<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 10-Q/A
Amendment No. 1
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998, OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 1-13531
___________
TRAMMELL CROW COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 75-2721454
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification Number)
2001 ROSS AVENUE
SUITE 3400
DALLAS, TEXAS
(Address of principal executive offices)
75201
(Zip Code)
(214) 863-3000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
At May 13, 1998, there were 33,911,416 shares of Common Stock outstanding.
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1998 (unaudited) and December 31, 1997 . . . . . . . . 1
Condensed Consolidated Statements of Operations for the three months ended March 31, 1998 and
1997 (unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1998 and
1997 (unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Condensed Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . 7
PART II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
TRAMMELL CROW COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS MARCH 31, DECEMBER 31,
1998 1997
--------------------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $65,165 $96,747
Accounts receivable, net of allowance for doubtful accounts of $838 in 1998 and $955
in 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,871 40,602
Receivables from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,021 926
Notes and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,291 4,007
Income taxes recoverable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,596 4,939
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,698 3,870
Real estate held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,982 98,567
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,329 9,220
------- ------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267,953 258,878
Furniture and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,693 6,309
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,027 14,397
Investments in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 11,279 11,244
Goodwill, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,792 27,111
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,775 8,297
------- ------
$360,519 $326,236
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,047 $18,523
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,594 56,270
Payables to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,003 4,466
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 826 875
Notes payable on real estate held for sale. . . . . . . . . . . . . . . . . . . . . . . . 93,039 76,623
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,060 2,185
-------- --------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,569 158,942
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,829 1,555
Deferred compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,809 8,391
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673 417
-------- --------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,880 169,305
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,073 19,859
Stockholders' equity
Preferred stock; $0.01 par value; 30,000,000 shares authorized; none issued
or outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock; $0.01 par value; 100,000,000 shares authorized; 33,911,416 and 33,892,038
shares issued and outstanding in 1998 and 1997, respectively. . . . . . . . . . . . . . 339 339
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,721 150,647
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,405) (12,734)
Less: Stockholder loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,089) (1,180)
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,566 137,072
-------- --------
$360,519 $326,236
-------- --------
-------- --------
</TABLE>
See accompanying notes.
1
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
----------------------
1998 1997
---- ----
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C>
REVENUES
Property management services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,887 $22,024
Brokerage services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,533 16,935
Infrastructure management services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,890 14,569
Development and construction services . . . . . . . . . . . . . . . . . . . . . . . . . . 8,891 5,206
Retail services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,727 325
------- -------
84,928 59,059
Income from investments in unconsolidated subsidiaries. . . . . . . . . . . . . . . . . . 2,415 58
Gain on disposition of real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 866 1,124
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,042 1,857
------- -------
90,251 62,098
COSTS AND EXPENSES
Salaries, wages, and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,516 37,339
Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,953 7,003
General and administrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,097 10,303
Profit sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2,570
Depreciation . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,085 898
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 -
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,666 552
Royalty and consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 528
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 281
------- -------
79,683 59,474
------- -------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,568 2,624
Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,239 1,023
------- -------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,329 $1,601
------- -------
------- -------
Earnings per share: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.19 *
----
----
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.18 *
----
----
</TABLE>
___________
* Information is not relevant due to change in capital structure.
See accompanying notes.
2
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
Ended March 31
-------------------
1998 1997
---- ----
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,329 $1,601
Adjustments to reconcile net income to net cash used in operating activities
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,085 898
Amortization . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 -
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 281
Deferred income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865 10
Income from investments in unconsolidated subsidiaries. . . . . . . . . . . . . . . . . . (2,415) (58)
Gain on disposition of real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . (866) (1,124)
Changes in operating assets and liabilities . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,976) 5,526
Receivables from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95) 1,226
Notes and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,048) (3,140)
Expenditures for real estate held for sale. . . . . . . . . . . . . . . . . . . . . . . (45,758) (11,045)
Proceeds from sale of real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,209 13,864
Proceeds from real estate notes payable . . . . . . . . . . . . . . . . . . . . . . . . 20,815 8,809
Payments on real estate notes payable . . . . . . . . . . . . . . . . . . . . . . . . . (4,399) (11,761)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . (16,609) (19,081)
Payables to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (463) (1,007)
Income taxes recoverable/payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,343 (2,767)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,582) 2,501
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (378) (552)
--------- ---------
Net cash used in operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,577) (15,819)
--------- ---------
INVESTING ACTIVITIES
Expenditures for furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,089) (605)
Acquisitions of real estate service companies . . . . . . . . . . . . . . . . . . . . . . . . (20,863) -
Investments in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . (597) (1,537)
Distributions from unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 2,977 564
Contributions from minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 457
Distributions to minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,994) (145)
--------- ---------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,395) (1,266)
--------- ---------
FINANCING ACTIVITIES
Principal payments on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,390) (1,819)
Proceeds from debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,615 2,306
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 -
Collections of stockholder loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 -
--------- ---------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . 32,390 487
--------- ---------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . (31,582) (16,598)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 96,747 58,505
--------- ---------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $65,165 $41,907
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
3
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
1. GENERAL
The consolidated interim financial statements of Trammell Crow Company (the
Company) included herein have been prepared in accordance with the requirements
for interim financial statements and do not include all disclosures required
under generally accepted accounting principles for complete financial
statements. These financial statements should be read in conjunction with the
consolidated financial statements included in the Company's annual report on
Form 10-K for the year ended December 31, 1997. In the opinion of management,
all adjustments and eliminations, consisting only of recurring adjustments,
necessary for a fair presentation of the financial statements for the interim
periods have been made. Interim results of operations are not necessarily
indicative of the results to be expected for the full year.
The Company has experienced and expects to continue to experience quarterly
variations in revenues and net income as a result of several factors, including
the timing of transactions, the commencement of new contracts, revenue mix and
the timing of additional selling, general and administrative expenses to support
new business activities. The Company's revenues tend to be higher in the last
quarter of the year than in the first three quarters because its clients have
demonstrated a tendency to close transactions toward the end of the year, which
causes the Company to earn more of its revenue under transaction-oriented
service contracts in the last quarter of the year. In addition, an increasing
percentage of the Company's property management and infrastructure management
contracts provide for incentive payments if the Company achieves certain
performance targets. Such incentive payments are generally earned in the fourth
quarter.
USE OF ESTIMATES
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INCOME TAXES
The provision for income taxes has been included in the accompanying
financial statements based on an estimated annual effective tax rate. The
differences between the provisions for income taxes and amounts computed by
applying the statutory federal income tax rates to income are primarily a result
of amortization of goodwill, state income taxes and non-deductible meals and
entertainment expenditures.
EARNINGS PER SHARE
Weighted average shares outstanding used to calculate basic earnings per
share were 33,899,574. Weighted average shares outstanding of 36,115,203 used to
calculate diluted earnings per share includes employee stock options to purchase
2,215,629 shares of common stock as these options are dilutive.
2. REAL ESTATE HELD FOR SALE
During the three months ended March 31, 1998, the Company sold three real
estate projects for an aggregate sales price of $10,209, resulting in a gain on
disposition of $866. During the three months ended March 31, 1997, the Company
sold six real estate projects for an aggregate sales price of $13,864, resulting
in a gain on disposition of $1,124.
In March 1997, the Company contributed real estate held for sale of $35,400
and the related $35,400 note payable to a partnership and received a 16% limited
partner interest. No gain was recognized.
4
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
3. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
Operating results for unconsolidated subsidiaries in which the Company has
an investment were as follows:
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31, 1998
--------------
<S> <C>
Total revenues. . . . . . . . . . . . . . $ 13,682
Total expense . . . . . . . . . . . . . . (8,128)
--------
Net income. . . . . . . . . . . . . . . $5,554
--------
--------
</TABLE>
4. STOCKHOLDERS' EQUITY
A summary of the Company's stock option activity for the three months ended
March 31, 1998 is as follows:
<TABLE>
<CAPTION>
EXERCISE PRICE OF $3.85 EXERCISE PRICE OF $17.50 TO
(BELOW MARKET PRICE AT $29.44 (AT MARKET PRICE AT
GRANT DATE) GRANT DATE) TOTAL
----------------------- --------------------------- -----
<S> <C> <C> <C>
OPTIONS OUTSTANDING:
December 31, 1997. . . . . . . . . . . . . . . . . . 2,423,769 2,364,277 4,788,046
Granted . . . . . . . . . . . . . . . . . . . . . . . - 118,943 118,943
Exercised . . . . . . . . . . . . . . . . . . . . . . (19,378) - (19,378)
Forfeited . . . . . . . . . . . . . . . . . . . . . . - (38,866) (38,866)
Expired . . . . . . . . . . . . . . . . . . . . . . . - - -
--------- --------- ---------
March 31, 1998. . . . . . . . . . . . . . . . . . . . 2,404,391 2,444,354 4,848,745
--------- --------- ---------
OPTIONS EXERCISABLE AT MARCH 31, 1998 2,404,391 15,822 2,381,347
--------- --------- ---------
--------- --------- ---------
</TABLE>
5. ACQUISITION OF TOOLEY & COMPANY
On March 16, 1998, the Company purchased all of the issued and outstanding
capital stock of Tooley & Company, Inc. (Tooley), a California real estate
services company primarily engaged in office management and leasing. The
Company paid cash of $23,100 for the capital stock, and paid an additional
$1,000 to two of the principals of Tooley as consideration for non-compete
agreements. The Company also agreed to pay the seller an additional $3,000 of
purchase price if Tooley achieves certain performance standards in the future,
as well as certain payments based upon the future performance of certain of
Tooley's projects. In connection with the acquisition, which was accounted for
using the purchase method of accounting, the Company recorded goodwill of
$17,375. The operations of Tooley are included in the Company's operations from
the date of acquisition. The Company borrowed $23,000 under its credit facility
to fund the purchase.
5
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
6. CONTINGENCIES
At March 31, 1998, the Company has guaranteed $3,775 of real estate notes
payable of others. These notes are collateralized by the underlying real estate.
The Company has outstanding letters of credit totaling $12,165 at March 31,
1998, which expire at varying dates through July 1999.
In addition, at March 31, 1998, the Company has several completion and
budget guarantees relating to development projects. Management does not expect
to incur any material losses under these guarantees.
The Company and its subsidiaries are defendants in lawsuits that arose in
the normal course of business. In management's judgment, the ultimate liability,
if any, from such legal proceedings will not have a material effect on the
Company's financial position.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and the notes thereto included in Item 1 of
this Quarterly Report on Form 10-Q.
OVERVIEW
Trammell Crow Company is one of the largest diversified commercial real
estate service firms in the United States. As a means of addressing the
comprehensive real estate service requirements of its diverse group of clients,
the Company is organized into five principal lines of business. Property
management services include serving the clients' needs with respect to all
aspects of building operations, tenant relations and oversight of building
improvement processes, primarily for building owners who do not occupy the
properties managed by the Company. Brokerage services include advising buyers,
sellers, landlords and tenants in connection with the sale and leasing of
office, industrial and retail space and land. Infrastructure management entails
providing comprehensive day-to-day occupancy related services, principally to
large corporations which occupy commercial facilities in multiple locations.
Specific infrastructure management services include administration, day-to-day
maintenance and repair of client occupied facilities and strategic functions
such as space planning, relocation coordination, facilities management and
portfolio management. The development and construction services provided by the
Company include financial planning, site acquisition, procurement of approvals
and permits, design and engineering coordination, construction bidding and
management and tenant finish coordination, project close-out and user move
coordination, general contracting and project finance advisory services. The
Company's retail services business provides tenant representation, disposition,
development and financial services to national and global retail customers.
Summarized operating data by business line for the quarters ended March 31, 1997
and 1998 (in thousands):
<TABLE>
<CAPTION>
Property Infrastructure
Management Brokerage Management
------------------ ------------------ ------------------
1997 1998 1997 1998 1997 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Service revenues . . . . . . . . . . . . $22,024 $24,887 $16,935 $25,533 $14,569 $22,890
Income from unconsolidated
subsidiaries. . . . . . . . . . . . . - - - - - -
Gain on disposition of real estate . . . - - - - - -
Other. . . . . . . . . . . . . . . . . . 1,407 1,487 144 68 150 34
------- ------- ------- ------- ------- -------
Total revenues . . . . . . . . . . . . . 23,431 26,374 17,079 25,601 14,719 22,924
Operating costs and expenses . . . . . . 19,971 21,546 17,472 23,240 14,085 20,858
------- ------- ------- ------- ------- -------
Income (loss) before income taxes. . . . $ 3,460 $ 4,828 $ (393) $ 2,361 $ 634 $ 2,066
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
EBITDA, as adjusted (1). . . . . . . . . $ 4,872 $ 5,342 $ 1,049 $ 2,798 $ 1,396 $ 2,387
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
<CAPTION>
Development and
Construction Retail Total
------------------ ------------------ ------------------
1997 1998 1997 1998 1997 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Service revenues . . . . . . . . . . . . $ 5,206 $ 8,891 $ 325 $2,727 $59,059 $84,928
Income from unconsolidated
Subsidiaries . . . . . . . . . . . . . . 58 2,415 - - 58 2,415
Gain on disposition of real estate . . . 158 581 966 285 1,124 866
Other. . . . . . . . . . . . . . . . . . 152 425 4 28 1,857 2,042
-------- ------- ------ ------ ------- -------
Total revenues . . . . . . . . . . . . . 5,574 12,312 1,295 3,040 62,098 90,251
Operating costs and expenses . . . . . . 6,807 11,411 1,139 2,628 59,474 79,683
-------- ------- ------ ------ ------- -------
Income (loss) before income taxes. . . . $(1,233) $ 901 $ 156 $ 412 $ 2,624 $10,568
-------- ------- ------ ------ ------- -------
-------- ------- ------ ------ ------- -------
EBITDA, as adjusted (1). . . . . . . . . $ (485) $ 2,350 $ 340 $ 771 $ 7,172 $13,648
-------- ------- ------ ------ ------- -------
-------- ------- ------ ------ ------- -------
</TABLE>
7
<PAGE>
(1) EBITDA, as adjusted, represents earnings before interest, income taxes,
depreciation and amortization, royalty and consulting fees and profit
sharing. Management believes that EBITDA, as adjusted, can be a
meaningful measure of the Company's operating performance, cash generation
and ability to service debt. However, EBITDA, as adjusted, should not be
considered as an alternative either to: (i) net earnings (determined in
accordance with GAAP); (ii) operating cash flow (determined in accordance
with GAAP); or (iii) liquidity. there can be no assurance that the
Company's calculation of EBITDA, as adjusted, is comparable to similarly
titled items reported by other companies.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997
REVENUES. The Company's total revenues grew $28.2 million, or 45.4%, to
$90.3 million in the first quarter of 1998 from $62.1 million in the first
quarter of 1997.
Property management services revenue, which represented 27.6% of the
Company's total revenue in the first quarter of 1998, increased $2.9 million, or
13.2%, to $24.9 million in the first quarter of 1998 from $22.0 million in the
first quarter of 1997. This increase was partially due to an overall increase in
the number of square feet under management (resulting primarily from the
acquisition of Tooley). In addition, a general increase in market rents and
decrease in vacancies has resulted in higher revenues for properties managed,
which in turn results in higher management fees to the Company since fees are
generally based on a percentage of property revenues.
Brokerage services revenue, which represented 28.3% of the Company's first
quarter 1998 total revenue, increased $8.6 million, or 50.9%, to $25.5 million
in the first quarter of 1998 from $16.9 million in the first quarter of 1997.
The revenue growth resulted from an increase in the number of brokerage
transactions fueled by an increase of 48% in the average number of brokers
employed during the first quarter of 1998, as compared to the first quarter of
1997, coupled with a general increase in market rents.
Infrastructure management services revenues, which represented 25.4% of the
Company's first quarter 1998 total revenue, increased $8.3 million, or 56.8%, to
$22.9 million in the first quarter of 1998 from $14.6 million in the first
quarter of 1997. The revenue growth resulted primarily from the addition of
three significant new customers in the financial services industry, and
expansion of services provided to another major customer.
On a combined basis, development and construction service fees, gain on
disposition of real estate and income from unconsolidated subsidiaries totaled
$12.2 million in the first quarter of 1998, which represented 13.5% of the
Company's first quarter 1998 total revenue. These combined revenues increased
$5.8 million, or 90.1%, from $6.4 million in the first quarter of 1997. This
revenue growth was primarily due to incentive development fees earned on a
significant transaction in the first quarter of 1998, and income from
unconsolidated subsidiaries resulting from sale of the underlying real estate.
Retail services revenue, which represented 3.0% of the Company's first
quarter 1998 total revenue, increased $2.4 million, or 800%, to $2.7 million in
the first quarter of 1998 from $.3 million in the first quarter of 1997,
primarily as a result of the acquisition of Doppelt & Company in August 1997.
OPERATING COSTS AND EXPENSES. The Company's operating costs and expenses
increased by $20.2 million, or 33.9%, to $79.7 million in the first quarter of
1998 from $59.5 million in the first quarter of 1997. A 35.3% increase in
salaries, wages, and benefits is primarily due to the increased staffing
required for the infrastructure management services business, as well as
increases in staffing in other parts of the Company to support growth.
Additionally, compensation increased in the first quarter of 1998 from the
comparable period in 1997 due to the impact of the new compensation structure
adopted in connection with the Company's initial public offering (the
"Offering") in the fourth quarter of 1997. The increase in commissions of 56.4%
corresponds to the growth in the Company's brokerage services revenues. The
increase in general and administrative expenses is primarily due to a $2 million
increase in rent, travel and overhead costs of the infrastructure management
services business to accommodate the growth in the number of employees, coupled
with a company-wide increase in administrative costs resulting from the overall
increase in number of employees. The Company had no profit sharing expense in
the first quarter of 1998 as compared to $2.6 million in the first quarter of
1997, as the future profits participation under the Company's Profit Sharing
Plan were terminated in conjunction with the Offering. Additionally, the Company
had no royalty or consulting expenses in the first quarter of 1998 as compared
to $.5 million in the first quarter of 1997, because certain royalty and
consulting arrangements to which the Company was a party were terminated
concurrent with the Offering. Interest expense increased in the first quarter
of 1998 as a result of interest expensed on real estate development projects
that were completed and operated in 1998.
8
<PAGE>
INCOME BEFORE INCOME TAXES. The Company's income before income taxes increased
$8.0 million, to $10.6 million in the first quarter of 1998 from $2.6 million in
the first quarter of 1997 due to the increases in revenues and expenses
described above.
NET INCOME. Net income increased $4.7 million, to $6.3 million in the first
quarter of 1998 from $1.6 million in the first quarter of 1997.
SEASONALITY
The Company has experienced and expects to continue to experience quarterly
variations in revenues and net income as a result of several factors, including
the timing of transactions, the commencement of new contracts, revenue mix and
the timing of additional selling, general and administrative expenses to support
new business activities. The Company's revenues tend to be higher in the last
quarter of the year than in the first three quarters because its clients have
demonstrated a tendency to close transactions toward the end of the year, which
causes the Company to earn more of its revenue under transaction-oriented
service contracts in the last quarter of the year. In addition, an increasing
percentage of the Company's property management and infrastructure management
contracts provide for incentive payments if the Company achieves certain
performance targets. Such incentive payments are generally earned in the fourth
quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital resources requirements include
expenditures for real estate held for sale and payments on notes payable
associated with its development and construction activities; the funding of
working capital needs, primarily accounts receivable from its clients and
affiliates; and the funding of capital investments. Historically, the Company
has financed its operations, investments and acquisitions with internally
generated funds, and additional liquidity has been available to the Company
through deferred compensation arrangements under its Profit Sharing Plan. The
Company terminated future profits participation under the Profit Sharing Plan in
connection with the Offering, and the Company expects that its cash flow from
operations in 1998 and future periods will be greater than in prior years as a
result of this change. In addition, the Company has historically financed its
development and construction services activities with construction loans secured
by underlying real estate.
Net cash flow used in operating activities totaled $41.6 million for the
three months ended March 31, 1998, compared to $15.8 million in the same period
in 1997. The increased use of cash in operating activities is primarily due to a
significant increase in development activity and related expenditures for real
estate held for sale, and payment in 1998 of profit sharing distributions
totaling $8.9 million.
Net cash flow used in investing activities totaled $22.4 million for the
three months ended March 31, 1998, compared to $1.3 million for the same period
in 1997. This change is primarily attributable to the acquisition of Tooley &
Company in March 1998.
Net cash flow provided by financing activities totaled $32.4 million for
the three months ended March 31, 1998, compared to $.5 million for the same
period in 1997. The increase in cash provided by financing activities is
primarily due to borrowings of $33 million as described below.
9
<PAGE>
On December 1, 1997, the Company obtained a $150 million master line of
credit from NationsBank of Texas, N.A., a national banking association (the
"NationsBank Facility"). The Company has borrowed, and expects to continue to
borrow, under the NationsBank Facility to finance future strategic acquisitions,
fund its co-investment activities and provide the Company with an additional
source of working capital. The NationsBank Facility contains various covenants
such as the maintenance of minimum equity and liquidity and covenants relating
to certain key financial data. The NationsBank Facility also includes
limitations on payment of cash dividends or other distributions of assets and
certain restrictions on investments and acquisitions that can be made by the
Company. The covenants contained in the NationsBank Facility and the amount of
the Company's other borrowings and contingent liabilities may have the effect of
limiting the credit available to the Company under the NationsBank Facility to
an amount less than the $150 million commitment. As of March 31, 1998, the
Company had borrowed $33.0 million under the NationsBank Facility, including
$10.0 million to fund its co-investment activities and $23.0 million for the
acquisition of Tooley, and the amount available thereunder was approximately
$113.8 million. In January and April 1998, the Company amended the NationsBank
Facility to change limitations imposed by certain of the covenants. The shares
of certain wholly-owned subsidiaries having 5% or more of the consolidated
assets, revenues or earnings of the Company, and subsidiaries which are engaged
primarily in the business of real estate development and ownership, whose assets
are not subject to any financing, having more than 5% of the consolidated
assets, revenues or earnings of the Company, are pledged as security for this
credit facility.
The Company intends to retain earnings to finance its growth and,
therefore, does not anticipate paying any dividends in the foreseeable future.
The Company believes that funds generated from operations, together with
existing cash and available credit under the NationsBank Facility will be
sufficient to finance its current operations, planned capital expenditure
requirements, payment obligations for development purchases and internal growth
for the foreseeable future. The Company's need, if any, to raise additional
funds to meet its working capital and capital requirements will depend upon
numerous factors, including the success and pace of its implementation of its
growth strategy. The Company regularly monitors capital raising alternatives to
be able to take advantage of available avenues to supplement its working
capital, including strategic corporate partnerships or other alliances, bank
borrowings and the sale of equity and/or debt securities.
IMPACT OF YEAR 2000
The Company has begun to assess the impact of the Year 2000 issue on its
operations, including the processing of its own transactions and the processing
of transactions for customers under both property management contracts and
infrastructure management services contracts.
Based on preliminary assessments, commenced in 1997, of the systems and
software used to process its own transactions, the Company believes that such
systems and software are Year 2000 compliant, or can be modified or replaced on
a timely basis to be compliant, without material cost to the Company. The
Company has recently begun assessments of the systems and software used to
process certain of its customers' transactions. Until the Company completes a
thorough assessment of its systems and software (including systems and software
used to process its customers' transactions), the Company cannot estimate the
costs and time period that will be required for any indicated modifications or
replacements of such systems and software. The Company expects to finish such
assessment, design an action plan (which will include specific remediation steps
and timetables, expected costs, and identification of the resources required for
implementation) and begin implementation of such action plan during 1998.
The Company also recognizes that Year 2000 issues could have an extensive
impact on the physical operation of buildings managed by the Company, such as
operation of elevators and energy management and security access systems.
Included in the Company's plans for addressing Year 2000 issues is a program to
assist the Company's customers with the identification and remediation of Year
2000 issues associated with critical systems at the customers' properties.
In addition, the Company has begun discussions with its vendors regarding
the need to be Year 2000 compliant. Although the Company has no reason to
believe that its vendors are not Year 2000 compliant (or will not be compliant
on a timely basis), the Company is unable to determine at this time the effect
that non-compliance by vendors would have on the Company's operations.
FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this Quarterly
Report on Form 10-Q, including without limitation statements containing the
words "believes" "anticipates," "expects" and words of similar import, are
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other matters which may cause the actual
results, performance or achievements of the Company or industry results to be
materially
10
<PAGE>
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks, uncertainties and other
matters include, but are not limited to,(i) the fact that a significant portion
of the Company's historic revenues have been derived from significant business
activities with certain entities which are affiliated with a significant
stockholder, (ii) the conduct of investment or development activities by
affiliates that are directly competitive with the Company's activities,
(iii) confusion that may be created in the market place between the Company and
such affiliates, (iv) the control over the affairs and policies of the Company
that could be exercised by the Company's directors, officers, employees and
affiliates due to their significant stock ownership, (v) the Company's ability
to continue to pursue an aggressive growth strategy (including through
acquisitions), (vi) the ability of the Company to manage fluctuations in the
Company's net earnings and cash flow which could result from the Company's
increased participation as a principal in real estate investments, (vii) the
Company's ability to compete in highly competitive national and local business
lines and (viii) the Company's ability to attract and retain qualified personnel
in all areas of its business (particularly management). In addition, the
Company's ability to achieve certain anticipated results will be subject to
other factors affecting the Company's business that are beyond the Company's
control, including but not limited to general economic conditions and the effect
of government regulation on the conduct of the Company's business. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such statements or publicly announce any updates or revisions to any of the
forward-looking statements contained herein to reflect any change in the
Company's expectation with regard thereto or any change in events, conditions,
circumstances or assumptions underlying such statements.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation incidental to its
business. In the Company's opinion, no litigation to which the Company is
currently a party, if decided adversely to the Company, is likely to have a
material adverse effect on the Company's results of operation or financial
condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 First Amendment of Credit Agreement dated as of December
1, 1997 among the Company, NationsBank of Texas, N.A. and
Bankers Trust Company - January 29, 1998
10.2 Second Amendment of Credit Agreement dated as of December
1, 1997 among the Company, NationsBank of Texas, N.A. and
Bankers Trust Company - April 27, 1998
27 Financial Data Schedule
(b) none
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRAMMELL CROW COMPANY
By: /s/ William P. Leiser
------------------------------------------
William P. Leiser
EXECUTIVE VICE PRESIDENT AND TREASURER
(CHIEF ACCOUNTING OFFICER AND DULY
AUTHORIZED TO SIGN THIS REPORT ON BEHALF OF
THE REGISTRANT)
Date: July 17, 1998
13
<PAGE>
FIRST AMENDMENT OF CREDIT AGREEMENT
THIS FIRST AMENDMENT OF CREDIT AGREEMENT (this "AMENDMENT") is entered
into to be effective as of January 29, 1998, between TRAMMELL CROW COMPANY, a
Delaware corporation ("BORROWER"), each of the banks or other lending
institutions which is a signatory to this Amendment (collectively,
"LENDERS"), NATIONSBANK OF TEXAS, N.A., a national banking association, as
Administrative Agent (in such capacity, together with its successors in such
capacity, "ADMINISTRATIVE AGENT"), and BANKERS TRUST COMPANY, as
Documentation Agent (in such capacity, together with its successors in such
capacity, "DOCUMENTATION AGENT").
R E C I T A L S
A. Borrower, Lenders, Administrative Agent, and Documentation Agent are
parties to the Credit Agreement dated as of December 1, 1997 (as renewed,
extended, modified, and amended from time-to-time, the "CREDIT AGREEMENT"),
providing for a $150,000,000.00 revolving line of credit.
B. Capitalized terms used herein shall, unless otherwise indicated, have
the respective meanings set forth in the Credit Agreement.
C. Borrower, Administrative Agent, Documentation Agent, and Lenders
desire to modify certain provisions contained in the Credit Agreement, subject
to the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, Lenders, Administrative
Agent, and Documentation Agent agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT.
(a) The definition of "LIQUID ASSETS" in SECTION 1 of the Credit Agreement
is hereby deleted in its entirety and replaced with the following:
"LIQUID ASSETS" means, as of any date, THE SUM OF (a) the
Companies' Cash and Cash Equivalents and (b) the lesser of (i) the
Unused Commitment as of such date, and (ii) the maximum amount of
Loans that Borrower could, subject to the conditions precedent set
forth herein, receive on such date from Lenders.
(b) SECTION 2.3(b)(ii) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(ii) Borrower shall pay to Administrative Agent, for the ratable
account of Lenders, a quarterly unused fee (prorated for partial
quarters) equal to THE SUM OF the amounts obtained by multiplying the
average Unused Commitment TIMES one-quarter of one percent (0.25%).
Such commitment fee shall accrue commencing on March 1, 1998, and
shall be due and payable on the last day of each March, June,
September, and December during the term hereof, commencing on
March 31, 1998, and on the Maturity Date, based upon the Unused
Commitment for each day during the quarter ending on such date.
Solely for purposes of this SECTION 2.3(b)(ii), "RATABLE" means, for
any calculation period, with respect to any Lender, the proportion
that (A) the average daily Unused Commitment of such
FIRST AMENDMENT
<PAGE>
Lender during such period bears to (B) the aggregate amount of the
average daily Unused Commitment of all Lenders during such period.
(c) SECTION 7 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
SECTION 7
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
7.1 FAILURE TO MAKE PAYMENT. Failure by Borrower to pay any
installment of, or principal of, any Loan when due, whether at stated
maturity, by acceleration, by notice of voluntary prepayment, by mandatory
prepayment, or otherwise; or failure by Borrower to pay any interest on any
Loan or any fee or any other amount due under this Agreement within five
(5) days after the date due; or
7.2 DEFAULT IN OTHER AGREEMENTS.
(a) Failure of Borrower or any Significant Subsidiary to pay when due
(i) any principal of or interest on any Indebtedness (other than the
Obligations), or (ii) any Contingent Obligation in an individual principal
amount of $5,000,000 or more or any Contingent Obligations in an aggregate
principal amount of $10,000,000 or more, in each case beyond the end of any
grace period provided therefor; or
(b) Breach or default by Borrower or any Significant Subsidiary
beyond the end of any grace period provided therefor with respect to any
other material term of (i) any evidence of any Indebtedness or any
Contingent Obligation in an individual principal amount of $5,000,000 or
more or any Contingent Obligations in an aggregate principal amount of
$10,000,000 or more, or (ii) any loan agreement, mortgage, indenture, or
other agreement relating to such Indebtedness or Contingent Obligations, if
the effect of such breach or default is to cause, or to permit the holder
or holders of such Indebtedness or Contingent Obligations (or a trustee on
behalf of such holder or holders) to cause, such Indebtedness or Contingent
Obligations to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case
may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise); or
7.3 BREACH OF CERTAIN COVENANTS. Failure of any Company to perform
or comply with any term or condition contained in SECTIONS 2.5, 5.1, or 5.2
or SECTION 6; or
7.4 BREACH OF WARRANTY. Any representation, warranty, certification,
or other statement made by any Company in any Loan Document or in any
statement or certificate at any time given by any Company in writing
pursuant hereto or thereto or in connection herewith or therewith shall be
false in any material respect on the date as of which made; or
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS. Any Company shall default
in the performance of or compliance with any term contained in this
Agreement or any of the other Loan
FIRST AMENDMENT -2-
<PAGE>
Documents, other than any such term referred to in any other section of
this SECTION 7 and such default shall not have been remedied or waived
within thirty (30) days after the earlier of an officer of Borrower
becoming aware of such default, or receipt by Borrower of notice from
Administrative Agent or any Lender of such default; or
7.6 INVOLUNTARY BANKRUPTCY, APPOINTMENT OF RECEIVER, ETC.
(a) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Borrower or any Significant Subsidiary in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency, or similar law now or hereafter in effect, which
decree or order is not stayed; or any other similar relief shall be granted
under any applicable Legal Requirement; or
(b) An involuntary case shall be commenced against Borrower or any
Significant Subsidiary under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency, or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian, or other officer having similar powers over Borrower or any
Significant Subsidiary, or over all or a substantial part of its property,
shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee, or other custodian of Borrower
or any Significant Subsidiary for all or a substantial part of its
property; or a warrant of attachment, execution, or similar process shall
have been issued against any substantial part of the property of Borrower
or any Significant Subsidiary, and any such event described in this CLAUSE
(b) shall continue for sixty (60) days unless dismissed, bonded, or
discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(a) Borrower or any Significant Subsidiary shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency, or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver, trustee, or other
custodian for all or a substantial part of its property; or Borrower or any
Significant Subsidiary shall make any assignment for the benefit of
creditors; or
(b) Borrower or any Significant Subsidiary shall be unable, or shall
fail generally, or shall admit in writing its inability, to pay its debts
as such debts become due; or the Board of Directors of Borrower or any
Significant Subsidiary (or any committee) thereof shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in CLAUSE (a) above or this CLAUSE (b); or
7.8 JUDGMENTS AND ATTACHMENTS. Any money judgment, writ or warrant
of attachment, or similar process involving in any individual case an
amount in excess of $250,000, or in the aggregate at any time an amount in
excess of $500,000 (in either case not adequately covered by insurance as
to which a solvent and unaffiliated insurance company has acknowledged
coverage) shall be entered or filed against Borrower or any Significant
Subsidiary or any of its or their respective assets and shall remain
undischarged, unvacated, unbonded, or unstayed for a period
FIRST AMENDMENT -3-
<PAGE>
of sixty (60) days (or in any event later than five (5) days prior to the
date of any proposed sale thereunder); or
7.9 DISSOLUTION. Any order, judgment, or decree shall be entered
against Borrower or any Significant Subsidiary decreeing the dissolution or
split up of Borrower or such Significant Subsidiary and such order shall
remain undischarged or unstayed for a period in excess of thirty (30) days;
or
7.10 EMPLOYEE BENEFIT PLANS. There shall occur one or more ERISA
Events which individually or in the aggregate results in or might
reasonably be expected to result in liability of Borrower or any of its
ERISA Affiliates in excess of $1,000,000 during the term of this Agreement;
or there shall exist an amount of unfunded benefit liabilities (as defined
in SECTION 4001(a)(18) of ERISA), individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), which exceeds
$1,000,000; or
7.11 CHANGE IN CONTROL. A Change of Control shall have occurred; or
7.12 INVALIDITY OF GUARANTY. Any Guaranty of this Agreement for any
reason, other than the satisfaction in full of all Obligations, is declared
by a court of competent jurisdiction to be null and void, or any Subsidiary
of Borrower denies that it has any further liability, including without
limitation with respect to future advances by Lenders, under its Guaranty
or gives notice to such effect; or
7.13 FAILURE OF SECURITY. From and after the execution,
acknowledgment, and filing of any Collateral Document by any Obligor, any
such Collateral Document shall be revoked by such Obligor or shall be
declared by a court of competent jurisdiction to be null and void or shall
cease to be in full force and effect as a result of any change in any Legal
Requirement; or Lenders shall fail to have a valid, perfected, and
enforceable first priority Lien (subject to Permitted Encumbrances) on any
Obligor's right, title, and interest in all the Collateral as a result of
any change in any Legal Requirements, the expiration of any required
filings or recordations with respect to the Collateral Documents, the
declaration by a court of competent jurisdiction that such Lien is null and
void, or the imposition of any priming Lien under applicable Legal
Requirement; or any Obligor shall contest in any manner that such
Collateral Document constitutes its valid and enforceable agreement or
shall assert in any manner that it has no further obligation or liability
under such Collateral Documents; or
7.14 CHANGE IN BOARD OF DIRECTORS. During any period of twelve (12)
consecutive calendar months, Continuing Directors shall cease to constitute
a majority of the Board of Directors of Borrower;
THEN (a) upon the occurrence of any Event of Default described in SECTION 7.6 or
7.7, each of (i) the unpaid principal amount of and accrued interest on the
Loans, and (ii) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest, notice of acceleration,
notice of intention to accelerate, or other requirements of any kind, all of
which are hereby expressly waived by Borrower, and the obligation of each Lender
to make any Loan, shall thereupon terminate, and (b) upon the occurrence and
during the continuation of any other Event of Default, Administrative Agent
shall, upon the
FIRST AMENDMENT -4-
<PAGE>
written request or with the written consent of Requisite Lenders, by written
notice to Borrower, declare all or any portion of the amounts described in
CLAUSES (i) and (ii) above to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Lender to make any
Loan, thereupon shall terminate.
(d) SECTION 9.5(a) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(a) No amendment, modification, termination, or waiver of any
provision of this Agreement, the Notes, or the other Loan Documents, and no
consent to any departure by Borrower therefrom, shall in any event be
effective without the written concurrence of Requisite Lenders; PROVIDED
THAT any such amendment, modification, termination, waiver, or consent
which does any of the following shall not be effective unless evidenced by
a writing signed by or on behalf of all Lenders: (i) increases the amount
of any of the Commitments or reduces the principal amount of any of the
Loans; (ii) changes in any manner the definition of "PRO RATA SHARE" or the
definition of "REQUISITE LENDERS;" (iii) changes in any manner any
provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of all Lenders; (iv) postpones the scheduled final
maturity date of any of the Loans; (v) changes the rate or amount of any
interest or fees payable hereunder; (vi) increases the maximum duration of
Interest Periods permitted hereunder; (vii) changes in any manner the
provisions contained in SECTION 7.1 or this SECTION 9.5; or (viii) releases
any Collateral.
2. AMENDMENT OF CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS.
(a) All references in the Loan Documents to the Credit Agreement shall
henceforth include references to the Credit Agreement, as modified and amended
by this Amendment, and as may, from time to time, be further amended, modified,
restated, extended, renewed, and/or increased.
(b) Any and all of the terms and provisions of the Loan Documents are
hereby amended and modified wherever necessary, even though not specifically
addressed herein, so as to conform to the amendments and modifications set forth
herein.
3. RATIFICATIONS. Borrower (a) ratifies and confirms all provisions of
the Loan Documents as amended by this Amendment, (b) ratifies and confirms that
all guaranties, assurances, and Liens granted, conveyed, or assigned to the
Credit Parties under the Loan Documents are not released, reduced, or otherwise
adversely affected by this Amendment and continue to guarantee, assure, and
secure full payment and performance of the present and future Obligation, and
(c) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional documents, and certificates as
Administrative Agent may reasonably request in order to create, perfect,
preserve, and protect those guaranties, assurances, and Liens.
4. REPRESENTATIONS. Borrower represents and warrants to the Credit
Parties that as of the date of this Amendment: (a) this Amendment and the other
documents executed in connection therewith (collectively, the "AMENDMENT
DOCUMENTS") have been duly authorized, executed, and delivered by Borrower and
each of the other Companies that are parties to the Amendment Documents; (b) no
action of, or filing with, any Governmental Authority is required to authorize,
or is otherwise required in connection with, the execution, delivery, and
performance by Borrower or the other Companies of the Amendment
FIRST AMENDMENT -5-
<PAGE>
Documents to which they are a party; (c) the Loan Documents, as amended by
the Amendment Documents, are valid and binding upon Borrower and the other
Companies that are parties to the Amendment Documents and are enforceable
against Borrower and the other Companies in accordance with their respective
terms, except as limited by Debtor Relief Laws and general principles of
equity; (d) the execution, delivery, and performance by Borrower and the
other Companies to which they are a party of the Amendment Documents do not
require the consent of any other Person and do not and will not constitute a
violation of any Governmental Requirement, order of any Governmental
Authority, or material agreements to which Borrower or any other Company is a
party thereto or by which Borrower or any other Company is bound; (e) all
representations and warranties in the Loan Documents are true and correct in
all material respects on and as of the date of this Amendment, except to the
extent that (i) any of them speak to a different specific date, or (ii) the
facts on which any of them were based have been changed by transactions
contemplated or permitted by the Credit Agreement; and (f) both before and
after giving effect to the Amendment Documents, no Potential Default or Event
of Default exists.
5. CONDITIONS. This Amendment and the other Amendment Documents shall
not be effective unless and until:
(a) the Credit Parties shall have received the Amendment Documents, in
form and substance acceptable to the Credit Parties;
(b) the representations and warranties in this Amendment are true and
correct in all material respects on and as of the date of this Amendment, except
to the extent that (i) any of them speak to a different specific date, or (ii)
the facts on which any of them were based have been changed by transactions
contemplated or permitted by the Credit Agreement; and
(c) both before and after giving effect to this Amendment, no Potential
Default or Event of Default exists.
6. CONTINUED EFFECT. Except to the extent amended hereby or by any
documents executed in connection herewith, all terms, provisions, and conditions
of the Credit Agreement and the other Loan Documents, and all documents executed
in connection therewith, shall continue in full force and effect and shall
remain enforceable and binding in accordance with their respective terms.
7. MISCELLANEOUS. Unless stated otherwise (a) the singular number
includes the plural and VICE VERSA and words of any gender include each other
gender, in each case, as appropriate, (b) headings and captions may not be
construed in interpreting provisions, (c) this Amendment must be construed --
and its performance enforced -- under Texas law, (d) if any part of this
Amendment is for any reason found to be unenforceable, all other portions of it
nevertheless remain enforceable, and (e) this Amendment may be executed in any
number of counterparts with the same effect as if all signatories had signed the
same document, and all of those counterparts must be construed together to
constitute the same document.
8. ENTIRETIES. THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
AMENDED BY THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THE CREDIT AGREEMENT
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
FIRST AMENDMENT -6-
<PAGE>
9. PARTIES. This Amendment binds and inures to Borrower and the Credit
Parties and their respective successors and permitted assigns.
SIGNATURE PAGE TO FIRST AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE
AGENT, BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
EXECUTED as of the day and year first mentioned.
TRAMMELL CROW COMPANY,
a Delaware corporation,
as Borrower
By: /s/ Richard H. Coe
------------------------------
Name: Richard H. Coe
-------------------------
Title: Vice President
------------------------
-7-
<PAGE>
SIGNATURE PAGE TO FIRST AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent and a Lender
By: /s/ John B. Lamb
---------------------------------
Name: John B. Lamb
----------------------------
Title: SVP
---------------------------
<PAGE>
SIGNATURE PAGE TO FIRST AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
BANKERS TRUST COMPANY,
as Documentation Agent and a Lender
By: /s/ Alexander B.V. Johnson
---------------------------------
Name: Alexander B.V. Johnson
----------------------------
Title: Managing Director
---------------------------
<PAGE>
SIGNATURE PAGE TO FIRST AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as
a Lender
By: /s/ Sam Jenkins
---------------------------------
Name: Sam Jenkins
----------------------------
Title: Senior V.P.
---------------------------
<PAGE>
To induce the Credit Parties to enter into this Amendment, the undersigned
jointly and severally (a) consent and agree to the Amendment Documents'
execution and delivery, (b) ratify and confirm that all guaranties, assurances,
and Liens granted, conveyed, or assigned to the Credit Parties under the Loan
Documents are not released, diminished, impaired, reduced, or otherwise
adversely affected by the Amendment Documents and continue to guarantee, assure,
and secure the full payment and performance of all present and future Obligation
(except to the extent specifically limited by the terms of such guaranties,
assurances, or Liens), (c) agree to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional guaranties,
assignments, security agreements, deeds of trust, mortgages, and other
agreements, documents, instruments, and certificates as Administrative Agent may
reasonably deem necessary or appropriate in order to create, perfect, preserve,
and protect those guaranties, assurances, and Liens, and (d) waive notice of
acceptance of this consent and agreement, which consent and agreement binds the
undersigned and their successors and permitted assigns and inures to the Credit
Parties and their respective successors and permitted assigns.
EACH OF THE CORPORATE GUARANTORS/PLEDGORS LISTED ON
SCHEDULE 1 ATTACHED HERETO (OTHER THAN THE CORPORATE
GUARANTORS BELOW)
By: /s/ Richard H. Coe
--------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW CENTRAL, LTD.
By: TCCT REAL ESTATE, INC., General Partner
By: /s/ Richard H. Coe
--------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW DALLAS/FORT WORTH, LTD.
By: TCDFW, INC., General Partner
By: /s/ Richard H. Coe
--------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW HOUSTON, LTD.
By: TC HOUSTON, INC., General Partner
FIRST AMENDMENT
<PAGE>
By: /s/ Richard H. Coe
--------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW DALLAS INDUSTRIAL, LTD.
By: TC DALLAS INDUSTRIAL, INC., General Partner
By: /s/ Richard H. Coe
--------------------------------------
Richard H. Coe
Authorized Officer
FIRST AMENDMENT
<PAGE>
TCCT #2, INC.
By: /s/ Christopher J. Nelson
--------------------------------------
Christopher J. Nelson
Authorized Officer
TCDFW #2, INC.
By: /s/ Christopher J. Nelson
--------------------------------------
Christopher J. Nelson
Authorized Officer
TCDI #2, INC.
By: /s/ Christopher J. Nelson
--------------------------------------
Christopher J. Nelson
Authorized Officer
TCH #2, INC.
By: /s/ Christopher J. Nelson
--------------------------------------
Christopher J. Nelson
Authorized Officer
FIRST AMENDMENT
<PAGE>
SCHEDULE 1
TC Atlanta, Inc.
TCCT Real Estate, Inc.
TCCT #2, Inc.
Trammell Crow Retail Services, Inc.
TC Carolinas, Inc.
TC Chicago, Inc.
TC Denver, Inc.
TCDFW, Inc.
TCDFW #2, Inc.
TC Dallas Industrial, Inc.
TCDI #2, Inc.
TC Houston, Inc.
TCH #2, Inc.
TC Tennessee, Inc.
TC MidAtlantic, Inc.
TC Northeast Metro, Inc.
TC New England, Inc.
Trammell Crow Realty Services, Inc.
TCC Risk Services, Inc.
TC Seattle, Inc.
Trammell Crow So. Cal., Inc.
Trammell Crow SE, Inc.
TC St. Louis, Inc.
Trammell Crow Corporate Services, Inc.
Trammell Crow Company, a Texas Corporation
Trammell Crow MW, Inc.
Trammell Crow NE, Inc.
Trammell Crow NW, Inc.
Trammell Crow Central Texas, Ltd.
Trammell Crow Dallas/Fort Worth, Ltd.
Trammell Crow Houston, Ltd.
Trammell Crow Dallas Industrial, Ltd.
FIRST AMENDMENT
<PAGE>
SECOND AMENDMENT OF CREDIT AGREEMENT
THIS SECOND AMENDMENT OF CREDIT AGREEMENT (this "AMENDMENT") is entered
into to be effective as of April 27, 1998, between TRAMMELL CROW COMPANY, a
Delaware corporation ("BORROWER"), each of the banks or other lending
institutions which is a signatory to this Amendment (collectively, "LENDERS"),
NATIONSBANK OF TEXAS, N.A., a national banking association, as Administrative
Agent (in such capacity, together with its successors in such capacity,
"ADMINISTRATIVE AGENT"), and BANKERS TRUST COMPANY, as Documentation Agent (in
such capacity, together with its successors in such capacity, "DOCUMENTATION
AGENT").
R E C I T A L S
A. Borrower, Lenders, Administrative Agent, and Documentation Agent are
parties to the Credit Agreement dated as of December 1, 1997 as amended by that
certain First Amendment to Credit Agreement dated as of January 29, 1998 (the
"FIRST AMENDMENT") (as modified, amended, renewed, and extended from time to
time, the "CREDIT AGREEMENT"), providing for a $150,000,000.00 revolving line of
credit.
B. Capitalized terms used herein shall, unless otherwise indicated, have
the respective meanings set forth in the Credit Agreement.
C. Borrower and the Credit Parties desire to modify certain provisions
contained in the Credit Agreement, subject to the terms and conditions set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, Lenders, Administrative
Agent, and Documentation Agent agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT.
(a) SECTION 1.1 of the Credit Agreement is hereby amended to delete the
definitions of "IMPLIED CAPITAL," "IMPUTED MULTIPLE," "LEVEL I," and "TOTAL
ASSET VALUE" in their entirety and replace such definitions with the following:
"IMPLIED CAPITAL" means, as of any date, THE PRODUCT OF (a) the
closing price on the immediately preceding trading day for Borrower's
common stock, as reported in THE WALL STREET JOURNAL, TIMES (b) THE SUM OF
(i) the number of issued and outstanding shares of common stock of Borrower
on such date, and (ii) the number of issued and outstanding shares of
common stock of Borrower that would be issued and outstanding on such date
if all options, warrants, and other securities, rights, or instruments that
are convertible into common stock of Borrower are exercised or converted on
such date.
"IMPUTED MULTIPLE" means, as of any date, (a) THE SUM OF (i) Implied
Capital, PLUS (ii) Total Liabilities, in each case as of such date, DIVIDED
BY (b) Adjusted EBITDA for the twelve (12) month period ending on such date
(if such date is the last day of a calendar month) or the last day of the
immediately preceding calendar month (if such date is not the last day of a
calendar month).
"LEVEL I" means such periods as the Total Leverage Ratio is greater
than or equal to 2.5 to 1.0 and (a) from the Closing Date through
December 31, 1998, less than 4.0 to 1.0, and (b) thereafter, less than 3.5
to 1.0.
SECOND AMENDMENT
<PAGE>
"TOTAL ASSET VALUE" means, as of any date, (a) if the Imputed Multiple
as of such date is equal to or greater than fifteen (15), then THE PRODUCT
OF (i) twelve (12) and (ii) Adjusted EBITDA for the twelve (12) month
period ending on such date (if such date is the last day of a calendar
month) or the last day of the immediately preceding calendar month (if such
date is not the last day of a calendar month), and (b) if the Imputed
Multiple as of such date is less than fifteen (15), then THE PRODUCT OF
(i) the LESSER of (A) ten (10), and (B) the Imputed Multiple as of such
date, and (ii) Adjusted EBITDA for the twelve (12) month period ending on
such date (if such date is the last day of a calendar month) or the last
day of the immediately preceding calendar month (if such date is not the
last day of a calendar month). For purposes of calculating Total Asset
Value, Adjusted EBITDA for any period shall be computed with respect to
Real Estate Investments, Subsidiaries, or other assets owned as of the date
of determination regardless of whether such Real Estate Investments,
Subsidiaries, or other assets were acquired during such period (subject to
adjustment satisfactory to Administrative Agent for any businesses or
assets not acquired in the relevant acquisition). No Adjusted EBITDA that
is derived from assets that are subject to any Lien (other than Permitted
Encumbrances) shall be reflected in the calculation of Total Asset Value.
(b) SECTION 2.5 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
2.5 USE OF PROCEEDS.
(a) LOANS AND LCS. The proceeds of the Loans shall be applied by
Borrower, and LCs shall be issued for the account of Borrower, for the
purposes described in the Recitals.
(b) MARGIN REGULATIONS. No portion of the proceeds of any Loan under
this Agreement shall be used by any Company in any manner that might cause
the Loans or the application of such proceeds to violate REGULATION G,
REGULATION U, REGULATION T, or REGULATION X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to
violate the Exchange Act, in each-case as in effect on the date or dates of
such borrowing and such use of proceeds.
(c) SECTION 6.4(g) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(g) MAXIMUM TOTAL LEVERAGE RATIO. Borrower shall not permit, as of
any date, the Total Leverage Ratio to exceed the ratio set forth opposite
such period below:
-------------------------------------------------------------
Period Ratio
-------------------------------------------------------------
Closing Date through 4.0 to 1.0
December 31, 1998
-------------------------------------------------------------
January 1, 1999 and thereafter 3.5 to 1.0
-------------------------------------------------------------
(d) SECTION 7 is hereby amended to add the following paragraph at the end
thereof:
SECOND AMENDMENT -2-
<PAGE>
If, as of the last day of any fiscal quarter of Borrower, the Implied
Multiple is less than fifteen (15) and, as a result, the calculation of
Total Asset Value utilizing a multiple of ten (10) instead of twelve (12)
(as provided in the definition of Total Asset Value) results in Borrower's
failure to comply with SECTIONS 6.4(f), (h), or (i) (a "NON-COMPLIANCE
EVENT"), then until THE EARLIER OF (i) the date that Borrower remedies such
Non-Compliance Event (by reducing its Total Debt, Real Estate Investments,
Non-Facility Debt, as applicable), and (ii) the last day of the next
succeeding fiscal quarter (E.G., if the Non-Compliance Event occurred on
June 30, then the last day of the next succeeding fiscal quarter would be
on September 30 immediately following), then (PROVIDED THAT no other
Potential Default or Event of Default exists) a Potential Default (and not
an Event of Default) shall exist. If any such Non-Compliance Event remains
unremedied as of the last day of such next succeeding fiscal quarter, then
an Event of Default shall immediately exist and Borrower shall have no
additional right or opportunity to remedy such Event of Default.
2. AMENDMENT OF CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS.
(a) All references in the Loan Documents to the Credit Agreement shall
henceforth include references to the Credit Agreement, as modified and amended
by the First Amendment and this Amendment, and as may, from time to time, be
further modified, amended, renewed, extended, restated, and/or increased.
(b) Any and all of the terms and provisions of the Loan Documents are
hereby amended and modified wherever necessary, even though not specifically
addressed herein, so as to conform to the amendments and modifications set forth
herein.
3. RATIFICATIONS. Borrower (a) ratifies and confirms all provisions of
the Loan Documents as amended by this Amendment, (b) ratifies and confirms that
all guaranties, assurances, and Liens granted, conveyed, or assigned to the
Credit Parties under the Loan Documents are not released, reduced, or otherwise
adversely affected by this Amendment and continue to guarantee, assure, and
secure full payment and performance of the present and future Obligation, and
(c) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional documents, and certificates as
Administrative Agent may reasonably request in order to create, perfect,
preserve, and protect such guaranties, assurances, and Liens.
4. REPRESENTATIONS. Borrower represents and warrants to the Credit
Parties that as of the date of this Amendment: (a) this Amendment and the other
documents executed in connection therewith (collectively, the "AMENDMENT
DOCUMENTS") have been duly authorized, executed, and delivered by Borrower and
each of the other Companies that are parties to the Amendment Documents; (b) no
action of, or filing with, any Governmental Authority is required to authorize,
or is otherwise required in connection with, the execution, delivery, and
performance by Borrower or the other Companies of the Amendment Documents to
which they are a party; (c) the Loan Documents, as amended by the Amendment
Documents, are valid and binding upon Borrower and the other Companies that are
parties to the Amendment Documents and are enforceable against Borrower and the
other Companies in accordance with their respective terms, except as limited by
Debtor Relief Laws and general principles of equity; (d) the execution,
delivery, and performance by Borrower and the other Companies of the Amendment
Documents to which they are a party do not require the consent of any other
Person and do not and will not constitute a violation of any Governmental
Requirement, order of any Governmental Authority, or material agreements to
which Borrower or any other Company is a party thereto or by which Borrower or
any other Company is bound; (e) all representations and warranties in the Loan
Documents are true and correct in all material respects on and as of the date of
this Amendment, except to the extent that (i) any of them speak to a different
specific date, or
SECOND AMENDMENT -3-
<PAGE>
(ii) the facts on which any of them were based have been changed by
transactions contemplated or permitted by the Credit Agreement; and (f) both
before and after giving effect to the Amendment Documents, no Potential
Default or Event of Default exists.
5. CONDITIONS. This Amendment and the other Amendment Documents shall
not be effective unless and until:
(a) the Credit Parties shall have received the Amendment Documents, in
form and substance acceptable to the Credit Parties;
(b) the representations and warranties in this Amendment are true and
correct in all material respects on and as of the date of this Amendment, except
to the extent that (i) any of them speak to a different specific date, or (ii)
the facts on which any of them were based have been changed by transactions
contemplated or permitted by the Credit Agreement; and
(c) both before and after giving effect to this Amendment, no Potential
Default or Event of Default exists.
6. CONTINUED EFFECT. Except to the extent amended hereby or by any
documents executed in connection herewith, all terms, provisions, and conditions
of the Credit Agreement and the other Loan Documents, and all documents executed
in connection therewith, shall continue in full force and effect and shall
remain enforceable and binding in accordance with their respective terms.
7. MISCELLANEOUS. Unless stated otherwise (a) the singular number
includes the plural and VICE VERSA and words of any gender include each other
gender, in each case, as appropriate, (b) headings and captions may not be
construed in interpreting provisions, (c) this Amendment must be construed --
and its performance enforced -- under Texas law, (d) if any part of this
Amendment is for any reason found to be unenforceable, all other portions of it
nevertheless remain enforceable, and (e) this Amendment may be executed in any
number of counterparts with the same effect as if all signatories had signed the
same document, and all of those counterparts must be construed together to
constitute the same document.
8. PARTIES. This Amendment binds and inures to Borrower and the Credit
Parties and their respective successors and permitted assigns.
9. ENTIRETIES. THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
AMENDED BY THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THE CREDIT AGREEMENT
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES TO FOLLOW]
SECOND AMENDMENT -4-
<PAGE>
SIGNATURE PAGE TO SECOND AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE
AGENT, BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
EXECUTED as of the day and year first mentioned.
TRAMMELL CROW COMPANY,
a Delaware corporation,
as Borrower
By: /s/ William Leiser
-------------------------------------
Name: William Leiser
--------------------------------
Title: Executive Vice President
-------------------------------
<PAGE>
SIGNATURE PAGE TO SECOND AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent and a Lender
By: /s/ Anthony T. Fertitta, Jr.
-------------------------------------
Name: Anthony T. Fertitta, Jr.
--------------------------------
Title: Vice President
-------------------------------
<PAGE>
SIGNATURE PAGE TO SECOND AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as
a Lender
By: /s/ Sam Jenkins
---------------------------------
Name: Sam Jenkins
----------------------------
Title: Senior V.P.
---------------------------
<PAGE>
SIGNATURE PAGE TO SECOND AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
MERCANTILE BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Timothy B. Kenney, VP
-------------------------------------
Name: Timothy B. Kenney
--------------------------------
Title: Vice President
-------------------------------
<PAGE>
SIGNATURE PAGE TO SECOND AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
BANKBOSTON, N.A.,
as a Lender
By: /s/ Keith D. Kimble, Jr.
-------------------------------------
Name: Keith D. Kimble, Jr.
--------------------------------
Title: Vice President
-------------------------------
<PAGE>
SIGNATURE PAGE TO SECOND AMENDMENT OF
CREDIT AGREEMENT BETWEEN
TRAMMELL CROW COMPANY, NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
SOCIETE GENERALE, SOUTHWEST AGENCY,
as a Lender
By: /s/ Scott Gosslee VP
-------------------------------------
Name: Scott Gosslee
--------------------------------
Title: Vice President
-------------------------------
<PAGE>
To induce the Credit Parties to enter into this Amendment, the undersigned
jointly and severally (a) consent and agree to the Amendment Documents'
execution and delivery, (b) ratify and confirm that all guaranties, assurances,
and Liens granted, conveyed, or assigned to the Credit Parties under the Loan
Documents are not released, diminished, impaired, reduced, or otherwise
adversely affected by the Amendment Documents and continue to guarantee, assure,
and secure the full payment and performance of all present and future Obligation
(except to the extent specifically limited by the terms of such guaranties,
assurances, or Liens), (c) agree to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional guaranties,
assignments, security agreements, deeds of trust, mortgages, and other
agreements, documents, instruments, and certificates as Administrative Agent may
reasonably deem necessary or appropriate in order to create, perfect, preserve,
and protect those guaranties, assurances, and Liens, and (d) waive notice of
acceptance of this consent and agreement, which consent and agreement binds the
undersigned and their successors and permitted assigns and inures to the Credit
Parties and their respective successors and permitted assigns.
EACH OF THE CORPORATE GUARANTORS/PLEDGORS LISTED ON
SCHEDULE 1 ATTACHED HERETO (OTHER THAN THE CORPORATE
GUARANTORS BELOW)
By: /s/ Richard H. Coe
-------------------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW CENTRAL, LTD.
By: TCCT REAL ESTATE, INC., General Partner
By: /s/ Richard H. Coe
----------------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW DALLAS/FORT WORTH, LTD.
By: TCDFW, INC., General Partner
By: /s/ Richard H. Coe
----------------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW HOUSTON, LTD.
By: TC HOUSTON, INC., General Partner
SECOND AMENDMENT
<PAGE>
By: /s/ Richard H. Coe
----------------------------------------------
Richard H. Coe
Authorized Officer
TRAMMELL CROW DALLAS INDUSTRIAL, LTD.
By: TC DALLAS INDUSTRIAL, INC., General Partner
By: /s/ Richard H. Coe
----------------------------------------------
Richard H. Coe
Authorized Officer
SECOND AMENDMENT
<PAGE>
TCCT #2, INC.
By: /s/ Christopher J. Nelson
---------------------------------------------
Christopher J. Nelson
Authorized Officer
TCDFW #2, INC.
By: /s/ Christopher J. Nelson
---------------------------------------------
Christopher J. Nelson
Authorized Officer
TCDI #2, INC.
By: /s/ Christopher J. Nelson
---------------------------------------------
Christopher J. Nelson
Authorized Officer
TCH #2, INC.
By: /s/ Christopher J. Nelson
---------------------------------------------
Christopher J. Nelson
Authorized Officer
SECOND AMENDMENT
<PAGE>
SCHEDULE 1
TC Atlanta, Inc.
TCCT Real Estate, Inc.
TCCT #2, Inc.
Trammell Crow Retail Services, Inc.
TC Carolinas, Inc.
TC Chicago, Inc.
TC Denver, Inc.
TCDFW, Inc.
TCDFW #2, Inc.
TC Dallas Industrial, Inc.
TCDI #2, Inc.
TC Houston, Inc.
TCH #2, Inc.
TC Tennessee, Inc.
TC MidAtlantic, Inc.
TC Northeast Metro, Inc.
TC New England, Inc.
Trammell Crow Realty Services, Inc.
TCC Risk Services, Inc.
TC Seattle, Inc.
Trammell Crow So. Cal., Inc.
Trammell Crow SE, Inc.
TC St. Louis, Inc.
Trammell Crow Corporate Services, Inc.
Trammell Crow Company, a Texas Corporation
Trammell Crow MW, Inc.
Trammell Crow NE, Inc.
Trammell Crow NW, Inc.
Trammell Crow Central Texas, Ltd.
Trammell Crow Dallas/Fort Worth, Ltd.
Trammell Crow Houston, Ltd.
Trammell Crow Dallas Industrial, Ltd.
SECOND AMENDMENT
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF TRAMMELL CROW COMPANY FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 65,165
<SECURITIES> 0
<RECEIVABLES> 51,000
<ALLOWANCES> (838)
<INVENTORY> 0
<CURRENT-ASSETS> 267,953<F1>
<PP&E> 22,281
<DEPRECIATION> (14,588)
<TOTAL-ASSETS> 360,519
<CURRENT-LIABILITIES> 160,569<F2>
<BONDS> 0
0
0
<COMMON> 339
<OTHER-SE> 143,227
<TOTAL-LIABILITY-AND-EQUITY> 360,519
<SALES> 0
<TOTAL-REVENUES> 90,251
<CGS> 0
<TOTAL-COSTS> 78,017
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,666
<INCOME-PRETAX> 10,568
<INCOME-TAX> 4,239
<INCOME-CONTINUING> 6,329
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,329
<EPS-PRIMARY> .19
<EPS-DILUTED> .18
<FN>
<F1>Includes real estate held for sale of $134,982.
<F2>Includes notes payable on real estate held for sale of $93,039.
</FN>
</TABLE>
