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 June 30, 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 July 31, 1995:
Common Stock, $0.01 par value 2,657,219
Class Number of Shares
<PAGE>
Right Management Consultants, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30 December 31,
1995 1994
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 4,420,353 $ 9,155,835
Accounts receivable, trade, net of allowance for
doubtful accounts of $1,062,000 and $651,000 in
1995 and 1994, respectively 19,034,136 14,282,604
Royalties and fees receivable from Affiliates 2,772,587 3,118,796
Current portion of note receivable 293,333 285,635
Prepaid expenses 1,368,552 978,727
Current deferred income taxes 683,000 621,000
------------ ------------
Total current assets 28,571,961 28,442,597
Property and equipment, less accumulated depreciation of
$8,400,000 in 1995 and $6,977,188 in 1994 7,434,945 6,693,861
Other Assets:
Intangible assets, less accumulated amortization of $5,727,835
in 1995 and $4,790,230 in 1994 17,952,865 11,888,139
Non-current deferred income taxes 869,059 394,000
Non-current portion of note receivable 273,901 435,067
Other 1,200,096 1,115,247
------------ ------------
20,295,921 13,832,453
------------ ------------
Total Assets $ 56,302,827 $ 48,968,911
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term debt and other obligations $ 5,172,078 $ 2,086,357
Accounts payable 4,137,924 3,354,159
Commissions payable 2,974,724 2,327,706
Accrued incentive compensation and benefits 1,832,002 5,521,178
Accrued redundant costs 717,063 976,779
Other accrued expenses 1,843,831 1,962,282
Deferred income 3,914,688 2,331,230
------------ ------------
Total current liabilities 20,592,310 18,559,691
Long-term debt and other obligations 5,905,866 4,707,075
Deferred compensation 1,533,779 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; 2,907,854
shares issued and 2,654,902 shares outstanding in 1995;
2,891,971 shares issued and 2,639,019 shares outstanding in 1994; 29,079 28,920
Additional paid-in capital 6,705,867 6,544,547
Retained earnings 22,411,161 18,829,744
Cumulative translation adjustment (358,108) (480,714)
------------ ------------
28,787,999 24,922,497
Less treasury stock, at cost, 252,952 shares (517,127) (517,127)
------------ ------------
28,270,872 24,405,370
------------ ------------
Total Liabilities and Stockholders' Equity $ 56,302,827 $ 48,968,911
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
Right Management Consultants, Inc.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three months ended
June 30,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue:
Company Office revenue $ 27,608,919 $ 19,467,190
Affiliate royalties 1,010,021 944,280
------------ ------------
Total revenue 28,618,940 20,411,470
Costs and expenses:
Consultants' compensation 10,240,507 7,273,137
Company Office sales and consulting support 1,903,888 1,122,587
Company Office administration 9,689,731 6,794,469
General sales, consulting and administration 3,615,547 2,747,212
------------ ------------
25,449,673 17,937,405
------------ ------------
Income from operations 3,169,267 2,474,065
Other income (expense):
Interest income 75,420 54,072
Interest expense (136,812) (56,250)
------------ ------------
(61,392) (2,178)
------------ ------------
Income before income taxes 3,107,875 2,471,887
Provision for income taxes 1,229,000 1,059,000
------------ ------------
Net income $ 1,878,875 $ 1,412,887
============ ============
Earnings per share:
Net income $ 0.68 $ 0.52
============ ============
Weighted average number of shares outstanding 2,771,714 2,700,430
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
Right Management Consultants, Inc.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue:
Company Office revenue $ 53,888,175 $ 38,344,440
Affiliate royalties 2,134,818 2,130,033
------------ ------------
Total revenue 56,022,993 40,474,473
Costs and expenses:
Consultants' compensation 19,730,815 14,060,559
Company Office sales and consulting support 3,989,331 2,603,416
Company Office administration 19,083,108 13,301,638
General sales, consulting and administration 7,104,392 5,579,686
------------ ------------
49,907,646 35,545,299
------------ ------------
Income from operations 6,115,347 4,929,174
Other income (expense):
Interest income 173,013 127,223
Interest expense (331,657) (137,311)
------------ ------------
(158,644) (10,088)
------------ ------------
Income before income taxes 5,956,703 4,919,086
Provision for income taxes 2,356,000 2,186,000
------------ ------------
Net income $ 3,600,703 $ 2,733,086
============ ============
Earnings per share:
Net income $ 1.31 $ 1.01
============ ============
Weighted average number of shares outstanding 2,759,085 2,706,322
========= =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
Right Management Consultants, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Operations:
Net income $ 3,600,703 $ 2,733,086
Adjustments to reconcile net income to net cash
utilized by operating activities:
Depreciation and amortization 2,102,764 1,454,358
Deferred taxes (537,000) (112,000)
Other non-cash charges 289,691 469,171
Revenue recognized for assumption of incomplete contracts (171,544) (141,529)
Provision for doubtful accounts 250,000 75,000
Changes in operating accounts:
Accounts receivable, trade and from Affiliates (4,005,161) (128,851)
Prepaid expenses and other assets (52,769) (604,767)
Accounts payable and accrued expenses (3,862,839) (2,551,739)
Commissions payable 605,162 (533,373)
Deferred income 1,257,425 970,608
----------- -----------
Net cash provided (utilized) by operating activities (523,568) 1,629,964
Investing Activities:
Purchase of property and equipment (1,385,932) (1,206,300)
Net cash paid for acquisitions (2,050,529) (927,503)
----------- -----------
Net cash utilized by investing activities (3,436,461) (2,133,803)
Financing Activities:
Payment of long-term debt and other obligations (984,920) (928,582)
Proceeds from stock issuances 161,380 318,520
----------- -----------
Net cash utilized by financing activities (823,540) (610,062)
Effect of exchange rate changes on cash and
cash equivalents 48,087 21,823
----------- -----------
Decrease in cash and cash equivalents (4,735,482) (1,092,078)
Cash and cash equivalents, beginning of period 9,155,835 8,638,758
========= =========
Cash and cash equivalents, end of period $ 4,420,353 $ 7,546,680
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Interest $ 247,015 $ 57,057
=========== ===========
Income taxes $ 3,056,450 $ 2,715,418
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
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 six months ended June
30, 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 Balance Sheets and 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 April 1, 1995, the Company acquired the shares of LM&P, SA
("LM&P") located in Paris, France. This transaction has been accounted for using
the purchase method. The aggregate purchase price of the acquisition of
approximately $2.6 million included $2 million in goodwill. This acquisition was
made for a combination of cash and future defined incentives. These incentives
are dependent on the results of the acquired entity subsequent to the
transaction. The present value of these estimated contingent payments,
aggregating approximately $750,000, has been accounted for as part of the
purchase price and is included in long-term debt and other obligations at June
30, 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.
The net cash paid for acquisitions of approximately $2,051,000 reflected in
the Consolidated Statement of Cash Flows for the six months ended June 30, 1995
was comprised of aggregate
6
<PAGE>
RIGHT MANAGEMENT CONSULTANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
cash paid at closing of approximately $3,950,000 for the two transactions
reduced by net borrowings of approximately $1,300,000 and cash acquired from
LM&P of approximately $594,000.
In August 1995, the Company received a commitment, subject to certain
conditions occurring, from its primary bank to amend its existing Amended and
Restated Revolving Credit and Term Loan Agreement to increase the maximum
unsecured revolving line of credit from $6,000,000 to $10,000,000. The Company
utilized approximately $1,500,000 of its revolving credit line during the six
month period to consummate the acquisitions of its Cupertino, California
Affiliate and LM&P. As of June 30, 1995 approximately $1,300,000 of the
$1,500,000 remains outstanding in addition to its existing term loan obligations
under this agreement.
NOTE C - GEOGRAPHIC SEGMENTS
Summarized operations of each of the Company's geographic segments in
the aggregate as of June 30, 1995 and 1994 and for the six months ended June 30,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 US Canada Europe Total
<S> <C> <C> <C> <C>
Identifiable assets $46,454,000 $ 2,351,000 $ 7,498,000 $56,303,000
=========== =========== =========== ===========
Revenue $48,692,000 $ 3,412,000 $ 3,919,000 $56,023,000
=========== =========== =========== ===========
Operating income (loss) $ 5,308,000 $ 968,000 $ (161,000) $ 6,115,000
=========== =========== =========== ===========
Depreciation and
amortization $ 1,875,000 $ 85,000 $ 142,000 $ 2,103,000
=========== =========== =========== ===========
Capital expenditures $ 1,252,000 $ 49,000 $ 85,000 $ 1,386,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1994 US Canada Europe Total
<S> <C> <C> <C> <C>
Identifiable assets $32,799,000 $ 1,745,000 $ 2,593,000 $37,137,000
=========== =========== =========== ===========
Revenue $34,567,000 $ 3,101,000 $ 2,806,000 $40,474,000
=========== =========== =========== ===========
Operating income (loss) $ 4,578,000 $ 699,000 $ (348,000) $ 4,929,000
=========== =========== =========== ===========
Depreciation and
amortization $ 1,249,000 $ 88,000 $ 117,000 $ 1,454,000
=========== =========== =========== ===========
Capital expenditures $ 1,089,000 $ 43,000 $ 74,000 $ 1,206,000
=========== =========== =========== ===========
</TABLE>
7
<PAGE>
RIGHT MANAGEMENT CONSULTANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE D - STOCKHOLDERS' EQUITY
At the May 1995 Annual Meeting of Shareholders, the Company's shareholders
approved the amendment and renaming of the 1993 Stock Option Plan (the "Plan").
Among the amendments to the Plan approved by shareholders were the renaming of
the Plan to the 1993 Stock Incentive Plan and authorization of the Company to
grant restricted stock in addition to stock options. Subsequent to this
amendment, the Company granted 19,000 shares of restricted stock to its
Executive Officers.
Details of the Company's existing stock options for the six month period
ended June 30, 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 (10,000)
Exercised during the period (15,883)
--------
Outstanding at June 30, 1995 473,817
========
PART I - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenue generated by Company Offices increased 42% or $8,142,000 for the
quarter ended June 30, 1995 over the corresponding quarter in 1994 and 41% or
$15,544,000 for the six months ended June 30, 1995 over the same period in 1994.
Revenue on a same office basis increased approximately 15% for both the three
and six month periods ended June 30, 1995 over the same periods in 1994. This
same office 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
together operate five offices and the acquisitions of Jannotta, Bray and
Associates ("JBA") and LM&P, all of which were acquired during or after the
second quarter in 1994.
Affiliate royalties increased 7% or $66,000, for the quarter ended June 30,
1995 over the corresponding quarter in 1994 and by less than 1% for the six
months ended June 30, 1995 over the corresponding period in 1994. This was
primarily due to increased market penetration in the aggregate U.S. Affiliate
offices, offset by reduced royalties resulting from the acquisitions of five
former Affiliate offices as discussed above. Revenue from these offices is
reflected as Company revenue subsequent to their respective acquisitions. On a
same office basis, Affiliate offices grew approximately 23% and 15% during the
second quarter and first six months in 1995 over corresponding periods in 1994.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Company Office expenses in the aggregate increased 44% or $6,644,000 for
the quarter ended June 30, 1995 and 43% or $12,838,000 for the six months ended
June 30, 1995 over the corresponding periods in 1994. Costs incurred by the
Company's newly acquired Affiliates accounted for approximately 17% and 19% of
these increases for the second quarter and first six months in 1995,
respectively. 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
respective periods. Aggregate Company Office margins were 21% for both the
quarter and six months ended June 30, 1995, slightly lower than the
corresponding periods' 22% in 1994. The Company is seeking to improve Office
margins through further economies of scale as the recent acquisitions continue
to be integrated.
General sales, consulting and administration expense increased 32% or
$868,000 for the quarter and 27% or $1,525,000 for the six months ended June 30,
1995 over the corresponding periods in 1994. These increases were primarily due
to investments made in the development of the Company's consulting services,
increases in amortization relating to recent acquisitions and additional
reserves for duplicate Company Office closures primarily related to the JBA
acquisition. Despite these increases, the total expenses in this category as a
percentage of revenue remained at 13% for both the quarter and six months ended
June 30, 1995 as compared to 13% and 14%, respectively, for the corresponding
periods in 1994.
Income before income taxes increased 26% to $3,108,000 for the quarter
ended June 30, 1995 from $2,472,000 for the corresponding quarter in 1994 and
21% to $5,957,000 for the first six months in 1995 from $4,919,000 for the same
period in 1994. This increase resulted principally from the combination of
greater Company Office revenue and reduced operating losses in the Company's
European operations. The reduced European operating losses reflect the
acquisition of LM&P effective April 1, 1995.
The Company's effective tax rate was approximately 40% for the quarter and
six months ended June 30, 1995 compared to 43% and 44% for the corresponding
periods in 1994. This reduction resulted from reduced taxes at the state level
and the reduced impact on the effective tax rate of nondeductible expenses
primarily associated with prior acquisitions.
Capital Resources and Liquidity
The Company's cash and cash equivalents decreased to $4,420,000 during the
six months ended June 30, 1995, from $9,156,000 as of December 31, 1994. This
decrease resulted principally from cash utilized by operations of $524,000,
purchases of property and equipment of $1,386,000, net cash paid for the
acquisitions of the Company's former Cupertino, California Affiliate and LM&P of
$2,051,000 and payment of long-term debt and other obligations aggregating
$985,000, which were in excess of proceeds from stock issuances of $161,000. The
total net cash utilized by operations increased by $2,154,000 for the first six
months of 1995 over the corresponding period in 1994. This was primarily due to
the payment of greater 1994 incentive compensation in 1995 over the amount paid
in 1994 and an increase in accounts receivable resulting from the increased
revenue over the period as well as a lengthening in the average days outstanding
for accounts receivable. The Company has been making
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
aggressive efforts to improve its collections and anticipates it can reverse
this trend over the course of the second half of the year.
Historically, ongoing cash requirements have been provided through
operations. As discussed, in August 1995 the Company received a commitment to
increase its total borrowing capacity $10,000,000 through a committed credit
line with its primary bank. During the first quarter in 1995, in connection with
the acquisition of the Cupertino, California Affiliate, the Company borrowed
$1,500,000 from this credit line at the floating rate of the bank which was
subsequently repaid in full during the second quarter. Also during the second
quarter, in connection with the acquisition of LM&P, the Company borrowed
6,500,000 French francs (approximately $1,300,000) under the same credit line at
the LIBOR rate plus 1.25%. This amount remains outstanding as of June 30, 1995.
As the Company continues its expansion through acquisitions, there may be a need
for additional financing to consummate certain transactions. Should this be
necessary, the Company anticipates cash and working capital will be sufficient
to service the debt and to maintain Company operations.
The key factor in the Company's liquidity is the operating results of the
Company Offices. The operating margin increased during the quarter to 21% from
20% in the first quarter 1995. The Company will continue to seek margin
improvement through further economies of scale from its recent acquisitions and
through greater efficiencies and cost reductions.
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.
10
<PAGE>
PART II - OTHER INFORMATION
Items 1, 2, 3, 4 and 5 were not applicable in the period ended June 30, 1995
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
10.55 - Purchase agreement between Right Associates (France)
and BDDP and Mr. Jean Liebaut, Mr. Francois Prieur,
Mr. Claude Maubras, Mr. Jean- Pierre Leclercq and Mr.
Claude Vieules, dated June 13, 1995.
11 - Consolidated Earnings per Share Calculation
b. No reports on Form 8-K were filed during the period for which
this Report is filed.
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/ Richard J. Pinola August 11, 1995
Richard J. Pinola Date
Chairman and Chief Executive Officer
BY:/s/ G. Lee Bohs August 11, 1995
G. Lee Bohs Date
Chief Financial Officer
11
SHARE PURCHASE AGREEMENT
BETWEEN:
- Right Associates (France), a societe en nom collectif with a capital of
FRF 3,450,000, whose registered office is Tour Winterthur, 102 Terrasse
Boieldieu, 92800 Puteaux, registered with the Nanterre Commercial and
Companies Registry under number B 344 987 052, represented by Mr. Lee
Bohs,duly empowered for the purposes hereof,
hereinafter referred to as the "Purchaser",
ON THE ONE HAND,
AND
- BDDP, a societe anonyme, having a capital of FRF 171,415,150, whose
registered office is at 162-164, rue de Billancourt, B.P. 411, 92100
Boulogne-Billancourt, France, registered with the Nanterre Commercial
and Companies Registry under number B 305 507 998, represented by Mr.
Hubert Genty, duly empowered for the purposes hereof pursuant to a
power of attorney attached as Schedule 1 hereto,
hereinafter referred to individually as "BDDP", and
- Mr. Jean Liebaut, residing 46, rue Singer - 75016 Paris, France,
hereinafter referred to individually as Mr. Liebaut, and
- Mr. Francois Prieur, residing 61, boulevard Suchet - 75016 Paris,
hereinafter referred to individually as Mr. Prieur, and
- Mr. Claude Maubras, residing 90, avenue Andre Morizet - 92100 Boulogne
Billancourt, hereinafter referred to individually as Mr. Maubras, and
- Mr. Jean-Pierre Leclercq, residing 40 allee Chanteraine-Chevry, 91190
Gif-sur Yvette, hereinafter referred to individually as Mr. Leclercq,
and
- Mr. Claude Vieules, residing 9 rue de l'Eglise 78270 Bennecourt
hereinafter referred to individually as Mr.Vieules.
hereinafter collectively referred to as the "Sellers",
ON THE OTHER HAND
WHEREAS:
1. LIEBAUT, MAUBRAS & PRIEUR - LM&P (hereinafter "the Company"), is a
French societe anonyme a directoire et conseil de surveillance,
(corporation with a directorate and a supervisory board), whose
registered office is 18-20, rue Fourcroy - 75017 Paris, France,
registered with the Paris Commercial and Companies Registry under
number B 349 716 803, with a corporate capital of FRF 250,000 divided
into 2,500 shares with a par value of FRF 100 each.
2. The activity of the Company is the supply of services with respect to
the outplacement of executives.
It has two secondary establishments, one located at 11, boulevard
Pershing - 75017 Paris, operating under the name of "CONVICTION" and
another located at 25, rue Fourcroy - 75017 Paris, operating under the
name of "ATOUTS-CARRIERES".
3. The 2,500 shares of the Company are held as follows on the Completion
Date, as defined in Article 3.1 below:
BDDP 1,275
Mr. Liebaut 375
Mr. Maubras 375
Mr. Prieur 375
Mr. Leclercq 50
Mr. Vieules 50
(the five individual shareholders, other than BDDP, shall be referred
to jointly as the "Minority Shareholders").
NOW, THEREFORE, THE PURCHASER AND THE SELLERS AGREE AS FOLLOWS:
Article 1 - Purchase and Sale of Shares
The Sellers hereby sell to the Purchaser, and the Purchaser hereby
purchases, under the appropriate ordinary and legal guarantees, and in
accordance with the terms and conditions hereof, 2,500 shares
representing the whole of the share capital of the Company (hereafter
the "Shares").
Article 2 - Purchase Price
2.1 Amount
The parties have agreed in principle on a total Purchase Price in the
amount of thirteen million four hundred and fifteen thousand francs (FRF
13,415,000) which will, however, be divided into six parts and subject, as
regards the Third, Fourth, Fifth and Sixth Part (as defined below) to the
adjustments mentioned in subparagraphs (c), (d) (e) and (f) herebelow.
(a) The first part of the Purchase Price (hereinafter the "First Part")
shall be equal to FRF 6,500,000.
(b) The second part of the Purchase Price (hereinafter the "Second Part")
shall be equal to FRF 3,315,000.
(c) The third part of the Purchase Price (hereinafter the "Third Part")
shall be equal to FRF 900,000, subject however to the following
adjustments:
(i) if the Net Revenue ( as defined below) of the Company with
respect to the period from April 1, 1995 to December 31, 1995,
as determined in the Company's 1995 Accounts (as defined
below) is not lower than a sum of FRF 14,250,000, the Third
Part shall be equal to the sum of FRF 900,000 increased by 10%
for each full FRF 750,000 increment in excess of FRF
14,250,000;
(ii) if the Net Revenue of the Company with respect to the period
from April 1, 1995 to December 31, 1995, as determined in the
Company's 1995 Accounts, is less than FRF 14,250,000, the
Third Part shall be equal to the sum of FRF 900,000 reduced by
10% for each full FRF 750,000, below FRF 14,250,000, with a
minimum amount which shall be not less than FRF 562,500.
(d) The fourth part of the Purchase Price (hereinafter the "Fourth Part")
shall be equal to FRF 1,200,000, subject however to the following
adjustments:
(i) if the Net Revenue of the Company with respect to the 1996
fiscal year, as determined in the Company's 1996 Accounts (as
defined below) is not lower than a sum of FRF 19,000,000, the
Fourth Part shall be equal to the sum of FRF 1,200,000
increased by 10% for each full FRF 1,000,000 increment in
excess of FRF 19,000,000;
(ii) if the Net Revenue of the Company with respect to the 1996
fiscal year, as determined in the Company's 1996 Accounts, is
less than FRF 19,000,000, the Fourth Part shall be equal to
the sum of FRF 1,200,000 reduced by 10% for each full FRF
1,000,000, below FRF 19,000,000, with a minimum amount which
shall be not less than FRF 750,000.
(e) The fifth part of the Purchase Price (hereinafter the "Fifth Part")
shall be equal to FRF 1,200,000, subject however to the same
adjustments as those provided in subparagraphs (i) and (ii) of (d)
above, the Net Revenue to be considered for the determination of the
Fifth Part being the Net Revenue of the Company with respect to the
1997 fiscal year, as determined in the Company's 1997 Accounts (as
defined below).
(f) The sixth part of the Purchase Price (hereinafter the "Sixth Part")
shall be equal to FRF 300,000, subject however to the following
adjustments:
(i) if the Net Revenue of the Company with respect to the period
from January 1, 1998 to March 31, 1998, as determined in the
Company's Interim Profit and Loss Account as at March 31, 1998
(as defined below) is not lower than a sum of FRF 4,750,000,
the Sixth Part shall be equal to the sum of FRF 300,000
increased by 10% for each full FRF 250,000 increment in excess
of FRF 4,750,000;
(ii) if the Net Revenue of the Company with respect to the period
from January 1, 1998 to March 31, 1998, as determined in the
Company's Interim Profit and Loss Account, as at March 31,
1998 is less than FRF 4,750,000, the Sixth Part shall be equal
to the sum of FRF 300,000 reduced by 10% for each full FRF
250,000, below FRF 4,750,000, with a minimum amount which
shall be not less than FRF 187,500.
For the purposes of paragraphs (c), (d) (e) and (f) above, the
following terms shall be defined as follows:
* the Company's 1995, 1996 and 1997 Accounts shall mean, the
corporate accounts of the Company as at December 31, 1995,
1996 and 1997 respectively prepared in accordance with French
accounting principles as consistenly applied within the
Company ( as such principles consistently applied in the
Company are set out in Schedule 2 hereto) and presented by the
Directorate and notified within three months from the end of
the fiscal year concerned to the Sellers;
* Net Revenue shall mean the net turnover of the company
(chiffre d'affaires net) as it appears in the profit and loss
account of the Company (Compte de resultat).
* Interim Profit and Loss Account as at March 31, 1998 shall
mean an interim profit and loss account of the Company as at
March 31, 1998 which shall be prepared in accordance with
French accounting principles, as consistently applied within
the Company and notified before April 25, 1998 to the Sellers.
However, in the event of modification of the legal status of the
Company, namely following a merger before the payment of the Sixth
Part, the Purchaser shall procure that in addition to the corporate
accounts of the Company, accounts for the division corresponding to the
LM&P activity as at December 31, 1995, 1996 and 1997 as well as an
Interim Profit and Loss Account of the LM&P division as at March 31,
1998, shall be prepared in accordance with the same accounting
principles as those defined above and in that case, the terms defined
hereabove shall refer respectively to the accounts of the LM&P division
as at December 31, 1995, 1996 and 1997 and to the interim profit and
loss account of the LM&P division as at March 31, 1998.
(g) (i) Subject to the provisions of this paragraph and of Article 2.2(c),
(d) (e) and (f) below, the Third Part, Fourth Part, Fifth Part and
Sixth Part shall be due and payable to the Minority Shareholders, each
Minority Shareholder being entitled to receive personally a share of
the Third, Fourth, Fifth and Sixth Part equal to the percentage
represented by the number of shares he held in the Company on the
Completion Date as compared to the total number of shares held on the
same date by the Minority Shareholders.
(ii) However, each Minority Shareholder, with the exception of Messrs.
Maubras and Prieur, shall only be entitled to receive his share of the
Third Part, Fourth Part, Fifth Part and Sixth Part on the First
Anniversary and Second Anniversary Payment Date (as regards the Third
and Fourth Part respectively) and on the Third Anniversary Payment Date
( as regards the Fifth and Sixth Part) (as defined in Article 2.2 (c),
(d), (e) and (f) below), if he is still employed, on each such Payment
Date, by the Company (or any successor thereof) unless the reason why
he is no longer employed is the said Minority Shareholder's death,
physical incapacity or dismissal without cause or for cause (motif reel
et serieux) other a gross misconduct (faute grave ou lourde). If, on
any such Payment Date, the Minority Shareholder is no longer employed
by the Company (or any successor thereof) for any other reason, the
Purchaser shall have no obligation to pay his share of the Third and/or
Fourth and/or Fifth Part and/or Sixth Part to him or to any third
party, including the remaining Minority Shareholders. However, in the
event of dismissal of any one of the Minority Shareholders for gross
misconduct (faute grave ou lourde) if, subsequently a definitive court
decision were to decide that the alleged gross misconduct was not
established and that consequently the dismissal in question was without
cause or for cause (motif reel et serieux) other than gross misconduct,
the Purchaser would promptly, upon receipt of a notification of an
enforceable copy of such definitive court decision, pay to the Minority
Shareholder concerned his share of the Third and/or Fourth and/or Fifth
and/or Sixth Part which had not, in due course, been paid to him
because of his dismissal for gross misconduct.
(iii) Messrs. Maubras and Prieur, shall be entitled to receive each
their share of the Third, Fourth, Fiffh and Sixth Part, Part on the
First Anniversary and Second Anniversary Payment Date (as regards the
Third and Fourth Part respectively) and on the Third Anniversary
Payment Date ( as regards the Fifth and Sixth Part) (as defined in
Article 2.2 (c),(d) (e) and (f) below), if they are each still
employed, on the First Anniversary and on the Second Anniversary
Payment Date, by the Company (or any successor thereof) unless the
reason why they are no longer employed is their death, physical
incapacity or dismissal without cause.or for cause (motif reel et
serieux) other a gross misconduct (faute grave ou lourde). If, on such
Payment Date, Mr Maubras and/or Mr. Prieur is no longer employed by the
Company (or any successor thereof) for any other reason, the Purchaser
shall have no obligation to pay his share of the Third, Fourth, Fifth
or Sixth Part to him or to any third party, including the remaining
Minority Shareholders. However, in the event of Mr Maubras or Mr.
Prieur's dismissal for gross misconduct (faute grave ou lourde) if,
subsequently a definitive court decision were to decide that the
alleged gross misconduct was not established and that consequently the
dismissal in question was without cause or for cause (motif reel et
serieux) other than gross misconduct, the Purchaser would promptly upon
receipt of a notification of an enforceable copy of such definitive
court decision, pay to Mr. Maubras or Mr. Prieur his share of the Third
and/or Fourth and/or Fifth and/or Sixth Part which had not in due
course been paid to him because of his dismissal for gross misconduct
(iv) In the event of death of a Minority Shareholder on or before the
First Anniversary and/or Second Anniversary and/or Third Anniversary
Payment Date, his share of the Third and/or Fourth and/or Fifth Part
and/or Sixth Payment shall be payable to his heirs.
2.2 Payment of the Purchase Price
(a) Payment of the First Part shall be made on the date hereof (the
"Completion Date") to BDDP, for an amount of FRF 3,315,000 and to the
Minority Shareholders, for an amount of FRF 3,185,000.
(b) Payment of the Second Part shall be made to BDDP at the latest six
months after the Completion Date.
(c) Payment of the Third Part shall be made to the Minority Shareholders,
subject to the conditions set forth in Article 2.1(g) above being
fulfilled, at the latest on April 30, 1996 (the "First Anniversary
Payment Date").
(d) Payment of the Fourth Part shall be made to the Minority Shareholders,
subject to the conditions set forth in Article 2.1(g) above being
fulfilled, at the latest on April 30, 1997 (the "Second Anniversary
Payment Date").
(e) Payment of the Fifth Part shall be made to the Minority Shareholders,
subject to the conditions set forth in Article 2.1(g) above being
fulfilled, at the latest on April 30, 1998(the "Third Anniversary
Payment Date").
(f) Payment of the Sixth Part shall be made to the Minority Shareholders,
subject to the conditions set forth in Article 2.1(g) above being
fulfilled, at the latest on the Third Anniversary Payment Date.
(g) The payment mentioned in paragraph (b) subject however to the possible
deductions therefrom pursuant to Article 8.2 (e) and (f) of this
Agreement is guaranteed by a letter of credit issued by the French
agency of a reputable U.S. bank chosen by the Purchaser.
(h) The payments mentioned in paragraphs (c), (d), (e) and (f) of this
Article is garanteed by Right Management Consultants Inc., the US
parent company of the Purchaser, by way of guaranty delivered to the
Sellers on the Completion Date. The Payment mentioned in paragraph (c)
of this article shall also be guaranteed by the letter of credit
referred to in paragraph (g) above which shall benefit the Minority
Shareholders after it ceases to benefit BDDP in compliance with
paragraph (g) above.
Article 3 - Completion of the Sale and Purchase of the Shares
3.1 Place and Date
The sale and purchase of the Shares contemplated herein shall take
place on the date hereof (the "Completion Date").
3.2 0bligations of the Sellers on the Completion Date
The following acts shall immediately be accomplished:
(a) Transfer of the Shares
The Sellers shall deliver to the Purchaser (i) the Company's share
transfer register and the individual shareholders' accounts, duly
certified by the President of the directoire, (ii) the relevant ordres
de mouvement (share transfer forms) for the transfer of the Shares,
duly signed by the Sellers in favor of the Purchaser, or any person or
entity designated by it, and (iii) any other document which the
Purchaser may reasonably require, in order to ensure the full and
complete transfer of title in favor of the Purchaser of all the Shares.
(b) Resignation of the members of the supervisory board (conseil de
surveillance)
The Sellers shall deliver to the Purchaser:
(i) a letter of resignation from each member of the supervisory
board including a letter of resignation from the President of
the supervisory board, duly signed, such resignations to be
effective as at the Completion Date,
(ii) the minutes of a supervisory board meeting held at the latest
on the Completion Date approving the Purchaser as well as any
other purchaser, including the new members of the supervisory
board, whose names have been given to the Sellers (in order to
meet the seven shareholder requirement) as new shareholders of
the Company. as well as the minutes of an ordinary
shareholders' meeting held at the latest on the Completion
Date, appointing the new members of the supervisory board
specified by the Purchaser.
(c) Corporate books
The Sellers shall deliver to the Purchaser the Company's corporate
books, duly up-to-date as at the Completion Date (minutes of meetings
of the supervisory board, of the directorate and of general meetings of
shareholders, atten dance register and/or sheets for supervisory board
meetings and for the general meetings of shareholders).
3.3 Obligations of the Purchaser on the Completion Date
(a) The Purchaser shall deliver to the Sellers the letter of credit and the
guaranty referred to in Article 2.2(g) and (h) above.
(b) The Purchaser shall execute new employment contracts with each Minority
Shareholder.
Article 4 - Foreign Investment Regulations / Board approvals
4.1 The parties wish to record that:
(a) the necessary consent has been obtained from the French
Ministry of Economy (Direction du Tresor) on June 2, 1995;
(b) the proposed transaction has been approved by the board of
directors of Right Management Consultants Inc on May 4, 1995;.
(c) the proposed transaction has been approved by the Supervisory
Board of BDDP on January 24, 1995.
Article 5 - Representations and Warranties
The Sellers, acting jointly and severally, hereby make the following
representations and give the following warranties to the Purchaser:
5.1 Incorporation of the Company
(a) The Company is a societe anonyme a directoire et conseil de
surveillance whose registered office is located at 18-20, rue Fourcroy
- 75017 Paris, France, and which is registered with the Commercial and
Companies Registry of Paris under the number B 349 716 803. The Company
has been duly incorporated and its existence complies with the French
legislation. It has the right to possess all its property and assets,
to run its business as it does at present, and to carry out all the
actions provided for herein. The certified copy of the articles of
incorporation of the Company which has been remitted to the Purchaser
and the copy, dated April 26, 1995, of the up-to-date K-bis excerpt
from the Commercial and Companies Registry of Paris, attached hereto as
Schedule 3, are complete and up-to-date copies.
(b) The corporate registers and all the documents which the laws and
regulations in force require to be drawn up or held, are in order,
complete, correct and up-to-date. All corporate publication and other
formalities have been duly effected.
5.2 Corporate Capital
The Company's corporate capital amounts to FRF 250,000, divided into
2,500 shares with a par value of FRF 100 each, all fully paid in,
validly issued and not liable, at the date hereof, to give rise to any
calls for funds. There are no undertakings of any kind concerning the
issue of new shares or other securities in the Company, or the
modification of its corporate capital. As at the date hereof, no
dividend or other payment or distribution to be paid by the Company has
been declared for the current financial year. Any dividends, other
payments or distributions declared before December 31, 1994 have been
paid in full on the date hereof. A full and accurate list of all the
Company's shareholders, showing the number of shares held by each of
them, is included in the recitals to this agreement.
5.3 The Shares
(a) Each shareholder of the Company has valid and transferable title to the
Shares which he holds, which are free of any liens, beneficial
interests, joint interests, options, guarantees, mortgages, sureties,
security interests, pledges, restrictions, charges, preferential
rights, preemptive rights, prior approvals or any other rights and
claims whatsoever, it being specified that each shareholder hereby
waives, to the extent necessary, with respect to the sale contemplated
herein the preemptive right that he holds under article 12 of the
articles of incorporation. All the authorizations which must be
obtained prior to the transfer of the Shares, in application of the
Company's articles of incorporation and the law, have been obtained on
the date hereof.
(b) The provisions of paragraph (a) above also apply to all rights attached
to the shares, and namely, to the preferential subscription right and
the allocation right for free shares.
5.4 The Sellers' Powers
The Sellers have all powers, authority and capacity to sign and commit
themselves under this Agreement and to perform all the operations
mentioned therein. Upon signature of this Agreement, it shall be
validly binding upon the Sellers. The signature of this Agreement, and
the completion of all the operations which will result therefrom or be
related thereto, are not liable to constitute a breach or default in
the performance of any provision of the law or regulations, or of a
decision, judgment or ruling handed down by any tribunal or court, or
of an agreement or other instrument or decision committing the Sellers
or the Company.
5.5 Subsidiaries and Holdings
The Company does not own any subsidiaries and does not have any
holdings in any companies or legal entities. The Company is not part of
a de facto company (societe en participation or de fait) or joint
venture. It does not have any establishment which requires registration
with a commercial court other than the court of Paris. It has two
establishments in Paris which are duly registered with the Paris
Commercial and Companies Registry.
5.6 Legal Reorganization - Judicial Liquidation - Conciliation Proceedings
- Extension Period
The Company has not suspended its payments, and is not subject to any
legal reorganization or judicial liquidation proceedings or any other
conciliation or collective bankruptcy proceedings provided for by Law
No. 84-148 of March 1, 1984 and its texts of application or by Law
n(degree) 94-475 of June 10, 1994 and its texts of application. It has
not requested an extension period (delai de grace) in application of
Article 1244-1 of the French Civil Code.
5.7 Disputes
The Company is not party to any legal action, arbitration, court
proceedings or judicial, administrative or other kind of inquiry, and
is not the object of any claim which could result in a dispute,
proceedings or a judicial, administrative or other inquiry, except for
those listed in Schedule 4.
5.8 Contracts
All contracts, agreements and arrangements entered into by the Company
(or in name of its departments ATOUTS-CARRIERES and/or CONVICTION)
constitute valid and enforceable undertakings for each of the parties
involved. None of these contracts, agreements or arrangements were
entered into in breach of the laws and regulations in force. The
Company, and the other parties, have duly performed their obligations
under these contracts, agreements and arrangements.
All of the above concerns the Company's day-to-day business, or was
entered into in accordance with normal conditions in the context of the
Company's business.
5.9 Tax Return
(a) Schedule 5 of this agreement contains copies of the following
documents, in the same form in which they were filed with the French
tax authorities, concerning the Company's financial year which ended on
December 31, 1994 (the "Tax Return"):
- Balance Sheet (assets and liabilities) and attached notes;
- Profit and loss accounts;
- Computation of the tax results;
- Other annexed accounting and tax documents.
(b) The Tax Return was prepared in accordance with the accounting
principles and practices generally accepted in France, which the
Company has consistently applied, as such principles consistently
applied by the Company are set out in Schedule 2 hereto.
(c) The Tax Return was prepared in the form required by the law, and
accurately reflects the Company's financial position and the results of
its operations. The Company's corporate accounts as they appear in the
Tax Return were certified by the Company's statutory auditor and
approved by the shareholders on the date hereof.
(d) As at December 31, 1994, the Company had no other liabilities or
obligations (due, payable, certain, possible (eventuel), conditional or
others, including any obligation resulting from a factoring agreement,
a subrogation or a leasing agreement) other than those fairly and
accurately indicated, or for which a provision has been made, in the
Tax Return.
5.10 Trade Receivables and Other Receivables
The Company's trade and other receivables, as indicated in the Tax
Return, and after correction in view of the provisions for returns,
claims and bad debts, as indicated in the Tax Return, and any
receivables which have arisen since December 31, 1994, are valid and
recoverable in full, or have been recovered, within the legal or
contractual time-limits.
5.11 Depreciation and Provisions
The depreciation and other provisions appearing in the Tax Return are
sufficient, and have been determined in accordance with the applicable
legislation and with necessary caution. At the date of December 31,
1994, they give an accurate and fair picture of the Company's position.
5.12 Use of the corporate names
The Company is entitled to use all its corporate names, and namely the
names "LM&P", "ATOUTS-CARRIERES" and "CONVICTION", of which it has full
title and enjoyment, without paying any royalties to any party
whatsoever, and this use does not breach any right belonging to any
third party.
5.13 Trademarks, Logos, Patents and Copyright
(a) With the exception of that which is indicated in Schedule 6, the
Company does not possess any trademark, logo, patent, software or any
other industrial or intellectual property right.
The Company has a complete and full right of title to the elements
listed in Schedule 6, which it uses validly, it being specified that
Atouts-Carrieres has never been effectively used. These elements are
duly protected in accordance with the applicable French or foreign
legislation or regulations. None of them are encumbered by any lien,
pledge, guarantee, surety, charge or other easement.
(b) The Company is not bound by any contract or other agreement relating to
a patent, trademark, logo, software, tradename, its own corporate name,
or any other industrial or intellectual property right, including, but
not limited to, any contract entered into with employees concerning
their inventions, and is not obliged to pay related royalties or fees
to any person whomsoever.
(c) The Company has not infringed, and does not infringe, any right
belonging to a third party relating to any patent, trademark, logo,
software, trade name, corporate name, or other industrial or
intellectual property right.
5.14 Title to the Property and Assets - Leases
(a) The Company owns all the assets entered into the Tax Return, and has
valid and negotiable title to its on-going business (fonds de commerce)
and, generally, to all its personal and real property. These are free
from any lien, security interest, pledge, retention of title right,
mortgage, easement, guarantee, promise, surety or other charge, with
the exception of those indicated in Schedule 7. No protest has been
registered in the name of the Company. All such property and assets are
used and are in good condition, except for wear and tear or except for
those for which a provision has been made in the Tax Return; they have
been consistently and properly maintained, in order to preserve their
usefulness and value. None of the said property or assets is out of
order or has any apparent defects which prevent its use or could
prevent its use in the future in accordance with the purpose for which
it has been designed, except due to the effect of wear and tear.
(b) The Company is not a party to any rental or leasing agreement relating
to real or personal property, with the exception of the agreements
listed in Schedule 8.
(c) Each of the leases for real or personal property to which the Company
is a party, either as a lessor or a lessee, is valid and enforceable in
accordance with its terms and conditions. None of these leases contain
any provisions whatsoever which are unusual, given the activity of the
Company. All the premises in which the Company carries out its activity
under a commercial lease, subject to the provisions of the Decree of
September 30, 1953, are registered with their local Commercial and
Companies Registry.
5.15 Insurance
The Company is adequately insured with reputedly solvent insurance
companies for the risks and amounts normally covered by companies which
are engaged in a similar activity, and namely for the risks inherent in
its civil liability; the Company is up-to-date in all its obligations
with respect to the said companies. A record of the insurance policies
is attached as Schedule 9.
5.16 Taxes
The provisions for taxes and the provisions for social, tax and
parafiscal charges (including, but not limited to, social security
contributions and contributions to complementary welfare and pension
schemes) which appear in the Tax Return are sufficient for the payment
of all taxes, social, tax and parafiscal charges and all the Company's
commitments at the date of the Tax Return (regardless of the date of
the event which is the origin of the taxes or social, tax and
parafiscal charges). The Company has filed its national, departmental
and local tax and social declarations at the required time, as well as
any records and other documents concerning its social, tax and
parafiscal charges, and has kept a copy of its originals filed. All
State, departmental and local taxes, duties and rights (including, but
not limited to, corporation tax, value added tax, business tax,
registration tax, land tax and customs duties) and all social, tax and
parafiscal charges owed by the Company or payable at the date hereof
have been paid within the legal deadline or a provision has been duly
made therefor except with respect to what has been provided in Schedule
4.
5.17 Contracts, Guarantees and Services
All services supplied by the Company have been carried out in
accordance with any representations, warranties and contracts made or
entered into by the Company in that respect, and with all provisions of
the applicable law and regulations. At the present time, there are no
third-party claims concerning the legal, contractual or other
guarantees applicable to the services supplied by the Company, except
with respect to what has been provided in Schedule 4.
5.18 Company Liabilities
(a) The Company does not owe any amount whatsoever, and has not made any
commitment concerning such a payment, to any of its ex or current
shareholders, corporate officers, employees, agents, sales
representatives, or any of their spouses, children or other relations,
other than as remuneration for services rendered. No shareholder,
corporate officer, employee, agent, sales representative, nor any of
their children, spouses or other relations, owes any amount to the
Company, with the exception of what may have been provided for in the
Tax Return.
(b) The interest paid to the Company's shareholders prior to the date
hereof has never exceeded the maximum authorized in Articles 39-1
3(degree) and 212 of the General Tax Code.
(c) No retirement indemnity has been promised or granted to any employee or
corporate officer.
5.19 Personnel
As at December 31, 1994, the Company employed approximately 13
employees and since that date there has been no substantial change in
the number or composition of its personnel. The Company has not granted
any special benefits in favor of its employees and/or corporate
officers other than those appearing in Schedule 16 hereto. The Company
is subject to the provisions of the National Collective Bargaining
Agreement for the Bureaux d'Etudes Techniques, Cabinets d'Ingenieurs
Conseils et Societes de Conseils and complies in all respects with
labor law and the terms and conditions of such collective bargaining
agreement. The Company has not entered into any agreement relating to
profit-sharing, pensions, workers' participation or an incentive scheme
(interessement) other than those listed in Schedule 10.
5.20 General Provisions
No existing fact or event of any kind is likely, to the knowledge of
the Sellers, to have a negative effect on the assets, liabilities,
business or activities of the Company, with the exception of that which
is specified in this agreement or in one of the Schedules.
In the application of this clause, the Sellers shall be deemed to have
knowledge of a fact or event if any of the Company's corporate officers
and executives had knowledge of it.
5.21 Absence of Changes
Between January 1, 1995 and the Completion Date there has not been:
(a) any change in the financial position, the assets, liabilities, business
or operations of the Company, other than normal changes which fall
within the scope of the normal course of business, with the exception
of what appears in Schedules 11 and 4;
(b) no purchase or sale of securities by the Company, no issue by it of any
shares or other securities, rights or options to purchase shares in the
Company, or which are capable of granting the right to acquire or
subscribe to securities which represent a share in the capital of the
Company;
(c) any loan granted, promised or secured by the Company;
(d) any assumption by the Company of an obligation or liability, other than
the current obligations or liabilities subscribed to in the normal
course of business;
(e) any expiry, termination or waiver, nor any amendment or default of any
contract, undertaking or arrangement in which the Company is or may be
a party, other than in the normal course of business;
(f) any abnormal increase or promised increase in the remuneration received
by the Company's employees, agents, sales representatives and corporate
officers, or in any benefits they receive (bonuses, shares in profits,
retirement or other pension, or other benefits of a similar kind) with
the exception of that which is indicated in Schedule 12;
(g) any sale, lease or transfer by the Company of any tangible or
intangible assets, other than in the normal course of business, nor any
cancellation of any of the Company's receivables or claims, or waiver
of them;
(h) any lien, security interest, pledge, mortgage, easement, guarantee,
promise, surety or other charge granted on the Company's tangible and
intangible assets;
(i) any social disturbance, conflict, strike or similar event affecting the
Company.
5.22 Lists
Schedule 13 hereto includes the name and address of each person who has
received general or special powers from the Company. The following
documents have been delivered to the Purchaser by the Sellers, in a
full and accurate form, on the date hereof:
(a) a list of all real estate, land, facilities or other property belonging
to the company or rented or used by it;
(b) a list of the banks and other financial institutions with which the
Company has an account or a credit line, which will also indicate (i)
the names of the people with powers of signature, (ii) the amount of
each of the credit lines, and any long, medium or short-term credit, or
any other financing agreement related to any borrowing by the Company
and any of the Company's debts towards the said banks and other
financial institutions, (iii) the amount of these which is guaranteed
by the Sellers, the names of the shareholders who have given the
guarantees, and the names of the banks and financial establishments in
favor of which the guarantees were provided;
(c) a list of guarantees, security and endorsements granted by the Company
in favor of third parties;
(d) a list of all employment agreements, non-competition agreements with
employees, consultants or any other third party and all other
agreements entered into by the Company (or in name of LM&P and
CONVICTION) with each of its employees, directors, shareholders or
third parties, and any agreements or plans applicable to the Company
and/or the said people, including, but not limited to, all collective
bargaining agreements, bonus schemes or profit-sharing plans of any
kind whatsoever, the Company's rules and regulations, and the annual
declaration of salary for each of the Company's employees;
(e) a list of all agency, license, distribution or representation
agreements to which the Company is a party, if applicable;
(f) a list of all other important contracts or insurance policies to which
the Company is a party;
(g) a list of existing customers of LM&P and CONVICTION, all information
pertaining to past customers being included in the Company's archives.
Article 6 - Additional Undertakings by the Sellers - Non competition
(a) The Sellers undertake not to take any measures after the date of
signature of this Agreement which would be liable to cause any
prejudice to the Company and none of the agreements which is binding
upon the Company shall be amended or terminated as a result of this
sale. In particular, the Employee Shareholders shall not use their last
name in any way that can be prejudicial to the Company, it being
specified that the Purchaser shall, as soon as reasonably practical
after the Completion Date and in any event no later than September 30,
1995, arrange for the modification of the corporate name into "LM&P" or
any other name it will deem appropriate with no reference to the
surname of any of the Minority Shareholders.
(b) For three years, as from the Effective date, the Sellers undertake (i)
not to hire any current or future members of the Company's personnel,
(ii) not to engage, directly or indirectly in any activity in France
which is in competition with the Company's activity (it being specified
that the word "indirectly" shall not apply to any activity conducted at
present or in the future by any of the present institutional
shareholders of the Company or present institutional shareholders of a
present shareholder of the Company), and (iii) not to become a
shareholder, director, de jure or de facto executive, in France of any
company which has a business activity in France which is in competition
with that of the Company. In addition, the Sellers guarantee that the
three members of the supervisory board named in the Company's K-bis
excerpt referred to in Article 5.1 (a), and attached as Schedule 3,
shall personally give and respect the same non-competition undertaking
with respect to the Purchaser.
Article 7 - Undertaking by the Purchaser
The Purchaser undertakes to continue to manage the Company substantially as it
was managed before the Completion Date. Furthermore, Messrs Liebaut, Maubras and
Prieur, each in his respective capacity under his amended employment agreement
referred to in Article 3.3 (b), shall have the responsibility of the marketing
and sales policies of the Company, provided however that the new majority
shareholder of the Company as from the Completion Date shall agree with these
policies.
Article 8 - Indemnification
8.1 Duration of the Representations, Warranties and other Commitments
Notwithstanding the fact that the legal status of the Purchaser or the
Company may be modified in any way whatsoever, and namely following a
merger or transformation:
(a) the representations, warranties and other commitments stipulated in
Articles 5 and 6 herein shall remain in force, with full effect and
full binding force, until the third anniversary of the Completion Date,
subject to the provisions of (b) below;
(b) however, the representations, warranties and other commitments
mentioned herein concerning taxes and social, tax and parafiscal
charges, shall survive until expiry of the applicable statutes of
limitation for each of the given areas. It is agreed that any claim
made in the context hereof before the expiry of the said statutes of
limitation shall remain covered by this indemnification clause;
(c) the representations and warranties contained herein are definitive, and
shall not be affected by any information whatsoever which may have been
communicated to the Purchaser, with the exception of what has been
disclosed in Schedule 18.
8.2 Indemnification of the Purchaser
(a) The Sellers, acting jointly, severally and irrevocably, agree to
indemnify the Purchaser, for all damage, loss, liability or expenses of
any kind, including court and reasonable legal fees and expenses
(hereinafter the "Damage"), which the Purchaser or the Company may have
to bear or lay out, following:
(i) any failure of the Sellers to respect their obligations under
this Agreement;
(ii) any inaccuracy, error or omission in the information,
representations and warranties given in this Agreement;
(iii) any reduction in the value of any assets, or any increase in
liabilities, which does not appear in the Tax Return.
(b) The parties agree that if it emerges that any Damage is deductible from
the Company's taxable results, the amount of the indemnity to be paid
by the Sellers in respect of such Damage shall be reduced by the tax
saving effectively made by the Company.
(c) The tax reassessments or other reassessments of any nature whatsoever
which lead merely to a time-lag in taxation (or which lead merely to a
transfer of taxation from one fiscal year to the next) are excluded
form the field of application of this undertaking to indemnify inasmuch
as they do not result in a final expense in principal, penalties or
indemnity for late payment.
(d) The parties further agree that the Sellers' obligation hereunder to
indemnify the Purchaser or the Company for any Damage they have
suffered shall only arise if the cumulative total of any and all Damage
suffered by the Purchaser or the Company is higher than one hundred
thousand francs (FRF 100,000).This amount shall be considered as a
deductible.
(e) The indemnification of the Purchaser by the Sellers in the event of
Damage, as defined in Article 8.2(a) to (d) shall be effected:
(i) first by reducing the Purchase Price by way of one or several
deduction(s), up to the amount of the Damage, from the
remaining payments due under the payment schedule provided
from Article 2.2; and then, after exhaustion of this first
possibility, by
(ii) paying damages to the Company or to the Purchaser (such
damages to the Purchaser to be legally considered as a
reduction of the Purchase Price already fully paid) at the
Purchaser's option.
(f) The indemnification of a Damage shall be due by the Sellers to the
Purchaser within 30 days of notification by the Purchaser to the
Sellers in compliance with Article 8.3 of a claim for a Damage actually
suffered by the Purchaser or the Company.
However, in the event of notification to the Company by a third party,
before complete payment of the Purchase Price, of a claim which is
likely to implement the Sellers' guarantee but has not yet given rise
to a Damage for the Company or the purchaser (a "Pending Claim"), the
Purchaser shall be entitled provisionally to deduct the amount of the
Pending Claim from the next payments due to the Sellers, provided the
Pending Claim has been duly notified to the Sellers in compliance with
Article 8.3. If, eventually, the Pending Claim does not materialize
into a Damage for the Company or the Purchaser or, alternatively,
materializes into a Damage for a lesser amount than the initial amount
of the Pending Claim, the Purchaser shall promptly, upon final
determination of the outcome of the Pending Claim, pay to the Sellers,
an amount ("X") equal to the difference between the amount of the
Pending Claim and the amount of the final corresponding Damage,
together with an interest on X at the legal rate (taux legal) from the
date X should have been paid to the Sellers, had there not been any
Pending Claim, to the date of payment.
8.3 Obligations of the Purchaser in the event of Claims
The Purchaser or the Company shall notify the Sellers in writing of any
demands and claims likely to implement the Sellers' guarantee. This
notification shall include a brief description of the nature of the
demand or claim, the identity of the person instigating it, and an
estimate of the Damage which could result therefrom for the Purchaser
or the Company. The Sellers, or their duly-appointed counsel, shall
have access to all books and other documents of the Company concerning
such a demand or claim, and these shall be made available at the
registered office of the Company or any other place mutually agreed
upon, subject to reasonable notice, and for a reasonable period. The
Sellers shall have the right to join in the defense or the conclusion,
by way of a settlement (transaction) or amicable agreement, of any such
demands or claims, at their own expense. The Purchaser and the Company
alone shall have the power to settle, negotiate or otherwise conclude
the matters concerning these demands or claims, provided however that
the Purchaser or the Company shall act in a reasonable manner taking
into account the commercial interests of the Company and not the fact
that they may be entitled to claim an indemnity for Damage from the
Sellers.
Article 9 - Transfer of the Agreement
The Sellers and the Purchaser may not transfer or delegate all or part of their
respective rights or obligations which result from this agreement without the
prior written approval of all other parties.
Article 10 - Miscellaneous Provisions
10.1 Expenses
Each party shall bear all the costs and expenses incurred by it in
connection with this agreement and its consequences, including, but not
limited to, the fees and disbursements owed to any counsel, independent
accountant or other person whose services may have been used by the
said party.
10.2 Applicable Law
This agreement shall be governed by French law, both for its
interpretation and its performance.
10.3 Disputes
Any disputes and litigation which may result herefrom shall be brought
before the Tribunal de Commerce of Paris.
10.4 The Sellers' and Purchaser's successors
This Agreement shall be jointly binding upon the heirs, beneficiaries,
legal representatives, executors and trustees of the Sellers and of the
Purchaser. This Agreement and all conditions and warranties contained
herein shall benefit to any successor and assign of the Purchaser in
the event of sale of the Shares to a third party after the payment of
the Sixth Part pursuant to Article 2.2 (f) but before the end of the
period of indemnification mentioned in Article 8.1. In the event of
transfer by the Purchaser of the Shares before the payment of the Sixth
Part, the provisions of this Agreement shall remain in full force and
effect and shall not be affected by such transfer.
10.5 Non-performance
In the event that either of the parties does not, at any time, require
the performance by the other party of any of the provisions herein, its
right to do so at any time in the future shall not be diminished in any
way. Moreover, the fact that one of the parties waives its right to
take advantage of the non-performance by the other party of one of the
clauses herein, shall not mean that the said party has waived the
rights conferred upon it by the said clause or any other clause of the
agreement.
10.6 Schedules
Each of the schedules hereto is an integral part of this agreement.
10.7 Notifications
Any notifications or communications made pursuant to this agreement
shall be made by registered letter with return receipt requested, or by
fax, confirmed by registered letter with return receipt requested, or
by hand delivery in exchange for a receipt, to the following addresses
or to any other address which may be communicated in writing by either
of the parties to the other at least five days before sending the said
notification or communication:
For notification to the Purchaser, to:
Right Associates (France)
Tour Winterthur
102 Terrasse Boieldieu
92800 Puteaux
For the attention of the Gerant
For notification to the Sellers, to:
BDDP
For the attention of the President
162-164, rue de Billancourt, B.P. 411
92103 Boulogne-Billancourt, France,
Mr. Jean Liebaut
46, rue Singer
75016 Paris, France
Mr. Francois Prieur
61, boulevard Suchet
75016 Paris
Mr. Claude Maubras
90, avenue Andre Morizet
92100 Boulogne Billancourt
Mr. Jean-Pierre Leclercq
40 allee Chanteraine-Chevry
91190 Gif-sur Yvette
Mr.Claude Vieules
9 rue de l'Eglise
78270 Bennecourt
Notifications shall be effective as from the date of receipt.
Executed in eight original counterparts
in Paris, on June 13, 1995
Right Associates (France) BDDP
/s/ G. Lee Bohs * /s/ Hubert Genty *
By Mr. Lee Bohs By Mr. Hubert Genty
/s/ Jean Liebaut *
Mr. Jean Liebaut
/s/ Claude Maubras *
Mr. Claude Maubras
/s/ Francois Prieur *
Mr. Francois Prieur
/s/ Jean-Pierre Leclercq*
Mr. Jean-Pierre Leclercq
/s/ Claude Vieules *
Mr. Claude Vieules
* French version executed only
Right Management Consultants, Inc.
Exhibit 11 - Consolidated Earnings Per Share Calculation
For the Three and Six Month Periods Ended June 30,
<TABLE>
<CAPTION>
Three Months Ended, Six Months Ended,
June 30, June 30,
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Earnings per common share
Primary and Fully Diluted EPS:
Net income $1,879,000 $1,413,000 $3,601,000 $2,733,000
========== ========== ========== ==========
Weighted average number of shares
issued and outstanding 2,651,000 2,635,000 2,646,000 2,625,000
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 and restricted stock 121,000 65,000 113,000 81,000
---------- ---------- ---------- ----------
Adjusted weighted average number
of shares outstanding 2,772,000 2,700,000 2,759,000 2,706,000
========= ========= ========= =========
Earnings per common share $ 0.68 $ 0.52 $ 1.31 $ 1.01
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000802806
<NAME> RIGHT MANAGEMENT CONSULTANTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,420
<SECURITIES> 0
<RECEIVABLES> 21,807
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,572
<PP&E> 15,835
<DEPRECIATION> 5,728
<TOTAL-ASSETS> 56,303
<CURRENT-LIABILITIES> 20,592
<BONDS> 0
<COMMON> 29
0
0
<OTHER-SE> 28,242
<TOTAL-LIABILITY-AND-EQUITY> 56,303
<SALES> 56,023
<TOTAL-REVENUES> 56,023
<CGS> 19,731
<TOTAL-COSTS> 42,803
<OTHER-EXPENSES> 7,104
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 159
<INCOME-PRETAX> 5,957
<INCOME-TAX> 2,356
<INCOME-CONTINUING> 3,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,601
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
</TABLE>
