EXHIBIT 10.19 -OPTION AND ESCROW AGREEMENT BETWEEN AND AMONG RIGHT MANAGEMENT
CONSULTANTS, INC. AND XXXXXXXXX X. XXXXXXXX, STRADIS PTY LTD, XXXXXXX X. X.
XXXXX, XXXXXXX X. XXXXXX AND XXXXX XXXXXXXXX, AND B&MCK NOMINEES DATED JULY 1,
1997
RIGHT D&A PTY LTD OPTION AND ESCROW AGREEMENT
THIS OPTION AND ESCROW AGREEMENT, is made and entered into as
of the first day of July, 1997 by, between and among, XXXXXXXXX X. XXXXXXXX,
STRADIS PTY LTD, XXXXXXX X. X. XXXXX, XXXXXXX X. XXXXXX and XXXXX XXXXXXXXX
("Sellers"), RIGHT MANAGEMENT CONSULTANTS, INC., a Pennsylvania corporation or
its designee ("Buyer"), and B&McK NOMINEES (VIC) PTY LTD (ACN 006 599 543) of
Xxxxx 00 Xxxxxx, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, 0000 ("Escrow Agent").
BACKGROUND
Simultaneously with the execution of this Agreement, Buyer is
purchasing 51% of the outstanding shares of Right D&A Pty Ltd ("RDA") from
Sellers. Sellers have agreed to provide Buyer with the options contained herein
to permit Buyer to acquire the remaining 49% of the outstanding shares of RDA on
the terms and conditions of this Agreement, and Buyer has agreed to provide
Sellers with the options contained herein to permit Sellers to require Buyer to
acquire the shares. Xxxxxxx X. X. Xxxxx is the sole beneficial owner of Stradis
Pty Ltd. The shares subject to options are all of the shares owned by Sellers as
set forth on Schedule 1 attached hereto.
NOW, THEREFORE, intending to be legally bound, it is agreed as follows:
1. Options.
(a) Each Seller hereby grants to Buyer a series of
options, commencing July 1, 2000 and exercisable as of July 1, 2000 and annually
thereafter, subject to
acceleration as provided in Paragraph 3, to purchase the number of RDA Shares
represented by the percentage points shown on the chart in subparagraph 1(c)
below corresponding to the anniversary dates shown on the chart. Each exercise
of an option by Buyer shall result in each Seller selling an amount of shares
owned by each in proportion to the total shares owned by all Sellers at such
time, unless the Sellers advise Buyer otherwise, in writing, within 30 days of
the exercise of any option by Buyer, in which case the shares to be purchased
pursuant to the exercise of the option shall be as specified in the writing from
Sellers.
(b) Each Seller is hereby granted by Buyer a series
of options, as described below. Each exercise of an option by a Seller shall
require Buyer to purchase up to the total shares subject to the options at such
time as shown below; provided, however, if more than one Seller exercises an
option at any anniversary date and the number of shares exceeds the number of
shares Buyer is required to purchase, the aggregate number of shares purchased
by Buyer shall be reduced to the maximum required amount, and such shares shall
be purchased from the Sellers who exercised options at that time in proportion
to their ownership of shares of RDA at that time.
(c) The options of this Paragraph 1 held by Sellers
shall be cumulative and shall commence on each anniversary date of the date of
this agreement, on the following schedule:
-2-
RDA Shares Available for Sale Measured by
Percentage Points of Total RDA Shares
Anniversary Date (Cumulative less any shares previously acquired)
Third, July 1, 2000 up to 10% points
Fourth, July 1, 2001 up to 20% points
Fifth, July 1, 2002 up to 30% points
Sixth, July 1, 2003 up to 40% points
Seven, July 1, 2004, up to 49% points
and each Anniversary
Date thereafter
2. Notice of Exercise of Option; Closing; Fiscal Year. Options
may be exercised effective on each Anniversary Date. In each case of the
exercise of an option set forth in paragraph 1 above, written notice of the
exercise shall be given to the other parties to this Agreement, including the
Escrow Agent, not later than May 31 of each fiscal year. Closing will take place
the last business day of the month following the end of the fiscal year. All
exercises during a fiscal year pursuant to options contained elsewhere in this
Agreement, shall be counted towards the limitation on annual exercises. For
purposes of this Agreement, a "fiscal year" shall be the 12 months ended June 30
each year.
3. Limitation on Seller Options; Acceleration of Buyer
Options. The options stated above held by Sellers are cumulative and
discretionary with the Sellers, provided, however, during any fiscal year no
more than 20% points of the shares subject to options be required to be
purchased by Buyer. Buyer may, in its sole discretion, accelerate its
acquisition of shares from Sellers outlined in the table of Paragraph 1 above,
and may purchase any or all RDA shares as of any anniversary date from July 1,
2000 and thereafter.
-3-
4. Additional Options. In the event any Seller, or any
person(s) who acquire(s) shares of RDA from any Seller, as permitted by this
agreement, shall no longer be associated with RDA or its subsidiaries as an
active full-time employee, whether by voluntary or involuntary termination of
employment including a termination based on sickness, incapacity or death (a
"Triggering Event"), Buyer shall have the right to acquire the shares of such
person; provided, however, such purchase must be made by Buyer in the case of
the death of an individual shareholder. The reference to Seller in the foregoing
sentence shall mean Xxxxxxx X. X. Xxxxx in the case of shares owned by Stradis
Pty Ltd. Upon the effectiveness of such a Triggering Event, and Buyer's
obtaining written notice of the event by the remaining Sellers, by RDA or
otherwise, Buyer shall have an additional option to acquire the shares, which
option shall remain outstanding for ninety (90) days from the receipt of notice
to Buyer or Buyer becoming aware of the Triggering Event, whichever is later. If
Buyer exercises the option within said 90 days, it shall close on the purchase
of these shares 30 days after its exercise of the additional option. In the
event Buyer does not exercise an option arising from a Triggering Event, the
shares shall continue to be held by the owner thereof subject to the option and
escrow provisions contained herein.
5. Purchase Price. In each exercise of an option granted in
Paragraph 4 above, the purchase price shall be based on the proportional
interest of the shares in the total shares outstanding as related to the actual
consolidated net sales revenue of RDA for the twelve months ended the last day
of the quarter preceding the date of the Triggering Event; and in the case of
Paragraph 1 above, the actual consolidated net sales revenue of RDA for the
fiscal year
-4-
ending June 30 immediately prior to the applicable anniversary date. "Net Sales
Revenue" shall mean gross client invoices less credit notes.
6. Permitted Transfers; Definition of "Seller". After July 1,
2000, the Sellers may transfer shares among themselves, provided that all such
shares shall remain subject to the options and the escrow provisions contained
herein, and a right of first refusal in favor of Buyer. Any planned transfer
shall be noticed to Buyer at least 60 days and allow Buyer 30 days to buy such
shares on the terms and conditions of the intended transfer. In addition,
subject to the approval of Buyer and all Sellers, which approval shall not be
unreasonably withheld, shares owned by the Sellers may be sold to full-time
employees of RDA and its subsidiaries, or potential full-time employees,
provided that all such shares shall remain subject to the option and the escrow
provisions, contained herein; and further provided that Buyer shall have right
of first refusal, as described above in this Paragraph 6, in connection with
such proposed sale. Each permitted transferee hereunder shall be referred to as
a Seller for purposes of this Agreement; and, prior to the acquisition of any
shares of RDA, shall execute a deed for the purpose of agreeing to be bound by
this Agreement. Any Seller who no longer owns shares of RDA shall not be deemed
a Seller for purposes of this Agreement. For purposes of this Agreement, Stradis
Pty Ltd and Xxxxxxx X. X. Xxxxx shall be considered as one Seller, and shall
determine how any of their rights hereunder shall be exercised as between the
two; provided, however, each shall be obligated to fulfill any obligations of
either hereunder.
-5-
7A. Change of Control of RMC.
(a) Rights of Sellers. In the event that: (1) a
"controlling interest" in the capital stock of RMC is sold in a single
transaction or a group of related transactions to one or more buyers acting in
concert; (2) RMC sells all or substantially all of its assets; or (3) RMC is a
party to any corporate merger or consolidation resulting in one or more parties
acting in concert who did not previously hold a "controlling interest" in the
capital stock of RMC, owning a controlling interest in RMC or its successor
entity (each such event constitutes a "change in control"), each Seller shall
have the right, if exercised within 12 months of the later of (i) the date
Sellers are advised of the change of control by the Buyer, or (ii) the effective
date of the change in control, to require RMC to purchase such Seller's
remaining shares in accordance with the purchase price applicable to a purchase
pursuant to the options granted in Paragraph 4 above, with the Triggering Event
being the effective date of a change in control described herein, or at their
option reacquire all RDA shares pursuant to subparagraph 7A(c) below. A Closing
on the purchase of shares shall occur within 90 days of Sellers' exercise of
either of the options of this Paragraph 7A(a).
(b) Definitions. For the purposes of this section, a
"controlling interest" in the capital stock will constitute that number of
shares which, as a practical matter, permits the holder or holders to elect a
majority of the members of the Board. It is agreed that shares of capital stock
possessing the right to cast a majority or more of the votes entitled to be cast
for the election of directors of the Company shall conclusively constitute a
"controlling interest", but that a block of shares possessing the right to cast
less than a majority of the number of votes entitled to be voted may, under the
circumstances then pertaining, constitute a
-6-
"controlling interest". The foregoing provisions shall not apply in the event
that the buyer or buyers of a controlling interest, purchaser of assets, or
merger party is controlled by a member or members of the Board of Directors or
management of the Company prior to the event related to a change of control.
(c) Buy Back. In addition to the option to require
Buyer to purchase shares in accordance with this Paragraph 7A, in the event of a
"change of control" within twelve (12) months of the later of (i) the date
Sellers are advised of the change of control by the Buyer, or (ii) the effective
date of the change in control, the Sellers who have not exercised their right to
require Buyer to acquire their shares, shall have the option to buy back the RDA
shares owned by Buyer or any entity owned by Buyer, which option shall be in
proportion to their then ownership of RDA shares or as otherwise agreed to by
the Sellers who exercise this Buy Back option; provided, however, Buyer, and
entities controlled by Buyer, shall not be required to sell back the RDA shares
unless Sellers acquire all RDA shares then owned by Buyer or entities controlled
by Buyer, including any shares any Seller requires Buyer to acquire on a "change
of control" pursuant to this Paragraph 7A. In addition, one or more of the
Sellers may require Buyer, or any entity owned by Buyer, to sell its RDA shares
to the Sellers who exercise their right, in proportion to their then ownership
of RDA Shares, if such Sellers have exercised the rights of Paragraph 7A(a) and
Buyer has failed to purchase the shares, provided, however, such additional
right must be exercised within thirty (30) days of Buyer's failure to purchase
the shares; and further provided that Buyer and entities conducted by it shall
only be required to sell back its RDA Shares if all such shares are being
purchased. The purchase price of a buy back shall be the
-7-
lesser of the price per share at their acquisition by Buyer (or its affiliate),
or the price per share pursuant to the formula used for a purchase pursuant to
Paragraph 4 above.
7B. Sale of RDA Shares by Buyer.
(a) In the event that Buyer, or any entity controlled
by Buyer, intends to voluntarily sell any or all RDA shares owned by it during
the term of this Agreement, it shall first offer the shares to the Sellers on
the terms and conditions of the proposed sale, and give the Sellers sixty (60)
days from their being advised of a proposed sale, to exercise a right of first
refusal to acquire the shares, in proportion to their then ownership of RDA, on
the terms and conditions of the proposed sale. When advising Seller of the terms
and conditions of the proposed sale, Buyer shall also advise Sellers of the
identity of the proposed purchaser. If less than all the Sellers have exercised
the option at the end of the 60 days, any shares not purchased shall be offered
to the Sellers exercising the option for a period of an additional 14 days.
Buyer shall only be obligated to sell the shares to the Sellers if one or more
Sellers are acquiring all the shares offered. If not, Buyer is free to sell the
shares to one or more third parties on the terms described in the notice to
Sellers, so long as such sale is closed within 90 days of the end of the notice
period described above, and so long as such sale terms and conditions are not
more favorable to the purchaser(s) than as described to Seller in the notice of
proposed sale.
(b) Furthermore, in the event Buyer is selling all of
its shares of RDA, it shall use its best efforts to have the purchaser offer to
acquire all shares of RDA owned by Sellers on the same terms and conditions as
the purchaser of Buyer's shares.
-8-
(c) In matching a third party offer which includes
considerations other than cash or cash equivalent consideration, Sellers'
matching offer may convert any non-cash or non-cash equivalent consideration to
an amount of cash which will give Buyer the same economic benefit of the third
party offer.
(d) In the event of a sale by Buyer to a third party,
that party shall be a permitted assignee, subject to the terms of this
Agreement, including execution of a deed as described in Paragraph 9 below,
except that in the case of a sale of all of Buyer's RDA shares, the provisions
of Paragraph 7A shall no longer apply.
(e) Buyer may not, without the prior written approval
of all the Sellers, voluntarily sell any RDA Shares, other than to an entity
under its control, prior to July 1, 2000.
8. Escrow Arrangements. To facilitate the closing of the
purchase of any shares acquired pursuant to the exercise of an option hereunder,
all shares of RDA owned by Sellers and Buyer shall be placed in escrow with the
Escrow Agent subject to the following:
(a) Escrow. Certificates representing the shares
shall remain in the name of the registered owners who shall provide one or more
signed blank share transfer forms, also to be placed in escrow.. Any transfers
of ownership shall be effected by the issuance of one or more certificates to
the purchaser and the issuance of one or more certificates representing the
balance of the shares to the registered owner. Buyer acknowledges that the
Shares acquired by it
-9-
at the Closing held as of July 1, 1997 will remain in the name of each Seller
until the stamp duty has been paid and new certificates issued.
(b) Receipt of Shares. The Escrow Agent hereby
acknowledges receipt of the escrowed shares, as identified on Schedule 1 hereof,
and agrees to hold such shares in escrow as agent for Buyer and Sellers, to be
distributed and released as provided herein.
(c) Release. On July 31, 2004, unless otherwise
instructed by Buyer and all Sellers, Escrow Agent shall return all shares not
purchased by Buyer to their respective owner.
(d) Disputes. In the event of a dispute among the
parties, the Escrow Agent shall hold the shares until the rights of the parties
hereto have been determined by final judgment of a court of competent
jurisdiction and the Escrow Agent shall have received evidence reasonably
satisfactory to it of such final judgment, at which time the Escrow Agent shall
promptly act in accordance with such final judgment. A "final judgment" for
these purposes shall be a judgment as to which the period of time for appealing
such judgment has expired without an appeal's having been timely made, or, if an
appeal is timely made, as to which such appeal has been disposed of and there is
no recourse to further appeals.
(e) Joint Instructions. The Escrow Agent shall, in
addition, disburse the shares in accordance with any joint written instructions
received from all Sellers (as defined in Paragraph 6) and Buyer.
-10-
(f) Responsibility. The Escrow Agent undertakes to
perform only such duties as are expressly set forth herein. In the event the
Escrow Agent becomes involved in litigation by reason hereof, it is hereby
authorized to deposit with the Clerk of the Court in which such litigation is
pending the shares then held by it pursuant hereto and, thereupon, the Escrow
Agent shall stand fully relieved and discharged of any further duties hereunder,
except to the extent that such court shall instruct the Escrow Agent to act. In
the event the Escrow Agent is threatened with litigation by reason hereof, it is
further hereby authorized to interplead all interested parties in any court of
competent jurisdiction and to deposit with the Clerk of such Court the shares
then held by it pursuant hereto and, thereupon, it shall stand fully relieved
and discharged of any further duties hereunder, except to the extent that such
court shall instruct the Escrow Agent to act.
(g) Liability. The Escrow Agent shall not be liable
for any action taken or omitted by it in good faith and reasonably believed by
it to be authorized or within the rights or powers conferred upon it by this
Agreement, and may consult with counsel of its own choice and shall have full
and complete authorization in good faith to act or refrain from acting in
accordance with the opinion of such counsel. In no event shall the Escrow Agent
be required to account for any funds subsequent to disposition thereof by the
Escrow Agent.
(h) Reliance. The Escrow Agent may rely and shall be
protected in acting, or refraining from acting, upon any written notice,
instruction or request furnished to it hereunder and reasonably believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
-11-
(i) Indemnification of Escrow Agent. Buyer and each
of the Sellers hereby agree jointly and severally to indemnify the Escrow Agent
for, and to hold it harmless against any loss, liability, or expense incurred
without negligence or bad faith on the part of the Escrow Agent, arising out of
or in connection with its entering into this Agreement and its performance of
its duties hereunder, including the costs and expenses of defending itself
against any claim of liability in the premises, and to pay or reimburse the
Escrow Agent upon request for all expenses, disbursements and advances,
including the costs of reasonable attorneys' fees, incurred or made by it in
connection with carrying out its duties hereunder.
(j) Resignation. The Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving not less than 15 days
notice of such resignation to the Buyer, the RDA and the Sellers specifying the
date when such resignation shall take effect. Promptly after such notice, a
successor escrow agent shall be appointed by mutual agreement of the Buyer, the
RDA and the Sellers, such successor escrow agent to become Escrow Agent
hereunder upon the resignation dated specified in such notice. If Buyer, the
Company and the Stockholders are unable to agree upon a successor escrow agent
within fifteen days of such notice, the Escrow Agent shall continue to serve
until its successor accepts the escrow and receives the Escrow Deposit.
(k) Expenses. Buyer shall pay all routine fees, costs
and expenses of the Escrow Agent throughout the term of the escrow. In the case
of a dispute, except for extraordinary expenses, if any, resulting from
additional services related to the dispute among the parties, each party shall
bear its own legal and accounting costs and expenses related to the
-12-
dispute, and Escrow Agent's extra costs and expenses, if any, resulting from a
dispute will be paid by each party in proportion to its ownership of Shares of
RDA, including any amounts payable pursuant to subparagraph 8(i) above.
9. Assignment; Successors. Buyer shall have the right to
assign the options, or any portion of the options to any entity controlled by
it; provided, however, should such entity no longer be controlled by Buyer, the
RDA Shares and options shall be reassigned to Buyer or assigned to an entity
controlled by Buyer. Subject to the terms hereof, Sellers may assign their
shares of RDA. Any permitted assignee of Buyer or Seller must execute a deed for
the purpose of agreeing to be bound by this Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their permitted
assigns, respective heirs, personal representatives, successors and assigns.
10. Termination. This Agreement will automatically terminate
whenever Buyer shall be the owner of 100% or none of the outstanding shares of
RDA.
11. Governing Law. This agreement shall be governed by the
laws of the State of Victoria, Australia and applicable the federal laws of
Australia.
-13-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
RIGHT D&A PTY LTD
BY: /S/ XXXXXXXXX X. XXXXXXXX
Xxxxxxxxx X. Xxxxxxxx
RIGHT MANAGEMENT CONSULTANTS, INC.
BY: /S/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
SELLERS:
BY: /S/ XXXXXXXXX X. XXXXXXXX
Xxxxxxxxx X. Xxxxxxxx
STRADIS PTY LTD
BY: /S/ WILLIAM D. T. XXXXX
Xxxxxxx X. X. Xxxxx
BY: /S/ WILLIAM D. T. XXXXX
Xxxxxxx X. X. Xxxxx
BY: /S/ XXXXXXX X . XXXXXX
Xxxxxxx X. Xxxxxx
BY: /S/ XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx
B&McK NOMINEES (VIC) PTY LTD, as
Escrow Agent
BY: /S/ B&MCK NOMINEES (VIC) PTY LTD
-14-
OPTION AND ESCROW AGREEMENT
Right D&A Pty Ltd
Schedule 1
Shareholders Shares
Right Management Consultants, Inc. 51,000
Xxxxxxxxx X. Xxxxxxxx 26,000
Stradis Pty Ltd 13,000
Xxxxxxx X. Xxxxxx 5,000
Xxxxx Xxxxxxxxx 5,000
-------
100,000
=======
-15-
