FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________
Commission File Number 0-15539
RIGHT MANAGEMENT CONSULTANTS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2153729
(State of other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
1818 Market Street, Philadelphia, Pennsylvania 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 988-1588
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of April 30, 1995:
Common Stock, $0.01 par value 2,639,093
Class Number of Shares
<PAGE>2
Right Management Consultants, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,577,904 $ 9,155,835
Accounts receivable, trade, net of allowance for
doubtful accounts of $964,000 and $651,000 in
1995 and 1994, respectively 20,091,616 14,282,604
Royalties and fees receivable from Affiliates 3,059,408 3,118,796
Current portion of note receivable 293,333 285,635
Prepaid expenses 1,265,795 978,727
Current deferred income taxes 630,000 621,000
---------- ----------
Total current assets 27,918,056 28,442,597
Property and equipment, less accumulated
depreciation of $7,631,971 in 1995 and
$6,977,188 in 1994 7,097,423 6,693,861
Other Assets:
Intangible assets, less accumulated amortization
of $5,253,049 in 1995 and $4,790,230 in 1994 16,115,079 11,888,139
Non-current deferred income taxes 795,121 394,000
Non-current portion of note receivable 332,234 435,067
Other 1,108,478 1,115,247
---------- ----------
18,350,912 13,832,453
---------- ----------
Total Assets $53,366,391 $48,968,911
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term debt and other
obligations $ 4,502,691 $ 2,086,357
Accounts payable 4,369,479 3,354,159
Commissions payable 2,717,810 2,327,706
Accrued incentive compensation and benefits 1,204,275 5,521,178
Accrued redundant costs 834,668 976,779
Other accrued expenses 1,309,374 1,779,934
Deferred income 4,450,545 2,331,230
Accrued income taxes 808,282 182,348
---------- ----------
Total current liabilities 20,197,124 18,559,691
Long-term debt and other obligations 5,424,401 4,707,075
Deferred compensation 1,420,754 1,296,775
Commitments and Contingent Liabilities
Stockholders' Equity:
Preferred stock, no par value; 1,000,000 shares
authorized; no shares issued or outstanding
Common stock, $.01 par value; 20,000,000 shares
authorized; 2,899,379 shares issued and
2,646,427 shares outstanding in 1995;
2,891,971 shares issued and 2,639,019 shares
outstanding in 1994; 28,994 28,920
Additional paid-in capital 6,616,370 6,544,547
Retained earnings 20,550,557 18,829,744
Cumulative translation adjustment (354,682) (480,714)
---------- ----------
26,841,239 24,922,497
Less treasury stock, at cost, 252,952 shares (517,127) (517,127)
---------- ----------
26,324,112 24,405,370
---------- ----------
Total Liabilities and Stockholders' Equity $53,366,391 $48,968,911
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>3
Right Management Consultants, Inc.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue:
Company Office revenue $26,279,256 $18,877,250
Affiliate royalties 1,124,797 1,185,753
----------- -----------
Total revenue 27,404,053 20,063,003
Costs and expenses:
Consultants' compensation 9,490,308 6,787,422
Company Office sales and consulting support 2,085,443 1,480,829
Company Office administration 9,393,377 6,507,169
General sales, consulting and administration 3,488,845 2,832,474
----------- -----------
24,457,973 17,607,894
----------- -----------
Income from operations 2,946,080 2,455,109
Other income (expense):
Interest income 97,593 73,151
Interest expense (194,845) (81,061)
----------- -----------
(97,252) (7,910)
----------- -----------
Income before income taxes 2,848,828 2,447,199
Provision for income taxes 1,127,000 1,127,000
----------- -----------
Net income $1,721,828 $1,320,199
========== ==========
Earnings per share:
Net income $0.63 $0.49
========== ==========
Weighted average number of shares outstanding 2,732,069 2,715,042
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>4
Right Management Consultants, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Operations:
Net income $1,721,828 $1,320,199
Adjustments to reconcile net income to net cash
utilized by operating activities:
Depreciation and amortization 1,037,349 677,222
Deferred taxes (410,000) (70,000)
Other non-cash charges 146,591 (21,939)
Revenue recognized for assumption of incomplete
contracts (171,544) (41,146)
Provision for doubtful accounts 175,000 75,000
Changes in operating accounts:
Accounts receivable, trade and from Affiliates (5,827,549) 722,062
Prepaid expenses and other assets (373,994) (515,204)
Accounts payable and accrued expenses (3,113,207) (2,594,210)
Commissions payable 357,185 (492,132)
Deferred income 2,088,636 605,814
---------- ----------
Net cash utilized by operating activities (4,369,705) (334,334)
Investing Activities:
Purchase of property and equipment (667,094) (407,028)
Net cash paid for acquisitions (1,108,121) (268,110)
---------- ----------
Net cash utilized by investing activities (1,775,215) (675,138)
Financing Activities:
Payment of long-term debt and other obligations (562,205) (640,811)
Proceeds from stock issuances 71,797 286,745
---------- ----------
Net cash utilized by financing activities (490,408) (354,066)
Effect of exchange rate changes on cash and
cash equivalents 57,397 10,848
---------- ----------
Decrease in cash and cash equivalents (6,577,931) (1,352,690)
Cash and cash equivalents, beginning of period 9,155,835 8,638,758
========= =========
Cash and cash equivalents, end of period $2,577,904 $7,286,068
========== ==========
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Interest $108,147 $40,171
========== ==========
Income taxes $809,240 $978,734
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>5
RIGHT MANAGEMENT CONSULTANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information and
footnote disclosures necessary for a fair presentation of consolidated financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. Certain amounts have been
reclassified in the 1994 Consolidated Statement of Cash Flows to conform with
the 1995 presentation. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report for the
year ended December 31, 1994.
Principles of Consolidation
The consolidated financial statements include the accounts of Right
Management Consultants, Inc., and its wholly-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.
Currency Translation
There are no material transaction gains or losses in the accompanying
consolidated financial statements.
NOTE B - ACQUISITIONS
Effective January 1, 1995, the Company acquired the assets of a former
Affiliate of the Company, located in Cupertino, California. This transaction has
been accounted for using the purchase method. The aggregate purchase price of
the acquisition of $4.7 million included $4.6 million in goodwill. This
acquisition was made for a combination of cash and non-cash items. Non-cash
items included the assumption of incomplete outplacement contracts and the
present value of future defined incentives. The assumption of incomplete
outplacement contracts resulted in revenue in 1995 of approximately $170,000.
The future defined incentives are contingent on the operating results of the
region where the acquired entity is operating. The present value of these
determinable contingent payments aggregated $2.1 million and has been accounted
for as part of the purchase price. The estimated amounts for these incentives
are included in long-term debt and other obligations at March 31, 1995. The
pro-forma effect of this acquisition on results of operations, if it had been
consummated at the beginning of each period presented, is immaterial and has
been omitted.
<PAGE>6
NOTE C - GEOGRAPHIC SEGMENTS
Summarized operations of each of the Company's segments in the
aggregate as of March 31, 1995 and 1994 and for the three months ended March 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 US Canada Europe Total
<S> <C> <C> <C> <C>
Identifiable assets $ 48,352,000 $1,926,000 $3,088,000 $53,366,000
============ ========== ========== ===========
Revenue $ 24,541,000 $1,451,000 $1,412,000 $27,404,000
============ ========== ========== ===========
Operating income (loss) $ 2,747,000 $ 261,000 $ (62,000) $ 2,946,000
============ ========== ========== ===========
Depreciation and
amortization $ 944,000 $ 47,000 $ 46,000 $ 1,037,000
============ ========== ========== ===========
Capital expenditures $ 598,000 $ 29,000 $ 40,000 $ 667,000
============ ========== ========== ===========
1994 US Canada Europe Total
Identifiable assets $ 30,537,000 $1,564,000 $2,912,000 $35,013,000
============ ========== ========== ===========
Revenue $ 16,963,000 $1,606,000 $1,494,000 $20,063,000
============ ========== ========== ===========
Operating income (loss) $ 2,203,000 $ 403,000 $ (151,000) $ 2,455,000
============ ========== ========== ===========
Depreciation and
amortization $ 576,000 $ 44,000 $ 57,000 $ 677,000
============ ========== ========== ===========
Capital expenditures $ 375,000 $ 15,000 $ 17,000 $ 407,000
============ ========== ========== ===========
</TABLE>
NOTE D - STOCKHOLDERS' EQUITY
Stock options for the three month period ended March 31, 1995 are
summarized as follows:
Outstanding at January 1, 1995 459,367
Granted at $17.50 - $19.50 per share 40,333
Canceled or expired during the period (2,000)
Exercised during the period (7,408)
-------
Outstanding at March 31, 1995 490,292
=======
<PAGE>7
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months ended March 31, 1995 vs. Three months ended March 31, 1994
Revenue generated by Company Offices during the quarter ended March 31,
1995 increased 39% or $7,402,000, over the corresponding quarter in 1994.
Revenue on a same Office basis increased approximately 15%. This growth can be
attributed to increases in the aggregate U.S. Offices, particularly in the
Northeastern U.S. The remaining increase was primarily due to revenue generated
by the recent acquisitions of two former Affiliates, which operate five offices,
and Jannotta, Bray and Associates ("JBA"), all of which were acquired since the
first quarter of 1994. The acquisitions of the two former Affiliates accounted
for approximately 24% of the revenue increase.
Affiliate royalties decreased 5% or $61,000, in 1995 over the corresponding
quarter in 1994. This was primarily due to the acquisitions of five former
Affiliate offices as discussed above. Affiliate royalties from these offices
represented approximately 13% of the total Affiliate royalties for the three
months ended March 31, 1994. Revenue from these offices is reflected as Company
revenue subsequent to their respective acquisitions. On a same office basis,
Affiliate offices grew approximately 9% over the prior year. This resulted
primarily from increased market penetration across the aggregate U.S. Affiliate
Offices offset by reduced royalties from Europe.
Company Office expenses in the aggregate increased 42% or $6,194,000 in the
first quarter 1995, compared to the same period in 1994. Costs incurred by the
Company's newly acquired Affiliates accounted for approximately 22% of this
increase. The remaining increases are due to certain duplicate facilities and
administration from the acquisition of JBA as well as general expense increases
from existing Company Offices related to the revenue growth during the quarter.
The Company's aggregate Company Office margins were approximately 20% and 22%
for the first quarter of 1995 and 1994, respectively. The Company is seeking to
improve the margins through further economies of scale from the acquisition.
General sales, consulting and administration expense reflected an increase
of approximately $657,000 or 23% in the first quarter in 1995, compared to the
same period in 1994. This increase was primarily due to investments made in the
development of the Company's consulting services, increases in interest and
amortization relating to recent acquisitions and additional reserves for
duplicate Company Office closures related to the JBA acquisition. Despite these
increases, the total expenses in this category as a percentage of revenue have
decreased to 13% in the first quarter of 1995 from 14% in the first quarter of
1994.
In the first quarter in 1995, income before income taxes increased 16% to
$2,849,000 from $2,447,000 for the corresponding quarter in 1994. This increase
resulted principally from the combination of greater Company Office revenue and
reduced operating losses in the Company's European operations.
<PAGE>8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
The Company's effective tax rate was approximately 40% in the first quarter
in 1995 versus 46% in the first quarter in 1994. This decrease was a result of
the Company's reduction in the effect of nondeductible expenses on the effective
tax rate and foreign taxes and reduced state taxes.
Capital Resources and Liquidity
The Company's cash and cash equivalents decreased to $2,578,000 during the
three months ended March 31, 1995, from $9,156,000 as of December 31, 1994. This
decrease resulted principally from cash utilized by operations of $4,370,000,
purchases of property and equipment of $667,000, net cash paid for the
acquisition of the assets of the Company's former Cupertino, California
Affiliate of $1,108,000 and payment of long-term debt and other obligations
aggregating $562,000, which were in excess of proceeds from stock issuances of
$72,000. The total net cash utilized by operations increased by $4,036,000 over
the first quarter of 1994. This was primarily due to the payment of greater 1994
incentive compensation in 1995 and an increase in accounts receivable resulting
from increased revenue and an increase in the average days of sales outstanding.
Historically, ongoing cash requirements have been provided through
operations. The Company's total borrowing capacity aggregates $6,000,000 through
a committed credit line with a bank. In connection with the acquisition of the
Cupertino, California Affiliate, the Company borrowed $1.5 million from this
credit line at the floating primary rate of the bank. The Company anticipates
cash and working capital will be sufficient to service this debt and maintain
Company operations at current levels for the foreseeable future.
The key factor in the Company's liquidity is the operating results of the
Company Offices. Substantial efforts have been made to integrate JBA into the
Company's existing operations. In order to improve our operating margin, the
Company is seeking to realize the benefits from economies of scale relating to
this acquisition.
The Company will continue to consider expansion opportunities as they
arise, although the economics and other circumstances justifying the expansion
will be key factors in determining the amount of resources the Company will
devote to further expansion.
<PAGE>9
PART II - OTHER INFORMATION
Items 1, 2, 3 and Item 5 were not applicable in the period ended March 31,
1995
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on
May 4, 1995. At the meeting, all nominees for the
election of directors, being Frank P. Louchheim, Richard
J. Pinola, Joseph T. Smith, Larry A. Evans, Nancy N.
Geffner, Robert M. Tomasko, Joseph E. Jannotta, Jr.,
John R. Bourbeau, Raymond B. Langton, Catherine Selleck
and Rebecca Maddox were elected as directors. The
amendment and renaming of the Right Management
Consultants, Inc. 1993 Stock Option Plan, the adoption
of the Directors' Stock Option Plan and the ratification
of the selection by the Board of Directors of Arthur
Andersen LLP as the Company's independent public
accountants for the current fiscal year were all
approved.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
10.54 - Purchase agreement between Right Management
Consultants, Inc. and Worth Associates, Inc. and Robert
A. Fish, dated February 15, 1995
11 - Consolidated Earnings per Share Calculation
b. The Company filed a Form 8-K on March 3, 1995 which
included the following items:
Item 4. Description of the acquisition by the Company of
its Cupertino, California Affiliate, effective
January 1, 1995
Item 7(c). Press release dated March 2, 1995
<PAGE>10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RIGHT MANAGEMENT CONSULTANTS, INC.
BY: /s/ Joseph T. Smith May 12, 1995
-----------------------------------------------------------
Joseph T. Smith Date
President and Chief
Operating Officer
BY: /s/ G. Lee Bohs May 12, 1995
--------------------------------------------------------------
G. Lee Bohs,
Chief Financial Officer Date
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, is made and entered into this 15th day of
February, 1995 by, between and among Right Management Consultants, Inc. a
Pennsylvania corporation ("Buyer"), Worth Associates, Inc., d.b.a. Right
Associates, a California Corporation ("Seller"), and Robert A. Fish
("Principal").
BACKGROUND
Seller is engaged in the business of selling and providing corporate
outplacement consulting and career consulting for employees and related human
resources consulting and services in Cupertino, California (the "Business") as
an affiliate member of the Right Associates (Registered Trademark) Affiliate
Network (the "Network") pursuant to an Affiliate Agreement with Buyer dated July
28, 1986, as amended by a related Evergreen Addendum dated March 24, 1992 and an
Amendment Agreement dated June 8, 1992 and (collectively, the "Affiliate
Agreement").
Principal is the principal shareholder of Seller and owns a majority of
the outstanding capital stock of Seller.
Buyer desires to buy substantially all of the assets of Seller and
Seller desires to sell such assets to Buyer pursuant to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Purchase and Sale of Assets.
At the Closing (hereinafter defined), Seller shall sell, transfer
and deliver to Buyer, by bill of sale, assignment or other instruments of
transfer in form and substance satisfactory to Buyer, and Buyer shall purchase
and accept from Seller, free and clear of all liens, claims, security interests
and encumbrances whatsoever, the following property (collectively the "Assets"):
(a) The Affiliate Agreement.
(b) All of Seller's customers lists and files, including the right
to service all of Seller's past and present customers and prospects, all
engagements of Seller and contracts for consulting, counselling and outplacement
services of candidates, including without limitation engagements for those
candidates and contracts listed on Schedule 1(b) attached hereto and made a part
hereof; and the right to fulfill all such contracts and engagements
(collectively, the "Counselling Contracts").
<PAGE>2
(c) All Employment and Non-Competition Agreements Seller has with
employees, consultants and contractors of Seller, a list of which is attached
hereto as Schedule 1(c).
(d) All of Seller's materials and supplies.
(e) All of Seller's prepaid expenses except as set forth in Section
1(k) hereof.
(f) All of Seller's right, title and interest in and to all leases
of all equipment and other personal property (the "Equipment Leases") and the
lease of the premises (the "Premises "Lease" and together with the Equipment
Leases, the "Leases") used by Seller in the conduct of the Business to which
Seller is a party, which Leases are listed on Schedule 1(f) attached hereto and
made a part hereof.
(g) All of Seller's furniture, fixtures, and equipment
(collectively, the "Equipment"), which Equipment is listed on Schedule 1(g)
attached hereto and made a part hereof.
(h) All of Seller's original books and records (other than
financial and tax records).
(i) All of Seller's permits and licenses to operate the business;
all of Seller's right, title, and interest in and to the name "Right Associates"
and such other trademarks and tradenames as Seller may have or use
(collectively, the "Names"), which Names are listed on Schedule 1(i) attached
hereto and made a part hereof; all advertising and yellow pages and telephone
numbers; and all related goodwill.
(j) All of Seller's sales and counseling materials.
(k) All other tangible and intangible assets of Seller not
otherwise described above but excluding Seller's cash, accounts receivable or
any security deposit or pre-paid rent under the Premises Leases as of the
Effective Date (hereinafter defined).
2. Excluded Assets.
The Assets shall not include any of Seller's cash, accounts receivable
as of the Effective Date ("Seller's Receivables"), the security deposit or
pre-paid rent under the Premises Lease as of the Effective Date, or such other
assets as are listed on Schedule 2 attached hereto and made a part hereof. The
parties hereto acknowledge and agree that Seller shall have the right to collect
Seller's Receivables on and after the Closing, subject to the provisions of
Sections 3 and 4 hereof. For purposes of determining if payments received are on
account of Seller's Receivables under this Agreement, if a payment received on
or after the Closing is not otherwise identifiable as being on account of (or
specifically not on account of) a specific
<PAGE>3
candidate or project, then such payment shall first be considered received on
account of Seller's Receivables to the extent thereof, and only payments
received in excess thereof or thereafter shall be considered received on account
of account receivables generated after the date of the Closing ("Buyer's
Receivables").
3. Collection of Seller's Receivables.
After the Closing:
(a) If Buyer shall receive payments solely on account of Seller's
Receivables, Buyer shall promptly (taking into account Buyer's normal accounting
procedures) forward such payments directly to Seller.
(b) If Buyer shall receive payments which are on account of both
Seller's Receivables, and Buyer's Receivables, Buyer shall deposit such payments
in its own account and promptly forward to Seller (taking into account Buyer's
normal accounting procedures) that portion of such payments received in the
prior calendar month which are on account of Seller's Receivables, along with an
accounting of all such payments.
4. Collection of Buyer's Receivables.
After the Closing:
(a) If Seller shall receive payments solely on account of Buyer's
Receivables, Seller shall promptly (taking into account Seller's normal
accounting procedures) forward such payments directly to Buyer.
(b) If Seller shall receive payments which are on account of both
Buyer's Receivables and Seller's Receivables, Seller shall deposit such payments
in its own account and promptly forward to Buyer (taking into account Seller's
normal accounting procedures) that portion of such payments received in the
prior calendar month which are on account of Buyer's Receivables, along with an
accounting of all such payments.
5. Assumption/Non-Assumption of Liabilities.
(a) Assumption of Certain Liabilities. At the Closing, Buyer shall
assume: (i) the obligations arising after the Effective Date under the Leases,
(ii) the obligations arising after the Effective Date under the Counselling
Contracts, and (iii) the obligations arising after the Effective Date under the
contracts and agreements listed on Schedule 5(a) (collectively, the "Assumed
Obligations").
(b) Non-Assumption of All Other Liabilities. It is expressly
acknowledged, understood and agreed by Seller that, except for the Assumed
Obligations, Buyer has not assumed,
<PAGE>4
undertaken, agreed to perform or accepted any responsibility for, and does not
and will not, in any way, assume, undertake, agree to perform, or accept
responsibility for, any debts, contracts, liabilities, or obligations or Seller
of any kind, whether such debts, contracts, liabilities or obligations be
absolute, known or unknown, liquidated or unliquidated, contingent or otherwise
pending or threatened, or whether incurred before or after the Effective Date,
including, without limitation, trade or other accounts payable, liabilities or
obligations of Seller to its employees under any employee benefit plans of any
kind, any liability for wage, income, sales or other tax or any other
liabilities of any and every kind.
(c) Closing Adjustments. At the Closing, (i) Buyer and Seller will
prorate as of the Effective Date, utilities, real estate taxes, rents under the
Leases, obligations/payments under the agreements listed on Schedule 5(a),
payroll, and such other items of expense as may require proration, and add or
deduct to the Cash Portion of the Purchase Price (hereinafter defined), as the
case may be, such prorated amounts; (ii) Buyer will reimburse Seller for the
amount of the security deposit under the Premises Lease as of the Closing Date
(hereinafter defined); and (iii) Buyer will reimburse Seller for expenses
incurred by the Business between the Effective Date and the Closing Date and
actually paid by Seller, less revenues earned by the Business between the
Effective Date and the Closing Date and actually collected by Seller.
6. Seller's Employees; Shareholders.
(a) Employing Employees. All of Seller's employee's who are so
employed by Seller on the Closing Date (the "Employees"), except Principal,
shall be hired and employed by Buyer effective as of the Effective Date at their
current levels of compensation (except for those employees who decline such
employment with Buyer). The Employees shall retain their original employment
date with Seller as their effective date of hire with Buyer for the purpose of
determining vesting and qualification for benefits offered by Buyer. The
Employees will be eligible for benefits available to other employees of Buyer at
their respective levels, except with respect to commission, bonus or incentive
plans. The Employees will remain on substantially identical salary, bonus,
commission and expense reimbursement plan as they had as employees of Seller
unless and until Principal and Buyer agree otherwise.
(b) Employment of Principal. Principal shall be employed by Buyer
on the Closing Date pursuant to the terms of an Employment Agreement in the form
attached hereto as Exhibit 6(b) ("Principal's Employment Agreement").
(c) Employee Restrictive Covenants. Each Employee may, at Buyer's
discretion, be required to execute and deliver to Buyer, at or prior to the
Closing, a standard Buyer Employee Non-
<PAGE>
Solicitation/Non-disclosure Agreement in the form attached hereto as Exhibit
6(c) (the "Employee Restrictive Covenant"), in connection with and as a
condition of such Employee's employment by Buyer. Buyer shall deliver to Seller
no later than 10 days prior to the Closing Date a list of Employees from which
Buyer shall require an Employee Restrictive Covenant, which list shall be
attached hereto at the Closing as Schedule 6(c) and made a part hereof.
(d) Shareholder Restrictive Covenants. In connection with and as an
inducement to Buyer to entering into this Agreement and purchasing the Assets
hereunder, each shareholder of Seller other than Principal shall be required to
execute and deliver to Buyer at or prior to Closing, a Restrictive Covenant
Agreement in the form attached hereto as Exhibit 6(d) (the "Employee-Shareholder
Restrictive Covenant Agreement").
(e) No Other Obligations. Except as set forth herein, Buyer assumes
no liability or responsibility for any liabilities or obligations relating to
the Employees for any wage, salary, bonus or commission plan, benefit plan,
accrued but unused vacation, or any taxes associated therewith. At the Closing,
Seller shall reimburse Buyer for any such amounts accrued or incurred by Seller,
but not paid by Seller, prior to the Effective Date.
7. The Purchase Price.
(a) Amount of the Purchase Price. The purchase price payable by
Buyer to Seller for the Assets (the "Purchase Price") is (i) $2,700,000; (ii)
minus all amounts owed by Seller to Buyer, including without limitation, all
amounts so owed pursuant to the Affiliate Agreement, and plus all amounts owed
by Buyer to Seller, including without limitation, all amounts so owed pursuant
to the Affiliate Agreement; (iii) minus the WIP Adjustment as set forth in
Section 7(b) hereof; and (iv) plus the Profit Incentive as set forth in Section
7(c) hereof. (The Purchase Price excluding the Profit Incentive is hereinafter
referred to as the "Cash Portion of the Purchase Price"). Nothing in this
Section 7(a) shall be interpreted as accelerating amounts owed under the
Affiliate Agreement or under any agreement or arrangement between Seller and any
affiliate or franchisee of Buyer; therefore, for example, royalties and
counseling fees owed under the Affiliate Agreement only upon the event of
certain collections shall continue to be owed only upon such collections and
shall not be considered owed at the time of the Closing. Notwithstanding
anything herein to the contrary, Principal hereby unconditionally and
irrevocably guaranties the obligations of Seller under the Affiliate Agreement
and under any agreement or arrangement between Seller and any affiliate or
franchisee of Buyer that will not be satisfied at or prior to the Closing.
(b) WIP Adjustment. The WIP Adjustment is the amount payable to
Buyer by Seller as compensation to Buyer for
<PAGE>6
performing services for candidates which still are in an outplacement consulting
program under a Counselling Contract (excluding any group programs) as of the
Effective Date. The WIP Adjustment is calculated by multiplying (A) the fees and
expenses billed by or on behalf of Seller through the Effective Date under,
pursuant to, or in connection with the Counselling Contracts (excluding billings
for group programs) for candidates still in an outplacement consulting program
as of the Effective Date, by (B) the percentage set forth in the following chart
opposite the number of days prior to the Effective Date such candidates were in
such outplacement program:
Days Existing Candidates in
Program Prior to Effective Date WIP ADJUSTMENT
------------------------------- --------------
0-30 Days 34%
31-60 Days 18%
61-90 Days 10%
91-120 Days 6%
121-180 Days 4%
over 180 days 2%
(c) Profit Incentive. The Profit Incentive is an amount to be
determined based upon the operating income of the Business in each of the three
fiscal years immediately following the Effective Date (each, a "Fiscal Year"). A
portion of the Profit Incentive shall be calculated for and after each of the
three Fiscal Years as follows:
(i) The portion of the Profit Incentive calculated for and
after the one year period beginning on the Effective Date (the "First Fiscal
Year") shall equal:
(1) 50% of the Business's Compensable Income (hereinafter
defined) if the Business's Operating Income (hereinafter defined) is greater
than $1,900,000; or
(2) 45% of the Business's Compensable Income if the
Business's Operating Income is between $1,500,001 and $1,900,000; or
(3) 40% of the Business's Compensable Income if the
Business's Operating Income is between $1,200,001 and $1,500,000; or
(4) 35% of the Business's Compensable Income if the
Business's Operating Income is between $900,001 and $1,200,000; or
(5) 30% of the Business's Compensable Income if the
Business's Operating Income is less than or equal to $900,000; provided however,
if the Business's Operating Income for the First Fiscal year is less than 10% of
the Business's Net Revenue (hereinafter defined) for the First Fiscal Year, the
<PAGE>7
portion of the Profit Incentive related to the First Fiscal Year shall be equal
to zero.
(ii) The portion of the Profit Incentive calculated for and
after the one year period beginning immediately after the First Fiscal Year (the
"Second Fiscal Year") shall equal:
(1) 50% of the Business's Compensable Income if the
Business's Operating Income is greater than $2,000,000; or
(2) 45% of the Business's Compensable Income if the
Business's Operating Income is between $1,600,001 and $2,000,000; or
(3) 40% of the Business's Compensable Income if the
Business's Operating Income is between $1,300,001 and $1,600,000; or
(4) 35% of the Business's Compensable Income if the
Business's Operating Income is between $1,000,001 and $1,300,000; or
(5) 30% of the Business's Compensable Income if the
Business's Operating Income is less than or equal to $1,000,000; provided
however, if the Business's Operating Income for the Second Fiscal year is less
than 10% of the Business's Net Revenue for the Second Fiscal Year, the portion
of the Profit Incentive related to the Second Fiscal Year shall be equal to
zero.
(iii) The portion of the Profit Incentive calculated for and
after the one year period beginning immediately after the Second Fiscal Year
(the "Third Fiscal Year") shall equal:
(1) 50% of the Business's Compensable Income if the
Business's Operating Income is greater than $2,100,000; or
(2) 45% of the Business's Compensable Income if the
Business's Operating Income is between $1,700,001 and $2,100,000; or
(3) 40% of the Business's Compensable Income if the
Business's Operating Income is between $1,400,001 and $1,700,000; or
(4) 35% of the Business's Compensable Income if the
Business's Operating Income is between $1,100,001 and $1,400,000; or
(5) 30% of the Business's Compensable Income if the
Business's Operating Income is less than or equal to $1,100,000; provided
however, if the Business's Operating Income
<PAGE>8
for the Third Fiscal year is less than 10% of the Business's Net Revenue for the
Third Fiscal Year, the portion of the Profit Incentive related to the Third
Fiscal Year shall be equal to zero.
(iv) Compensable Income means, with respect to any fiscal year,
the Business's Operating Income for such fiscal year minus 10% of its Net
Revenue for such fiscal year.
(v) Net Revenues means, with respect to any fiscal year, (A)
the total amount of the Business's client billings on an accrual basis in
accordance with generally accepted accounting principles, reduced by the amount
of client billings allocated or paid to other Buyer-owned or Buyer- subsidiary
owned offices, offices of Buyer's franchised affiliates or third party
consultants or contractors pursuant to the Network policies regarding client
billings allocations among offices in the Network (the "Policies"), plus (B) the
amount allocated or paid by other Buyer-owned or Buyer-subsidiary owned offices
or offices of Buyer's franchised affiliates to Buyer in respect of the Business
in accordance with the Policies.
(vi) Operating Income means, with respect to any fiscal year,
the Business's Net Revenues for such fiscal year less the direct costs
attributable solely to the operation of the Business in such fiscal year (the
"Costs"). The Costs include, in addition to other direct costs which are
attributable solely to the operation of the Business shall include: (A) an
allocation for insurance purchased by Buyer for its various operations and
businesses which is directly related to the Business (allocated in accordance
with the standard methodology used by Buyer for offices not subject to any
profit incentive or earnout arrangement), (B) depreciation of physical assets of
the Business acquired before or after the Closing (calculated in accordance with
the standard methodology used by Buyer for offices not subject to any profit
incentive or earnout arrangement), and (C) a direct charge for any capital
expenditures for the Business in excess of any amounts budgeted or approved by
Buyer for the Business (in lieu of amortization of such amounts).
The Costs also shall include a carrying charge at a rate of 1%
per month for accounts receivable over 60 days; provided that if and when such
an account receivable is deemed uncollectible by the Business and a charge for
such account receivable is taken against income, the 1% carrying charge shall no
longer be levied against it. The charge against income for such account
receivable deemed uncollected shall be reversed if and when such account
receivable is collected.
The Costs shall not include (A) the first $50,000 per year of
Principal's salary and 20% of his fringe benefits costs (which shall be charged
against Buyer's corporate accounts), (B) any allocations of overhead from other
offices or from the corporate headquarters of Buyer, (C) royalty charges
<PAGE>9
against the Business under the Affiliate Agreement, (D) payments due as part of
the Profit Incentive, (E) charges for working capital (except with respect to
past due accounts as described herein), (F) travel and related expenses for
Principal or other Business employees for travel pertaining to Buyer corporate
purposes (except Business staff training), or (G) any charge for Federal or
California state income or franchise taxes on the Business's revenue or Buyer's
corporate revenue, or (H) any amortization of intangible assets acquired at
Closing (which consist of those assets listed in Sections 1(a), 1(b), 1(c),
1(e), 1(f), 1(h) and 1(i) hereof), or any incremental valuation adjustment
subsequently made thereto.
(d) Payment of Purchase Price. The Purchase Price shall be payable
as follows:
(i) Buyer shall deliver to Seller at the Closing the Cash
Portion of the Purchase Price by wire transfer of immediately available funds to
an account designated by Seller.
(ii) Buyer shall deliver to Seller by check within 60 days
after the end of the First Fiscal Year, the Second Fiscal Year and the Third
Fiscal Year, the portion of the Profit Incentive, if any, for such Fiscal Year.
In the event that payment of the portion of the Profit Incentive for a Fiscal
Year is not made within 60 days after the end of such Fiscal Year, the amount of
such payment shall accrue interest at the rate of 1% per month, prorated for
each day that such payment is late.
(e) Access to Financial Information. Seller and Principal shall
each have the right, on an on-going basis during the three Fiscal Years and once
during the one year period after the end of the Third Fiscal Year, to examine,
or have a duly authorized representative examine, the books of account and
records of Buyer relating to the costs and cost allocations that comprise the
Costs, and the Net Revenues (but only those books and records relating to the
Costs and the Net Revenues). Such financial information generally will be
accessible to Seller and Principal through on-line computer linkage between the
Business's office and Buyer's headquarters, and may be subject to correction, if
necessary, based upon discussions between the Business's office and Buyer's
headquarters. To the extent such information is not accessible through on-line
linkage, or if Principal's employment with Buyer pursuant to Principal's
Employment Agreement has been terminated for any reason whatsoever, Seller and
Principal each shall have access to such financial information during regular
business hours and upon prior reasonable notice. During such an examination, the
examining party, or its duly authorized representative shall have free and full
access to such books and records, for the purpose of conducting the examination
and for the purpose of making copies thereof and extracts therefrom.
<PAGE>10
(f) Allocation of Purchase Price. The Purchase Price shall be
allocated as follows:
(i) All physical, tangible Assets, including the Equipment,
materials and supplies, and all Leases shall be valued at their book value as
carried on Seller's books as of the Effective Date.
(ii) The remainder of the Purchase Price shall be allocated to
the customer and contact list, Counselling Contracts, covenants not to compete
described in Section 1(c), other intangibles and the goodwill, with $100,000
being specifically allocated to all the covenants not to compete and restrictive
covenants referenced in this Agreement and the $12,500 being specifically
allocated to the Affiliate Agreement. Notwithstanding the foregoing, Seller and
Principal acknowledge and agree that $100,000 is not the limit or extent of the
dollar value of damages that could be incurred by Buyer in the event of a
violation or breach, by Seller, Principal or any other party, of any of the
covenants not to compete or restrictive covenants referenced or contained in
this Agreement.
(g) Matters Related to Principal's Employment. Pursuant and subject
to the terms of an Employment Agreement between Buyer and Principal of even date
herewith (the "Employment Agreement"), Principal has been given full
responsibility for the overall operations of the Business. Buyer acknowledges
that such responsibility for Principal is a material inducement for Seller to
believe that it may receive substantial Profit Incentive under this Agreement
and for Seller and Principal to enter into this Agreement.
8. Restrictive Covenants.
In order to induce Buyer to execute this Agreement and purchase the
Assets hereunder for the purpose of operating the Business, Seller and Principal
each hereby covenant and agree as follows:
(a) Non-Competition. Seller and Principal each hereby covenant
and agree that for a period of 4 years following the Effective Date, they,
individually and collectively, shall not, directly or indirectly, either for
their own account or as a partner or joint venturer, or as an agent for any
person or entity other than Buyer, or as a shareholder (other than as the holder
of 5% or less of an exchange listed stock), owner or otherwise, anywhere within
the Territory (hereinafter defined): (i) engage in the business of selling or
providing corporate outplacement consulting services; (ii) engage in any
corporate outplacement consulting and career consulting for employees, provide
any related human resources services and products or engage in any business in
competition with any business carried on by Seller immediately preceding the
Effective Date; or (iii)
<PAGE>11
solicit or induce any employee of Buyer to terminate such employee's employment
with Buyer.
(b) Territory. For the purposes of this Agreement, Territory
shall mean the Territory assigned to Seller under the Affiliate Agreement which
is listed on Schedule 8(b) hereto.
(c) Non-Solicitation. Seller and Principal each hereby covenant
and agree that for a period of 4 years following the Effective Date, they,
individually and collectively, shall not, directly or indirectly, either for
their own account or as a partner or joint venturer, or as an agent for any
person or entity other than Buyer, or as a shareholder (other than as the holder
of 5% or less of an exchange listed stock), owner or otherwise, solicit, attempt
to solicit or cause to be solicited any party who is, as of the Effective Date a
client of Seller or who was actively solicited by Seller, its agents,
representatives, affiliates or employees within 6 months prior to the Effective
Date, including without limitation, the entities listed on Schedule 8(c) hereto.
(d) Non-Disclosure. Seller and Principal each hereby covenant
and agree that at all times after the Effective Date, they shall not,
individually or collectively, use for their benefit or disclose, communicate or
divulge to, or use for the direct or indirect benefit of any person, firm,
association or company other than Buyer, any confidential information regarding
the business methods, business policies, procedures, techniques, research or
development projects or results, or other processes or knowledge not in the
public domain, used or developed by Buyer or Seller in or for the Business or
any names or the addresses of any customers or clients of the Business or any
data on or relating to past, present or prospective customers or clients or any
other confidential information relating to or dealing with the business
operations or activities of the Business or the Network. Nothing in this Section
8(d), shall be interpreted as prohibiting Seller or Principal from working or
speaking on matters relating to the corporate outplacement industry generally
except as may be expressly prohibited by the terms of this Agreement, including
this Section 8(d), or other agreements by which Seller or Principal are bound.
(e) Remedies. Seller and Principal each hereby acknowledges
that the restrictions contained in this Section 8 in view of the nature of the
Business engaged and the transactions taking place under this Agreement, are
reasonable and necessary in order to protect the legitimate interests of Buyer,
and that any violation thereof would result in irreparable injuries to Buyer.
Seller and Principal each therefore acknowledges that, in the event of a
violation of any of these restrictions, Buyer shall be entitled to obtain from
any court of competent jurisdiction emergency, preliminary and permanent
injunctive relief from the person violating such restrictions as well as damages
and an equitable accounting of all earnings, profits and
<PAGE>12
other benefits from such person arising from such violation, which rights will
be cumulative and in addition to any other rights or remedies to which Buyer may
be entitled from such person.
(f) Enforceable. If for any reason, and to the extent, any
paragraph or portion of a paragraph from this Section 8 shall be held by a court
to be invalid or unenforceable, it is agreed that the same shall not affect any
other paragraph or portion hereof, but the remaining covenants and restrictions
or portions hereof shall remain in full force and effect; and that if such
invalidity or enforceability is due to the unreasonableness of the time or
geographical area covered by the said covenants and restrictions, said covenants
and restrictions of this Agreement shall nevertheless be effective for such
period of time and for such area as may be determined to be reasonable by a
court of competent jurisdiction.
(g) Non-Responsibility. Seller and Principal shall not be
deemed to have breached any covenant or agreement in this Section 8 on account
of any action or omission of any employee or shareholder of Seller on his or her
own behalf or on behalf of or for the benefit of any person or entity other than
Seller or Principal.
9. Closing; Effective Date.
The closing under this Agreement (the "Closing") will take place on
February 15, 1995 (the "Closing Date") at the offices of Gray Cary Ware &
Freidenrich, counsel to Seller, or at such other time or place as the parties
shall mutually agree. Unless otherwise specified herein, the date as of which
the transactions provided for herein shall be deemed effective (the "Effective
Date") is January 1, 1995.
10. Representations and Warranties of Seller and Principal.
Seller and Principal hereby jointly and severally, and
unconditionally, represent and warrant to Buyer that:
(a) Corporate Organization; Authority. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of
California; has the power and authority to own and use the Assets and to carry
on the Business as it is now conducted; and is qualified to do business in each
jurisdiction wherein the conduct of the Business makes such qualification
necessary. Seller has the full corporate power,
<PAGE>13
right, and authority to make, execute, deliver, and perform this Agreement, and
to take all steps and to do all things necessary and appropriate to consummate
the transactions contemplated herein. The execution, delivery, and performance
of this Agreement have been duly authorized by all necessary corporate action on
the part of Seller and will not contravene or violate or constitute a breach of
the terms of Seller's Articles of Incorporation or By-laws.
(b) Binding Obligation - Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller in accordance with its terms. The execution, delivery, and
performance of the Agreement will not conflict with, result in a breach of, or
entitle any party to terminate or call a default under any contract, instrument,
judgment, order, decree, law, rule, or regulation applicable to Seller or by
which Seller is bound.
(c) Binding Obligation - Principal. This Agreement constitutes
the legal, valid and binding obligation of Principal enforceable against
Principal in accordance with its terms. The execution, delivery and performance
of the Agreement will not conflict with, result in a breach of, or entitle any
party to terminate or call a default under any contract, instrument, judgment,
order, decree, law, rule or regulation applicable to Principal or by which
Principal is bound.
(d) Shareholders. All of the issued and outstanding shares of
stock of Seller are owned by the shareholders listed on Schedule 10(d) attached
hereto and made a part hereof (the "Shareholders"), and except as set forth on
Schedule 10(d), there are no warrants, options or any other documents or
instruments in existence or effect which give any other person or entity the
right, contingent or otherwise, to purchase any shares of Seller's stock from
Seller or Principal.
(e) Consents. No consent of any party to any contract or
arrangement to which Seller or Principal is a party, by which Seller or
Principal is bound, or to which the Business is subject is required for the
execution, consummation, or performance of this Agreement. No authorization,
approval, or consent of, and no registration or filing with, any governmental or
regulatory official, body, or authority is required in connection with the
execution, delivery, or performance of this Agreement by Seller or Principal.
(f) Litigation. There are no actions, suits, proceedings,
orders, investigations, or claims pending or threatened, against or relating to
Seller, the Assets, the Business, or that would affect this Agreement, or, that
if adversely determined, could have a material adverse affect on Seller or the
Business, at law or in equity, or before or by any federal, state, municipal or
other governmental department,
<PAGE>14
commission, board, bureau, agency or instrumentality, domestic or foreign, and
there is no basis for any of the foregoing.
(g) Taxes. Seller has delivered to Buyer the federal income tax
return of Seller for the year ended December 31, 1993. All federal, state,
local, and other returns and reports which are required to be filed by Seller
have been filed, and all taxes indicated thereon as being payable, and all
assessments, interest, and penalties levied thereon have been paid by Seller for
all periods up through and including the Effective Date. No tax return of Seller
is currently under audit by any taxing authority. Seller has withheld all
amounts required by law to be withheld from payments made by it as of the
Effective Date and has remitted such amounts to the appropriate authorities
within the times required by law.
(h) Books and Records. The books and accounts and other
corporate records of Seller relating to the Business and the Assets are complete
and correct in all material respects, and all material transactions of Seller
have been accurately recorded therein.
(i) Compliance with Laws. Seller is in compliance with all
existing requirements of federal, state, and local laws, regulations and
ordinances, and all existing requirements of all governmental bodies or agencies
having jurisdiction over it and relating to Seller or the operation of the
Business. Seller has not violated any laws relating to pollution or protection
of the environment. There are no pending or, to the best of Seller's knowledge,
threatened lawsuits or administrative proceedings against Seller that may affect
Seller or the Business regarding environmental compliance, control or liability.
(j) Financial Statements. Seller has delivered to Buyer the
financial statements of Seller for the 11-month period ending November 30, 1994
and, in a memo to Buyer dated November 30, 1994 accompanying the 11-month
financial statements, certain pro forma statements of Seller for the 11-month
period ending November 30, 1994 (collectively the "Financial Statements"). The
Financial Statements are true, correct and complete in all respects, and fairly
and accurately present the financial condition of Seller as of the date thereof
and the results of Seller's operations for the period described therein under
accounting principles consistently applied in previous years. Since November 30,
1994 Seller has operated the Business only in the ordinary course; there has
been no material adverse change in the financial condition, results of
operation, assets, business operations, future prospects known to Seller or
Principal, or liabilities of the Seller or the Business. There are no
liabilities of Seller, long-term or short-term, contingent or otherwise, as of
the Effective Date, which are not set forth in the Financial Statements. No
liabilities have been incurred since November 30, 1994 other than in the normal
course and which have not been recorded in Seller books and records. Seller has
<PAGE>15
previously provided Buyer various estimates of business conditions and prospects
respecting the Business for 1994 (the "Informal Estimates"). The Financial
Statements supersede all such Informal Estimates, and Seller and Principal
hereby expressly disclaim any representations or warranties regarding any such
Informal Estimates.
(k) Counselling Contracts. Schedule 1(b) contains a complete
list of all of Seller's counselling contracts and all candidates being
counselled under such counselling contracts as of the date hereof, which list
will be updated in full by Seller on the Closing Date. All counselling contracts
are in good standing, and Seller is not in default or breach of, and there
exists no event or state of facts which, after the giving of notice, the passage
of time or both, would constitute a default or breach under any of the
counselling contracts. Seller has not transferred, assigned, or granted any
interest in or agreed to transfer, assign, or grant any interest in any of the
counselling contracts to any party. Seller is not aware of any fact, event or
circumstances that would cause a disruption in Seller's relations or business
prospects with any of its clients. Seller has delivered, or at or prior to the
Closing will deliver to Buyer true and correct copies of the current counselling
contracts.
(l) Leases. Schedule 1(f) contains a true and complete schedule
of all of the Leases, listing for each of the Leases the name and address of the
lessor, the amount of payments due annually, and a description of the leased
premises or equipment and its location. Seller has paid all amounts due and is
not in default under any of the Leases, and there exists no condition or event
which, with the passage of time, the giving of notice or both, will constitute a
default under any such Lease. The Leases are the sole leases of interests in
real property or personal property relating to Seller or the Business or to
which Seller is a party. The Leases may be assigned to Buyer without the consent
of any third party, or Seller has obtained or will obtain, prior to the Closing,
the necessary consents to authorize such assignment to Buyer. Seller has
delivered, or at or prior to the Closing will deliver, to Buyer true and correct
copies of the Leases.
(m) Equipment. All of the Equipment is listed on Schedule 1(g),
which list shall be updated in full by Seller on the Closing Date, and all such
Equipment is in good operating condition and repair, subject to normal wear and
tear, is usable in the regular and ordinary course of business, and conforms to
all applicable laws, ordinances, codes, rules, and regulations relating to its
use and operation.
(n) Names. Schedule 1(i) contains complete list of all of the
Names used or held by Seller for use by Seller in the conduct of the Business.
The Names do not infringe upon the fictitious names, corporate names, trade
names, trademarks,
<PAGE>16
service marks, business styles, or other proprietary rights or property of any
other party, no other party is infringing upon the Names, and no such
infringement has been alleged, either by or against Seller. Seller and Principal
will not, from and after the Closing Date, collectively or individually, use any
of the Names, or any names similar thereto, except as an employee, consultant or
other agent of Buyer.
(o) Assets. The Assets include all material rights and property
necessary to the conduct of the Business by Buyer in the manner it is currently
conducted by Seller. Seller owns all of the Assets free and clear of all liens,
claims, security interests, and encumbrances of any kind whatsoever.
(p) Employees. Schedule 10(p) attached hereto and made a part
hereof contains a true and correct list of all of Seller's employees, their
current compensation, including all anticipated bonuses and incentive payments,
and the date and amount of their last compensation increase. Except as disclosed
on Schedule 10(p), no Employee has received an increase in compensation or has
been granted participation in a bonus or incentive payment plan within the past
three months, and no such increase or grant of participation was made except in
the ordinary course. Except as disclosed on Schedule 10(p), as of the Effective
Date, no present or former employee of Seller shall be entitled to any
retirement pay or retirement benefits of any kind. Except as disclosed on
Schedule 10(p) Seller is not a party to any contract with any labor union, or
any bonus, pension, profit sharing, retirement, insurance, deferred compensation
plan or other plan providing for benefits to employees of Seller for which Buyer
shall become obligated to make payments or become otherwise liable. Seller does
not now maintain or make contributions to and has not, at any time in the past,
maintained or made contributions to (i) any employee benefit plan which is
subject to the minimum funding requirements of ERISA, or (ii) any multi-employer
plan subject to the terms of the Multi-Employer Pension Amendment Act of 1980.
(q) Insurance Policies. Schedule 10(q) contains a schedule of
all insurance policies owned or maintained by Seller insuring or relating to the
Assets or the Business. Said list includes policy numbers, identity of insurers,
and a brief description of the nature of insurance included in each such policy.
All said insurance policies are in full force and effect, and all premiums
thereunder have been paid through the Effective Date. Seller will continue to
maintain such insurance coverage in full force and effect through the Closing
Date. Seller has delivered, or at or prior to the Closing will deliver to Buyer
true and correct copies of said insurance policies.
(r) No Bulk Sale. No provision contained in the California
Uniform Commercial Code - Bulk Transfers, or any other California law applicable
to or triggered by the bulk transfer of
<PAGE>17
assets, is applicable to the transactions contemplated by this Agreement.
(s) Business; Competition. Seller is not presently conducting,
and has not in the past conducted, any business other than the Business. To the
best knowledge of Seller and Principal, no Shareholder or Employee, or any
affiliate of any of them, nor any person with whom any of them does not act at
arm's length, has any direct or indirect interest in any business competitive
with the Business.
(t) No Misrepresentations. No statement made by Seller or
Principal in any representation, warranty, or covenant made by Seller and/or
Principal to Buyer in this Agreement, or in any other document furnished by
Sellers to Buyer in connection with the transaction contemplated hereby,
contains any untrue statement of material fact, or omits to state a material
fact required to be stated to make such statement, in light of the circumstances
in which such statement was made, not misleading. Notwithstanding the foregoing,
Seller and Principal make no representation or warranty regarding the Informal
Estimates.
(u) Accuracy at Closing. Seller's representations and
warranties contained in this Agreement will be accurate, true and complete and
correct in all material respects on and as of the Closing Date as though made at
such date in identical language.
11. Representations and Warranties of Buyer. Buyer hereby
unconditionally represents and warrants to Seller as follows:
(a) Corporate Organization; Authority. Buyer is a corporation
duly organized and validly subsisting under the laws of Pennsylvania and has the
power and authority to own the Assets and conduct the Business. Buyer has the
full corporate power, right and authority to make, execute, deliver and perform
this Agreement, and to take all steps and to do all things necessary and
appropriate to consummate the transactions contemplated herein. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on the part of Buyer and will not contravene or
violate or constitute a breach of the terms of Buyer's Articles of Incorporation
or By-laws.
(b) Binding Obligation. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid and binding obligation
of Buyer in accordance with its terms. The execution, delivery and performance
of the Agreement will not conflict with, result in a breach of, or entitle any
party to terminate or call a default with respect to any contract, instrument,
judgment, order, decree, law, rule or regulation applicable to Buyer or by which
Buyer is bound.
(c) Consents. No consent of any party to any contract or
arrangement to which Buyer is a party or by which it is bound
<PAGE>18
is required for the execution, consummation or performance of this Agreement. No
authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in connection
with the execution, delivery or performance of this Agreement by Buyer.
(d) Litigation. There are no actions, suits, proceedings,
orders, investigations, or claims pending or threatened, against or relating to
Buyer that would affect this Agreement, or, if adversely determined, could have
a material adverse affect on Buyer, at law or in equity, or before or by any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, and there is no basis
for any of the foregoing.
(e) No Misrepresentations. No statement made by Buyer in any
representation, warranty or covenant made by Buyer to Seller in this Agreement,
or in any other document furnished by Buyer to Seller in connection with the
transaction contemplated hereby, contains any untrue statement of material fact,
or omits to state a material fact required to be stated to make such statement,
in light of the circumstances in which such statement was made, not misleading.
(f) Accuracy at Closing. Buyer's representations and warranties
contained in this Agreement will be accurate, true and complete, and correct in
all material respects on and as of the Closing Date as though made at such date
in identical language.
12. Employment; Key person Insurance - Principal.
(a) Buyer shall employ Principal, as of the Effective Date, as
Managing Principal of the Business pursuant to Principal's Employment Agreement,
executed by Buyer and Principal at or prior to the Closing.
(b) Buyer shall, at its sole option and expense (i) procure,
maintain, be named the owner and beneficiary of one or more Key Person Life
Insurance Policies with a total face amount of $2,500,000 on the life of
Principal, or take assignment from Seller of any and all Key Life Insurance
Policies on the Life of Principal owned by Seller. Principal shall cooperate
fully by performing all the requirements of any life insurance company issuing
such a policy which are conditions to the issuance of such a policy, and Seller
and Principal shall cooperate fully by, at Buyer's request pursuant to this
Section 12, causing the insurance companies that issued the existing Key Life
Insurance Policies on the life of Principal owned by Seller to transfer such
policies to Buyer. Buyer will prorate life insurance premiums as of the
Effective Date with Seller or any other person assigning a life insurance policy
to Buyer under this Section 12(b).
<PAGE>19
13. Conditions to Obligation of Buyer. Buyer's obligation to consummate
the transaction contemplated by this Agreement is subject to the satisfaction
and fulfillment at or before the date of Closing of each of the following
conditions:
(a) Representations and Warranties True at Closing. All
representations and warranties of Seller and Principal made in or pursuant to
this Agreement shall be true and correct, in all material respects, at and as of
the Closing with the same force and effect as though made at and as of the
Closing, and Seller shall have performed, observed and complied in all material
respects with all the obligations and conditions required by this Agreement to
be performed, observed or complied with at or prior to the Closing; and Buyer
shall have received, at Closing, a certificate to such effect from the Chief
Executive Officer of Seller and from Principal in form and substance reasonably
satisfactory to Buyer.
(b) Key Person Insurance. Buyer shall have obtained Key Person
Insurance on the life of Principal in a face amount of $2,500,000.
(c) Performance of Agreements and Conditions. Seller shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed and complied with by it
prior to or at the Closing.
(d) No Bankruptcy. As of the Closing Date: (i) no creditors of
Seller shall have filed a petition seeking the entry of a decree or order for
relief under bankruptcy or insolvency or similar laws or for liquidation or
reorganization of Seller, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, or similar official for Seller or any of its
property; (ii) Seller shall not have commenced a voluntary case under bankruptcy
laws or insolvency or similar laws; and (iii) Seller shall not have consented to
the appointment or taking possession by a receiver, liquidator, assignee,
trustee, custodian or similar official for Seller or Seller's property.
(e) Deliveries. Seller shall have delivered to Buyer the
following:
(i) Certified copies of resolutions of the Board of
Directors and the shareholders of Seller authorizing the execution and delivery
of this Agreement and the performance of the transactions contemplated herein.
(ii) Certified copy of Seller's Articles of Incorporation
and By-Laws, a certificate of good corporate standing for Seller and
certificates of authority evidencing Seller's qualification to do business for
each jurisdiction wherein the conduct of the Business makes such qualifications
necessary.
<PAGE>20
(iii) Possession of the Assets (or the right to obtain
possession on demand) together with bills of sale, endorsements, assignments,
certificates of titles and other good and sufficient instruments of sale,
transfer, assignment and releases as may be necessary, appropriate or desirable
and in form satisfactory to Buyer to transfer to and effectively vest good title
to the Assets (i.e. free and clear of all liens, claims, security interests, and
encumbrances whatsoever), to Buyer.
(iv) Assignments of the Leases and the consent of the
lessors of the Leases to such assignments in form and substance satisfactory to
Buyer, along with an estoppel certificate of each lessor stating that with such
lessor's Lease is in full force and effect and no default or event which would,
with notice or the passage of time (or both) constitute a default by Seller or
by the lessor, has occurred or is continuing thereunder.
(v) Principal's Employment Agreement executed and delivered
by Principal.
(vi) All of the Shareholder Restrictive Covenants executed
and delivered by all of the Shareholders other than Principal.
(vii) All of the Employee Restrictive Covenants executed
and delivered by the Employees listed on Schedule 6(c).
(viii) The opinion, dated as of the date of Closing, of
Gray Cary Ware & Freidenrich, a Professional Corporation, counsel to Seller, in
form and substance satisfactory to counsel for Buyer, with respect to the items
set forth on Schedule 13(e)(viii) hereto.
14. Conditions to Obligation of Seller.
Seller's obligations to consummate the transaction contemplated by
this Agreement is subject to the satisfaction and fulfillment at or before the
date of Closing of each of the following conditions:
(a) Representations and Warranties True at Closing. All
representations and warranties of Buyer made in or pursuant to this Agreement
shall be true and correct, in all material respects, at and as of the Closing
with the same force and effect as though made at and as of the Closing, and
Buyer shall have performed, observed and complied in all material respects with
all the obligations and conditions required by this Agreement to be performed,
observed or complied with at or prior to the Closing; and Seller shall have
received, at the Closing, a certificate to such effect from an officer of Buyer
in form and substance reasonably satisfactory to Seller.
<PAGE>21
(b) Performance of Agreements and Conditions. Buyer shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed and complied with by it
prior to or at the Closing.
(c) No Bankruptcy. As of the Closing Date: (i) no creditors of
Buyer shall have filed a petition seeking the entry of a decree or order for
relief under bankruptcy or insolvency or similar laws or for liquidation or
reorganization of Buyer, or the appointment of a receiver, liquidator, assignee,
custodian, trustee, or similar official for Buyer or any of its property; (ii)
Buyer shall not have commenced a voluntary case under bankruptcy laws or
insolvency or similar laws; and (iii) Buyer shall not have consented to the
appointment or taking possession by a receiver, liquidator, assignee, trustee,
custodian or similar official for Buyer or Buyers property.
(d) Deliveries. Buyer shall have delivered to Seller the
following:
(i) Payment of the Cash Portion of the Purchase Price.
(ii) Principal's Employment Agreement executed by Buyer.
(iii) Certified copies of resolutions of the Board of Directors
of Buyer authorizing the execution and delivery of this Agreement and the
performance of the transactions contemplated herein.
(iv) Certified copies of Buyer's Articles of Incorporation and
By-Laws and a certificate of good corporate standing of Buyer.
(v) The opinion, dated as of the date of Closing, of Fox,
Rothschild, O'Brien & Frankel, counsel to Buyer, in form and substance
satisfactory to counsel for Seller with respect to the items set forth of
Schedule 14(d)(v) hereto.
15. Pre-Closing Covenants of Seller.
Seller hereby covenants and agrees with Buyer that between the
date hereof and the Closing Date:
(a) Except as contemplated by this Agreement, Seller shall not
engage in any practice, take or fail to take any action, embark on any course of
action, or enter into any material transaction outside the ordinary course of
the operation of its Business.
(b) Seller will use its best efforts to preserve and maintain
the Business and Assets in the same manner and condition
<PAGE>22
as they exist as of the date hereof, normal wear and tear excepted.
(c) Seller will use its best efforts to retain its present
employees and to maintain its current relationship with its customers.
(d) Seller will permit Buyer and its authorized agents and
representatives during normal business hours to have access to and to examine
the Assets and the relevant books and records of Seller and the Business, and
Seller will cooperate with Buyer in its investigation of Seller, its Business
and the Assets.
16. Further Assurances.
At the Closing and at all times thereafter, Seller shall, upon the
request of Buyer execute all documents, instruments, certifications and further
assurances and take all steps reasonably necessary or appropriate to implement,
confirm or perfect the transactions provided under this Agreement.
17. Indemnification.
(a) Seller and Principal shall jointly and severally indemnify,
hold harmless and defend Buyer (and its officers and directors), from and
against any and all claims, liabilities, losses, damages, costs, and expenses,
including reasonable counsel fees and costs incurred in investigation (each of
the foregoing being referred to herein as a "Loss") incurred or suffered by or
threatened against Buyer, directly or indirectly, by reason of: (i) any breach
by Seller or Principal of any of the warranties, representations, covenants or
agreements made by Seller or Principal in this Agreement; (ii) any and all
liabilities and obligations of, or claims against Seller not expressly assumed
by Buyer hereunder; (iii) any liability arising in connection with sales,
franchise, personal property, income, social security or other taxes assessed
against Seller or Principal; and (iv) any and all liabilities and obligations or
claims arising, or arising out of events which occurred, prior to the Closing
Date, out of, or in connection with, Seller, the Business or the Assets.
(b) Buyer shall indemnify, hold harmless and defend Seller and
Principal from and against any Loss incurred or suffered by or threatened
against Seller or Principal, directly or indirectly, by reason of: (i) any
breach by Buyer of any of the warranties, representations, covenants or
agreements made by Buyer contained in this Agreement; and (ii) any and all
liabilities and obligations or claims arising, or out of events arising, after
the Closing Date out of, or in connection with, Seller, the Business or the
Assets.
(c) As soon as reasonably practical (but in no event later than
twenty days) after receipt by a party hereto (the
<PAGE>
"Indemnitee") of notice of any Loss, in respect of which the other party may be
liable under this Section 17, the Indemnitee shall give notice thereof to the
other party obligated to provide indemnification hereunder (the "Indemnifying
Party"). The Indemnitee may at its option claim indemnity under this Section 17
as soon as a claim has been threatened by a third party, regardless of whether
an actual Loss has been suffered, so long as the Indemnitee shall in good faith
determine that such claim is not frivolous and that the Indemnitee (or any
director or officer of the Indemnitee) may be liable or otherwise incur a Loss
as a result thereof and shall give notice of such determination to the
Indemnifying Party. The Indemnitee shall permit the Indemnifying Party, at its
option and expense, to assume the defense of any such claim by counsel
satisfactory to the Indemnitee and to settle or otherwise dispose of the same,
provided that the Indemnitee may at all times, and at its expense, participate
in such defense, and provided, further, that the Indemnifying Party shall not,
in defense of any such claim, except with the prior written consent of the
Indemnitee, consent to the entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff in question to the Indemnitee and its affiliates a release
of all liabilities in respect of such claims, or that does not result only in
the payment of money damages by the Indemnifying Party.
(d) Failure by an Indemnitee to give prompt notice to an
Indemnifying Party specified in Section 17(c) above shall not release, waive, or
otherwise affect the Indemnifying Party's obligation to indemnify hereunder
except to the extent that the Indemnifying Party can demonstrate actual loss and
prejudice as a result of such failure.
18. Right of Offset.
(a) In addition to any other remedy available to Buyer against
Seller and Principal hereunder or under any law or otherwise for any Loss, Buyer
shall be entitled to offset against any and all amounts payable hereunder by
Buyer to Seller, the amount of any Loss (i) incurred by Buyer, (ii) threatened
in writing against Buyer by a Third Party (hereinafter defined), (iii) or
threatened against Buyer as a result of a breach by Seller or Principal of the
Restrictive Covenants set forth in Section 8 hereof.
(b) In addition to any other remedy available to Seller or
Principal against Buyer hereunder or under any law or otherwise for any Loss,
Seller or Principal, as the case may be, shall be entitled to offset against any
and all amounts payable hereunder by Seller to Buyer, the amount of any Loss (i)
incurred by Seller or Principal, or (ii) threatened in writing against Seller or
Principal.
<PAGE>24
(c) For the purposes of this Section 18, a Third Party shall
mean any person or entity other than Buyer or any subsidiary of Buyer. In the
event that the Third Party threatening a Loss is a person or entity other than a
governmental department or agency, then in order for Buyer to be able to offset
pursuant to the foregoing Section 18(a)(ii), Buyer must be threatened in writing
by counsel to such Third Party.
(d) Monies offset hereunder shall be held in escrow in an
institution in an interest bearing account insured (to the extent permitted by
law) by the Federal Deposit Insurance Corporation, or successor thereto, or in
some other mutually agreeable manner with some other mutually agreeable entity
serving as escrow agent, pending a final resolution, in the form of a final,
non-appealable, judgment of a court of competent jurisdiction or other final
resolution, such as a court approved or mutually agreeable (between the parties
hereto) settlement, with respect to such Loss. Interest earned on the funds held
in the escrow account will be payable to the recipient of the escrowed funds.
19. Survival of Representations.
All representations and warranties made by the parties herein and
pursuant hereto shall survive the Closing and expire upon the third anniversary
of the Effective Date unless a claim is brought thereon by Buyer, Seller or
Principal, as the case may be, prior to such third anniversary.
20. Expenses; Sales and Transfer Taxes.
The parties hereto shall bear their own respective expenses,
including legal and accounting fees, incident to the preparation and carrying
out of this Agreement. Buyer and Seller will jointly pay, in equal shares, any
sales, transfer or privilege taxes and duties due upon or with respect to the
transactions under this Agreement, if any.
21. Miscellaneous.
(a) Notices. All notices, demands and other communications to
be made hereunder ("Notice") shall be given in writing and shall be deemed to
have been duly given if personally delivered or sent by certified or registered
mail, postage prepaid, return receipt requested, to the other party at the
following address (or to such other address as may be given by Notice by any
party):
If to Buyer: Right Management Consultants, Inc.
1818 Market Street, 14th Floor
Philadelphia, PA 19103-3614
Attention: President
<PAGE>25
with copy to: Theodore A. Young, Esquire
Fox, Rothschild, O'Brien & Frankel
2000 Market Street, 10th Floor
Philadelphia, PA 19103-3291
If to Seller: Worth Associates, Inc.
19925 Stevens Creek Blvd.
Suite 174
Cupertino, CA 95014
If to Principal: Robert A. Fish
c/o Worth Associates, Inc.
19925 Stevens Creek Blvd.
Suite 174
Cupertino, CA 95014
With copy to: Marvin Meisel, Esquire
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, CA 94301
Notice shall be deemed effective, if personally delivered, when delivered, and
if mailed, at midnight on the third business day after deposit in the U.S. mail.
(b) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
(c) Governing Law. This Agreement has been made, executed and
delivered in, and is to be governed, construed and enforced in accordance with
the laws of Pennsylvania, without regard to any conflict of law provisions.
(d) Headings. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
(e) Entire Agreement. This Agreement contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof, and supersedes all prior written and oral negotiations,
agreements and writings, except with respect to certain issues related to the
transactions contemplated hereby addressed in a letter from Buyer to Seller
dated of even date herewith and delivered by Buyer and acknowledged by Seller at
the Closing.
(f) Modification. This Agreement may be amended, superseded,
terminated or extended, and the terms hereof may be waived, only by a written
instrument signed by all of the parties or, in the case of a waiver, signed by
the party waiving compliance.
<PAGE>
(g) Preservation of Rights. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
(h) Provisions Severable. The provisions of this Agreement are
independent of and severable from each other. No provisions will be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
one or more of any of the provisions hereof may be invalid or unenforceable in
whole or in part.
(j) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
RIGHT MANAGEMENT CONSULTANTS, INC.
By: /s/ G. Lee Bohs
______________________________
G. Lee Bohs, Senior Vice
President and Chief Financial
Officer
WORTH ASSOCIATES, INC.
By: /s/ Robert A. Fish
______________________________
Robert A. Fish, President
/s/ Robert A. Fish
______________________________
ROBERT A. FISH
Right Management Consultants, Inc.
Exhibit 11 - Consolidated Earnings Per Share Calculation
For the Three Month Period Ended March 31,
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Earnings per common share Primary and Fully Diluted EPS:
Primary EPS
Net income $1,722,000 $1,320,000
========== ==========
Weighted average number of shares
issued and outstanding 2,642,000 2,614,000
Dilutive effect (excess of number
of shares issuable over number of
shares assumed to be using the
average market price during the
period) of outstanding options 90,000 101,000
------ -------
Adjusted weighted average number
of shares outstanding 2,732,000 2,715,000
========= =========
Earnings per common share $0.63 $0.49
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000802806
<NAME> RIGHT MANAGEMENT CONSULTANTS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,578
<SECURITIES> 0
<RECEIVABLES> 24,115
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,918
<PP&E> 12,350
<DEPRECIATION> 5,253
<TOTAL-ASSETS> 53,366
<CURRENT-LIABILITIES> 20,197
<BONDS> 0
<COMMON> 29
0
0
<OTHER-SE> 26,295
<TOTAL-LIABILITY-AND-EQUITY> 53,366
<SALES> 27,404
<TOTAL-REVENUES> 27,404
<CGS> 9,490
<TOTAL-COSTS> 20,969
<OTHER-EXPENSES> 3,487
<LOSS-PROVISION> 175
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> 2,849
<INCOME-TAX> 1,127
<INCOME-CONTINUING> 1,722
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,722
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
