SEC Filing | Heidrick & Struggles International, Inc.

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As filed with the Securities and Exchange Commission on February 12, 1999

Registration No. 333-61023
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Amendment No. 3 to
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933

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Heidrick & Struggles International, Inc.
(Exact name of Registrant as specified in its charter)

Delaware 7361-05 36-2681268
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation) Classification Code
Number)

233 South Wacker Drive--Suite 4200
Chicago, Illinois 60606-6303
(312) 496-1200
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

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c/o Richard D. Nelson
Heidrick & Struggles, Inc.
233 South Wacker Drive--Suite 4200
Chicago, Illinois 60606-6303
(312) 496-1200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Copies of all correspondence to:
Vincent Pagano Jr.
SIMPSON THACHER & BARTLETT
425 Lexington Avenue
New York, New York 10017
(212) 455-2000

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC.
CROSS-REFERENCE SHEET

Pursuant to Item 501(b) of Regulation S-K

S-4 Item Number and Caption Prospectus
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page; Cross Reference
Sheet; Outside Front Cover
Page of Prospectus.
2. Inside Front and Outside Back Cover Pages Table of Contents
of Prospectus.............................
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Joint Consent
Statement/Prospectus Summary;
Risk Factors.
4. Terms of the Transaction................... Joint Consent
Statement/Prospectus Summary;
Risk Factors; Proposed Merger;
Certain United States Federal
Tax Consequences; Comparison
of Stockholder
Rights; Rights of Dissenting
Stockholders.
5. Pro Forma Financial Information............ Joint Consent
Statement/Prospectus Summary;
Unaudited Pro Forma Condensed
Consolidated Financial Data.
6. Material Contacts with the Company Being
Acquired.................................. Joint Consent
Statement/Prospectus Summary;
The Merger; Management's
Discussion and Analysis of
Financial Condition and
Results of Operations; The
Company.
7. Additional Information Required for
Reoffering by Persons and Parties Deemed *
to be Underwriters........................
8. Interests of Named Experts and Counsel..... Legal Matters.
9. Disclosure of Commission Position on
Indemnification for Securities Act *
Liabilities...............................
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 *
Registrants...............................
11. Incorporation of Certain Information by *
Reference.................................
12. Information with Respect to S-2 or S-3 *
Registrants...............................
13. Incorporation of Certain Information by *
Reference.................................

S-4 Item Number and Caption Prospectus
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14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants......... Joint Consent
Statement/Prospectus Summary;
Selected Financial Data;
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations; The Company;
Management; Security Ownership
of Certain Beneficial Owners
and Management; Comparison of
Stockholder Rights; Index to
Financial Statements.
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3 Companies.. *
16. Information with Respect to S-2 or S-3
Companies................................. *
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies................. Joint Consent
Statement/Prospectus Summary;
Selected Financial Data;
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations; The Company;
Comparison of Stockholder
Rights.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Joint Consent
Statement/Prospectus Summary;
Rights of Dissenting
Stockholders; Vote By Written
Consent; The Merger; Rights of
Dissenting Stockholders; The
Company; Management;
Comparison of Stockholder
Rights.
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer...................... *

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* Item is omitted because answer is negative or item is inapplicable.

PRELIMINARY COPY
SUBJECT TO COMPLETION

HEIDRICK & STRUGGLES INTERNATIONAL, INC.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

To the Stockholders of Heidrick & Struggles International, Inc.:

Pursuant to the requirements of the General Corporation Law of the State of
Delaware, the Board of Directors seeks stockholder approval of (i) the adoption
of the Agreement and Plan of Merger, dated as of February 12, 1999, (the
"Merger Agreement"), by and among Heidrick & Struggles International, Inc., a
Delaware corporation ("HSI") and Heidrick & Struggles, Inc., a Delaware
corporation ("H&S Inc."), including the amendment and restatement of HSI's
Certificate of Incorporation to read in its entirety as Annex I to the Merger
Agreement and the amendment and restatement of HSI's By-Laws to read in their
entirety as Annex II to the Merger Agreement, and (ii) certain further
amendments to the Certificate of Incorporation of HSI (the "IPO Charter
Amendments") to be filed by the Board of Directors of HSI with the Secretary of
State of the State of Delaware in connection with the completion of the initial
public offering of the common stock of HSI. Pursuant to HSI's Certificate of
Incorporation, each of these actions requires approval by the written consent
of the holders of a majority of the Class A Common Stock of HSI ("Class A
Common Stock") issued and outstanding voting separately as a class and the
written consent of the holders of a majority of the Class B Common Stock of HSI
("Class B Common Stock") issued and outstanding voting separately as a class.
In the merger (the "Merger"), H&S Inc. will merge with and into HSI, and HSI
will be the surviving corporation. Upon the effectiveness of the Merger, each
share of the issued and outstanding capital stock of H&S Inc. will be converted
into 2.8249 shares of Common Stock of the surviving corporation, each share of
Class A Common Stock will become one share of Common Stock of the surviving
corporation and each share of Class B Common Stock will be cancelled without
consideration therefor.

By this written consent, stockholders are being asked to consider and consent
to the two above-mentioned proposals.

Please read the enclosed materials carefully. This Joint Consent
Statement/Prospectus more fully describes the Merger and the IPO Charter
Amendments.

______________________________________
Richard D. Nelson
Secretary

PRELIMINARY COPY
SUBJECT TO COMPLETION

HEIDRICK & STRUGGLES, INC.

233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

To the Stockholders of Heidrick & Struggles, Inc.:

Pursuant to the requirements of the General Corporation Law of the State of
Delaware, the Board of Directors seeks stockholder approval of (i) an
amendment to the Certificate of Incorporation of Heidrick & Struggles, Inc., a
Delaware corporation ("H&S Inc.") to change its name to H&S Transition, Inc.
(the "Name Change"), (ii) the adoption of the Agreement and Plan of Merger,
dated as of February 12, 1999, (the "Merger Agreement"), by and among Heidrick
& Struggles International, Inc., a Delaware corporation ("HSI"), and H&S,
Inc., including the amendment of HSI's Certificate of Incorporation to read in
its entirety as Annex I to the Merger Agreement and the amendment and
restatement of HSI's By-Laws to read in their entirety as Annex II to the
Merger Agreement, and (iii) certain further amendments to the Certificate of
Incorporation of HSI (the "IPO Charter Amendments") to be filed by the Board
of Directors of HSI with the Secretary of State of the State of Delaware
following the completion of the initial public offering of the common stock of
HSI. Pursuant to H&S Inc.'s Certificate of Incorporation, the Name Change and
the IPO Charter Amendments require approval by the written consent of the
holders of a majority of the Common Stock of H&S Inc. issued and outstanding,
and the Merger requires the approval by the written consent of the holders of
two-thirds of the Common Stock of H&S Inc. issued and outstanding. In the
merger (the "Merger"), H&S Inc. will merge with and into HSI, and HSI will be
the surviving corporation. Upon the effectiveness of the Merger, each share of
the issued and outstanding capital stock of H&S Inc. will be converted into
2.8249 shares of Common Stock of the surviving corporation, each share of
Class A Common Stock will become one share of Common Stock of the surviving
corporation and each share of Class B Common Stock will be cancelled without
consideration therefor.

By this written consent, stockholders are being asked to consider and
consent to the three above-mentioned proposals.

Please read the enclosed materials carefully. This Joint Consent
Statement/Prospectus more fully describes the Merger, the Name Change and the
IPO Charter Amendments. Do not send us your stock certificates at this time.
Once the Merger becomes effective, you will be advised of the procedure for
surrendering your certificates in exchange for the Merger consideration
described in the attached materials.

_____________________________________
Richard D. Nelson
Secretary

Subject to Completion, dated February 12, 1999
JOINT CONSENT STATEMENT/PROSPECTUS

HEIDRICK & STRUGGLES INTERNATIONAL, INC.
AND
HEIDRICK & STRUGGLES, INC.
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This Joint Consent Statement/Prospectus is being furnished to the holders of
Class A Common Stock and Class B Common Stock of Heidrick & Struggles
International, Inc., a Delaware corporation ("HSI"), in connection with the
solicitation of written consents by HSI, to approve (i) the adoption of the
Agreement and Plan of Merger, dated as of February 12, 1999 (the "Merger
Agreement") by and among HSI and Heidrick & Struggles, Inc., a Delaware
corporation ("H&S Inc."), including the amendment and restatement of HSI's
Certificate of Incorporation to read in its entirety as Annex I to the Merger
Agreement and the amendment and restatement of HSI's By-Laws to read in their
entirety as Annex II to the Merger Agreement, and (ii) certain further
amendments to the Certificate of Incorporation of HSI (the "IPO Charter
Amendments") to be filed by the Board of Directors of HSI with the Secretary
of State of the State of Delaware in connection with the completion of the
initial public offering of the common stock of HSI.

As permitted under Delaware law, HSI is soliciting consents to take the
above actions without a stockholders' meeting. The approval of the Merger
Agreement and the IPO Charter Amendments each requires approval by the written
consent of the holders of a majority of the issued and outstanding shares of
Class A Common Stock without par value ("Class A Common Stock") of HSI voting
separately as a class and the written consent of the holders of a majority of
the Class B Common Stock without par value ("Class B Common Stock") of HSI
voting separately as a class.

This Joint Consent Statement/Prospectus is also being furnished to the
holders of Common Stock, par value $1.00 per share (the "H&S Inc. Common
Stock") of H&S Inc., in connection with the solicitation of written consents
by H&S Inc., to approve (i) an amendment to the Certificate of Incorporation
of H&S Inc. to change its name to H&S Transition, Inc. (the "Name Change"),
(ii) the adoption of the Merger Agreement and (iii) the IPO Charter
Amendments.

Upon effectiveness of the merger of H&S Inc. with and into HSI (the
"Merger"), Heidrick & Struggles International, Inc. will be the surviving
corporation (referred to herein as the "Company", "H&S" or "Heidrick &
Struggles International, Inc.") and each share of the issued and outstanding
H&S Inc. Common Stock will be converted into 2.8249 shares of Common Stock,
par value $.01 per share, of the Company (the "Company Common Stock"), each
share of Class A Common Stock will be converted into one share of Company
Common Stock and each share of Class B Common Stock will be cancelled without
consideration therefor.

As permitted under Delaware law, H&S Inc. is soliciting consents to take the
above actions without a stockholders' meeting. Pursuant to H&S Inc.'s
Certificate of Incorporation, the Name Change and the IPO Charter Amendments
require approval by the written consent of the holders of a majority of the
H&S Inc. Common Stock issued and outstanding and the adoption of the Merger
Agreement requires the approval by the written consent of the holders of two-
thirds of the H&S Inc. Common Stock issued and outstanding.

This Joint Consent Statement/Prospectus also serves as the prospectus of HSI
with respect to the shares of Company Common Stock issuable upon consummation
of the Merger.

This Joint Consent Statement/Prospectus and the accompanying form of consent
are first being mailed to stockholders of HSI and H&S Inc. on or about
February 12, 1999.
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See "Risk Factors" beginning on page 20 for a discussion of certain factors
that should be considered in connection with the Merger.
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THE SHARES OF COMPANY COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The Date of this Joint Consent Statement/Prospectus is February 12, 1999

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS JOINT CONSENT STATEMENT/PROSPECTUS IN CONNECTION WITH
THE NAME CHANGE, THE MERGER AND THE IPO CHARTER AMENDMENTS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS JOINT CONSENT
STATEMENT/PROSPECTUS NOR ANY DELIVERY OF COMPANY COMMON STOCK SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION CONTAINED HEREIN OR IN THE AFFAIRS OF HSI OR H&S INC. SINCE THE
DATE HEREOF.

TABLE OF CONTENTS

Page
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Joint Consent Statement/Prospectus Summary................................ 4

Vote by Written Consent................................................... 13

Information concerning HSI................................................ 13

Information concerning H&S Inc............................................ 13

The Name Change........................................................... 13

The Merger................................................................ 13
Background of the Merger................................................ 13
Reasons for the Merger.................................................. 14
Recommendation of the Board of Directors of HSI......................... 14
Recommendation of the Board of Directors of H&S Inc..................... 14
Proposed Merger......................................................... 14
Conditions to the Merger................................................ 15
Amendment or Waiver of Merger Agreement................................. 15
Accounting Treatment of the Transaction................................. 15
Amendment of HSI's Certificate of Incorporation and By-Laws............. 16
Regulatory Approvals.................................................... 16

Rights of Dissenting Stockholders......................................... 16

The IPO Charter Amendments................................................ 19

Risk Factors.............................................................. 20

Dividend Policy........................................................... 26

Unaudited Pro Forma Condensed Consolidated Financial Data................. 27

Selected Financial Data................................................... 33

Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 35

The Company............................................................... 45

Management................................................................ 54

Security Ownership of Certain Beneficial Owners and Management............ 56

Comparison of Stockholder Rights.......................................... 57

Certain United States Federal Tax Consequences ........................... 63

Legal Matters............................................................. 64

Experts................................................................... 64

Additional Information.................................................... 64

Index to Consolidated Financial Statements................................ F-1

Annex A--Agreement and Plan of Merger

Annex B--Section 262 of the Delaware General Corporation Law

Annex C--Post-IPO Certificate of Incorporation

JOINT CONSENT STATEMENT/PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements
(including the notes thereto) appearing elsewhere in this Joint Consent
Statement/Prospectus. It is expected that H&S Inc. will merge with and into HSI
prior to the completion of the initial offering to the public (the "Offering")
of the Company Common Stock of the combined company. Unless the context
requires otherwise, all references herein to "H&S," the "Company" and "Heidrick
& Struggles International, Inc." mean Heidrick & Struggles International, Inc.
after the Merger, its wholly and majority owned subsidiaries and its and their
respective predecessors, collectively. All references to "HSI" refer to
Heidrick & Struggles International, Inc. before the Merger. The Merger is not
conditioned on the successful completion of the Offering.

Vote by Written Consent

The approval by HSI of the Merger Agreement and the IPO Charter Amendments
will require the approval by the written consent of the holders of a majority
of the Class A Common Stock issued and outstanding voting separately as a class
and the written consent of the holders of a majority of Class B Common Stock
issued and outstanding voting separately as a class.

The Name Change and the IPO Charter Amendments require the approval of the
holders of a majority of the H&S Inc. Common Stock issued and outstanding.
Adoption of the Merger Agreement by H&S Inc. requires the approval of the
holders of two-thirds of the H&S Inc. Common Stock issued and outstanding.

HSI and H&S Inc.

HSI was incorporated in Delaware on May 9, 1968. HSI conducts executive
searches primarily in Europe. HSI has two classes of stock, the Class A Common
Stock and the Class B Common Stock. All of the Class B Stock is owned by H&S
Inc. Shares of the Class A Common Stock are owned by employees of HSI. HSI's
principal place of business is 233 South Wacker Drive, Suite 4200, Chicago,
Illinois 60606-6303, and its telephone number is (312) 496-1200.

H&S Inc. was incorporated in Delaware on October 8, 1956 as successor to a
partnership formed in 1953. H&S Inc. conducts executive searches in North
America, Latin America and Asia. H&S Inc. has one class of Common Stock, which
is owned by employees of H&S Inc. H&S Inc.'s principal place of business is 233
South Wacker Drive, Suite 4200, Chicago, Illinois 60606-6303, and its telephone
number is (312) 496-1200.

The Name Change

In order to facilitate the qualification to do business of a new entity to be
created as a subsidiary of the Company after the Merger which will be named
"Heidrick & Struggles, Inc.," H&S Inc. proposes to amend its Certificate of
Incorporation prior to the Merger to change its name to "H&S Transition, Inc."

The Board of Directors of H&S Inc. has determined that it is advisable and in
the best interests of H&S Inc. that the Name Change be approved by the
stockholders of H&S Inc.

The Merger

Merger Agreement

A copy of the Merger Agreement is annexed as Annex A to this Joint Consent
Statement/Prospectus and is incorporated herein by reference. The description
of the provisions of the Merger Agreement that follows is necessarily
incomplete; reference is made to the Merger Agreement itself for a complete
description of each matter and of all of the terms and conditions of the
Merger.

Effect of the Merger

Pursuant to the Merger Agreement, H&S Inc. will merge with and into HSI with
Heidrick & Struggles International, Inc. being the surviving corporation of the
Merger. The Merger shall become effective when the Certificate of Merger is
filed with the Secretary of State of Delaware or at such subsequent time as the
parties agree (the "Effective Time"). At the Effective Time, the separate
corporate existence of H&S Inc. will cease and Heidrick & Struggles
International, Inc. will be the surviving corporation. At the Effective Time,
the Company's Certificate of Incorporation will be amended and restated to read
in its entirety as Annex I to the Merger Agreement and the Company's By-Laws
will be amended and restated to read in their entirety as Annex II to the
Merger Agreement. At the Effective Time, each share of the issued and
outstanding capital stock of H&S Inc. will be converted into 2.8249 shares of
Company Common Stock as provided in the Merger Agreement. Any fractional shares
will be cancelled, and the holders thereof will receive cash for their
fractional interests.

Currently, the authorized number of shares of HSI is 300,000 shares, of which
(i) 150,000 are Class A Common Stock, of which 144,534 shares are currently
issued and outstanding, and (ii) 150,000 shares are Class B Common Stock, of
which 80,185 shares are currently issued and outstanding. At the Effective
Time, each issued and outstanding share of Class A Common Stock will be
converted into one share of Company Common Stock, and each share of Class B
Common Stock will cease to be outstanding and will be cancelled and retired and
no consideration will be delivered in exchange therefor. Upon consummation of
the Merger, 513,118 shares of HSI Common Stock will be issued in exchange for
all outstanding shares of H&S Inc. Upon consummation of the Merger, 28,000
shares of Company Common Stock will be issued to the Mulder partners. See "Risk
Factors--Nonrecurring and Other Charges."

Currently, the authorized number of shares of H&S Inc. Common Stock is
500,000, of which 181,641 shares are currently issued and outstanding. At the
Effective Time, each share of H&S Inc. Common Stock that is issued and
outstanding immediately prior to the Effective Time will automatically be
converted into 2.8249 shares of Company Common Stock. All shares of H&S Inc.
Common Stock will cease to be outstanding and will be cancelled and returned.
Each holder of H&S Inc. Common Stock will cease to have any rights with respect
to any shares of H&S Inc. Common Stock, except the right to receive the
applicable number of shares of Company Common Stock.

Conditions to the Merger

The obligations of HSI and H&S Inc. to effect the Merger are subject to
various conditions, including, without limitation, obtaining the requisite
stockholder approval, the termination or the expiration of the waiting period,
if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the receipt of an opinion from Simpson Thacher &
Bartlett that the Merger will qualify as a tax-free reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations promulgated thereunder and the absence of any
injunction or other legal restraint or prohibition preventing the consummation
of the Merger. The completion of the Offering is not a condition to the Merger.

Closing Date

The closing of the Merger shall take place on the second business day after
which the last to be fulfilled or waived of all the conditions precedent to the
Merger (other than those conditions that can only be fulfilled at the closing)
is fulfilled or waived or at such other time as the parties may agree.

Amendment of HSI's Certificate of Incorporation and By-Laws Pursuant to the
Merger

Pursuant to the terms of the Merger Agreement, at the Effective Time of the
Merger, (i) the Certificate of Incorporation of HSI will be amended and
restated to read in its entirety as Annex I to the Merger Agreement, which
will, as so amended, be the Certificate of Incorporation of the Company and
(ii) the By-Laws of HSI will be amended and restated to read in their entirety
as Annex II to the Merger Agreement, which will, as so amended, be the By-Laws
of the Company. Such amended and restated Certificate of Incorporation will
eliminate both the Class A Common Stock and the Class B Common Stock, providing
instead for the Company Common Stock and preferred stock (the "Preferred
Stock"). The Company Common Stock will have a par value of $.01 per share and a
total of 750,000 shares will be authorized and the Preferred Stock will have a
par value of $.01 per share and a total of 250,000 shares will be authorized.
Certain additional provisions of the Company's Certificate of Incorporation are
described under "Comparison of Stockholder Rights."

Recommendation of the Board of Directors of HSI

The Board of Directors of HSI (the "HSI Board") has determined that it is
advisable and in the best interests of HSI that H&S Inc. be merged with and
into HSI, with HSI as the surviving corporation, in accordance with the Merger
Agreement. The HSI Board recommends that the stockholders of HSI approve the
merger and adopt the Merger Agreement, including the amendment and restatement
of HSI's Certificate of Incorporation to read in its entirety as Annex I to the
Merger Agreement and the amendment and restatement of HSI's By-Laws to read in
their entirety as Annex II to the Merger Agreement.

Recommendation of the Board of Directors of H&S Inc.

The Board of Directors of H&S Inc. (the "H&S Inc. Board") has determined that
it is advisable and in the best interests of H&S Inc. that H&S Inc. be merged
with and into HSI, with HSI as the surviving corporation, in accordance with
the Merger Agreement. The H&S Inc. Board recommends that the stockholders of
H&S Inc. approve the Merger and adopt the Merger Agreement including the
amendment and restatement of HSI's Certificate of Incorporation to read in its
entirety as Annex I to the Merger Agreement and the amendment and restatement
of HSI's By-Laws to read in their entirety as Annex II to the Merger Agreement.

Rights of Dissenting Stockholders

Under Section 262 of the Delaware General Corporation Law (the "DGCL"), a
holder of Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock
may dissent from the Merger and obtain payment for the fair value of his or her
shares. In order to dissent, (i) the dissenting stockholder must deliver to HSI
or H&S Inc., as the case may be, prior to February 26, 1999, written notice of
his or her intent to demand payment for his or her shares if the Merger is
effected and (ii) the dissenting stockholder must not consent to the Merger.
See "Rights of Dissenting Stockholders."

Regulatory Approvals

Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the applicable waiting period has expired or been terminated. On August 13,
1998, HSI and H&S Inc. filed Notification and Report Forms under the HSR Act
with the FTC and the Antitrust Division. On August 25, 1998, the FTC and the
Antitrust Division granted early termination of the waiting period under the
HSR Act with respect to the Merger effective immediately. See "Regulatory
Approvals."

Certain United States Federal Tax Consequences

For a summary of the material U.S. federal income tax consequences of the
Merger, see "Certain United States Federal Tax Consequences."

BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING ON THE
PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER, IT IS RECOMMENDED THAT HOLDERS OF
H&S INC. COMMON STOCK CONSULT THEIR TAX ADVISORS CONCERNING THE FEDERAL (AND
ANY STATE, LOCAL AND NON-U.S.) TAX CONSEQUENCES OF THE MERGER IN THEIR
PARTICULAR CIRCUMSTANCES.

The IPO Charter Amendments

Once the Offering is completed, the Company expects to implement certain
additional amendments to the Certificate of Incorporation of the Company. If
these amendments are approved by the stockholders of H&S Inc. and HSI, the
Board of Directors of the Company (the "Board of Directors") will file an
amended and restated Certificate of Incorporation with the Secretary of State
of the State of Delaware at the time of the completion of the Offering. These
amendments are described in greater detail later in this Joint Consent
Statement/Prospectus under the caption "Comparison of Stockholder Rights." In
general, they include (i) the increase in the authorized number of shares of
Common Stock of the Company to 100,000,000, (ii) the increase in the authorized
number of shares of Preferred Stock of the Company to 10,000,000 and (iii) the
adoption of certain restrictions on the ability of the stockholders to act by
written consent.

Recommendation of the Board of Directors of HSI

The HSI Board has determined that it is advisable and in the best interests
of HSI that HSI approve the IPO Charter Amendments, subject to the successful
completion of the Offering and recommends that the stockholders of HSI approve
the IPO Charter Amendments.

Recommendation of the Board of Directors of H&S Inc.

The H&S Inc. Board has determined that it is advisable and in the best
interests of H&S Inc. that H&S Inc. approve the IPO Charter Amendments, subject
to the successful completion of the Offering and recommends that the
stockholders of H&S Inc. approve the IPO Charter Amendments.

The Company

After the Merger, the Company will continue to function much as HSI and H&S
Inc. functioned in concert prior to the Merger. In this Joint Consent
Statement/Prospectus, the terms "H&S," the "Company" and "Heidrick & Struggles
International, Inc." are used both to refer to the historic collective
operations of HSI and H&S Inc. and to the anticipated operations of the Company
after the Merger.

After the Merger, Heidrick & Struggles International, Inc. will be one of the
leading global executive search firms and believes that, based on revenues, it
will be the largest executive search firm in the United States and the second
largest in the world. With over 46 years of experience in fulfilling its
clients' leadership needs, H&S Inc. and HSI offer and conduct executive search
services in nearly every major business center in the world. The Company's
services focus on the identification, evaluation and recommendation of
qualified candidates for senior level executive positions. Through its
worldwide network of approximately 800 professionals in 59 offices, H&S
provides executive search services to a broad range of clients, including
Fortune 500 companies, major non-U.S. companies, middle market and emerging
growth companies, governmental and not-for-profit organizations and other
leading private and public entities. The size of the Company's business has
grown significantly over the past five years as evidenced by the fact that the
combined worldwide revenues of H&S Inc. and HSI have grown at a compound annual
rate of approximately 25%.

According to Kennedy Information LLC ("Kennedy"), worldwide executive search
industry revenue has grown at a 20% compound annual growth rate from
approximately $3.5 billion in 1993 to approximately $7.3 billion in 1997. H&S
believes that a number of favorable trends are contributing to the growth of
the executive search industry, including the following: (i) an increase in
competition for executive talent and a resulting increase in executive
compensation levels and turnover, (ii) a growing acceptance by corporate
leadership of the use of executive search consultants, (iii) the increasing
globalization of business driving the demand for executive talent by
multinationals, (iv) an increased demand for executive search services by
start-up and newly-acquired companies, (v) a greater need for managers with
diverse leadership skills and (vi) a reduction of the number of layers of
executive management, which limits the internal pool from which companies can
draw for talent.

Key Competitive Strengths

The Company believes that it possesses several key competitive strengths
which position it to capitalize on the growing demand for its services. These
strengths include the following:

. Experienced Team of Executive Search Consultants. As of December 31,
1998, the Company employed 349 executive search consultants
("consultants") who, on average, have approximately 11 years of
experience in executive search and 9 years of experience in other
industries. H&S believes that this depth of experience is a prerequisite
to the effective performance of senior level executive searches. The
Company attributes its success in attracting and retaining such high
caliber consultants to its premier reputation, unique team oriented
culture and performance-based compensation system. The Company believes
that its attractiveness as an employer is reflected in its low turnover
rate among its consultants. For the period from January 1, 1995 through
December 31, 1998, an annual average of fewer than 1.5% of H&S's
consultants have left to work elsewhere in the executive search industry.

. Global Presence. The Company's 59 offices are located in major business
centers in 30 countries around the world. The Company's global presence
enables it to serve the needs of multinational companies and local
businesses worldwide, and provides it with access to an international
network of candidates and referral sources. The Company's offices in
North America, Europe, Asia Pacific and Latin America employed 174, 132,
28 and 15 consultants, as of December 31, 1998, respectively, and
generated 1998 revenues of $180 million, $125 million, $14 million and
$10 million, respectively.

. Emphasis on Senior Level Executive Search. H&S is an industry leader in
placing senior level executives within the world's largest and most
complex organizations. Approximately 66% of the executive searches
performed by the Company worldwide, representing approximately 73% of
revenues (and approximately 81% of the searches performed in North
America, representing approximately 81% of revenues) in 1998, were for
chief executive officers ("CEOs"), presidents, chief financial officers
("CFOs"), chief operating officers ("COOs"), chief administrative
officers ("CAOs"), chief information officers ("CIOs"), members of boards
of directors and other senior management positions (such as division
heads). These senior level executive searches generally provide a higher
level of revenue per search and result in greater visibility with the
Company's clients and within the executive search industry. The Company
believes that performing senior level, high profile executive search
assignments: (i) strengthens its brand name recognition and contacts with
leading decision makers, referral sources and high caliber candidates;
(ii) enhances H&S's ability to secure other senior level executive
searches and (iii) enables the Company to attract and retain highly
qualified consultants.

. Industry Practice Groups and Functional Specialties. H&S's business is
organized around seven core industry practice groups, each focused on a
specific industry. These core industry practice groups are international
technology, industrial, consumer products, financial services, health
care, professional services and higher education/not-for-profit. Certain
H&S consultants also specialize in searches for functional positions such
as members of boards of directors, CEOs, CFOs and CIOs. The Company
believes that its operational structure enables its consultants to
provide its clients with superior executive search services. By enabling
its consultants to specialize, the Company's consultants are better able
to successfully build relationships with candidates and referral sources
and to understand its clients' cultures, operations, business strategies
and industries. Understanding these factors is critical to understanding
the needs of clients' and candidates' and, therefore, to the successful
placement of candidates. The Company's industry practice groups and
functional specialties emphasize H&S's consultative approach and are
designed to build and maintain long-term relationships with its clients.

. Global Support Platform. The Company's consultants work with a team of
440 associates, all of whom have access to a sophisticated global
technology infrastructure. This technology infrastructure consists of

internally developed proprietary databases containing over 840,000
candidate profiles and over 29,000 client records, coupled with a broad
range of on-line services and industry reference sources. H&S also deploys
advanced Internet-based technology to support the research needs of the
Company's professionals. The Company believes that its global support
structure enables its professionals to complete searches efficiently and
effectively. Given the importance of technology to the search process, H&S
is continuing to improve its information management infrastructure by
implementing its Integrated Global Information System ("IGIS"), an ongoing
strategic technology initiative. IGIS is designed to enhance the
functionality, speed and quality of the Company's information management.
See "The Company--Assignment Research and Information Management."

Growth Strategy

The Company's goal is to be the leading global provider of executive search
services while achieving sustainable revenue and earnings growth. The Company
pursues a focused growth strategy with the following key elements:

. Expand and Develop Client Relationships. The Company continually seeks to
expand its relationships with existing clients and to develop new client
relationships. The Company accomplishes this by continuing to (i)
aggressively pursue the highest level executive search assignments, (ii)
expand the breadth and depth of its industry practice groups and
functional specialties, (iii) offer services across a broadening range of
geographic locations by strategically opening offices in cities where H&S
is not currently located and (iv) actively recruit consultants who have
the demonstrated ability to expand the Company's client base.
Historically, the Company has successfully expanded its client base and
generated repeat business from existing clients. For example, H&S had
over 1,800 clients in 1995 and over 3,100 in 1998. Of the searches
performed in 1998, more than 75% were on behalf of clients for whom it
had conducted multiple assignments over the last six years.

. Pursue Strategic Acquisitions. The executive search industry is highly
fragmented, consisting of more than 4,000 executive search firms
worldwide. The industry has been consolidating in recent years as a
number of smaller firms have joined with larger firms in the industry,
such as H&S, in order to gain the benefits of superior managerial,
financial and technological resources. The Company maintains a focused
acquisition strategy designed to acquire executive search firms with
complementary corporate cultures in order to increase its penetration in
existing and new geographic markets and expand the depth and breadth of
its industry practice groups and functional specialties. The Company has
completed a number of strategic acquisitions worldwide that are
consistent with its acquisition strategy. See "--Recent Acquisitions."

. Enhance Executive Search Professional Productivity. The Company believes
that its consultants generate one of the highest levels of average
revenue per consultant in the industry. H&S's consultants generated an
average revenue per consultant of $1.2 million in the U.S. in 1997 as
compared to $809,000 for the average of the other nine of the largest ten
U.S. executive search firms. H&S believes that its infrastructure can be
leveraged to allow for increases in the productivity of its executive
search professionals. Specifically, the Company expects that its IGIS
initiative will enable H&S's professionals to access a greater amount of
information sources more quickly and to perform more sophisticated search
functions to help them identify candidates more efficiently and
effectively. IGIS will provide the Company with a scalable technology
infrastructure that is designed to support a significant number of
additional users without significant incremental costs.

. Pursue New, Complementary Lines of Business. H&S expects that it will
expand the range of services it offers, including Internet-based
recruiting, interim management placement and board of directors
consulting services. The Company's Internet-based recruiting initiative
is designed to serve clients' growing demand for technology
professionals. The Internet service provides a unique end-to-end
recruiting solution for candidate identification, screening, degree and
job verification and client workflow

management to expedite the search process. Clients interact with the
Internet service through a secure Internet site where they may analyze
pre-screened candidates for opportunities in the $75,000 to $150,000
annual compensation range. The Company's Internet-based recruiting service
is in the pilot project phase and is expected to be formally launched in
the first half of 1999.

Recent Strategic Acquisitions and Alliance

Over the past eighteen months, H&S Inc. and HSI have successfully completed
the strategic acquisition of two executive search firms and a strategic
alliance with one executive search firm:

. Fenwick. On June 26, 1998, H&S Inc. acquired Fenwick Partners, Inc.
("Fenwick"). Fenwick, a Boston-based executive search firm, employed nine
consultants and had fiscal 1997 revenues of $6.4 million. This
transaction expanded the reach of H&S Inc.'s international technology
group into a third key technology center in the United States. Fenwick,
based in the "Route 128" technology corridor in Massachusetts,
complements the H&S Inc.'s existing offices in Menlo Park, California and
Tysons Corner, Virginia which also focus on senior level recruitment for
computer hardware and software, telecommunications, engineering and
medical electronics companies.

. Mulder. On October 1, 1997, HSI acquired Mulder & Partner GmbH & Co. KG
("Mulder") which employed 13 consultants. Prior to the acquisition,
Mulder was the largest executive search firm in Germany, as measured by
revenues, with $21.8 million in revenues for the nine months ended
September 30, 1997. This transaction immediately positioned HSI as the
largest executive search firm in Germany and the second largest in
Europe.

. Redelinghuys. On August 31, 1998, the Company entered into an alliance
with Redelinghuys & Partners, a senior executive search firm with offices
in Capetown and Johannesburg in the Republic of South Africa. The
alliance consists of a licensing agreement as well as a transfer fee
sharing agreement and allows the Company to expand its services to its
clients to the African continent.

The Offering

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act of
1933, as amended (the "Securities Act") in connection with the Offering. The
Company expects that the Merger will take place prior to the completion of the
Offering. The completion of the Offering is not a condition to the Merger.

SUMMARY FINANCIAL DATA

The following tables set forth summary historical financial and other data of
H&S Inc. and HSI as of the dates and for the periods indicated, which have been
derived from, and are qualified by reference to, H&S Inc.'s and HSI's financial
statements and other records, and unaudited summary pro forma condensed
consolidated financial data. See "Unaudited Pro Forma Condensed Consolidated
Financial Data." The unaudited pro forma financial data are presented for
informational purposes only and should not be construed to indicate (i) the
results of operations or the financial position of the Company that actually
would have occurred had the Merger and other matters reflected therein occurred
as of the dates indicated or (ii) the results of operations or the financial
position of the Company in the future. The following table should be read in
conjunction with the Consolidated Financial Statements and related Notes
thereto included elsewhere in this Prospectus.

Unaudited Summary Pro Forma Condensed Consolidated Financial Data(1)

Year Ended Nine Months Ended
December 31, September 30,
------------ ---------------------
1997 1997 1998
------------ -------- --------
(in thousands, except per
share
and other operating data)

Statement of Operations Data:
Revenue.................................... $284,792 $212,694 $251,721
Operating income........................... 16,595 13,775 13,471
Net income................................. $ 8,327 $ 6,268 $ 4,717
======== ======== ========
Share Data:
Basic earnings per common share............ $ 13.41 $ 10.25 $ 7.53
======== ======== ========
Diluted earnings per common share.......... $ 13.41 $ 10.25 $ 7.53
======== ======== ========
Basic weighted average common shares
outstanding............................... 621,057 611,426 626,701
======== ======== ========
Diluted weighted average common shares
outstanding............................... 621,078 611,426 626,761
======== ======== ========
Balance Sheet Data (at end of period):
Working capital............................ $ 17,182 $ 26,735 $ 7,925
Total assets............................... 173,612 187,773 231,620
Long-term debt, less current maturities.... 2,004 701 5,667
Mandatorily redeemable common stock........ 87,752 87,703 91,301
Other Operating Data:
Number of offices (at end of period)....... 51 51 55
======== ======== ========
Average number of consultants during the
period.................................... 263 258 312
======== ======== ========

- --------

(1) See Notes to "Selected Unaudited Pro Forma Condensed Consolidated Financial
Data" on page 27.

Summary Financial Data

H&S Inc.
(in thousands, except other operating data)

Nine Months Ended
Year Ended December 31, September 30,
------------------------------------------ -----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- ----------- -----------
(unaudited) (unaudited)

Statement of Operations
Data:
Revenue................ $77,990 $96,127 $108,685 $137,665 $180,244 $136,309 $157,976
Operating income....... 9,168 10,670 10,617 10,712 11,945 10,788 8,062
Net income............. $ 5,744 $ 6,342 $ 6,358 $ 6,449 $ 6,498 $ 5,619 $ 3,827
Balance Sheet Data (at
end of period):
Working capital........ $13,024 $13,549 $ 17,193 $ 20,628 $ 24,873 $ 30,704 $ 16,029
Total assets........... 41,139 45,058 55,900 68,643 93,640 125,445 148,296
Long-term debt, less
current maturities.... 1,562 735 1,189 993 1,636 572 5,604
Other Operating Data:
Number of offices (at
end of period)........ 16 18 20 25 28 28 31
Average number of
consultants during the
period................ 94 108 119 137 159 155 192

Summary Financial Data

HSI
(in thousands, except other operating data)

Nine Months Ended
Year Ended December 31, September 30,
--------------------------------------- -----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ----------- -----------
(unaudited) (unaudited)

Statement of Operations
Data:
Revenue................ $30,513 $39,634 $52,815 $64,558 $82,732 $54,569 $93,745
Operating income....... 2,840 5,123 3,302 3,438 3,037 2,430 2,241
Net income (loss)...... $ 1,606 $ 2,649 $ 1,800 $ 2,141 $ 976 $ 952 $(2,596)
Balance Sheet Data (at
end of period):
Working capital........ $ 4,478 $ 7,908 $ 7,777 $ 9,345 $(2,849) $10,303 $(2,527)
Total assets........... 15,273 21,998 25,756 32,851 59,947 42,170 62,132
Long-term debt, less
current maturities.... 59 -- -- 267 368 129 63
Other Operating Data:
Number of offices (at
end of period)........ 10 12 13 16 23 19 24
Average number of
consultants during the
period................ 51 55 59 71 95 89 120

VOTE BY WRITTEN CONSENT

The approval of the adoption by HSI of the Merger Agreement and the IPO
Charter Amendments each require the approval by the written consent of the
holders of a majority of the Class A Common Stock issued and outstanding
voting separately as a class and the written consent of the majority of the
Class B Common Stock issued and outstanding voting separately as a class.

INFORMATION CONCERNING HSI

INFORMATION CONCERNING H&S INC.

H&S Inc. was incorporated in Delaware on October 8, 1956 as successor to a
partnership formed in 1953. H&S Inc. conducts executive searches in North
America, Latin America and Asia. H&S Inc. has one class of Common Stock which
is owned by employees of H&S Inc. H&S Inc.'s principal place of business is
233 South Wacker Drive, Suite 4200, Chicago, Illinois 60606-6303, and its
telephone number is (312) 496-1200.

THE NAME CHANGE

In order to facilitate the qualification to do business of a new entity to
be created as a subsidiary of the Company after the Merger which will be named
"Heidrick & Struggles, Inc.," H&S Inc. proposes to amend its Certificate of
Incorporation prior to the Merger to change its name to "H&S Transition, Inc."

The Board of Directors of H&S Inc. has determined that it is advisable and
in the best interests of H&S Inc. that the Name Change be approved by the
stockholders of H&S Inc.

THE MERGER

Background of the Merger

Prior to 1984, H&S Inc. and HSI operated under a single ownership structure.
In 1984, H&S Inc. consummated a spin-off of HSI to its European partners while
retaining a significant equity interest in HSI. Since that time, HSI has
conducted primarily European-based operations, while H&S Inc. has conducted
all other operations. HSI filed with the Commission on July 24, 1998 a
Registration Statement on Form S-1 under the Securities Act relating to the
Offering, which was amended on September 8, 1998. H&S Inc. and HSI plan to
consummate the Merger prior to the completion of the Offering in order to
reunite the two companies in a single corporate structure. The Merger is not
conditioned on the successful completion of the Offering.

Reasons for the Merger

The merger of H&S Inc. with and into HSI is intended to combine the existing
separate companies into one legal entity in contemplation of the Offering. HSI
and H&S Inc. have operated together closely, and now the HSI Board and the H&S
Inc. Board (together the "Boards") believe that it is in the interests of the
companies and their stockholders to combine them into one legal entity.

The Boards each believe that the completion of the Merger represents an
opportunity for both companies, in accordance with their respective strategic
business plans, to expand their presence in the global executive search
market.

Recommendation of the Board of Directors of HSI

The HSI Board has determined that it is advisable and in the best interests
of HSI that H&S Inc. be merged with and into HSI with HSI as the surviving
corporation, in accordance with the Merger Agreement. The HSI Board recommends
that the stockholders of HSI approve the Merger and adopt the Merger
Agreement, including the amendment and restatement of HSI's Certificate of
Incorporation to read in its entirety as Annex I to the Merger Agreement and
the amendment and restatement of HSI's By-Laws to read in their entirety as
Annex II to the Merger Agreement.

Recommendation of the Board of Directors of H&S Inc.

The H&S Inc. Board has determined that it is advisable and in the best
interests of H&S Inc. that H&S Inc. be merged with and into HSI with HSI as
the surviving corporation, in accordance with the Merger Agreement. The H&S
Inc. Board recommends that the stockholders of H&S Inc. approve the Merger and
adopt the Merger Agreement, including the amendment and restatement of HSI's
Certificate of Incorporation to read in its entirety as Annex I to the Merger
Agreement and the amendment and restatement of HSI's By-Laws to read in their
entirety as Annex II to the Merger Agreement.

Proposed Merger

Merger Agreement--Principal Provisions

Pursuant to the Merger Agreement, H&S Inc. will merge with and into HSI with
Heidrick & Struggles International, Inc. being the surviving corporation of
the Merger. At the Effective Time, the Company's Certificate of Incorporation
will be amended and restated to read in its entirety as Annex I to the Merger
Agreement and the Company's By-Laws will be amended and restated to read in
their entirety as Annex II to the Merger Agreement. At the Effective Time, the
separate corporate existence of H&S Inc. will cease and HSI will be the
surviving corporation. At the Effective Time, each share of H&S Inc. Common
Stock will be converted into 2.8249 shares of Company Common Stock, as
provided in the Merger Agreement. Any fractional shares will be cancelled, and
the holders thereof will receive cash for their fractional interests.

Currently, the authorized number of shares of HSI is 300,000 shares, of
which (i) 150,000 are Class A Common Stock, of which 144,534 shares are
currently issued and outstanding, and (ii) 150,000 shares are Class B Common
Stock, of which 80,185 shares are currently issued and outstanding. At the
Effective Time, 750,000 shares of Company Common Stock will be authorized and
each issued and outstanding share of Class A Common Stock will be converted
into one share of Company Common Stock, and each share of Class B Common Stock
will cease to be outstanding and will be cancelled and retired and no
consideration will be delivered in exchange therefor. The Class A Common Stock
and the Class B Common Stock are currently without par value. The Company
Common Stock will have a par value of $.01 per share. Upon consummation of the
Merger, 28,000 shares of Company Common Stock will be issued to the Mulder
partners. See "Risk Factors--Nonrecurring and Other Charges."

is issued and outstanding immediately prior to the Effective Time will be
automatically converted into 2.8249 shares of Company Common Stock. Each
holder of H&S Inc. Common Stock will cease to have any rights with respect to
any shares of H&S Inc. Common Stock, except the right to receive the
applicable number of shares of Company Common Stock.

The closing of the Merger shall take place on the second business day after
which the last to be fulfilled or waived of all the conditions precedent to
the Merger (other than these conditions that can only be fulfilled at the
closing) is fulfilled or waived or at such other time as the parties may
agree.

Other Provisions of the Merger Agreement

In the Merger Agreement, H&S Inc. has represented and warranted that (i) it
is a duly organized and validly existing corporation in good standing and that
any other corporation or other organization of which H&S Inc. holds at least a
majority of the securities or other interests is duly organized, validly
existing and in good standing, (ii) that it has requisite power and authority
to enter into the Merger Agreement and consummate the transactions
contemplated thereby, (iii) that the execution of the Merger Agreement does
not contravene its Certificate of Incorporation or Bylaws or any other
agreement and (iv) that the H&S Board has approved the Merger and recommended
that the stockholders of H&S Inc. adopt the Merger Agreement.

HSI has represented and warranted in the Merger Agreement that it is a duly
organized and validly existing corporation with requisite power and authority
to enter into the Merger Agreement and consummate the transactions
contemplated thereby, that the execution of the Merger Agreement does not
contravene its Certificate of Incorporation or Bylaws or any other agreement,
and that the HSI Board has approved the Merger and recommended that the
stockholders of HSI adopt the Merger Agreement.

Both H&S Inc. and HSI have agreed in the Merger Agreement to use their best
efforts to cause the Merger to qualify as a reorganization under the
provisions of Section 368 of the Code. Both parties have also agreed to do all
things necessary to consummate the Merger under applicable laws and
regulations, including making the appropriate filings pursuant to the HSR Act.

Conditions to the Merger

The obligations of HSI and H&S Inc. to effect the Merger are subject to
various conditions, including, without limitation, obtaining the requisite
stockholder approval, the termination of the expiration of the waiting period,
if any, under the HSR Act, the receipt of an opinion from Simpson Thacher &
Bartlett that the Merger will qualify as a tax-free reorganization within the
meaning of Section 368 of the Code and the regulations promulgated thereunder
and the absence of any injunction or other legal restraint or prohibition
preventing the consummation of the Merger. The successful completion of the
Offering is not a condition to the consummation of the Merger.

Amendment or Waiver of Merger Agreement

At any time prior to the Effective Time, either party may, by action taken
by their respective Boards of Directors, to the extent permitted by the DGCL
amend or modify any provision or add provisions to the Merger Agreement, waive
any inaccuracies in the representations and warranties contained therein or in
any document delivered pursuant to the Merger Agreement and waive compliance
with any of the agreements or conditions contained therein.

Accounting Treatment of the Transaction

The Merger will be accounted for as a reverse acquisition, as the
stockholders of H&S Inc. will own a majority of the outstanding shares of the
Company Common Stock upon completion of the transaction. Accordingly, for
accounting purposes, HSI is treated as the acquired company and H&S Inc. is
considered to be the acquiring company.

Amendment of HSI's Certificate of Incorporation and By-Laws

Pursuant to the terms of the Merger Agreement, at the Effective Time of the
Merger, (i) the Certificate of Incorporation of HSI will be amended and
restated to read in its entirety as Annex I to the Merger Agreement, which
will, as so amended be the Certificate of Incorporation of the Company and
(ii) the By-Laws of HSI will be amended and restated to read in their entirety
as Annex II to the Merger Agreement, which will, as so amended, be the By-Laws
of the Company. Such amended and restated Certificate of Incorporation will
eliminate both the Class A Common Stock and the Class B Common Stock,
providing instead for the authorization of 750,000 shares of Company Common
Stock of $.01 par value per share and 250,000 shares of Preferred Stock of
$.01 par value per share. Certain additional provisions of the Company's
Certificate of Incorporation are described under "Comparison of Stockholder
Rights."

Regulatory Approvals

Under the HSR Act and the rules promulgated thereunder by the FTC, the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division and the
applicable waiting period has expired or been terminated. On August 13, 1998,
HSI and H&S Inc. filed Notification and Report Forms under the HSR Act with
the FTC and the Antitrust Division. On August 25, 1998, the FTC and the
Antitrust Division granted early termination of the waiting period under the
HSR Act with respect to the Merger effective immediately.

RIGHTS OF DISSENTING STOCKHOLDERS

Record holders of shares of Class A Common Stock, Class B Common Stock and
H&S Inc. Common Stock who follow the appropriate procedures are entitled to
appraisal rights under Section 262 of the DGCL in connection with the Merger.
The following discussion is not a complete statement of the law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262, which is reprinted in its entirety as Annex B to this
Joint Consent Statement/Prospectus. Except as set forth herein, the
stockholders of HSI and H&S Inc. will not be entitled to appraisal rights in
connection with the Merger.

Under the DGCL, record holders of shares of Class A Common Stock, Class B
Common Stock and H&S Inc. Common Stock who follow the procedures set forth in
Section 262 and who have not consented to the Merger will be entitled to have
their shares of Class A Common Stock, Class B Common Stock or H&S Inc. Common
Stock, as the case may be, (such shares "Dissenting Shares") appraised by the
Delaware Court of Chancery and to receive payment of the "fair value" of such
shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, as
determined by such court.

Under Section 262, where a merger is to be approved by written consent, each
company must, either before the effective date of the merger or within ten
days thereafter, notify each stockholder that such appraisal rights
are available and include in each such notice a copy of Section 262. Such
notice may, and, if given on or after the effective date of the merger, shall
also notify such stockholders of the effective date of the merger. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing such notice, demand in writing from the surviving corporation, the
appraisal of such holder's shares. If such notice did not notify stockholders
of the effective date of the merger, each company shall send a second notice
before the effective date of the merger notifying each stockholder who is
entitled to appraisal rights of the effective date or the surviving
corporation shall send such second notice to the stockholders on or within 10
days after such effective date; provided, however, that if such second notice
is sent more than 20 days following the sending of the first notice, such
second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares. This
Joint Consent Statement/Prospectus constitutes such notice. Any such
stockholder who wishes to exercise appraisal rights should review the
following discussion and Annex B carefully because failure to timely and
properly comply with the procedures specified in Section 262 will result in
the loss of appraisal rights under the DGCL.

A holder of shares of Class A Common Stock, Class B Common Stock or H&S Inc.
Common Stock wishing to exercise appraisal rights must deliver to the
respective company, before February 26, 1999, written demand for appraisal of
such holder's shares of Class A Common Stock, Class B Common Stock or H&S Inc.
Common Stock, as the case may be. In addition, a holder of shares of Class A
Common Stock, Class B Common Stock or H&S Inc. Common Stock wishing to
exercise appraisal rights must hold of record such shares on the date the
written demand for appraisal is made and must continue to hold such shares
through the Effective Time.

Only a holder of record of shares of Class A Common Stock, Class B Common
Stock or H&S Inc. Common Stock is entitled to assert appraisal rights for the
shares registered in that holder's name. A demand for appraisal should be
executed by or on behalf of the holder of record fully and correctly, as the
holder's name appears on the stock certificates.

If the shares of Class A Common Stock, Class B Common Stock or H&S Inc.
Common Stock are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if these shares are owned of record by more than one person, as
in a joint tenancy or tenancy in common, the demand should be executed by or
on behalf of all joint owners. An authorized agent, including one or more
joint owners, may execute a demand for appraisal on behalf of a holder of
record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, the agent is agent
for such owner or owners. A record holder such as a broker who holds shares of
Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock as nominee
for several beneficial owners may exercise appraisal rights with respect to
the shares held, for one or more beneficial owners, while not exercising such
rights with respect to the shares held for other beneficial owners; in such
case, the written demand should set forth the number of shares as to which
appraisal is sought and where no number of shares is expressly mentioned the
demand will be presumed to cover all shares held in the name of the record
owner. Holders of shares of Class A Common Stock, Class B Common Stock or H&S
Inc. Common Stock who hold their shares in brokerage accounts or other nominee
forms and who wish to exercise appraisal rights are urged to consult with
their brokers to determine the appropriate procedures for the making of a
demand for appraisal by such nominee. All written demands for appraisal of
shares of Class A Common Stock, Class B Common Stock should be mailed or
delivered to Richard D. Nelson, Secretary, Heidrick & Struggles International,
Inc., 233 South Wacker Drive-Suite 4200, Chicago, Illinois 60606-6303 so as to
be received before February 26, 1999. All written demands for appraisal of
shares of H&S Inc. Common Stock should be mailed or delivered to Richard D.
Nelson, Secretary, Heidrick & Struggles, Inc., 233 South Wacker Drive-Suite
4200, Chicago, Illinois 60606-6303 so as to be received before February 26,
1999.

Within 120 days after the Effective Time, but not thereafter, the Company,
or any holder of shares of Class A Common Stock, Class B Common Stock or H&S
Inc. Common Stock entitled to appraisal rights under Section 262 and who has
complied with the foregoing procedures, may file a petition in the Delaware
Court of Chancery demanding a determination of the fair value of such shares.
The Company is not under any obligation, and has no present intention, to file
a petition with respect to the appraisal of the fair value of the shares of
Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock.
Accordingly, it is the obligation of the stockholders to initiate all
necessary action to perfect their appraisal rights within the time prescribed
in Section 262.

Within 120 days after the Effective Time, any record holder of shares of
Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock who has
complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of shares of Class A Common Stock, Class B
Common Stock or H&S Inc. Common Stock with respect to which demands for
appraisal have been received and the aggregate number of holders of such
shares. Such statements must be mailed within 10 days after a written request
therefor has been received by the Company.

If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the holders of shares
of Class A Common Stock, Class B Common Stock or H&S

Inc. Common Stock entitled to appraisal rights and will appraise the "fair
value" of the shares of Class A Common Stock, Class B Common Stock or H&S Inc.
Common Stock, as the case may be, exclusive of any element of value arising
from the accomplishment or expectation of the Merger, together with a fair
rate of interest, if any, to be paid upon the amount determined to be the fair
value. Holders considering seeking appraisal should be aware that the fair
value of their shares of Class A Common Stock, Class B Common Stock or H&S
Inc. Common Stock as determined under Section 262 could be more than, the same
as or less than the value of the consideration that they would otherwise
receive in the Merger if they did not seek appraisal of their shares of Class
A Common Stock, Class B Common Stock or H&S Inc. Common Stock, respectively.
The Delaware Supreme Court has stated that "proof of value by any techniques
or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in the
appraisal proceedings. More specifically, the Delaware Supreme Court has
stated that: "Fair value, in an appraisal context, measures 'that which has
been taken from the shareholder, viz., his proportionate interest in a going
concern.' In the appraisal process, the corporation is valued 'as an entity,'
not merely as a collection of assets or by the sum of the market price of each
share of its stock. Moreover, the corporation must be viewed as an on-going
enterprise, occupying a particular market position in the light of future
prospects." In addition, Delaware courts have decided that the statutory
appraisal remedy, depending on factual circumstances, may or may not be a
stockholder's exclusive remedy. The Court will also determine the amount of
interest, if any, to be paid upon the amounts to be received by persons whose
shares of Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock
have been appraised. The costs of the action may be determined by the Court
and taxed upon the parties as the Court deems equitable. The Court may also
order that all or a portion of the expenses incurred by any holder of shares
of Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock in
connection with an appraisal, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged pro rata against the value of all of the shares of
Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock entitled
to appraisal.

Any holder of shares of Class A Common Stock, Class B Common Stock or H&S
Inc. Common Stock who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Time, be entitled to vote the shares
of Class A Common Stock, Class B Common Stock or H&S Inc. Common Stock,
respectively, subject to such demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends
or other distributions payable to holders of record of shares of Class A
Common Stock, Class B Common Stock or H&S Inc. Common Stock as of a date prior
to the Effective Time).

If any holder of shares of Class A Common Stock, Class B Common Stock or H&S
Inc. Common Stock who demands appraisal of shares under Section 262 fails to
perfect, or effectively withdraws or loses, the right to appraisal, as
provided in the DGCL, the shares of Class A Common Stock, Class B Common Stock
or H&S Inc. Common Stock, respectively, of such holder will be converted in
accordance with the Merger Agreement, as more fully described under "The
Merger." A holder of shares of Class A Common Stock, Class B Common Stock or
H&S Inc. Common Stock will fail to perfect, or will effectively lose, the
right to appraisal if no petition for appraisal is filed within 120 days after
the Effective Time. A holder may withdraw a demand for appraisal by delivering
to the Company a written withdrawal of the demand for appraisal and acceptance
of the Merger, except that any such attempt to withdraw made more than 60 days
after the Effective Time will require the written approval of the Company.

Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.

The foregoing is a summary of certain of the provisions of Section 262 of
the DGCL and is qualified in its entirety by reference to the full text of
such Section, a copy of which is attached hereto as Annex B.

THE IPO CHARTER AMENDMENTS

Once the Offering is completed, the Company expects to implement certain
additional amendments to the Certificate of Incorporation of the Company. If
these amendments are approved by the stockholders of H&S Inc. and HSI, the
Board of Directors will file an amended and restated Certificate of
Incorporation with the Secretary of State of the State of Delaware upon the
completion of the Offering. These amendments are described in greater detail
later in this Joint Consent Statement/Prospectus under the caption "Comparison
of Stockholder Rights." In general, they include (i) the increase in the
authorized number of shares of Company Common Stock to 100,000,000, (ii) the
increase in the authorized number of shares of Preferred Stock to 10,000,000
and (iii) the adoption of certain restrictions on the ability of the
stockholders to act by written consent.

Recommendation of the Board of Directors of HSI

The HSI Board has determined that it is advisable and in the best interests
of HSI that HSI approve the IPO Charter Amendments, subject to the successful
completion of the Offering, and recommends that the stockholders of HSI
approve the IPO Charter Amendments.

Recommendation of the Board of Directors of H&S Inc.

The H&S Inc. Board has determined that it is advisable and in the best
interests of H&S Inc. that H&S Inc. approve the IPO Charter Amendments,
subject to the successful completion of the Offering, and recommends that the
stockholders of H&S Inc. approve the IPO Charter Amendments.

RISK FACTORS

Stockholders of HSI and H&S Inc. should consider the specific factors set
forth below as well as the other information set forth in this Prospectus.
This Joint Consent Statement/Prospectus contains forward-looking statements.
Such statements are indicated by words or phrases such as "anticipates,"
"estimates," "projects," "management believes," "the Company believes,"
"intends," "expects" and similar words and phrases. Such forward-looking
statements are subject to certain risks, uncertainties or assumptions and may
be affected by certain other factors, including the specific factors set forth
below. Should one or more of these risks, uncertainties or other factors
materialize, or should underlying assumptions prove incorrect, actual results,
performance or achievements of the Company may vary materially from any future
results, performance or achievements expressed or implied by such forward-
looking statements. All written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements in this paragraph.

Dependence On Attracting and Retaining Qualified Consultants

H&S's success depends upon its ability to attract and retain consultants who
possess the skills and experience necessary to fulfill its clients' executive
search needs. Competition for qualified consultants is intense. H&S generally
does not require its consultants to sign noncompetition agreements, and many
other executive search firms have experienced high consultant turnover rates.
H&S believes it has been able to attract and retain highly qualified,
effective consultants as a result of its premium reputation, its unique team-
oriented culture and its performance-based compensation system. Consultants
have the potential to earn substantial bonuses based on the amount of revenue
generated by obtaining executive search assignments and executing search
assignments and by assisting other consultants to obtain or complete executive
search assignments. Bonuses represent a significant proportion of consultants'
total compensation. Any diminution of its reputation, reduction in H&S's
compensation levels or restructuring of H&S's compensation system could impair
H&S's ability to retain existing or attract additional qualified consultants.
In connection with the Offering, the Company has established new equity-based
compensation plans which were not previously a part of its compensation
structure. There can be no assurance that these plans will be as successful in
attracting and retaining consultants as were the Company's prior practices. In
addition, there can be no assurance that H&S will be successful in identifying
and hiring consultants with the requisite experience, skills and established
client relationships. Any such inability to attract and retain qualified
consultants could have a material adverse effect on H&S's business, results of
operations and financial condition. See "--Portable Client Relationships" and
"The Company--Key Competitive Strengths."

Portable Client Relationships

H&S's success depends upon the ability of its consultants to develop and
maintain strong, long-term relationships with its clients. Usually, one or two
consultants have primary responsibility for a client relationship. When a
consultant leaves one executive search firm and joins another, clients that
have established relationships with the departing consultant may move their
business to the consultant's new employer. The loss of one or more clients is
more likely to occur if the departing consultant enjoys widespread name
recognition or has developed a reputation as a specialist in executing
searches in a specific industry or management function. Although client
portability historically has not caused significant problems for H&S, the
failure to retain its most effective consultants or maintain the quality of
service to which its clients are accustomed, and the ability of a departing
consultant to move business to his or her new employer, could have a material
adverse effect on H&S's business, results of operations and financial
condition. See "--Dependence on Attracting and Retaining Qualified
Consultants," "The Company--Services" and "The Company--Clients and
Marketing."

Maintenance of Professional Reputation and Brand Name

The Company's ability to secure new engagements and hire qualified
professionals is highly dependent upon the Company's overall reputation and
brand name recognition as well as the individual reputations of its
professionals. Because the Company obtains a majority of its new engagements
from existing clients, or from referrals by those clients, the dissatisfaction
of any such client could have a disproportionate, adverse impact on the
Company's ability to secure new engagements. Any factor that diminishes the
reputation of the Company or any of its personnel, including poor performance,
could make it substantially more difficult for the Company to compete
successfully for both new engagements and qualified consultants, and could
have an adverse effect on the Company's business, results of operations and
financial condition. See "The Company--Clients and Marketing."

Nonrecurring and Other Charges

During the fourth quarter ending December 31, 1998, the Company incurred and
during the first quarter ending March 31, 1999 the Company expects to incur,
nonrecurring charges totaling $27.6 million net of income taxes. These charges
arise in connection with (i) the modification of the terms of the Mulder
acquisition agreement, (ii) the early settlement of certain profit sharing
arrangements in connection with the acquisition of certain Latin American
offices and (iii) the postponement of its initial public offering.

The Company has agreed to modify the terms of the Mulder agreement,
including the termination of all employment contingencies, resulting in a
nonrecurring charge expected to total $21.2 million, net of income taxes. This
nonrecurring charge represents the write-off of $4.5 million of deferred
compensation assets and a cash payment of $5.6 million and the issuance of
28,000 shares of common stock (worth $11.1 million, based upon the estimated
fair market value of HSI) to the previous owners of Mulder. This charge will
be recorded as compensation expense in the first quarter of 1999. See Note 2
of "Heidrick & Struggles International, Inc. and Subsidiaries--Notes to
Consolidated Financial Statements."

On September 1, 1996, the Company acquired certain Latin American offices
for a purchase price of $609,000. The acquisition agreement called for the
sellers, who joined the Company as consultants, to receive, in addition to
salary and bonus, approximately 60% of future pre-tax profit from certain
operations net of certain corporate overhead. The Company, in exchange for
payments amounting to $2.5 million to the sellers over the next two years,
will receive all future pretax profits. The early settlement of these profit
sharing arrangements was recorded as compensation expense in the fourth
quarter of 1998.

As required by Staff Accounting Bulletin No. 1, Topic 5A, H&S Inc. and HSI
were required to expense all charges incurred in connection with the
postponement of the Company's planned initial public offering in September
1998. The amount of such charges was $3.9 million and was recorded as general
and administrative expense in the fourth quarter of 1998.

Restrictions Imposed By Blocking Arrangements

Either by agreement with clients or for marketing or client relationship
purposes, executive search firms frequently refrain, for a specified period of
time, from recruiting certain employees of a client, and possibly other
entities affiliated with such client, when conducting executive searches on
behalf of other clients (a "blocking" arrangement). Blocking arrangements
generally remain in effect for one or two years following completion of an
assignment. However, the duration and scope of the blocking arrangement or
"off limits" period, including whether it covers all operations of a client
and its affiliates or only certain divisions of a client, generally depends on
such factors as the length of the client relationship, the frequency with
which the executive search firm has been engaged to perform executive searches
for the client and the number of assignments the executive search firm has
generated or expects to generate from the client. Some of H&S's clients are
recognized as industry leaders and/or employ a significant number of qualified
executives who are potential candidates for other companies in that client's
industry. Blocking arrangements with such a client or awareness by a client's
competitors of such an arrangement may make it difficult for H&S to obtain
executive search assignments from, or to fulfill executive search assignments
for, competitors while employees of that client may not be solicited. As H&S's
client base grows, particularly in its targeted business sectors, blocking
arrangements increasingly may impede H&S's growth or its ability to attract
and serve new clients, which could have an adverse effect on H&S's business,
results of operations and financial condition. See "The Company--Clients and
Marketing."

Competition

The global executive search industry is extremely competitive and highly
fragmented. H&S competes primarily with other large global executive search
firms and with smaller boutique or specialty firms that focus on regional or
functional markets or on particular industries. Some of H&S's competitors
possess greater resources, greater name recognition and longer operating
histories than H&S in particular markets, which may afford these firms
significant advantages in obtaining future clients and attracting qualified
professionals in those markets. There are limited barriers to entry into the
executive search industry and new executive search firms continue to enter the
market. Many executive search firms have a smaller client base than H&S and
therefore may be subject to fewer blocking arrangements than H&S. See "--
Restrictions Imposed by Blocking Arrangements." There can be no assurance that
H&S will be able to continue to compete effectively with existing or potential
competitors or that significant clients or prospective clients of H&S will not
decide to perform executive search services using in-house personnel. See "The
Company--Competition."

Implementation of Acquisition Strategy

H&S's ability to grow and remain competitive may depend on its ability to
consummate strategic acquisitions of other executive search firms. Although
H&S evaluates possible acquisitions on an ongoing basis, there can be no
assurance that H&S will be successful in identifying, competing for, financing
and completing such acquisitions. An acquired business may not achieve desired
levels of revenue, profitability or productivity or otherwise perform as
expected. Client satisfaction or performance problems at a single acquired
firm could have a material adverse effect on the Company. In addition, growth
through acquisition of existing firms involves risks such as diversion of
management's attention, difficulties in the integration of operations,
difficulties in retaining personnel, increased blocking conflicts or
liabilities not known at the time of acquisition, possibly including adverse
tax and accounting impacts (such as the effects on earnings resulting from
increased goodwill). Some or all of such factors could have material adverse
effects on H&S's business, results of operations and financial condition. The
Company may finance any future acquisitions in whole or in part with Common
Stock (which could result in dilution to purchasers of Common Stock offered
hereby), indebtedness, or cash. The Company's ability to finance acquisitions
using Common Stock may be dependent upon the market price of the Common Stock,
and a drop in the market price of the Common Stock may have the effect of
precluding it from accomplishing certain desirable acquisitions. See "The
Company--Key Competitive Strengths."

Ability to Achieve and Manage Growth

The Company has experienced and may continue to experience significant
growth in its revenue and employee base. The Company's growth has placed, and
may in the future continue to place, a significant strain on its
administrative, operational and financial resources. The Company anticipates
that, if successful in expanding its business, the Company will be required to
recruit and hire additional consultants and certain new administrative and
other personnel to support its operations. Failure to attract and retain such
additional personnel could have a material adverse effect on the Company and
its growth. Because newly-hired consultants require a large initial investment
in signing bonuses, guaranteed bonuses and salaries and benefits for
associated support staff and do not tend to immediately provide
proportionately higher revenues, the Company's average revenue per consultant
and overall profitability may be negatively impacted by such new hires in the
short term. In addition, the initial costs of recruiting such professionals
may not be offset by increased revenues. Moreover, the Company may open
offices in new geographic locations, which would entail certain start-up and
maintenance costs that could be substantial. To manage its growth
successfully, the Company will also have to continue to improve and upgrade
its financial, accounting and information systems, controls and infrastructure
as well as hire, train and manage additional employees. In the event the
Company is unable to upgrade its financial controls and accounting and
reporting systems adequately to support its anticipated growth, the Company's
business, results of operations and financial condition could be materially
adversely affected.

Reliance on Information Management Systems

H&S's success depends in large part upon its ability to store, retrieve,
process and manage substantial amounts of information. To achieve its
operational goals and to remain competitive, H&S believes that it must
continue to improve and upgrade its information management systems, which will
require the licensing of third

party software or the development, either internally or through engagement of
third parties, of new proprietary software and systems. See "Use of Proceeds."
Any failure in the implementation of IGIS, the Company's strategic technology
initiative, including H&S's inability to license, design, develop, implement
and utilize, in a cost-effective manner, improved information systems that
provide the capabilities necessary for H&S to compete effectively, or any
interruption or loss of H&S's information processing capabilities, for any
reason, could have a material adverse effect on H&S's business, results of
operations and financial condition. See "The Company--Assignment Research and
Information Management."

Executive Search Liability Risk

Executive search firms are exposed to potential claims with respect to the
executive search process. A client could assert a claim for such matters as
breach of a blocking arrangement or confidentiality agreement or for
presenting a candidate who proves to be unsuitable for the position filled. In
addition, a candidate could assert an action against H&S for failure to
maintain the confidentiality of the candidate's employment search or for
alleged discrimination or other violations of employment law by H&S or a
client of H&S. The Company maintains professional liability insurance in such
amounts and with such coverages and deductibles as management believes are
adequate. There can be no assurance, however, that the Company's insurance
will cover all such claims or that its insurance coverage will continue to be
available at economically feasible rates. See "Business--Insurance."

Social, Political and Economic Risks Affecting Multinational Operations

For 1998 and 1997, 45.9% and 40.6%, respectively, of the Company's revenues
were generated from outside the United States. H&S offers its services in 30
countries from 59 offices around the world. The Company is exposed to the risk
of changes in social, political and economic conditions inherent in foreign
operations such as the recent economic developments in Asia and Latin America.
In particular, the Company conducts business in various countries where the
systems and bodies of commercial law and trade practices arising thereunder
are evolving. Commercial laws in such countries are often vague, arbitrary,
contradictory, inconsistently administered and retroactively applied. Under
such circumstances, it is difficult for the Company to determine with
certainty at all times the exact requirements of such local laws. Failure of
the Company to remain in compliance with local laws could have a material
adverse impact on H&S's prospects, business, results of operations and
financial condition. In addition, the global nature of the Company's
operations poses various challenges to the Company's management and its
financial, accounting and other systems which, if not satisfactorily met,
could have a material adverse impact on the Company's business, results of
operations and financial condition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

Absence of Dividends

The Company intends to retain all of its earnings for the future operation
and expansion of its business and does not anticipate paying cash dividends on
its Common Stock at any time in the foreseeable future. See "Dividend Policy."

European Monetary Union

Commencing January 1, 1999, 11 European countries entered into the European
Monetary Union and replaced their local currencies with a single currency, the
Euro. During a three-year transition period, the national currencies will
continue to circulate, but their relative values will be fixed denominations
of the Euro.

The Company recognizes that there are risks and uncertainties associated
with the conversion to the Euro including, but not limited to, an increasingly
competitive European environment resulting from greater transparency of
pricing, uncertainty as to tax consequences and the inability to update
financial reporting systems on a timely basis.

The Company is upgrading its systems to enable them to process transactions
denominated in Euro. The upgrade will allow the Company to utilize Euro or
local currency as needed. The upgrade is scheduled to be completed in March
1999. Failure to adapt information technology systems could have an adverse
effect on the Company's financial condition and results of operations. The
Company is also dependent on many third parties, including banks and other
providers of information, for proper transaction clearance and reporting. If
any of these systems are not appropriately upgraded to manage transactions
denominated in Euro, the Company's operations could be adversely affected.

The Company can give no assurance that the Company or third parties on whom
the Company depends will have in place in a timely manner the systems
necessary to process Euro-denominated transactions. Moreover, any disruption
of business or financial activity in European markets resulting from the
conversion to the Euro may hurt the Company's business in those markets,
resulting in lost revenues.

Year 2000 Compliance

The Year 2000 issue is the result of computer programs being written to use
two digits to define year dates. Computer programs running date-sensitive
software may recognize a date using "00" as the year 1900 rather than the Year
2000. This could result in systems failure or miscalculations causing
disruptions of operations. The Company utilizes information technology to
facilitate (i) its search processes communications with candidates and clients
and (ii) its financial management systems and other support systems.

The Company has formed a task force to evaluate and correct its Year 2000
issues and to assess compliance of its suppliers. The Company will replace
systems that are not Year 2000 compliant. The IGIS systems scheduled to be
deployed during the spring and summer of 1999 will be Year 2000 compliant. The
Company currently has certification as to Year 2000 compliance from its key
software suppliers.

MCI Systemhouse has been retained as the Company's system integrator and is
conducting Year 2000 testing. The Company has a complete duplication of
hardware and software to conduct on site, realistic testing and is currently
conducting its own tests of these systems. In addition, the Company's
personnel will conduct testing during the spring of 1999 and will continue to
monitor and test the systems through the end of 1999. The Company has also
specifically addressed its non-information technology related systems and
believes that there will be no significant operational problems relating to
the Year 2000 issue.

The Company's primary business does not depend on material relationships
with third party vendors, but the Company does utilize third party vendors for
a number of functions, including its automated payroll functions, insurance
and investment of pension funds. The Company is initiating formal
communications with third party providers to determine the extent to which
these third parties are moving toward Year 2000 compliance. The Company also
utilizes third party on-line information services and the Internet to
communicate and to retrieve information about potential candidates and
clients. Failure of these third parties to have their systems timely converted
may have a material adverse effect on the Company's operations.

The Company anticipates completing the Year 2000 project not later than the
third quarter of 1999. The Company has budgeted $500,000 to be expensed as
incurred to address Year 2000 issues. The Company's total Year 2000 project
cost estimates include the impact of third party Year 2000 issues.

The following scenarios with respect to the Company's systems could occur:
(i) the software code may not be Year 2000 compliant, (ii) integration of
upgrades may not be complete by the Year 2000 and (iii) the integration may be
complete by the Year 2000 but not fully tested or monitored prior to the Year
2000 such that testing and monitoring will uncover problems that the Company
cannot remedy in a timely manner.

performed manually using non-networked computers. Failure of search-related
systems might force the Company to use older proprietary systems to conduct
searches and might cause sorting problems lowering productivity. If any non-
information technology system is non-compliant, the Company will need to
replace such a system.

The Company's cost and timing estimates with respect to achieving Year 2000
compliance were based on numerous assumptions about future events, including
third party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could
differ materially from those anticipated. Specific factors that might cause
such material differences include, but are not limited to, the availability
and cost of personnel trained in this area, the ability to locate and correct
all relevant computer codes, and similar uncertainties.

DIVIDEND POLICY

The Company does not intend to pay any cash dividends for the foreseeable
future but instead intends to retain earnings, if any, for the future
operation and expansion of the Company's business. Any determination to pay
dividends in the future will be at the discretion of the Company's Board of
Directors and will be dependent upon the Company's results of operations,
financial condition, contractual restrictions, restrictions imposed by
applicable law and other factors deemed relevant by the Board of Directors.
The Company's revolving credit facility prohibits the Company from declaring
and paying cash dividends on the Common Stock. Future indebtedness and loan
facilities also may prohibit or restrict the ability of the Company to pay
dividends and make distributions to its stockholders.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

The following unaudited pro forma condensed consolidated financial data of
the Company give effect to (i) the Merger as described below, (ii) the
amendment of the Mulder acquisition agreement, and (iii) the consolidation of
the historical consolidated financial data of Mulder prior to the acquisition
of Mulder by HSI. The pro forma data is presented as if the above transactions
had occurred on January 1, 1997 for the statement of operations and related
data and on September 30, 1998 for balance sheet data.

The unaudited pro forma condensed consolidated statement of operations data
for the year ended December 31, 1997 reflects the results of operations of
HSI, and H&S Inc. for the year then ended and Mulder for the nine months ended
September 30, 1997. The historical results of operations of Mulder have been
included in HSI's financial statements subsequent to the date of the
acquisition.

This unaudited pro forma condensed consolidated data assume that the Merger
is effected by the exchange of 2.8249 shares of HSI Common Stock for each
share of H&S Inc. at the end of each period presented. This is a fixed
exchange ratio agreed upon by HSI and H&S Inc. The Merger will be accounted
for as a reverse acquisition, as the stockholders of H&S Inc. will own a
majority of the outstanding shares of the Common Stock of the Company upon
completion of the transaction. Accordingly, for accounting purposes, HSI is
treated as the acquired company and H&S Inc. is considered to be the acquiring
company. Prior to the Merger, H&S Inc. owned 35.6823% of all outstanding HSI
Common Stock. The acquisition by H&S Inc. of the remaining 64.3177% of HSI
will be recorded using the purchase method of accounting. The difference
between the fair value and the book value of the interest in HSI being
acquired (the "Excess Purchase Price") will be allocated first among
identifiable tangible and intangible assets and then any residual value will
be recorded as goodwill.

The purchase price of HSI to H&S Inc. is based upon (i) the ownership in the
Company upon completion of the Merger of holders of HSI shares immediately
prior to the Merger and (ii) the fair market value of the Company after the
Merger.

The unaudited pro forma condensed consolidated financial data are a
presentation of historical results with accounting adjustments. The unaudited
pro forma condensed consolidated financial data do not reflect, except as
indicated in the accompanying notes, the effects of any of the anticipated
changes to be made by the Company in its operations from the historical
operations, are presented for informational purposes only and should not be
construed to indicate (i) the results of operations or the consolidated
financial position of the Company that actually would have occurred had the
transactions described above been consummated as of the dates indicated or
(ii) the results of operations or the consolidated financial position of the
Company in the future.

The following unaudited pro forma condensed consolidated financial data and
accompanying notes are qualified in their entirety by reference to, and should
be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the consolidated financial
statements and notes thereto of H&S Inc., HSI and Mulder and the other
historical consolidated financial information included elsewhere in this
Prospectus.

Selected Unaudited Pro Forma Condensed Consolidated Financial Data

Year Ended Nine Months Ended
December 31, September 30,
------------ ------------------
1997 1997 1998
------------ -------- --------
(in thousands except per
share and share data)

Statement of Operations Data(1):
Revenue...................................... $284,792 $212,694 $251,721
Operating expenses:
Salaries and employee benefits(2)............ 197,637 145,780 174,603
General and administrative expenses(3)....... 70,560 53,139 63,647
-------- -------- --------
Total operating expenses................... 268,197 198,919 238,250
-------- -------- --------
Operating income............................. 16,595 13,775 13,471
-------- -------- --------
Non-operating income (expense):
Interest income.............................. 1,622 901 907
Interest expense............................. (309) (249) (339)
Other........................................ 1,159 779 (3,700)
-------- -------- --------
Total non-operating income (expense)....... 2,472 1,431 (3,132)
-------- -------- --------
Equity in net income of affiliate(4)......... -- -- --
-------- -------- --------
Minority interest in income of consolidated
subsidiaries................................ (26) -- --
-------- -------- --------
Income before income taxes................... 19,041 15,206 10,339
Provision for income taxes(5)................ 10,714 8,938 5,622
-------- -------- --------
Net income................................... $ 8,327 $ 6,268 $ 4,717
======== ======== ========
Basic and diluted earnings per common share.. $ 13.41 $ 10.25 $ 7.53
======== ======== ========
Basic weighted average common shares
outstanding................................. 621,057 611,426 626,701
======== ======== ========
Diluted weighted average common shares
outstanding................................. 621,078 611,426 626,761
======== ======== ========
Balance Sheet Data (at end of period)(6):
Working capital.............................. $ 17,182 $ 26,735 $ 7,925
Total assets................................. 173,612 187,773 231,620
Long-term debt, less current maturities...... 2,004 701 5,667
Mandatorily redeemable common stock.......... 87,752 87,703 91,301

Year Ended December 31, 1997
---------------------------------------------------------------------------------
Historical
------------------ Pro Forma Pro Forma Historical Pro Forma Pro Forma
HSI Mulder(1) Adjustments HSI H&S Inc. Adjustments Consolidated
------- --------- ----------- --------- ---------- ----------- ------------
(in thousands)

Revenue................. $82,732 $21,816 $ -- $104,548 $180,244 $ -- $284,792
Operating expenses:
Salaries and employee
benefits.............. 59,139 14,610 (1,420)(2) 72,329 125,308 -- 197,637
General and
administrative
expenses.............. 20,556 5,557 -- 26,113 42,991 1,456 (3) 70,560
------- ------- ------- -------- -------- ------- --------
Total operating
expenses............ 79,695 20,167 (1,420) 98,442 168,299 1,456 268,197
------- ------- ------- -------- -------- ------- --------
Operating income....... 3,037 1,649 1,420 6,106 11,945 (1,456) 16,595
------- ------- ------- -------- -------- ------- --------
Non-operating income
(expense):
Interest income........ -- 36 -- 36 1,586 -- 1,622
Interest expense....... -- (159) -- (159) (150) -- (309)
Other.................. 144 529 -- 673 486 -- 1,159
------- ------- ------- -------- -------- ------- --------
Total non-operating
income (expense).... 144 406 -- 550 1,922 -- 2,472
------- ------- ------- -------- -------- ------- --------
Equity in net income of
affiliate.............. -- -- -- -- 115 (115)(4) --
------- ------- ------- -------- -------- ------- --------
Minority interest in
income of consolidated
subsidiaries........... (26) -- -- (26) -- -- (26)
------- ------- ------- -------- -------- ------- --------
Income before income
taxes.................. 3,155 2,055 1,420 6,630 13,982 (1,571) 19,041
Provision for income
taxes.................. 2,179 1,668 (569)(5) 3,278 7,484 (48)(5) 10,714
------- ------- ------- -------- -------- ------- --------
Net income.............. $ 976 $ 387 $ 1,989 $ 3,352 $ 6,498 $(1,523) $ 8,327
======= ======= ======= ======== ======== ======= ========

Nine Months Ended September 30, 1997
---------------------------------------------------------------------------------
Historical
------------------ Pro Forma Pro Forma Historical Pro Forma Pro Forma
HSI Mulder(1) Adjustments HSI H&S Inc. Adjustments Consolidated
------- --------- ----------- --------- ---------- ----------- ------------
(in thousands)

Revenue................. $54,569 $21,816 $ -- $ 76,385 $136,309 $ -- $212,694
Operating expenses:
Salaries and employee
benefits.............. 37,565 14,610 -- 52,175 93,605 -- 145,780
General and
administrative
expenses.............. 14,574 5,557 -- 20,131 31,916 1,092 (3) 53,139
------- ------- ------- -------- -------- ------- --------
Total operating
expenses............ 52,139 20,167 -- 72,306 125,521 1,092 198,919
------- ------- ------- -------- -------- ------- --------
Operating income....... 2,430 1,649 -- 4,079 10,788 (1,092) 13,775
------- ------- ------- -------- -------- ------- --------
Non-operating income
(expense):
Interest income........ -- 36 -- 36 865 -- 901
Interest expense....... -- (159) -- (159) (90) -- (249)
Other.................. 77 529 -- 606 173 -- 779
------- ------- ------- -------- -------- ------- --------
Total non-operating
income (expense).... 77 406 -- 483 948 -- 1,431
------- ------- ------- -------- -------- ------- --------
Equity in net income of
affiliate.............. -- -- -- -- 287 (287)(4) --
------- ------- ------- -------- -------- ------- --------
Minority interest in
income of consolidated
subsidiaries........... -- -- -- -- -- -- --
------- ------- ------- -------- -------- ------- --------
Income before income
taxes.................. 2,507 2,055 -- 4,562 12,023 (1,379) 15,206
Provision for income
taxes.................. 1,555 1,668 (569)(5) 2,654 6,404 (120)(5) 8,938
------- ------- ------- -------- -------- ------- --------
Net income.............. $ 952 $ 387 $ 569 $ 1,908 $ 5,619 $(1,259) $ 6,268
======= ======= ======= ======== ======== ======= ========

Nine Months Ended September 30, 1998
-----------------------------------------
(in thousands)
Historical Pro
----------------- Pro Forma Forma
HSI H&S Inc. Adjustments Combined
------- -------- ----------- --------

Revenue.............................. $93,745 $157,976 $ -- $251,721
Operating expenses:
Salaries and employee benefits...... 66,411 112,452 (4,260)(2) 174,603
General and administrative
expenses........................... 25,093 37,462 1,092 (3) 63,647
------- -------- ------ --------
Total operating expenses.......... 91,504 149,914 (3,168) 238,250
------- -------- ------ --------
Operating income.................... 2,241 8,062 3,168 13,471
------- -------- ------ --------
Non-operating income (expense):
Interest income..................... -- 907 -- 907
Interest expense.................... -- (339) -- (339)
Other............................... (3,843) 143 -- (3,700)
------- -------- ------ --------
Total non-operating income
(expense)........................ (3,843) 711 -- (3,132)
------- -------- ------ --------
Equity in net income of affiliate.... -- (612) 612 (4) --
------- -------- ------ --------
Minority interest in income of
consolidated subsidiaries........... -- -- -- --
------- -------- ------ --------
Income before income taxes........... (1,602) 8,161 3,780 10,339
Provision for income taxes........... 994 4,334 294 (5) 5,622
------- -------- ------ --------
Net income (loss).................... $(2,596) $ 3,827 $3,486 $ 4,717
======= ======== ====== ========

- --------
(1) HSI acquired 100% of Mulder on October 1, 1997, for a combination of cash
and 32,000 shares of HSI Class A Common Stock. On October 1, 1997, HSI
delivered 4,000 shares of HSI common stock, paid $8.7 million to the
partners of Mulder and incurred $1.1 million of associated transaction
costs. An additional $5.2 million (plus interest at an annual percentage
rate of 4%) is due to the partners of Mulder in five equal annual
installments, the first of which was paid on October 1, 1998. The
remaining shares are to be issued in four annual installments beginning
January 1, 1999. Because the total purchase price was contingent upon the
continued employment of Mulder consultants, the cost of acquisition was
accounted for as compensation expense to be recognized over a five-year
period beginning October 1, 1997. The December 31, 1997 and September 30,
1997 statements of operations have been adjusted to reflect the historical
operations of Mulder prior to the Mulder acquisition. In connection with
the Merger, the Mulder acquisition agreement was amended on July 2, 1998
such that the remaining $5.2 million (plus interest) will be paid within
90 days of the completion of the Merger, and 28,000 shares of Common Stock
(which will be valued, based on estimated fair market value of the
Company, at $11.1 million) will be issued to the Mulder partners
immediately after the Merger. This non-recurring charge and other non-
recurring charges discussed in "Risk Factors--Non-Recurring and Other
Charges" will be recorded on or before March 31, 1999, and have not been
reflected in the pro forma statement of operations. All employment
contingencies relating to Mulder consultants have been terminated.
(2) Amortization of deferred compensation expense of $1.4 million and of $4.3
million relating to the acquisition of Mulder has been eliminated from
salaries and employee benefits for the periods ending December 31, 1997
and September 30, 1998, respectively. Under the amendment to the Mulder
acquisition agreement, the remaining $21.2 million of the $26.9 million of
compensation, based upon estimated fair market value of the Company will
be expensed in the first quarter of 1999, contingent upon the completion
of the Merger.
(3) Adjustments have been made to reflect the impact of allocating the Excess
Purchase Price to intangible assets and goodwill of HSI, and are subject
to change based upon the final determination of the respective fair values
of these assets. For the year ended December 31, 1997, and for the nine
months ended September 30, 1997 and 1998, $1.5 million; $1.1 million and
$1.1 million of amortization related to acquired intangibles and goodwill
has been charged to general and administrative expenses, respectively.
(4) Equity in net income of affiliate has been eliminated from H&S Inc. for
all periods shown to reflect 100% ownership of HSI after the Merger.
(5) Adjustments are made to the provision for income taxes to reflect the
increased income tax liability resulting from the elimination of the
equity in net income of affiliate as discussed in footnote 4 above and the
decrease in the Mulder income tax liability. Income taxes for the
partnership were higher than they would have been for a corporation
because certain items such as salary and bonus are not tax deductible for
German partnerships but are for German corporations. Although corporations
are subject to corporate income tax, this incremental tax is less than the
tax effect of the previously non-deductible items. Therefore, pro forma
provision for income taxes has been adjusted as follows:

Equity in
Net Income
of Mulder
Affiliate Income Tax
Period Adjustment Adjustment
------ ---------- ----------

Nine months ended September 30, 1997................. $(120) $(569)
Year ended December 31, 1997......................... $ (48) $(569)
Nine months ended September 30, 1998................. $ 294 $ --

(6) See the Unaudited Pro Forma Condensed Consolidated Balance Sheet at
September 30, 1998 on page 31 for further details regarding pro forma
balance sheet adjustments.

Unaudited Pro Forma Condensed Consolidated Balance Sheet
At September 30, 1998

Pro Forma Contract
Merger Reflecting Amendment Consolidated
HSI H&S Inc. Adjustments Merger Adjustments Pro Forma
------- -------- ----------- ---------- ----------- ------------
(in thousands)

Current assets:
Cash and cash
equivalents........... $ 7,616 $ 37,186 $ -- $ 44,802 $ (5,577)(2) $ 39,225
Accounts receivable,
net of allowance...... 29,215 44,116 (1,200) 72,131 -- 72,131
Notes receivable from
affiliate............. -- 3,648 (3,648)(1) -- -- --
Other current assets... 6,044 13,896 -- 19,940 -- 19,940
Property and equipment,
net of accumulated
depreciation........... 10,329 22,231 -- 32,560 -- 32,560
Other assets:
Cash and investments
designated for
nonqualified
retirement plan....... -- 11,860 -- 11,860 -- 11,860
Investment in Heidrick
& Struggles
International, Inc.... -- 5,917 (5,917)(1) -- -- --
Goodwill............... 367 6,123 27,937 (1) 34,427 -- 34,427
Prepaid compensation
expense............... 4,505 -- -- 4,505 (4,505)(2) --
Intangibles............ -- -- 11,731 (1) 11,731 -- 11,731
Other non-current
assets................ 4,056 3,319 2,371 (1) 9,746 -- 9,746
------- -------- ------- -------- --------- --------
Total other assets.... 8,928 27,219 36,122 72,269 (4,505) 67,764
------- -------- ------- -------- --------- --------
Total assets.......... $62,132 $148,296 $31,274 $241,702 $ (10,082) $231,620
======= ======== ======= ======== ========= ========
Current liabilities:
Short-term debt........ $ 420 $ 1,436 $ -- $ 1,856 $ -- $ 1,856
Accounts payable....... 4,508 3,657 (1,200)(1) 6,965 -- 6,965
Accrued expenses--
Salaries and employee
benefits............. 27,219 67,933 -- 95,152 -- 95,152
Other................. 8,291 9,791 -- 18,082 -- 18,082
Income taxes payable... 1,316 -- -- 1,316 -- 1,316
Note payable to
affiliate............. 3,648 -- (3,648)(1) -- -- --
Long-term debt, less
current maturities..... 63 5,604 -- 5,667 -- 5,667
Liability for
nonqualified retirement
plans.................. -- 11,281 -- 11,281 -- 11,281
Commitments and
contingent liabilities. -- -- -- -- -- --
Mandatorily redeemable
common stock........... 11,044 48,594 41,745 (1) 101,383 (10,082)(2) 91,301
Stockholders' equity.... 5,623 -- (5,623)(1) -- -- --
------- -------- ------- -------- --------- --------
Total liabilities and
stsckholders' equity. $62,132 $148,296 $31,274 $241,702 $ (10,082) $231,620
======= ======== ======= ======== ========= ========

- --------
(1) These pro forma adjustments reflect the impact of allocating the Excess
Purchase Price to intangibles and goodwill of HSI, and are subject to
change based upon the final determination of the respective fair values of
the assets. The Excess Purchase Price, based on an estimated fair market
value of $52,789 less the HSI Book Value of $10,750 and less the
elimination of a deferred tax liability of $2,371, is $39,668.
This Excess Purchase Price has been allocated to identifiable intangibles
and goodwill as follows:

Weighted Average
Fair Market Remaining Useful
Asset Classification Value Life in Years
-------------------- ----------- ----------------

Intangibles.................................... $11,731 12
Goodwill....................................... 27,937 40
-------
Total Excess Purchase Price.................... $39,668
=======

The foregoing allocations of the Excess Purchase Price are based upon
current estimates and information available to H&S Inc. In determining the
foregoing estimated useful lives, management considered the nature,
competitive position of the Company, and historical and expected future
operating income. After the Merger, the Company will continually review
whether subsequent events and circumstances have occurred that indicate the
intangibles or goodwill may not be recoverable. If events and circumstances
indicate that intangibles or goodwill related to the acquired business
should be reviewed for possible impairment, the Company will use projections
to assess whether future operating income of the business, on a non-
discounted basis (before amortization), is likely to exceed the amortization
over the remaining life of the intangibles or goodwill, and, on such basis,
whether a write-down of intangibles or goodwill to recoverable value is
appropriate.

The ultimate allocation of the Excess Purchase Price to intangibles and
goodwill is subject to final determination of the fair value of the assets
of HSI, which will be based upon the report of a professional appraiser that
will be completed in connection with the consummation of Merger. H&S Inc.
management believes that the above preliminary allocations of the purchase
price are reasonable and will not materially change.
The pro forma adjustments include the elimination of H&S Inc.'s investment
in HSI. In addition, $4,848 of intercompany debt and payables were
eliminated.
The reclassification of $5,623 of stockholder's equity and the $41,745
increase in mandatorily redeemable common stock are a result of the
application of reverse acquisition accounting.

(2) The amendment of the Mulder acquisition agreement resulted in the
following adjustments to HSI.

(i) Cash has been adjusted by $5,577 to reflect the cash consideration to
be paid for Mulder.

(ii) Mandatorily redeemable common stock has been increased by $11,126 to
account for shares to be issued to Mulder partners, and reduced by
$21,208 to eliminate the one-time compensation charge.

(iii) Deferred compensation expense has been reduced by $4,505 to eliminate
the asset due to the recording of the one-time compensation charge
described above.

SELECTED FINANCIAL DATA

The selected consolidated financial data presented below for each of the
five years in the period ended December 31, 1997 have been derived from the
respective audited consolidated financial statements of H&S Inc. and HSI which
in the case of HSI were audited by Barbier Frinault & Associes (Arthur
Andersen), independent public accountants, and in the case of H&S Inc. were
audited for fiscal years 1994 through 1997 by Arthur Andersen LLP, independent
public accountants and for 1993 by McGladrey & Pullen, LLP, independent public
accountants. The selected consolidated financial data for the nine months
ended September 30, 1998 and 1997 were derived from the respective unaudited
consolidated financial statements of H&S Inc. and HSI, which in the opinion of
management, reflect all adjustments necessary, which consist only of normal
recurring adjustments, for a fair presentation of the interim period financial
data. The results for the nine months are not necessarily indicative of the
results to be expected for the full year. The data set forth are qualified in
their entirety by, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements, the notes thereto and the other
financial data and statistical information included in this Prospectus.

The table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," H&S Inc.'s, HSI's
and Mulder's Financial Statements, related notes and other financial
information included elsewhere in this Prospectus.

Selected Financial Data

H&S Inc.

Year Ended Nine Months Ended
December 31, September 30,
---------------------------------------------- -----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- -------- --------
(in thousands, except per share, share and other operating
data)

Statement of Operations
Data:
Revenue................ $77,990 $96,127 $108,685 $137,665 $180,244 $136,309 $157,976
Operating expenses:
Salaries and employee
benefits.............. 53,402 66,379 77,215 98,272 125,308 93,605 112,452
General and
administrative
expenses.............. 15,420 19,078 20,853 28,681 42,991 31,916 37,462
------- ------- -------- -------- -------- -------- --------
Total operating
expenses............. 68,822 85,457 98,068 126,953 168,299 125,521 149,914
------- ------- -------- -------- -------- -------- --------
Operating income....... 9,168 10,670 10,617 10,712 11,945 10,788 8,062
------- ------- -------- -------- -------- -------- --------
Non-operating income
(expense):
Interest income........ 320 808 1,156 1,385 1,586 865 907
Interest expense....... (184) (180) (207) (180) (150) (90) (339)
Other income (expense). 71 89 108 (94) 486 173 143
------- ------- -------- -------- -------- -------- --------
Total non-operating
income (expense)..... 207 717 1,057 1,111 1,922 948 711
------- ------- -------- -------- -------- -------- --------
Equity in net income
(loss) of affiliate... 725 1,252 778 775 115 287 (612)
------- ------- -------- -------- -------- -------- --------
Income before income
taxes................. 10,100 12,639 12,452 12,598 13,982 12,023 8,161
Provision for income
taxes................. 4,356 6,297 6,094 6,149 7,484 6,404 4,334
------- ------- -------- -------- -------- -------- --------
Net income............. $ 5,744 $ 6,342 $ 6,358 $ 6,449 $ 6,498 $ 5,619 $ 3,827
======= ======= ======== ======== ======== ======== ========
Basic earnings per
common share.......... $ 40.08 $ 39.64 $ 38.42 $ 33.75 $ 22.56
======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 158,661 162,718 169,161 166,509 169,624
======== ======== ======== ======== ========
Diluted earnings per
common share.......... $ 40.08 $ 39.64 $ 38.42 $ 33.75 $ 22.56
======== ======== ======== ======== ========
Diluted average common
shares outstanding.... 158,661 162,718 169,168 166,509 169,645
======== ======== ======== ======== ========
Balance Sheet Data (at
end of period):
Working capital........ $13,024 $13,549 $ 17,193 $ 20,628 $ 24,873 $ 30,704 $ 16,029
Total assets........... 41,139 45,058 55,900 68,643 93,640 125,445 148,296
Long-term debt, less
current maturities.... 1,562 735 1,189 993 1,636 572 5,604
Mandatorily redeemable
common stock.......... 17,892 25,818 31,700 39,373 47,459 48,694 48,594
Other Operating Data:
Number of offices (at
end of period)........ 16 18 20 25 28 28 31
Average number of
consultants during the
period................ 94 108 119 137 159 155 192

Selected Financial Data

HSI

Year Ended Nine Months Ended
December 31, September 30,
----------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- --------
(in thousands, except per share, share and other
operating data)

Statement of Operations
Data:
Revenue................ $30,513 $39,634 $52,815 $64,558 $82,732 $54,569 $93,745
Operating expenses:
Salaries and employee
benefits.............. 18,688 24,299 35,249 44,020 59,139 37,565 66,411
General and
administrative
expenses.............. 8,985 10,212 14,264 17,100 20,556 14,574 25,093
------- ------- ------- ------- ------- ------- --------
Total operating
expenses............ 27,673 34,511 49,513 61,120 79,695 52,139 91,504
------- ------- ------- ------- ------- ------- --------
Operating income....... 2,840 5,123 3,302 3,438 3,037 2,430 2,241
------- ------- ------- ------- ------- ------- --------
Non-operating income
(expense)............. (477) (366) 338 133 144 77 (3,843)
------- ------- ------- ------- ------- ------- --------
Minority interest in
income of consolidated
subsidiaries.......... (107) (222) -- -- (26) -- --
------- ------- ------- ------- ------- ------- --------
Income (loss) before
income taxes.......... 2,256 4,535 3,640 3,571 3,155 2,507 (1,602)
Provision for income
taxes................. 650 1,886 1,840 1,430 2,179 1,555 994
------- ------- ------- ------- ------- ------- --------
Net income (loss)...... $ 1,606 $ 2,649 $ 1,800 $ 2,141 $ 976 $ 952 $ (2,596)
======= ======= ======= ======= ======= ======= ========
Basic earnings per
common class A shares. $ 12.44 $ 13.56 $ 5.66 $ 5.67 $(14.12)
======= ======= ======= ======= ========
Basic weighted average
class A common shares
outstanding........... 93,996 102,641 112,098 109,100 119,474
======= ======= ======= ======= ========
Diluted earnings per
class A common shares
outstanding........... $ 12.44 $ 13.56 $ 5.34 $ 5.67 $ (11.44)
======= ======= ======= ======= ========
Diluted weighted
average class A common
shares outstanding.... 93,996 102,641 118,868 109,100 147,474
======= ======= ======= ======= ========
Basic and diluted
earnings per common
class B shares........ $ 9.57 $ 11.39 $ 5.19 $ 5.06 $ (13.81)
======= ======= ======= ======= ========
Weighted average class
B common shares
outstanding........... 65,787 65,787 65,787 65,787 65,787
======= ======= ======= ======= ========
Balance Sheet Data (at
end of period):
Working capital........ $ 4,478 $ 7,908 $ 7,777 $ 9,345 $(2,849) $10,303 $ (2,527)
Total assets........... 15,273 21,998 25,756 32,851 59,947 42,170 62,132
Long-term debt, less
current maturities.... 59 -- -- 267 368 129 63
Mandatorily redeemable
common stock.......... 4,019 6,166 8,323 9,922 12,120 11,532 11,044
Total stockholders'
equity................ 3,112 4,757 5,758 6,399 6,270 6,409 5,623
Other Operating Data:
Number of offices (at
end of period)........ 10 12 13 16 23 19 24
Average number of
consultants during the
period................ 51 55 59 71 95 89 120

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

The following discussion of the historical results of operations and
liquidity and capital resources of H&S Inc. and HSI should be read in
conjunction with the Selected Combined Financial Data and the Audited
Consolidated Financial Statements of H&S Inc., HSI and Mulder and related
notes thereto appearing elsewhere in this Prospectus.

General

The Company is one of the leading global executive search firms and believes
that, based on revenues, it is the largest executive search firm in the United
States and the second largest in the world. The Company offers and conducts
executive search services through its global network of offices to a broad
range of clients, including Fortune 500 companies, major non-U.S. companies,
middle market and emerging growth companies, governmental and not-for-profit
organizations, and other leading private and public entities.

Throughout their history, H&S Inc. and HSI have operated as a single entity,
and from the time of founding in 1953 until 1984, operated under a single
ownership structure. In 1984, H&S Inc. consummated a spin-off of HSI to its
European partners while retaining a significant equity interest. H&S Inc. and
HSI plan to consummate the Merger in order to reunite the two companies into a
single ownership structure. The selected financial data set forth herein
reflects the historical operations of each of H&S Inc. and HSI.

Pursuant to their focused growth strategies, H&S Inc. and HSI each completed
an acquisition in the past year. In June 1998, H&S Inc. acquired Fenwick, a
Boston-based executive search firm focused on the technology sector. In
October 1997, HSI acquired Mulder, the largest executive search firm in
Germany. Both acquisitions were accounted for using the purchase method of
accounting, with the results of the acquired companies included in H&S Inc.'s
and HSI's respective consolidated statements of income beginning on the date
of each acquisition.

With 59 offices in 30 countries, the Company conducts business using various
currencies. Revenue earned in each country is generally matched with the
associated expenses incurred, thereby reducing currency risk to earnings.
However, because certain assets or liabilities are denominated in non-U.S.
currencies, changes in currency rates may cause fluctuations of the valuation
of such assets or liabilities. For financial information by geographic region,
see Note 12 of "Heidrick & Struggles, Inc. and Subsidiaries--Notes to
Consolidated Financial Statements" and Note 9 of "Heidrick & Struggles
International, Inc. and Subsidiaries--Notes to Consolidated Financial
Statements."

Revenue

The Company's revenue is derived from providing executive search services to
its clients, and is largely a function of average revenue per consultant and
the average number of consultants employed (based on number of months employed
during the period). Average revenue per consultant is a function of the number
of searches performed per consultant and the average fee earned per search.
Revenue largely consists of executive search fees (net of value added taxes in
Europe) and allocated costs. Allocated costs include charges for communication
expenses, research related materials, duplicating and similar items.

Revenue from executive search services is recognized when such services are
billed to clients and substantially rendered. Typically, the Company is paid
an initial retainer for its services equal to approximately one-third of the
estimated guaranteed first year cash compensation for the position to be
filled. In addition, if the actual cash compensation of a placed candidate
exceeds the retainer estimate, the Company will bill the client for one-third
of the excess. Allocated costs are calculated as a percentage of the expected
search fee for an assignment with certain dollar caps per search. The Company
generally bills its clients for its initial retainer and allocated costs in
one-third increments over a 90-day period commencing in the month of the
initial acceptance or confirmation of the contract by its client.

With respect to each executive search assignment, the Company and its client
enter into a contract, which outlines the general terms and conditions of the
assignment. These contracts generally are cancelable at the option of either
party with compensation payable pro rata for the first 90 days.

Because newly-hired consultants require a large initial investment in
signing bonuses, guaranteed bonuses and salaries and benefits for associated
support staff and do not tend to immediately provide proportionately higher
revenues, the Company's average revenue per consultant and overall
profitability are typically negatively impacted by such new hires in the short
term.

Operating Expenses

The Company's operating expenses are divided into two general categories:
(i) salaries and employee benefits; and (ii) general and administrative
expenses.

Salaries and employee benefits. The largest components of the Company's
operating expenses are compensation and benefits paid to consultants,
executive officers and administrative and support personnel, of which the most
important constituent parts are salaries and annual bonuses. Other items
included in this category are signing bonuses and guaranteed bonuses (often
incurred in connection with the hiring of new consultants), payroll taxes,
profit sharing and retirement benefits and employee insurance benefits. In
recent quarters the Company has hired a larger than normal number of
consultants, which has resulted in a higher than normal level of signing
bonuses and guaranteed bonuses. A consultant's base salary represents, on
average, less than one-half of the consultant's total annual compensation.
Typically, a portion of the credit for a particular assignment goes to the
consultants who originate the executive search assignment, and a portion goes
to the consultants who perform the executive search assignment. In addition, a
portion of each consultant's annual compensation is based on management's
assessment of that consultant's teamwork.

General and administrative expenses. The key components of general and
administrative expenses include rent, information systems costs, general
office expenses and professional service costs (including legal, accounting
and third party professional services). In addition, general and
administrative expenses include depreciation, amortization and allowance for
doubtful accounts.

Non-Operating Income (Expense)

Non-operating income (expense) consists of interest income, interest expense
and other income and expenses.

Equity in Net Income (Loss) of Affiliate

H&S Inc. holds a significant interest in HSI. For H&S Inc., equity in net
income (loss) of affiliate relates to the income earned or loss incurred from
H&S Inc.'s investment in HSI after giving effect to currency translation
adjustments.

Taxes

H&S Inc. and HSI are subject to federal, state and non-U.S. income taxes.
Income generated outside of the United States may be subject to higher tax
rates than U.S. income. As a result, the Company's effective tax rate may be
higher than prevailing U.S. tax rates. Historically, certain non-deductible
expenses have increased the Company's effective tax rate. H&S Inc.'s and HSI's
provisions for income taxes reflects their best judgment as to the likely
effective tax rate for a given period. In recent periods, due to volatility in
their actual effective income tax rates, HSI has increased its provision for
income taxes while H&S Inc. has decreased its provision for income taxes.

Year 2000 Compliance

The Year 2000 issue is the result of computer programs being written to use
two digits to define year dates. Computer programs running date-sensitive
software may recognize a date using "00" as the year 1900 rather than the Year
2000. This could result in systems failures or miscalculations causing
disruptions of operations. The Company utilizes information technology to
facilitate (i) its search processes communications with candidates and clients
and (ii) its financial management systems and other support systems.

The Company believes that failure to be Year 2000 compliant will not have a
significant impact on its human resource functions. However, any failure of
the financial systems to be Year 2000 compliant could hinder timely reporting
of financial data and processing of financial information as these functions
would have to be performed manually using non-networked computers. Failure of
search-related systems might force the Company to use older proprietary
systems to conduct searches and might cause sorting problems lowering
productivity. If any non-information technology system is non-compliant, the
Company will need to replace such a system.

The Company's cost and timing estimates to achieve Year 2000 compliance were
based on numerous assumptions about future events, including third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially
from those anticipated. Specific factors that might cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties.

Recently Issued Financial Accounting Standards

and annual financial statements. It is effective for annual periods beginning
after December 15, 1997 and will be adopted by the Company as of December 31,
1998. The Company does not expect that adoption of this Standard will have an
impact on its consolidated financial position or its results of operations.
However, it is expected that adoption of this Standard will result in
additional footnote disclosure.

During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities," which establishes new standards for
reporting information about derivatives and hedging. It is effective for
periods beginning after June 15, 1999 and will be adopted by the Company as of
January 1, 2000. The Company expects that adoption of this Standard will have
no effect on its consolidated financial position, results of operations or on
disclosures within the financial statements as they currently do not engage in
the use of derivative instruments or other hedging activities.

Results of Operations--H&S Inc.

The following table sets forth selected statements of operations data for
H&S Inc. as a percentage of revenues for the periods indicated:

Nine Months
Ended
Year Ended September
December 31, 30,
------------------- ------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----

Revenue...................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries and employee benefits............. 71.0 71.4 69.5 68.7 71.2
General and administrative expenses........ 19.2 20.8 23.9 23.4 23.7
----- ----- ----- ----- -----
Total operating expenses................. 90.2 92.2 93.4 92.1 94.9
----- ----- ----- ----- -----
Operating income............................. 9.8 7.8 6.6 7.9 5.1
----- ----- ----- ----- -----
Non-operating income (expense):
Interest income............................ 1.1 1.0 0.9 0.6 0.6
Interest expense........................... (0.2) (0.1) (0.1) (0.1) (0.2)
Other income (expense)..................... 0.1 (0.1) 0.3 0.1 0.1
----- ----- ----- ----- -----
Total non-operating income (expense)..... 1.0 0.8 1.1 0.6 0.5
----- ----- ----- ----- -----
Equity in net income (loss) of affiliate..... 0.7 0.6 0.1 0.2 (0.4)
----- ----- ----- ----- -----
Income before income taxes................... 11.5 9.2 7.8 8.7 5.2
Provision for income taxes................... 5.6 4.5 4.2 4.7 2.7
----- ----- ----- ----- -----
Net income................................... 5.9% 4.7% 3.6% 4.0% 2.5%
===== ===== ===== ===== =====

Nine Months Ended September 30, 1998 Compared to the Nine Months Ended
September 30, 1997

Revenue. H&S Inc. revenue increased $21.7 million, or 15.9%, to $158.0
million for the nine months ended September 30, 1998 from $136.3 million for
the nine months ended September 30, 1997. This increase was primarily due to
an increase in the number of confirmed searches resulting from a 24.1%
increase in the average number of consultants employed during the period.
Three new offices were opened after the third quarter of 1997: Melbourne,
Route 128 and Irvine, which generated approximately $5.0 million of revenue
during the first nine months of 1998.

Salaries and employee benefits. H&S Inc. salaries and employee benefits
increased $18.9 million, or 20.1%, to $112.5 million for the nine months ended
September 30, 1998 from $93.6 million for the nine months ended September 30,
1997. As a percentage of revenues, salaries and employee benefits increased
from 68.7% to

71.2%. A majority of this percentage increase was due to signing bonuses and
guaranteed bonuses associated with the hiring of 48 new consultants between
October 1, 1997 and September 30, 1998, consistent with H&S Inc.'s growth
strategy. H&S Inc. also added 38 associates and 83 administrative personnel,
in part to support these consultants.

General and administrative expenses. H&S Inc. general and administrative
expenses increased $5.6 million, or 17.4%, to $37.5 million for the nine
months ended September 30, 1998 from $31.9 million for the nine months ended
September 30, 1997. As a percentage of revenues, general and administrative
expenses increased from 23.4% to 23.7%. This percentage increase was primarily
due to an increase in maintenance and installation expenses, technical support
and equipment rentals associated with IGIS.

Non-operating income (expense). H&S Inc. non-operating income decreased
$237,000, or 25.0%, to $711,000 for the nine months ended September 30, 1998
from $948,000 for the nine months ended September 30, 1997. This decrease is
primarily due to a loss on the sale of certain computer equipment replaced by
new computers in connection with IGIS during the nine months ended September
30, 1998.

1997 Compared to 1996

Revenue. H&S Inc. revenue increased $42.5 million, or 30.9%, to $180.2
million for 1997 from $137.7 million for 1996. This increase was primarily the
result of a 16.1% increase in the average number of consultants employed
during the year and an increase of 12.8% in the average revenue per consultant
to $1.1 million from $1.0 million in 1996. H&S Inc. employed 26 more
consultants at December 31, 1997 than at December 31, 1996. In addition three
new offices were added during 1997: Miami, Philadelphia and Sao Paulo, which
generated approximately $1.5 million of revenue.

Salaries and employee benefits. H&S Inc. salaries and employee benefits
increased $27.0 million, or 27.5%, to $125.3 million for 1997 from $98.3
million for 1996. As a percentage of revenues, salaries and employee benefits
decreased to 69.5% from 71.4%, reflecting increased search team productivity
as revenues increased relatively faster than staffing levels. This improvement
occurred despite an increase of approximately $833,000 in H&S Inc.'s
contributions to the employee 401(k) plan.

General and administrative expenses. H&S Inc. general and administrative
expenses increased $14.3 million, or 49.9%, to $43.0 million for 1997 from
$28.7 million for 1996. As a percentage of revenues, general and
administrative expenses increased to 23.9% in 1997. This percentage increase
principally relates to research and development in connection with the IGIS
initiative.

Non-operating income (expense). H&S Inc. non-operating income increased
$800,000 to $1.9 million for 1997 from $1.1 million for 1996. The increase was
primarily due to the absence of certain losses incurred in 1996 as a result of
H&S Inc.'s relocation of corporate offices in Chicago and an increase in
interest income reflecting higher cash balances during the year.

1996 Compared to 1995

Revenue. H&S Inc. revenue increased $29.0 million, or 26.7% to $137.7
million for 1996 from $108.7 for 1995. This increase was primarily due to a
15.1% increase in the average number of consultants employed and an increase
of 10.1% in the average revenue per consultant to $1.0 million in 1996 from
$915,000 in 1995. H&S Inc. employed 23 more consultants at December 31, 1996
than at December 31, 1995. H&S opened five new offices in 1996 in Caracas,
Charlotte, Lima, Santiago and Singapore, which resulted in a $1.5 million
increase in revenue between 1995 and 1996.

Salaries and employee benefits. H&S Inc. salaries and employee benefits
increased $21.1 million, or 27.3% to $98.3 million for 1996 from $77.2 million
in 1995. As a percentage of revenues, salaries and employee benefits increased
slightly to 71.4% from 71.0%. This percentage increase primarily reflects
increased signing bonuses and guaranteed bonuses associated with hiring 33
consultants in 1996 as compared with hiring 22 in 1995.

General and administrative expenses. H&S Inc. general and administrative
expenses increased $7.8 million, or 37.5%, to $28.7 million for 1996 from
$20.9 for 1995. As a percentage of revenues, general and administrative
expenses increased from 19.2% in 1995 to 20.8% in 1996. This percentage
increase was primarily due to: (i) an increase in the provision for doubtful
accounts and (ii) an increase in professional services costs due to increased
legal and consulting fees relating to an information technology analysis,
certain office openings and consideration of a comparable restructuring. The
provision for doubtful accounts increased to reflect the increase in accounts
receivable of $6.3 million or 30% to $27.2 million for 1996 from $20.9 million
in 1995.

Non-operating income (expense). H&S Inc. non-operating income remained
relatively constant at $1.1 million for both 1996 and 1995. The primary
component was interest income, which increased slightly to $1.4 million for
1996 from $1.2 million for 1995. This increase was offset by asset write-offs
for 1996 relating to the relocation of H&S Inc.'s corporate offices.

Results of Operations--HSI

The following table sets forth selected statements of operations data for
HSI as a percentage of revenues for the periods indicated:

Nine
Months
Ended
Year Ended September
December 31, 30,
------------------- ------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----

Revenue.................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries and employee benefits .......... 66.7 68.2 71.5 68.8 70.8
General and administrative expenses...... 27.0 26.5 24.8 26.7 26.8
----- ----- ----- ----- -----
Total operating expenses............... 93.7 94.7 96.3 95.5 97.6
----- ----- ----- ----- -----
Operating income (loss).................... 6.3 5.3 3.7 4.5 2.4
Non-operating income (loss)................ 0.6 0.2 0.2 0.1 (4.1)
Minority interest in income of consolidated
subsidiaries.............................. 0.0 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Income (loss) before income taxes.......... 6.9 5.5 3.9 4.6 (1.7)
Provision for income taxes................. 3.5 2.2 2.6 2.8 1.1
----- ----- ----- ----- -----
Net income (loss).......................... 3.4% 3.3% 1.3% 1.8% (2.8)%
===== ===== ===== ===== =====

Nine Months Ended September 30, 1998 Compared to the Nine Months Ended
September 30, 1997

Revenue. HSI revenue increased $39.1 million or 71.8%, to $93.7 for the nine
months ended September 30, 1998 from $54.6 million for the nine months ended
September 30, 1997. A significant reason for this increase was the acquisition
of Mulder in the fourth quarter of 1997, which had $15.3 million in revenues
for the nine months ended September 30, 1998. Excluding Mulder, revenue
increased by 43.7% due to an increase in the average number of consultants
from 89 for the nine months ended September 30, 1997 to 122 for the nine
months ended September 30, 1998, and a 26.2% increase in average revenue per
consultant. Two new offices were opened after the first nine months of 1997:
Lisbon and Prague which generated approximately $1.5 million of revenue in the
nine months ended September 30, 1998.

Salaries and employee benefits. HSI salaries and employee benefits increased
$28.8 million or 76.8%, to $66.4 million for the nine months ended September
30, 1998 from $37.6 million for the nine months ended September 30, 1997. As a
percentage of revenues, salaries and employee benefits increased from 68.8%
for the

nine months ended September 30, 1997 to 70.8% for the nine months ended
September 30, 1998. Approximately $4.3 million of this increase was due to the
amortization of deferred compensation expense resulting from the Mulder
acquisition. Excluding the impact of the deferred compensation relating to the
Mulder acquisition, salaries and employee benefits were 66.3% of revenue for
the nine months ended September 30, 1998. This reflects the fact that revenues
have increased in 1998 at a higher rate than salaries and employee benefits,
despite increases in professional and administrative personnel.

General and Administrative Expenses. HSI general and administrative expenses
increased $10.5 million or 72.2%, to $25.1 million for the nine months ended
September 30, 1998, from $14.6 million for the nine months ended September 30,
1997. As a percentage of revenues, general and administrative expenses
remained relatively constant, moving from 26.7% at September 30, 1997 to 26.8%
at September 30, 1998.

Non-operating expenses. HSI's non-operating expenses increased from a net
non-operating gain of $77,000 for the nine months ended September 30, 1997 to
a net non-operating loss of $3.8 million for the nine months ended September
30, 1998. This increase was due primarily to the one-time provision in June
1998 of $2.9 million for the relocation of the London office, and a $91,000
loss on the disposal of computer equipment. The remaining increase was due to
higher interest expense related to borrowings on HSI's line of credit,
borrowings by HSI from H&S Inc. and lower interest income as a result of
reduced cash balances, all resulting from the use of available funds for the
Mulder acquisition, and purchases of certain property and equipment.

1997 Compared to 1996

Revenue. HSI revenue increased $18.1 million, or 28.2%, to $82.7 million for
1997 from $64.6 for 1996. A significant reason for the increase was the
acquisition of Mulder in the fourth quarter of 1997 which contributed revenue
of $5.7 million in 1997. Excluding Mulder, revenue increased by 19.2%,
primarily as a result of a 29.2% increase in the average number of consultants
employed during the period. HSI employed 26 more consultants at December 31,
1997 as compared to December 31, 1996. Excluding the impact of currency
exchange rate fluctuations, the average revenue per consultant increased
slightly from 1996 to 1997. In addition to Mulder, three new offices were
added in 1997: Oslo, Lisbon and Prague which generated approximately $1.9
million in revenue.

Salaries and employee benefits. HSI salaries and employee benefits increased
$15.1 million, or 34.3% to $59.1 million for 1997 from $44.0 million in 1996.
As a percentage of revenue, salaries and employee benefits increased to 71.5%
from 68.2%. This percentage increase was primarily due to approximately $2.4
million of additional compensation and benefits to administrative and support
staff resulting from the hiring of new employees in connection with the
development of enhancements to HSI's executive search system.

General and administrative expenses. HSI general and administrative expenses
increased $3.5 million, or 20.2% to $20.6 million for 1997 from $17.1 million
for 1996. As a percentage of revenue, general and administrative expenses
declined to 24.8% from 26.5%. This decline was due primarily to a reduction in
the provision for doubtful accounts and growth in revenue outpacing increases
in rent, telecommunications and other costs. The provision for doubtful
accounts was decreased to reflect improved collection policies and efforts.

Non-operating income (expense). HSI non-operating income increased by
$11,000 to $144,000 from $133,000 for 1996.

1996 Compared to 1995

Revenue. HSI revenue increased $11.8 million, or 22.2% to $64.6 million for
1996 from $52.8 for 1995. The increase was primarily the result of a 20.3%
increase in the average number of consultants employed and a 1.6% increase in
average revenue per consultant. HSI employed 5 more consultants at December
31, 1996 than at December 31, 1995. Two new offices were added in 1996:
Amsterdam and Copenhagen, which generated approximately $1.4 million in
revenue.

Salaries and employee benefits. HSI salaries and employee benefits increased
$8.8 million or 24.9%, to $44.0 million for 1996 from $35.2 million in 1995.
As a percentage of revenue, salaries and employee benefits increased from
66.7% to 68.2%. This percentage increase primarily reflects the addition of 38
employees and the fact that performance bonuses were paid at a higher
percentage of revenues.

General and administrative expenses. HSI general and administrative expenses
increased $2.8 million, or 19.9%, to $17.1 million for 1996 from $14.3 million
for 1995. As a percentage of revenue, general and administrative expenses
declined from 27.0% to 26.5%.

Non-operating income (expense). HSI non-operating income decreased $205,000
to $133,000 for 1996 from $338,000 for 1995. The decrease was due in part to
reduced interest income on cash balances.

Nonrecurring and Other Charges

During the fourth quarter ending December 31, 1998, the Company incurred,
and during the first quarter ending March 31, 1999 the Company expects to
incur, nonrecurring charges net of income taxes, totaling $27.6 million. These
charges arise in connection with (i) the modification of the terms of the
Mulder acquisition agreement, (ii) the early settlement of certain profit
sharing arrangements in connection with the acquisition of certain Latin
American offices and (iii) the postponement of its initial public offering.

H&S Inc.'s policy on acquisitions is to align as quickly as possible, the
interests of all consultants. The modification of the Mulder agreement was
undertaken to settle the contingent cash and stock payments and eliminate the
employment contingencies relating thereto in order to more closely align the
interests of the Mulder consultants with the interests of the other H&S Inc.
and HSI consultants. Likewise, the early settlement of the profit sharing
agreement in connection with the acquisition of certain Latin American offices
was undertaken for the purpose of fixing the amount of the profit sharing and
thereby aligning the interests of all consultants in Latin America with the
interests of other H&S Inc. and HSI consultants.

Liquidity and Capital Resources

H&S Inc. and HSI periodically evaluate their liquidity requirements, capital
needs and availability of capital resources in view of plans for expansion and
other operating cash needs. Both H&S Inc. and HSI have historically financed
their operations primarily through internally generated funds, supplemented by
sales of common stock to certain key employees and periodic borrowings under
their respective credit facilities. H&S Inc. and HSI have accrued employee
bonuses throughout the year. H&S Inc. has paid such bonuses in December, and
HSI has paid such bonuses in December and March. Employee bonuses are accrued
when earned and are based on the performance of the respective employee and
the Company.

H&S Inc.

H&S Inc. maintained cash and cash equivalents at December 31, 1996 and 1997,
and at September 30, 1998, totalling $7.2 million, $10.1 million and $37.2
million, respectively. Towards these sums, cash flows from operating
activities contributed $5.6 million in 1996 and $6.7 million in 1997
reflecting principally net income from operations. Cash flows from operating
activities contributed $46.8 million for the nine months ended September 30,
1998, reflecting an increase in accrued expenses of $52.1 million, principally
due to accruals for bonuses.

Cash flows from financing activities were $610,000, $6.0 million, and $(4.4)
million for 1996 and 1997 and the nine months ended September 30, 1998,
respectively. H&S Inc.'s financing activities consist principally of sales of
its common stock to employees net of repurchase obligations and borrowings
under its credit facility. H&S Inc.'s long-term debt consists of amounts
payable to former shareholders from whom H&S Inc. has repurchased stock.

H&S Inc. has a $40 million reducing revolving credit facility, which will be
increased to $60 million upon the effectiveness of the Merger. This facility
will terminate on December 31, 2001. In the case of a $40 million line of
credit, the facility reduces annually by $5 million on December 31, 1999 and
2000, and in the case of a $60 million line of credit, the facility reduces
annually by $10 million on December 31, 1999 and 2000. There was $22 million
outstanding under the line of credit at December 31, 1998. These borrowings
bear fixed interest at either (i) the then existing LIBOR plus an applicable
margin as determined by certain tests of H&S Inc.'s financial condition (the
"Applicable Margin") or (ii) the then existing prime rate, at H&S Inc.'s
discretion. At December 31, 1998, the interest rate on the debt was LIBOR plus
the Applicable Margin, which sum equaled approximately 6.8%. The line of
credit has certain financial requirements H&S Inc. must meet relating to net
worth, liabilities and cash flows. As of December 31, 1998, H&S Inc. met all
of its financial requirements. H&S Inc. is required to pay commitment fees on
the unused portion of the line of credit on a quarterly basis. See Note 5 to
Consolidated Financial Statements.

Capital expenditures amounted to $6.7 million, $5.7 million and $10.3
million for 1996 and 1997 and the nine months ended September 30, 1998,
respectively. These expenditures consisted primarily of system development
costs, office furniture and fixtures, leasehold improvements and computer
equipment and software. The system development costs relate primarily to H&S
Inc.'s IGIS initiative. IGIS expenditures of $1.2 million in 1997 and $6.9
million for the nine months ended September 30, 1998 have been capitalized.
Additional capital expenditures of $9.5 million are expected to be made
through the end of the first quarter of 1999 and will begin to be amortized in
the second quarter of 1999.

HSI.

HSI maintained cash and cash equivalents at December 31, 1996 and 1997, and
at September 30, 1998, amounting to $8.2 million, $8.1 million and $7.6
million, respectively. Towards these sums, cash flows from operating
activities contributed $6.3 million in 1996 and $6.9 million in 1997,
principally reflecting increases in working capital, non-cash expenses for
depreciation and amortization and net income offset by accruals for bonuses in
connection with the Mulder acquisition. For the nine months ended September
30, 1998, cash flows used in operating activities were $8.2 million,
reflecting increases in non-cash expenses for depreciation and amortization
and increases in accrued expenses, principally due to accruals for bonuses.

Cash flows from financing activities were $331,000, $9.7 million and $(3.9)
million, for 1996 and 1997 and at September 30, 1998, respectively. Borrowings
during 1997 increased significantly in connection with certain payments to
finance the Mulder acquisition. Borrowings during this period principally
reflect funding of employee bonuses paid in March and the purchase of certain
property and equipment. HSI's financing activities include borrowings and
payments on its credit facility, purchase and sales of its common stock to
employees and borrowings under a loan agreement with H&S.

HSI's long-term debt consists of amounts payable to former shareholders who
have sold their stock back to HSI. To provide additional liquidity, HSI has an
$8.0 million multicurrency line of credit. This facility will reduce to $4.9
million on March 1, 1999, $1.1 million on May 1, 1999 and will terminate on
May 31, 1999. The borrowings bear interest at the Euro OverNight Index Average
("EONIA") plus 100 basis points or LIBOR plus 100 basis points, depending on
the currency of the borrowing. The borrowings can be drawn in Euros, ECU or
British Pounds. At 12/31/98, there was $3.4 million outstanding under the
facility and the interest rate was 4.57%.

Capital expenditures totaled $2.0 million, $6.0 million and $6.3 million for
1996 and 1997 and the nine months ended September 30, 1998, respectively.
These expenditures consisted primarily of purchases of office furniture and
fixtures, computer equipment and software. Additionally, HSI made payments of
$10.2 million in cash and stock in connection with the Mulder acquisition
during 1997.

Quarterly Comparisons

The following table sets forth certain quarterly financial information of
H&S Inc. and HSI for each quarter of 1997 and for the first two quarters of
1998. The information is derived from the quarterly financial statements of
the companies which are unaudited but which, in the opinion of management,
have been prepared on the same basis as the financial statements included
herein and include all adjustments, consisting only of normal recurring items,
necessary for the fair presentation of the information for the periods
presented. The financial data shown below should be read in conjunction with
the respective Consolidated Financial Statements and Notes thereto. The
operating results for any quarter are not necessarily indicative of results
for any future period.

H&S Inc.

Three Months Ended
------------------------------------------------------------------------------
March 31, June 30, September 30, December 31, March 31, June 30, September 30,
1997 1997 1997 1997 1998 1998 1998
--------- -------- ------------- ------------ --------- -------- -------------
(in thousands)

Revenue................. $39,973 $46,375 $49,961 $43,935 $45,937 $52,778 $59,261
Operating income........ 1,440 3,965 5,383 1,157 827 2,742 4,493
Net income.............. 890 1,767 2,962 879 51 1,192 2,584

HSI

Three Months Ended
-------------------------------------------------------------------------------
March 31, June 30, September 30, December 31, March 31, June 30, September 30,
1997 1997 1997 1997 1998 1998 1998
--------- -------- ------------- ------------ --------- -------- -------------
(in thousands)

Revenue................. $17,953 $18,121 $18,495 $28,163 $28,053 $31,402 $34,290
Operating income (loss). 1,479 629 322 607 (103) 1,195 1,149
Net income (loss)....... 724 214 14 24 (652) (2,193) 249

THE COMPANY

General

Heidrick & Struggles International, Inc. is one of the leading global
executive search firms and believes that, based on revenues, it is the largest
executive search firm in the United States and the second largest in the
world. With over 46 years of experience in fulfilling its clients' leadership
needs, H&S offers and conducts executive search services in nearly every major
business center in the world. The Company's services focus on the
identification, evaluation and recommendation of qualified candidates for
senior level executive positions. Through its worldwide network of
approximately 800 professionals in 59 offices, H&S provides executive search
services to a broad range of clients, including Fortune 500 companies, major
non-U.S. companies, middle market and emerging growth companies, governmental
and not-for-profit organizations and other leading private and public
entities. The size of the Company's business has grown significantly over the
past five years as evidenced by the fact that the combined worldwide revenues
of H&S Inc. and HSI have grown at a compound annual rate of approximately 25%.

Executive Search Industry Overview

Executive search firms are generally separated into two broad categories:
retained search firms and contingency search firms. Retained search firms
fulfill their clients' senior leadership needs by working on a consultative
basis with clients in identifying, evaluating, assessing and recommending
qualified candidates for senior level positions, typically with annual cash
compensation of $100,000 and above. Retained firms generally are compensated
for their services whether or not they are successful in placing a candidate,
and are generally retained on an exclusive basis. On the other hand,
contingency search firms focus primarily on mid-level positions with annual
cash compensation of less than $150,000. Contingency firms are compensated
only upon successfully placing a recommended candidate and are generally not
hired on an exclusive basis or involved in the evaluation, assessment or
recommendation of candidates. Both types of firms are normally paid a fee for
their services equal to approximately one-third of the first year total cash
compensation for the position being filled.

According to Kennedy, a leading industry source, revenue in the executive
search industry historically has been divided almost evenly between retained
and contingency search firms; however, retained search firms are estimated by
Kennedy to employ only one-third of the consultants in the industry. Thus, the
average revenue per consultant for retained firms generally is substantially
higher than for contingency firms.

Worldwide executive search industry revenue has grown at a 20% compound
annual growth rate from approximately $3.5 billion in 1993 to approximately
$7.3 billion in 1997 according to Kennedy. The executive search industry is
highly fragmented, consisting of more than 4,000 executive search firms
worldwide. According to Kennedy's Executive Recruiter News ("ERN"), more than
80% of retained firms and approximately 90% of contingency firms generated
less than $2 million in revenues in 1997.

H&S believes that a number of favorable trends are contributing to the
growth of the executive search industry, including the following:

Increased Competition for Executive Talent. Historically, it was typical for
executives to spend an entire career with one or two organizations. However,
in today's rapidly changing business environment, companies have been
aggressively seeking outside talent and, as a result, successful executives
are often recruited by a number of different organizations in various
geographic locations over the course of their careers. This increase

in competition for management talent and the resulting executive turnover has
forced many companies to seek assistance in recruiting executives on a more
frequent basis. Increased competition has also caused compensation levels for
executives to increase considerably over the past several decades. Because
fees for executive search firms are based on cash compensation, higher cash
compensation levels have translated into higher executive search fees.

Greater Acceptance by Corporate Leadership of the Use of Executive Search
Consultants. The influence of a number of factors, including larger
institutional shareholdings, a rise in shareholder activism and a greater
concern for corporate governance have led many boards of directors and company
management teams to expect that their choices of senior executives will be
under greater scrutiny than was the case in the past. As a result of these
trends, many boards of directors and company management teams hire outside
executive search firms to advise them with respect to their selection and
recruitment of executives.

Increased Globalization of Business. The increasing globalization of
business has created demand, particularly from multinational enterprises, for
executives in parts of the world in which such enterprises do not have
significant prior operating experience. Because the process of identifying and
evaluating candidates across national borders can be difficult, these
enterprises have turned to executive search firms for assistance.

Increased Demand for Executive Search Services by Start-up and Newly-
acquired Companies. The recent growth in the amount of capital available for
investment in start-up companies and for acquisitions has created a need for
talented executives to manage these entities. The activities of private equity
investors and venture capital firms have been accelerating at such a pace that
they often find it difficult to identify leaders for the companies in which
they invest, and these investors have often sought the services of executive
search firms to aid them in this task.

Greater Need for Executives with Diverse Leadership Skills. In response to a
rapidly changing business environment, companies are setting more stringent
hiring standards for senior executives. The process of identifying and
evaluating such executives is therefore becoming more difficult and, as a
result, companies are increasingly relying on executive search firms to help
them meet their leadership needs.

Reduction in Number of Layers of Management. The recent trend of corporate
"right-sizing" by eliminating certain layers of management at a number of
companies has effectively reduced the pool from which such companies can draw
talented managers. In lieu of the traditional practice of grooming leaders
from within, companies have increasingly used executive search firms to find
appropriate talent from outside their organization.

Key Competitive Strengths

The Company believes that it possesses several key competitive strengths
which position it to capitalize on the growing demand for its services. These
strengths include the following:

Experienced Team of Executive Search Consultants. As of December 31, 1998,
the Company employed 349 consultants who, on average, have approximately 11
years of experience in executive search and 9 years of experience in other
industries. H&S believes that this depth of experience is a prerequisite to
the effective performance of senior level executive searches. The Company
attributes its success in attracting and retaining such high caliber
consultants to its premier reputation, unique team oriented culture and
performance-based compensation system. The Company believes that its
attractiveness as an employer is reflected in its low turnover rate among its
consultants. For the period from January 1, 1995 through December 31, 1998, an
annual average of fewer than 1.5% of H&S's consultants have left to work
elsewhere in the executive search industry. Under

the Company's compensation system, a portion of the bonus for a particular
assignment goes to the consultants who originate the executive search
assignment, and a portion goes to the consultants who perform the executive
search assignment. In addition, a portion of each consultant's annual
compensation is based on management's assessment of that consultant's
teamwork. This compensation component encourages the Company's consultants to
work as a team and is part of the reason that 59% of the executive searches
performed in 1998 by H&S were shared by two or more consultants. The incentive
to utilize the differing talents of the Company's consultants means that those
who originate an assignment outside of their area of expertise often bring
that assignment to those with a specific industry or functional skill to
execute the search.

Global Presence. The Company's 59 offices are located in major business
centers in 30 countries around the world. The Company's global presence
enables it to serve the needs of multinational companies and local businesses
worldwide, and provides it with access to an international network of
candidates and referral sources. The Company's offices in North America,
Europe, Asia Pacific and Latin America employ 174, 132, 28 and 15 consultants,
as of December 31, 1998, respectively, and generated 1998 revenues of $180
million, $125 million, $14 million and $10 million, respectively. The
Company's global reach allows it to benefit from the increasing globalization
of business and the demand, particularly from multinational enterprises, for
assistance in identifying and evaluating candidates for executive positions
across national borders.

Emphasis on Senior Level Executive Search. H&S is an industry leader in
placing senior level executives within the world's largest and most complex
organizations. Approximately 66% of the executive searches performed by the
Company worldwide, representing approximately 73% of revenues (and
approximately 50% of the searches performed in North America, representing
approximately 81% of revenues) in 1998 were for CEOs, presidents, CFOs, COOs,
CAOs, CIOs, members of boards of directors and other senior management
positions (such as division heads). These senior level executive searches
generally provide a higher level of revenue per search and result in greater
visibility with the Company's clients and within the executive search
industry. The Company believes that performing senior level, high profile
executive search assignments: (i) strengthens its brand name recognition and
contacts with leading decision makers, referral sources and high caliber
candidates; (ii) enhances H&S's ability to secure other senior level executive
searches and (iii) enables the Company to attract and retain highly qualified
consultants.

Industry Practice Groups and Functional Specialties. H&S's business is
organized around seven core industry practice groups, each focused on a
specific industry. These core industry practice groups are international
technology, industrial, consumer products, financial services, health care,
professional services and higher education/not-for-profit. Certain H&S
consultants also specialize in searches for functional positions such as
members of boards of directors, CEOs, CFOs and CIOs. The Company believes that
its operational structure provides its clients with superior executive search
services by enabling its consultants to successfully build relationships with
candidates and referral sources and to understand its clients' cultures,
operations, business strategies and industries. These factors are critical to
understanding clients' and candidates' needs and ultimately to the successful
placement of a candidate. The Company's industry practice groups and
functional specialties emphasize H&S's consultative approach and are designed
to build and maintain long-term relationships with its clients.

Global Support Platform. The Company's consultants work with a team of 440
associates, as of December 31, 1998, all of whom have access to a
sophisticated global technology infrastructure. This technology infrastructure
consists of internally developed proprietary global databases containing over
840,000 candidate profiles and over 29,000 company records, coupled with a
broad range of on-line services and industry reference sources. H&S also
deploys advanced Internet-based technology to support the research needs of
the Company's professionals. The Company believes that its global support
structure enables its professionals to complete searches efficiently and
effectively. Given the importance of technology to the search process, H&S is
continuing to improve its information management infrastructure by
implementing its Integrated Global Information System ("IGIS"), an ongoing
strategic technology initiative. IGIS is designed to enhance the
functionality, speed and quality of the Company's information management. See
"--Assignment Research and Information Management."

Growth Strategy

Expand and Develop Client Relationships. The Company continually seeks to
expand its relationships with existing clients and to develop new client
relationships. The Company accomplishes this by continuing to (i) aggressively
pursue the highest level executive search assignments, (ii) expand the breadth
and depth of its industry practice groups and functional specialties, (iii)
offer services across a broadening range of geographic locations by
strategically opening offices in cities where H&S is not currently located and
(iv) actively recruit consultants who have the demonstrated ability to expand
the Company's client base. Historically, the Company has successfully expanded
its client base and generated repeat business from existing clients. For
example, H&S had over 1,800 clients in 1995 and over 3,100 in 1998. Of the
searches performed in 1998, more than 75% were on behalf of clients for whom
it had conducted multiple assignments over the last six years. As appropriate,
H&S will strategically open new offices in cities where it is not currently
located in order to serve the needs of its clients and plans to open one or
two offices in each of the next several years. Between 1995 and 1998,
including through acquisitions, the Company added 26 offices and 181
consultants.

Pursue Strategic Acquisitions. The executive search industry is highly
fragmented, consisting of more than 4,000 executive search firms worldwide.
The industry has been consolidating in recent years as a number of smaller
firms have joined with larger firms in the industry, such as H&S, in order to
gain the benefits of superior managerial, financial and technological
resources. The Company maintains a focused acquisition strategy designed to
acquire executive search firms with complementary corporate cultures in order
to increase its penetration in existing and new geographic markets and expand
the depth and breadth of its industry practice groups and functional
specialties. The Company has completed a number of strategic acquisitions
worldwide that are consistent with its acquisition strategy. See "--Recent
Acquisitions."

Enhance Executive Search Professional Productivity. The Company believes
that its consultants generate one of the highest levels of average revenue per
consultant in the industry. H&S's consultants generated an average revenue per
consultant of $1.2 million in the U.S. in 1997 as compared to $809,000 for the
average of the other nine of the largest ten U.S. executive search firms. H&S
believes that its infrastructure can be leveraged to allow for increases in
the productivity of its executive search professionals. Specifically, the
Company expects that its IGIS initiative will enable H&S's professionals to
access a greater amount of information sources more quickly and to perform
more sophisticated search functions to help them identify candidates more
efficiently and effectively. IGIS will provide the Company with a scalable
technology infrastructure that will support a significant number of additional
users without significant incremental costs.

Pursue New, Complementary Lines of Business. H&S expects that it will expand
the range of services it offers, including Internet-based recruiting, interim
management placement and board of directors consulting services. The Company's
Internet-based recruiting initiative is designed to serve clients' growing
demand for technology professionals. The Internet service provides a unique
end-to-end recruiting solution for candidate identification, screening, degree
and job verification and client workflow management to expedite the search
process. Clients interact with the Internet service through a secure Internet
site where they may analyze pre-screened candidates for opportunities in the
$75,000 to $150,000 annual compensation range. The Company's Internet-based
recruiting service is in the pilot project phase and is expected to be
formally launched in the first half of 1999.

Services

H&S provides executive search services exclusively on a retained basis for a
broad range of clients, including Fortune 500 companies, major non-U.S.
companies, middle market and emerging growth companies, governmental and not-
for-profit organizations and other leading private and public entities.

The H&S executive search process typically consists of the following steps:
(i) analyze the client's needs in order to (a) determine the required set of
skills for the position, (b) understand its organizational structure,
relationships and culture, (c) define the required experience and (d) identify
the other characteristics necessary for the successful candidate; (ii) prepare
a written position specification that outlines the responsibilities of the

position, qualifications required of the ideal candidate, and criteria for
success; (iii) share the written specification with (a) other H&S consultants
with relevant industry and functional expertise to pinpoint referral sources
and candidates and (b) the research team which will identify candidates from a
broad range of sources; (iv) identify candidates; (v) interview and evaluate
candidates on the basis of experience and potential cultural fit with the
client organization; (vi) present confidential written reports on the
candidates who most closely fit the position specification; (vii) schedule a
mutually convenient meeting between the client and each candidate; (viii)
collect references on the final candidate and (ix) assist in structuring of
the compensation package and supporting the successful candidate's integration
into the client team.

Company Organization

The Company's operational structure is designed to provide high quality
executive search services to its clients worldwide. The Company organizes its
team of executive search consultants by (i) industry practice groups, (ii)
functional specialties and (iii) geography, through its network of offices. On
a given search assignment, the Company will generally utilize the expertise of
consultants in more than one of its offices, industry practice groups and
functional specialties. For example, an executive search for a CIO of a
financial services company located in London may involve an executive search
consultant in London with an existing relationship with the client, another
executive search consultant in New York with expertise in the financial
services practice group and a third executive search consultant in Menlo Park
with expertise in CIO recruiting. By combining consultants with varying
geographic, industry and functional expertise, the Company believes that it
can best ensure the successful completion of executive search assignments for
its clients.

Industry Practice Groups. The Company's business is organized around seven
core industry practice groups, each focused on a particular industry. These
core industry practice groups and their relative sizes, as measured by
revenues, are as follows:

Percentage of
Industry Practice Group 1998 Revenue
----------------------- -------------

International Technology.................................... 27%
Financial Services.......................................... 19
Industrial.................................................. 19
Consumer Products........................................... 17
Health Care................................................. 8
Professional Services....................................... 4
Higher Education/Not-for-Profit............................. 3
Other....................................................... 3
---
100%

Consultants from each of these industry practice groups can be located in
any one of the Company's offices. Certain markets have a significant
concentration of companies within particular industry sectors, and the Company
has staffed its offices accordingly. For example, the Company's financial
services practice group has its largest concentration of consultants in New
York and London, the two largest financial centers in the world. Each industry
practice group is coordinated by a Practice Managing Partner who (i)
establishes marketing and search strategies, (ii) identifies focused accounts
and target clients and (iii) facilitates and assists the marketing activities
of the consultants in the group. The Company believes that this operational
structure provides its clients with superior services by enabling its
consultants to successfully build relationships with candidates and referral
sources within particular industries and to understand its clients'
operations, business strategies and industry dynamics and company culture. H&S
believes that these factors are critical to the successful placement of a
candidate.

Functional Specialties. H&S recognizes that the task of searching for
candidates for certain executive positions often requires specialized skills
in much the same way as a search for an executive in a particular industry. As
a result, certain H&S consultants specialize in searches for particular
positions such as a board of directors member, CEO, CFO or CIO. Typically, a
consultant in a particular industry practice group who receives

an assignment for a given functional position will consult with one or more
colleagues with the appropriate functional expertise throughout the search
assignment. This coordination benefits the Company's clients because the best
candidate for certain functional positions often will come from a different
industry. For example, a client in the industrial sector seeking a new CIO may
benefit from exposure to a candidate whose background is in the health care
sector, even though that candidate may be less well known by the members of
H&S's industrial practice group. Since the Company's functional specialists
tend to have experience with appropriate candidates from many different
industries, they can bring experience from a range of industry practice groups
to the assignment.

Global Network. H&S is a major executive search presence through its global
network of 59 offices located in 30 countries, and offers and conducts
executive searches in nearly every major business center in the world. Each
office is managed by an Office Managing Partner and staffed with consultants,
associates, administrative assistants and other support staff. While central
administrative functions are provided by the Chicago office, each region has
or will have its own regional manager as well as research and support
functions.

The following listing sets forth the regions, countries and locations where
HSI and H&S Inc. maintained offices and had affiliated offices as of September
30, 1998:

Region Country Location
- ------------- ------------- -----------------

North America United States Atlanta, GA
Boston, MA
Charlotte, NC
Chicago, IL
Cleveland, OH
Dallas, TX
Greenwich, CT
Houston, TX
Irvine, CA
Jacksonville, FL
Los Angeles, CA
Menlo Park, CA
Miami, FL
New York, NY
Philadelphia, PA
Route 128, MA
San Francisco, CA
Tysons Corner, VA
Washington, DC
Canada Toronto
Asia Pacific Australia Melbourne
Sydney
Hong Kong Hong Kong
India New Delhi
Japan Tokyo
Singapore Singapore
Latin America Argentina Buenos Aires
Brazil Sao Paulo
Chile Santiago
Mexico Mexico City
Peru Lima
Venezuela Caracas

Region Country Location
- ----------- --------------- ------------------

Europe Belgium Brussels
Czech Republic Prague
Denmark Copenhagen
Finland Helsinki
France Paris
Germany Berlin
Dresden
Dusseldorf
Frankfurt
Hamburg
Munich (2 offices)
Italy Milan
Rome
The Netherlands Amsterdam
Norway Oslo
Poland Warsaw
Portugal Lisbon
Russia Moscow
Spain Barcelona
Madrid
Sweden Stockholm
Switzerland Geneva
Zurich
United Kingdom London
Manchester
Middle East Israel Tel Aviv
Africa South Africa Capetown*
Johannesburg*

North America
*Affiliate

H&S Inc. has 19 offices in the United States and one in Canada and, as of
December 31, 1998, employed a total of 174 consultants in the region.
Approximately 55% of the Company's worldwide revenues in 1998 were generated
in the United States and Canada. The largest offices in the North American
region in terms of revenues are New York, Menlo Park and Chicago. The New York
office is a leader of the financial services practice, the

Menlo Park office is the center of the Company's international technology
practice, and the Chicago office has a diverse practice which includes a
significant concentration of consultants in the industrial and health care
practices.

Europe, Middle East and Africa

HSI has 26 offices in 16 European countries, one office in the Middle East
and a strategic alliance with an affiliate having two offices in South Africa
and, as of December 31, 1998, employed 132 consultants in the region.
Approximately 38% of the Company's worldwide revenues in 1998 were generated
by HSI. The Company's offices in Germany, the United Kingdom and France
generate the highest revenues of the H&S offices in the region. The markets in
Germany and the United Kingdom are the two largest executive search markets in
Europe, and the Company has a strong market position in both of these
countries. In 1997, H&S believes that (with the inclusion of Mulder) it
generated more revenue than any other executive search firm in Germany, and,
as measured by revenues, was the fourth largest in the United Kingdom. The
German practice grew significantly with H&S's 1997 acquisition of Mulder, and
presently there are seven H&S offices in Germany. See "--Recent Acquisitions."
The United Kingdom office is a leader in financial services placement, largely
serving the needs of multinational British financial enterprises based in the
City of London.

Asia Pacific

H&S Inc. has offices in Melbourne, Sydney, New Delhi, Hong Kong, Tokyo and
Singapore and, as of December 31, 1998, employed 28 consultants in the Asia
Pacific region. Approximately 4% of the Company's worldwide revenues in 1998
were generated in the Asia Pacific region. The focus of the Company in the
Asia Pacific region is to serve the regional needs of multinational
corporations headquartered in the United States and Europe.

Latin America

H&S Inc. has six offices and, as of December 31, 1998, employed 15
consultants in Latin America. Approximately 3% of the Company's worldwide
revenues in 1998 were generated in the Latin American region. Similar to the
Company's focus in the Asia Pacific region, the focus of the Company in the
Latin American region is to serve the regional needs of multinational
corporations headquartered in the United States and Europe.

Clients and Marketing

The Company has a diverse group of clients in a variety of industries
located throughout the world, including Fortune 500 companies, major non-U.S.
companies, middle market and emerging growth companies, governmental and not-
for-profit organizations and other leading private and public entities. No
single client accounted for over 2% of the Company's revenues in 1998.
Historically, the Company has been successful both in adding to its client
base and in generating repeat business from existing clients. For example, H&S
was engaged by over 1,800 clients in 1995 and over 3,100 in 1998, and, of the
searches performed in 1998, more than 75% were on behalf of clients for whom
it had conducted multiple assignments over the last six years.

The Company's consultants market the firm's executive search services
through two principal means: (i) targeted client calling and (ii) industry
networking with clients and referral sources. These efforts are assisted by
the Company's databases which provide all H&S consultants with up to date
information as to contacts made by their colleagues with particular referral
sources, candidates and clients.

In addition to its active marketing, the Company benefits from a significant
number of referrals generated by its reputation for successfully completed
assignments. To build on this advantage, H&S seeks to develop an enhanced
awareness of the Heidrick & Struggles brand name. As a result of its efforts,
H&S is more frequently invited to make presentations to prospective clients,
often competing for executive search engagements with major competitors in the
industry. In 1998, H&S succeeded in obtaining executive search engagements
from a majority of the presentations in which it participated. The Company
publishes a quarterly leadership journal, The Art of Taking Charge, which is
distributed to senior executives, featuring interviews with business leaders
and publicizes the Company's brand name.

One of the limitations of the firm's marketing is the existence or
anticipated existence of blocking arrangements. Either by agreement with
clients or for client relations purposes, executive search firms frequently
refrain from recruiting employees of a client, and possibly other entities
affiliated with that client, for a specified period of time (generally not
more than one year). See "Risk Factors--Restrictions Imposed by Blocking
Arrangements." H&S actively manages its blocking arrangements and seeks to
mitigate adverse effects of blocking by strengthening its long-term
relationships with focused accounts. Additionally, in recent years market
conditions and industry practices have resulted in blocking arrangements that
are becoming narrower in scope and shorter in duration.

Assignment Research and Information Management

The Company's technology infrastructure consists of internally developed
global databases containing over 840,000 candidate profiles and approximately
29,000 client records, coupled with a broad range of on-line services and
industry reference sources. H&S's professionals use the Company's information
technology infrastructure to (i) gather business intelligence regarding
clients' businesses, industries, competitors and strategies, (ii) develop and
manage company and candidate profiles, (iii) identify market needs and new
business opportunities and (iv) coordinate and implement marketing,
communication, financial and administrative functions. The Company believes
that its global support structure allows its professionals to complete
searches efficiently and effectively. Given the importance of technology to
the search process, H&S is continuing to improve its information management
infrastructure by implementing IGIS. IGIS is designed to enhance the
functionality, speed and quality of the Company's information management.

IGIS represents a long-term strategic initiative for the deployment of
technology and is designed to support rapid growth of the Company. Phase I of
IGIS will upgrade the Company's financial management systems and the H&S
search system and is expected to be operational in the second quarter of 1999.
A PeopleSoft based financial management system will provide a fully integrated
worldwide accounting and financial reporting system. An Oracle-based search
system will allow H&S consultants to more efficiently and effectively manage
complex search assignments, while keeping them informed about client and
candidate contacts. The IGIS upgrades will also enhance the ease and speed of
use and information processing on the Internet, one of the Company's most
valuable information tools. The Company uses Internet technology in three
primary ways: (i) as an external source of information through the broad range
of online information resources, (ii) through the Company's intranet, as a
tool for organizing and accessing its internally generated information,
including H&S's proprietary databases and (iii) through the Company's
extranet, Heidrick.com, as a means of connecting clients and candidates on a
secure network where each can review information about the other. Phase II of
IGIS will deploy refinements to the financial and search systems as well as
new systems to provide tailored automated data reporting and financial and
operating information to the Company's senior managers.

The Company's information technology infrastructure, including IGIS, is
overseen by a technology management team led by H&S's Managing Partner of
Global Technology. Among other services, this team provides the Company's
employees with coordinated training programs. To address issues of data
security associated with increasing remote database access, the Company uses
password protection and conducts regular security audits. In addition, the
Company currently utilizes video-conferencing technology in many of its
locations. This technology facilitates candidate interviews and presentations
to client search committee members in different locations. The Company intends
to continue to develop its technology infrastructure as its and its clients'
needs evolve.

Professional Staff and Employees

As of December 31, 1998, H&S had 1,483 full time employees, of which 349
were consultants, 440 were associates and 694 were corporate and support
staff. In each of the last five years, no consultant accounted for any
material portion of the Company's revenues. H&S is not a party to any
collective bargaining agreement and considers relations with its employees to
be good. H&S Inc.'s and HSI's executive search professionals are categorized
either as consultants or associates. Associates assist consultants by
performing research and other functions.

Competition

The executive search industry is highly competitive. It is estimated that
there are more than 4,000 executive search firms worldwide. There are
relatively few barriers to entry and new competitors frequently enter the
market. While H&S faces competition to some degree from all firms in the
industry, the Company believes its most direct competition comes from other
retained search firms. In particular, H&S competes with the largest global
search firms: Korn/Ferry International, Russell Reynolds Associates, Inc.,
SpencerStuart & Associates and Egon Zehnder International. To a lesser extent,
H&S also faces competition from smaller boutique or specialty firms that
specialize in certain regional markets or industry segments. Each firm with
which H&S competes is also a competitor in seeking to attract the most
effective consultants. In the Company's experience, the executive search
business is more quality-sensitive than price-sensitive. As a result, H&S
competes on the level of service it offers, reflected by its industry practice
groups, functional specialties and client focus, and, ultimately, on the
quality of its search results.

Recent Strategic Acquisitions and Alliance

Over the past year, H&S Inc. and HSI have successfully completed the
strategic acquisition of two executive search firms and one strategic
alliance:

Fenwick. On June 26, 1998, H&S Inc. acquired Fenwick, a Boston-based
executive search firm which employed nine consultants and had fiscal 1997
revenues of $6.4 million. This transaction expanded the reach of H&S's
international technology group into a third key technology center in the
United States. Fenwick, based in the "Route 128" technology corridor in
Massachusetts, complements the Company's existing offices in Menlo Park,
California and Tysons Corner, Virginia which also focus on senior level
recruitment for computer hardware and software, telecommunications,
engineering and medical electronics companies.

Mulder. On October 1, 1997, HSI acquired Mulder which employed 13
consultants. Prior to the acquisition, Mulder was the largest executive search
firm in Germany, as measured by revenues, with $21.8 million in revenues for
the nine months ended September 30, 1997. This transaction immediately
positioned the Company as the largest executive search firm in Germany and the
second largest in Europe.

Redelinghuys. On August 31, 1998, the Company entered into an alliance with
Redelinghuys & Partners, a senior executive search firm with offices in
Capetown and Johannesburg in the Republic of South Africa. The alliance
consists of a licensing agreement as well as a transfer fee sharing agreement
and allows the Company to expand its services to its clients to the African
continent.

Facilities

The Company leases all of its office locations. The aggregate square footage
of office space under such leases is approximately 433,830. The leases for
these offices call for future minimum lease payments of approximately $100
million and have terms which will expire between 1998 and 2013 (exclusive of
renewal options exercisable by H&S). H&S believes that its facilities are
adequate for its current needs and that it will not have difficulty leasing
additional office space to satisfy anticipated future needs.

Insurance

H&S maintains insurance in such amounts and with such coverages and
deductibles as management believes are adequate. The principal risks that H&S
insures against are professional liability, workers' compensation, personal
injury, bodily injury, property damage and fidelity losses. There can be no
assurance that the Company's insurance will adequately protect it from
potential losses and liabilities. See "Risk Factors--Executive Search
Liability Risk."

Legal Proceedings

From time to time the Company has been involved in litigation incidental to
its business. H&S currently is not a party to any litigation the adverse
resolution of which, in management's opinion, would be likely to have a
material adverse effect on the Company's business, financial condition or
results of operations.

MANAGEMENT

Directors and Executive Officers

The Company's Board of Directors initially will have eight members, all of
whom will be employees of the Company. In accordance with the Certificate of
Incorporation, the members of the Board of Directors will be divided into
three classes and will be elected for a term of office expiring at the third
succeeding annual shareholders' meeting following their election to office or
until a successor is duly elected and qualified. The Certificate of
Incorporation also provides that such classes shall be as nearly equal in
number as possible. The terms of office of the Class I, Class II, and Class
III directors expire at the annual meeting of stockholders in 2000, 2001, and
2002, respectively. The following will be employee directors and executive
officers of the Company:

Name Age Position with Company Director Class
- ---- --- --------------------- --------------

Patrick S. Pittard...... 52 President and Chief Executive Officer,
Director III
Donald M. Kilinski...... 39 Chief Financial Officer and Treasurer
Richard D. Nelson....... 59 Chief Administrative Officer, Counsel and
Secretary
Gerard R. Roche......... 67 Senior Chairman, Director III
David C. Anderson....... 56 North America Managing Partner, Director II
Thomas J. Friel......... 50 Asia Pacific Managing Partner, Director II
David B. Kixmiller...... 48 Director I
Bengt Lejsved........... 54 Director I
Dr. Jurgen B. Mulder.... 60 President-Europe, Director III
Dr. John C. Viney....... 50 Vice Chairman, Director II

Patrick S. Pittard will be President and Chief Executive Officer of the
Company and a member of the Board of Directors of the Company after the
Merger. He has been President and Chief Executive Officer of H&S Inc. since
1997 and has been a member of the Board of Directors of H&S Inc. since 1986.
Since joining H&S Inc. in 1983, Mr. Pittard has held the positions of Office
Managing Partner for the Atlanta and Jacksonville offices and North America
Managing Partner. Mr. Pittard is also a member of the Board of Directors of
Jefferson Pilot Corporation.

Donald M. Kilinski will be Chief Financial Officer and Treasurer of the
Company after the Merger. He has been Chief Financial Officer of H&S Inc.
since he joined H&S Inc. in 1997, and has been Chief Financial Officer and
Treasurer of HSI since 1998. Prior to joining H&S Inc., Mr. Kilinski was Chief
Financial Officer of BBDO Asia Pacific Ltd. from September 1995 to April 1997,
and Vice President of Finance of BBDO Worldwide from July 1992 to August 1995
and from April 1997 through November 1997.

Richard D. Nelson will be Chief Administrative Officer, Counsel and
Secretary of the Company after the Merger. He joined H&S Inc. in 1981, has
been Chief Administrative Officer, Secretary and General Counsel of H&S Inc.
since 1981 and was Chief Financial Officer from 1981 until 1997. He was
Treasurer of HSI from 1980 until 1989, and then became Assistant Treasurer. He
has also been Secretary and a member of the Board of Directors of HSI since
1980.

Gerard R. Roche will be Senior Chairman and a member of the Board of
Directors of the Company after the Merger. Mr. Roche joined H&S Inc. in 1964,
and has been a member of the Board of Directors of H&S Inc. since 1970. He is
also a member of the Board of Directors for Gulfstream Aerospace Corporation.

David C. Anderson will be North America Managing Partner and a member of the
Board of Directors of the Company after the Merger. Mr. Anderson has been the
Office Managing Partner of H&S Inc.'s Dallas office since joining the firm in
1992 and the North America Managing Partner since 1998. He has been a member
of the Board of Directors of H&S Inc. since 1992.

Thomas J. Friel will be Managing Partner for Asia Pacific and a member of
the Board of Directors of the Company after the Merger. Since joining H&S Inc.
in 1979, Mr. Friel has served as Office Managing Partner of H&S Inc.'s Menlo
Park office, Worldwide Practice Managing Partner for the International
Technology Practice and since 1992 has been Managing Partner for Asia Pacific.
He has been a member of the Board of Directors of H&S Inc. since 1983.

David B. Kixmiller will be a member of the Board of Directors of the Company
after the Merger. Mr. Kixmiller joined H&S Inc. in 1984 and was Office
Managing Partner of the Menlo Park Office from 1991 until 1998. He has been a
member of the Board of Directors of H&S Inc. since 1987.

Bengt Lejsved will be a member of the Board of Directors of the Company
after the Merger. Mr. Lejsved joined HSI in 1990 and is currently the Area
Managing Partner for the Northern and Eastern European Area. He has been a
member of the Board of Directors of HSI since 1994.

Dr. Jurgen B. Mulder will be President-Europe and a Director of the Company
after the Merger. He has been President and Chief Executive Officer of HSI
since November 16, 1998. He was Vice Chairman of HSI from October 1, 1997
until November 16, 1998. Prior to joining HSI in 1997, Dr. Mulder was a
Partner in Mulder & Partner GmbH & Co. KG., the firm he founded in 1978.

Dr. John C. Viney will be Vice Chairman and Practice Managing Partner for
the Global Board of Directors Practice of the Company after the Merger. Dr.
Viney joined HSI in 1985 and previously served as Office Managing Partner for
the London office. He has been a member of the Board of Directors of HSI since
1987.

Director Compensation

None of the directors who are also employees of the Company will receive any
compensation for their services as directors. The Company will reimburse out-
of-pocket expenses incurred by all directors in attending Board of Directors
and committee meetings.

Executive Compensation

The following table sets forth the compensation awarded or paid to, or
earned by, the Chief Executive Officer of H&S Inc. and HSI and H&S Inc.'s
other most highly compensated executive officer during 1998.

Summary Compensation Table

Annual Compensation Long-Term Compensation
-------------------------------- ---------------------------------
Awards Payouts
---------------------- ----------
Other
Annual Restricted Securities Long-Term All Other
Compen- Stock Underlying Incentive Compen-
Name and Principal Position Year Salary($) Bonus($) sation Award(s)($) Options(#) Payouts($) sation($)
- --------------------------- ---- --------- --------- ------- ----------- ---------- ---------- ---------

Patrick S. Pittard,
President and Chief
Executive Officer of
H&S Inc................ 1998 $600,000 1,200,000 -- -- -- -- $ 16,320 (1)
Richard D. Nelson,
Chief Administrative
Officer, Secretary and
Counsel of H&S Inc..... 1998 450,000 525,000 -- -- -- -- 31,046(2)
Dr. Jurgen B. Mulder(3),
President and Chief
Executive Officer of
HSI.................... 1998 512,000 1,518,000 -- -- -- -- --
Gerard Clery-Melin, (3)
Former President and
Chief Executive Officer
of HSI................. 1998 329,000 127,000 -- -- -- -- 2,268,218(4)
Donald M. Kilinski,
Chief Financial Officer
of H&S Inc. and Chief
Financial Officer and
Treasurer of HSI....... 1998 200,000 200,000 -- -- -- -- 83,652(5)

- --------

(1) This amount represents compensation for expenses relating to the personal
use of a vehicle ($2,500), club dues ($165), group term life insurance
($4,032), employer profit sharing contributions ($7,623) and employer
401(k) matching contributions ($2,000).

(2) This amount represents compensation for expenses relating to the personal
use of a vehicle ($7,336) club dues ($7,787), group term life insurance
($6,300), employer profit sharing contributions ($7,623) and employer
401(k) matching contributions ($2,000).

(3) Mr. Clery-Melin's employment as President and Chief Executive Officer of
HSI was terminated and Dr. Jurgen Mulder was appointed President and Chief
Executive Officer of HSI on November 16, 1998.

(4) This amount represents compensation paid in connection with Mr. Clery-
Melin's termination, as further set forth below.

(5) This amount represents compensation for expenses relating to group term
life insurance ($726), relocation expenses ($73,302), employer profit
sharing contributions ($7,623) and employer 401(k) matching contributions
($2,000).

Mr. Pittard, Mr. Kilinski and Mr. Nelson have agreements with H&S Inc.
providing for severance benefits. Mr. Pittard's agreement entitles him to 12
months of his monthly base salary if he is terminated without cause. Mr.
Kilinski's agreement entitles him to three months of his monthly base salary
if he is terminated without cause. Mr. Nelson's agreement entitles him to 6
months of his monthly base salary and the pro rata portion of his bonus if his
employment is terminated for any reason.

In November 1998, Gerard Clery-Melin resigned as a Director of HSI, and his
employment as President and Chief Executive Officer of HSI was terminated. In
connection with his termination, Mr. Clery-Melin was paid an aggregate of
$766,018 for contractual advance notice compensation and severance indemnity.
Mr. Clery-Melin will receive an additional $1,502,200 during 1999, subject, in
part, to compliance with certain restrictive covenants relating to his
employment and nonsolicitation of Company employees.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of December 31, 1998 and following the Merger
by (i) directors of the Company, (ii) each of the named executive officers of
the Company, (iii) each person known by the Company to be the beneficial owner
of 5% or more of the outstanding shares of Common Stock and (iv) all of the
Company's directors and executive officers, as a group. Unless otherwise
indicated, the Company believes that the beneficial owner has sole voting and
investment power over such shares.

Following
Prior to the Merger the Merger
----------------------------------------- --------------------
Shares of Percentage Shares of Percentage Shares of
Class A of Class A Class B of Class B Common Percentage
Name and Address of Common Common Common Common Stock of Common
Beneficial Owner(1) Stock Stock Held Stock Stock Held Held Stock Held
------------------- --------- ---------- --------- ---------- --------- ----------

Patrick S. Pittard...... 0 0.0% 0 0.0% 15,873 2.7%
Donald M. Kilinski...... 0 0.0 0 0.0 2,797 *
Richard D. Nelson....... 0 0.0 0 0.0 15,873 2.7
Gerard R. Roche......... 0 0.0 0 0.0 25,068 4.3
David C. Anderson....... 0 0.0 0 0.0 7,706 1.3
Thomas J. Friel......... 0 0.0 0 0.0 15,873 2.7
David B. Kixmiller...... 0 0.0 0 0.0 10,062 1.7
Bengt Lejsved........... 2,298 1.6% 0 0.0 2,298 *
Dr. Jurgen B. Mulder.... 1,225 * 0 0.0 1,225 *
Dr. John C. Viney....... 9,509 6.6 0 0.0 9,509 1.6
Gerard Clery-Melin...... 9,000 6.2 0 0.0 9,000 1.5
All directors and
executive officers of
the Company as a group
(11 persons)........... 22,032 14.4 0 0.0 115,284 19.5
Heidrick & Struggles,
Inc.................... 0 0.0 80,185 100 0 0

- --------
* Represents holdings of less than one percent.
(1) Each of such person's business address is 233 South Wacker Drive--Suite
4200, Chicago, IL 60606.

COMPARISON OF STOCKHOLDER RIGHTS

The rights of the holders of HSI's Class A Common Stock and Class B Common
Stock are currently governed by the restated Certificate of Incorporation of
HSI, as amended (the "HSI Certificate of Incorporation"), the restated Bylaws
of HSI (the "HSI Bylaws") and the DGCL. The rights of the holders of H&S Inc.
Common Stock are currently governed by the Certificate of Incorporation of H&S
Inc., as amended (the "H&S Inc. Certificate of Incorporation"), the Bylaws of
H&S Inc. (the "H&S Inc. Bylaws") and the DGCL. The Board of Directors of the
Company will amend and restate the HSI Bylaws following the Merger to be
consistent with the Amended Certificate of Incorporation and the Post-IPO
Certificate of Incorporation (the "Amended Bylaws"). In connection with the
Merger, holders of H&S Inc. Common Stock and Class A Common Stock will become
stockholders of the Company and the rights of such former H&S Inc.
stockholders and the rights of former HSI stockholders will be governed by the
HSI Certificate of Incorporation which will be amended and restated pursuant
to the Merger Agreement to read in its entirety as Annex I to the Merger
Agreement (the "Amended Certificate of Incorporation"), the Amended Bylaws and
the DGCL. The Amended Certificate of Incorporation is attached as Annex I, and
the Amended Bylaws are attached as Annex II to the Merger Agreement which is
Annex A to this Joint Consent Statement/Prospectus. If the IPO Charter
Amendments are approved and the Offering is completed, the Amended Certificate
of Incorporation will be further amended to include such amendments (as so
amended, the "Post-IPO Certificate of Incorporation"). The Post-IPO
Certificate of Incorporation is attached to this Joint Consent
Statement/Prospectus as Annex C.

The following summary which does not purport to be a complete statement of
the differences among the H&S Inc. Certificate of Incorporation and H&S Inc.
Bylaws, the HSI Certificate of Incorporation and the HSI Bylaws and the
Amended Certificate of Incorporation and the Amended Bylaws and the Post-IPO
Certificate of Incorporation, is qualified in its entirety by reference to the
full text of each of such documents and the DGCL.

Common Stock

Following the Merger, the Amended Certificate of Incorporation will
authorize 750,000 shares of Company Common Stock, par value $.01 per share.
Following the Merger, the Amended Certificate of Incorporation will no longer
provide for Class A Common Stock or Class B Common Stock. Stockholders will be
entitled to one vote per share on all matters to be voted upon by the
stockholders. The holders of Company Common Stock will not have cumulative
voting rights in the election of directors. Holders of Company Common Stock
will be entitled to receive dividends if, as and when dividends are declared
from time to time by the Company's Board of Directors out of funds legally
available therefor, after payment of dividends required to be paid on
outstanding preferred stock (as described below), if any. In the event of
liquidation, dissolution or winding up of the Company, the holders of Company
Common Stock will be entitled to share ratably in all assets remaining after
payment of liabilities and accrued but unpaid dividends and liquidation
preferences on any outstanding preferred stock of the Company. The shares of
Company Common Stock will have no preemptive or conversion rights and will not
be subject to further calls or assessment by the Company. There will be no
redemption or sinking fund provisions applicable to the Company Common Stock.
The Company Common Stock will be duly authorized, validly issued, fully paid
and non-assessable.

The Post-IPO Certificate of Incorporation will increase the number of shares
of Company Common Stock authorized to 100,000,000.

Classified Board of Directors

Section 141(d) of the DGCL provides that a corporation's board of directors
may be divided into various classes with staggered terms of offices. The HSI
Certificate of Incorporation provides for two Classes of Directors, Class A
and Class B, whose terms of offices are not staggered. The holders of the
shares of Class A Common Stock and the holders of the shares of Class B Common
Stock, voting together, have the right to elect that number of the total
number of HSI's directors in excess of two (the "Class A Directors") and the
holders of the shares of Class B Common Stock, voting separately, have the
right to elect the remaining two directors (the "Class B Directors"). The H&S
Inc. Certificate of Incorporation does not provide for a classified board.

Pursuant to the Amended Certificate of Incorporation, the Company's Board of
Directors will be divided into three classes of directors, with the classes to
be as nearly equal in number as possible. As a result, approximately one-third
of the Board of Directors will be elected each year. The classification of
directors will have the effect of making it more difficult for stockholders to
change the composition of the Company's Board of Directors. The Company
believes that a classified Board of Directors will help to assure the
continuity and stability of the Board of Directors and the Company's business
strategies and policies, since a majority of the Directors at any given time
will have had prior experience as Directors of the Company. The Company
believes that this in turn will permit the Board of Directors to represent
more effectively the interests of stockholders.

With a classified Board of Directors, at least two annual meetings of
stockholders, instead of one, will generally be required to effect a change in
a majority of the members of the Board of Directors. As a result, the
classification of the Board of Directors of the Company may discourage proxy
contests for the election of Directors, unsolicited tender offers or purchases
of a substantial block of the Common Stock because it could prevent a
potential acquiror from obtaining control of the Board of Directors in a
relatively short period of time.

Number of Directors; Filling Vacancies on the Board of Directors

The HSI Bylaws provide that the number of directors shall be seven and shall
from time to time be determined by resolution either by the stockholders or
the board of directors, but may not be less than four. The H&S Inc. Bylaws
provide that the Board of Directors shall consist of eleven directors as
determined by majority vote or by unanimous written consent of either the
Board of Directors or the Executive Committee of the Board of Directors.

The HSI Bylaws provide that if there is a vacancy or new directorship
created by any increase in the number of directors, if such vacancy is in the
office of a Class A Director, a majority of the Class A Directors and Class B
Directors then in office, though less than a quorum, or if such vacancy is in
the office of a Class B Director a majority of the Class B Directors then in
office, though less than a quorum, may fill such a vacancy. The H&S Inc.
Bylaws provide that if there are no directors in office an election may be
held or if the directors in office do not constitute a majority of the whole
board, the Court of Chancery may order an election to fill such vacancies,
upon application of a stockholder or stockholders holding at least ten percent
of the H&S Inc. Common Stock. Vacancies and newly created directorships may be
filled by a majority of directors then in office though less than a quorum or
by a sole remaining director.

The Amended Certificate of Incorporation provides that the number of
directors will be fixed from time to time exclusively pursuant to a resolution
adopted by directors constituting a majority of the total number of directors
that the Company would have if there were no vacancies on the Board of
Directors, but must consist of not more than fifteen nor less than eight
directors. The Amended Certificate of Incorporation provides that, subject to
the rights of holders of any shares of Preferred Stock, any vacancy in the
Board of Directors that results from an increase in the number of Directors
may be filled only by a majority of the Directors then in office, provided
that a quorum is present, and any other vacancy may be filled by a majority of
the Directors then in office, even if less than a quorum, or by the sole
remaining Director. Accordingly, these provisions could temporarily prevent
any stockholder from obtaining majority representation on the Board of
Directors by enlarging the Board of Directors and filling the new
Directorships with its own nominees.

Removal of Directors

The DGCL provides generally, that any director may be removed, with or
without cause, by the holders of a majority of the shares then entitled to
vote, unless such corporation's certificate of incorporation provides
otherwise or in certain situations in which such board of directors is
classified or such certificate of incorporation provides for cumulative
voting. The HSI Bylaws provide that the holders of a majority of the
outstanding shares of Class A Common Stock and Class B Common Stock, acting
together, may remove a Class A Director, without cause, at any time, and that
the holders of a majority of the outstanding shares of Class B Common Stock
acting alone, may remove a Class B director without cause at any time. The H&S
Inc. Bylaws and H&S Inc. Certificate of Incorporation are silent on the
removal of directors and therefore the DGCL governs their removal.

The Amended Certificate of Incorporation and the Amended Bylaws provide that
directors may be removed only for cause and only upon the affirmative vote of
holders of at least 75% of the voting power of all the then outstanding shares
of stock entitled to vote generally in the election of directors, voting
together as a single class. This provision delays stockholders who do not
agree with the policies of the Board of Directors from replacing Directors,
unless they can demonstrate that the Directors should be removed for cause and
obtain the requisite vote. Such a delay may help ensure that the Company's
Board of Directors, if confronted with a proxy contest or an unsolicited
proposal for an extraordinary corporate transaction, will have sufficient time
to review the proposal and appropriate alternatives to the proposal and to act
in what it believes is the best interest of the Company's stockholders.

Stockholders Action

The HSI Bylaws and the H&S Inc. Bylaws provide that unless otherwise
provided in their respective certificates of incorporation, any action
required or which may be taken at any annual or special meeting of such
stockholders may be taken by written consent in lieu of a meeting.

The Post-IPO Certificate of Incorporation and the Amended Bylaws provide
that, subject to the rights of any holders of Preferred Stock to elect
additional directors under specified circumstances, stockholder action can be
taken only at an annual or special meeting of stockholders and may not be
taken by written consent in lieu of a meeting. The Amended Bylaws provide that
to elect additional directors under specified circumstances, special meetings
of stockholders can be called only by the Board of Directors, pursuant to a
resolution adopted by a majority of the total number of directors.
Stockholders are not permitted to call a special meeting or to require that
the Board of Directors call a special meeting of stockholders. Moreover, the
business permitted to be conducted at any special meeting of stockholders is
limited to the business brought before the meeting pursuant to the notice of
meeting given by the Company. The provisions of the Company's Post-IPO
Certificate of Incorporation prohibiting action by written consent without a
meeting and the provisions of the Company's Bylaws governing the calling of
and matters considered at special meetings may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting. These
provisions would also prevent the holders of a majority of the voting power of
the outstanding shares of stock entitled to vote generally in the election of
Directors from using the written consent procedure to take stockholder action
and from taking action by written consent without giving all the stockholders
entitled to vote on a proposed action the opportunity to participate in
determining such proposed action at a meeting.

Advance Notice Procedures

Unlike the Bylaws of HSI and H&S Inc., the Amended Bylaws establish an
advance notice procedure for stockholders to make nominations of candidates
for election as directors, or bring other business before an annual meeting of
stockholders of the Company (the "Stockholders Notice Procedure"). The
Stockholders Notice Procedure provides that only persons who are nominated by,
or at the direction of, the Board of Directors, or by a stockholder who has
given timely written notice to the Secretary of the Company prior to the
meeting at which directors are to be elected, will be eligible for election as
directors of the Company. The Stockholders Notice Procedure also provides that
at an annual meeting only such business may be conducted as has been brought
before the meeting by, or at the direction of, the Chairman of the Board of
Directors or by a stockholder who has given timely written notice to the
Secretary of the Company of such stockholder's intention to bring such
business before such meeting. Under the Stockholders Notice Procedure, for
notice of stockholder nominations to be made at an annual meeting to be
timely, such notice must be received by the Company not less than 60 days nor
more than 90 days prior to the first anniversary of the previous year's annual
meeting (or, if the date of the annual meeting is advanced by more than 30
days or delayed by more than 60 days from such anniversary date, not earlier
than the 90th day prior to such meeting and not later than the later of (x)
the 60th day prior to such meeting and (y) the 10th day after public
announcement of the date of such meeting is first made). Notwithstanding the
foregoing, in the event that the number of directors to be elected is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by
the Company at least 70 days prior to the first anniversary of the preceding
year's annual

meeting, a stockholder's notice will be timely, but only with respect to
nominees for any new positions created by such increase, if it is received by
the Company not later than the 10th day after such public announcement is
first made by the Company. Under the Stockholders Notice Procedure, for notice
of a stockholder nomination to be made at a special meeting at which directors
are to be elected to be timely, such notice must be received by the Company
not earlier than the 90th day before such meeting and not later than the later
of (x) the 60th day prior to such meeting and (y) the 10th day after the
public announcement of the date of such meeting is first made. In addition,
under the Stockholders Notice Procedure, a stockholder's notice to the Company
proposing to nominate a person for election as a director or relating to the
conduct of business other than the nomination of directors must contain
certain specified information. If the Chairman of the Board of Directors or
other officer presiding at a meeting determines that a person was not
nominated, or other business was not brought before the meeting, in accordance
with the Stockholders Notice Procedure, such person will not be eligible for
election as a director, or such business will not be conducted at such
meeting, as the case may be. By requiring advance notice of nominations by
stockholders, the Notice of Meeting Provision will afford the Board of
Directors a meaningful opportunity to consider the qualifications of the
proposed nominees and, to the extent deemed necessary or desirable by the
Board of Directors, to inform the stockholders about such qualifications. By
requiring advance notice of proposed business, the Notice of Meeting Proposal
Provision will provide the Board of Directors with a meaningful opportunity to
inform stockholders, prior to such meeting, of any business proposed to be
conducted at such meeting, together with any recommendation or statement of
the Board of Directors' position as to action to be taken with respect to such
business, so as to enable stockholders better to determine whether they desire
to attend such a meeting or to grant a proxy to the Board of Directors as to
the disposition of any such business. Although the Company's Bylaws do not
give the Board of Directors any power to approve or disapprove stockholder
nominations for the election of Directors or proposals for action, they may
have the effect of precluding a contest for the election of Directors or the
consideration of stockholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of Directors or to approve its
proposal without regard to whether consideration of such nominees or proposals
might be harmful or beneficial to the Company and its stockholders.

Liability of Directors; Indemnification

Section 145 of the DGCL permits a corporation to indemnify officers,
directors, employees and agents for actions taken in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation, and with respect to any criminal action, which
they had no reasonable cause to believe was unlawful.

Both the HSI Bylaws and the H&S Inc. Bylaws contain provisions requiring
each such corporation to indemnify a director, if he acted in good faith and
in a manner he 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 that his conduct was unlawful.
Each of HSI and H&S Inc. is required to indemnify a director in any action
brought by or in the right of the corporation, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, provided that no indemnification shall be made
in respect of a claim or matter as to which such person shall have been
adjudged liable for negligence or misconduct in the performance of his duty to
the corporation, unless and only to the extent the Court of Chancery or other
court in which such action was brought, shall determine upon application, that
despite the adjudication of liability such person is fairly and reasonably
entitled to indemnity for such expenses as such court shall deem proper.
Indemnification described above shall be made by such corporation only upon a
determination that indemnification is proper because he has met the applicable
standard of conduct. Such determination shall be made (i) by each respective
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum
is not obtainable or, even if obtainable, a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders of HSI or H&S Inc., as the case may be.

The Amended Certificate of Incorporation provides that a director will not
be personally liable for monetary damages to the Company or its stockholders
for breach of fiduciary duty as a director, except for liability (i) for

any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for paying a
dividend or approving a stock repurchase or redemption in violation of Section
174 of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit. The Amended Certificate of Incorporation also
provides that each current or former director, officer, employee or agent of
the Company, or each such person who is or was serving or who had agreed to
serve at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
(including the heirs, executors, administrators or estate of such person),
will be indemnified by the Company to the full extent permitted by the DGCL,
as the same exists or may in the future be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment). The Amended Certificate of Incorporation
also specifically authorizes the Company to enter into agreements with any
person providing for indemnification greater or different than that provided
by the Amended Certificate of Incorporation.

Restrictions on Amendment

The DGCL provides that to amend a certificate of incorporation, a board of
directors must adopt a resolution setting forth the amendment proposal and
then call either a special meeting of the stockholders or consider the
proposal at the next annual meeting or if permitted by such certificate of
incorporation to approve such amendment by written consent. The DGCL also
provides that the stockholders, and if provided in the charter, the directors
are entitled to amend the Bylaws.

Both the HSI Certificate of Incorporation and the H&S Inc. Certificate of
Incorporation provide that the respective certificates of incorporation of HSI
and H&S Inc. may be amended in the manner prescribed by the DGCL. The HSI
Bylaws provide that the HSI Bylaws may be amended by the HSI Board at any
regular meeting or a special meeting, if notice of the proposed amendment is
contained in the notice of such special meeting, provided that in no event may
the section relating to the number of directors be amended, to reduce the
number of directors to less than four or the manner of electing Class A and
Class B directors or the number of class of directors required for action by
the Board be altered. The HSI Bylaws may be amended in any respect or repealed
by a majority vote of the holders of the Class A common stock and a majority
vote of the holders of Class B Common Stock, voting separately at any annual
or special meeting of stockholders.

The H&S Inc. Certificate of Incorporation also expressly authorizes the H&S
Inc. Board to adopt, amend or repeal the H&S Inc. Bylaws and the H&S Inc.
Bylaws provide that the H&S Inc. Board or holders of H&S Inc. Common Stock may
do so at any regular or special meeting.

The Company's Amended Certificate of Incorporation provides that the
approval of holders of at least 75% of the voting power entitled to vote
generally in the election of Directors, voting together as a single class, is
required to adopt any Amended Certificate of Incorporation provision
inconsistent with or to alter, amend or repeal the provisions of the Company's
Amended Certificate of Incorporation classifying the Board of Directors;
governing the removal of directors; establishing the minimum and maximum
number of members of the Board of Directors; eliminating the ability of
stockholders to act by written consent; authorizing the Board of Directors to
consider the interests of clients and other customers, creditors, employees
and other constituencies of the Corporation and its subsidiaries and the
effect upon communities in which the Corporation and its subsidiaries do
business, in evaluating proposed corporate transactions; establishing the
Board of Directors' authority to issue, without a vote or any other action of
the stockholders, any or all authorized shares of stock of the Corporation,
securities convertible into or exchangeable for any authorized shares of stock
of the Corporation and warrants, options or rights to purchase, subscribe for
or otherwise acquire shares of stock of the Corporation for any such
consideration and on such terms as the Board of Directors in its discretion
lawfully may determine and authorizing that the Bylaws of the Corporation may
establish procedures regulating the submission by stockholders of nominations
and proposals for consideration at meetings of stockholders of the
Corporation. In addition, the Company's Amended Certificate of Incorporation
provides that the approval of the Board of

Directors or the affirmative vote of the holders of 75% of the voting power
entitled to vote generally in the election of Directors, voting together as a
single class, is required to alter, amend or repeal the above provisions of
the Company's Amended Certificate of Incorporation or to adopt any provision
of the Amended Certificate of Incorporation inconsistent with such provisions
or to alter, amend or repeal certain provisions of the Company's Bylaws or to
adopt any provision of the Bylaws inconsistent with such provisions.

Preferred Stock

Unlike the HSI Certificate of Incorporation and the H&S Inc. Certificate of
Incorporation, the Amended Certificate of Incorporation authorizes 250,000
shares of preferred stock. Subject to the Amended Certificate of Incorporation
and applicable law, the authority of the Company's Board of Directors with
respect to each series of preferred stock, includes but is not limited to the
authority to generally determine the following: the designation of such
series, the number of shares initially constituting such series and whether to
increase or decrease such number of shares, dividend rights and rates, terms
of redemption and redemption prices, liquidation preferences, voting rights,
conversion rights, whether a sinking fund will be provided for the redemption
of the shares of such series (and, if so, the terms and conditions thereof)
and whether a purchase fund shall be provided for the shares of such series
(and, if so, the terms and conditions thereof).

The Company believes that the availability of the preferred stock will
provide increased flexibility in structuring possible future financings and
acquisitions and in meeting other corporate needs that might arise. Having
such authorized shares available for issuance will allow the Company to issue
shares of preferred stock without the expense and delay of a special
stockholders' meeting. The authorized shares of preferred stock, as well as
shares of Common Stock, will be available for issuance without further action
by the stockholders, unless such action is required by applicable law or the
rules of any stock exchange on which the Company's securities may be listed.
The Company's Board of Directors will have the power (subject to applicable
law) to issue a series of preferred stock that could, depending on the terms
of such series, impede the completion of a merger, tender offer or other
takeover attempt. For instance, subject to applicable law, such series of
preferred stock might impede a business combination by including class voting
rights that would enable the holder to block such a transaction. The Company's
Board of Directors will make any determination to issue such shares based on
its judgment as to the best interests of the Company and its stockholders. The
Company's Board of Directors, in so acting, could issue preferred stock having
terms which could discourage an acquisition attempt or other transaction that
some, or a majority of the stockholders might believe to be in their best
interest or in which stockholders might receive a premium for their stock over
the then market price of such stock.

The Post-IPO Certificate of Incorporation will increase the number of shares
of preferred stock authorized to 10,000,000.

The Delaware General Corporation Law

The Company is a Delaware corporation subject to Section 203 of the DGCL.
("Section 203"). Section 203 provides in general that a stockholder acquiring
more than 15% of the outstanding voting stock of a corporation subject to
Section 203 (an "Interested Stockholder") but less than 85% of such stock may
not engage in certain Business Combinations (as defined in Section 203) with
the corporation for a period of three years subsequent to the date on which
the stockholder became an Interested Stockholder unless (i) prior to such date
the corporation's board of directors approved either the Business Combination
or the transaction in which the stockholder became an Interested Stockholder
or (ii) the Business Combination is approved by the corporation's board of
directors and authorized by a vote of at least 66 2/3% of the outstanding
voting stock of the corporation not owned by the Interested Stockholder. A
"Business Combination" includes mergers, asset sales and other transactions
resulting in financial benefit to a stockholder. Section 203 could prohibit or
delay mergers or other takeover or change of control attempts with respect to
the Company and, accordingly, may discourage attempts that might result in a
premium over the market price for the shares held by stockholders.

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES

The following discussion is a summary of the material U.S. federal income
tax consequences of the exchange of H&S Inc. Common Stock for Company Common
Stock pursuant to the Merger. The discussion which follows is based on the
Code, Treasury regulations promulgated thereunder, administrative rulings and
pronouncements and judicial decisions, all as of the date hereof and all of
which are subject to change, possibly with retroactive effect. The discussion
below is for general information only and does not address the effects of any
state, local or non-U.S. tax laws on the Merger. In addition, the discussion
below relates to persons who hold H&S Inc. Common Stock as a capital asset.
The tax treatment of an H&S Inc. stockholder may vary depending upon such
stockholder's particular circumstances, and certain stockholders (such as non-
United States persons or stockholders who acquired H&S Inc. Common Stock
pursuant to the exercise of H&S Inc. employee stock options or otherwise as
compensation) will be subject to special rules not discussed below.

Consummation of the Merger is conditioned upon the receipt by H&S Inc. and
HSI of an opinion from Simpson Thacher & Bartlett ("Tax Counsel") dated the
Closing Date that the Merger will constitute a reorganization within the
meaning of Section 368 of the Code. Such opinion of counsel will be based on
facts existing as of the Effective Time and on certain assumptions and on
certain representations as to factual matters made by H&S Inc. and HSI. If
such assumptions or representations are untrue or incorrect in certain
material respects, the conclusions reached in the opinion may no longer be
correct. Neither H&S Inc. nor HSI is currently aware of any facts or
circumstances which would cause any such representations or assumptions or
representations made to counsel to be untrue or incorrect in any material
respect. An opinion of counsel is not binding on the Internal Revenue Service
(the "IRS") or the courts. In the past, the IRS has stated it was considering
whether a merger such as the Merger should qualify as a reorganization within
the meaning of Section 368 of the Code, and the IRS will not currently issue
rulings on these transactions. Nonetheless, under current law, Tax Counsel is
of the opinion that the Merger will qualify as a reorganization within the
meaning of Section 368 of the Code. Moreover, included in the 2000 budget
proposals of the Clinton Administration is a provision, not yet effective,
that, if applicable to the Merger, would require H&S Inc. to recognize gain in
the Merger as if it had distributed its HSI stock immediately prior to the
transaction. The proposal would not affect the tax treatment of the
stockholders of H&S Inc. or HSI, but, if applicable to the Merger, would cause
H&S Inc. to incur a significant income tax liability. The provision is
proposed to be effective only in respect of transactions occurring after the
date it is enacted. It cannot be predicted whether the proposal will be
enacted in its current (or any other) form or, if enacted, what its effective
date will be.

Assuming the Merger constitutes a reorganization within the meaning of
Section 368 of the Code, under current law the material U.S. federal income
tax consequences that will result from the Merger are as follows:

1. No gain or loss will be recognized by an H&S Inc. stockholder upon the
exchange of his, her or its H&S Inc. Common Stock for Company Common Stock,
except that an H&S Inc. stockholder who receives cash proceeds in lieu of a
fractional share interest in Company Common Stock will recognize gain or
loss equal to the difference between such proceeds and the tax basis
allocated to the fractional share interest. Such gain or loss will
constitute capital gain or loss and will be long-term capital gain or loss
if such stockholder's shares of H&S Inc. Common Stock have been held for
more than one year at the Effective Time.

2. The tax basis of the Company Common Stock received by an H&S Inc.
stockholder will be the same as such stockholder's tax basis in the H&S
Inc. Common Stock surrendered in exchange thereof decreased by the tax
basis allocated to any fractional share interest exchanged for cash.

3. The holding period of the Company Common Stock received by an H&S Inc.
stockholder will include the period during which the H&S Inc. Common Stock
surrendered in exchange therefor was held.

4. No gain or loss will be recognized by H&S Inc. or HSI as a result of
the Merger.

THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT TO
BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A
DECISION WHETHER TO VOTE IN FAVOR OF APPROVAL OF THE MERGER AND THE MERGER
AGREEMENT. H&S INC. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN ADVISORS
CONCERNING THE UNITED STATES FEDERAL, STATE AND LOCAL AND NON-U.S. TAX
CONSEQUENCES OF THE MERGER TO THEM.

LEGAL MATTERS

Simpson Thacher & Bartlett will deliver (i) an opinion concerning certain
federal income tax consequences of the Merger (see "Certain United States
Federal Tax Consequences") and (ii) an opinion on the legality of the Company
Common Stock.

EXPERTS

The Consolidated Financial Statements and Schedule of H&S Inc. as of
December 31, 1996 and 1997, and for each of the years in the three-year period
ended December 31, 1997 included in this Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their report with respect thereto, and are included herein in reliance upon
the reports of said firm and the authority of said firm as experts in
accounting and auditing.

The Consolidated Financial Statements of HSI as of December 31, 1996 and
1997 and for each of the years in the three-year period ended December 31,
1997 included in this Registration Statement have been audited by Barbier
Frinault & Associes (Arthur Andersen), independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the reports of said firm and the authority of said firm as
experts in accounting and auditing.

The Consolidated Statements of Income and Cash Flows of Mulder for each of
the years in the two-year period ended December 31, 1996 and the nine-month
period ended September 30, 1997 included in this Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the reports of said firm and the authority of said firm as
experts in accounting and auditing.

ADDITIONAL INFORMATION

HSI has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-4 (herein, together with all amendments and
exhibits thereto, referred to as the "Registration Statement") under the
Securities Act with respect to the registration of the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, omits certain information contained in the Registration Statement
as permitted by the rules and regulations of the Commission. Statements
contained herein concerning the provisions of any contract, agreement or other
document are not necessarily complete, and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement for a more complete description of the matter involved, and each
such statement is qualified in its entirety by such reference. The
Registration Statement, including the exhibits and schedules filed therewith,
may be inspected at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a Web
site at http://www.sec.gov containing reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission.

Neither H&S Inc. nor HSI is currently subject to the informational
requirements of the Securities and Exchange Act of 1934 (the "Exchange Act").
Financial and other information about H&S Inc., HSI and their subsidiaries is
not publicly available other than as set forth in this Joint Consent
Statement/Prospectus and other than as set forth in the Registration Statement
on Form S-1 filed on July 24, 1998 and amended on September 8, 1998. As a
result of the effectiveness of the Registration Statement, the Company will
become subject to the informational requirements of the Exchange Act. The
Company will fulfill its obligations with respect to such requirements by
filing periodic reports with the Commission. In addition, the Company will
furnish its stockholders with annual reports containing audited financial
statements certified by its independent accountants and quarterly reports for
the first three quarters of each fiscal year containing unaudited summary
financial information.

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997 and
(unaudited) as of
September 30, 1998....................................................... F-3
Consolidated Statements of Income and Comprehensive Income For the Years
Ended December 31, 1995, 1996 and 1997 and (unaudited) for the Nine
Months Ended September 30, 1997 and 1998................................. F-5
Consolidated Statements of Stockholders' Equity For the Years Ended
December 31, 1995, 1996 and 1997 and (unaudited) for the Nine Months
Ended September 30, 1998................................................. F-6
Consolidated Statements of Cash Flows For the Years Ended December 31,
1995, 1996 and 1997 and (unaudited) for the Nine Months Ended September
30, 1997 and 1998........................................................ F-7
Notes to Consolidated Financial Statements................................ F-8

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Report of Independent Public Accountants.................................. F-17
Consolidated Balance Sheets as of December 31, 1996 and 1997 and
(unaudited) as of
September 30, 1998....................................................... F-18
Consolidated Statements of Income and Comprehensive Income For the Years
Ended December 31, 1995, 1996 and 1997 and (unaudited) for the Nine
Months Ended September 30, 1997 and 1998................................. F-19
Consolidated Statements of Stockholders' Equity For the Years Ended
December 31, 1995, 1996 and 1997 and (unaudited) for the Nine Months
Ended September 30, 1998................................................. F-20
Consolidated Statements of Cash Flows For the Years Ended December 31,
1995, 1996 and 1997 and (unaudited) for the Nine Months Ended September
30, 1997 and 1998........................................................ F-21
Notes to Consolidated Financial Statements................................ F-22

MULDER & PARTNER GMBH & CO. KG AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Report of Independent Public Accountants................................. F-29
Consolidated Statements of Income and Comprehensive Income For the Years
Ended December 31, 1995 and 1996 and for the Nine Months Ended September
30, 1997................................................................ F-30
Consolidated Statements of Cash Flows For the Years Ended December 31,
1995 and 1996 and the Nine Months Ended September 30, 1997.............. F-31
Notes to Consolidated Financial Statements............................... F-32

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Heidrick & Struggles, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of HEIDRICK &
STRUGGLES, INC. AND SUBSIDIARIES (a Delaware corporation) as of December 31,
1996 and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Heidrick & Struggles, Inc.
and Subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Chicago, Illinois
July 19, 1998

F-2

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share figures)

December 31,
----------------- September 30,
1996 1997 1998
------- -------- -------------
(unaudited)

Current assets:
Cash and cash equivalents................... $ 7,171 $ 10,074 $ 37,186
Accounts receivable--
Trade, less allowances for doubtful
accounts of $1,925, $3,276, and $1,800 at
December 31, 1996 and 1997 and September
30, 1998, respectively.................... 27,184 38,349 44,116
Other...................................... 843 1,384 1,753
Notes receivable............................ 273 193 242
Notes receivable from affiliate............. -- -- 3,648
Prepaid expenses............................ 976 1,265 3,069
Prepaid income taxes........................ -- -- 1,743
Deferred income taxes....................... 5,293 7,045 7,089
------- -------- --------
Total current assets...................... 41,740 58,310 98,846
------- -------- --------
Property and equipment:
Leasehold improvements...................... 5,894 6,724 7,748
Office furniture and fixtures............... 8,168 9,588 11,943
Computer equipment and software............. 7,500 8,368 5,440
Automobiles................................. 727 853 993
System development costs.................... -- 1,243 8,108
------- -------- --------
22,289 26,776 34,232
Less--Accumulated depreciation and
amortization............................... (8,850) (11,334) (12,001)
------- -------- --------
Property and equipment, net............... 13,439 15,442 22,231
------- -------- --------
Other assets:
Cash and investments designated for
nonqualified retirement plan............... 5,791 10,439 11,860
Investment in Heidrick & Struggles
International, Inc......................... 6,413 6,528 5,917
Goodwill.................................... -- -- 6,123
Deferred income taxes....................... 1,260 2,921 3,319
------- -------- --------
Total other assets........................ 13,464 19,888 27,219
------- -------- --------
Total assets................................ $68,643 $ 93,640 $148,296
======= ======== ========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-3

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except share figures)

December 31,
--------------- September 30,
1996 1997 1998
------- ------- -------------
(unaudited)

Current liabilities:
Short-term debt................................ $ -- $ 3,500 $ --
Current maturities of long-term debt........... 490 808 1,436
Accounts payable............................... 1,734 2,909 3,657
Accrued expenses--
Salaries and employee benefits................ 12,916 17,806 67,933
Profit sharing and retirement................. 1,538 2,732 2,246
Rent.......................................... 1,833 1,817 1,877
Other......................................... 1,425 3,028 5,668
Income taxes payable........................... 1,176 837 --
------- ------- ---------
Total current liabilities.................... 21,112 33,437 82,817
------- ------- ---------
Long-term debt, less current maturities.......... 993 1,636 5,604
------- ------- ---------
Liability for nonqualified retirement plans...... 7,165 11,108 11,281
------- ------- ---------
Commitments and contingent liabilities...........
Mandatorily redeemable common stock:
Common stock, $1 par value, 500,000 shares
authorized and issued at December 31, 1996 and
1997 and September 30, 1998; 166,512, 173,024
and 165,178 shares outstanding at December 31,
1996 and 1997 and September 30, 1998,
respectively, at book value................... 39,373 47,459 48,594
------- ------- ---------
Total liabilities and mandatorily redeemable
common stock................................ $68,643 $93,640 $ 148,296
======= ======= =========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-4

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except share figures)

Twelve Months Ended Nine Months Ended
December 31, September 30,
---------------------------- ------------------
1995 1996 1997 1997 1998
-------- -------- -------- -------- --------
(unaudited)

Revenue...................... $108,685 $137,665 $180,244 $136,309 $157,976
Operating expenses:
Salaries and employee
benefits.................. 77,215 98,272 125,308 93,605 112,452
General and administrative
expenses.................. 20,853 28,681 42,991 31,916 37,462
-------- -------- -------- -------- --------
Total operating expenses. 98,068 126,953 168,299 125,521 149,914
-------- -------- -------- -------- --------
Operating income......... 10,617 10,712 11,945 10,788 8,062
-------- -------- -------- -------- --------
Non-operating income
(expense):
Interest income............ 1,156 1,385 1,586 865 907
Interest expense........... (207) (180) (150) (90) (339)
Other...................... 108 (94) 486 173 143
-------- -------- -------- -------- --------
Net non-operating income
(expense)............... 1,057 1,111 1,922 948 711
-------- -------- -------- -------- --------
Equity in net income (loss)
of affiliate................ 778 775 115 287 (612)
-------- -------- -------- -------- --------
Income
before income taxes .... 12,452 12,598 13,982 12,023 8,161
Provision for income taxes... 6,094 6,149 7,484 6,404 4,334
-------- -------- -------- -------- --------
Net income............... $ 6,358 $ 6,449 $ 6,498 $ 5,619 $ 3,827
======== ======== ======== ======== ========
Basic earnings per common
share....................... $ 40.08 $ 39.64 $ 38.42 $ 33.75 $ 22.56
======== ======== ======== ======== ========
Basic weighted average common
shares outstanding.......... 158,661 162,718 169,161 166,509 169,624
======== ======== ======== ======== ========
Diluted earnings per common
share....................... $ 40.08 $ 39.64 $ 38.42 $ 33.75 $ 22.56
======== ======== ======== ======== ========
Diluted weighted average
common shares outstanding... 158,661 162,718 169,168 166,509 169,645
======== ======== ======== ======== ========
Net income................... $ 6,358 $ 6,449 $ 6,498 $ 5,619 $ 3,827
======== ======== ======== ======== ========
Other comprehensive income
(loss), before tax:
Foreign currency
translation adjustment.... (92) (465) (956) 103 (1,086)
Unrealized gain (loss) on
available-for-sale
investments............... -- 188 1,110 1,086 77
-------- -------- -------- -------- --------
Other comprehensive income
(loss), before tax.......... (92) (277) 154 1,189 (1,009)
-------- -------- -------- -------- --------
Income tax benefit (expense)
related to items of other
comprehensive income (loss). 39 116 (64) (501) 432
-------- -------- -------- -------- --------
Other comprehensive income
(loss), net of tax.......... (53) (161) 90 688 (577)
-------- -------- -------- -------- --------
Comprehensive income......... $ 6,305 $ 6,288 $ 6,588 $ 6,307 $ 3,250
======== ======== ======== ======== ========

F-5

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share figures)

Accumulated
Other
Common Stock Treasury Stock Compre- Compre-
-------------- Paid-in ------------------ Retained hensive hensive
Shares Amount Capital Shares Amount Earnings Income Income Total
------- ------ ------- -------- -------- -------- ----------- ------- -------

Balance at December 31,
1994.................. 500,000 $500 $ 6,492 (338,715) $(10,082) $3,026 $ 64 $ --
Treasury stock
transactions--
Stock issued.......... -- -- 1,591 12,870 441 -- -- 2,032
Stock repurchased..... -- -- -- (14,770) (2,455) -- -- (2,455)
Comprehensive income
Net income............ -- -- -- -- -- 6,358 -- $6,358 6,358
------
Other comprehensive
income, net of tax
Foreign currency
translation
adjustment......... -- -- -- -- -- -- -- (53) --
------
Other comprehensive
income............... -- -- -- -- -- -- (53) (53) (53)
------
Comprehensive income... 6,305
======
Retained earnings
allocable to
mandatorily redeemable
common stock.......... -- -- -- -- -- (5,882) -- (5,882)
------- ---- ------- -------- -------- ------- ----- -------
Balance at December 31,
1995.................. 500,000 500 8,083 (340,615) (12,096) 3,502 11 --
Treasury stock
transactions--
Stock issued.......... -- -- 2,381 14,507 543 -- -- 2,924
Stock repurchased..... -- -- -- (7,380) (1,541) -- -- (1,541)
Comprehensive income
Net income............ -- -- -- -- -- 6,449 -- 6,449 6,449
------
Other comprehensive
income, net of tax
Unrealized gain on
available-for-sale
investments........ -- -- -- -- -- -- -- 109 --
Foreign currency
translation
adjustment......... -- -- -- -- -- -- -- (270) --
------
Other comprehensive
income............... -- -- -- -- -- -- (161) (161) (161)
------
Comprehensive income... 6,288
======
Retained earnings
allocable to
mandatorily redeemable
common stock.......... -- -- -- -- -- (7,671) -- (7,671)
------- ---- ------- -------- -------- ------- ----- -------
Balance at December 31,
1996.................. 500,000 500 10,464 (333,488) (13,094) 2,280 (150) --
Treasury stock
transactions--
Stock issued.......... -- -- 3,584 18,438 765 -- -- 4,349
Stock repurchased..... -- -- -- (11,926) (2,850) -- -- (2,850)
Comprehensive income
Net income............ -- -- -- -- -- 6,498 -- 6,498 6,498
------
Other comprehensive
income, net of tax
Unrealized gain on
available-for-sale
investments........ -- -- -- -- -- -- -- 644 --
Foreign currency
translation
adjustment......... -- -- -- -- -- -- -- (554) --
------
Other comprehensive
income............... -- -- -- -- -- -- 90 90 90
------
Comprehensive income... 6,588
======
Retained earnings
allocable to
mandatorily redeemable
common stock.......... -- -- -- -- -- (8,087) -- (8,087)
------- ---- ------- -------- -------- ------- ----- -------
Balance at December 31,
1997.................. 500,000 500 14,048 (326,976) (15,179) 691 (60) --
Treasury stock
transactions
Stock issued
(unaudited).......... -- -- 26 115 5 -- -- 31
Stock repurchased
(unaudited).......... -- -- -- (7,961) (2,148) -- -- (2,148)
Comprehensive income
Net income
(unaudited).......... -- -- -- -- -- 3,827 -- 3,827 3,827
------
Other comprehensive
income net of tax
Unrealized gain on
available-for-sale
investments
(unaudited)........ -- -- -- -- -- -- -- 36 --
Foreign currency
translation
adjustments
(unaudited)........ -- -- -- -- -- -- -- (613) --
------
Other comprehensive
income net of tax
(unaudited).......... -- -- -- -- -- -- (577) (577) (577)
------
Comprehensive income
(unaudited)........... -- -- -- -- -- -- -- $3,250 --
======
Retained earnings
allocable to
mandatorily redeemable
common stock
(unaudited)........... -- -- -- -- -- (1,133) -- (1,133)
------- ---- ------- -------- -------- ------- ----- -------
Balance at September
30, 1998 (unaudited).. 500,000 $500 $14,074 (334,822) $(17,322) $ 3,385 $(637) $ --
======= ==== ======= ======== ======== ======= ===== =======

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-6

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Nine Months
Twelve Months Ended Ended
December 31, September 30,
--------------------------- ----------------
1995 1996 1997 1997 1998
------- -------- -------- ------- -------
(unaudited)

Cash flows from operating
activities
Net income..................... $ 6,358 $ 6,449 $ 6,498 $ 5,619 $ 3,827
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization.. 2,217 2,705 3,417 2,558 2,900
Loss on sale of property and
equipment..................... 29 522 50 55 468
Deferred income taxes.......... 293 (1,327) (3,499) 372 (503)
Equity in net income (loss) of
affiliate..................... (778) (775) (115) (287) 612
Accretion of discount on
securities.................... -- (321) -- -- --
Stock based compensation....... -- -- -- -- 31
Changes in assets and
liabilities:
Trade & other receivables..... (2,411) (7,301) (12,385) (10,249) (9,338)
Prepaid expenses.............. (169) (179) (379) (239) (1,549)
Accounts payable.............. (329) 348 1,485 1,156 584
Accrued expenses.............. 611 3,687 8,046 44,622 52,051
Income taxes payable.......... 1,515 (737) (370) (2,267) (2,492)
Nonqualified retirement plan
liability.................... 2,135 2,560 3,943 3,471 172
------- -------- -------- ------- -------
Net cash provided by
operating activities........ 9,471 5,631 6,691 44,811 46,763
------- -------- -------- ------- -------
Cash flows from investing
activities
Acquisitions................... -- -- -- -- (3,060)
Purchases of securities for
nonqualified retirement plan.. -- (5,603) (3,538) (978) (1,344)
Purchases of property and
equipment..................... (4,136) (6,730) (5,718) (3,468) (10,272)
Proceeds from sales of property
and equipment................. -- 58 65 -- 5
Purchases of marketable
securities.................... (2,376) (10,303) (8,176) (579) --
Proceeds from maturities of
marketable securities......... -- 13,000 8,176 -- --
------- -------- -------- ------- -------
Net cash used in investing
activities.................. (6,512) (9,578) (9,191) (5,025) (14,671)
------- -------- -------- ------- -------
Cash flows from financing
activities.....................
Proceeds from long-term debt... -- -- 3,500 -- 5,148
Payments on long-term debt..... (1,213) (1,453) (875) (591) (9,559)
Proceeds from sales of treasury
stock......................... 2,032 2,924 4,349 4,279 --
Purchases of treasury stock.... (547) (861) (1,014) (777) --
------- -------- -------- ------- -------
Net cash provided by
financing activities........ 272 610 5,960 2,911 (4,411)
------- -------- -------- ------- -------
Effect of foreign currency
exchange rates on cash and cash
equivalents.................... (278) (88) (557) (185) (569)
------- -------- -------- ------- -------
Net increase (decrease) in cash
and cash equivalents........... 2,953 (3,425) 2,903 42,512 27,112
Cash and cash equivalents:
Beginning of period............ 7,643 10,596 7,171 7,171 10,074
------- -------- -------- ------- -------
End of period.................. $10,596 $ 7,171 $ 10,074 $49,683 $37,186
======= ======== ======== ======= =======
Supplemental disclosures of cash
flow information
Cash paid for--
Interest...................... $ 196 $ 221 $ 161 $ 102 $ 263
Income Taxes.................. $ 4,509 $ 7,589 $ 10,874 $ 7,183 $ 6,563
Supplemental schedule of noncash
financing and investing
activities
Unrealized gain (loss) on
available-for-sale
investments................... $ -- $ 188 $ 1,110 $ 1,086 $ 77
Issuance of notes payable for
the purchase of treasury
stock......................... $ 1,908 $ 680 $ 1,836 $ 500 $ 2,150
Payable from the acquisition of
net assets.................... $ -- $ -- $ -- $ -- $ 348
Debt from the acquisition of
net assets.................... $ -- $ -- $ -- $ -- $ 3,037

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-7

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share figures)

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Heidrick & Struggles, Inc. and Subsidiaries (the "Company") are engaged in
providing management consulting and executive search services to clients on a
retained basis. The Company's clients are primarily located throughout North
America, South America and the Pacific Basin.

Principles of Consolidation

The consolidated financial statements include Heidrick & Struggles, Inc. and
its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated in the consolidated financial statements.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

Accounting Pronouncements to be Adopted in 1998

During 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information", which establishes
new standards for reporting information about operating segments in interim
and annual financial statements. It is effective for annual periods beginning
after December 15, 1997 and will be adopted by the Company as of December 31,
1998. The Company does not expect that adoption of this Standard will have an
impact on its consolidated financial position or its consolidated results of
operations. However, it is expected that adoption of this Standard will result
in additional footnote disclosure.

During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities," which establishes new standards for
reporting information about derivatives and hedging. It is effective for
periods beginning after June 15, 1999 and will be adopted by the Company as of
January 1, 2000. The Company expects that adoption of this Standard will have
no effect on its consolidated financial position, results of operations or on
disclosures within the consolidated financial statements as they currently do
not engage in the use of derivative instruments or other hedging activities.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with a purchased
maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration
of credit risk consist primarily of accounts receivable. Concentrations of
credit risk with respect to accounts receivable are limited due to the
Company's large number of customers and their dispersion across many different
industries. At December 31, 1997, the Company had no significant
concentrations of credit risk.

F-8

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets or, for leasehold improvements, the shorter of the lease term or the
estimated useful life of the asset, as follows:

Office furniture and fixtures................................... 10 years
Computer equipment and software................................. 3-5 years
Automobiles..................................................... 3 years

Depreciation for financial statement purposes for the years ended December
31, 1995, 1996 and 1997 totaled $2,217, $2,705 and $3,417, respectively.
Depreciation is calculated for tax purposes using accelerated methods.

System Development Costs

In accordance with Statement of Position No. 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use," development
costs are capitalized. Once the software is placed in service, it will be
depreciated using the straight-line method over a three to five year period.

Investments Designated for Nonqualified Retirement Plan

Investments designated for the nonqualified retirement plan are carried at
the fair value of the security in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Investments designated
for the nonqualified retirement plan are debt and equity securities that are
classified as available-for-sale securities as more fully described in Note 2.

Investment in Heidrick & Struggles International, Inc.

The Company accounts for its investment in Heidrick & Struggles
International, Inc. ("HSI") by the equity method as more fully described in
Note 3. Using this method, the Company's equity in the net income of the
affiliate is recognized in the Company's statement of income and added to the
investment account. Dividends received, if any, from the affiliate are treated
as reductions in the investment account.

Revenue Recognition

Revenue from client services is recognized as clients are billed, generally
over a 60 to 90 day period commencing in the month of the initial acceptance
of a search. If a search is canceled within the first 90 days, the Company
will pro-rate the fee up to the date of cancellation. Revenue consists of the
amount billed to clients, net of sales taxes.

Income Taxes

Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities,
applying enacted statutory tax rates in effect for the year in which the tax
differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.

Earnings per Common Share

F-9

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted.

Translation of Foreign Currencies

The translation of financial statements into U.S. dollars has been performed
in accordance with SFAS No. 52, "Foreign Currency Translation." The local
currency for all subsidiaries has been designated as the functional currency
except for subsidiaries which operate in highly inflationary economies which
use the U.S. dollar as their functional currency. Non-U.S. assets and
liabilities have been translated into U.S. dollars at the current rate of
exchange prevailing at the balance sheet date. Revenues and expenses have been
translated at the average exchange rate for the period. Translation gains and
losses are reflected as a separate component of stockholders' equity and not
included in income.

Interim Financial Information

The consolidated financial statements and related notes thereto for the nine
months ended September 30, 1997 and September 30, 1998 are unaudited and have
been prepared on the same basis as the audited consolidated financial
statements included herein. In the opinion of management, such unaudited
consolidated financial statements include all adjustments (consisting of
normal recurring adjustments) necessary to present fairly the information set
forth herein. Operating results for the nine months ended September 30, 1998
are not necessarily indicative of results that may be expected for the fiscal
year ending December 31, 1998.

2. Investments Designated for Nonqualified Retirement Plan

Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", which requires investments
in debt and equity securities be classified as held-to-maturity, available-
for-sale or trading securities. The Company's investments designated for a
nonqualified plan are classified as investments available-for-sale (see Note
9). These securities are carried at fair value based on publicly reported
market quotes as of December 31, 1996 and 1997. Any unrealized gains and
losses on available-for-sale securities have been excluded from earnings and
have been reported as a separate component of stockholders' equity.

The following details the cost and unrealized gain components that make up
the fair value of the investments:

December 31, December 31,
1996 1997
------------ ------------

Cost basis...................................... $4,888 $ 8,835
Gross unrealized gain........................... 188 1,298
------ -------
Fair value.................................... $5,076 $10,133
====== =======

3. Investment in HSI

The Company has an investment in HSI which is accounted for under the equity
method. The percentage of common stock ownership at December 31, 1996 and 1997
was 39.3% and 35.5%, respectively. Based on an agreement between the Company
and HSI, effective January 1, 1995, 65% of the net income of HSI is allocated
to Class A shares and 35% of the net income of HSI is allocated to Class B
shares, regardless of the exact percentage of each class holding. The Company
owns all Class B shares of HSI.

4. Acquisitions

During 1996, the Company purchased selected assets of two companies. Each
combination was accounted for by the purchase method of accounting. The
purchase price for each of these transactions includes the cost of the net
assets as of the date of the transaction.

F-10

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The selected assets of International Consultants S.A. were acquired on
September 1, 1996, for a total purchase price of $609, none of which was
recorded as goodwill. The selected assets of Global Management S.R.L. were
acquired on February 16, 1996, for a total purchase price of $55, none of
which was recorded as goodwill.

On June 26, 1998, the Company purchased selected assets and liabilities of
Fenwick Partners, Inc. The purchase price was approximately $6,120 which is to
be paid in 3 installments. The first installment of $3,060 was paid on June
26, 1998. The remaining installments, including interest at a rate of 5%, are
due in June of 1999 and June of 2000 and approximate $321 and $3,037,
respectively.

5. Line of Credit

The Company has a $25,000 reducing revolving credit facility ("line of
credit") which is valid until September 30, 2001. This new line of credit
became effective October 1, 1997. The $25,000 line of credit will be reduced
annually by $5,000 on September 30, 1998, 1999 and 2000. There were no
borrowings outstanding under the former line of credit at December 31, 1996.
There was $3,500 outstanding under the line of credit at December 31, 1997.
The borrowings bear interest at either LIBOR plus 1% or the prime rate, at the
Company's discretion. At December 31, 1997, the interest rate on the debt was
the prime rate, 8.5%. The line of credit has certain financial requirements
the Company must meet relating to net worth, liabilities, and cash flows. As
of December 31, 1997, the Company met all of its financial requirements. The
Company is required to pay commitment fees on the unused portion of the line
of credit on a quarterly basis. Commitment fee expense for the year ended
December 31, 1997 totaled $8.

6. Related Party Transactions

The Company loaned HSI $5,148 during the first quarter of 1998. The loan was
originally due in full on June 17, 1998, but was extended. On July 31, 1998,
$1,500 was repaid, and the balance plus interest was due on September 30,
1998. The interest rate on this loan is fixed at 6.7%. Accounts payable
includes a payable of $367 to HSI at December 31, 1996. Accounts receivable
includes a receivable of $776 from HSI at December 31, 1997. All transactions
between the Company and HSI are recorded at cost.

7. Long-Term Debt

Long-term debt consists of amounts due to former stockholders who have sold
their stock back to the Company (see Note 8). The obligations are unsecured
and payable in annual installments over periods ranging from two to five years
with interest payable generally at the prime commercial rate (8.25% and 8.50%,
at December 31, 1996 and 1997, respectively).

The fair value of the debt based on current rates for similar debt is
estimated to be $2,055 at December 31, 1997.

Future principal payments on long-term debt are due as follows:

Years ending December 31--
1998........................................................... $ 808
1999........................................................... 808
2000........................................................... 428
2001........................................................... 400
2002........................................................... --
------
$2,444
======

F-11

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. Stockholder Agreements

In accordance with the terms of stock purchase agreements between the
Company and its stockholders, the Company is obligated to purchase the shares
of stock owned by a stockholder if the stockholder desires to sell or transfer
the shares, or upon a stockholder's termination of employment at book value as
defined in the stock purchase agreements. Redemption amounts relating to the
stock purchase agreements are included in Mandatorily Redeemable Common Stock
in the accompanying balance sheets. Payments for shares are generally made
over a four year period. These agreements will be terminated upon successful
completion of an initial public offering.

9. Employee Benefit Plans

Qualified Retirement Plans

The Company has a defined contribution retirement plan for all eligible
employees. The plan contains a 401(k) provision which provides for employee
tax deferred contributions.

The Company matched employee contributions on a two-for-one basis up to a
maximum Company contribution of $1, $1 and $2 per participant for the years
ended December 31, 1995, 1996 and 1997, respectively. The Company has the
option of making discretionary contributions. For the years ended December 31,
1995, 1996 and 1997, the Company elected to contribute to each eligible
participant a sum equal to 3.03% of the participant's total compensation (as
defined) and an additional 3.03% of the participant's compensation above the
Social Security taxable wage base.

The plan allows participants the option of having their account balances or
portions thereof invested in the Company's common stock. At December 31, 1996
and 1997 the plan held 131,182 and 129,865 shares, respectively, of the
Company's common stock. The Company sells shares of common stock to the plan
and is required to repurchase the shares issued to the plan at net book value
as defined in the stock purchase agreements. This requirement will be
cancelled upon successful completion of an initial public offering.

The plan provides that forfeitures will be used to reduce the Company's
contributions. Forfeitures are created when participants terminate employment
before becoming entitled to their full benefits under the plan. Company
expense for the plan for the years ended December 31, 1995, 1996 and 1997 was
$1,144, $1,339 and $2,174, respectively.

In addition, the subsidiaries each maintain defined contribution retirement
plans for their eligible employees. Retirement plan expense for these plans
for the years ended December 31, 1995, 1996 and 1997 totaled $167, $128 and
$154, respectively.

Nonqualified Retirement Plans

The Company also has two separate nonqualified retirement plans. The first
plan is for United States based employees and includes both an optional
employee contribution and a discretionary employer contribution. The plan
expense for the years ended December 31, 1995, 1996 and 1997 was $1,254,
$1,440 and $1,350, respectively. The liability for this retirement plan
consisted of the following at December 31, 1996 and 1997:

December 31, December 31,
1996 1997
------------ ------------

Employer contributions.......................... $4,980 $ 6,390
Employee deferrals.............................. 1,660 3,785
Earnings of designated assets................... 158 316
------ -------
$6,798 $10,491
====== =======

F-12

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Investments designated for the nonqualified plan are carried at fair market
value based on publicly quoted prices. The Company has recognized an
unrealized gain as of December 31, 1996 and 1997 of $188 and $1,298,
respectively, which is recorded as a separate component of stockholders'
equity (see Note 2). The nonqualified plan was unfunded until 1996.

The fair value of the assets designated for the nonqualified plan consist of
the following at December 31, 1996 and 1997:

December 31, December 31,
1996 1997
------------ ------------

Cash and cash equivalents....................... $ 715 $ 306
Stock mutual fund............................... 3,349 6,919
Bond mutual fund................................ 1,727 3,214
------ -------
$5,791 $10,439
====== =======

In 1995, the Company instituted a second nonqualified retirement plan for
employees classified as senior associates. This plan provides for only
discretionary employer contributions. The plan expense for the years ended
December 31, 1995, 1996 and 1997 was $197, $170 and $250, respectively. The
liability for this retirement plan at December 31, 1996 and 1997 was $367 and
$617, respectively.

Upon completion of the initial public offering, the Company will cease all
contributions to both plans. The existing assets will continue to earn income
and be paid out to the participants according to the plan document.

10. Income Taxes

The deferred tax assets and liabilities consist of the following components
as of December 31, 1996 and 1997:

1996 1997
------ -------

Deferred tax assets--
Receivable allowances........................................ $ 858 $ 1,515
Accrued vacations............................................ 308 433
Accrued bonuses.............................................. 4,491 6,206
Liability for nonqualified retirement plans.................. 3,055 5,035
Other accrued expenses....................................... 385 439
Foreign net operating loss carryforwards..................... 275 595
Cumulative translation adjustment............................ 234 636
------ -------
9,606 14,859
Valuation allowance.......................................... (276) (502)
------ -------
Net deferred tax assets.................................... 9,330 14,357
------ -------
Deferred tax liabilities--
Leasehold improvements and equipment......................... (232) (225)
Equity in undistributed income of affiliate.................. (1,718) (2,085)
System development costs..................................... -- (356)
Unrealized gain on available-for-sale investments............ (79) (545)
Other........................................................ (748) (1,180)
------ -------
Net deferred tax liabilities............................... (2,777) (4,391)
------ -------
Net deferred income taxes................................ $6,553 $ 9,966
====== =======

F-13

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The deferred tax amounts mentioned above have been classified in the
accompanying consolidated balance sheets as of December 31, 1996 and December
31, 1997, as follows:

1996 1997
------- -------

Current deferred tax assets............................. $ 6,041 $ 8,593
Current deferred tax liabilities........................ (748) (1,548)
------- -------
Net current deferred tax asset........................ 5,293 7,045
------- -------
Long-term deferred tax assets........................... 3,289 5,764
Long-term deferred tax liabilities...................... (2,029) (2,843)
------- -------
Net long-term deferred tax asset...................... 1,260 2,921
------- -------
$ 6,553 $ 9,966
======= =======

The provision for income taxes for the years ended December 31, 1995, 1996
and 1997, is as follows:

1995 1996 1997
------ ------- -------

Current--
Federal....................................... $4,322 $ 5,142 $ 7,962
State......................................... 1,600 2,478 2,500
Foreign....................................... 292 322 435
Deferred........................................ (120) (1,793) (3,413)
------ ------- -------
$6,094 $ 6,149 $ 7,484
====== ======= =======

A reconciliation of income tax expense for the years ended December 31,
1995, 1996 and 1997, to income taxes at the statutory federal income tax rate
of 35%, is as follows:

1995 1996 1997
------ ------ ------

Income taxes at statutory rate..................... $4,358 $4,409 $4,982
Increase (decrease) due to--
State income taxes, net of federal tax benefit... 1,040 1,611 1,625
Nondeductible expenses........................... 272 341 357
Foreign taxes in excess of federal tax rates..... 41 408 721
Other, net....................................... 383 (620) (201)
------ ------ ------
$6,094 $6,149 $7,484
====== ====== ======

The undistributed earnings of HSI included in the Company's income for the
years ended December 31, 1996 and 1997 totaled $4,052 and $4,167,
respectively, which under existing law, will not be subject to U.S. tax until
distributed as dividends. Furthermore, any taxes paid to foreign governments
on those earnings may be used in whole or in part as credits against the U.S.
tax on any dividends distributed from such earnings. The Company has provided
a deferred tax liability for the undistributed earnings of HSI. As the
earnings of the consolidated foreign subsidiaries will be permanently
reinvested in the Company, no deferred tax liability has been provided.

The sources of earnings before income taxes are as follows:

Years Ended December
31,
-------------------------
1995 1996 1997
------- ------- -------

United States.................................. $13,288 $13,508 $16,065
Foreign........................................ (836) (910) (2,083)
------- ------- -------
Total...................................... $12,452 $12,598 $13,982
======= ======= =======

F-14

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

11. Commitments and Contingencies

Operating Leases

The Company leases office space in various buildings for its own use. The
terms of these operating leases provide that the Company pays base rent and a
share of increases in operating expenses and real estate taxes in excess of
defined amounts. These leases expire at various dates through 2013. The
Company also leases computer equipment which is accounted for as an operating
lease.

Minimum future lease payments due in each of the next five years ending
December 31, are as follows:

Years ending December 31--
1998.......................................................... $ 7,704
1999.......................................................... 7,936
2000.......................................................... 7,252
2001.......................................................... 5,695
2002.......................................................... 5,128
Thereafter.................................................... 13,182
-------
$46,897
=======

Rent expense under operating leases for the years ended December 31, 1995,
1996 and 1997 was $5,875, $6,976 and $8,374, respectively.

Employment Agreement

The Company has an employment agreement with an officer which provides for
certain payments upon retirement but requires the officer to provide services
and not to compete with the Company. The payments are indexed to the Consumer
Price Index and would currently approximate $196 for each of the first five
years of retirement and approximately $98 for each of the succeeding five
years. The agreement also states the payments are ratably forfeited during the
period which the individual remains an active employee after having reached
the age of 65. At December 31, 1997, the first eighteen months of payments
have been forfeited as a result of that provision. This agreement also
provides for the same payments to the officer in the event of his disability
while an employee of the Company except that the payments would be reduced by
any amounts received from disability insurance carried by the Company. If the
officer dies while an employee or during the ten years of the retirement plan,
the agreement provides for payments to his widow or estate of one-half of the
amounts for retirement. As future services expected to be received by the
Company are commensurate with retirement payments to be made, no provision for
any payment under this plan has been made in the accompanying financial
statements.

Litigation

In the normal course of business, the Company is a party to various matters
involving disputes and/or litigation. While it is not possible at this time to
determine the ultimate outcome of these matters, management believes that the
ultimate liability, if any, will not be material to the consolidated results
of operations, financial condition or liquidity of the Company.

F-15

HEIDRICK & STRUGGLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12. Segment and Geographic Information

The Company operates as a single business segment. The Company's geographic
data for operations is as follows:

Years Ended December 31,
----------------------------
1995 1996 1997
-------- -------- --------

Revenue:
United States................................... $ 99,067 $124,568 $156,173
Foreign......................................... 9,618 13,097 24,071
-------- -------- --------
Total......................................... $108,685 $137,665 $180,244
======== ======== ========
Operating Income (loss):
United States................................... $ 11,568 $ 11,917 $ 14,558
Foreign......................................... (951) (1,205) (2,613)
-------- -------- --------
Total......................................... $ 10,617 $ 10,712 $ 11,945
======== ======== ========
Identifiable Assets:
United States................................... $ 49,995 $ 58,547 $ 78,834
Foreign......................................... 5,905 10,096 14,806
-------- -------- --------
Total......................................... $ 55,900 $ 68,643 $ 93,640
======== ======== ========

During all years presented above, no individual customer accounted for
greater than 10% of revenue.

13. Merger Agreement

On June 30, 1998, the Company's Board of Directors approved a merger
agreement with HSI which details the plan to merge the Company with and into
HSI prior to an initial public offering; and recommended that the merger
agreement be submitted to the stockholders for approval. After completion of
the merger, the corporation will be named Heidrick & Struggles International,
Inc.

14. Unaudited Interim Information

H&S Inc. has replaced its previous line of credit with a $40,000 reducing
revolving credit facility, which will be increased to $60,000 upon the
effectiveness of the Merger. This facility will terminate on December 31,
2001. In the case of a $40,000 line of credit, the facility reduces annually
by $5,000 on December 31, 1999 and 2000, and in the case of a $60,000 line of
credit, the facility reduces annually by $10,000 on December 31, 1999 and
2000. There was $22,000 outstanding under the line of credit at December 31,
1998. The borrowings bear interest at LIBOR plus an applicable margin as
determined by certain tests of H&S Inc.'s financial condition.

The Company extended the term of its loan to HSI, and the balance was
received on January 20, 1999.

F-16

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Heidrick & Struggles International, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of HEIDRICK &
STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES (a Delaware corporation) as of
December 31, 1996 and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Heidrick & Struggles
International, Inc. and Subsidiaries as of December 31, 1996 and 1997, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.

Barbier Frinault & Associes
Arthur Andersen

Neuilly-sur-Seine, France
July 19, 1998

F-17

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share figures)

December 31,
---------------- September
1996 1997 30, 1998
------- ------- -----------
(unaudited)

Current assets:
Cash and cash equivalents...................... $ 8,202 $ 8,053 $ 7,616
Accounts receivable--
Trade, less allowances for doubtful accounts
of $1,730, $1,416, and $2,312 at December
31, 1996 and 1997 and September 30, 1998,
respectively................................ 14,464 23,617 29,215
Other........................................ 365 358 806
Prepaid expenses............................... 1,049 1,502 2,119
Deferred income taxes.......................... 1,528 4,810 3,119
------- ------- -------
Total current assets....................... 25,608 38,340 42,875
------- ------- -------
Property and equipment:
Leasehold improvements......................... 4,231 6,573 3,041
Office furniture and fixtures.................. 3,371 4,747 8,307
Computer equipment and software................ 3,381 6,498 10,554
Automobiles.................................... 684 1,675 1,843
------- ------- -------
11,667 19,493 23,745
Less--Accumulated depreciation and
amortization.................................. (5,981) (9,327) (13,416)
------- ------- -------
Property and equipment, net.................. 5,686 10,166 10,329
------- ------- -------
Other assets:
Goodwill....................................... 948 808 367
Deferred compensation expense.................. -- 8,766 4,505
Deferred income taxes.......................... -- 568 2,020
Other assets................................... 609 1,299 2,036
------- ------- -------
Total other assets......................... 1,557 11,441 8,928
------- ------- -------
Total assets............................... $32,851 $59,947 $62,132
======= ======= =======
Current liabilities:
Short-term debt................................ $ -- $ 7,639 $ --
Current maturities of long-term debt........... 57 178 420
Accounts payable............................... 720 4,265 4,508
Accrued expenses--
Salaries and employee benefits............... 9,530 16,436 27,219
Professional fees............................ 1,295 806 528
VAT.......................................... 1,201 1,855 3,466
Payroll taxes................................ 1,268 1,250 2,206
Other........................................ 982 2,676 2,091
Income taxes payable........................... 1,210 6,084 1,316
Note payable to affiliate...................... -- -- 3,648
------- ------- -------
Total current liabilities.................. 16,263 41,189 45,402
------- ------- -------
Long-term liabilities............................ 267 368 63
------- ------- -------
Mandatorily redeemable common stock:
Class A common stock, no par value, 150,000
shares authorized, 101,668, 122,055, and
122,055 shares issued and outstanding at
December 31, 1996 and 1997 and September 30,
1998, respectively, at book value............. 9,922 12,120 11,044
Stockholders' equity:
Class B common stock, no par value, 150,000
shares authorized, 65,787 shares issued and
outstanding at December 31, 1996 and 1997 and
September 30, 1998, at book value............. 2,361 2,361 2,361
Retained earnings.............................. 3,981 4,799 3,278
Accumulated other comprehensive income......... 57 (665) 264
Less--Treasury stock, at cost, 0, 2,244, and
2,744 shares at December 31, 1996 and 1997 and
September 30, 1998, respectively.............. -- (225) (280)
------- ------- -------
Total stockholders' equity................. 6,399 6,270 5,623
------- ------- -------
Total liabilities and stockholders' equity. $32,851 $59,947 $62,132
======= ======= =======

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-18

HEIDRICK & STRUGGLES INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except share and per share figures)

Nine Months
Twelve Months Ended Ended September
December 31, 30,
------------------------- ----------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(unaudited)

Revenue........................... $52,815 $64,558 $82,732 $54,569 $93,745
Operating expenses:
Salaries and employee benefits.. 35,249 44,020 59,139 37,565 66,411
General and administrative ex-
penses......................... 14,264 17,100 20,556 14,574 25,093
------- ------- ------- ------- -------
Total operating expenses...... 49,513 61,120 79,695 52,139 91,504
------- ------- ------- ------- -------
Operating income (loss)....... 3,302 3,438 3,037 2,430 2,241
Non-operating income (expense).... 338 133 144 77 (3,843)
Minority interest in income of
consolidated subsidiaries........ -- -- (26) -- --
------- ------- ------- ------- -------
Income (loss) before income
taxes........................ 3,640 3,571 3,155 2,507 (1,602)
Provision for income taxes........ 1,840 1,430 2,179 1,555 994
------- ------- ------- ------- -------
Net income (loss)............. $ 1,800 $ 2,141 $ 976 $ 952 $(2,596)
======= ======= ======= ======= =======
Basic earnings per Class A common
share............................ $ 12.44 $ 13.56 $ 5.66 $ 5.67 $(14.12)
======= ======= ======= ======= =======
Basic weighted average Class A
common shares outstanding........ 93,996 102,641 112,098 109,100 119,474
======= ======= ======= ======= =======
Diluted earnings per Class A
common share..................... $ 12.44 $ 13.56 $ 5.34 $ 5.67 $(11.44)
======= ======= ======= ======= =======
Diluted weighted average Class A
common shares outstanding........ 93,996 102,641 118,868 109,100 147,474
======= ======= ======= ======= =======
Basic and diluted earnings per
Class B common share............. $ 9.57 $ 11.39 $ 5.19 $ 5.06 $(13.81)
======= ======= ======= ======= =======
Basic and diluted weighted average
Class B common shares
outstanding...................... 65,787 65,787 65,787 65,787 65,787
======= ======= ======= ======= =======
Net income (loss)................. $ 1,800 $ 2,141 $ 976 $ 952 $(2,596)
======= ======= ======= ======= =======
Other comprehensive income (loss),
before tax:
Foreign currency translation
adjustment..................... 232 (191) (1,331) (1,165) 1,699
------- ------- ------- ------- -------
Other comprehensive income (loss),
before tax....................... 232 (191) (1,331) (1,165) 1,699
------- ------- ------- ------- -------
Income tax (expense) benefit
related to items of other
comprehensive income (loss)...... (117) 76 609 443 (770)
------- ------- ------- ------- -------
Other comprehensive income (loss),
net of tax....................... 115 (115) (722) (722) 929
------- ------- ------- ------- -------
Comprehensive income (loss)....... $ 1,915 $ 2,026 $ 254 $ 230 $(1,667)
======= ======= ======= ======= =======

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-19

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share figures)

Accumulated
Class B Treasury Other Total
Common Stock Stock Compre- Compre- Stock-
------------- -------------- Retained hensive hensive holders'
Shares Amount Shares Amount Earnings Income Income Equity
------ ------ ------ ------ -------- ----------- ------- --------

Balance at December 31,
1994................... 65,787 $2,361 -- $ -- $ 5,679 $ 57 $ 8,097
Treasury stock
transactions--
Stock repurchased...... -- -- (650) (61) -- -- (61)
Comprehensive income
Net income............. -- -- -- -- 1,800 -- $ 1,800 1,800
-------
Foreign currency
translation
adjustment............ -- -- -- -- -- 115 115 115
-------
Comprehensive income.... 1,915
=======
Retained earnings
allocable to
mandatorily redeemable
Class A common stock... -- -- -- -- (4,310) -- (4,310)
------ ------ ------ ----- ------- ---- -------
Balance at December 31,
1995................... 65,787 2,361 (650) (61) 3,169 172 5,641
Treasury stock
transactions--
Stock issued........... -- -- 5,101 467 -- -- 467
Stock repurchased...... -- -- (4,451) (406) -- -- (406)
Comprehensive income
Net income............. -- -- -- -- 2,141 -- 2,141 2,141
-------
Foreign currency
translation
adjustment............ -- -- -- -- -- (115) (115) (115)
-------
Comprehensive income.... 2,026
=======
Retained earnings
allocable to
mandatorily redeemable
Class A common stock... -- -- -- -- (1,329) -- (1,329)
------ ------ ------ ----- ------- ---- -------
Balance at December 31,
1996................... 65,787 2,361 -- -- 3,981 57 6,399
Treasury stock
transactions--
Stock issued........... -- -- 4,000 425 -- -- 425
Stock repurchased...... -- -- (6,244) (650) -- -- (650)
Comprehensive income
Net income............. -- -- -- -- 976 -- 976 976
-------
Foreign currency
translation
adjustment............ -- -- -- -- -- (722) (722) (722)
-------
Comprehensive income.... 254
=======
Retained earnings
allocable to
mandatorily redeemable
Class A common stock... -- -- -- -- (158) -- (158)
------ ------ ------ ----- ------- ---- -------
Balance at December 31,
1997................... 65,787 2,361 (2,244) (225) 4,799 (665) 6,270
Treasury stock
transactions--
Stock repurchased
(unaudited)........... -- -- (500) (55) -- -- (55)
Comprehensive income
Net loss (unaudited)... -- -- -- -- (2,596) -- (2,596) (2,596)
-------
Foreign currency
translation adjustment
(unaudited)........... -- -- -- -- -- 929 929 929
-------
Comprehensive income
(unaudited)............ $(1,667)
=======
Retained earnings
allocable to
mandatorily redeemable
Class A common stock
(unaudited)............ -- -- -- -- 1,075 -- 1,075
------ ------ ------ ----- ------- ---- -------
Balance at September 30,
1998 (unaudited)....... 65,787 $2,361 (2,744) $(280) $ 3,278 $264 $ 5,623
====== ====== ====== ===== ======= ==== =======

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-20

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Nine Months
Twelve Months Ended
Ended December 31, September 30,
-------------------------- ----------------
1995 1996 1997 1997 1998
------- ------- -------- ------- -------
(unaudited)

Cash flows from operating
activities
Net income (loss).............. $ 1,800 $ 2,141 $ 976 $ 952 $(2,596)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization................ 1,230 1,721 2,623 1,347 3,797
Loss on sale of property and
equipment................... 1 162 92 38 14
Deferred income taxes........ 17 (398) (1,061) (466) 436
Changes in assets and
liabilities:
Accounts receivable........ (2,861) (1,933) (4,480) (2,641) (4,107)
Prepaid expenses........... (721) 796 (521) (966) (534)
Other assets............... 26 (612) (912) 103 4,723
Accounts payable........... (1,264) (563) 2,198 1,174 1,145
Accrued expenses........... 1,286 4,617 5,275 6,281 10,093
Income taxes payable....... (78) 394 2,733 1,960 (4,765)
------- ------- -------- ------- -------
Net cash (used in)
provided by operating
activities.............. (564) 6,325 6,923 7,782 8,206
------- ------- -------- ------- -------
Cash flows from investing
activities
Acquisitions................... (561) (540) (10,186) -- --
Proceeds from sales of property
and equipment................. 104 72 82 141 2,047
Purchases of property and
equipment..................... (3,894) (2,039) (6,014) (2,626) (6,255)
------- ------- -------- ------- -------
Net cash used in
investing activities.... (4,351) (2,507) (16,118) (2,485) (4,208)
------- ------- -------- ------- -------
Cash flows from financing
activities
Proceeds from issuance of
common stock.................. 892 737 2,465 1,394 --
Purchases of treasury stock.... (61) (406) (401) -- (55)
Proceeds from short-term debt.. -- -- 7,639 -- 3,801
Payments on short-term debt.... -- -- -- -- (7,640)
------- ------- -------- ------- -------
Net cash provided by
financing activities.... 831 331 9,703 1,394 (3,894)
------- ------- -------- ------- -------
Effect of foreign currency
exchange rates on cash and cash
equivalents..................... 198 38 (657) (454) (541)
------- ------- -------- ------- -------
Net (decrease) increase in cash
and cash equivalents............ (3,886) 4,187 (149) 6,237 (437)
Cash and cash equivalents:
Beginning of period............ 7,901 4,015 8,202 8,202 8,053
------- ------- -------- ------- -------
End of period.................. $ 4,015 $ 8,202 $ 8,053 $14,439 $ 7,616
======= ======= ======== ======= =======
Supplemental disclosures of cash
flow information
Cash paid for--
Interest..................... $ 3 $ 9 $ 3 $ 3 $ 340
Income taxes................. $ 2,358 $ 1,467 $ 1,418 $ 627 $ 5,278
Supplemental schedule of noncash
operating activities
Payable from the acquisition of
net assets.................... $ 437 $ -- $ -- $ -- $ --
Issuance of notes payable for
the purchase of treasury
stock......................... $ -- $ -- $ 249 $ -- $ --

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-21

HEIDRICK & STRUGGLES INTERNATIONAL, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share figures)

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Heidrick & Struggles International, Inc. and Subsidiaries, (the "Company"),
are engaged in providing management consulting and executive search services
to clients on a retained basis. The Company's clients are primarily located
throughout Europe.

Basis of Accounting

The financial statements of the Company have been prepared in conformity
with U.S. generally accepted accounting principles.

Principles of Consolidation

The consolidated financial statements include Heidrick & Struggles
International, Inc. and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in the
consolidated financial statements.

Accounting Estimates

Accounting Pronouncements to be Adopted in 1998

During 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information", which establishes
new standards for reporting information about operating segments in interim
and annual financial statements. It is effective for periods beginning after
December 15, 1997 and will be adopted by the Company as of December 31, 1998.
The Company does not expect that adoption of this Standard will have an impact
on its consolidated financial position or its consolidated results of
operations. However, it is expected that adoption of this Standard will result
in additional footnote disclosure.

During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities", which establishes new standards for
reporting information about derivatives and hedging. It is effective for
periods beginning after June 15, 1999 and will be adopted by the Company as of
January 1, 2000. The Company expects that adoption of this Standard will have
no effect on its consolidated financial position, results of operations or on
disclosures within the consolidated financial statements as they currently do
not engage in the use of derivative instruments or other hedging activities.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with a purchased
maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

F-22

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Property and Equipment

Office furniture and fixtures.................................. 8-10 years
Computer equipment and software................................ 3-5 years
Automobiles.................................................... 4 years

Depreciation for financial statement purposes for the years ended December
31, 1995, 1996, and 1997 totaled $1,189, $1,594 and $2,315, respectively.

Intangible assets are stated at cost and amortized using the straight-line
method over the estimated economic useful life. The Company continually
evaluates whether subsequent events and circumstances have occurred that
indicate the remaining estimated useful life of an intangible asset may
warrant revision, or that the remaining balance of an intangible asset may not
be recoverable. The Company evaluates the recoverability of intangible assets
by measuring the carrying amount of the assets against the estimated
undiscounted future cash flows associated with them. At the time such
evaluations indicate that the future undiscounted cash flows of such assets
are not sufficient to recover the carrying value of such assets, the assets
are adjusted to their fair values. Based on these evaluations, there were no
adjustments to the carrying value of intangibles in 1998, 1997 and 1996.

Revenue Recognition

Income Taxes

Earnings per Common Share

The Company adopted SFAS No. 128, "Earnings Per Share" at December 31, 1997.
Basic earnings per common share is computed by dividing net income by weighted
average common shares outstanding for the year. Diluted earnings per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted. In accordance
with SFAS No. 128, the Company utilizes the two-class method of calculating
earnings per share. As such, the earnings are assigned to each class according
to the terms of the stock agreements and earnings per share are computed by
dividing the earnings assigned to each class by the shares outstanding in that
class.

Translation of Foreign Currencies

The translation of financial statements into U.S. dollars has been performed
in accordance with the SFAS No. 52, "Foreign Currency Translation." The local
currency for all subsidiaries has been designated as the functional currency
except for subsidiaries which operate in highly inflationary economies which
use the U.S. dollar as their functional currency. Non-U.S. assets and
liabilities have been translated into U.S. dollars at the current rate of
exchange prevailing at the balance sheet date. Revenues and expenses have been
translated at the

F-23

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

average exchange rates for the period. Translation gains and losses are
reflected as a separate component of stockholders' equity and not included in
income.

Interim Financial Information

The consolidated financial statements and related notes thereto for the nine
months ended September 30, 1997 and September 30, 1998 are unaudited and have
been prepared on the same basis as the audited financial statements included
herein. In the opinion of management, such unaudited financial statements
include all adjustments (consisting of normal recurring adjustments) necessary
to present fairly the information set forth herein. Operating results for the
nine months ended September 30, 1998 are not necessarily indicative of results
that may be expected for the fiscal year ended December 31, 1998.

2. Acquisitions

Tesco AG

On July 20, 1995, the Company acquired 100% of Tesco AG. The purchase price
amounted to $1,406 and the excess of purchase price over the fair value of net
assets was $969. Only $1,154 of the purchase price was paid and therefore only
$717 of the goodwill was recorded as of December 31, 1997. The goodwill is
being amortized over five years and the accumulated amortization amounts to
$314 at December 31, 1997. The amortization expense was $29, $127, and $158 in
1995, 1996, and 1997, respectively.

The remaining part of the purchase price has not yet been paid and is not
recorded, as the payment is contingent upon certain conditions, which have not
been met. Additional goodwill will be recorded for any additional amounts paid
as part of this acquisition.

Mulder & Partner GmbH & Co. KG

Effective October 1, 1997 the Company acquired 100% of Mulder & Partner GmbH
& Co. KG ("Mulder"). The Company entered into a deferred contingent payment
agreement with the sellers as described below:

. $8,695 was paid on October 1, 1997 and $1,066 of associated transaction
costs were incurred; $5,228 plus 4% interest will be paid in annual equal
installments over a five year period ending October 1, 2002.

. Shares of the Company will be issued over a five year period to the
partners of Mulder as follows:

Number
of shares
to be issued
------------

October 1, 1997.............................................. 4,000
January 1, 1999.............................................. 8,000
January 1, 2000.............................................. 7,000
January 1, 2001.............................................. 7,000
January 1, 2002.............................................. 6,000
------
32,000
======

At October 1, 1997, consideration corresponding to the issuance of the first
4,000 shares was accounted for at a value of $106.16 per share, representing
the fair value of the shares of the Company at this date. The entire purchase
price (initial cash payment, future cash installments and all shares) is
contingent upon the continued employment of the selling shareholders for the
five year period ending October 1, 2002. A pro rata portion of the total
purchase price is forfeited in the event a selling shareholder leaves the
employment of the Company prior to October 1, 2002. Due to these employment
contingencies, the purchase price has been accounted for as compensation
expense over the five year period of the contingency.

F-24

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On July 2, 1998, the Mulder acquisition agreement was amended. The amended
agreement is contingent upon the merger of the Company and Heidrick &
Struggles, Inc. The amended purchase price is $28,396, which is to be paid as
follows:

. $8,695 was due and paid in cash, $1,066 of associated transactions were
incurred, and 4,000 shares of the Company's stock were issued to the
former stockholders of Mulder on October 1, 1997.

. $5,228 plus interest accrued from October 1, 1997 at a rate of 4% is due
90 days after the merger of the Company and Heidrick & Struggles, Inc.

. $12,773 represented by shares in the newly merged entity is due to the
former stockholders of Mulder 90 days after the merger of the Company and
Heidrick & Struggles, Inc.

All employment contingencies were eliminated from the acquisition agreement.

Due to the early settlement and elimination of employment contingencies, all
remaining amounts will be expensed in the quarter when the amendment becomes
effective.

3. Line of Credit

The Company was granted a multicurrency line of credit which became
effective on October 13, 1997. The $9,892 line of credit will be reduced
annually by $1,978 on July 1, 1998, 1999, 2000 and 2001. The line of credit
will expire on July 1, 2002. The interest rate on the credit line is LIBOR
plus 1%. The interest rate at December 31, 1997 was 7.2%. The total
outstanding balance was $7,639 at December 31, 1997. The interest expense on
the debt was $21 for the year ended December 31, 1997. The credit line has a
financial requirement, which requires that the ratio of total debt to tangible
net worth be less than 90%. As a result of this financial requirement,
retained earnings are restricted to the extent the ratio of debt to tangible
net worth exceeds 90%. Also, no investment greater than $2 million is allowed
without prior approval from the banks. Finally, there may be no substantial
sale of German assets without the bank's prior approval. As of December 31,
1997, the Company met all of its financial requirements.

4. Related Party Transactions

At December 31, 1997, Heidrick & Struggles, Inc. owned 35.5% of the stock of
the Company. Heidrick & Struggles, Inc. loaned the Company $5,148 during the
first quarter of 1998. Of this amount, $1,500 was repaid on July 31, 1998 and
the balance plus interest is due on September 30, 1998. The interest rate on
this loan is fixed at approximately 6.7%. Accounts receivable includes a
receivable of $367 from Heidrick & Struggles, Inc. at December 31, 1996.
Accounts payable includes a payable of $776 to Heidrick & Struggles, Inc. at
December 31, 1997. All transactions between the Company and Heidrick &
Struggles, Inc. are recorded at cost.

Based on an agreement between the Company and Heidrick & Struggles, Inc.,
effective January 1, 1995, 65% of the net income of the Company is allocated
to Class A shares and 35% of the net income of the Company is allocated to
Class B shares, regardless of the exact percentage of each class holding.
Heidrick & Struggles, Inc. owns all Class B shares.

5. Long-Term Debt

Long-term debt consists of amounts due to former stockholders who have sold
their stock back to the Company (see Note 6). The obligations are payable in
annual installments over a period of five years with interest payable at the
prime commercial rate (8.25% and 8.50%, at December 31, 1996 and 1997,
respectively).

The fair value of the debt based on current rates for similar debt is
estimated to be $454 at December 31, 1997.

F-25

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Future principal payments on long-term debt are due as follows:

Years ending December 31--
1998............................................................. $178
1999............................................................. 242
2000............................................................. 56
2001............................................................. 56
2002............................................................. --
----
$532
====

6. Stockholder Agreements

In accordance with the terms of the stock purchase agreements between the
Company and its Class A stockholders, the Company is obligated to purchase the
shares of stock owned by a Class A stockholder if the stockholder desires to
sell or transfer the shares, or upon a stockholder's termination of employment
at book value as defined in the stock purchase agreements. Redemption amounts
relating to the stock purchase agreements are included in Mandatorily
Redeemable Common Stock in the accompanying balance sheets. Payments for
shares are generally made over a four year period. These agreements will
terminate upon successful completion of an initial public offering.

7. Income Taxes

The deferred tax assets and liabilities consist of the following components
as of December 31, 1996 and 1997:

1996 1997
------ ------

Deferred tax assets--
Receivable allowances................................... $ 616 $ 584
Accrued vacations....................................... 170 222
Accrued bonuses......................................... -- 496
Property and equipment.................................. 826 963
Pension reserve......................................... -- 2,222
Other accrued expenses.................................. -- 323
Cumulative translation adjustment....................... -- 568
------ ------
Net deferred tax assets............................... 1,612 5,378
------ ------
Deferred tax liabilities--
Other accrued expenses.................................. (84) --
Cumulative translation adjustment....................... (41) --
------ ------
Net deferred tax liabilities.......................... (125) --
------ ------
Net deferred income taxes........................... $1,487 $5,378
====== ======

The deferred tax amounts mentioned above have been classified in the
accompanying consolidated balance sheets as of December 31, 1996, and December
31, 1997, as follows:

1996 1997
------ ------

Current deferred tax assets............................... $1,612 $4,810
Current deferred tax liabilities.......................... (84) --
------ ------
Net current deferred tax asset........................ 1,528 4,810
------ ------
Long-term deferred tax asset.............................. -- 568
Long-term deferred tax liabilities........................ (41) --
------ ------
Net long-term deferred tax............................ (41) 568
------ ------
$1,487 $5,378
====== ======

F-26

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The provision for income taxes for the years ended December 31, 1995, 1996
and 1997, is as follows:

1995 1996 1997
------ ------ -------

Current--
U.S. Federal.................................... $ 428 $ 151 $ 533
Foreign......................................... 1,395 1,677 2,707
Deferred.......................................... 17 (398) (1,061)
------ ------ -------
$1,840 $1,430 $ 2,179
====== ====== =======

The Company is a U.S. corporation, but operates entirely outside of the
U.S., primarily in Europe. The Company pays foreign taxes for operations in
each of the foreign countries in which it operates and pays U.S. federal taxes
on its total operations after foreign tax credits.

A reconciliation of income tax expense for the years ended December 31,
1995, 1996, and 1997, to the statutory U.S. federal income tax rate of 35%, is
as follows:

1995 1996 1997
------- ------- -------

Income taxes at statutory rate................... $ 1,274 $ 1,250 $ 1,104
Increase (decrease) due to--
Foreign taxes in excess of federal tax rates... 69 494 357
Alternative minimum tax........................ 3 67 --
Other, net..................................... 494 (381) 718
------- ------- -------
$1,840 $ 1,430 $ 2,179
======= ======= =======

8. Commitments and Contingencies

Operating Leases:

The Company leases office space in various buildings for its own use. The
leases expire at various dates through 2012. The Company also leases computer
equipment which is accounted for as an operating lease.

Minimum future lease payments due in each of the next five years ending
December 31, are as follows:

Years ending December 31--
1998.......................................................... $ 6,877
1999.......................................................... 6,576
2000.......................................................... 5,937
2001.......................................................... 4,657
2002.......................................................... 2,195
Thereafter.................................................... 27,249
-------
$53,491
=======

Rent expense under operating leases for the years ended December 31, 1995,
1996 and 1997 was $3,621, $4,707 and $5,307, respectively.

Litigation

F-27

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)

9. Segment Information

The Company operates in a single business segment. The Company's geographic
data for operations is as follows:

Twelve Months Ended
December 31,
------------------------
1995 1996 1997
------- ------- -------

Revenue:
United Kingdom....................................... $15,491 $20,565 $27,588
Germany.............................................. 10,898 12,614 19,900
France............................................... 9,243 11,211 12,253
Other................................................ 17,183 20,168 22,991
------- ------- -------
Total.............................................. $52,815 $64,558 $82,732
======= ======= =======
Operating income (loss):
United Kingdom....................................... $ 883 $ 589 $ 1,028
Germany.............................................. 1,134 1,279 1,042
France............................................... 877 (3) 915
Other................................................ 408 1,573 52
------- ------- -------
Total.............................................. $ 3,302 $ 3,438 $ 3,037
======= ======= =======
Identifiable assets:
United Kingdom....................................... $ 5,533 $ 6,295 $12,288
Germany.............................................. 4,799 4,729 24,093
France............................................... 5,424 6,985 9,921
Other................................................ 10,000 14,842 13,645
------- ------- -------
Total.............................................. $25,756 $32,851 $59,947
======= ======= =======

During all years presented above, no individual customer accounted for greater
than 10% of revenue.

10. Merger Agreement

On June 30, 1998, the Company's Board of Directors approved a merger
agreement with Heidrick & Struggles, Inc. which details the plan to merge
Heidrick & Struggles, Inc. with and into the Company prior to an initial
public offering; and recommended that the merger agreement be submitted to the
Stockholders for approval. After completion of the merger, the corporation
will be named Heidrick & Struggles International, Inc.

11. Unaudited Interim Information

The term of the Company's loan from Heidrick & Struggles, Inc. was extended,
and the balance was paid on January 20, 1999.

HSI has negotiated a $7,969 multicurrency line of credit. This facility will
reduce to $4,922 on March 1, 1999, $1,055 on May 1, 1999 and will terminate on
May 31, 1999. The borrowings bear interest at the Euro OverNight Index Average
("EONIA") plus 100 basis points or LIBOR plus 100 basis points, depending on
the currency of the borrowing. The borrowings can be drawn in Euros, ECU or
British Pounds. At 12/31/98, there was $3,437 outstanding under the facility
and the interest rate was 4.57%.

F-28

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Mulder & Partner GmbH & Co. KG:

We have audited the accompanying consolidated statements of income and
related consolidated statements of cash flows of MULDER & PARTNER GMBH & CO.
KG AND SUBSIDIARIES (a German limited partnership) for the nine months ended
September 30, 1997 and for each of the two years in the period ending December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of the operations of Mulder & Partner
GmbH & Co. KG and Subsidiaries and their cash flows for the nine months ended
September 30, 1997 and for each of the two years in the period ending December
31, 1996, in conformity with generally accepted accounting principles.

Arthur Andersen LLP

Chicago, Illinois
July 19, 1998

F-29

MULDER & PARTNER GMBH & CO. KG AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except share and per share figures)

Twelve Months Nine Months
Ended December Ended
31, September 30,
---------------- -------------
1995 1996 1997
------- ------- -------------

Revenue......................................... $31,529 $32,560 $21,816
Operating expenses:
Salaries and employee benefits................ 24,045 24,701 14,610
General and administrative expenses........... 6,560 7,404 5,557
------- ------- -------
Total operating expenses.................... 30,605 32,105 20,167
------- ------- -------
Operating income............................ 924 455 1,649
Non-operating income (expense):
Interest income............................... 13 28 36
Interest expense.............................. (133) (94) (159)
Other income.................................. 581 2,106 529
------- ------- -------
461 2,040 406
------- ------- -------
Income before income taxes.................. 1,385 2,495 2,055
Provision for income taxes...................... 1,149 2,663 1,668
------- ------- -------
Net income (loss)........................... $ 236 $ (168) $ 387
------- ------- -------
Comprehensive income (loss)..................... $ 236 $ (168) $ 387
======= ======= =======

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-30

MULDER & PARTNER GMBH & CO. KG AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Twelve Months
Ended Nine Months
December 31, Ended
---------------- September 30,
1995 1996 1997
------- ------- -------------

Cash flows from operating activities
Net income (loss)............................ $ 236 $ (168) $ 387
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............. 25 356 231
Deferred income taxes...................... 89 72 (2)
Changes in assets and liabilities:
Trade & other receivables................ (1,530) (2,309) 1,319
Prepaid expenses......................... (52) (173) 170
Accounts payable......................... 138 292 (246)
Accrued expenses......................... 4,282 2,152 (165)
Income taxes payable..................... 195 2,130 1,409
------- ------- -------
Net cash provided by operating
activities............................ 3,383 2,352 3,103
------- ------- -------
Cash flows from investing activities
Purchases of property and equipment.......... (615) (991) (21)
Purchases of long-term investments........... (1,965) (2,212) (455)
------- ------- -------
Net cash used in investing activities.. (2,580) (3,203) (476)
------- ------- -------
Cash flows from financing activities
Dividends paid............................... (1,411) (872) (557)
Proceeds from long-term debt................. 376 1,299 --
Payments on long-term debt................... -- -- (1,964)
------- ------- -------
Net cash provided by (used in)
financing activities.................. (1,035) 427 (2,521)
------- ------- -------
Effect of foreign currency exchange rates on
cash and cash equivalents..................... 65 (38) (25)
------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................... (167) (462) 81
Cash and cash equivalents:
Beginning of period.......................... 812 645 183
------- ------- -------
End of period................................ $ 645 $ 183 $ 264
======= ======= =======
Supplemental disclosures of cash flow
information
Cash paid for--
Interest..................................... $ 133 $ 94 $ 159
Income taxes................................. $ 864 $ 761 $ 140
======= ======= =======

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-31

MULDER & PARTNER GMBH & CO. KG AND SUBSIDIARIES

NOTES TO CONSOLIDATED INCOME STATEMENTS AND
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995 and 1996
and the nine months ended September 30, 1997

1. Nature of Business and Summary of General Accounting Principles

Nature of Business

Mulder & Partner GmbH & Co. KG and Subsidiaries (as of December 31, 1995:
Mulder & Partner GmbH) (the "Company") are engaged in providing management
consulting and executive search services to clients on a retained basis. The
Company's clients are primarily located in Germany.

Basis of Accounting

The financial statements of the Company have been prepared in conformity
with U.S. generally accepted accounting principles.

Principles of Consolidation

The consolidated financial statements include Mulder & Partner GmbH & Co.,
KG and its wholly and majority owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in the consolidated financial
statements.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and the accompanying notes. Actual results could differ from those
estimates.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the useful lives of the assets
and German tax law as follows:

Office furniture and fixtures.................................. 4-20 years
Computer equipment and software................................ 2-3 years

Depreciation for consolidated financial statement purposes for the years
ended December 31, 1995 and 1996 and the nine months ended September 30, 1997
totaled $25, $356 and $231, respectively.

Revenue Recognition

Revenue from client services is recognized as clients are billed, generally
over a 90 day period commencing in the month of the initial acceptance of a
search. Revenue consists of the amount billed to clients, net of expenses and
value added taxes.

Translation of Foreign Currencies

The consolidated financial statements were translated in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency
Translation." The functional currency for the Company is the German
Deutschmark. The consolidated financial statements have been translated into
U.S. Dollars by applying the average annual exchange rates on the consolidated
income statements and the consolidated statements of cash flows.

F-32

2. Income Taxes

The provision for income taxes for the years ended December 31, 1995 and
1996 and the nine months ended September 30, 1997, is as follows:

Before After After
reorganization reorganization Reorganization
(see below) (see below) (see below)
Nine months ended
1995 1996 September 30, 1997
-------------- -------------- ------------------

Current taxes--
Trade taxes on income
(Municipality tax)......... $ 325 $2,591 $1,666
Corporate income tax
including Solidarity
Surcharge (Federal tax).... 735 -- --
Deferred taxes................ 89 72 2
------ ------ ------
$1,149 $2,663 $1,668
====== ====== ======

A reconciliation of income tax expense for the years ended December 31, 1995
and 1996 and the nine months ended September 30, 1997 to the statutory German
trade tax rate of 19% is as follows:

Nine months ended
1995 1996 September 30, 1997
------ ------ ------------------

Income taxes at statutory rate................ $ 263 $ 474 $ 390
Increase due to--
Corporate income tax at statutory rate of
45% including Solidarity Surcharge of 7.5%. 670 -- --
Nondeductible expenses...................... 216 2,189 1,278
------ ------ ------
$1,149 $2,663 $1,668
====== ====== ======

Since the change of the legal status of Mulder & Partner GmbH in 1996 the
Company is only subject to trade tax on income. With notarial deed dated June
13, 1996, Mulder & Partner GmbH was reorganized retroactively (effective
January 1, 1996) from a limited liability corporation into Mulder & Partner
GmbH & Co., KG (a limited partnership with a limited liability corporation as
general partner) according to Sect. 190 following the German Reorganization
Law ("Umwandlungsgesetz"). Due to the change of the legal status, the Company
is no longer subject to German corporate income taxation. The income of the
partnership is now taxed at the level of the individual partners.

The reorganization has been performed at book value without realizing any
capital gain or loss. Accordingly the reorganization has not had any German
income tax implications.

Deferred Taxes

Deferred taxes are applicable for German trade tax on income and German
corporate income tax.

3. Commitments and Contingencies

Operating Leases:

The Company leases office space in various buildings for its own use. These
leases expire at various dates through 2002. The Company also leases computer
equipment and automobiles which are accounted for as operating leases.

F-33

Minimum future lease payments due in each of the next five years ending
December 31, are as follows:

Years ending December 31

1998............................................................. $ 952
1999............................................................. 940
2000............................................................. 889
2001............................................................. 427
2002............................................................. 239
------
$3,447
======

Rent expense under operating leases for the years ended December 31, 1995,
1996, and the nine months ended September 30, 1997 was $978, $1,157 and $789,
respectively.

Litigation

In the normal course of business, the Company is a party to various matters
involving disputes and/or litigation. While it is not possible at this time to
determine the ultimate outcome of these matters, management believes that the
ultimate liability, if any, will not be material to the results of operations,
financial condition or liquidity of the Company.

4. Segment Information

The Company operates as a single business segment and in a single primary
geographic location (Germany).

F-34

ANNEX A

AGREEMENT AND PLAN OF MERGER
OF
HEIDRICK & STRUGGLES, INC.
AND
HEIDRICK & STRUGGLES INTERNATIONAL, INC.

AGREEMENT AND PLAN OF MERGER (the "Agreement"), entered into as of February
12, 1999, by and among Heidrick & Struggles, Inc., a Delaware corporation
("H&S Inc."), and Heidrick & Struggles International, Inc., a Delaware
corporation ("H&S International"). H&S Inc. and H&S International are referred
to individually herein as a "Party" and collectively herein as the "Parties."

RECITALS

WHEREAS, the Parties intend that H&S Inc. merge with and into H&S
International (the "Merger"), with H&S International to be the surviving
corporation of the Merger (the "Surviving Corporation"), all pursuant to the
terms and conditions of this Agreement and the applicable provisions of the
Delaware General Corporation Law (the "DGCL"). Upon the effectiveness of the
Merger, each share of the issued and outstanding capital stock of H&S Inc.
will be converted into 2.8249 shares of Common Stock, par value $.01 per
share, of H&S International ("H&S International Common Stock"), as provided in
this Agreement.

WHEREAS, the respective Boards of Directors of H&S Inc. and H&S
International have determined that the transactions contemplated by this
Agreement are fair to and in the best interests of their respective
stockholders.

WHEREAS, the respective Boards of Directors of H&S Inc. and H&S
International have unanimously approved the Merger subject to the terms and
conditions of this Agreement in accordance with the applicable provisions of
the DGCL.

WHEREAS, H&S Inc. and H&S International intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder.

WHEREAS, the authorized number of shares of H&S International is 300,000
shares of which (i) 150,000 are Class A Common Stock, no par value ("Class A
Common Stock"), of which 144,534 shares are currently issued and outstanding;
and (ii) 150,000 shares are Class B Common Stock, no par value ("Class B
Common Stock"), of which 80,185 shares are currently issued and outstanding.

WHEREAS, the authorized number of shares of H&S Inc. is 500,000 shares of
Common Stock, par value $1.00 per share ("H&S Inc. Common Stock"), of which
181,641 shares are currently issued and outstanding.

NOW, THEREFORE, in consideration of the premises and the mutual promises set
forth herein, and in consideration of the representations, warranties and
covenants set forth herein, intending to be legally bound hereby, the Parties
hereby agree as follows:

A-1

ARTICLE I

The Merger; Closing; Effective Time

1.1. The Merger. Subject to and upon the terms and conditions of this
Agreement and the DGCL, H&S Inc. will be merged with and into H&S
International at the "Effective Time," as such term is hereinafter defined. At
the Effective Time, the separate corporate existence of H&S Inc. shall
thereupon cease, and H&S International shall be the Surviving Corporation.

1.2. Closing. The closing of the Merger (the "Closing") shall take place (i)
at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York,
NY 10017 at 10:00 A.M. on the second business day after which the last to be
fulfilled or waived of the conditions set forth in Article IV hereof (other
than those conditions that can only be fulfilled at the Closing) shall be
fulfilled or waived in accordance with this Agreement (the "Closing Date") or
(ii) at such other place and time and/or on such other date as the Parties may
agree.

1.3. Filing of Merger Documents; Effective Time. As soon as practicable
after the Closing, H&S International and H&S Inc. will (i) execute and file a
certificate of merger relating to the Merger (the "Certificate of Merger")
with the Secretary of State of Delaware as provided in the DGCL and (ii) make
all other filings or recordings required under the DGCL. The Merger shall
become effective at the time at which the Certificate of Merger is duly filed
with the Secretary of State of Delaware or at such subsequent time as the
Parties shall agree and be specified in the Certificate of Merger (the
"Effective Time").

1.4. Effect of the Merger. The Merger will, from and after the Effective
Time, have all of the effects provided by applicable law, including, without
limitation, the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of H&S Inc. shall be vested in the Surviving
Corporation, and all debts, liabilities and duties of H&S Inc. shall become
the debts, liabilities and duties of the Surviving Corporation.

1.5. Certificate of Incorporation. At the Effective Time, the Certificate of
Incorporation of H&S International shall be amended and restated in accordance
with the DGCL in the form attached as Annex I hereto, which will be the
Certificate of Incorporation of the Surviving Corporation, until amended in
accordance therewith and the provisions of the DGCL.

1.6. By-Laws. The By-laws of H&S International immediately prior to the
Effective Time shall be amended and restated to read in their entirety as
Annex II hereto, until further amended or restated in accordance therewith and
the provisions of the DGCL.

1.7. Directors and Officers of Surviving Corporation. The directors of H&S
International immediately prior to the Effective Time will be the directors of
the Surviving Corporation, and the officers of H&S International immediately
prior to the Effective Time will be the officers of the Surviving Corporation,
until their death, resignation or removal, and until their respective
successors are duly elected or appointed.

1.8. Effect on Capital Stock.

(a) Capital Stock of H&S Inc. At the Effective Time, without any further
action on the part of any holder thereof, each share of H&S Inc. Common Stock
that is issued and outstanding immediately prior to the Effective Time will by
virtue of the Merger be automatically converted into 2.8249 shares of validly
issued, fully paid and non-assessable H&S International Common Stock. Any
fractional shares shall be cancelled, and the holders thereof will receive
cash for their fractional shares.

(b) Capital Stock of H&S International, Inc.

(i) At the Effective Time, without any further action on the part of the
holder thereof, each share of Class A Common Stock that is issued and
outstanding immediately prior to the Effective Time will by virtue of the
Merger be automatically converted into one share of validly issued, fully paid
and non-assessable H&S International Common Stock.

A-2

(ii) Each share of Class B Common Stock that is issued and outstanding at
the Effective Time will, by virtue of the Merger, cease to be outstanding and
shall be cancelled and retired and no stock of H&S International or other
consideration shall be delivered in exchange therefor.

1.9. Stock Certificates.

(a) At the Effective Time, certificates representing shares of H&S Inc.
Common Stock or Class A Common Stock, as the case may be, held by the
stockholders of H&S Inc. and H&S International (the "Stockholders"),
respectively, will be deemed to represent such number of shares of H&S
International Common Stock into which such shares of H&S Inc. Common Stock or
Class A Common Stock have been converted pursuant to Sections 1.8(a) or
1.8(b)(i) hereof.

(b) No Further Ownership Rights in H&S Inc. Common Stock; Exchange of
Shares. As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of H&S Inc. Common Stock
shall cease to be outstanding and shall be canceled and retired and shall
cease to exist, and each holder of a certificate which immediately prior to
the Effective Time represented any such shares of H&S Inc. Common Stock (a
"Certificate") shall thereafter cease to have any rights with respect to such
shares of H&S Inc. Common Stock, except that such Certificates will represent
such number of shares of H&S International Common Stock as is set forth in
Section 1.8(a) hereof. Notwithstanding anything in the preceding sentence or
Section 1.8(a) hereof to the contrary, each holder of H&S Inc. Common Stock
shall have the right to surrender and the Company may require each such holder
to surrender for exchange any and all certificates representing shares of such
H&S Inc. Common Stock for (i) a certificate or certificates representing such
number of whole shares of H&S International Common Stock as is set forth in
Section 1.8(a) hereof and (ii) cash in lieu of any fractional shares of such
H&S International Common Stock. Any shares of H&S Inc. Common Stock so
surrendered shall be cancelled.

(c) Lost, Stolen or Destroyed Certificates. In the event that any
Certificate to be delivered to H&S International pursuant hereto shall have
been lost, stolen or destroyed, in exchange for such lost, stolen or destroyed
Certificate, upon the making of an affidavit of that fact by the holder
thereof, H&S International shall issue and deliver such shares of H&S
International Common Stock as may be required pursuant to Sections 1.8(a) or
1.8(b)(i) hereof; provided, however, that H&S International may, in its
discretion and as a condition precedent to such issuance and delivery, require
the owner of such lost, stolen or destroyed Certificate to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may
be made against H&S International with respect to the Certificate alleged to
have been lost, stolen or destroyed.

ARTICLE II

Representations and Warranties

2.1. Representations and Warranties of H&S Inc. Except as set forth in the
H&S Inc. Disclosure Schedule delivered by H&S Inc. to H&S International prior
to the execution of this Agreement (the "H&S Inc. Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein), H&S Inc. represents and
warrants to H&S International as follows:

(a) Organization, Standing and Power. Each of H&S Inc. and any other
corporation or other organization of which H&S Inc. holds at least a majority
of the securities or other interests is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization.

(b) Authority; No Conflicts. H&S Inc. has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by H&S Inc. of
this Agreement and the consummation by H&S Inc. of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of H&S Inc. This Agreement has been duly executed and
delivered by H&S Inc. and constitutes the valid and binding agreement of H&S
Inc., enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy,

A-3

insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors generally, by general equity principles (regardless or
whether such enforceability is considered in a proceeding in equity or at law)
or by an implied covenant of good faith and fair dealing.

(c) Non-Contravention. The execution, delivery and performance by H&S Inc.
of this Agreement and the consummation by H&S Inc. of the transactions
contemplated hereby do not and will not contravene or conflict with or create
a default under the Certificate of Incorporation or By-laws of H&S Inc. or any
agreement, instrument or other obligation by which it is bound.

(d) Board Approval. The Board of Directors of H&S Inc., by resolutions duly
adopted (the "H&S Inc. Board Approval"), has duly (i) determined that this
Agreement and the Merger are advisable and in the best interests of H&S Inc.
and its stockholders, (ii) approved this Agreement and the Merger and (iii)
recommended that the stockholders of H&S Inc. approve and adopt this Agreement
and the Merger. The H&S Inc. Board Approval constitutes approval of this
Agreement and the Merger for purposes of Section 203 of the DGCL.

2.2. Representations and Warranties of H&S International. Except as set
forth in the H&S International Disclosure Schedule delivered by H&S
International to H&S Inc. prior to the execution of this Agreement (the "H&S
International Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein), H&S International represents and warrants to H&S Inc. as
follows:

(a) Organization, Standing and Power. H&S International is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware.

(b) Authority; No Conflicts. H&S International has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
H&S International of this Agreement and the consummation by H&S International
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of H&S International. This Agreement
has been duly executed and delivered by H&S International and constitutes the
valid and binding agreement of H&S International, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors generally, by general equity principles
(regardless or whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing.

(c) Non-Contravention. The execution, delivery and performance by H&S
International of this Agreement and the consummation by H&S International of
the transactions contemplated hereby do not and will not contravene or
conflict with or create a default under the Certificate of Incorporation or
By-laws of H&S International or any agreement, instrument or other obligation
by which it is bound.

(d) Board Approval. The Board of Directors of H&S International, by
resolutions duly adopted (the "H&S International Board Approval"), has duly
(i) determined that this Agreement and the Merger are advisable and in the
best interests of H&S International and its stockholders, (ii) approved this
Agreement and the Merger and (iii) recommended that the stockholders of H&S
International approve and adopt this Agreement and the Merger. The H&S
International Board Approval constitutes approval of this Agreement and the
Merger for purposes of Section 203 of the DGCL.

A-4

ARTICLE III

Additional Agreements

3.1. Tax-Free Qualification. Each of H&S Inc. and H&S International shall
use its best efforts to cause the Merger to qualify as, and neither H&S Inc.
nor H&S International shall, nor shall either permit any of its subsidiaries
to (either before or after consummation of the Merger), take any action that
would prevent or impede the Merger from qualifying as, a reorganization under
the provisions of Section 368 of the Code.

3.2. Best Efforts. Subject to the terms and conditions of this Agreement,
each Party will use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger and
the other transactions contemplated by this Agreement. In furtherance and not
in limitation of the foregoing, if required, each party hereto agrees to make
an appropriate filing of a Notification and Report Form pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
with respect to the transactions contemplated hereby as promptly as
practicable after the date hereof and to supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable.

ARTICLE IV

Conditions Precedent

4.1. Conditions to Each Party's Obligation to Effect the Merger. The
obligations of H&S Inc. and H&S International to effect the Merger are subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:

(a) Stockholder Approval. Each of H&S Inc. and H&S International shall have
obtained the required stockholder vote in favor of the adoption of this
Agreement and the transactions contemplated hereby.

(b) No Injunctions or Restraints; Illegality. No law, rule or regulation
shall have been adopted or promulgated, and no temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
governmental entity of competent jurisdiction shall be in effect, having the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger.

(c) HSR Act. The waiting period (and any extension thereof), if any,
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.

(d) Representations and Warranties. Each of the representations and
warranties of the Parties set forth in this Agreement shall have been true and
correct in all material respects on the date of this Agreement and each Party
shall deliver to the other a certificate, signed on its behalf by its chief
executive officer and dated the Closing Date, to such effect.

(e) Tax Opinion. H&S Inc. and H&S International shall have received an
opinion dated the Closing Date of Simpson Thacher & Bartlett that the Merger
qualifies as a tax-free reorganization within the meaning of Section 368 of
the Code and the regulations promulgated thereunder.

A-5

ARTICLE V

Miscellaneous

5.1. Governing Law. The laws of the State of Delaware, irrespective of its
choice of law principles, will govern the validity of this Agreement, the
construction of its terms and the interpretation and enforcement of the rights
and duties of the Parties.

5.2. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

5.3. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any Party whose
signature appears thereon and all of which together will constitute one and
the same instrument.

5.4. Severability. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable,
the remainder of this Agreement and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the Parties. The Parties further agree to replace such invalid or
unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of the invalid or unenforceable provision.

5.5. Amendment and Waiver. At any time prior to the Effective Time, whether
or not the stockholders of either or both of the Parties have adopted this
Agreement, the Parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent permitted by the DGCL, (i)
amend or modify any provision of this Agreement or add provisions to this
Agreement; (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein.

A-6

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

ATTEST: HEIDRICK & STRUGGLES, INC.

/s/ Richard D. Nelson /s/ Patrick S. Pittard

By:_____________________________
- -------------------------
Name: Patrick S. Pittard
Secretary
Title: President and Chief
Executive Officer

ATTEST: HEIDRICK & STRUGGLES INTERNATIONAL,
INC.

/s/ Richard D. Nelson
/s/ Dr. Jurgen B. Mulder
- -------------------------
By:_____________________________
Secretary
Name: Dr. Jurgen B. Mulder

Title: President and Chief
Executive Officer

A-7

ANNEX I

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

HEIDRICK & STRUGGLES INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies as follows:

1. The name of the corporation is Heidrick & Struggles International,
Inc. The date of the filing of its original Certificate of Incorporation
with the Secretary of State of the State of Delaware was May 9, 1968 under
the name Heidrick and Struggles International, Inc. A Restated Certificate
of Incorporation was filed with the Secretary of State of the State of
Delaware on September 13, 1984 under the name Heidrick and Struggles
International, Inc. Certificates of Amendment to the Restated Certificate
of Incorporation were filed on August 9, 1989 and on November 7, 1990
respectively. A Certificate of Amendment to the Restated Certificate of
Incorporation was filed on December 23, 1992 changing the name of the
Corporation to Heidrick & Struggles International, Inc.

2. This Amended and Restated Certificate of Incorporation has been duly
adopted by the Board of Directors and by written consent of the
stockholders in accordance with the provisions of Sections 228, 242 and 245
of the General Corporation Law of the State of Delaware and amends and
restates the provisions of the existing Restated Certificate of
Incorporation.

3. Upon the filing of this Amended and Restated Certificate of
Incorporation, (i) each issued and outstanding share of Class A Common
Stock, without par value, of the Corporation (the "Old Shares"), shall
immediately, and without any action on the part of the holder thereof, be
converted into one share of Common Stock, par value $.01 per share, of the
Corporation ("Common Stock") and (ii) each issued and outstanding share of
Class B Common Stock, without par value, of the Corporation shall
immediately be cancelled without payment therefor.

The certificates formerly representing the Old Shares shall represent
such number of shares of Common Stock into which the Old Shares shall have
been converted.

4. The text of the Restated Certificate of Incorporation as amended
heretofore is hereby amended and restated to read in its entirety as
follows:

"FIRST: The name of the corporation is Heidrick & Struggles
International, Inc.

SECOND: The registered office of the corporation in the State of
Delaware is located at No. 1209 Orange Street, in the City of
Wilmington, County of New Castle; and the name of its registered agent
at such address is The Corporation Trust Company.

THIRD: The purposes of the corporation are to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.

A-I-1

FOURTH: (1) The total number of shares of all classes of stock which
the corporation shall have authority to issue is 1,000,000, consisting
of 250,000 shares of Preferred Stock, par value $.01 per share
("Preferred Stock"), and 750,000 shares of Common Stock, par value $.01
per share ("Common Stock"). The number of authorized shares of any of
the Preferred Stock or the Common Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority in voting power of the
stock of the corporation entitled to vote thereon irrespective of the
provisions of Section 242(b)(2) of the General Corporation Law of the
State of Delaware (or any successor provision thereto), and no vote of
the holders of any of the Preferred Stock or the Common Stock voting
separately as a class shall be required therefor.

(2) The Board of Directors is hereby expressly authorized, by
resolution or resolutions, to provide, out of the unissued shares of
Preferred Stock, for series of Preferred Stock and, with respect to
each such series, to fix the number of shares constituting such series
and the designation of such series, the voting powers (if any) of the
shares of such series, and the preferences and relative, participating,
optional or other special rights, if any, and any qualifications,
limitations or restrictions thereof, of the shares of such series. The
powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding.

(3) The Board of Directors is hereby expressly authorized, by
resolution or resolutions, to issue, without a vote or any other action
of the stockholders, any or all authorized shares of stock of the
Corporation, securities convertible into or exchangeable for any
authorized shares of stock of the Corporation and warrants, options or
rights to purchase, subscribe for or otherwise acquire shares of stock
of the Corporation for any such consideration and on such terms as the
Board of Directors in its discretion lawfully may determine.

(4) (a) Each holder of Common Stock, as such, shall be entitled to
one vote for each share of Common Stock held of record by such holder
on all matters on which stockholders generally are entitled to vote;
provided, however, that, except as otherwise required by law, holders
of Common Stock, as such, shall not be entitled to vote on any
amendment to this Amended and Restated Certificate of Incorporation
(including any certificate of designations relating to any series of
Preferred Stock) that relates solely to the terms of one or more
outstanding series of Preferred Stock if the holders of such affected
series are entitled, either separately or together with the holders of
one or more other such series, to vote thereon pursuant to this Amended
and Restated Certificate of Incorporation (including any certificate of
designations relating to any series of Preferred Stock) or pursuant to
the General Corporation Law of the State of Delaware.

(b) Except as otherwise required by law, holders of a series of
Preferred Stock, as such, shall be entitled only to such voting rights,
if any, as shall expressly be granted thereto by this Amended and
Restated Certificate of Incorporation (including any certificate of
designations relating to such series).

(c) Subject to applicable law and the rights, if any, of the holders
of any outstanding series of Preferred Stock or any class or series of
stock having a preference over or the right to participate with the
Common Stock with respect to the payment of dividends, dividends may be
declared and paid on the Common Stock at such times and in such amounts
as the Board of Directors in its discretion shall determine.

(d) Upon the dissolution, liquidation or winding up of the
corporation, subject to the rights, if any, of the holders of any
outstanding series of Preferred Stock or any class or series of stock
having a preference over or the right to participate with the Common
Stock with respect to the distribution of assets of the corporation
upon such dissolution, liquidation or winding up of the corporation,
the holders of the Common Stock, as such, shall be entitled to receive
the assets of the corporation available for distribution to its
stockholders ratably in proportion to the number of shares held by
them.

A-I-2

FIFTH: The Board of Directors shall be authorized to make, amend,
alter, change, add to or repeal the By-Laws of the corporation in any
manner not inconsistent with the laws of the State of Delaware, subject
to the power of the stockholders to amend, alter, change, add to or
repeal the By-Laws made by the Board of Directors. Notwithstanding
anything contained in this Amended and Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of
at least 75 percent in voting power of all the shares of the
corporation entitled to vote generally in the election of directors,
voting together as a single class, shall be required in order for the
stockholders to alter, amend or repeal any provision of the By-Laws
which is to the same effect as Section 3 of Article Fourth, Article
Fifth and Article Seventh of this Amended and Restated Certificate of
Incorporation or to adopt any provision inconsistent therewith.

SIXTH: (1) To the fullest extent permitted by the laws of the State
of Delaware:

(a) The corporation shall indemnify any person (and such person's
heirs, executors or administrators) who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (brought in the right of the
corporation or otherwise), whether civil, criminal, administrative
or investigative, and whether formal or informal, including appeals,
by reason of the fact that such person is or was a director or
officer of the corporation or, while a director or officer of the
corporation, is or was serving at the request of the corporation as
a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability
company or other enterprise, for and against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person or such heirs,
executors or administrators in connection with such action, suit or
proceeding, including appeals. Notwithstanding the preceding
sentence, the corporation shall be required to indemnify a person
described in such sentence in connection with any action, suit or
proceeding (or part thereof) commenced by such person only if the
commencement of such action, suit or proceeding (or part thereof) by
such person was authorized by the Board of Directors of the
corporation. The corporation shall indemnify any person (and such
person's heirs, executors or administrators) who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (brought in the right of the
corporation or otherwise), whether civil, criminal, administrative
or investigative, and whether formal or informal, including appeals,
by reason of the fact that such person is or was an employee or
agent of the corporation or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust,
limited liability company or other enterprise, for and against all
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person
or such heirs, executors or administrators in connection with such
action, suit or proceeding, including appeals.

(b) The corporation shall promptly pay expenses incurred by any
person described in the first sentence of subsection (a) of this
Article Sixth, Section (1) in defending any action, suit or
proceeding in advance of the final disposition of such action, suit
or proceeding, including appeals, upon presentation of appropriate
documentation.

(c) The corporation may purchase and maintain insurance on behalf
of any person described in subsection (a) of this Article Sixth,
Section (1) against any liability asserted against such person,
whether or not the corporation would have the power to indemnify
such person against such liability under the provisions of this
Article Sixth, Section (1) or otherwise.

(d) The Corporation is expressly authorized to enter into
agreements with any person providing for indemnification greater or
different than that provided by this Amended and Restated
Certificate of Incorporation.

A-I-3

(e) The provisions of this Article Sixth, Section (1) shall be
applicable to all actions, claims, suits or proceedings made or
commenced after the adoption hereof, whether arising from acts or
omissions to act occurring before or after its adoption. The
provisions of this Article Sixth, Section (1) shall be deemed to be
a contract between the corporation and each director or officer who
serves in such capacity at any time while this Article Sixth,
Section (1) and the relevant provisions of the laws of the State of
Delaware and other applicable law, if any, are in effect, and any
repeal or modification hereof shall not affect any rights or
obligations then existing with respect to any state of facts or any
action, suit or proceeding then or theretofore existing, or any
action, suit or proceeding thereafter brought or threatened based in
whole or in part on any such state of facts. If any provision of
this Article Sixth, Section (1) shall be found to be invalid or
limited in application by reason of any law or regulation, it shall
not affect the validity of the remaining provisions hereof. The
rights of indemnification provided in this Article Sixth, Section
(1) shall neither be exclusive of, nor be deemed in limitation of,
any rights to which an officer, director, employee or agent may
otherwise be entitled or permitted by contract, this Amended and
Restated Certificate of Incorporation, vote of stockholders or
directors or otherwise, or as a matter of law, both as to actions in
such person's official capacity and actions in any other capacity
while holding such office, it being the policy of the corporation
that indemnification of any person whom the corporation is obligated
to indemnify pursuant to the first sentence of subsection (a) of
this Article Sixth, Section (1) shall be made to the fullest extent
permitted by law, as the same exists or may in the future be amended
(but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to
provide prior to such amendment.)

(f) For purposes of this Article Sixth, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an 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 services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries.

(2) A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for
paying a dividend or approving a stock repurchase or redemption in
violation of Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which the director derived an
improper personal benefit and except to the extent such exemption from
liability or limitation thereof is not permitted under the General
Corporation Law of the State of Delaware as the same exists or may
hereafter be amended. Any amendment, modification or repeal of the
foregoing sentence shall not adversely affect any right or protection
of a director of the corporation hereunder in respect of any act or
omission occurring prior to the time of such amendment, modification or
repeal.

A-I-4

class of directors whose term expires at that annual meeting shall be
elected for a term expiring at the third succeeding annual meeting. If
the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director
of any class elected to fill a newly created directorship resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case shall a
decrease in the number of directors remove or shorten the term of any
incumbent director. A director shall hold office until the annual
meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Any
newly created directorship on the Board of Directors that results from
an increase in the number of directors shall, subject to the rights of
holders of any shares of Preferred Stock, be filled only by a majority
of the directors then in office, provided that a quorum is present. Any
other vacancy may, subject to the rights of holders of any shares of
Preferred Stock, be filled only by a majority of the Directors,
although less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of
his predecessor. Directors may be removed only for cause, and only by
the affirmative vote of at least 75 percent in voting power of all
shares of the corporation entitled to vote generally in the election of
directors, voting as a single class.

(2) Notwithstanding the foregoing, whenever the holders of any one or
more series of Preferred Stock issued by the corporation shall have the
right, voting separately as a series or separately as a class with one
or more such other series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, removal, filling
of vacancies and other features of such directorships shall be governed
by the terms of this Amended and Restated Certificate of Incorporation
(including any certificate of designations relating to any series of
Preferred Stock) applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article Seventh
unless expressly provided by such terms.

(3) The Board of Directors is hereby expressly authorized to consider
the interests of clients and other customers, creditors, employees and
other constituencies of the Corporation and its subsidiaries and the
effect upon communities in which the Corporation and its subsidiaries
do business, in evaluating proposed corporate transactions.

EIGHTH: Notwithstanding anything contained in this Amended and
Restated Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 75 percent in voting power of all the
shares of the corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to
alter, amend or repeal Section 3 of Article Fourth, Article Fifth,
Article Seventh or this Article Eighth or to adopt any provision
inconsistent therewith.

Heidrick & Struggles International, Inc. does hereby further certify that
this Amended and Restated Certificate of Incorporation was duly adopted by the
Board of Directors and by unanimous written consent of the stockholders in
accordance with the provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, HEIDRICK & STRUGGLES INTERNATIONAL, INC. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
, its this day of , 1999.

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

By: ______________________________________

Name:

Title:

A-I-5

ANNEX II

AMENDED AND RESTATED

BY-LAWS

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

----------------

ARTICLE I.

Stockholders

Section 1. The annual meeting of the stockholders of the corporation for the
purpose of electing directors and for the transaction of such other business
as may properly be brought before the meeting shall be held on such date, and
at such time and place within or without the State of Delaware as may be
designated from time to time by the Board of Directors.

Section 2. Special meetings of the stockholders shall be called at any time
only by the Chairman of the Board, if there be one, or the President of the
Corporation and shall be called by the Chairman of the Board or the President
of the Corporation, only at the request in writing of a majority of the Board
of Directors, pursuant to a resolution adopted by a majority of the total
number of directors. The purpose or purposes of the proposed meeting shall be
included in the notice setting forth such call.

Section 3. Except as otherwise provided by law, notice of the time, place
and, in the case of a special meeting, the purpose or purposes of the meeting
of stockholders shall be delivered personally or mailed not earlier than
sixty, nor less than ten days previous thereto, to each stockholder of record
entitled to vote at the meeting at such address as appears on the records of
the corporation.

Section 4. The holders of a majority in voting power 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
Amended and Restated Certificate of Incorporation; but if at any regularly
called meeting of stockholders there be less than a quorum present, the
stockholders present may adjourn the meeting from time to time without further
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 original meeting. If the adjournment is for more than 30 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 5. The Chairman of the Board, or if there be no Chairman or in the
Chairman's absence or at the Chairman's direction, the President, or in the
President's absence or at the President's direction, any officer of the
corporation shall call all meetings of the stockholders to order and shall act
as Chairman of such meeting. The Secretary of the corporation or, in such
officer's absence, an Assistant Secretary shall act as secretary of the
meeting. If neither the Secretary nor an Assistant Secretary is present, the
Chairman of the meeting shall appoint a secretary of the meeting. Unless
otherwise determined by the Board of Directors prior to the meeting, the
Chairman of the meeting shall determine the order of business and shall have
the authority in his or her discretion to regulate the conduct of any such
meeting, including, without limitation, by imposing restrictions on the
persons (other than stockholders of the corporation or their duly appointed
proxies) who may attend any such meeting, whether any stockholder or
stockholders' proxy may be excluded from any meeting of stockholders based
upon any determination by the Chairman, in his or her sole discretion, that
any such person has unduly disrupted or is likely to disrupt the proceedings
thereat, and the circumstances in which any person may make a statement or ask
questions at any meeting of stockholders. The Chairman of the meeting shall
have authority to adjourn any meeting of stockholders.

A-II-1

Section 6. At all meetings of stockholders, any stockholder entitled to vote
thereat shall be entitled to vote in person or by proxy, but no proxy shall be
voted after three years from its date, unless such proxy provides for a longer
period. Without limiting the manner in which a stockholder may authorize
another person or persons to act for the stockholder as proxy pursuant to the
General Corporation Law of the State of Delaware, the following shall
constitute a valid means by which a stockholder may grant such authority: (1)
a stockholder may execute a writing authorizing another person or persons to
act for the stockholder as proxy, and execution of the writing may be
accomplished by the stockholder or the stockholder's authorized officer,
director, employee or agent signing such writing or causing his or her
signature to be affixed to such writing by any reasonable means including, but
not limited to, by facsimile signature; or (2) a stockholder may authorize
another person or persons to act for the stockholder as proxy by transmitting
or authorizing the transmission of a telegram, cablegram, or other means of
electronic transmission to the person who will be the holder of the proxy or
to a proxy solicitation firm, proxy support service organization or like agent
duly authorized by the person who will be the holder of the proxy to receive
such transmission, provided that any such telegram, cablegram or other means
of electronic transmission must either set forth or be submitted with
information from which it can be determined that the telegram, cablegram or
other electronic transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other electronic transmissions
are valid, the judge or judges of stockholder votes or, if there are no such
judges, such other persons making that determination shall specify the
information upon which they relied.

Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission created pursuant to the preceding paragraph of this
Section 6 may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of
the entire original writing or transmission.

Proxies shall be filed with the Secretary of the meeting prior to or at the
commencement of the meeting to which they relate.

Section 7. When a quorum is present at any meeting, the vote of the holders
of a majority in voting power of the stock present in person or represented by
proxy and entitled to vote on the matter shall decide any question brought
before such meeting, unless the question is one upon which by express
provision of statute or of the Amended and Restated Certificate of
Incorporation or these By-Laws, a different vote is required, in which case
such express provision shall govern and control the decision of such question.

Section 8. In order that the corporation may determine the stockholders (a)
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or (b) if and to the extent permitted by the Amended and
Restated Certificate of Incorporation, entitled to consent to corporate action
in writing without a meeting, or (c) entitled to 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
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date (i) in the
case of clause (a) above, shall not be more than sixty nor less than ten days
before the date of such meeting, (ii) in the case of clause (b) above, shall
not be more than ten days after the date upon which the resolution fixing the
record date is adopted by the board of directors, and (iii) in the case of
clause (c) above, shall not be more than sixty days prior to such action. If
for any reason the Board of Directors shall not have fixed a record date for
any such purpose, the record date for such purpose shall be determined as
provided by law. Only those stockholders of record on the date so fixed or
determined shall be entitled to any of the foregoing rights, notwithstanding
the transfer of any such stock on the books of the corporation after any such
record date so fixed or determined.

Section 9. 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

A-II-2

germane to the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of
meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced at the time and kept at the place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.

Section 10. The Board of Directors, in advance of all meetings of the
stockholders, shall appoint one or more judges of stockholder votes, who may
be stockholders or their proxies, but not directors of the corporation or
candidates for office. In the event that the Board of Directors fails to so
appoint judges of stockholder votes or, in the event that one or more judges
of stockholder votes previously designated by the Board of Directors fails to
appear or act at the meeting of stockholders, the Chairman of the meeting may
appoint one or more judges of stockholder votes to fill such vacancy or
vacancies. Judges of stockholder votes appointed to act at any meeting of the
stockholders, before entering upon the discharge of their duties, shall be
sworn faithfully to execute the duties of judge of stockholder votes with
strict impartiality and according to the best of their ability and the oath so
taken shall be subscribed by them. Judges of stockholder votes shall, subject
to the power of the Chairman of the meeting to open and close the polls, take
charge of the polls, and, after the voting, shall make a certificate of the
result of the vote taken.

Section 11. (A) Annual Meetings of Stockholders. (1) Nominations of persons
for election to the Board of Directors of the corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the corporation's notice of meeting delivered
pursuant to Article 1, Section 3 of these By-Laws, (b) by or at the direction
of the Board of Directors or of the Chairman of the Board or (c) by any
stockholder of the corporation who is entitled to vote at the meeting, who
complied with the notice procedures set forth in subparagraphs (2) and (3) of
this paragraph (A) of this By-Law and who was a stockholder of record at the
time such notice is delivered to the Secretary of the corporation.

(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this By-Law, the stockholder must have given timely notice thereof in writing
to the Secretary of the corporation, and, in the case of business other than
nominations, such other business must be a proper matter for stockholder
action. To be timely, a stockholder's notice shall be delivered to the
Secretary at the principal executive offices of the corporation not less than
sixty days nor more than ninety days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than thirty days, or delayed by
more than sixty days, from such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the ninetieth day prior to
such annual meeting and not later than the close of business on the later of
the sixtieth day prior to such annual meeting or the tenth 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 re-election as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including such person's written consent
to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, 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; and (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 and (ii) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder and
such beneficial owner.

(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of
this By-Law to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the corporation is increased and there is
no public announcement naming all of the nominees for director or specifying
the size of the increased

A-II-3

Board of Directors made by the corporation at least seventy days prior to the
first anniversary of the preceding year's annual meeting, a stockholder's
notice required by this By-Law 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 at the principal executive offices of the
corporation not later than the close of business on the tenth day following
the day on which such public announcement is first made by the corporation.

(B) Special Meetings of Stockholders. 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 pursuant to Article I,
Section 2 of these By-Laws. 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 the corporation who is entitled to vote at the meeting, who complies with
the notice procedures set forth in this By-Law and who is a stockholder of
record at the time such notice is delivered to the Secretary of the
corporation. 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 as required by paragraph (A)(2) of this By-Law shall be
delivered to the Secretary at the principal executive offices of the
corporation not earlier than the ninetieth day prior to such special meeting
and not later than the close of business on the later of the sixtieth day
prior to such special meeting or the tenth 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.

(C) General. (1) Only persons who are nominated in accordance with the
procedures set forth in this By-Law shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as
shall have been brought before the meeting in accordance with the procedures
set forth in this By-Law. Except as otherwise provided by law, the Amended and
Restated Certificate of Incorporation or these By-Laws, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in accordance with
the procedures set forth in this By-Law and, if any proposed nomination or
business is not in compliance with this By-Law, to declare that such defective
nomination shall be disregarded or that such proposed business shall not be
transacted.

(2) For purposes of this By-Law, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act.

(3) For purposes of this By-Law, no adjournment nor notice of adjournment of
any meeting shall be deemed to constitute a new notice of such meeting for
purposes of this Section 11, and in order for any notification required to be
delivered by a stockholder pursuant to this Section 11 to be timely, such
notification must be delivered within the periods set forth above with respect
to the originally scheduled meeting.

(4) Notwithstanding the foregoing provisions of this By-Law, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
By-Law. Nothing in this By-Law 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 the Exchange Act.

ARTICLE II

Board Of Directors

Section 1. The Board of Directors of the corporation shall consist of such
number of directors, not less than eight directors and not more than fifteen
directors, as shall from time to time be fixed exclusively by resolution
adopted by affirmative vote of a majority of the total number of Directors
that the Corporation would have if

A-II-4

there are no vacancies on the Board of Directors. The directors shall be
divided into three classes in the manner set forth in the Amended and Restated
Certificate of Incorporation of the corporation, each class to be elected for
the term set forth therein. Directors shall (except as hereinafter provided
for the filling of vacancies and newly created directorships) be elected by
the holders of a plurality of the voting power present in person or
represented by proxy and entitled to vote. A majority of the total number of
directors then in office (but not less than one-third of the number of
directors constituting the entire Board of Directors) shall constitute a
quorum for the transaction of business and, except as otherwise provided by
law or by the corporation's Amended and Restated Certificate of Incorporation,
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. Directors need not be
stockholders.

Section 2. Any newly created directorship on the Board of Directors that
results from an increase in the number of directors shall, subject to the
rights of holders of any shares of Preferred Stock, be filled only by a
majority of the directors then in office, provided that a quorum is present.
Any other vacancy may, subject to the rights of holders of any shares of
Preferred Stock, be filled only by a majority of the Directors, although less
than a quorum, or by a sole remaining director; and the directors so chosen
shall hold office for a term as set forth in the Amended and Restated
Certificate of Incorporation of the corporation. If any applicable provision
of the General Corporation Law of the State of Delaware expressly confers
power on stockholders to fill such a directorship at a special meeting of
stockholders, such a directorship may be filled at such meeting only by the
affirmative vote of at least 75 percent in voting power of all shares of the
corporation entitled to vote generally in the election of directors, voting as
a single class.

Section 3. Meetings of the Board of Directors shall be held at such place
within or without the State of Delaware as may from time to time be fixed by
resolution of the Board or as may be specified in the notice of any meeting.
Regular meetings of the Board of Directors shall be held at such times as may
from time to time be fixed by resolution of the Board and special meetings may
be held at any time upon the call of the Chairman of the Board or the
President, by oral, or written notice including, telegraph, telex or
transmission of a telecopy, e-mail or other means of transmission, duly served
on or sent or mailed to each director to such director's address or telecopy
number as shown on the books of the corporation not less than one day before
the meeting. The notice of any meeting need not specify the purposes thereof.
A meeting of the Board may be held without notice immediately after the annual
meeting of stockholders at the same place at which such meeting is held.
Notice need not be given of regular meetings of the Board held at times fixed
by resolution of the Board. Notice of any meeting need not be given to any
director who shall attend such meeting in person (except when the director
attends a meeting for the express purpose of objecting at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened), or who shall waive notice thereof, before or
after such meeting, in writing.

Section 4. Notwithstanding the foregoing, whenever the holders of any one or
more series of Preferred Stock issued by the corporation shall have the right,
voting separately by series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, removal, filling of
vacancies and other features of such directorships shall be governed by the
terms of the Amended and Restated Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to Article SEVENTH of the Amended and Restated Certificate of
Incorporation unless expressly provided by such terms. The number of directors
that may be elected by the holders of any such series of Preferred Stock shall
be in addition to the number fixed by or pursuant to the By-Laws. Except as
otherwise expressly provided in the terms of such series, the number of
directors that may be so elected by the holders of any such series of stock
shall be elected for terms expiring at the next annual meeting of stockholders
and without regard to the classification of the members of the Board of
Directors as set forth in Section 1 hereof, and vacancies among directors so
elected by the separate vote of the holders of any such series of Preferred
Stock shall be filled by the affirmative vote of a majority of the remaining
directors elected by such series, or, if there are no such remaining
directors, by the holders of such series in the same manner in which such
series initially elected a director.

Section 5. If at any meeting for the election of directors, the corporation
has outstanding more than one class of stock, and one or more such classes or
series thereof are entitled to vote separately as a class, and there

A-II-5

shall be a quorum of only one such class or series of stock, that class or
series of stock shall be entitled to elect its quota of directors
notwithstanding absence of a quorum of the other class or series of stock.

Section 6. The Board of Directors may designate three or more directors to
constitute an executive committee, one of whom shall be designated Chairman of
such committee. The members of such committee shall hold such office until
their successors are elected and qualify. Any vacancy occurring in the
committee shall be filled by the Board of Directors. Regular meetings of the
committee shall be held at such times and on such notice and at such places as
it may from time to time determine. The committee shall act, advise with and
aid the officers of the corporation in all matters concerning its interest and
the management of its business, and shall generally perform such duties and
exercise such powers as may from time to time be delegated to it by the Board
of Directors, and shall have authority to exercise all the powers of the Board
of Directors, so far as may be permitted by law, in the management of the
business and the affairs of the corporation whenever the Board of Directors is
not in session or whenever a quorum of the Board of Directors fails to attend
any regular or special meeting of such Board. The committee shall have power
to authorize the seal of the corporation to be affixed to all papers which are
required by the Delaware General Corporation Law to have the seal affixed
thereto. The fact that the executive committee has acted shall be conclusive
evidence that the Board of Directors was not in session at such time or that a
quorum of the Board had failed to attend the regular or special meeting
thereof.

The executive committee shall keep regular minutes of its transactions and
shall cause them to be recorded in a book kept in the office of the
corporation designated for that purpose, and shall report the same to the
Board of Directors at their regular meeting. The committee shall make and
adopt its own rules for the government thereof and shall elect its own
officers.

Section 7. The Board of Directors may from time to time establish such other
committees to serve at the pleasure of the Board which shall be comprised of
such members of the Board and have such duties as the Board shall from time to
time establish. Any director may belong to any number of committees of the
Board. The Board may also establish such other committees with such members
(whether or not directors) and such duties as the Board may from time to time
determine.

Section 8. Unless otherwise restricted by the Amended and Restated
Certificate of Incorporation or these By-Laws, 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, and the writing
or writings are filed with the minutes of proceedings of the Board of
Directors.

Section 9. The members of the Board of Directors or any committee thereof
may participate in a meeting of such Board or committee, as the case may be,
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this subsection shall constitute
presence in person at such a meeting.

Section 10. The Board of Directors may establish policies for the
compensation of directors and for the reimbursement of the expenses of
directors, in each case, in connection with services provided by directors to
the corporation.

ARTICLE III.

Officers

Section 1. The Board of Directors, as soon as may be after each annual
meeting of the stockholders, shall elect officers of the corporation,
including a Chairman of the Board or President and a Secretary. The Board of
Directors may also from time to time elect such other officers (including one
or more Vice Presidents, a Treasurer, one or more Assistant Vice Presidents,
one or more Assistant Secretaries and one or more Assistant Treasurers) as it
may deem proper or may delegate to any elected officer of the corporation the
power to appoint

A-II-6

and remove any such other officers and to prescribe their respective terms of
office, authorities and duties. Any Vice President may be designated
Executive, Senior or Corporate, or may be given such other designation or
combination of designations as the Board of Directors may determine. Any two
or more offices may be held by the same person.

Section 2. All officers of the corporation elected by the Board of Directors
shall hold office for such term as may be determined by the Board of Directors
or until their respective successors are chosen and qualified. Any officer may
be removed from office at any time either with or without cause by the
affirmative vote of a majority of the members of the Board then in office, or,
in the case of appointed officers, by any elected officer upon whom such power
of removal shall have been conferred by the Board of Directors.

Section 3. Each of the officers of the corporation elected by the Board of
Directors or appointed by an officer in accordance with these By-laws shall
have the powers and duties prescribed by law, by the By-Laws or by the Board
of Directors and, in the case of appointed officers, the powers and duties
prescribed by the appointing officer, and, unless otherwise prescribed by the
By-Laws or by the Board of Directors or such appointing officer, shall have
such further powers and duties as ordinarily pertain to that office. The
Chairman of the Board or the President, as determined by the Board of
Directors, shall be the Chief Executive Officer and shall have the general
direction of the affairs of the corporation.

Section 4. Unless otherwise provided in these By-Laws, in the absence or
disability of any officer of the corporation, the Board of Directors may,
during such period, delegate such officer's powers and duties to any other
officer or to any director and the person to whom such powers and duties are
delegated shall, for the time being, hold such office.

ARTICLE IV

Certificates Of Stock

Section 1. The shares of stock of the corporation shall be represented by
certificates, provided that the Board of Directors may provide by resolution
or resolutions that some or all of any or all classes or series of the
corporation's stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the Chairman of the Board of Directors, or the President or a Vice President,
and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the corporation, or as otherwise permitted by law,
representing the number of shares registered in certificate form. Any or all
the signatures on the certificate may be a facsimile.

Section 2. Transfers of stock shall be made on the books of the corporation
by the holder of the shares in person or by such holder's attorney upon
surrender and cancellation of certificates for a like number of shares, or as
otherwise provided by law with respect to uncertificated shares.

Section 3. No certificate for shares of stock in the corporation shall be
issued in place of any certificate alleged to have been lost, stolen or
destroyed, except upon production of such evidence of such loss, theft or
destruction and upon delivery to the corporation of a bond of indemnity in
such amount, upon such terms and secured by such surety, as the Board of
Directors in its discretion may require.

ARTICLE V

Corporate Books

The books of the corporation may be kept outside of the State of Delaware at
such place or places as the Board of Directors may from time to time
determine.

A-II-7

ARTICLE VI.

Checks, Notes, Proxies, Etc.

All checks and drafts on the corporation's bank accounts and all bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers or agent or agents as shall be hereunto authorized from time to time
by the Board of Directors. Proxies to vote and consents with respect to
securities of other corporations owned by or standing in the name of the
corporation may be executed and delivered from time to time on behalf of the
corporation by the Chairman of the Board, the President, or by such officers
as the Board of Directors may from time to time determine.

ARTICLE VII.

Fiscal Year

The fiscal year of the corporation shall begin on the first day of January
in each year and shall end on the thirty-first day of December following.

ARTICLE VIII.

Corporate Seal

The corporate seal shall have inscribed thereon the name of the corporation.
In lieu of the corporate seal, when so authorized by the Board of Directors or
a duly empowered committee thereof, a facsimile thereof may be impressed or
affixed or reproduced.

ARTICLE IX.

Audits

The accounts, books and records of the Corporation shall be audited upon the
conclusion of each fiscal year by an independent certified public accountant,
and it shall be the duty of the Board of Directors to cause such audit to be
made annually.

ARTICLE X.

Amendments

These By-Laws may be amended, added to, rescinded or repealed at any meeting
of the Board of Directors or of the stockholders, provided notice of the
proposed change was given in the notice of the meeting of the stockholders or,
in the case of a meeting of the Board of Directors, in a notice given not less
than two days prior to the meeting; provided, however, that, notwithstanding
any other provisions of these By-Laws or any provision of law which might
otherwise permit a lesser vote of the stockholders, the affirmative vote of
the holders of at least 75 percent in voting power of all shares of the
corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required in order for the stockholders to
alter, amend or repeal Section 2 and Section 11 of Article I, Sections 1 and 2
of Article II or this proviso to this Article X of these By-Laws or to adopt
any provision inconsistent with any of such Sections or with this proviso.

A-II-8

ANNEX B

SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

(S)262 Appraisal Rights.

(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to (S)228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S)251 (other than a merger effected pursuant to
(S)251(g) of this title), (S)252, (S)254, (S)257, (S)263 or (S)264 of this
title:

(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of (S)251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. b. and c. of this
paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

B-1

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation,
a written demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.

B-2

(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation

B-3

of the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such teens as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.

B-4

ANNEX C

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

HEIDRICK & STRUGGLES INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies as follows:

3. The text of the Existing Amended and Restated Certificate of
Incorporation as amended heretofore is hereby amended and restated to read
in its entirety as follows:

"FIRST: The name of the corporation is Heidrick & Struggles
International, Inc.

THIRD: The purposes of the corporation are to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.

FOURTH: (1) The total number of shares of all classes of stock which
the corporation shall have authority to issue is 110,000,000,
consisting of 10,000,000 shares of Preferred Stock, par value $.01 per
share ("Preferred Stock"), and 100,000,000 shares of Common Stock, par
value $.01 per share ("Common Stock"). The number of authorized shares
of any of the Preferred Stock or the Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding)
by the affirmative vote of the holders of a majority in voting power of
the stock of the corporation entitled to vote thereon irrespective of
the provisions of Section 242(b)(2) of the General Corporation Law of
the State of Delaware (or any successor provision thereto), and no vote
of the holders of any of the Preferred Stock or the Common Stock voting
separately as a class shall be required therefor.

C-1

shares of such series. The powers, preferences and relative,
participating, optional and other special rights of each series of
Preferred Stock, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at
any time outstanding.

(4)(a) Each holder of Common Stock, as such, shall be entitled to one
vote for each share of Common Stock held of record by such holder on
all matters on which stockholders generally are entitled to vote;
provided, however, that, except as otherwise required by law, holders
of Common Stock, as such, shall not be entitled to vote on any
amendment to this Amended and Restated Certificate of Incorporation
(including any certificate of designations relating to any series of
Preferred Stock) that relates solely to the terms of one or more
outstanding series of Preferred Stock if the holders of such affected
series are entitled, either separately or together with the holders of
one or more other such series, to vote thereon pursuant to this Amended
and Restated Certificate of Incorporation (including any certificate of
designations relating to any series of Preferred Stock) or pursuant to
the General Corporation Law of the State of Delaware.

FIFTH: The Board of Directors shall be authorized to make, amend,
alter, change, add to or repeal the By-Laws of the corporation in any
manner not inconsistent with the laws of the State of Delaware, subject
to the power of the stockholders to amend, alter, change, add to or
repeal the By-Laws made by the Board of Directors. Notwithstanding
anything contained in this Amended and Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of
at least 75 percent in voting power of all the shares of the
corporation entitled to vote generally in the election of directors,
voting together as a single class, shall be required in order for the
stockholders to alter, amend or repeal any provision of the By-Laws
which is to the same effect as Section 3 of Article Fourth, Article
Fifth, Article Seventh and Article Eighth of this Amended and Restated
Certificate of Incorporation or to adopt any provision inconsistent
therewith.

SIXTH: (1) To the fullest extent permitted by the laws of the State
of Delaware:

C-2

informal, including appeals, by reason of the fact that such person
is or was a director or officer of the corporation or, while a
director or officer of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint
venture, trust, limited liability company or other enterprise, for
and against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such person or such heirs, executors or administrators
in connection with such action, suit or proceeding, including
appeals. Notwithstanding the preceding sentence, the corporation
shall be required to indemnify a person described in such sentence
in connection with any action, suit or proceeding (or part thereof)
commenced by such person only if the commencement of such action,
suit or proceeding (or part thereof) by such person was authorized
by the Board of Directors of the corporation. The corporation shall
indemnify any person (and such person's heirs, executors or
administrators) who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding (brought in the right of the corporation or otherwise),
whether civil, criminal, administrative or investigative, and
whether formal or informal, including appeals, by reason of the fact
that such person is or was an employee or agent of the corporation
or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability
company or other enterprise, for and against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person or such heirs,
executors or administrators in connection with such action, suit or
proceeding, including appeals.

C-3

Sixth, Section (1) shall be made to the fullest extent permitted by
law, as the same exists or may in the future be amended (but, in the
case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such
amendment.)

SEVENTH: (1) The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors consisting of
not less than eight and not more than fifteen directors, the exact
number of directors to be determined from time to time by resolution
adopted by affirmative vote of a majority of the total number of
Directors that the Corporation would have if there are no vacancies on
the Board of Directors. The directors shall be divided into three
classes designated Class I, Class II and Class III. Each class shall
consist, as nearly as possible, of one-third of the total number of
directors constituting the entire Board of Directors. Class I directors
shall be originally elected for a term expiring at the succeeding
annual meeting of stockholders, Class II directors shall be originally
elected for a term expiring at the second succeeding annual meeting of
stockholders, and Class III directors shall be originally elected for a
term expiring at the third succeeding annual meeting of stockholders.
At each succeeding annual meeting of stockholders following 1999,
successors to the class of directors whose term expires at that annual
meeting shall be elected for a term expiring at the third succeeding
annual meeting. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the
number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a newly created
directorship resulting from an increase in such class shall hold office
for a term that shall coincide with the remaining term of that class,
but in no case shall a decrease in the number of directors remove or
shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires
and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement, disqualification or
removal from office. Any newly created directorship on the Board of
Directors that results from an increase in the number of directors
shall, subject to the rights of holders of any shares of Preferred
Stock, be filled only by a majority of the directors then in office,
provided that a quorum is present. Any other vacancy may, subject to
the rights of holders of any shares of Preferred Stock, be filled only
by a majority of the Directors, although less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the
same remaining term as that of his predecessor. Directors may be
removed only for cause, and only by the affirmative vote of at least 75
percent in voting power of all shares of the corporation entitled to
vote generally in the election of directors, voting as a single class.

C-4

EIGHTH: Subject to the rights of any holders of Preferred Stock to elect
additional directors under specified circumstances, any action required or
permitted to be taken by the holders of the Common Stock of the corporation
must be effected at a duly called annual or special meeting of such holders
and may not be effected by any consent in writing by such holders. Except
as otherwise required by law and subject to the rights of the holders of
any series of Preferred Stock, special meetings of stockholders of the
corporation may be called only by the Chairman of the Board, if there be
one, or the President of the corporation, at the request of the Board of
Directors pursuant to a resolution approved by the Board of Directors. The
By-Laws of the Corporation may establish procedures regulating the
submission by stockholders of nominations and proposals for consideration
at meetings of stockholders of the Corporation.

NINTH: Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 75 percent in voting power of all the shares of the
corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to alter, amend or repeal
Section 3 of Article Fourth, Article Fifth, Article Seventh, Article Eighth
or this Article Ninth or to adopt any provision inconsistent therewith."

C-5

IN WITNESS WHEREOF, HEIDRICK & STRUGGLES INTERNATIONAL, INC. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
, its this day of , 1999.

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

By: ______________________________________

Name:

Title:

C-6

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") authorizes the Registrant to indemnify the officers and
directors of the Company, under certain circumstances and subject to certain
conditions and limitations as stated therein, against all expenses and
liabilities incurred by or imposed upon them as a result of actions, suits and
proceedings, civil or criminal, brought against them as such officers and
directors if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the Registrant and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful.

Reference is hereby made to the Registrant's Amended and Restated By-laws, a
copy of which is filed as Exhibit 3.03, which provides for indemnification of
officers and directors of the Registrant to the full extent authorized by
Section 145 of the Delaware Law. The Amended and Restated By-laws authorize
the Registrant to purchase and maintain insurance on behalf of any officer,
director, employee, trustee or agent of the Registrant or its subsidiaries
against any liability asserted against or incurred by them in such capacity or
arising out of their status as such, whether or not the Registrant would have
the power to indemnify such officer, director, employee, trustee or agent
against such liability under the provisions of such Article or Delaware law.

The Registrant maintains a directors' and officers' insurance policy which
insures the officers and directors of the Registrant from any claim arising
out of an alleged wrongful act by such persons in their respective capacities
as officers and directors of the Registrant.

Section 102(b)(7) of the Delaware Law permits corporations to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of a fiduciary duty of care as a
director. Reference is made to the Registrant's Amended and Restated
Certificate of Incorporation, a copy of which is filed as Exhibit 3.01, which
limits a director's liability in accordance with such Section.

Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits:

Exhibit
Number Description
-------- -----------

*2.01 Merger Agreement for merger of Heidrick & Struggles, Inc. with the Regis-
trant (Contained in Annex A to Joint Consent Statement/Prospectus)
*3.01 Form of Amended and Restated Certificate of Incorporation of the Regis-
trant (Contained in Annex I to the Merger Agreement)
*3.02 Form of Post-IPO Certificate of Incorporation (Contained in Annex C to
Joint Consent Statement/Prospectus)
*3.03 Form of Amended and Restated By-Laws of the Registrant (Contained in Annex
II to the Merger Agreement)
*4.01 Specimen stock certificate
*5 Opinion of Simpson Thacher & Bartlett as to the legality of the Company
Common Stock
*8 Opinion of Simpson Thacher & Bartlett as to certain United States federal
tax consequences
*10.01 Employment Agreement of Richard D. Nelson
*10.02 Employment Agreement of Patrick S. Pittard
*10.03 Employment Agreement of Donald M. Kilinski
*10.04 Employment Agreement of Dr. Jurgen B. Mulder
*10.05 Settlement Agreement of Gerard Clery-Melin

II-1

*11 Statement re: computation of per share earnings
*21 Subsidiaries of the Registrant
**23.01 Consent of Arthur Andersen LLP
**23.02 Consent of Barbier Frinault & Associes (Arthur Andersen)
*23.03 Consent of Simpson Thacher & Bartlett (contained in Exhibit 5.01)
*23.04 Consent of Simpson Thacher & Bartlett (contained in Exhibit 8.01)
**23.05 Consent of Arthur Andersen LLP
**23.06 Consent of Barbier Frinault & Associes (Arthur Andersen)
*23.07 Consent of Arthur Andersen LLP
*23.08 Consent of Barbier Frinault & Associes (Arthur Andersen)
**24.01 Powers of Attorney (included in signature page)
*99.01 Consent of David C. Anderson
*99.02 Consent of Thomas J. Friel
*99.03 Consent of David B. Kixmiller
*99.04 Consent of Gerard R. Roche
*99.05 Consent of Dr. John C. Viney

- --------

*Filed herewith.
**Previously filed.

(b) Financial Statement Schedules:

Schedule II--H&S Inc. Allowance for doubtful accounts.

Item 22. Undertakings

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the Offering of such securities at that time shall be
deemed to be the initial bona fide International Representative thereof.

II-2

The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
files subsequent to the effective date of the registration statement through
the date of responding to the request.

The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.

The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.

The Registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therin, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;"

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Chicago,
State of Illinois, on the 12th day of February, 1999.

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

/s/ Donald M. Kilinski
By______________________________________

Chief Financial Officer and
Treasurer
Title___________________________________

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities on the 12th day of February, 1999.

Signature Title
- --------- -----

* President, Chief Executive Officer and
___________________________________________ Director
Dr. Jurgen Mulder
(principal executive officer)

/s/ Donald M. Kilinski Chief Financial Officer and Treasurer
___________________________________________
Donald M. Kilinski
(principal financial and accounting
officer)

* Director
___________________________________________
Peter R. Breen

* Director
___________________________________________
Romeo Crameri

* Director
___________________________________________
Milena Djurdjevic

* Director
___________________________________________
Bengt Lejsved

* Director
___________________________________________
Jurgen Mulder

* Director
___________________________________________
Richard D. Nelson

* Director
___________________________________________
Christoph Netta

* Director
___________________________________________
Patrick S. Pittard

* Director
___________________________________________
Reinhold H. Thiele

*By Donald M. Kilinski, attorney-in-
fact

II-5

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Heidrick & Struggles, Inc. and
Subsidiaries:

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Heidrick & Struggles, Inc. and
subsidiaries included in this registration statement and have issued our
report thereon dated July 19, 1998. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
Schedule II--Heidrick & Struggles, Inc. Allowance for Doubtful Accounts is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

Arthur Andersen LLP

Chicago, Illinois
July 19, 1998

II-6

SCHEDULE II

Heidrick & Struggles, Inc.

Charged
Balance at to Balance at
Beginning of Costs & End of
Year Expenses Deduction Year
------------ -------- --------- ----------

Year Ended December 31:
Allowance for doubtful accounts
1997............................. $1,925 $3,324 $(1,973) $3,276
------ ------ ------- ------
1996............................. $1,617 $2,263 $(1,955) $1,925
------ ------ ------- ------
1995............................. $1,691 $1,504 $(1,578) $1,617
------ ------ ------- ------

The accompanying notes to consolidated financial statements are an integral
part of these statements.

II-7


 
                                                                    Exhibit 4.01

================================================================================


[    NUMBER    ]     HEIDRICK & STRUGGLES INTERNATIONAL, INC.     [   SHARES   ]

             INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
                                           

    AUTHORIZED CAPITAL STOCK 750,000 COMMON SHARES OF $0.01 PAR VALUE EACH

THIS CERTIFIES THAT                                           is the owner of
                    -----------------------------------------
                                                             full paid and non- 
- -------------------------------------------------------------
assessable

   SHARES OF THE CAPITAL STOCK OF HEIDRICK & STRUGGLES INTERNATIONAL, INC.,
transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed. In Witness
Whereof, the said Corporation has caused this Certificate to be signed by its
duly authorized officers and sealed with the Seal of the Corporation.
this                      day                       of                 A.D. 19
    ----------------------                             ----------------       --

- -----------------------------                       ----------------------------
                    SECRETARY                                          PRESIDENT


The transfer of this certificate and the stock represented thereby are subject 
to the provisions and limitations of an Agreement with the Corporation, a copy 
of which being on file with the Secretary of the Corporation



 

For Value Received, __________ hereby sell, assign and transfer unto ______ 
_________ Shares represented by the within Certificate, and do hereby 
irrevocably constitute and appoint ________ Attorney to transfer said Shares on 
the books of the within named Corporation with full power of substitution in the
premises.


Dated ____________ 19__

In presence of 

_____________    ________________________



            [Letterhead of Simpson Thacher & Bartlett appears here]

                                                                       EXHIBIT 5

                                                               February 12, 1999

Heidrick & Struggles International, Inc.
233 South Wacker Drive - Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

        We have acted as counsel to Heidrick & Struggles International, Inc., a 
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by the Company with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended, relating to the issuance by the Company to the
shareholders of Heidrick & Struggles, Inc. of shares of the Company's Common
Stock, par value $.01 per share (the "Shares"), pursuant to the Merger Agreement
described in the Registration Statement (the "Merger Agreement").

        We have examined the Registration Statement and a form of the share 
certificate, which has been filed with the Commission as an exhibit to the 
Registration Statement. We also have examined the originals, or duplicates or 
certified or conformed copies, or such records, agreements, instruments and 
other documents and have made such other and further investigations as we have 
deemed relevant and necessary in connection with the opinions expressed herein. 
As to questions of fact material to this 


 
Heidrick & Struggles                   2                      February 12, 1999 
International, Inc. 

opinion, we have relied upon certificates of public officials and of officers
and representatives of the Company.

        In such examination, we have assumed the genuineness of all signatures, 
the legal capacity of natural persons, the authenticity of all documents 
submitted to us as originals, the conformity to original documents of all 
documents submitted to us as duplicates or certified or conformed copies, and 
the authenticity of the originals of such latter documents.

        Based upon the foregoing, and subject to the qualifications and 
limitations stated herein, we are of the opinion that (1) when the Board of 
Directors and the stockholders of the Company have taken all necessary corporate
action to authorize and approve the issuance of the Shares, and (2) when the 
Shares have been issued in the Merger in accordance with the Merger Agreement, 
the Shares will be validly issued, fully paid and nonassessable.

        We are members of the Bar of the State of New York and we do not 
express any opinion herein concerning any law other than the Delaware General 
Corporation Law.

        We hereby consent to the filing of this opinion letter as Exhibit 5 to 
the Registration Statement and to the use of our name under the caption "Legal 
Matters" in the Prospectus included in the Registration Statement.

                                        Very truly yours,

                                        
                                        /s/ SIMPSON THACHER & BARTLETT



            [Letterhead of Simpson Thacher & Bartlett appears here]

 
                                                                       EXHIBIT 8

                                                               February 12, 1999

        Re:     Agreement and Plan of Merger
                dated as of February 12, 1999
                between Heidrick & Struggles, Inc.
                and Heidrick & Struggles International Inc.
                -------------------------------------------

Heidrick & Struggles, Inc.
233 South Wacker Drive
Suite 4200
Chicago, Illinois 60606-6303

Heidrick & Struggles International, Inc.
233 South Wacker Drive
Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

        You have requested our opinion with respect to certain United States 
federal income tax consequences of the proposed transaction in which Heidrick & 
Struggles, Inc. ("H&S Inc.") will be merged (the "Merger") with and into 
Heidrick & Struggles International, Inc. ("HSI"). All capitalized terms used but
not defined herein have the meanings ascribed to them in the Agreement and Plan 
of Merger, dated as of February 12, 1999, between H&S Inc. and HSI (the "Merger 
Agreement"). This opinion is being delivered as an exhibit to the registration 
statement on Form S-4 (the "Registration Statement") initially filed by HSI with
the Securities and Exchange Commission on August 7, 1998 and


 
Heidrick & Struggles, Inc.             2                       February 12, 1999

containing the Joint Consent Statement/Prospectus of HSI and H&S Inc. relating
to the Merger (the "Joint Consent Statement/Prospectus").

        In acting as counsel to HSI and H&S Inc. in connection with the Merger, 
we have, in preparing our opinion, as hereinafter set forth, participated in the
preparation of the Merger Agreement and the preparation and filing of the Joint
Consent Statement/Prospectus.

        You have requested that we render the opinion set forth below. In
rendering such opinion, we have assumed with your consent that the Merger will
be effected in accordance with the Merger Agreement and that the representations
made by HSI and H&S Inc. in letters provided to us are true, correct and
complete as of the date hereof and will be true, correct and complete as of the
Effective Time. We have also assumed that the representations and warranties
contained in the Merger Agreement, and statements as to factual matters
contained in the Registration Statement, are true, correct and complete as of
the date hereof, and that the parties have complied with and, if applicable,
will continue to comply with, the covenants contained in the Merger Agreement.
We have further assumed that, with respect to the shares received by the former 
stockholders of H&S Inc. in the Merger, the value of any such shares repurchased
pursuant to the stock repurchase agreement during the two year period following 
the Merger (or if shorter, the period during which such repurchases are required
to be made) together with the value of shares of H&S Inc. Common Stock 
surrendered by Dissenting Stockholders will not exceed 50% of the value (all as 
determined under Treasury regulations Section 1.368-1(e) as of the date of the 
Merger) of the former H&S Inc. Common Stock outstanding as of such date. For 
purposes of the foregoing, references to shares or Common Stock are to shares 
treated as outstanding for federal income tax purposes.

        We have examined the documents referred to above and the originals, or
copies certified or otherwise identified to our satisfaction, of such records,
documents, certificates or other instruments and made such other inquiries as in
our judgment are necessary or appropriate to enable us to render the opinion set
forth below. We have not, however, undertaken any independent investigation of
any factual matter set forth in any of the foregoing.

        If the Merger is effected on a factual basis different from that 
contemplated in the Merger Agreement and the Joint Consent Statement/Prospectus 
the opinion expressed herein may be inapplicable. Our opinion is based on the 
Internal Revenue Code of 1986, as

 
Heidrick & Struggles, Inc.            3                       February 12, 1999


amended (the "Code"), Treasury Regulations, administrative interpretations, and 
judicial precedents as of the date hereof. If there is any subsequent change in 
the applicable law or regulations, or if there are subsequently any new 
applicable administrative or judicial interpretations of the law or regulations,
the opinion expressed herein may become inapplicable.

        Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Merger will be consummated in accordance
with the Merger Agreement (and exhibits thereto) and the Delaware General
Corporation Law and as described in the Joint Consent Statement/Prospectus, we
are of the opinion that for federal income tax purposes the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Code.

        We express our opinion herein only as to those matters specifically set 
forth above and no opinion should be inferred as to the tax consequences of the 
Merger under any state, local or foreign law, or with respect to other areas of 
United States federal taxation. We are  members of the Bar of the State of New 
York, and we do not express any opinion herein concerning any law other than
the federal law of the United States.

        We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under the
captions "Certain United States Federal Tax Consequences" and "Legal Matters" 
in the Joint Consent Statement/Prospectus. This opinion letter is rendered to
you in connection with the above described transaction. This opinion letter may
not be relied upon by you for


 
Heidrick & Struggles, Inc.              4                      February 12, 1999


any other purpose, or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent.


                                        Very truly yours,


                                        /s/ SIMPSON THACHER & BARTLETT


 
                                                                   EXHIBIT 10.01

                                       EMPLOYMENT AGREEMENT OF RICHARD D. NELSON


                               RICHARD D. NELSON
                             72 WEST ADAMS STREET
                            CHICAGO, ILLINOIS 60603
                                (312) 372-4000
                    


                                                November 7, 1980


Mr. G. R. Roche
President
Heidrick and Struggles, Inc.
245 Park Avenue
New York, New York 10167
                                   
Dear Gerry:

         This letter will serve to confirm that I will become an
employee/officer of Heidrick and Struggles, Inc., in accordance with the terms
and conditions set forth in the attachment to this letter. The term of
employment shall for compensation/insurance, etc., purposes commence on January
1, 1981--although I will actually be in place at H&S on March 1, 1981. The
foregoing also applies to my assistant, Maryann Rodal.

         Please sign the original and carbon copy of this letter, as provided
below, indicating H&S's acceptance and approval of my employment agreement,
which shall become effective upon execution by you.  Return the carbon copy
directly to me for my files. (A pre-addressed stamped return envelope is
enclosed.)

         Best regards.


                                              Very truly yours,

                                              /s/ Richard D. Nelson

                                              Richard D. Nelson


RDN/mmr
Encls.

APPROVED AND ACCEPTED:
NOVEMBER 14, 1980.

HEIDRICK AND STRUGGLES, INC.

By:  /s/ Gerard R. Roche
   -----------------------------
    ITS PRESIDENT

 
1.      COMPENSATION.
        ------------

         Base                              $ 90,000.00
                                  
         Bonus (Minimum Annual Guaranteed) $ 30,000.00
         
         
         [Subject to increase as mutually agreed, but should 
         at least keep up with the CPI.]  But this is not an 
         absolute requirement.
         
2.      STOCK.
        -----
      
         5,000 Shares (January 31, 1981 Audited Book Value).
         
3.      TITLE.
        -----

         SVP -- CF-AO AND COUNSEL
         
         [NOTE: Also, titles of Secretary and Treasurer-Office of 
         Treasurer is presently vacant and should be filled. 
         Ultimately, another person may hold the office of Treasurer.
         
4.      TERM.
        ----

         January 1, 1981 until terminated by either upon at least 30 
         days' notice to the other. If terminated by either, an 
         amount equal to six months' base compensation plus pro rata 
         portion of bonus shall be paid to employee on the effective 
         date of termination, except that, if terminated by employee 
         to join another search firm, no termination compensation 
         shall be payable.
         
         Although term begins January 1, 1981, employee will 
         officially assume the position on March 1, 1981. During the 
         two-month interim, employee will conclude certain Company 
         legal projects, review Company financial/accounting systems, 
         procedures and reports, meet with appropriate Company 
         personnel, identify problem areas, etc. Subject to 
         partnership approval, employee will utilize his present 
         office until March 1, 1981.

 
5.    RESPONSIBILITIES.
      ----------------

         (a) Items I, III, IV, V, VI, VII per attachment 
             [Notations on attachment were made by DPB.]
               
         (b) Legal. (About 50% of current legal work will be brouqht 
             in-house.)
               
         (c) Employee will report directly to the President.
          

6.    OUTSIDE ACTIVITIES.
      ------------------

         Employee will work for Company on a full-time basis, but 
         Employee will be allowed to continue outside directorships and 
         advisory functions to three/six corporations.
         

7.    MISCELLANEOUS FRINGE BENEFITS.
      -----------------------------

         (a) Standard Company insurance--hospital, life, etc., and 
             profit-sharing and deferred compensation.
              
         (b) Club dues (downtown and, after one year, a country 
             club). [To be included in expense allowance.]
              
         (c) Vacation -- 20 business days.
         
         (d) Business expense reimbursement per standard policy.
              
         (e) Automobile--None. [Subject to review after one year.]
              

8.     ASSISTANT.
       ---------

         Employee's present assistant, who has, for over five years, worked with
         the Company, will work for the Company commencing March 1, 1981, at a
         salary of $1,600.00 per month plus standard Company benefits and
         benefits parallel with those presently provided at the partnership. The
         assistant will be responsible for paralegal type work and other
         responsibilities for employee.
         

 
9.     ELECTRONIC COMPUTER DISC TYPEWRITER (QYX).
       -----------------------------------------

         Employee recently purchased a QYX for $7,000.00, which is presently
         utilized for many Company legal/administrative tasks. The QYX was
         financed by a noninterest bearing loan, of which $5,000.00 will remain
         unpaid in January, 1981, The loan is payable at the rate of $500.00
         per calendar quarter until fully paid, but will have to be paid in full
         when employee leaves in January, 1981. The Company will provide a
         $5,000.00 loan upon the same terms to pay off the present loan and will
         also pay the standard QYX maintenance contract cost, moving cost and
         supplies.
         
         If the QYX "fits" with the Company's system, it will be sold to the
         Company at employee's cost; otherwise Employee wi11 use or dispose of
         the QYX at no cost to the Company.


 
                                                                   EXHIBIT 10.02

                                      EMPLOYMENT AGREEMENT OF PATRICK S. PITTARD

                             HEIDRICK & STRUGGLES
                        Consultants in Executive Search


Richard D. Nelson, 
Partner, Chief Financial and                     
Administrative Officer, Counsel                              September 18, 1997 

                                  

Mr. Patrick S. Pittard
6390 River Chase Circle
Atlanta, Georgia 30328
                       
Dear Pat:
    
     The purpose of this letter is to amend and restate your employment
agreement with Heidrick & Struggles, Inc. upon your January 23, 1997, election
as President-CEO of the company, as follows:
    
1.   Effective January 23, 1997, your monthly base salary will be $41,666.66
     (which is $500,000.00 annually). Currently, salaries are reviewed annually
     in December, so that your first annual salary review will be in December
     1997.
         
2.   You will continue to be eligible for a discretionary bonus. During your
     tenure as CEO, your bonus range will be 40% to 140% of your base
     compensation. You understand that all bonuses are discretionary and not
     earned until declared by the Board of Directors or the Executive Committee
     of the Board of Directors. Currently, all bonuses are paid in December, and
     all bonuses are payable only if you are in the employ on the bonus payment
     date(s).
         
3.   You have requested that you be permitted, at your option, to have a paid
     leave of absence of up to 12 months following the end of your current term
     as CEO, provided that the firm is doing well and there is no pressing
     business reason to postpone or shorten this leave of absence. You have also
     requested that during your leave of absence you be paid $25,000.00 for
     each month of your leave (i.e., $300,000.00 for the year).
         
     If you do not return to the firm following your leave of absence, you have
     agreed to immediately repay to the firm all of the $25,000.00 monthly
     compensation payments that you received during your leave of absence. In
     addition, if you should leave the firm (other than due to death or
     disability) during the 24 month period following your leave of absence you
     will, on your effective date of termination, repay to the firm an amount
     equal to the total of all of the $25,000.00 monthly compensation payments

 
Mr. Patrick S. Pittard
September 18, 1997
Page Two 
                                                            
                                                            
    you received during your leave of absence multiplied by a fraction the
    denominator of which is 24 and the numerator of which is the number of full
    or fractional calendar months remaining between the effective date of your
    leaving the firm and the end of the 24 month period following the end of
    your leave of absence.
    
    If you and the firm mutually agree, the payments to you during your leave of
    absence may be in the form of a loan for a sum less than $25,000.00 per
    month, which loan would be forgiven ratably over the 24 months following
    your return to the firm, plus a "gross-up" payment for the difference
    between the monthly loan amount and $25,000.00. The "gross-up" and loan
    forgiveness amount will be in addition to the amount payable under Section 4
    below.
    
    This letter confirms that the company, pursuant to Executive Committee
    authorization, has approved your request and that the Chief Financial and
    Administrative Officer has been authorized to carry out the administrative
    details of the above.
    
4.  During your leave of absence it is the firm's expectation and desire that
    you will continue to maintain your business development related activities
    so that when you return to the firm to continue your executive search
    practice your business contacts and relationships will have been retained.
    The firm will reimburse you (upon receipt of the customary expense report)
    for your reasonable business development related expenses consistent with
    your past activities.
    
5.  For the 24 month period following your return to the firm from your leave of
    absence, your total compensation (base and bonus) shall be guaranteed to be
    not less than $750,000.00 for the first 12 months and $500,000.00 for the
    second 12 months.
    
6.  If, during your tenure with the firm as President-CEO, the firm decides to
    terminate your employment without cause, you will be given at least 12
    months' notice of termination or 12 months' pay (at the rate of your then
    current monthly base salary) in lieu of notice.
    
7.  You will continue to be eligible to participate in our fringe benefit
    program in accordance with the programs' terms.
    
8.  Our fringe benefit programs, bonus programs, and policies are reviewed from
    time to time by the company's management. Therefore, our programs and
    policies may be modified, amended or terminated at any time.
    

 
Mr. Patrick S. Pittard 
September 18, 1997 
Page Three 

9.   You will continue to be an "employee at will," provided however that if,
     during your term as CEO of our firm, your employment with the firm is
     terminated by the firm for any reason other than cause, you will be paid an
     amount equal to your total cash compensation for the last three full fiscal
     years ending September 30 divided by three.

10.  Two copies of our current agreement relating to trade secrets, confidential
     information, clients, etc., are enclosed. Please review and sign both
     copies and return one to me for processing.
    
11.  This letter of agreement, which contains our understanding, can be amended
     only in a writing which is signed by you and the Chief Administrative
     Officer of the company.
     
To acknowledge your approval, please sign and return to me one copy of this
letter together with the agreement referred to in Item 10 above.


                             Very truly yours,
                             
                             /s/ Richard D. Nelson
                             
                             Richard D. Nelson


                             

ACCEPTED:



/s/ Patrick S. Pittard                                  9/18/97
- -----------------------                                 -------
    Patrick S. Pittard                                   Date
  

 
                             HEIDRICK & STRUGGLES
                        Consultants in Executive Search
                 


                                                September 18, 1997
                             



Mr. Patrick S. Pittard
6390 River Chase Circle
Atlanta, Georgia 30328

Dear Pat:

        In your capacity as an employee of Heidrick & Struggles, Inc. (H&S) you
may have reason to be in possession of H&S confidential information and
property. In order to protect such information and property we ask you to
acknowledge and agree to the following as condition for initial and continuing
employment as an H&S employee:

CONFIDENTIAL INFORMATION
- ------------------------

Over many years Heidrick & Struggles, Inc. ("H&S") and H&S employees in the
ordinary course of their employment with and on behalf of H&S have (and
continue to), at considerable expense, developed and created procedures,
manuals, computer programs and printouts, systems, lists, and data which
constitute trade secrets/confidential information which are valuable property
rights of H&S ("confidential information").

Confidential information shall mean information which is not generally known to
the public which is used in our business including, but not limited to, products
or services; fees, costs and pricing structure; designs; analyses; drawings;
photographs; reports; computer software, including operating systems,
applications, and program listings, flow charts, manuals and documentation; data
bases; accounting and business methods; inventions and new developments and
methods whether or not reduced to practice; H&S clients and their confidential
information; client lists; all copyrightable works; and all similar and related
information in whatever form. Confidential information shall not include any
information which has been published in a form generally available to the public
prior to the date upon which the Employee proposes to disclose such information.

You, as an H&S employee, may become privy to some of our confidential
information.
                                                                    
        1.   You agree that you will not, during or after the term of your
             employment, in whole or in part, make personal use of, or disclose
             to any person, firm, corporation, association, or other entity, for
             any reason whatsoever, any H&S confidential information or property
             rights, whether now existing or hereafter developed.

 
Mr. Patrick S. Pittard
September 18, 1997
Page Two 


        2.   If, for any reason, your employment with H&S terminates, you agree
             to (a) cooperate with H&S so that all clients of H&S and
             particularly clients for whom you have rendered services, may be
             retained by H&S; and (b) promptly return and deliver to H&S all of
             the papers, records, film, documents, property, computer drives and
             discs, materials, etc. (and all copies, notes, and memoranda
             thereof), which you may have relating, in any way, to the business
             or clients of H&S, all of which is and shall be the exclusive
             property of H&S.
         
COMPANY PROPERTY
- ----------------

In your capacity as an employee of Heidrick & Struggles, Inc. (H&S) you may have
reason to be in possession of H&S property. Examples of such items are personal
computers, office supplies, software packages, personally created databases with
H&S client information/people/business, related data, etc. in consideration of
giving you possession and use of this property, we ask that you acknowledge and
agree to the following:

        1.   All property supplied by H&S to you or created by you with H&S
             property (including, but not limited to, personal computers,
             printers, personally created databases, and software packages and
             all copies thereof) is H&S property and will remain H&S property
             unless and until otherwise mutually agreed upon in writing by H&S
             and you.
         
        2.   If, for any reason, your employment with H&S terminates or H&S
             requests the return of H&S property, you agree to promptly return
             and deliver to H&S all H&S property.
         
             Upon your signing, this letter shall become a binding agreement
construed and enforced in accordance with the laws of the State of Illinois.


                                  HEIDRICK & STRUGGLES, INC.
                                  

                                  By: /s/ Richard D. Nelson
                                      -----------------------
                                       Richard D. Nelson
                                       

 
Mr. Patrick S. Pittard 
September 18, 1997
Page Three 

I have read and understand the above
and agree to be bound by this letter
agreement.



/s/ Patrick S. Pittard                            9/18/97
- -----------------------                          ---------
Patrick S. Pittard                               Date


 
                                                                   EXHIBIT 10.03

                                      EMPLOYMENT AGREEMENT OF DONALD M. KILINSKI


                             HEIDRICK & STRUGGLES
                        Consultants in Executive Search
                                                  

Patrick S. Pittard
President and Chief Executive Officer


                                 December 1, 1997



Mr. Donald M. Kilinski
834 Hillcrest Road
Ridgewood, NJ 07450
                    
Dear Don:
   
The following agreement supersedes the letter of November 24, 1997, which is now
null and void. 

We are looking forward to your arrival and want to set forth our understanding:
   
1.   You will join our Corporate Office in Chicago, Illinois with the title of
     Chief Financial Officer of Heidrick & Struggles, Inc., reporting jointly to
     Rick Nelson and me. This joint reporting relationship will continue for a
     period of 90 days for a mentoring process with Rick. Following that period,
     you will report solely to me. You will be paid a monthly base salary of
     $16,666.67 (which is $200,000 annually), commencing on your first day of
     employment, which will be December 8, 1997. Currently salaries are reviewed
     annually in November/December, so that your first salary review will be in
     November/December 1998.
        
2.   You will first be eligible to be considered for a discretionary bonus for
     the bonus year ending on September 30, 1998. Currently all bonuses are paid
     in December. You understand that, except for the minimum bonuses referred
     to below, all bonuses are discretionary and not earned until declared by
     the Board of Directors or the Executive Committee of the Board of
     Directors, and that all discretionary, incentive and/or minimum bonuses are
     payable only if you are in our employ on the bonus payment dates.
        
     As we discussed, you will receive a $100,000.00 minimum bonus for the
     fiscal year ending September 30, 1998, payable in December 1998 when
     bonuses are paid for the fiscal year ending September 30, 1998. Subsequent
     years' bonuses, which are discretionary, are dependent upon your
     performance and the firm's performance.
        

 
Mr. Donald M. Kilinski 
December 1, 1997 
Page Two

3.  We will award you 115 shares of Heidrick & Struggles' stock at book value
    (or equal value cash) as a signing bonus, grossing up for taxes, if any.
    
4.  You will be eligible to participate in our fringe benefit programs in
    accordance with the programs' terms. Copies of the booklets and Summary Plan
    Descriptions describing our group health, life/AD&D insurance, long-term
    disability, time-off benefits such as vacation, paid holidays, paid sick
    time, short-term disability salary continuation, and the Flexible Spending
    Account and Heidrick & Struggles, Inc. 401(k) Profit-Sharing and Retirement
    Plan will be provided at a later date.
    
5.  Our fringe benefit programs, bonus programs, and policies are reviewed from
    time to time by the company's management. Therefore, our programs and
    policies may be modified, amended or terminated at any time.
    
6.  If Heidrick & Struggles terminates your employment any time during your
    first 24 months for any reason other than "cause," you will be awarded 3
    months salary as severance pay.
    
7.  You will receive 4 weeks paid vacation until such time as the normal
    Heidrick & Struggles vacation policy exceeds 4 weeks.
    
8.  You will be an "employee at will" unless or until we may otherwise agree in
    writing. This gives both of us the maximum flexibility and permits either of
    us to terminate employment and compensation at any time for any reason.
    
9.  Two copies of an agreement relating to trade secrets, confidential
    information, clients, et cetera, are enclosed. Please review and sign both
    copies and return one to me for processing. Of course, please call me if you
    have any questions about this agreement.
    
10. We will reimburse you for all moving and transportation expenses from
    Ridgewood, New Jersey to the Chicago, Illinois area (including appropriate
    househunting trips), in accordance with company policy. We will also pay you
    $5,000.00 for incidental expenses. Please feel free to talk to Rick Nelson
    about any details of relocation reimbursement.
    
11. We will pay the initiation fee and regular monthly dues for one business
    club per year. The club must meet the requirements of our business club
    policy. The selection of any club is subject to the prior approval of the
    CEO or CAO.
    
12. You have advised us that you have not signed any agreements that will, in
    any way, affect your joining our firm or the perforrnance of your work with
    us.
    

 
Mr. Donald M. Kilinski 
December 1, 1997 
Page Three
                                                           
                                                           
13. You will be nominated as a Director during the upcoming election process.
    You understand that your election as a Director is subject to stockholder
    approval which we expect will be forthcoming.
    
14. This agreement, which contains our entire understanding, can be amended only
    in a writing which is signed by you, together with either the CEO or CAO of
    the company. You specifically acknowledge that no promises or commitments
    have been made to you that are not set forth in this letter.
    
To acknowledge your acceptance of our offer of employment, please sign and
return to me the enclosed copy of this letter, together with the agreement
referred to in Item 9 above.

                                        Sincerely,


                                        /s/ Patrick S. Pittard

                                        Patrick S. Pittard


Enclosures

cc: Richard D. Nelson

ACCEPTED:


/s/ Donald M. Kilinski                          December 1, 1997
- -----------------------                         ----------------
Donald M. Kilinski                              Date

 
                             HEIDRICK & STRUGGLES
                        Consultants in Executive Search




                                        December 1, 1997

Mr. Donald M. Kilinski
834 Hillcrest Road
Ridgewood, NJ 07450
              
Dear Don:

In your capacity as an employee of Heidrick & Struggles, Inc. ("H&S") you may
have reason to be in possession of H&S confidential information and property. In
order to protect such information and property we ask you to acknowledge and
agree to the following as condition for initial and continuing employment as an
H&S employee:

CONFIDENTIAL INFORMATION
- ------------------------

Over many years H&S and H&S employees in the ordinary course of their employment
with and on behalf of H&S have (and continue to), at considerable expense,
developed and created procedures, manuals, computer programs and printouts,
systems, lists, and data which constitute trade secrets/confidential information
which are valuable property rights of H&S ("confidential information").

Confidential information shall mean information which is not generally known to
the public which is used in our business including, but not limited to, products
or services; fees, costs and pricing structure; designs; analyses; drawings;
photographs; reports; computer software, including operating systems,
applications, and program listings, flow charts, manuals and documentation; data
bases; accounting and business methods; inventions and new developments and
methods whether or not reduced to practice; H&S clients and their confidential
information; client lists; all copyrightable works; and all similar and related
information in whatever form. Confidential information shall not include any
information which has been published in a form generally available to the public
prior to the date upon which the Employee proposes to disclose such information.

You, as an H&S employee, may become privy to some of our confidential
information.

        1.   You agree that you will not, during or after the term of your
             employment, in whole or in part, make personal use of, or disclose
             to any person, firm, corporation, association, or other entity, for
             any reason whatsoever, any H&S confidential information or property
             rights, whether now existing or hereafter developed.

 
Mr. Donald M. Kilinski
December 1, 1997
Page Two

        2.   If, for any reason, your employment with H&S terminates, you agree
             to promptly return and deliver to H&S all of the papers, records,
             film, documents, property, computer drives and discs, materials,
             etc. (and all copies, notes, and memoranda thereof), which you may
             have relating, in any way, to the business or clients of H&S, all
             of which is and shall be the exclusive property of H&S.
          
COMPANY PROPERTY
- ----------------

In your capacity as an employee of H&S you may have reason to be in possession
of H&S property. Examples of such items are personal computers, office
supplies, software packages, personally created databases with H&S client
information/people/business, related data, etc. In consideration of giving you
possession and use of this property, we ask that you acknowledge and agree to
the following:

        1.   All property supplied by H&S to you or created by you with H&S
             property (including, but not limited to, personal computers,
             printers, personally created databases, and software packages and
             all copies thereof) is H&S property and will remain H&S property
             unless and until otherwise mutually agreed upon in writing by H&S
             and you.
          
        2.   If, for any reason, your employment with H&S terminates or H&S
             requests the return of H&S property, you agree to promptly return
             and deliver to H&S all H&S property.
          
Upon your signing, this letter shall become a binding agreement construed and
enforced in accordance with the laws of the State of Illinois.

                                        HEIDRICK & STRUGGLES, INC.


                                        By: /s/ Patrick S. Pittard
                                            ----------------------
                                                Patrick S. Pittard



I have read and understand the above and agree
to be bound by this letter agreement.

/s/ Donald M. Kilinski                      December 1, 1997
- ----------------------                      ----------------
Donald M. Kilinski                          Date


 
                                                                   EXHIBIT 10.04


                             EMPLOYMENT AGREEMENT
                             --------------------


by and between

Mulder & Partner GmbH & Co. KG, represented by its general partner Mulder
Beteiligungsverwaltung GmbH, here represented by its newly appointed managing
director with power to represent alone Mr. Gerard Clery-Melin, Kurfuerstendamm
102, D-10711 Berlin,

                              - the following referred to as "Company"-

joined by


Heidrick & Struggles International Inc., Sears Tower, 233 S. Wacker Drive, 
Chicago Illinois 60606-6303, USA, here represented by its President and Chief 
Executive Officer with power to represent alone Mr. Gerard Clery-Melin,

for the limited purpose to fulfil item I. 3 hereof and to guarantee the
fulfillment of this agreement by Company,


                              - the following referred to as "HSI"-

and


Dr. Jurgen B. Mulder. Kleebergstrasse 5, 60322 Frankfurt


                              - the following referred to as "the Partner"-

I.   DATE, DUTIES, TITLE


     (1)  This Agreement enters into force as of October 1, 1997 and shall be of
          indefinite duration. 

     (2)  The Partner shall work as a consultant in executive search. He shall
          acquire executive search orders and successfully implement them
          according to the high quality level and the current version of the
          Heidrick & Struggles directives and standards.


 
                                                                             -2-

          (3)  the Partner shall have the title of "Partner" of HSI and shall
               work in the office of Frankfurt. The Partner shall be elected to
               Directorship of HSI (Member of the Board) at the next HSI
               shareholders meeting. The Partner shall have access to the
               shareholding of HSI in accordance with the stock programm (the
               programm currently applicable is attached as Exhibit 1) as
               Director and shall enjoy all rights of a Director of HSI as of
               the entering into force of this Agreement. For the application of
               the stock programm the shares to be issued to the Partner
               pursuant to the Purchase Agreement concerning the Partner's share
               interest in the Company shall be taken into consideration.

     II.  Compensation

     (1)  The Partner's compensation follows the compensation policy of the
          Company as in force from time to time. The present version is attached
          to this contract as Exhibit 2. The Company uses the total cost to the
          firm ("TCF") concept which includes in the total compensation the cost
          components listed in Exhibit 3. The total compensation of the Partner
          includes:

          .    a fixed base compensation consisting of the base salary and the 
               TCF cost components listed in Exhibit 3, and
          .    a bonus (including pension contribution according to II 4).

          The total compensation shall be at minimum the fixed base
          compensation. In case that the total compensation determined by the
          HSI compensation system is less than the fixed base compensation
          ("negative bonus") the Partner shall not be required to pay back the
          negative balance.

     (2)  Base Salary.

          The gross salary of the partner is DM 875,000.00 per annum payable in
          twelve equal monthly installments at the end of each month. This
          salary covers overtime and week-end work. Revision of the base salary
          shall be considered by the parties once a year and shall need the
          mutual agreement of either party to become effective.


 
                                                                             -3-


(3)  Fringe Benefits.

     The Company shall pay the employer's contribution to the social security
     institutions. Accident insurance, health insurance, life insurance and
     luggage insurance shall be provided by the Company either by continuing the
     contracts existing at the time this contract becomes effective or through
     new and/or revised contracts. The amounts covered shall remain unchanged
     unless agreed otherwise by the parties. The cost of the fringe benefits,
     including the insurance coverage, are part of the base compensation of the
     Partner (base TCF).

(4)  Pension.

     The Partner is entitled to a pension according to the terms of the pension
     scheme existing at the Company on the date this contract entered into
     force. The parties are aware that the Company and Victoria
     Lebensversicherung AG have agreed on a group insurance contract of December
     1, 1978, which covers the claims of the Partner. The Company shall provide
     for the payment of the premiums which become due in the future under this
     insurance contract being continued. Any assignment or pledge of the claims
     arising out of this insurance contract by the Company to a third party are
     excluded and ineffective with respect to the Partner: the existing pledges
     in the favour of the Partner shall remain in force. A Partner shall be
     entitled to the payment of the pension even if the employment with the
     Company has not yet been terminated. Such payments shall not be calculated
     against the Partner's compensation.

     The premiums which become due under this insurance contract shall be
     deducted from the Partner's bonus. The pension shall be increased yearly by
     the amount by which expected insurance payments out of the group insurance
     contract of the Victoria Lebensversicherung AG to the respective Partner
     are increased according to the calculation of the actuary of the Company.




 
                                                                             -4-

          In case that the employment of the Partner ends before having acquired
          a vested interest in the pension, the claims out of the group
          insurance attributable to the Partner shall be assigned to the
          Partner.

(5)       Bonus.

          The bonus shall be determined according to the Company cash
          compensation policy as in force from time to time.

(6)       Integration Period.

          The parties agree that the following exceptions will apply to the
          above described compensation arrangements in order to facilitate the
          transition between the compensation system existing until effective
          date at the Company and the newly to be introduced HSI compensation
          system.

          (a) Year 1997:

              For the period starting on effective date until December 31, 1997,
              the Partner shall be compensated in accordance with the Company's
              compensation system in force as of effective date, which will be
              applied consistently with its application prior to the entering
              into force of this contract.

          (b) Advance against Bonus:

              Exceptionally in the year 1998, advances against 1998 bonus shall
              be paid to the Partner as follows:


              - in June 1998, an amount of DM 520,000.00 gross and
              - in October 1998, an amount of DM 520,000.00 gross.

              From these gross amounts, the compulsory withholding will be
              deducted, in conformity with legislation.


   





 
                                                                             -5-

          These advances will be deducted from the 1998 bonus. If for any reason
          it appears that the advances exceed the final bonus, the excess shall
          be promptly repaid by the Partner to the Company. The partner agrees
          that the Company has the right to deduct the excess from any payment
          of any kind due to the Partner by the Company of by HSI.

     (c)  Years 1998, 1999, 2000:

          For the integration period (years 1998, 1999, 2000), an equalisation
          mechanism shall apply as described in (S) 5 of the Purchase Agreement
          between the Partner and a subsidiary of HSI concerning the sale of the
          limited partnership interest in the Company to a subsidiary of HSI.
          During the integration period as an exception the level in the range
          of the guideline compensation formula which will be used for
          determining the Partner's total compensation shall not be influenced
          by the quality and partnership evaluation of the Partner but shall be
          the average level used for all the Partners of HSI. As of January 1,
          2001, the Partner's compensation shall follow strictly the then
          Company compensation policy without any exception.

III. VACATION.

     1.   Per calendar year the right for vacation comprises thirty work days
          unless agreed otherwise. Saturdays, Sundays and legal holidays are not
          to be considered as work days. There shall be no carry forward of
          holidays for work done for the Company prior to effective date.

     2.   The date of holidays shall take into account the requirements of the
          Company's business and be discussed with the managing director. The
          preferred holiday date of the Partner shall adequately be considered.

     3.   If holidays can not be taken in the calendar year in which they come
          into existence due to important business considerations, it can be
          taken until March 31 of the following year. Thereafter the claim for
          holidays ends without any compensation due therefore.

 
                                                                             -6-

IV.  BUSINESS EXPENSES AND COMPANY CAR.

     1.   Necessary travel expenses and other expenses of the Partner within his
          work for the Company shall be reimbursed against proof as far as
          adequate and tax deductable.

     2.   The Partner is entitled to a Company car of the upper class (e.g. S-
          class Mercedes Benz, BMW 7 or a car of the same price level). All cost
          of the company car such as maintenance, car tax, car insurance and gas
          shall be paid by the Company and are not part of TCF. The Partner may
          use the company car for private purposes. Taxes on the private use
          as payment in kind shall be paid by the Partner according to the
          salary tax provisions applicable from time to time. If the Partner
          does not use a company car he shall be entitled to an allowance per
          kilometer for use of his own car in such an amount as permitted by tax
          law.

     3.   The Partner is entitled to a second telephone connection in his home
          which shall be used exclusively for business purpose, a mobile phone
          and a car phone. The cost for the purchase and the installation of
          such telephone connections as well as the basic and current telephone
          charges shall be borne by the Company and are not part of the TCF.

V.   SICKNESS AND DEATH

     1.   Each case of incapacity (Arbeitsunfahigkeit) due to sickness shall be
          made known to the Company without undue delay.

     2.   At the latest after three days of incapacity a medical confirmation
          shall be presented which confirms the incapacity and its potential
          duration.

     3.   In case of a sickness which the Partner can not be made responsible
          for the contractual total compensation shall be paid for further six
          months.

     4.   In case of death bonus earned shall be paid to the Partners' heirs.



 
VI.  EXCLUSIVITY, CONFIDENTIALITY

     (1)  The Partner shall make all his work capacity available to the Company.
          He shall not during the duration of this contract do any work for
          which he gets paid or for which normally a compensation is paid with
          the exception of speeches and seminars which are made for business
          promotion purposes. In that case the payment belongs to the Company.

     (2)  The Partner shall not disclose to third parties any confidential
          information or any other information on the Company and its business
          during or after the duration of this employment agreement.

     (3)  In case this employment agreement ends the Partner shall return to the
          Company all Company documents and other items. This comprises also
          notes and copies of documents made by the Partner. There shall be no
          retention right in these documents and items.

VII. TERM AND TERMINATION.

     1.   The contract is entered into for an indefinite period of time. It
          shall end when the Partner turns 68 years of age, but not before
          December 31, 2002. It may be further extended by mutual agreement of
          the Company and the Partner.

     2.   The Company is entitled to terminate the contract with 6 months
          written notice to the end of a quarter, the Partner is entitled to
          terminate with 3 months written notice to the end of a quarter
          (ordentliche Kundigung).

     3.   The right for termination for cause (ausserordentliche Kundigung) of
          both Parties shall remain unaffected.

     4.   The Parties agree that in any case of termination for cause or not for
          cause, whether by the Company or by the Partner, the Company shall be
          entitled to free the Partner from his obligation to work. In such case
          the right of the Partner to the Company car ends.


 
                                                                             -8-

VIII. FINAL PROVISIONS.

      1. The prior employment contract of the Partner with the Company is
         herewith repealed. For labor law purposes the Partner shall be
         considered as being employed since his first employment with the
         Company or its legal predecessor started.

      2. This contract comprises all agreements between the Partner and the
         Company in relation to the employment relationship. Changes of this
         contract shall required written form.

      3. HSI herewith guarantees the fulfillment of the obligations of Company 
         under this Employment Agreement.

      4. The English version of the contract is exclusively binding even if 
         translations into the German language are prepared.

      5. If any provision of this contract shall be or become invalid or are
         unenforceable the validity and enforceability of the other provisions
         of this contract shall remain unaffected. The parties shall agree on a
         valid provision which as closely as possible achieves the economic
         effect of the unvalid or unenforceable provision. The same shall apply
         in case of incompleteness of the contract.

Berlin, September 25, 1997


Gerard Clery-Melin
/s/ Gerard Clery-Melin
__________________________________________
Mulder & Partner KG


                                   /s/ Jurgen M. Mulder     
                                   ________________________________________  
                                   Partner


Gerard Clery-Melin
/s/ Gerard Clery-Melin
__________________________________________
Heidrick & Struggles International Inc.

 
                                                                             -9-

                   LIST OF EXHIBITS TO EMPLOYMENT AGREEMENT
                   ----------------------------------------



1. HSI Stock Programm

2. HSI Compensation Policy

3. Cost components to be deducted from Bonus


 
                                                                       EXHIBIT 1

                      HEIDRICK & STRUGGLES INTERNATIONAL
                      ----------------------------------

                             REVISED STOCK PROGRAM
                             ---------------------

OVERALL OBJECTIVES:
- ------------------

Our Partner/Director - Stockholders are the foundation of our corporate 
partnership.  They represent our assets as well as contribute to and share the 
Firm's equity.

The stock program is the "vehicle" by which we all participate in building the
Firm and passing the "baton" of ownership as we move from one generation to
another.  We all have the same expectations that our collective contributions to
the Firm (both financial and professional) will yield a fair "return" when we
retire.  At the same time, we want to feel that we are all "together" and being
treated equally.

The stock program, therefore, must achieve general basic goals: provide
sufficient equity, enable the Firm's ownership to easily pass from one
generation to another, be equally administered among the Partners, and generate
an average return of 20 to 25%.


SUFFICIENT EQUITY RATIO:
- -----------------------

Our Firm's equity (common stock plus retained earnings) should be in the range
of 20 - 25% of net fee revenue. While this may vary from year to year, over the
long term, this ratio is needed to provide adequate capital.  One of the stock
program's goals is to maintain this ratio.


 
STOCK PROGRAM - IN GENERAL:
- --------------------------


To achieve the goals of the Stock Program, the following principles have been 
and need to be followed:

1.   The amount of stock to be purchased annually per Partner/Director is 
     reviewed by the Executive Committee and presented to the Board.

2.   The standard amount of stock to be owned by any one Partner/Director is
     reviewed regularly by the Executive Committee and presented to the Board.
     Anyone over the standard is given the opportunity to sell back to "overage"
     over a period of time as approved by the Executive Committee.

3.   All Directors will purchase their total amount of stock (up to the standard
     number) within seven years or less, on a regular annual basis.

4.   All stock will be purchased between January and March 31st of each year.
     The payment details will be arranged with each Partner/Director.

     Note: The Firm will approve the pledging of shares with a bank to help a 
            Partner obtain financing.

All shares are purchased at the December 31 book value of the year immediately
preceding the purchase. (If the final book value is not known at the sale date,
an estimated value will be used and an adjustment will be made when the final
book value is known.)



 
STOCK PROGRAM
- -------------


The Stock program is as follows:

1.  Partners may purchase up to $10,000 worth of shares after their appointment 
    and in each subsequent year.

2.  New Directors must purchase shares up to a level of $50,000 upon their 
    election.

3.  Directors who own less than the standard amount of shares must purchase a 
    minimum of $25,000 worth of shares each year until they reach the standard 
    amount.

4.  The standard amount of stock to be owned by each Director is $200,000.

5.  Directors may purchase additional shares until they reach 5,000 shares.
    This is subject to the Executive Committee verifying that this does not 
    create unreasonable dilution.

 
                                                                       EXHIBIT 2

                   EUROPEAN PARTNER CASH COMPENSATION POLICY
                   ----------------------------------------- 

1.   CASH COMPENSATION DETERMINATION PROCEDURE
     -----------------------------------------

     Annually, in February-March, the level of total cash compensation is
     reviewed by each Partner's Manager. The Manager's recommendations are
     brought to the President and the Compensation Committee for discussion,
     review and further authorization. All bonuses are discretionary, and are
     not earned in whole or in part unless and until authorized by the
     Compensation Committee and the Board of Directors or the Executive
     Committee of the Board. In particular, no bonus is payable to a Partner who
     has left the Firm or is under notice for whatever reason at the time of the
     Compensation review. Also the Firm's profitability is always an important
     consideration in the bonus determination process.

2.   PARTNER CASH COMPENSATION GUIDELINES - GERMANY
     ----------------------------------------------

     In general, TCF total compensation (Total Cost to the Firm) guidelines will
     fall within the following ranges:
     10-15% of BILLINGS up to 150,000 DEM
     15-20% of BILLINGS between 150,000 and 700,000 DEM
     20-25% of BILLINGS over 700,000 DEM
     10-15% of SOB up to 150,000 DEM
     15-20% of SOB between 150,00 and 700,000 DEM
     20-25% of SOB between 700,000 and 1,000,000 DEM
     25-30% of SOB over 1,000,000 DEM

     Note that the above mentioned ranges are subject to potential revisions 
     from time to time by the Executive Committee.

     Within the ranges, two critical factors evaluated by Management - Quality
     and Partnership - will determine where in the five percent spread
     individual Partners may be paid. (See the next page for some of the
     criteria to be evaluated for each of these two factors.) The average
     Partner will be at the midpoint of the range. Consideration of the two
     factors is not limited to a single year's performance - weight also may be
     given to prior years' factors.

NOTE 1:     
- -------

     Principals are paid an agreed-upon level of cash compensation which is not
     tied to the Partner cash compensation guidelines. Fee and SOB numbers will
     be recorded for all Principals and will be reviewed when Principals are
     reviewed. While Fee and SOB numbers generally are viewed as a measure of a
     Principal's progress, special, discretionary bonus consideration may be
     given if the numbers and performance justify additional compensation in the
     opinion of the Compensation Committee and is approved by the Executive
     Committee of the Board of Directors or the Board of Directors.

NOTE 2:
- -------

     The above policy, procedure and guidelines are subject to
     amendment/modification, at any time, by the Board of Directors or the
     Executive Committee of the Board.


 
QUALITY
- -------

 .  Completion ratio (one year and three years)
 .  Time to complete
 .  Confirmation level
 .  Searches open over 6 months
 .  Observance of quality standards
 .  Quality of client portfolio
 .  Search administration
 .  Client survey


PARTNERSHIP
- -----------

 .  Pass-offs
 .  Assistance to others on searches and potential searches
 .  Attitude towards staff and support staff
 .  Mentoring of new staff
 .  Notable non-billable activities
 .  Partners/Principals opinion survey

 
                                                                       EXHIBIT 3


         Total Cost to the Firm ("TCF") to be deducted from the bonus:
         -------------------------------------------------------------

- - Base salary

- - Social costs

- - Benefits such as: life insurance, accident insurance etc.

- - Pension contribution (insurance premium)

- - Club dues


 

                                                                   EXHIBIT 10.05

                                                                     TRANSLATION
                                                                           FINAL
                                                                          012599


                             SETTLEMENT AGREEMENT

BETWEEN THE UNDERSIGNED
- -----------------------


HEIDRICK & STRUGGLES INTERNATIONAL, INC.
whose registered office is at 1209 Orange Street, Wilmington, Delaware, U.S.A.
represented by [Jurgen B. Mulder]
acting as Branch Manager

hereafter referred to as "the Company"


                                ON THE ONE HAND

AND

Mr. Gerard CLERY-MELIN
residing at 48, boulevard Malesherbes
75008 Paris, FRANCE

                               ON THE OTHER HAND

WHEREAS
- -------

Mr. Gerard CLERY-MELIN was hired by the Company on February 1, 1978, as Manager
of the Paris branch of the Company.

Mr. Gerard CLERY-MELIN subsequently exercised the functions, effective June 18,
1980, of "President Europe" - a post which he held ever since that date on the
basis of the above-mentioned employment contract.

During the course of a collaboration which exceeds 20 years, Mr. Gerard 
CLERY-MELIN contributed largely to the development of the activities, the
results, and the notoriety of the Company in France as well as in the other
European countries.

Mr. Gerard CLERY-MELIN demonstrated in this regard a total commitment to the
exercise of responsibilities which had been entrusted upon him by the Company,
as well as an attachment and an absolute loyalty towards said Company.

However, the Board of Directors of the Company decided, during the course of
1998, to define and implement a new strategy.



 
Mr. Gerard CLERY-MELIN communicated to the Company his personal observations and
opinions regarding the commercial strategy defined by the new management.

The behavior thus adopted by Mr. Gerard CLERY-MELIN was justified according to 
him by his willingness to formulate any useful proposition regarding the best 
way in which the market could be developed and, in particular, the French 
market.

For its part, the Company considered that the attitude of Mr. Gerard CLERY-MELIN
could in no way be considered as constructive, given, in particular, the high 
level of responsibilities of Mr. Gerard CLERY-MELIN.

Quite to the contrary, the Company, in particular through the person of Mr. 
Patrick Pittard, considered that the critical attitude adopted by Mr. Gerard
CLERY-MELIN towards the policies decided by the Board of Directors was 
reflective of the refusal by Mr. Gerard CLERY-MELIN to conform himself to the 
directives that had been communicated to him, which attitude could only impair 
the proper functioning of the business.

The Company, therefore, considered that a loss of irretrievable trust had 
developed which would render impossible the continuation of the employment 
relationship.

Accordingly, the Company decided to initiate against Mr. Gerard CLERY-MELIN a 
procedure of dismissal.

By registered letter, return receipt requested dated November 16, 1998, the 
Company informed Mr. Gerard CLERY-MELIN that it was considering a procedure of 
dismissal and, for this purpose, called him to a predismissal meeting in order 
to discuss such measure on Tuesday, November 24, 1998, at 2:00 p.m.

By registered letter, return receipt requested dated November 26, 1998, the 
Company notified Mr. Gerard CLERY-MELIN of his dismissal for the reasons 
indicated above.

The contractual term of advance notice which started on the first date of the 
presentation of this letter, namely November 27, 1998, was set at 12 months. 
According to the terms of the letter of dismissal, Mr. Gerard CLERY-MELIN was 
relieved from the duty to perform any task during said advance notice of 12 
months.

Mr. Gerard CLERY-MELIN vigorously protested the decision of dismissal that had 
been taken against him.

Mr. Gerard CLERY-MELIN considered that his dismissal was not based on any real 
and serious cause.

Specifically, Mr. Gerard CLERY-MELIN considered that, after 20 years of a 
collaboration accomplished on the basis of the greatest professional conscience,
a dismissal predicated on only a divergence of views, which is in no way 
supported by legitimate reasons, does not justify a 

                                      -2-


 
severance of the employment relationship in as brutal and untimely a manner as 
has just occurred.

In this regard, Mr. Gerard CLERY-MELIN considered that he had incurred, as a 
result of these allegations, a moral and professional harm which, on a personal 
level, are absolutely incontestable and which are of a nature that will produce,
for professional purposes, extremely grave consequences adversely impacting his 
personal and professional notoriery as well as to his honor.

Moreover, Mr. Gerard CLERY-MELIN stressed the particular harm that the severance
of the employment relationship has caused, as a result among other things, of 
his age, the loss of his social status that such severance implies given the 
level of responsibility that had been entrusted to him as well as the tainting 
of his professional image that would ensue, particularly in regard to the brutal
departure that had been imposed on him as a result of the release of activities
during the term of his advance notice.

As a result, Mr. Gerard CLERY-MELIN communicated to the Company his intention to
initiate additional proceedings against the Company in order to obtain the 
condemnation of the Company to the payment of the sum of 10 million Francs.

In the light of the foregoing, and in order to put a definitive end to any 
litigation that could arise from this situation, the parties came together and, 
on the basis of reciprocal concessions, have decided to agree on the following 
settlement.

ARTICLE 1
- ---------

The Company shall pay to Mr. Gerard CLERY-MELIN, on December 17, 1998:

- -    The sum of FF 2,716,796 (two million seven hundred sixteen thousand seven
     hundred ninety-six francs) as an indemnity in lieu of the contractual
     advance notice term of 12 months involving a dispensation from work,
     payable in two wire bank accounts, namely FF 2,343,200 (two million three
     hundred forty three thousand and two hundred francs) on December 17, 1998,
     and FF 373,596 (three hundred seventy three thousand five hundred ninety
     six francs) on January 4, 1999;

- -    The sum of FF 543,400 (five hundred forty-three thousand four hundred
     francs) as an indemnity in lieu of accrued vacation payable by wire bank
     transfer on January 4, 1999.

The sum of FF 1,572,219.93 (one million five hundred seventy-two thousand two 
hundred nineteen francs and ninety three cents) as a severance indemnity in 
accordance with the applicable collective labor agreement by wire bank transfer 
on December 17, 1998.

From the sums hereabove identified, with the exception of the severance 
indemnity pursuant to the applicable collective labor agreement, shall be 
deducted the social charges at the rates currently in effect.

                                      -3-

 
ARTICLE 2
- ---------

After having taken into account the moral and professional harm claimed by Mr. 
Gerard CLERY-MELIN, the Company undertakes to remit by bank wire to Mr. Gerard 
CLERY-MELIN on the basis of an indemnity for abusive termination the global, 
definitive and lump-sum amount of FF 2,943,200 (two million nine hundred forty 
three thousand and two hundred francs), which amount includes all monetary 
damages for any reason as well as any indemnity relating to the severance of the
employment contract with the Company as well as the cessation of any functions 
which he occupied within the Company.

The transfers relating to the foregoing sum shall be effected according to the 
following schedule:

 .    735,800 francs on March 31, 1999;
 .    735,800 francs on June 30, 1999;
 .    735,800 francs on September 30, 1999;
 .    735,800 francs on November 30, 1999;

From the amount indicated in the prior paragraph shall be deducted the amount of
the generalized social contribution (CGS) and the contribution to the 
reimbursement of the social debt (CRDS).

ARTICLE 3
- ---------

Mr. Gerard CLERY-MELIN undertakes moreover, after his departure from the 
Company, not to take any action that could taint the image of the Company or 
that of its principal shareholder, HEIDRICK & STRUGGLES, INC. ("H&S"), or which 
would be likely to discredit the Company, its activities, its management or its 
personnel.

The Company, for its part, undertakes irrevocably a reciprocal engagement of 
non-denigration.

On the basis of the foregoing commitment, the Company undertakes, in particular,
to refrain from any verbal or written declaration that could taint or harm,
directly or indirectly, Mr. Gerard CLERY-MELIN, or, in a general manner, to make
any statement or adopt any attitude under whatever form which would be likely to
taint or cause harm to Mr. Gerard CLERY-MELIN.

ARTICLE 4
- ---------

Mr. Gerard CLERY-MELIN acknowledges that he will return to the Company, no later
than December 15, 1998, all documents materials and equipment belonging to the 
Company, H&S or a subsidiary of the Company or H&S, and, in particular, any 
documents (including correspondence) whatever the nature relating to the 
activities, the services, the customers or the members of the personnel of the 
Company.

Mr. Gerard CLERY-MELIN undertakes moreover to maintain strictly confidential any
information of which he has had knowledge during his employment, regarding the 
Company,

                                      -4-

 
H&S, or a subsidiary of the Company or H&S, including the clients, business and 
operations of the Company, H&S, or a subsidiary of the Company or H&S, and shall
not disclose or communicate, directly or indirectly, to any third party, firm, 
association or company, without the prior written approval of a legal 
representative of the Company.

ARTICLE 5
- ---------

The Company, having requested Mr. Gerard CLERY-MELIN to accept a limitation on  
his freedom to engage into professional activities, accepts to pay to Mr. 
Gerard CLERY-MELIN the sum of 4,924,417 francs according to the following 
payment schedule:

- -    187,289 francs on January 5, 1999;
- -    430,648 francs to be paid the first day of each month, from February 1, 
     1999 until December 1, 1999.

From the sums hereabove identified shall be deducted the social charges at the 
rates currently in effect.

The limitations placed on the freedom of Mr. Gerard CLERY-MELIN are as follows:

5.1  Mr. Gerard CLERY-MELIN undertakes not to solicit any employees from the 
     Company, H&S, or the subsidiaries of the Company or H&S.

5.2  Gerard CLERY-MELIN undertakes to prohibit himself from lending a personal
     hand to the hiring of employees of the Company, H&S, or the subsidiaries of
     the Company or H&S in order for same to join the ranks of a company
     exercising a competing activity. The employees identified in the foregoing
     two paragraphs are those who are present on the date of signature of this
     Agreement, as well as any employees who are hired by the Company, H&S or
     any subsidiaries of the Company or H&S prior to January 1, 2001.

5.3  Mr. Gerard CLERY-MELIN undertakes not to join, directly or indirectly, by
     means of affiliation or by means of an employment agreement, the operations
     of Korn/Ferry International, Spencer Stuart Associates, Russell Reynolds
     and Egon Zender either in France or outside France. The foregoing
     prohibition covers also any assistance or consultation provided by Mr.
     Gerard CLERY-MELIN to Korn/Ferry International, Spencer Stuart Associates,
     Russell Reynolds and Egon Zender.

The commitments undertaken under items 5.1, 5.2 and 5.3 above will take effect 
on the date of signature of the present Agreement and will end on December 31, 
2000.

The foregoing monthly payment shall be suspended in the case Mr. Gerard 
CLERY-MELIN were not to respect the commitments under items 5.1 and 5.2 above.

The foregoing suspension may take effect only upon the following conditions 
being met.

                                      -5-

 

The Company shall as soon as it is in a position to assess in good faith that
Mr. Gerard CLERY-MELIN did not respect any of his commitments under this
Article, formally summon him by registered mail (return receipt requested) to
provide an explanation in regard to the precise facts expressly invoked by the
Company. Should Mr. Gerard CLERY-MELIN fail to respond within the foregoing
thirty (30) day period, or should his explanations prove totally insufficient,
the parties agree to put the matter in the hands of the persons who, according
to the Company, would have been the object of the solicitation under review.

The Company shall, upon the expiration of the foregoing deadline, take the 
initiative in regard to the interrogation of said persons by registered mail 
(return receipt requested), with copy thereof addressed on the same date and 
under the same form to Mr. Gerard CLERY-MELIN.

The attestation upon one's honor of the persons under review, according to which
they have not been the object of a solicitation, shall constitute proof that Mr.
Gerard CLERY-MELIN has respected his commitments contemplated under items 5.1 
and 5.2, provided that this attestation is obtained in writing no later than 
thirty (30) days after receipt by said persons of the letter mentioned in the 
foregoing paragraph.

The sums paid to Mr. Gerard CLERY-MELIN prior to the date of the suspension, 
which notified by registered letter return receipt requested shall have released
Mr. Gerard CLERY-MELIN from the commitments contemplated under items 5.1 and 
5.2, shall remain definitively due, pro rata temporis, over the period of 24 
months starting January 1, 1999.

If Mr. Gerard CLERY-MELIN joins the ranks of the companies identified under item
5.3 above during the course of the first semester of the year 1999, he shall 
definitively lose the right of benefit to the payments provided under the 
present article.

If Mr. Gerard CLERY-MELIN rejoins the ranks of said firms between July 1, 1999 
and December 31, 2000, the sums due under the present article shall be computed,
pro rata temporis, over the period of 24 months having started January 1, 1999.

In the event of disagreement between the parties, only a court decision is no
longer appealable may definitively determine the amount of sums due to Mr. 
Gerard CLERY-MELIN by application of the present article.

ARTICLE 6
- ---------

Mr. Gerard CLERY-MELIN having received all of the sums to which he could claim 
as a result of the totality of his collaboration within the Company, including 
any salaries whatever their title or characterization, premiums and various 
indemnities, as well as the reimbursement of expenses that he has incurred for 
said collaboration and, in light of the payments identified in Articles 1 and 2 
above, acknowledges that said payments extinguish all of his rights relating to 
the performance and the cessation of his employment contract;

Mr. Gerard CLERY-MELIN declares his irrevocable renunciation to claiming from 
the Company any other benefits in kind or in cash of any nature whatsoever 
(salaries whatever their

                                      -6-




 
name or characterization, premiums and various participations, reimbursements, 
indemnities of any nature in lieu of advance notice and accrued vacation, 
indemnities for non-observation procedures required by law or applicable 
collective labor agreement or for termination which is not founded on a real and
serious cause) as they relate to the performance and the termination of his 
employment;

The Company declares, irrevocably, its renunciation to bringing directly or 
indirectly, by its intermediary, that of its shareholders or that of any of its 
affiliates, any action whatever the nature against Mr. Gerard CLERY-MELIN on any
theory or under any form whatsoever given the fact that all of the disputes 
between the parties that arose or are likely to arise as a result of the 
relationship between said party, whatever the nature or the reason, that have 
taken place between Mr. Gerard CLERY-MELIN, the Company, its shareholders or its
affiliates are definitively extinguished.

ARTICLE 7
- ---------

It is expressly agreed between the parties that one may derogate from the 
principle of confidentiality attached to the present settlement in connection 
with the formalities imposed under the procedures in effect for the introduction
on the market of the Company, as well as vis-a-vis the tax administration, the 
social security administration and the courts which may be entitled to have 
knowledge of such agreement.

ARTICLE 8
- ---------

As a result of the present settlement, the undersigned parties acknowledge that 
they are free and release one towards the other, any amounts due having been 
definitively settled and extinguished between themselves for any reason 
whatsoever.

Each of the parties undertakes to perform in good faith the present settlement 
which has been drawn up in accordance with the provisions of Articles 2044 and 
following of the Civil Code.

Executed in two (2) originals

on December 23, 1998
   -----------------------------

HEIDRICK & STRUGGLES INTERNATIONAL, INC.


By: /s/ Jurgen B. Mulder
   ------------------------------------------
     Jurgen B. Mulder


/s/ Gerard Clery-Melin
- ---------------------------------------------
GERARD CLERY-MELIN

                                      -7-


 
                                                                      EXHIBIT 11

COMPUTATION OF PER SHARE EARNINGS


HEIDRICK & STRUGGLES, INC.

The following is a reconciliation of the shares used in the computation
of basic and diluted earnings per share ("EPS"):



 
 
                                                                                                        Nine Months Ended
                                                  12 Months Ended December 31,                            September 30,
                                        -----------------------------------------------           ----------------------------
                                           1995               1996             1997                  1997                1998 
                                        -------------    -----------       ------------           ----------       -----------
                                                                                                            
BASIC EPS
Income available to common shareholders   $     6,358      $   6,449         $    6,498            $   5,619       $     3,827
Weighted-average shares outstanding           158,661        162,718            169,161              166,509           169,624
                                        -------------    -----------       ------------           ----------       -----------
Basic EPS                                 $     40.08      $   39.64              38.42                33.75             22.56
                                        =============    ===========       ============           ==========       ===========
                                                                                                                              
DILUTED EPS
Income available to common shareholders  $     6,358       $   6,449         $    6,498            $   5,619       $     3,827 
Weighted-average shares outstanding          158,661         162,718            169,161              166,509           169,624 
Exercise of stock options                         -                -                  7                  -                  21
                                       -------------    ------------      -------------          -----------      ------------
Total shares                                 158,661         162,718            169,168              166,509           169,645    
                                       -------------    ------------      -------------          -----------      ------------
Diluted EPS                              $     40.08       $   39.64              38.42                33.75             22.56 
                                       =============    ============      =============          ===========      ============
 


HEIDRICK & STRUGGLES INTERNATIONAL, INC.

The following is a reconciliation of the shares used in the computation of basic
and diluted EPS for Class A common shares:

 

                                                                                                        Nine Months Ended
                                                  12 Months Ended December 31,                            September 30,        
                                        -----------------------------------------------           ----------------------------
                                           1995               1996             1997                  1997                1998 
                                        -------------    -----------       ------------           ----------       -----------
                                                                                                            
BASIC EPS
Income available to Class A common                                                                                            
  shareholders                           $     1,170       $   1,392         $      634            $     619       $    (1,687)
Weighted-average shares outstanding           93,996         102,641            112,098              109,100           119,474 
                                       -------------    ------------      -------------            ---------       -----------
Basic EPS                                $     12.44       $   13.56               5.66                 5.67            (14.12)
                                       =============    ============      =============            =========       ===========
                                                                                                                              
DILUTED EPS                                                                                                                   
Income available to Class A common                                                                                            
  shareholders                           $     1,170       $   1,392         $      634            $     619       $    (1,687)
Weighted-average shares outstanding           93,996         102,641            112,098              109,100           119,474 
Stock purchase obligations                      -                  -              6,770                 -               28,000 
                                       -------------    ------------      -------------            ---------       -----------
Total shares                                  93,996         102,641            118,868              109,100           147,474 
                                       -------------    ------------      -------------            ---------       -----------
Diluted EPS                              $     12.44       $   13.56        $      5.34            $    5.67       $    (11.44)
                                       =============    ============      =============            =========       ===========
 

The following is a reconciliation of the shares used in the computation
of basic and diluted EPS for Class B common shares:

 
 
                                                                                                        Nine Months Ended
                                                  12 Months Ended December 31,                            September 30,
                                        -----------------------------------------------           ----------------------------      
                                           1995               1996             1997                  1997                1998       
                                        -------------    -----------       ------------           ----------       -----------      
                                                                                                                  
BASIC EPS
Income available to Class B common                                                                                                  
  shareholders                           $       630       $     749         $      342            $     333       $      (909)
Weighted-average shares outstanding           65,787          65,787             65,787               65,787            65,787 
                                         -----------    ------------       ------------           ----------       ----------- 
Basic and Diluted EPS                    $      9.57       $   11.39               5.19                 5.06            (13.81)
                                         ===========    ============       ============           ==========       ===========


 
                                                                    
                                                                 EXHIBIT 21     
            
         SUBSIDIARIES OF HEIDRICK & STRUGGLES INTERNATIONAL, INC.     
 
   

                                                         State or
                                                        Country of     % of
Name                                                     Domicile    ownership
- ----                                                  -------------- ---------
                                                               
Heidrick & Struggles Espana, Inc.                     Illinois         100%
Heidrick & Struggles AB                               Sweden           100%
Heidrick & Struggles OY                               Finland          100%
Heidrick & Struggles International SRL                Italy             99%
Heidrick & Struggles Sp.zoo                           Poland           100%
Heidrick & Struggles s.r.o.                           Czechoslovakia   100%
Heidrick & Struggles BV                               Netherlands      100%
Heidrick & Struggles Consultores de Gestao Lda        Portugal          99%
Heidrick & Struggles AG                               Switzerland      100%
Heidrick & Struggles AS                               Norway           100%
Heidrick & Struggles Unternehmensberatung GmbH & Co.  Germany          100%
 KG
Heidrick & Struggles Unternehmensberatung             Germany          100%
 Verwaltungs-GmbH
Heidrick & Struggles Ltd.                             Israel            99%
ESE Consultants S.A.                                  France            94%
Mulder & Partner Interim Management GmbH              Germany
 58.82% owned by Heidrick & Struggles
 Unternehmensberatung GmbH & Co. KG
IMA-JMP Anzeigenangentur GmbH                         Germany
 100% owned by Heidrick & Struggles
 Unternehmensberatung GmbH & Co. KG


 
                                                                 
                                                              EXHIBIT 23.07     
 
              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
  As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our firm) included in or made part of
this registration statement.
 
                                          ARTHUR ANDERSEN LLP
 
Chicago, Illinois
   
February 12, 1999


 
                                                                 
                                                              EXHIBIT 23.08     
 
              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
  As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our firm) included in or made part of
this registration statement.
 
                                          BARBIER FRINAULT & ASSOCIES
                                          ARTHUR ANDERSEN
 
Neuilly-sur-Seine, France
   
February 12, 1999


 
                                                                   EXHIBIT 99.01



                                                  February 10, 1999             


Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

          I hereby consent to the references to my becoming a director of 
Heidrick & Struggles International, Inc. ("H&S") in the Registration Statement 
on Forms S-1 and S-4 of H&S, to be filed with Securities and Exchange 
Commission.

                                   Sincerely yours,



                                   /s/ David C. Anderson
                                   -------------------------
                                   David C. Anderson


 
                                                                   EXHIBIT 99.02



                                             February 10, 1999



Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

             I hereby consent to the references to my becoming a director of
Heidrick & Struggles International, Inc. ("H&S") in the Registration Statement
on Forms S-1 and S-4 of H&S, to be filed with Securities and Exchange
Commission.

                                        Sincerely yours,


                                        /s/ Thomas J. Friel 
                                        ----------------------------
                                        Thomas J. Friel


 
                                                                   EXHIBIT 99.03


                                             February 10, 1999

Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

          I hereby consent to the references to my becoming a director of 
Heidrick & Struggles International, Inc. ("H&S") in the Registration Statement 
on Forms S-1 and S-4 of H&S, to be filed with Securities and Exchange 
Commission.

                                             Sincerely yours,




                                             /s/ David B. Kixmiller
                                             -----------------------------------
                                             David B. Kixmiller


 
                                                                   EXHIBIT 99.04



                                             February 10, 1999



Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

          I hereby consent to the references to my becoming a director of
Heidrick & Struggles International, Inc. ("H&S") in the Registration Statement
on Forms S-1 and S-4 of H&S, to be filed with Securities and Exchange
Commission.

                                        Sincerely yours,



                                        /s/ Gerard R. Roche
                                        ----------------------  
                                        Gerard R. Roche


 
                                                                   EXHIBIT 99.05


                                          February 10, 1999



Heidrick & Struggles International, Inc.
233 South Wacker Drive, Suite 4200
Chicago, Illinois 60606-6303

Ladies and Gentlemen:

          I hereby consent to the references to my becoming a director of 
Heidrick & Struggles International, Inc. ("H&S") in the Registration Statement 
on Forms S-1 and S-4 of H&S, to be filed with Securities and Exchange 
Commission.

                                               Sincerely yours,



                                               /s/ John Viney
                                               --------------------
                                               Dr. John C. Viney