.05. NO VIOLATION. The execution and delivery of this Agreement
by TASA and each of the Shareholders do not, and the consummation by each of
them of the transactions contemplated hereby, and compliance with the terms
hereof will not, (a) conflict with, or result in any violation of or default or
loss of any benefit under, any provision of TASA's Memorandum and Articles of
Association (or analogous organizational documents); (b) conflict with, or
result in any violation of or default or loss of any benefit under, any permit,
concession, grant, franchise, law, rule or regulation, or any judgment, decree
or order of any court or other governmental agency or instrumentality to which
TASA or any TASA Subsidiary or any of the Shareholders is a party or to which
any of their respective property is subject; (c) conflict with, or result in a
breach or violation of or default or loss of any benefit under, or accelerate
the performance required by, the terms of any agreement, contract, indenture or
other instrument to which TASA or any TASA Subsidiary is a party or to which any
of their respective property is subject, or constitute a default or loss of any
right thereunder or an event which, with the lapse of time or notice or both,
might result in a default or loss of any right thereunder or the creation of any
lien, charge or encumbrance upon any of the assets or properties of TASA or any
TASA Subsidiary, or give rise to a right of termination under any TASA Contract;
or (d) result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any TASA License.
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SECTION 2.06. APPROVALS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by each of TASA and the
Shareholders will not require the consent, approval, order or authorization of
any Governmental Entity or Regulatory Authority or any other Person under any
statute, law, rule, regulation, permit, license, agreement, indenture or other
instrument to which TASA, the TASA Subsidiaries or any of the Shareholders is a
party or to which any of their properties are subject, and no declaration,
filing or registration with any Governmental Entity or Regulatory Authority is
required or advisable in connection with the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
performance by each of them of its respective obligations hereunder, other than
the approval of the Board of Managers of the TASA Partnership and the Board of
Directors of TASA, each with regard to the transfer of the shares of TASA Common
Stock to TMP.
SECTION 2.07. FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) TASA has delivered to TMP (i) true, correct and complete copies of
TASA's audited consolidated balance sheets as of December 31, 1997, 1996 and
1995, and the related statements of operations (together with the auditors'
reports thereon) for the years ended December 31, 1997, 1996 and 1995, together
with notes to such financial statements (the "AUDITED FINANCIAL STATEMENTS") and
(ii) true, correct and complete copies of TASA's unaudited combined and
combining balance sheets as at June 30, 1998, and the related statements of
operations for the six months ended June 30, 1998 and 1997 (the "INTERIM
FINANCIAL STATEMENTS"). The Audited Financial Statements and Interim Financial
Statements are herein collectively referred to as the "FINANCIAL STATEMENTS".
(b) The Financial Statements are true, correct and complete in all
material respects, are in accordance with the books and records of TASA and have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby, and the balance
sheets included therein present fairly as of their respective dates the
financial condition of TASA (subject, in the case of Interim Financial
Statements, to non-material year-end adjustments that may be required upon
audit, which adjustments will not have a Material Adverse Effect on such
financial statements). All material liabilities and obligations, whether
absolute, accrued, contingent or otherwise, whether direct or indirect, and
whether due or to become due, which existed at the date of such Financial
Statements have been disclosed in the balance sheets included in the Financial
Statements or in notes to the Financial Statements to the extent such
liabilities were required, under generally accepted accounting principles, to be
so disclosed. The statements of operations,
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accumulated deficit and cash flows included in the Financial Statements present
fairly the results of operations, accumulated deficit and cash flows of TASA for
the periods indicated (subject, in the case of Interim Financial Statements, to
year-end adjustments that may be required upon audit, which adjustments will not
have a Material Adverse Effect on such financial statements), and the notes
included in the Financial Statements present fairly the information purported to
be shown thereby. The statements of operations included in the consolidated
Financial Statements of TASA do not contain any material items of special or
non-recurring income or other income not earned in the ordinary course of
business except as expressly specified therein. All amounts billed to customers
and clients of the TASA Subsidiaries reflected in the consolidated Financial
Statements are for executive search services and collateral activities relating
thereto and not for any other business.
(c) Since the Balance Sheet Date there has been (i) no Material Adverse
Change in the assets or liabilities, or in the business or condition, financial
or otherwise, or in the results of operations or, to the best knowledge of TASA
and each of the Shareholders, prospects, of TASA or the TASA Subsidiaries,
whether as a result of any legislative or regulatory change, revocation of any
license or right to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or otherwise,
(ii) no adverse change in the assets or liabilities or in the business or
condition, financial or otherwise, of any of them except in the ordinary course
of business; and, to the best knowledge of TASA and the Shareholders, no fact or
condition exists or is contemplated or threatened which could reasonably be
anticipated to cause such a change in the future and (iii) no decreases in
revenue or operating income. There has been no Material Adverse Change since
the Balance Sheet Date in the amount of accounts receivable (or the allowance
with respect thereto) or accounts payable of TASA from that reflected in the
June 30, 1998 balance sheet.
SECTION 2.08. ACCOUNTING MATTERS. Neither TASA nor any TASA Subsidiary
nor, to the best knowledge of TASA, any of TASA's directors or officers, has
taken any action or is aware of any facts or circumstances in respect of TASA,
any TASA Subsidiary or their respective accounting procedures which would have
the effect of precluding accounting for the transactions contemplated by this
Agreement as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretive releases thereto and the relevant
pronouncements of the United States Securities and Exchange Commission. No
Shareholder has in any way reduced their respective risk or committed to reduce
their respective risk with respect to either the shares of TASA Common Stock
held by such Shareholder or the
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TMP Common Stock to be acquired by such Shareholder hereunder, whether by
entering into a put, collar, option or other arrangement.
SECTION 2.09. NO UNDISCLOSED LIABILITIES. Except as set forth in the
notes to the Financial Statements or on the TASA Disclosure Schedule, the
liabilities on the latest balance sheet included in the Financial Statements
consist solely of accrued obligations and liabilities incurred by TASA in the
ordinary course of its business to Persons which are not Affiliates of TASA or
any of the Shareholders. There are no liabilities of TASA or the TASA
Subsidiaries of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, determined or determinable or otherwise, including
without limitation documentary or standby letters of credit, bid or performance
bonds, or customer or third party guarantees, and no existing condition,
situation or set of circumstances that could reasonably result in such a
liability, other than (i) liabilities disclosed in the Financial Statements, and
(ii) liabilities which have arisen after the Balance Sheet Date in the ordinary
course of business and consistent with past practice (none of which is a
liability for breach of contract, breach of warranty (other than chargebacks
incurred in the ordinary course of business and consistent with past practice),
tort, infringement claim or lawsuit) which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. There are
no asserted claims for indemnification by any Person against TASA or any TASA
Subsidiary under any law or agreement or pursuant to the Memorandum and Articles
of Association (or analogous organizational documents) of TASA or any TASA
Subsidiary and TASA is not aware of any facts or circumstances that might
reasonably give rise to the assertion of such a claim against TASA or any TASA
Subsidiary.
SECTION 2.10. CORPORATE ACTION. All corporate action of the Board of
Directors of TASA and of the Shareholders taken on or prior to the date hereof
has been duly authorized, adopted or ratified in accordance with applicable law
and TASA's or such TASA Subsidiary's Memorandum and Articles of Association (or
analogous organizational documents) and has been duly recorded in its respective
corporate (or equivalent) minute books (which have been made available for
inspection by TMP).
SECTION 2.11. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE. Since the
Balance Sheet Date, neither TASA nor any TASA Subsidiary has (a) issued any
stock, bond or other corporate security (including without limitation securities
convertible into or rights to acquire capital stock of any of them), (b)
borrowed any amount or incurred or become subject to any liability (absolute,
accrued or contingent), except current liabilities incurred, liabilities under
contracts entered into, borrowings under the banking facilities disclosed on the
TASA Disclosure Schedule and liabilities
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in respect of letters of credit issued under such banking facilities, all of
which were in the ordinary course of business, (c) discharged or satisfied any
lien or encumbrance or incurred or paid any obligation or liability (absolute,
accrued or contingent) other than current liabilities shown on the most recent
balance sheet included in the Financial Statements and current liabilities
incurred since the Balance Sheet Date in the ordinary course of business, (d)
except as disclosed in the TASA Disclosure Schedule, declared or made any
payment or distribution to shareholders or purchased or redeemed any shares of
its capital stock or other securities, (e) mortgaged, pledged or subjected to
lien any of its assets, tangible or intangible, other than liens of current real
property taxes not yet due and payable, (f) sold, assigned or transferred any of
its tangible assets except in the ordinary course of business, or canceled any
debt or claim, (g) sold, assigned, transferred or granted any license with
respect to any patent, trademark, trade name, service mark, copyright, trade
secret or other intangible asset, (h) suffered any loss of property in excess of
$25,000 in the aggregate or waived any right of substantial value whether or not
in the ordinary course of business, (i) suffered any adverse change in its
relations with, or any loss or threatened loss of, any of its suppliers, or its
customers disclosed pursuant to Section 2.22, (j)(i) granted any severance or
termination pay to any of its directors, officers or employees, (ii) entered
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) or arrangement with any of its
directors, officers or employees, (iii) increased any benefits payable under any
existing severance or termination pay policies or employment agreements, or
(iv) increased the compensation, bonus or other benefits payable to any of its
directors or officers or, other than in the ordinary course of business and
consistent with past practice, employees, (k) made any material change in the
manner of its business or operations, (l) made any material change in any method
of accounting or accounting practice, except for any such change required by
reason of a concurrent change in generally accepted accounting principles or
disclosed in the Financial Statements, (m) entered into any transaction except
in the ordinary course of business or as otherwise contemplated hereby or (n)
entered into any commitment (contingent or otherwise) to do any of the
foregoing.
SECTION 2.12. TAXES. Except as set forth on Schedule 2.12 of the TASA
Disclosure Schedule:
(a) All Tax Returns required to be filed by or on behalf of TASA or any
TASA Subsidiary have been properly prepared and duly and timely filed with the
appropriate taxing authorities in all jurisdictions in which such Tax Returns
are required to be filed (after giving effect to any valid extensions of time in
which to
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make such filings), and all such Tax Returns were true, complete and correct in
all material respects.
(b) All Taxes payable by or on behalf of TASA and the TASA Subsidiaries or
in respect of their respective income, assets or operations (including interest
and penalties) have been fully and timely paid, and adequate reserves or
accruals for Taxes have been provided in the Closing Balance Sheet with respect
to any period for which Tax Returns have not yet been filed or for which Taxes
are not yet due and owing.
(c) Neither TASA nor any of the TASA Subsidiaries has executed or filed
with the IRS or any other taxing authority any agreement, waiver or other
document or arrangement extending or having the effect of extending the period
for assessment or collection of Taxes (including, but not limited to, any
applicable statute of limitation), and no power of attorney with respect to any
Tax matter is currently in force.
(d) TASA and the TASA Subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has duly and timely withheld from employee salaries,
wages and other compensation and has paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
under all applicable laws.
(e) TMP has received complete copies of (A) all U.S. federal and foreign
income or franchise Tax Returns of TASA and the TASA Subsidiaries relating to
the taxable periods since December 31, 1995 and (B) any audit report issued
within the last three years relating to Taxes due from or with respect to TASA,
the TASA Subsidiaries, their respective income, assets or operations. All
income and franchise Tax Returns filed by or on behalf of TASA and the TASA
Subsidiaries for the taxable years ended on the respective dates set forth on
the TASA Disclosure Schedule have been examined by the relevant taxing authority
or the statute of limitations with respect to such Tax Returns has expired.
(f) The TASA Disclosure Schedule lists all material types of Taxes paid
and material types of Tax Returns filed by or on behalf of TASA and the TASA
Subsidiaries and indicates those Taxes with respect to which TASA or any TASA
Subsidiary is or has been a member of an Affiliated Group for any Tax purpose.
Except as set forth on the TASA Disclosure Schedule, no claim has been made by a
taxing authority in a jurisdiction where TASA or any TASA Subsidiary does not
file Tax Returns such that it is or may be subject to taxation by that
jurisdiction.
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(g) All deficiencies asserted or assessments made as a result of any
examinations by the IRS or any other taxing authority of the Tax Returns of or
covering or including TASA and/or the TASA Subsidiaries have been fully paid,
and there are no other audits or investigations by any taxing authority or
proceedings in progress, nor have the Shareholders, TASA or any TASA Subsidiary
received any notice from any taxing authority that it intends to conduct such an
audit or investigation. No issue has been raised by a U.S. federal, state,
local or foreign taxing authority in any current or prior examination which, by
application of the same or similar principles, could reasonably be expected to
result in a proposed deficiency for any subsequent taxable period. The results
of any settlement and the necessary adjustments resulting therefrom are properly
reflected in the Closing Balance Sheet.
(h) Neither TASA, any TASA Subsidiary nor any other Person (including any
of the Shareholders) on behalf of TASA has (A) filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by TASA or TASA Subsidiary, (B) agreed to or is
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of state, local or foreign law by reason of a change in
accounting method initiated by TASA or any TASA Subsidiary or has any knowledge
that the IRS has proposed any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or operations of
TASA or any TASA Subsidiary, or has otherwise taken any action that would have
the effect of deferring any liability for Taxes from any taxable period ending
on or before the Closing to any taxable period ending thereafter, (C) executed
or entered into closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law with respect to TASA or any TASA Subsidiary, or (D) requested any
extension of time within which to file any Tax Return, which Tax Return has
since not been filed.
(i) No property owned by TASA or any TASA Subsidiary is (i) property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) constitutes "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (iii) is "tax-exempt bond financed property" within the
meaning of Section 168(g) of the Code.
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(j) Neither TASA nor any TASA Subsidiary is a party to any tax sharing or
similar agreement or arrangement (whether or not written) pursuant to which it
will have any obligation to make any payments after the Closing.
(k) There is no contract, agreement, plan or arrangement covering any
person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by TMP or any of its Affiliates by reason of
Section 280G of the Code, or would constitute compensation in excess of the
limitation set forth in Section 162(m) of the Code.
(l) TASA and each TASA Subsidiary has substantial authority for the
treatment of or has disclosed (in accordance with Section 6662(d)(2)(B)(ii) of
the Code) on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income tax within the
meaning of Section 6662(d) of the Code.
(m) Neither TASA nor any TASA Subsidiary is subject to any private letter
ruling of the IRS or comparable rulings of other taxing authorities.
(n) There are no liens as a result of any unpaid Taxes upon any of the
assets of TASA or any TASA Subsidiary.
(o) All material Tax elections of TASA and the TASA Subsidiaries are
clearly set forth in the Tax Returns described in Section 2.12(e)(A). Neither
TASA nor any TASA Subsidiary have elections in effect for U.S. federal income
tax purposes under Sections 108, 168, 338, 441, 463, 472, 1017, 1033 or 4977 of
the Code.
(p) Other than the Affiliated Group of which TASA is the parent and each
of TASA and the TASA Subsidiaries are currently members, neither TASA nor any
TASA Subsidiary has ever been a member of any Affiliated Group of corporations
for any Tax purposes. Neither TASA nor TASA owns any interest in any entity
that is treated as a partnership for U.S. federal income tax purposes or would
be treated as a pass-through or transparent entity for any tax purpose.
(q) Neither TASA nor any Tasa Subsidiary is a United States Real Property
Holding Corporation ("USRPHC") within the meaning of Section 897 of the Code and
neither was a USRPHC on any "determination date" (as defined in Section
1.897-2(c) of the Treasury regulations under the Code) that occurred in the five
year period preceding the Closing.
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(r) Neither TASA nor any TASA Subsidiary has any application pending with
any taxing authority requesting permission for any changes in accounting
methods.
(s) Neither TASA nor any TASA Subsidiary has filed an election pursuant to
Revenue Procedure 95-11, 1995-1 C.B. 505 or under Treasury regulation Section
1.1502-75(c) or any similar provision of foreign, national, international, state
or local law.
SECTION 2.13. LITIGATION. Except as disclosed in the TASA Disclosure
Schedule, there is no action, suit, investigation, arbitration or proceeding
pending or, to the best knowledge of TASA and the Shareholders, threatened
against or affecting TASA and the TASA Subsidiaries or any of their respective
properties or rights (including without limitation no charge of patent and/or
trademark infringement), by or before any Governmental Entity, or any basis in
fact therefor known to TASA and the Shareholders, against or involving TASA and
the TASA Subsidiaries or any of their respective officers, directors or
employees (in their capacity as such), assets, business or products, whether at
law or in equity. With respect to each litigation or claim described in the
TASA Disclosure Schedule, copies of all pleadings, filings, correspondence with
opposing parties and their counsel, opinions of counsel, results of studies,
judgments, orders, attachments, impositions of or recordings of Liens and other
documents have been furnished to TMP. Neither TASA nor any TASA Subsidiary nor
any Shareholder has received any written opinion or memorandum of legal advice
from legal counsel to the effect that any of them is exposed to any liability
for a potential litigation or claim which may have a Material Adverse Effect.
Except as disclosed in the TASA Disclosure Schedule, TASA is not engaged in any
legal action to recover monies due it or for damages sustained by it.
SECTION 2.14. COMPLIANCE WITH LAWS. The business of TASA and the TASA
Subsidiaries has not been conducted in violation of any law or any ordinance or
regulation of any Governmental Entity, except for violations that individually
or in the aggregate would not and, insofar as may reasonably be foreseen, in the
future will not, have a Material Adverse Effect. No investigation or review by
any Governmental Entity (including without limitation any audit or similar
review by any foreign, state or local taxing authority) with respect to TASA and
the TASA Subsidiaries is pending or, to TASA's and the Shareholders' best
knowledge, threatened, nor has any Governmental Entity indicated in writing to
TASA or the TASA Subsidiaries an intention to conduct the same. TASA nor, to
the best of its knowledge, any director, officer, consultant or employee of TASA
and the TASA Subsidiaries (in their capacity as such), is in default with
respect to any order, writ, injunction or decree known to or served upon TASA or
any of the TASA Subsidiaries
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of any Governmental Entity or Regulatory Authority, which default would have a
Material Adverse Effect. There is no existing law, rule, regulation or order,
whether Federal, state, local or foreign, which would prohibit or materially
restrict TASA or any of the TASA Subsidiaries from, or otherwise materially
adversely affecting them in, conducting their business in any jurisdiction in
which they now conduct business or in which they currently propose to conduct
business. TASA and the TASA Subsidiaries are in compliance with all applicable
Environmental Laws.
SECTION 2.15. TITLE TO PROPERTY.
(a) TASA and the TASA Subsidiaries do not own any real property. The TASA
Disclosure Schedule identifies all of the rights and interests in leasehold
estates owned by TASA and the TASA Subsidiaries as of the date hereof, and the
nature and amount of its respective interest therein. TASA and the TASA
Subsidiaries have valid, subsisting and enforceable leases to all leasehold
estates identified and reflected in the TASA Disclosure Schedule (with such
exceptions as are, individually or in the aggregate, not material and do not,
individually or in the aggregate, materially interfere with the use made and
proposed to be made of such properties) and either good and marketable title or
rights as lessee to all personalty of any kind or nature owned or used by TASA
and the TASA Subsidiaries in their respective business, in each case free and
clear of all Liens, encumbrances or claims whatsoever, except for (i) Liens,
encumbrances, defects or irregularities of title identified on the TASA
Disclosure Schedule which, individually or in the aggregate, do not detract from
or materially interfere with the present or reasonably foreseeable use or value
of the properties subject thereto, and (ii) Liens for non-delinquent ad valorem
taxes and non-delinquent statutory liens arising other than by reason of default
by TASA or any of the TASA Subsidiaries. TASA or the TASA Subsidiaries as
lessee have the right under valid leases to occupy, use, possess and control all
property leased by them as now occupied, used, possessed and controlled by them.
The assets and properties owned or leased by TASA and the TASA Subsidiaries are
sufficient to operate and conduct their business in a manner consistent with at
least the same standards of quality and reliability as have been achieved as of
the date hereof. At the Closing, TASA and the TASA Subsidiaries will own, free
and clear of all Liens, encumbrances or claims whatsoever, other than those
permitted or disclosed hereunder, all the assets (including without limitation
all cash) included in the June 30, 1998 balance sheet included in the Interim
Financial Statements and all assets acquired since that date, other than assets
disposed of in the ordinary course of business.
(b) Each lease or agreement under which TASA or any TASA Subsidiary is a
lessee or lessor of any property, real or personal, is a valid and binding
agreement
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of such Person and, to the best knowledge of TASA, the other party thereto (in
each case with such exceptions as are, individually or in the aggregate, not
material and do not, individually or in the aggregate, materially interfere with
the use made and proposed to be made of such properties by TASA), without any
default by TASA and the TASA Subsidiaries thereunder and, to the best knowledge
of TASA, without any default thereunder by any other party thereto. No event
has occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by TASA or any TASA Subsidiary
under any such lease or agreement or, to the best knowledge of TASA and the TASA
Subsidiaries by any other party thereto. TASA and the TASA Subsidiaries
possession of such property has not been disturbed and no claim has been
asserted in writing against TASA or any TASA Subsidiary adverse to its rights in
such leasehold interests. Each Shareholder agrees that, in the event that such
Shareholder leaves the employ of TASA or any TASA Subsidiary, such Shareholder
shall be responsible personally for payments under any automobile leases entered
into by TASA or any TASA Subsidiary on behalf of such Shareholder, if
applicable.
SECTION 2.16. CONDITION OF PROPERTY AND RELATED MATTERS.
(a) All buildings, structures, appurtenances and material items of
machinery, equipment and other material tangible assets used by TASA and the
TASA Subsidiaries are in good operating condition and repair, normal wear and
tear excepted, are usable in the ordinary course of business, are adequate and
suitable for the uses to which they are being put and conform in all material
respects to all applicable laws, ordinances, codes, rules, regulations and
authorizations relating to their construction, use and operation. None of their
premises or equipment are in need of maintenance or repairs other than ordinary
routine maintenance and repairs which are not material, individually or in the
aggregate, in nature or cost.
(b) All properties and tangible assets reflected in the latest balance
sheet included in the Financial Statements have a fair market or realizable
value at least equal to the value thereof as reflected therein.
(c) The accounts receivable of all kinds of TASA and the TASA
Subsidiaries, net of the allowance for doubtful accounts applicable thereto
included in the latest balance sheet included in the Financial Statements, are
collectible in full over the period of usual trade terms (by use of TASA's
normal collection methods without resort to litigation or reference to a
collection agency), and there do not exist any defenses, counterclaims and
set-offs which would materially adversely affect such receivables, including
fees returnable to the payor for unsuccessful placements,
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and all such receivables are actual and bona fide receivables representing
obligations for the total dollar amount thereof shown on TASA's books. TASA and
the TASA Subsidiaries have fully performed all obligations with respect thereto
which they were obligated to perform to the date hereof. TASA delivered to TMP
an aging schedule for the accounts receivable as of June 30, 1998.
SECTION 2.17. CONTRACTS.
(a) The TASA Disclosure Schedule contains a complete list of all currently
effective written or oral (i) employment contracts, arrangements or policies
(including without limitation any collective bargaining contract or union
agreement) of TASA and the TASA Subsidiaries which may not be immediately
terminated without penalty (or any augmentation or acceleration of benefits);
(ii) leases, sales contracts and other agreements with respect to any property,
real or personal, of TASA and the TASA Subsidiaries, except for leases of
personal property involving less than $25,000 individually; (iii) contracts or
commitments for capital expenditures or acquisitions in excess of $50,000 for
one project or set of related projects; (iv) agreements, contracts, indentures
or other instruments relating to the borrowing of money, or the guarantee of any
obligation (third party or otherwise) for the borrowing of money; (v) contracts
or agreements providing for any covenant not to compete by TASA and the TASA
Subsidiaries or otherwise restricting in any way any of them engaging in any
business activity (including a description of the businesses to which the
covenant not to compete applies); (vi) contracts or agreements relating to
consultancies, professional retentions, agency, sales or distributorship
arrangements pertaining to TASA and the TASA Subsidiaries or their respective
products or activities; (vii) contracts, agreements or commitments requiring
TASA and the TASA Subsidiaries to indemnify or hold harmless any Person (other
than purchase orders entered into in the ordinary course of business and
consistent with past practice); (viii) all contracts with any customer or
supplier listed on the TASA Disclosure Schedule pursuant to Section 2.23 hereto
other than outstanding purchase orders in the ordinary course of business; and
(ix) contracts, agreements, arrangements or commitments, other than the
foregoing, which could reasonably be considered material to the business of any
member of TASA and the TASA Subsidiaries (all agreements, arrangements or
commitments to which any of them is a party, whether or not listed on the TASA
Disclosure Schedule, being hereinafter referred to as "TASA CONTRACTS"). True
and correct copies of all the TASA Contracts listed on the TASA Disclosure
Schedule have been furnished to TMP. All TASA Contracts are valid and binding
in all material respects and TASA or the TASA Subsidiaries have duly performed
their respective obligations thereunder in all material respects to the extent
such obligations have accrued, and no breach or default thereunder by them or,
to the best knowledge of TASA, any other party
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thereto has occurred that could impair the ability of TASA or the TASA
Subsidiaries to enforce any material rights thereunder. There are no material
liabilities of TASA or the TASA Subsidiaries or, to the best knowledge of TASA,
any other party to any of the TASA Contracts arising from any breach of or
default in any provision thereof, nor has there occurred any breach or default
thereof by any of TASA or the TASA Subsidiaries which would permit the
acceleration of any obligation of any party thereto or the creation of a lien or
encumbrance upon any material asset(s) of any of them. There are no
negotiations pending or in progress to revise any material terms of such TASA
Contracts.
SECTION 2.18. EMPLOYEE AND LABOR MATTERS AND PLANS.
(a) Except as set forth in this Section 2.18, neither TASA nor any of the
TASA Subsidiaries has any Employee Plans.
(b) The TASA Disclosure Schedule sets forth a description of TASA's
vacation, medical and sick leave policies, copies of which have previously been
delivered to TMP.
(c) The consummation of the transactions contemplated by this Agreement
will not (either alone or in conjunction with another event, such as a
termination of employment or other services) entitle any employee or other
person to receive severance or other compensation which would not otherwise be
payable absent the consummation of the transactions contemplated by this
Agreement.
(d) The TASA Disclosure Schedule sets forth a complete and accurate list
showing the names, the rate of compensation (and the portions thereof
attributable to salary and bonuses, respectively) and location of all current
employees of TASA and the TASA Subsidiaries that received, for the year ended
December 31, 1997, or are expected to receive, during the year ending December
31, 1998, annual base salary or other compensation in excess of $100,000 (or the
equivalent thereof in foreign currency). There are no covenants, agreements or
restrictions to which TASA or the TASA Subsidiaries are a party, including but
not limited to employee non-compete agreements, prohibiting, limiting or in any
way restricting any officer or employee listed on the TASA Disclosure Schedule
from engaging in any types of business activity in any location. To the best
knowledge of TASA, no officer or employee listed on the TASA Disclosure
Schedule, and no group of employees has any plans to terminate their employment.
There has not been, and TASA does not anticipate, any adverse change in
relations with employees as a result of the announcement of the transactions
contemplated by
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this Agreement. TASA has not instituted any "freeze" of, or delayed or deferred
the grant of, any cost-of-living or other salary adjustments for any of its
employees.
(e) The TASA Disclosure Schedule sets forth by number and employment
classification the approximate numbers of employees employed by each TASA
Subsidiary as of the date of this Agreement, and, except as set forth therein,
none of said employees are subject to union or collective bargaining agreements.
There have been no audits of the equal employment opportunity practices of TASA
or the TASA Subsidiaries and, to the best knowledge of TASA, no basis for such
claim exists. There is no unfair labor practice charge or complaint against
TASA or the TASA Subsidiaries pending before the National Labor Relations Board
or similar foreign agency or strike, dispute, slowdown or stoppage pending or
threatened against or involving TASA or the TASA Subsidiaries and none has
occurred since January 1, 1993. No representation question exists respecting
the employees of TASA or the TASA Subsidiaries and no collective bargaining
agreement is currently being negotiated by TASA or the TASA Subsidiaries, nor is
any grievance procedure or arbitration proceeding pending under any collective
bargaining agreement and no claim therefor has been asserted. Neither TASA nor
any TASA Subsidiary has received notice from any union or employees setting
forth demands for representation, elections or for present or future changes in
wages, terms of employment or working conditions.
(f) The TASA Disclosure Schedule sets forth all outstanding loans and
other advances (other than travel advances in the ordinary course of business
which do not exceed $15,000 per individual) made by TASA to any of its officers,
directors, employees, shareholders or consultants.
(g) TASA and each of the TASA Subsidiaries has completed all the necessary
deductions for social security taxes pursuant to the requirements under the laws
of the applicable jurisdiction and each has correctly and truthfully and
submitted them at the correct time.
(h) TASA and each of the TASA Subsidiaries has a pension plan for all
full-time and part-time employees which is drawn up and operated in accordance
with the legal and statutory conventions and regulations and which will at least
yield the legally required payments in the jurisdictions where such plans are
required, and such liabilities are accrued for on the Closing Balance Sheet in
accordance with U.S. generally accepted accounting principles.
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(i) TASA and each of the TASA Subsidiaries has insured all its full-time
and part-time workers against industrial and non-industrial accidents to the
extent required by law.
(j) Each of TASA and the TASA Subsidiaries has completed all the necessary
statements for any required pension plan and accident insurance correctly and
truthfully and submitted them at the correct time.
(k) TASA and each of the TASA Subsidiaries has paid all the assessed
social security payments, pension plans payments, unemployment insurance
payments and accident insurance payments which have fallen due and those which
have not yet fallen due have been take into account up to the accounting date in
the balance sheet as of the Balance Sheet Date, and elsewhere in the company
books, and sufficient reserves have been set aside in the balance sheet as of
the Balance Sheet Date, for all such accumulated obligations which have not yet
been assessed.
SECTION 2.19. INSURANCE POLICIES. The TASA Disclosure Schedule contains a
correct and complete description of all insurance policies covering TASA and the
TASA Subsidiaries. Each such policy is in full force and effect and, to the
best knowledge of TASA, is adequate in coverage and amount to insure fully
against risks to which TASA or the TASA Subsidiaries and their employees,
businesses, properties and other assets may be exposed in the operation of their
respective business. All retroactive premium adjustments under any worker's
compensation policy or any other policy have been recorded in the Financial
Statements in accordance with generally accepted accounting principles and are
reflected in the Financial Statements. All premiums with respect to such
insurance policies have been paid on a timely basis, and no notice of
cancellation or termination has been received with respect to any such policy.
No notice or claim has not been made in due and timely fashion. There are no
pending claims against such insurance by or on behalf of any member of TASA as
to which the insurers have denied coverage or otherwise reserved rights.
SECTION 2.20. RECORDS. TASA and the TASA Subsidiaries have records that
accurately and validly reflect its transactions and accounting controls
sufficient to insure that such transactions are (i) in all material respects
executed in accordance with its management's general or specific authorization
and (ii) recorded in conformity with generally accepted accounting principles.
SECTION 2.21. BROKERAGE FEES. Neither TASA nor any of the Shareholders
has retained any financial advisor, broker, agent or finder or paid or agreed to
pay
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any financial advisor, broker, agent or finder on account of this Agreement or
any transaction contemplated hereby or any transaction of like nature that would
be required to be paid.
SECTION 2.22. CUSTOMERS.
(a) The TASA Disclosure Schedule lists all customers that paid TASA during
the year ended December 31, 1997 or that TASA expects will pay to TASA during
the year ending December 31, 1998, more than two percent of TASA's revenues as
reflected on TASA's statement of operations for such year.
(b) TASA has no information which might reasonably indicate that any of
the customers TASA listed on the TASA Disclosure Schedule intend to cease
dealing with TASA, nor has any information been brought to its attention which
might reasonably lead it to believe any such customer intends to alter in any
material respect the amount of such purchases, sales or the extent of dealings
with TASA or would alter in any material respect such dealings in the event of
the consummation of the Acquisition.
SECTION 2.23. INTELLECTUAL PROPERTIES. The TASA Disclosure Schedule
contains an accurate and complete list of all domestic and foreign patents,
patent applications, patent licenses, software licenses (other than generally
available pre-packaged "off-the-shelf" software) and know-how licenses, trade
names, trademarks, copyrights, service marks, trademark registrations and
applications, service mark registrations and applications, and copyright
registrations and applications and any financial and operational management
information systems and databases, owned (in whole or in part), licensed to any
extent or used or anticipated to be used by TASA in the conduct of its business
(collectively, the "INTELLECTUAL PROPERTY"). TASA or a TASA Subsidiary either
owns all right, title and interest in and to, or possesses the exclusive right
to use, the Intellectual Property, trade secrets and technology used in the
conduct of their business (including, without limitation, the exclusive right to
use and license the same (in the jurisdiction(s) where registered in the case of
trademarks, service marks and copyrights)) and each item constituting part of
the Intellectual Property in which TASA or a TASA Subsidiary has an ownership or
license interest has been, to the extent indicated on the TASA Disclosure
Schedule, duly registered with, filed in or issued by, as the case may be, the
United States Patent and Trademark Office or such other Governmental Entities,
domestic or foreign, as are indicated on the TASA Disclosure Schedule and such
registrations, filings and issuances remain in full force and effect. Since
January 1, 1993 no claim of infringement or misappropriation of patents,
trademarks, trade names, service marks, copyrights or trade secrets of any
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other Person has been made nor, to the best knowledge of TASA, threatened
against TASA or a TASA Subsidiary and, to the best knowledge of TASA, is
infringing or misappropriating any patents, trademarks, trade names, service
marks, copyrights or trade secrets of any other Person. Without limiting any
other provisions hereof, neither TASA nor any TASA Subsidiary has granted any
license, franchise or permit to any Person to use any of the Intellectual
Property and no other Person has the right to use the same trademarks, service
marks or trade names used by TASA and the TASA Subsidiaries or any similar
trademarks, service marks or trade names likely to lead to confusion. Since
January 1, 1993, the business conducted by TASA and the TASA Subsidiaries have
not been conducted under any corporate, trade or fictitious name. The TASA
Disclosure Schedule sets forth all trademark registrations and applications,
service mark registrations and applications and copyright registrations and
applications abandoned by TASA and the TASA Subsidiaries since January 1, 1993.
SECTION 2.24. LICENSES. TASA and the TASA Subsidiaries have all material
licenses, permits and other governmental certificates, authorizations and
approvals required by every Federal, state, local and foreign Governmental
Entity for the conduct of their business and the use of their properties as
presently conducted or used including, without limitation, all material licenses
required under Environmental Laws and any Federal, state, local or foreign law
relating to public health and safety, or employee health and safety
(collectively, "TASA LICENSES"). The TASA Disclosure Schedule contains a true
and complete list of the TASA Licenses, exclusive of any TASA Licenses with
respect to state or local sales, use or other Taxes. All of the TASA Licenses
are in full force and effect and no action or claim is pending nor, to the best
of TASA's knowledge, is threatened to revoke or terminate any TASA License or
declare any TASA License invalid in any material respect. TASA has taken all
necessary action to maintain such TASA Licenses. The TASA Disclosure Schedule
contains a true and complete list of all local and foreign governmental or
judicial consents, orders, decrees and other compliance agreements relating to
TASA or the TASA Subsidiaries or any of their respective assets or business
under which TASA or the TASA Subsidiaries is operating or bound.
SECTION 2.25. NO ILLEGAL OR IMPROPER TRANSACTIONS. Neither TASA nor the
TASA Subsidiaries has, nor has any of their respective directors, officers or
employees, directly or indirectly used funds or other assets of TASA or the TASA
Subsidiaries, or made any promise or undertaking in such regard, for (a)
contributions, gifts, entertainment or other expenses relating to political
activity which would be illegal in the countries where made; (b) payments to or
for the benefit of governmental officials or employees, whether domestic or
foreign which would be illegal in the countries where made; (c) payments to or
for the benefit of
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any person, firm, corporation or other entity, or any director, officer,
employee, agent or representative thereof which would be illegal in the
countries where made; or (d) the establishment or maintenance of a secret or
unrecorded fund; and there have been no false or fictitious entries made in
TASA's books or records.
SECTION 2.26. OWNERSHIP OF TMP COMMON STOCK. Neither TASA, any TASA
Subsidiary nor any Shareholder, directly or indirectly, own any shares of TMP
Common Stock.
SECTION 2.27. RESTRICTIVE DOCUMENTS AND TERRITORIAL RESTRICTIONS. Neither
TASA nor the TASA Subsidiaries is subject to, or a party to, any charter,
by-law, mortgage, Lien, lease, license, permit, agreement, contract, instrument,
law, rule, ordinance, regulation, order, judgment or decree, or any other
restriction of any kind or character, which materially adversely affects the
business, prospects, operations or condition (financial or otherwise) of TASA or
the TASA Subsidiaries or any of their assets or property, or which would prevent
consummation of the transactions contemplated hereby, or the continued operation
of TASA's or the TASA Subsidiaries' business after the date hereof on
substantially the same basis as heretofore operated or which would restrict the
ability of TASA or the TASA Subsidiaries to acquire any property or conduct
business in any area.
SECTION 2.28. SECURITIES ACT MATTERS. Each Shareholder, severally and not
jointly, hereby represents and warrants as follows:
(a) Unless otherwise set forth on the TASA Disclosure Schedule, it is
the record and beneficial owner of the outstanding shares of TASA's Common Stock
set forth on Schedule A hereto, and owns such shares free and clear of all
Liens, restrictions and other encumbrances (other than restrictions imposed by
United States, state and foreign securities laws).
(b) It acknowledges that its representations and warranties contained
herein are being relied upon by TMP as a basis for the exemption of the issuance
of the TMP Common Stock hereunder from the registration requirements of the
Securities Act and any applicable state securities laws.
(c) It understands that (i) the TMP Common Stock has not been
registered under the Securities Act or any state securities laws by reason of
its issuance in a transaction exempt from the registration requirements of the
Securities Act and applicable state securities laws and (ii) the TMP Common
Stock must be held indefinitely unless a subsequent disposition thereof is
registered under the
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Securities Act and applicable state securities laws pursuant to Section 6.10 or
otherwise, or is exempt from such registration.
(d) It is acquiring the TMP Common Stock set forth on Schedule A
hereto for its own account and not with a view to, or for sale in connection
with, directly or indirectly, any distribution thereof that would require
registration under the Securities Act or applicable state or foreign securities
laws or would otherwise violate the Securities Act or such state or foreign
securities laws.
(e) It has relied upon independent investigations made by it or its
specifically appointed personal representatives and is fully familiar with the
business, results of operations, financial condition, prospects and other
affairs of TMP and realizes that the TMP Common Stock is a speculative
investment involving a high degree of risk for which there is no assurance of
any return. It has such knowledge and experience in financial and business
affairs, including investing in companies similar to TMP, and is capable of
determining the information necessary to make an informed investment decision,
of requesting such information from TMP, and of utilizing the information that
it has received from TMP to evaluate the merits and risks of its investment in
the TMP Common Stock. It is able to bear the economic risk of its investment in
the TMP Common Stock and understands that it must do so for an indefinite period
of time.
(f) It and its personal attorneys, accountants, investment and
financial advisors, if any, have had the opportunity to review the books and
records of TMP and have been provided access to such information as it or its
advisors, if any, have requested. It acknowledges that it has received and
carefully reviewed copies of (i) this Agreement, and all exhibits and schedules
attached hereto, (ii) the TMP Exchange Act Filings and (iii) all other reports
delivered to TASA pursuant to Section 5.01 hereof (collectively, the
"STOCKHOLDER INFORMATION").
(g) Each Shareholder acknowledges that no action has been taken that
would permit an offering of shares of TMP Common Stock to the public in the
jurisdiction in which such Shareholder is resident or located or in any other
jurisdiction where action for that purpose would be required and, accordingly,
no shares of TMP Common Stock may be resold in any jurisdiction in any manner
that would result in the characterization of the transactions contemplated
hereby or the offer of TMP Common Stock as a public offering.
(h) Each Shareholder is aware that no federal, state, foreign or
other agency has passed upon or made any finding or determination concerning the
fairness of the transactions contemplated hereby or the adequacy of the
disclosure
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of the exhibits and schedules to this Agreement and the Stockholder Information,
and such Shareholder must forego the security, if any, that such a review would
provide.
(i) It understands and acknowledges that neither the United States
Internal Revenue Service nor any foreign tax authority has been asked to rule on
the tax consequences of the Acquisition and, accordingly, in making its decision
to approve the Acquisition it has relied upon the investigations of its own tax
and business advisers in addition to its own independent investigations as to,
and that it and its advisors have fully considered all, the tax consequences of
the Acquisition.
(j) It has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about TMP, and compliance with applicable requirements
regarding the holding period and the amount of securities to be sold and the
manner of sale; and that such rule may not be available for resale of the Common
Stock.
(k) It represents and warrants that in making its decision to approve
the Acquisition, it and its professional tax and business advisors have been
given the opportunity to discuss TMP's business, management and financial
affairs with TMP's management, and has had the opportunity to examine all
relevant documents and to ask questions of, and to receive answers from TMP or
any person(s) acting on TMP's behalf concerning the terms and conditions of the
Acquisition or any other matter set forth in this Agreement and the schedules
and exhibits hereto, and to obtain any additional information necessary to
verify the accuracy of the information set forth herein or therein. It
represents and warrants that it desires no further information for such
evaluation.
(l) It has delivered to TMP a certificate in the form of EXHIBIT
2.28(L) hereto, certifying as to its status as an Accredited Investor or
non-U.S. Person.
(m) It understands that the TMP Common Stock will bear the following
legend (or a substantially similar legend):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF WITHOUT SUCH REGISTRATION OR THE DELIVERY TO THE COMPANY OF AN
OPINION OF
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COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH DISPOSITION
WILL NOT REQUIRE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED."
SECTION 3.29. NO MISLEADING STATEMENTS. This Agreement, the information
and schedules referred to herein and the information that has been furnished to
TMP in connection with the transactions contemplated hereby do not include any
untrue statement of a material fact and do not omit to state any material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact
known to TASA or the Shareholders which materially adversely affects or in the
future may (so far as they can now reasonably foresee) materially adversely
affect the business, condition (financial or otherwise), property or assets of
TASA which has not been set forth herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TMP
Except as set forth (by reference to the applicable Section of this
Agreement) in the disclosure schedule of TMP previously delivered to TASA (the
"TMP DISCLOSURE SCHEDULE"), TMP hereby agrees and represents and warrants to
TASA, the TASA Subsidiaries and each Shareholder individually as follows:
SECTION 3.01. ORGANIZATION, ETC. TMP is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as it is now
being conducted and to own, operate or lease the properties and assets it
currently owns, operates or holds under lease. TMP has all requisite corporate
power and authority to enter into this Agreement and each of the other
agreements contemplated hereby, to carry out its obligations under this
Agreement and each of the other agreements contemplated hereby and to consummate
the transactions contemplated hereby and thereby.
SECTION 3.02. CAPITALIZATION. The authorized capital stock of TMP
consists of 240,000,000 shares of stock, consisting of (a) 1,000,000 shares of
preferred stock, none of which are issued, and (b) 39,000,000 shares of Class B
Common Stock, $.001 par value, of which 2,381,000 are issued and outstanding as
of August 7, 1998, and 200,000,000 shares of TMP Common Stock, of which
24,629,158 shares are issued and outstanding as of August 7, 1998. There are no
shares of TMP Common Stock
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held as treasury shares. All outstanding shares of TMP Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable. All
of the outstanding shares of TMP Common Stock were issued in compliance with all
applicable Federal and state securities laws. None of the outstanding
securities has been issued in violation of any pre-emptive rights, rights of
first refusal or similar rights. The issuance and delivery by TMP of the TMP
Common Stock pursuant to this Agreement has been duly authorized by all
necessary corporate action on the part of TMP. Upon delivery of the
certificates for the TMP Common Stock in accordance with the terms of this
Agreement, such shares of TMP Common Stock will be validly issued, fully paid
and non-assessable.
SECTION 3.03. AUTHORIZATION. The execution and delivery by TMP of this
Agreement, the consummation of the transactions contemplated hereby and the
performance by TMP of its obligations hereunder have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and delivered
by TMP and constitutes the legal, valid and binding obligation of TMP,
enforceable against TMP in accordance with its terms.
SECTION 3.04. NO VIOLATION. The execution and delivery of this Agreement
by TMP do not, and the consummation by TMP of the transactions contemplated
hereby, and compliance with the terms hereof will not, (a) conflict with, or
result in any violation of or default or loss of any benefit under, any
provision of TMP's Certificate of Incorporation or By-laws or Holding's
Memorandum and Articles of Association; (b) conflict with, or result in any
violation of or default or loss of any benefit under, any permit, concession,
grant, franchise, law, rule or regulation, or any judgment, decree or order of
any court or other governmental agency or instrumentality to which TMP is a
party or to which any of its property is subject; (c) conflict with, or result
in a breach or violation of or default or loss of any benefit under, or
accelerate the performance required by, the terms of any material agreement,
contract, indenture or other instrument to which TMP is a party or to which any
of its property is subject, or constitute a default or loss of any right
thereunder or an event which, with the lapse of time or notice or both, might
result in a material default or loss of any material right thereunder or the
creation of any lien, charge or encumbrance upon any of the assets or properties
of TMP; or (d) result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any material TMP License. TMP is in compliance with all
applicable laws, rules or regulations relating to or affecting the operation,
conduct or ownership of its property or business, other than violations that
individually or in the aggregate would not, and insofar as may reasonably be
foreseen in the future will not, have a Material Adverse Effect.
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SECTION 3.05. APPROVALS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by TMP will not require
the consent, approval, order or authorization of any Governmental Entity or
Regulatory Authority or any other Person under any statute, law, rule,
regulation, permit, license, agreement, indenture or other instrument to which
TMP is a party or to which any of its properties are subject, and no
declaration, filing or registration with any Governmental Entity or Regulatory
Authority is required or advisable by TMP in connection with the execution and
delivery of this Agreement, the consummation by TMP of the transactions
contemplated hereby, or the performance by TMP of its obligations hereunder,
other than such filings or registrations with, or authorizations, consents or
approvals of, governmental bodies, agencies, officials or authorities, the
failure of which to make or obtain would not have a Material Adverse Effect.
SECTION 3.06. SEC FILINGS. (a) TMP have delivered to TASA (i) TMP's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, TMP's
proxy statement dated April 27, 1998, TMP's Quarterly Report on Form 10-Q/A for
its fiscal quarter ended March 31, 1998 and TMP's Quarterly Report on Form 10-Q
for its fiscal quarter ended June 30, 1998. The TMP Exchange Act Filings, as of
their respective filing dates, did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Since March 31, 1998, except as disclosed in TMP's press releases,
there has been no Material Adverse Change in the assets or liabilities, or in
the business or condition, financial or otherwise, of TMP, or in the results of
operations or, to the best knowledge of TMP, prospects, of TMP, whether as a
result of any legislative or regulatory change, revocation of any license or
right to do business, fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation or act of God or otherwise.
SECTION 3.07. NO MISLEADING STATEMENTS. This Agreement, the information
and schedules referred to herein and the information that has been furnished to
TASA by TMP in connection with the transactions contemplated hereby do not
include any untrue statement of a material fact and do not omit to state any
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to TMP which materially adversely affects or in the future may (so
far as TMP can now reasonably foresee) materially adversely affect the business,
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condition (financial or otherwise), property or assets of TMP which has not been
set forth herein.
SECTION 3.08. SUFFICIENT FINANCIAL RESOURCES. TMP has available to it
sufficient financial resources to complete the transactions contemplated hereby
in accordance with the terms of this Agreement. For Swiss tax purposes, TMP
shall neither directly nor indirectly finance the Stock Consideration and/or any
other payments to the Shareholders under the Agreement out of financial
resources of (i) TASA, (ii) the TASA Subsidiaries, or (iii) the Shareholders.
ARTICLE IV
COVENANTS OF TASA
AND THE SHAREHOLDERS
TASA and the Shareholders, jointly and severally, agree that:
SECTION 4.01. CONDUCT OF TASA AND THE TASA SUBSIDIARIES. From the date
hereof until the Closing, TASA shall, and shall cause the TASA Subsidiaries to,
in all material respects conduct their business in the ordinary course. Without
limiting the generality of the foregoing, from the date hereof until the
Closing, except as contemplated hereby, without the written consent of TMP:
(a) TASA and the TASA Subsidiaries will not adopt or propose any
change in their respective Memorandum or Articles of Association, or enter into
any agreement or incur any obligation, the terms of which would be violated by
the consummation of the transactions contemplated by this Agreement;
(b) Except as contemplated by this Agreement or as previously
approved by TMP in writing, TASA and the TASA Subsidiaries will not:
(i) enter into any written contract, agreement, plan or
arrangement covering any director, officer or employee of TASA and the TASA
Subsidiaries that provides for the making of any payments, the acceleration
of vesting of any benefit or right or any other entitlement contingent upon
(A) the Acquisition or (B) the termination of employment after the
Acquisition;
(ii) enter into or amend any employment agreements (oral or
written) to increase the compensation payable or to become payable by
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it to any of its employees or otherwise materially alter its employment
relationship with, officers, directors or consultants over the amount
payable as of the date hereof, or increase the compensation payable to any
other employees (other than (A) increases in the ordinary course of
business which are not in the aggregate material to TASA and the TASA
Subsidiaries, taken as a whole, or (B) pursuant to plans disclosed in the
TASA Disclosure Schedule), or adopt or, except as required by applicable
law to maintain a plan's tax-qualified status, amend any employee benefit
plan or arrangement (oral or written); or
(iii) loan or advance any money to any officer, director,
employee, shareholder or consultant of TASA and the TASA Subsidiaries,
other than travel advances in the ordinary course of business which do not
exceed $15,000 at any time outstanding to any one person;
(c) Except for the transfer of the TASA Common Stock held by TASA
International NV Curacao to TASA, TASA and the TASA Subsidiaries will not
(i) purchase, acquire, issue, deliver, sell or authorize the issuance, delivery
or sale of any stock appreciation rights or of any shares of their capital stock
or of any class or any securities convertible into or exchangeable for, or
rights, warrants or options to acquire, any such shares or convertible or
exchangeable securities, (ii) make any changes in their capital structure or
(iii) enter into any agreement or understanding or take any preliminary action
with respect to the matters referred to in clause (i) or (ii) of this paragraph
(c);
(d) TASA and the TASA Subsidiaries will keep in full force and effect
its existing insurance policies and will not modify or reduce the coverage
thereunder;
(e) TASA and the TASA Subsidiaries will not (i) pay any dividend or
make any other distribution to holders of its or their capital stock (other than
dividends paid by a TASA Subsidiary to TASA), (ii) split, combine or reclassify
any of its or their capital stock or propose or authorize the issuance of any
other securities in respect of or in lieu of or in substitution for any shares
of its or their capital stock, (iii) repurchase, redeem or otherwise acquire any
shares of its or their capital stock or (iv) take any preliminary action with
respect thereto;
(f) TASA and the TASA Subsidiaries will not incur any additional
indebtedness for borrowed money (including, without limitation, by way of
guarantee or the issuance and sale of debt securities or rights to acquire debt
securities) other than by way of draws in the ordinary course of business on
existing
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bank facilities disclosed on the TASA Disclosure Schedule, or incur any account
payable except in the ordinary course of business, or enter into or modify any
contract, agreement, commitment or arrangement with respect to the foregoing;
(g) TASA and the TASA Subsidiaries will not enter into any
transaction that would, in the reasonable judgment of TMP, delay the occurrence
of the Closing beyond October 31, 1998;
(h) TASA and the TASA Subsidiaries will not (i) sell, lease or
otherwise dispose of any of its assets having a book or market value in excess
of $50,000 in the aggregate or that are otherwise material, individually or in
the aggregate, to the business, results of operations or financial condition of
TASA and the TASA Subsidiaries or (ii) enter into, or consent to the entering
into of, any agreement granting a preferential right to sell, lease or otherwise
dispose of any of such assets;
(i) TASA and the TASA Subsidiaries will not (i) enter into any new
line of business; (ii) change its investment, liability management and other
material policies in any material respect; (iii) incur or commit to any capital
expenditures, obligations or liabilities in connection therewith other than
capital expenditures, obligations or liabilities that (a) are listed on the TASA
Disclosure Schedule or (b) individually do not exceed $50,000 and in the
aggregate do not exceed $150,000; (iv) acquire or agree to acquire by merging or
consolidating with, or acquire or agree to acquire by purchasing a substantial
portion of the assets of, or in any other manner, any business or Person;
(v) otherwise, except as to the acquisition of materials and supplies for its
products and activities in the ordinary course of business and consistent with
past practices, acquire or agree to acquire any assets for a total consideration
in the aggregate in excess of $50,000; or (vi) make any investment in any
Person;
(j) TASA will not, and will not permit any TASA Subsidiary to, (i)
change its methods of accounting in effect at December 31, 1997 except as
required by changes in generally accepted accounting principles concurred in by
Arthur Andersen LLP, TASA's independent auditors; (ii) change any of its methods
of accounting for income and deductions for income tax purposes from those
employed in the preparation of the income tax returns for the taxable year ended
December 31, 1997; or (iii) change its fiscal year;
(k) TASA and the TASA Subsidiaries will not settle or compromise, or
agree to settle or compromise, any suit or other litigation matter or matter in
an arbitration proceeding for any material amount (after taking into account any
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insurance proceeds to which TASA or such TASA Subsidiary is entitled) or
otherwise on terms which would have a Material Adverse Effect;
(l) TASA will not (i) transfer, sell or otherwise dispose of, or
grant to any Person any right to acquire, the shares of the TASA Subsidiaries
owned by it.
SECTION 4.02. ACCESS TO RECORDS. At all reasonable times from and after
the date hereof until the Closing, TASA and the TASA Subsidiaries shall afford
TMP, and its accountants, counsel, financial advisors and other representatives
full and complete access to the properties, employees and officers of TASA and
the TASA Subsidiaries and to all books, accounts, financial and other records
and contracts of every kind; provided, however, that no investigation pursuant
to this Section shall affect any representation or warranty given by TASA to TMP
hereunder. TASA and the TASA Subsidiaries shall also furnish to TMP as promptly
as practicable (i) following the end of each calendar month, consolidated and
consolidating balance sheets and related statements of operations of TASA as of
the end of such month commencing with the month ended June 30, 1998 (all such
financial statements shall be covered by and conform to the representations and
warranties set forth in Section 2.07(b) hereof and shall be included in the term
"Financial Statements" for purposes of this Agreement); and (ii) all financial
and operating data and other information concerning TASA's business, properties
and personnel as TMP may request. Before the Closing, TASA and the TASA
Subsidiaries will, as requested by TMP, make available on a regular and frequent
basis the officers and other appropriate employees of TASA and the TASA
Subsidiaries to discuss with representatives of TMP the condition, operations,
business and prospects of TASA and the TASA Subsidiaries. TMP will, and will
cause its accountants, counsel, financial advisor and other representatives to,
comply with reasonable policies established by TASA with respect to access to
TASA's employees, officers and facilities.
SECTION 4.03. NO OTHER BIDS. None of TASA, the TASA Subsidiaries or the
Shareholders shall, nor shall they authorize or permit any officer, director or
employee of, or any investment banker, attorney, accountant or other
representative retained by, TASA or the TASA Subsidiaries to, (i) encourage,
solicit or initiate any inquiries or the making of any proposal that may
reasonably be expected to lead to any "takeover proposal" or (ii) participate in
any discussions or negotiations, or provide third parties with any information,
relating to any such inquiry or proposal. TASA shall immediately advise TMP of
any such inquiries or proposals. As used in this Section 4.03, "TAKEOVER
PROPOSAL" shall mean any proposal for a merger or other Business Combination
involving, directly or indirectly, TASA or any TASA Subsidiary, a substantial
equity interest in TASA or any TASA Subsidiary or
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a substantial portion of the assets of TASA or any TASA Subsidiary, in each case
other than the transactions contemplated hereby, and "SUBSTANTIAL EQUITY
INTEREST" shall mean any equity ownership representing beneficial ownership of
five percent or more of the outstanding capital stock of TASA or any TASA
Subsidiary.
SECTION 4.04. MAINTENANCE OF BUSINESS. TASA will, and will cause each
TASA Subsidiary to, use commercially reasonable efforts to carry on its
business, keep available the services of its officers and employees and preserve
its relationships with those of its customers, suppliers, licensors, licensees
and others having business relationships with it that are material to its
business in substantially the same manner as it has prior to the date hereof.
If TASA or any TASA Subsidiary becomes aware of a material deterioration or
facts which are likely to result in a material deterioration in the relationship
with any material customer, supplier, licensor, licensee or others having
business relationships with any member of TASA or any TASA Subsidiary, it will
promptly bring such information to the attention of TMP in writing.
SECTION 4.05. COMPLIANCE WITH OBLIGATIONS. Prior to the Closing Date,
TASA will, and will cause each TASA Subsidiary to, comply with (a) all
applicable Federal, state, local and foreign laws, rules and regulations, (b)
all material agreements and obligations, including its Memorandum and Articles
of Association (or analogous organizational documents), by which it, its
properties or its assets may be bound, and (c) all decrees, orders, writs,
injunctions, judgments, statutes, rules and regulations applicable to it, its
properties or its assets.
SECTION 4.06. PRETAX OPERATING PROFIT. To the extent allowed by TMP, TASA
shall take all commercially reasonable steps to provide that operations of TASA
generate on a consolidated basis a pretax profit of 15% of Revenues for the
years ending December 31, 1999 and 2000 and 20% for the year ending December 31,
2001. Revenues shall mean the sum of (i) billings to clients (but not including
expenses billed), (ii) exchange gains/losses on collection of invoices billed in
other than local currency, (iii) provisions for doubtful client accounts
receivable, (iv) write-offs of client accounts receivable, (v) rebates to
clients and (vi) any other required adjustments to billings. The before
mentioned results are based upon the presently existing structure and personnel
which will be acquired by TMP. TMP recognizes that the management and
shareholder decisions relating to TASA after Closing will no longer be the
responsibility of the partners of TASA and TMP's decisions may impact the
generation of the above pretax operating profit targets.
SECTION 4.07. SHAREHOLDERS. The Shareholders will cause TASA to comply
with the provisions of this Article IV. Each Shareholder further agrees not to
grant
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any power of attorney with respect to the shares of TASA Common Stock, TASA or
TASA's business or assets. No Shareholder will in any way reduce their
respective risk or commit to reduce their respective risk with respect to the
shares of TASA Common Stock held by such Shareholder or the TMP Common Stock to
be acquired by such Shareholder hereunder, whether by entering into a put,
collar, option or other arrangement with respect to the shares of TMP Common
Stock constituting their portion of the Stock Consideration, until after the
publication of financial results of TMP covering at least 30 days' of
post-Closing combined operations of TMP and TASA.
ARTICLE V
COVENANTS OF TMP
SECTION 5.01. ACCESS TO RECORDS. At all reasonable times from and after
the date hereof until the Closing, TMP shall afford TASA and the Shareholders
and their respective accountants, counsel and other representatives full and
complete access to the properties, employees and officers of TMP and to all
books, accounts, financial and other records and contracts of every kind of TMP;
provided, however, that no investigation pursuant to this Section shall affect
any representation or warranty given by TMP to TASA or the Shareholders
hereunder. Before the Closing, will, as requested by TASA, make available on a
regular and frequent basis the officers and other appropriate employees of TMP
to discuss with representatives of TASA and the Shareholders the condition,
operations, business and prospects of TMP. TASA, the TASA Subsidiaries and the
Shareholders will, and will cause their respective accountants, counsel and
other representatives to, comply with reasonable policies established by TMP
with respect to access to its employees, officers and facilities.
SECTION 5.02. TREASURY SHARES. TMP shall redeem after Closing, but not
later than December 30, 1998, all of the 286 treasury shares of TASA in the
amount of CHF 2,152,906. This amount shall be deemed the purchase price to be
paid by TMP to TASA and is equal to the acquisition value paid by TASA to TASA
International NV, Curacao.
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SECTION 5.03. GENERAL MEETING OF SHAREHOLDERS OF TASA. TMP undertakes to
call an ordinary general meeting of shareholders of TASA immediately after
Closing and to hold such meeting in 1998 with respect to fiscal year 1997 and
fiscal year 1998 to the date of such meeting. To the extent possible, such
meeting shall be constituted as a meeting of all shareholders as set forth in
art 701 of the Swiss Code of Obligations. TMP shall hold such meeting not later
than December 31, 1998. In addition, TMP shall give a comprehensive discharge
to Dr. Peter Beglinger, Peter Magnet and Michael Squires (the "TASA Directors")
at such meeting. To the best of TMP's knowledge, there are no facts or
circumstances which would prevent TMP from giving the TASA Directors a full
discharge at the general meeting of shareholders. TMP shall deliver to the TASA
Directors immediately following the general meeting of shareholders a copy of
the minutes of such meeting.
ARTICLE VI
COVENANTS OF TASA, THE SHAREHOLDERS AND TMP
TASA, the Shareholders and TMP agree that:
SECTION 6.01. JOINT TRANSITION COMMITTEE. TASA and TMP shall promptly
following the date hereof establish a joint transition committee, with
representatives of senior management of both companies, to recommend steps to be
carried out in combining the operations of the companies, to facilitate access
to information and to consult and advise with respect to major activities of
TASA pending the Acquisition; provided that such committee shall neither
operate, nor make any agreement on behalf of, any of TASA or TMP prior to the
Acquisition.
SECTION 6.02. ADVICE OF CHANGES. TASA will promptly advise TMP in writing
of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Acquisition;
(b) any notice or other communication from any Governmental Entity or
Regulatory Authority in connection with the Acquisition;
(c) any actions, suits, claims, investigation or other judicial
proceedings commenced or threatened against TASA or any of its Subsidiaries
which, if pending on the date of this Agreement, would have been required to
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have been disclosed pursuant to this Agreement or which relate to the
consummation of the Acquisition;
(d) any event known to TASA's executive officers occurring subsequent
to the date of this Agreement that would render any representation or warranty
of TASA contained in this Agreement, if made on or as of the date of such event
or the Closing Date, untrue, inaccurate or misleading in any material respect
(other than an event so affecting a representation or warranty which is
expressly limited to a state of facts existing at a time prior to the occurrence
of such event); and
(e) any Material Adverse Change in the business condition of TASA and
the TASA Subsidiaries, taken as a whole.
From time to time prior to the Closing, each of TASA and TMP will promptly
supplement or amend its Disclosure Schedule and the Exhibits hereto with respect
to any matter hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in such
Schedule and Exhibits hereto. No supplement or amendment of a Schedule or
Exhibit made pursuant to this Section shall be deemed to cure any breach of,
affect or otherwise diminish any representation or warranty made in this
Agreement unless the other party hereto specifically agrees thereto in writing.
SECTION 6.03. REGULATORY APPROVALS. Prior to the Closing, each party
shall execute and file, or join in the execution and filing of, any application
or other document that may be necessary in order to obtain the authorization,
approval or consent of any Governmental Entity or Regulatory Authority which may
be reasonably required, or that the other company may reasonably request, in
connection with the consummation of the Acquisition. Each party shall use its
commercially reasonable efforts to obtain all such authorizations, approvals and
consents.
SECTION 6.04. ACTIONS CONTRARY TO STATED INTENT. Neither party shall, or
shall permit any of its Subsidiaries to, take any action that would, or
reasonably might be expected to, result in any of its representations and
warranties set forth herein being or becoming untrue in any material respect, or
in any of the conditions to the Acquisition set forth in Article VII not being
satisfied.
SECTION 6.05. CERTAIN FILINGS. The parties shall cooperate with one
another:
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(a) in determining whether any action by or in respect of, or filing
with, any Governmental Entity or Regulatory Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement; and
(b) in seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
SECTION 6.06. PUBLIC ANNOUNCEMENTS. TASA will consult with TMP before
issuing any press release or making any public statement with respect to this
Agreement and the transactions contemplated hereby and, except as may be
required by applicable law, will not issue any such press release or make any
such public statement (other than in response to unsolicited inquiries) prior to
such consultation. TASA will consult with TMP before issuing any other press
release or making any public statement and, except as may be required by
applicable law, will not issue any such press release or make any such public
statement without the prior consent of TMP.
SECTION 6.07. SATISFACTION OF CONDITIONS PRECEDENT. The parties hereto
will use their commercially reasonable efforts to satisfy or cause to be
satisfied all the conditions precedent that are set forth in Article VII, as
applicable to each of them, and to cause the transactions contemplated by this
Agreement to be consummated, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of third parties and to
make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect the transactions
contemplated hereby. Each of the parties hereto agrees to negotiate in good
faith with respect to any additional agreement reasonably requested by another
party hereto which such requesting party determines in good faith is necessary
to effect the transactions contemplated hereby.
SECTION 6.08. CONFIDENTIALITY. Each of the parties hereto agrees to
retain, and to cause their respective Subsidiaries, directors, officers,
employees and agents to retain, in strict confidence, in accordance with the
terms of the Confidentiality Agreement, all Information (as such term is defined
in the Confidentiality Agreement) received from any other party.
SECTION 6.09. TRADING PROHIBITION. Each of TASA and the Shareholders
hereby acknowledge that the transactions contemplated hereby and information
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disclosed and to be disclosed to TASA and the Shareholders and their respective
representatives may, from time to time, constitute or include material
non-public information concerning TMP. Each of TASA and the Shareholders
acknowledges that they are aware, and that they have advised and will continue
to advise all employees of TASA and any TASA Subsidiary and the representatives
of the Shareholders, TASA and the TASA Subsidiaries to whom the existence of
this transaction or any such information has been or may be disclosed by TASA,
the TASA Subsidiaries, the Shareholders or each of their respective
representatives that (i) the federal securities laws may prohibit a person who
has material, non-public information from purchasing or selling securities of
any company to which such information relates and (ii) material non-public
information shall not be communicated to any other person except as expressly
permitted by this Agreement. Between the date of this Agreement and the Closing
neither TASA nor any Shareholder will acquire, and TASA will not permit any TASA
Subsidiary to acquire, any shares of TMP Common Stock except that each of the
Shareholders may acquire their portion of the shares of TMP Common Stock
constituting the Stock Consideration at Closing as contemplated herein. Each of
the Shareholders will not reduce their risk or commit to reduce their risk with
respect to the Stock Consideration to be acquired by such Shareholder hereunder,
whether by entering into a put, collar, option, margin or other arrangement with
respect to the shares of TMP Common Stock constituting their portion of the
Stock Consideration, until after the publication of financial results of TMP
covering at least 30 days of post-Closing combined operations of TMP and TASA.
SECTION 6.10 REGISTRATION OF STOCK CONSIDERATION.
(a) REGISTRATION. TMP shall, for the benefit of the Shareholders, at
TMP's expense, use its best efforts to (i) cause to be filed with the United
States Securities and Exchange Commission (the "SEC") within 21 days after the
Closing a resale registration statement on Form S-3 or any other appropriate
form (the "Registration Statement") to register the shares of TMP Common Stock
comprising the Stock Consideration, (ii) use its best efforts to cause such
Registration Statement to be declared effective under the Securities Act of
1933, as amended (the "Securities Act") by the SEC as soon as practicable and
(iii) keep such Registration Statement effective until such time as the
Shareholders may dispose of their shares of TMP Common Stock pursuant to the
provisions of Rule 144 under the Securities Act. Each Shareholder hereby agrees
to furnish to TMP all information with respect to such Shareholder necessary to
make the disclosure in the Registration Statement with respect to such
Shareholder not materially misleading. TMP will, in the event that the
Registration Statement is declared effective, provide to each Shareholder and to
Janvey, Gordon, Herlands, Randolph, Rosenberg & Cox LLP, counsel to the
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Shareholders, a reasonable number of copies of the Prospectus which is a part of
the Registration Statement, notify each Shareholder when the Registration
Statement has become effective and use its best efforts to take certain other
actions as are required to permit certain unrestricted sales of the Stock
Consideration. TMP further agrees, if necessary, to supplement or amend the
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by TMP for such Registration Statement
or by the Securities Act or by any other rules and regulations thereunder for
resale registrations, and TMP agrees to furnish to the Shareholders copies of
any such supplement or amendment promptly after its being used or filed with the
SEC.
(b) EXPENSES. TMP shall pay all expenses in connection with the
registration pursuant to Section 6.10(a) hereof and will reimburse the
Shareholders for the reasonable fees and disbursements of Janvey, Gordon,
Herlands, Randolph, Rosenberg & Cox LLP, counsel for the Shareholders, incurred
in connection with the registration statement.
(c) NOTICE. In connection with the obligations of TMP with respect
to the Registration Statement pursuant to Section 6.10(a) hereof, TMP shall
notify each Shareholder of the effective date of the Registration Statement.
(d) RULE 144. For so long as TMP is subject to the reporting
requirements of Section 13 or 15 of the Exchange Act and any shares of TMP
Common Stock comprising the Stock Consideration are not freely tradable, TMP
will use its best efforts to file the reports required to be filed by it under
the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules
and regulations adopted by the SEC thereunder, or, if it ceases to be so
required to file such reports, it will, upon the request of any Shareholder (i)
make publicly available such information as is necessary to permit sales of
securities of TMP pursuant to Rule 144 under the Securities Act and (ii) take
such further action that is reasonable in the circumstances, in each case, to
the extent required from time to time to enable such Shareholder to sell its
shares of TMP Common Stock without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act,
as such rule may be amended from time to time or (b) any similar rules or
regulations hereafter adopted by the SEC.
SECTION 6.11. EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS. Prior to the
Closing, TASA shall convene an extraordinary meeting of shareholders to (i)
accept the resignations of the TASA Directors from the Board of Directors of
TASA and (ii) elect a new Board of Directors for TASA. TASA shall deliver to
TMP original copies of the minutes of such meeting. Upon receipt of the minutes
from the
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extraordinary general meeting of shareholders to be held pursuant to this
Section 6.11, TMP shall without delay file an application and such minutes with
the competent Commercial Register to register the new directors and to remove
the TASA Directors.
ARTICLE VII
CONDITIONS OF CLOSING
SECTION 7.01. CONDITIONS TO ALL PARTIES' OBLIGATIONS. The obligations of
all the parties to this Agreement to effect the Acquisition shall be subject to
the fulfillment of the following conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or restraint issued by any court of competent
jurisdiction, no order, decree, restraint or pronouncement by any Governmental
Entity, and no other legal restraint or prohibition which would prevent or have
the effect of preventing the consummation of the Acquisition shall have been
issued or adopted or be in effect.
(b) All material permits, approvals, filings and consents required or
advisable to be obtained or made, and all waiting periods required or
contemplated to expire, prior to the consummation of the Acquisition under
applicable federal laws of the United States or applicable laws of any state or
foreign country having jurisdiction over the Acquisition and the other
transactions contemplated herein shall have been obtained, made or expired, as
the case may be (all such permits, approvals, filings and consents and the lapse
of all such waiting periods being referred to as the "REQUISITE REGULATORY
APPROVALS"), and all such Requisite Regulatory Approvals shall be in full force
and effect.
(c) All shares of TASA Common Stock held by TASA International NV
Curacao shall be transferred to TASA prior to the Closing.
SECTION 7.02. CONDITIONS TO THE OBLIGATIONS OF TMP TO EFFECT THE
ACQUISITION. The obligations of TMP under this Agreement to effect the
Acquisition are subject to the fulfillment at or prior to the Closing of the
following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of TASA and the Shareholders set forth in Article II hereof shall
be true and correct as of the date when made and at and as of the
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Closing, except for such changes as are permitted by this Agreement and except
to the extent a representation or warranty speaks only as of an earlier date;
PROVIDED, HOWEVER, that any inaccuracy of a representation or warranty, on the
date hereof or on the Closing Date, shall not result in the non-satisfaction of
this Section 7.02(a) unless any such inaccuracy or inaccuracies, either (i)
individually or in the aggregate, constitute facts or circumstances having a
Material Adverse Effect on TASA or (ii) are willful and intentional
misrepresentations that constitute common law fraud.
(b) COVENANTS AND AGREEMENTS. Each of TASA and the Shareholders
shall have duly performed and complied with the covenants and agreements
required by this Agreement to be performed by or complied with by it prior to or
at the Closing. None of the events or conditions entitling TMP to terminate
this Agreement under Article VIII hereof shall have occurred and be continuing.
(c) CONSENTS. Any consent required for the consummation of the
Acquisition under any material TASA Contract or TASA License or for the
continued enjoyment by TASA and the TASA Subsidiaries of the benefits of any
such contract or license after the Acquisition, shall have been obtained.
(d) OPINIONS OF COUNSEL. TMP shall have received the opinion, in
form and content satisfactory to TMP, of (i) Beglinger Holenstein, Swiss counsel
to TASA, concerning matters included in Sections 2.01, 2.02, 2.03, 2.04, 2.05,
2.06 and 2.13 with respect to matters concerning TASA and the Shareholders; (ii)
Egli Patentwaelte, Horneggstr. 4, P.O. Box 8034 Zurich, Switzerland, patent
counsel to TASA, concerning matters included in Section 2.23; and (iii) Janvey,
Gordon, Herlands, Randolph, Rosenberg & Cox, LLP, concerning matters included in
Sections 2.01, 2.02, 2.03, 2.04, 2.05, 2.06, 2.09, 2.12, 2.13, 2.16, 2.22, 2.23
and 2.26 with respect to TASA, Inc. With respect to matters not under Swiss
law, such firms may rely on qualified local counsel, provided that such counsel
has been approved by TMP in advance.
(e) CERTIFICATES OF TASA. TMP shall have received certificates of
TASA, satisfactory in form and substance to TMP with respect to matters in this
Section 7.02.
(f) NO ADVERSE DECISION. There shall not be any action taken or
threatened, or any statute, rule, regulation or order enacted, entered,
threatened, or deemed applicable to the transactions contemplated hereby, by any
foreign or United States Federal or state government or Governmental Entity or
Regulatory
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Authority or court that, whether in connection with the grant of a Requisite
Regulatory Approval, any agreement proposed by any foreign or United States
Federal or state government or Governmental Entity or Regulatory Authority, or
otherwise, which (i) requires or could reasonably be expected to require any
divestiture by TASA of a portion of its business that TMP in its reasonable
judgment believe will have a Material Adverse Effect on TASA or (ii) imposes any
condition upon TASA that in TMP's reasonable judgment (x) would be materially
burdensome to TASA or (y) would materially increase the costs incurred or that
will be incurred by TMP as a result of consummating the Acquisition and the
other transactions contemplated hereby. There shall be no action, suit,
investigation or proceeding pending or threatened by or before any Governmental
Entity which (i) seeks to restrain, enjoin, prevent the consummation of or
otherwise materially affect the transactions contemplated by this Agreement or
(ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
transactions.
(g) PROCEEDINGS; RECEIPT OF DOCUMENTS. All corporate and other
proceedings taken or required to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to TMP and its counsel, and TMP and its
counsel shall have received all such information and such counterpart originals
or certified or other copies of such documents as TMP or its counsel may
reasonably request. TMP shall have received such other instruments, approvals
and other documents as it may reasonably request to make effective the
transactions contemplated hereby.
(h) ADVERSE CHANGE. From June 30, 1998 to the Closing, TASA shall
not have suffered any Material Adverse Change (whether or not such change is
described in any supplement to the TASA Disclosure Schedule).
(i) LETTERS FROM ACCOUNTANTS. TASA shall have delivered to TMP a
letter from Arthur Andersen LLP, dated the Closing Date, to the effect that,
subject to customary qualifications and without taking into consideration the
transactions contemplated by this Agreement and the exhibits hereto, TASA
qualifies to enter into a pooling of interests transaction for United States
financial reporting purposes.
(j) TAX MATTERS. TMP shall have received statements in accordance
with Treasury regulation Sections 1.897-2(h) and 1.1445-2(c).
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(k) NON-COMPETE/NON-SOLICITATION AGREEMENTS. Each of the
Shareholders shall have entered into a non-compete/non-solicitation agreement
with TMP, in substantially the form of EXHIBIT 7.02(K).
(l) ESCROW AGREEMENT. Each of the Shareholders shall have entered
into the Escrow Agreement.
SECTION 7.03. CONDITIONS TO THE OBLIGATIONS OF TASA AND THE SHAREHOLDERS
TO EFFECT THE ACQUISITION. The obligations of TASA and the Shareholders under
this Agreement to effect the Acquisition are subject to the fulfillment at or
prior to the Closing of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of TMP set forth in Article III hereof shall be true and correct
as of the date when made and at and as of the Closing (except to the extent a
representation or warranty speaks only as of an earlier date and except for
changes contemplated by this Agreement); PROVIDED, HOWEVER, that any inaccuracy
of a representation or warranty, on the date hereof or on the Closing Date,
shall not result in the non-satisfaction of this Section 7.03(a) unless any such
inaccuracy or inaccuracies, either (i) individually or in the aggregate,
represent a Material Adverse Effect on TMP or (ii) are willful and intentional
misrepresentations that constitute common law fraud.
(b) COVENANTS. TMP shall have complied with the covenants and
agreements required by this Agreement to be performed or complied with by it
prior to or at the Closing in all material respects. None of the events or
conditions entitling TASA and the Shareholders to terminate this Agreement under
Article VIII hereof shall have occurred and be continuing.
(c) CERTIFICATE OF TMP. TASA shall have received a certificate of
TMP with respect to the matters covered in this Section 7.03.
(d) OPINION OF COUNSEL. TASA and the Shareholders shall have
received the opinion of Fulbright & Jaworski L.L.P., counsel to TMP, in form and
content satisfactory to TASA and the Shareholders, covering matters included in
Sections 3.01, 3.02, 3.03, 3.04 and 3.05.
(e) ADVERSE CHANGE. From June 30, 1998 to the Closing, TMP shall not
have suffered any Material Adverse Change (whether or not such change is
described in any supplement to the TMP Disclosure Schedule).
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(f) NON-COMPETE/NON-SOLICITATION AGREEMENTS. TMP shall have entered
into a non-compete/non-solicitation agreement with each Shareholder.
(g) ESCROW AGREEMENT. TMP shall have entered into the Escrow
Agreement.
(h) REORGANIZATION REPRESENTATIONS. TMP shall have delivered to TASA
a certificate substantially in the form of EXHIBIT 7.03(H) hereto.
ARTICLE VIII
TERMINATION, AMENDMENTS AND WAIVERS
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual consent of the Board of Directors of TMP and the
unanimous consent of the Shareholders;
(b) by TMP and the unanimous consent of the Shareholders if the
Closing shall not have occurred on or before the close of business on October
31, 1998, provided that the terminating party is not in Default;
(c) by TMP, if it is not in material breach of its obligations under
this Agreement, and if (A) there has been a breach by TASA or the Shareholders
of any of their respective representations and warranties hereunder such that
Section 7.02(a) will not be satisfied or (B) there has been the willful breach
on the part of TASA or the Shareholders of any of their respective covenants or
agreements contained in this Agreement such that the first sentence of Section
7.02(b) will not be satisfied, and, in both case (A) and case (B), such breach
has not been cured within ten (10) days after notice to TASA;
(d) by the unanimous consent of the Shareholders, if none of them are
in material breach of their respective obligations under this Agreement, and if
(A) there has been a breach by TMP of any of its representations and warranties
hereunder such that Section 7.03(a) will not be satisfied or (B) there has been
the willful breach on the part of TMP of any of its covenants or agreements
contained in this Agreement such that the first sentence of Section 7.03(b) will
not be satisfied, and, in both case (A) and (B), such breach has not been cured
within ten (10) days after notice to TMP;
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(e) by TMP, if, prior to the Closing TASA or the Shareholders holding
a majority of the shares of TASA have entered into a letter of intent,
commitment letter or other written agreement with a third party regarding a
takeover proposal (as defined in Section 4.03) or has otherwise breached the
provisions of Section 4.03 hereof;
(f) by TMP, if, after the date of this Agreement, there shall have
occurred a Material Adverse Change in TASA;
(g) by the unanimous consent of the Shareholders, if, after the date
of this Agreement, there shall have occurred a Material Adverse Change in TMP.
SECTION 8.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by TASA or TMP as provided in Section 8.01 hereof, this Agreement
shall, except as provided herein, forthwith become void and there shall not be
any liability or obligation with respect to the terminated provisions of this
Agreement on the part of TASA or TMP or their respective officers or directors,
except and to the extent such termination results from the willful breach by a
party of any of its representations, warranties or agreements hereunder.
Notwithstanding the foregoing, (i) if TMP shall become entitled to terminate,
and shall terminate, this Agreement pursuant to Section 8.01(e), then TASA and
the Shareholders shall promptly, but in no event later than one business day
after the occurrence of the event described in Section 8.01(e), pay to TMP a fee
of $5,000,000, such amount to be paid in cash in immediately available funds by
wire transfer to an account designated by TMP, or (ii) if a party hereto
terminates this Agreement pursuant to Section 8.01(c) or (d) because of the
willful breach by the other party of its covenants and agreements set forth
herein, as the case may be, the party terminating the Agreement in the case of a
termination pursuant to Section 8.01(c) or (d) shall be entitled to
reimbursement for all its out-of-pocket expenses incurred in connection with
this Agreement and the Acquisition from the other party.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors, at any time
prior to Closing. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 8.04. WAIVER. At any time prior to the Closing, the parties
hereto, by action taken by their respective Boards of Directors or Executive
Committees, may (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties of the other party hereto contained herein
or in any document delivered
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pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. INDEMNIFICATION BY THE SHAREHOLDERS. (a) Subject to
Section 9.04, the Shareholders shall, jointly and severally, indemnify TMP and
hold TMP harmless after the Closing from and against and in respect of any
losses, damages, expenses, liabilities, claims, settlements, assessments and
judgments (including reasonable costs and attorneys' fees and other expenses
arising out of any claim, or the defense, settlement or investigation thereof,
made with respect to any of the foregoing, including, without limitation, those
arising in any action against any Shareholder) incurred or suffered by TMP,
arising out of, based upon or resulting from (i) any breach by TASA or the
Shareholders of their respective representations and warranties, obligations or
covenants contained in this Agreement or any document or certificate delivered
by them pursuant to this Agreement, (ii) any Taxes for all periods through the
Closing Date (whether or not disclosed on the TASA Disclosure Schedule) which
Taxes have not been reserved for on the June 30, 1998 balance sheet included in
the Interim Financial Statements, or (iii) the failure of TASA or the TASA
Subsidiaries to obtain any consent required in connection with the consummation
of the transactions contemplated hereby.
(b) Each Shareholder shall, severally and not jointly, indemnify TMP and
hold TMP harmless from and against and in respect of any losses, damages,
expenses, liabilities, claims, settlements, assessments and judgments (including
reasonable costs and attorneys' fees and other expenses arising out of any
claim, or the defense, settlement or investigation thereof, made with respect to
any of the foregoing, including, without limitation, those arising in any action
against such Shareholder) incurred or suffered by TMP, arising out of, based
upon or with respect to untrue statements or omission, made in the Registration
Statement (or any amendment thereto) in reliance upon and in conformity with
written information furnished to TMP by such Shareholder expressly for use in
the Registration Statement (or any amendment or supplement thereto).
SECTION 9.02. INDEMNIFICATION BY TMP. Subject to Section 9.04
(Limitations), TMP shall indemnify and hold harmless the Shareholders at all
times
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after the Closing from and against and in respect of any losses, damages,
expenses, liabilities, claims, settlements, assessments and judgments (including
reasonable costs and attorneys' fees and other expenses arising out of any
claim, or the defense, settlement or investigation thereof, made with respect to
any of the foregoing) incurred or suffered by the Shareholders, arising out of,
based upon or resulting from (i) any breach by TMP of its representations and
warranties, obligations or covenants contained in this Agreement or any document
or certificate delivered by TMP pursuant to this Agreement, or (ii) arising out
of any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), covering the Stock
Consideration, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 9.03. BROKERAGE FEES. Subject to Section 9.04, each of TASA and
TMP shall indemnify and hold harmless the other party from and against the
payment of any and all broker's and finder's expenses, commissions, fees or
other forms of compensation which may be due or payable from or by the
indemnifying party, or may have been earned by any third party acting on behalf
of the indemnifying party in connection with the negotiation and execution
hereof and the consummation of the transactions contemplated hereby.
SECTION 9.04. LIMITATIONS. (a) No party hereto shall be entitled to make
any claim for indemnification under this Article IX with respect to the breach
of any representation and warranty contained in this Agreement after the date on
which such representation and warranty ceases to survive pursuant to Section
9.07.
(b) Notwithstanding anything to the contrary contained herein, no
Indemnified Party shall be entitled to indemnification from an Indemnifying
Party until the aggregate losses suffered by such Indemnified Party and for
which indemnification is available hereunder exceed $100,000, whereupon the
Indemnified Party shall be entitled to claim indemnification for all losses
suffered by such Indemnified Party and for which indemnification is available
hereunder; provided, however, that this $100,000 threshold shall not be
applicable with respect to indemnification under clauses (ii) or (iii) of
Section 9.01 hereof.
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(c) Except as set forth in the last sentence hereof, a Shareholder's
liability hereunder and under the Registration Statement shall be limited to the
value of the Stock Consideration received by such Shareholder on the Closing
Date whether or not the value of the Stock Consideration changes subsequent to
the Closing Date and whether or not the Shareholder disposes of all or a part of
such Stock Consideration. No limitation provided in this Section 9.04, however,
shall be applicable with respect to any claim for fraud committed by such
Shareholder.
SECTION 9.05 NOTICE AND DEFENSE OF CLAIMS. Each party entitled to
indemnification under this Article IX (the "INDEMNIFIED PARTY") shall give
notice to the party required to provide indemnification (the "INDEMNIFYING
PARTY") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and, in the event of any claim or demand
asserted by a third party, shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Agreement unless such failure to give notice materially adversely affected the
ability of the Indemnifying Party to defend such claim or to the extent the
Indemnifying Party was actually damaged thereby. The Indemnifying Party, in the
defense of any such claim or litigation, shall not, except with the consent of
the Indemnified Party, consent to entry of any judgment or entry into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party of a release from all
liability in respect to such claim or litigation. The Indemnified Party shall
not settle or compromise any such claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
Indemnified Party shall furnish such information regarding itself or the claim
in question as the Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
SECTION 9.06. NON-EXCLUSIVE REMEDY. Indemnification pursuant to this
Agreement shall not preclude TMP or the Shareholders from exercising any other
remedies it may have, subject to the limitations set forth in Section 9.04
hereof.
SECTION 9.07. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement shall survive the
Closing and shall remain in full force and effect for the applicable period of
time
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set forth in this Section 9.07. Any representations, warranties or portion
thereof the breach or misrepresentation with respect to which would be expected
to be encountered or discerned in TMP's audit of the combined financial
statement of TMP and TASA for the fiscal year ending December 31, 1998, shall
survive until the date TMP's independent certified public accountants issue
their final report and opinion on such audit. Any other representations and
warranties shall survive for a period of one year after the Closing.
SECTION 9.08 REIMBURSEMENT. Subject to Section 9.04 hereof, at the time
that the Indemnified Party shall suffer a loss because of a breach of any
warranty, representation or covenant by the Indemnifying Party or at the time
the amount of any liability on the part of the Indemnifying Party under this
Agreement is determined (which in the case of payment to third persons shall be
the earlier of (i) the date of such payment, provided that the Indemnified Party
has fully complied with Section 9.05, or (ii) the date that a court of competent
jurisdiction shall enter a final judgment, order or decree (after exhaustion or
expiration of appeal rights) establishing such liability) (such loss or amount
being hereinafter referred to as the "INDEMNITY CLAIM")), the Indemnifying Party
shall forthwith, upon notice from the Indemnified Party, pay to the Indemnified
Party the amount of the Indemnity Claim; provided, however, that TMP shall pay
any such amounts owed by it in TMP Common Stock, based upon the dollar amount
indemnity of such Claim divided by the higher of (i) the average of the closing
sale price per share as reported by the Nasdaq National Market for the 30-day
period ending two days prior to the date any such Indemnity Claim is paid, and
(ii) $28.00. If such amount is not paid forthwith, then the Indemnified Party
may, at its option, take legal action against the Indemnifying Party for
reimbursement in the amount of its Indemnity Claim. For purposes hereof the
Indemnity Claim shall include the amounts so paid, or determined to be owing, by
the Indemnified Party together with costs and reasonable attorney's fees and
interest on the foregoing items (but only to the extent pre-judgment interest
due the Indemnified Party is not already included within such items) at the rate
of ten percent (10%) per annum from the date the Indemnity Claim is due from the
Indemnifying Party to the Indemnified Party as hereinabove provided, until the
Indemnity Claim shall be paid.
SECTION 9.09. OFFSET. Any claim of TMP arising pursuant to this
Article IX or any other provision of this Agreement shall be offset against the
value of the Escrowed Shares on a pro rata basis in proportion to the percentage
such Shareholder's portion of the Stock Consideration bears to the total Stock
Consideration, before any other claim is made on the Shareholders.
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SECTION 9.10. ARBITRATION. In order to insure that the transactions
contemplated hereby qualify for treatment as a pooling-of-interests for
financial reporting purposes, the parties agree that any dispute, disagreement
or controversy between any Indemnified Party and the Indemnifying Party with
respect to any claim for indemnification pursuant to this Agreement that is not
resolved within the applicable time period specified in Section 9.07 of this
Agreement (the "Indemnification Termination Date") shall promptly be submitted
to the American Arbitration Association (the "AAA") to be resolved by binding
arbitration in accordance with the arbitration rules of the AAA. The place of
arbitration shall be New York, New York. The arbitration tribunal shall be
composed of three arbitrators, one of which shall be appointed by TMP within 10
business days of the Indemnification Termination Date, one of which shall be
appointed by the Shareholders within 10 business days of the Indemnification
Termination Date and one of which shall be appointed by the arbitrators
appointed by TMP and the Shareholders within 15 business days of the
Indemnification Termination Date. The arbitrators will be directed to resolve
such dispute, disagreement or controversy as soon as practicable (and, in any
event, by the earlier of (i) two months of the date the claims for
indemnification is made and (ii) the Indemnification Termination Date).
ARTICLE X
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth below:
"Accredited Investor" shall mean (i) an individual whose net worth or joint
net worth with such person's spouse exceeds $1,000,000 or (ii) an individual
whose income exceeded $200,000 in 1996 and 1997, or whose income with his or her
spouse exceeded $300,000 in such years, and who reasonably expects to reach such
levels in 1998.
"Acquisition" shall have the meaning given such term in the Recitals
hereto.
"Affiliate" or "affiliate" shall mean, with respect to any Person, any
other Person that, directly or indirectly, controls or is controlled by or is
under common control with such Person. As used in this definition of
"Affiliate", the term "control" and any derivatives thereof mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.
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"Affiliated Group" shall mean any affiliated group within the meaning of
Section 1504 of the Code or any similar group defined under a similar provision
of state, local or foreign law, including, but not limited to, any combined,
consolidated or unitary group.
"Agreement" shall mean this Purchase Agreement.
"Audited Financial Statements" shall have the meaning given such term in
Section 2.07 hereof.
"Balance Sheet Date" shall mean December 31, 1997.
"Business Combination" shall mean (i) any merger or consolidation of TASA
or any TASA Subsidiary representing more than ten percent of TASA's consolidated
assets or revenues with or into any Person (other than TASA), (ii) any sale,
lease, exchange, transfer or other disposition (whether in one transaction or a
series of related transactions) of more than ten percent of TASA's consolidated
assets, (iii) the adoption of any plan or proposal for the liquidation or
dissolution of TASA or any TASA Subsidiary representing more than ten percent of
TASA's consolidated assets or revenues, (iv) any issuance, sale, purchase or
redemption of equity securities, any reclassification of equity securities or
recapitalization of TASA representing more than ten percent of TASA's
consolidated assets or revenues, and (v) any transaction having an effect
similar to those described above.
"Business Day" shall mean any day, other than a Saturday, Sunday or legal
holiday under the Federal laws of the United States.
"Closing" shall have the meaning given such term in Section 1.02 hereof.
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Shares" shall have the meaning given such term in Section 1.01
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean collectively the Common Stock, par value
s.fr. 100 per share, of TASA.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement, dated as of May 19, 1998 between TMP and TASA.
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"Environmental Laws" shall mean all Federal, state, local and foreign
environmental statutes and regulations relating to pollution, hazardous
substances or protection of the environment, including but not limited to the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq.; the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; related
state, local and foreign laws; and all applicable published rules, regulations,
directives, guidance and policies of the EPA and of all similar state and local
agency requirements.
"EPA" shall mean the United States Environmental Protection Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as it
exists and is hereafter amended.
"Employee Plan" shall mean: (i) any "employee benefit plan," as such term
is defined in Section 3(3) of ERISA, whether or not subject to the provisions of
ERISA, or any other similar arrangement under the laws of any other jurisdiction
in which TASA or any TASA Subsidiary does business; (ii) any personnel policy;
and (iii) any other employment, consulting, collective bargaining, stock option,
stock bonus, stock purchase, phantom stock, incentive, bonus, deferred
compensation, retirement, severance, dependent care, employee assistance,
material fringe benefit, dental, death benefit, golden parachute or other
compensatory plan, contract, policy or arrangement which is not an employee
benefit plan as defined in Section 3(3) of ERISA, or any other similar
arrangement under the laws of any other jurisdiction in which TASA or any TASA
Subsidiary does business.
"Escrow Agreement" shall have the meaning given such term in Section 1.02
hereof.
"Escrow Release Date" shall have the meaning given such term in Section
1.02 hereof.
"Escrowed Shares" shall have the meaning given such term in Section 1.01
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
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"Financial Statements" shall have the meaning given such term in Section
2.07 hereof.
"Generally accepted accounting principles" shall mean generally accepted
accounting principles in Switzerland.
"Governmental Entity" shall mean any foreign or domestic court,
administrative agency or commission or other governmental authority or
instrumentality.
"Indemnification Termination Date" shall have the meaning given such term
in Section 9.10 hereof.
"Indemnified Party" shall have the meaning given such term in Section 9.05
hereof.
"Indemnifying Party" shall have the meaning given such term in Section 9.05
hereof.
"Indemnity Claim" shall have the meaning given such term in Section 9.08
hereof.
"Intellectual Property" shall have the meaning given such term in Section
2.22 hereof.
"Interim Financial Statements" shall have the meaning given such term in
Section 2.07 hereof.
"IRS" shall mean the Internal Revenue Service.
"Liens" shall mean all liens, charges, security interests, rights or claims
of others, restraints on transfer or other encumbrances.
"Material Adverse Change" shall mean a change or a development involving a
prospective change which would have a Material Adverse Effect.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on the business, prospects, results of operations,
financial condition or assets of such Person and its Subsidiaries taken as a
whole. In determining whether any individual event would result in a Material
Adverse Effect, notwithstanding that such event does not of itself have such
effect, a Material
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Adverse Effect shall be deemed to have occurred if the cumulative effect of such
event and all other then existing events would result in a Material Adverse
Effect.
"PBGC" shall mean the United States Pension Benefit Guaranty Corporation.
"Person" shall mean an individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"Regulatory Authority" shall mean any foreign, Swiss, United States Federal
or state government or governmental authority the approval of which, or filing
with, is legally required or permitted for consummation of the transactions
contemplated by this Agreement.
"Requisite Regulatory Approvals" shall have the meaning given such term in
Section 7.01(b) hereof.
"SEC" means the United States Securitas and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Significant Subsidiaries" means, with respect to TASA, the following:
TASA, Inc., a Florida corporation, TASA/Consulting Partners GmbH and Inter Ad
GmbH, each a German corporation, TASA Ltd., a corporation organized under the
laws of the United Kingdom, TASA S.p.A., an Italian corporation and TASA
Executive Search Pty. Ltd., an Australian corporation.
"Stockholder Information" shall have the meaning given such term in Section
2.26(f) hereof.
"Subsidiary" means, with respect to any entity, any corporation of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are directly or indirectly owned by such entity; provided, however, that the
term "Subsidiaries", when used alone, shall mean, in the case of TASA, the TASA
Subsidiaries, and in the case of TMP, the TMP Subsidiaries.
"TASA Balance Sheet" shall mean the consolidated balance sheet of TASA at
December 31, 1997.
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"TASA Contracts" shall have the meaning given such term in Section 2.16(a)
hereof.
"TASA Disclosure Schedule" shall have the meaning given such term in the
preamble to Article II hereof.
"TASA License" shall have the meaning given such term in Section 2.23
hereof.
"Tax" or "Taxes" shall mean any and all federal, state, local, foreign and
other taxes, levies, fees, imposts, duties and charges of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), whether or not imposed on TASA or any TASA
Subsidiary, including, without limitation, taxes imposed on, or measured by,
income, franchise, profits, or gross receipts, and also ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer, and gains taxes, and custom duties.
"Tax Return" shall mean returns, reports, information statements, and other
documentation (including any additional or supporting material) filed or
maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any Tax.
"TMP Disclosure Schedule" shall have the meaning given such term in the
preamble to Article III hereof.
"TMP Exchange Act Filings" shall have the meaning given such term in
Section 3.06 hereof.
"U.S. Person" means:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) any estate of which any executor or administrator is a U.S.
Person;
(iv) any trust of which any trustee is a U.S. Person;
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(v) any agency or branch of a foreign entity located in the United
States;
(vi) any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. Person;
(vii) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in
the United States; and
(viii) any partnership or corporation if:
(a) organized or incorporated under the laws of any foreign
jurisdiction; and
(b) formed by a U.S. Person principally for the purpose of
investing in securities not registered under the Securities
Act, unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) under the
Securities Act) who are not natural persons, estates or
trusts.
"United States" means the United States of America, its territories and
possessions and any state of the United States (including for the purposes
hereof the District of Columbia).
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. TAKING OF NECESSARY ACTION; SPECIFIC PERFORMANCE.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees, subject to applicable laws, to use all reasonable efforts
promptly to take or cause to be taken all action and promptly to do or cause to
be done all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. Without limiting the foregoing, the parties hereto shall use
their best efforts to obtain and make all consents, approvals, assurances and
filings of or with third parties and
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Governmental Entities necessary or, in their reasonable opinion, advisable for
the consummation of the transactions contemplated by this Agreement. Each party
shall cooperate with the other in good faith to help the other satisfy its
obligations hereunder and thereunder. The parties hereto understand and agree
that the covenants and undertakings on each of their parts herein contained are
uniquely related to the desire of the parties hereto to consummate the
Acquisition, that the Acquisition is a unique business opportunity and that,
although monetary damages may be available for the breach of such covenants and
undertakings, monetary damages would be an inadequate remedy therefor.
Accordingly, the parties hereto agree that TMP shall be entitled to obtain
specific performance by TASA and the Shareholders of every such covenant and
undertaking contained herein to be performed by them.
SECTION 11.02. EFFECT OF DUE DILIGENCE. No investigation by or on
behalf of one party into the business, operations, prospects, assets or
condition (financial or otherwise) of another party shall diminish in any way
the effect of any representations or warranties made by such party.
SECTION 11.03. EXPENSES. Except as provided in Section 8.02 hereof,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring the same;
provided that the Shareholders shall be responsible for the legal, accounting
and other fees incurred jointly by the Shareholders and TASA.
SECTION 11.04. SUCCESSORS AND ASSIGNS. This Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties hereto.
SECTION 11.05. ENTIRE AGREEMENT. This Agreement and the other
documents referred to herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated hereby, and controls and
supersedes any prior understandings, agreements or representations by or between
the parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof or thereof in any way, including without limitation that
certain letter dated June 2, 1998, from TMP to TASA.
SECTION 11.06. NOTICES. All notices or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by telex, telefax or telegraphic communication, by recognized
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overnight courier marked for overnight delivery, or by registered or certified
mail, postage prepaid, addressed as follows:
(a) If to TASA or a Shareholder c/o TASA International AG,
Dufourstrasse 101, CH-8008, Zurich, Switzerland, Attention: President (or, in
the case of a Shareholder, such Shareholder) , with a copy to: Janvey, Gordon,
Herlands, Randolph, Rosenberg & Cox LLP, 757 Third Avenue, 16th Floor, New York,
New York 10017, Attention: Richard I. Janvey and Ralph Janvey; and Beglinger
Holenstein, Utoquai 29/31 CH-8008, Zurich, Switzerland, Attention: Dr. Peter
Beglinger; and
(b) If to TMP, 1633 Broadway, New York, New York 10019, Attention:
Chairman, with copies to: Myron Olesnyckyj, Esq., TMP Worldwide Inc., 1633
Broadway, New York, New York 10019, Fulbright & Jaworski L.L.P., 666 Fifth
Avenue, New York, New York 10103, Attention: Gregg Berman, Esq.; and Umbricht
Rechtsanwalte, Bahnhofstrasse 22, CH-8022, Zurich, Switzerland, Attention: Dr.
Robert P. Umbricht;
or such other addresses as shall be furnished by like notice by such party. All
such notices and communications shall, when telexed (provided the correct
answerback has been received) or telefaxed (immediately thereafter confirmed by
telephone) or telegraphed, be effective when telexed, telefaxed or delivered to
the telegraph company, respectively, or if sent by nationally recognized
overnight courier service, be effective one Business Day after the same has been
delivered to such courier service marked for overnight delivery, or, if mailed,
be effective when received.
SECTION 11.07. APPLICABLE LAW. Except for Section 2.03, which shall
be governed by Swiss law, this Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without reference
to or application of any conflicts of laws principles.
SECTION 11.08. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 11.09. HEADINGS. The headings used in this Agreement are for
convenience only and are not to be considered in construing or interpreting any
term or provision of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
TMP WORLDWIDE INC.
By: /s/ Myron Olesnyckyj
--------------------------------
TASA HOLDING AG
By: /s/ Michael Squire
--------------------------------
SHAREHOLDERS:
/s/ Pierre Aussure
-----------------------------------
Pierre Aussure
/s/ Gerhard Bartels
-----------------------------------
Dr. Gerhard Bartels
/s/ David K. Bray
-----------------------------------
David K. Bray, Individually on his own behalf and
as a Trustee of a pension trust
/s/ Charles M. Brusselmans
-----------------------------------
Charles M. Brusselmans
/s/ Neil C. Callie
-----------------------------------
Neil C. Callie
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/s/ Trevor M. Clark
-----------------------------------
Trevor M. Clark, Individually on his own behalf
and as Trustee of a pension trust
/s/ Jo Carol Conover
-----------------------------------
Jo Carol Conover
/s/ Manuel G. Cortines
-----------------------------------
Manuel G. Cortines
/s/ Edgar S. K. Dammrof
-----------------------------------
Dr. Edgar S. K. Dammrof
/s/ Victor C. Dana
-----------------------------------
Victor C. Dana
/s/ Fiona M. H. Darby
-----------------------------------
Fiona M. H. Darby, Individually on her own behalf
and as Trustee of a pension trust
/s/ Herman DeKessel
-----------------------------------
Herman DeKessel
/s/ James P. Demchak
-----------------------------------
James P. Demchak
/s/ Trevor M. Dunn
-----------------------------------
Trevor M. Dunn
/s/ Luis Escudero Ygartua
-----------------------------------
Luis Escudero Ygartua
/s/ Joaquim Espriu Malagelada
-----------------------------------
Joaquim Espriu Malagelada
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/s/ Juan Manuel Farias Guitierrez
-----------------------------------
Juan Manuel Farias Guitierrez
/s/ Patrick J. M. Fearon
-----------------------------------
Patrick J. M. Fearon, Individually on his own
behalf and as Trustee of a pension trust
/s/ Richard L. Fleming
-----------------------------------
Richard L. Fleming
/s/ Michael Franzino
-----------------------------------
Michael Franzino
/s/ Vito Gioia
-----------------------------------
Vito Gioia
/s/ Duane R. Goar
-----------------------------------
Duane R. Goar
/s/ Frans J. Gosses
-----------------------------------
Frans J. Gosses
/s/ Christian A. F. Groh
-----------------------------------
Christian A. F. Groh
/s/ Neil R. Hatherly
-----------------------------------
Neil R. Hatherly, Individually on his own behalf
and as Trustee of a pension trust
/s/ Russel J. Ingersoll
-----------------------------------
Russel J. Ingersoll, Individually on his own
behalf and as Trustee of a pension trust
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/s/ Klaus Jacobs
-----------------------------------
Klaus Jacobs
/s/ Thomas R. Keller
-----------------------------------
Thomas R. Keller
/s/ Dag E. Kremer-Nehring
-----------------------------------
Dag E. Kremer-Nehring
/s/ Michel LeGuillou
-----------------------------------
Michel LeGuillou
/s/ Claudia K. Liebesny
-----------------------------------
Claudia K. Liebesny
/s/ David W. H. Lowry
-----------------------------------
David W. H. Lowry
/s/ Peter Magnet
-----------------------------------
Peter Magnet
/s/ Bernhard Mahlo
-----------------------------------
Bernhard Mahlo
/s/ Warren L. McGregor
-----------------------------------
Warren L. McGregor
/s/ John McLaughlin
-----------------------------------
John McLaughlin
/s/ Massimo Misticoni
-----------------------------------
Massimo Misticoni
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/s/ Maria Elena Quijada Cordero
-----------------------------------
Maria Elena Quijada Cordero
/s/ Gregor A. Ramsey
-----------------------------------
Gregor A. Ramsey, Individually on his own behalf
and as Trustee of a pension trust
/s/ R. Fritz Rijke
-----------------------------------
R. Fritz Rijke
/s/ Herbert Schmaderer
-----------------------------------
Herbert Schmaderer
/s/ Andrew R. F. Simpson
-----------------------------------
Andrew R. F. Simpson, Individually and as Trustee
/s/ Michael T. D. Squires
-----------------------------------
Michael T. D. Squires
/s/ John B. Strickland
-----------------------------------
John B. Strickland
/s/ Hans Uher
-----------------------------------
Hans Uher
/s/ Alan R. Van Es
-----------------------------------
Alan R. Van Es, Individually on his own behalf and
as Trustee of a pension trust
/s/ Victoriano Vila Vilar
-----------------------------------
Victoriano Vila Vilar
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/s/ Robert B. Whaley
-----------------------------------
Robert B. Whaley
/s/ Jeffrey C. Wierichs
-----------------------------------
Jeffrey C. Wierichs
/s/ Gabriele Wilner-Lange
-----------------------------------
Dr. Gabriele Wilner-Lange
/s/ Andrea M. Wine
-----------------------------------
Andrea M. Wine
/s/ Herbert J. Wise
-----------------------------------
Herbert J. Wise
/s/ Heinz H. Witt
-----------------------------------
Heinz H. Witt
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Exhibit 1.03(b)
DECLARATION OF ASSIGNMENT
-------------------------
With effect as of Closing under the Agreement to be dated and entered into
as of August 31, 1998, by and among TMP Worldwide Inc., TASA Holding AG, myself
and the other Shareholders, as set out on Schedule A to the Agreement and under
the confition precedent that the Closing under the Agreement will take place by
September 30, 1998, I ___________________________________, with an address at
(Print Name)
______________________________________________________________________________
(Print Address and Domicile)
hereby assign _______________ registered shares, Nos. ___________________ of
TASA
(No. of shares) (Share Certificates)
Holding AG, Zug, Switzerland, with a par value of CHF 100.00, together with all
preferential and ancillary rights, to TMP Worldwide Inc., a Delaware
corporation, in accordance with Section 1.03(c) of the Agreement and Article 165
of the Swiss Code of Obligations.
This Assignment shall be governed by, and construed and interpreted in
accordance with, the substantive laws of Switzerland.
-65-
<PAGE>
- ----------------------------------------
(Place of Execution)
Date: August ____, 1998 -------------------------------
(Signature)
-------------------------------
(Print Name)
-66-
<PAGE>
Exhibit 2.28(l)
CERTIFICATE AS TO INVESTOR STATUS
---------------------------------
Pursuant Section 2.28(l) of the Agreement, dated as of August 31, 1998 by
and among TMP Worldwide Inc., TASA Holding AG and the Shareholders of TASA
Holding AG named therein (the "Agreement"), the undersigned hereby certifies
that it is either:
(PLEASE CHECK ONE)
/ / an Accredited Investor, or a non-U.S. person;
OR
/ / a U.S. person and not an Accredited Investor.
Capitalized terms used in this certificate are defined in the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
31st day of August, 1998.
By:
--------------------------------
Name:
------------------------------
(Please Print)
<PAGE>
EXHIBIT 7.03(h)
TMP WORLDWIDE INC.
OFFICER'S CERTIFICATE
Pursuant to section 7.03(h) of the Agreement, dated as of August 31,
1998, by and among TMP Worldwide Inc. ("TMP"), TASA Holding AG ("TASA") and the
shareholders of TASA named therein (the "Shareholders") (the "Agreement"), it is
a condition to the obligations of TASA and the Shareholders under the Agreement
that TMP deliver this certificate to TASA. In connection therewith, the
undersigned officer of TMP hereby certifies on behalf of TMP to the best of his
knowledge and belief:
1. TMP has no current plan or intention to:
(1) liquidate TASA;
(2) merge TASA into another entity;
(3) cause TASA to sell or otherwise dispose of any of its assets,
except for dispositions made in the ordinary course of its business; or
(4) sell or otherwise dispose of any of the TASA stock acquired by
TMP pursuant to the Agreement, except for transfers described in Section
368(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the "Code") or
permitted under Section 1.368-1(d) of the Income Tax Regulations.
2. TMP has no current plan or intention to cause TASA to issue additional
shares that would result in TMP losing control of TASA within the meaning of
Section 368(c) of the Code.
3. TMP has no current plan or intention to reacquire any of the TMP
Common Stock (as defined in the Agreement) issued to the Shareholders pursuant
to the Agreement. To the best of the knowledge of the undersigned, no person
related to TMP (within the meaning of Section 1.368-1(e)(3) of the Income Tax
Regulations) and no person acting as an intermediary for or on behalf of TMP or
such a related person has a plan or intention to acquire any of the TMP Common
Stock issued pursuant to the Agreement.
<PAGE>
4. Following the acquisition of the TASA common stock, TMP (including the
members of TMP's qualified group (as defined in section 1.368-1(d)(4)(ii) of the
Income Tax Regulations) in the aggregate will continue the historic business of
TASA or use a significant portion of TASA's historic business assets in a
business.
5. TMP does not own, directly or indirectly, nor has it owned during the
last five years, directly or indirectly, any stock of TASA.
6. TMP will acquire the TASA shares solely for voting stock of TMP.
7. TMP is not an investment company within the meaning of Section
368(a)(2)(F) of the Code.
8. The rate of the exchange of shares of TASA common stock for TMP Common
Stock has been negotiated through arm's length bargaining. Following the
Closing, the compensation paid to the Shareholders will be for services actually
rendered and not allocable to their shares of TASA common stock.
9. There is no intercorporate indebtedness existing between TMP and TASA.
To the best of the knowledge of the undersigned, there exists no indebtedness
between TASA and any person related to TMP (within the meaning of Section
1.368-1(e)(3) of the Income Tax Regulations).
10. The payment of cash in lieu of fractional shares of stock of TASA is
not separately bargained for consideration and is being made by TMP for the sole
purpose of saving TMP the expense and inconvenience of issuing fractional
shares.
IN WITNESS WHEREOF, I have, on behalf of TMP, signed this Certificate
as of August __, 1998.
TMP WORLDWIDE INC.
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT 23.1(B)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
TMP Worldwide Inc.
New York, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our reports dated March
20, 1998, relating to the consolidated financial statements and schedule of TMP
Worldwide Inc. appearing in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO SEIDMAN, LLP
New York, New York
September 16, 1998
<PAGE>
EXHIBIT 23.1(C)
The Board of Directors
Morgan & Banks Limited
Level 11, Grosvenor Place
225 George Street
SYDNEY NSW 2000
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We hereby consent to the use of our report dated 16 June 1998, relating to the
consolidated balance sheets of Morgan & Banks Limited as at 31 March 1998 and
1997, and the consolidated profit and loss statements and cash flow statements
for each of the years in the three year period ended 31 March 1998, which report
is incorporated by reference in the Registration Statement on Form S-3 of TMP
Worldwide Inc. dated 16 September 1998.
We also consent to the reference to us under the caption "Experts" in the
Prospectus constituting a part of this Registration Statement.
Sydney, Australia
16 September 1998
[LOGO]
PANNELL KERR FORSTER
<PAGE>
EXHIBIT 23.1(D)
PRIVATE & CONFIDENTIAL
The Directors
TMP Worldwide Inc
1633 Broadway
New York NY 10019
16 September, 1998
Dear Sir
We consent to the inclusion of our report dated 4 February 1997, with respect to
the consolidated balance sheets of Austin Knight Limited as of 31 December 1995
and 1996, and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the years in the two year period ended 31
December 1996, which report is incorporated by reference in the Registration
Statement on Form S-3 of TMP Worldwide Inc. dated 16 September 1998.
Yours sincerely
KPMG
