10-Q

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

ý	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                              to

COMMISSION FILE NUMBER: 000-21571

TMP WORLDWIDE INC.
(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization) 13-3906555
(IRS Employer Identification No.)

622 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip code)

(212) 351-7000
(Registrant's telephone number, including area code)

        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 ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes ý    No. o

        Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the latest practicable date.

Class	Outstanding on November 7, 2002
Common Stock	106,410,292
Class B Common Stock	4,762,000

TMP WORLDWIDE INC.

INDEX

		Page No.
	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Condensed Balance Sheets—September 30, 2002 and December 31, 2001	3
	Consolidated Condensed Statements of Operations—Three Months and Nine Months Ended September 30, 2002 and 2001	4
	Consolidated Condensed Statements of Comprehensive Income (Loss)—Three Months and Nine Months Ended September 30, 2002 and 2001	5
	Consolidated Condensed Statement of Stockholders' Equity—Nine Months Ended September 30, 2002	6
	Consolidated Condensed Statements of Cash Flows—Nine Months Ended September 30, 2002 and 2001	7
	Notes to Consolidated Condensed Financial Statements	8
	Report of Independent Certified Public Accountants	25
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39
	PART II—OTHER INFORMATION
Item 2(c).	Changes in Securities and Use of Proceeds	40
Item 6.	Exhibits and Reports on Form 8-K	40
	Signatures	41
	Certifications	42

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

TMP WORLDWIDE INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)

		September 30, 2002			December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents		$	199,901		$	340,581
Accounts receivable, net			510,425			507,373
Work-in-process			26,266			27,480
Prepaid and other			96,191			130,484
	Total current assets		832,783			1,005,918
Property and equipment, net			168,302			192,695
Intangibles, net			564,900			939,847
Other assets			73,582			67,902
		$	1,639,567		$	2,206,362
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	386,492		$	401,031
Accrued expenses and other liabilities			178,823			278,522
Accrued integration and restructuring costs			29,284			44,121
Accrued business reorganization costs			53,805			—
Deferred commissions & fees			130,562			139,100
Current portion of long-term debt			13,654			66,834
	Total current liabilities		792,620			929,608
Long-term debt, less current portion			4,425			9,130
Other long-term liabilities			20,626			38,362
	Total liabilities		817,671			977,100
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, authorized 800 shares; issued and outstanding: none			—			—
Common stock, $0.001 par value, authorized 1,500,000 shares; issued: 107,331 and 106,181 shares, respectively; outstanding: 106,404 and 106,181 shares, respectively			107			106
Class B common stock, $0.001 par value, authorized 39,000 shares; issued and outstanding: 4,762 shares			5			5
Additional paid-in capital			1,283,807			1,263,340
Accumulated other comprehensive loss:
Foreign currency translation adjustments			(25,308	)		(91,437	)
Unrealized gain on forward foreign exchange contracts			8			332
Retained earnings (deficit)			(426,881	)		56,916
Treasury stock, at cost; 927 shares			(9,842	)		—
Total stockholders' equity			821,896			1,229,262
		$	1,639,567		$	2,206,362

See accompanying notes to consolidated condensed financial statements.

3

TMP WORLDWIDE INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

		Three Months Ended September 30,						Nine months Ended September 30,
		2002			2001			2002			2001
Commissions & fees		$	284,024		$	361,173		$	865,800		$	1,121,974
Operating expenses:
	Salaries & related		154,556			179,798			480,039			574,123
	Office & general		67,513			71,722			210,208			231,521
	Marketing & promotion		40,346			41,743			105,082			152,437
	Merger & integration		(902	)		20,208			10,748			61,934
	Business reorganization and other special charges		2,597			—			117,017			—
	Amortization of intangibles		750			7,473			2,441			19,578
	Total operating expenses		264,860			320,944			925,535			1,039,593
	Operating income (loss)		19,164			40,229			(59,735	)		82,381
Interest and other income (expense), net			473			2,257			(100	)		11,032
Income (loss) before provision (benefit) for income taxes and minority interests			19,637			42,486			(59,835	)		93,413
Provision (benefit) for income taxes			6,131			17,389			(2,862	)		43,355
Income (loss) before minority interests			13,506			25,097			(56,973	)		50,058
Minority interests			(497	)		(534	)		(1,550	)		(1,094	)
Income (loss) before accounting change			14,003			25,631			(55,423	)		51,152
Cumulative effect of accounting change, net of tax			—			—			(428,374	)		—
Net income (loss) applicable to common and Class B common stockholders		$	14,003		$	25,631		$	(483,797	)	$	51,152
Basic earnings per share:
Income (loss) before accounting change		$	0.13		$	0.23		$	(0.50	)	$	0.47
Cumulative effect of accounting change, net of tax			—			—			(3.85	)		—
Net income (loss)		$	0.13		$	0.23		$	(4.35	)	$	0.47
Diluted earnings per share:
Income (loss) before accounting change		$	0.12		$	0.23		$	(0.50	)	$	0.45
Cumulative effect of accounting change, net of tax			—			—			(3.85	)		—
Net income (loss)		$	0.12		$	0.23		$	(4.35	)	$	0.45
Weighted average shares outstanding:
	Basic		111,519			109,862			111,367			108,975
	Diluted		112,076			113,665			111,367			113,215

See accompanying notes to consolidated condensed financial statements.

4

TMP WORLDWIDE INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)

	Three Months Ended September 30,
	2002			2001
Net income applicable to common and Class B common stockholders	$	14,003		$	25,631
Change in net unrealized gain on forward foreign exchange contracts, net of tax		(796	)		—
Change in cumulative foreign currency translation adjustment		11,078			4,674
Comprehensive income	$	24,285		$	30,305

	Nine Months Ended September 30,
	2002			2001
Net income (loss) applicable to common and Class B common stockholders	$	(483,797	)	$	51,152
Change in net unrealized gain on forward foreign exchange contracts, net of tax		(324	)		—
Change in cumulative foreign currency translation adjustment		66,129			(8,961	)
Comprehensive income (loss)	$	(417,992	)	$	42,191

See accompanying notes to consolidated condensed financial statements.

5

TMP WORLDWIDE INC.

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except per share amounts)
(unaudited)

				Class B Common Stock, $0.001 Par Value
	Common Stock, $0.001 Par Value
									Accumulated Other Comprehensive Income (Loss)
							Additional Paid-in Capital					Retained Earnings (Deficit)			Treasury Stock			Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2001	106,181	$	106	4,762	$	5	$	1,263,340	$	(91,105	)	$	56,916			—		$	1,229,262
Issuance of common stock in connection with the exercise of employee stock options	441		1	—		—		7,229		—			—			—			7,230
Tax benefit of stock options exercised	—		—	—		—		1,508		—			—			—			1,508
Issuance of common stock in connection with business combinations	396		—	—		—		4,394		—			—			—			4,394
Issuance of common stock in connection with employee stay bonuses and other, net of cancellations	109		—	—		—		3,832		—			—			—			3,832
Issuance of common stock for 401(k) plan	204		—	—		—		3,504		—			—			—			3,504
Repurchase of common stock	—		—	—		—		—		—			—			(9,842	)		(9,842	)
Change in net unrealized gain on forward foreign exchange contracts, net of tax	—		—	—		—		—		(324	)		—			—			(324	)
Change in cumulative foreign currency translation adjustment	—		—	—		—		—		66,129			—			—			66,129
Net loss	—		—	—		—		—		—			(483,797	)		—			(483,797	)
Balance, September 30, 2002	107,331	$	107	4,762	$	5	$	1,283,807	$	(25,300	)	$	(426,881	)	$	(9,842	)	$	821,896

See accompanying notes to consolidated condensed financial statements.

6

TMP WORLDWIDE INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

				Nine months Ended September 30,
				2002			2001
Cash flows from operating activities:
	Net income (loss) applicable to common and Class B common stockholders			$	(483,797	)	$	51,152
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Cumulative effect of accounting change, net of tax			428,374			—
		Depreciation and amortization			43,018			55,243
		Provision for doubtful accounts			5,787			10,868
		Net loss on disposal and write-off of fixed assets			20,742			2,626
		Net loss on write-down of other assets			14,796			—
		Tax benefit of stock options exercised			1,508			14,497
		Common stock issued for matching contribution to 401(k) plan, employee stay bonuses and other			7,336			7,014
		Provision (benefit) for deferred income taxes			(6,194	)		5,100
		Effect of pooled companies included in more than one period			—			(618	)
		Minority interests			(1,550	)		(1,094	)
	Changes in assets and liabilities, net of effects of purchases of businesses:
		(Increase) decrease in accounts receivable			(8,793	)		102,339
		Decrease in work-in-process, prepaid and other			9,899			11,382
		Decrease in deferred commissions & fees			(8,667	)		(29,043	)
		Increase in accrued business reorganization costs			53,805			—
		Decrease in accounts payable and accrued liabilities			(101,225	)		(116,863	)
			Total adjustments		458,836			61,451
			Net cash provided by (used in) operating activities		(24,961	)		112,603
Cash flows from investing activities:
	Capital expenditures				(36,885	)		(56,660	)
	Payments for purchases of businesses and intangible assets, net of cash acquired				(22,926	)		(293,755	)
	Purchases of long term investments				—			(6,550	)
			Net cash used in investing activities		(59,811	)		(356,965	)
Cash flows from financing activities:
	Payments on capitalized leases				(3,694	)		(3,888	)
	Borrowings under line of credit and proceeds from issuance of debt				28,290			37,521
	Repayments under line of credit and principal payments on debt				(82,571	)		(70,569	)
	Cash received from the exercise of employee stock options				7,230			32,015
	Dividends paid by pooled entities				—			(7,825	)
	Payments for treasury stock				(9,842	)		—
			Net cash used in financing activities		(60,587	)		(12,746	)
Effect of exchange rate changes on cash and cash equivalents					4,679			(1,520	)
Net decrease in cash and cash equivalents					(140,680	)		(258,628	)
Cash and cash equivalents, beginning of period					340,581			576,265
Cash and cash equivalents, end of period				$	199,901		$	317,637
Supplemental disclosures of cash flow information:
Cash paid during the period for:
	Interest			$	5,278		$	6,305
	Income taxes			$	20,633		$	13,644

See accompanying notes to consolidated condensed financial statements.

7

TMP WORLDWIDE INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(in thousands, except per share amounts)
(unaudited)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

        TMP Worldwide Inc. ("TMP" or the "Company"), founded in 1967, is a global provider of career solutions. The Company, through its flagship Interactive product, Monster® (www.monster.com), is the global leader in online career management. TMP is also one of the world's largest recruitment advertising agencies through its Advertising & Communications division, the world's largest yellow pages advertising agency through its Directional Marketing division and a leading provider of online moving services through Monstermoving^SM.com (www.monstermoving.com), one of the world's largest selection and temporary contracting agencies through its eResourcing division and a premier Executive Search firm.

Basis of Presentation

        The consolidated condensed interim financial statements included herein are unaudited and have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

        These statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for fair presentation of the information contained herein. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The Company adheres to the same accounting policies in preparation of interim financial statements. As permitted under generally accepted accounting principles, interim accounting for certain expenses, including income taxes and selected marketing and promotion costs are based on full year assumptions. Such amounts are expensed in full in the year incurred. For interim financial reporting purposes, income taxes are recorded based upon estimated annual income tax rates. Marketing and promotion expenses, specific to our Monster segment, are recorded for interim financial reporting purposes in proportion to actual commissions and fees as a percent of estimated annual commissions and fees for the Monster segment which are adjusted during interim periods as our forecasts for such commissions and fees change.

        The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. During the third quarter of 2002, the Company re-evaluated the need for bonus accruals, the level of its allowance for doubtful accounts and other accruals. As a result, during the third quarter ended September 30, 2002, the Company reduced bonus accruals by approximately $5.4 million, allowance for doubtful accounts by approximately $1.5 million and general accruals by approximately $1.4 million, all of which were accrued during the first six months of 2002.

        Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable. The Company performs continuing credit evaluations of its customers and does not require collateral. The Company has not experienced significant losses related to receivables from individual customers or groups of customers in any particular industry or

8

geographic area. In addition, the Company invests in short-term commercial paper rated P1 by Moody's or A1 by Standard & Poors or better.

        During the nine months ended September 30, 2002, the Company completed one acquisition using the purchase method of accounting. In addition, for the period January 1, 2001 through December 31, 2001, the Company completed 35 acquisitions using the purchase method of accounting. Given the number of acquisitions affecting the prior year period, the results of operations from period to period may not necessarily be comparable. Furthermore, results of operations for the interim periods are not necessarily indicative of annual results.

        The amounts charged to clients for temporary contracting services are reported in gross billings and commissions and fees after deducting the costs of the temporary contractors. The details for such amounts for both traditional and interactive operations are:

	Three Months Ended September 30,
	2002		2001
Temporary contracting revenue	$	199,117	$	222,311
Temporary contracting costs		160,802		175,067
Temporary contracting billings/commissions & fees	$	38,315	$	47,244

	Nine Months Ended September 30,
	2002		2001
Temporary contracting revenue	$	589,087	$	685,833
Temporary contracting costs		473,289		532,452
Temporary contracting billings/commissions & fees	$	115,798	$	153,381

Recently Issued Accounting Pronouncements

        In July 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 146, Accounting for Restructuring Costs ("SFAS 146"). SFAS 146 applies to costs associated with an exit activity (including restructuring) or with a disposal of long-lived assets. Those activities can include eliminating or reducing product lines, terminating employees and contracts, and relocating plant facilities or personnel. Under SFAS 146, a company will record a liability for a cost associated with an exit or disposal activity when that liability is incurred and can be measured at fair value. SFAS 146 will require a company to disclose information about its exit and disposal activities, the related costs, and changes in those costs in the notes to the interim and annual financial statements that include the period in which an exit activity is initiated and in any subsequent period until the activity is completed. SFAS 146 is effective prospectively for exit or disposal activities initiated after December 31, 2002, with earlier adoption encouraged. Under SFAS 146, a company may not restate its previously issued financial statements and the new Statement grandfathers the accounting for liabilities that a company had previously recorded under Emerging Issues Task Force Issue No. 94-3.

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NOTE 2—ACCOUNTING CHANGES

        In June 2001, the FASB issued SFAS No. 141, Business Combinations ("SFAS 141"), and SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). SFAS 141 eliminates the pooling of interests method of accounting for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. The Company adopted SFAS 141 as of July 1, 2001.

        As of January 1, 2002, the Company adopted SFAS 142, which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill and indefinite-lived intangible assets are no longer amortized but tested for impairment on an annual basis, or more frequently if circumstances warrant. The provisions of the standard also require the completion of a transitional impairment test in the year of adoption, with any impairment identified upon initial implementation treated as a cumulative effect of a change in accounting principle.

        In conjunction with the implementation of the new accounting standards for goodwill, the Company has completed the transitional goodwill impairment review. The impairment review is based on a discounted cash flow approach that uses the Company's estimates of future market share, revenues and costs for each reporting unit as well as appropriate discount rates. As a result of the adoption of SFAS 142, the Company recorded a non-cash impairment charge of $448,374 ($428,374, net of tax) to reduce the carrying value of its goodwill. The impairment charge has been reflected as a cumulative effect of accounting change, net of tax, in the accompanying consolidated condensed statement of operations.

        A summary of changes in the Company's goodwill during the nine months ended September 30, 2002, by business segment is as follows:

	December 31, 2001(c)		Additions & Adjustments			Impairments			Currency Translation Adjustment			September 30, 2002
Monster(a)	$	149,496	$	28,085		$	—		$	10,564		$	188,145
Advertising & Communications(b)		254,646		(21,660	)		(126,000	)		14,827			121,813
Directional Marketing(b)		59,502		28,375			(29,374	)		(338	)		58,165
eResourcing(a)		432,871		(17,723	)		(274,000	)		28,263			169,411
Executive Search		24,093		—			(19,000	)		410			5,503
Total	$	920,608	$	17,077		$	(448,374	)	$	53,726		$	543,037

(a)

In the nine months ended September 30, 2002, the business of Sale Search Rekrytering & Urval i Stockholm AB, a July 2001, acquisition was moved from the Company's eResourcing division to its Monster division as a result of a regional consolidation.

(b)

In the nine months ended September 30, 2002, the business of USMotivation, Inc. a September 2001 acquisition, was moved from the Company's Advertising & Communications division to its Directional Marketing division as a result of management realignment. In addition, goodwill existing as of December 31, 2001 and any subsequent impairments that related to our Monstermoving product, are now combined with those of Directional Marketing.

(c)

Goodwill as of December 31, 2001 is shown net of accumulated amortization of $68,738.

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        As of September 30, 2002 and December 31, 2001, the Company's intangible assets consisted of the following:

	September 30, 2002					December 31, 2001
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Indefinite-lived Intangible Assets
Goodwill	$	543,037	$	—		$	989,346	$	(68,738	)
Amortizable Intangible Assets
Non-compete agreements		7,256		(5,158	)		5,266		(3,400	)
Client lists		24,348		(12,640	)		24,159		(13,535	)
Trademarks		9,596		(2,195	)		7,173		(1,404	)
Other amortizable intangibles		1,181		(525	)		1,286		(306	)
Intangible assets	$	585,418	$	(20,518	)	$	1,027,230	$	(87,383	)

        Amortization expense for the three and nine months ended September 30, 2002 was $750 and $2,441, respectively. Amortization expense for each of the five succeeding years is estimated to be approximately $3 million to $4 million per year.

        SFAS 142 also requires purchased intangible assets other than goodwill to be amortized over their useful lives unless these lives are determined to be indefinite. In accordance with SFAS 142, the Company ceased amortizing goodwill effective January 1, 2002.

        The following tables present a reconciliation of net income and earnings per share for the three and nine months ended September 30, 2002 and 2001, adjusted to exclude goodwill amortization for the 2001 periods (net of taxes) as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2002		2001		2002			2001
Net Income Reconciliation
Reported net income (loss)	$	14,003	$	25,631	$	(483,797	)	$	51,152
Add back: Goodwill amortization, net of tax		—		5,858		—			15,143
Adjusted net income (loss)	$	14,003	$	31,489	$	(483,797	)	$	66,295

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		Three Months Ended September 30,				Nine Months Ended September 30,
		2002		2001		2002			2001
Earnings Per Share Reconciliation
Basic earnings per share:
Reported net income (loss)		$	0.13	$	0.23	$	(4.35	)	$	0.47
Add back: Goodwill amortization, net of tax			—		0.05		—			0.14
Adjusted net income (loss)		$	0.13	$	0.28	$	(4.35	)	$	0.61
Diluted earnings per share:
Reported net income (loss)		$	0.12	$	0.23	$	(4.35	)	$	0.45
Add back: Goodwill amortization, net of tax			—		0.05		—			0.14
Adjusted net income (loss)		$	0.12	$	0.28	$	(4.35	)	$	0.59
Weighted average shares outstanding:
	Basic		111,519		109,862		111,367			108,975
	Diluted		112,076		113,665		111,367			113,215

NOTE 3—EARNINGS PER SHARE

        Basic earnings per share does not include the effects of potentially dilutive stock options and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effects of common shares issuable upon exercise of employee stock options for periods in which the options' exercise price is lower than the Company's average share price for the period.

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        A reconciliation of shares used in calculating the Company's weighted average basic and diluted earnings per common and Class B common share is as follows:

	Three Months Ended September 30,
	2002		2001
Basic	111,519		109,862
Effect of assumed conversion of stock options	557	*	3,803	*
Diluted	112,076		113,665

	Nine months Ended September 30,
	2002		2001
Basic	111,367		108,975
Effect of assumed conversion of stock options	—	*	4,240	*
Diluted	111,367		113,215

*

Certain stock options were excluded from the computation of earnings per share due to their antidilutive effect. The weighted average number of such options is approximately 16,563 and 5,268 for the three months ended September 30, 2002 and 2001, respectively, and 18,881 and 2,208 for the nine months ended September 30, 2002 and 2001, respectively.

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NOTE 4—BUSINESS COMBINATIONS

Acquisitions Accounted for using the Purchase Method

        In September 2002, the Company's Directional Marketing division acquired Moving.com for cash of $2.9 million and 396 shares of common stock valued at approximately $4.4 million. Moving.com is a leading relocation resource on the Internet and offers a wide variety of moving solutions to different users. The acquisition of Moving.com was made to enhance the Company's Monstermoving product offerings and give its users additional access to a premier network of relocation service providers. The Company has initially recorded approximately $6.5 million of goodwill and $0.8 million of trademarks in connection with the acquisition and is still in the process of refining its purchase price allocation. During the year ended December 31, 2001, the Company completed 35 acquisitions using the purchase method of accounting.

        The summarized unaudited pro forma results of operations set forth below for the nine month period ended September 30, 2001 and the year ended December 31, 2001 assume the acquisitions in 2001 occurred as of the beginning of 2001 and apply the accounting rules that were in effect at the date of acquisition. As of January 1, 2002, in accordance with SFAS 142, the amortization of goodwill has ceased. As a result, $15,143 and $20,470 of goodwill amortization expense, net of tax, that will not continue in future periods, is included in the pro forma results for the nine months ended September 30, 2001 and the year ended December 31, 2001, respectively.

		Nine months Ended September 30,
				Year Ended December 31, 2001
		2001
Commissions & fees		$	1,207,489	$	1,533,781
Net income applicable to common and Class B common stockholders		$	3,632	$	22,476
Net income per common and Class B common share:
	Basic	$	0.03	$	0.20
	Diluted	$	0.03	$	0.20

        The unaudited pro forma results of operations are not necessarily indicative of what actually would have occurred if the acquisitions had been completed at the beginning of each of the periods presented, nor are the results of operations necessarily indicative of the results that will be attained in the future.

Merger & Integration Costs Incurred with Pooling of Interests Transactions

        In connection with pooling of interests transactions, the Company recorded merger & integration costs of $10,748 for the nine months ended September 30, 2002. Of this amount, the Company realized a $324 benefit relating to merger costs and $11,072 relates to integration costs.

        The merger benefits of $324 for the nine months ended September 30, 2002 consist primarily of the reversal of previously accrued costs, partially offset by transaction related costs that were recorded in the beginning of 2002. The $11,072 of integration costs are shown in the "Expensed" column in the schedule of Accrued Integration and Restructuring Costs below.

14

        In connection with pooling of interests transactions, the Company expensed merger & integration costs of $61,934 for the nine months ended September 30, 2001. Of this amount $18,644 is for merger costs and $43,290 is for integration costs.

        The merger costs of $18,644 for the nine months ended September 30, 2001 consist of (1) $1,405 of non-cash employee stay bonuses, including amortization of $806, which relates to $1,864 recorded as a prepaid compensation and a corresponding long term liability, expensed over the course of a year from the date of grant for TMP shares set aside for key personnel of acquired companies who now have remained employees of the Company for a full year and now have earned such shares, (2) $1,126 paid in cash to key personnel of pooled companies as employee stay bonuses, (3) $9,043 of transaction related costs, including legal, accounting, printing and advisory fees and the costs incurred for the subsequent registration of shares issued in the acquisitions and (4) $7,070 in severance costs for managers and staff of pooled companies. The $43,290 of integration costs consist of: (a) $7,982 for assumed lease obligations of closed facilities, (b) $25,004 for consolidation of acquired facilities and associated write-offs and (c) $10,304 for severance, relocations and other employee costs.

Accrued Integration and Restructuring Costs

        In connection with its acquisitions, the Company formulated plans to integrate the operations of the acquired companies. Such plans involve the closure of offices and the elimination of redundant management and employees. The objectives of the plans are to take advantage of the Company's existing operating infrastructure and efficiencies or to develop efficiencies from the infrastructure of the acquired companies, and to create a cross-selling platform in the related markets in which the Company operates. Accrued integration and restructuring charges are not associated with the business reorganization initiatives that the Company announced in the second quarter of 2002 (see Note 5).

        In connection with plans to integrate operations of acquired companies, during the nine months ended September 30, 2002, the Company (i) expensed, as part of merger and integration expenses, $11,072 for companies acquired in transactions accounted for as poolings of interests and (ii) increased goodwill by $5,807 for companies acquired in transactions accounted for under the purchase method. These costs and liabilities include:

			Additions						Deductions
	Balance December 31, 2001		Charged to Goodwill			Expensed			Applied against Related asset			Payments			Balance September 30, 2002
Assumed obligations on closed leased facilities	$	17,617	$	(1,713	)	$	8,909		$	(364	)	$	(7,679	)	$	16,770	(a)
Consolidation of acquired facilities		15,588		8,928			(149	)		(740	)		(12,561	)		11,066	(b)
Contracted lease payments exceeding current market costs		498		(112	)		—			—			(96	)		290	(c)
Severance, relocation and other employee costs		9,833		(1,296	)		2,312			(1,136	)		(8,843	)		870	(d)
Pension obligations		585		—			—			—			(297	)		288	(e)
Total	$	44,121	$	5,807		$	11,072		$	(2,240	)	$	(29,476	)	$	29,284

15

(a)

Accrued liabilities for surplus property in the amount of $16,770 as of September 30, 2002 relate to 67 leased office locations of acquired companies that were either underutilized prior to the acquisition date or will be closed by the Company in connection with acquisition-related restructuring plans. The amount is based on the present value of minimum future lease obligations, net of estimated sublease income.

(b)

Other costs associated with the closure or consolidation of existing offices of acquired companies in the amount of $11,066 as of September 30, 2002 relate to termination costs of contracts relating to billing systems, external reporting systems and other contractual arrangements with third parties.

(c)

Above market lease costs in the amount of $290 as of September 30, 2002 relate to the present value of contractual lease payments in excess of current market lease rates.

(d)

Estimated employee severance and relocation expenses and other employee costs in the amount of $870 as of September 30, 2002 relate to estimated severance for terminated employees at closed locations, costs associated with employees transferred to continuing offices and other related costs. Employee groups affected include sales, service, administrative and management personnel at duplicate locations as well as redundant management and administrative personnel at corporate headquarters. As of September 30, 2002, the accrual related to approximately 52 employees including senior management, sales, service and administrative personnel. During the nine months ended September 30, 2002, payments of $8,843 were made to 373 employees for severance and charged against the reserve.

(e)

Pension obligations in the amount of $288 relate to the Company's acquisition of Austin Knight Ltd.

        The Company continues to evaluate and assess the impact of duplicate responsibilities and office locations. In connection with the finalization of preliminary plans relating to purchased entities, additions to acquisition-related restructuring reserves within one year of the date of acquisition are treated as additional purchase price but costs incurred resulting from plan revisions made after the first year will be charged to operations in the period in which they occur.

16

NOTE 5—BUSINESS REORGANIZATION AND OTHER SPECIAL CHARGES

        In the second quarter of 2002, the Company announced a reorganization initiative to further streamline its operations, lower its cost structure, integrate businesses previously acquired and improve its return on capital. This reorganization program includes a workforce reduction, consolidation of excess facilities, restructuring of certain business functions and other special charges, primarily for exiting activities that are no longer part of the Company's strategic plan.

        As a result of the reorganization initiative, the Company recorded business reorganization and other special charges of $2,597 and $117,017 classified as a component of operating expenses, for the three and nine months ended September 30, 2002, respectively. Information relating to the business reorganization and other special charges is as follows:

Workforce Reduction

        In the second and third quarters of 2002, the Company incurred business reorganization costs to reduce its global workforce by approximately 1,000 employees. As a result, the Company recorded a workforce reduction charge of $37,492 for the nine months ended September 30, 2002, primarily relating to severance and fringe benefits.

Consolidation of Excess Facilities and Other Special Charges

        During the nine months ended September 30, 2002, the Company recorded charges of $79,525 relating to consolidation of excess facilities, write-down of investments, professional fees and other charges. Consolidation of excess facilities includes: (a) $45,865 relating to future lease obligations, non-cancelable lease costs and other contractual arrangements with third parties net of estimated sublease income, and (b) $14,593 for fixed asset write-offs related to property and equipment that was disposed of or removed from operations including leasehold improvements, computer equipment, software and furniture and fixtures. The Company also recorded $9,742 for the write-down of investments in and loans to certain businesses that are no longer considered to be part of TMP's strategic plan. Professional fees and other charges, primarily related to workforce reduction and the items above, were $9,325.

        A summary of the business reorganization costs and other special charges is outlined as follows:

Business Reorganization Costs	Total Charge		Noncash Charges			Cash Payments			Liability at September 30, 2002
Workforce reduction	$	37,492	$	(4,784	)	$	(21,775	)	$	10,933
Consolidation of excess facilities		60,458		(14,827	)		(6,970	)		38,661
Write-down of investments		9,742		(9,742	)		—			—
Professional fees and other		9,325		—			(5,114	)		4,211
Total	$	117,017	$	(29,353	)	$	(33,859	)	$	53,805

17

NOTE 6—SEGMENT AND GEOGRAPHIC DATA

        The Company operates in five business segments: Monster®, Advertising & Communications, Directional Marketing, eResourcing and Executive Search. Operations are conducted in the following geographic regions: North America, the Asia/Pacific Region (primarily Australia and New Zealand), the United Kingdom and Continental Europe.

        Segment information is presented in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"). This standard is based on a management approach which requires segmentation based upon the Company's internal organization and disclosure of revenue and operating income based upon internal accounting methods. The Company's financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with generally accepted accounting principles. Corporate level operating expenses are allocated to the segments and are included in the operating results below. Assets are not allocated to segments for internal reporting purposes.

        The Company has structured its operations to encourage the cross-selling of its services, specifically those of Monster. As a result, fees for products and services sold by other operating segments on behalf of Monster are included in the commissions and fees of the Monster operating segment. Excluding fees from the agency/media relationship between our Advertising & Communications and Monster divisions, fees from cross-selling were $10.2 million and $27.7 million, respectively for the three and nine months ended September 30, 2002 and $11.8 million and $27.8 million, respectively for the three and nine months ended September 30, 2001. In addition, the Company's Advertising & Communications division recognizes commissions from the agency/media relationship on the sale of Monster products to its clients. For the three months ended September 30, 2002 and 2001, these commissions were $4.5 million and $1.7 million, respectively and for the nine months ended September 30, 2002 and 2001, these commissions were $9.4 million and $6.2 million, respectively.

        In the third quarter of 2002, the Company changed the composition of its segments to reflect the internal reorganization of Monstermoving and Directional Marketing. As a result, the operations of Monstermoving are now combined with those of Directional Marketing and prior period disclosures have been restated for consistent presentation.

        During the nine months ended September 30, 2002, the Company moved the business of USMotivation, a September 2001 acquisition, from its Advertising and Communications segment to its Directional Marketing segment as a result of a management realignment. As a result, the operations of USMotivation are included in the Directional Marketing results below from January 1, 2002. For the three and nine months ended September 30, 2002 USMotivation reported commission and fees of $3.0 million and $9.9 million respectively and operating income of $0.6 million and $1.9 million respectively. Prior periods have been restated for consistent presentation. For the three and nine months ended September 30, 2001, USMotivation reported commissions and fees of $0.3 million and an operating loss of $0.2 million.

        The following is a summary of the Company's operations by business segment and by geographic region, for the three and nine month periods ended September 30, 2002 and 2001.

18

Information by business segment	Monster		Advertising & Communications		Directional Marketing		eResourcing			Executive Search			Total
For the three months ended September 30, 2002
Commissions & fees:
Traditional sources	$	—	$	34,584	$	28,965	$	76,415		$	15,808		$	155,772
Interactive sources		103,169		7,582		5,172		12,175			154			128,252
Total commissions & fees		103,169		42,166		34,137		88,590			15,962			284,024
Operating expenses:
Salaries & related, office & general and marketing & promotion		88,653		40,211		23,163		94,546			15,842			262,415
Merger & integration costs		—		—		—		(10	)		(892	)		(902	)
Business reorganization & other special charges		1,535		92		563		221			186			2,597
Amortization of intangibles		372		61		131		87			99			750
Total operating expenses		90,560		40,364		23,857		94,844			15,235			264,860
Operating income (loss)	$	12,609	$	1,802	$	10,280	$	(6,254	)	$	727			19,164
Total other income, net		*		*		*		*			*			473
Income before provision for income taxes and minority interests		*		*		*		*			*		$	19,637

*

Not allocated.

19

Information by business segment	Monster		Advertising & Communications			Directional Marketing		eResourcing			Executive Search			Total
For the three months ended September 30, 2001
Commissions & fees:
Traditional sources	$	—	$	48,317		$	28,832	$	86,749		$	22,956		$	186,854
Interactive sources		144,800		2,496			5,914		21,104			5			174,319
Total commissions & fees		144,800		50,813			34,746		107,853			22,961			361,173
Operating expenses:
Salaries & related, office & general and marketing & promotion		92,473		47,353			30,738		100,085			22,614			293,263
Merger & integration costs		744		8,484			133		11,252			(405	)		20,208
Amortization of intangibles (a)		879		1,716			774		3,732			372			7,473
Total operating expenses		94,096		57,553			31,645		115,069			22,581			320,944
Operating income (loss)	$	50,704	$	(6,740	)	$	3,101	$	(7,216	)	$	380			40,229
Total other income, net		*		*			*		*			*			2,257
Income before provision for income taxes and minority interests		*		*			*		*			*		$	42,486

(a)

Includes goodwill amortization as follows:

Monster	$	608
Advertising & Communications		1,596
Directional Marketing		577
eResourcing		3,658
Executive Search		364
Total	$	6,803

*

Not allocated.

20

Information by business segment	Monster		Advertising & Communications			Directional Marketing			eResourcing			Executive Search			Total
For the nine months ended September 30, 2002
Commissions & fees:
Traditional sources	$	—	$	105,721		$	78,708		$	239,780		$	51,561		$	475,770
Interactive sources		316,579		23,001			13,967			35,947			536			390,030
Total commissions & fees		316,579		128,722			92,675			275,727			52,097			865,800
Operating expenses:
Salaries & related, office & general and marketing & promotion		255,233		124,023			72,041			290,229			53,803			795,329
Merger & integration costs		1,206		3,565			(79	)		7,525			(1,469	)		10,748
Business reorganization & other special charges		25,975		21,977			15,932			37,961			15,172			117,017
Amortization of intangibles		1,133		225			504			257			322			2,441
Total operating expenses		283,547		149,790			88,398			335,972			67,828			925,535
Operating income (loss)	$	33,032	$	(21,068	)	$	4,277		$	(60,245	)	$	(15,731	)		(59,735	)
Total other expense, net		*		*			*			*			*			(100	)
Loss before provision (benefit) for income taxes and minority interests		*		*			*			*			*		$	(59,835	)

*

Not allocated.

21

Information by business segment	Monster		Advertising & Communications			Directional Marketing			eResourcing			Executive Search			Total
For the nine months ended September 30, 2001
Commissions & fees:
Traditional sources	$	—	$	140,836		$	75,239		$	311,351		$	86,962		$	614,388
Interactive sources		420,232		19,081			16,458			51,791			24			507,586
Total commissions & fees		420,232		159,917			91,697			363,142			86,986			1,121,974
Operating expenses:
Salaries & related, office & general and marketing & promotion		297,661		153,766			85,956			337,136			83,562			958,081
Merger & integration costs		3,281		20,649			9,021			30,027			(1,044	)		61,934
Amortization of intangibles (a)		2,108		4,421			2,315			9,709			1,025			19,578
Total operating expenses		303,050		178,836			97,292			376,872			83,543			1,039,593
Operating income (loss)	$	117,182	$	(18,919	)	$	(5,595	)	$	(13,730	)	$	3,443			82,381
Total other income, net		*		*			*			*			*			11,032
Income before provision for income taxes and minority interests		*		*			*			*			*		$	93,413

(a)

Includes goodwill amortization as follows:

Monster	$	1,310
Advertising & Communications		4,065
Directional Marketing		1,733
eResourcing		9,478
Executive Search		1,000
Total	$	17,586

*

Not allocated.

22

Information by geographic region	United States		Asia Pacific		United Kingdom		Continental Europe			Other (a)			Total
For the three months ended September 30, 2002
Total commissions & fees	$	164,191	$	37,314	$	46,078	$	30,646		$	5,795		$	284,024
Income (loss) before provision (benefit) for income taxes and minority interests	$	19,491	$	4,007	$	264	$	(3,961	)	$	(164	)	$	19,637
For the three months ended September 30, 2001
Total commissions & fees	$	217,297	$	41,581	$	55,902	$	40,976		$	5,417		$	361,173
Income before provision (benefit) for income taxes and minority interests (b)	$	35,043	$	1,674	$	4,408	$	384		$	977		$	42,486

Information by geographic region	United States			Asia Pacific			United Kingdom			Continental Europe			Other (a)			Total
For the nine months ended September 30, 2002
Total commissions & fees	$	491,091		$	108,747		$	144,203		$	104,295		$	17,464		$	865,800
Income (loss) before provision (benefit) for income taxes and minority interests	$	(13,717	)	$	(7,016	)	$	(6,695	)	$	(31,557	)	$	(850	)	$	(59,835	)
For the nine months ended September 30, 2001
Total commissions & fees	$	678,656		$	128,813		$	167,841		$	127,287		$	19,377		$	1,121,974
Income (loss) before provision (benefit) for income taxes and minority interests (b)	$	92,926		$	8,505		$	(60	)	$	(9,068	)	$	1,110		$	93,413

(a)

Includes the Americas other than the United States.

(b)

Includes goodwill amortization of $6,803 for the three months ended September 30, 2001 and $17,586 for the nine months ended September 30, 2001.

23

NOTE 7—STOCK REPURCHASE PROGRAM

      In September 2002, the Board of Directors approved a share repurchase plan to acquire outstanding common stock on the open market. Under the terms of the plan, the Company is authorized to repurchase up to five million shares of common stock and intends to purchase such shares from time-to-time as conditions warrant. The Company's Board of Directors has authorized these purchases to occur over a period of eighteen months. As of September 30, 2002, the Company had repurchased 927 shares of TMP Worldwide common stock for an aggregate purchase price of approximately $9.8 million in cash.

NOTE 8—PROPOSED SPIN-OFF OF eRESOURCING AND EXECUTIVE SEARCH BUSINESS UNITS

        On October 21, 2002, the Company announced plans to spin off, to its shareholders, its eResourcing and Executive Search divisions, forming a completely separate and new publicly traded company. The Company believes each of the resulting companies will be better positioned to focus on its core businesses and competencies, and thus compete more effectively in their respective markets. The spin-off is subject to a number of customary conditions, such as receipt of an opinion that the spin-off will be tax-free for federal income tax purposes, the effectiveness of the registration statement relating to the shares of the new company and final board approval. TMP Worldwide expects the transaction to be completed in the first quarter of 2003. Upon completion of the spinoff, the Company will reflect the results of operations for eResourcing and Executive Search as discontinued operations.

24

Report of Independent Certified Public Accountants

Board of Directors
TMP Worldwide Inc.
New York, New York

        We have reviewed the consolidated condensed balance sheet of TMP Worldwide Inc. as of September 30, 2002, the related consolidated condensed statements of operations and comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2002 and 2001, the consolidated condensed statement of stockholders' equity for the nine-month period ended September 30, 2002, and the consolidated condensed statements of cash flows for the nine-month periods ended September 30, 2002 and 2001 included in the accompanying Securities and Exchange Commission Form 10-Q for the period ended September 30, 2002. These financial statements are the responsibility of the Company's management.

        We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

        Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

        We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2001, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 2002, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2001 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/  BDO SEIDMAN, LLP BDO Seidman, LLP

New York, New York
November 14, 2002

25

TMP WORLDWIDE INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements in this Quarterly Report on Form 10-Q concerning our business outlook or future economic performance, anticipated profitability, gross billings, commissions and fees, expenses or other financial items and statements concerning assumptions made or exceptions as to any future events, conditions, performance or other matters are "forward-looking statements" as that term is defined under the federal securities laws. Forward-looking statements are subject to risks, uncertainties, and other factors, which would cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, (i) our ability to manage our growth, (ii) our risks associated with expansion, (iii) our ability to maximize the value of our brands, particularly Monster, and the costs of maintaining and enhancing our brand awareness are increasing, (iv) the risks we face relating to developing technology, including the Internet, (v) our heavy reliance on our information systems and the potential that if we lose technology, or fail to further develop our technology, our business could be harmed, (vi) our vulnerability to intellectual property infringement claims brought against us by others, (vi) computer viruses may cause our systems to incur delays or interruptions, (vii) our markets are highly competitive, (viii) our operating results fluctuate from quarter to quarter, (ix) our operations will be affected by global economic fluctuations, (x) we face risks relating to our foreign operations, (xi) our dependence on our highly skilled professionals, (xii) we face risks maintaining our professional reputation and brand name, (xiii) we face restrictions imposed by blocking arrangements, (xiv) we are subject to potential legal liability from both clients and employers, and our insurance coverage may not cover all of our potential liability, (xv) traditional media remains important to us (xvi) we depend on key management personnel, (xvii) we are influenced by a principal stockholder, (xviii) effects of anti-takeover provisions could inhibit the acquisition of TMP by others, (xix) terrorist attacks have contributed to economic instability in the United States; continued terrorist attacks, war or civil disturbances could lead to further economic instability and depress our stock price, (xx) there may be volatility in our stock price, (xxi) the risks we face associated with government regulation and (xxii) the risks concerning our ability to consummate the spin-off of our eResourcing and Executive Search divisions. Please see "Risk Factors" in our Form 10-K for the year ended December 31, 2001 for more information.

Overview

        We have built Monster® (http://www.monster.com) into the Internet's leading global career management website. Job seekers look to manage their careers through us by posting their resumes on Monster, by searching Monster's database of job postings, either directly or through the use of customized job search agents, and by utilizing our extensive career, continuing education and relocation resources. We are also one of the world's largest recruitment advertising agencies and executive search and selection agencies. Employers and professional recruiters look to us to help them find the right employee, at all levels from an entry-level candidate to a CEO, which we refer to as our "Intern to CEO" strategy. We believe the Internet offers a substantial opportunity for our clients to refine their candidate searches through the use of our online human capital solutions and Monster's resume database, which as of September 2002 contained more than 20 million resumes. We are also the world's largest yellow pages advertising agency.

        We have built our Interactive platform by expanding our Interactive businesses into certain European countries, migrating our traditional businesses to the Internet and adding new Interactive services. Monster is the leading global career portal on the Web with over 41 million visits in September 2002 according to I/Pro. The Monster global network consists of local language and content sites in 22 countries, throughout North America, Europe and the Asia Pacific region.

        On October 21, 2002, we announced plans to spin off, to our shareholders, our eResourcing and Executive Search divisions. These two divisions will be combined into a new, publicly traded company

26

with a completely separate board of directors. TMP Worldwide will remain a stand-alone corporate entity comprised of Monster, Advertising & Communications and Directional Marketing. The spin-off is subject to a number of customary conditions, such as receipt of an opinion that the spin-off will be tax-free for federal income tax purposes, final board approval and the effectiveness of the registration statement relating to the shares of the new company. We expect the transaction to be completed in the first quarter of 2003.

        Gross billings refers to billings for advertising placed on the Internet, in newspapers and telephone directories by our clients, and associated fees for related services, such as access to Monster's resume database. In addition, Executive Search fees, selection fees, and net fees from temporary contracting services are also part of gross billings. Gross billings and related costs for recruitment advertising and yellow page advertising, placed by our Advertising & Communications and Directional Marketing businesses respectively, are not shown separately in our consolidated financial statements because they include a substantial amount of funds that are collected from our clients but passed through to publishers for advertisements. However, the trends in gross billings in these two segments directly impact the commissions and fees that they earn because, for these segments, we earn commissions based on a percentage of the media advertising purchased at a rate established by the related publisher. We also earn associated fees for related services; such amounts are also included in gross billings. Publishers and third party websites typically bill us for the advertising purchased and we in turn bill our clients for this amount and retain a commission. Generally, the payment terms for Directional Marketing clients require payment to us prior to the date payment is due to the publishers. The payment terms with Advertising & Communications clients typically require payment when payment is due to publishers. Historically, we have not experienced substantial problems with unpaid accounts.

        Commissions and fees related to our Interactive businesses are derived from:

•

the placement of job postings and access to our on-line resume database and related services delivered via the Internet, primarily our own website, http://www.monster.com;

•

searches for permanent and temporary employees, at the management and professional levels, and related services conducted through the Internet;

•

interactive advertising, sponsorships and referral fees, primarily on our own website, www.monstermoving.com;

•

Internet advertising services provided to our Directional Marketing clients;

•

custom website development, providing both creative content and technical expertise with a focus on employer-employee relationships;

•

the providing of interactive advertising services and technologies, which allow advertisers to measure and track sales, repeat traffic and other key statistics to enable such advertisers to greatly reduce costs, while driving only the most qualified users to their web sites; and

•

resume response management, which is the gathering, reviewing, and short-listing of resumes sent in response to a specific job posting.

        For Advertising & Communications in the U.S., media commissions historically average 15% of recruitment advertising gross billings. Using both interactive and traditional means, we also earn fees from related services such as campaign development and design, retention and referral programs, resume screening, brochures and other collateral services, research and other creative and administrative services. Outside of the U.S., where we derive the majority of our traditional Advertising & Communications commissions and fees, our commission rates for recruitment media advertising vary, historically ranging from approximately 10% in Australia to 15% in Canada and the United Kingdom.

        Our Directional Marketing division designs and executes yellow page advertising. For the nine months ended September 30, 2001, our effective gross margin rate was 17.1% of yellow page media billings. Due to continued reductions in commission rates by the publishers and higher discounts

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provided to clients, the gross margin rate declined to 15.6% for the nine months ended September 30, 2002.

        eResourcing offers placement services for executives and professionals in permanent and temporary positions, including specific short-term projects. This business focuses on mid-level professionals or executives, those who typically earn between $50,000 and $150,000 annually, and provides these services primarily in the U.S., Europe, Australia, New Zealand and Hong Kong.

        Executive Search offers an advanced and comprehensive range of services aimed at finding the appropriate senior executive for our clients. Such senior executives typically earn in excess of $150,000 annually. Our specialized services include identification of candidates, competence measurement, assessment of candidate/company cultural fit and transaction negotiation and closure.

Critical Accounting Policies and Items Affecting Comparability

        Quality financial reporting relies on consistent application of company accounting policies that are based on generally accepted accounting principles. The policies discussed below are considered by management to be critical to understanding our financial statements and often require management judgment and estimates regarding matters that are inherently uncertain. Although our commission and fees recognition policy contains a relatively low level of uncertainty, it does require judgment on complex matters that are subject to multiple sources of authoritative guidance.

Commissions and Fees Recognition and Work-In-Process

        Monster.    Our Monster division earns fees for the placement of job postings on its website and access to its online resume database. Such website related fees are recognized over the length of the underlying agreement, typically one to twelve months. Unearned revenues are reported on the balance sheet as deferred commissions and fees.

        Advertising & Communications.    Our Advertising & Communications division derives commissions and fees for job advertisements placed in newspapers, Internet career job boards, such as Monster.com and other media, plus associated fees for related services. Commissions and fees are generally recognized upon placement date for newspapers and other print media.

        Directional Marketing.    Our Directional Marketing division derives commissions and fees primarily from the placement of advertisements in telephone directories (yellow page advertising), as well as fees from mortgage companies, real estate firms and other moving related companies through its online relocation product, Monstermoving. Commissions and fees for yellow page advertisements are recognized on the publication's closing dates. Direct operating costs incurred that relate to future commissions and fees for yellow page advertisements, are deferred (recorded as work-in-process in the accompanying consolidated condensed balance sheets) and are subsequently charged to expense when the directories are closed for publication and the related commission is recognized as income. Commissions and fees related to the division's Monstermoving product are derived primarily from advertisements placed on the website and links to advertisers' websites, and are recognized over the stated terms of the contract, typically a three to twelve month period.

        eResourcing.    For permanent placement services provided by our eResourcing division, a fee equal to between 20% and 30% of a candidate's first year estimated annual cash compensation is billed in equal installments over three consecutive months (the average length of time needed to successfully complete an assignment) and is recognized upon successful completion of the placement, net of an allowance for estimated fee reversals. eResourcing's temporary contracting commissions and fees are recognized over the contract period as services are performed.

        Executive Search.    Our Executive Search division earns fees for Executive Search services and these are recognized as clients are billed. Billings begin with the client's acceptance of a contract. A retainer equal to 33¹/3% of a candidate's first year estimated annual cash compensation is billed in equal installments over three consecutive months (at which time, in general, the retainer has been

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substantially earned). A final invoice is issued in the event that the candidate's actual compensation package exceeds the original estimate.

Accounts Receivable

        We are required to estimate the collectibility of our trade receivables and notes receivable. A considerable amount of judgment is required in assessing the ultimate realization of these receivables including the current credit-worthiness of each customer. Changes in required reserves may occur due to changing circumstances, including changes in the current market environment or in the particular circumstances of individual customers.

Merger, Integration, Restructuring and Business Reorganization Plans

        We have recorded significant charges and accruals in connection with our merger, integration, restructuring and business reorganization plans. These reserves include estimates pertaining to employee separation costs and the settlements of contractual obligations resulting from our actions. Although we do not anticipate significant changes, the actual costs may differ from these estimates.

Contingencies

        We are subject to proceedings, lawsuits and other claims related to labor, service and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies are made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.

Interim Financial Reporting

        As permitted under generally accepted accounting principles, interim accounting for certain expenses, including income taxes and selected marketing and promotion costs are based on full year assumptions. Such amounts are expensed in full in the year incurred. For interim financial reporting purposes, income taxes are recorded based upon estimated annual income tax rates. Marketing and promotion expenses, specific to our Monster segment, are recorded for interim financial reporting purposes in proportion to actual commissions and fees as a percent of estimated annual commissions and fees for the Monster segment which are adjusted during interim periods as our forecasts for such commissions and fees change.

Intangibles

        Intangibles represent acquisition costs in excess of the fair value of net tangible assets of businesses purchased and consist primarily of the value of client lists, non-compete agreements, trademarks and goodwill. With the exception of goodwill these costs are being amortized over periods ranging from two to thirty years. In conjunction with our adoption of Statement of Financial Accounting Standards ("SFAS") 142 "Goodwill and Other Intangible Assets" ("SFAS 142"), we will evaluate our goodwill annually for impairment, or earlier if indicators of potential impairment exist. The determination of whether or not goodwill or other intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the business units. Changes in our strategy and or market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets. In addition, SFAS 142 eliminates the amortization of indefinite lived intangible assets. Results of operations for the nine months ended September 30, 2001 include $17,586 of amortization expense that will not continue in future periods as a result of our adoption of SFAS 142. See Note 2 to the Consolidated Condensed Financial Statements for a full discussion of our implementation of SFAS 142.

        In connection with our implementation of SFAS 142, the Company has recorded a non-cash charge of $428.4 million, net of tax, at January 1, 2002, which has been reflected in our consolidated

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condensed statement of operations as a cumulative effect of accounting change for the nine months ended September 30, 2002. The Company has adopted a policy to review each reporting unit for impairment using a discounted cash flow approach that uses forward-looking information regarding market share, revenues and costs for each reporting unit as well as appropriate discount rates. As a result, changes in these assumptions and current working capital could materially change the outcome of each reporting unit's fair value determinations in future periods, which could require a further permanent write-down of goodwill. The write-down of goodwill shown as a cumulative effect of change in accounting principle in our consolidated condensed statement of operations for the nine months ended September 30, 2002 was determined using the forward-looking information that was available to us on January 1, 2002.

Business Combinations

        During the nine months ended September 30, 2002, we completed one acquisition accounted for as a purchase with estimated annual gross billings of $2.4 million. For the period January 1, 2001 through December 31, 2001, we completed 35 acquisitions accounted for as purchases with estimated annual gross billings of approximately $242.6 million. The results of operations of these businesses are included in the accompanying consolidated condensed financial statements from their respective dates of acquisition. Given the significant number of acquisitions affecting the prior periods, the results of operations from period to period may not necessarily be comparable.

Results of Operations

        The following table sets forth our gross billings, commissions and fees, commissions and fees as a percentage of gross billings, EBITDA and cash flow information (amounts in thousands).

	Three Months Ended September 30,						Nine months Ended September 30,
	2002			2001			2002			2001
GROSS BILLINGS:
Interactive(1)	$	138,057		$	190,855		$	416,258		$	563,243
Advertising & Communications		145,692			172,552			442,652			589,852
Directional Marketing		195,726			165,293			504,295			440,640
eResourcing(2)		80,945			90,136			249,989			324,049
Executive Search		15,884			22,956			51,638			86,963
Total	$	576,304		$	641,792		$	1,664,832		$	2,004,747
COMMISSIONS AND FEES:
Interactive(1)	$	128,252		$	174,319		$	390,030		$	507,586
Advertising & Communications		34,584			48,317			105,721			140,836
Directional Marketing		28,965			28,832			78,708			75,239
eResourcing(2)		76,415			86,749			239,780			311,351
Executive Search		15,808			22,956			51,561			86,962
Total	$	284,024		$	361,173		$	865,800		$	1,121,974
COMMISSIONS AND FEES AS A PERCENTAGE OF GROSS BILLINGS:
Interactive(1)		92.9	%		91.3	%		93.7	%		90.1	%
Advertising & Communications		23.7	%		28.0	%		23.9	%		23.9	%
Directional Marketing		14.8	%		17.4	%		15.6	%		17.1	%
eResourcing(2)		94.4	%		96.2	%		95.9	%		96.1	%
Executive Search		99.5	%		100.0	%		99.9	%		100.0	%
Total		49.3	%		56.3	%		52.0	%		56.0	%

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EBITDA (3):
Income (loss) before provision (benefit) for income taxes	$	19,637		$	42,486		$	(59,835	)	$	93,413
Interest income, net		(26	)		(1,345	)		(107	)		(10,720	)
Minority interests		497			534			1,550			1,094
Depreciation and amortization		14,263			19,107			43,018			55,243
EBITDA	$	34,371		$	60,782		$	(15,374	)	$	139,030
CASH FLOW INFORMATION:
Cash provided by (used in) operating activities	$	29,899		$	33,541		$	(24,961	)	$	112,603
Cash used in investing activities	$	(21,515	)	$	(250,857	)	$	(59,811	)	$	(356,965	)
Cash used in financing activities	$	(22,119	)	$	(8,267	)	$	(60,587	)	$	(12,746	)
Effect of exchange rate changes on cash and cash equivalents	$	296		$	2,429		$	4,679		$	(1,520	)

(1)

Represents fees earned in connection with recruitment, yellow page and other advertisements placed on the Internet, interactive moving services, employment searches and temporary contracting services sourced through the Internet.

(2)

Amounts for temporary contracting are reported net of the costs paid to the temporary contractor.

(3)

Earnings before interest, income taxes, depreciation and amortization. EBITDA is presented to provide additional information about our ability to meet our future debt service, capital expenditures and working capital requirements and is one of the measures that determine our ability to borrow under our credit facility. EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of our profitability or liquidity.

The Three Months Ended September 30, 2002 Compared to the Three Months Ended
September 30, 2001

        Gross billings for the three months ended September 30, 2002 were $576.3 million, a decrease of $65.5 million or 10.2% as compared to gross billings of $641.8 million for the three months ended September 30, 2001. This decrease resulted primarily from the effects of challenging global labor markets as we continue to be affected by weak economies in North America and Europe.

        The difficult global economic environment has had a negative impact on our commissions and fees as our clients' hiring needs and related resources diminished throughout 2001 and 2002. As a result, our total commissions and fees for the quarter ended September 30, 2002 were $284.0 million, a decrease of $77.2 million or 21.4% versus $361.2 million in 2001. The three months ended September 2002 also includes a $11.5 million benefit compared to the prior year period from the weakening U.S. dollar. The decrease is primarily related to our Monster, Advertising & Communications, Executive Search and eResourcing segments, which are particularly sensitive to fluctuations in the global economic and employment environment.

        Interactive commissions and fees include fees earned in connection with recruitment, yellow page and other advertisements placed on the Internet, Interactive services, employment searches and temporary contracting services sourced through the Internet. Approximately 96% of our interactive commisions and fees were derived from on-line recruitment during the three months ended September 30, 2002 which has been adversely affected by the increase in jobless claims in North America and Europe. Interactive commissions and fees declined 26.4% to $128.3 million for the quarter ended September 30, 2002, versus the same period in 2001.

        Monster contributed Interactive commissions and fees of $103.2 million for the three months ended September 30, 2002, a decrease of $41.6 million or 28.8% from the $144.8 million reported in 2001. The decrease in Monster's commissions and fees reflects the increased unemployment rate and the effects of a challenging global employment environment. We continue to focus on cross-selling

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opportunities with our traditional lines of business and introduce new revenue generating products, such as Monster JobMatch, to prospective and existing client companies. In addition, our Monster properties were the 25th most visited properties on the Internet in the month of September 2002, with more than 13.4 million unique visitors reported by ComScore/Media Metrix. We feel this positions our Monster properties to take advantage of future strength in the economy and labor markets.

        Advertising & Communications total commissions and fees, including its Interactive business, were $42.2 million for the quarter ended September 30, 2002, a 17.0% decrease from $50.8 million in 2001. The decline in newspaper job placement advertising continues to be partially offset by the addition of new creative services such as employee communications and retention programs and other solutions to support corporate human resources departments. Commissions and fees in Advertising & Communications traditional operations were $34.6 million for the three months ended September 30, 2002, down from $48.3 million in 2001, a decline of 28.4%. However, the division's contribution to total Interactive commissions and fees increased to $7.6 million, up $5.1 million, versus the prior year period of $2.5 million, as clients continue to migrate towards online recruitment solutions and Interactive employer/employee communications and retention services.

        Directional Marketing commissions and fees, including its Interactive business, were $34.1 million for the three months ended September 30, 2002, relatively flat when compared to the $34.7 million reported in the three months ended September 30, 2001. The slight decrease primarily reflects its interactive operations, which had a decrease in commissions and fees of $0.7 million for the quarter ended September 30, 2002 versus the comparable 2001 period, relating to the weak U.S. economy and a decrease in our clients' allocation of advertising resources. Monstermoving is now being managed by our Directional Marketing business.

        eResourcing commissions and fees, including its Interactive business, were $88.6 million, down 17.9% from the $107.9 million for the same period last year. eResourcing's traditional business generated $76.4 million in commissions and fees during the three months ended September 30, 2002, down 11.9% from $86.7 million reported for the prior year period, reflecting lower commitments for both permanent placements and temporary contactors as a result of the weak global labor markets. During the three months ended September 30, 2002, eResourcing contributed $12.2 million to total Interactive commissions and fees, down 42.3% over the same period last year.

        Executive Search commissions and fees, including its Interactive operations, were $16.0 million in the third quarter of 2002, down 30.5% from $23.0 million in the same period in 2001, again reflecting the continued impact that the global economy is having on executive level search placements.

        Total operating expenses for the three months ended September 30, 2002 were $264.9 million, compared with $320.9 million for the same period in 2001. The decrease of $56.0 million or 17.5% is due primarily to $21.1 million less in merger and integration costs, savings as a result of our business reorganization in the second quarter of 2002, cost cutting measures put into place in the latter half of 2001 and the effects of no goodwill amortization in 2002, offset by an increase of $11.0 million relating to the weakening of the U.S. dollar, compared to the prior year period. In addition, during the quarter we re-evaluated the need for bonus and other accruals. As a result, during the quarter ended September 30, 2002, we reduced bonus accruals by approximately $5.4 million, allowance for doubtful accounts by approximately $1.5 million and general accruals by approximately $1.4 million, all of which were accrued during the first six months of 2002.

        Salaries and related costs for the three months ended September 30, 2002 were $154.6 million, compared with $179.8 million for the same period in 2001. The $25.2 million decrease compared to the prior period primarily relates to the implementation of strategic cost cutting across all of our divisions in 2001 and 2002, offset by the effects of a weaker U.S. dollar in the September 2002 period. In addition, our business reorganization and other special charges announced in the second quarter of 2002 resulted in the termination of approximately 1,000 employees, thus lowering our salaries and related costs in the third quarter.

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        Office and general expenses for the three months ended September 30, 2002 were $67.5 million compared with $71.7 million for the same period in 2001. The decrease of $4.2 million reflects our implementation of cost-cutting measures across all of our divisions, offset by an increase in foreign currency rates and the effects of a weaker U.S. dollar in the 2002 period.

        Marketing and promotion expenses decreased $1.4 million to $40.3 million for the quarter ended September 30, 2002 from $41.7 million for September 30, 2001. The 3.3% decrease was due primarily to decreased marketing for our Interactive operations, as we have scaled back on the marketing of our Monster brands, particularly in Europe. The decrease also reflects lower advertising rates in 2002 compared to 2001.

        Merger and integration expenses reflect costs incurred as a result of pooling-of-interests transactions and the integration of such companies. For the three months ended September 30, 2002, merger and integration costs resulted in a benefit of $0.9 million, reflecting the finalization of our integration plans and the reversal of previously accrued costs that were below our expectations. For the three months ended September 30, 2001, merger and integration expenses were $20.2 million or 5.6% of total commissions and fees. These expenses include office integration costs, the write-off of fixed assets that will not be used in the future, separation pay, professional fees and employee stay bonuses to certain key personnel of the merged companies. The decrease of $21.1 million is a result of the finalization of our exit strategies related to our pooled businesses.

        Business reorganization and other special charges were $2.6 million, or $0.02 per diluted share on an after tax basis for the three months ended September 30, 2002. The charge is primarily comprised of professional fees that were incurred during the third quarter of 2002, mainly relating to the consolidation of our tax structure across Europe and employee stay bonuses that were earned in the third quarter as a result of transitioning certain responsibilities in connection with various office consolidations. The continued weakness in our markets has required a renewed emphasis on streamlining our operations. To this end, we continue to work toward bringing our cost structure in line with our commissions and fees.

        Amortization of intangibles was $0.8 million for the quarter ended September 30, 2002 compared to $7.5 million for the same period in 2001. The decrease relates to our adoption of SFAS 142. As a result, goodwill arising from purchase acquisitions has not been amortized in the current period. Had goodwill not been amortized in the prior period, amortization expense would have been $0.7 million in September 2001.

        Operating income for the three months ended September 30, 2002 was $19.2 million compared to operating income of $40.2 million for the comparable period in 2001. The decrease of $21.0 million is primarily attributable to the effects that the weak labor market has had on our traditional and interactive operations.

        The provision for income taxes for the three months ended September 30, 2002 was $6.1 million on a pretax income of $19.6 million, compared with a tax expense of $17.4 million on a pretax profit of $42.5 million for 2001. Excluding the effects of our merger and integration benefit and business reorganization and other special charges, our effective tax rates for the three months ended September 30, 2002 and September 30, 2001 were 30.0% and 37.7% respectively. The effective tax benefit rate on the business reorganization and other special charges was 19.4%, reflecting the portion of the charge incurred in lower taxed foreign jurisdictions and valuation allowances. Our effective tax rate decreased primarily due the elimination of non-deductible goodwill amortization expense in 2002 resulting from the adoption of new accounting standards, reduced expenditures of non-deductible merger and integration costs and more effective utilization of foreign losses. In each period, the effective tax rate differs from the U.S. Federal statutory rate of 35% due to non-deductible expenses such as certain merger costs from pooling of interests transactions, and deviations from the U.S. tax rate in foreign jurisdictions. A valuation allowance has been recorded on losses incurred in certain

33

foreign jurisdictions where offset against profitable units is not permitted, and in certain start-up countries where there is no history of profitability.

        Net income applicable to common and Class B common stockholders was $14.0 million for the quarter ended September 30, 2002, or $0.12 per diluted share compared with $31.5 million or $0.28 per diluted share for the prior period, adjusted to exclude the effects of goodwill amortization in the 2001 period.

The Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001

        Gross billings for the nine months ended September 30, 2002 were $1,664.8 million, a decrease of $339.9 million or 17.0% as compared to gross billings of $2,004.7 million for the nine months ended September 30, 2001. This decrease in gross billings resulted primarily from the effect of the challenging economic and labor markets on our Monster, Advertising & Communications, eResourcing and Executive Search divisions, partially offset by an increase of $63.7 million or 14.4% in Directional Marketing gross billings. The increase in Directional Marketings gross billings primarily relates to our realignment of the business of USMotivation, a September 2001 Advertising and Communications acquisition, that is now being managed by our Directional Marketing division. USMotivation generated gross billings of $57.3 million for the nine months ended September 30, 2002 compared to $1.5 million in the period ended 2001.

        The difficult global economic environment has had a negative impact on our commissions and fees as our clients' hiring needs and related resources diminished throughout 2001 and into 2002. Reflecting the rise in U.S. unemployment rates, our total commissions and fees for the nine months ended September 30, 2002 decreased to $865.8 million, down $256.2 million or 22.8% from $1,122.0 million in 2001. The decrease is primarily related to our Monster, Advertising & Communications, Executive Search and eResourcing segments, which are particularly sensitive to fluctuations in the global economic and labor markets, offset by a $34.9 million benefit, compared to the prior year period, relating to the weakening U.S. dollar during the nine months of 2002. Historically, companies have been reluctant to commit extensive resources to their hiring needs at the first signs of an economic rebound. Therefore, we expect there to be a lag between general economic recovery and an improvement in the labor markets.

        Interactive commissions and fees include fees earned in connection with recruitment, yellow page and other advertisements placed on the Internet, Interactive moving services and employment searches and temporary contracting services sourced through the Internet. Interactive commissions and fees were $390.0 million for the nine months ended September 30, 2002, a decrease of $117.6 million or 23.2% over the same period in 2001 largely as a result of the weak global labor markets. Interactive commissions and fees represented 45.0% of our total commissions for the nine months ended September 30, 2002, which is flat when compared to the 45.2% for the comparable period in 2001.

        Monster reported Interactive commissions and fees of $316.6 million for the nine months ended September 30, 2002, a decrease of $103.6 million or 24.7% over the $420.2 million reported in 2001. The decrease in Monster's commissions and fees reflects the increased unemployment rate and the effects of a challenging global economy.

        Advertising & Communications total commissions and fees, including its Interactive business, were $128.7 million for the nine months ended September 30, 2002, a 19.5% decrease from $159.9 million in 2001 as our clients continue to scale back their recruitment spending. The decline in newspaper job placement advertising continues to be partially offset by the addition of new creative services such as employee communications and retention programs and other services provided to corporate human resources departments. Commissions and fees in Advertising & Communications traditional operations were $105.7 million for the nine months ended September 30, 2002, down from $140.8 million in 2001, a decline of 24.9%. However, the division's contribution to Interactive commissions and fees was

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$23.0 million for the nine months ended September 30, 2002, an increase of 20.5% or $3.9 million, over the prior year period of $19.1 million, as we continue to migrate our clients to the Internet.

        Directional Marketing commissions and fees, including its Interactive business, were $92.7 million for the nine months ended September 30, 2002, an increase of $1.0 million or 1.1% compared to the $91.7 million reported in the nine months ended September 30, 2001. The increase primarily reflects a full nine months of operations for USMotivation, which was acquired in September of 2001, offset by a decrease in commissions and fees relating to our Monstermoving product offerings. Monstermoving is an on-line extension of our Directional Marketing business and has been integrated into its operations to take further advantage of the Directional Marketing client base.

        eResourcing commissions and fees, including its Interactive business, were $275.7 million, down 24.1% from the $363.1 million for the same period last year. eResourcing's traditional business generated $239.8 million in commissions and fees during the nine months ended September 30, 2002, down 23.0% from $311.4 million reported for the prior year period, reflecting lower demand for both permanent employees and temporary contactors as a result of the weak global economic environment. During the nine months ended September 30, 2002, eResourcing contributed $35.9 million to Interactive commissions and fees, down 30.6% over the same period last year.

        Executive Search commissions and fees of $52.1 million in the first nine months of 2002 were down 40.1% from $87.0 million in the same period in 2001, again reflecting the continued impact that the challenging global economy is having on executive level search placements, particularly in the United States.

        Total operating expenses for the nine months ended September 30, 2002 were $925.5 million, compared with $1,039.6 million for the same period in 2001. The decrease of $114.1 million or 11.0% is due primarily to cost cutting measures that we began implementing near the end of 2001, reduced marketing and promotion expense, primarily for our Monster products of $47.3 million and a decrease in merger & integration costs of $51.2 million as we finalized the integration of our acquisitions accounted for as pooling-of-interests. These decreases were offset by our business reorganization and other special charges of $117.0 million in 2002 and an increase of $34.9 million relating to the weakening of the U.S. dollar, compared to the prior year period.

        Salaries and related costs for the nine months ended September 30, 2002 were $480.0 million compared with $574.1 million for the same period in 2001. The $94.1 million decrease compared to the prior period primarily relates to the implementation of cost cutting across all of our divisions in reaction to the current economic and labor environment. During the 2nd and 3rd quarters of 2002, we terminated approximately 1,000 employees in connection with our business reorganization and other special charges, further reducing our salaries and related costs.

        Office and general expenses for the nine months ended September 30, 2002 were $210.2 million compared with $231.5 million for the same period in 2001. The $21.3 million decrease reflects our continued implementation of cost-cutting measures across all of our divisions in response to current economic conditions and our business reorganization and other special charges.

        Marketing and promotion expenses decreased $47.3 million to $105.1 million for the nine months ended September 30, 2002 from $152.4 million for September 30, 2001. The 31.1% decrease was due primarily to decreased marketing for our Interactive operations, as we scale back on the marketing of our Monster brands.

        Merger and integration expenses reflect costs incurred as a result of pooling-of-interests transactions and the integration of such companies. For the nine months ended September 30, 2002, merger and integration costs were $10.7 million, a decrease of $51.2 million or 82.6%, compared with $61.9 million for the same period in 2001. These expenses include lease obligations, office integration costs, the write-off of fixed assets that will not be used in the future, separation pay, professional fees

35

and employee stay bonuses to certain key personnel of the merged companies. The decrease of $51.2 million is a result of the finalization of our exit strategies related to our pooled businesses.

        Business reorganization and other special charges were $117.0 million for the nine months ended September 30, 2002. The charge is primarily comprised of severance and related costs of $37.5 million, accruals for future lease obligations on exited properties of $45.9 million and the write-off of fixed assets, primarily leasehold improvements, computer equipment and software of $14.6 million and professional fees of $9.3 million. Furthermore, we recorded a charge of $9.7 million for the write-down of investments in and loans to certain businesses that we no longer consider strategic. The continued weakness in our markets has required a renewed emphasis on streamlining our operations. To this end, we continue to work toward bringing our cost structure in line with our commissions and fees.

        Amortization of intangibles was $2.4 million for the nine months ended September 30, 2002 compared to $19.6 million for the same period in 2001. The decrease relates to our adoption of SFAS 142. As a result, goodwill arising from purchase acquisitions has not been amortized in the current period. Had goodwill not been amortized in the prior period, amortization expense would have been $2.0 million for the nine months ended September 30, 2001.

        Operating loss for the nine months ended September 30, 2002 was $59.7 million, compared to operating income of $82.4 million for the comparable period in 2001. Excluding goodwill amortization, operating income would have been $100.0 million in the nine months ended September 30, 2001. The nine months ended 2002 resulted in a loss primarily due to our business reorganization and other special charges of $117.0 million.

        Interest and other expenses was $0.1 million for the nine months ended September 30, 2002 compared to $11.0 million of interest and other income in the first nine months of 2001. The decrease of $11.1 million primarly reflects lower U.S. interest rates in 2002 and a lower average cash balance available for investment in the nine months ended September 30, 2002 compared to the prior year period.

        The benefit for income taxes for the nine months ended September 30, 2002 was $2.9 million on a pretax loss of $59.8 million, compared with a tax expense of $43.3 million on a pretax profit of $93.4 million for 2001. Excluding the effects of our merger and integration costs and business reorganization and other special charges, our effective tax rates for the nine months ended September 30, 2002 and September 30, 2001 were 33.4% and 38.9% respectively. Our effective tax rate decreased primarily due to the elimination of non-deductible goodwill amortization expense in 2002 resulting from the adoption of new accounting standards, reduced expenditures of non-deductible pooling acquisition costs and more effective utilization of foreign losses. In each period, the effective tax rate differs from the U.S. Federal statutory rate of 35% due to non-deductible expenses such as certain merger costs from pooling of interests transactions, and deviations from the U.S. tax rate in foreign jurisdictions. A valuation allowance has been recorded principally on losses incurred in certain foreign jurisdictions where offset against profitable units is not permitted, and in certain start-up countries where we have no history of profitability.

        In conjunction with the adoption of SFAS 142, as of the beginning of fiscal year 2002, we completed a goodwill impairment review for each of our operating segments and recorded a charge of $428.4 million net of tax, at January 1, 2002. This charge is reflected in our statement of operations, for the nine months ended September 30, 2002, as a cumulative effect of accounting change. According to our policy and under the new rules, we will perform a similar review annually, or sooner if indicators of potential impairment exist. Our impairment review is based on a discounted cash flow approach that uses our estimates of market share, revenues and costs for each operating segment as well as appropriate discount rates. The estimates that we have used are consistent with the plans and estimates that we are using to manage the underlying business. If we fail to achieve our estimates of market share or if labor markets fail to improve, we may incur further charges for impairment of goodwill.

36

        Net loss applicable to common and Class B common stockholders was $483.8 million for the nine months ended September 30, 2002, or $4.35 per diluted share compared with net income of $66.3 million or $0.59 per diluted share for the prior period, adjusted to exclude the effects of goodwill amortization in the 2001 period.

Liquidity and Capital Resources

        Our principal capital requirements have been to fund (i) acquisitions, (ii) working capital, (iii) capital expenditures and (iv) marketing and development of our Interactive businesses. Our working capital requirements are generally higher in the quarters ending March 31 and September 30, during which periods the payments to the major yellow page directory publishers are at their highest levels. Historically, we have met our liquidity needs by (a) funds provided by operating activities, (b) equity offerings, (c) long-term borrowings, (d) capital equipment leases and (e) seller-financed notes.

        We invest our excess cash predominantly in money market funds, overnight deposits, and commercial paper that are highly liquid, of high-quality investment grade, and have maturities of less than three months with the intent to make such funds readily available for operating and strategic long-term equity investment purposes.

        In connection with the proposed spin-off of our eResourcing and Executive Search divisions the Company has agreed to fund the initial cash requirements of these divisions upon completion of the spin-off. The total initial cash requirements of these divisions has not yet been determined.

        On September 3, 2002, we announced a share repurchase program that allows us to purchase up to 5 million shares of common stock from time to time on the open market over a period of eighteen months. In the third quarter 2002, we repurchased 927 thousand shares at an average price of $10.62 per share.

        As of September 30, 2002, we had cash and cash equivalents totaling $199.9 million, compared to $340.6 million as of December 31, 2001. Our net use of cash of $140.7 million in the nine months of September 2002, primarily related to investing and financing activities. Also contributing to our use of cash for the nine months of 2002 was cash used in operations of $25.0 million which relates primarily to cash payments made in connection with our business reorganization and other special charges of $33.9 million, merger and integration cash payments of $19.2 million and the decline in our commissions and fees as a result of the slowing global economy. In addition, we paid income taxes of $20.6 million during the nine months ended September 30, 2002 compared to $13.6 million in the prior period. Approximately $10.2 million of the nine month 2002 tax payments were originally due prior to December 31, 2001, but were deferred under special relief established by Federal and state taxing authorities in response to the September 11th terrorist attacks. Deferred commissions and fees decreased $8.5 million or 6.1% for the first nine months of 2002, primarily within our Interactive operations.

        Cash used in investing activities was $59.8 million for the nine months ended September 30, 2002 and included $15.2 million of payments related to the integration of purchase acquisitions made in 2001, $2.9 million cash paid in connection with our purchase of Moving.com, $0.8 million paid in connection with our purchase of the Jobs.com URL and approximately $4.0 million for earn-out provisions of previous acquisitions. Also contributing to our decrease in cash in the first nine months of 2002 were capital expenditures of $36.9 million as we continue to invest in new technology, especially in our Monster division.

        Cash used in financing activities was $60.6 million for the nine months ended September 30, 2002 as a result of net repayments on debt of $58.0 million and cash paid to repurchase common stock of $9.8 million, offset by cash received from employee stock option exercises of $7.2 million. Debt payments primarily related to acquisition notes, capital lease obligations, and repayments under our

37

primary line of credit. Part of our acquisition strategy had been to pay portions of acquisition costs over time through the use of seller-financed notes, generally ranging from two to five years. Several of these notes allow for the lender to put a portion or all of the principal balance back to the Company at various points during the year. In the event that all of these put-able notes had to be paid in the fourth quarter of 2002, we would be obligated to pay the lenders approximately $2.3 million. Our current cash balance is sufficient to meet this demand.

        At September 30, 2002, we had a $185.0 million committed line of credit from our primary lender pursuant to a revolving credit agreement expiring November 4, 2003. As of September 30, 2002, approximately $165.5 million was unused and accounts receivable are sufficient to allow for the draw down of this entire amount. Our current interest rate under the agreement is LIBOR plus 50 basis points. Our recently announced proposed spin-off of our eResourcing and Executive Search divisions requires the consent of our primary lender. We are currently in negotiations with our primary lender to secure their consent. Our primary lender may require concessions from us in consideration for granting such consent.

        We believe that our current cash and cash equivalents, primary line of credit, and anticipated cash to be generated from operating activities will provide us with sufficient liquidity to satisfy our working capital needs, capital expenditures, investment requirements and commitments through at least the next twelve months. Our cash generated from operating activities is subject to fluctuations in the global economy, unemployment rates and the demand for yellow pages advertising.

Recent Accounting Pronouncements

        In June 2001, the Financial Accounting Standards Board issued SFAS 141 and SFAS 142. SFAS 141 requires all business combinations initiated after September 30, 2001 to be accounted for using the purchase method. It also requires that the Company recognize acquired intangible assets, apart from goodwill, if the intangible assets meet certain criteria. In accordance with the transitional guidance provided under SFAS 141, goodwill was not amortized on purchase business combinations completed subsequent to June 30, 2001.

        SFAS 142 establishes new guidelines for accounting for goodwill and other intangible assets. It requires that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that the Company (1) identify reporting units for the purpose of assessing potential future impairments of goodwill, (2) reassess the useful lives of other existing recognized intangible assets, and (3) cease amortization of intangible assets in accordance with the guidance in SFAS 142. SFAS 142 must be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized after that date, regardless of when those assets were initially recognized. In accordance with SFAS 142, the Company completed a transitional goodwill impairment test and the results are included in the accompanying consolidated condensed financial statements.

        With the adoption of SFAS 142, the amortization of goodwill has ceased as of January 1, 2002. As a result, approximately $6.8 million pre-tax, or $0.05 in diluted earnings per share, net of tax, in the third quarter of 2001 and approximately $17.6 million pre-tax, or $0.13 in diluted earnings per share, net of tax, in the first nine months of 2001 has been eliminated for comparative purposes. On an annualized basis, we will eliminate amortization expense of approximately $23.8 million pre-tax, or $0.18 in diluted earnings per share, net of tax.

        In July 2002, the FASB issued SFAS 146, Accounting for Restructuring Costs. SFAS 146 applies to costs associated with an exit activity (including restructuring) or with a disposal of long-lived assets. Those activities can include eliminating or reducing product lines, terminating employees and contracts, and relocating plant facilities or personnel. Under SFAS 146, a company will record a liability for a cost associated with an exit or disposal activity when that liability is incurred and can be measured at fair value. SFAS 146 will require a company to disclose information about its exit and disposal activities, the

38

related costs, and changes in those costs in the notes to the interim and annual financial statements that include the period in which an exit activity is initiated and in any subsequent period until the activity is completed. SFAS 146 is effective prospectively for exit or disposal activities initiated after December 31, 2002, with earlier adoption encouraged. Under SFAS 146, a company may not restate its previously issued financial statements and the new Statement grandfathers the accounting for liabilities that a company had previously recorded under Emerging Issues Task Force Issue 94-3.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Our primary market risks include fluctuations in interest rates, variability in interest rate spread relationships (i.e., prime to LIBOR spreads) and exchange rate variability. At September 30, 2002 the utilized portion of our five-year revolving credit agreement was approximately $19.5 million, including $14.3 million reflected as a reduction to accounts receivable and $5.2 million for standby letters of credit. Interest on the outstanding balance is charged based on a variable interest rate related to our choice of (1) the higher of (a) prime rate or (b) Federal Funds rate plus ¹/2 of 1% or (2) LIBOR plus a margin determined by the ratio of our debt to earnings before interest, taxes, depreciation and amortization (EBITDA) as defined in the Agreement, and is thus subject to market risk in the form of fluctuations in interest rates. The majority of our borrowings are in the form of seller-financed notes and capitalized equipment leases. We use forward foreign exchange contracts as cash flow hedges to offset risks related to foreign currency transactions. These transactions primarily relate to non-functional currency denominated inter-company funding loans, non-functional currency denominated seller notes and non-functional currency denominated forecasted transactions, primarily acquisitions. At September 30, 2002, the fair value of these forward foreign exchange contracts was $35.9 million resulting in a decrease in net unrealized gain of $324 for the nine months ended September 30, 2002 reflected in our consolidated condensed statement of stockholders' equity. We do not trade derivative financial instruments for speculative purposes.

        We also conduct operations in various foreign countries, including Australia, Belgium, Canada, China, Denmark, Finland, France, Germany, India, Italy, Japan, the Netherlands, New Zealand, Norway, Sweden, Singapore, Spain, and the United Kingdom. For the nine months ended September 30, 2002, approximately 43% of our commissions and fees were earned outside the United States and collected in local currency and related operating expenses were also paid in such corresponding local currency. Accordingly, we will be subject to risk for exchange rate fluctuations between such local currencies and the dollar.

        The financial statements of our non-U.S. subsidiaries are translated into U.S. dollars using current rates of exchange, with gains or losses included in the cumulative translation adjustment account, a component of stockholders' equity. During the nine months ended September 30, 2002, we had a translation gain of $66.1 million, primarily attributable to the weakening of the U.S. dollar against the Australian dollar, the Euro, the Swedish Kroner and the British Pound.

ITEM 4. CONTROLS AND PROCEDURES

        As of September 30, 2002, an evaluation was performed under the supervision and with the participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2002. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to September 30, 2002.

39

TMP WORLDWIDE INC.

PART II
OTHER INFORMATION

Item 2(c). CHANGES IN SECURITIES AND USE OF PROCEEDS

        On September 10, 2002, we issued 395,515 shares of our common stock in a private placement transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended, in exchange for all of the outstanding shares of Moving.com, Inc.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)

The following exhibits are filed as part of this report:



3.1

Amended and Restated Bylaws of TMP Worldwide Inc.



10.1

Employment Letter, dated September 11, 2002, by and between TMP Worldwide Inc. and Michael Sileck.



10.2

Employment Letter, dated September 24, 2002, by and between TMP Worldwide Inc. and John Mclaughlin.



10.3

Agreement, dated September 11, 2002, by and between TMP Worldwide Inc. and Paul Camara.



15.1

Consent of Independent Certified Public Accountants.*



99.1

Certification by Andrew J. McKelvey pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



99.2

Certification by Michael Sileck pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



(b)

Reports on Form 8-K:



(i)

The Company's Current Report on Form 8-K, filed August 7, 2002, relating to the Company's announcement of results of operations for the six months ended June 30, 2002 and that James Treacy, the Company's President and Chief Operating Officer would be leaving the Company.



(ii)

The Company's Current Report on Form 8-K, filed August 21, 2002, relating to Andrew J. McKelvey's sales of the Company's common stock.

        All other items of this report are inapplicable.

(*)

BDO Seidman, LLP has issued a SAS 71 report on the interim financial statements included herein. This Quarterly Report on Form 10-Q will be incorporated by reference into TMP's registration statements. Please note that BDO's report on such interim financial statements, however, should not be deemed a part of such registration statements and that Securities Act Section 11 liability should not extend to BDO's report.

40

SIGNATURES

        Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TMP WORLDWIDE INC. (Registrant)
	By:	/s/  ANDREW J. MCKELVEY Andrew J. McKelvey Chief Executive Officer
Dated: November 14, 2002
	By:	/s/  MICHAEL SILECK Michael Sileck Chief Financial Officer (Principal Financial and Accounting Officer)
Dated: November 14, 2002

41

CERTIFICATIONS

I,

Andrew J. McKelvey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TMP Worldwide Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and



c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and



b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: November 14, 2002 /s/ ANDREW J. MCKELVEY Andrew J. McKelvey
Chief Executive Officer

42

CERTIFICATIONS

I, Michael Sileck, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TMP Worldwide Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and



c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and



b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: November 14, 2002 /s/ MICHAEL SILECKMichael Sileck
Chief Financial Officer

43

QuickLinks

TMP WORLDWIDE INC. INDEX
TMP WORLDWIDE INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
TMP WORLDWIDE INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
TMP WORLDWIDE INC. CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited)
TMP WORLDWIDE INC. CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (in thousands, except per share amounts) (unaudited)
TMP WORLDWIDE INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
TMP WORLDWIDE INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (in thousands, except per share amounts) (unaudited)
Report of Independent Certified Public Accountants
TMP WORLDWIDE INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TMP WORLDWIDE INC. PART II OTHER INFORMATION
SIGNATURES
CERTIFICATIONS
CERTIFICATIONS

EX-3.1

                                                                    Exhibit 3.1



                              AMENDED AND RESTATED
                                     BYLAWS
                                       OF
                               TMP WORLDWIDE INC.

                                    ARTICLE I
                                     OFFICES

         Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.

         Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the Corporation may require.


                                   ARTICLE II
                            MEETINGS OF STOCKHOLDERS

         Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of New York, State of New York at such place
as may be fixed from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting.

         Section 2. Annual meetings of stockholders shall be held at such date
and time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which they shall elect by a plurality
vote a board of directors, and transact such other business as may properly be
brought before the meeting.

         Section 3. Notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.

         Section 4. Nominations of persons for election to the board of
directors and the proposal of business to be transacted by the stockholders may
be made at an annual meeting of stockholders (a) pursuant to the Corporation's
notice with respect to such meeting, (b) by or at the direction of the board of
directors or (c) by any stockholder of record of the Corporation who was a
stockholder of record at the time of the giving of the notice provided for in
the following paragraph, who is entitled to vote at the meeting and who has
complied with the notice procedures set forth in this section.


         For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of the foregoing
paragraph, (1) the stockholder must have given timely notice thereof in writing
to the secretary of the Corporation, (2) such business must be a proper matter
for stockholder action under the Delaware General Corporation Law, (3) if the
stockholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the Corporation with a Solicitation Notice, as
that term is defined in subclause (c)(iii) of this paragraph, such stockholder
or beneficial owner must, in the case of a proposal, have delivered a proxy
statement and form of proxy to holders of at least the percentage of the
Corporation's voting shares required under applicable law to approve any such
proposal, or, in the case of a nomination or nominations, have delivered a proxy
statement and form of proxy to holders of a percentage of the Corporation's
voting shares reasonably believed by such stockholder or beneficial holder to be
sufficient to elect the nominee or nominees proposed to be nominated by such
stockholder, and must, in either case, have included in such materials the
Solicitation Notice and (4) if no Solicitation Notice relating thereto has been
timely provided pursuant to this section, the stockholder or beneficial owner
proposing such business or nomination must not have solicited a number of
proxies sufficient to have required the delivery of such a Solicitation Notice
under this section. To be timely, a stockholder's notice shall be delivered to
the secretary not less than 45 or more than 75 days prior to the first
anniversary of the date on which the Corporation first mailed its proxy
materials for the preceding year's annual meeting of stockholders; provided,
however, that if the date of the annual meeting is advanced more than 30 days
prior to or delayed by more than 30 days after the anniversary of the preceding
year's annual meeting, notice by the stockholder to be timely must be so
delivered not later than the close of business on the later of (i) the 90th day
prior to such annual meeting or (ii) the 10th day following the day on which
public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person as would be required to be disclosed in solicitations of
proxies for the election of such nominees as directors pursuant to Regulation
14A under the Securities Exchange Act of 1934, and such person's written consent
to serve as a director if elected; (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; (c) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner, (ii) the class and number
of shares of the Corporation that are owned beneficially and of record by such
stockholder and such beneficial owner, and (iii) whether either such stockholder
or beneficial owner intends to deliver a proxy statement and form of proxy to
holders of, in the case of a proposal, at least the percentage of the
Corporation's voting shares required under applicable law to approve the
proposal or, in the case of a nomination or nominations, a sufficient number of
holders of the Corporation's voting shares to elect such nominee or nominees (an
affirmative statement of such intent being referred to in this section as a
"Solicitation Notice").

         In the event that the number of directors to be elected to the board of
directors is increased and there is no public announcement naming all of the
nominees for director or


                                      -2-


specifying the size of the increased board of directors made by the Corporation
at least 55 days prior to the first anniversary of the date on which the
Corporation first mailed its proxy materials for the preceding year's annual
meeting of stockholders, a stockholder's notice required by this section shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the secretary of
the Corporation not later than the close of business on the 10th day following
the day on which such public announcement is first made by the Corporation.

         Only persons nominated in accordance with the procedures set forth in
this section shall be eligible to serve as directors and only such business
shall be conducted at an annual meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
section. The chairman of the meeting shall have the power and the duty to
determine whether a nomination or any business proposed to be brought before the
meeting has been made in accordance with the procedures set forth in this
section and in Section 8 of this Article and, if any proposed nomination or
business is not in compliance with such procedures, to declare that such
defectively proposed business or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.

         Notwithstanding the foregoing provisions of this section or of Section
8 of this Article, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder with respect to matters set forth herein. Nothing in such
provisions shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under such Act.

         Section 5. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, at the principal place of business of the
Corporation.

         Section 6. Special meetings of the stockholders, for any purpose or
purposes unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board or the president and
shall be called by the chairman of the board, the president or secretary at the
request in writing of a majority of the board of directors, or at the request in
writing of stockholders owning a majority in amount of the entire capital stock
of the Corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.

         Section 7. Notice of a special meeting stating the place, date and hour
of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.


                                      -3-


         Section 8. Only such business shall be conducted at a special meeting
of stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
board of directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the board of directors or (b) by any stockholder of
record of the Corporation who is a stockholder of record at the time of giving
of notice provided for in this paragraph, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in Section 4 of
this Article. Nominations by stockholders of persons for election to the board
of directors may be made at such a special meeting of stockholders if the
stockholder's notice required by the second paragraph of Section 4 of this
Article shall be delivered to the secretary of the Corporation not later than
the close of business on the later of the 90th day prior to such special meeting
or the 10th day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the board of
directors to be elected at such meeting.

         Section 9. The chairman of any meeting of stockholders shall determine
the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to the
chairman in order. The chairman shall have the power to adjourn the meeting to
another place, if any, date and time. The date and time of the opening and
closing of the polls for each matter upon which the stockholders will vote at
the meeting shall be announced at the meeting.

         Section 10. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

         Section 11. When a quorum is present at any meeting, and except as
provided in Section 2 of Article II of these bylaws, the vote of the holders of
a majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express provision of the statutes or of the certificate of
incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.

         Section 12. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no


                                      -4-



proxy shall be voted on or after three years from its date, unless the proxy
provides for a longer period.

         Section 13. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the Corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.

                                   ARTICLE III
                                    DIRECTORS

         Section 1. The number of directors which shall constitute the whole
board shall be not less than one and not more than nine as shall be fixed from
time to time by resolution passed by a majority of the whole board. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until that director's successor is elected and qualified. Directors need
not be stockholders, residents of Delaware or citizens of the United States.

         Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, by a sole remaining
director, or by the stockholders of the Corporation and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.

         Section 3. The business of the Corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these bylaws directed or required to
be exercised or done by the stockholders.

                       MEETINGS OF THE BOARD OF DIRECTORS

         Section 4. The board of directors of the Corporation may hold meetings,
both regular and special, either within or without the State of Delaware.



                                      -5-


         Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors.

         Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.

         Section 7. Special meetings of the board may be called by the chairman
of the board or the president or any director by mailing seven day's written
notice to each director or by telephone or by telegraph, telex, facsimile or
electronic transmission not less than 24 hours before the meeting.

         Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

         Section 9. Unless otherwise restricted by the certificate of
incorporation or these bylaws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing or by electronic transmission, and the writing or
writings or electronic transmission or transmissions are filed with the minutes
of proceedings of the board or committee. Such filing shall be in paper form if
minutes are maintained in paper form and shall be in electronic form if minutes
are maintained in electronic form.

         Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

                             COMMITTEES OF DIRECTORS

         Section 11. The board of directors may designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any


                                      -6-


absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members present at
any meetings and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the board
of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or by these by-laws, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to the following
matters: (i) approving or adopting, or recommending to the stockholders, any
action or matter expressly required by the Delaware General Corporation Law to
be submitted to stockholders for approval or (ii) adopting, amending or
repealing any by-law of the Corporation.

         Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.

                               EXECUTIVE COMMITTEE

         Section 13. The board of directors may, by resolution passed by a
majority of the whole board of directors, designate an executive committee which
shall have and may exercise all the powers and authority of the board of
directors in the management of the business, properties and affairs of the
Corporation, including authority to take all action provided by law and in the
bylaws to be taken by the board of directors, except as such powers and
authority are limited by Section 11 of this Article. The executive committee
shall consist of those directors appointed by the board of directors. All acts
done and powers conferred by the executive committee shall be deemed to be, and
may be certified as being, done or conferred under authority of the board of
directors.

                            COMPENSATION OF DIRECTORS

         Section 14. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the board of directors shall have the authority
to fix the compensation of directors. The directors may also be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of directors
and/or a stated salary as director. The directors may also be granted stock
options at the discretion of the board of directors. No such payment or
compensation shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.

                              REMOVAL OF DIRECTORS

         Section 15. Unless otherwise restricted by the certificate of
incorporation or these bylaws, any director or the entire board of directors may
be removed, with or without cause, by the holders of a majority of shares
entitled to vote at an election of directors.


                                      -7-


                                   ARTICLE IV
                                     NOTICES

         Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at such person's address as it appears on the records
of the Corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Without limiting the manner by which notice otherwise may be given
to stockholders, any notice to stockholders may also be given by electronic
transmission in the manner provided in the Delaware General Corporation Law.
Notice to directors may also be given by courier, telephone, telegram, telex,
facsimile or electronic transmission or personally.

         Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, or waiver by electronic transmission by such person or persons,
whether before or after the time stated therein, shall be deemed equivalent
thereto.

                                    ARTICLE V
                                    OFFICERS

         Section 1. The officers of the Corporation shall be chosen by the board
of directors and shall be a chairman of the board, a president, a secretary and
a treasurer. The board of directors may also choose one or more vice presidents
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide.

         Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a chairman of the board of
directors, a president, a secretary and a treasurer.

         Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.

         Section 4. The salaries of all officers and agents of the Corporation
shall be fixed by the board of directors.

         Section 5. The officers of the Corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
Corporation shall be filled by the board of directors.


                                      -8-




                   THE CHAIRMAN AND VICE CHAIRMAN OF THE BOARD

         Section 6. The chairman of the board of directors shall preside at all
meetings of stockholders and of the board of directors. The chairman shall have
such other powers and perform such other duties as are provided in these bylaws
and, in addition thereto, as the board of directors may from time to time
determine. The Vice Chairman of the board of directors shall perform such duties
as may be prescribed by the board of directors.

                                THE PRESIDENT

         Section 7. The president shall be the chief executive officer of the
Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.

         Section 8. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the Corporation.

                             THE VICE-PRESIDENTS

         Section 9. In the absence of the president or in the event of the
president's inability or refusal to act, the vice-president (or in the event
there be more than one vice-president, the vice-presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the president, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe. The
board may designate one or more vice-presidents as a senior vice-president.






                                      -9-


                    THE SECRETARY AND ASSISTANT SECRETARY

         Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision the secretary shall be. The secretary
shall have custody of the corporate seal of the Corporation and the secretary,
or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the
secretary's signature or by the signature of such assistant secretary. The board
of directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by that officer's signature.

         Section 11. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of the secretary's inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.

                    THE TREASURER AND ASSISTANT TREASURERS

         Section 12. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the board of directors.

         Section 13. The treasurer shall disburse the funds of the Corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all the treasurer's transactions as treasurer and of the financial condition of
the Corporation.

         Section 14. If required by the board of directors, the treasurer shall
give the Corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of the treasurer's office
and for the restoration to the Corporation, in case of the treasurer's death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the treasurer's possession or
control belonging to the Corporation.

         Section 15. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such


                                      -10-


determination, then in the order of their election), shall, in the absence of
the treasurer or in the event of the treasurer's inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.

                                   ARTICLE VI
                              CERTIFICATES OF STOCK

         Section 1. Every holder of stock in the Corporation shall be entitled
to have a certificate, signed by, or in the name of the Corporation by, the
chairman or vice-chairman of the board of directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the Corporation, certifying the number of shares owned
by that holder in the Corporation.

         Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if that
person or entity were such officer, transfer agent or registrar at the date of
issue.

                                LOST CERTIFICATES

         Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or the
owner's legal representative, to advertise the same in such manner as it shall
require and/or to give the Corporation a bond or payment of applicable insurance
premium in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.

                               TRANSFERS OF STOCK

         Section 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

                               FIXING RECORD DATE

         Section 5. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to


                                      -11-


receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.

         In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
secretary of the Corporation, request the board of directors to fix a record
date. The board of directors shall promptly, but in all events within 10 days
after the date on which such a request is received, adopt a resolution fixing
the record date. If no record date has been fixed by the board of directors
within 10 days of the date on which such a request is received, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or any officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the board of directors and prior action by the board of
directors is required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the board of
directors adopts the resolution taking such prior action.

                             REGISTERED STOCKHOLDERS

         Section 6. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

                                   ARTICLE VII
                                 INDEMNIFICATION

         Section 1. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding,



                                      -12-


whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that the person is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.

         Section 2. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

         Section 3. To the extent that a present or former director or officer
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1 or 2 of this Article
VII or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.

         Section 4. Any indemnification under Sections 1 or 2 of this Article
VII (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article VII. Such determination shall be made,
with respect to a person which is a director or officer at the time of such
determination, (a) by a majority vote of the directors who were not parties to
such action, suit or proceeding, even though less than a quorum, or (b) by a
committee of such directors designated by majority vote of such directors,



                                      -13-


even though less than a quorum, or (c) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion, or
(d) by the stockholders.

         Section 5. Expenses (including attorneys' fees) incurred by a director
or officer of the Corporation in defending any civil, criminal, administrative
or investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VII. Such
expenses (including attorneys' fees) incurred by former directors and officers
or other employees and agents may be so paid upon such terms and conditions, if
any, as the Corporation deems appropriate.

         Section 6. The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article VII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

         Section 7. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation, as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Article VII.

         Section 8. For purposes of Article VII, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under Article VII with respect to
the resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued.

         Section 9. For purposes of Article VII, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves service by, such director,
officer, employee, or agent, as the case may be, with respect to an employee
benefit plan, its participants, or beneficiaries; and a person who acted in
good faith and in a manner that person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan


                                      -14-


shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in Article VII.

         Section 10. The indemnification and advancement of expenses provided
by, or granted pursuant to this Article VII shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.

         Section 11. The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses or
indemnification brought under this Article VII or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine the Corporation's obligation to advance
expenses (including attorneys' fees).

                                  ARTICLE VIII
                               GENERAL PROVISIONS
                                    DIVIDENDS

         Section 1. Dividends upon the capital stock of the Corporation subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.

         Section 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

                                ANNUAL STATEMENT

         Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.

                                     CHECKS

         Section 4. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.


                                      -15-


                                   FISCAL YEAR

         Section 5. The fiscal year of the Corporation shall be fixed, and shall
be subject to change, by the Board of Directors.

                                      SEAL

         Section 6. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.

                                   ARTICLE IX
                                   AMENDMENTS

         Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the entire board of directors,
when such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal bylaws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.



                                      -16-

EX-10.1

                                                                    Exhibit 10.1


                               TMP WORLDWIDE INC.
                                622 THIRD AVENUE
                               NEW YORK, NY 10017


                                      September 11, 2002


Mr. Michael Sileck

Dear Mike:

            This will confirm our  understanding and agreement with respect to
your  continued  employment as Chief  Financial  Officer of TMP Worldwide Inc.
(the "Company").  You and the Company hereby agree as follows:

         1. The Company agrees to employ you and you agree to be employed by the
Company as Chief Financial Officer, with such duties and responsibilities with
respect to the Company and its affiliates as the Company's Chief Executive
Officer ("CEO") or Board of Directors (the "Board") shall reasonably direct. You
agree to devote your best efforts, energies, abilities and full business time,
skill and attention to your duties. You agree to perform the duties and
responsibilities assigned to you to the best of your ability, in a diligent,
trustworthy, businesslike and efficient manner for the purpose of advancing the
business of the Company and to adhere to any and all of the employment policies
of the Company.

         2. The term of this agreement is for a period of 3 years, provided,
however, that this agreement and your employment with the Company is subject to
earlier termination at any time as provided in Section 4 below.

         3. In consideration for your services and other agreements hereunder,
during your employment the Company shall (a) pay you a base salary of $500,000
per year (prorated for periods of less than one year) in regular installments in
accordance with the Company's payroll practice for salaried employees, (b)
provide you with medical, dental and disability coverage, if any, and 401(k)
Plan, life insurance and other benefit plan eligibility, if any, comparable to
that regularly provided to other senior management in accordance with the
Company's policies, (c) provide you with 4 weeks vacation per year in accordance
with the Company's policies (prorated for periods of less than one year), (d)
provide you with annual bonuses from time to time on the basis of satisfaction
of such EPS and/or other targets as are determined by the CEO or the Board with
respect to each calendar year, provided, however, that for calendar 2002 you
will receive a guaranteed bonus of $500,000 (except in the event you terminate
your employment with the Company prior to December 31, 2002, such bonus shall be
pro-rated for any period of less than the full ten months between March 1, 2002
and December 31, 2002), which bonus is payable in February 2003, (e) provide you
with reimbursement of business expenses in accordance with the Company's
policies subject to the presentation of appropriate receipts and invoices
therefore (it being understood that you will be eligible for first class airline
travel for business purposes), and (f) provide you with a car service or car
allowance for business related purposes. Your base salary will be reviewed on an
annual basis, it being understood that any increases in compensation shall



Mr. Michael Sileck
September 11, 2002
Page 2


be subject to the sole discretion of the Company's CEO and Board.

         4. You may terminate this agreement at any time upon 60 days' prior
written notice. The Company may terminate this agreement at any time upon
written notice. This agreement shall also terminate automatically in the event
you should die or, in the reasonable determination of the Company, become unable
to perform by reason of physical or mental incompetency your obligations
hereunder for a period of 120 days in any 365 day period. It is understood and
agreed that in the event that this agreement is terminated by the Company in
accordance with the second sentence of this Section 4 other than for Cause (as
defined below), then subject to (i) your execution and delivery of the Company's
then current form of separation agreement and general release applicable to
similarly situated employees and (ii) the expiration of any rescission period
provided thereby (without the rescission having been exercised), you shall, as
your sole and exclusive remedy, be entitled to (i) receive as severance your
then applicable base salary hereunder for a period of twelve months (the
"Specified Period"), payable in regular installments in accordance with the
Company's applicable payroll practice for salaried employees and (ii) during the
Specified Period, have the Company make available to you (and/or pay COBRA
premiums on) medical and dental benefits on the same terms and conditions as
would have been made available to you had you remained employed by the Company
during such period. Except as expressly provided in the preceding sentence, or
elsewhere in this agreement or under the terms of any written option or stock
bonus agreement between the parties, in the event of the termination of this
agreement or your employment for any reason, the Company shall have no further
obligations to you hereunder or with respect to your employment from the
effective date of termination. "Cause" shall mean the occurrence of any one or
more of the following events: (i) your willful failure or gross negligence in
performance of your duties or compliance with the reasonable directions of the
CEO or the Board that remains unremedied for a period of twenty (20) days after
the CEO or the Board has given written notice specifying in reasonable detail
your failure to perform such duties or comply with such directions; (ii) your
failure to comply with a material employment policy of the Company that remains
unremedied for a period of twenty (20) days after the CEO or the Board has given
written notice to you specifying in reasonable detail your failure to comply; or
(iii) your indictment for (a) a felony, (b) criminal dishonesty or (c) fraud.
The parties agree that the definition of "Cause" in Section 6 of the option
agreement dated February 22, 2002 (the "February Option Agreement") and in
paragraph 2 of the Stock Bonus Agreement dated March 4, 2002 are hereby amended
to be consistent with the definition of "Cause" set forth in the preceding
sentence. In the event that your employment is terminated by you within a period
of twelve months following a Change in Control (as defined below) such event
shall, for the purposes of post termination compensation under this agreement
only, be deemed to be a termination by the Company without "Cause", subject,
however to the provisions of Section 7 below.

         5. You acknowledge that you have not relied on any representation not
set forth in this agreement. You represent that you are free to enter into this
employment arrangement and that you are not bound by any restrictive covenants
or similar provisions restricting the performance of your duties hereunder.

         6. In the event of the termination of your employment by the Company
for reasons other than Cause, the options granted to you under the February
Option Agreement, as




Mr. Michael Sileck
September 11, 2002
Page 3


well as any other options granted to you by the Company from time to time
pursuant to written option agreements, shall automatically and immediately
become (i) fully vested and (ii) exercisable for the balance of the ten year
term provided by the applicable stock option agreement, subject to the other
terms of such option agreement, and (iii) in the event of any Change in Control
(as defined in February Option Agreement):

                  (a) the options covered by the February Option Agreement and
         any other options which may be granted to you by the Company from time
         to time pursuant to written option agreements, shall automatically and
         immediately become (i) fully vested and (ii) exercisable for the
         balance of the ten year term provided by the applicable stock option
         agreement, subject to the other terms of such option agreement; and

                  (b) the shares of Company Common Stock covered by the Stock
         Bonus Agreements dated March 4, 2002 and September 11, 2002 shall
         automatically and immediately become fully vested,

subject in each case of (a) and (b) to the provisions of Section 7 below.

         7. Notwithstanding anything in Section 6 or the last sentence of
Section 4 to the contrary, you shall in no event be entitled to any payment or
acceleration of options or shares of Company common stock that would cause any
portion of the amount received by you to constitute an "excess parachute
payment" as defined under Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"). In furtherance of the provisions of this Section 7, the
following provisions shall apply:

                           (1) Anything in this agreement to the contrary
                  notwithstanding, in the event that any payment or acceleration
                  of options or shares of Company common stock by the Company to
                  or for your benefit (collectively, a "Payment") would be
                  nondeductible by the Company for federal income tax purposes
                  because of Section 280G of the Code, then the aggregate
                  present value of amounts payable or distributable to or for
                  your benefit pursuant to this agreement or any option or stock
                  bonus agreement shall be reduced to the Reduced Amount (as
                  defined below). Any such reduction shall be accomplished first
                  by reducing the number of options to acquire Company common
                  stock and shares of Company common stock covered by stock
                  bonus agreements which otherwise would have immediately vested
                  in full, as determined in the reasonable discretion of the
                  Board (provided that any options and shares of Company common
                  stock so reduced shall continue to vest in accordance with the
                  terms of the applicable agreements irrespective of your
                  continued employment or, if earlier, the date or dates on
                  which such options or shares can vest without being deemed
                  nondeductible, as determined in the reasonable discretion of
                  the Board); and second, if necessary, by reducing cash
                  payments constituting part of the payments or other
                  consideration to which you become entitled (collectively, such
                  cash payments, other consideration and the aggregate present
                  value of the immediate vesting of options and shares of
                  Company common stock (calculated in accordance with Section
                  280G of the Code and any regulations promulgated thereunder)
                  are referred to as the "Severance Amount").


Mr. Michael Sileck
September 11, 2002
Page 4


                           (2) The "Reduced Amount" shall be the amount,
                  expressed in present value, which maximizes the aggregate
                  present value of the Severance Amount without causing any
                  Payment to be nondeductible by the Company because of Section
                  280G of the Code. For purposes of this clause (2), present
                  value shall be determined in accordance with Section 280(d)(4)
                  of the Code.

                           (3) All determinations required to be made under this
                  Section 7 shall be made by the Company's independent public
                  accountants (the "Accounting Firm") which shall provide
                  detailed supporting calculations to the Company and you. Any
                  such determination by the Accounting Firm shall be binding
                  upon the Company and you.

                           (4) It is possible that as a result of the
                  uncertainty in the application of Section 280G of the Code at
                  the time of the initial determination by the Accounting Firm,
                  a portion of the Severance Amount will have been made by the
                  Company which should not have been made ("Overpayment") or
                  that an amount in addition to the Severance Payment which will
                  not have been made could have been made ("Underpayment"), in
                  each case, consistent with the calculations required to be
                  made hereunder.

                                    (x) Overpayment. In the event that the
                           Accounting Firm, based upon the assertion of a
                           deficiency by the Internal Revenue Service against
                           you which the Accounting Firm believes has a high
                           probability of success, determines that an
                           Overpayment has been made, any such Overpayment paid
                           or distributed by the Company to or for your benefit
                           shall be treated for all purposes as a loan ab initio
                           (from the beginning) to you which you shall repay to
                           the Company together with interest at the applicable
                           federal rate provided for in Section 1274(d) of the
                           Code.

                                    (y) Underpayment. If precedent or other
                           substantial authority indicates that an Underpayment
                           has occurred, any such Underpayment shall be promptly
                           paid by the Company to or for your benefit together
                           with interest at the applicable federal rate provided
                           for in Section 1274(d) of the Code.

         8. All notices, demands or other communications to be given or
delivered under or by reason of this agreement shall be in writing and shall be
deemed to have been properly served if delivered personally, by courier, or by
certified or registered mail, return receipt requested and first class postage
prepaid, in case of notice to the Company, to the attention of the CEO at the
address set forth on the first page of this agreement (with a copy to Myron
Olesnyckyj, TMP Worldwide Inc., 622 Third Avenue, 39th Floor, New York, NY
10017) and in the case of notices to you to your office or residence address, or
such other addresses as the recipient party has specified by prior written
notice to the sending party. All such notices and communications shall be deemed
received upon the actual delivery thereof in accordance with the foregoing.


Mr. Michael Sileck
September 11, 2002
Page 5


         9. You may not assign or delegate this agreement or any of your rights
or obligations hereunder without the prior written consent of the Company. All
references in this agreement to practices or policies of the Company are
references to such practices or policies as may be in effect from time to time.
The Company acknowledges that the sign on bonus provided in Section 3 of the
letter agreement between the parties dated December 31, 2001 (the "Prior
Employment Agreement") is not refundable.

         10. This agreement (i) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any previous
arrangements relating thereto, as well as any previous arrangements relating to
employment between you and any of the Company's affiliates, including but not
limited to the Prior Employment Agreement, (ii) may be signed in counterparts,
(iii) shall be governed by the laws of the state of New York (other than the
conflicts of laws provisions thereof) and (iv) may not be amended, terminated,
extended or waived orally.

         Please sign the additional originally executed copy of this letter in
the space provided for your signature below to indicate your acceptance and
agreement with the terms of this letter agreement and return one fully executed
original to me.

                                 Very truly yours,

                                 TMP WORLDWIDE INC.


                                 By: /s/ Andrew J. McKelvey
                                    ------------------------------------------
                                 Name:  Andrew J. McKelvey
                                 Title: CEO

Accepted and agreed:



/s/ Michael Sileck
- ---------------------------------
Michael Sileck

EX-10.2

                                                                    Exhibit 10.2



                              TMP WORLDWIDE INC.
                               622 THIRD AVENUE
                              NEW YORK, NY 10017



                                    September 24, 2002


Mr. John Mclaughlin



Dear John:

         This will confirm our understanding and agreement with respect to your
taking the position of Global Director, Search and Selection, of TMP Worldwide
Inc. (the "Company"). You and the Company hereby agree as follows:

         1. The Company agrees to employ you and you agree to be employed by the
Company as Global Director, Search and Selection, with such duties and
responsibilities with respect to the Company and its affiliates as the Company's
Chief Executive Officer ("CEO") or such other person from time to time
designated by the CEO to deal with matters related to this agreement (the
"Designee") shall reasonably direct. You agree to devote your best efforts,
energies, abilities and full business time, skill and attention to your duties.
You agree to perform the duties and responsibilities assigned to you to the best
of your ability, in a diligent, trustworthy, businesslike and efficient manner
for the purpose of advancing the business of the Company and to adhere to any
and all of the employment policies of the Company. You acknowledge that your
duties will require you to be based in the Company's corporate headquarters in
New York. Your role in this new position will commence on a date within the next
two months selected by the Company.

         2. In consideration for your services and other agreements hereunder,
during your employment the Company shall (a) pay you a base salary of $500,000
per year (prorated for periods of less than one year) in regular installments in
accordance with the Company's payroll practice for salaried employees, (b)
provide you with medical, dental and disability coverage, if any, and 401(k)
Plan, life insurance and other benefit plan eligibility, if any, comparable to
that regularly provided to other senior management in accordance with the
Company's policies, (c) provide you with 4 weeks vacation per year in accordance
with the Company's policies (prorated for periods of less than one year), (d)
provide you with annual bonuses of up to 100% of your base salary from time to
time on the basis of satisfaction of such EPS and/or other targets as are
determined by the CEO or the Designee with respect to each calendar year, (e)
provide you with reimbursement of business expenses in accordance with the
Company's policies subject to the presentation of appropriate receipts and
invoices therefore, and (f) provide you with reimbursement of all reasonable
moving and relocation expenses incurred in connection with (x) the relocation of
you and your family from New Zealand to New York and (y) the relocation of you
and your family back to New Zealand from New York, provided in the case of (y)
you




Mr. John Mclaughlin
September 24, 2002
Page 2


relocate back to New Zealand within 6 months of the termination of this
agreement. Your base salary will be reviewed on an annual basis, it being
understood that any increases in compensation shall be subject to the sole
discretion of the Company's CEO or the Designee.

         3. You may terminate this agreement at any time upon 60 days' prior
written notice. The Company may terminate this agreement at any time upon
written notice. This agreement shall also terminate automatically in the event
you should die or, in the reasonable determination of the Company, become unable
to perform by reason of physical or mental incompetency your obligations
hereunder for a period of 120 days in any 365 day period. It is understood and
agreed that in the event that this agreement is terminated by the Company in
accordance with the second sentence of this Section 3 other than for Cause (as
defined below), then subject to (i) your execution and delivery of the Company's
then current form of separation agreement and general release applicable to
similarly situated employees and (ii) the expiration of any rescission period
provided thereby (without the rescission having been exercised), you shall, as
your sole and exclusive remedy, be entitled to (i) receive as severance your
then applicable base salary hereunder for a period of twelve months (the
"Specified Period"), payable in regular installments in accordance with the
Company's applicable payroll practice for salaried employees and (ii) during the
Specified Period, have the Company make available to you (and/or pay COBRA
premiums on) medical and dental benefits on the same terms and conditions as
would have been made available to you had you remained employed by the Company
during such period. Except as expressly provided in the preceding sentence, or
elsewhere in this agreement or under the terms of any written option or stock
bonus agreement between the parties, in the event of the termination of this
agreement or your employment for any reason, the Company shall have no further
obligations to you hereunder or with respect to your employment from the
effective date of termination. "Cause" shall mean the occurrence of any one or
more of the following events: (i) your willful failure or gross negligence in
performance of your duties or compliance with the reasonable directions of the
CEO or the Designee that remains unremedied for a period of twenty (20) days
after the CEO or the Designee has given written notice specifying in reasonable
detail your failure to perform such duties or comply with such directions; (ii)
your failure to comply with a material employment policy of the Company that
remains unremedied for a period of twenty (20) days after the CEO or the
Designee has given written notice to you specifying in reasonable detail your
failure to comply; or (iii) your commission of (a) a felony, (b) criminal
dishonesty or (c) fraud.

         4. You acknowledge that you have not relied on any representation not
set forth in this agreement. You represent that you are free to enter into this
employment arrangement and that you are not bound by any restrictive covenants
or similar provisions restricting the performance of your duties hereunder.

         5. In the event of the termination of your employment by the Company
for reasons other than Cause, any options that have been or may be granted to
you by the Company from time to time pursuant to written option agreements shall
automatically and immediately become



Mr. John Mclaughlin
September 24, 2002
Page 3


(i) fully vested and (ii) exercisable for the balance of the ten year term
provided by the applicable stock option agreement, subject to the other terms of
such option agreement, and (iii) in the event of any Change in Control (as
defined in Option Agreement dated September 11, 2002):

                  (a) any options which have been or may be granted to you by
         the Company from time to time pursuant to written option agreements,
         shall automatically and immediately become (i) fully vested and (ii)
         exercisable for the balance of the ten year term provided by the
         applicable stock option agreement, subject to the other terms of such
         option agreement; and

                  (b) the shares of Company Common Stock covered by the Stock
         Bonus Agreement dated September 11, 2002 shall automatically and
         immediately become fully vested,

subject in each case of (a) and (b) to the provisions of Section 6 below.

         6. Notwithstanding anything in Section 5 to the contrary, you shall in
no event be entitled to any payment or acceleration of options or shares of
Company common stock that would cause any portion of the amount received by you
to constitute an "excess parachute payment" as defined under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of the
provisions of this Section 6, the following provisions shall apply:

                           (1) Anything in this agreement to the contrary
notwithstanding, in the event that any payment or acceleration of options or
shares of Company common stock by the Company to or for your benefit
(collectively, a "Payment") would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Code, then the aggregate
present value of amounts payable or distributable to or for your benefit
pursuant to this agreement or any option or stock bonus agreement shall be
reduced to the Reduced Amount (as defined below). Any such reduction shall be
accomplished first by reducing the number of options to acquire Company common
stock and shares of Company common stock covered by stock bonus agreements which
otherwise would have immediately vested in full, as determined in the reasonable
discretion of the Board of Directors of the Company (the "Board"), provided that
any options and shares of Company common stock so reduced shall continue to vest
in accordance with the terms of the applicable agreements irrespective of your
continued employment or, if earlier, the date or dates on which such options or
shares can vest without being deemed nondeductible, as determined in the
reasonable discretion of the Board, and second, if necessary, by reducing cash
payments constituting part of the payments or other consideration to which you
become entitled (collectively, such cash payments, other consideration and the
aggregate present value of the immediate vesting of options and shares of
Company common stock (calculated in accordance with Section 280G of the Code and
any regulations promulgated thereunder) are referred to as the "Severance
Amount").



Mr. John Mclaughlin
September 24, 2002
Page 4


                           (2) The "Reduced Amount" shall be the amount,
expressed in present value, which maximizes the aggregate present value of the
Severance Amount without causing any Payment to be nondeductible by the Company
because of Section 280G of the Code. For purposes of this clause (2), present
value shall be determined in accordance with Section 280(d)(4) of the Code.

                           (3) All determinations required to be made under this
Section 6 shall be made by the Company's independent public accountants (the
"Accounting Firm") which shall provide detailed supporting calculations to the
Company and you. Any such determination by the Accounting Firm shall be binding
upon the Company and you.

                           (4) It is possible that as a result of the
uncertainty in the application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm, a portion of the Severance Amount
will have been made by the Company which should not have been made
("Overpayment") or that an amount in addition to the Severance Payment which
will not have been made could have been made ("Underpayment"), in each case,
consistent with the calculations required to be made hereunder.

                                    (x) Overpayment. In the event that the
                           Accounting Firm, based upon the assertion of a
                           deficiency by the Internal Revenue Service against
                           you which the Accounting Firm believes has a high
                           probability of success, determines that an
                           Overpayment has been made, any such Overpayment paid
                           or distributed by the Company to or for your benefit
                           shall be treated for all purposes as a loan ab initio
                           (from the beginning) to you which you shall repay to
                           the Company together with interest at the applicable
                           federal rate provided for in Section 1274(d) of the
                           Code.

                                    (y) Underpayment. If precedent or other
                           substantial authority indicates that an Underpayment
                           has occurred, any such Underpayment shall be promptly
                           paid by the Company to or for your benefit together
                           with interest at the applicable federal rate provided
                           for in Section 1274(d) of the Code.

         7. All notices, demands or other communications to be given or
delivered under or by reason of this agreement shall be in writing and shall be
deemed to have been properly served if delivered personally, by courier, or by
certified or registered mail, return receipt requested and first class postage
prepaid, in case of notice to the Company, to the attention of the CEO at the
address set forth on the first page of this agreement (with a copy to Myron
Olesnyckyj, TMP Worldwide Inc., 622 Third Avenue, 39th Floor, New York, NY
10017) and in the case of notices to you to your office or residence address, or
such other addresses as the recipient party has




Mr. John Mclaughlin
September 24, 2002
Page 5


specified by prior written notice to the sending party. All such notices and
communications shall be deemed received upon the actual delivery thereof in
accordance with the foregoing.

         8. You may not assign or delegate this agreement or any of your rights
or obligations hereunder without the prior written consent of the Company. All
references in this agreement to practices or policies of the Company are
references to such practices or policies as may be in effect from time to time.

         9. This agreement (i) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any previous
arrangements relating thereto, as well as any previous arrangements relating to
employment between you and any of the Company's affiliates, including but not
limited to the Employment Agreement between you and the Company dated February
7, 2002, (ii) may be signed in counterparts, (iii) shall be governed by the laws
of the state of New York (other than the conflicts of laws provisions thereof)
and (iv) may not be amended, terminated, extended or waived orally. Please
understand that while it is our hope that our relationship will be a long one,
your employment will be on at "at will" basis. Nothing in this letter should be
construed as creating any other type of employment relationship.

         Please sign the additional originally executed copy of this letter in
the space provided for your signature below to indicate your acceptance and
agreement with the terms of this letter agreement and return one fully executed
original to me.


                                    Very truly yours,

                                    TMP WORLDWIDE INC.


                                    By: /s/ Andrew J. McKelvey
                                       ---------------------------------
                                    Name:  Andrew J. McKelvey
                                    Title: CEO

Accepted and agreed:



/s/ John Mclaughlin
- ----------------------------
John Mclaughlin

EX-10.3

                                                                    Exhibit 10.3



                                          September 11, 2002


Mr. Paul Camara

Dear Paul,

This will confirm our understanding regarding any termination of your employment
with TMP Worldwide Inc. ("TMPW" or the "Company").

1. SEVERANCE. If your employment with TMPW is terminated by TMPW for any reason
other than Cause (defined below), then subject to the terms hereof you shall be
entitled to (i) receive severance equal to eighteen months' salary, payable in
equal semi-monthly installments over eighteen months (provided that if such
termination occurs on or after January 1, 2003, both references to "eighteen
months" in the proceeding clause shall be changed to "two years"), (ii) through
the date which is twenty one (21) months after the last day of your employment
make available to you (and/or pay COBRA premiums on) medical and dental benefits
on the same terms and conditions as would have been made available to you had
you remained employed by TMPW during such period, and (iii) after the expiration
of this twenty one month period and for so long as you shall live, to provide
you with (or reimburse you for the premiums on) medical and dental benefits
substantially similar to those that would have been available to you had you
remained employed by TMPW during such period, it being understood however that
from and after the date you became eligible for Medicare coverage the medical
and dental benefits called for by this clause (iii) shall be supplemental
benefits. It is understood that all of the foregoing obligations are expressly
conditioned on your signing, delivering and not exercising any right to revoke a
separation agreement and general release in TMPW's then standard format. "Cause"
shall mean the occurrence of any one or more of the following events: (i) your
willful failure or gross negligence in performance of your duties or compliance
with the reasonable directions of the Chairman or the Board of Directors of TMPW
that remains unremedied for a period of twenty (20) days after the Chairman or
the Board of Directors of TMPW has given written notice specifying in reasonable
detail your failure to perform such duties or comply with such directions; (ii)
your failure to comply with a material employment policy of TMPW that remains
unremedied for a period of twenty (20) days after the Chairman or the Board of
Directors of TMPW has given written notice to you specifying in reasonable
detail your failure to comply; or (iii) your commission of (a) a felony, (b)
criminal dishonesty, (c) any crime involving moral turpitude or (d) fraud. All
severance payments shall be reduced by applicable withholding taxes, payroll
deductions and amounts required by law to be withheld.

2. OPTIONS AND STOCK. In the event of the termination of your employment by TMPW
for reasons other than Cause, the options granted to you under stock option
agreements dated September 11, 2002, September 10, 2001, August 5, 1999 and
December 9, 1998, as well as any other options granted to you by TMPW from time
to time after the date hereof pursuant to written option agreements
(collectively, the "Designated Option Agreements"), shall automatically and






immediately become (i) fully vested and (ii) exercisable for the balance of the
ten year term provided by the applicable stock option agreement, subject to the
other terms of such option agreement, and (iii) in the event of any Change in
Control (as defined in Option Agreement dated September 11, 2002):

                  (a) the options covered by the Designated Option Agreements,
         shall automatically and immediately become (i) fully vested and (ii)
         exercisable for the balance of the ten year term provided by the
         applicable stock option agreement, subject to the other terms of such
         option agreement; and

                  (b) the shares of Company Common Stock covered by the Stock
         Bonus Agreement dated September 11, 2002 shall automatically and
         immediately become fully vested,

subject in each case of (a) and (b) to the provisions of Section 3 below.

3. SECTION 280G. Notwithstanding anything in Section 2 to the contrary, you
shall in no event be entitled to any payment or acceleration of options or
shares of Company common stock that would cause any portion of the amount
received by you to constitute an "excess parachute payment" as defined under
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). In
furtherance of the provisions of this Section 3, the following provisions shall
apply:

                           (1) Anything in this agreement to the contrary
                  notwithstanding, in the event that any payment or acceleration
                  of options or shares of Company common stock by the Company to
                  or for your benefit (collectively, a "Payment") would be
                  nondeductible by the Company for federal income tax purposes
                  because of Section 280G of the Code, then the aggregate
                  present value of amounts payable or distributable to or for
                  your benefit pursuant to this agreement or any option or stock
                  bonus agreement shall be reduced to the Reduced Amount (as
                  defined below). Any such reduction shall be accomplished first
                  by reducing the number of options to acquire Company common
                  stock and shares of Company common stock covered by stock
                  bonus agreements which otherwise would have immediately vested
                  in full, as determined in the reasonable discretion of the
                  Board (provided that any options and shares of Company common
                  stock so reduced shall continue to vest in accordance with the
                  terms of the applicable agreements irrespective of your
                  continued employment or, if earlier, the date or dates on
                  which such options or shares can vest without being deemed
                  nondeductible, as determined in the reasonable discretion of
                  the Board); and second, if necessary, by reducing cash
                  payments constituting part of the payments or other
                  consideration to which you become entitled (collectively, such
                  cash payments, other consideration and the aggregate present
                  value of the immediate




                  vesting of options and shares of Company common stock
                  (calculated in accordance with Section 280G of the Code and
                  any regulations promulgated thereunder) are referred to as the
                  "Severance Amount").

                           (2) The "Reduced Amount" shall be the amount,
                  expressed in present value, which maximizes the aggregate
                  present value of the Severance Amount without causing any
                  Payment to be nondeductible by the Company because of Section
                  280G of the Code. For purposes of this clause (2), present
                  value shall be determined in accordance with Section 280(d)(4)
                  of the Code.

                           (3) All determinations required to be made under this
                  Section 3 shall be made by the Company's independent public
                  accountants (the "Accounting Firm") which shall provide
                  detailed supporting calculations to the Company and you. Any
                  such determination by the Accounting Firm shall be binding
                  upon the Company and you.

                           (4) It is possible that as a result of the
                  uncertainty in the application of Section 280G of the Code at
                  the time of the initial determination by the Accounting Firm,
                  a portion of the Severance Amount will have been made by the
                  Company which should not have been made ("Overpayment") or
                  that an amount in addition to the Severance Payment which will
                  not have been made could have been made ("Underpayment"), in
                  each case, consistent with the calculations required to be
                  made hereunder.

                                    (x) Overpayment. In the event that the
                           Accounting Firm, based upon the assertion of a
                           deficiency by the Internal Revenue Service against
                           you which the Accounting Firm believes has a high
                           probability of success, determines that an
                           Overpayment has been made, any such Overpayment paid
                           or distributed by the Company to or for your benefit
                           shall be treated for all purposes as a loan ab initio
                           (from the beginning) to you which you shall repay to
                           the Company together with interest at the applicable
                           federal rate provided for in Section 1274(d) of the
                           Code.

                                    (y) Underpayment. If precedent or other
                           substantial authority indicates that an Underpayment
                           has occurred, any such Underpayment shall be promptly
                           paid by the Company to or for your benefit together
                           with interest at the applicable federal rate provided
                           for in Section 1274(d) of the Code.

4. GENERAL. This agreement (i) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any previous
arrangements or letters relating




Mr. Paul Camara
September 11, 2002
Page 4



thereto, (ii) may be signed in counterparts, (iii) shall be governed by the
laws of the state of New York (other than the conflicts of laws provisions
thereof) and (iv) may not be amended, terminated or waived orally. Please
understand that while it is our hope that our relationship will be a long
one, your employment will be on an "at will" basis. Nothing in this letter
should be construed as creating any other type of employment relationship.

Please sign and return an enclosed copy of this letter to me. If you have any
questions, or if there is anything I have overlooked, please do not hesitate to
call me.

                                          With best regards,

                                          Sincerely,

                                          TMP Worldwide Inc.


                                          By: /s/ Andrew J. McKelvey
                                             -----------------------------------
                                                  Andrew J. McKelvey
                                                  Chairman

Accepted and Agreed:


/s/ Paul Camara
- -----------------------------
Paul Camara


Dated: 9/13/02
      -----------------------

EX-15.1

                                                              Exhibit 15.1

TMP Worldwide Inc.
New York, New York

We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of TMP Worldwide Inc. and Subsidiaries for the periods
ended September 30, 2002 and 2001, as indicated in our report dated November
14, 2002; because we did not perform an audit, we expressed no opinion on that
information.

We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, is
incorporated by reference in Registration Statements on Forms S-3 and S-8
(Nos. 333-81843, 333-63631, 333-50699, 333-18937, 333-63499, 333-88193,
333-75031, 333-93065, 333-70795, 333-83131, and 333-96101).

We also are aware that the aforementioned report, pursuant to Rule 436 (c)
under the Securities Act of 1933, is not considered a part of the
Registration Statement or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.



/s/ BDO Seidman LLP



BDO Seidman, LLP
New York, New York


November 14, 2002

EX-99.1

                                                            Exhibit 99.1



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of TMP Worldwide Inc. (the
"Company") on Form 10-Q for the period ended September 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Andrew J. McKelvey, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

    (1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934;

and

    (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

                                     /s/ Andrew J. McKelvey
                                     Andrew J. McKelvey
                                     CHIEF EXECUTIVE OFFICER

November 14, 2002

EX-99.2

                                                            Exhibit 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Quarterly Report of TMP Worldwide Inc. (the
"Company") on Form 10-Q for the period ended September 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Michael Sileck, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

      (1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
                                                 /s/ Michael Sileck
                                                 Michael Sileck
                                                 CHIEF FINANCIAL OFFICER


November 14, 2002