<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1997
REGISTRATION NO. 333-25741
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
LASALLE PARTNERS INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 6531 36-4150422
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
---------------
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
(312) 782-5800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
WILLIAM E. SULLIVAN
EXECUTIVE VICE PRESIDENT
LASALLE PARTNERS INCORPORATED
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
(312) 782-5800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
CHARLES W. MULANEY, JR., ESQ. THOMAS A. COLE, ESQ.
RODD M. SCHREIBER, ESQ. SIDLEY & AUSTIN
SKADDEN, ARPS, SLATE, MEAGHER & FLOM ONE FIRST NATIONAL PLAZA
(ILLINOIS) CHICAGO, ILLINOIS 60603
333 WEST WACKER DRIVE, SUITE 2100 (312) 853-7000
CHICAGO, ILLINOIS 60606
(312) 407-0700
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of prospectus: one to be used
in connection with a United States offering (the "U.S. Prospectus") and one to
be used in connection with a concurrent international offering (the
"International Prospectus"). The U.S. Prospectus and the International
Prospectus are identical except that they contain different front cover pages.
The form of U.S. Prospectus is included herein and the front cover page of the
International Prospectus which is labeled "International Cover Page" follows
the back cover page for the U.S. Prospectus.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued June 23, 1997
4,000,000 Shares
LOGO
COMMON STOCK
-----------
ALL OF THE 4,000,000 SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY
THE COMPANY. OF THE 4,000,000 SHARES OF COMMON STOCK BEING OFFERED,
3,200,000 SHARES ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND
CANADA BY THE U.S. UNDERWRITERS AND 800,000 SHARES ARE BEING OFFERED
INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS. SEE "UNDERWRITERS." PRIOR TO THIS
OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK OF
THE COMPANY. IT IS CURRENTLY ESTIMATED THAT THE INITIAL
OFFERING PRICE PER SHARE OF COMMON STOCK WILL BE BETWEEN $19
AND $21. SEE "UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS
TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC
OFFERING PRICE.
-----------
APPLICATION HAS BEEN MADE TO LIST THE COMMON STOCK ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "LAP."
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------
THESE SECURITIES 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.
-----------
PRICE $ A SHARE
-----------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------- ------------- -----------
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>
- -----
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriters."
(2) Before deducting expenses of the Offering payable by the Company,
estimated at $2,000,000.
(3) The Selling Stockholder has granted to the U.S. Underwriters an option,
exercisable within 30 days of the date hereof, to purchase up to an
aggregate of 600,000 additional shares of Common Stock at the price to
public, less underwriting discounts and commissions, for the purpose of
covering over-allotments, if any. If the U.S. Underwriters exercise such
option in full, the total price to public, underwriting discounts and
commissions, and proceeds to the Selling Stockholder will be $ ,
$ and $ , respectively. The Company will not receive any proceeds
from the exercise of the over-allotment option. See "Underwriters."
-----------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Sidley & Austin, counsel for the Underwriters. It is expected that the
delivery of the Shares will be made on or about , 1997 at the offices of
Morgan Stanley & Co. Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
-----------
MORGAN STANLEY DEAN WITTER
WILLIAM BLAIR & COMPANY
MONTGOMERY SECURITIES
, 1997
<PAGE>
[Inside Front Cover]
Diagram depicting organizational structure and representative clients.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
2
<PAGE>
[Inside Front Cover Foldout]
Map of United States depicting locations of
principal offices of LaSalle Partners Incorporated and
pictures of buildings for which the
Company provides management services,
corporate and financial services and
investment management services.
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
----------------
UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
----------------
For investors outside of the United States: No action has been or will be
taken in any jurisdiction by the Company or any Underwriter that would permit
a public offering of the Common Stock or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required,
other than in the United States. Persons into whose possession this Prospectus
comes are required by the Company and the Underwriters to inform themselves
about and to observe any restrictions as to the offering of the Common Stock
and the distribution of this Prospectus.
----------------
In this Prospectus references to "dollar" and "$" are to United States
dollars, and the term "United States" or "U.S." means the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 4
Risk Factors...................... 10
Background of the Company......... 16
Incorporation Transactions........ 17
Use of Proceeds................... 18
Dividend Policy................... 18
Capitalization.................... 19
Dilution.......................... 20
Selected Financial Data........... 21
Pro Forma Consolidated Financial
Statements....................... 23
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 26
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Business........................... 41
Management......................... 55
Principal and Selling Stockholders. 61
Certain Relationships and Related
Transactions...................... 63
Description of Capital Stock....... 64
Shares Eligible for Future Sale.... 68
Certain U.S. Federal Tax
Considerations for Non-U.S.
Holders of Common Stock........... 70
Underwriters....................... 73
Legal Matters...................... 77
Experts............................ 77
Additional Information............. 77
Index to Financial Statements...... F-1
</TABLE>
----------------
The Company intends to furnish to its stockholders annual reports containing
consolidated financial statements audited by an independent public accounting
firm and quarterly reports for the first three quarters of each fiscal year
containing interim unaudited financial information.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere
herein, including information under the heading "Risk Factors." Unless
otherwise indicated, all information in this Prospectus: (i) assumes no
exercise of the Underwriters' over-allotment option; (ii) reflects the
contribution of all of the partnership interests in LaSalle Partners Limited
Partnership ("LPL") and LaSalle Partners Management Limited Partnership
(together with LPL, the "Predecessor Partnerships") to the Company (the
"Contribution"), which will be completed immediately prior to the closing of
the offering of the Company's Common Stock (the "Offering"), and (iii) reflects
the amendment and restatement of the Company's Articles of Incorporation
immediately prior to the closing of the Offering. Following the Contribution,
the operations of the Predecessor Partnerships will be contributed to
subsidiaries of the Company as described under the caption "Incorporation
Transactions." Throughout this Prospectus, except where the context otherwise
requires, references to the "Company" or "LaSalle Partners" mean the
Predecessor Partnerships, including The Galbreath Company ("Galbreath") from
and after the merger of Galbreath with the Predecessor Partnerships, and their
subsidiaries as of and for the periods prior to the closing of the Offering
and, thereafter, collectively LaSalle Partners Incorporated and its
subsidiaries. See "Incorporation Transactions."
THE COMPANY
COMPANY OVERVIEW
LaSalle Partners is a leading full-service real estate firm that provides
management services, corporate and financial services and investment management
services to corporations and other real estate owners, users and investors
worldwide. By offering a broad range of real estate products and services, and
through its extensive knowledge of domestic and international real estate
markets, the Company is able to serve as a single source provider of solutions
for its clients' full range of real estate needs. The Company holds a leading
market position in each of its primary businesses. For example, the Company
believes it is the largest property manager of office buildings in the United
States, one of the largest outsource service providers for corporate occupied
facilities and the third largest manager of institutional equity capital
invested in domestic real estate assets and securities. The Company is also the
fourth largest manager of institutional real estate equity investments in the
United Kingdom. Founded in 1968, the Company is headquartered in Chicago,
Illinois, and maintains corporate offices in 10 United States cities and four
international markets. The Company also maintains over 300 property and other
offices throughout the United States. In 1996, the Company generated total
revenue of $176.0 million and earnings before interest, taxes, depreciation and
amortization of $32.3 million, representing an increase of 15.9% and 32.7%,
respectively, from the prior year's results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
On April 22, 1997, Galbreath, a property management, facility management and
development management company, merged with LaSalle Partners. Based on the 1996
Commercial Property News survey of property managers (the "1996 CPN Survey"),
the combination of Galbreath and the Company would have ranked the Company as
the third largest property manager in the United States. The Company's
principal objectives for the merger were to expand the Company's geographic
presence, add additional client relationships and provide the potential for
significant economic synergies with the Company's Management Services group. As
a result of the merger, the Company assumed management responsibility for an
additional 71 million square feet of commercial space.
COMPETITIVE ADVANTAGES
The Company believes that it has several competitive advantages which have
established it as a leader in the real estate services and investment
management industries. These advantages include the Company's:
. Relationship Orientation. The Company's client-driven focus enables the
Company to develop long-term relationships with owners and users of real
estate. By developing such relationships, the Company generates repeat
business and creates recurring revenue sources; 87% of the Company's 1996
revenue
4
<PAGE>
was derived from clients for which the Company provided services in prior
years. The Company's relationship orientation is supported by an employee
compensation system which is unique in the real estate industry. LaSalle
Partners compensates its professionals with a salary, bonus and stock
ownership plan which is designed to reward client relationship building,
teamwork and quality performance, rather than on a commission basis which
is typical in the industry.
. Full Range of Services. By offering a wide range of high quality,
complementary services, the Company can combine its services to develop
and implement real estate strategies that meet the increasingly complex
needs of its clients. The Company's product and service capabilities
include property management and leasing, facility management, development
management, tenant representation, investment banking, land acquisition
and development, and investment management.
. Geographic Reach. With 10 corporate offices and over 300 property and
other offices throughout the United States, LaSalle Partners possesses
in-depth knowledge of local markets and can provide its full range of
real estate services throughout the country. In addition, the Company's
four international offices give the Company the ability to serve its
clients' needs in key international markets. The international offices
also serve as the platform from which the Company will expand its
international presence.
. Reputation. The Company is widely recognized by large corporations and
institutional owners and users of real estate as a provider of high
quality, professional real estate services and investment management
products. The Company believes its name recognition and reputation for
quality services are significant advantages when pursuing new business
opportunities.
. Experienced Management/Employee Equity Incentives. The Company's senior
management team has an average of approximately 18 years of experience in
the real estate services industry and, with the exception of Lizanne
Galbreath who joined the Company on April 22, 1997 in connection with the
Galbreath merger, has been with LaSalle Partners for an average of
approximately 16 years. The Company uses equity-based incentive
compensation and bonus plans and minimum stock ownership guidelines to
foster employee commitment and align employee and stockholder interests.
Immediately following the Offering, the Company's senior management team
will indirectly own approximately 21.4% of the outstanding Common Stock
and total employee ownership will be approximately 47.5%.
BUSINESS
To meet the diverse needs of its clients, the Company provides its full range
of real estate services through three principal business groups: Management
Services, Corporate and Financial Services and Investment Management.
Management Services. The Company's Management Services group develops and
implements property level strategies to increase investment value for real
estate owners and optimize occupancy costs for corporate owners and users of
real estate. The Management Services group provides three primary service
capabilities: (i) property management and leasing for property owners; (ii)
facility management for properties occupied by corporate owners and users; and
(iii) development management for both investors and real estate users seeking
to develop new buildings or renovate existing facilities. As of March 31, 1997,
the Management Services group had property management, leasing or facility
management responsibility for approximately 132.7 million square feet of
commercial space.
Corporate and Financial Services. The Company's Corporate and Financial
Services group provides transaction and advisory services through three primary
service capabilities: (i) tenant representation for corporations and
professional service firms; (ii) investment banking services to address the
financing, acquisition and disposition needs of real estate owners; and (iii)
land acquisition and development services for owners, users and developers of
land. The Corporate and Financial Services group executed over 250 tenant
representation assignments in 1996, representing approximately seven million
square feet, and completed institutional property sales, debt and equity
financings and portfolio advisory activities on assets and portfolios valued at
approximately $4.9 billion.
5
<PAGE>
Investment Management. The Company's Investment Management group provides
real estate investment management services to institutional investors,
corporations and high net worth individuals. The Company offers its clients a
broad range of private investments (i.e., purchases of real estate assets) and
public investments such as real estate investment trusts ("REITs") and
commercial mortgage-backed securities ("CMBS"). Private real estate investments
have been made on a direct basis and through fund investments in portfolios of
assets. Investments in public REITs and CMBS are generally managed through
investment funds or client-specific portfolios. As of March 31, 1997, the
Company had approximately $15.1 billion of real estate assets under management,
of which approximately $2.5 billion consisted of public real estate securities.
GROWTH STRATEGY
The Company is pursuing a growth strategy which capitalizes on existing
client relationships and emerging industry trends. Key components of its growth
strategy include:
. Expanding Client Relationships. The Company intends to utilize its broad
real estate services capabilities to increase the range of services
provided to existing clients as well as to develop new client
relationships.
. Broadening International Presence. The Company intends to grow its
existing international operations and enter new markets to meet the
increasingly global needs of its clients.
. Selectively Pursuing Strategic Acquisitions. As the industry
consolidation among real estate service providers continues, the Company
intends to selectively pursue strategic acquisitions which expand the
Company's product and service offerings and geographic presence and which
provide the opportunity for economies of scale.
. Pursuing Co-investment Opportunities. The Company intends to accelerate
its strategy of co-investing with its investment management clients to
take advantage of recovering real estate markets. This strategy is
intended to increase the growth of assets under management, generate
return on investment and create potential opportunities to provide
services related to the acquisition, financing, property management,
leasing and disposition of such investments.
INCORPORATION TRANSACTIONS
The Company and LaSalle Partners Management Services, Inc. ("LPMS"), LaSalle
Partners Corporate & Financial Services, Inc. ("LCFS") and LaSalle Advisors
Capital Management, Inc. ("LACM") were formed in April 1997 in connection with
the conversion of the business and operations of the Predecessor Partnerships
from partnership to corporate form. Immediately prior to the closing of the
Offering, the general and limited partners of the Predecessor Partnerships will
exchange their partnership interests in the Predecessor Partnerships for
12,200,000 shares of Common Stock, and the Company will succeed to the business
and operations of the Predecessor Partnerships. Prior to the exchange, neither
the Company, LPMS, LCFS nor LACM had any assets or conducted any operations
other than in connection with their formation.
Following the exchange, the Company will operate as a holding company with
the business and operations of the Predecessor Partnerships being conducted
through four principal wholly-owned operating subsidiaries, LPMS, LCFS, LACM
and LaSalle Partners International, Inc. ("LPII" and, collectively with LPMS,
LCFS and LACM, the "Principal Operating Subsidiaries"). LPII, an existing
subsidiary of the Predecessor Partnerships, will continue to conduct the
Company's international operations. The Predecessor Partnerships are
undertaking these transactions in order to facilitate access to the capital
markets, provide greater flexibility for acquisitions, create longer-term
liquidity for their partners and reduce administrative burdens associated with
operating as a partnership. See "Incorporation Transactions."
6
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Common Stock offered:
U.S. offering.................................... 3,200,000 shares
International offering........................... 800,000 shares
Total Common Stock offered....................... 4,000,000 shares
Common Stock to be outstanding after the Offering. 16,200,000 shares (1)
Use of proceeds................................... To repay certain
outstanding indebtedness of
the Company and for general
corporate purposes. See
"Use of Proceeds."
Proposed New York Stock Exchange symbol........... LAP
</TABLE>
- --------
(1) Excludes an aggregate of: (i) 725,000 shares of Common Stock issuable upon
exercise of options to be granted under the Company's 1997 Stock Award and
Incentive Plan ("1997 Stock Incentive Plan") upon closing of the Offering,
with an exercise price equal to the initial public offering price; and (ii)
1,490,000 additional shares of Common Stock reserved for future grants or
awards under the Company's 1997 Stock Incentive Plan. See "Management--
Director Compensation" and "--1997 Stock Award and Incentive Plan."
RISK FACTORS
Prospective investors should consider certain factors discussed in detail
elsewhere in this Prospectus under the caption "Risk Factors."
7
<PAGE>
SUMMARY FINANCIAL DATA
The information set forth below should be read in conjunction with "Pro Forma
Consolidated Financial Statements," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Predecessor
Partnerships' Combined Financial Statements and notes thereto, all included
elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1996
PRO FORMA AS
1992 1993 1994 1995 1996 ADJUSTED (1)
---------- ---------- ----------- ----------- ----------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Total revenue.... $ 103,334 $ 104,049 $ 126,918 $ 151,827 $ 175,967 $ 207,559
Total operating
expenses........ 84,722 87,036 108,903 131,711 149,066 177,382
---------- ---------- ----------- ----------- ----------- -----------
Operating income
(loss).......... 18,612 17,013 18,015 20,116 26,901 30,177
Interest expense. 5,590 5,257 5,159 3,806 5,730 1,075
Earnings (loss)
before provision
for income
taxes........... 13,022 11,756 12,856 16,310 21,171 29,102
Net provision
(benefit) for
income taxes.... 355 300 554 505 1,207 11,204
---------- ---------- ----------- ----------- ----------- -----------
Net earnings
(loss).......... $ 12,667 $ 11,456 $ 12,302 $ 15,805 $ 19,964 $ 17,898
========== ========== =========== =========== =========== ===========
Pro forma:
Primary and
fully diluted
earnings (loss)
per share(2)... $1.13
===========
OTHER DATA:
EBITDA(3)........ $ 21,034 $ 19,544 $ 20,866 $ 24,356 $ 32,317 $ 37,624
Cash flows
provided by
(used in)
operating
activities...... 14,675 4,837 24,628 13,553 13,964 13,646
Cash flows
provided by
(used in)
investing
activities...... (1,727) (2,738) (4,885) (5,706) (32,478) (31,852)
Cash flows
provided by
(used in)
financing
activities...... (19,000) (6,758) (12,028) (12,365) 17,189 19,195
Investments under
management(4)... $6,500,000 $7,000,000 $10,700,000 $11,500,000 $15,200,000 $15,200,000
Total square
feet-facility
management(5)... 2,400 50,600 50,600 67,600 68,600 81,600
Total square feet
under
management(6)... 47,000 98,300 102,400 125,700 131,600 202,900
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------
1997
PRO FORMA AS
1996 1997 ADJUSTED (1)
------------ ------------ -------------
<S> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Total revenue.... $ 27,285 $ 36,019 $ 43,384
Total operating
expenses........ 32,490 39,291 46,269
------------ ------------ -------------
Operating income
(loss).......... (5,205) (3,272) (2,885)
Interest expense. 937 1,695 265
Earnings (loss)
before provision
for income
taxes........... (6,142) (4,967) (3,150)
Net provision
(benefit) for
income taxes.... (350) (248) (1,213)
------------ ------------ -------------
Net earnings
(loss).......... $ (5,792) $ (4,719) $ (1,937)
============ ============ =============
Pro forma:
Primary and
fully diluted
earnings (loss)
per share(2)... $(0.12)
=============
OTHER DATA:
EBITDA(3)........ $ (4,094) $ (1,498) $ (599)
Cash flows
provided by
(used in)
operating
activities...... (12,721) (4,678) (7,892)
Cash flows
provided by
(used in)
investing
activities...... (5,967) (2,038) (2,185)
Cash flows
provided by
(used in)
financing
activities...... 14,921 7,705 7,573
Investments under
management(4)... $11,500,000 $15,100,000 $15,100,000
Total square
feet-facility
management(5)... 67,600 69,100 82,100
Total square feet
under
management(6)... 130,200 132,700 204,000
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED(7)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 8,094 $ 14,994
Total assets............................................ 124,075 166,411
Long-term debt(8)....................................... 57,083 --
Total liabilities....................................... 109,425 50,575
Partners' capital/stockholders' equity.................. 14,650 115,836
</TABLE>
- -------
(Footnotes on following page)
8
<PAGE>
- --------
(1) As adjusted to give effect to the merger of Galbreath with the Company, the
Incorporation Transactions and the sale of the shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $20.00 per share and the receipt and application of the net proceeds
therefrom, as though they had occurred on January 1, 1996. See "Use of
Proceeds," "Background of the Company" and "Incorporation Transactions."
(2) Pro forma as adjusted primary and fully diluted earnings (loss) per share
is based upon 15,869,337 shares of Common Stock outstanding, which includes
the 12,200,000 shares of Common Stock to be issued in connection with the
Incorporation Transactions and gives effect to the additional 3,669,337
shares of the 4,000,000 shares of Common Stock to be issued in the
Offering, the proceeds of which will be used to repay indebtedness. The
Company will have 16,200,000 shares of Common Stock outstanding upon
completion of the Offering. See "Use of Proceeds."
(3) EBITDA represents earnings before interest, income taxes, depreciation and
amortization, thereby removing the effect of certain non-cash charges on
income, such as the amortization of intangible assets relating to
acquisitions. Management believes that EBITDA is widely used in the real
estate industry and can be a meaningful measure of operating performance,
cash generation and ability to service debt. However, EBITDA should not be
considered as an alternative either to: (i) net earnings (determined in
accordance with generally accepted accounting principles ("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 is comparable to similarly titled items reported by other companies.
(4) Investments under management represents the aggregate fair market value or
cost basis of assets managed by the Investment Management group as of the
end of the periods shown. The percentage of investments under management
stated at cost represented 3% in 1992 and 1993, 7% in 1994 and 1995, and 8%
in 1996 and 1997 of the amounts shown.
(5) Represents the total square footage of properties for which the Company
provided facility management services as of the end of the periods shown.
(6) Represents the total square footage of properties for which the Company
provided property management and leasing or facility management services as
of the end of the periods shown.
(7) As adjusted to give effect to the merger of Galbreath with the Company, the
Incorporation Transactions and the sale of the shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $20.00 per share and the receipt and application of the net proceeds
therefrom, as though they had occurred on March 31, 1997. See "Use of
Proceeds," "Background of the Company" and "Incorporation Transactions."
(8) See Note 7 to Notes to the Predecessor Partnerships' Combined Financial
Statements.
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RISK FACTORS
Prospective investors should carefully consider the following information in
addition to the other information presented in this Prospectus before
purchasing the shares of Common Stock offered hereby.
GENERAL ECONOMIC CONDITIONS; REAL ESTATE ECONOMIC CLIMATE
Periods of economic slowdown or recession, rising interest rates or
declining demand for real estate could adversely affect certain segments of
the Company's business. Such economic conditions could result in a general
decline in rents which in turn would adversely affect revenue from property
management fees (which in certain cases are calculated as a percentage of the
revenue generated by the property under management) and commissions or fees
derived from property sales and leases (which are typically based on the sale
price or lease revenue commitment, respectively). Such conditions could also
lead to a decline in sale prices as well as a decline in demand for capital
invested in commercial real estate and related assets.
The condition of the real estate market tends to be cyclical and related to
the condition of the economy as a whole or, at least, to the perceptions of
investors and users as to the economic outlook. The sharp downturn in the
commercial real estate market in the early 1990s has caused and may continue
to cause some property owners to dispose of their properties or to lose them
through foreclosures. Such changes in the ownership of properties may be
accompanied by a change in property and investment management firms and could
cause the Company to lose property and investment management agreements or
make the agreements it retains less profitable.
RISK OF TERMINATION OR OTHER LOSS OF MANAGEMENT AGREEMENTS
The Company is substantially dependent on revenue received for services
performed under property management and leasing and investment management
agreements, and would be adversely affected if a significant number of these
agreements were terminated or were not renewed. For the year ended December
31, 1996, revenue from property management and leasing agreements and
investment management agreements constituted approximately 37% and 32%,
respectively, of total revenue. Most property management and leasing and
investment management agreements have terms of approximately three years and
typically are terminable by the client for any reason on as little as 30 to 60
days' notice. There can be no assurance that any such contracts will not be
cancelled prior to expiration or will be renewed when the term expires. In
addition, the Company derives substantial property management and leasing and
investment banking fees from real estate assets managed by its Investment
Management group. Contracts for these related services may be terminated or
lost for a number of reasons, including the termination or cancellation of the
underlying asset management agreement or disposition of the subject property.
The loss of a substantial number of these agreements could have a material
adverse effect on the Company.
In addition, the Company will sell the remaining real estate assets held by
four multiple investor funds ("commingled funds") formed by the Company in the
1980s to hold real estate investments on behalf of numerous tax-exempt
institutional investors. The Company receives investment advisory, property
management and leasing and investment banking fees for services provided in
connection with these funds. In 1996, 1995 and 1994, revenue derived from, or
in connection with, these funds represented 11.5%, 12.8% and 20.1%,
respectively, of the Company's total revenue. The Company expects that revenue
derived from, or in connection with, these funds will decrease and eventually
be eliminated as the remaining assets of the funds are sold. While the timing
of the revenue losses will depend on the timing of the dispositions, the
Company expects to complete substantially all of such dispositions prior to
the end of 1998. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
DEPENDENCE ON PROPERTY PERFORMANCE
The Company's revenue from property management and leasing services are
generally based on percentages of the revenue generated by the properties that
it manages. In addition, leasing commissions typically are based
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on the value of the lease revenue commitments. Accordingly, the continued
success of the Company will be dependent, in part, upon the performance of the
properties it manages. Such performance in turn will depend in part upon the
ability of the Company to attract and retain creditworthy tenants for the
properties it manages, the Company's ability to control operating expenses
(some of which are beyond the Company's control), financial conditions
prevailing generally and in the areas in which such properties are located and
the real estate market generally.
RISKS INHERENT IN PURSUING SELECTIVE ACQUISITION STRATEGY
The Company intends to continue to selectively pursue domestic and
international acquisitions as a means of strengthening its position as an
industry leader, as well as expanding and enhancing its current product and
service offerings and geographic market coverage. The success of the Company's
acquisition strategy will be dependent upon the availability of suitable
acquisition candidates on favorable terms, of which there can be no assurance.
Further, there can be no assurance that any acquisition, including the merger
of Galbreath with the Company, will be integrated successfully into the
Company's operations or will perform in accordance with expectations or that
business judgements as to the value or consequences of any such acquisition
will prove correct. The consideration paid for any future acquisition may be
in cash, debt or shares of the Company's capital stock. The Company could
incur substantial indebtedness or substantial goodwill or both in connection
with its acquisition strategy. In addition, issuances of additional shares of
the Company's capital stock in connection with an acquisition could result in
dilution to stockholders.
CONCENTRATION OF PROPERTIES IN CENTRAL BUSINESS DISTRICTS
Many of the properties for which the Company provides management and leasing
or investment management services are office buildings in the central business
districts ("CBDs") of major urban cities. Approximately 39% of the 132.7
million square feet under the Company's property, leasing and facility
management agreements, and approximately 36% of the $12.6 billion in private
real estate assets under the Company's investment management agreements as of
March 31, 1997, are related to properties located in CBDs. During the early
1990s, rental rates and property values of CBD office buildings experienced
greater declines relative to other property types and locations. This decline,
and the slower recovery of this sector to date, has been largely attributable
to over-supply of new office space and corporate restructurings affecting
large businesses. The cyclical market conditions of the CBD office sector will
continue to have an important impact on the Company's operations.
RISKS ASSOCIATED WITH CO-INVESTMENT ACTIVITIES
The Company intends to use the increased financial flexibility created by
the Offering to expand its co-investment activities. The Company's increased
participation as a principal in real estate investments could increase
fluctuations in the Company's net earnings and cash flow. The Company's co-
investments also inherently involve the risk of loss of the Company's
investment. Moreover, in certain of these investments, the Company will not
have complete discretion to control the timing of the disposition of such
investments and, as a result, the recognition of any related gain or loss. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
SEASONALITY
Historically, the Company's revenue, operating income and net earnings in
the first three calendar quarters are substantially lower than in the fourth
quarter. This seasonality is due to a calendar year-end focus on the
completion of transactions, which is consistent with the real estate industry
generally. In addition, an increasing percentage of the Company's management
contracts contain clauses providing for performance bonuses to be received if
the Company achieves certain performance targets. Such incentive payments are
generally earned in the fourth quarter. In contrast, the Company's non-
variable operating expenses, which are treated as expenses when incurred
during the year, are relatively constant on a quarterly basis. Therefore, the
Company typically sustains a loss in the first and second quarter of each
calendar year, reports a small profit or loss in the third quarter and records
a substantial majority of the Company's earnings in the fourth calendar
quarter. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Quarterly Results of Operations."
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COMPETITION
The Company competes in a variety of business disciplines within the
commercial real estate industry, including investment management, tenant
representation, corporate facility management, construction and development
management, on-site property management and leasing, and investment banking.
Each of these business disciplines is highly competitive on a national as well
as local level. Depending on the industry segment, the Company faces
competition from other real estate service providers, institutional lenders,
insurance companies, investment banking firms, investment managers and
accounting firms. Some of the Company's principal competitors in certain of
these business disciplines have greater financial resources and a broader
global presence. Many of the Company's competitors are local or regional firms
which are substantially smaller than the Company on an overall basis; however,
they may be substantially larger on a local or regional basis. The Company has
faced increased competition in recent years in the Management Services and
Investment Management segments of its business which has, in some cases,
resulted in lower property and investment management fees, or compensation
arrangements more closely aligned with performance. In recent years, there has
also been a significant increase in the number of REITs which self-manage
their real estate assets, which could decrease the demand for property
management services, and thereby increase competition. In general, with
respect to each of the Company's business disciplines, there can be no
assurance that the Company will be able to continue to compete effectively,
will be able to maintain current fee or margin levels or arrangements or will
not encounter increased competition.
RISK RELATED TO GENERAL PARTNER STATUS
Subsidiaries of the Company are general partners in numerous general and
limited partnerships which invest in or manage real estate assets. As a
general partner, these subsidiaries may be liable to their partners as well as
liable for the obligations of such partnerships. Because all of the Company's
general partnership interests are held through its special purpose
subsidiaries, the Company believes that its exposure to contingent liabilities
is limited to the total invested or committed capital in and notes from or
advances to such subsidiaries holding the general partnership interests.
ENVIRONMENTAL CONCERNS
Various federal, state and local laws and regulations impose liability on
current or previous real property owners or operators for the cost of
investigating, cleaning up or removing contamination caused by hazardous or
toxic substances at the property. In the Company's role as an on-site property
manager, it could be held liable as an operator for such costs. Such liability
may be imposed without regard to legality of the original actions and without
regard to whether the Company knew of, or was responsible for, the presence of
such hazardous or toxic substances, and such liability may be joint and
several with other parties. If the liability is joint and several, the Company
could be responsible for payment of the full amount of the liability, whether
or not any other responsible party is also liable. Further, any failure of the
Company to disclose environmental issues could subject the Company to
liability to a buyer or lessee of property. In addition, some environmental
laws create a lien on the contaminated site in favor of the government for
damages and costs it incurs in connection with the contamination. The operator
of a site may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site,
including the presence of asbestos-containing materials. There can be no
assurance that any of such liabilities to which the Company or any of its
affiliates may become subject will not have a material adverse effect upon the
business or financial condition of the Company.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 16,200,000 shares of
Common Stock outstanding. The 4,000,000 shares sold in the Offering (4,600,000
if the Underwriters exercise in full the over-allotment option) will be freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "Securities Act"), except for any shares held by an
"affiliate" of the Company. The 12,200,000
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shares to be held by the stockholders of the Company (11,600,000 if the
Underwriters exercise in full the over-allotment option) will be deemed to be
"restricted securities," as that term is defined in Rule 144 under the
Securities Act ("Rule 144"), in that such shares were issued in private
transactions not involving a public offering. None of such shares will be
eligible for sale under Rule 144 prior to the first anniversary of the closing
of the Offering. For a summary description of the requirements of Rule 144,
see "Shares Eligible for Future Sale." The Company intends to file a
registration statement on Form S-8 with respect to the shares reserved for
issuance under its 1997 Stock Incentive Plan, including the 725,000 shares of
Common Stock underlying options which the Company expects to award to certain
employees and directors pursuant to such plan upon the closing of the
Offering.
The Company and each of the Company's existing stockholders will enter into
lock-up agreements with the Representatives (as herein defined) not to sell or
otherwise dispose of any of their shares of Common Stock for a period of 180
days from the date of this Prospectus without the prior written consent of
Morgan Stanley & Co. Incorporated. Certain stockholders of the Company are
entitled to register their shares under the Securities Act for resale, at the
expense of the Company. See "Shares Eligible for Future Sale--Registration
Rights" and "Underwriters."
In March 1997, DEL/LaSalle Finance Company, L.L.C. ("DEL/LaSalle"), a
limited liability company, all of the membership interests of which are owned
by DEL-LPL Limited Partnership ("DEL-LPL") and DEL-LPAML Limited Partnership
("DEL-LPAML" and together with DEL-LPL, the "Employee Partnerships"), limited
partnerships which are comprised of approximately 200 of the Company's current
and former employees, purchased the limited partnership interests in the
Predecessor Partnerships owned by a subsidiary of Dresdner Bank AG
("Dresdner"). Dresdner was required to sell the interests in order to comply
with bank regulatory requirements. As consideration for such purchase,
DEL/LaSalle issued to Dresdner a $35.0 million promissory note (the "Dresdner
Note"). The purchase price was determined in May 1996 and was based on the
original purchase price for such interests plus Dresdner's share of expected
undistributed earnings for 1996. All of the 1,826,548 shares of Common Stock
to be received by DEL/LaSalle in connection with the Incorporation
Transactions and 2,831,150 of the shares of Common Stock held by the Employee
Partnerships, representing an aggregate of approximately 29% of the
outstanding Common Stock after giving effect to the Offering, will be pledged
to support DEL/LaSalle's obligations under the Dresdner Note. The principal
amount of the Dresdner Note is due in five installments, with $3.5 million due
on April 15, 2000 and $7.8 million due on each April 15 thereafter, through
2004. The Dresdner Note bears interest at 7.0% per annum, payable on each
April 15 beginning on April 15, 1998. DEL/LaSalle will not have any assets
other than the Common Stock issued in connection with the Incorporation
Transactions. Funds for repayment of the Dresdner Note, including interest
thereon, will be provided by capital contributions from the Employee
Partnerships and through the sale of Common Stock in the public market or in
privately negotiated transactions. DEL/LaSalle has granted the U.S.
Underwriters a 30-day option to purchase up to 600,000 shares of Common Stock
to cover over-allotments in connection with the Offering. In the event that
the Underwriters' over-allotment option is exercised, the proceeds to
DEL/LaSalle will be used to repay a portion of the Dresdner Note. If an event
of default occurs under the Dresdner Note, Dresdner will have the right to
sell any or all of the pledged shares in the public market or in privately
negotiated transactions, subject to compliance with the Securities Act and
applicable law. See "Shares Eligible for Future Sale" and "Underwriters."
No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Common Stock.
CONTROL BY PRINCIPAL STOCKHOLDER
Upon completion of this Offering, the Employee Partnerships, directly and
through DEL/LaSalle, will beneficially own approximately 48.0% of the
Company's outstanding shares of Common Stock (approximately 44.3% if the
Underwriters exercise in full the over-allotment option). Accordingly, the
Employee Partnerships will continue to be able to exercise substantial
influence over the business and affairs of the Company, including but not
limited to having sufficient voting power to substantially influence the
election of all of the directors to be elected at any annual or special
meeting of stockholders and, in general, to substantially influence the
outcome of any corporate transaction or other matter submitted to the
stockholders for approval, including mergers, consolidations, the sale of
substantially all of the Company's assets, charter amendments and other
extraordinary
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corporate transactions or may prevent or cause a change in the control of the
Company. The Common Stock will be voted in accordance with the direction of
partners having a majority of the percentage ownership interests in the
Employee Partnerships. In addition, Lizanne Galbreath, a director and member
of senior management of the Company, and other former stockholders of
Galbreath who are now employees of the Company will own an additional 6.7% of
the Company's outstanding shares of Common Stock following the Offering. See
"Principal and Selling Stockholders."
LACK OF PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common Stock.
Although application has been made to list the Common Stock on the New York
Stock Exchange, there can be no assurance that an active trading market will
develop or be sustained. The price of shares of Common Stock to be sold in the
Offering will be determined by negotiations among the Company and the
Underwriters and may be higher than the price at which the Common Stock will
trade after completion of the Offering. See "Underwriters" for factors to be
considered in determining such offering price. The market price of the Common
Stock could be subject to significant fluctuations in response to quarter-to-
quarter variations in operating results of the Company or its competitors,
conditions in the commercial real estate industry, the commencement of,
developments in or outcome of litigation, changes in estimates of the
Company's performance by securities analysts, and other events or factors,
including the events and other factors described in this "Risk Factors"
section. In addition, the stock market in recent years has experienced price
and volume fluctuations that have often been unrelated or disproportionate to
the operating performance of companies. These fluctuations, as well as general
economic and market conditions, may adversely affect the market price of the
Common Stock. See "Underwriters."
ANTI-TAKEOVER PROVISIONS
The Company's Articles of Amendment and Restatement (the "Restated Articles
of Incorporation") and Amended and Restated Bylaws (the "Bylaws") will include
provisions that may delay, defer or prevent a takeover attempt that may be in
the best interest of stockholders. The Company has a classified Board of
Directors, pursuant to which directors are divided into three classes, with
three-year staggered terms. The classified board provision could increase the
likelihood that, in the event an outside party acquired a controlling block of
the Company's stock or initiated a proxy contest, incumbent directors
nevertheless would retain their positions for a substantial period, which may
have the effect of discouraging, delaying or preventing a change in control of
the Company. In addition, the Restated Articles of Incorporation will provide
for: (i) the ability of the Board of Directors to establish one or more
classes and series of capital stock including the ability to issue up to
10,000,000 shares of preferred stock, and to determine the price, rights,
preferences and privileges of such capital stock without any further
stockholder approval; (ii) a requirement that any stockholder action without a
meeting be pursuant to unanimous written consent; and (iii) certain advance
notice procedures for nominating candidates for election to the Board of
Directors. Such provisions could discourage bids for the Common Stock at a
premium as well as affect the market price of the Common Stock. In addition,
certain provisions of the Maryland General Corporation Law (the "MGCL") may
also have the effect of delaying, deterring or preventing a change in the
control of the Company. The possible impact of these provisions on takeover
attempts could adversely affect the price of the Common Stock. See
"Description of Capital Stock."
ABSENCE OF DIVIDENDS; DIVIDEND POLICY
The Company does not currently intend to pay any dividends on the Common
Stock in the foreseeable future. Any payment of future dividends and the
amounts thereof will be dependent upon the Company's earnings, financial
requirements and other factors deemed relevant by the Company's Board of
Directors, including the Company's contractual obligations. The Company
expects that provisions to be contained in agreements governing the Company's
long-term indebtedness after the Offering will limit the amount of dividends
that the Company may pay to its stockholders. See "Dividend Policy."
IMMEDIATE AND SUBSTANTIAL DILUTION
The initial public offering price is expected to be substantially higher
than the pro forma net tangible book value per share of Common Stock. As a
result, assuming an initial public offering price of $20.00 per share,
purchasers of shares of Common Stock in the Offering will incur immediate and
substantial dilution of $16.07 in net tangible book value per share. See
"Dilution."
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FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business," as well as within this
Prospectus generally. In addition, when used in this Prospectus, the words
"believes," "intends," "anticipates," "expects" and words of similar import may
constitute "forward-looking statements." Such statements are subject to a
number of risks and uncertainties. Actual results in the future could differ
materially from those described in the forward-looking statements as a result
of the risk factors set forth above and the matters set forth in the Prospectus
generally. The Company undertakes no obligation to publicly release any updates
or revisions to these forward-looking statements to reflect any future events
or circumstances.
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BACKGROUND OF THE COMPANY
The Company, founded in 1968, is a leading full-service real estate firm
that provides management services, corporate and financial services and
investment management services to corporations and other real estate owners
and investors worldwide. The Company has grown by expanding both its client
base and its range of services and products in anticipation of client needs
and to seize market opportunities. Primarily providing investment banking,
investment management and land services in its early years of existence, the
Company expanded to offer development management services beginning in 1975,
property management and leasing services beginning in 1978 and tenant
representation services beginning in 1978. In addition, the Company was a
pioneer in the facility management services business, first offered by the
Company in 1990.
The Predecessor Partnerships were formed in 1986 by the Employee
Partnerships to conduct the Company's business. In 1988, DSA-LSPL, Inc. and
DSA-LSAM, Inc., affiliates of Dai-ichi Life (U.S.A.), Inc. ("Dai-ichi"),
became limited partners of the Predecessor Partnerships.
In November 1994, the Predecessor Partnerships acquired substantially all of
the assets of Alex. Brown Kleinwort Benson Realty Advisors Corporation
("ABKB"), a real estate investment advisor, in exchange for a 20% limited
partnership interest in the Predecessor Partnerships (the "ABKB Acquisition").
Through its acquisition of Kleinwort Benson, the parent company of ABKB,
Dresdner acquired these limited partnership interests, but was required to
sell such interests in order to comply with bank regulatory requirements. In
March 1997, DEL/LaSalle purchased the Dresdner limited partnership interests
in exchange for a $35.0 million note. The purchase price was determined in May
1996 and was based on the original purchase price for such interests plus
Dresdner's share of expected undistributed earnings for 1996. Following the
repurchase, the Employee Partnerships, directly and through DEL/LaSalle, and
Dai-ichi had ownership interests in the Predecessor Partnerships of 75.6% and
24.4%, respectively. The Employee Partnerships are the sole general partners
of the Predecessor Partnerships. See "Shares Eligible for Future Sale."
In October 1996, the Predecessor Partnerships acquired all of the capital
stock of CIN Property Management Limited ("CIN Property Management"), the
affiliated real estate investment and property management advisor for the
British Coal Pension Fund. This entity immediately changed its name to CIN
LaSalle Investment Management Limited ("CIN LaSalle Investment").
On April 22, 1997, Galbreath, a property management, facility management and
development management company, merged with the Predecessor Partnerships. As
consideration for Galbreath, the Predecessor Partnerships issued to the former
stockholders of Galbreath limited partnership interests representing an 18%
interest in the Predecessor Partnerships. Following the Galbreath merger, the
Employee Partnerships, directly and through DEL/LaSalle, and Dai-ichi had
ownership interests in the Predecessor Partnerships of approximately 62% and
20% respectively. The proportional interests of the Employee Partnerships,
DEL/LaSalle, Dai-ichi and the former stockholders of Galbreath may change
slightly depending upon the result of current negotiations between them
relating to a Galbreath joint venture. See "Business--Galbreath Acquisition."
The Company, LPMS, LPCFS and LACM were incorporated in Maryland in April
1997. Prior to the Incorporation Transactions (as defined below), the Company,
LPMS, LCFS and LACM will have no operations other than in connection with
their formation.
The Company's executive offices are located at 200 East Randolph Drive,
Chicago, Illinois 60601 and its telephone number is (312) 782-5800. The
Company has corporate offices in 10 United States cities and in London, Paris,
Mexico City and Beijing and has over 300 property and other offices throughout
the United States.
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INCORPORATION TRANSACTIONS
The Company and LPMS, LPCFS and LACM were formed in April 1997 in connection
with the conversion of the business and operations of the Predecessor
Partnerships from partnership to corporate form. Immediately prior to the
closing of the Offering, pursuant to agreements among the partners, each of
the general and limited partners of the Predecessor Partnerships will exchange
all of their respective general and limited partnership interests (the
"Partnership Interests Exchange") in the Predecessor Partnerships for an
aggregate of 12,200,000 shares of Common Stock. The Company will cause the
Predecessor Partnerships to contribute, among other things, substantially all
of their respective assets and liabilities (the "Asset Contributions")
relating to: (i) the management services group to LPMS; (ii) the corporate and
financial services group to LPCFS; and (iii) the investment management group
to LACM. LPII, an existing subsidiary of the Predecessor Partnerships, will
continue to conduct the Company's international operations. Following the
Partnership Interests Exchange and the Asset Contributions, the Company will
operate as a holding company with the business and operations of the
Predecessor Partnerships being conducted through the Principal Operating
Subsidiaries. The Predecessor Partnerships are undertaking these transactions
in order to facilitate access to the capital markets, provide greater
flexibility for acquisitions, create longer-term liquidity for their partners
and reduce administrative burdens associated with operating as a partnership.
Following the Partnership Interests Exchange, the Employee Partnerships and
DEL/LaSalle, Dai-ichi and the former stockholders of Galbreath will own 63.7%,
18.3% and 18.0%, respectively, of the Company's outstanding Common Stock
immediately prior to the Offering. The percentage ownership interest of the
Employee Partnerships, DEL/LaSalle, Dai-ichi and the former stockholders of
Galbreath in the Company following the Partnership Interests Exchange will be
identical to their effective economic ownership interests in the Predecessor
Partnerships. See "Principal and Selling Stockholders." The proportional
interests of the Employee Partnerships, DEL/LaSalle, Dai-ichi and the former
stockholders of Galbreath may change slightly depending upon the result of
current negotiations between them relating to a Galbreath joint venture. See
"Business--Galbreath Acquisition." The Partnership Interests Exchange and the
Asset Contributions are collectively referred to as the "Incorporation
Transactions." The closing of the Offering is conditioned upon, among other
things, the completion of the Partnership Interests Exchange. In connection
with the Incorporation Transactions, the Company will amend and restate its
Articles of Incorporation. See "Description of Capital Stock."
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,000,000 shares of
Common Stock offered hereby (assuming an initial public offering price of
$20.00 per share), after deducting estimated underwriting discounts and
commissions and estimated expenses of the Offering payable by the Company, are
estimated to be approximately $72.4 million. The Company will not receive any
proceeds from the exercise of the over-allotment option.
The Company will use the net proceeds to repay the full amount of the
indebtedness outstanding under promissory notes issued to Dai-ichi (the "Dai-
ichi Notes"). Any remaining proceeds will be used to repay the indebtedness
outstanding under the Company's long-term credit facility (the "Long-Term
Facility") and for general corporate purposes. The Dai-ichi Notes consist of
approximately $6.2 million principal amount of Class A Notes and $31.0 million
principal amount of Class B Notes, each bearing interest at 10.0%, payable
annually on December 31. Principal payments on the Class A Notes are due in two
equal installments on June 30, 1997 and 1998. Principal payments on the Class B
Notes are due in 10 equal installments on June 30th of each year beginning in
1999. Borrowings under the Long-Term Facility mature on September 6, 1999, and
bear interest at the greater of the lending bank's prime rate and the
applicable federal funds rate plus .5%. Principal payments on borrowings under
the Long-Term Facility are payable on June 15 of each year for amounts
outstanding on March 31, based on a defined amortization schedule. As of March
31, 1997, the principal amount of borrowings under the Long-Term Facility was
approximately $29.2 million, of which approximately $23.3 million is
anticipated to be outstanding at the time of the Offering. Upon completion of
the Offering, the Company intends to use its borrowing capacity, cash generated
from operations and the remaining net proceeds of the Offering to pursue its
growth strategy, including international expansion, selective acquisitions and
co-investment activities. Pending application of the net proceeds of the
Offering as described herein, the Company intends to invest the proceeds in
investment-grade, short-term, interest-bearing securities.
DIVIDEND POLICY
The Company has not paid any dividends on its Common Stock to date. After the
Offering, the Company intends to retain its earnings to support the expansion
of its business. Any dividends declared will be at the discretion of the Board
of Directors and will depend upon the Company's financial condition, earnings
and other factors, including the terms of the Company's indebtedness. The
Company expects that provisions to be contained in agreements governing the
Company's long-term indebtedness after the Offering will limit the amount of
dividends that the Company may pay to its stockholders.
18
<PAGE>
CAPITALIZATION
The following table sets forth the pro forma short-term debt and
capitalization of the Company at March 31, 1997, as adjusted to give effect to
the merger of Galbreath with the Company and the Incorporation Transactions as
if such transactions had occurred on March 31, 1997, and as further adjusted
to give effect to the sale of 4,000,000 shares of Common Stock offered hereby
at an assumed initial public offering price of $20.00 per share, and the
receipt and application of the net proceeds therefrom, as described under "Use
of Proceeds." This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Pro Forma Consolidated Financial Statements" and the Predecessor
Partnerships' Combined Financial Statements and the notes thereto, all
included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------
PRO PRO FORMA
FORMA AS ADJUSTED
-------- -----------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Short-term debt:
Borrowings under short-term credit facility............. $ 16,800 $ 16,800
Current maturities of long-term debt(1)................. 9,332 --
-------- --------
Total short-term debt................................. $ 26,132 $ 16,800
======== ========
Long-term debt:
Long-term credit facility, less current maturities(1)... $ 22,977 $ --
Subordinated loans, less current maturities............. 34,106 --
-------- --------
Total long-term debt, less current maturities......... 57,083 --
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value per share, 10,000,000
shares authorized; no shares issued and outstanding.... -- --
Common Stock, $.01 par value per share, 100,000,000
shares authorized; 12,200,000 shares issued and
outstanding pro forma; 16,200,000 shares issued and
outstanding pro forma as adjusted(2)................... 122 162
Additional paid-in capital.............................. 43,314 115,674
Retained earnings....................................... -- --
-------- --------
Total stockholders' equity............................ 43,436 115,836
-------- --------
Total capitalization................................ $100,519 $115,836
======== ========
</TABLE>
- --------
(1) See Note 7 to Notes to the Predecessor Partnerships' Combined Financial
Statements.
(2) Excludes an aggregate of: (i) 725,000 shares of Common Stock issuable upon
exercise of options to be granted under the Company's 1997 Stock Incentive
Plan upon closing of the Offering, with an exercise price equal to the
initial public offering price; and (ii) 1,490,000 additional shares of
Common Stock reserved for future grants or awards under the Company's 1997
Stock Incentive Plan. See "Management--Director Compensation" and "--1997
Stock Award and Incentive Plan."
19
<PAGE>
DILUTION
The pro forma net tangible book value (deficit) of the Company as of March
31, 1997 (as adjusted to give effect to the merger of Galbreath with the
Company and the Incorporation Transactions) was $(8.8) million, or $(.72) per
share of Common Stock. Pro forma net tangible book value (deficit) per share
is determined by dividing the tangible net worth of the Company (total assets
less intangible assets and total liabilities) by the aggregate number of
shares of Common Stock outstanding, assuming the merger of Galbreath with the
Company and the Incorporation Transactions had taken place on March 31, 1997.
Without taking into account any changes in such net tangible book value after
March 31, 1997, other than to give effect to the sale of the 4,000,000 shares
of Common Stock offered hereby (at an assumed initial public offering price of
$20.00 per share) and the receipt and application of the net proceeds
therefrom, pro forma net tangible book value of the Company as of March 31,
1997 would have been approximately $63.6 million, or $3.93 per share. This
represents an immediate increase in net tangible book value of $4.65 per share
to the current stockholders of the Company and an immediate dilution in net
tangible book value of $16.07 per share to purchasers of Common Stock in the
Offering. The following table illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............ $20.00
Pro forma net tangible book value (deficit) per share at
March 31, 1997............................................ $(.72)
Increase in pro forma net tangible book value per share
attributable to purchasers in the Offering................ 4.65
-----
Pro forma net tangible book value per share after the
Offering.................................................. 3.93
------
Dilution in pro forma net tangible book value per share to
purchasers in the Offering................................ $16.07
======
</TABLE>
The following table summarizes on a pro forma basis, as of March 31, 1997,
the difference between the existing stockholders and the purchasers of shares
in the Offering (at an assumed initial public offering price of $20.00 per
share, before deducting estimated underwriting discounts and commissions and
estimated offering expenses) with respect to the number of shares of Common
Stock purchased from the Company, the total consideration paid and the average
price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.. 12,200,000 75.3% $ 43,436,000 35.2% $3.56
New investors.......... 4,000,000 24.7 80,000,000 64.8 20.00
---------- ----- ------------ -----
Total................ 16,200,000 100.0% $123,436,000 100.0% 7.62
========== ===== ============ =====
</TABLE>
The foregoing calculations exclude an aggregate of: (i) 725,000 shares of
Common Stock issuable upon exercise of options to be granted under the
Company's 1997 Stock Incentive Plan upon closing of the Offering, with an
exercise price equal to the initial public offering price; and (ii) 1,490,000
additional shares of Common Stock reserved for future grants or awards under
the Company's 1997 Stock Incentive Plan. See "Management--Director
Compensation" and "--1997 Stock Award and Incentive Plan."
20
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a pro forma basis for the
Company and on a historical combined basis for the Predecessor Partnerships.
The selected financial data as of December 31, 1995 and 1996 and for the years
ended December 31, 1994, 1995 and 1996 have been derived from the Predecessor
Partnerships' Combined Financial Statements audited by KPMG Peat Marwick LLP,
independent certified public accountants, included elsewhere herein. The
selected financial data as of December 31, 1992, 1993 and 1994 and for the
years ended December 31, 1992 and 1993 have been derived from the Predecessor
Partnerships' Combined Financial Statements audited by KPMG Peat Marwick LLP,
not included herein. The selected financial data as of March 31, 1997 and for
the three months ended March 31, 1996 and March 31, 1997 have been derived
from the Predecessor Partnerships' Unaudited Combined Financial Statements
also included elsewhere herein. Such financial statements include all
adjustments, consisting of normal recurring adjustments, which the Company
considers necessary for a fair presentation of its financial position and
results of operations for these periods. Operating results for the three
months ended March 31, 1997 are not necessarily indicative of results that may
be expected for the entire year. The unaudited pro forma, as adjusted,
statement of operations data for 1996 and for the three months ended March 31,
1997 give effect to the merger of Galbreath with the Company, the
Incorporation Transactions (as described under the heading "Incorporation
Transactions") and the Offering as if they occurred on January 1, 1996. In
addition, the unaudited pro forma, as adjusted, balance sheet data as of March
31, 1997 give effect to the merger of Galbreath with the Company, the
Incorporation Transactions and the Offering as if they occurred on March 31,
1997. The information set forth below should be read in conjunction with "Pro
Forma Consolidated Financial Statements," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Predecessor
Partnerships' Combined Financial Statements and the notes thereto, all
included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1996 PRO FORMA
AS ADJUSTED
1992 1993 1994 1995 1996 (1)
---------- ---------- ----------- ----------- ----------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS
DATA:
Total revenue... $ 103,334 $ 104,049 $ 126,918 $ 151,827 $ 175,967 $ 207,559
Total operating
expenses....... 84,722 87,036 108,903 131,711 149,066 177,382
---------- ---------- ----------- ----------- ----------- -----------
Operating income
(loss)......... 18,612 17,013 18,015 20,116 26,901 30,177
Interest
expense........ 5,590 5,257 5,159 3,806 5,730 1,075
Earnings (loss)
before
provision for
income taxes... 13,022 11,756 12,856 16,310 21,171 29,102
Net provision
(benefit) for
income taxes... 355 300 554 505 1,207 11,204
---------- ---------- ----------- ----------- ----------- -----------
Net earnings
(loss)......... $ 12,667 $ 11,456 $ 12,302 $ 15,805 $ 19,964 $ 17,898
========== ========== =========== =========== =========== ===========
Pro forma:
Primary and
fully diluted
earnings (loss)
per share (2) $ 1.13
===========
OTHER DATA:
EBITDA (3)...... $ 21,034 $ 19,544 $ 20,866 $ 24,356 $ 32,317 $ 37,624
Cash flows
provided by
(used in)
operating
activities..... 14,675 4,837 24,628 13,553 13,964 13,646
Cash flows
provided by
(used in)
investing
activities..... (1,727) (2,738) (4,885) (5,706) (32,478) (31,852)
Cash flows
provided by
(used in)
financing
activities..... (19,000) (6,758) (12,028) (12,365) 17,189 19,195
Investments
under
management (4). $6,500,000 $7,000,000 $10,700,000 $11,500,000 $15,200,000 $15,200,000
Total square
feet-facility
management (5). 2,400 50,600 50,600 67,600 68,600 81,600
Total square
feet under
management (6). 47,000 98,300 102,400 125,700 131,600 202,900
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------
1997 PRO FORMA
AS ADJUSTED
1996 1997 (1)
------------ ------------ --------------
<S> <C> <C> <C>
STATEMENT OF
OPERATIONS
DATA:
Total revenue... $ 27,285 $ 36,019 $ 43,384
Total operating
expenses....... 32,490 39,291 46,269
------------ ------------ --------------
Operating income
(loss)......... (5,205) (3,272) (2,885)
Interest
expense........ 937 1,695 265
Earnings (loss)
before
provision for
income taxes... (6,142) (4,967) (3,150)
Net provision
(benefit) for
income taxes... (350) (248) (1,213)
------------ ------------ --------------
Net earnings
(loss)......... $ (5,792) $ (4,719) $ (1,937)
============ ============ ==============
Pro forma:
Primary and
fully diluted
earnings (loss)
per share (2) $ (0.12)
==============
OTHER DATA:
EBITDA (3)...... $ (4,094) $ (1,498) $ (599)
Cash flows
provided by
(used in)
operating
activities..... (12,721) (4,678) (7,892)
Cash flows
provided by
(used in)
investing
activities..... (5,967) (2,038) (2,185)
Cash flows
provided by
(used in)
financing
activities..... 14,921 7,705 7,573
Investments
under
management (4). $11,500,000 $15,100,000 $15,100,000
Total square
feet-facility
management (5). 67,600 69,100 82,100
Total square
feet under
management (6). 130,200 132,700 204,000
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1997
---------------------------------------------- ------------------------
PRO FORMA
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED (7)
-------- -------- -------- -------- -------- -------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 9,784 $ 5,125 $ 12,840 $ 8,322 $ 7,207 $ 8,094 $ 14,994
Total assets............ 72,590 84,512 107,055 115,001 156,614 124,075 166,411
Long-term debt (8)...... 51,319 56,619 41,028 40,805 55,551 57,083 --
Total liabilities....... 87,277 99,801 93,898 100,004 132,367 109,425 50,575
Total partners' capital
(deficit)/stockholders'
equity................. (14,687) (15,289) 13,157 14,997 24,247 14,650 115,836
</TABLE>
- -------
(Footnotes on following page)
21
<PAGE>
- --------
(1) As adjusted to give effect to the merger of Galbreath with the Company,
the Incorporation Transactions and the sale of the shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $20.00 per share and the receipt and application of the net proceeds
therefrom, as though they had occurred on January 1, 1996. See "Use of
Proceeds," "Background of the Company" and "Incorporation Transactions."
(2) Pro forma as adjusted primary and fully diluted earnings (loss) per share
is based upon 15,869,337 shares of Common Stock outstanding, which
includes the 12,200,000 shares of Common Stock to be issued in connection
with the Incorporation Transactions and gives effect to 3,669,337 of the
4,000,000 shares of Common Stock to be issued in the Offering, the
proceeds of which will be used to repay indebtedness. The Company will
have 16,200,000 shares of Common Stock outstanding upon completion of the
Offering. See "Use of Proceeds."
(3) EBITDA represents earnings before interest, income taxes, depreciation and
amortization, thereby removing the effect of certain non-cash charges on
income, such as the amortization of intangible assets relating to
acquisitions. Management believes that EBITDA is widely used in the real
estate industry and can be a meaningful measure of operating performance,
cash generation and ability to service debt. However, EBITDA 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 is comparable to similarly titled items
reported by other companies.
(4) Investments under management represents the aggregate fair market value or
cost basis of assets managed by the Investment Management group as of the
end of the periods shown. The percentage of investments under management
stated at cost represented 3% in 1992 and 1993, 7% in 1994 and 1995, and
8% in 1996 and 1997 of the amounts shown.
(5) Represents the total square footage of properties for which the Company
provided facility management services as of the end of the periods shown.
(6) Represents the total square footage of properties for which the Company
provided property management and leasing or facility management services
as of the end of the periods shown.
(7) As adjusted to give effect to the merger of Galbreath with the Company,
the Incorporation Transactions and the sale of the shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $20.00 per share and the receipt and application of the net proceeds
therefrom, as though they had occurred on March 31, 1997. See "Use of
Proceeds," "Background of the Company" and "Incorporation Transactions."
(8) See Note 7 to Notes to the Predecessor Partnerships' Combined Financial
Statements.
22
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements are
derived from the Predecessor Partnerships' Combined Financial Statements. The
unaudited pro forma consolidated statements of earnings give effect to the
merger of Galbreath with the Company and the Incorporation Transactions, as if
they had occurred on January 1, 1996. The unaudited pro forma consolidated
statements of earnings, as adjusted, give further effect to the Offering and
the receipt and application of the net proceeds therefrom. The unaudited pro
forma consolidated balance sheet gives effect to the merger of Galbreath with
the Company and the Incorporation Transactions, as if they had occurred on
March 31, 1997. The unaudited pro forma consolidated balance sheet, as
adjusted, gives further effect to the Offering and the receipt and application
of the net proceeds therefrom. See "Incorporation Transactions," "Use of
Proceeds," "Capitalization," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The unaudited pro forma
consolidated financial statements should be read in conjunction with the
Predecessor Partnerships' Combined Financial Statements and the notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and other financial information, all included elsewhere herein.
The pro forma adjustments are based upon available information and certain
assumptions that management of the Company believes are reasonable under the
circumstances. The pro forma consolidated financial statements are not
necessarily indicative of what the actual financial position and results of
operations would have been as of March 31, 1997 and for the year ended
December 31, 1996 and the three months ended March 31, 1997 had the Company
completed the merger of Galbreath with the Company and consummated the
Incorporation Transactions and the Offering (and the receipt and application
of the net proceeds therefrom) as of the dates indicated nor does it purport
to represent the future financial position or results of operations of the
Company.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------------------------------------------------------------
GALBREATH MERGER
HISTORICAL -----------------------------------
COMBINED DISPOSITION OF PRO FORMA
PREDECESSOR HISTORICAL BUSINESS UNITS PRO ACQUISITION INCORPORATION COMPANY/
PARTNERSHIPS (1) COMBINED (1) ADJUSTMENTS (2) FORMA ADJUSTMENTS (3) ADJUSTMENTS GALBREATH
---------------- ------------ --------------- ------ --------------- ------------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based
services....... $34,244 $12,648 $(6,022) $6,626 $ -- $ -- $ 40,870
Equity in
earnings from
unconsolidated
ventures....... 1,394 73 -- 73 -- -- 1,467
Construction
operations,
net............ 205 -- -- -- -- -- 205
Other income.... 176 783 (117) 666 -- -- 842
------- ------- ------- ------ ----- ------- ----------
Total revenue... 36,019 13,504 (6,139) 7,365 -- -- 43,384
Operating
expenses:
Compensation and
benefits....... 27,217 9,814 (5,246) 4,568 -- -- 31,785
Other operating
and
administrative. 10,300 2,884 (1,174) 1,710 -- -- 12,010
Depreciation and
amortization... 1,774 179 -- 179 333 -- 2,286
------- ------- ------- ------ ----- ------- ----------
Total operating
expenses....... 39,291 12,877 (6,420) 6,457 333 -- 46,081
------- ------- ------- ------ ----- ------- ----------
Operating income
(loss)......... (3,272) 627 281 908 (333) -- (2,697)
Interest expense. 1,695 72 (72) -- -- -- 1,695
------- ------- ------- ------ ----- ------- ----------
Earnings (loss)
before
provision for
income taxes... (4,967) 555 353 908 (333) -- (4,392)
Net provision
(benefit) for
income taxes.... (248) 33 -- 33 -- (1,476)(6) (1,691)
------- ------- ------- ------ ----- ------- ----------
Net earnings
(loss)......... $(4,719) $ 522 $ 353 $ 875 $(333) $ 1,476 $ (2,701)
======= ======= ======= ====== ===== ======= ==========
Primary and fully
diluted earnings
(loss) per
share........... $ (0.22)
Supplemental
primary and
fully diluted
earnings (loss)
per share.......
Shares used in
computation of
primary and
fully diluted
earnings per
share...........
12,200,000 (8)
===========
</TABLE>
- -------
<TABLE>
<CAPTION>
PRO FORMA
OFFERING AS
ADJUSTMENTS ADJUSTED
----------- ----------
<S> <C> <C>
Revenue:
Fee-based
services....... $ -- $ 40,870
Equity in
earnings from
unconsolidated
ventures....... -- 1,467
Construction
operations,
net............ -- 205
Other income.... -- 842
------ ----------
Total revenue... -- 43,384
Operating
expenses:
Compensation and
benefits....... -- 31,785
Other operating
and
administrative. 188 (4) 12,198
Depreciation and
amortization... -- 2,286
------ ----------
Total operating
expenses....... 188 46,269
------ ----------
Operating income
(loss)......... (188) (2,885)
Interest expense. (1,430)(5) 265
------ ----------
Earnings (loss)
before
provision for
income taxes... 1,243 (3,150)
Net provision
(benefit) for
income taxes.... 478 (6) (1,213)
------ ----------
Net earnings
(loss)......... $ 764 $ (1,937)
====== ==========
Primary and fully
diluted earnings
(loss) per
share...........
Supplemental
primary and
fully diluted
earnings (loss)
per share....... $ (0.12)(7)
==========
Shares used in
computation of
primary and
fully diluted
earnings per
share........... 15,869,337 (7)
===========
</TABLE>
- -------
(Footnotes on following page)
23
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------------------------------------------------
GALBREATH MERGER
HISTORICAL ------------------------------------
COMBINED DISPOSITION OF PRO FORMA
PREDECESSOR HISTORICAL BUSINESS UNITS PRO ACQUISITION INCORPORATION COMPANY/
PARTNERSHIPS (1) COMBINED (1) ADJUSTMENTS (2) FORMA ADJUSTMENTS (3) ADJUSTMENTS GALBREATH
---------------- ------------ --------------- ------- --------------- ------------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based
services....... $170,709 $53,326 $(25,731) $27,595 $ -- $ -- $ 198,304
Equity in
earnings from
unconsolidated
ventures....... 3,220 572 -- 572 -- -- 3,792
Construction
operations,
net............ 1,271 -- -- -- -- -- 1,271
Other income.... 767 4,068 (643) 3,425 -- -- 4,192
-------- ------- -------- ------- ------- ------- ----------
Total revenue... 175,967 57,966 (26,374) 31,592 -- -- 207,559
Operating
expenses:
Compensation and
benefits....... 104,673 41,747 (23,965) 17,782 -- -- 122,455
Other operating
and
administrative. 38,977 12,055 (4,302) 7,753 -- -- 46,730
Depreciation and
amortization... 5,416 701 -- 701 1,330 -- 7,447
-------- ------- -------- ------- ------- ------- ----------
Total operating
expenses....... 149,066 54,503 (28,267) 26,236 1,330 -- 176,632
-------- ------- -------- ------- ------- ------- ----------
Operating income
(loss)......... 26,901 3,463 1,893 5,356 (1,330) -- 30,927
Interest expense. 5,730 504 (504) -- -- -- 5,730
-------- ------- -------- ------- ------- ------- ----------
Earnings before
provision for
income taxes... 21,171 2,959 2,397 5,356 (1,330) -- 25,197
Net provision for
income taxes.... 1,207 210 -- 210 -- 8,284 (6) 9,701
-------- ------- -------- ------- ------- ------- ----------
Net earnings
(loss)......... $ 19,964 $ 2,749 $ 2,397 $ 5,146 $(1,330) $(8,284) $ 15,496
======== ======= ======== ======= ======= ======= ==========
Primary and fully
diluted earnings
per share....... $ 1.27
==========
Supplemental
primary and
fully diluted
earnings per
share...........
Shares used in
computation of
primary and
fully diluted
earnings per
share........... 12,200,000(8
==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------
PRO FORMA
OFFERING AS
ADJUSTMENTS ADJUSTED
----------- ----------
<S> <C> <C>
Revenue:
Fee-based
services....... $ -- $ 198,304
Equity in
earnings from
unconsolidated
ventures....... -- 3,792
Construction
operations,
net............ -- 1,271
Other income.... -- 4,192
------- ----------
Total revenue... -- 207,559
Operating
expenses:
Compensation and
benefits....... -- 122,455
Other operating
and
administrative. 750 (4) 47,480
Depreciation and
amortization... -- 7,447
------- ----------
Total operating
expenses....... 750 177,382
------- ----------
Operating income
(loss)......... (750) 30,177
Interest expense. (4,655)(5) 1,075
------- ----------
Earnings before
provision for
income taxes... 3,905 29,102
Net provision for
income taxes.... 1,503 (6) 11,204
------- ----------
Net earnings
(loss)......... $ 2,402 $ 17,898
======= ==========
Primary and fully
diluted earnings
per share.......
Supplemental
primary and
fully diluted
earnings per
share........... $ 1.13(7)
==========
Shares used in
computation of
primary and
fully diluted
earnings per
share........... 15,869,337(7)
==========
</TABLE>
(1) The "Historical" columns represent the combined statements of operations
of the Predecessor Partnerships and the combined statements of operations
of Galbreath for the three months ended March 31, 1997 and the year ended
December 31, 1996.
(2) These adjustments give effect to the elimination of revenue and related
compensation, benefits, operating and other expenses associated with
Galbreath's tenant representation and investment banking units which, in
connection with the merger, are being disposed of or eliminated, and the
elimination of interest expense related to Galbreath's debt which was
repaid in connection with the merger of Galbreath with the Company. Such
business units were not retained as they did not meet the strategic
objectives of the Company.
(3) The adjustment gives effect to the amortization of intangibles and
goodwill associated with the merger of Galbreath with the Company.
(4) The adjustment gives effect to the estimated incremental general and
administrative costs associated with operation as a public company.
(5) The adjustment gives effect to the repayment of the Dai-ichi Notes and the
Long-Term Facility. See "Use of Proceeds."
(6) The adjustment gives effect to the provision (benefit) for income taxes as
though the Company and Galbreath were taxable entities as of January 1,
1996 at an estimated effective tax rate of 38.5%.
(7) Includes the 12,200,000 shares of Common Stock to be issued in connection
with the Incorporation Transactions and 3,669,337 of the 4,000,000 shares
of Common Stock to be issued in the Offering, the proceeds of which will
be used to repay indebtedness. The Company will have 16,200,000 shares of
Common Stock outstanding upon completion of the Offering. See "Use of
Proceeds."
(8) Represents the 12,200,000 shares to be issued in connection with the
Incorporation Transactions.
24
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------------------------------------------------------------------
GALBREATH MERGER
HISTORICAL ---------------------------------
COMBINED DISPOSITION OF PRO FORMA
PREDECESSOR HISTORICAL BUSINESS UNITS PRO ACQUISITION INCORPORATION COMPANY/
PARTNERSHIPS(1) COMBINED(1) ADJUSTMENTS(2) FORMA ADJUSTMENTS ADJUSTMENTS(3) GALBREATH
--------------- ----------- -------------- ------ ----------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.... $ 8,094 $ 2,689 $ (1,774) $ 915 $ -- $ -- $ 9,009
Trade
receivables.... 52,052 8,665 (5,641) 3,024 -- -- 55,076
Other
receivables.... 4,116 1,020 (596) 424 -- -- 4,540
Prepaid
expenses....... 1,115 -- -- -- -- -- 1,115
Deferred tax
asset.......... -- -- -- -- 179(6) -- 179
Other assets.... -- 3,576 (3,576) -- -- -- --
-------- ------- -------- ------ ------- ------- --------
Total current
assets......... 65,377 15,950 (11,587) 4,363 179 -- 69,919
Property and
equipment....... 14,409 2,183 (35) 2,148 -- -- 16,557
Goodwill
resulting from
business
acquisitions.... 10,827 -- -- -- 23,651 (6) -- 34,478
Intangibles
resulting from
business
acquisitions.... 11,820 -- -- -- 5,913 (6) -- 17,733
Investment in
Galbreath....... -- -- -- -- 29,293 (7) -- --
(29,293)(6)
Investments in
real estate
ventures........ 15,752 129 (32) 97 -- -- 15,849
Long-term
receivables,
net............. 4,878 291 (291) -- -- -- 4,878
Other assets,
net............. 1,012 1,003 (1,003) -- -- -- 1,012
-------- ------- -------- ------ ------- ------- --------
$124,075 $19,556 $(12,948) $6,608 $29,743 $ -- $160,426
======== ======= ======== ====== ======= ======= ========
LIABILITIES AND PARTNERS' CAPITAL/STOCKHOLDERS' EQUITY
Current
liabilities:
Accounts payable
and accrued
liabilities.... $ 19,059 $ 3,559 $ -- $3,559 $ 507 (7) $ -- $ --
886 (6)
24,011
Accrued
compensation... 6,143 5,317 (2,867) 2,450 -- -- 8,593
Borrowings under
short-term
credit
facility....... 16,800 930 (930) -- -- -- 16,800
Current
maturities of
long-term debt. 9,332 599 (599) -- -- -- 9,332
-------- ------- -------- ------ ------- ------- --------
Total current
liabilities.... 51,334 10,405 (4,396) 6,009 1,393 -- 58,736
Long-term debt:
Subordinated
loans, less
current
maturities..... 34,106 -- -- -- -- -- 34,106
Long-term credit
facility, less
current
maturities..... 22,977 455 (455) -- -- -- 22,977
-------- ------- -------- ------ ------- ------- --------
Total long-term
debt........... 57,083 455 (455) -- -- -- 57,083
Other long-term
liabilities..... 1,008 -- -- -- 163 (6) -- 1,171
-------- ------- -------- ------ ------- ------- --------
Total
liabilities.... 109,425 10,860 (4,851) 6,009 1,556 -- 116,990
Partners'
capital/stockholders'
equity:
Common stock.... -- -- -- -- -- 122 122
Additional paid-
in capital..... -- -- -- -- -- 43,314 43,314
Retained
earnings....... -- -- -- -- -- -- --
Predecessor
Partnership's
partners'
capital........ 14,650 -- -- -- 28,786 (7) (43,436) --
Galbreath
owners' equity. -- 8,696 (8,097) 599 (599)(6) -- --
-------- ------- -------- ------ ------- ------- --------
Total partners'
capital/
stockholders'
equity......... 14,650 8,696 (8,097) 599 28,187 -- 43,436
-------- ------- -------- ------ ------- ------- --------
$124,075 $19,556 $(12,948) $6,608 $29,743 $ -- $160,426
======== ======= ======== ====== ======= ======= ========
- -------
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
PRO
OFFERING FORMA AS
ADJUSTMENTS ADJUSTED
----------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.... $72,400 (4)
(66,415)(5) $ 14,994
Trade
receivables.... -- 55,076
Other
receivables.... -- 4,540
Prepaid
expenses....... -- 1,115
Deferred tax
asset.......... -- 179
Other assets.... -- --
------- --------
Total current
assets......... 5,985 75,904
Property and
equipment....... -- 16,557
Goodwill
resulting from
business
acquisitions.... -- 34,478
Intangibles
resulting from
business
acquisitions.... -- 17,733
Investment in
Galbreath....... -- --
Investments in
real estate
ventures........ -- 15,849
Long-term
receivables,
net............. -- 4,878
Other assets,
net............. -- 1,012
------- --------
$ 5,985 $166,411
======= ========
LIABILITIES AND PARTNERS
Current
liabilities:
Accounts payable
and accrued
liabilities.... $ -- $ --
24,011
Accrued
compensation... -- 8,593
Borrowings under
short-term
credit
facility....... -- 16,800
Current
maturities of
long-term debt. (9,332)(5) --
------- --------
Total current
liabilities.... (9,332) 49,404
Long-term debt:
Subordinated
loans, less
current
maturities..... (34,106)(5) --
Long-term credit
facility, less
current
maturities..... (22,977)(5) --
------- --------
Total long-term
debt........... (57,083) --
Other long-term
liabilities..... -- 1,171
------- --------
Total
liabilities.... (66,415) 50,575
Partners'
capital/stockholders'
equity:
Common stock.... 40 (4) 162
Additional paid-
in capital..... 72,360 (4) 115,674
Retained
earnings....... -- --
Predecessor
Partnership's
partners'
capital........ -- --
Galbreath
owners' equity. -- --
------- --------
Total partners'
capital/
stockholders'
equity......... 72,400 115,836
------- --------
$ 5,985 $166,411
======= ========
</TABLE>
- -------
(1) The "Historical" columns represent the combined balance sheet of the
Predecessor Partnerships as of March 31, 1997, and the combined balance
sheet of Galbreath as of March 31, 1997.
(2) These adjustments give effect to the distribution of certain assets and
liabilities, including assets and liabilities associated with Galbreath's
tenant representation and investment banking units, which will be made in
connection with the merger of Galbreath with the Company and the repayment
of debt in connection with the merger of Galbreath with the Company. Such
business units were not retained as they did not meet the strategic
objectives of the Company.
(3) These adjustments give effect to the issuance of 12,200,000 shares of
Common Stock in exchange for all of the outstanding partnership interests
of the Predecessor Partners in connection with the Incorporation
Transactions.
(4) This adjustment gives effect to the receipt of $72,400 of net proceeds
from the issuance of 4,000,000 shares of Common Stock in the Offering (at
an assumed initial public offering price of $20.00 per share).
(5) This adjustment gives effect to the repayment of the Dai-ichi Notes and
the Long-Term Facility. See "Use of Proceeds."
(6) These adjustments give effect to the allocation of the purchase price of
Galbreath of $29,293 to identifiable assets and liabilities at their
estimated fair values. The excess purchase price of $29,564 was allocated
to management contracts ($5,913) and goodwill ($23,651), which are being
amortized over 8 years and 40 years, respectively, based on the Company's
estimate of useful lives. Due to the nature and expected recovery of
assets and settlement of liabilities, historical stated value approximates
fair value. Estimated current and long-term obligations resulting from the
merger of $886 and $163, respectively, have been recorded as liabilities
and additional goodwill and intangible assets. Upon conversion to a
corporation, Galbreath will recognize a deferred tax asset of $179 which
has been deducted from goodwill and intangible assets.
(7) This adjustment represents management's estimate of the fair value of
Galbreath of $29,293, including transaction related costs of $507, which
is based upon the estimated fair value of the consideration received by
the Company which was based on a discounted EBITDA analysis. Such value is
consistent with the value used to execute cash purchase and sale
transactions by the Employee Partnerships at December 31, 1996.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
LaSalle Partners is a leading full service real estate firm that provides
management services, corporate and financial services and investment
management services to corporations and other real estate owners, users and
investors worldwide. The Management Services segment provides three primary
service capabilities: (i) property management and leasing for property owners;
(ii) facility management for properties occupied by corporate owners and
users; and (iii) development management for both investors and real estate
users seeking to develop new buildings or renovate existing facilities. The
Corporate and Financial Services segment provides transaction and advisory
services through three primary service capabilities: (i) tenant representation
for corporations and professional service firms; (ii) investment banking
services to address the financing, acquisition and disposition needs of real
estate owners; and (iii) land acquisition and development services for owners,
users and developers of land. The Investment Management segment provides real
estate investment management services to institutional investors, corporations
and high net worth individuals.
The Company has benefited from the recovery in real estate markets which
began in 1993. Specifically, rising rental and occupancy rates have positively
affected revenue for the Company's property management and leasing and tenant
representation businesses. In addition, improving real estate property values
and improved trading values for public real estate securities have resulted in
higher revenue for the Company's Investment Management segment.
Although a significant portion of the Company's revenue is transactional in
nature, 87% of the Company's 1996 revenue was derived from clients for which
the Company provided services in previous years. The Company believes that its
strong client-service orientation, its focus on cross-selling its products and
services, and its development of strategic alliances with major users and
owners of real estate strengthen its client relationships and create recurring
revenue sources. The Company's revenue has increased at a compound rate of
17.7%, 12.4% and 14.2% for the three year, five year and ten year periods
ended December 31, 1996, respectively. In addition, the Company's wide range
of product and service offerings enabled the Company to maintain a stable
level of revenue from 1990 to 1993, the sharpest downturn in the real estate
markets in recent decades. None of the Company's clients accounted for 10% or
more of the Company's total revenue for 1994, 1995 or 1996.
The Company's operating expenses consist of compensation and benefits, other
operating and administrative expenses and depreciation and amortization.
Compensation and benefits tend to be relatively constant as a percentage of
revenue on an annual basis. Other operating and administrative expenses
consist principally of overhead costs and to a lesser extent business
development expenses, professional fees and employee training and development.
Overhead generally consists of occupancy costs and other routine business
expenses (i.e., office equipment, supplies and telecommunications) necessary
to conduct the Company's day-to-day operations. Overhead costs tend to be
relatively fixed, with increases occurring as the Company expands into new
geographic markets and as significant changes occur in staffing levels. The
remaining components of other operating and administrative expenses are
relatively variable. Depreciation and amortization has increased in recent
years due to the acquisitions of ABKB and CIN Property Management, increased
investment in technology and the Company's relocation of its Chicago
headquarters. Depreciation and amortization expenses will increase as a result
of the merger of Galbreath with the Company.
Historically, the Company's revenue, operating income and net earnings in
the first three calendar quarters are substantially lower than in the fourth
quarter. This seasonality is due to a calendar year-end focus on the
completion of transactions, which is consistent with the real estate industry
generally. In addition, an increasing percentage of the Company's management
contracts contain clauses providing for performance bonuses to be received if
the Company achieves certain performance targets. Such incentive payments are
generally earned in
26
<PAGE>
the fourth quarter. In contrast, the Company's non-variable operating
expenses, which are treated as expenses when incurred during the year, are
relatively constant on a quarterly basis. Therefore, the Company typically
sustains a loss in the first and second quarter of each calendar year, reports
a small profit or loss in the third quarter and records a substantial majority
of the Company's earnings in the fourth calendar quarter. See "--Quarterly
Results of Operations."
The Company receives investment advisory, property management and leasing
and investment banking fees for services provided in connection with four
multiple investor funds ("commingled funds") formed by the Company in the
1980s to hold real estate investments on behalf of numerous tax-exempt
institutional investors. Revenue derived from, or in connection with, these
funds represented 11.5% of the Company's total revenue in 1996 compared to
12.8% and 20.1% in 1995 and 1994, respectively. The Company expects that such
revenue will decrease and eventually be eliminated as the remaining assets of
the funds are sold. While the timing of the revenue loss will depend on the
timing of the dispositions, the Company expects to complete substantially all
of such dispositions prior to the end of 1998.
The Company is pursuing a strategy of selective acquisitions in order to
expand its capability to serve clients and strengthen its position as an
industry leader. As a result of the merger of Galbreath with the Company, the
Company added 71 million square feet to its property and facility management
portfolio, added new client relationships and expanded its market coverage.
Previously, with the acquisition of ABKB's real estate business in late 1994
and with the 1996 purchase of CIN Property Management, the Company added
approximately $5.3 billion to its assets under management, extended the
Company's securities advisory capabilities and established the Company as the
fourth largest manager of institutional real estate equity investments in the
United Kingdom.
As of March 31, 1997, the Company had a total net investment of $15.8
million in 33 separate property or fund co-investments (which properties and
funds had a total acquisition cost exceeding $1.0 billion). Twenty-nine of
these co-investments were made in the last three years. The holding period for
co-investments typically ranges from three to seven years. Such co-investments
are typically represented by non-controlling general partner and limited
partner interests. The Company intends to use the increased financial
flexibility created by the Offering to expand its co-investment activities.
The Company's increased participation as a principal in real estate
investments could increase fluctuations in the Company's net earnings and cash
flow as a result of the timing and magnitude of the gains or losses and
potential incentive participation fees, if any, to be recognized on the
disposition of the assets. In certain of these investments, the Company will
not have complete discretion to control the timing of the disposition of such
investments. Co-investment also creates opportunities for the Company to
provide services related to the acquisition, financing, property management,
leasing and disposition of such investments.
PRO FORMA FINANCIAL INFORMATION
The Pro Forma Consolidated Financial Statements included elsewhere herein
give effect to, among other things, the merger of Galbreath with the Company,
the Incorporation Transactions and the Offering. See "Pro Forma Consolidated
Financial Statements."
THREE MONTHS ENDED MARCH 31, 1997
On a pro forma basis, the Company's total revenue for the three months ended
March 31, 1997 was $43.4 million, compared to actual historical revenue of
$36.0 million. Pro forma total revenue of Galbreath includes fees generated
primarily from management services activities, such as property management and
leasing, facility management and development management assignments. Total
revenue of Galbreath also includes other income which consists of revenue
generated from the management of various insurance programs on behalf of
properties, investment income and other miscellaneous income.
Pro forma operating loss for the Company for the three months ended March
31, 1997 was $2.9 million compared to actual historical operating loss of $3.3
million. The decrease in operating loss on a pro forma basis is primarily the
result of the addition of $.9 million of pro forma Galbreath operating income,
including the effect
27
<PAGE>
of eliminating the net excess costs associated with Galbreath's tenant
representation and investment banking units which are being disposed of or
eliminated by the Company, partially offset by $.3 million of amortization of
management contracts and goodwill associated with the merger and $.2 million
of incremental expense associated with public ownership.
Pro forma net loss for the three months ended March 31, 1997 was $1.9
million, which reflects the decrease in operating loss, the Company's
repayment of indebtedness under the Dai-ichi Notes and the Long-Term Facility
and the tax effect as though the Company and Galbreath were taxable entities
for the entire period.
YEAR ENDED DECEMBER 31, 1996
On a pro forma basis, the Company's total revenue for 1996 was $207.6
million, compared to actual historical revenue of $176.0 million.
Pro forma operating income for the Company in 1996 was $30.2 million,
compared to actual historical operating income of $26.9 million. The increase
in operating income of the Company on a pro forma basis is primarily the
result of the addition of $5.4 million of pro forma Galbreath operating
income, including the effect of eliminating the net excess costs associated
with Galbreath's tenant representation and investment banking units which are
being disposed of or eliminated by the Company, offset by $1.3 million of
amortization of intangibles and goodwill associated with the merger and $.8
million of incremental expense associated with public ownership. Prior to the
merger with Galbreath, the Company's operating income as a percentage of total
revenue was 15.3%, compared to 14.5% on a pro forma basis. The decrease is
attributable to the amortization of goodwill and intangibles incurred in
connection with the merger of Galbreath with the Company. The Company believes
that potential synergies created by the merger will improve the operating
margin for the combined management services business. Such synergies are
expected to result primarily from eliminating infrastructure redundancies,
centralizing accounting and personnel functions and enhancing Galbreath's
management information systems.
Pro forma net income for 1996 was $17.9 million, reflecting the increase in
operating income, the Company's repayment of indebtedness under the Dai-ichi
Notes and the Long-Term Facility and the tax effect as though the Company and
Galbreath were taxable entities for the entire year.
The Galbreath combination is being treated for accounting purposes as a
purchase under Accounting Principles Board Opinion No. 16. The excess purchase
price over the fair value of the identifiable assets and liabilities acquired
was $29.6 million, of which $5.9 million was allocated to management contracts
and $23.7 million was allocated to goodwill. The amounts allocable to
management contracts and goodwill are being amortized on a straight-line basis
over 8 and 40 years, respectively, based on the Company's estimate of useful
lives.
28
<PAGE>
RESULTS OF OPERATIONS
The following unaudited table sets forth for the periods indicated the
percentage of total revenue represented by certain items reflected in the
Company's historical statement of earnings.
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
------------------- -------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenue:
Management Services..................... 41.3% 40.7% 40.7% 44.0% 40.0%
Corporate and Financial Services........ 27.7 24.6 26.0 14.4 13.8
Investment Management................... 31.0 34.7 33.3 41.6 46.2
----- ----- ----- ----- -----
Total revenue......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Compensation and benefits............... 61.6% 60.1% 59.5% 85.5% 75.6%
Other operating and administrative...... 22.0 23.9 22.2 29.5 28.6
Depreciation and amortization........... 2.2 2.8 3.0 4.1 4.9
----- ----- ----- ----- -----
Total operating expenses.............. 85.8% 86.8% 84.7% 119.1% 109.1%
Operating income (loss)................. 14.2% 13.2% 15.3% (19.1)% (9.1)%
Interest expense.......................... 4.1 2.5 3.3 3.4 4.7
----- ----- ----- ----- -----
Earnings (loss) before provision
(benefit) for income taxes........... 10.1% 10.7% 12.0% (22.5)% (13.8)%
Net provision (benefit) for income taxes.. 0.4 0.3 0.7 (1.3) (0.7)
----- ----- ----- ----- -----
Net earnings (loss)....................... 9.7% 10.4% 11.3% (21.2)% (13.1)%
===== ===== ===== ===== =====
</TABLE>
29
<PAGE>
The following unaudited tables summarize the revenue, operating expenses and
operating income by segment, and the percentage of segment revenue represented
by such items, for the years ended December 31, 1994, 1995 and 1996 and for the
three months ended March 31, 1996 and 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
------------------------------------------------- -------------------------------
1994 1995 1996 1996 1997
--------------- --------------- --------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGEMENT SERVICES:
Segment revenue:
Property management
fees.................. $ 32,465 61.7% $ 34,017 53.8% $ 37,465 52.1% $ 7,774 64.2% 8,666 60.0%
Leasing fees........... 9,747 18.5 13,951 22.2 14,819 20.6 443 3.7 1,173 8.1
Facility management
fees.................. 6,222 11.8 10,477 16.6 13,639 19.0 2,698 22.3 3,417 23.7
Development management
fees.................. 3,557 6.8 3,125 4.9 5,465 7.6 1,038 8.6 1,115 7.7
Intersegment sales..... 160 0.3 1,370 2.2 200 0.3 100 0.8 25 0.2
Other income........... 466 0.9 212 0.3 281 0.4 60 0.4 47 0.3
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
$ 52,617 100.0% $ 63,152 100.0% $ 71,869 100.0% $12,113 100.0% $14,443 100.0%
Operating Expenses:
Compensation, benefits,
other operating and
administrative........ 46,267 87.9 50,859 80.5 59,486 82.8 13,392 110.6 15,849 109.7
Depreciation and
amortization.......... 1,076 2.0 1,202 1.9 1,651 2.3 337 2.8 512 3.5
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Operating income
(loss)................ $ 5,274 10.1% $ 11,091 17.6% $ 10,732 14.9% $(1,616) (13.3%) (1,918) (13.3%)
======== ===== ======== ===== ======== ===== ======= ===== ======= =====
CORPORATE AND FINANCIAL
SERVICES:
Segment revenue:
Tenant representation
fees.................. $ 19,359 55.2% $ 23,037 61.8% $ 31,200 66.8% $ 2,881 73.7% $ 3,409 68.6%
Investment banking
fees.................. 9,432 26.9 6,908 18.5 6,664 14.3 293 7.5 612 12.3
Land fees.............. 4,300 12.2 3,675 9.8 4,938 10.6 298 7.6 707 14.2
Construction
operations, net....... 1,284 3.7 1,358 3.6 1,271 2.7 311 7.9 205 4.1
Equity in earnings from
unconsolidated
ventures.............. 476 1.4 2,171 5.9 1,380 3.0 89 2.3 -- 0.0
Intersegment sales..... 1,000 2.1 -- 0.0 -- 0.0
Other income........... 233 0.6 154 0.4 253 0.5 40 1.0 33 0.7
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
$ 35,084 100.0% $ 37,303 100.0% $ 46,706 100.0% $ 3,912 100.0% $ 4,966 100.0%
Operating expenses:
Compensation, benefits,
other operating and
administrative........ 27,463 78.3 28,604 76.7 34,831 74.6 7,038 179.9 8,764 176.5
Depreciation and
amortization.......... 845 2.4 890 2.4 1,055 2.3 218 5.6 218 4.4
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Operating income
(loss)................ $ 6,776 19.3% $ 7,809 20.9% $ 10,820 23.1% $(3,344) (85.5%) $(4,016) (80.9%)
======== ===== ======== ===== ======== ===== ======= ===== ======= =====
INVESTMENT MANAGEMENT:
Segment revenue:
Advisory fees.......... $ 35,734 90.7% $ 45,117 85.5% $ 53,618 91.5% $11,004 96.9% $14,640 88.0%
Acquisition fees....... 2,944 7.5 6,411 12.2 2,939 5.0 305 2.7 505 3.0
Equity in earnings from
unconsolidated
ventures.............. 548 1.4 959 1.8 1,840 3.2 -- 0.0 1,394 8.4
Other income........... 151 0.4 255 0.5 195 0.3 51 0.4 96 0.6
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
$ 39,377 100.0% $ 52,742 100.0% $ 58,592 100.0% $11,360 100.0% $16,635 100.0%
Operating expenses:
Compensation, benefits,
other operating and
administrative........ 32,482 82.5 49,378 93.6 50,533 86.2 11,049 97.3 12,929 77.7
Depreciation and
amortization.......... 930 2.4 2,148 4.1 2,710 4.6 556 4.9 1,044 6.3
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----
Operating income
(loss)................ $ 5,965 15.1% $ 1,216 2.3% $ 5,349 9.2% $ (245) (2.2%) $ 2,662 16.0%
======== ===== ======== ===== ======== ===== ======= ===== ======= =====
Total segment revenue... $127,078 $153,197 $177,167 $27,385 $36,044
Intersegment revenue
eliminations........... (160) (1,370) (1,200) (100) (25)
-------- -------- -------- ------- -------
Total revenue.......... $126,918 $151,827 $175,967 $27,285 $36,019
======== ======== ======== ======= =======
Total segment operating
expenses............... $109,063 $133,081 $150,266 $32,590 $39,316
Intersegment operating
expenses............... (160) (1,370) (1,200) (100) (25)
-------- -------- -------- ------- -------
Total operating
expenses.............. $108,903 $131,711 $149,066 $32,490 $39,291
======== ======== ======== ======= =======
Total operating income
(loss)................ $ 18,015 $ 20,116 $ 26,901 $(5,205) $(3,272)
======== ======== ======== ======= =======
</TABLE>
30
<PAGE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
CONSOLIDATED RESULTS
Total Revenue. The Company's total revenue grew $8.7 million, or 32.0%, to
$36.0 million for the three months ended March 31, 1997 from $27.3 million in
the prior year period. The increase is attributable to the continued
improvement in real estate market conditions, the acquisition of CIN Property
Management in October 1996 and the increase in co-investments.
Operating Expenses. The Company's operating expenses grew $6.8 million, or
20.9%, to $39.3 million for the three months ended March 31, 1997 from $32.5
million in the prior year period. The increase is primarily attributable to
the acquisition of CIN Property Management, increased staffing levels and
higher compensation and benefits generally as a result of anticipated
transactions. As a percentage of total revenue, operating expenses declined to
109.1% for the three months ended March 31, 1997 from 119.1% in the prior year
period.
Operating Income (Loss). The Company typically incurs a loss in the first
quarter of the calendar year. For the three months ended March 31, 1997, the
Company's operating loss decreased $1.9 million to $3.3 million from $5.2
million in the prior year period. The decrease is primarily attributable to
the earnings associated with the acquisition of CIN Property Management and
equity earnings generated from co-investments with which additional
compensation costs are not associated. As a percentage of total revenue, the
operating loss decreased to 9.1% for the three months ended March 31, 1997
from 19.1% in the prior year period.
Interest Expense. Interest expense increased $.8 million, or 80.9%, to $1.7
million in 1997 from $.9 million in 1996. The increase is substantially a
result of increased borrowings under the Long-Term Facility to fund the CIN
Property Management acquisition, technology and infrastructure investments and
co-investments.
Provision (Benefit) for Income Taxes. The benefit for income taxes decreased
by $.1 million to $.2 million in 1997 from $.4 million in 1996.
Net Earnings (Loss). The Company's net loss decreased $1.1 million, or
18.5%, to $4.7 million in 1997 from $5.8 million in 1996.
SEGMENT OPERATING RESULTS
Management Services. The Management Services segment's revenue, which
represented 40.0% of the Company's total revenue for the three months ended
March 31, 1997, increased $2.3 million, or 19.2%, to $14.4 million from $12.1
million in the prior year period. The increase was due to a $.9 million
increase in property management fees and $.7 million increase in leasing fees
as a result of the net addition of 4.5 million square feet of new property
management assignments. In addition, facility management fees increased $.7
million as a result of an increase of one million square feet of property
under management in the fourth quarter of 1996.
Operating expenses increased $2.6 million, or 19.2%, to $16.4 million for
the three months ended March 31, 1997 from $13.7 million in the prior year
period. The increase is primarily attributable to increased compensation,
relocation, travel and marketing expenses associated with the national leasing
and business development group established in the second half of 1996 as well
as increased staffing levels to manage the additional property and facility
management assignments.
The Management Services segment's operating loss increased $.3 million, or
18.7%, to $1.9 million for the three months ended March 31, 1997 from $1.6
million in the prior year period. As a percentage of revenue, Management
Services' operating loss remained constant at 13.3% for the three months ended
March 31, 1997 compared to the prior year period.
Corporate and Financial Services. The Corporate and Financial Services
segment's revenue, which represented 13.8% of the Company's total revenue for
the three months ended March 31, 1997, increased
31
<PAGE>
$1.1 million, or 26.9%, to $5.0 million for the three months ended March 31,
1997 from $3.9 million in the prior year period. The increase is attributable
to an increased number of transactions in the tenant representation,
investment banking and land units.
Operating expenses for the Corporate and Financial Services segment
increased $1.7 million, or 23.8%, to $9.0 million for the three months ended
March 31, 1997 from $7.3 million in the prior year period. The increase in
operating expenses primarily represents increased staffing levels in the
Company's tenant representation unit in addition to increased marketing
efforts by the investment banking unit.
The Corporate and Financial Services segment's operating loss increased $.7
million, or 20.1%, to $4.0 million for the three months ended March 31, 1997
from $3.3 million in the prior year period. The revenue of the Corporate and
Financial Services segment are heavily weighted to the fourth quarter of the
year with operating expenses generally spread evenly throughout the year in
accordance with GAAP. As a percentage of segment revenue, the operating loss
decreased to 80.9% in 1997 from 83.0% in 1996.
Investment Management. The Investment Management segment's revenue, which
represented 46.2% of the Company's total revenue for the three months ended
March 31, 1997, increased $5.3 million, or 46.4%, to $16.6 million for the
three months ended March 31, 1997 from $11.4 million in the prior year period.
The increase is primarily attributable to the earnings associated with the
acquisition of CIN Property Management which had revenue of $3.5 million in
1997, as well as to equity earnings recognized on $7.9 million of net
additional co-investments at March 31, 1997.
Operating expenses increased $2.4 million, or 20.4%, to $14.0 million for
the three months ended March 31, 1997 from $11.6 million in the prior year
period. The increase is primarily attributable to the additional compensation
and other direct operating expenses associated with the acquisition of CIN
Property Management totaling $2.8 million offset by a slight decrease in
staffing in other units within the Investment Management segment.
Operating income was $2.7 million for the three months ended March 31, 1997
compared to an operating loss of $.2 million for the prior year period. The
increase is attributable to the net income generated from CIN Property
Management in addition to equity earnings on co-investments for which
compensation and other operating costs are not incurred. As a percentage of
segment revenue, operating income increased to 16.0% for the three months
ended March 31, 1997 from a negative 2.2% in the prior year period.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
CONSOLIDATED RESULTS
Total Revenue. The Company's total revenue grew $24.1 million, or 15.9%, to
$176.0 million in 1996 from $151.8 million in 1995. In general, the strong
United States economy in 1996 and a lack of new construction since the early
1990s have resulted in tightening supplies and rising rental rates for
commercial real estate in the United States. Accordingly, the amount of public
and private capital invested in commercial real estate generally has increased
with improving market conditions. These conditions have resulted in revenue
growth for all three of the Company's business segments. None of the Company's
clients accounted for 10% or more of the Company's total revenue in 1996.
Operating Expenses. The Company's operating expenses increased $17.4
million, or 13.2%, to $149.1 million in 1996 from $131.7 million in 1995. The
increase in operating expenses generally reflected higher levels of
compensation and benefits associated with increased staffing and higher
incentive compensation associated with the Company's increased revenue. In
addition, depreciation and amortization expenses increased $1.2 million, or
27.7%, primarily as a result of amortization of goodwill and other intangibles
associated with the acquisition of CIN Property Management in October 1996
(which are being amortized over five to 20 years) and depreciation expense
associated with the Company's investment in technology-related assets and the
relocation of its corporate headquarters. As a percentage of total revenue,
operating expenses declined to 84.7% in 1996 from 86.8% in 1995, primarily
reflecting the relatively fixed nature of certain administrative expenses as
well as
32
<PAGE>
the impact in 1995 of the $1.9 million provision for the estimated
uncollectible portion of a receivable from Diverse Real Estate Holdings
Limited Partnership ("Diverse"). See "Certain Relationships and Related
Transactions."
Operating Income. Based on the factors noted above, the Company's operating
income increased $6.8 million, or 33.7%, to $26.9 million in 1996 from $20.1
million in 1995. As a percentage of total revenue, operating income increased
to 15.3% in 1996 from 13.2% in 1995.
Interest Expense. Interest expense increased $1.9 million, or 50.6%, to $5.7
million in 1996 from $3.8 million in 1995, principally as a result of
increased borrowings under the Long-Term Facility to fund the CIN Property
Management acquisition, technology and infrastructure investments and co-
investments.
Provision for Income Taxes. Provision for income taxes increased $.7
million, or 139%, to $1.2 million in 1996 from $.5 million in 1995, due to an
increased volume of transactions performed in jurisdictions with higher state
taxes and increased foreign taxes paid in connection with international
operations.
Net Earnings. Net earnings increased $4.2 million, or 26.3%, to $20.0
million in 1996 from $15.8 million in 1995. Net earnings in 1996 represented
11.3% of total revenue, compared with 10.4% in the previous year.
SEGMENT OPERATING RESULTS
Management Services. The Management Services segment's revenue, which
represented approximately 40.7% of the Company's total revenue in 1996,
increased $8.7 million, or 13.8%, to $71.9 million in 1996 from $63.2 million
in 1995. This increase was primarily due to a $4.3 million increase in
property management and leasing fees and a $3.2 million increase in facility
management revenue. Property management and leasing fees increased as a result
of the net addition of approximately six million square feet of new property
management and leasing assignments in 1996 and, to a lesser extent, rising
rental rates for office buildings generally. The increase in facility
management fees was principally due to the initiation of a major new facility
management assignment and increased incentive-based fees related to cost
savings achieved for facility management accounts added in prior years. The
Company's property management and leasing revenue was impacted by a $.6
million decline in revenue related to the sale of certain commingled fund
properties. Total revenue from property management and leasing services
provided to commingled fund properties in 1996 was $11.9 million compared to
$12.5 million in 1995.
Operating expenses increased $9.1 million, or 17.4%, to $61.1 million in
1996 from $52.1 million in 1995 as a result of increased staffing levels to
meet the demands associated with an expansion of square feet under management.
In addition, the segment incurred approximately $2.0 million of incremental
expenses associated with an increased commitment of senior personnel to the
national leasing effort. This effort included an expansion in selected
regional markets resulting in approximately $1.0 million of relocation and
recruiting costs. The segment also incurred approximately $.7 million in
consulting fees to enhance client service and information reporting for
property management assignments and in training costs expended on new
technology implemented in 1996 regarding tenant request and other systems.
Operating income decreased by $.4 million, or 3.2%, to $10.7 million in 1996
from $11.1 million in 1995. The Management Services segment's operating income
represented 39.9% of the Company's total operating income in 1996. As a
percentage of segment revenue, operating income decreased to 14.9% in 1996
from 17.6% in 1995.
Corporate and Financial Services. The Corporate and Financial Services
segment's revenue, which represented about 26.5% of the Company's total
revenue in 1996, increased $9.4 million, or 25.2%, to $46.7 million in 1996
from $37.3 million in 1995. This record revenue resulted primarily from an
$8.2 million increase in revenue from the Company's tenant representation
business. A number of significant tenant representation transactions and a
series of transactions generated from a new facility management client
accounted for the majority of the increased tenant representation revenue. The
tenant representation business completed 256 transactions totaling over 6.7
million square feet in 1996 compared to 132 transactions and 3.6 million
square feet in 1995. General improvements in real estate market fundamentals,
including declining vacancies in Class A buildings and increases in office
rents, have prompted several of the Company's clients to complete large
33
<PAGE>
relocations or lease extensions. Approximately 79% of tenant representation
revenue in 1996 was generated from strategic alliances with large corporations
or professional service firms.
Operating expenses for the Corporate and Financial Services segment
increased $6.4 million, or 21.7%, to $35.9 million in 1996 from $29.5 million
in 1995, principally as a result of higher staffing levels to meet the higher
levels of activity throughout the year and as a result of increased incentive
compensation earned by employees. The Corporate and Financial Services
segment's operating income, which represented 40.2% of the Company's total
operating income in 1996, increased $3.0 million in 1996, or 38.6%, to $10.8
million in 1996 from $7.8 million in 1995. As a percentage of segment revenue,
operating income increased to 23.1% in 1996 from 20.9% in 1995.
Investment Management. The Investment Management segment's revenue, which
represented 33.3% of the Company's total revenue in 1996, increased $5.9
million, or 11.1%, to $58.6 million in 1996 from $52.7 million in 1995. The
net gain in revenue was primarily attributable to growth in the Company's
European advisory business resulting from the CIN Property Management
acquisition in October 1996, and, to a lesser extent, the increase in assets
under management from the Company's co-investment activities and the Company's
securities advisory business. Strong fundamentals in the publicly traded real
estate securities markets during 1996, and the resulting capital inflows to
this sector, contributed to the growth in the Company's securities advisory
business.
Revenue was negatively impacted by a $1.0 million decline in investment
management fees from the Company's four large commingled funds in 1996, as a
result of the sale of several commingled fund assets during the year. The
funds had a net asset value of $726 million at the end of 1996, compared to
$983 million at the end of 1995. Investment Management segment revenue from
these funds, which totaled $5.9 million in 1996, will continue to decline as
substantially all of the remaining properties are expected to be sold by the
end of 1998.
Operating expenses increased $1.7 million, or 3.3%, to $53.2 million in 1996
from $51.5 million in 1995. The increase is primarily attributable to
additional operating expenses and amortization of goodwill and intangible
assets associated with the acquisition of CIN Property Management totaling
$2.6 million and, to a lesser extent, to employee relocation costs totaling
$1.2 million. The 1996 increase in expenses was offset by $2.0 million in
certain one-time expenses incurred in 1995 related to the reorganization of
this segment.
Operating income, which represented 19.9% of the Company's total operating
income in 1996, increased $4.1 million to $5.3 million in 1996 from $1.2
million in 1995. As a percentage of segment revenue, operating income
increased to 9.2% in 1996 from 2.3% in 1995.
34
<PAGE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
CONSOLIDATED RESULTS
Total Revenue. Total revenue increased $24.9 million, or 19.6%, to $151.8
million in 1995 from $126.9 million in 1994. The revenue increase resulted
from the full year effect of the acquisition of ABKB's securities and advisory
business in late 1994 and from revenue growth in the Management Services
segment's leasing and facility management activities. The Company's revenue
growth also reflected improvements in both general economic conditions and in
real estate industry fundamentals.
Operating Expenses. The Company's operating expenses increased $22.8
million, or 20.9%, to $131.7 million in 1995 from $108.9 million in 1994. As a
percentage of total revenue, operating expenses increased to 86.8% in 1995
from 85.8% in 1994. The increase in operating expenses was attributable
primarily to a $13.1 million increase in compensation and benefits expenses,
an $8.3 million increase in other operating and administrative expenses and,
to a lesser extent, a $1.4 million increase in depreciation and amortization
expense. The increase in compensation and benefits expenses reflected the
effect of the ABKB acquisition in late 1994 and higher levels of employee
incentive compensation associated with certain segments exceeding their
operating income objectives. The increase in other operating and
administrative expenses was primarily attributable to the effect of the ABKB
acquisition and, to a lesser extent, to certain one-time costs and the $1.9
million provision for the uncollectible portion of the Company's long-term
receivable from Diverse. The increase in depreciation and amortization expense
principally resulted from the full-year effect of the amortization of the
intangible assets arising from the acquisition of ABKB in late 1994. The $9.4
million in intangibles recognized in that transaction are being amortized over
a 10 year period. In 1994, operating expenses included a $4.2 million charge
related to the commitment to relocate the Company's headquarters, which charge
was allocated to all of the Company's business segments, principally on a
head-count basis.
Operating Income. Operating income increased $2.1 million, or 11.7%, to
$20.1 million in 1995 from $18.0 million in 1994. As a result of the factors
noted above, as a percentage of total revenue, operating income represented
13.2% in 1995 compared to 14.2% in 1994.
Interest Expense. Interest expense declined to $3.8 million in 1995 from
$5.2 million in 1994 and is substantially attributable to the $14.1 million
principal payment made on the Dai-ichi Notes in late 1994.
Net Earnings. Net earnings increased $3.5 million, or 28.5%, to $15.8
million in 1995 from $12.3 million in 1994. Net earnings represented 10.4% of
total revenue, compared with 9.7% in 1994.
SEGMENT OPERATING RESULTS
Management Services. The Management Services segment's revenue, which
represented 40.7% of the Company's total revenue in 1995, increased $10.5
million, or 20.0%, to $63.2 million in 1995 from $52.6 million in 1994.
Facility management revenue increased $4.3 million as the Company obtained
over 17.0 million square feet of new assignments. Improving leasing markets
drove leasing revenue to record levels in 1995, with leasing revenue
increasing $4.2 million over 1994 levels. Property management fees also
increased $1.6 million to $34.0 million, principally as a result of new
assignments.
Operating expenses increased $4.7 million, or 10.0%, to $52.1 million in
1995 from $47.3 million in 1994, primarily as a result of increased staffing
levels to support new assignments in addition to expanded marketing costs
associated with promoting the Company's facilities management initiative. As a
percentage of revenue, operating expenses decreased to 82.4% in 1995 from
89.9% in 1994 primarily as a result of higher than normal corporate overhead
expenses incurred in 1994 as a result of the Management Services segment's
allocation of the headquarters relocation charge. The Management Services
segment's operating income, which represented 55.1% of the Company's total
operating income in 1995, increased $5.8 million, or 110%, to $11.1 million in
1995 from $5.3 million in 1994. As a percentage of segment revenue, operating
income increased to 17.6% in 1995 from 10.0% in 1994.
35
<PAGE>
Corporate and Financial Services. The Corporate and Financial Services
segment's revenue, which represented approximately 24.6% of the Company's
total revenue in 1995, increased $2.2 million, or 6.3%, to $37.3 million in
1995 from $35.1 million in 1994. The revenue growth resulted from $3.7 million
of increased revenue from tenant representation activities. The tenant
representation business completed 132 transactions totaling 3.6 million square
feet in 1995, compared with 98 transactions totaling 3.8 million square feet
in 1994. Although the total square footage of transactions in 1995 was
slightly less than in 1994, revenue per square foot increased due to a
concentration of activity in cities with higher average rents. Revenue gains
were offset principally by decreased revenue from its investment banking
activities. The reduction in the Company's investment banking revenue was
primarily attributable to senior personnel being dedicated to the development
of new products and initiatives in 1995, including CMBS and hotel investments,
rather than new business development.
Operating expenses increased $1.2 million, or 4.2%, to $29.5 million in 1995
from $28.3 million in 1994. As a percentage of revenue, operating expenses
represented 79.1% in 1995 compared to 80.7% in 1994. The 1994 operating
expenses for this segment were adversely affected by the one-time allocation
of the headquarters relocation charge. The Corporate and Financial Services
segment's operating income, which represented 38.8% of the Company's total
operating income in 1995, increased $1.0 million in 1995, or 15.2%, to $7.8
million in 1995 from $6.8 million in 1994. The increase was a result of the
strengthening of the real estate market, increased tenant representation fees
and the investment in a commercial land and residential development entity. As
a percentage of segment revenue, operating income increased to 20.9% in 1995
from 19.3% in 1994.
Investment Management. The Investment Management segment's revenue, which
represented 34.7% of the Company's total revenue in 1995, increased $13.4
million, or 33.9%, to $52.7 million in 1995 from $39.4 million in 1994. The
substantial majority of the increase in revenue was associated with the ABKB
acquisition, partially offset by a $7.0 million decrease in commingled fund
revenue. This decline in commingled fund revenue was primarily attributable to
the voluntary reduction in fees in 1995, as well as sales of real estate
assets held by such funds. In addition, as a result of the downturn in real
estate markets, commingled fund advisory fees, which are calculated as a
percentage of real estate net asset value ("NAV"), declined because of such
reductions in property NAVs.
Operating expenses increased $18.1 million, or 54.2%, to $51.5 million in
1995 from $33.4 million in 1994. The substantial majority of the increase is
associated with the ABKB acquisition and the amortization of the related
goodwill and intangible assets in addition to certain one-time expenses
incurred in 1995 totaling $2.0 million related to the restructuring of this
segment. As a percentage of revenue, operating expenses increased to 97.7% in
1995 from 84.9% in 1994. The Investment Management segment's operating income,
which represented 6.0% of the Company's total operating income in 1995,
decreased $4.7 million to $1.2 million in 1995 from $6.0 million in 1994. As a
percentage of segment revenue, operating income decreased to 2.3% in 1995 from
15.1% in 1994.
36
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth certain unaudited combined statements of
operations data for each of the Company's last nine quarters. In the opinion
of management, this information has been presented on the same basis as the
audited financial statements appearing elsewhere in this Prospectus, and
includes all adjustments, consisting only of normal recurring adjustments and
accruals, that the Company considers necessary for a fair presentation. The
unaudited combined quarterly information should be read in conjunction with
the Predecessor Partnerships' Combined Financial Statements and the notes
thereto. The operating results for any quarter are not necessarily indicative
of the results for any future period.
<TABLE>
<CAPTION>
1995 1996 1997
------------------------------------ ------------------------------------ ---------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31
-------- ------- -------- ------- -------- ------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE(1):
Management Services..... $11,782 $13,777 $13,697 $22,526 $12,013 $15,332 $18,484 $25,840 $14,418
Corporate and Financial
Services............... 3,302 6,336 9,880 17,785 3,912 6,933 8,712 26,149 4,966
Investment Management... 11,336 12,693 13,105 15,608 11,360 12,466 11,979 22,787 16,635
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenue........... $26,420 $32,806 $36,682 $55,919 $27,285 $34,731 $39,175 $74,776 $36,019
OPERATING EXPENSES:
Compensation and
benefits............... $21,489 $22,352 $22,145 $25,197 $23,327 $24,346 $24,995 $32,005 $27,217
Other operating and
administrative (1)..... 7,083 8,702 8,467 12,036 8,052 8,831 10,088 12,006 10,300
Depreciation and
amortization........... 1,003 1,057 1,052 1,128 1,111 1,134 1,169 2,002 1,774
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss). $(3,155) $ 695 $ 5,018 $17,558 $(5,205) $ 420 $ 2,923 $28,763 $(3,272)
Interest expense........ 941 948 959 958 937 1,104 1,944 1,745 1,695
Income tax provision
(benefit).............. (127) (8) 126 514 (350) (39) 56 1,540 (248)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net earnings (loss)..... $(3,969) $ (245) $ 3,933 $16,086 $(5,792) $ (645) $ 923 $25,478 $(4,719)
======= ======= ======= ======= ======= ======= ======= ======= =======
EBITDA(2)............... $(2,152) $ 1,752 $ 6,070 $18,686 $(4,094) $ 1,554 $ 4,092 $30,765 $(1,498)
Net cash provided by
(used in) operating.... (8,926) 3,429 10,543 8,507 (12,721) 7,639 1,863 17,183 (4,678)
Net cash provided by
(used in) investing.... (695) (2,266) (1,629) (1,116) (5,967) (3,139) (2,678) (20,694) (2,038)
Net cash provided by
(used in) financing.... 2,349 (1,970) (8,644) (4,100) 14,921 (4,432) 1,099 5,601 7,705
</TABLE>
The following table sets forth the above quarterly financial information as
a percentage of total revenue:
<TABLE>
<CAPTION>
1995 1996 1997
----------------------------------- ----------------------------------- ---------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31
-------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE(1):
Management Services..... 44.6% 42.0% 37.3% 40.3% 44.0% 44.1% 47.2% 34.6% 40.0%
Corporate and Financial
Services............... 12.5 19.3 26.9 31.8 14.4 20.0 22.2 35.0 13.8
Investment Management... 42.9 38.7 35.7 27.9 41.6 35.9 30.6 30.4 46.2
----- ----- ----- ----- ----- ----- ----- ----- -----
Total revenue........... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
OPERATING EXPENSES:
Compensation and
benefit................ 81.3% 68.1% 60.4% 45.1% 85.5% 70.1% 63.8% 42.8% 75.6%
Other operating and
administrative (1)..... 26.8 26.5 23.1 21.5 29.5 25.4 25.7 16.0 28.6
Depreciation and
amortization........... 3.8 3.2 2.9 2.0 4.1 3.3 3.0 2.7 4.9
----- ----- ----- ----- ----- ----- ----- ----- -----
Operating income (loss). (11.9)% 2.1% 13.7% 31.4% (19.1)% 1.2% 7.5% 38.5% (9.1)%
Interest expense........ 3.6 2.9 2.6 1.7 3.4 3.2 5.0 2.3 4.7
Income tax provision
(benefit).............. (0.5) 0.0 0.3 0.9 (1.3) (0.1) 0.1 2.1 (0.7)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net earnings (loss)..... (15.0)% (0.7)% 10.7% 28.8% (21.2)% (1.9)% 2.4% 34.1% (13.1)%
===== ===== ===== ===== ===== ===== ===== ===== =====
EBITDA (2).............. (8.1)% 5.3% 16.5% 33.4% (15.0)% 4.5% 10.4% 41.1% (4.2)%
</TABLE>
- --------
(1)Excludes intersegment revenue and intersegment expense.
(2) EBITDA represents earnings before interest, income taxes, depreciation and
amortization, thereby removing the effect of certain non-cash charges on
income, such as the amortization of intangible assets relating to
acquisitions. Management believes that EBITDA is widely used in the real
estate industry and can be a meaningful measure of operating performance,
cash generation and ability to service debt. However, EBITDA 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 is comparable to similarly titled items
reported by other companies.
37
<PAGE>
Segment Revenue. A substantial majority of Management Services revenue
reflects property and facility management fees earned evenly throughout the
year. However, fourth quarter revenue is generally higher due to higher levels
of leasing fees earned in the fourth quarter as well as incentive fees earned
under performance-based agreements. Corporate and Financial Services revenue
has historically increased from quarter to quarter in a given year with the
largest proportion of transactions being completed in the fourth quarter,
consistent with the industry. Investment Management revenue is generally
earned evenly throughout the year with the fourth quarter 1996 revenue
reflective of the CIN Property Management acquisition in October 1996.
Operating Expenses. Bonus accruals are recorded quarterly on the basis of
the progress toward achievement of revenue targets. Consequently, fourth
quarter compensation and benefit expenses track the higher level of revenue
generated in the fourth quarter. Other operating and administrative expenses
are generally relatively consistent throughout the year.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows used in operations totaled $4.7 million for the three months
ended March 31, 1997 compared to $12.7 million for the prior year period. Net
cash flows provided by operations totaled $14.0 million, $13.6 million and
$24.6 million for the years ended December 31, 1996, 1995 and 1994,
respectively. The primary element of change for the three months ended March
31, 1997 and in the years 1996 through 1994 is the increase in receivables,
which can be attributed to the significant increase in leasing commissions
generated in the fourth quarter of each year for both the Management Services
and Corporate and Financial Services segments. Fees recognized from lease
transactions are typically collected half when the lease is executed and half
when the space is occupied with occupancy generally occurring between six and
12 months after the lease execution. These increases have been partially
offset by steady increases in accounts payable and accrued compensation which
is also attributable to the increase in fourth quarter revenue generation.
Since 1993, the Company has invested or committed approximately $30 million
(which has been reduced by approximately $16.3 million through subsequent
dispositions of a portion of these investments and through sales of
participations in these investments to employees and others) in over 30
separate properties or funds. In addition to its share of investment returns,
the Company typically earns property management, leasing, and advisory fees on
these investments. The equity earnings from these co-investments have had a
relatively small impact on the Company's current earnings and cash flow.
However, this impact will increase as such existing co-investments are sold
over the next several years, and as the Company's co-investment activity
accelerates following the Offering.
Net cash used in investing activities was $2.0 million for the three months
ended March 31, 1997 compared to $6.0 million for the prior year period. The
reduction in net cash used in investing activities is a result of $.9 million
of distributions from real estate investments and a decrease of $4.1 million
in capital investments over the prior year period offset by an increase in
capital contributions of $1.1 million to real estate ventures. Net cash used
in investing activities was $32.5 million in 1996, compared to $5.7 million in
1995. The increase was attributable to the acquisition of CIN Property
Management for $15.7 million, as well as increases in co-investment activity,
expenditures on furniture and fixtures at the Company's new corporate
headquarters and increased investments in technology. Net cash used in
investing activities was $5.7 million in 1995, compared to $4.9 million in
1994. Net co-investment activity in 1995 was $2.0 million lower than in the
prior year; however, capital investments in technology in 1995 were $2.8
million higher than in 1994. As of March 31, 1997, the Company had unfunded
commitments for existing co-investments of $1.1 million.
Historically, the Company has financed its operations, acquisitions and co-
investments with internally generated funds, partnership equity and borrowings
under revolving credit facilities. In September 1996, the Company replaced its
$30 million revolving line of credit with a $70 million credit agreement
terminating on September 6, 1999. The agreement consists of a short-term
facility (the "Short-Term Facility") and the Long-Term Facility totaling $30
million and $40 million, respectively. The agreement is secured by certain of
the Company's receivables, fixed assets and investments in ventures. The
agreement requires that the Company
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maintain a certain level of net worth and meet earnings before interest, taxes,
depreciation and amortization targets. The Company is further prohibited,
without the lenders' prior approval, from incurring certain indebtedness
(including certain levels of indebtedness in connection with co-investments),
guaranteeing certain obligations or disposing of a significant portion of its
assets. The facilities bear variable rates of interest based on market rates.
The Company expects to renegotiate the terms of the Short-Term Facility and
Long-Term Facility in connection with the assumption of such indebtedness by
the Company in the Incorporation Transactions.
The Short-Term Facility is a revolving line of credit which must be paid down
annually for a 30-consecutive-day period and is restricted as to use for
general business purposes. Amounts outstanding on the Short-Term Facility at
March 31, 1997 totaled $16.8 million. The Long-Term Facility is limited in use
to investments in real estate ventures, business acquisitions and certain
capital expenditures, subject to lender approval. Principal payments on
borrowings under the Long-Term Facility are payable annually on June 15 for
amounts outstanding as of March 31 based on a defined amortization schedule.
Principal payments made on June 15 of each year increase the available balance
on the facility from which to borrow. Amounts outstanding on the Long-Term
Facility as of March 31, 1997 totaled $29.2 million.
At March 31, 1997, the Company also had outstanding $37.2 million in
subordinated debt owed to affiliates of Dai-ichi in the form of $6.2 million in
Class A Notes and $31 million in Class B Notes (the "Dai-ichi Notes"), each
bearing interest at 10% payable annually on December 31st. Principal payments
on the Class A Notes are $3.1 million due on June 30, 1997 and 1998. Principal
payments on the Class B Notes are due in ten equal payments of $3.1 million on
June 30th of each year beginning in 1999. The Notes are prepayable without
penalty. In 1994, a principal repayment of $14.1 million was made on the Class
A Notes with capital contributions received in connection with the ABKB
acquisition.
Net cash provided by financing activities was $7.7 million for the three
months ended March 31, 1997 compared to $14.9 million for the prior year
period. The change is primarily attributable to the increased cash flow
provided by operations resulting in a decrease in borrowing needs. Net cash
provided by (used in) financing activities was $17.2 million in 1996, compared
to ($12.4) million in 1995. Borrowings under the Long-Term Facility in 1996
were used to fund the acquisition of CIN Property Management, the increase in
co-investment activity, and infrastructure investments. Net cash used in
financing activities was $12.4 million in 1995, compared to $12.0 million in
1994. Distributions to partners increased by $3.0 million in 1995, compared to
1994.
Upon completion of the Offering, the Company intends to repay the full amount
of the indebtedness outstanding under the Dai-ichi Notes. The remaining
proceeds will be used to repay the indebtedness outstanding under the Long-Term
Facility. After the existing long-term debt is paid, the Company plans to
increase its long-term debt periodically in order to continue to pursue
international expansion, strategic acquisitions and co-investments. The Company
believes that cash generated from operations, the net proceeds of the Offering
and available borrowings will be sufficient to meet its capital and liquidity
requirements for the forseeable future. See "Use of Proceeds."
DISPOSITION
On December 31, 1996, the Company completed the sale of its construction
management business to a former member of the Company's management. This
business, which specializes in the interior build-out of office and retail
space for tenants in the Chicago and Los Angeles markets, had 1996 revenue,
which are shown net of related expenses on the Company's combined statements of
earnings, of $1.3 million. The business was sold in exchange for a note of $9.1
million. The note, which is secured by the current and future assets of the
business, is due December 31, 2006. For financial reporting purposes, the
Company has not treated the transaction as a divestiture. Principal and
interest to be received under the note will be treated as a reserve, if
necessary, for any anticipated financial exposure under the terms of the asset
purchase agreement, with the remainder recognized as income as principal and
interest payments are received.
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INFLATION
The Company's operations are directly affected by various national and
economic conditions, including interest rates, the availability of credit to
finance real estate transactions and the impact of tax laws. To date, the
Company does not believe that general inflation has had a material impact on
its operations, as revenue, commissions and other variable costs related to
revenue are primarily impacted by real estate supply and demand rather than
general inflation.
OTHER MATTERS
In connection with the Offering and the Incorporation Transactions, the
Company will become subject to Federal and additional state and local income
taxes as it converts from partnership to corporate form. Concurrently with the
Incorporation Transactions, the Company will record deferred tax assets and
liabilities in accordance with the provisions of SFAS No. 109. Such amounts
are not expected to have a material effect on the Company's Pro Forma
Consolidated Financial Statements.
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BUSINESS
COMPANY OVERVIEW
LaSalle Partners is a leading full-service real estate firm that provides
management services, corporate and financial services and investment
management services to corporations and other real estate owners, users and
investors worldwide. By offering a broad range of real estate products and
services, and through its extensive knowledge of domestic and international
real estate markets, the Company is able to serve as a single source provider
of solutions for its clients' full range of real estate needs. The Company
holds a leading market position in each of its primary businesses. For
example, the Company believes it is the largest property manager of office
buildings in the United States, one of the largest outsource service providers
for corporate occupied facilities and the third largest manager of
institutional equity capital invested in domestic real estate assets and
securities. The Company is also the fourth largest manager of institutional
real estate equity investments in the United Kingdom. Founded in 1968, the
Company is headquartered in Chicago, Illinois, and maintains corporate offices
in 10 United States cities and four international markets. The Company also
maintains over 300 property and other offices throughout the United States. In
1996, the Company generated total revenue of $176.0 million and earnings
before interest, taxes, depreciation and amortization of $32.3 million,
representing an increase of 15.9% and 32.7%, respectively, from the prior
year's results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
To meet the diverse needs of its clients, the Company provides its full
range of real estate services through three principal business groups:
Management Services, Corporate and Financial Services and Investment
Management. The Management Services group develops and implements property
level strategies to increase investment value for real estate owners and
optimize occupancy costs for corporate owners and users of real estate. The
Corporate and Financial Services group provides tenant representation
services, investment banking services and land acquisition and development
services. The Investment Management group provides real estate investment
management services to institutional investors, corporations and high net
worth individuals.
On April 22, 1997, Galbreath, a property management, facility management and
development management company, was merged with the Company. Based on the 1996
CPN Survey, the combination of Galbreath and the Company would have ranked the
Company as the third largest property manager in the United States. The
Company's principal objectives for the merger were to expand the Company's
geographic presence, add additional client relationships and provide the
potential for significant economic synergies with the Management Services
group. Such synergies are expected to result primarily from eliminating
infrastructure redundancies, centralizing accounting and personnel functions
and enhancing Galbreath's management information systems.
COMPETITIVE ADVANTAGES
The Company believes that it has several competitive advantages which have
established it as a leader in the real estate services and investment
management industries. These advantages include the Company's:
. Relationship Orientation. The Company's client-driven focus enables the
Company to develop long-term relationships with owners and users of real
estate. By developing such relationships, the Company generates repeat
business and creates recurring revenue sources; 87% of the Company's 1996
revenue was derived from clients for which the Company provided services
in prior years. The Company's relationship orientation is supported by an
employee compensation system which is unique in the real estate industry.
LaSalle Partners compensates its professionals with a salary, bonus and
stock ownership plan which is designed to reward client relationship
building, teamwork and quality performance, rather than on a commission
basis which is typical in the industry.
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. Full Range of Services. By offering a wide range of high quality,
complementary services, the Company can combine its services to develop
and implement real estate strategies that meet the increasingly complex
needs of its clients. The Company's product and service capabilities
include property management and leasing, facility management, development
management, tenant representation, investment banking, land acquisition
and development, and investment management.
. Geographic Reach. With 10 corporate offices and over 300 property and
other offices throughout the United States, LaSalle Partners possesses
in-depth knowledge of local markets and can provide its full range of
real estate services throughout the country. In addition, the Company's
four international offices give the Company the ability to serve its
clients' needs in key international markets. The international offices
also serve as the platform from which the Company will expand its
international presence.
. Reputation. The Company is widely recognized by large corporations and
institutional owners and users of real estate as a provider of high
quality, professional real estate services and investment management
products. The Company believes its name recognition and reputation for
quality services are significant advantages when pursuing new business
opportunities.
. Experienced Management/Employee Equity Incentives. The Company's senior
management team has an average of approximately 18 years of experience in
the real estate services industry and, with the exception of Lizanne
Galbreath who joined the Company on April 22, 1997 in connection with the
Galbreath merger, has been with LaSalle Partners for an average of
approximately 16 years. The Company uses equity-based incentive
compensation and bonus plans and minimum stock ownership guidelines to
foster employee commitment and align employee and stockholder interests.
Following the Offering, the Company's senior management team will
indirectly own approximately 21.4% of the outstanding Common Stock and
total employee ownership will be approximately 47.5%.
INDUSTRY TRENDS
The real estate services industry is emerging from the severe downturn in
the real estate markets in the early 1990s. Strong improvements in commercial
real estate fundamentals--supply, demand, vacancy and rental rates--have
contributed to increased property values. The Company believes that the
recovery of the real estate markets and the trends described below provide
growth opportunities for the Company.
CONSOLIDATION
The real estate services industry is highly fragmented. For example, the top
10 property managers (based on square footage) manage less than 4% and the top
50 property managers manage less than 7% of the 61 billion total square feet
of commercial property (industrial, office and retail) located in the United
States. Many large real estate service firms engaged in the property
management business, including the Company, believe that, as a result of
substantial existing infrastructure investments and the ability to spread
fixed costs over a broader base of business, it is possible to recognize
incrementally higher margins on property management assignments as the amount
of square footage under management increases. The advantages of scale in the
property management business, including the ability to provide higher quality
service at a lower cost to the user, has led to a significant consolidation
trend among real estate service providers.
In addition, large users of commercial real estate services have recently
demonstrated a desire to use a smaller number of real estate firms capable of
providing a full range of services across multiple geographic markets. The
ability to offer a full range of services requires significant corporate
infrastructure investment, including information technology and personnel
training. Smaller regional and local real estate service firms, with limited
resources, are less able to make such investments.
GROWTH OF OUTSOURCING
In recent years, outsourcing of professional real estate services has
increased substantially as corporations have focused corporate resources,
including capital, on their core competencies. In addition, public and other
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non-corporate users of real estate, such as government agencies and health and
educational institutions, have begun outsourcing real estate activities as a
means of reducing costs. As a result, there are significant growth
opportunities for firms that can provide integrated real estate services
across many geographic markets.
ALIGNMENT OF INTERESTS OF INVESTORS AND INVESTMENT MANAGERS
As a result of recovering real estate markets, institutional investors have
increased their allocation of investment capital to real estate and many
investors have shown a desire to commit their capital to investment managers
willing to co-invest with them on specific investments. In addition, investors
are increasingly requiring that the fees paid to investment managers be more
closely aligned with investment performance. As a result, the Company believes
that those investment managers with co-investment capital will have an
advantage in attracting real estate investment capital. Co-investment brings
with it the opportunity to provide additional services related to the
acquisition, financing, property management, leasing and disposition of such
investments.
INCREASING DEMAND FOR GLOBAL SERVICES; GLOBALIZATION OF CAPITAL FLOWS
As many United States corporations have pursued growth opportunities in
international markets, they have increased their demand for global real estate
services, such as facility management, tenant representation and development
management. The Company believes that this trend will favor those real estate
service providers with the capability to provide services in key international
markets. Additionally, real estate capital flows have become more global as
foreign investors have invested in United States assets, and United States
investors have sought international real estate investment opportunities. This
trend has created new markets for investment managers that can facilitate
international real estate capital flows and can execute cross-border real
estate transactions.
GROWTH STRATEGY
Following the Offering, the Company intends to use its increased financial
flexibility to pursue its growth strategy, which is designed to capitalize on
existing client relationships and emerging industry trends. Key components of
its growth strategy include the following:
EXPANDING CLIENT RELATIONSHIPS
Based on its ability to deliver high quality real estate services, the
Company has been able to successfully leverage discrete client assignments
into more comprehensive relationships utilizing some or all of its business
groups. Current industry trends, particularly improving real estate markets
and the increased outsourcing of real estate services, provide a favorable
environment for the Company to increase the scope of its current client
relationships and to develop new relationships through its broad array of
services. The Company's business groups identify new clients and markets and
pursue opportunities to sell the products and services of many of the
Company's business units. The Company's Client Services Group, which is a
dedicated firm-wide marketing organization, acts as a catalyst in assisting
Company professionals in all groups in marketing multiple services of the firm
to existing and prospective clients.
BROADENING INTERNATIONAL PRESENCE
To take advantage of the trend toward globalization of real estate capital
sources and investment opportunities and the international business expansion
of many of its corporate clients, the Company intends to expand its existing
international operations and enter new international markets. This expansion
is expected to include the opening of new international offices and may
include selective acquisitions of international real estate services
companies. In order to serve its clients' increasingly global real estate
needs, and to pursue new business opportunities, the Company has opened
offices in London, Paris, Mexico City and Beijing. The Company intends to use
these international offices to serve as a platform from which the Company will
expand its international presence.
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SELECTIVELY PURSUING STRATEGIC ACQUISITIONS
The Company intends to selectively pursue acquisition targets to expand its
capability to serve clients and strengthen its position as an industry leader.
The expected benefits of such acquisitions include expanding and enhancing its
product and service offerings, broadening its geographic market coverage or
generating economies of scale. The Company will only pursue acquisitions which
meet its standards for quality of service and are compatible with the
Company's culture. Consistent with this strategy, the Company acquired the
assets of ABKB, a domestic real estate investment management business, in late
1994 and CIN Property Management, an investment management business in the
United Kingdom, in late 1996. Through these acquisitions, the Company added
over $5 billion to its assets under management, extended the Company's
securities advisory capabilities and established the Company as one of the
largest managers of real estate investment equity capital in the United
Kingdom. More recently, in April 1997, Galbreath, a national property
management company with 71 million square feet under management, was merged
with the Company. This merger expands the Company's market presence in Ohio,
Pennsylvania, New York, Florida and other key markets and offers the potential
for significant economic synergies with its Management Services group.
PURSUING CO-INVESTMENT OPPORTUNITIES
The Company intends to accelerate its strategy of co-investing with its
investment management clients, to take advantage of recovering real estate
markets. As of March 31, 1997, the Company had a total net investment of $15.8
million in 33 separate property or fund co-investments. The acquisition cost
of the properties acquired through these co-investments exceeds $1.0 billion.
Existing co-investments consist primarily of office and hotel properties
purchased within the last three years.
The Company's co-investment strategy is supported by its broad fundamental
real estate research capabilities, which include identifying trends in
geographic regions and property types. The Company's extensive knowledge of
local markets drawn from each of its business segments facilitates the
identification and evaluation of specific investment opportunities. Co-
investments provide the Company with the opportunity to participate in any
returns generated by such investments and provide services related to the
acquisition, financing, property management, leasing and disposition of such
investments. As a result of the Offering, the Company will have additional
financial flexibility to pursue its co-investment strategy.
BUSINESS SEGMENTS
The Company serves its clients through its three principal business groups.
MANAGEMENT SERVICES
The Company's Management Services group develops and implements property
level strategies to increase investment value for real estate owners and
optimize occupancy costs for corporate owners and users of real estate. The
Management Services group provides three primary service capabilities: (i)
property management and leasing for property owners ("Property Management and
Leasing Services"); (ii) facility management for properties occupied by
corporate owners and users ("Facility Management Services"); and (iii)
development management for both investors and real estate users seeking to
develop new buildings or renovate existing facilities ("Development Management
Services"). As of March 31, 1997, the Management Services group had property
management, leasing or facility management responsibility for approximately
132.7 million square feet of commercial space. In 1996, the Management
Services group generated revenue of $71.9 million and operating income of
$10.7 million, representing approximately 41% of the Company's total revenue
and approximately 40% of the Company's total operating income.
Based on the 1996 CPN Survey, the Company is the largest property manager of
office buildings in the United States and is the eighth largest property
manager in the United States overall. As a result of the merger of Galbreath
with the Company, the Management Services group assumed management
responsibility for
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approximately 71 million additional square feet of primarily office and
industrial space. Including Galbreath, the Company would have ranked as the
third largest property management firm in the 1996 CPN Survey.
[Bar graph depicting the Management Services group's total square footage under
management for the period 1992-1996]
Property Management and Leasing Services. Active since 1978, the Company's
Property Management and Leasing Services unit operates, markets and leases
commercial real estate. The Company was a pioneer in the development of value-
creating property management services. The Company's goal is to enhance its
clients' property values through aggressive day-to-day management focused on
maintaining high levels of occupancy and tenant satisfaction, while lowering
the operating costs of such properties. The Company's Property Management and
Leasing Services unit generated approximately $52.3 million in revenue in
1996.
Prior to the merger of Galbreath with the Company, the Company represented
more than 70 property owners, providing on-site Property Management and
Leasing Services for approximately 170 office, retail, mixed-use and
industrial properties, in 29 of the largest markets in the U.S. During 1996,
leasing professionals completed over 1,200 lease transactions totaling
approximately 9.5 million square feet. As a result of the merger of Galbreath
with the Company, the Company assumed management responsibility for over 200
additional properties in five additional markets (including two of the largest
markets in the U.S.) for over 20 new institutional real estate owners.
The Company provides property management or leasing services, or both, for
many well-known buildings, including the Amoco Building in Chicago, the
Citicorp Center in New York, and the Transamerica Building in San Francisco.
While major office buildings represent the Company's most visible assignments,
the Company is also active in the management of retail projects, industrial
real estate, mid-size assets of all types and portfolios of smaller
properties. The clients of the Company's Property Management and Leasing
Services unit include domestic and international pension funds, the Company's
own investment funds and third-party corporate and institutional investment
clients. Representative clients served in 1996 included The Allstate
Corporation, Amoco Corporation, Lincoln National Corporation, Mitsui Fudosan
Co. Ltd. and Transamerica Corporation.
Consolidation among property management and leasing companies, in
combination with improving leasing markets, provides significant opportunities
for the Company. Since the fee arrangements for most of the Company's Property
Management and Leasing Services assignments are largely dependent on property
revenues, the Company has benefited from the national recovery in commercial
real estate markets. This recovery has been characterized by rising average
commercial rental and occupancy rates during the 1993-1996 time period.
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The Company intends to expand its Property Management and Leasing Services
unit through a combination of targeted marketing initiatives and acquisitions.
The Company believes that its established infrastructure and its reputation
for high quality service make the Company an attractive potential acquiror to
many smaller local, regional and national property management firms. The
marketing efforts of the Property Management and Leasing Services unit are
directed toward pursuing new third-party management assignments, expanding the
Company's relationships with existing clients and capitalizing on new business
opportunities that may arise from the Investment Management group's
initiatives, such as implementation of its co-investment strategy. As of March
31, 1997, more than half of the Company's 63.5 million square foot Property
Management and Leasing Services portfolio was composed of assets owned by
unrelated third party clients and the remainder was composed of assets managed
for clients for which LaSalle Partners also provided investment advisory
services. The Company believes that during the next several years, this
business mix will become increasingly weighted toward assets owned by
unrelated third-parties, with a decreasing emphasis on assets owned in the
Company's existing investment funds, as many of the commingled funds created
by the Company in the 1980s reach maturity and dissolution. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The Company's Property Management and Leasing Services are typically
provided by an on-site general manager and staff supported through extensive
regional supervisory teams as well as central resources in areas such as
training, technical and environmental services, accounting, marketing and
human resources. Property general managers assume full responsibility for
property management and leasing activities, client satisfaction and financial
results. Property Management and Leasing Services personnel are compensated,
not by fees or commissions, but through a combination of base salary and
performance bonus that is directly linked to results produced for clients.
The Company typically receives fees based on the value of the lease revenue
commitment for leases consummated while it serves as exclusive property
leasing agent. Increasingly, management agreements provide for incentive
compensation relating to operating expense reductions, gross revenue,
occupancy objectives or tenant satisfaction levels. As is customary in the
industry, management contract terms typically range from one to three years,
but are cancellable at any time upon a short notice period, usually 30 to 60
days. However, on a portfolio basis, the Company's current average length per
management assignment is approximately four years.
Facility Management Services. The Company's Facility Management Services
unit provides comprehensive portfolio and property management services to
corporations and institutions that outsource their real estate management
functions. The properties under management range from corporate headquarters
to industrial complexes, sales offices and data centers. Facility Management
Services professionals create working partnerships with each client to deliver
fully-integrated real estate services that are tailored to the specific needs
of each organization. Typically, performance measures are developed to
quantify progress made toward the goals and objectives that are set mutually
with clients. The Company's Facility Management Services unit also serves as
an important "port of entry" for the Company's other business units. Depending
on client needs, the Facility Management Services unit, either alone or
through the Company's other business units, provides services such as
portfolio planning, property management, leasing, tenant representation,
acquisition, finance, disposition, project management, development management
and land advisory services. In 1996, the Facility Management Services unit
generated revenue of approximately $13.6 million. Facility Management Services
relationships also generated revenue of approximately $12.8 million in 1996
for the Company's other business units.
The Company was a pioneer in the facility management services business and
currently is one of the largest providers of facility management services in
the United States. The Company's target clients typically have large
portfolios (usually over one million square feet) with significant
opportunities to reduce costs and improve service delivery. At March 31, 1997,
the Company managed approximately 5,500 facilities, totaling more than 69
million square feet of space for eight clients. Representative clients served
in 1996 included Ameritech, BankAmerica Corporation and Sun Microsystems, Inc.
As a result of the merger of Galbreath with the Company, the Company assumed
management responsibility for facilities totaling 13 million square feet for
clients such as Eli Lilly and Company, The LTV Corporation and The Mead
Corporation. The Facility Management Services -
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unit is also exploring new business opportunities with universities, health
care institutions, government agencies and other potential clients.
The Company believes that the global corporate trend of outsourcing non-core
business functions represents an important long-term business opportunity for
LaSalle Partners. The Company believes that its broad-based service
capabilities will become an increasingly valuable competitive advantage in
pursuing Facility Management Services assignments. The Company believes that
its demonstrated experience, cost-cutting successes and client satisfaction
also provide it with an important competitive advantage. The Company has set
and consistently met its objective of cutting operating costs of its
properties under management between 10% and 30% within the first two years of
the assignment. In order to efficiently provide all services required to
manage and operate large facility portfolios, the Company forms partnerships
with major building services and architecture firms.
The Facility Management Services unit is compensated on the basis of
negotiated fees, which are typically structured to include a base fee and a
performance bonus. The performance bonus compensation is based on a
quantitative evaluation of progress toward performance measures and regularly
scheduled client satisfaction surveys. Facility Management Services agreements
are typically three to five years in duration.
Development Management Services. Active since 1975, the Company's
Development Management Services unit manages all aspects of the development,
redevelopment and renovation of commercial projects, principally on a fee
basis. The Company prepares projections, budgets, schedules and cash flows for
its clients in addition to undertaking entitlement, zoning and a variety of
other development-related responsibilities. All of the Company's current
development business is conducted for third-party clients, many of which are
corporations with significant office space needs. The Development Management
Services unit frequently manages development initiatives for clients of the
Company's Facility Management Services, Tenant Representation Services and
Land Services units, as well as for clients of the Company's Investment
Management group which are pursuing development-related investment strategies.
In 1996, the Development Management Services unit generated approximately $5.5
million in revenue.
The Company has extensive experience in ground-up development in the office,
retail and institutional sectors and has completed more than 41 million square
feet of development and redevelopment projects for clients such as Capital
Cities/ABC, Inc., Duracell International Inc., McDonald's Corporation and The
Prudential Insurance Company of America. The Development Management Services
unit is currently managing the development of 17 projects totaling
approximately 4.5 million square feet nationally. Capitalizing on experience
gained in the redevelopment of Union Station in Washington, D.C., the Company
also specializes in mixed-use developments and is currently managing the
redevelopment of Grand Central Terminal in New York as a combined
transportation center and retail facility and the redevelopment of Orchestra
Hall in Chicago, Illinois.
The Development Management Services unit generates development and advisory
fees. Fees are typically fixed and are negotiated based upon the cost of the
developments or improvements. Assignments are typically multi-year in nature.
CORPORATE AND FINANCIAL SERVICES
The Company's Corporate and Financial Services group provides transaction
and advisory services through three primary service capabilities: (i) tenant
representation for corporations and professional service firms ("Tenant
Representation Services"); (ii) investment banking services to address the
financing, acquisition and disposition needs of real estate owners
("Investment Banking Services"); and (iii) land acquisition and development
services for owners, users and developers of land ("Land Services"). In 1996,
the Corporate and Financial Services group generated revenue of $46.7 million
and operating income of $10.8 million, representing approximately 27% of the
Company's total revenue and approximately 40% of the Company's total operating
income.
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[Bar graph depicting revenue for the Tenant Representation Services unit for
the period 1992-1996]
Tenant Representation Services. First offered in 1978, the Company's Tenant
Representation Services unit assists clients by defining space requirements,
identifying suitable alternatives, recommending appropriate occupancy
solutions and negotiating lease and ownership terms with third parties. This
unit also includes the project management group which provides strategic
occupancy planning, field tenant improvement, project management and
relocation management to the Company's clients.
The Company seeks to lower its clients' real estate costs, minimize real
estate occupancy risks, improve clients' flexibility and occupancy control and
create more productive office environments. The Company uses a multi-
disciplined approach to develop occupancy strategies that are linked to its
clients' core business objectives. In 1996, the Tenant Representation Services
unit generated revenue of approximately $31.2 million, completing over 250
transactions for a total of approximately seven million square feet.
The domestic tenant representation industry includes a large number of
service providers offering a wide range of service quality and capabilities.
The Tenant Representation Services unit directs its marketing efforts toward
developing "strategic alliances" with clients whose real estate requirements
include ongoing assistance in meeting their real estate needs and also toward
clients who have the need to consider multiple real estate options and to
execute complex strategies. The Company believes that it is recognized as one
of the highest quality providers of tenant representation services in the
United States. Representative clients served in 1996 included Amoco
Corporation, Aon Corporation, R.R. Donnelley & Sons Company and Towers Perrin.
In many cases, the Company develops a strategic alliance with clients to
deliver fully integrated real estate services, including comprehensive on-
going strategic planning and transaction execution services across multiple
office locations. The Company views its strategic alliances as a competitive
advantage since these long-term relationships lower business development costs
for the Company and create recurring revenue sources. In 1996, approximately
79% of Tenant Representation Services unit revenue was derived from strategic
alliances. Through these relationships, the Company gains a better
understanding of its clients' portfolio and occupancy requirements since the
same professionals service the client's needs nationwide. The Company believes
that these relationships enable it to deliver more consistent services and
better results than single-transaction, commissioned brokerage service
providers.
Responsibility for the national occupancy needs of strategic alliance
clients is assigned to dedicated client teams. These teams allocate resources
to address specific client requirements in markets throughout the United
States. The Company's Tenant Representation Services unit draws upon the
resources and local market knowledge of the Company's network of Property
Management and Leasing Services professionals located in over 300 property and
other offices in 31 of the largest markets in the U.S.
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In addition to its strategic alliances, the Company also represents clients
in large, complex transaction assignments that typically involve relocations
of headquarters facilities or major consolidations of offices. In such
assignments, the Company draws on other capabilities of the firm to enable
clients to consider development of new facilities, weigh the benefits of
purchase or lease decisions and evaluate long-term financing options.
The Company believes that the educational background and skills of its
Tenant Representation professionals and its employee compensation structure
are uncommon in the industry and are a significant competitive strength. The
Company's Tenant Representation Services professionals are recruited on the
basis of strong educational credentials and broad business experience, with
approximately 90% holding Master of Business Administration or other advanced
degrees. In contrast to the Company's major national brokerage competitors,
the Company's Tenant Representation Services professionals do not earn
commissions, but are compensated by means of a base salary and performance
bonus that is determined by their contribution to achieving predetermined
client performance objectives.
The Tenant Representation Services unit uses state-of-the-art computer
technology, including proprietary software developed by the Company, to
improve productivity and enhance client service. For example, it has created
an on-line lease analysis/negotiation program that enables users to scan in a
lease from a third party, and then compare lease language in each section
against a database of "best-practices" lease language drawn from previous
engagements.
The Company is generally compensated for Tenant Representation Services on a
negotiated fee basis. Although fees are generated by lease commissions, they
are often also determined by performance related to targets set by the Company
and the client prior to the Company's engagement and, in the case of strategic
alliances, at annual intervals thereafter. Quantitative and qualitative
measurements assess progress relative to these goals, and the Company is
compensated accordingly, with incentive fees often awarded for superior
performance.
Investment Banking Services. Active since 1968, the Company's Investment
Banking Services unit is engaged in real estate finance, portfolio advisory
activities, corporate finance and institutional property sales. In 1996, the
Company completed institutional property sales, debt financings, equity
financings and portfolio advisory activities on assets and portfolios valued
at approximately $4.9 billion. The Investment Banking Services unit generated
revenue of approximately $6.7 million in 1996.
The Company believes that its Investment Banking Services unit has a number
of competitive strengths, including its broad accumulated base of real estate
investment banking knowledge and an ability to draw on the Company's access to
global capital sources. The Company's Management Services group and Investment
Management group are valuable resources for the Investment Banking Services
unit in providing local market and property information and capital markets
expertise.
The Investment Banking Services unit is integral to the business development
efforts of the Company's other business units by researching, developing and
introducing innovative new financial products and strategies. Such efforts
have included the development of the Company's hotel investment capability and
its commercial mortgage backed securities operation, both of which are
currently operated within the Company's Investment Management group.
In 1996, approximately 61% of the Company's Investment Banking Services
assignments represented repeat business from its clients. In addition,
approximately 54% of Investment Banking Services revenue represented fees
derived from sales of assets for clients for which LaSalle Partners also
provides investment management services. Representative clients served in 1996
included ENRON Corp., Equifax Inc., G.E. Investment Corp. and Sumitomo Trust &
Banking Co., Ltd.
The Company is typically compensated for Investment Banking Services on the
basis of the value of transactions completed or securities placed, but in
certain circumstances the Company receives retainer fees for strategic
advisory services.
49
<PAGE>
Land Services. The Company has been active in the evaluation, acquisition
and disposition of land assets since 1970. The Company's Land Services
professionals offer clients expertise and broad experience in a range of land-
related competencies, including land planning and urban design, political
approvals, market and financial analysis and valuations. The Land Services
unit completed 37 transactions in 1996 in United States markets as well as in
multiple international markets. The Company's Land Services unit benefits from
LaSalle Partners' strong relationships with its clients, with approximately
50% of Land Services unit transactions in 1996 involving clients serviced by
other business units of the Company. The Land Services unit generated
approximately $4.9 million of revenue in 1996.
The Land Services unit acquires and sells urban and suburban development
projects and sites for future development, undertakes complex land assemblages
and site searches and provides advisory services for owners of land and land-
development projects. The Company's Land Services unit also originates and
executes land-related investment programs in development properties and
portfolios of land assets for the clients of the Company's Investment
Management group. In addition, the Company developed expertise in the sale of
portfolios of land and land-related assets by completing such assignments for
several corporate clients, as well as the disposition of the $1.7 billion
National Land Fund for the Resolution Trust Corporation. The Company's Land
Services professionals also have advised public institutions on land-related
assignments, including the conversion of military base facilities, master
planning of peripheral airport land and the evaluation and disposition of land
related to major transit systems.
Representative clients served in 1996 included the California Public
Employees' Retirement System, City of Chicago, Nippon Landic (USA), Inc. and
Shell Oil Company.
INVESTMENT MANAGEMENT
The Company's Investment Management group provides real estate investment
management services to institutional investors, corporations and high net-
worth individuals. The Company serves its clients through a broad range of
real estate money management products and services in the public and private
capital markets to meet various strategic, risk/return and liquidity
requirements, with a wide variety of equity and debt products. This business
is organized along two functional lines, private equity and debt investments
and public equity and debt investments. The Company offers its clients a range
of investment alternatives, including private direct (i.e. single asset
acquisitions) and fund (i.e. portfolios of assets) investments in many real
estate property types (e.g., office, retail, hotel, industrial, residential,
land and parking) and public investments, primarily in REITs, other public
real estate equities and CMBS. The Company believes that the success of the
Investment Management group is built on the foundation of fully integrated
research, innovative investment strategies and a strong client focus. The
Company has developed a reputation as an industry leader and innovator in real
estate investment management. The Investment Management group's strategy is
focused on three fundamentals: (i) developing and executing tailored
investment strategies to meet a variety of client objectives; (ii) providing
superior performance for its clients; and (iii) delivering a high level of
service.
As of March 31, 1997, the Company managed approximately $15.1 billion of
real estate assets, making LaSalle Partners the third largest manager of
institutional equity capital invested in domestic real estate assets and
securities. Approximately $2.5 billion of this total represents public real
estate securities currently managed by the Company's ABKB/LaSalle Securities
unit ("ABKB/LaSalle Securities"), a leading domestic institutional real estate
money manager.
The investment and capital origination activities of the Company's
Investment Management group are becoming increasingly international. As of
March 31, 1997, 22% of the Company's assets under management were invested
outside of the United States. Additionally, approximately 38% of equity
capital currently under management by the Company originated from
international investors. The Company expects its international Investment
Management group to continue to increase as a proportion of total capital
raised and invested. In 1996, the Investment Management group generated $58.6
million of revenue and $5.3 million of operating income, representing
approximately 33% of the Company's total revenue and 20% of the Company's
total
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<PAGE>
operating income. Investment Management group activities generate significant
additional business for other parts of the Company's operations, particularly
in the areas of Property Management and Leasing Services and Investment
Banking Services.
The Company maintains an extensive real estate research department which
monitors real estate and capital market conditions to enhance investment
decisions and identify future opportunities. The Company believes that its
commitment of 12 professionals is one of the industry's most significant
commitments to fundamental research for real estate investors. In addition to
drawing on public sources for information, the research department utilizes
the extensive local presence of LaSalle Partners professionals throughout the
United States to gain proprietary insight into local market conditions.
Representative clients served in 1996 included the British Coal Pension Fund,
California Public Employees' Retirement System, Cargill, Dai-ichi Life
(U.S.A.), Inc. and Oregon Public Employees' Retirement Fund.
[Bar graph depicting the Investment Management group's Assets under management
for the period 1992-1996]
Private Equity and Debt Investments. The Company introduced its first
institutional investment fund in 1979 and currently has a series of commingled
investment funds with over 115 investors. The Company also has 34 single
client account relationships ("separate accounts") with domestic and
international investors for whom the Company manages private real estate
investments. On behalf of its Investment Management clients, the Company
acquires, manages, leases, finances and divests real estate investments across
a broad range of real estate property types.
To take advantage of the trend toward globalization of real estate capital
sources, the Company strengthened and extended its international investment
activities with the acquisition in October 1996, of CIN Property Management
(now renamed CIN LaSalle Investment). The Company believes that CIN LaSalle
Investment, the fourth largest manager of real estate equity investments in
the United Kingdom, will expand the Company's investment activities and
capital raising in the United Kingdom and continental Europe. The Company also
initiated opportunistic investment programs in France in 1996, acquiring for
clients one of the first distressed French real estate loan portfolios sold by
financial institutions. The Company believes that significant additional
investment opportunities will arise in France due to existing economic
conditions, and that it is well positioned to play a role in the restructuring
of French real estate assets. The Company currently has approximately 300
assets under investment or property management agreements in the United
Kingdom and France, with a total value of approximately $3.4 billion at March
31, 1997.
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<PAGE>
The Company continues to explore additional international markets for its
Investment Management group clients. The Company intends to leverage its
organizational strength through selective acquisitions and the use of the
Company's international offices to take advantage of the accelerating interest
in international investment, to expand investment activity to new countries
and to strengthen its position as a leading intermediary for international
real estate capital flows.
The trend among investors is to favor advisors that co-invest in newly
formed investment vehicles in order to better align the interests of the
investor and the advisor. The Company believes that co-investment will become
increasingly important in order for the Company to retain and expand its
competitive position. The Company also believes that its co-investment
strategy will greatly strengthen its ability to raise capital for new
investment funds over which the Company exercises discretionary investment
authority. After the Offering, the Company intends to accelerate its co-
investment activities. By increasing assets under management, the Company will
gain the opportunity to provide additional services related to the
acquisition, financing, property management, leasing and disposition of such
assets. Co-investment will also provide a vehicle for the Company to
participate in investment opportunities resulting from recovering real estate
markets. As of March 31, 1997, the Company had a net total investment of $15.8
million in 33 separate property or fund co-investments. The acquisition cost
of the properties acquired through these co-investments exceeds $1.0 billion.
Existing co-investments consist primarily of office and hotel properties
purchased within the last three years.
Investment Management group operations are conducted with teams of
professionals dedicated to achieving client objectives. The portfolio managers
serve as the relationship coordinators for the Company's clients and are
responsible for drawing on all of the resources of the Investment Management
group (including research, investment services and specialty products) and the
rest of the Company's global resources. All investment decisions for private
market investments must be approved by the Company's five-member investment
committee. The investment committee approval process is utilized for both the
Company's discretionary investment funds and for all of its separate account
clients.
The Company is generally compensated for investment management services for
private equity and debt investments based on initial capital invested, with
additional fees tied to investment performance above benchmark levels. The
term of the Company's advisory agreements varies by the form of investment
vehicle involved and the type of service provided. The Company's investment
funds have various lifespans, typically ranging between five and ten years,
with extension provisions based on a vote of investors. Separate account
advisory agreements generally have three year terms with "at will" termination
provisions.
Public Equity and Debt Investments. The Company offers its clients the
ability to invest in either separate account or fund investment vehicles
focused on public real estate equity and debt securities. The Company
principally invests its clients' capital in domestic REIT equities and CMBS.
LaSalle Partners is also active in private placement investments in publicly
traded real estate companies and selected investments in private real estate
companies seeking capital to ultimately gain access to the public markets.
The Company conducts its securities investment business through ABKB/LaSalle
Securities, which was formed by the Company in 1994 in connection with the
acquisition of ABKB's real estate advisory business. As of the end of 1994,
ABKB/LaSalle Securities served 21 clients and had approximately $630 million
of assets under management. As of March 31, 1997, ABKB/LaSalle Securities
served 35 securities investment clients with $2.5 billion of assets under
management. The Company is typically compensated by its securities investment
clients on the basis of the market value of assets under management with
increasing use of incentive fees tied to performance of investments above
benchmark levels.
GALBREATH ACQUISITION
On April 22, 1997, the Predecessor Partnerships acquired Galbreath pursuant
to a Contribution and Exchange Agreement, of the same date, among the Employee
Partnerships, the Predecessor Partnerships, Galbreath, the former stockholders
of Galbreath and certain related entities (the "Contribution and Exchange
52
<PAGE>
Agreement"). Pursuant to the Contribution and Exchange Agreement, all of the
outstanding capital stock of Galbreath and related entities was contributed to
the Predecessor Partnerships in exchange for limited partnership interests
representing an aggregate of 18% of the Predecessor Partnerships' general and
limited partnership interests.
The Employee Partnerships and the Predecessor Partnerships have agreed to
jointly and severally indemnify the former Galbreath stockholders for any
damage or loss resulting from, among other things, any breach of the Employee
Partnerships' or the Predecessor Partnerships' representations and warranties
contained in the Contribution and Exchange Agreement. The former Galbreath
stockholders have agreed to provide similar indemnification to the Company and
the Employee Partnerships. The indemnification obligations of the Predecessor
Partnerships and the Employee Partnerships as a group and the former Galbreath
stockholders as a group are generally limited to an amount equal to 30% of the
value of the partnership interests transferred to the former Galbreath
stockholders. Pursuant to the Contribution and Exchange Agreement, the
representations and warranties will survive until the date of the issuance of
the financial statements of the Company for the year ending December 31, 1997,
which date shall not be later than March 31, 1998.
Pursuant to the Contribution and Exchange Agreement, as long as Galbreath
Holdings LLC ("Galbreath Holdings") is the beneficial owner of at least ten
percent of the Company's outstanding Common Stock, it shall have the right to
nominate one member to the Board of Directors. Lizanne Galbreath was the
initial nominee of Galbreath Holdings.
Under the Contribution and Exchange Agreement, Galbreath was obligated to
acquire and transfer to the Predecessor Partnerships the fifty percent
partnership interest of a joint venture partner in Galbreath Middle-Atlantic
Partnership ("GMAP"). GMAP provides property management and leasing services
in the Pittsburgh metropolitan area. The third-party partner in GMAP has
indicated that it will not complete the sale of its interests. As a result,
the Company and Galbreath are engaged in negotiations to determine the number
of shares of Common Stock and/or cash that the former stockholders of
Galbreath will surrender to the Employee Partnerships and Dai-ichi to replace
the value of the GMAP interests.
In connection with the Contribution and Exchange Agreement, the Company
granted the Employee Partnerships, Dai-ichi, and the former Galbreath
stockholders certain registration rights. See "Shares Eligible for Future
Sale--Registration Rights."
COMPETITION
The market for commercial real estate services provided by the Company is
both highly fragmented and highly competitive. In each of its business
disciplines, the Company competes on the basis of the skill and quality of its
personnel, the variety of services offered, the cost of the services offered,
the ability to enhance asset values, the breadth of geographic coverage and
the quality of its infrastructure, including training and technology. The
Company believes it has a strong reputation for the quality of its services as
well as its client oriented approach. The Company believes that its
experienced employees, broad range of services provided, local and broad
market expertise, and operating infrastructure enable it to compete
effectively in each of its business disciplines. See "Risk Factors--
Competition."
FACILITIES
The Company's principal executive office is located at 200 East Randolph
Drive, Chicago, Illinois, where the Company currently occupies over 100,000
square feet of office space pursuant to a lease that expires in February 2006.
The Company has 10 United States corporate offices located in Atlanta,
Baltimore, Chicago, Columbus, Dallas, Denver, Los Angeles, New York, San
Francisco and Washington D.C. and four international corporate offices located
in London, Paris, Mexico City and Beijing. The Company's corporate offices are
each leased pursuant to agreements with terms ranging from month-to-month to
10 years. In addition, the Company has over 300 property and other offices
throughout the United States. On-site property management offices are
generally located within properties under management and are provided without
cost.
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<PAGE>
ENVIRONMENTAL
Various federal, state and local laws and regulations impose liability on
current or previous real property owners or operators for the cost of
investigating, cleaning up or removing contamination caused by hazardous or
toxic substances at the property. In the Company's role as an on-site property
manager, it could be held liable as an operator for such costs. Such liability
may be imposed without regard to fault or legality of the original actions and
without regard to whether the Company knew of, or was responsible for, the
presence of such hazardous or toxic substances, and such liability may be
joint and several with other parties. If the liability is joint and several,
the Company could be responsible for payment of the full amount of the
liability, whether or not any other responsible party is also liable. Further,
any failure of the Company to disclose environmental issues could subject the
Company to liability to a buyer or lessee of property. In addition, some
environmental laws create a lien on the contaminated site in favor of the
government for damages and costs it incurs in connection with the
contamination. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral. The owner or operator
of a site may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site,
including the presence of asbestos-containing materials. See "Risk Factors--
Environmental Concerns."
On November 29, 1996, Galbreath received a Citation and Notification of
Penalty from the Occupational Safety and Health Administration ("OSHA")
describing certain asbestos-related violations. The citation set forth a
proposed penalty amount of approximately $150,000. Galbreath has complied with
OSHA's requests, but has denied any wrongdoing. Galbreath is currently in
negotiations with OSHA with respect to the amount due in connection with the
citation. On March 7, 1997, the Secretary of Labor of the United States
Department of Labor brought an action against Galbreath before the
Occupational Safety and Health Review Commission seeking an order affirming
the citation and the amount proposed therein. Galbreath has filed a motion for
extension of time to answer the complaint.
LEGAL PROCEEDINGS
The Company is a defendant in various litigation matters arising in the
ordinary course of business, some of which involve claims for damages that are
substantial in amount. Most of these matters are covered by insurance. In the
opinion of the Company, the ultimate resolution of such litigation matters
will not have a material adverse effect on the financial position, results of
operations and liquidity of the Company.
EMPLOYEES
As of May 31, 1997, following the merger of Galbreath with the Company, the
Company employed 1,322 people, including 1,096 professional staff members and
226 support personnel. None of the Company's employees are members of any
labor union.
The Company has entered into an agreement with LPI Service Corporation
("LPISC"), a company controlled by a former employee of LaSalle Partners,
pursuant to which LPISC provides the services of approximately 3,000
janitorial, engineering and property maintenance workers for certain
properties managed by the Company. LaSalle Partners has an option to purchase
LPISC. Approximately 600 of the employees of LPISC are members of labor
unions.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Stuart L.
Scott 58 Chairman of the Board of Directors and Chief Executive Officer
Robert C.
Spoerri 48 President, Chief Operating Officer and Director
William E.
Sullivan 42 Executive Vice President, Chief Financial Officer and Director
Daniel W.
Cummings 44 Co-President--LaSalle Advisors Capital Management, Inc. and Director
Charles K. 50
Esler, President and Chief Executive Officer--LaSalle Partners Management
Jr. Services, Inc. and Director
Lizanne
Galbreath 39 Chairman, LaSalle Partners Management Services, Inc. and Director
M.G. Rose 57 President, Tenant Representation Division--LaSalle Partners
Corporate & Financial Services, Inc. and Director
Lynn C.
Thurber 50 Co-President--LaSalle Advisors Capital Management, Inc. and Director
Earl E. 40 Managing Director, Investment Banking Division--LaSalle Partners
Webb Corporate & Financial Services, Inc. and Director
Darryl 52
Hartley-
Leonard Nominee for Director*
Thomas C. 60
Theobald Nominee for Director*
</TABLE>
- --------
*These individuals have consented to become directors of the Company following
completion of the Offering. The Company intends to identify at least one
additional independent director prior to consummation of the Offering.
Stuart L. Scott. Mr. Scott has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since its incorporation, and Chief
Executive Officer and Chairman of the Management Committee of the Predecessor
Partnerships since December 1992. Prior to December 1992, Mr. Scott was
President of the Predecessor Partnerships for more than 15 years and Co-
Chairman of the Management Committee from January 1990 to December 1992. Mr.
Scott originally joined the Company in 1973. He is a member of the Board of
Directors of Hartmarx Corporation, a clothing manufacturing company. He holds
a B.A. from Hamilton College and a J.D. from Northwestern University.
Robert C. Spoerri. Mr. Spoerri has been President, Chief Operating Officer
and a director of the Company since its incorporation, and Chief Operating
Officer and Vice-Chairman of the Management Committee of the Predecessor
Partnerships since January 1994. From January 1990 to December 1993, Mr.
Spoerri was a Co-Director of the asset management group of the Predecessor
Partnerships and the Director of the property management and leasing group of
the Predecessor Partnerships from January 1980 to December 1989. Mr. Spoerri
originally joined the Company in 1977. He holds a B.S. from Indiana University
and an M.B.A. from Harvard University.
William E. Sullivan. Mr. Sullivan has been Executive Vice President, Chief
Financial Officer and a director of the Company since its incorporation, and
Executive Vice President and Chief Financial Officer of the Predecessor
Partnerships since February 1997. From September 1995 to February 1997, Mr.
Sullivan was a Managing Director of the special projects group of the
Predecessor Partnerships. From January 1992 to September 1995, Mr. Sullivan
was a Senior Vice President of the special projects group. Mr. Sullivan
originally joined the Company in 1984. He holds a B.S.B.A. from Georgetown
University and an M.M. from Northwestern University.
Daniel W. Cummings. Mr. Cummings has been a director of the Company since
its incorporation, and a Co-President of LaSalle Advisors Capital Management,
Inc., an operating subsidiary of the Company, since April
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<PAGE>
1997. Mr. Cummings has been a Managing Director and Co-President of LaSalle
Advisors Limited Partnership, a subsidiary of one of the Predecessor
Partnerships, since November 1994. From January 1992 to November 1994, Mr.
Cummings was a Managing Director--Portfolio Management of LaSalle Advisors
Limited Partnership. Mr. Cummings originally joined the Company in 1979. He
holds a B.A. from Dartmouth College and an M.B.A. from the University of
Chicago.
Charles K. Esler. Mr. Esler has been a director of the Company since its
incorporation, and President and Chief Executive Officer of LaSalle Partners
Management Services, Inc., an operating subsidiary of the Company, since April
1997. Since 1992, Mr. Esler has been President of LaSalle Partners Management
Limited, one of the Predecessor Partnerships. Mr. Esler originally joined the
Company in 1979. He holds a B.S.M.E. from the University of Michigan and an
M.B.A. from Northwestern University.
Lizanne Galbreath. Ms. Galbreath has been Chairman of LaSalle Partners
Management Services, Inc. and a director of the Company since April 1997, when
Galbreath was merged with the Company. Prior to the merger, Ms. Galbreath was
Chairman and Chief Executive Officer of Galbreath from August 1995 to April
1997. From June 1993 to August 1995, Ms. Galbreath served as Vice-Chairman of
Galbreath, and from June 1992 to May 1993, Ms. Galbreath was Senior Managing
Director in charge of national accounts. Ms. Galbreath originally joined
Galbreath in 1984. Ms. Galbreath holds a B.A. from Dartmouth College and an
M.B.A. from the University of Pennsylvania.
M.G. Rose. Mr. Rose has been a director of the Company since its
incorporation, and President, Tenant Representation Division of LaSalle
Partners Corporate & Financial Services, Inc., an operating subsidiary of the
Company, since April 1997. Mr. Rose has been a Managing Director and President
of the tenant representation group of the Predecessor Partnerships since
September 1983. He originally joined the Company in 1978. Mr. Rose holds a
mechanical engineering degree from the University of Cincinnati.
Lynn C. Thurber. Ms. Thurber has been a director of the Company since its
incorporation, and a Co-President of LaSalle Advisors Capital Management,
Inc., an operating subsidiary of the Company, since April 1997. Ms. Thurber
has been a Managing Director and Co-President of LaSalle Advisors Limited
Partnership, a subsidiary of one of the Predecessor Partnerships, since
November 1994. Ms. Thurber was Chief Executive Officer of ABKB from May 1993
to November 1994, at which time its assets were acquired by the Company. From
July 1992 to May 1993, Ms. Thurber served as Chief Operating Officer and
Director of Acquisitions of ABKB. Prior to that time, Ms.Thurber was a
Principal at Morgan Stanley & Co. Incorporated. She holds an A.B. from
Wellesley College and an M.B.A. from Harvard University.
Earl E. Webb. Mr. Webb has been a director of the Company since its
incorporation, and Managing Director, Investment Banking Division of LaSalle
Partners Corporate & Financial Services, Inc., an operating subsidiary of the
Company, since April 1997. Mr. Webb has been Managing Director of the
Investment Banking Division of the Predecessor Partnerships since January
1995. From January 1992 to January 1995, Mr. Webb was a Senior Vice-President
of the Predecessor Partnerships. Mr. Webb originally joined the Company in
1985. Mr. Webb has also been a member of the board of directors of Players
International, Inc., a multi-jurisdictional gaming company, since September
1996. He holds a B.S. from the University of Virginia and an M.M. from
Northwestern University.
Darryl Hartley-Leonard. Mr. Hartley-Leonard is a private investor. He
formerly worked for Hyatt Hotels Corporation ("Hyatt") for 32 years. From 1994
to 1996 he served as Chairman of the Board of Directors of Hyatt and from 1986
to 1994, he served as Chief Executive Officer/Chief Operating Officer of
Hyatt. Mr. Hartley-Leonard currently serves on the board of directors of
TeleQuest Corporation, a privately-held, high-technology company; PGI, a
global events, entertainment, exhibition and business communications company;
The Metropolitan Residential Hotel Company, a long-term stay apartment hotel
company; and Cohabaco, a cigar distribution company. Mr. Hartley-Leonard holds
a B.A. degree from Blackpool Lancashire College of Lancaster University and an
honorary doctorate of business administration from Johnson and Wales
University.
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<PAGE>
Thomas C. Theobald. Mr. Theobald has served as a Managing Director at
William Blair Capital Partners since September 1994. From July 1987 to August
1994, Mr. Theobald was Chairman of Continental Bank Corporation. He currently
serves on the board of directors of Xerox Corporation, a manufacturer of
document processing products and systems; Anixter International, a supplier of
electrical apparatus and equipment; Enron Global Power & Pipelines LLC, a
worldwide manager of power plants and natural gas pipelines; Stein Roe Funds,
an income trust fund and investment trust fund manager; LaSalle Income and
Growth Fund, a REIT; and Peregrine Asia Pacific Growth Fund, an investment
fund focused on investments in the Asian pacific region. Mr. Theobald holds an
A.B. degree from the College of the Holy Cross and an M.B.A. degree from
Harvard University.
The Company's Board of Directors will be divided into three classes, each of
whose members will serve for a staggered three-year term. The board will
consist of three Class I Directors (Messrs. Spoerri, Esler and Cummings),
three Class II Directors (Messrs. Sullivan and Webb and Ms. Galbreath) and
three Class III Directors (Messrs. Scott and Rose and Ms. Thurber). At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the directors or director of the same class whose
terms are then expiring. The terms of the Class I Directors, Class II
Directors and Class III Directors will expire upon the election and
qualification of successor directors at the annual meeting of stockholders
held during the calendar years 1998, 1999 and 2000, respectively. Mr. Hartley-
Leonard will become a Class I Director and Mr. Theobald will become a Class
III Director upon completion of the Offering.
Each officer serves at the discretion of the Board of Directors. There are
no family relationships among any of the directors and executive officers of
the Company.
BOARD OF DIRECTORS COMMITTEES AND COMPENSATION
Effective upon the closing of the Offering, there will be two committees of
the Board of Directors of the Company: the Audit Committee and the
Compensation Committee. The members of the Audit Committee and the
Compensation Committee will be appointed prior to the closing of the Offering.
The Compensation Committee will review and approve all compensation, including
incentive compensation, for the executive officers of the Company and
administer the 1997 Stock Incentive Plan. The Audit Committee will review the
results and scope of the audit and other services provided by the Company's
independent auditors and will review and evaluate the Company's internal
control functions. The Audit Committee will consist of directors who are
neither officers, employees nor affiliates of the Company.
Pursuant to the Contribution and Exchange Agreement, as long as Galbreath
Holdings is the beneficial owner of at least ten percent of the Company's
outstanding Common Stock, it shall have the right to nominate one member to
the Board of Directors of the Company. Lizanne Galbreath was the initial
nominee of Galbreath Holdings.
DIRECTOR COMPENSATION
The Company's directors are not currently compensated. Following the
Offering, each non-employee director will receive an annual retainer of
$25,000, plus $1,000 for attendance at each meeting of the Board of Directors,
the Audit Committee or the Compensation Committee. In connection with the
Offering, each non-employee director will receive an initial grant of options
to purchase 5,000 shares of Common Stock at the initial public offering price.
Each non-employee director elected to the Board of Directors for the first
time thereafter will receive upon such election an initial grant of options to
purchase 5,000 shares of Common Stock at fair market value on the date of
grant. In addition, each non-employee director will receive an annual grant of
options to purchase 1,000 shares for each year during such director's term.
All of the foregoing options shall have a 10 year term and shall vest over a 5
year period, with 20% becoming vested on each anniversary of the date of
grant. In addition, a non-employee director may elect to receive, in lieu of
the annual cash retainer, stock options in an amount equal to the annual cash
retainer, net of the aggregate exercise price of the stock options, divided by
the then current market price of the Common Stock. Such stock options will
have an exercise price of $1.00 per share and an exercise period ending 10
years from December 31st of the year in which the retainer was earned. The
foregoing award of options will be granted automatically under the 1997 Stock
Incentive Plan.
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<PAGE>
EXECUTIVE COMPENSATION
Since the Company had no operating history prior to the date hereof, the
following table sets forth, for the year ended December 31, 1996, the cash
compensation paid to the Chief Executive Officer and the other five most
highly compensated executive officers of the Company (the "Named Executive
Officers") by the Predecessor Partnerships.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1)
---------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(2)
- --------------------------- -------- -------- ---------------
<S> <C> <C> <C>
Stuart L. Scott
Chairman of the Board of Directors
and Chief Executive Officer................. $336,000 $464,000 $ 14,203
Robert C. Spoerri
President and Chief Operating Officer....... 320,000 442,000 13,834
Daniel W. Cummings
Co-President--LaSalle Advisors Capital
Management, Inc............................. 260,000 352,000 12,447
Charles K. Esler, Jr.
President and Chief Executive Officer--
LaSalle Partners Management Services, Inc... 270,000 380,000 12,328
M. G. Rose
President, Tenant Representation Division--
LaSalle Partners Corporate & Financial
Services, Inc............................... 270,000 541,500 12,328
Lynn C. Thurber
Co-President--LaSalle Advisors Capital
Management, Inc............................. 260,000 352,000 245,500(3)
</TABLE>
- --------
(1) Represents total cash compensation paid to the Named Executive Officers
for all services rendered to the Predecessor Partnerships during the year
ended December 31, 1996.
(2) The amounts shown in this column consist of: (i) "tax gross up" payments
made in respect to certain compensation; (ii) premiums paid on life
insurance policies; and (iii) contributions by the Company to the
Company's 401(k) savings plan for the benefit of the Named Executive
Officers.
(3) Included under All Other Compensation for Ms. Thurber was $232,292 for
reimbursement of certain relocation expenses.
EMPLOYEE STOCK PURCHASE PLAN
The Company's 1997 Employee Stock Purchase Plan (the "Stock Purchase Plan")
is intended to qualify under Section 423 of the Internal Revenue Code of 1986
(the "Code"). Purchases under the Stock Purchase Plan will occur at the end of
each option period. The first option period will begin on January 1, 1998.
Thereafter, each option period will be a successive six-month purchase period.
The Stock Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions that may not exceed $21,250 per year. The purchase
price of Common Stock available under the Stock Purchase Plan is equal to 85%
of the fair market value of the Common Stock at the beginning or the end of a
purchase period, whichever is lower. Unless terminated sooner, the Stock
Purchase Plan will terminate 10 years from its effective date. The Board of
Directors has authority to amend or terminate the Stock Purchase Plan;
provided, no such action may adversely affect the rights of any participant.
1997 STOCK AWARD AND INCENTIVE PLAN
General. The 1997 Stock Incentive Plan provides for the grant of various
types of stock-based compensation to eligible participants. The purpose of the
1997 Stock Incentive Plan is to promote the success of the Company's business
in the best interests of its stockholders by providing incentives to those
individuals who are or will be responsible for such success.
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The 1997 Stock Incentive Plan is designed to comply with the requirements of
Regulation G (12 C.F.R. (S)207), the requirements for "performance-based
compensation" under Section 162(m) of the Code and the conditions for
exemption from the short-swing profit recovery rules under Rule 16b-3 of the
Securities Exchange Act of 1934 (the "Exchange Act"). The summary that follows
is qualified by reference to the actual terms of the 1997 Stock Incentive
Plan.
The 1997 Stock Incentive Plan provides for the granting of stock options
("Options"), including "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Code and non-qualified stock options. Options granted
under the 1997 Stock Incentive Plan may be accompanied by stock appreciation
rights or limited stock appreciation rights, or both ("Rights"). Rights may
also be granted independently of Options. The 1997 Stock Incentive Plan also
provides for the granting of restricted stock and restricted stock units
("Restricted Awards"), dividend equivalents, performance shares and other
stock- and cash-based awards. Pursuant to the 1997 Stock Incentive Plan,
certain additional options may be granted to non-employee directors (as more
fully described under the heading "Management--Director Compensation"). The
1997 Stock Incentive Plan also permits the plan's administrator to make loans
to participants in connection with the grant of awards, on terms and
conditions determined solely by the plan administrator. All awards will be
evidenced by an agreement (an "Award Agreement") setting forth the terms and
conditions applicable thereto.
Plan Administration. The 1997 Stock Incentive Plan is administered by the
Board of Directors, and from and after the Offering will be administered by a
committee of the Board of Directors, the composition of which will at all
times satisfy the provisions of Rule 16b-3 of the Exchange Act (such Board of
Directors or committee is sometimes referred to herein as the "Plan
Administrator"). Subject to the terms of the 1997 Stock Incentive Plan, the
Plan Administrator has the right to grant awards to eligible recipients and to
determine the terms and conditions of Award Agreements, including the vesting
schedule and exercise price of such awards, and the effect, if any, of a
change in control of the Company on such awards.
Shares Subject to the 1997 Stock Award and Incentive Plan. The 2,215,000
shares reserved for issuance under the 1997 Stock Incentive Plan may be
authorized but unissued shares of Common Stock or shares which have been or
may be reacquired by the Company in the open market, in private transactions
or otherwise.
Eligibility. Discretionary grants of Options, Rights, Restricted Awards and
dividend equivalents, performance shares and loans in connection therewith may
be made to any non-employee director, employee or any independent contractor
of the Company or its direct and indirect subsidiaries and affiliates who is
determined by the Plan Administrator to be eligible for participation in the
1997 Stock Incentive Plan, consistent with the purpose of such plan; provided
that ISOs may only be granted to employees of the Company and its
subsidiaries.
Exercise of Options. Options will vest and become exercisable over the
exercise period, at such times and upon such conditions, including amount and
manner of payment of the exercise price, as the Plan Administrator determines
and sets forth in the Award Agreement. The Plan Administrator may accelerate
the exercisability of any outstanding Option at such time and under such
circumstances as it deems appropriate. Options that are not exercised within
10 years from the date of grant, however, will expire without value. Options
are exercisable during the optionee's lifetime only by the optionee. The Award
Agreements will contain provisions regarding the exercise of Options following
termination of employment with or service to the Company, including
terminations due to the death, disability or retirement of an award recipient,
or upon a change in control of the Company.
Initial Grants. The Board of Directors has authorized the grant of options
to purchase shares of Common Stock under the 1997 Stock Incentive Plan at the
initial public offering price, upon the closing of the Offering. Such options
vest on the sixth anniversary of the date of grant, subject to earlier vesting
if the Company's Common Stock exceeds certain targeted trading prices
following the first anniversary of the date of grant. Of such options, 75,000
will be granted to each of Messrs. Scott and Spoerri, and 37,500 will be
granted to each of Messrs. Cummings, Esler and Rose and Ms. Thurber.
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<PAGE>
EMPLOYEE STOCK OWNERSHIP GUIDELINES
Following the Offering, the Company will adopt stock ownership guidelines
for its executive officers and key employees (the "Covered Employees"). These
guidelines will require Covered Employees to maintain certain specified levels
of stock ownership based on a multiple of their annual compensation levels.
Compliance with such guidelines will be phased in over two, four or six years,
depending on the position of the Covered Employee. Failure to maintain such
ownership will disqualify the Covered Employee from participating in the
Company's option grant program.
STOCK COMPENSATION PROGRAM
The Predecessor Partnerships maintained a bonus compensation plan for
employees whose targeted annual compensation exceeded $100,000 (the "Bonus
Plan Employees"). Under such plan, Bonus Plan Employees were paid a percentage
of their total compensation in the form of limited partnership interests in
the Employee Partnerships. Following the Offering, the Company intends to
adopt a stock compensation program designed to continue the equity
participation emphasis of the earlier plan and to facilitate compliance with
the Company's equity ownership guidelines (the "Stock Compensation Program").
Under the Stock Compensation Program, each employee of the Company whose
targeted annual compensation equals or exceeds $100,000 (the "New Plan
Employees") may apply a specified percentage of his or her annual compensation
on a tax-deferred basis toward Common Stock or, at the direction of the
employee, for other applications made available by the administrator. If a New
Plan Employee elects to be credited with Common Stock, the total amount
credited in Common Stock (the "Allocation") will be increased by a percentage
(the "Equity Enhancement") sufficient to represent a 15% discount from the
fair market value of Common Stock. The number of shares issued in respect of
the Allocation and the Equity Enhancement will be based on the fair market
value of Common Stock when credited. Shares credited to New Plan Employees
which are attributable to the Allocation will be fully vested on the date of
grant and shares attributable to the Equity Enhancement will vest on the third
anniversary of the date of grant. The shares of Common Stock used for the
Stock Compensation Program will be shares which have or may be acquired by the
Company in the open market, in private transactions or otherwise.
EMPLOYMENT AGREEMENT
In April 1997, the Company entered into an employment agreement with Ms.
Galbreath as Chairman and Chief Executive Officer of Galbreath/LaSalle
Development Company (the "Employment Agreement"). The term of the Employment
Agreement is for the period from April 22, 1997 to December 31, 1997. The
Employment Agreement provides for a base salary and target bonus for calendar
year 1997 of $200,000 and $300,000, respectively, each to be pro-rated to
reflect the term of the agreement. Ms. Galbreath's bonus shall be determined
by the Company based on criteria used to determine the bonuses of other
members of management of the Company, and shall be payable in cash and Common
Stock. In addition, the Employment Agreement provides that Ms. Galbreath may
terminate her employment at any time, and that the Company may terminate her
employment under certain limited circumstances. The agreement further provides
that, commencing January 1, 1998, Ms. Galbreath's employment with the Company
shall continue subject to mutual agreement of the Company and Ms. Galbreath
from time to time, provided that the Company shall be obligated to pay to Ms.
Galbreath a separation payment equal to six months of her base salary if her
employment is terminated prior to December 31, 1998 for reasons other than as
set forth in the Employment Agreement.
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information concerning the beneficial
ownership of the Common Stock immediately prior to and following the closing
of the Offering by: (i) each director of the Company; (ii) each director
nominee of the Company; (iii) each of the Named Executive Officers; (iv) the
directors, director nominees and executive officers of the Company as a group;
and (v) each person who at such time will beneficially own more than 5% of the
outstanding shares of Common Stock. DEL/LaSalle has granted the U.S.
Underwriters a 30-day option to purchase up to an aggregate of 600,000
additional shares of Common Stock on the same terms and conditions as the
Offering to cover over-allotments, if any, in connection with the Offering.
See "Shares Eligible for Future Sale" and "Underwriters."
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
-----------------------------------
PERCENT
BEFORE PERCENT AFTER
NUMBER OFFERING OFFERING
--------- -------- -------------
DIRECTORS, DIRECTOR NOMINEES, EXECUTIVE
OFFICERS AND CERTAIN STOCKHOLDERS
- ---------------------------------------
<S> <C> <C> <C>
DEL-LPL Limited Partnership............... 5,054,175(2) 41.4% 31.2%
DSA-LSPL, Inc............................. 1,896,660(3) 15.6 11.7
c/o Dai-ichi Life (U.S.A.), Inc.
399 Park Avenue, 24th Floor
New York, New York 10022
DEL/LaSalle Finance Company, L.L.C........ 1,826,548(4) 15.0 11.3
DEL-LPAML Limited Partnership............. 891,913(5) 7.3 5.5
Galbreath Holdings, LLC................... 1,727,027(6) 14.2 10.7
Stuart L. Scott........................... (7)(8)
Robert C. Spoerri......................... (7)(9)
William E. Sullivan....................... (10)
Daniel W. Cummings........................ (9)(11)
Charles K. Esler.......................... (12)
Lizanne Galbreath......................... (13)
M.G. Rose................................. (9)(14)
Lynn C. Thurber........................... (9)(15)
Earl E. Webb.............................. (9)(16)
Darryl Hartley-Leonard.................... --
Thomas C. Theobald........................ --
All directors, director nominees and
executive officers as a group
(11 persons)............................. (17)
</TABLE>
- --------
(1) Beneficial ownership prior to the consummation of the Incorporation
Transactions has not been included because there were outstanding only a
nominal number of shares of Common Stock. Unless otherwise indicated,
each person listed above has sole investment and voting power with
respect to the shares listed. Each of Messrs. Scott, Spoerri, Sullivan,
Cummings, Esler, Rose and Webb, and Ms. Thurber are partners in the
Employee Partnerships. The number of shares of Common Stock beneficially
owned by each does not include the 5,054,175 shares owned by DEL-LPL, the
891,913 shares owned by DEL-LPAML and the 1,826,548 shares (1,226,548
shares of Common Stock if the over-allotment option is exercised in full)
owned by DEL/LaSalle. Unless otherwise indicated, the address of each
person or entity is c/o LaSalle Partners Incorporated, 200 East Randolph
Street, Chicago, IL 60601.
(2) Does not include the 891,913 shares of Common Stock owned by DEL-LPAML,
one of the Employee Partnerships. Includes 762,675 shares of Common Stock
attributable to partnership interests of former employees of the
Predecessor Partnerships.
(3) Does not include the 334,705 shares of Common Stock owned by DSA-LSAM,
Inc., an entity under common ownership with DSA-LSPL, Inc.
(Footnotes continued on following page)
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<PAGE>
(4) DEL/LaSalle, the "Selling Stockholder" has granted the U.S. Underwriters
a 30-day option to purchase 600,000 shares of Common Stock on the same
terms and conditions as the Offering. All of the outstanding membership
interests in DEL/LaSalle are owned by the Employee Partnerships. See
"Incorporation Transactions."
(5) Includes 134,590 shares of Common Stock attributable to partnership
interests held by former employees of the Predecessor Partnerships.
(6) Does not include the 468,972 shares of Common Stock owned by Galbreath-
LPL Holdings, L.L.C. ("Galbreath-LPL"). Galbreath Holdings is the non-
member manager of Galbreath-LPL and, therefore, might be deemed to be the
beneficial owner of such shares for purposes of Rule 13d-3 ("Rule 13d-3")
promulgated pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Galbreath Holdings disclaims beneficial ownership
of such shares of Common Stock.
(7) Does not include the 5,054,175 shares of Common Stock owned by DEL-LPL,
one of the Employee Partnerships, of which the listed person, as the sole
stockholder of a general partner of DEL-LPL, might be deemed to be the
beneficial owner for purposes of Rule 13d-3. Also does not include the
1,826,548 shares of Common Stock of DEL/LaSalle, which is 85% owned by
DEL-LPL. The listed person disclaims beneficial ownership of the shares
of Common Stock owned by DEL-LPL and DEL/LaSalle.
(8) Mr. Scott, either directly or through an affiliate, owns a 9.5% interest
in the Employee Partnerships, on a fully-diluted basis. Mr. Scott owns
all of the issued and outstanding common stock of DEL-SLS, Inc., a
general partner of DEL-LPL.
(9) Mr. Spoerri, either directly or through an affiliate, owns a 6.8%
interest in the Employee Partnerships, on a fully-diluted basis. Mr.
Spoerri owns all of the issued and outstanding common stock of DEL-RCS,
Inc., a general partner of DEL-LPL.
(10) Mr. Sullivan owns a 1.0% limited partnership interest in the Employee
Partnerships, on a fully-diluted basis.
(11) Mr. Cummings, either directly or through an affiliate, owns a 2.6%
interest in the Employee Partnerships, on a fully-diluted basis. Mr.
Cummings owns all of the issued and outstanding common stock of DEL-DWC,
Inc., a general partner of DEL-LPL.
(12) Mr. Esler, either directly or through an affiliate, has a 2.4% interest
in the Employee Partnerships, on a fully diluted basis. Mr. Esler owns
all of the issued and outstanding common stock of DEL-CKE, Inc., a
general partner of DEL-LPAML Limited Partnership ("DEL-LPAML"), one of
the Employee Partnerships. Does not include the 891,913 shares of Common
Stock owned by DEL-LPAML of which Mr. Esler might be deemed to be the
beneficial owner for purposes of Rule 13d-3. Mr. Esler disclaims such
beneficial ownership. Also does not include the 1,826,548 shares of
Common Stock of DEL/LaSalle which is 15% owned by DEL-LPAML.
(13) Ms. Galbreath owns, either directly or through a trust for which she is
the sole beneficiary, a 45.0% interest in, and is the managing member of,
Galbreath Holdings. Ms. Galbreath also owns a 40.3% interest in
Galbreath-LPL. Because Ms. Galbreath is the non-member manager of
Galbreath Holdings and Galbreath Holdings is the managing member of
Galbreath-LPL, Ms. Galbreath might be deemed to be the beneficial owner
of all shares of Common Stock owned by Galbreath Holdings and Galbreath-
LPL for purposes of Rule 13d-3. Ms. Galbreath disclaims beneficial
ownership of such shares of Common Stock, except to the extent of her
ownership interests.
(14) Mr. Rose, either directly or through an affiliate, owns a 5.87% interest
in the Employee Partnerships, on a fully-diluted basis. Mr. Rose is a
general partner of DEL-LPL.
(15) Ms. Thurber, either directly or through an affiliate, owns a 1.9%
interest in the Employee Partnerships, on a fully-diluted basis. Ms.
Thurber owns all of the issued and outstanding common stock of DEL-LCT,
Inc., a general partner of DEL-LPL.
(16) Mr. Webb, either directly or through an affiliate, owns a 1.3% interest
in the Employee Partnerships. Mr. Webb owns all of the issued and
outstanding common stock of DEL-EEW, Inc., a general partner of DEL-LPL.
(17) See footnotes (7)-(16) above.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Scott, Spoerri, Rose, Esler and Cummings, as well as entities
affiliated with Messrs. Scott and Spoerri, are limited partners of Diverse.
Diverse has an ownership interest in and operates investment assets, primarily
as the managing general partner of real estate development ventures. Prior to
January 1, 1992, the Company earned fees for providing development advisory
services to Diverse as well as fees for the provision of administrative
services. Effective January 1, 1992, the Company discontinued charging fees to
Diverse for these services. At the end of 1994, 1995 and 1996, the total
receivable due from Diverse in connection with such
fees and interest thereon was $5.3 million, $3.4 million and $2.4 million,
respectively. In 1992, Diverse began the process of discontinuing its
operations and disposing of its assets. Diverse made a payment of $1.5 million
in 1994 and $1.0 million in 1996 to reduce the receivable due to the Company.
In 1995, the Company recorded a $1.9 million provision for the estimated
uncollectible portion of the receivable due to the Company by Diverse. Messrs.
Scott, Spoerri, Rose, Esler and Cummings directly hold an approximately 11.9%,
2.2%, 2.5%, .3% and .3% partnership interest in Diverse, respectively. In
addition, the Stuart Scott Trust and Lakewood Equities, entities affiliated
with Messrs. Scott and Spoerri, have a 5.7% and .7% partnership interest in
Diverse, respectively. Diverse did not make distributions to its partners in
1994, 1995 or 1996.
In addition, the Company provides property management and leasing services to
properties in which Diverse has an ownership interest. At the end of 1994, 1995
and 1996, the total receivable due from these properties was $.6 million, $.3
million and $45,000, respectively. The properties made payments to the Company
in each of those years totaling $1.8 million, $1.7 million and $.9 million,
respectively. The Company believes that the services provided to properties in
which Diverse has an ownership interest are on terms no more favorable than
those given to unaffiliated persons.
The Company provides certain administrative services to the Employee
Partnerships for which the Company is not reimbursed. For the years ended
December 31, 1994, 1995 and 1996, respectively, the Company believes that the
estimated value of the services provided to the Employee Partnerships was $.3
million, $.2 million and $.3 million. It is expected that after the closing of
the Offering, the Company will continue to provide such services to the
Employee Partnerships without charge. After the Incorporation Transactions, the
Company expects that the value of such services will be substantially lower.
Through an affiliated entity, Mr. Scott beneficially owns all of the
outstanding shares of common stock of LP Finance 1996-1 Corporation ("LP
Finance"). LP Finance owns a 37.3% limited partnership interest in FBEC--One
Urban Centre, L.P. ("One Urban"), which interest is expected to be exchanged
for an interest in Florida Business Environment Company, L.P. ("FBEC"), a fund
being organized by the Company to invest in real estate in Florida (One Urban
and FBEC together, the "Florida Fund"). LP Finance's percentage interest in
FBEC would be determined by the total amount of capital ultimately raised. Mr.
Scott is also a director and the president and chairman of the board of LaSalle
FOF, Inc. ("LaSalle FOF"), the general partner of the Florida Fund. Mr. Scott
also owns approximately 37.3% of the outstanding shares of common stock of
LaSalle FOF. Since December 1996, the Company has provided and continues to
provide investment management services to the Florida Fund. The Company earns
an annual advisory fee of $.1 million plus a percentage of the fund properties'
net operating income and may earn an additional fee equal to a percent of
profits in excess of profits providing a specified internal rate of return. A
new advisory agreement is currently being negotiated pursuant to which the
Company would earn an annual advisory fee equal to a percentage of the fund
properties' net operating income and may earn an additional fee equal to a
percent of profits in excess of profits providing a specified internal rate of
return. The Company was also paid an acquisition fee of $.2 million in
connection with a property purchased by the fund. The Company believes that the
services provided to the Florida Fund are on terms no more favorable to the
fund than those terms given to unaffiliated persons.
The Company provides property management and leasing and investment
management services to Dai-ichi and affiliates of Dai-ichi. For the years ended
December 31, 1994, 1995 and 1996, respectively, Dai-ichi paid $16.4 million,
$9.3 million and $11.6 million for such services. At the end of such years, the
Company had
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<PAGE>
receivables of $4.9 million, $3.6 million and $2.5 million due from Dai-ichi
with respect to such services. The Company believes that the services provided
to Dai-ichi and its affiliates are on terms no more favorable to Dai-ichi than
those available to unaffiliated persons. The Company has also issued to Dai-
ichi the Dai-ichi Notes, which will be repaid out of the net proceeds to the
Company from the Offering. At each of December 31, 1994, 1995 and 1996,
respectively, an aggregate of $37.2 million, was outstanding under the Dai-
ichi Notes. The largest aggregate indebtedness outstanding under the Dai-ichi
Notes since January 1, 1994 was $51.3 million. In 1994, a principal payment of
$14.1 million was made on the Class A Notes. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
In 1996, approximately $3.8 million of the revenues generated by Galbreath
were derived from real estate properties that were owned, in part, by entities
that Ms. Galbreath and the members of her immediate family control (the
"Galbreath Affiliates"). In 1996, Galbreath also paid leasing commissions,
rent and other operating expenses of $.3 million to the Galbreath Affiliates.
The Company believes that the services provided to the Galbreath Affiliates
and the agreements regarding said leasing commissions, rent and operating
expenses are on terms no more favorable to the Galbreath Affiliates than those
available to unaffiliated persons.
In connection with the Incorporation Transactions and the merger of
Galbreath with the Company, the Company granted certain registration rights to
Dai-ichi, the Employee Partnerships and the former stockholders of Galbreath
with respect to the shares of Common Stock to be issued to them in the
Incorporation Transactions. See "Risk Factors--Shares Eligible for Future
Sale," "Incorporation Transactions" and "Shares Eligible for Future Sale--
Registration Rights."
DESCRIPTION OF CAPITAL STOCK
The following description briefly summarizes certain information regarding
the capital stock of the Company. This information does not purport to be
complete and is subject in all respects to the applicable provisions of the
Maryland General Corporation Law, as amended, the Restated Articles of
Incorporation and the Bylaws.
The Board of Directors is authorized to reclassify any unissued portion of
the authorized shares of capital stock to provide for the issuance of shares
in other classes or series, including preferred stock in one or more series,
to establish the number of shares in each class or series and to fix the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of such class or series.
The authorized capital stock of the Company consists of (i) 100,000,000
shares of common stock, $.01 par value per share and (ii) 10,000,000 shares of
Preferred Stock, $.01 par value per share ("Preferred Stock"). Upon the
closing of the Offering, 16,200,000 shares of Common Stock will be issued and
outstanding. The Company has no shares of Preferred Stock issued and
outstanding, nor will any shares of Preferred Stock be issued and outstanding
upon the closing of the Offering.
COMMON STOCK
Each share of Common Stock entitles the holder thereof to one vote on all
matters submitted to a vote of stockholders, including the election of
directors. There is no cumulative voting in the election of directors.
Consequently, the holders of a majority of the outstanding shares of Common
Stock can elect all of the directors then standing for election.
Holders of the Common Stock are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the Board of Directors out of
funds legally available therefor. See "Dividend Policy." Holders of Common
Stock have no conversion, preemptive or other rights to subscribe for any
securities of the Company, and there are no redemption or sinking fund
provisions with respect to such shares. All outstanding
64
<PAGE>
shares of Common Stock are, and the shares to be sold in the Offering when
issued and paid for will be, validly issued, fully paid and nonassessable. In
the event of any liquidation, dissolution or winding-up of the affairs of the
Company, holders of Common Stock will be entitled to share ratably in the
assets of the Company remaining after provision for payment of liabilities to
creditors. The rights, preferences and privileges of holders of Common Stock
are subject to the rights of the holders of any shares of Preferred Stock and
any additional classes of stock which the Company may issue in the future.
PREFERRED STOCK
The Restated Articles of Incorporation authorize the Board of Directors to
create and issue up to 10,000,000 shares of Preferred Stock in one or more
classes or series and to fix for each such class or series the voting powers,
designations, preferences and relative, participating, optional or other
special rights and any qualifications, limitations or restrictions thereof.
Upon the closing of the Offering, none of such shares will be outstanding. The
Board of Directors is authorized to, among other things, provide that any such
class or series of Preferred Stock may be (i) subject to redemption at such
time or times and at such price or prices as the Board may establish; (ii)
entitled to receive dividends (which may be cumulative or non-cumulative) at
such rates, on such conditions, and at such times, and payable in preference
to, or in such relation to, the dividends payable on any other class or
classes or any other series as the Board may establish; (iii) entitled to such
rights upon the dissolution of, or upon any distribution of the assets of, the
Company as the Board may establish; or (iv) convertible into, or exchangeable
for, shares of any other class or classes of stock, or of any other series of
the same or any other class or classes of stock, of the Company at such price
or prices or at such rates of exchange and with such adjustments as the Board
may establish. Issuance of Preferred Stock could discourage bids for the
Common Stock at a premium as well as create a depressive effect on the market
price of the Common Stock.
ADDITIONAL CLASSES OF STOCK
Additional classes of stock, including preferred stock, may be issued from
time to time, in one or more series, as authorized by the Board of Directors.
Prior to issuance of shares of each series, the Board of Directors is required
by the MGCL and the Company's Restated Articles of Incorporation to set for
each such series the preferences, conversion or other rights, voting powers,
restrictions, limitations as to the dividends or other distributions,
qualifications and terms or conditions of redemption, as are permitted under
Maryland law. The Board of Directors could authorize the issuance of capital
stock with terms and conditions which could have the effect of discouraging a
takeover or other transaction which holders of some, or a majority, of the
Common Stock might believe to be in their best interests or in which holders
of some, or a majority, of the Common Stock might receive a premium for their
Common Stock over the then market price of such Common Stock. As of the date
hereof, no such additional classes of stock are outstanding and the Company
has no present plans to issue any such stock.
LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION
The Restated Articles of Incorporation contain provisions which eliminate
the personal liability of a director or officer to the Company and its
stockholders for breaches of fiduciary duty to the fullest extent provided by
law. Under Maryland law, however, these provisions do not eliminate or limit
the personal liability of a director or officer (i) to the extent that it is
proved that the director or officer actually received an improper benefit or
profit or (ii) if a judgment or other final adjudication is entered in a
proceeding based on a finding that the directors' or officers' action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in such proceeding. These
provisions do not affect the ability of the Company or its stockholders to
obtain equitable relief, such as an injunction or rescission.
The Restated Articles of Incorporation and Bylaws provide that the Company
shall indemnify and advance expenses to its directors and officers to the
fullest extent permitted by the MGCL, and that the Company shall indemnify and
advance expenses to its officers to the same extent as its directors and to
such further extent as is consistent with law. The MGCL provides that a
corporation may indemnify any director made a party to any
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proceeding by reason of service in that capacity unless it is established that
(i) the act or omission of the director was material to the matter giving rise
to the proceeding and (a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty, or (ii) the director actually received an
improper personal benefit in money, property or services, or (iii) in the case
of any criminal proceeding, the director had reasonable cause to believe that
the act or omission was unlawful. The statute permits Maryland corporations to
indemnify their officers, employees or agents to the same extent as its
directors and to such further extent as is consistent with law.
The Company intends to obtain directors' and officers' liability insurance
("D&O Insurance") prior to the effective date of the Offering, and expects to
maintain such insurance following such date. In addition, the Company will
enter into an indemnification agreement with each of its directors and certain
officers of the Company under which the Company will indemnify each of them
against expenses and losses incurred for claims brought against them by reason
of being a director or officer of the Company. The Company expects that the
indemnification agreements will indemnify and advance expenses to its
directors and officers to the fullest extent permitted by the MGCL.
The Company believes that the limitation of liability and indemnification
provisions in the Restated Articles of Incorporation, the D&O Insurance and
the indemnification agreements will enhance the Company's ability to continue
to attract and retain qualified individuals to serve as directors and
officers. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been
informed 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.
CERTAIN ARTICLES OF INCORPORATION, BYLAW AND STATUTORY PROVISIONS AFFECTING
STOCKHOLDERS
Certain provisions in the Restated Articles of Incorporation and Bylaws and
the MGCL may have the effect of delaying, deferring or preventing a change of
control of the Company or may operate only with respect to extraordinary
corporate transactions involving the Company.
The Restated Articles of Incorporation provides for the Board of Directors
to be divided into three classes, as nearly equal in number as possible,
serving staggered terms. Approximately one-third of the Board will be elected
each year. See "Management." A director may be removed by the stockholders,
but only for cause, and only by the affirmative vote of the holders, voting as
a single class, of two-thirds of the voting power of the Company's then
outstanding capital stock entitled to vote generally in the election of
directors. The Company believes that classification of the Board of Directors
will help to assure the continuity and stability of the Company's business
strategies and policies as determined by the Board of Directors. The provision
for a classified board, together with the director removal provisions, could
prevent a party who acquires control of a majority of the outstanding voting
stock from obtaining control of the Board until the second annual stockholders
meeting following the date the acquiror obtains the controlling stock
interest. The classified board provision, together with the director removal
provisions, could have the effect of discouraging a potential acquiror from
making a tender offer or initiating a proxy contest or otherwise attempting to
gain control of the Company and could increase the likelihood that incumbent
directors will retain their positions.
The Bylaws provide that stockholders at an annual meeting may only consider
proposals or nominations specified in the notice of meeting or brought before
the meeting by or at the direction of the Board or by a stockholder who was a
stockholder of record on the record date for the meeting, who is entitled to
vote at the meeting and who has given to the Company's Secretary timely
written notice, in proper form, of the stockholder's intention to bring that
proposal or nomination before the meeting. In addition to certain other
applicable requirements, for a stockholder proposal or nomination to be
properly brought before an annual meeting by a stockholder, such stockholder
generally must have given notice thereof in proper written form to the
Secretary of the Company not less than 90 days nor more than 120 days prior to
the anniversary date of the immediately preceding annual meeting of
stockholders. Although the Bylaws do not give the Board the power to approve
or disapprove stockholder nominations of candidates or proposals regarding
other business to be
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conducted at a special or annual meeting, the Bylaws may have the effect of
precluding the conduct of certain business at a meeting if the proper
procedures are not followed or may discourage or defer a potential acquiror
from conducting a solicitation of proxies to elect its own slate of directors
or otherwise attempting to obtain control of the Company.
Pursuant to the MGCL, the Bylaws permit stockholders to call special
meetings of stockholders upon written request of holders of shares entitled to
cast not less than a majority of all votes entitled to be cast at such
meeting. The Bylaws provide that only business specified in the notice of a
special meeting will be conducted at such meeting. Such provisions do not,
however, affect the ability of stockholders to submit a proposal to the vote
of all stockholders of the Company at an annual meeting in accordance with the
Bylaws, which provide for the additional notice requirements for stockholder
nominations and proposals at the annual meetings of stockholders as described
above. In addition, pursuant to the MGCL, the Bylaws provide that any action
required to be taken at a meeting of the stockholders may be taken without a
meeting by unanimous written consent, if such consent sets forth such action
and is signed by each stockholder entitled to vote on the matter and a written
waiver of any right to dissent signed by each stockholder entitled to notice
of the meeting but not entitled to vote thereat.
The Restated Articles of Incorporation and Bylaws provide that the
affirmative vote of at least 80% of the total votes eligible to be cast in the
election of directors is required to amend, alter, change or repeal certain of
their provisions. This requirement of a super-majority vote to approve
amendments to certain provisions of the Restated Articles of Incorporation and
Bylaws could enable a minority of the Company's stockholders to exercise veto
power over any such amendments.
Under the MGCL, certain "Business Combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer
or issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting
power of the corporation's shares or an affiliate of the corporation who, at
any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding
voting stock of the corporation (an "Interested Stockholder") or an affiliate
thereof are prohibited for five years after the most recent date on which the
Interested Stockholder became an Interested Stockholder. Thereafter, any such
Business Combination must be recommended by the Board of Directors of such
corporation and approved by the affirmative vote of at least (i) 80% of the
votes entitled to be cast by holders of outstanding voting shares of the
corporation and (ii) 66 2/3% of the votes entitled to be cast by holders of
outstanding voting shares of the corporation other than shares held by the
Interested Stockholder with whom the Business Combination is to be effected,
unless, among other things, the corporation's stockholders receive a minimum
price (as defined in the MGCL) for their shares and the consideration is
received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. It is anticipated that the Company's Board of
Directors will exempt from the Maryland statute any business combination with
the Employee Partnerships, any present or future affiliate or associate of any
of them, or any other person acting in concert or as a group with any of the
foregoing persons. Pursuant to the MGCL, these provisions also do not apply to
Business Combinations which are approved or exempted by the Board of Directors
of the corporation prior to the time that the Interested Stockholder becomes
an Interested Stockholder.
The Company will elect to include in its Restated Articles of Incorporation
provisions exempting it from the application of the Maryland control share
acquisition statute.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank. Application has been made to list the Common Stock on the New
York Stock Exchange under the symbol "LAP."
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the closing of this Offering, the Company will have approximately
16,200,000 shares of Common Stock outstanding. The 4,000,000 shares of Common
Stock sold in this Offering (4,600,000 shares if the Underwriters' over-
allotment option is exercised in full) will be freely tradable without
restriction under the Securities Act, except for any such shares held at any
time by an "affiliate" of the Company, as such term is defined under Rule 144
promulgated under the Securities Act.
The remaining 12,200,000 shares of Common Stock outstanding upon the closing
of the Offering (11,600,000 if the Underwriters exercise in full the over-
allotment option) will be owned by the Employee Partnerships, including
DEL/LaSalle, the former Galbreath stockholders and affiliates of Dai-ichi and
may be publicly sold only if such Common Stock is registered under the
Securities Act or sold in accordance with an applicable exemption from
registration, such as Rule 144. In general, under Rule 144, as currently in
effect, a person who has beneficially owned shares for at least one year,
including an "affiliate," as that term is defined in Rule 144, is entitled to
sell, within any three-month period, a number of "restricted" shares that does
not exceed the greater of one percent (1%) of the then outstanding shares of
Common Stock (approximately 162,000 shares immediately after the Offering) or
the average weekly trading volume during the four calendar weeks preceding
such sale. Sales under Rule 144 are also subject to certain manner of sale
limitations, notice requirements and the availability of current public
information about the Company. Rule 144(k) provides that a person who is not
deemed an "affiliate" and who has beneficially owned shares for at least two
years is entitled to sell such shares at any time under Rule 144 without
regard to the limitations described above.
Under the terms of the partnership agreement of the Employee Partnerships,
partners thereof generally will be entitled to receive upon their withdrawal
from the Employee Partnerships, death or incapacity, or upon request, up to
that number of shares of Common Stock held by the Employee Partnerships which
represents their pro rata interest in the shares of Common Stock held by the
Employee Partnerships. Partners of the Employee Partnerships who receive
shares upon their withdrawal or by election will not be subject to any
contractual restrictions on resale with respect to shares of the Common Stock
received by them but will be subject to the restrictions on transfer described
above. However, unless such shares are registered for sale under the
Securities Act, for purposes of Rule 144 they would be considered "restricted
securities" and would be subject to the limitations on sale pursuant to Rule
144 described above. For the purposes of determining compliance with the
volume limitations of Rule 144, all sales of Common Stock by partners of the
Employee Partnerships will generally be aggregated. In addition, the holding
period for partners of the Employee Partnerships under Rule 144 will generally
include the holding period of the Employee Partnerships.
The Company will agree with the Underwriters, subject to certain exceptions,
not to sell or otherwise dispose of any shares of Common Stock for a period of
180 days from the date of this Prospectus without the prior written consent of
Morgan Stanley & Co. Incorporated. Each of the Company's current stockholders
will enter into or is bound by a similar agreement. See "Underwriters."
The Company is unable to estimate the number of shares of Common Stock that
may be sold in the future by the existing stockholders or the effect, if any,
that sales of shares by such stockholders will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock by such stockholders, or the perception that such sales could
occur, could adversely affect prevailing market prices.
In March 1997, DEL/LaSalle, a limited liability company whose only members
are the Employee Partnerships, purchased the limited partnership interests in
the Predecessor Partnerships owned by a subsidiary of Dresdner. Dresdner was
required to sell the interests in order to comply with bank regulatory
requirements. As consideration for such purchase, DEL/LaSalle issued to
Dresdner the Dresdner Note. The purchase price was determined in May 1996 and
was based on the original purchase price for such interests plus Dresdner's
share of expected undistributed earnings for 1996. All of the 1,826,548 shares
of Common Stock to be received by DEL/LaSalle in connection with the
Incorporation Transactions and 2,831,150 of the shares of Common Stock held by
the Employee Partnerships, representing an aggregate of approximately 29% of
the outstanding Common
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Stock after giving effect to the Offering, will be pledged to support
DEL/LaSalle's obligations under the Dresdner Note. The principal amount of the
Dresdner Note is due in five installments, with $3.5 million due on April 15,
2000 and $7.8 million due on each April 15 thereafter, through 2004. The
Dresdner Note bears interest at 7.0% per annum, payable on each April 15
beginning on April 15, 1998. DEL/LaSalle will not have any assets other than
the Common Stock issued in connection with the Incorporation Transactions.
Funds for repayment of the Dresdner Note, including interest thereon, will be
provided by capital contributions from the Employee Partnerships and through
the sale of Common Stock in the public market or in privately negotiated
transactions. DEL/LaSalle has granted the U.S. Underwriters a 30-day option to
purchase up to 600,000 shares of Common Stock to cover over-allotments in
connection with the Offering. In the event that the Underwriters' over-
allotment option is exercised, the proceeds to DEL/LaSalle will be used to
repay a portion of the Dresdner Note. If an event of default occurs under the
Dresdner Note, Dresdner will have the right to sell any or all of the pledged
shares in the public market or in privately negotiated transactions, subject
to compliance with the Securities Act and applicable law.
REGISTRATION RIGHTS
In connection with the merger of Galbreath with Predecessor Partnerships,
the Company entered into a Registration Rights Agreement (the "Registration
Rights Agreement") by and among the Employee Partnerships, affiliates of Dai-
ichi, an entity formed by the former Galbreath stockholders (each a "Current
Stockholder") and the Company. The Registration Rights Agreement provides
that, subject to certain limitations, at any time following 12 months from the
date of closing of the Offering (the "Effective Date"), each Current
Stockholder has the right to demand, on no more than two occasions, that the
Company register all or a portion of the shares of Common Stock owned by such
stockholder at the Effective Date, subject to a minimum demand of 20.0% of the
total shares originally issued to such stockholder or a lesser percentage if
the anticipated aggregate price to the public would exceed $5.0 million. The
Company will be required to use its best efforts to effect any such
registration on demand. Such registrations will be at the Company's expense,
except that each selling stockholder will bear its pro rata share of the
underwriting discounts and commissions.
In addition, at any time after the expiration of 12 months from the
Effective Date, the Current Stockholders will have certain incidental rights
to require the Company to include in any registration statement filed by the
Company with respect to its securities (whether for its own account or for the
account of any securityholder) such amount of shares of Common Stock requested
by the Current Stockholders to be included therein, subject to certain
exceptions. Such registrations will be at the Company's expense, except that
each selling stockholder will bear its pro rata share of the underwriting
discounts and commissions.
The Registration Rights Agreement also provides that, prior to the transfer
of Common Stock by the Current Stockholders, such stockholders must provide
notice to the Company of the proposed transfer unless the proposed transfer is
to one of the Current Stockholders, certain institutional investors, persons
who would own after the transfer less than 5.0% of the Company's outstanding
Common Stock, purchasers pursuant to Rule 144 under the Securities Act, or to
an underwriter in a firm commitment underwriting. The Company will then have
the option of purchasing the shares proposed to be transferred at a price
equal to the average closing market price of Common Stock during the five
trading days prior to such notice.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock applicable to "Non-United States Holders." Subject to the discussion
below under "Estate Tax," a "Non-United States Holder" is any beneficial owner
of Common Stock that, for United States federal income tax purposes is a non-
resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust as such terms are defined in the Internal Revenue Code
of 1986, as amended (the "Code"). This discussion is based on the Code,
existing, proposed and temporary regulations promulgated thereunder, and
administrative and judicial interpretations as of the date thereof, all of
which are subject to change either retroactively or prospectively. This
discussion does not address all aspects of United States federal income and
estate taxation that may be relevant to Non-United States Holders in light of
their particular circumstances and does not address any tax consequences
arising under the laws of any state, local or foreign taxing jurisdiction or
the application of a particular tax treaty. Prospective investors are urged to
consult their tax advisors regarding the United States federal, state and
local income and other tax consequences, and the non-United States tax
consequences, of owning and disposing of Common Stock.
Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, could effect the United States
taxation of dividends on Common Stock paid to a Non-United States Holder. The
Proposed Regulations are generally proposed to be effective with respect to
dividends paid after December 31, 1997, subject to certain transition rules.
It cannot be predicted at this time whether the Proposed Regulations will be
adopted as proposed or what modifications, if any, may be made to them. The
discussion below is not intended to include a complete discussion of the
provisions of the Proposed Regulations, and prospective investors are urged to
consult their tax advisors with respect to the effect the Proposed Regulations
may have if adopted.
DIVIDENDS
Subject to the discussion below, any dividend paid to a Non-United States
Holder generally will be subject to United States withholding tax either at a
rate of 30% of the gross amount of the dividend or such lower rate as may be
specified by an applicable tax treaty. For purposes of determining whether tax
is to be withheld at a 30% rate or at a reduced rate as specified by an
applicable tax treaty, under current United States Treasury Regulations the
Company ordinarily will presume that dividends paid to a holder with an
address in a foreign country are paid to a resident of such country absent
knowledge that such presumption is not warranted. Under such Regulations,
dividends paid to a holder with an address within the United States generally
will be presumed to be paid to a holder who is not a Non-United States Holder
and will not be subject to the 30% withholding tax, unless the Company has
actual knowledge that the holder is a Non-United States Holder.
The Proposed Regulations would provide for certain presumptions (which
differ from those described above) upon which the Company may generally rely
to determine whether, in the absence of certain documentation, a holder should
be treated as a Non-United States Holder for purposes of the 30% withholding
tax described above. The presumptions would not apply for purposes of granting
a reduced rate of withholding under a treaty. Under the Proposed Regulations,
to obtain a reduced rate of withholding under a treaty a Non-United States
Holder would generally be required to provide an Internal Revenue Service Form
W-8 certifying such Non-United States Holder's entitlement to benefits under a
treaty. The Proposed Regulations also would provide special rules to determine
whether, for purposes of determining the applicability of a tax treaty and for
purposes of the 30% withholding tax described above, dividends paid to a Non-
United States Holder that is an entity should be treated as paid to the entity
or those holding an interest in that entity.
Dividends received by a Non-United States Holder that are effectively
connected with a United States trade or business conducted by such Non-United
States Holder are exempt from withholding tax. However, such effectively
connected dividends are subject to regular United States income tax in the
same manner as if the
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Non-United States Holder were a United States person for federal income tax
purposes. A Non-United States Holder may claim exemption from withholding
under the effectively connected income exception by filing Internal Revenue
Service Form 4224 (Exemption From Withholding of Tax on Income Effectively
Connected With the Conduct of a Trade or Business in the United States) each
year with the Company or its paying agent prior to the payment of the
dividends for such year. The Proposed Regulations would replace Form 4224 with
Form W-8. Effectively connected dividends received by a corporate Non-United
States Holder may be subject to additional "branch profits tax" at a rate of
30% (or such lower rate as may be specified by an applicable tax treaty) of
such corporate Non-United States Holder's effectively connected earnings and
profits, subject to certain adjustments.
A Non-United States Holder eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the United
States Internal Revenue Service ("IRS").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain realized upon the sale or other
disposition of Common Stock unless (i) such gain is effectively connected with
a United States trade or business of the Non-United States Holder; (ii) the
Non-United States Holder is an individual who holds the Common Stock as a
capital asset, is present in the United States for a period or periods
aggregating 183 days or more during the taxable year in which such sale or
disposition occurs, and certain other conditions are met; or (iii) the Company
is or has been a "United States real property holding corporation" for federal
income tax purposes at any time within the shorter of the five-year period
preceding such disposition or such holder's holding period and certain other
conditions are met. The Company has determined that it is not and has never
been, and the Company does not believe that it will become, a "United States
real property holding corporation" for federal income tax purposes. Non-United
States Holders should consult applicable tax treaties, which might result in
United States federal income tax treatment on the sale or other disposition of
Common Stock different than as described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax
withheld. A similar report is sent to the holder. Pursuant to tax treaties or
other agreements, the IRS may make its reports available to tax authorities in
the recipient's country of residence.
Unless the Company has actual knowledge that a holder is a Non-United States
Holder, dividends paid to a holder at an address within the United States may
be subject to backup withholding at a rate of 31% if the holder is not an
"exempt recipient" as defined in Treasury Regulations (which includes
corporations) and fails to provide a correct taxpayer identification number
and other information to the Company. Backup withholding will generally not
apply to dividends paid to holders at an address outside the United States
(unless the Company has knowledge that the holder is a United States person).
Proceeds from the disposition of Common Stock by a Non-United States Holder
effected by or through a United States office of a broker will be subject to
information reporting and to backup withholding at a rate of 31% of the gross
proceeds unless such Non-United States Holder certifies under penalties of
perjury as to, among other things, its address and status as a Non-United
States Holder or otherwise establishes an exemption. Generally, United States
information reporting and backup withholding will not apply to a payment of
disposition proceeds if the transaction is effected outside the United States
by or through a non-United States office of a broker. However, if such broker
is, for United States federal income tax purposes, a United States person, a
"controlled foreign corporation," or a foreign person which derives 50% or
more of its gross income for certain
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periods from the conduct of a United States trade or business, information
reporting (but not backup withholding) will apply unless (i) such broker has
documentary evidence in its files that the holder is a Non-United States
Holder and certain other conditions are met, or (ii) the holder otherwise
establishes an exemption.
The Proposed Regulations would, if adopted, alter the aforegoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions and other rules under which Non-United States Holders may
be subject to backup withholding in the absence of required certifications and
would modify the definition of an "exempt recipient" in the case of a
corporation.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of United States
income taxes, a refund may be obtained, provided the required documents are
filed with the IRS.
ESTATE TAX
An individual Non-United States Holder who is treated as the owner of Common
Stock at the time of such individual's death or has made certain lifetime
transfers of an interest in Common Stock will be required to include the value
of such Common Stock in such individual's gross estate for United States
federal estate tax purposes and may be subject to United States federal estate
tax, unless an applicable tax treaty provides otherwise. For United States
federal estate tax purposes, a "Non-United States Holder" is an individual who
is neither a citizen nor a domiciliary of the United States. Whether an
individual is considered a "domiciliary" of the United States for estate tax
purposes is generally determined on the basis of all of the facts and
circumstances.
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UNDERWRITERS
Under the terms and subject to conditions contained in an Underwriting
Agreement dated the date hereof, the U.S. Underwriters named below, for whom
Morgan Stanley & Co. Incorporated, William Blair & Company, L.L.C. and
Montgomery Securities are acting as U.S. Representatives, and the
International Underwriters named below, for whom Morgan Stanley & Co.
International Limited, William Blair & Company, L.L.C. and Montgomery
Securities are acting as International Representatives, have severally agreed
to purchase, and the Company has agreed to sell to them, severally, the
respective number of shares of Common Stock set forth opposite the names of
such Underwriters below:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated.....................
William Blair & Company, L.L.C........................
Montgomery Securities.................................
---------
Subtotal............................................ 3,200,000
---------
International Underwriters:
Morgan Stanley & Co. International Limited............
William Blair & Company, L.L.C........................
Montgomery Securities.................................
---------
Subtotal............................................ 800,000
---------
Total............................................. 4,000,000
=========
</TABLE>
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The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively
referred to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all of the shares of Common Stock offered hereby (other than
those covered by the U.S. Underwriters' over-allotment option described
below), if any such shares are taken.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly,
any Shares or distribute any prospectus relating to the Shares outside the
United States or Canada or to anyone other than a United States or Canadian
Person. Pursuant to the Agreement Between U.S. and International Underwriters,
each International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States
or Canadian Person. With respect to any Underwriter that is a U.S. Underwriter
and an International Underwriter, the foregoing representations and agreements
(i) made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter apply only to it in its capacity as an International
Underwriter. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the Agreement
Between U.S. and International Underwriters. As used herein, "United States or
Canadian Person" means any national or resident of the United States or
Canada, or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States and Canada of any United States or Canadian Person), and includes any
United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
Underwriters under the Underwriting Agreement are referred to herein as the
"Shares."
Pursuant to the Agreement Between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and International Underwriters of
any number of Shares as may be mutually agreed. The per share price of any
Shares so sold shall be the public offering price set forth on the cover page
hereof, in United State dollars, less an amount not greater than the per share
amount of the concession to dealers set forth below.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has
agreed not to offer or sell, any Shares, directly or indirectly, in any
province or territory of Canada or to, or for the benefit of, any resident of
any province or territory of Canada in contravention of the securities laws
thereof and has represented that any offer or sale of Shares in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus
in the province or territory of Canada in which such offer or sale is made.
Each U.S. Underwriter has further agreed to send to any dealer who purchases
from it any of the Shares a notice stating in substance that, by purchasing
such Shares, such dealer represents and agrees that it has not offered or
sold, and will not offer or sell, directly or indirectly, any of such Shares
in any province or territory of Canada or to, or for the benefit of, any
resident of any province or territory of Canada in contravention of the
securities laws thereof and that any offer or sale of Shares in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus
in the province or territory of Canada in which such offer or sale is made,
and that such dealer will deliver to any other dealer to whom it sells any of
such Shares a notice containing substantially the same statement as is
contained in this sentence.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not
offered or sold and, prior to the date six months after the closing date for
the sale of the Shares to the International Underwriters, will not offer or
sell, any Shares to persons in the
74
<PAGE>
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the Shares in, from or otherwise involving the United
Kingdom; and (iii) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection with the
offering of the Shares to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully be
issued or passed on.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or
sales of Japanese International Underwriters or dealers and except pursuant to
any exemption from the registration requirements of the Securities and
Exchange Law and otherwise in compliance with applicable provisions of
Japanese law. Each International Underwriter has further agreed to send to any
dealer who purchases from it any of the Shares a notice stating in substance
that by purchasing such Shares, such dealer represents and agrees that it has
not offered or sold, and will not offer or sell, any of such Shares, directly
or indirectly, in Japan or to or for the account of any resident thereof
except for offers or sales to Japanese International Underwriters or dealers
and except pursuant to any exemption from the registration requirements of the
Securities and Exchange Law and otherwise in compliance with applicable
provisions of Japanese law, and that such dealer will send to any other dealer
to whom it sells any of such Shares a notice containing substantially the same
statement as is contained in this sentence.
The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price. Any
Underwriter may allow, and such dealers may reallow, a concession not in
excess of $ a share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, the offering price and other
selling terms may from time to time be varied by the Representatives.
The Selling Stockholder has granted to the U.S. Underwriters an option,
exercisable for 30 days from the date of this Prospectus, to purchase up to an
aggregate of 600,000 additional shares of Common Stock at the public offering
price set forth on the cover page hereof, less underwriting discounts and
commissions. The U.S. Underwriters may exercise such option solely for the
purpose of covering over-allotments, if any, made in connection with the
offering of the shares of Common Stock offered hereby. To the extent such
option is exercised, each U.S. Underwriter will become obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional shares of Common Stock as the number set forth next to such U.S.
Underwriter's name in the preceding table bears to the total number of shares
of Common Stock set forth next to the names of all U.S. Underwriters in the
preceding table.
The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Common Stock offered by them.
The Company has applied to have the Common Stock approved for listing on The
New York Stock Exchange under the symbol "LAP."
Each of the Company and the directors, executive officers, the Selling
Stockholder and the other stockholders of the Company have agreed that,
without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the Underwriters, it will not, during the period ending 180 days
after the date of this Prospectus, (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for
75
<PAGE>
Common Stock, or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The restrictions described in this paragraph
do not apply to (a) the sale of shares to the Underwriters, (b) the issuance
by the Company of shares of Common Stock upon the exercise of an option or a
warrant or the conversion of a security outstanding on the date of this
Prospectus of which the Underwriters have been advised in writing, (c)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares, (d) stock or stock option issuances
by the Company pursuant to existing employee benefit plans, or (e) the
distribution of shares of Common Stock by the Employee Partnerships to their
respective partners; provided that any such partners agree to be bound by the
foregoing limitations.
At the request of the Company, the Underwriters have reserved for sale at
the initial offering price, up to 200,000 shares offered hereby for directors,
officers, employees, business associates and related persons of the Company.
The number of shares of Common Stock available for sale to the general public
will be reduced to the extent such persons purchase such reserved shares. Any
reserved shares which are not so purchased will be offered by the Underwriters
to the general public on the same basis as the other shares offered hereby.
All purchasers of the shares of Common Stock reserved pursuant to this
paragraph who are also directors or senior officers of the Company will be
required to enter into agreements identical to those described in the
immediately preceding paragraph restricting the transferability of such shares
for a period of 180 days after the date of this Prospectus.
In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the Offering, creating a short position in the Common Stock
for their own account. In addition, to cover over-allotments or stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares
of Common Stock in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the Common Stock in the Offering, if the syndicate repurchases
previously distributed Common Stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriters are not required to engage in
these activities and may end any of these activities at any time.
The Representatives perform investment banking services to the Company for
which they receive customary compensation. An affiliate of Morgan Stanley &
Co. Incorporated has retained the Company for investment advisory services on
behalf of one of its clients. Such client pays customary fees to the Company
for such services. Thomas C. Theobald, a director nominee of the Company, is
an employee of William Blair & Company, L.L.C.
The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. The
Selling Stockholder has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
PRICING OF THE OFFERING
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price will be determined by negotiations between
the Company and the U.S. Representatives. Among the factors to be considered
in determining the initial public offering price will be the future prospects
of the Company and its industry in general, sales, earnings and certain other
financial and operating information of the Company in recent periods, and the
price-earnings ratios, price-sales ratios, aggregate value-EBITDA ratios,
market prices of securities and certain financial and operating information of
companies engaged in activities similar to those of the Company. The estimated
initial public offering price range set forth on the cover page of this
Preliminary Prospectus is subject to change as a result of market conditions
and other factors.
76
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Skadden, Arps, Slate, Meagher & Flom (Illinois) and
for the Underwriters by Sidley & Austin, Chicago, Illinois. Skadden, Arps,
Slate, Meagher & Flom (Illinois) and Sidley & Austin will rely upon the
opinion of Piper & Marbury L.L.P., Baltimore, Maryland, as to certain matters
of Maryland law.
EXPERTS
The Combined Financial Statements of the Predecessor Partnerships as of
December 31, 1995 and 1996, and for each of the years in the three-year period
ended December 31, 1996 and the balance sheet of LaSalle Partners Incorporated
as of April 22, 1997 included in this Prospectus and Registration Statement
have been included herein and in the Registration Statement in reliance upon
the reports of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
The Combined Financial Statements of Galbreath as of December 31, 1996 and
for the year then ended included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report
appearing herein, and are included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") under
the Securities Act of 1933, as amended, with respect to the Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, and the exhibits and schedules to the Registration
Statement. Statements made in this Prospectus as to the contents of any
agreement or other document referred to herein are not necessarily complete,
and reference is made to the copy of such agreement or other document filed as
an exhibit or schedule to the Registration Statement, and each such statement
shall be deemed qualified in its entirety by such reference. For further
information, reference is made to the Registration Statement and to the
exhibits and schedules filed therewith.
After consummation of the Offering, the Company will be subject to the
information and reporting requirements of the Exchange Act and, in accordance
therewith will be required to file proxy statements, reports and other
information with the Commission. The Registration Statement, as well as any
such report, proxy statement and other information filed by the Company with
the Commission, may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Upon listing of the
Common Stock on the New York Stock Exchange, Inc. (the "NYSE"), reports, proxy
statements and other information concerning the Company may be inspected at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company intends to furnish to its stockholders annual reports containing
consolidated financial statements audited by an independent public accounting
firm accompanied by an opinion expressed by such independent public accounting
firm and quarterly reports for the first three quarters of each fiscal year
containing unaudited consolidated financial information in each case prepared
in accordance with GAAP.
77
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LaSalle Partners Limited Partnership and LaSalle Partners Management
Limited Partnership
Report of KPMG Peat Marwick LLP, Independent Auditors................... F-2
Combined Balance Sheets as of December 31, 1995 and 1996, and
(unaudited) as of March 31, 1997....................................... F-3
Combined Statements of Earnings For the Years Ended December 31, 1994,
1995 and 1996, and (unaudited) for the Three Months Ended March 31,
1996 and 1997.......................................................... F-4
Combined Statements of Partners' Capital (Deficit) For the Years Ended
December 31, 1994, 1995 and 1996, and (unaudited) for the Three Months
Ended March 31, 1997................................................... F-5
Combined Statements of Cash Flows For the Years Ended December 31, 1994,
1995 and 1996, and (unaudited) for the Three Months Ended March 31,
1996 and 1997.......................................................... F-6
Notes to Combined Financial Statements.................................. F-7
LaSalle Partners Incorporated
Report of KPMG Peat Marwick LLP, Independent Auditors................... F-17
Balance Sheet as of April 22, 1997...................................... F-18
Notes to Balance Sheet.................................................. F-19
The Galbreath Company and Affiliates
Report of Deloitte & Touche LLP, Independent Auditors................... F-20
Combined Balance Sheets as of December 31, 1996, and (unaudited) as of
March 31, 1997......................................................... F-21
Combined Statements of Income and Owner's Equity for the Year Ended
December 31, 1996, and (unaudited) for the Three Months Ended March 31,
1996 and 1997.......................................................... F-22
Combined Statements of Cash Flows for the Year Ended December 31, 1996,
and (unaudited) for the Three Months Ended March 31, 1996 and 1997..... F-23
Notes to Combined Financial Statements.................................. F-24
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
LaSalle Partners Limited Partnership
LaSalle Partners Management Limited Partnership:
We have audited the accompanying combined balance sheets of LaSalle Partners
Limited Partnership and subsidiaries and LaSalle Partners Management Limited
Partnership and subsidiaries as of December 31, 1995 and 1996, and the related
combined statements of earnings, partners' capital (deficit), and cash flows
for each of the years in the three-year period ended December 31, 1996. These
combined financial statements are the responsibility of the general partners
of the Partnerships. Our responsibility is to express an opinion on these
combined 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 audit 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of LaSalle Partners
Limited Partnership and subsidiaries and LaSalle Partners Management Limited
Partnership and subsidiaries as of December 31, 1995 and 1996, and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
March 21, 1997
except as to note 12
which is as of April 22, 1997
F-2
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP
AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP
AND SUBSIDIARIES
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
ASSETS 1995 1996 1997
------ --------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents...................... $ 8,322 $ 7,207 $ 8,094
Trade receivables, net of allowances........... 71,677 87,283 52,052
Other receivables.............................. 2,035 3,005 4,116
Prepaid expenses............................... 1,016 1,228 1,115
--------- -------- --------
Total current assets......................... 83,050 98,723 65,377
Property and equipment, at cost, less accumulated
depreciation of $22,900, $23,310 and $24,295 in
1995, 1996 and 1997, respectively (note 2)...... 10,132 14,549 14,409
Intangibles resulting from business acquisitions
(note 3)........................................ 8,351 23,735 22,647
Investments in real estate ventures (note 6)..... 7,386 13,687 15,752
Long-term receivables, net of allowances......... 5,296 5,052 4,878
Other assets, net................................ 786 868 1,012
--------- -------- --------
$ 115,001 $156,614 $124,075
========= ======== ========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities....... $ 31,160 $ 34,228 $ 19,059
Accrued compensation (note 9).................. 24,872 26,016 6,143
Borrowings under short-term credit facility
(note 7)...................................... -- 6,500 16,800
Current maturities of long-term debt (note 7).. 1,308 9,064 9,332
--------- -------- --------
Total current liabilities.................... 57,340 75,808 51,334
Long-term debt (note 7):
Subordinated loans, less current maturities.... 37,213 34,106 34,106
Long-term credit facility, less current
maturities.................................... 3,592 21,445 22,977
--------- -------- --------
Total long-term debt......................... 40,805 55,551 57,083
Other long-term liabilities...................... 1,859 1,008 1,008
Commitments and contingencies (notes 4, 6, 8 and
11)
--------- -------- --------
Total liabilities............................ 100,004 132,367 109,425
Partners' capital................................ 14,997 24,247 14,650
--------- -------- --------
$ 115,001 $156,614 $124,075
========= ======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP
AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP
AND SUBSIDIARIES
COMBINED STATEMENTS OF EARNINGS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------- ----------------
1994 1995 1996 1996 1997
-------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Fee based services (note 5)..... $123,243 $146,282 $170,709 $26,734 $34,244
Equity in earnings from
unconsolidated ventures (note
6)............................. 1,024 3,130 3,220 89 1,394
Construction operations, net
(note 4)....................... 1,284 1,358 1,271 311 205
Other income.................... 1,367 1,057 767 151 176
-------- -------- -------- ------- -------
Total revenue................. 126,918 151,827 175,967 27,285 36,019
Operating expenses:
Compensation and benefits (note
9)............................. 78,108 91,183 104,673 23,327 27,217
Other operating and
administrative................. 27,944 36,288 38,977 8,052 10,300
Depreciation and amortization
(note 2)....................... 2,851 4,240 5,416 1,111 1,774
-------- -------- -------- ------- -------
Total operating expenses...... 108,903 131,711 149,066 32,490 39,291
-------- -------- -------- ------- -------
Operating income (loss)......... 18,015 20,116 26,901 (5,205) (3,272)
Interest expense (note 7)......... 5,159 3,806 5,730 937 1,695
-------- -------- -------- ------- -------
Earnings (loss) before provision
for income taxes............... 12,856 16,310 21,171 (6,142) (4,967)
Net provision (benefit) for income
taxes (note 2)................... 554 505 1,207 (350) (248)
-------- -------- -------- ------- -------
Net earnings (loss)............... $ 12,302 $ 15,805 $ 19,964 $(5,792) $(4,719)
======== ======== ======== ======= =======
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP
AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP
AND SUBSIDIARIES
COMBINED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS OTHER TOTAL
-------- -------- ----- --------
<S> <C> <C> <C> <C>
Partners' capital (deficit), January 1,
1994...................................... $(50,356) 35,067 -- $(15,289)
Net earnings............................. 8,400 3,902 -- 12,302
Distributions............................ (7,614) (3,348) -- (10,962)
Assets, net of liabilities contributed by
limited partners........................ -- 13,000 -- 13,000
Limited partners' cash contributions..... -- 14,106 -- 14,106
-------- ------ ----- --------
Total contributions.................... -- 27,106 -- 27,106
-------- ------ ----- --------
Partners' capital (deficit), December 31,
1994...................................... (49,570) 62,727 -- 13,157
Net earnings............................. 8,782 7,023 -- 15,805
Distributions............................ (8,839) (5,126) -- (13,965)
-------- ------ ----- --------
Partners' capital (deficit), December 31,
1995...................................... (49,627) 64,624 -- 14,997
Net earnings............................. 11,093 8,871 -- 19,964
Distributions............................ (6,563) (5,250) -- (11,813)
Effect of cumulative translation
adjustments............................. -- -- 1,099 1,099
-------- ------ ----- --------
Partners' capital (deficit), December 31,
1996...................................... $(45,097) 68,245 1,099 $ 24,247
Net earnings (loss) (unaudited).......... (2,622) (2,097) -- (4,719)
Distributions (unaudited)................ (2,442) (1,953) -- (4,395)
Effect of cumulative translation
adjustments (unaudited)................. -- -- (483) (483)
-------- ------ ----- --------
Partners' capital (deficit), March 31, 1997
(unaudited)............................... $(50,161) 64,195 616 $ 14,650
======== ====== ===== ========
</TABLE>
See accompanying notes to combined financial statements.
F-5
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP
AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP
AND SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------- ------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net earnings (loss)......... $ 12,302 $ 15,805 $ 19,964 $ (5,792) $ (4,719)
Reconciliation of net
earnings (loss) to net
cash provided by operating
activities:
Depreciation and
amortization............. 2,851 4,240 5,416 1,111 1,774
Equity in earnings and
gain on sale from
unconsolidated ventures
(note 6)................. (1,349) (3,130) (3,220) (89) (1,394)
Provision for loss on
receivables and other
assets................... 247 2,732 986 3 1,140
Operating distributions
from unconsolidated
ventures................. 398 1,078 3,571 629 386
Changes in:
Receivables............... 2,634 (9,699) (17,234) 22,477 33,123
Prepaid expenses and other
assets................... (312) 172 37 90 15
Accounts payable, accrued
liabilities and accrued
compensation............. 7,857 2,355 4,444 (31,150) (35,003)
-------- -------- -------- -------- --------
Net cash provided by
(used in) operating
activities............. 24,628 13,553 13,964 (12,721) (4,678)
Cash flows provided by (used
in) investing activities:
Net capital additions--
property and equipment..... (2,218) (5,055) (10,790) (5,113) (981)
Acquisition of CIN (note
3)......................... -- -- (15,700) -- --
Investments in real estate
ventures:
Capital contributions and
advances to real estate
ventures................. (9,435) (1,941) (9,270) (1,065) (2,206)
Distributions, repayments
of advances and sale of
investments.............. 6,768 1,290 3,282 211 1,149
-------- -------- -------- -------- --------
Net cash used in
investing activities .. (4,885) (5,706) (32,478) (5,967) (2,038)
Cash flows provided by (used
in) financing activities:
Net borrowings under credit
facility................... (2,000) 1,600 29,002 18,000 12,100
Payment of subordinated
notes payable.............. (14,106) -- -- -- --
Distributions to partners... (10,962) (13,965) (11,813) (3,079) (4,395)
Contributions from
partners................... 15,040 -- -- -- --
-------- -------- -------- -------- --------
Net cash provided by
(used in) financing
activities............. (12,028) (12,365) 17,189 14,921 7,705
Effects of foreign currency
translation on cash
balances................... -- -- 210 -- (102)
-------- -------- -------- -------- --------
Net increase (decrease) in
cash and cash equivalents.. 7,715 (4,518) (1,115) (3,767) 887
Cash and cash equivalents,
January 1.................. 5,125 12,840 8,322 8,322 7,207
-------- -------- -------- -------- --------
Cash and cash equivalents,
December 31................ $ 12,840 $ 8,322 $ 7,207 $ 4,555 $ 8,094
======== ======== ======== ======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (UNAUDITED WITH RESPECT TO
INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997):
Combined interest paid was $5,217, $3,798 and $5,191 for the years ended
December 31, 1994, 1995 and 1996, respectively, and $12 and $773 for the three
months ended March 31, 1996 and 1997, respectively.
See accompanying notes to combined financial statements.
F-6
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED AS TO INTERIM PERIODS)
(1) ORGANIZATION
LaSalle Partners Limited Partnership ("LPL") and LaSalle Partners Management
Limited Partnership ("LPML"), two Delaware limited partnerships (collectively,
the "Partnerships"), were formed on June 29, 1988 to provide real estate
services to clients including leasing, brokerage, construction and development
management, real property asset management and real estate investment advice.
Prior to June 29, 1988, these real estate services were provided by the
general partners of the Partnerships, DEL-LPL Limited Partnership and DEL-
LPAML Limited Partnership (collectively "DEL"), respectively. Previous to
January 23, 1995, LPML transacted business under the name of LaSalle Partners
Asset Management Limited.
Prior to November 30, 1994, the sole limited partners of LPL and LPML were
DSA-LSPL, Inc. and DSA-LSAM, Inc. (collectively "DSA"), respectively. On that
date, the Partnerships admitted Alex. Brown Kleinwort Benson Realty Advisors
Corporation ("ABKB") as an additional limited partner (note 3). Effective
March 31, 1995, ABKB changed its name to KB-LPL, Inc. DEL, DSA and KB-LPL,
Inc. had ownership interests of 55.6%, 24.4% and 20.0%, respectively, at
December 31, 1995 and 1996.
In August 1995, Dresdner Bank AG ("Dresdner") purchased the parent company
of KB-LPL, Inc. As a result of bank regulatory requirements, Dresdner was
required to sell its interests in the Partnerships. Pursuant to an agreement
reached with Dresdner in May, 1996, DEL re-purchased KB-LPL, Inc.'s ownership
in the Partnerships during the first quarter of 1997.
Under the provisions of the partnership agreements, LPL and LPML partnership
interests are paired on a one-for-one basis and may only be purchased or sold
in tandem. Partnership interests in DEL are also paired on a one-for-one
basis. Further, the partnership agreements provide for changes in ownership
interests. DEL has the right to increase their ownership interest by making
additional capital contributions to the Partnerships. Such additional capital
would be used by the Partnerships to repay subordinated notes payable,
including Class A and Class B notes, to DSA (note 7). If DEL does not exercise
their right, DSA has the right to convert any unpaid principal on the
subordinated notes into an additional capital contribution thus increasing
their ownership interests (note 7). Provisions in the partnership agreements
provide for the repayment of the Class A notes payable to DSA to be made
directly by the Partnerships.
The Partnerships' net cash flow, after appropriate reserves, is generally
distributed to the partners in accordance with their ownership interests. The
partnership agreements permit distributions during each year to the partners
in connection with estimated federal income tax payments owed by the partners.
Net profits and losses of the Partnerships are generally allocated to the
partners in accordance with their ownership interests in effect during each
year.
The Partnerships expect to be subject to a reorganization as part of the
Incorporation Transactions of LaSalle Partners Incorporated ("LPI"). Due to
common control and management of the Partnerships and LPI and identical
ownership before and after the Incorporation Transactions, such transactions
are expected to be accounted for in a manner similar to the accounting used
for a pooling of interests. Thus, LPI's financial statements will include the
financial position and results of operations of the Partnerships at their
historical cost basis.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination and Consolidation
Due to common ownership and management of LPL and LPML, the financial
position and results of operations of the Partnerships have been presented on
a combined basis. The combined financial statements
F-7
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
include the accounts of the Partnerships and their majority owned and
controlled partnerships and subsidiaries. All material intercompany
transactions between the Partnerships and their subsidiaries have been
eliminated in consolidation and combination.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash Held for Others
The Partnerships control certain cash and cash equivalents as agents for
their investment and property management clients. Such amounts, which total
$198,821 and $338,504 at December 31, 1995 and 1996, respectively, are not
included in the accompanying Combined Balance Sheets.
Statement of Cash Flows
Cash and cash equivalents include demand deposits and investments in U.S.
Treasury instruments (generally held available for sale) with maturities of
three months or less. The combined carrying value of such investments of
$5,979 and $1,000 approximates their market value at December 31, 1995 and
1996, respectively.
Impairment of Long-Lived Assets
The Partnerships adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 121 Accounting for the Impairment of Long-lived Assets
and Long-lived Assets to be Disposed of on January 1, 1996. This statement
requires that long-lived assets and certain identifiable intangibles are to be
reviewed for impairment whenever events or change in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount
of an asset to future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying value of the assets exceed the
fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or fair value less costs to sell. Adoption of SFAS No.
121 did not have a material impact on the Partnerships' financial position,
results of operations, or liquidity.
Investments in Real Estate Ventures
The Partnerships have limited and general partner interests in various real
estate ventures with interests ranging from less than 1% to 49.5% which are
accounted for using the equity method (note 6).
The Partnerships also have nominal limited and general partner interests in
certain real estate ventures for which no significant capital will be
contributed. These investments, which represent ownership interests of up to
2%, are accounted for under the cost method.
Intangibles Resulting from Business Acquisitions
The Partnerships periodically evaluate the recoverability of the carrying
amount of intangibles resulting from business acquisitions by assessing
whether any impairment indications are present, including substantial
F-8
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
recurring operating deficits or significant adverse changes in legal or
economic factors that affect the businesses acquired. If such analysis
indicates impairment, the intangible asset would be adjusted in the period
such changes occurred based on its estimated fair value, which is derived from
expected cash flow of the businesses.
Fair Value of Financial Instruments
The Partnerships' financial instruments include cash and cash equivalents,
receivables, accounts payable and notes payable. The estimated fair value of
cash and cash equivalents, receivables and payables approximate their carrying
amounts due to the short maturity of these instruments. The estimated fair
value of the Company's credit facilities approximates their carrying value due
to their variable interest rate terms. A reasonable estimate of fair value is
not practicable for the subordinated debt due to the unique conversion
features of the debt and the limited availability of similar financing (note
1).
Foreign Currency Translation
The financial statements of subsidiaries outside the United States, except
those subsidiaries located in highly inflationary economies, are generally
measured using the local currency as the functional currency. The assets and
liabilities of these subsidiaries are translated at the rates of exchange at
the balance sheet date. The resultant translation adjustments are included as
a separate component of partners' capital. Income and expense are translated
at average monthly rates of exchange. Gains and losses from foreign currency
transactions of these subsidiaries are included in net earnings. For
subsidiaries operating in highly inflationary economies, gains and losses from
balance sheet translation adjustments are included in net earnings.
Revenue Recognition
Advisory and management fees are recognized in the period in which the
services are performed. Transaction commissions are recorded as income at the
time the related services are provided unless significant future contingencies
exist. Construction and Development Management fees are generally recognized
as billed, which approximates the percentage of completion method of
accounting. Fees recognized in the current period that are expected to be
received beyond one year have been discounted to the present value of future
payments.
Depreciation
Depreciation and amortization is calculated for financial reporting purposes
using the straight-line method based on the estimated useful lives of the
assets. Furniture totaling $12,109 and $14,400 at December 31, 1995 and 1996,
respectively, is depreciated over seven years. Computer equipment and software
totaling $12,023 and $13,862 at December 31, 1995 and 1996, respectively, are
depreciated over three years. Leasehold improvements totaling $8,900 and
$9,597 at December 31, 1995 and 1996, respectively, are amortized over the
lease periods ranging from one to 10 years.
Income Tax Provision
Included in the accompanying Combined Statements of Earnings is a federal
and state income tax provision for wholly-owned corporate subsidiaries and a
state tax provision for certain states which require partnerships to pay
income taxes. No other provision for income taxes has been made as any
liability for such taxes would be that of the respective partners.
F-9
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Interim Information
The combined financial statements as of March 31, 1997 and for the three
months ended March 31, 1997 and 1996 are unaudited; however, in the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the combined financial
statements for these interim periods have been included. The results for the
interim period ended March 31, 1997 are not necessarily indicative of the
results to be obtained for the full fiscal year.
Reclassifications
Certain 1994 and 1995 amounts have been reclassified to conform to the 1996
presentation.
(3) ACQUISITIONS
On October 17, 1996, subsidiaries of the Partnerships acquired all of the
common stock of CIN Property Management Limited, a London, England investment
and property management private limited liability company, for $15,709
including transaction expenses. The name of the entity was immediately changed
to CIN LaSalle Advisors Capital Management Limited ("CIN"). The acquisition
was accounted for as a purchase and accordingly, operating results of this
business subsequent to the date of acquisition are included in the
accompanying Combined Statements of Earnings. The excess purchase price over
the fair value of the identifiable assets and liabilities acquired was $15,700
which was allocated to goodwill and other intangibles and is being amortized
on a straight-line basis over 5 to 20 years. Other intangibles aggregating
$4,710 represent advisory contracts which are being amortized over 5 years
based on the Partnerships' estimate of useful lives. The effect of the year
end translation adjustment (note 2) increased the recorded amount of goodwill
by $960. Intangibles resulting from business acquisitions in the accompanying
Combined Balance Sheets includes $16,320 at December 31, 1996 related to the
CIN acquisition.
On November 30, 1994, ABKB contributed all of its net assets valued at
$13,000 (including cash of $934) to the Partnerships. This transaction, in
combination with ABKB's purchase of partnership units from an affiliate of
DEL, resulted in ABKB acquiring a 20% limited partner interest (note 1). The
asset contribution transaction was accounted for using the purchase method of
accounting. Accordingly, the Partnerships allocated the purchase price to the
identifiable assets and liabilities acquired based on their estimated fair
values with the excess being allocated to advisory contracts. The excess value
of $9,361 is being amortized on a straight-line basis over a period of 10
years. Intangibles resulting from business acquisitions in the accompanying
Combined Balance Sheets include $8,351 and $7,415 at December 31, 1995 and
1996, respectively, related to the ABKB acquisition. The results of the
acquired business subsequent to November 30, 1994 have been included in the
accompanying Combined Statements of Earnings.
The pro forma results of such acquisitions are not material to the
Partnerships' combined financial statements.
(4) DISPOSITIONS
Effective December 31, 1996, the Partnerships sold its construction
management business and certain related assets to a former member of
management for a $9.1 million note. The note, which is secured by the current
and future assets of the business, is due December 31, 2006 and bears interest
at rates of 6.8% to 10%, with interest payments due annually. Principal
payments are also due annually beginning January 1998 as defined.
F-10
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Under the terms of the Asset Purchase Agreement, the Partnerships have
agreed to provide certain administrative and financial services, at cost,
beginning January 1997 and may provide certain financial assistance if
necessary.
For financial reporting purposes, the Partnerships have not treated the
transaction as a divestiture. As such, the net assets sold as part of the
transaction aggregating $68 at December 31, 1996 have been included in other
assets in the accompanying Combined Balance Sheets. The results of operations
of the construction management business will be accounted for similar to the
equity method of accounting. As such, principal and interest to be received
under the note will be treated as a reduction of such net assets and as a
reserve, if necessary, for any anticipated financial exposure under the terms
of the Asset Purchase Agreement with the remainder recognized as income.
The revenue related to the construction business sold for the years ended
December 31, 1994, 1995 and 1996 totaled $4,858, $4,977 and $5,678,
respectively. For financial statement presentation purposes these revenues
have been presented net of related expenses totaling $3,574, $3,619 and
$4,407, respectively, in the accompanying Combined Statements of Earnings.
The Partnerships pay subcontractors for expenses incurred on behalf of
construction management clients for which they are reimbursed monthly.
Included in trade receivables in the accompanying Combined Balance Sheets are
amounts due from clients totaling $15,281 and $21,757, respectively, related
to construction fee and reimbursable receivables at December 31, 1995 and
1996, respectively. Corresponding liabilities related to amounts payable to
subcontractors are included in accounts payable and accrued liabilities in the
accompanying Combined Balance Sheets totaling $17,926 and $20,109 at December
31, 1995 and 1996, respectively. In accordance with the Asset Purchase
Agreement, any trade receivables, net of related payables to subcontractors,
which are uncollected at April 30, 1997 will be reimbursed to the Partnerships
by the purchaser.
(5) BUSINESS SEGMENTS
The Partnerships' operations have been classified into three business
segments: Management Services, Corporate and Financial Services and Investment
Management. The Management Services segment provides three primary service
capabilities: (i) property management and leasing for property owners, (ii)
facility management for properties occupied by corporate owners and users; and
(iii) development management for both investors and real estate users seeking
to develop new buildings or renovate existing facilities. The Corporate and
Financial Services segment provides transaction and advisory services through
three primary service capabilities, including: (i) tenant representation for
corporations and professional services firms; (ii) investment banking services
to address the financing, acquisition and disposition needs of real estate
owners; and (iii) land acquisition and development services for owners, users
and developers of land. The Investment Management segment provides real estate
investment management services to institutional investors, corporations and
high net worth individuals.
Total revenue by industry segment includes revenue derived from services
provided to other segments. Operating income represent total revenue less
direct and indirect allocable expenses. The Partnerships allocate all
expenses, other than interest and income taxes, as substantially all expenses
incurred benefit one or more of the segments. Identifiable assets by segment
are those assets that are used by or are a result of each segments' business.
Corporate assets are principally cash and cash equivalents, office furniture
and leasehold improvements.
F-11
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Summarized financial information by business segment for 1994, 1995 and 1996
is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
MANAGEMENT SERVICES:
Revenue................................................ $52,457 $61,782 $71,669
Intersegment revenue................................... 160 1,370 200
------- ------- -------
Total Revenue...................................... $52,617 $63,152 $71,869
======= ======= =======
Operating income....................................... $ 5,274 $11,091 $10,732
======= ======= =======
Depreciation and amortization.......................... $ 1,076 $ 1,202 $ 1,651
Identifiable assets.................................... 21,193 20,154
CORPORATE AND FINANCIAL SERVICES:
Revenue................................................ $35,084 $37,303 $45,706
Intersegment revenue................................... -- -- 1,000
------- ------- -------
Total Revenue...................................... $35,084 $37,303 $46,706
======= ======= =======
Operating income....................................... $ 6,776 $ 7,809 $10,820
======= ======= =======
Depreciation and amortization.......................... $ 845 $ 890 $ 1,055
Identifiable assets.................................... 37,977 46,292
INVESTMENT MANAGEMENT:
Revenue................................................ $39,377 $52,742 $58,592
Intersegment revenue................................... -- -- --
------- ------- -------
Total Revenue...................................... $39,377 $52,742 $58,592
======= ======= =======
Operating income....................................... $ 5,965 $ 1,216 $ 5,349
======= ======= =======
Depreciation and amortization.......................... $ 930 $ 2,148 $ 2,710
Identifiable assets.................................... 26,898 53,337
</TABLE>
The Partnerships maintain operations and provide services outside of the
United States. International revenue aggregated $4,311, $5,164 and $7,676 in
1994, 1995 and 1996, respectively. Identifiable assets of such operations
aggregated $5,827 and $26,702 at December 31, 1995 and 1996, respectively.
(6) INVESTMENTS IN REAL ESTATE VENTURES
The Partnerships have invested in certain real estate ventures which own and
operate commercial real estate. These investments include noncontrolling
general and limited partnership ownership interests ranging from less than 1%
to 49.5% of the respective ventures. The Partnerships have made initial
capital contributions to the ventures. The Partnerships have remaining
commitments to certain ventures for additional capital contributions of
approximately $2,300 as of December 31, 1996. Substantially all venture
interests are held by corporate subsidiaries of the Partnerships. Accordingly,
the Partnerships' exposure to liabilities and losses of the ventures is
limited to its initial and remaining commitments.
Such investments have been accounted for under the equity method of
accounting in the accompanying combined financial statements. As such, the
Partnerships recognize their share of the underlying profits and losses
F-12
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
of the ventures as revenue in the accompanying Combined Statements of
Earnings. The Partnerships generally are entitled to operating distributions
in accordance with their respective ownership interests.
Summarized combined financial information for the unconsolidated ventures is
presented below:
<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- ----------
<S> <C> <C> <C>
Balance Sheet:
Investments in real estate....................... $759,714 $1,043,074
Total assets..................................... $871,335 $1,167,413
======== ==========
Mortgage indebtedness............................ 376,151 67,971
Total liabilities................................ $439,309 $ 617,635
======== ==========
Total equity..................................... $432,026 $ 549,778
======== ==========
Investments in unconsolidated ventures............. $ 6,302 $ 12,562
======== ==========
Statements of Operations:
Revenues......................................... $119,664 $187,720 $ 212,048
Net earnings..................................... $ 13,235 $ 31,783 $ 35,333
======== ======== ==========
Equity in earnings from unconsolidated ventures.... $ 1,024 $ 3,130 $ 3,220
======== ======== ==========
</TABLE>
The Partnerships also have investments which are accounted for using the
cost method which totaled $1,084 and $1,125 at December 31, 1995 and 1996,
respectively (note 2). Certain of the Partnerships' capital contributions to
the ventures are represented by notes payable which totaled $515 and $1,008 at
December 31, 1995 and 1996, respectively. Such notes are generally interest
bearing and mature in 2000.
(7) DEBT
Credit Facilities
In September 1996, the Partnerships replaced their $30 million revolving
line of credit ($4,900 outstanding at December 31, 1995), due annually on
April 30, with a $70 million credit agreement, terminating on September 6,
1999. The agreement consists of a short-term and long-term facility totaling
$30 million and $40 million, respectively. The credit agreement is secured by
certain of the Partnerships' receivables, fixed assets and investments in
ventures. The Partnerships must maintain a certain level of combined net
worth, earnings before interest, taxes, depreciation and amortization, and are
prohibited, without the lenders' prior approval, from incurring certain
indebtedness (including certain levels of indebtedness in connection with co-
investments), guaranteeing certain obligations, or disposing of a significant
portion of their assets. The facilities bear variable rates of interest based
on market rates.
The short-term facility is a revolving line of credit which must be paid
down annually for a 30 consecutive day period and is restricted as to use for
general business purposes. Amounts outstanding on the short-term facility at
December 31, 1996 aggregated $6,500.
The long-term facility is limited in use to fund investments in real estate
ventures, business acquisitions and certain capital expenditures, subject to
lender approval. Principal payments on borrowings under the long-term facility
are payable annually on June 15 for amounts outstanding as of March 31 based
on a defined amortization schedule. Principal payments made on June 15 of each
year increase the available balance on the facility from which to borrow.
Amounts outstanding on the long-term facility at December 31, 1996 aggregated
$27,402.
F-13
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Subordinated Loans
Subordinated loans consist of Class A and Class B unsecured notes payable to
DSA. The amounts outstanding on the Class A and Class B notes were $37,213 at
December 31, 1995 and 1996. Interest is payable annually on December 31 at a
rate of 10%.
Aggregate principal payments related to long-term debt due in each of the
next five years ending December 31 are as follows:
<TABLE>
<CAPTION>
CREDIT
FACILITY SUBORDINATED TOTAL
-------- ------------ -------
<S> <C> <C> <C>
1997........................................ $ 5,957 $ 3,107 $ 9,064
1998........................................ 5,617 3,106 8,723
1999........................................ 5,192 3,100 8,292
2000........................................ 5,107 3,100 8,207
2001........................................ 3,843 3,100 6,943
Thereafter.................................. 1,686 21,700 23,386
------- ------- -------
$27,402 $37,213 $64,615
======= ======= =======
</TABLE>
The credit facility is subject to renewal in September 1999. In the event
the lender does not renew the credit facility, all amounts outstanding will be
due on that date. The above payment table assumes the facility will be
renewed.
(8) LEASES
The Partnerships lease office space in various buildings for its own use
with remaining lease terms ranging from one to ten years. The terms of these
operating leases provide for the Partnerships to pay base rent and a share of
increases in operating expenses and real estate taxes in excess of defined
amounts.
Minimum future lease payments (i.e., base rent) due in each of the next five
years ending December 31 are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
1997..................................... $ 3,940
1998..................................... 3,384
1999..................................... 3,308
2000..................................... 3,203
2001..................................... 2,964
Thereafter............................... 11,866
--------
$ 28,665
========
</TABLE>
Rent expense was $4,825, $5,597 and $6,117 during 1994, 1995 and 1996,
respectively. Of these amounts, $2,726, $2,560 and $218 were paid to
affiliates during 1994, 1995 and 1996, respectively.
In anticipation of the expiration of one of its leases on July 31, 1997, the
Partnerships executed a lease to relocate its corporate headquarters in
February 1996. The present value of the net lease obligation from the date of
the move through the end of the current lease term was accrued during 1994
when the Partnerships committed to the relocation plan. Such accrual,
aggregating $3,503, is being amortized as paid over the remaining lease term.
The lease payments related to this period have not been included in the
schedule of minimum future lease payments.
F-14
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)
(9) COMPENSATION AND EMPLOYEE BENEFITS
Compensation
Compensation for all professional employees consists of a combination of a
salary and target bonus, which is established on an individual basis at the
beginning of the employees' compensation year. Actual bonuses are based on
individuals meeting stated objectives and other subjective criteria. These
amounts may vary in a year when the operating results of the Partnerships are
significantly above or below the year's business plan. Prior to 1996, the
general partners of DEL shared in a compensation pool which was calculated as
a percentage of net earnings before interest expense on the subordinated notes
of the Partnerships, amortization of intangible assets and other adjustments
as defined in the partnership agreements. Effective January 1, 1996, those
individuals are compensated consistent with the compensation program for all
professional employees of the Partnerships.
Effective January 1, 1996, the Partnerships implemented an Employee
Ownership Program ("Program") which allows employees meeting certain criteria
to receive a portion of their compensation in ownership interests in DEL. The
Partnerships are required to reimburse DEL for the value of such ownership
interests.
The accompanying Combined Statements of Earnings for the years ended
December 31, 1994, 1995 and 1996 include bonus expense of $18,184, $19,419 and
$26,683, respectively, of which $4,584 related to the Program in 1996.
Retirement Plan
The Partnerships have a qualified profit sharing plan which incorporates IRC
Section 401(k) for their eligible employees. Contributions under the qualified
profit sharing plan are made via a combination of employer match and an annual
contribution on behalf of eligible employees. Included in the accompanying
Combined Statements of Earnings for the years ended December 31, 1994, 1995
and 1996 are contributions of $598, $689 and $1,009, respectively.
Related trust assets of the Plan are managed by trustees and are excluded
from the accompanying combined financial statements.
(10) TRANSACTIONS WITH AFFILIATES
Certain partners of DEL have an ownership interest in Diverse Real Estate
Holdings Limited Partnership ("Diverse"). Diverse has an ownership interest in
and operates investment assets, primarily as the managing general partner of
real estate ventures. Included in the accompanying Combined Balance Sheets is
a long term receivable, net of allowance, from Diverse totaling $3,413 and
$2,413 at December 31, 1995 and 1996, respectively. A provision for the
estimated uncollectible portion of the receivable was recorded in the amount
of $1,900 and is included in the accompanying Combined Statements of Earnings
for 1995.
Certain officers of the Partnerships are trustees for real estate funds
which were organized by a subsidiary. The Partnerships earn advisory and
management fees for services rendered to the funds. Included in the
accompanying combined financial statements are revenues of $15,084, $10,502
and $11,635 for 1994, 1995 and 1996, respectively, as well as receivables of
$1,247 and $1,793 at December 31, 1995 and 1996, respectively, related to such
services.
The Partnerships also earn fees and commissions for services rendered to
other affiliates. These affiliates include DSA and its affiliates, real estate
ventures in which the Partnerships have an equity interest, and ventures
F-15
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
in which Diverse has an ownership interest. Included in the accompanying
combined financial statements are fees and commission revenues from such
affiliates of $16,189, $17,310 and $17,537 for 1994, 1995 and 1996,
respectively, as well as receivables for reimbursable expenses, fees and
commissions as of December 31, 1995 and 1996 of $10,182 and $5,245,
respectively.
In accordance with the partnership agreements, the Partnerships provide
certain administrative services to DEL for which they are not reimbursed.
(11) COMMITMENTS AND CONTINGENCIES
The Partnerships are defendants in various litigation matters arising in the
ordinary course of business, some of which involve claims for damages that are
substantial in amount. Most of these litigation matters are covered by
insurance. In the opinion of management, the ultimate resolution of such
litigation matters will not have a material adverse effect on the financial
position, results of operation or liquidity of the Company.
(12) SUBSEQUENT EVENT
On April 22, 1997, The Galbreath Company, a property management, facility
management and development management company, merged with the Partnerships.
F-16
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
LaSalle Partners Incorporated:
We have audited the accompanying balance sheet of LaSalle Partners
Incorporated as of April 22, 1997. This financial statement is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit of a balance sheet includes examining, on a
test basis, evidence supporting the amounts and disclosures in that balance
sheet. An audit of a balance sheet also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of LaSalle Partners Incorporated as
of April 22, 1997, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Chicago, Illinois
April 22, 1997
F-17
<PAGE>
LASALLE PARTNERS INCORPORATED
BALANCE SHEET
APRIL 22, 1997
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash..................................................................... $ 100
=====
<CAPTION>
STOCKHOLDER'S EQUITY
- --------------------
<S> <C>
Stockholder's equity:
Common Stock, $.01 par value; 10,000,000 shares authorized; 10 shares
issued and outstanding................................................ $ --
Additional paid-in capital............................................. 100
-----
Total stockholder's equity........................................... $ 100
=====
</TABLE>
See accompanying notes to Balance Sheet
F-18
<PAGE>
LASALLE PARTNERS INCORPORATED
NOTES TO BALANCE SHEET
APRIL 22, 1997
(1) ORGANIZATION
LaSalle Partners Incorporated was incorporated under the General Corporation
Laws of Maryland on April 15, 1997. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, $.01 par value per
share. The Company expects to amend its Articles of Incorporation to authorize
capital stock of the Company consisting of 100,000,000 shares of Common Stock,
$.01 par value per share and 10,000,000 shares of Preferred Stock, $.01 par
value per share. Each outstanding share of Common Stock will entitle the
holder to one vote for each share on all matters voted on by stockholders,
including the election of Directors.
In the event the Offering is not completed, offering costs incurred will be
borne by LaSalle Partners Limited Partnership and subsidiaries and LaSalle
Partners Management Limited Partnership and subsidiaries on behalf of the
Company.
(2) SUBSEQUENT EVENTS (UNAUDITED)
The Company expects to issue additional shares of Common Stock in the
Company through a public offering (the "Offering"). Immediately prior to the
closing of the Offering, pursuant to agreements among the partners, each of
the general and limited partners of the Predecessor Partnerships will exchange
all of their respective general and limited partnership interests (the
"Partnership Interests Exchange") in the Predecessor Partnerships for an
aggregate of 12,200,000 shares of Common Stock. The Company will cause the
Predecessor Partnerships to contribute, among other things, substantially all
of their respective assets and liabilities (the "Asset Contributions")
relating to: (i) the management services group to LaSalle Partners Management
Services ("LPMS"); (ii) the corporate and financial services group to LaSalle
Partners Corporate & Financial Services ("LPCFS"); and (iii) the investment
management group to LaSalle Advisors Capital Management, Inc. ("LACM").
Following the Partnership Interests Exchange and the Asset Contributions, the
Company will operate as a holding company with the business and operations of
the Predecessor Partnerships being conducted through LPMS, LPCFS, LACM and
LaSalle Partners International, Inc. Due to common control and management of
the Predecessor Partnerships and the Company and identical ownership before
and after the Incorporation Transactions, such transactions are expected to be
accounted for in a manner similar to the accounting used for a pooling of
interests. Thus, the Company's financial statements will include the financial
position and results of operations of the Predecessor Partnerships at their
historical cost basis.
The Company expects to establish an Option and Stock Incentive Plan as
described under the caption "Management."
F-19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Owners of
The Galbreath Company and Affiliates:
We have audited the accompanying combined balance sheet of The Galbreath
Company and affiliates as of December 31, 1996, and the related combined
statements of income and owners' equity and of cash flows for the year then
ended. The combined financial statements include the accounts of The Galbreath
Company and affiliated entities as described in Note 1 to the combined
financial statements, all of which are under common ownership and common
management. These financial statements are the responsibility of the
companies' management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides a reasonable basis
for our opinion.
In our opinion such financial statements present fairly, in all material
respects, the combined financial position of The Galbreath Company and
affiliates at December 31, 1996 and the combined results of their operations
and their combined cash flows for the year then ended in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Columbus, Ohio
April 7, 1997
(except for Note 9 as to which
the date is April 22, 1997)
F-20
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER MARCH 31,
ASSETS 31, 1996 1997
- ------ ----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 5,805,443 $ 2,688,885
Accounts receivable:
Trade, less allowance for doubtful accounts of $840,000
at 1996 and 1997........................................ 6,709,273 7,532,315
Reimbursable expenses.................................... 1,601,197 1,132,911
Notes receivable........................................... 275,377 227,721
Advances to brokers, customers and other................... 962,249 791,501
Investments:
Securities............................................... 2,932,106 2,974,656
Real estate partnerships................................. 55,992 129,483
Prepaids and other......................................... 635,407 601,384
----------- -----------
Total current assets................................... 18,977,044 16,078,856
FIXED ASSETS--Net............................................ 2,120,459 2,182,838
DEPOSITS AND OTHER ASSETS.................................... 632,953 1,002,953
LONG-TERM NOTES RECEIVABLE-Less current portion.............. 379,677 290,932
----------- -----------
TOTAL........................................................ $22,110,133 $19,555,579
=========== ===========
<CAPTION>
LIABILITIES AND OWNERS' EQUITY
- ------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable--trade.................................... $1,832,743 $1,671,260
Accrued expenses:
Compensation............................................. 2,848,899 457,536
Health and workers' compensation benefits................ 529,241 1,135,626
Commissions.............................................. 4,824,574 3,723,815
Other.................................................... 1,785,745 1,888,150
Demand and other notes payable............................. 930,000 930,000
Current portion of long-term debt.......................... 86,400 82,000
Current portion of capital lease obligations............... 517,100 517,100
----------- -----------
Total current liabilities.............................. 13,354,702 10,405,487
LONG-TERM DEBT-Less current position......................... 278,684 257,084
CAPITAL LEASE OBLIGATIONS--Less current portion.............. 302,939 197,169
OWNERS' EQUITY............................................... 8,173,808 8,695,839
----------- -----------
TOTAL........................................................ $22,110,133 $19,555,579
=========== ===========
</TABLE>
See notes to combined financial statements.
F-21
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
COMBINED STATEMENTS OF INCOME AND OWNERS' EQUITY
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, ------------------------
1996 1996 1997
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
REVENUE:
Leasing fees, net of outside broker
fees of $6,637,214, $763,306 and
$1,132,341 for the periods ending
December 31, 1996, March 31, 1996 and
1997, respectively.................... $34,147,028 $ 6,550,517 $ 7,879,961
Management fees........................ 17,171,812 4,187,580 4,510,027
Development fees....................... 2,007,393 395,775 258,469
Other income........................... 4,639,995 1,116,922 855,547
----------- ----------- -----------
Total revenue........................ 57,966,228 12,250,794 13,504,004
----------- ----------- -----------
OPERATING EXPENSES:
Payroll................................ 21,671,229 5,479,076 5,535,148
Brokerage and leasing fees, excluding
outside broker fees................... 20,076,197 3,557,111 4,279,451
Rent................................... 2,810,522 716,124 813,780
Travel and entertainment............... 2,026,774 439,115 422,000
Professional fees...................... 1,726,755 321,727 400,625
Advertising and promotions............. 1,200,427 323,739 213,777
General and administrative............. 2,869,729 725,635 758,738
Other operating expenses............... 1,420,568 305,619 274,330
Depreciation and amortization.......... 701,219 168,113 178,953
----------- ----------- -----------
Total operating expenses............. 54,503,420 12,036,259 12,876,802
----------- ----------- -----------
OPERATING INCOME......................... 3,462,808 214,535 627,202
INTEREST EXPENSE......................... 504,063 97,544 71,617
----------- ----------- -----------
EARNINGS BEFORE PROVISION FOR INCOME
TAXES................................... 2,958,745 116,991 555,585
TAXES.................................... 209,603 33,746 33,554
----------- ----------- -----------
NET INCOME............................... 2,749,142 83,245 522,031
OWNERS' EQUITY, Beginning of period...... 5,548,738 5,548,738 8,173,808
DISTRIBUTIONS TO OWNERS.................. (124,072) (27,354) --
----------- ----------- -----------
OWNERS' EQUITY, End of period............ $ 8,173,808 $ 5,604,629 $ 8,695,839
=========== =========== ===========
</TABLE>
See notes to combined financial statements.
F-22
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, ------------------------
1996 1996 1997
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 2,749,142 $ 83,245 $ 522,031
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 701,219 168,113 178,953
Equity in income of real estate
partnerships....................... (561,681) (42,012) (73,491)
Gain on sale of assets.............. (13,715) -- --
Change in:
Receivables and advances to
brokers, customers and other..... (1,808,602) (1,455,097) (184,008)
Prepaid and other assets.......... 426,350 409,133 (335,977)
Accounts payable--trade........... 707,768 25,314 (161,483)
Accrued expenses.................. 966,852 (1,736,871) (2,783,332)
----------- ----------- -----------
Net cash provided by (used in)
operating activities............ 3,167,333 (2,548,175) (2,837,307)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets.............. (322,600) (96,430) (241,332)
Proceeds from sales of fixed assets... 270,543 -- --
Sales (purchases) of investments--
securities........................... 354,507 (70,493) (42,550)
Change in restricted cash............. 132,345 132,345 --
Collections of notes receivable
issued............................... 205,733 -- 136,401
Increase in notes receivable.......... (503,557) (26,255) --
Distributions from real estate
partnerships......................... 489,373 -- --
----------- ----------- -----------
Net cash provided by (used in)
investing activities............ 626,344 (60,833) (147,481)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable, including
capital lease obligations............ (9,077,535) -- (131,770)
Proceeds from notes payable........... 6,996,938 1,947,900 --
Repayment of notes payable............ -- (604,082) --
Distributions to owners............... (124,072) (27,354) --
----------- ----------- -----------
Net cash provided by (used in)
financing activities............ (2,204,669) 1,316,464 (131,770)
----------- ----------- -----------
INCREASE IN CASH....................... 1,589,008 (1,292,544) (3,116,558)
CASH AND CASH EQUIVALENTS--Beginning of
period................................ 4,216,435 4,216,435 5,805,443
----------- ----------- -----------
CASH AND CASH EQUIVALENTS--End of
period................................ $ 5,805,443 $ 2,923,891 $ 2,688,885
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest................. $ 334,428 $ 70,159 $ 24,331
=========== =========== ===========
Capital lease obligations incurred for
fixed assets.......................... $ 108,237 $ -- $ --
=========== =========== ===========
Transfer of real estate investment to
satisfy demand note payable........... $ 168,000 $ -- $ --
=========== =========== ===========
Transfer of note and accrued interest
receivable to satisfy demand note and
accrued interest payable.............. $ 574,522 $ -- $ --
=========== =========== ===========
Fixed asset additions in accounts
payable............................... $ 46,025 $ -- $ --
=========== =========== ===========
</TABLE>
See notes to combined financial statements.
F-23
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business--The Company leases and manages commercial real
estate properties for related and third parties and provides real estate
brokerage, development and consulting services to clients throughout the
United States. The financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Principles of Combination--The accompanying combined financial statements
include the accounts of 1) The Galbreath Company and its subsidiary, Galbreath
Florida Region Partnership (collectively "Galbreath Ohio"); 2) The Galbreath
Company of California, Inc. ("Galbreath California"); and 3) Galbreath
Incorporated (formerly The Galbreath Company, Inc.) and its subsidiary, The
Galbreath Company L.P., and its affiliated entities (Galbreath Columbus Circle
Development Corp. and Galbreath Columbus Circle Development Associates L.P.)
(collectively "Galbreath New York"), collectively the "Company." Effective
December 31, 1996, Galbreath Incorporated was merged into The Galbreath
Company. Since the merger involves entities with common ownership, it was
accounted for similar to a pooling of interests. All of the combined entities
have common management and ownership. All significant intercompany balances
and transactions have been eliminated.
Capital--At December 31, 1996, The Galbreath Company had 750 authorized
shares of no-par value common stock with 100 shares outstanding.
At December 31, 1996, Galbreath California had 100 authorized and 10
outstanding shares of Class A Voting common stock without par value and 900
authorized and 90 outstanding shares of Class B Nonvoting common stock without
par value.
At December 31, 1996, Galbreath Columbus Circle Development Corp. had 100
authorized and outstanding shares of no-par value common stock.
Cash and Cash Equivalents--The Company considers all checking accounts, cash
funds and highly liquid debt instruments with original maturities of three
months or less to be cash equivalents. The Company's cash and cash equivalents
are held primarily at five financial institutions at December 31, 1996.
Investment Securities--The Company's investment securities consist primarily
of two mutual funds totaling $2,932,106 at December 31, 1996. The investment
securities are classified as available for sale and are stated at market
value, which approximates cost.
Investments in Real Estate Partnerships--Investments in real estate
partnerships (primarily Galbreath Middle-Atlantic General Partnership and The
Galbreath Company--Southeast) are accounted for using the equity method.
Fixed Assets--Depreciation of fixed assets is computed using the straight-
line method over the estimated useful lives of the assets ranging from three
to ten years.
Income Taxes--Each of the entities comprising the Company is treated as an S
Corporation or partnership for income tax purposes. Accordingly, taxable
income or loss is generally included in the separate income tax returns of the
Company's owners and is not taxable to the Company.
F-24
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Employee Savings and Retirement Plan--Company employees may participate in
The Galbreath Company Savings and Retirement Plan. The defined contribution
plan covers all full-time employees of the Company and certain affiliated
companies. Employees may contribute a percentage of their pay to the plan.
Employer contributions of $200,961 in 1996 was at the discretion of the
Company.
Self-Insurance Programs--The Company uses various self-insurance plans for
certain of its health and workers' compensation insurance programs. The
associated liability has been recorded in the financial statements based on
information currently available as to the estimated ultimate cost for
incidents prior to the balance sheet date. Losses in excess of certain limits
are insured with third-party insurance companies.
Revenue Recognition--Revenue is recognized when the service has been
provided or the leasing transaction has been finalized.
The Company manages several buildings for the federal government under the
terms of which the Company is directly responsible for all operating expenses.
The Company receives a fixed fee, based on occupied square footage, which is
reflected in the combined financial statements net of operating expenses of
$10,051,234 for the year ended December 31, 1996.
Advertising--Advertising costs are expensed as incurred.
Litigation--The Company and its subsidiary are defendants in several
lawsuits incidental to their businesses. In the opinion of management, the
outcome of such litigation will not have a material adverse effect on the
Company's combined financial statements.
2. FIXED ASSETS
The Company's fixed assets at December 31, 1996 were comprised of the
following:
<TABLE>
<S> <C>
Furniture and fixtures $ 1,244,592
Leasehold improvements 747,108
Office equipment 3,412,953
Computer software 315,410
Automobiles 56,310
-----------
Total fixed assets 5,776,373
Accumulated depreciation (3,655,914)
-----------
Fixed assets--net $ 2,120,459
===========
</TABLE>
3. DEMAND AND OTHER NOTES PAYABLE
Demand and other notes payable at December 31, 1996 consist primarily of
unsecured related party notes payable, bearing interest at a fixed rate of 8%.
F-25
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
4. LONG-TERM DEBT
Long-term debt at December 31, 1996 consists of the following:
<TABLE>
<S> <C>
Related parties, unsecured, due in installments to May 1999,
7%-10% $110,676
9.42% Note, unsecured, due in installments to March 1999 245,408
Other 9,000
--------
Total long-term debt 365,084
Less current portion 86,400
--------
Long-term debt--less current portion $278,684
========
</TABLE>
At December 31, 1996 long-term debt matures as follows:
<TABLE>
<S> <C>
Year Ending December 31:
1997 $ 86,400
1998 62,659
1999 216,025
--------
Total $365,084
========
</TABLE>
5. CAPITAL LEASES
The Company has entered into various capital lease agreements primarily
related to office equipment. Such equipment had capitalized cost and book
value of approximately $1,684,000 and $850,000, respectively, at December 31,
1996. Capital leases are due in principal installments of $517,100 in 1997 and
$302,939 in 1998, bearing interest at 7.44%-13.21%.
6. NOTES PAYABLE--LINE-OF-CREDIT
At December 31, 1996, the Company has a financing agreement with a lender
that provides for the following: 1) revolving credit borrowings of up to
$3,500,000 with interest at prime plus .5% and expiring on April 30, 1998; 2)
demand note borrowings of up to $2,000,000 with interest at prime plus 1.0%;
and 3) term note borrowings of up to $500,000 available to October 31, 1997
with interest at prime plus .75%. Amounts borrowed under the term note are
payable in installments from November 1997 to October 2000. Loans under the
financing agreement are secured by accounts receivable and a pledged
securities account. The agreements are subject to a Subordination Agreement
which limits the repayment of certain related party debt and requires
compliance with various covenants. No amounts are outstanding at December 31,
1996.
F-26
<PAGE>
THE GALBREATH COMPANY AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
7. OPERATING LEASES
The Company leases certain equipment and office space under operating lease
agreements. Total lease expense for 1996 was $2,810,522 net of sublease
rentals of $82,715. Minimum future rental payments under these leases at
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
RELATED
ALL OTHERS PARTY
---------- --------
<S> <C> <C>
Year:
1997 $1,084,935 $ 87,785
1998 634,524 35,581
1999 557,867 12,052
2000 405,895
2001 112,187
Thereafter 84,651
---------- --------
Total $2,880,059 $135,418
========== ========
</TABLE>
8. RELATED PARTY TRANSACTIONS
The Company manages, leases and develops various real estate properties
owned, in part, by entities in which certain owners of the Company have an
interest. Total related party fees from these entities were $3,819,000 in
1996.
The Company incurred leasing commissions, rent and other operating expenses
to entities in which certain owners of the Company have an interest. Total
related party operating expenses incurred to these entities were $348,000 in
1996.
At December 31, 1996, the Company has long-term note receivables of $335,015
due from three related parties in which certain owners of the Company have
interests. These notes bear interest at 9.52%-10% and are due in installments
through May 2000.
9. SUBSEQUENT EVENT
On April 22, 1997, The Galbreath Company and The Galbreath Company of
California, Inc. merged with LaSalle Partners Limited Partnership and LaSalle
Partners Management Limited Partnership, a full-service real estate firm that
provides management services, corporate and financial services and investment
management services to corporations and other worldwide real estate owners,
users and investors.
10. INTERIM INFORMATION (UNAUDITED)
The interim condensed combined financial statements are unaudited but, in
the opinion of management, reflect all adjustments necessary for a fair
presentation of the results of operations and financial position for such
periods. All such adjustments reflected in the interim condensed combined
financial statements are considered to be of a normal recurring nature. The
results of operations for any interim period are not necessarily indicative of
results for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto for the year ended
December 31, 1996.
F-27
<PAGE>
LOGO
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
International Cover Page
Issued June 23, 1997
4,000,000 Shares
LA SALLE PARTNERS
COMMON STOCK
-----------
ALL OF THE 4,000,000 SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY
THE COMPANY. OF THE 4,000,000 SHARES OF COMMON STOCK BEING OFFERED, 800,000
SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND
CANADA BY THE INTERNATIONAL UNDERWRITERS AND 3,200,000 SHARES ARE BEING
OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS. SEE "UNDERWRITERS." PRIOR TO THIS OFFERING, THERE HAS
BEEN NO PUBLIC MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS
CURRENTLY ESTIMATED THAT THE INITIAL OFFERING PRICE PER SHARE
OF COMMON STOCK WILL BE BETWEEN $19 AND $21. SEE
"UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS TO BE
CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING
PRICE.
-----------
APPLICATION HAS BEEN MADE TO LIST THE COMMON STOCK ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "LAP."
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------
THESE SECURITIES 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.
-----------
PRICE $ A SHARE
-----------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------- ------------- -----------
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>
- -----
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriters."
(2) Before deducting expenses of the Offering payable by the Company,
estimated at $2,000,000.
(3) The Selling Stockholder has granted to the U.S. Underwriters an option,
exercisable within 30 days of the date hereof, to purchase up to an
aggregate of 600,000 additional shares of Common Stock at the price to
public, less underwriting discounts and commissions, for the purpose of
covering over-allotments, if any. If the U.S. Underwriters exercise such
option in full, the total price to public, underwriting discounts and
commissions, and proceeds to the Selling Stockholder will be $ ,
$ and $ , respectively. The Company will not receive any proceeds
from the exercise of the over-allotment option. See "Underwriters."
-----------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Sidley & Austin, counsel for the Underwriters. It is expected that the
delivery of the Shares will be made on or about , 1997 at the offices of
Morgan Stanley & Co. Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
-----------
MORGAN STANLEY DEAN WITTER
WILLIAM BLAIR & COMPANY
MONTGOMERY SECURITIES
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the Offering are as follows:
<TABLE>
<CAPTION>
EXPENSES AMOUNT
-------- ---------
<S> <C>
SEC Registration Fee .......................................... $ 27,879
NASD Fee ...................................................... 9,700
New York Stock Exchange Fee ................................... 81,100
Printing Expenses ............................................. 225,000
Legal Fees and Expenses ....................................... 1,150,000
Transfer Agent and Registrar Fees.............................. 10,000
Accounting Fees and Expenses .................................. 275,000
Miscellaneous Expenses ........................................ 221,321
---------
Total...................................................... 2,000,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Restated Articles of Incorporation will relieve the Company's directors
from monetary damages to the Company or its stockholders for breach of such
directors' fiduciary duty as directors. Section 2-418 of the MGCL empowers the
Company to indemnify, subject to the standards contained therein, any person
in connection with any action, suit or proceeding brought or threatened by
reason of the fact that such person was a director, officer, employee or agent
of the Company, or is or was serving as such with respect to another entity at
the request of the Company. The MGCL also provides that the Company may
purchase insurance on behalf of any such director, officer, employee or agent.
The Company's Restated Articles of Incorporation and Bylaws will provide for
the indemnification of each director and officer of the Company to the fullest
extent permitted by applicable law.
Section 9 of the Underwriting Agreement between the Company and the
Underwriters, a form of which is filed as Exhibit 1.01 hereto, provides for
indemnification by the Company of the Underwriters and each person, if any,
who controls any Underwriter, against certain liabilities and expenses, as
stated therein, including liabilities under the Securities Act of 1933, as
amended.
The Company intends to obtain directors' and officers' liability insurance
("D&O Insurance") prior to the effective date of the Offering, and expects to
continue to carry D&O Insurance following such date. In addition, the Company
will enter into an indemnification agreement with each of its directors and
certain officers of the Company. The D&O Insurance and the indemnification
agreements will insure the Company's officers and directors against certain
liabilities, including liabilities under the securities laws. The Company
expects that the indemnification agreements will indemnify and advance
expenses to its directors and officers to the fullest extent permitted by the
MGCL.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Immediately prior to the closing of the Offering, each of the general and
limited partners of LaSalle Partners Limited Partnership and LaSalle Partners
Management Limited Partnership will contribute all of their respective general
and limited partnership interests in such partnerships to the Company in
exchange for an aggregate of 12,200,000 shares of Common Stock. The issuances
of Common Stock will constitute a "transaction by any issuer not involving any
public offering" and thus will be exempt from the registration requirements of
the Securities Act of 1933 (the "Act") under Section 4(2) thereof.
II-1
<PAGE>
ITEM 16. EXHIBITS.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.01* Form of Underwriting Agreement
2.01* Subscription Agreement
3.01 Articles of Incorporation of LaSalle Partners Incorporated
3.02 Bylaws of LaSalle Partners Incorporated
3.03 Form of Articles of Amendment and Restatement of LaSalle Partners
Incorporated
3.04 Form of Amended and Restated Bylaws of LaSalle Partners
Incorporated
4.01* Form of certificate representing shares of Common Stock
5.01* Opinion and consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois)
5.02 Opinion and consent of Piper & Marbury L.L.P.
10.01 Credit Agreement, dated as of September 6, 1996, by and among
LaSalle Partners Management Limited Partnership ("LPML"), LaSalle
Partners Limited Partnership ("LPL") and Harris Trust and Savings
Bank ("Harris")
10.02 Security Agreement, dated as of September 6, 1996, by and among
LPL, LPML and Harris
10.03 Supporting Subsidiary Security Agreement, dated as of September 6,
1996, by and among certain subsidiaries named therein and Harris
10.04 Pledge and Security Agreement, dated as of September 6, 1996, by
and among LPL, LPML and Harris
10.05 Collateral Assignment of Partnership Interests, dated as of
September 6, 1996, by and among LPL, LPML and Harris
10.06 Subsidiary Collateral Assignment of Partnership Interests, dated
as of September 6, 1996, by and among certain subsidiaries named
therein and Harris
10.07 Guaranty Agreement, dated as of September 6, 1996, by and among
certain subsidiaries or affiliates of LPL or LPML and Harris
10.08 Contribution and Exchange Agreement, dated as of April 21, 1997,
by and among DEL-LPL Limited Partnership ("DEL-LPL"), DEL-LPAML
Limited Partnership ("DEL-LPAML"), LPL, LPML, The Galbreath
Company ("Galbreath"), Galbreath Company of California, Inc.,
Galbreath Holdings, LLC ("Galbreath Holdings") and the
stockholders of Galbreath
10.09 Agreement for the sale and purchase of shares in CIN Property
Management Limited, dated October 8, 1996, by and between British
Coal Corporation and LaSalle Partners International
10.10 Asset Purchase Agreement, dated as of December 31, 1996, by and
among LaSalle Construction Limited Partnership, LPL, Clune
Construction Company, L.P. and Michael T. Clune
10.11 LaSalle Partners Incorporated 1997 Stock Award and Incentive Plan
10.12 Form of LaSalle Partners Incorporated Employee Stock Purchase Plan
10.13* Form of LaSalle Partners Incorporated Stock Compensation Program
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.14 Registration Rights Agreement, dated as of April 22, 1997, by and
among LaSalle Partners Incorporated, LPL, LPML, DEL-LPL, DEL-
LPAML, DSA-LSPL, Inc. ("DSA-LSPL"), DSA-LSAM, Inc. ("DSA-LSAM")
and Galbreath Holdings
10.15* Form of Indemnification Agreement
10.16 Consent Agreement, dated as of April 15, 1997, by and among DSA-
LSPL, DSA-LSAM, DEL-LPL, DEL-LPAML, DEL/LaSalle Finance Company,
L.L.C. ("DEL/LaSalle"), LPL and LPML
10.17 Consent Agreement, dated as of April 22, 1997, by and among the
Stockholders of Galbreath and the Galbreath Company of
California, Inc., Galbreath Holdings, DEL-LPL, DEL-LPAML,
DEL/LaSalle, LPL and LPML.
21.01 List of Subsidiaries
23.01 Consent of KPMG Peat Marwick LLP, independent auditors
23.02 Consent of Deloitte & Touche, LLP, independent auditors
23.03* Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(included in Exhibit 5.01)
23.04 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.02)
23.05 Consent of Darryl Hartley-Leonard
23.06 Consent of Thomas C. Theobald
24.01** Power of Attorney
27.01 Financial Data Schedule
</TABLE>
- --------
*To be filed by Amendment
**Previously filed
(b) Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
because they are not required under the related instructions, are not
applicable or the information has been provided in the Financial Statements,
or the notes thereto, included in this Registration Statement.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
II-3
<PAGE>
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 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 in 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 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 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 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 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 offering thereof.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
CHICAGO, STATE OF ILLINOIS, ON JUNE 23, 1997.
LaSalle Partners Incorporated
*
By: _________________________________
Stuart L. Scott
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT TO BE SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board of Directors June 23, 1997
____________________________________ and Chief Executive Officer
Stuart L. Scott (Principal Executive Officer)
* President, Chief Operating Officer June 23, 1997
____________________________________ and Director
Robert C. Spoerri
* Executive Vice President, Chief June 23, 1997
____________________________________ Financial Officer and Director
William E. Sullivan (Principal Financial Officer and
Principal Accounting Officer)
* Co-President--LaSalle Advisors June 23, 1997
____________________________________ Capital Management, Inc. and
Daniel W. Cummings Director
* President and Chief Executive June 23, 1997
____________________________________ Officer--LaSalle Partners
Charles K. Esler Management Services, Inc.
and Director
* President, Tenant Representation June 23, 1997
____________________________________ Division--LaSalle Partners
M. G. Rose Management Services, Inc.
and Director
* Co-President--LaSalle Advisors June 23, 1997
____________________________________ Capital Management, Inc. and
Lynn C. Thurber Director
* Managing Director, Investment June 23, 1997
____________________________________ Banking Division, LaSalle
Earl E. Webb Partners Corporate & Financial
Services, Inc. and Director
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, LaSalle Partners June 23, 1997
____________________________________ Management Services, Inc.
Lizanne Galbreath and Director
</TABLE>
/s/ William E. Sullivan
*By: __________________________
William E. Sullivan
Attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
------- ----------- -----------
<C> <S> <C>
1.01* Form of Underwriting Agreement
2.01* Subscription Agreement
3.01 Articles of Incorporation of LaSalle Partners
Incorporated
3.02 Bylaws of LaSalle Partners Incorporated
3.03 Form of Articles of Amendment and Restatement of LaSalle
Partners Incorporated
3.04 Form of Amended and Restated Bylaws of LaSalle Partners
Incorporated
4.01* Form of certificate representing shares of Common Stock
5.01* Opinion and consent of Skadden, Arps, Slate, Meagher &
Flom (Illinois)
5.02 Opinion and consent of Piper & Marbury L.L.P.
10.01 Credit Agreement, dated as of September 6, 1996, by and
among LaSalle Partners Management Limited Partnership
("LPML"), LaSalle Partners Limited Partnership ("LPL")
and Harris Trust and Savings Bank ("Harris")
10.02 Security Agreement, dated as of September 6, 1996, by
and among LPL, LPML and Harris
10.03 Supporting Subsidiary Security Agreement, dated as of
September 6, 1996, by and among certain subsidiaries
named therein and Harris
10.04 Pledge and Security Agreement, dated as of September 6,
1996, by and among LPL, LPML and Harris
10.05 Collateral Assignment of Partnership Interests, dated as
of September 6, 1996, by and among LPL, LPML and Harris
10.06 Subsidiary Collateral Assignment of Partnership
Interests, dated as of September 6, 1996, by and among
certain subsidiaries named therein and Harris
10.07 Guaranty Agreement, dated as of September 6, 1996, by
and among certain subsidiaries or affiliates of LPL or
LPML and Harris
10.08 Contribution and Exchange Agreement, dated as of April
21, 1997, by and among DEL-LPL Limited Partnership
("DEL-LPL"), DEL-LPAML Limited Partnership ("DEL-
LPAML"), LPL, LPML, The Galbreath Company
("Galbreath"), Galbreath Company of California, Inc.,
Galbreath Holdings, LLC ("Galbreath Holdings") and the
stockholders of Galbreath
10.09 Agreement for the sale and purchase of shares in CIN
Property Management Limited, dated October 8, 1996, by
and between British Coal Corporation and LaSalle
Partners International
10.10 Asset Purchase Agreement, dated as of December 31, 1996,
by and among LaSalle Construction Limited Partnership,
LPL, Clune Construction Company, L.P. and Michael T.
Clune
10.11 LaSalle Partners Incorporated 1997 Stock Award and
Incentive Plan
10.12 Form of LaSalle Partners Incorporated Employee Stock
Purchase Plan
10.13* Form of LaSalle Partners Incorporated Stock Compensation
Program
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
------- ----------- -----------
<C> <S> <C>
10.14 Registration Rights Agreement, dated as of April 22,
1997, by and among LaSalle Partners Incorporated, LPL,
LPML, DEL-LPL, DEL-LPAML, DSA-LSPL, Inc. ("DSA-LSPL"),
DSA-LSAM, Inc. ("DSA-LSAM") and Galbreath Holdings
10.15* Form of Indemnification Agreement
10.16 Consent Agreement, dated as of April 15, 1997, by and
among DSA-LSPL, DSA-LSAM, DEL-LPL, DEL-LPAML,
DEL/LaSalle Finance Company, L.L.C. ("DEL/LaSalle"),
LPL and LPML
10.17 Consent Agreement, dated as of April 22, 1997, by and
among the Stockholders of Galbreath and the Galbreath
Company of California, Inc., Galbreath Holdings LLC,
DEL-LPL, DEL-LPAML, DEL/LaSalle, LPL and LPML
21.01 List of Subsidiaries
23.01 Consent of KPMG Peat Marwick LLP, independent auditors
23.02 Consent of Deloitte & Touche LLP, independent auditors
23.03* Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois) (included in Exhibit 5.01)
23.04 Consent of Piper & Marbury L.L.P. (included in Exhibit
5.02)
23.05 Consent of Darryl Hartley-Leonard
23.06 Consent of Thomas C. Theobald
24.01** Power of Attorney
27.01 Financial Data Schedule
</TABLE>
- --------
*To be filed by Amendment
**Previously filed
<PAGE>
ARTICLES OF INCORPORATION
-------------------------
OF
LASALLE PARTNERS INCORPORATED
-----------------------------
The undersigned, being a natural person and acting as incorporator,
does hereby adopt the following Articles of Incorporation for the purpose of
forming a business corporation in the State of Maryland, pursuant to the
provisions of the Maryland General Corporation Law.
FIRST: (1) The name of the incorporator is M. Martha Sherry.
(2) The incorporator's address is:
c/o Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Suite 2100
Chicago, Illinois 60606
(3) The incorporator is at least eighteen years of age.
(4) The incorporator is forming the corporation named in these
Articles of Incorporation under the general laws of the State of Maryland, to
wit, the Maryland General Corporation Law ("MGCL").
SECOND: The name of the corporation (the "Corporation") is La Salle
Partners Incorporated.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the provisions of the
MGCL.
FOURTH: The address of the principal office of the Corporation within
the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 11 East
Chase Street, Baltimore City, Maryland 21202.
<PAGE>
FIFTH: The name and the address of the resident agent of the
Corporation within the State of Maryland is CSC-Lawyers Incorporating Service
Company, 11 East Chase Street, Baltimore City, Maryland 21202.
SIXTH: (1) The total number of shares of stock which the Corporation
has authority to issue is 10,000,000 shares of Common Stock, each having a par
value of one penny ($.01).
(2) The aggregate par value of all the authorized shares of stock is
$100,000.
(3) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its stock of any class, whether now or
hereafter authorized, or securities convertible into shares of its stock of any
class or classes, whether now or hereafter authorized, for such consideration as
may be deemed advisable by the Board of Directors and without any action by the
stockholders.
(4) Provisions, if any, governing the restriction on the
transferability of any of the shares of stock of the Corporation may be set
forth in the Bylaws of the Corporation or in any agreement or agreements duly
entered into.
(5) To the extent permitted by Section 2-104(b)(5) of the MGCL,
notwithstanding any provision of the MGCL requiring a greater proportion than a
majority of the votes entitled to be cast in order to take or authorize any
action, any such action may be taken or authorized upon the concurrence of at
least a majority of the aggregate number of votes entitled to be cast thereon.
SEVENTH: (1) The number of directors of the Corporation shall be
eight which number may be increased or decreased pursuant to the Bylaws of the
Corporation, but shall never be less than the minimum number permitted by the
MGCL now or hereafter in force. The names of the directors who will serve until
the first annual meeting of stockholders and until their successors are elected
and qualified are: Daniel W. Cummings, Charles K. Esler, M.G. Rose, William E.
Sullivan, Stuart L. Scott, Robert C. Spoerri, Lynn C. Thurber and Earl E. Webb.
(2) The initial Bylaws of the Corporation shall be adopted by the
initial directors. Thereafter, the power to adopt, alter, and repeal the Bylaws
of the Corporation shall be vested in the Board of Directors of the Corporation.
2
<PAGE>
(3) The liability of the directors of the Corporation is limited to
the fullest extent permitted by the provisions of Section 2-405.2 of the MGCL,
as the same may be amended and supplemented.
(4) The Corporation shall, to the fullest extent permitted by the
MGCL, as the same may be amended and supplemented, and, without limiting the
generality of the foregoing in accordance with Section 2-418 of the MGCL,
indemnify directors and officers of the Corporation whom it shall have power to
indemnify under said law from and against any and all of the expenses,
liabilities or other matters referred to in or covered by the MGCL, and the
Board of Directors is hereby empowered to authorize from time to time rights of
indemnification to employees and agents of the Corporation similar to those
conferred in this Article SEVENTH to directors and officers of the Corporation.
EIGHTH: From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the MGCL at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and any contract rights at any
time conferred upon the stockholders of the Corporation by these Articles of
Incorporation are granted subject to the provisions of this Article.
NINTH: The duration of the Corporation shall be perpetual.
3
<PAGE>
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: April 14, 1997
/s/ M. Martha Sherry
____________________
M. Martha Sherry
4
<PAGE>
Exhibit 3.02
BYLAWS
of
LASALLE PARTNERS INCORPORATED
-----------------------------
A Maryland Corporation
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I - OFFICES.................................................. 1
Section 1. Principal Office............................. 1
Section 2. Other Offices................................ 1
ARTICLE II - MEETINGS OF STOCKHOLDERS................................ 1
Section 1. Place of Meetings............................ 1
Section 2. Annual Meetings.............................. 1
Section 3. Special Meetings............................. 2
Section 4. Quorum....................................... 2
Section 5. Voting....................................... 3
Section 6. Record Date.................................. 3
Section 7. Informal Action.............................. 3
ARTICLE III - DIRECTORS.............................................. 4
Section 1. Number and Election of Directors............. 4
Section 2. Vacancies.................................... 4
Section 3. Duties and Powers............................ 4
Section 4. Organization................................. 4
Section 5. Resignations and Removals of Directors....... 5
Section 6. Meetings..................................... 5
Section 7. Quorum....................................... 5
Section 8. Actions of Board............................. 6
Section 9. Meetings by Means of Conference Telephone.... 6
Section 10. Committees................................... 6
Section 11. Compensation................................. 7
Section 12. Interested Directors......................... 7
ARTICLE IV - OFFICERS................................................ 8
Section 1. General...................................... 8
Section 2. Election..................................... 8
Section 3. Voting Securities Owned by the Corporation... 8
Section 4. Chairman of the Board of Directors........... 9
Section 5. President.................................... 9
Section 6. Vice Presidents.............................. 10
Section 7. Secretary.................................... 10
Section 8. Treasurer.................................... 11
Section 9. Assistant Secretaries........................ 11
Section 10. Assistant Treasurers......................... 11
Section 11. Other Officers............................... 12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V - STOCK....................................... 12
Section 1. Form of Certificates............. 12
Section 2. Signatures....................... 12
Section 3. Lost, Destroyed, Stolen or
Mutilated Certificates........... 13
Section 4. Transfers........................ 13
Section 5. Beneficial Owners................ 13
ARTICLE VI - NOTICES..................................... 14
Section 1. Notices.......................... 14
Section 2. Waivers of Notice................ 14
ARTICLE VII - GENERAL PROVISIONS......................... 14
Section 1. Dividends........................ 14
Section 2. Disbursements.................... 15
Section 3. Fiscal Year...................... 15
Section 4. Corporate Seal................... 15
ARTICLE VIII - INDEMNIFICATION........................... 15
Section 1. Power to Indemnify in Actions,
Suits or Proceedings............. 15
Section 2. Authorization of Indemnification. 16
Section 3. Directors' Reliance On Reports... 16
Section 4. Indemnification by a Court....... 17
Section 5. Expenses Payable in Advance...... 18
Section 6. Nonexclusivity of Indemnification
and Advancement of Expenses...... 18
Section 7. Insurance........................ 18
Section 8. Certain Definitions.............. 19
Section 9. Survival of Indemnification and
Advancement of Expenses.......... 19
Section 10. Limitation on Indemnification.... 19
Section 11. Indemnification of Employees and
Agents........................... 20
ARTICLE IX - AMENDMENTS.................................. 21
Section 1. Amendments....................... 21
Section 2. Entire Board of Directors........ 21
</TABLE>
ii
<PAGE>
BYLAWS
OF
LASALLE PARTNERS INCORPORATED
-----------------------------
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-------
Section 1. Principal Office. The principal office of the Corporation
within the State of Maryland shall be in the City of Baltimore, State of
Maryland.
Section 2. Other Offices. The Corporation may also have offices at
such other places, both within and without the State of Maryland, as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Maryland, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect directors, and transact such other
business as may properly be brought before the meeting. Written notice of the
annual meeting stating the place, date and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting and each other stockholder
enti-
<PAGE>
tled to notice of such meeting not less than ten nor more than ninety days
before the date of the meeting. Failure to hold an annual meeting does not
invalidate the Corporation's existence or affect any otherwise valid corporate
acts.
Section 3. Special Meetings. Unless otherwise prescribed by law or
by the Charter, special meetings of stockholders, for any purpose or purposes,
may be called by either (i) the Chairman of the Board of Directors, if there be
one, (ii) the President, (iii) the Board of Directors or (iv) the Secretary at
the request in writing of stockholders owning a majority of the capital stock of
the Corporation issued and outstanding and entitled to vote at the meeting,
which request shall state the purpose or purposes of the proposed meeting and
the matters proposed to be acted upon at such meeting. At a special meeting of
the stockholders, only such business shall be conducted as shall be specified in
the notice of meeting (or any supplement thereto). Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten nor
more than ninety days before the date of the meeting to each stockholder
entitled to vote at such meeting and each stockholder entitled to notice of such
meeting.
Section 4. Quorum. Except as otherwise required by law or by the
Charter, the holders of a majority of the capital 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. A quorum, once established, shall not be broken by the withdrawal of
enough votes to leave less than a quorum. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
2
<PAGE>
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting not less than ten nor more than ninety days before the date of the
meeting.
Section 5. Voting. At all meetings of the stockholders at which a
quorum is present, except as otherwise required by law, the Charter or these
Bylaws, any question brought before any meeting of stockholders shall be decided
by the affirmative vote of the holders of a majority of the total number of
votes of the capital stock represented and entitled to vote on such question,
voting as a single class. Such votes may be cast in person or by proxy but no
proxy shall be voted on or after eleven months from its date, unless such proxy
provides for a longer period. The Board of Directors, in its discretion, or the
officer of the Corporation presiding at a meeting of stockholders, in his or her
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 6. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than ninety nor less than ten days before
the date of such meeting nor more than ninety days prior to such other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 7. Informal Action. Any action required or permitted to be
taken at a meeting of the stockholders may be taken without a meeting if there
is filed with the records of stockholders meetings a unanimous written consent
which sets forth the action and is signed by each stockholder entitled to vote
on the matter and a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote thereat.
3
<PAGE>
ARTICLE III
DIRECTORS
---------
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than 3 nor more than 25 members, the exact number of
which shall be determined from time to time by resolution adopted by the Board
of Directors; provided, that so long as there are less than three stockholders,
the number of directors may be less than three but not less than the number of
stockholders. Initially, the Board of Directors shall consist of 8 directors.
Except as provided in Section 2 of this Article III, directors shall be elected
by the stockholders at the annual meetings of stockholders, and each director so
elected shall hold office until such director's successor is duly elected and
qualified, or until such director's death, or until such director's earlier
resignation or removal. Directors need not be stockholders.
Section 2. Vacancies. Any vacancy on the Board of Directors that
results from an increase in the number of directors may be filled by a majority
of the entire Board of Directors, and any other vacancy occurring on the Board
of Directors may be filled by a majority of the Board of Directors then in
office, even if less than a quorum, or by a sole remaining director.
Section 3. Duties and Powers. The business of the Corporation shall
be managed by the direction of the Board of Directors which may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Charter or by these Bylaws required to be exercised or done
by the stockholders.
Section 4. Organization. At each meeting of the Board of Directors,
the Chairman of the Board of Directors, if there be one, or a director chosen by
a majority of the directors present, shall act as Chairman. The Secretary of the
Corporation shall act as Secretary at each meeting of the Board of Directors. In
case the Secretary shall be absent from any meeting of the Board of Directors,
an Assistant Secretary shall perform the duties of Secretary at such meeting;
and in the absence
4
<PAGE>
from any such meeting of the Secretary and all the Assistant Secretaries, the
Chairman of the meeting may appoint any person to act as Secretary of the
meeting.
Section 5. Resignations and Removals of Directors. Any director of
the Corporation may resign at any time, by giving written notice to the Chairman
of the Board of Directors, if there be one, or the President or the Secretary of
the Corporation. Such resignation shall take effect at the time therein
specified or, if no time is specified, immediately; and, unless otherwise
specified in such notice, the acceptance of such resignation shall not be
necessary to make it effective. Except as otherwise required by law, any
director may be removed from office at any time, but only for cause (as such
term would be construed under Section 2-406(a) of the Maryland General
Corporation Law (the "MGCL") or any successor provision), and only by the
affirmative vote of a majority of all votes entitled to vote in the election of
directors.
Section 6. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Maryland. Regular meetings of the Board of Directors may be held at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman of the Board of Directors, if there be one, or a majority of the
directors then in office. Notice of every regular or special meeting of the
Board stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone, facsimile or telegram on twenty-four (24) hours'
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances.
Section 7. Quorum. Except as may be otherwise required by law, the
Charter or these Bylaws, at all meetings of the Board of Directors, a majority
of the entire Board of Directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board
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of Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
Section 8. Actions of Board. Unless otherwise provided by the
Charter or these Bylaws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all the members of the Board of Directors 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 or committee.
Section 9. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Charter or these Bylaws, members of the Board of
Directors of the Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of a 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 Section 9 shall constitute
presence in person at such meeting.
Section 10. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. Any committee, to the extent permitted by
law and provided in the resolution establishing such committee, shall have and
may exercise all the powers and authority of the Board of Directors in the
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management of the business and affairs of the Corporation, except the power to
declare dividends or distributions on stock, approve any merger or share
exchange which does not require stockholder approval, amend these Bylaws, issue
stock other than as permitted by statute or recommend to the stockholders any
action which requires stockholder approval. Each committee shall keep regular
minutes and report to the Board of Directors when required.
Section 11. Compensation. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary, or such other emoluments as the Board of Directors shall from time to
time determine. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 12. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because such person's or their
votes are counted for such purpose if (i) (A) the material facts as to such
person's or their relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum or (B)
the material facts as to such person's or their relationship or interest and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; and (ii) the contract or
trans-
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action is fair as to the Corporation as of the time it is authorized, approved
or ratified, by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
ARTICLE IV
OFFICERS
--------
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Charter or these By-Laws. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting held
after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relat-
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ing to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation. Except where
by law the signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him or her by these Bylaws or by the Board of
Directors.
Section 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these Bylaws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
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Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as from time to time may be
assigned to him or her by these Bylaws or by the Board of Directors.
Section 6. Vice Presidents. At the request of the President or in
his or her absence or in the event of his or her inability or refusal to act
(and if there be no Chairman of the Board of Directors), the Vice President or
the Vice Presidents if there is more than one (in the order designated by the
Board of Directors) shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision the Secretary shall be. If the Secretary
shall be unable or shall refuse to cause to be given notice of all meetings of
the stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President may
choose another officer to cause such notice to be given. The Secretary shall
have custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and
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when so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his or her signature. The Secretary shall see that
all books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case may
be.
Section 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under control of the Treasurer belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise
provided in these Bylaws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his or her
disability or refusal to act, shall perform the duties of the Secretary, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
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Section 10. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties
of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Assistant
Treasurer and for the restoration to the Corporation, in case of the Assistant
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under control of the Assistant Treasurer belonging to
the Corporation.
Section 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
-----
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, if there be one, the
President or a Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
may be a facsimile. In case
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any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
Section 3. Lost, Destroyed, Stolen or Mutilated Certificates. The
Board of Directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or such person's legal
representative, to advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by such person's attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, properly endorsed for transfer and
payment of all necessary transfer taxes; provided, however, that such surrender
and endorsement or payment of taxes shall not be required in any case in which
the officers of the Corporation shall determine to waive such requirement. Every
certificate exchanged, returned or surrendered to the Corporation shall be
marked "Cancelled," with the date of cancellation, by the Secretary or Assistant
Secretary of the Corporation or the transfer agent thereof. No transfer of stock
shall be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing from
and to whom transferred.
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Section 5. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
-------
Section 1. Notices. Whenever written notice is required by law, the
Charter or these Bylaws, to be given to any director, member of a committee or
stockholder, such notice may be given by mail, addressed to such director,
member of a committee or stockholder, at such person's address as it appears on
the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Written notice may also be given personally or by telegram,
facsimile, telex or cable.
Section 2. Waivers of Notice. (a) Whenever any notice is required by
law, the Charter or these Bylaws, to be given to any director, member of a
committee or stockholder, a waiver thereof in writing, signed, by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to notice.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Subject to the requirements of the MGCL and
the provisions of the Charter, dividends upon the capital stock of the
Corporation may
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be declared by the Board of Directors at any regular or special meeting of the
Board of Directors, and may be paid in cash, in property, or in shares of the
Corporation's capital stock.
Section 2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall end
on December 31 of each year.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Maryland." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. Power to Indemnify in Actions, Suits or Proceedings.
Subject to Section 2 of this Article VIII, the Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, a "Proceeding") by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
Proceeding unless it is established that: (i) the act or omission of such person
was material to the matter giving rise to the Proceeding and (A) was committed
in bad faith or (B) was the result of active and deliberate
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dishonesty; (ii) such person actually received an improper personal benefit in
money, property or services; or (iii) in the case of any criminal proceeding,
such person had reasonable cause to believe that the act or omission was
unlawful ((i), (ii) and (iii) collectively, "Improper Conduct"). The
termination of any Proceeding by judgment, order or settlement shall not, of
itself, create a presumption that such person committed Improper Conduct. The
termination of any Proceeding by conviction or upon a plea of nolo contendere or
its equivalent, or an entry of an order of probation prior to judgment, shall
create a rebuttable presumption that such person committed Improper Conduct.
Section 2. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such did not commit Improper Conduct. Such determination shall be made
(i) by a majority vote of a quorum consisting of directors who are not parties
to such Proceeding or, if a quorum cannot be obtained, then by a majority vote
of a committee of the Board of Directors consisting solely of two or more
directors who are not parties to such Proceeding and who were duly designated to
act in the matter by a majority vote of the full Board in which the designated
directors who are parties to such Proceeding may participate, (ii) by written
opinion of special legal counsel selected by the Board of Directors or a
committee of the Board as set forth in (i) of this Section 2 or, if the
requisite quorum of the full Board cannot be obtained therefor and the committee
cannot be established, by a majority vote of the full Board of Directors in
which directors who are parties to such proceedings may participate or (iii) by
the stockholders. To the extent, however, that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
Proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
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Section 3. Directors' Reliance On Reports. For purposes of any
determination under Section 2 of this Article VIII, a director shall be deemed
not to have committed Improper Conduct if (i) in performing his or her duties,
such director relied on any information, opinion, report or statement, including
any financial statement or other financial data, prepared or presented by (A) an
officer or employee of the Corporation whom such director reasonably believed to
be reliable and competent on the matters presented, (B) a lawyer, public
accountant or other person, as to a matter which such director reasonably
believed to be within the person's professional or expert competence or (C) a
committee of the Board of Directors on which such director did not serve, as to
a matter within its delegated authority, if such director reasonably believed
the committee to merit confidence; and (ii) such director did not have any
knowledge concerning the matter in question which would cause such reliance to
be unwarranted. The provisions of this Section 3 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a director may be
deemed to not have committed Improper Conduct.
Section 4. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 2 of this Article VIII, and
notwithstanding the absence of any determination thereunder, a court of
appropriate jurisdiction, upon application of an officer or director and such
notice as the court shall require, may order indemnification in the following
circumstances: (i) if it determines an officer or director has not committed
Improper Conduct, the court shall order indemnification, in which case the
officer or director shall be entitled to recover the expenses of securing such
reimbursement; or (ii) if it determines that the officer or director is fairly
and reasonably entitled to indemnification, whether or not the officer or
director has committed Improper Conduct or, in a Proceeding charging improper
personal benefit to the officer or director, such officer or director has been
adjudged to be liable on the basis that the personal benefit was improperly
received, the court may order such indemnification as the court shall deem
proper, provided, however, that such indemnification shall be limited to
expenses with respect to (x) any Proceeding by or in the right of the
Corporation or (y) any Proceeding charging improper personal benefit to the
officer or director, where such
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officer or director has been adjudged to be liable on the basis that the
personal benefit was improperly received.
Section 5. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of (i) a
written affirmation by the director of the director's good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met and (ii) a written undertaking by or on behalf of such director or officer
to repay such amount if it shall ultimately be determined that such person is
not entitled to be indemnified by the Corporation as authorized in this Article
VIII.
Section 6. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Charter or any Bylaw, agreement, contract, vote of
stockholders or directors, an agreement or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Section 1 of this Article VIII shall be made to the fullest
extent permitted by law. The provisions of this Article VIII shall not be deemed
to preclude the indemnification of any person who is not specified in Section 1
of this Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the MGCL, or otherwise.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation would have
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the power or the obligation to indemnify such person against such liability
under the provisions of this Article VIII.
Section 8. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued. For purposes of this Article VIII, 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, partner, trustee,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries.
Section 9. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 10. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 4 hereof),
the Corporation shall not be obligated to indemnify any director or officer (or
his or her heirs, execu-
19
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tors or personal or legal representatives) or advance expenses in connection
with a proceeding (or part thereof) initiated by such person unless such
proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 11. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
----------
Section 1. Amendments. Any and all provisions of these Bylaws may be
altered or repealed and new bylaws may be adopted at any annual meeting of the
stockholders, or at any special meeting called for that purpose, and the Board
of Directors shall have the power, at any regular or special meeting thereof, to
make and adopt new bylaws, or to amend, alter or repeal any of these Bylaws of
the Corporation.
Section 2. Entire Board of Directors. As used in this Article IX and
in these Bylaws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
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EXHIBIT 3.03
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
LASALLE PARTNERS INCORPORATED
-----------------------------
Pursuant to the provisions of the Maryland General Corporation Law,
LaSalle Partners Incorporated, a Maryland corporation (the "Corporation"),
having its principal office in Baltimore City, Maryland, hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation desires to amend and restate its Charter as
currently in effect as hereinafter provided. The provisions set forth in these
Articles of Amendment and Restatement are all of the provisions of the Charter
of the Corporation currently in effect.
SECOND: The Charter of the Corporation is hereby amended and restated
in its entirety as follows:
FIRST: The name of the corporation (the "Corporation") is LaSalle
Partners Incorporated.
SECOND: The purposes for which the Corporation is formed are as
follows:
(a) To provide property and facility management services, corporate
and financial services and investment management services and other related
services to real estate owners, users and investors; and
(b) To carry on any and all business, transactions and activities
permitted by the Maryland General Corporation Law (the "MGCL").
THIRD: The address of the principal office of the Corporation within
the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 11 East
Chase Street, Baltimore City, Maryland 21202. The name and address of the
resident agent of the Corporation within the State of Maryland is CSC-Lawyers
Incorporating Service Company, 11 East Chase Street, Baltimore City, Maryland
21202. The resident agent is a Maryland corporation.
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FOURTH: (a) Authorized Capital Stock. The total number of shares of
stock which the Corporation shall have authority to issue is 110,000,000 shares
of capital stock, consisting of 100,000,000 shares of common stock, par value
$.01 per share (the "Common Stock"), and 10,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). The aggregate par value of
all of the Corporation's authorized shares of capital stock is $1,100,000.
(b) Common Stock. The powers, preferences and rights, and the
qualifications, limitations and restrictions of the Common Stock are as follows:
(1) Voting. Except as otherwise expressly required by law or
provided herein, and subject to any voting rights provided to holders of any
other class or series of common stock or to holders of Preferred Stock at any
time outstanding, the holders of any outstanding shares of Common Stock shall
vote together as a single class on all matters with respect to which
stockholders are entitled to vote under applicable law or this Charter, or upon
which a vote of stockholders is otherwise duly called for by the Corporation. At
each annual or special meeting of stockholders, each holder of record of shares
of Common Stock on the relevant record date shall be entitled to cast one (1)
vote in person or by proxy for each share of the Common Stock standing in such
holder's name on the stock transfer records of the Corporation.
(2) No Cumulative Voting. The holders of shares of Common Stock
shall not have cumulative voting rights.
(3) Dividends. Subject to the rights of the holders of any other
class or series of common stock or the holders of Preferred Stock, and subject
to any other provisions of this Charter, as they may be amended from time to
time, holders of shares of Common Stock shall be entitled to receive such
dividends and other distributions in cash, stock or property of the Corporation
when, as and if declared thereon by the Board of Directors from time to time out
of assets or funds of the Corporation legally available therefor.
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(4) Liquidation, Dissolution, etc. In the event of any
liquidation, dissolution or winding up (either voluntary or involuntary) of the
Corporation, the holders of shares of Common Stock shall be entitled to receive
the assets and funds of the Corporation available for distribution after
payments to creditors and to the holders of any other series of capital stock of
the Corporation that shall have a preference in the event of any liquidation,
dissolution or winding up that may at the time be outstanding, in proportion to
the number of shares of Common Stock held by them.
(5) No Preemptive or Subscription Rights. No holder of shares of
Common Stock shall be entitled to preemptive or subscription rights.
(c) Ability to Reclassify. The Board of Directors may classify and
reclassify any unissued shares of any class of capital stock by setting or
changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of such shares of stock. Subject to the
terms and conditions of any outstanding capital stock, the power of the Board of
Directors to classify and reclassify any of the shares of capital stock shall
include, without limitation, subject to the provisions of this Charter,
authority to classify or reclassify any unissued shares of such stock into a
class or classes of stock that have a priority as to distributions and upon
liquidation and to divide and classify shares of any class into one or more
series of such class by determining, fixing or altering one or more of the
following:
(1) the designation of such class or series, the number of shares
to constitute such class or series which may be increased or decreased (but not
below the number of shares of that class or series then outstanding) by
resolution of the Board of Directors;
(2) whether the shares of such class or series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the terms
of such voting rights;
(3) the dividends, if any, payable on such class or series,
whether any such dividends shall be
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cumulative, and, if so, from what dates, the conditions and dates upon which
such dividends shall be payable, the preference or relation which such dividends
shall bear to the dividends payable on any shares of stock of any other class or
any other series of the same class;
(4) whether the shares of such class or series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption, and whether or not there shall be a sinking fund
or purchase account in respect thereof, and, if so, the terms thereof;
(5) whether the shares of such class or series shall be
convertible into, or exchangeable for, shares of stock of any other class or any
other series of the same class or any other securities and, if so, the price or
prices or the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;
(6) the rights of the holders of shares of such class or series
upon the liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation, which rights may vary depending
upon whether such liquidation, dissolution or winding up is voluntary or
involuntary and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such rights of any
other class or series of stock; and
(7) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof, insofar as they are not inconsistent with the provisions
of this Charter, to the full extent permitted in accordance with the laws of the
State of Maryland.
The terms of any capital stock classified or reclassified pursuant to
powers of the Board of Directors as set forth herein shall be set forth in
Articles Supplementary filed for record with the Maryland State Department of
Assessments and Taxation prior to the issuance of any such capital stock.
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(d) Preferred Stock. The Board of Directors is hereby expressly
authorized to provide for the issuance of all or any shares of the Preferred
Stock in one or more classes or series, and to fix for each such class or series
such voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series, including, without
limitation, the authority to provide that any such class or series may be (i)
subject to redemption at such time or times and at such price or prices; (ii)
entitled to receive dividends (which may be cumulative, cumulative to a limited
extent or non-cumulative) at such rates, on such conditions, and at such times,
and payable in preference to, or in such relation to, the dividends payable on
any other class or classes or any other series; (iii) entitled to such rights
upon the dissolution of, or upon any distribution of the assets of, the
Corporation; or (iv) convertible into, or exchangeable for, shares of any other
class or classes of stock, or of any other series of the same or any other class
or classes of stock, of the Corporation at such price or prices or at such rates
of exchange and with such adjustments; all as may be stated in such resolution
or resolutions.
(e) Power to Sell and Purchase Shares. Subject to the requirements of
applicable law, the Corporation shall have the power to issue and sell all or
any part of any shares of any class of stock herein or hereafter authorized to
such persons, and for such consideration, as the Board of Directors shall from
time to time, in its discretion, determine, whether or not greater consideration
could be received upon the issue or sale of the same number of shares of another
class, and as otherwise permitted by law. Subject to the requirements of
applicable law, the Corporation shall have the power to purchase any shares of
any class of stock herein or hereafter authorized from such persons, and for
such consideration, as the Board of Directors shall from time to time, in its
discretion, determine, whether or not less consideration could be paid upon the
purchase of the same number of shares of another class, and as otherwise
permitted by law.
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FIFTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(a) The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors.
(b) The number of directors of the Corporation initially shall be
nine, which number may from time to time be increased or decreased by, or in the
manner provided in, the Bylaws of the Corporation, provided, that the number of
directors shall never be less than three nor more than fifteen.
(c) The directors of the Corporation, other than those who may be
elected by the holders of any class or series of common stock or Preferred
Stock, shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors. The
term of the initial Class I directors shall expire on the date of the 1998
annual meeting; the term of the initial Class II directors shall expire on the
date of the 1999 annual meeting; and the term of the initial Class III directors
shall expire on the date of the 2000 annual meeting. At each succeeding annual
meeting of stockholders beginning in 1998, successors to the class of directors
whose term expires at that annual meeting shall be elected by a plurality vote
of all shares cast at such meeting to hold office for a three-year term. 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.
The following persons shall serve as Class I directors until the 1998
annual meeting of stockholders:
Robert C. Spoerri
Charles K. Esler
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Daniel W. Cummings
The following persons shall serve as Class II directors until the 1999
annual meeting of stockholders:
William E. Sullivan
Earl E. Webb
Lizanne Galbreath
The following persons shall serve as Class III directors until the
2000 annual meeting of stockholders:
Stuart L. Scott
M.G. Rose
Lynn C. Thurber
(d) Election of directors need not be by written ballot unless the
Bylaws so provide.
(e) A director shall hold office until the annual meeting for the
year in which his or her term expires and until his or her successor shall be
elected and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
(f) Subject to the terms of any one or more other classes or series
of common stock or Preferred Stock, any vacancy on the Board of Directors that
results from an increase in the number of directors may be filled by a majority
of the entire Board of Directors, and any other vacancy occurring on the Board
of Directors may be filled by a majority of the remaining Directors, even if
less than a quorum, or by a sole remaining director. Any vacancy on the Board of
Directors which results from the removal of a director may also be filled by the
stockholders. Any director of any class elected by the stockholders to fill a
vacancy resulting from the removal of a director of such class shall serve for
the balance of the term of the removed director. Any director elected by the
Board of Directors to fill a vacancy shall serve until the next annual meeting
of stockholders and until his successor is elected and qualifies. Subject to the
rights, if any, of the holders of shares of Preferred Stock or shares of any
other class or series of common stock then outstanding, any director of the
Corporation may be removed from office at any time, but only for cause (as such
term
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would be construed under Section 2-406(a) of the MGCL, or any successor
provision) and only by the affirmative vote of the holders of at least two-
thirds (2/3) of the voting power of the Corporation's then outstanding capital
stock entitled to vote generally in the election of directors. Notwithstanding
the foregoing, whenever the holders of any one or more classes or series of
Preferred Stock or one or more other classes or series of common stock shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be governed by the
terms of this Charter applicable thereto, and such directors so elected shall
not be divided into classes pursuant to this Article FIFTH unless expressly
provided by such terms.
(g) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the MGCL,
this Charter, and the Bylaws of the Corporation; provided, however, that no
Bylaws hereafter adopted by the stockholders shall invalidate any prior act of
the directors which would have been valid if such Bylaws had not been adopted.
SIXTH: To the fullest extent permitted by the MGCL or Maryland
decisional law, as amended, supplemented or interpreted, no director or officer
shall be personally liable to the Corporation or any of its stockholders for
monetary damages. Any repeal or modification of this Article SIXTH by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation existing at the time of
such repeal or modification with respect to acts or omissions occurring prior to
such repeal or modification.
SEVENTH: The Corporation shall indemnify its directors and officers
to the fullest extent permitted by the MGCL or Maryland decisional law, as
amended, supplemented or interpreted, and such right to indemnification shall
continue as to a person who has ceased to be a director or officer of the
Corporation and shall inure to the benefit of his or her heirs, executors and
personal
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and legal representatives; provided, however, that, except for proceedings to
enforce rights to indemnification, the Corporation shall not be obligated to
indemnify any director or officer (or his or her heirs, executors or personal or
legal representatives) in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was authorized
or consented to by the Board of Directors. The right to indemnification
conferred by this Article SEVENTH shall include the right to be paid by the
Corporation the expenses incurred in defending or otherwise participating in any
proceeding in advance of its final disposition.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those conferred
in this Article SEVENTH to directors and officers of the Corporation.
The rights to indemnification and to the advance of expenses conferred
in this Article SEVENTH shall not be exclusive of any other right which any
person may have or hereafter acquire under this Charter, the Bylaws of the
Corporation, any statute, agreement, vote of stockholders or disinterested
directors or otherwise.
Any repeal or modification of this Article SEVENTH by the stockholders
of the Corporation shall not adversely affect any rights to indemnification and
to the advancement of expenses of a director or officer of the Corporation
existing at the time of such repeal or modification with respect to any acts or
omissions occurring prior to such repeal or modification.
EIGHTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected: (i) at a duly called annual or
special meeting of the stockholders of the Corporation or (ii) by written
consent if there is filed with the records of stockholders meetings a unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter and a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote thereat.
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NINTH: Unless otherwise prescribed by law or otherwise provided
herein, special meetings of the stockholders, for any purpose or purposes, may
be called by either (i) the Chairman of the Board of Directors, if there be one,
(ii) the President, (iii) the Board of Directors or (iv) the Secretary at the
request in writing of stockholders owning a majority of the capital stock of the
Corporation issued and outstanding and entitled to vote at the meeting.
TENTH: Meetings of stockholders may be held at any place in the United
States as is provided in the Bylaws or set by the Directors of the Corporation
in accordance therewith. The books of the Corporation may be kept (subject to
any provision contained in the MGCL) outside the State of Maryland at such place
or places as may be designated from time to time by the Board of Directors or in
the Bylaws of the Corporation.
ELEVENTH: The Board of Directors or the stockholders shall have the
power to adopt, amend, alter or repeal the Corporation's Bylaws. The
affirmative vote of at least a majority of the entire Board of Directors or the
affirmative vote of at least a majority of the shares of stock entitled to vote
thereon shall be required to adopt, amend, alter or repeal the Corporation's
Bylaws.
TWELFTH: The Corporation hereby expressly elects not to be governed by
the provisions of Title 3, Subtitle 7 of the MGCL.
THIRTEENTH: The Corporation hereby expressly elects not to be governed
by the provision in Title 3, Subtitle 6, Section 3-602 with respect to any
business combination with the following: DEL-LPL Limited Partnership and DEL-
LPAML Limited Partnership and any present or future affiliate or associate of
DEL-LPL Limited Partnership or DEL-LPAML Limited Partnership, or any person
acting in concert with any of the foregoing persons.
FOURTEENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Charter in the manner now or hereafter
prescribed in this Charter, the Bylaws of the Corporation or the MGCL, and all
rights herein conferred upon stockholders are granted subject to such
reservation; provided, however, that notwithstanding anything else contained in
this
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Charter to the contrary, the affirmative vote of the holders of at least eighty
percent (80%) of the then outstanding shares of Common Stock shall be required
to change Article FIFTH, Article SIXTH, Article SEVENTH, Article NINTH, Article
TWELFTH, Article THIRTEENTH or this Article FOURTEENTH and, to the extent
permissible under the MGCL, the affirmative vote of the holders of at least a
majority of the then outstanding shares of Common Stock voting as a single class
shall be required to change any other provision contained in this Charter.
FIFTEENTH: The duration of the Corporation shall be perpetual.
THIRD: The foregoing amendment and restatement of the Charter of the
Corporation has been duly approved by a majority of the entire Board of
Directors and no stock entitled to vote on the matter was outstanding at the
time of such approval.
FOURTH: (a) As of immediately before the filing of these Articles of
Amendment and Restatement, the Corporation has the authority to issue 10,000,000
shares of Common Stock, par value $.01 per share. The aggregate par value of
all of the authorized shares of stock is $100,000.
(b) As amended, the total number of shares of stock which the
Corporation shall have authority to issue has been increased to 110,000,000
shares of capital stock, consisting of 100,000,000 shares of Common Stock, par
value $.01 per share, and 10,000,000 shares of Preferred Stock, $.01 per share.
As amended, the aggregate par value of all of the Corporation's authorized
shares of capital stock is $1,100,000.
(c) The shares of stock of the Corporation are divided into classes,
and the amendment contains a description, as amended, of each class, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption.
FIFTH: The current address of the principal office of the Corporation
within the State of Maryland is c/o CSC-Lawyers Incorporating Service Company,
11 East Chase Street, Baltimore City, Maryland 21202.
SIXTH: The name and address of the Corporation's current resident
agent is CSC-Lawyers
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Incorporating Service Company, 11 East Chase Street, Baltimore City, Maryland
21202.
SEVENTH: The number of directors of the Corporation is nine. The
names of the directors currently in office are:
Daniel W. Cummings Robert C. Spoerri
Charles K. Esler William E. Sullivan
Lizanne Galbreath Lynn C. Thurber
M.G. Rose Earl E. Webb
Stuart L. Scott
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IN WITNESS WHEREOF, LaSalle Partners Incorporated has caused these
presents to be signed in its name and on its behalf by its President and
attested to by its Secretary on this ____ day of ___________, 1997.
By:
-----------------------------
Name: Robert C. Spoerri
Title: President
Attest:
- ---------------------------
Name: William E. Sullivan
Title: Secretary
THE UNDERSIGNED, President of LaSalle Partners Incorporated, who
executed on behalf of the Corporation the foregoing Articles of Amendment and
Restatement of which this certificate is made a part, hereby acknowledges in the
name and on behalf of said Corporation the foregoing Articles of Amendment and
Restatement to be the corporate act of said Corporation and hereby certifies
that to the best of his knowledge, information and belief the matters and facts
set forth therein with respect to the authorization and approval thereof are
true in all material respects under the penalties of perjury.
--------------------------------
Name: Robert C. Spoerri
Title: President
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Exhibit 3.04
FORM OF
AMENDED AND RESTATED BYLAWS
of
LASALLE PARTNERS INCORPORATED
-----------------------------
A Maryland Corporation
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I- OFFICES.......................................................... 1
Section 1. Principal Office...................................... 1
Section 2. Other Offices......................................... 1
ARTICLE II - MEETINGS OF STOCKHOLDERS....................................... 1
Section 1. Place of Meetings..................................... 1
Section 2. Annual Meetings....................................... 1
Section 3. Special Meetings...................................... 2
Section 4. Quorum................................................ 2
Section 5. Proxies............................................... 3
Section 6. Voting................................................ 3
Section 7. Nature of Business at Meetings of
Stockholders....................................... 4
Section 8. Record Date........................................... 5
Section 9. Informal Action....................................... 6
ARTICLE III - DIRECTORS..................................................... 6
Section 1. Number and Election of Directors...................... 6
Section 2. Nomination of Directors............................... 7
Section 3. Vacancies............................................. 9
Section 4. Duties and Powers..................................... 9
Section 5. Organization.......................................... 9
Section 6. Resignations and Removals of
Directors.......................................... 10
Section 7. Meetings.............................................. 10
Section 8. Quorum................................................ 10
Section 9. Actions of Board...................................... 11
Section 10. Meetings by Means of Conference
Telephone.......................................... 11
Section 11. Committees........................................... 11
Section 12. Compensation......................................... 12
ARTICLE IV - OFFICERS....................................................... 12
Section 1. General............................................... 12
Section 2. Election.............................................. 13
Section 3. Voting Securities Owned by the
Corporation........................................ 13
Section 4. Chairman of the Board of
Directors.......................................... 13
Section 5. President............................................. 14
Section 6. Executive Vice Presidents............................. 14
Section 7. Other Vice Presidents................................. 14
Section 8. Secretary............................................. 15
Section 9. Treasurer............................................. 16
Section 10. Assistant Secretaries................................. 16
</TABLE>
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<TABLE>
<S> <C>
Section 11. Assistant Treasurers............ 16
Section 12. Other Officers.................. 17
ARTICLE V - STOCK..................................... 17
Section 1. Form of Certificates............ 17
Section 2. Signatures...................... 18
Section 3. Lost, Destroyed, Stolen or
Mutilated Certificates....... 18
Section 4. Transfers....................... 18
Section 5. Transfer and Registry Agents.... 19
Section 6. Beneficial Owners............... 19
ARTICLE VI - NOTICES.................................. 19
Section 1. Notices......................... 19
Section 2. Waivers of Notice............... 19
ARTICLE VII - GENERAL PROVISIONS...................... 20
Section 1. Dividends....................... 20
Section 2. Disbursements................... 20
Section 3. Fiscal Year..................... 20
Section 4. Corporate Seal.................. 20
ARTICLE VIII - INDEMNIFICATION........................ 21
Section 1. Power to Indemnify in Actions,
Suits or Proceedings......... 21
Section 2. Authorization of Indemnification 21
Section 3. Directors' Reliance On Reports.. 22
Section 4. Indemnification by a Court...... 23
Section 5. Expenses Payable in Advance..... 23
Section 6. Nonexclusivity of Indemnification
and Advancement of Expenses.. 23
Section 7. Insurance....................... 24
Section 8. Certain Definitions............. 24
Section 9. Survival of Indemnification and
Advancement of Expenses...... 25
Section 10. Limitation on Indemnification... 25
Section 11. Indemnification of Employees and
Agents....................... 25
ARTICLE IX - AMENDMENTS............................... 25
Section 1. Amendments...................... 25
Section 2. Entire Board of Directors....... 26
</TABLE>
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AMENDED AND RESTATED BYLAWS
OF
LASALLE PARTNERS INCORPORATED
-----------------------------
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-------
Section 1. Principal Office. The principal office of the Corporation
within the State of Maryland shall be in the City of Baltimore, State of
Maryland.
Section 2. Other Offices. The Corporation may also have offices at
such other places, both within and without the State of Maryland, as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Maryland, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at
which meetings the stockholders shall elect directors, and transact such other
business as may properly be brought before the meeting. Written notice of the
annual meeting stating the place, date and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting and each other stockholder
entitled to notice of such meeting not less than ten nor more than ninety days
before the date of the meeting. Failure
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to hold an annual meeting does not invalidate the Corporation's existence or
affect any otherwise valid corporate acts.
Section 3. Special Meetings. Unless otherwise prescribed by law or
by the Charter, special meetings of stockholders, for any purpose or purposes,
may be called by either (i) the Chairman of the Board of Directors, if there be
one, (ii) the President, (iii) the Board of Directors or (iv) the Secretary at
the request in writing of stockholders owning a majority of the capital stock of
the Corporation issued and outstanding and entitled to vote at the meeting,
which request shall state the purpose or purposes of the proposed meeting and
the matters proposed to be acted upon at such meeting. At a special meeting of
the stockholders, only such business shall be conducted as shall be specified in
the notice of meeting (or any supplement thereto). Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than ten nor
more than ninety days before the date of the meeting to each stockholder
entitled to vote at such meeting and each stock holder entitled to notice of
such meeting.
Section 4. Quorum. Except as otherwise required by law or by the
Charter, the holders of a majority of the capital 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. A quorum, once established, shall not be broken by the withdrawal of
enough votes to leave less than a quorum. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stock-
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holder entitled to vote at the meeting not less than ten nor more than ninety
days before the date of the meeting.
Section 5. Proxies. Any stockholder entitled to vote may do so in
person or by his or her proxy appointed by an instrument in writing signed by
such stockholder or by his or her attorney thereunto authorized, delivered to
the Secretary of the meeting; provided, however, that no proxy shall be voted or
acted upon after eleven months from its date, unless said proxy provides for a
longer period.
Section 6. Voting. At all meetings of the stockholders at which a
quorum is present, except as otherwise required by law, the Charter or these
Bylaws, any question brought before any meeting of stockholders shall be decided
by the affirmative vote of the holders of a majority of the total number of
votes of the capital stock present in person or represented by proxy and
entitled to vote on such question, voting as a single class. The Board of
Directors, in its discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in his or her discretion, may require that any votes
cast at such meeting shall be cast by written ballot.
Section 7. Nature of Business at Meetings of Stockholders. No
business may be transacted at an annual meeting of stockholders, other than
business that is either (a) properly brought before the annual meeting by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) otherwise properly brought before the annual meeting by any
stockholder of the Company (i) who is a stockholder of record on the date of the
giving of the notice provided for in this Section 7 and on the record date for
the determination of stockholders entitled to vote at such annual meeting and
(ii) who complies with the notice procedures set forth in this Section 7.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Company.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at
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the principal executive offices of the Company not less than ninety (90) days
nor more than one hundred twenty (120) days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that
in the event that the annual meeting is called for a date that is not within
thirty (30) days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later than the close
of business on the tenth (10th) day following the day on which notice of the
date of the annual meeting was mailed or public announcement of the date of the
annual meeting was made, whichever first occurs. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a shareholder's notice as described above.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of capital stock of the Company which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 7, provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 7 shall be deemed to preclude discussion by
any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought
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before the meeting and such business shall not be transacted.
For purposes of this Section 7, "public announcement" shall mean an
announcement 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 Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Section 8. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to 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 by the Board of Directors and which record
date: (a) in the case of determination of stockholders entitled to vote at any
meeting of stockholders or adjournment thereof, shall not be more than ninety
nor less than ten days before the date of such meeting; and (b) in the case of
any other action, shall not be more than ninety days prior to such other action.
If no record date is fixed: (x) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the later
of (i) the close of business on the day on which notice is mailed or (ii) the
thirtieth day before the meeting; and (y) the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 9. Informal Action. Any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting if
there is filed with the records of stockholders meetings a unani-
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mous written consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and a written waiver of any right to
dissent signed by each stockholder entitled to notice of the meeting but not
entitled to vote thereat.
ARTICLE III
DIRECTORS
---------
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than 3 nor more than 15 members, the exact number of
which shall be determined from time to time by resolution adopted by the Board
of Directors. Initially, the Board of Directors shall consist of eleven
directors. Except as provided in Section 3 of this Article III, directors
shall be elected by the stockholders at the annual meetings of stockholders, and
each director so elected shall hold office until such director's successor is
duly elected and qualified, or until such director's death, or until such
director's earlier resignation or removal. Directors need not be stockholders.
Section 2. Nomination of Directors. Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors of the Company, except as may be otherwise provided in the Charter
with respect to the right of holders of preferred stock of the Corporation to
nominate and elect a specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be made at any
annual meeting of stockholders, or at any special meeting of stockholders
called for the purpose of electing directors, (a) by or at the direction of the
Board of Directors (or any duly authorized committee thereof) or (b) by any
stockholder of the Company (i) who is a stockholder of record on the date of the
giving of the notice provided for in this Section 2 and on the record date for
the determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such
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stockholder must have given timely notice thereof in proper written form to the
Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Company (a) in the case of an annual meeting, not less than ninety (90) days nor
more than one hundred twenty (120) days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that in
the event that the annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the annual
meeting was mailed or public announcement of the date of the annual meeting was
made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the special meeting was mailed or public announcement of the date of
the special meeting was made, whichever first occurs. In no event shall the
public announcement of an adjournment of an annual or special meeting commence a
new time period for the giving of a shareholder's notice as described above.
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Company which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act, and the rules and regulations promulgated thereunder; and (b) as
to the stockholder giving the notice (i) the name and record address of such
stockholder, (ii) the class or series and number of shares of capital stock of
the Company which are owned beneficially or of record by such stockholder, (iii)
a description of all arrangements or
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understandings between such stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the persons
named in its notice and (v) any other information relating to such stockholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person shall be eligible for election as a director of the Company
unless nominated in accordance with the procedures set forth in this Section 2.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
For purposes of this Section 2, "public announcement" shall mean an
announcement 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.
Section 3. Vacancies. Subject to the terms of any one or more
classes or series of preferred stock, any vacancy on the Board of Directors that
results from an increase in the number of directors may be filled by a majority
of the entire Board of Directors, and any other vacancy occurring on the Board
of Directors may be filled by a majority of the Board of Directors then in
office, even if less than a quorum, or by a sole remaining director. The
stockholders may elect to fill a vacancy on the Board of Directors which results
from the removal of a Director. Notwithstanding the foregoing, whenever the
holders of any one or more class or classes or series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect
directors at an
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annual or special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be governed by the
Charter.
Section 4. Duties and Powers. The business of the Corporation shall
be managed by the direction of the Board of Directors which may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Charter or by these Bylaws required to be exercised or done
by the stockholders.
Section 5. Organization. At each meeting of the Board of Directors,
the Chairman of the Board of Directors, if there be one, or a director chosen by
a majority of the directors present, shall act as Chairman. The Secretary of
the Corporation shall act as Secretary at each meeting of the Board of
Directors. In case the Secretary shall be absent from any meeting of the Board
of Directors, an Assistant Secretary shall perform the duties of Secretary at
such meeting; and in the absence from any such meeting of the Secretary and all
the Assistant Secretaries, the Chairman of the meeting may appoint any person
to act as Secretary of the meeting.
Section 6. Resignations and Removals of Directors. Any director or
the entire Board of Directors may be removed only in accordance with the
provisions of the Charter.
Section 7. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Maryland. Regular meetings of the Board of Directors may be held at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman of the Board of Directors, the Vice Chairman, if there be one, or a
majority of the directors then in office. Notice of every regular or special
meeting of the Board stating the place, date and hour of the meeting shall be
given to each director either by mail not less than forty-eight (48) hours
before the date of the meeting, by telephone, facsimile or telegram on twenty-
four (24) hours' notice, or on such shorter notice as the person or persons
calling such meeting may deem necessary or appropriate in the circumstances.
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Section 8. Quorum. Except as may be otherwise required by law, the
Charter or these Bylaws, at all meetings of the Board of Directors, a majority
of the entire Board of Directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present.
Section 9. Actions of Board. Unless otherwise provided by the Charter
or these Bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all the members of the Board of Directors 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 or committee.
Section 10. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Charter or these Bylaws, members of the Board of
Directors of the Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of a 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 Section 10 shall constitute
presence in person at such meeting.
Section 11. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof pres-
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ent at any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member. Any committee, to the extent permitted by law and provided in the
resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, except the power to declare dividends or
distributions on stock, approve any merger or share exchange which does not
require stockholder approval, amend these Bylaws, issue stock other than as
permitted by statute or recommend to the stockholders any action which requires
stockholder approval. Each committee shall keep regular minutes and report to
the Board of Directors when required.
Section 12. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary, or such other emoluments as the Board of Directors shall from time to
time determine. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
OFFICERS
--------
Section 1. General. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Executive Vice
Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers and
other officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Charter or these By-Laws. The officers of the
Corporation need not be stockholders of the Corporation nor, except in the case
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of the Chairman of the Board of Directors, need such officers be directors of
the Corporation.
Section 2. Election. The Board of Directors at its first meeting held
after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Executive Vice
President and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to vote
in person or by proxy at any meeting of security holders of any corporation in
which the Corporation may own securities and at any such meeting shall possess
and may exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have exercised
and possessed if present. The Board of Directors may, by resolution, from time
to time confer like powers upon any other person or persons. Shares of the
Corporation's own stock owned directly or indirectly by the Corporation shall
not be voted at any meeting and shall not be counted in determining the total
number of outstanding shares entitled to be voted at any given time unless such
shares are held by the Corporation in a fiduciary capacity.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Unless the Board of Directors
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shall otherwise determine, the Chairman of the Board of Directors shall be the
Chief Executive Officer of the Corporation and shall in general supervise and
control all of the business and affairs of the Corporation. The Chairman of the
Board of Directors shall possess the power to execute all deeds, mortgages,
bonds, contracts, certificates and other instruments of the Corporation, except
in cases where the execution thereof shall be expressly delegated by the Board
of Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed or signed. The
Chairman of the Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him or her by
these Bylaws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, be the Chief Operating Officer of the Corporation. The President
shall possess the power to execute all deeds, mortgages, bonds, contracts and
other instruments of the Corporation requiring a seal, under the seal of the
Corporation. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as from time to time may be
assigned to him or her by these Bylaws or by the Board of Directors.
Section 6. Executive Vice Presidents. At the request of the President
or in his or her absence or in the event of his or her inability or refusal to
act, the Executive Vice President or the Executive Vice Presidents if there is
more than one (in the order designated by the Board of Directors) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Each Executive Vice
President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Executive
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have
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all the powers of and be subject to all the restrictions upon the President.
Section 7. Other Vice Presidents. The Board of Directors, the Chairman
of the Board of Directors and the President shall have the power to appoint such
other Vice Presidents of the Corporation as he or she shall from time to time
deem necessary for the proper conduct of the Corporation's affairs. The Chairman
of the Board of Directors and the President shall notify the Board of Directors
of the appointment of any Vice Presidents within a reasonable period of time
after such appointment. Such Vice President shall perform such duties and have
such powers as the Board of Directors, the Chairman of the Board of Directors,
the President, and any Executive Vice Presidents from time to time may
prescribe. Compensation of such Vice Presidents shall be fixed by the Chairman
of the Board of Directors or the President and they shall serve at the pleasure
of the Chairman of the Board of Directors and the President, provided, that any
Vice President may be removed by the vote of a majority of the Directors present
at a duly called meeting.
Section 8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision the Secretary shall be. If the Secretary
shall be unable or shall refuse to cause to be given notice of all meetings of
the stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President may
choose another officer to cause such notice to be given. The Secretary shall
have custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the
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Corporation and to attest the affixing by his or her signature. The Secretary
shall see that all books, reports, statements, certificates and other documents
and records required by law to be kept or filed are properly kept or filed, as
the case may be.
Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in the
Treasurer's possession or under control of the Treasurer belonging to the
Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise provided
in these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the President, any Executive Vice President, if there be
one, or the Secretary, and in the absence of the Secretary or in the event of
his or her disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any
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Executive Vice President, if there be one, or the Treasurer, and in the absence
of the Treasurer or in the event of the Treasurer's disability or refusal to
act, shall perform the duties of the Treasurer, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the Treasurer. If
required by the Board of Directors, an Assistant Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of the office of Assistant Treasurer and for the restoration to the
Corporation, in case of the Assistant Treasurer's death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other property
of whatever kind in the Assistant Treasurer's possession or under control of the
Assistant Treasurer belonging to the Corporation.
Section 12. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
-----
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have certificates which represent and certify
the shares of stock such stockholder holds in the Corporation. Each stock
certificate shall include on its face the name of the Corporation, the name of
the stockholder to whom it is issued, the class of stock and number of shares
represented by the certificate and a statement that the Corporation shall
furnish on request and without charge a full statement of any designations,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of
redemption, and, in the case of preferred stock or a special class in a series,
the differences in the relative rights and preferences between the shares of
each series to the extent that they have been set and the
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authority of the Board of Directors to set the relative rights and preferences
of a subsequent series, and shall otherwise be in such form, not inconsistent
with the Maryland General Corporation Law ("MGCL") and the Charter, as shall be
approved by the Board of Directors or any officer or officers designated for
such purpose by resolution of the Board of Directors.
Section 2. Signatures. Each such certificate shall be signed, in the
name of the Corporation, (i) by the Chairman of the Board of Directors, if there
be one, or the President or an Executive Vice President and (ii) by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Corporation, certifying the number of shares owned by such holder of
stock in the Corporation. Any or all of the signatures on a certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost, Destroyed, Stolen or Mutilated Certificates. The
Board of Directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or such person's legal
representative, to advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by such person's attorney
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lawfully constituted in writing and upon the surrender of the certificate
therefor, properly endorsed for transfer and payment of all necessary transfer
taxes; provided, however, that such surrender and endorsement or payment of
taxes shall not be required in any case in which the officers of the Corporation
shall determine to waive such requirement. Every certificate exchanged, returned
or surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or Assistant Secretary of the Corporation or the
transfer agent thereof. No transfer of stock shall be valid as against the
Corporation for any purpose until it shall have been entered in the stock
records of the Corporation by an entry showing from and to whom transferred.
Section 5. Transfer and Registry Agents. The Corporation may from time
to time maintain one or more transfer offices or agencies and registry offices
or agencies at such place or places as may be determined from time to time by
the Board of Directors.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
-------
Section 1. Notices. Whenever written notice is required by law, the
Charter or these Bylaws, to be given to any director, member of a committee or
stock holder, such notice may be given by mail, addressed to such director,
member of a committee or stockholder, at such person's address as it appears on
the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail.
18
<PAGE>
Written notice may also be given personally or by telegram, facsimile, telex or
cable.
Section 2. Waivers of Notice. (a) Whenever any notice is required by
law, the Charter or these Bylaws, to be given to any director, member of a
committee or stockholder, a waiver thereof in writing, signed, by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting, present by person or represented by proxy, shall constitute a waiver of
notice of such meeting, except where the person attends the 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.
(b) Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or members of
a committee of directors need be specified in any written waiver of notice
unless so required by law, the Charter or these Bylaws.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Subject to the requirements of the MGCL and the
provisions of the Charter, dividends upon the capital stock of the Corporation
may be declared by the Board of Directors at any regular or special meeting of
the Board of Directors, and may be paid in cash, in property, or in shares of
the Corporation's capital stock.
Section 2. Disbursements. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall end
on December 31 of each year.
19
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Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Maryland." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. Power to Indemnify in Actions, Suits or Proceedings.
Subject to Section 2 of this Article VIII, the Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, a "Proceeding") by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
Proceeding unless it is established that: (i) the act or omission of such person
was material to the matter giving rise to the Proceeding and (A) was committed
in bad faith or (B) was the result of active and deliberate dishonesty; (ii)
such person actually received an improper personal benefit in money, property
or services; or (iii) in the case of any criminal proceeding, such person had
reasonable cause to believe that the act or omission was unlawful ((i), (ii) and
(iii) collectively, "Improper Conduct"). The termination of any Proceeding by
judgment, order or settlement shall not, of itself, create a presumption that
such person committed Improper Conduct. The termination of any Proceeding by
conviction or upon a plea of nolo contendere or its equivalent, or an entry of
an order of probation prior to judgment, shall create a rebuttable presumption
that such person committed Improper Conduct.
20
<PAGE>
Section 2. Authorization of Indemnification. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such did not commit Improper Conduct. Such determination shall be made
(i) by a majority vote of a quorum consisting of directors who are not parties
to such Proceeding or, if a quorum cannot be obtained, then by a majority vote
of a committee of the Board of Directors consisting solely of two or more
directors who are not parties to such Proceeding and who were duly designated to
act in the matter by a majority vote of the full Board in which the designated
directors who are parties to such Proceeding may participate, (ii) by written
opinion of special legal counsel selected by the Board of Directors or a
committee of the Board as set forth in (i) of this Section 2 or, if the
requisite quorum of the full Board cannot be obtained therefor and the committee
cannot be established, by a majority vote of the full Board of Directors in
which directors who are parties to such proceedings may participate or (iii) by
the stockholders. To the extent, however, that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
Proceeding de scribed above, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection therewith,
without the necessity of authorization in the specific case.
Section 3. Directors' Reliance On Reports. For purposes of any
determination under Section 2 of this Article VIII, a director shall be deemed
not to have committed Improper Conduct if (i) in performing his or her duties,
such director relied on any information, opinion, report or statement, including
any financial statement or other financial data, prepared or presented by (A) an
officer or employee of the Corporation whom such director reasonably believed to
be reliable and competent on the matters presented, (B) a lawyer, public
accountant or other person, as to a matter which such director reasonably
believed to be within the person's professional or expert competence or (C) a
committee of the Board of Directors on which such director did not serve, as to
a matter within its delegated authority, if
21
<PAGE>
such director reasonably believed the committee to merit confidence; and (ii)
such director did not have any knowledge concerning the matter in question which
would cause such reliance to be unwarranted. The provisions of this Section 3
shall not be deemed to be exclusive or to limit in any way the circumstances in
which a director may be deemed to not have committed Improper Conduct.
Section 4. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 2 of this Article VIII, and
notwithstanding the absence of any determination thereunder, a court of
appropriate jurisdiction, upon application of an officer or director and such
notice as the court shall require, may order indemnification in the following
circumstances: (i) if it determines an officer or director has not committed
Improper Conduct, the court shall order indemnification, in which case the
officer or director shall be entitled to recover the expenses of securing such
reimbursement; or (ii) if it determines that the officer or director is fairly
and reasonably entitled to indemnification, whether or not the officer or
director has committed Improper Conductor, in a Proceeding charging improper
personal benefit to the officer or director, such officer or director has been
adjudged to be liable on the basis that the personal benefit was improperly
received, the court may order such indemnification as the court shall deem
proper, provided, however, that such indemnification shall be limited to
expenses with respect to (x) any Proceeding by or in the right of the
Corporation or (y) any Proceeding charging improper personal benefit to the
officer or director, where such officer or director has been adjudged to be
liable on the basis that the personal benefit was improperly received.
Section 5. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of (i) a
written affirmation by the director of the director's good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met and (ii) a written undertaking by or on behalf of such director or officer
to repay such amount if it shall ultimately be determined that such person is
22
<PAGE>
not entitled to be indemnified by the Corporation as authorized in this Article
VIII.
Section 6. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Charter or any Bylaw, agreement, contract, vote of
stockholders or directors, an agreement or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Section 1 of this Article VIII shall be made to the fullest
extent permitted by law. The provisions of this Article VIII shall not be
deemed to preclude the indemnification of any person who is not specified in
Section 1 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the MGCL, or otherwise.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation would have the
power or the obligation to indemnify such person against such liability under
the provisions of this Article VIII.
Section 8. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation
23
<PAGE>
serving at the request of such constituent corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, shall stand in the
same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, 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, partner, trustee, employee or agent of the
Corporation which imposes duties on, or involves services by, such director or
officer with respect to an employee benefit plan, its participants or
beneficiaries.
Section 9. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VIII shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
Section 10. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 4 hereof),
the Corporation shall not be obligated to indemnify any director or officer (or
his or her heirs, executors or personal or legal representatives) or advance
expenses in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
Section 11. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
24
<PAGE>
ARTICLE IX
AMENDMENTS
----------
Section 1. Amendments. These Bylaws may be altered, amended or
repealed, in whole or in part, or new Bylaws may be adopted by the Board of
Directors or by the stockholders as provided in the Charter.
Section 2. Entire Board of Directors. As used in this Article IX and
in these Bylaws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
25
<PAGE>
EXHIBIT 5.02
Piper & Marbury
L.L.P.
CHARLES CENTER SOUTH WASHINGTON
36 SOUTH CHARLES STREET NEW YORK
BALTIMORE, MARYLAND 21201-3018 PHILADELPHIA
410-539-2530 EASTON
FAX: 410-539-0489
June 17, 1997
LaSalle Partners Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
Re: LaSalle Partners Incorporated
-----------------------------
Ladies and Gentlemen:
We have acted as Maryland counsel to LaSalle Partners Incorporated, a
Maryland corporation (the "Company"), in connection with the registration
statement on Form S-1 (the "Original Registration Statement") filed with the
Securities and Exchange Commission on April 24, 1997, and Amendment No. 1 to the
Original Registration Statement filed on May 8, 1997 (the "First Amendment," and
together with the Original Registration Statement, the "Registration
Statement"), relating to the offering (including an over-allotment option) of an
aggregate of 4,600,000 shares of the Company's common stock, $.01 par value (the
"Shares").
In our capacity as Maryland counsel, we have reviewed the following:
(a) The Charter of the Company, as amended to date (the "Charter"),
certified by the Maryland State Department of Assessments and Taxation
(the "Department");
(b) A copy of the By-laws of the Company certified by an officer of the
Company, as in effect on the date hereof (the "By-laws");
(c) The Registration Statement;
(d) Certified resolutions of the Board of Directors of the Company
authorizing the Registration Statement and the issuance of the Shares;
<PAGE>
PIPER & MARBURY
L.L.P
LaSalle Partners Incorporated
June 17, 1997
Page 2
(e) A good standing certificate for the Company of recent date issued by
the Department;
(f) A Certificate of the Secretary of the Company dated June 17, 1997 as
to certain factual matters including the issuance of the Shares; and
(g) Such other documents as we have considered necessary to the rendering
of the opinion expressed below.
In our examination of the aforesaid documents, we have assumed, without
independent investigation, that the Shares have been or will be issued in
accordance with the terms of the resolutions authorizing their issuance. In
such examination we also have assumed, without independent investigation, the
genuineness of all signatures, the legal capacity of all individuals who have
executed any of the aforesaid documents, the authenticity of all documents
submitted to us as originals, the conformity with originals of all documents
submitted to us as copies (and the authenticity of the originals of such copies)
and that all public records reviewed are accurate and complete. As to factual
matters (including, without limitation, the issuance of capital stock) we have
relied on the Certificate of the Secretary of the Company referenced in
paragraph (f) above and have not independently verified the matters stated
therein.
Based upon the foregoing, having regard for such legal considerations as we
deem relevant, and limited in all respects to applicable Maryland law, we are of
the opinion and advise you as follows:
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland.
(2) When issued and paid for in the manner contemplated by the
Registration Statement, the Shares will be legally issued, fully paid
and nonassessable.
<PAGE>
PIPER & MARBURY
L.L.P.
LaSalle Partners Incorporated
June 17, 1997
Page 3
The opinions expressed above are limited to the law of Maryland, exclusive
of the securities or "blue sky" laws of the State of Maryland. We hereby consent
to the filing of this opinion as Exhibit 5 to the Registration Statement and to
the reference to our firm in the Registration Statement.
Very truly yours,
<PAGE>
Exhibit 10.01
CREDIT AGREEMENT
DATED AS OF September 6, 1996
BY AND AMONG
LASALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP,
LASALLE PARTNERS LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP,
THE BANKS PARTY HERETO,
AND
HARRIS TRUST AND SAVINGS BANK
AS AGENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C>
ARTICLE I DEFINITIONS.................................................
ARTICLE II THE CREDITS.................................................
Section 2.1. Facility A.............................................
Section 2.2. Facility B.............................................
Section 2.3. Facility C.............................................
Section 2.4. Letters of Credit......................................
Section 2.5. Rate Options...........................................
Section 2.6. Optional Principal Payments............................
Section 2.7. Reduction of Commitments...............................
Section 2.8. Disbursement of Loans..................................
Section 2.9. Method of Selecting Rate Options and Interest Periods..
Section 2.10. Minimum Amount of Each Loan............................
Section 2.11. Rate After Maturity....................................
Section 2.12. Place and Application of Payments......................
Section 2.13. The Notes..............................................
Section 2.14. Applicable Interest Rates..............................
Section 2.15. Lending Installation...................................
Section 2.16. Mandatory Prepayments..................................
Section 2.17. Fees...................................................
Section 2.18. Discretionary Extension of Revolving Credit
Termination Date.....................................
ARTICLE III CHANGE IN CIRCUMSTANCES.....................................
Section 3.1. Yield Protection.......................................
Section 3.2. Change of Law..........................................
Section 3.3. Unavailability of Deposits or Inability to Ascertain,
or Inadequacy of, IBOR...............................
Section 3.4. Funding Indemnity......................................
Section 3.5. Lender Certificate.....................................
ARTICLE IV CONDITIONS PRECEDENT........................................
Section 4.1. Effectiveness of Agreement.............................
Section 4.2. Each Loan..............................................
Section 4.3. New Supporting Subsidiary..............................
ARTICLE V REPRESENTATIONS AND WARRANTIES..............................
Section 5.1. Existence and Standing.................................
Section 5.2. Authorization and Validity.............................
Section 5.3. Compliance with Laws and Contracts.....................
Section 5.4. Financial Statements...................................
Section 5.5. Material Adverse Change................................
Section 5.6. Taxes..................................................
Section 5.7. Litigation.............................................
Section 5.8. Affiliates.............................................
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Section 5.9. ERISA..................................................
Section 5.10. Accuracy of Information................................
Section 5.11. Regulation U...........................................
Section 5.12. Material Agreements....................................
Section 5.13. Approvals..............................................
Section 5.14. Subordinated Indebtedness..............................
ARTICLE VI COVENANTS...................................................
Section 6.1. Financial Reporting....................................
Section 6.2. Use of Proceeds........................................
Section 6.3. Notice of Default......................................
Section 6.4. Conduct of Business....................................
Section 6.5. Taxes..................................................
Section 6.6. Insurance..............................................
Section 6.7. Compliance with Laws...................................
Section 6.8. Maintenance of Properties..............................
Section 6.9. Inspection.............................................
Section 6.10. Indebtedness...........................................
Section 6.11. Sale of Assets.........................................
Section 6.12. Sale and Leaseback.....................................
Section 6.13. Investments and Acquisitions...........................
Section 6.14. Guaranties.............................................
Section 6.15. Liens..................................................
Section 6.16. Rentals................................................
Section 6.17. Net Worth..............................................
Section 6.18. Letters of Credit......................................
Section 6.19. Related Person.........................................
Section 6.20. EBITDA.................................................
Section 6.21. Fixed Charge Coverage Ratio............................
Section 6.22. Maximum Leverage Ratio.................................
Section 6.23. Distributions..........................................
Section 6.24. Long-Term Receivables..................................
Section 6.25. The Dai-Ichi Indebtedness..............................
Section 6.26. New Supporting Subsidiaries............................
Section 6.27. Additional Co-Investments..............................
ARTICLE VII DEFAULTS....................................................
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES..............
Section 8.1. Non-Bankruptcy Defaults................................
Section 8.2. Bankruptcy Defaults....................................
Section 8.3. Collateral for Undrawn Letters of Credit...............
Section 8.4. Preservation of Rights.................................
ARTICLE IX THE AGENT...................................................
Section 9.1. Appointment and Authorization..........................
Section 9.2. Rights as a Lender.....................................
Section 9.3. Standard of Care.......................................
Section 9.4. Costs and Expenses.....................................
Section 9.5. Indemnity..............................................
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
ARTICLE X GENERAL PROVISIONS.........................................
Section 10.1. Successors and Assigns.................................
Section 10.2. Survival of Representations............................
Section 10.3. Governmental Regulation................................
Section 10.4. Taxes..................................................
Section 10.5. Choice of Law..........................................
Section 10.6. Headings...............................................
Section 10.7. Entire Agreement.......................................
Section 10.8. Expenses; Indemnification..............................
Section 10.9. Accounting.............................................
Section 10.10. Severability of Provisions.............................
Section 10.11. Setoff.................................................
Section 10.12. Waivers, Modifications, and Amendments.................
Section 10.13. Assignment Agreements..................................
Section 10.14. Participants...........................................
Section 10.15. Joint and Several......................................
Section 10.16. Giving Notice..........................................
Section 10.17. Limitation of Liability................................
Section 10.18. Counterparts...........................................
</TABLE>
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Opinion
Exhibit C-1 - Form of Borrowers' Security Agreement
Exhibit C-2 - Form of Supporting Subsidiaries' Security Agreement
Exhibit D - Form of Pledge Agreement
Exhibit E - Form of Guaranty Agreement
Exhibit F - Form of Compliance Certificate
Exhibit G - Form of Borrowing Base Certificate
Exhibit H - [Intentionally Omitted]
Exhibit I - Form of Collateral Assignment of Partnership Interests
Exhibit J - Form of Subsidiary Collateral Assignment of Partnership
Interests
SCHEDULES
Schedule I - List of Supporting Subsidiaries
Schedule II - List of Affiliates
Schedule III - List of Indebtedness
Schedule IV - List of Investments
Schedule V - List of Liens
Schedule VI - Existing L/Cs
Schedule VII - Co-Investments
Schedule VIII - Initial Facility B Loans
4
<PAGE>
CREDIT AGREEMENT
This Agreement, dated as of September 6, 1996, is among LaSalle Partners
Management Limited Partnership, a Delaware limited partnership, LaSalle Partners
Limited Partnership, a Delaware limited partnership, the banks from time to time
party hereto (each a "Lender" and, collectively, the "Lenders") and Harris Trust
and Savings Bank, as agent (the "Agent").
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related transactions,
consummated after the date of this Agreement, by which a Borrower or any of the
Affiliates (i) acquires any going business or all or substantially all of the
assets of any firm, corporation or division thereof, whether through purchase of
assets, merger or otherwise, or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or at least
a majority of the partnership interests of any partnership.
"Adjusted IBOR Rate" means a rate per annum determined pursuant to the
following formula:
Adjusted IBOR Rate = IBOR
-----------------------
100%-IBOR Reserve Percentage
"Affiliate" means any corporation (including any Subsidiary), partnership,
limited liability company or trust of which one or more of the Borrowers owns,
directly or indirectly, a majority of the securities which have ordinary voting
power for the election of directors (in the case of a corporation), a majority
of the partnership interests (in the case of a partnership), a majority of
ownership (in the case of a limited liability company) or a majority of the
beneficial interests (in the case of a trust).
"Agent" means Harris Trust and Savings Bank and any successor pursuant to
Section 9.1 hereof.
"Agreement" means this Credit Agreement, as it may be amended from time to
time.
"Agreement Accounting Principles" means generally accepted principles of
accounting from time to time in effect.
"Application" is defined in Section 2.4(d) hereof.
5
<PAGE>
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Person" means such individual person or persons as may be
designated by the Borrowers in writing to the Agent from time to time to act as
an Authorized Person hereunder.
"Borrower" means each of LPL and LPML.
"Borrowers' Security Agreement" means the Security Agreement dated as of
September 6, 1996 in the form of Exhibit C-1 hereto.
"Borrowing" means the total of loans of a single type made to a Borrower by
all of the Lenders on a single date and for a single Interest Period.
Borrowings of Loans under a Facility are made ratably by the Lenders according
to their respective Commitments under that Facility.
"Borrowing Base" means, as of any time it is to be determined, 90% of the
then outstanding unpaid amount of Eligible Receivables.
"Borrowing Date" means a date on which a Borrowing is made hereunder.
"Borrowing Notice" is defined in Section 2.9.
"Business Day" means (i) with respect to borrowing, payment or rate
selection of Eurodollar Loans, a day on which banks are open for business in
Chicago and on which dealings in U.S. Dollars are carried on in the applicable
foreign interbank market and (ii) for all other purposes, a day on which banks
are open for business in Chicago.
"Capitalized Lease" of a Person means any lease of property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person, prepared in accordance with
Agreement Accounting Principles.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted the Agent for the benefit of the
Lenders by the Security Agreements.
"Collateral Assignment of Partnership Interest" means the Collateral
Assignment of Partnership Interest dated as of September 6, 1996 in the form of
Exhibit I hereto.
"Combined Equity" means, as at any date of determination, the sum of the
consolidated owner's equity of LPML and its Subsidiaries and the consolidated
owner's equity of LPL and its Subsidiaries, determined in accordance with
Agreement Accounting Principles, plus
6
<PAGE>
the principal amount of the Dai-Ichi Indebtedness outstanding at such time.
"Combined Funded Indebtedness" means, as at any date of determination, the
sum of all Indebtedness described in clause (i) of the definition of
Indebtedness (x) of LPML and its Subsidiaries and (y) of LPL and its
Subsidiaries determined, in each case, on a consolidated basis in accordance
with Agreement Accounting Principles.
"Combined Net Income" means the sum of the consolidated Net Incomes of each
of the Borrowers (excluding income by reason of a dividend or Distribution from
the other Borrower).
"Commitment" means any Facility A Commitment, Facility B Commitment, or
Facility C Commitment and "Commitments" means any or all of the foregoing, as
the context may require.
"Dai-Ichi Entity" means Dai-ichi Life (U.S.A.), Inc. and any of its
affiliates.
"Dai-Ichi Indebtedness" means the sum of (i) LPL's obligations to DSA-LSPL,
Inc. evidenced by those two certain promissory notes each dated August 27, 1996
from LPL to DSA-LSPL, Inc. in the original principal amounts of $24,341,091 and
$4,878,895.96, respectively, of which $24,341,091 and $4,878,895.96,
respectively, are outstanding on the date hereof, and (ii) LPML's obligations to
DSA-LSAM, Inc. evidenced by those two certain promissory notes, each dated
August 27, 1996, from LPML to DSA-LSAM, Inc. in the original principal amounts
of $6,658,909 and $1,334,704.39, respectively of which $6,658,909 and
$1,334,704.39, respectively, are outstanding on the date hereof. It is
understood that such promissory notes so evidence obligations owed to DSA-LSPL,
Inc. and DSA-LSAM, Inc. and shall only constitute "Dai-Ichi Indebtedness" so
long as such promissory notes are owed to such Persons.
"Default" means an event described in Section 7.
"DEL-LPAML" means DEL-LPAML Limited Partnership, a Delaware limited
partnership.
"DEL-LPL" means DEL-LPL Limited Partnership, a Delaware limited
partnership.
"Distributions" means the payment or distribution of any asset of a
partnership to any of its partners, whether from capital, income or otherwise,
excepting, however, compensation and reimbursements that are paid to partners
and are unrelated to their partnership interests.
"Domestic Rate" means, for any day, the greater of:
(A) the rate of interest announced by the Agent from time to time as
its prime commercial rate, as in effect on such day; and
7
<PAGE>
(B) the sum of (x) the rate determined by the Agent to be the average
(rounded upwards, if necessary, to the next higher 1/100 of 1%) of the
rates per annum quoted to the Agent at approximately 10:00 a.m. (Chicago
time) (or as soon thereafter as is practicable) on such day (or, if such
day is not a Business Day, on the immediately preceding Business Day) by
two or more Federal funds brokers selected by the Agent for the sale to the
Agent at face value of Federal funds in an amount equal or comparable to
the principal amount owed to the Agent for which such rate is being
determined, plus (y) 1/2 of 1% (0.50%).
"Domestic Rate Loan" means a Loan which bears interest at the rate
specified in Section 2.14(a) hereof.
"Domestic Rate Interest Period" means, with respect to a Domestic Rate
Loan, a period commencing on a Business Day selected by the Borrower pursuant to
this Agreement (on which Business Day interest on such Domestic Rate Loan
commences accruing at the Domestic Rate) and ending on the day on which such
Domestic Rate Loan is paid in full.
"EBITDA" means, with reference to any period, Net Income for such period
plus all amounts deducted in arriving at such Net Income amount in respect of
(i) Interest Expense for such period, plus (ii) federal, state and local income
taxes for such period, plus (iii) all amounts properly charged for depreciation
and amortization of intangible assets during such period on the books of the
Borrowers.
"Eligible Receivables" means, on any given day, the total of all
Receivables included in the most recent certificate furnished under Section
6.1(d) hereof, and satisfying the following requirements: (a) the Agent has a
duly perfected first priority security interest in each such Receivable under
the Security Agreements; (b) each such Receivable represents moneys due solely
for services rendered in the ordinary course of business; (c) except as
otherwise provided in the next sentence of this definition, each such Receivable
is unconditionally due and payable, has been billed to the Person obligated to
pay the same or if not yet billed has remained unbilled for not more than 10
days following the end of the fiscal quarter during which such services were
performed and is due and payable in full not later than one year after such day,
provided, however, that, if such Receivable is due and payable later than one
year, but not later than 18 months, after such day, 75% (or such higher
percentage as the Agent may approve in its discretion) of the amount of such
Receivable may be included in the Eligible Receivables (subject to the
provisions of Section 6.24); (d) as of such day, no such Receivable is more than
120 days past due or is payable by a Person owing Receivables of which more than
15% are more than 120 days past due; (e) if the Person obligated to pay such
Receivable is a Related Person, the transaction giving rise to such Receivable
is in compliance with Section 6.19 hereof; (f) no Person obligated to pay any
such
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Receivable is the subject of a petition for bankruptcy or any other petition for
relief under the Bankruptcy Code, or has made an assignment for the benefit of
creditors, or has suspended its business operations, become insolvent, or
suffered a receiver or a trustee to be appointed for any of its assets or
affairs or has notified a Borrower, a Supporting Subsidiary or any Affiliate
that it will not or is not obligated to pay such Receivable in full (provided
that if such obligor admits liability for a portion of such Receivable, such
portion may, subject to satisfaction of the other eligibility criteria set forth
herein, constitute an Eligible Receivable); and (g) the Agent has not determined
that collection of such Receivable is insecure or that such Receivable may not
be paid. Notwithstanding the requirements of item (c) above, (i) a leasing
commission Receivable shall not be deemed conditional by reason of the fact that
the Tenant has not commenced occupancy of the leased premises, provided that
such premises are located in a building that is complete and is in operation;
and (ii) the Agent may, upon request by the Borrowers, include within the
Eligible Receivables, either the entire amount or such discounted percentage as
the Agent shall determine of any commission that is a Receivable that satisfies
the requirements (except item (c)) set forth above but is conditional (other
than upon performance by a Borrower) or is payable more than 18 months later, if
the Agent determines, based on factors deemed appropriate by it (such as, but
not limited to, the nature of the conditions to be satisfied, the status of and
other factors that might affect the satisfaction thereof, the ability (including
financial ability, experience and expertise) of the Person or Persons that are
or will be satisfying such conditions, the creditworthiness of the Person or
Persons obligated to pay such Receivable and the length of time before such
conditions will be fully satisfied and such Receivable will be paid) that there
is substantial certainty that such Receivable will be paid when due. The Agent
agrees to respond to a request made by the Borrowers under the preceding
sentence within 20 days of such request. It is specifically understood that in
no event shall "Eligible Receivables" include promissory notes from Borrowers'
or Supporting Subsidiaries' partners for the purchase of partnership interests
in the Borrowers or Supporting Subsidiaries or any obligation owed by any Dai-
Ichi Entity.
"ERISA" means the Employee Retirement Security Income Act of 1974, as
amended from time to time.
"Eurodollar Interest Period" means, with respect to a Eurodollar Loan, a
period of one, two, three or six months commencing on a Business Day selected by
a Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall
end on the day in the applicable succeeding calendar month which corresponds
numerically to the beginning day of such Eurodollar Interest Period, provided,
however, that if there is no such numerically corresponding day in such
succeeding month, such Eurodollar Interest Period shall end on the last Business
Day of such succeeding month. If a Eurodollar Interest Period would otherwise
end on a day which is not a Business Day, such Eurodollar Interest Period shall
end on the next succeeding Business Day, provided,
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however, that if said next succeeding Business Day falls in a new month, such
Eurodollar Interest Period shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Loan which bears interest at a rate specified in
Section 2.14(b) hereof.
"Eurodollar Margin" means (i) 0.50% per annum for each Eurodollar Loan made
under Facility A and Facility B and (ii) 0.75% per annum for each Eurodollar
Loan made under Facility C.
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate
at which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed during such Interest Period by the Board of
Governors of the Federal Reserve System (or any successor) on "eurocurrency
liabilities," as defined in such Board's Regulation D, (or on any other category
of liabilities that includes deposits by reference to which the interest rate on
Eurodollar Loans is determined or any category of extension of credit or other
assets that include loans by non-United States offices of any Lender to United
States residents) subject to any amendments of such reserve requirement by such
Board or its successor, taking into account any transitional adjustments
thereto. For purposes of this definition, the Eurodollar Loans shall be deemed
to be "eurocurrency liabilities" as defined in Regulation D without benefit or
credit for any prorations, exemptions or offsets under Regulation D.
"Facility" means any of the Facility A Commitments, the Facility B
Commitments, or the Facility C Commitments.
"Facility A Commitments" means the obligation of the Lenders under Section
2.1 hereof to make Loans to the Borrowers or to participate in Letters of Credit
in an aggregate amount not exceeding $30,000,000 as such amount may be modified
from time to time pursuant to the terms of this Agreement.
"Facility A Loans" is defined in Section 2.1 hereof.
"Facility B Commitments" means the obligation of the Lenders under Section
2.2 hereof to make Loans to the Borrowers in an aggregate amount not exceeding
$10,000,000 as such amount may be modified from time to time pursuant to the
terms of this Agreement.
"Facility B Loans" is defined in Section 2.2. hereof.
"Facility C Commitments" means the obligation of the Lenders under Section
2.3 hereof to make Loans to the Borrowers in an aggregate amount not exceeding
$40,000,000 as such amount may be modified from time to time pursuant to the
terms of this Agreement.
"Facility C Loans" is defined in Section 2.3 hereof.
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"Fixed Charge Coverage Ratio" means, with respect to the four most recent
fiscal quarters and calculated on the basis of the financial statements
submitted with respect to said period pursuant to Section 6.1, the ratio of (i)
EBITDA during said period less distributions to the partners of the Borrowers
and depreciation of fixed assets during said period to (ii) the sum of Fixed
Charges of each of the Borrowers during said period.
"Fixed Charges" means, for any Person with reference to any period, the sum
of (i) the aggregate amount of payments required to be made by such Person
during such period in respect of principal on all Indebtedness whether at
maturity, as a result of mandatory sinking fund redemption, mandatory
prepayment, acceleration or otherwise (other than the Dai-Ichi Indebtedness and
Loans that will mature at the end of their Interest Period before the Revolving
Credit Termination Date and are not required to be repaid in accordance with an
amortization schedule applicable to Loans under Facility B or C), plus (ii)
Interest Expense for such period.
"Guaranty" of a Person means any agreement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter or take-or-pay contract and shall include, without limitation, the
contingent liability of such Person in connection with any application for a
letter of credit.
"Guaranty Agreement" means the Guaranty Agreement dated as of September 6,
1996 in the form of Exhibit E hereto.
"IBOR" means, with respect to a Eurodollar Loan for a Eurodollar Interest
Period, the rate of interest per annum as determined by the Agent (rounded
upwards, if necessary to the nearest whole multiple of 1/16 of 1%) at which
deposits of United States dollars in immediately available and freely
transferable funds would be offered at 9:00 a.m. (Chicago time) two Business
Days prior to the commencement of such Eurodollar Interest Period by the
principal Nassau office of the Agent to major banks in the interbank market upon
request by such major banks for delivery on the first day of, and for a period
approximately equal to, such Eurodollar Interest Period and in an amount
approximately equal to the amount of the Eurodollar Loan.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property
other than accounts payable arising in the ordinary course of such Person's
business on terms customary in the trade, (iii) obligations, whether or not
assumed, secured by Liens or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments, (v) Capitalized
Lease Obligations, (vi) obligations for which such
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Person is obligated pursuant to a Guaranty and (vii) obligations for which such
Person is obligated pursuant to a letter of credit.
"Interest Expense" means for any Person for any period, the total interest
expense of such Person during such period with respect to its outstanding
Indebtedness, including, without limitation, all commissions and other fees and
charges owed with respect to Letters of Credit.
"Interest Period" means a Eurodollar Interest Period or a Domestic Rate
Interest Period.
"Investment" of a Person means any loan, advance, extension of credit
(excluding accounts receivable arising in the ordinary course of business),
deposit account or contribution of capital or any commitment to contribute
capital by such Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, notes, debentures or other securities of any
other Person made by such Person (including, without limitation, notes payable
by such Person).
"Lending Installation" means any office, branch, subsidiary or affiliate of
any Lender.
"Letter of Credit" means a letter of credit which is issued upon the
application of one or both Borrowers and, if applicable, one or more Supporting
Subsidiaries.
"Lien" of a Person means any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest under a
Capitalized Lease or analogous instrument, in, of or on any property of such
Person.
"Loan" means any of the Facility A Loans, the Facility B Loans or the
Facility C Loans.
"Loan Documents" means this Agreement, the Notes, the Applications and the
Security Agreements.
"LPI Affiliate" means any corporation, partnership, limited liability
company or trust of which LPI owns, directly or indirectly, a majority of the
securities which have ordinary voting power for the election of directors (in
the case of a corporation), a majority of the partnership interests (in the case
of a partnership), a majority of ownership (in the case of a limited liability
company) or a majority of the beneficial interests (in the case of a trust).
"LPL" means LaSalle Partners Limited, a Delaware limited partnership.
"LPML" means LaSalle Partners Management Limited, a Delaware limited
partnership.
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"Net Income" means, with respect to any Person for any Period, the net
income (or loss) of such Person for such period, determined in accordance with
Agreement Accounting Principles.
"Net Operating Income" means, for the borrowers for any period, their Net
Income for such period before all extraordinary items and all interest expense
on the Dai-Ichi Indebtedness.
"Net Worth" means, for the Borrowers, at any time the amount reflected as
total partners' capital on the combined consolidated balance sheet of the
Borrowers at such time, prepared in accordance with Agreement Accounting
Principles ("Partners' Capital") plus the aggregate principal amount of the Dai-
Ichi Indebtedness outstanding at such time.
"Note" means any of the Facility A Notes, the Facility B Notes or the
Facility C Notes or any of them.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, all reimbursement and other obligations under the Applications and
all other obligations of the Borrowers to the Lenders or Agent arising under the
Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation and its successors
and assigns.
"Person" means any corporation, natural person, firm, joint venture,
partnership, limited liability company, trust, unincorporated organization,
enterprise, government or any department or agency of any government.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code as to which any Borrower or any Affiliate may have any
liability.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
September 6, 1996 in the form of Exhibit D hereto.
"Rate Option" means the following two rate options provided for in Section
2.14 hereof: (a) the Domestic Rate; or (b) the Adjusted IBOR Rate.
"Receivables" means and includes all of the Borrowers' and the Supporting
Subsidiaries' present and future rights to payment for services rendered,
whether or not evidenced by instruments or chattel paper, and whether or not
they have been earned by performance; proceeds of any letters of credit on which
a Borrower or Supporting Subsidiary is named as beneficiary; contract rights;
chattel paper; instruments; documents; insurance proceeds; and all such
obligations whatsoever owing to a Borrower or Supporting Subsidiary, together
with all instruments and all documents of title representing any of the
foregoing.
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"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Related Person" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with a Borrower. A
Person shall be deemed to control another Person if the controlling Person owns
20% or more of any class of voting securities of the controlled Person (if the
controlled Person is a corporation) or 20% or more of the partnership or joint
venture interests (whether general, limited or both) of the controlled Person
(if the controlled Person is a partnership or joint venture) or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership, by
contract or otherwise.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property having an original term
(including any required renewals or any renewals at the option of the lessor or
lessee) of one year or more but does not include any amounts payable under
Capitalized Leases of such Person.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code and of Section 302
of ERISA shall be a reportable event regardless of the issuance of any such
waivers in accordance with Section 412(d) of the Internal Revenue Code).
"Required Lenders" means, as of the date of determination thereof, those
Lenders holding at least 66 2/3% of the Commitments or, in the event that no
Commitments are outstanding hereunder, holding at least 66 2/3% of the Loans and
credit risk on the Letters of Credit outstanding hereunder provided that anytime
there are fewer than three Lenders party hereto "Required Lenders" shall mean
all the Lenders.
"Revolving Credit Termination Date" means September 6, 1999 or September 6
of any later year that the Lenders, in their sole discretion, may establish
pursuant to Section 2.18 hereof.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Security Agreements" means the Borrowers' Security Agreement, the
Subsidiary Security Agreement, the Guaranty Agreement, the
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Collateral Assignment of Partnership Interests, the Subsidiary Collateral
Assignment of Partnership Interests and the Pledge Agreement.
"Subsidiary" means a partnership or corporation that, under Agreement
Accounting Principles, is included in the consolidated financial statements of
LPML or LPL, as the case may be.
"Subsidiary Collateral Assignment of Partnership Interest" means the
Collateral Assignment of Partnership Interest dated as of September 6, 1996 in
the form of Exhibit J hereto.
"Subsidiary Security Agreement" means the Supporting Subsidiary Security
Agreement dated as of September 6, 1996 in the form of Exhibit C-2 hereto.
"Supporting Subsidiary" means all Subsidiaries (whether now or hereafter
existing) except for (i) LP International, a Limited Liability Company ("LPI")
and the LPI Affiliates and (ii) other Subsidiaries not party to the Subsidiary
Security Agreement that do not in the aggregate have outstanding more than 5% of
all Receivables owed to the Borrowers and Subsidiaries (excluding LPI and the
LPI Affiliates).
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under a Plan exceeds the fair market value
of all Plan assets allocable to such benefits, all determined as of the then
most recent valuation date for such Plan.
"Unmatured Default" means an event or circumstance that, with passage of
time or notice or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
Section 2.1. Facility A. Until the Revolving Credit Termination Date, each
Lender agrees, on the terms and conditions set forth in this Agreement, to make
loans (individually, a "Facility A Loan" and, collectively, the "Facility A
Loans") to the Borrowers from time to time in a principal amount requested by
either Borrower up to the maximum amount of the Facility A Commitment which each
Lender agrees to extend to the Borrowers as set forth opposite such Lender's
signature hereto under the heading "Facility A Commitment" or as otherwise
provided in Section 10.13 hereof, as such amount may be reduced pursuant hereto.
The Facility A Commitments may be utilized by the Borrowers in the form of
Facility A Loans and Letters of Credit, all as more fully hereinafter set forth,
provided that the aggregate principal amount of Facility A Loans and Letters of
Credit outstanding at any one
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time under Facility A shall not exceed the lesser of (i) the Facility A
Commitments and (ii) the Borrowing Base as then determined and computed. During
the period from and including the date hereof to but not including the Revolving
Credit Termination Date, the Borrowers may use the Facility A Commitments by
borrowing, repaying and reborrowing Facility A Loans in whole or in part and/or
by having the Agent issue Letters of Credit, having such Letters of Credit
expire or otherwise terminate without having been drawn upon or, if drawn upon,
reimbursing the Agent for each such drawing, and having the Agent issue new
Letters of Credit, all in accordance with the terms and conditions of this
Agreement. For purposes of this Agreement, where a determination of the unused
or available amount of the Facility A Commitments is necessary, the Facility A
Loans, the Facility B Loans and the face amount of all Letters of Credit shall
be deemed to utilize the Facility A Commitments. The obligations of the Lenders
hereunder are several and not joint, and no Lender shall under any circumstances
be obligated to extend credit under the Facility A Commitments in excess of its
Facility A Commitment. Each Borrowing of Facility A Loans shall be made ratably
from the Lenders in accordance with their Facility A Commitments.
Section 2.2. Facility B. Until the Revolving Credit Termination Date, the
Borrowers may request the Lenders to make loans (each, a "Facility B Loan" and,
collectively, the "Facility B Loans") to the Borrowers from time to time in a
principal amount requested by either Borrower. In making such a request a
Borrower shall submit to the Lenders an explanation of the use of such Loan and
if all Lenders, in their reasonable discretion (based on each such Lender's then
existing policies and guidelines concerning the types of activities and
transactions it is then willing to finance and such other criteria as such
Lender deems relevant), agree to provide the requested financing for such use,
the Lenders shall make the requested Loan and the amount thereof shall be a use
of the Facility B Commitments. In no event shall the Lenders be obligated to
make any such requested Loan for a use that any Lender does not approve in its
reasonable discretion. The maximum amount of the Facility B Commitment which
each Lender agrees to consider extending to the Borrowers shall be as set forth
opposite such Lender's signature hereto under the heading "Facility B
Commitment" or as otherwise provided in Section 10.13 hereof, as such amount may
be reduced pursuant hereto. The Facility B Commitment may be utilized by the
Borrowers in the form of Facility B Loans, all as more fully hereinafter set
forth, provided that the aggregate principal amount of Facility B Loans
outstanding at any one time shall not exceed the Facility B Commitments and the
sum of the aggregate principal amount of Facility A Loans and Letters of Credit
outstanding under Facility A plus the aggregate principal amount of Facility B
Loans outstanding at any one time shall not exceed the Facility A Commitments.
The obligations of the Lenders hereunder are several and not joint, and no
Lender shall under any circumstances be obligated to extend credit under the
Facility B Commitments in excess of its Facility B Commitment. Each Borrowing
of Facility B Loans shall be made ratably by the Lenders in accordance with
their Facility B Commitments. Notwithstanding the
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foregoing, each Lender agrees on the date hereof to advance its pro rata share
of the Facility B Loans listed on Schedule VIII hereto (the "Initial Facility B
Loans"). Until the Revolving Credit Termination Date, on the last day of an
Interest Period for any Borrowing of Initial Facility B Loans or any other
Facility B Loans, each Lender agrees, on the terms and conditions set forth in
this Agreement (and subject to any mandatory prepayment of a Facility B Loan
pursuant to Section 2.16(c) or any other provision of this Agreement), to make a
new Facility B Loan in an amount up to but not greater than the principal amount
of its outstanding Facility B Loan maturing on such date; provided that (i) on
each June 15 the Borrowers shall repay one-fourth (1/4th) of the original
principal amount of each Facility B Loan outstanding on the immediately
preceding March 31 (other than the Initial Facility B Loans) with the aggregate
principal amount of all Facility B Loans not sooner paid due and payable on the
Revolving Credit Termination Date and (ii) the Borrowers shall repay the Initial
Facility B Loans in accordance with the amortization schedule set forth on
Schedule VIII. In order to so repay the Facility B Loans in accordance with
clauses (i) and (ii) of the preceding sentence, the Borrowers shall select
Eurodollar Interest Periods that end on or before the dates for such payments or
have outstanding Domestic Rate Loans in an amount sufficient so that all such
required payments may be made on or before the required payment dates through
repayments of Domestic Rate Loans or repayments of Eurodollar Loans on the last
day of their Interest Periods, without refunding such Eurodollar Loans with new
Facility B Loans, and not through repayments of Eurodollar Loans before the last
day of their then applicable Interest Periods.
Section 2.3. Facility C. Until the Revolving Credit Termination Date, each
Lender agrees, on the terms and conditions set forth in this Agreement, to make
loans (each, a "Facility C Loan" and, collectively, the "Facility C Loans") to
the Borrowers from time to time in a principal amount requested by either
Borrower. The maximum amount of the Facility C Commitment which each Lender
agrees to extend to the Borrowers shall be as set forth opposite such Lender's
signature hereto under the heading "Facility C Commitment" or as otherwise
provided in Section 10.13 hereof, as such amount may be reduced pursuant hereto.
The Borrowers may use the Facility C Commitments by borrowing, repaying and
reborrowing Facility C Loans in whole or in part as more fully set forth herein,
provided that the aggregate principal amount of Facility C Loans outstanding at
any one time shall not exceed the Facility C Commitments. The obligations of the
Lenders hereunder are several and not joint, and no Lender shall under any
circumstances be obligated to extend credit under the Facility C Commitments in
excess of its Facility C Commitment. Each Borrowing of Facility C Loans shall be
made ratably by the Lenders in accordance with their Facility C Commitments. On
each June 15 occurring after the earlier to occur of (i) the date two years
after the date hereof and (ii) the date on which the Borrowers shall have
borrowed more than 50% of the Facility C Commitments (without giving effect to
any repayments thereof), the Borrowers shall repay one-seventh (1/7th) of the
original principal amount of each Facility C Loan
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outstanding on the immediately preceding March 31 with the aggregate principal
amount of all Facility C Loans not sooner paid due and payable on the Revolving
Credit Termination Date. In order to so repay the Facility C Loans in accordance
with clauses (i) and (ii) of the preceding sentence, the Borrowers shall select
Eurodollar Interest Periods that end on or before the dates for such payments or
have outstanding Domestic Rate Loans in an amount sufficient so that all such
required payments may be made on or before the required payment dates through
repayments of Domestic Rate Loans or repayments of Eurodollar Loans on the last
day of their Interest Periods, without refunding such Eurodollar Loans with new
Facility C Loans, and not through repayments of Eurodollar Loans before the last
day of their then applicable Interest Periods.
Section 2.4. Letters of Credit.
(a) General Terms. Subject to the terms and conditions hereof, the
Facility A Commitments may be availed of by the Borrowers in the form of standby
letters of credit issued by the Agent at the application of either or both
Borrowers and, if applicable, one or more Supporting Subsidiaries (individually
a "Letter of Credit" and collectively the "Letters of Credit"), provided that
each requested Letter of Credit is in a form acceptable to the Agent and the
aggregate amount of Letters of Credit issued and outstanding hereunder shall not
at any time exceed $5,000,000. Notwithstanding anything herein to the contrary,
those letters of credit listed and described on Schedule VI hereto previously
issued by Harris Trust and Savings Bank for the account of the Borrowers (each,
an "Existing L/C") shall each constitute a "Letter of Credit" hereunder for all
purposes of this Agreement to the same extent, and with the same force and
effect, as if such Existing L/Cs had been issued at the request of a Borrower
hereunder. For purposes of this Agreement, a Letter of Credit shall be deemed
outstanding as of any time in an amount equal to the maximum amount which could
be drawn thereunder under any circumstances and over any period of time. If and
to the extent any Letter of Credit expires or otherwise terminates without
having been drawn upon, the availability under the Facility A Commitments shall
to such extent be reinstated. The Letters of Credit shall be issued by the
Agent, but each Lender shall be obligated to reimburse the Agent for such
Lender's pro rata share of the amount of each draft drawn under a Letter of
Credit in accordance with this Section 2.4 and, accordingly, each Letter of
Credit shall be deemed to utilize the Facility A Commitments of all Lenders pro
rata.
(b) Term. Each Letter of Credit issued hereunder shall expire not later
than the earlier of (i) twelve (12) months from the date of issuance (or be
cancelable not later than twelve (12) months from the date of issuance and each
renewal) or (ii) the Facility A Revolving Credit Termination Date. In the event
the Agent issues any Letter of Credit with an expiration date that is
automatically extended unless the Agent gives notice that the expiration date
will not so extend beyond its then scheduled expiration date, the
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Agent will give such notice of non-renewal before the time necessary to prevent
such automatic extension if before such required notice date (i) the expiration
date of such Letter of Credit if so extended would be after the Revolving Credit
Termination Date, (ii) the Facility A Commitments have terminated or (iii) an
Event of Default exists and the Required Lenders have given the Agent
instructions not to so permit the extension of the expiration date of such
Letter of Credit.
(c) General Characteristics. Each Letter of Credit issued hereunder shall
be payable in U.S. Dollars, conform to the general requirements of the Agent for
the issuance of such a letter of credit as to form and substance, and be a
letter of credit which the Agent may lawfully issue.
(d) Applications. At the time either Borrower requests a Letter of Credit
to be issued (or prior to the first issuance of a Letter of Credit in the case
of a continuing application), such Borrower shall execute and deliver to the
Agent an application for such Letter of Credit in the form then customarily
prescribed by the Agent (individually an "Application" and collectively the
"Applications"). As set forth in Section 10.2, each Borrower shall be jointly
and severally liable under each such application for a Letter of Credit executed
by any Borrower. Subject to the other provisions of this subsection, the
obligation of the Borrowers to reimburse the Agent for drawings under a Letter
of Credit shall be governed by the Application for such Letter of Credit.
Anything contained in the Applications to the contrary notwithstanding, (i) in
the event the Agent is not reimbursed by the Borrowers for the amount the Agent
pays on any drawing under a Letter of Credit issued hereunder by 11:00 a.m.
(Chicago time) on the date when such drawing is paid, the Borrowers shall be
deemed to have requested a Domestic Rate Loan in the amount of such
reimbursement obligation, (ii) the Borrowers shall pay fees in connection with
each Letter of Credit as set forth in Section 2.17 hereof, (iii) prior to the
occurrence of a Default or an Event of Default the Agent will not call for
additional collateral security for the obligations of the Borrowers under the
Applications other than the collateral security contemplated by this Agreement
and the Security Agreements, and (iv) prior to the occurrence of a Default or an
event of Default the Agent will not call for the funding of a Letter of Credit
by such Borrower prior to being presented with a drawing thereunder (or, in the
event a time draft is presented, prior to its due date).
(e) Participations in Letters of Credit. Each Lender shall participate on
a pro rata basis in accordance with its Facility A Commitment in the Letters of
Credit issued by the Agent, which participation shall automatically arise upon
the issuance of each Letter of Credit. Each Lender unconditionally agrees that
in the event the Agent is not immediately reimbursed by the applicable Borrower
for the amount paid by the Agent on any draft presented under a Letter of
Credit, then in that event such Lender shall pay to the Agent such Lender's pro
rata share of the amount of each draft so paid and in return such Lender shall
automatically receive
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an equivalent percentage participation in the rights of the Agent to obtain
reimbursement from such Borrower for the amount of such draft, together with
interest thereon as provided for herein. The obligations of the Lenders to the
Agent under this subsection shall be absolute, irrevocable and unconditional
under any and all circumstances whatsoever (except, without limiting the
Borrowers' obligations under each Application, to the extent the Borrowers are
relieved from their obligation to reimburse the Agent for a drawing under a
Letter of Credit because of the Agent's gross negligence or willful misconduct
in determining that documents received under a Letter of Credit comply with the
terms thereof) and shall not be subject to any set-off, counterclaim or defense
to payment which any Lender may have or have had against either Borrower, the
Agent, any other Lender or any other party whatsoever. In the event that any
Lender fails to honor its obligation to reimburse the Agent for its pro rata
share of the amount of any such draft, then in that event (i) each other Lender
shall pay to the Agent its pro rata share of the payment due the Agent from the
defaulting Lender, (ii) the defaulting Lender shall have no right to participate
in any recoveries from such Borrower in respect of such draft and (iii) all
amounts to which the defaulting Lender would otherwise be entitled under the
terms of this Agreement or any of the other Loan Documents shall first be
applied to reimbursing the Lenders for their respective pro rata shares of the
defaulting Lender's portion of the draft, together with interest thereon as
provided for herein. Upon reimbursement to the other Lenders (pursuant to clause
(iii) above or otherwise) of the amount advanced by them to the Agent in respect
of the defaulting Lender's share of the draft together with interest thereon,
the defaulting Lender shall thereupon be entitled to its participation in the
Agent's right of recovery against the applicable Borrower in respect of the
amount paid by the Agent under the Letter of Credit.
Section 2.5. Rate Options; Payment on Last Day of Interest Period. The
Loans may be Domestic Rate Loans or Eurodollar Loans, or a combination thereof,
selected by the Borrowers in accordance with Section 2.9. Each Loan shall be
paid in full by the Borrowers on the last day of the Interest Period applicable
thereto or, if earlier, on the Revolving Credit Termination Date.
Section 2.6. Optional Principal Payments. The Borrowers may from time to
time prepay Domestic Rate Loans in whole or in part, without premium or penalty,
upon notice to the Lender not later than 12:00 noon Chicago time on the day of
such prepayment (which shall be a Business Day). Any such partial prepayment of
Domestic Rate Loans outstanding under Facility A shall be in a minimum aggregate
amount of $100,000, or any integral multiple thereof. Any such partial
prepayment of Domestic Rate Loans outstanding under Facility B or Facility C
shall be in a minimum aggregate amount of $500,000, and in integral multiples of
$100,000. A Eurodollar Loan may not be paid prior to the last day of the
applicable Interest Period.
Section 2.7. Reduction of Commitments. The Borrowers may permanently
reduce the Commitments under any Facility, in whole or
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in part, and in integral multiples of $5,000,000 if in part, upon at least five
Business Days' joint written notice to the Agent, which shall specify the amount
of any such reduction and the applicable Facility, provided, however, that the
amount of the Commitments under a Facility may not be reduced below an amount
such that the outstanding principal amount of the Loans and the aggregate
undrawn face amount of outstanding Letters of Credit under such Facility would
exceed the Commitments under such Facility as so reduced.
Section 2.8. Disbursement of Loans. Not later than 1:30 p.m. (Chicago
time) on each Borrowing Date, each Lender shall, subject to Article IV, make
available its Loan in funds immediately available in Chicago, Illinois at the
principal office of the Agent, except to the extent such Borrowing is a
reborrowing, in whole or in part, of the principal amount of a maturing
Borrowing of Loans (a "Refunding Borrowing"), in which case each Lender shall
record the Loan made by it as a part of such Refunding Borrowing on its books
and records or on a schedule to its applicable Note, as provided in Section
2.13, and shall effect the repayment, in whole or in part, as appropriate, of
its maturing Loan through the proceeds of such new Loan. The Agent shall make
the proceeds of each Borrowing available to the applicable Borrower at the
Agent's principal office in Chicago, Illinois.
Section 2.9. Method of Selecting Rate Options and Interest Periods.
(a) Notice to Agent. The Borrowers shall select the Rate Options and
Interest Periods applicable to each Loan from time to time. An Authorized
Person designated by a Borrower shall give telecopy or telephonic notice (a
"Borrowing Notice") to the Agent (which notice shall be irrevocable once given
and, if by telephone, shall be promptly confirmed in writing) not later than (i)
12:00 noon Chicago time on the Borrowing Date for each Domestic Rate Loan and
(ii) 10:00 a.m. Chicago time three Business Days before the Borrowing Date for
each Eurodollar Loan, specifying:
(i) the Borrower to which the Borrowing is to be made,
(ii) the Borrowing Date, which shall be a Business Day, of such
Borrowing,
(iii) the amount of such Borrowing,
(iv) the Rate Option selected for such Borrowing,
(v) the Facility under which such Borrowing shall apply, and, in the
case of Facility C Loans a description of the proposed Investment or
Acquisition to be financed with such Loan, and
(vi) in the case of each Eurodollar Loan, the Interest Period
applicable thereto.
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The Borrowers may not select with respect to Eurodollar Loans for any Facility
an Interest Period that extends beyond the Revolving Credit Termination Date.
(b) Notice to the Lenders. The Agent shall give prompt telephonic, telex
or telecopy notice to each of the Lenders of any borrowing request received
pursuant to Section 2.9(a) and, if such notice requests the Lenders to make
Eurodollar Loans, the Agent shall give notice to the Borrower and each of the
Lenders by like means of the interest rate applicable thereto promptly after the
Agent has made such determination.
(c) Rate Determinations. The Agent shall determine each interest rate
applicable to the Loans hereunder, and its determination thereof shall be
conclusive and binding except in the case of manifest error or willful
misconduct.
Section 2.10. Minimum Amount of Each Loan. Each Loan shall be in the
minimum amount of $100,000 (and in multiples of $100,000 if in excess thereof),
provided, however, that any Domestic Rate Loan under the Facility A Commitments
may be in the aggregate amount of the unused portion of the Facility A
Commitments and any Facility A Loan may be in the amount of a drawing paid under
a Letter of Credit.
Section 2.11. Rate After Maturity. Except as provided in the next
sentence, any Loan not paid at maturity, whether by acceleration or otherwise,
shall bear interest until paid in full at a rate per annum equal to the Domestic
Rate plus 3% per annum. In the case of a Eurodollar Loan the maturity of which
is accelerated, such Eurodollar Loan shall bear interest, for the remainder of
the applicable Interest Period, at the higher of the rate otherwise applicable
to such Interest Period plus 3% per annum or the Domestic Rate plus 3% per
annum.
Section 2.12. Place and Application of Payments. All amounts payable under
this Agreement by the Borrowers shall be made to the Agent by no later than
12:00 noon (Chicago time) at the principal office of the Agent in Chicago,
Illinois (or such other location in the State of Illinois as the Agent may
designate to the Borrowers) for the benefit of the Lenders. Any payments
received after such time shall be deemed to have been received by the Agent on
the next Business Day. All such payments shall be made in lawful money of the
United States of America, in immediately available funds at the place of
payment, without setoff or counterclaim. The Agent will promptly thereafter
cause to be distributed like funds relating to the payment of principal or
interest on Loans or fees ratably to the Lenders and like funds relating to the
payment of any other amount payable to the Lender to such Lender, in each case
to be applied in accordance with the terms of this Agreement.
Section 2.13. The Notes. (a) Each Facility A Loan made to a borrower by a
Lender shall be evidenced by a single promissory note of the Borrowers payable
to such Lender in the amount of its Facility A Commitment and otherwise in the
form of Exhibit A-1
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hereto. Each such promissory note is hereinafter referred to as a "Facility A
Note" and collectively as the "Facility A Notes".
(b) Each Facility B Loan made to a Borrower by a Lender shall be evidenced
by a single promissory note of the Borrowers payable to such Lender in the
amount of its Facility B Commitment and otherwise in the form of Exhibit A-2
hereto. Each such promissory note is hereinafter referred to as a "Facility B
Note" and collectively as the "Facility B Notes".
(c) Each Facility C Loan made to a Borrower by a Lender shall be evidenced
by a single promissory note of the Borrowers payable to such Lender in the
amount of its Facility C Commitment and otherwise in the form of Exhibit A-3
hereto. Each such promissory note is hereinafter referred to as a "Facility C
Note" and collectively as the "Facility C Notes".
(d) Each Lender shall record on its books and records or on a schedule to
its Note the amount of each Loan made by it to a Borrower, all payments of
principal and the principal balance from time to time outstanding thereon, the
type of such Loan and, for any Eurodollar Loan, the Interest Period and interest
rate applicable thereto; provided that upon the transfer of any Note all such
amounts shall be recorded on a schedule to such Note. The record thereof,
whether shown on such books and records of a Lender or on a schedule to any
Note, shall be prima facie evidence as to all such matters; provided, however,
that the failure of any Bank to record any of the foregoing or any error in any
such record shall not limit or otherwise affect the obligation of the Borrowers
to repay all Loans together with accrued interest thereon. At the request of
any Lender and upon such Lender tendering to the Borrowers the Note to be
replaced, the Borrowers shall furnish a new Note to such Lender to replace any
outstanding Note, and at such time the first notation appearing on a schedule on
the reverse side of, or attached to, such Note shall set forth the aggregate
unpaid principal amount of all Loans, if any, then outstanding thereon.
Section 2.14. Applicable Interest Rates.
(a) Domestic Rate Loans. Each Domestic Rate Loan made by a Lender shall
bear interest (computed (x) on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed or (y), at all times that the Domestic Rate
is based on the rate described in clause (B) of the definition thereof, on the
basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is made until maturity (whether by
acceleration or otherwise) at a rate per annum equal to the Domestic Rate from
time to time in effect, payable quarterly in arrears on the last day of each
March, June, September and December and on the last day of the applicable
Interest Period and at maturity (whether by acceleration or otherwise).
(b) Eurodollar Loans. Each Eurodollar Loan made by a Lender shall bear
interest (computed on the basis of a year of 360 days
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and actual days elapsed) on the unpaid principal amount thereof from the date
such Loan is made until maturity (whether by acceleration or otherwise) at a
rate per annum equal to the sum of the applicable Eurodollar Margin plus the
Adjusted IBOR Rate applicable to such Loan, payable on the last day of the
applicable Interest Period, at maturity (whether by acceleration or otherwise)
and, if the applicable Interest Period is longer than three months, on each day
occurring every three months after the date such Loan is made.
Section 2.15. Lending Installation. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Note issued to a Lender shall be deemed held
by such Lender for the benefit of such Lending Installation. Subject to Section
3.5, a Lender may, by notice to the Borrowers, designate a Lending Installation
through which Loans will be made by it and for whose account payments on Loans
are to be made.
Section 2.16. Mandatory Prepayments.
(a) Borrowing Base Deficiency. Each Borrower covenants and agrees that if
at any time the sum of the aggregate principal amount of outstanding Facility A
Loans plus the then outstanding amount of Letters of Credit shall be in excess
of the Borrowing Base as then determined and computed, the Borrowers shall
immediately and without notice or demand pay over the amount of the excess to
the Agent for the account of the Lenders as and for a mandatory prepayment on
such Obligations, with each such prepayment first to be applied to the Facility
A Loans until payment in full thereof with any remaining balance to be held by
the Agent as collateral security for the Obligations owing under the
Applications.
(b) Cleanup Period. During each four month period commencing October 1 of
each year to and including February 1 of the following year, the Borrowers shall
reduce the Obligations (other than Letters of Credit) outstanding under the
Facility A Commitments to zero for a period of 30 consecutive days.
(c) Acquisitions and Investments. On the day either Borrower receives
proceeds from the sale of all or any portion of any Investment or Acquisition
which was purchased or acquired with the proceeds of any Facility B Loan or
Facility C Loan or from a prepayment of Notes or a liquidating dividend, the
Borrowers shall make a mandatory prepayment of the Loans the proceeds of which
were used to purchase or acquire such Investment or Acquisition to be applied to
the installments due on such Loan in the inverse order of maturity and
thereafter any remaining proceeds (net of taxes) shall be applied pro rata to
the installments of all other Facility B and Facility C Loans then outstanding
(except that the Borrowers may retain any such remaining proceeds that may be
derived from the direct or indirect sale of the Borrowers' interest in the New
Shorewood LP).
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Section 2.17. Fees.
(a) Commitment Fee. For the period from and including the date hereof to
but not including the applicable Revolving Credit Termination Date, the
Borrowers shall pay to the Agent for the account of the Lenders a commitment fee
at the rate of 0.15% per annum (computed on the basis of a year of 360 days for
the actual number of days elapsed) on the average daily unused portion of the
Facility A Commitments and the Facility C Commitments. Such commitment fee shall
be payable quarterly in arrears on the last day of each March, June, September
and December in each year (commencing September 30, 1996) and on the Revolving
Credit Termination Date.
(b) Letter of Credit Fees. On the last day of each calendar quarter,
commencing on September 30, 1996, the Borrowers shall pay to the Agent for the
pro rata account of the Lenders a letter of credit fee computed at the rate of
0.50% per annum (computed on the basis of a year of 360 days for the actual
number of days elapsed) on the daily average face amount of Letters of Credit
outstanding during such quarter. In addition to the letter of credit fee called
for above, the Borrowers further agree to pay to the Agent for its own account
such processing and transaction fees and charges as the Agent from time to time
customarily imposes in connection with any amendment, cancellation, negotiation
and/or payment of letters of credit and drafts drawn thereunder.
(c) Agent's Fee. The Borrowers shall pay to the Agent, for its own use and
benefit, an Agent's fee as mutually agreed upon by the Borrowers and the Agent.
Section 2.18. Discretionary Extension of Revolving Credit Termination
Date. On or before June 1, 1998, the Borrowers may request in writing to the
Agent a two year extension of the Revolving Credit Termination Date. The Agent
will promptly give notice thereof to the Lenders. The Lenders will notify the
Borrowers in writing by August 1, 1998, whether they agree to provide such
extension of the Revolving Credit Termination Date. If a Lender fails to notify
the Borrowers or notifies them that no such extension will take place, the
Revolving Credit Termination Date will take place as scheduled. If each Lender
notifies the Borrowers that they agree to such extension, the Revolving Credit
Termination Date will automatically be extended to September 6, 2001.
ARTICLE III
CHANGE IN CIRCUMSTANCES
Section 3.1. Yield Protection. If any law or any governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof, or compliance of any Lender with such,
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(i) subjects a Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrowers
(excluding taxation of the overall net income of such Lender or applicable
Lending Installation), or changes the oasis of taxation of payments to such
Lender in respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit, capital, or similar requirement against
assets of, deposits with or for the account of, commitments of, or credit
extended by, such Lender or any applicable Lending Installation (other than
reserves and assessments taken into account in determining the interest
rate applicable to Eurodollar Loans), or
(iii) imposes any other condition the result of which is to increase
the cost to a Lender or any applicable Lending Installation of making,
funding or maintaining loans or reduces any amount receivable by such
Lender or any applicable Lending Installation in connection with loans, or
requires a Lender or any applicable Lending Installation to make any
payment calculated by reference to the amount of loans held or interest
received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender (which demand shall set forth in
reasonable detail the basis for, and a computation of, the amount thereof), the
Borrowers shall pay such Lender that portion of such increased expense incurred
or reduction in an amount received, or (in the case of a capital requirement)
pay to such Lender such amount as shall compensate such Lender for the reduction
in its return on capital caused by such requirement, which such Lender
reasonably determines is attributable to making, funding and maintaining its
Loans and its Commitments.
Section 3.2. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time after the date hereof any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for any Lender to make or continue to maintain Eurodollar Loans or to give
effect to its obligations as contemplated hereby, such Lender shall promptly
give notice thereof to the Borrowers, with a copy to the Agent, and such
Lender's obligations to make or maintain Eurodollar Loans under this Agreement
shall terminate until it is no longer unlawful for such Lender to make or
maintain Eurodollar Loans. The Borrowers shall prepay on demand the outstanding
principal amount of any such affected Eurodollar Loans, together with all
interest accrued thereon and all other amounts then due and payable to such
Lender under this Agreement; provided, however, subject to all of the terms and
conditions of this Agreement, the Borrowers may then elect to borrow the
principal amount of the affected Eurodollar Loan from such Lender by means of a
Domestic Rate Loan from such
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Lender that shall not be made ratably by the Lenders but only from such affected
Bank.
Section 3.3 Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, IBOR. If on or before the first day of any Interest Period for
any Borrowing of Eurodollar Loans:
(a) the Agent determines that deposits (in the applicable amount) are
not being offered to it in the eurodollar interbank market for such
Interest Period, or
(b) Lenders having 50% or more of the aggregate amount of the
Commitments advise the Agent that IBOR as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding their
Eurodollar Loans for such Interest Period,
then the Agent shall forthwith give notice thereof to the Borrowers and the
Lenders, whereupon until the Agent notifies the Borrowers that the circumstances
giving rise to such suspension no longer exist, the obligations of the Lenders
to make Eurodollar Loans shall be suspended.
Section 1.4. Funding Indemnity. If any Lender incurs any loss, cost or
expense (including, without limitation, any loss of profit, and any loss, cost
or expense in the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund or maintain any Eurodollar Loan or in relending
or reinvesting such deposits or amounts paid or prepaid to such Lender) as a
result of:
(a) any payment or prepayment of a Eurodollar Loan on a date other
than the last day of its Interest Period,
(b) any failure (because of a failure to meet the conditions of
Article IV or otherwise) by the Borrowers to borrow a Eurodollar Loan on
the date specified in a notice given pursuant to Section 2.8, or
(c) any acceleration of the maturity of a Eurodollar Loan,
then, upon the demand of such Lender, the Borrower shall pay to the Lender such
amount as will reimburse the Lender for such loss, cost or expense. If any
Lender makes such a claim for compensation, it shall provide to the Borrowers
(with a copy to the Agent) a certificate executed by an officer of such Lender
setting forth the amount of such loss, cost or expense in reasonable detail and
the amount shown on such certificate, if reasonably calculated, shall be
conclusive.
Section 3.5. Lender Certificate; Survival of Indemnity. To the extent
reasonably possible, a Lender shall designate an alternate Lending Installation
with respect to its Eurodollar Loans to reduce any liability of the Borrowers to
the Lender under
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Section 3.1 or to avoid the unavailability of a Rate Option under Section 3.3,
so long as such designation is not disadvantageous to the Lender. A certificate
of the Lender as to the amount due under Section 3.1 or 3.4 shall be final,
conclusive and binding on the Borrowers in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though the Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the Adjusted IBOR applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the certificate shall be payable on demand after
receipt by the Borrowers of the certificate. The obligations of the Borrowers
under Sections 3.1 and 3.4 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1. Effectiveness of Agreement.
(a) This Agreement shall only become effective when, and the Lenders shall
not be required to make the initial Loan hereunder and the Agent shall not be
required to issue the initial Letter of Credit unless, the Borrowers have
furnished to the Agent for each Lender:
(i) Copies of the partnership agreements of each Borrower and
supporting Subsidiary that is a partnership, certified by a general partner
or other duly authorized officer thereof to be a true, correct and complete
copy thereof.
(ii) Copies, certified by the secretary or assistant secretary of each
Supporting Subsidiary that is a corporation, and of each corporate general
partner in the case of each Borrower and each Supporting Subsidiary that is
a partnership having a corporation as its general partner, of its board of
directors' resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for the Lender) authorizing the execution of the Loan
Documents.
(iii) Certificates, executed by a general partner of each Borrower and
each Supporting Subsidiary that is a partnership, and by the secretary or
assistant secretary of each Supporting Subsidiary that is a corporation,
and of each corporate general partner in the case of each Borrower and each
Supporting Subsidiary that is a partnership having a corporation as its
general partner, which shall identify by name and title and bear the
signature of the partners or officers authorized to sign
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the Loan Documents and of the Authorized Persons and which shall designate
the Authorized Persons.
(iv) A written opinion of Hagan & Associates and GoodSmith, Gregg &
Unruh or other counsel to the Borrowers and Supporting Subsidiaries
acceptable to the Lenders, addressed to the Lenders in substantially the
form of Exhibit B-1 and B-2 hereto.
(v) Such Lender's Notes executed by the Borrowers.
(vi) An executed copy of each Security Agreement together with any
financing statements requested by the Agent in connection therewith.
(vii) An executed Borrowing Base certificate in the form attached
hereto as Exhibit G showing the computation of the Borrowing Base in
reasonable detail as of the close of business on July 30, 1996.
(viii) The Liens granted to the Agent under the Security Agreements
shall have been perfected in a manner satisfactory to each Lender and the
Agent shall have a perfected security interest in the investments listed
under Item 1 on Schedule VII hereto.
(ix) The Borrowers shall have terminated the Amended and Restated
Credit Agreement dated as of June 15, 1994 among the Borrowers and Harris
Trust and Savings Bank, all amounts payable thereunder shall have been paid
or shall be paid with the proceeds of the first Borrowing hereunder and
Harris Trust and Savings Bank shall have released any Liens granted to it
by the Borrowers and any Supporting Subsidiary (by executing below Harris
Trust and Savings Bank waives compliance with the requirement for notice of
termination of the "Commitments" thereunder).
(x) DSA-LSPL, Inc. and DSA-LSAM, Inc. shall have consented to the
terms hereof in form and substance satisfactory to the Lenders.
(xi) Such other documents as the Agent or Its counsel may have
reasonably requested.
Section 4.2. Each Loan. The Lenders shall not be required to make any
Loan nor shall the Agent be obligated to issue any Letter of Credit unless on
the applicable Borrowing Date:
(a) There exists no Default or, solely in the case of a Loan that
would increase the aggregate principal amount of all outstanding Loans
(after giving effect to any concurrent repayment of Loans) or the increase
in or issuance of a Letter of Credit, Unmatured Default; provided that
notwithstanding Section 2.9, at any time
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that an Unmatured Default exists the Borrowers may not request a Eurodollar
Loan and all Loans made while an Unmatured Default exists shall be made as
Domestic Rate Loans.
(b) In the case of a Loan that would increase the aggregate principal
amount of all outstanding Loans (after giving effect to any concurrent
repayment of Loans) or the increase in or issuance of a Letter of Credit,
the representations and warranties contained in Article V are true and
correct as of such Borrowing Date except for changes in the Schedules
hereto reflecting transactions permitted by this Agreement.
(c) All legal matters incident to the making of such Loan shall be
satisfactory to the Lenders and their counsel.
(d) Taking into account such Loan, no prepayment would be required
under Section 2.16.
(e) The aggregate outstanding principal amount of all Facility A Loans
and the aggregate face amount of all outstanding Letters of Credit shall
not exceed the lesser to the Facility A Commitments then in effect and the
Borrowing Base as then computed and determined.
(f) The aggregate outstanding principal amount of all Facility A Loans
and the aggregate face amount of all outstanding Letters of Credit plus the
aggregate principal amount of all Facility B Loans shall not exceed the
Facility A Commitments then in effect.
(g) In the case of the issuance of any Letter of Credit, the Agent
shall have received a properly completed Application therefor together with
the fees called for hereby.
Each Borrowing Notice with respect to each Loan shall constitute a
representation and warranty by the Borrowers that the conditions contained in
Sections 4.2(a), (b), (d) and, if applicable, (e) have been satisfied (and each
request by a Borrower for the issuance of a Letter of Credit shall constitute a
representation and warranty by the Borrowers that the conditions contained in
Sections 4.2 (a), (b), (d) and (e) for making a Loan on the date of issuance of
the Letter of Credit have been satisfied).
Section 4.3. New Supporting Subsidiary. As a condition to any Subsidiary
becoming a Supporting Subsidiary after the date hereof, the Borrowers shall have
delivered or caused such Subsidiary to deliver to the Agent for each Lender the
following documentation:
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(i) Copies of the partnership agreements of such Subsidiary, certified
by a general partner or other duly authorized officer thereof to be a true,
correct and complete copy thereof.
(ii) Copies, certified by the secretary or assistant secretary of each
corporate general partner (if any) of such Subsidiary of its board of
directors' resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for the Lender) authorizing the execution of the Loan
Documents to which such Subsidiary, as a Supporting Subsidiary, is a party.
(iii) Certificates, executed by a general partner of such Subsidiary
and by the secretary or assistant secretary of each corporate general
partner of such Subsidiary (if any), which shall identify by name and title
and bear the signature of the partners or officers authorized to sign the
Loan Documents to which such Subsidiary, as a Supporting Subsidiary, is a
party.
(iv) A written opinion of Hagan & Associates or other counsel to such
Subsidiary acceptable to the Lenders, addressed to the Lenders in form and
substance substantially similar to the opinions expressed in Exhibits B-1
and B-2 with respect to the Supporting Subsidiaries.
(v) A duly executed Assumption and supplemental Security Agreement in
the form attached as Exhibit A to the Subsidiary Security Agreement.
(vi) A duly executed Assumption and Supplemental Guaranty Agreement in
the form attached as Exhibit A to the Guaranty Agreement.
(vii) Financing statements duly executed by such subsidiary and duly
filed in all jurisdictions in which, in the judgment of the Agent, the same
are required to be filed in order to perfect the security interests created
by such Subsidiary, as a Supporting Subsidiary, under the Subsidiary
Security Agreement.
(viii) Current searches in such Uniform Commercial Code filing offices
as the Agent shall require, prepared by independent search companies
acceptable to the Agent, evidencing no filings against any of the
collateral pledged by such Subsidiary as a Supporting Subsidiary, under the
Security Documents.
(ix) Such other documents as the Agent or Its counsel may have
reasonably requested.
ARTICLE V
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lenders that:
Section 5.1. Existence and Standing. Each of the Borrowers is a limited
partnership duly formed, validly existing and (where applicable) in good
standing under the laws of its jurisdiction of formation, and all such
partnerships have the requisite authority to conduct their businesses in each
jurisdiction in which conducted where the failure to have such authority could
have a material adverse effect on the business, financial condition or results
of operations of such entity. The general partners of LPL and LPML are limited
partnerships duly formed, validly existing and in good standing under the laws
of the jurisdiction of their formation.
Section 5.2. Authorization and Validity. The Borrowers have the power and
authority and legal right to execute and deliver the Loan Documents to which
they are parties and to perform their obligations thereunder. The execution and
delivery by the Borrowers of the Loan Documents to which they are parties and
the performance of their obligations thereunder have been duly authorized by
appropriate corporate or partnership proceedings and the Loan Documents executed
by the Borrowers constitute legal, valid and binding obligations of the
Borrowers enforceable against them in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
Section 5.3. Compliance with Laws and Contracts; Senior Liabilities.
Neither the execution and delivery of the Loan Documents, nor the consummation
of the transactions therein contemplated, nor compliance with the provisions
thereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrowers, the partnership agreement
of any Borrower or the provisions of any indenture, instrument or agreement to
which any Borrower is a party or is subject, or by which it, or its property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than Liens permitted under Section
6.15(g) hereof) in, of or on the property of any Borrower pursuant to the terms
of any such indenture, instrument or agreement. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
the execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents except for filings and
recordings of such financing statements executed by the Borrowers and Supporting
Subsidiaries and delivered to the Agent required in connection with perfection
of the security interests and Liens granted pursuant to the Security Agreements.
The Obligations are and shall at all times constitute "Senior Liabilities" as
defined in Section 5 of each of the promissory notes evidencing the Dai-Ichi
Indebtedness and are
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entitled to all of the benefits of the subordination provisions in such Section
5.
Section 5.4. Financial Statements. The December 31, 1995 combined
financial statements of LPL and LPML and their Subsidiaries heretofore delivered
to the Lenders were prepared in accordance with Agreement Accounting Principles
and fairly present the financial condition and operations of LPL and LPML and
their Subsidiaries at such date and the results of their operations for the
period then ended.
Section 5.5. Material Adverse Change. No material adverse change in the
business, financial condition, prospects or results of operations of the
Borrowers has occurred since the date of the financial statements referred to in
Section 5.4 (except changes representing customary cyclical trends of the
Borrowers within the fiscal year and consistent with historical performance).
Section 5.6. Taxes. The Borrowers and the Affiliates have filed all
United States federal tax returns and all other tax returns, if any, which were
required to be filed and have paid all taxes, if any, due and payable by them
pursuant to said returns or pursuant to any assessment received by the Borrowers
or any Affiliate, except such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. No tax liens have
been filed and no claims are being asserted with respect to any such taxes. The
charges, accruals and reserves on the books of the Borrowers and the Affiliates
in respect of any taxes or other governmental charges are adequate.
Section 5.7. Litigation. There is no proceeding pending or, to the
knowledge of any of the Borrowers, threatened against or affecting any Borrower
or any Affiliate or their assets which has a reasonable possibility of
materially adversely affecting the business, financial condition or results of
operations of any Borrower or Supporting Subsidiary or of the Borrowers and the
Affiliates, taken as a whole, or the ability of any Borrower or any Supporting
Subsidiary to perform its obligations under the Loan Documents.
Section 5.8. Affiliates. Schedule "II" hereto contains an accurate list
of the Affiliates, setting forth their respective jurisdictions of formation or
incorporation, the partners or shareholders thereof and the percentages of their
respective partnership or shareholder interests.
Section 5.9. ERISA. Neither the Borrower nor any Affiliate has a Plan.
Section 5.10. Accuracy of Information. No information, exhibit or report
furnished by any Borrower to the Lender in connection with a Loan or the
negotiation of the Loan Documents contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading.
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<PAGE>
Section 5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of any Borrower or Affiliate which are
subject to any limitation on their sale or pledge, or any other restriction,
under any Loan Document.
Section 5.12. Material Agreements. None of the Borrowers nor any
Affiliate is a party to any agreement or instrument or subject to any charter or
other corporate restriction materially and adversely affecting its business,
properties or assets, operations or condition (financial or otherwise). None of
the Borrowers nor any Affiliate is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in (i)
any agreement to which it is a party, which default might have a material
adverse effect on the business, properties or assets, operations, or condition
(financial or otherwise) of any of the Borrowers or Supporting Subsidiaries or
of the Borrowers and the Affiliates taken as a whole or (ii) any agreement or
instrument evidencing or governing Indebtedness of any of the Borrowers or
Supporting Subsidiaries.
Section 5.13. Approvals. No authorization, consent, license, exemption or
filing or registration with any court or governmental department, agency or
instrumentality, or any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery or performance of the Loan Documents
by the Borrowers except for such approvals and consents which have been obtained
and are in full force and effect.
Section 5.14. Subordinated Indebtedness. The subordination provisions of
the Dai-Ichi Indebtedness (including, without limitation, the subordination of
any Liens granted the holders of the Dai-Ichi Indebtedness) are enforceable
against the Borrowers and the holders thereof, and all Loans, reimbursements
obligations under Letters of Credit, and interest thereon are within the
definition of "Senior Liabilities" under the notes evidencing the Dai-Ichi
Indebtedness.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Lenders shall otherwise
consent in writing:
Section 6.1. Financial Reporting. The Borrowers will maintain and cause
each Affiliate to maintain a system of accounting established and administered
in accordance with generally accepted accounting principles, and furnish to the
Lenders:
(a) By March l of each calendar year, preliminary fiscal year end financial
statements for LPL, LPML and their Subsidiaries for the preceding fiscal year,
and as soon as available but in no event later than 120 days after the close of
each fiscal year, an
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unqualified audit report certified by independent certified public accountants,
reasonably acceptable to the Lenders, prepared in accordance with Agreement
Accounting Principles on a combined basis for LPL and LPML and their
Subsidiaries including balance sheets as of the end of such period, related
profit and loss, reconciliation of surplus and cash flow statements, accompanied
by any management letter prepared by said accountants (whether for the partners
or any committee of the partners) and by a certificate of said accountants that,
in the course of their examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or Unmatured Default
with respect to Sections 6.10, 6.11, 6.12, 6.13, 6.14, 6.16, 6.17, 6.18, 6.19,
6.20, 6.21, 6.22, 7.12 and 7.13 of this Agreement, or if, in the opinion of such
accountants, any such Default or Unmatured Default shall exist, stating the
nature and status thereof.
(b) As soon as available but in no event later than 60 days after the close
of the first, second and third quarterly periods of each fiscal year, on a
consolidated basis for LPL and LPML and their Subsidiaries, unaudited balance
sheets as at the close of each such period and profit and loss and
reconciliation of surplus statements for the period from the beginning of such
fiscal year to the end of such quarter, all certified on behalf of the Borrowers
by the chief financial officers or treasurers (or designees acceptable to the
Lenders) of the Borrowers.
(c) Together with the financial statements required hereunder, a compliance
certificate in substantially the form of Exhibit F hereto signed on behalf of
the Borrowers by the chief financial officers or treasurers (or designees
acceptable to the Lenders) of the Borrowers, showing the calculations necessary
to determine compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default exists, stating
the nature and status thereof, and describing any existing or anticipated
material adverse change from the cash flow projections delivered pursuant to
clause (g) below for the period covered by such compliance certificate.
(d) Within 20 days after the close of each calendar month, a Borrowing Base
Certificate in the form of Exhibit G hereto executed by an Authorized Person of
either Borrower, showing the computation of the Borrowing Base in reasonable
detail as of the close of business on the last day of such month.
(e) Within 270 days after the close of each fiscal year, a statement of the
Unfunded Liabilities of each Plan (if any), certified as correct by an actuary
enrolled under ERISA.
(f) As soon as possible and in any event within 10 days after either
Borrower knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by a partner or chief financial officer of such Borrower,
describing said Reportable Event and the action which it proposes to take with
respect thereto.
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<PAGE>
(g) By March 31 of each calendar year a business plan for the then current
fiscal year and a projection by the Borrowers of their combined cash flows for
the current fiscal year, and promptly upon experiencing any material adverse
change from such projected cash flows a written description of such change.
(h) Promptly after execution of any amendment to the partnership agreement
of either Borrower a true and correct copy of such amendment.
(i) Such other information (including non-financial information) as any
Lender may from time to time reasonably request.
Section 6.2. Use of Proceeds. The Borrowers will use the proceeds of the
Loans under Facility A solely for general business purposes. The proceeds of
Loans under Facility B and Facility C will be used solely to fund Investments
and Acquisitions permitted under Section 6.13(k) or (l) or consented to by the
Required Lenders, in their absolute discretion, after receipt of pro forma
financial information of the type described in Section 6.13(1) and such other
information as any Lender may request (or, in the case of Facility B, any other
use consented to by the Lenders in their absolute discretion). The Borrowers
will not, nor will they permit any of their Affiliates to, use any of the
proceeds of the Loans to purchase or carry any "margin stock" (as defined in
Regulation U) or to make any other Acquisition or for any purpose other than as
set forth in the preceding two sentences. In no event will any proceeds from
Loans be used, directly or indirectly, to pay any of the principal of the Dai-
Ichi Indebtedness, all such payments to be made exclusively from capital
contributions made to LPL and LPML by their partners.
Section 6.3. Notice of Default. The Borrowers will, and will cause each
of their Affiliates to, give prompt notice in writing to each Lender of the
occurrence of any Default or Unmatured Default and of any other development,
financial or otherwise, which has a reasonable possibility of having a material
adverse effect on its business, properties or affairs or the ability of the
Borrowers to repay the Obligations.
Section 6.4. Conduct of Business. The Borrowers will, and will cause each
of their Affiliates to, carry on and conduct their business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted, or has been conducted, by the Borrowers and their
Affiliates and do all things necessary to remain validly existing and, where
applicable, in good standing in its jurisdiction of incorporation or formation
and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
Section 6.5. Taxes. The Borrowers will, and will cause each of their
Affiliates to, pay when due all taxes, assessments and governmental charges and
levies upon it or its income, profits or property to the extent payable by the
Borrowers or any of their
36
<PAGE>
Affiliates, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside.
Section 6.6. Insurance. The Borrowers will, and will cause each of their
Affiliates to, maintain with financially sound and reputable insurance companies
insurance on all their property in such amounts and covering such risks as is
consistent with sound business practice, and the Borrowers will furnish to the
Lender upon request full information as to the insurance carried.
Section 6.7. Compliance with Laws. The Borrowers will, and will cause
each of their Affiliates to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject.
Section 6.8. Maintenance of Properties. The Borrowers will, and will
cause each of their Affiliates to, do all things necessary to maintain,
preserve, protect and keep its properties in good repair, working order and
condition, and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times.
Section 6.9. Inspection. The Borrowers will, and will cause each of their
Affiliates to, permit each Lender, by its representatives and agents, to inspect
any of the properties, corporate books and financial records of the Borrowers
and each of their Affiliates, to examine and make copies of the books of
accounts and other financial records of the Borrowers and each of their
Affiliates, and to discuss the affairs, finances and accounts of the Borrowers
and each of their Affiliates with, and to be advised as to the same by, their
respective officers, all at such reasonable times and intervals as the Lender
may designate.
Section 6.10. Indebtedness. The Borrowers will not, nor will they permit
any of their Affiliates to, create, incur or suffer to exist any Indebtedness,
except:
(a) the Loans;
(b) Indebtedness existing on the date hereof and described on Schedule
"III" hereto;
(c) Indebtedness of (i) a Borrower to the other Borrower or to a Supporting
Subsidiary, (ii) a Supporting Subsidiary to a Borrower or to another Supporting
Subsidiary, or (iii) Affiliates that are not Supporting Subsidiaries to other
Affiliates that are not Supporting Subsidiaries;
(d) Indebtedness of Affiliates that are not Supporting Subsidiaries to
Borrowers, or Borrowers to Affiliates that are not Supporting Subsidiaries, up
to an aggregate principal amount not to exceed $1,000,000 at any one time
outstanding;
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(e) Indebtedness of LPML to its partners or of LPL to its partners not
exceeding $1,000,000 outstanding at any time in the aggregate for all such
Indebtedness;
(f) Capitalized Lease Obligations (in addition to that referred to in
Section 6.10(b)) not exceeding $500,000 outstanding at any time, provided,
however, that Capitalized Lease Obligations (in addition to that referred to in
Section 6.10(b)) exceeding $500,000 outstanding at any time may be incurred if,
prior to incurring such additional Capitalized Lease Obligations, the Borrowers
reduce the Facility A Commitments by the amount of such additional Capitalized
Lease Obligations in the manner set forth in Section 2.7 without regard to the
minimum amount required by Section 2.7;
(g) the Dai-Ichi Indebtedness;
(h) Guaranties permitted by Section 6.14; and
(i) Indebtedness of LPI and LP International, Inc. to Borrowers permitted
by Section 6.13(h).
Section 6.11. Sale of Assets. The Borrowers will not, nor will they
permit any of their Affiliates to, lease, sell or otherwise dispose of all, or a
substantial portion of, their property, assets or business to any other Person.
The Borrowers will not, nor will they permit any of their Affiliates to, sell or
otherwise dispose of any accounts receivable, with or without recourse, or any
Collateral (other than (x) fixed assets no longer used or useful in the conduct
of their business and (y) Investments and Acquisitions purchased with the
proceeds of Loans hereunder so long as the Borrowers comply with Section 2.16
hereof). Notwithstanding the foregoing provisions of this Section 6.11, any
Borrower or Affiliate of a Borrower may sell property or assets (including
Receivables) to a newly-formed Supporting Subsidiary which has been created for
the purpose of owning or holding such property and assets.
Section 6.12. Sale and Leaseback. The Borrowers will not, nor will they
permit any of their Affiliates to, sell or transfer any property in order to
concurrently or subsequently lease as lessee such or similar property.
Section 6.13. Investments and Acquisitions. The Borrowers will not, nor
will they permit any of their Affiliates to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and other
investments in, Affiliates), or commitments therefor, or to become or remain a
partner in any partnership or joint venture, or to acquire any going business or
all or substantially all of the assets of any Person or any division or business
of a Person, whether through purchase of assets, merger or otherwise, except:
(a) Short-term obligations of, or fully guaranteed by, the United States of
America.
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<PAGE>
(b) Commercial paper rated A-1 or better by Standard and Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc. or P-l or better by Moody's
Investors Service, Inc.
(c) Demand deposit accounts maintained in the ordinary course of business.
(d) Certificates of deposit issued by and time deposits with commercial
banks (whether domestic or foreign) having capital and surplus in excess of
$50,000,000.
(e) Certificates of deposit issued by and time deposits with commercial
banks (whether domestic or foreign) having capital and surplus in excess of
$10,000,000 but less than $50,000,000, which deposits shall not exceed
$1,500,000 in the aggregate.
(f) Advances to (x) their respective partners and to their respective
employees in an aggregate amount not to exceed $2,500,000 outstanding at any
time and (y) their employee relocation firms in an aggregate amount not to
exceed $1,500,000 outstanding at any time.
(g) Loans by LPML and LPL to employee investment partnerships they sponsor
in an aggregate amount not to exceed $300,000 at any time outstanding.
(h) Investments in LPI and LP International, Inc. through loans or other
advances not exceeding $2,700,000 in aggregate principal amount at any time
outstanding in addition to those shown on Schedule "IV" hereto which aggregate
Investment may be further advanced by LPI and LP International, Inc. to any LPI
Affiliate organized outside the United States.
(i) Investments in existence on the date hereof and described on Schedule
"IV" hereto.
(j) Loans, advances or other extensions of credit to or from a Borrower or
Affiliate permitted by Section 6.10(b)-(e).
(k) Investments (other than Investments that constitute Acquisitions) of
any Borrower or Affiliate not specified above provided that the aggregate amount
of all such Investments in any calendar year does not exceed $3,000,000 and the
aggregate amount of any one such Investment shall not exceed $1,000,000
outstanding at any time.
(l) Acquisitions by the Borrowers in substantially the same line of
business as conducted by the Borrowers on the date hereof not specified above
provided that the aggregate purchase price (including indebtedness and other
liabilities assumed) incurred or assumed by the Borrowers for all such
Acquisitions in any calendar year does not exceed $10,000,000 and the aggregate
purchase price (including indebtedness and other liabilities assumed) incurred
or assumed by the Borrowers of any one Acquisition shall not exceed $2,500,000;
provided further that 30 days prior to the consummation
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<PAGE>
or any such Acquisition the Borrowers shall deliver to the Lenders pro forma
financial statements of the Borrowers demonstrating that after giving effect to
such Acquisition the Borrowers would be in compliance with Sections 6.16, 6.17,
6.19, 6.20, 6.21 and 6.22, for the next succeeding 12 month period and, in the
case of Section 6.22, would be in compliance with such covenant after giving
effect to such Acquisition and its financing if such covenant were tested as of
such date.
Section 6.14. Guaranties. The Borrowers will not, nor will they permit
any of their Affiliates to, make or suffer to exist any Guaranty (including,
without limitation, any Guaranty of the obligations of an Affiliate), except by
endorsement of instruments for deposit or collection in the ordinary course of
business, the Letters of Credit, the Guaranty Agreement, Guaranties listed on
Schedule M, other Guaranties of monetary obligations not exceeding $250,000 in
the aggregate outstanding at any time, and Guaranties of performance and/or
payment obligations of Affiliates under contracts to construct tenant
improvements that in the aggregate have an outstanding contract value not
exceeding $5,000,000.
Section 6.15. Liens. The Borrowers will not, nor will they permit any of
their Affiliates to, create, incur, or suffer to exist any Lien in, of or on the
property (including, without limitation, Receivables and accounts) of the
Borrowers or any of their Affiliates, except:
(a) Liens for taxes, assessments or governmental charges or levies on its
property if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings.
(b) Statutory Liens of landlords and other Liens imposed by law, such as
carriers', warehousemen's and mechanics' liens and other similar liens arising
in the ordinary course of business which secure payment of obligations not more
than 60 days past due.
(c) Liens arising out of pledges or deposits under worker's compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation.
(d) Utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way affect
the marketability of the same or interfere with the use thereof in the business
of the Borrower or the Affiliates.
(e) Liens existing on the date hereof and described in Schedule "V" hereto.
(f) Liens of lessors on property leased by a Borrower or Affiliate pursuant
to leases permitted by this Agreement.
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<PAGE>
(g) Liens in favor of DSA-LSPL, Inc. and DSA-LSAM, Inc. subordinated to the
Liens in favor of the Agent pursuant to documentation in form and substance
satisfactory to the Lenders in their sole discretion.
Section 6.16. Rentals. The Borrowers will not, nor will they permit any
Affiliate to, create, incur or suffer to exist obligations for Rentals in excess
of the following amounts during the following calendar years in the aggregate
for the Borrowers and their Affiliates:
CALENDAR YEAR AMOUNT
1996 $7,000,000
1997 $8,100,000
1998 $9,300,000
Section 6.17. Net Worth. The Borrowers shall not on the dates set forth
below permit Net Worth to be less than the amount set forth opposite such
amount:
NET WORTH SHALL
DATE NOT BE LESS THAN
----------------- ----------------
December 31, 1996 $50,000,000
December 31, 1997 $60,000,000
December 31, 1998 $70,000,000
Section 6.18. Letters of Credit. The Borrowers will not, nor will they
permit any of their Affiliates to, apply for or become liable upon any letter
of credit, except the Letters of Credit.
Section 6.19. Related Person. Except for Indebtedness to Related Persons
permitted under Section 6.10, Investments in Related Persons permitted under
Section 6.13 and Distributions to Related Persons permitted by Section 6.23, the
Borrowers will not, and will not permit any of their Affiliates to, enter into
any transaction (including, without limitation, the purchase or sale of any
property or service) with, or make any payment or transfer to, any Related
Person except in the ordinary course of business and pursuant to the reasonable
requirements of such Borrower's or such Affiliate's business and upon fair and
reasonable terms no more or less favorable to such Borrower or such Affiliate
than the Borrower or such Affiliate would obtain in a comparable arms-length
transaction.
Section 6.20. EBITDA. The Borrowers shall have EBITDA during the periods
specified below of at least the amount set forth opposite such period:
<TABLE>
<CAPTION>
FROM AND INCLUDING TO AND INCLUDING MINIMUM EBITDA
- ------------------ ------------------ --------------
<S> <C> <C>
January 1, 1996 September 30, 1996 $20,250,000
January 1, 1996 December 31, 1996 $27,000,000
January 1, 1997 March 31, 1997 $ 2,560,000
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
January 1, 1997 June 30, 1997 $ 9,600,000
January 1, 1997 September 30, 1997 $20,800,000
January 1, 1997 December 31, 1997 $32,000,000
January 1, 1998 March 31, 1998 $ 2,960,000
January 1, 1998 June 30, 1998 $11,100,000
January 1, 1998 September 30, 1998 $24,000,000
January 1, 1998 December 31, 1998 $37,000,000
January 1, 1999 March 31, 1999 $ 3,200,000
January 1, 1999 June 30, 1999 $12,000,000
January 1, 1999 September 30, 1999 $26,000,000
</TABLE>
Section 6.21. Fixed Charge Coverage Ratio. The Borrowers shall maintain,
or cause to be maintained, as of the last day of each fiscal quarter of the
Borrowers commencing December 31, 1996, a Fixed Charge Coverage Ratio greater
than or equal to 1.15 to 1.00.
Section 6.22. Maximum Leverage Ratio. The Borrowers shall not as of
December 31 of any year permit the ratio of Combined Funded Indebtedness minus
the Dai-Ichi Indebtedness included in such amount to the sum of (x) Combined
Equity and (y) Combined Funded Indebtedness minus the Dai-Ichi Indebtedness
included in such amount to be greater than 0.45 to 1.00.
Section 6.23. Distributions. LPML and LPL shall not make any
Distributions to any of their respective partners, except for Distributions made
in compliance with their partnership agreements as in effect on the date hereof
and delivered to the Lenders pursuant to Section 4.1(a)(i) hereof (the
"Partnership Agreements"); provided that immediately prior to and after giving
effect to any such Distribution no Default or Unmatured Default shall have
occurred and be continuing. Within 120 days after the end of each fiscal year,
the Borrowers will deliver to the Lenders a description of the Distributions for
such fiscal year as set forth on a cash flow distribution schedule in a form
consistent with the Partnership Agreements.
Section 6.24. Long-Term Receivables. The Borrowers shall, promptly upon
request of the Lender, deliver to the Lender true, correct and complete copies
of all documents evidencing (a) any Receivable that is in an amount in excess of
$100,000 and is not due and payable within one (1) year and (b) any Receivable
in excess of 18 months which Lender has determined constitutes an Eligible
Receivable.
Section 6.25. The Dai-Ichi Indebtedness. No payment of the Dai-Ichi
Indebtedness shall be made before the date such payment is due, and no Borrower
shall take any action to cause any such Indebtedness to become due before its
regularly scheduled due date. The Borrowers shall not amend or consent to any
amendments to the Dai-Ichi Indebtedness or any document evidencing the Dai-Ichi
Indebtedness. The Borrowers shall only repay the Dai-Ichi Indebtedness out of
the proceeds from the sale or issuance of additional equity of either Borrower.
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Section 6.26. New Supporting Subsidiaries. To the extent required by the
definition of Supporting Subsidiary, the Borrowers shall cause their
Subsidiaries to become Supporting Subsidiaries by delivering to the Agent the
documents required by Section 4.3 hereof.
Section 6.27. Additional Co-Investments. Within 45 days of the date
hereof the Borrowers shall take all actions necessary in order to grant the
Agent a first prior perfected security interest in all investments listed under
Item 2 on Schedule VII hereto.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
Section 7.1. Any material representation or warranty made or deemed made
by or on behalf of any Borrower or Affiliate to the Lenders under or in
connection with this Agreement, any Loan, or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
materially false as of the date on which made.
Section 7.2. Nonpayment or principal of, or interest upon, any Note at the
Revolving Credit Termination Date or, other than at the Revolving Credit
Termination Date, within two days after written notice that the same is due, or
nonpayment of any other obligations under any of the Loan Documents within five
days after written notice that the same is due, or violation by any Borrower of
the prohibitions in Section 6.25.
Section 7.3. The breach by any Borrower (other than a breach which
constitutes a Default under Section 7.1 or 7.2) of any of the terms or
provisions of this Agreement or any other Loan Document which is not remedied
within thirty days after written notice from the Agent or any Lender.
Section 7.4. Failure of any Borrower or any Affiliate to pay any
indebtedness when due or within any applicable cure or grace period; or the
default by any Borrower or any Affiliate in the performance of any term,
provision or condition contained in any agreement under which any Indebtedness
was created or is governed, the effect of which is to cause, or to permit the
holder or holders of such Indebtedness to cause, such Indebtedness to become due
prior to its stated maturity; or any Indebtedness shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof; provided that the aggregate
amount of all Indebtedness affected by any or all of the foregoing is at least
$500,000.
Section 7.5. Any Borrower or any Affiliate shall (a) have an order for
relief entered with respect to it under the Federal
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Bankruptcy Code, (b) not pay, or admit in writing its inability to pay, its
debts generally as they become due, (c) make an assignment for the benefit of
creditors, (d) apply for, seek, consent to, or acquiesce in, the appointment of
a receiver, custodian, trustee, examiner, liquidator or similar official for it
or any substantial part of its property, (e) institute any proceeding seeking an
order for relief under the Federal Bankruptcy Code or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (f) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.5 or (g) fail to contest in good faith any appointment or proceeding
described in Section 7.6.
Section 7.6 Without the application, approval or consent of the Borrower
or any Affiliate, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for any Borrower or any Affiliate or any substantial part of
its property, or a proceeding described in Section 7.5(e) shall be instituted
against any Borrower or any Affiliate, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of 60 consecutive days.
Section 7.7. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of, all or any
substantial portion of the property of any Borrower or any Supporting Subsidiary
or of the Borrowers and the Affiliates taken as a whole.
Section 7.8. Any Borrower or any Affiliate shall fail within 30 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $500,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith.
Section 7.9. Unfunded Liabilities of any Plans shall exceed in the
aggregate $500,000 or any Reportable Event shall occur in connection with any
Plan.
Section 7.10. There shall occur a change in the business, financial
condition, prospects or results of operations of a Borrower that the Required
Lenders determine to be material and adverse.
Section 7.11. Both Robert and Stuart shall cease, directly or indirectly
through a wholly owned "S" corporation, to be either Class A Limited Partners or
general partners of both DEL-LPAML and DEL-LPL having senior management
responsibility for such partnerships (other than by reason of death or
disability) (it being understood for purposes of this Section 7.11 that "S"
corporations majority controlled by an individual but in which related family
members hold minority interests will be considered "wholly owned" by such
controlling individual.
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Section 7.12. At any time fewer than ten of the persons that, as of the
date of this Agreement, are members of the Board of Directors of DEL-LPAML shall
cease to be members of such Board of Directors (or such other board or committee
as shall succeed to the powers and authority of such Board of Directors) or
shall cease to be officers of one of the Borrowers active in the management of
such Borrower or ceases to be a partner in both Borrowers.
Section 7.13. At any time fewer than ten of the persons that, as of the
date of this Agreement, are members of the Board of Directors of DEL-LPL shall
cease to be members of such Board of Directors (or such other board or committee
as shall succeed to the powers and authority of such Board of Directors) or
shall cease to be officers of one of the Borrowers active in the management of
such Borrowers or cease to be a partner in both Borrowers.
Section 7.14. The occurrence of any "default," as defined in any Loan
Document (other than the Agreement or the Notes) or the breach of any of the
terms or provisions of any Loan Document (other than the Agreement or the
Notes), which default or breach continues beyond any period of grace therein
provided.
Section 7.15. At any time DEL-LPL Limited Partnership ceases to be the
sole general partner of LPL with the right to name a majority of the members of
the "Partnership Committee" (or equivalent governing body) of LPL or if at any
time DEL-LPAML Limited Partnership ceases to be the sole general partner of LPML
with the right to name a majority of the members of the "Partnership Committee"
(or equivalent governing body) of LPML or if either at any time ceases to own
and control at least 51% of all partnership interests in such Borrower in which
it is the sole general partner.
Section 7.16. At any time other than a regularly scheduled payment date
for the Dai-Ichi Indebtedness any payment becomes due or is made thereon.
Section 7.17. At any time either DEL-LPL or DEL-LPAML becomes liable on
any debt for borrowed money without the Required Lenders' written consent.
Section 7.18. At any time from and after the date hereof demand shall be
made upon either Borrower or any Affiliate for the payment of any portion of any
note or other indebtedness identified as a "Note Payable" on the Borrowers
Capitalization Summary as from time to time delivered to the Lenders pursuant to
Section 6.1 hereof in a face amount of $1,000,000 or more or more than two
"Notes Payable" regardless of the face amounts thereof.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
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Section 8.1. Non-Bankruptcy Defaults. When any Event of Default other than
those described in Section 7.5 or 7.6 hereof has occurred and is continuing, the
Agent shall, by written notice to the borrowers: (a) if so directed by the
Required Lenders, terminate the remaining Commitments and all other obligations
of the Lenders hereunder on the date stated in such notice (which may be the
date thereof); (b) if so directed by the Required Lenders, declare the principal
of and the accrued interest on all outstanding Notes to be forthwith due and
payable and thereupon all outstanding Notes, including both principal and
interest thereon, shall be and become immediately due and payable together with
all other amounts payable under the Loan Documents without further demand,
presentment, protest or notice of any kind; and (c) if so directed by the
Required Lenders, demand that the Borrowers immediately pay to the Agent the
full amount then available for drawing under each or any Letter of Credit, and
the Borrowers agree to immediately make such payment and acknowledge and agree
that the Lenders would not have an adequate remedy at law for failure by the
Borrowers to honor any such demand and that the Agent, for the benefit of the
Lenders, shall have the right to require the Borrowers to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any Letter of Credit. The Agent, after giving notice to the
Borrower pursuant to this Section 8.1, shall also promptly send a copy of such
notice to the other Lenders, but the failure to do so shall not impair or annul
the effect of such notice.
Section 8.2. Bankruptcy Defaults. When any Event or Default described in
Section 7.5 or 7.6 hereof has occurred and is continuing, then all outstanding
Notes shall immediately become due and payable together with all other amounts
payable under the Loan Documents without presentment, demand, protest or notice
of any kind, the obligation of the Lenders to extend further credit pursuant to
any of the terms hereof shall immediately terminate and the Borrowers shall
immediately pay to the Agent the full amount then available for drawing under
all outstanding Letters of Credit, the Borrowers acknowledging that the Lenders
would not have an adequate remedy at law for failure by the Borrowers to honor
any such demand and that the Lenders, and the Agent on their behalf, shall have
the right to require the Borrowers to specifically perform such undertaking
whether or not any draws or other demands for payment have been made under any
of the Letters of Credit.
Section 8.3. Collateral for Undrawn Letters of Credit. If the prepayment
of the amount available for drawing under any or all outstanding Letters of
Credit is required under Section 2.15 or under Section 8.2, the Borrowers shall
forthwith pay the amount required to be so prepaid, to be held by the Agent as
additional Collateral (as defined in the Security Agreements) on the same terms
and conditions on which the Collateral is held.
Section 8.4. Preservation of Rights. No delay or omission of the Lender
to exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding
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the existence of a Default or the inability of the Borrowers to satisfy the
conditions precedent to such Loan shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other rights.
All remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Lenders until the Obligations have
been paid in full and all Commitments of the Lender hereunder have expired.
ARTICLE IX
AGENT
Section 9.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Lenders expressly agree that
the Agent is not acting as a fiduciary of the Lenders in respect of the Loan
Documents, the Borrowers or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Agent or any of
the Lenders except as expressly set forth herein. The Agent may resign at any
time by sending 20 days prior written notice to the Borrowers and the Lenders.
In the event of any such resignation, the Required Lenders may appoint a new
agent after consultation with the Borrowers, which shall succeed to all the
rights, powers and duties of the Agent hereunder and under the other Loan
Documents. Any resigning Agent shall be entitled to the benefit of all the
protective provisions hereof with respect to its acts as an agent hereunder, but
no successor Agent shall in any event be liable or responsible for any actions
of its predecessor. If the Agent resigns and no successor is appointed, the
rights and obligations of such Agent shall be automatically assumed by the
Required Lenders and (i) the Borrowers shall be directed to make all payments
due each Lender hereunder directly to such Lender and (ii) the Agent's rights in
the Collateral Documents shall be assigned without representation, recourse or
warranty to the Lenders as their interests may appear.
Section 9.2. Rights as a Lender. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Lender may have and may exercise the same as though it were not the Agent and
the terms "Lender" or "Lenders" as used herein and in all of such documents
shall, unless the context otherwise expressly indicates, include the Agent in
its individual capacity as a Lender.
Section 9.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies and acknowledge their agreement with the provisions
of the Loan Documents and such other information and documents concerning the
transactions contemplated and financed hereby as they have requested to receive
and/or review. The Agent makes no representations or warranties of any
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kind or character to the Lenders with respect to the validity, enforceability,
genuineness, perfection, value, worth or collectibility hereof or of the Notes
or any of the other Obligations or of any of the other Loan Documents or of the
Liens provided for thereby or of any other documents called for hereby or
thereby or of the Collateral. The Agent need not verify the worth or existence
of the Collateral and may rely exclusively on reports of the Borrowers in
computing the Borrowing Base. Neither the Agent nor any director, officer,
employee, agent or representative thereof (including any security trustee
therefor) shall in any event be liable for any clerical errors or errors in
judgment, inadvertence or oversight, or for action taken or omitted to be taken
by it or them hereunder or under the other Loan Documents or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct. The Agent shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, certificate,
warranty, instruction or statement (oral or written) of anyone (including anyone
in good faith believed by it to be authorized to act on behalf of the
Borrowers), unless it has actual knowledge of the untruthfulness of same. The
Agent may execute any of its duties hereunder by or through employees, agents,
and attorneys-in-fact and shall not be answerable to the Lenders for the default
or misconduct of any such agents or attorneys-in-fact selected with reasonable
care. The Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agencies hereby created and its duties hereunder, and shall
incur no liability to anyone and be fully protected in acting upon the advice of
such counsel. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Lender. The Agent shall in
all events be fully protected in acting or failing to act in accord with the
instructions of the Required Lenders. Upon the occurrence of an Event of
Default hereunder, the Agent shall take such action with respect to the
enforcement of the Liens on the Collateral and the preservation and protection
thereof as it shall be directed to take by the Required Lenders but unless and
until the Required Lenders have given such direction the Agent shall take or
refrain from taking such actions as it deems appropriate and in the best of
interest of all Lenders. The Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by the Agent by reason of taking or continuing to take any such
action. The Agent may treat the owner of any Note as the holder thereof until
written notice of transfer shall have been filed with the Agent signed by such
owner in form satisfactory to the Agent. Each Lender acknowledges that it has
independently and without reliance on the Agent or any other Lender and based
upon such information, investigations and inquiries as it deems appropriate made
its own credit analysis and decision to extend credit to the Borrowers. It
shall be the responsibility of each Lender to keep itself informed as to the
creditworthiness of the Borrowers and the Agent shall have no liability to any
Lender with respect thereto.
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Section 9.4. Costs and Expenses. Each Lender agrees to reimburse the
Agent for all costs and expenses suffered or incurred by the Agent or any
security trustee in performing its duties hereunder and under the other Loan
Documents, or in the exercise of any right or power imposed or conferred upon
the Agent hereby or thereby, to the extent that the Agent is not promptly
reimbursed for same by the Borrowers or out of the Collateral, all such costs
and expenses to be borne by the Lenders ratably in accordance with the amounts
of their respective Commitments. If any Lender fails to reimburse the Agent for
such Lender's share of any such costs and expenses, such costs and expenses
shall be paid pro rata by the remaining Lenders, but without in any manner
releasing the defaulting Lender from its liability hereunder.
Section 9.5. Indemnity. The Lenders shall ratably indemnify and hold the
Agent, and its directors, officers, employees, agents and representatives
(including as such any security trustee therefor) harmless from and against any
liabilities, losses, costs and expenses suffered or incurred by them hereunder
or under the other Loan Documents or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the Borrowers or out
of the Collateral and except to the extent that any event giving rise to a claim
was caused by the gross negligence or willful misconduct of the party seeking to
be indemnified. If any Lender defaults in its obligations hereunder, its share
of the obligations shall be paid pro rata by the remaining Lenders, but without
in any manner releasing the defaulting Lender from its liability hereunder.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers and
the Lenders and their respective successors and assigns, except that the
Borrowers shall not have the right to assign any of their rights or obligations
under this Agreement. No Lender shall disclose to any purchaser or prospective
purchaser of an interest in the Loans any financial or other information
pertaining to the Borrowers without the prior written consent of the Borrowers,
which shall not be unreasonably withheld. Any request, authority or consent of
any Person who at the time of making such request or giving such authority or
consent is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
Section 10.2. Survival of Representations. All representations and
warranties of the Borrowers contained in this Agreement shall survive delivery
of the Notes and the making of the Loans herein contemplated.
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Section 10.3. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrowers in violation of any limitation or prohibition
provided by any applicable statute or regulation.
Section 10.4. Taxes. Any taxes (excluding taxes measured by the net
income of any Lender) payable or ruled payable by Federal or State authority in
respect of the Loan Documents shall be paid by the Borrowers, together with
interest and penalties, if any.
Section 10.5. Choice of Law. The Loan Documents (other than those
containing a contrary express choice of law provision) shall be construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois, but giving effect to applicable federal laws. The Borrowers hereby
irrevocably submit to the non-exclusive jurisdiction of any United States
federal or Illinois state court sitting in Chicago in any action or proceedings
arising out of or relating to any Loan Documents and the Borrowers hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in any such court.
Section 10.6. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
Section 10.7. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrowers and the Lenders and supersede
all prior agreements and understandings among the Borrowers and the Lenders
relating to the subject matter thereof.
Section 10.8. Expenses; Indemnification. The Borrowers shall reimburse
the Agent for any costs, internal charges and out-of-pocket expenses (including,
except as hereinafter provided, attorneys' fees and time charges of attorneys
and paralegals for the Agent, which attorneys and paralegals may be employees of
the Agent) paid or incurred by the Agent in connection with the preparation,
review, execution, delivery, amendment, modification, administration, collection
and enforcement of the Loan Documents and in connection with the recording or
filing of any of the foregoing. The Borrowers further agree to indemnify the
Lenders, their directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
such Lender is a party thereto) which any of them may pay or incur arising out
of or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder, other than any of the
foregoing that result from the gross negligence or willful misconduct of such
Lender. The obligations of the Borrowers under this Section shall survive the
termination of this Agreement.
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Section 10.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
Section 10.10. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
Section 10.11. Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if any Default occurs and is
continuing, any indebtedness from the Lenders to the Borrowers (including all
account balances, whether provisional or final and whether or not collected or
available but excluding all accounts of any Borrower in a fiduciary capacity)
may be offset and applied toward the payment of the Obligations owing to the
Lenders, whether or not the Obligations, or any part hereof, shall then be due.
The Borrowers agree that any holder of a participation in a Loan may, to the
fullest extent permitted by law, exercise all its rights of payment with respect
to such participation as if such holder were the direct creditor of the
Borrowers in the amount of the participation.
Section 10.12. Waivers, Modifications and Amendments. Any provision
hereof or of any of the other Loan Documents may be amended, modified, waived or
released and any Default or Unmatured Default and its consequences may be
rescinded and annulled upon the written consent of the Required Lenders;
provided, however, that without the consent of all Lenders no such amendment,
modification or waiver shall increase the amount or extend the term of any
Lender's Commitment or reduce the amount of any principal of or interest rate
applicable to, or extend the maturity of, any obligation owed to it or reduce
the amount of the fees to which it is entitled hereunder or release any
substantial (in value) part of the collateral security afforded by the Security
Agreements (except in connection with a sale or other disposition required to be
effected by the provisions hereof or of the Security Agreement) or change this
Section or change the definition of "Required Lenders" or change the number of
Lenders required to take any action hereunder or under any of the other Loan
Documents. No amendment, modification or waiver of the Agent's protective
provisions shall be effective without the prior written consent of the Agent.
Section 10.13. Assignment Agreements. Each Lender may, from time to time
upon at least 5 Business Days' prior written notice to the Agent, assign to
other commercial lenders part of its rights and obligations under this Agreement
(including without limitation the indebtedness evidenced by the Notes then owned
by such assigning Lender, together with an equivalent proportion of its
Commitments to make Loans hereunder) pursuant to written agreements
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executed by such assigning Lender, such assignee lender or lenders, the
Borrowers and the Agent, which agreements shall specify in each instance the
portion of the indebtedness evidenced by the Notes which is to be assigned to
each such assignee lender and the portion of the Commitments of the assigning
Lender to be assumed by it (the "Assignment Agreements"); provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of the assigning Lender's rights and obligations under this Agreement
and the assignment shall cover the same percentage of such Lender's Commitments,
Loans, Notes and credit risk with respect to Letters of Credit; (ii) unless the
Agent otherwise consents, the aggregate amount of the Commitments, Loans, Notes
and credit risk with respect to Letters of Credit of the assigning Lender being
assigned pursuant to each such assignment (determined as of the effective date
of the relevant Assignment Agreement) shall in no event be less than $5,000,000
and shall be an integral multiple of $1,000,000; (iii) the Agent and the
Borrowers must each consent, which consent of the Borrowers shall not be
unreasonably withheld, to each such assignment to a party which was not an
original signatory of this Agreement; and (iv) the assigning Lender must pay to
the Agent a processing and recordation fee of $5,000 and any out-of-pocket
expenses incurred by the Agent in connection with such Assignment Agreement.
Upon the execution of each Assignment Agreement by the assigning Lender
thereunder, the assignee lender thereunder, the Borrowers and the Agent and
payment to such assigning Lender by such assignee lender of the purchase price
for the portion of the indebtedness of the Borrowers being acquired by it, (i)
such assignee lender shall thereupon become a "Lender" for all purposes of this
Agreement with Commitments in the amounts set forth in such Assignment Agreement
and with all the rights, powers and obligations afforded a Lender hereunder,
(ii) such assigning Lender shall have no further liability for funding the
portion of its Commitments assumed by such other Lender and (iii) the address
for notices to such assignee Lender shall be as specified in the Assignment
Agreement executed by it. Concurrently with the execution and delivery of such
Assignment Agreement, the Borrowers shall execute and deliver Notes to the
assignee Lender in the respective amounts of its Commitment under each Facility
and new Notes to the assigning Lender in the respective amounts of its
Commitment under each Facility after giving effect to the reduction occasioned
by such assignment, all such Notes to constitute "Notes" for all purposes of
this Agreement and of the other Loan Documents.
Section 10.14. Participants. Each Lender shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and other Obligations and/or
Commitments held by such Bank at any time and from time to time to one or more
other Persons; provided that no such participation shall relieve any Lender of
any of its obligations under this Agreement, and, provided, further that no such
participant shall have any rights under this Agreement except as provided in
this Section 10.14, and the Agent shall have no obligation or responsibility to
such participant. Any agreement pursuant to which such participation is granted
shall provide that the granting Bank shall retain the sole
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right and responsibility to enforce the obligations of the Borrowers, Guarantors
and Supporting Subsidiaries under this Agreement and the other Loan Documents
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of the Loan Documents, except that such agreement may
provide that such Lender will not agree to any modification, amendment or waiver
of the Loan Documents that would reduce the amount of or postpone any fixed date
for payment of any Obligation in which such participant has an interest. Any
party to which such a participation has been granted shall have the benefits of
Section 3.1 and Section 3.4 hereof but shall not be entitled to receive any
greater payment under either such Section than the Lender granting such
participation would have been entitled to receive with respect to the rights
transferred.
Section 10.15. Joint and Several. Each Borrower acknowledges that credit
is being extended by the Lenders under this Agreement based upon the joint and
several liability of each Borrower for all Obligations. Each Borrower's joint
and several liability on the Notes, under each Letter of Credit and for all
Obligations shall not in any manner be impaired or affected by who executes any
application for a Letter of Credit, who receives or uses the proceeds of the
Loans or the credit provided by the Letters of Credit or for what purposes such
proceeds or credit are used, and each Borrower waives notice of borrowing
requests issued by, and Loans made to, other Borrowers. The joint and several
liability of each Borrower for all Obligations is absolute and unconditional and
shall not be impaired or otherwise affected by any failure, neglect or omission
on the Lender's part to resort to one or all of the Borrowers, any of the
"Collateral" described in the Security Agreements, or any other Person or
collateral for payment of the Obligations.
Section 10.16. Giving Notice. Except for notices under Article II, any
notice required or permitted to be given under this Agreement shall be in
writing. Such written notices shall be deemed given when sent, if sent by
facsimile transmission, or when delivered, if sent by mail, overnight courier or
hand delivery, addressed, in the case of a notice to any one or more of the
Borrowers, to LPL at 200 East Randolph Street, Chicago, Illinois, 60601,
Attention: Treasurer (with a copy to Hagan & Associates at 200 East Randolph
Street, Suite 4322, Chicago, Illinois 60601) or, in the case of notice to the
Agent or any Lender, such address as set forth on the applicable signature page
hereof. The Borrowers and the Lenders may each change the address for service of
notice upon it by a notice in writing to the other parties hereto.
Section 10.17. Limitation of Liability. In addition to, and not in
limitation of, any limitation on liability provided by law or by any contract,
agreement, instrument or document, the liability of the Borrowers shall be
limited to the assets of the Borrowers, and no present or future partner of a
Borrower shall have any personal liability under this Agreement, except if such
partner is itself a Borrower.
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Section 10.18. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
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IN WITNESS WHEREOF, the Borrowers and the Lenders have executed this
Agreement as of the date first above written.
LASALLE PARTNERS LIMITED PARTNERSHIP, a
Delaware limited partnership
By: /s/ Timothy M. McGarrity
--------------------------------
Name: Timothy M. McGarrity
------------------------------
Title: Vice President, Treasurer and
-----------------------------
Assistant Secretary
LASALLE PARTNERS MANAGEMENT LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: /s/ Charles K. Esler, Jr.
---------------------------------
Name: Charles K. Esler, Jr.
-------------------------------
Title: President, Managing Director,
------------------------------
Treasurer and Secretary
55
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Address for Notice and Amount
of Commitment:
111 West Monroe HARRIS TRUST AND SAVINGS BANK, in its
Chicago, Illinois 60690 individual capacity as a Lender and as
Attention: Emerging Majors Agent
Telecopy: (312) 461-2591
Telephone: (312) 461-6182 By: /s/ M. Elizabeth Gilliam
-------------------------------------
Name: M. Elizabeth Gilliam
Title: Vice President
Facility A Commitment: $17,142,850
Facility B Commitment: $ 5,714,300
Facility C Commitment: $22,857,150
Lending Offices:
Domestic Rate Loans:
111 West Monroe Street
Chicago, Illinois 60690
Eurodollar Loans:
111 West Monroe Street
Chicago, Illinois 60690
56
<PAGE>
135 South LASalle Street LASALLE NATIONAL BANK
Chicago, Illinois 60603
Attention: James Turner
Telecopy: (312) 904-6021
Telephone: (312) 904-7103 By: /s/ James F. Turner
--------------------------
Name: James F. Turner
Title: Vice President
Facility A Commitment: $12,857,150
Facility B Commitment: $ 4,285,700
Facility C Commitment: $17,142,850
Lending Offices:
Domestic Rate Loans:
111 West Monroe Street
Chicago, Illinois 60690
Eurodollar Loans:
135 South LaSalle Street
Chicago, Illinois 60603
57
<PAGE>
Exhibit 10.02
Security Agreement
This Security Agreement (the "Agreement") dated as of September 6, 1996 by
and among LaSalle Partners Limited Partnership, a Delaware limited partnership
("LPL"), LaSalle Partners Management Limited Partnership, a Delaware limited
partnership ("LPML") (LPL and LPML are hereinafter referred to collectively as
the "Debtors" and individually as a "Debtor"), and Harris Trust and Savings Bank
("Harris") with its mailing address 111 West Monroe Street, Chicago, Illinois
60690, acting as agent hereunder for the Lenders hereinafter identified and
defined (Harris acting as such agent and any successor or successors to Harris
acting in such capacity being hereinafter referred to as the "Agent");
W i t n e s s e t h T h a t:
Whereas, the Debtors, Harris, individually and as agent, and LaSalle
National Bank have entered into a Credit Agreement dated as of September 6, 1996
(such Credit Agreement as the same may be amended, modified or restated from
time to time being hereinafter referred to as the "Credit Agreement"), pursuant
to which such lenders (Harris and the other lenders which are now or which from
time to time hereafter become party to the Credit Agreement being hereinafter
referred to collectively as the "Lenders" and individually as a "Lender") have
agreed, subject to certain terms and conditions, to extend credit and make
certain other financial accommodations available to the Debtors;
Whereas, as a condition precedent to extending the credit facilities to the
Debtors under the Credit Agreement, the Lenders have required, among other
things, that each Debtor grant to the Agent a lien on and security interest in
certain personal properties of such Debtor as collateral security for such
credit facilities and related obligations pursuant to this Agreement;
Now, Therefore, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Grant of Security Interest in the Collateral; Obligations
Secured.
(a) Each Debtor hereby grants to the Agent for the benefit of the
Lenders a security interest in and right of set-off against, and
acknowledges and agrees that the Agent has and shall continue to have for
the benefit of the Lenders a continuing security interest in and right of
set-off against, any and all right, title and interest of each Debtor,
whether now owned or existing or hereafter created, acquired or arising, in
and to the following:
(i) Receivables. All of Debtor's present and future rights to
payment for services rendered, whether or not evidenced by instruments
or chattel paper, and whether or not they have been earned by
performance, proceeds of any letters of credit on which Debtor is
named as beneficiary, contract rights, chattel paper,
<PAGE>
instruments, documents, notes, drafts, acceptances, insurance
proceeds, and all such obligations whatsoever owing to such Debtor,
together with all instruments and all documents of title representing
any of the foregoing (the "Receivables"); and
(ii) Equipment. Equipment, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now
has or hereafter acquires any rights (the term "Equipment" means and
includes all equipment, machinery, tools, trade fixtures, furniture,
furnishings, office equipment, vehicles [including vehicles subject to
a certificate of title law] and all other goods now or hereafter used
or usable in connection with such Debtor's business, together with all
parts, accessories and attachments relating to any of the foregoing);
(iii) Deposits and Property in Possession. All deposit
accounts (whether general, specific or otherwise) maintained with the
Agent or any of the Lenders and all sums now or hereafter on deposit
therein or payable thereon, and any and all other property or
interests in property which now is or may from time to time hereafter
come into the possession, custody or control of the Agent or any of
the Lenders, or any agent of any of them, in any way and for any
purpose (whether for safekeeping, custody, pledge, transmission,
collection or otherwise) but excluding all accounts of any Debtor in a
fiduciary capacity;
(iv) Records. Supporting evidence and documents relating to
any of the above-described property, including, without limitation,
computer programs, disks, tapes, and related electronic data
processing media, and all rights of such Debtor to retrieve the same
from third parties, written applications, credit information, account
cards, payment records, correspondence, delivery and installation
certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, insurance certificates and the like,
together with all books of account, ledgers and cabinets in which the
same are reflected or maintained, all whether now existing or
hereafter arising;
(v) Accessions and Additions. All accessions and additions to
and substitutions and replacements of any and all of the foregoing,
whether now existing or hereafter arising; and
(vi) Proceeds. All substitutions for and all replacements,
proceeds of the foregoing and, to the extent not otherwise included,
all payments under any insurance (whether or not the Agent is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing. For purposes of this Agreement, the term "proceeds"
includes whatever is receivable or received when Receivables or
proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary
2
<PAGE>
all of the foregoing being herein sometimes referred to as the
"Collateral".
(b) This Agreement is made and given to secure, and shall secure, the
payment and performance of (i) any and all indebtedness, obligations and
liabilities of each Debtor under or in connection with or evidenced by (w)
the Credit Agreement or (x) the Notes of each Debtor heretofore or
hereafter issued under the Credit Agreement and the obligations of each
Debtor to reimburse the Agent for the amount of all drawings on all Letters
of Credit issued for the account of the Debtors pursuant to the Credit
Agreement, and all other obligations of either Debtor under any and all
applications for such Letters of Credit or (y) any of the Security
Documents, in each case whether now existing or hereafter arising (and
whether arising before or after the filing of a petition in bankruptcy),
due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired and (ii) any and all expenses and
charges, legal or otherwise, suffered or incurred by the Agent and the
Lenders in collecting or enforcing any of such indebtedness, obligations
and liabilities or in realizing on or protecting or preserving any security
therefor, including, without limitation, the lien and security interest
granted hereby other than any of the foregoing that result from the gross
negligence or willful misconduct of the Agent or such Lender (all of the
indebtedness, obligations, liabilities, expenses and charges described in
clauses (i) and (ii) above being hereinafter referred to as the
"Obligations").
Section 2. Terms defined in Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms have
in the Credit Agreement. The term "Debtor" and "Debtors" as used herein shall
mean and include the Debtors collectively and also each individually, with all
grants, representations, warranties and covenants of and by the Debtors, or any
of them, herein contained to constitute joint and several grants,
representations, warranties and covenants of and by the Debtors; provided,
however, that unless the context in which the same is used shall otherwise
require, any grant, representation, warranty or covenant contained herein
related to the Collateral shall be made by each Debtor only with respect to the
Collateral owned by it or represented by such Debtor as owned by it.
Section 3. Covenants, Agreements, Representations and Warranties. Each
Debtor hereby covenants and agrees with, and represents and warrants to, the
Agent and the Lenders that:
(a) Each Debtor is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
the sole and lawful owner of the Collateral and has full right, power and
authority to enter into this Agreement and to perform each and all of the
matters and things herein provided for; and the execution and delivery of
this Agreement, and the observance and performance of any of the matters
and things herein set forth, will not contravene or constitute a default
under any provision of law or any judgment, injunction, order or decree
binding upon either Debtor or any provision of either Debtor's partnership
agreement or of any covenant, indenture or agreement of or affecting either
Debtor or any of their respective properties, or result in the creation or
imposition of any lien or encumbrance on any of its property. LPL's
3
<PAGE>
Federal tax identification number is 36-3588030. LPML's Federal tax
identification number is 36-3588029.
(b) The Collateral is and will remain in the Debtor's possession or
control at the locations listed on Schedule A attached hereto
(collectively, the "Permitted Collateral Locations"). If for any reason
Collateral is at any time kept or located at locations other than the
Permitted Collateral Locations, the Agent shall nevertheless have and
retain a security interest therein. Each Debtor's chief executive office
and principal place of business is at, and each Debtor keeps and shall keep
all of its books and records relating to Receivables only at, 200 East
Randolph Drive, Chicago, Illinois 60601; and neither Debtor has any other
executive offices or places of business other than those listed on Schedule
A. Neither Debtor will maintain an executive office or place of business
at a location other than those specified pursuant to the immediately
preceding sentence without first providing the Agent thirty (30) days'
prior written notice of such Debtor's intent to do so; provided, however,
that each Debtor will at all times maintain its chief executive office in
the contiguous continental United States of America.
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary or
involuntary, except for the security interest of the Agent therein and the
Liens permitted under Section 6.15 of the Credit Agreement.
(d) Except as permitted by the Credit Agreement, neither Debtor will,
without the Agent's prior written consent, sell, assign, mortgage, lease or
otherwise dispose of the Collateral or any interest therein. Provided that
no Event of Default has occurred and is continuing the Debtors shall be
entitled to receive and retain the proceeds of any such sale up to $100,000
for all such Debtors in any calendar year. If the Debtors receive any such
proceeds in excess of $100,000 per calendar year, the Debtors shall notify
the Agent and if the Lenders so direct, apply such proceeds to repay
outstanding Facility A Loans and reduce the Facility A Commitments by such
amount. The Agent shall, upon a Debtor's request, provide a release of its
lien on any Collateral sold or otherwise disposed of by such Debtor in
accordance with the first sentence of this paragraph.
(e) Each Debtor will insure the Collateral which is insurable against
such risks and hazards as other companies similarly situated insure
against, and including in any event loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as the Agent
may reasonably specify, in amounts and under policies containing loss
payable clauses to the Agent as its interest may appear (and, if the Agent
requests, naming the Agent and the Lenders as additional insureds therein)
by insurers reasonably acceptable to the Agent. All premiums on such
insurance shall be paid by the Debtors and the policies of such insurance
(or certificates therefor) delivered to the Agent. All insurance required
hereby shall provide that any loss shall be payable notwithstanding
4
<PAGE>
any act or negligence of the relevant Debtor, shall provide that no
cancellation thereof shall be effective until at least thirty (30) days
after receipt by the relevant Debtor and the Agent of written notice
thereof, and shall be satisfactory to the Agent in all other respects.
Each Debtor may retain any proceeds of such insurance arising out of the
loss, damage, or destruction of the Collateral owned or leased by it so
long as no Event of Default (as hereinafter defined) shall have occurred
and be continuing or shall arise after giving effect to such loss, damage,
or destruction. During the existence of any Event of Default, each Debtor
will immediately pay over such proceeds of insurance to the Agent which
shall thereafter be applied to the reduction of the Obligations (whether or
not then due) or held as collateral security therefor, as the Agent may
then determine and as otherwise provided for in the Credit Agreement. All
insurance proceeds shall be subject to the lien and security interest of
the Agent. Each Debtor hereby authorizes the Agent, at the Agent's option,
to adjust, compromise and settle any losses under any insurance afforded at
any time during the existence of any Event of Default, and such Debtor does
hereby irrevocably constitute the Agent, its officers, agents and
attorneys, as such Debtor's attorneys-in-fact, with full power and
authority to effect such adjustment, compromise and/or settlement and to
endorse any drafts drawn by an insurer of the Collateral or any part
thereof and to do everything necessary to carry out such purposes and to
receive and receipt for any unearned premiums due under policies of such
insurance.
(f) Each Debtor will at all reasonable times allow the Agent, any
Lender and their respective representatives free access to and right of
inspection of the Collateral.
(g) LPL has not invoiced Receivables or otherwise transacted
business, and does not invoice Receivables or otherwise transact business,
under any trade names other than its name set forth in the introductory
paragraph of this Agreement and "LaSalle Partners Limited." LPML has not
invoiced Receivables or otherwise transacted business, and does not invoice
Receivables or otherwise transact business, under any trade names other
than its name set forth in the introductory paragraph of this Agreement and
"LaSalle Partners Management Limited." Neither Debtor will change its name
or transact business under any other trade name, in each case without first
giving the Agent thirty (30) days' prior written notice of its intent to do
so.
(h) Each Debtor agrees to execute and deliver to the Agent such
further agreements and assignments or other instruments and documents and
to do all such other things as the Agent may reasonably deem necessary or
appropriate to assure the Agent its security interest hereunder, including
such financing statement or statements or amendments thereof or supplements
thereto or other instruments and documents as the Agent may from time to
time reasonably require in order to comply with the Uniform Commercial Code
as enacted in the State of Illinois and any successor statute(s) thereto
(the "Code"). Each Debtor hereby agrees that a carbon, photographic or
other reproduction of this Agreement or any such financing statement is
sufficient for filing as a financing statement by the Agent without notice
thereof to such Debtor wherever the
5
<PAGE>
Agent in its sole discretion desires to file the same. In the event for
any reason the law of any jurisdiction other than Illinois becomes or is
applicable to the Collateral or any part thereof, or to any of the
Obligations, each Debtor agrees to execute and deliver all such instruments
and documents and to do all such other things as the Agent in its sole
discretion deems necessary or appropriate to preserve, protect and enforce
the security interest of the Agent under the law of such other
jurisdiction. Each Debtor agrees to mark its books and records to reflect
the security interest of the Agent in the Collateral. Without limiting the
generality of the foregoing, each Debtor will: (i) at the request of the
Agent, either turn over possession to the Agent or mark conspicuously each
negotiable document and each chattel paper included in the Collateral and
each of the records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Agent, indicating that such document, chattel
paper or Collateral is subject to the security interest granted hereby;
(ii) if any Receivable owned by a Debtor in an amount greater than $10,000
shall be or becomes evidenced by a promissory note or other instrument
(other than checks received in payment of obligations under Receivables) or
chattel paper, deliver and pledge to the Agent hereunder such note,
instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices as the Agent or any Lender may reasonably request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby.
(i) After the occurrence and during the continuance of an Event of
Default or the occurrence of an event which with the lapse of time or the
giving of notice would be an Event of Default under Section 7.6 of the
Credit Agreement, on failure of a Debtor to perform any of the covenants
and agreements herein contained, the Agent may at its option perform the
same and in so doing may expend such sums as the Agent may reasonably deem
advisable in the performance thereof, including, without limitation, the
payment of any insurance premiums, the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claims,
and all other expenditures which the Agent may be compelled to make by
operation of law or which the Agent may make by agreement or otherwise for
the protection of the security hereof. All such sums and amounts so
expended shall be repayable by the Debtors immediately without notice or
demand, shall constitute additional Obligations secured hereunder and shall
bear interest from the date said amounts are expended at the rate per annum
(computed on the basis of a 360-day year for the actual number of days
elapsed) determined by adding 2% to the Domestic Rate as from time to time
in effect with any change in such rate per annum as so determined by reason
of a change in such Domestic Rate to be effective on the date of such
change in said Domestic Rate (such rate per annum as so determined being
hereinafter referred to as the "Default Rate"). No such performance of any
covenant or agreement by the Agent on behalf of a Debtor, and no such
advancement or expenditure therefor, shall relieve such Debtor of any
default under the terms of this Agreement or in any way obligate the Agent
or any Lender to take any further or future action with respect thereto.
The Agent is hereby authorized to charge any depository or
6
<PAGE>
other account of any Debtor maintained with the Agent but excluding all
accounts of any Debtor in a fiduciary capacity for the amount of such sums
and amounts so expended.
Section 4. Special Provisions Re: Receivables.
(a) Except as otherwise provided in this subsection (a), each Debtor
shall continue to collect, at its own expense, all amounts due or to become
due such Debtor under the Receivables. In connection with such
collections, a Debtor may take such action as such Debtor may deem
necessary or advisable to enforce collection of the Receivables; provided,
however, that the Agent shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default and upon
written notice to the Debtors of its intention to do so, to notify (and, if
requested by the Agent, the Debtors shall notify) the account debtors or
obligors under any Receivables, or other obligations in which a security
interest is granted hereby, of the assignment of such Receivables or
obligations to the Agent and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Debtor thereunder
directly to the Agent and, upon such notification and at the expense of
such Debtor, to enforce collection of any such Receivables or obligations
through legal proceedings or otherwise, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
such Debtor might have done, and to do so in the Agent's own name or in the
name of others (including, without limitation, such Debtor). After receipt
by a Debtor of the notice from the Agent referred to in the proviso to the
preceding sentence: (i) all amounts and proceeds (including instruments)
received by a Debtor in respect of the Receivables, or other obligations in
which a security interest is granted hereby, shall be received in trust for
the benefit of the Agent hereunder, shall be segregated from other funds of
such Debtor and shall be forthwith paid over to the Agent in the same form
as so received (with any necessary endorsement) to be held as collateral
and either released to such Debtor so long as no Event of Default shall
have occurred and be continuing or if an Event of Default shall have
occurred and be continuing, applied as provided in the Credit Agreement;
and (ii) neither Debtor shall adjust, settle or compromise the amount or
payment of any Receivable, or other obligations in which a security
interest is granted hereby, or release wholly or partly any account debtor
or obligor thereof, or allow any credit or discount thereon.
Section 5. Special Provisions Re: Equipment.
(a) Each Debtor will at its own cost and expense maintain, keep and
preserve the Equipment in good repair, working order and condition,
ordinary wear and tear excepted, and, without limiting the foregoing, make
all necessary and proper repairs, replacements and additions to the
Equipment so that the efficiency thereof shall be fully preserved and
maintained.
(b) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, sell
obsolete, worn out or unusable
7
<PAGE>
Equipment which is concurrently replaced with similar Equipment at least
equal in quality and condition to that sold and owned by such Debtor free
of any lien, charge or encumbrance other than the security interest granted
hereby and any liens permitted under Section 6.15 of the Credit Agreement.
(c) Upon the Agent's request, each Debtor shall at its own cost and
expense cause the lien of the Agent in and to any portion of the Collateral
subject to a certificate of title law to be duly noted on such certificate
of title or to be otherwise filed in such manner as is prescribed by law in
order to perfect such lien and will cause all such certificates of title
and evidences of lien to be deposited with the Agent.
(d) No material portion of the Equipment is or will be attached to
real estate in such a manner that the same may become a fixture.
Section 6. Power of Attorney. In addition to any other powers of attorney
contained herein, each Debtor hereby appoints the Agent, its nominee, or any
other person whom the Agent may designate as such Debtor's attorney in fact,
with full power upon the occurrence and during the continuation of an Event of
Default hereunder to sign such Debtor's name on verifications of accounts, to
send requests for verification of Receivables to such Debtor's customers and
account debtors, to endorse such Debtor's name on any checks, notes,
acceptances, money orders, drafts and any other forms of payment or security
that may come into the Agent's possession, to sign such Debtor's name on any
invoice or bill of lading relating to any Receivables, on claims to enforce
collection of any Receivable, on notices to and drafts against customers and
account debtors, on schedules and assignments of Receivables, on notices of
assignment and on public records, to notify the post office authorities to
change the address for delivery of such Debtor's mail to an address designated
by the Agent and to receive, open and dispose of all mail addressed to such
Debtor and to do all things necessary to carry out this Agreement. Such Debtor
hereby ratifies and approves all acts of any such attorney and agrees that
neither the Agent nor any such attorney will be liable for any acts or omissions
nor for any error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct. The foregoing power of attorney, being
coupled with an interest, is irrevocable until the Obligations have been fully
paid and satisfied and the commitments of the Lenders to extend credit to or for
the account of the Debtors under the Credit Agreement have terminated. The
Agent may file one or more financing statements disclosing its security interest
in any or all of the Collateral without a Debtor's signature appearing thereon.
Each Debtor also hereby grants the Agent a power of attorney to execute any such
financing statements, or amendments and supplements to financing statements, on
behalf of such Debtor without notice thereof to such Debtor, which power of
attorney is coupled with an interest and is irrevocable until the Obligations
have been fully paid and satisfied and the commitments of the Lenders to extend
credit to or for the account of either Debtor under the Credit Agreement have
terminated.
Section 7. Defaults and Remedies.
8
<PAGE>
(a) The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(i) default in the payment when due (whether by lapse of time,
acceleration or otherwise) of the Obligations or any part thereof
after giving effect to any applicable notice or grace period; or
(ii) any material representation or warranty made by either
Debtor herein, or in any statement or certificate furnished by it
pursuant hereto, or in connection with this Agreement, shall be false
in any material respect as of the date of the issuance or making
thereof; or
(iii) default in the observance or performance of any
provisions hereof requiring the maintenance of insurance on the
Collateral or dealing with the use or remittance of proceeds of
Collateral after the earlier of: (a) the date of which such default
shall first become known to any officer of either Debtor or (b)
written notice thereof is given to a Debtor by the Agent or any
Lender; or
(iv) default in the observance or performance of any other
provision hereof which is not remedied within 30 days after written
notice thereof is given to a Debtor by the Agent or any Lender; or
(v) the occurrence of any event or the existence of any
condition which is specified as an "Default" under the Credit
Agreement.
(b) Upon the occurrence and during the continuation of any Event of
Default hereunder, the Agent shall have, in addition to all other rights
provided herein or by law, the rights and remedies of a secured party under
the Code (regardless of whether the Code is the law of the jurisdiction
where the rights or remedies are asserted and regardless of whether the
Code applies to the affected Collateral), and further the Agent may,
without demand and without advertisement, notice, hearing or process of
law, all of which each Debtor hereby waives, at any time or times, sell and
deliver any or all Collateral held by or for it at public or private sale,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion. In addition to all
other sums due the Agent or any Lender hereunder, each Debtor shall pay the
Agent and any Lender all costs and expenses incurred by the Agent or such
Lender, including attorneys' fees and court costs, in obtaining,
liquidating or enforcing payment of Collateral or the Obligations or in the
prosecution or defense of any action or proceeding by or against the Agent,
such Lender or either Debtor concerning any matter arising out of or
connected with this Agreement or the Collateral or the Obligations,
including, without limitation, any of the foregoing arising in, arising
under or related to a case under the United States Bankruptcy Code (or any
successor statute). Any requirement of reasonable notice shall be met if
such notice is personally served on or mailed, postage prepaid, to the
Debtors in accordance with Section 12(b) hereof at
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<PAGE>
least ten (10) days before the time of sale or other event giving rise to
the requirement of such notice; provided however, no notification need be
given to a Debtor if such Debtor has signed, after an Event of Default
hereunder has occurred, a statement renouncing any right to notification of
sale or other intended disposition. The Agent shall not be obligated to
make any sale or other disposition of the Collateral regardless of notice
having been given. The Agent or any Lender may be the purchaser at any
such sale. Each Debtor hereby waives all of its rights of redemption from
any such sale. Subject to the provisions of applicable law, the Agent may
postpone or cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such
sale may, without further notice, be made at the time and place to which
the sale was postponed or the Agent may further postpone such sale by
announcement made at such time and place.
(c) Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default hereunder, the Agent
shall have the right, in addition to all other rights provided herein or by
law, to take physical possession of any and all of the Collateral and
anything found therein, the right for that purpose to enter without legal
process any premises where the Collateral may be found (provided such entry
be done lawfully), and the right to maintain such possession on each
Debtor's premises (each Debtor hereby agreeing to lease such premises
without cost or expense to the Agent or its designee if the Agent so
requests) or to remove the Collateral or any part thereof to such other
places as the Agent may desire. Upon the occurrence and during the
continuation of any Event of Default hereunder, each Debtor shall, upon the
Agent's demand, assemble the Collateral and make it available to the Agent
at a place designated by the Agent. If the Agent exercises its right to
take possession of the Collateral, each Debtor shall also at its expense
perform any and all other steps requested by the Agent to preserve and
protect the security interest hereby granted in the Collateral, such as
placing and maintaining signs indicating the security interest of the
Agent, appointing overseers for the Collateral and maintaining Collateral
records.
(d) Without in any way limiting the foregoing, each Debtor hereby
grants to the Agent and the Lenders a royalty-free irrevocable license and
right to use all of such Debtor's patents, patent applications, patent
licenses, trademarks, trademark registrations, trademark licenses, trade
names, trade styles, and similar intangibles in connection with any
foreclosure or other realization by the Agent or the Lenders on all or any
part of the Collateral. The license and right granted the Agent and the
Lenders hereby shall be without any royalty or fee or charge whatsoever.
(e) Failure by the Agent to exercise any right, remedy or option
under this Agreement or any other agreement between any Debtor and the
Agent or provided by law, or delay by the Agent in exercising the same,
shall not operate as a waiver; and no waiver shall be effective unless it
is in writing, signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated. Neither the
Agent or any Lender, nor any party acting as attorney for the Agent or any
Lender,
10
<PAGE>
shall be liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence or
willful misconduct. The rights and remedies of the Agent and the Lenders
under this Agreement shall be cumulative and not exclusive of any other
right or remedy which the Agent or the Lenders may have. For purposes of
this Agreement, an Event of Default shall be construed as continuing after
its occurrence until the same is waived in writing by the Lenders or the
Required Lenders, as the case may be, in accordance with the Credit
Agreement.
Section 8. Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default hereunder shall, when received by the Agent
in cash or its equivalent, be applied by the Agent in reduction of the
Obligations in accordance with the terms of the Credit Agreement. Each Debtor
shall remain liable to the Agent and the Lenders for any deficiency. Any surplus
remaining after the full payment and satisfaction of the Obligations shall be
returned to the Debtors or to whomsoever the Agent reasonably determines is
lawfully entitled thereto.
Section 9. Continuing Agreement. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Obligations, both for principal and interest, have been fully paid and
satisfied and the commitments of the Lenders to extend credit to or for the
account of either Debtor under the Credit Agreement have terminated. Upon such
termination of this Agreement, the Agent shall, upon the request and at the
expense of the Debtors, forthwith release its security interest hereunder.
(a) The Agent. In acting under or by virtue of this Agreement, the
Agent shall be entitled to all the rights, authority, privileges and
immunities provided in Article IX of the Credit Agreement, all of which
provisions of said Article IX are incorporated by reference herein with the
same force and effect as if set forth herein in their entirety. The Agent
hereby disclaims any representation or warranty to the Lenders concerning
the perfection of the security interest granted hereunder or in the value
of any of the Collateral.
Section 10. Primary Security; Obligations Absolute. The lien and security
herein created and provided for stand as direct and primary security for the
Obligations. No application of any sums received by the Agent in respect of the
Collateral or any disposition thereof to the reduction of the Obligations or any
portion thereof shall in any manner entitle any Debtor to any right, title or
interest in or to the Obligations or any collateral security therefor, whether
by subrogation or otherwise, unless and until all Obligations have been fully
paid and satisfied and the commitments of the Lenders to extend credit or
otherwise make financial accommodations available to or for the account of each
Debtor under the Credit Agreement have expired or otherwise have been
terminated. Each Debtor acknowledges and agrees that the lien and security
hereby created and provided for are absolute and unconditional and shall not in
any manner be affected or impaired by any acts or omissions whatsoever of the
Agent, any Lender or any other holder of any of the Obligations, and without
limiting the generality of the foregoing, the lien and security hereof shall not
be impaired by any acceptance by the Agent, any Lender or any holder of any of
the Obligations of any other security for or guarantors upon any of the
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Obligations or by any failure, neglect or omission on the part of the Agent, any
Lender or any other holder of any of the Obligations to realize upon or protect
any of the Obligations or any collateral security therefor. Without limiting
the restrictions contained in Sections 10.13 and 10.14 of the Credit Agreement,
the lien and security hereof shall not in any manner be impaired or affected by
(and the Agent and the Lenders, without notice to anyone, are hereby authorized
to make from time to time) any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration, substitution, exchange,
change in, modification or disposition of any of the Obligations, or of any
collateral security therefor, or of any guaranty thereof or of any obligor
thereon. The Lenders may at their discretion at any time grant credit to the
Borrowers, or any of them individually, without notice to any Debtor in such
amounts and on such terms as the Lenders may elect without in any manner
impairing the lien and security hereby created and provided for. No release,
compromise or discharge of any Debtor hereunder or with respect to any of the
Obligations or any Collateral provided by such Debtor shall release or
discharge, or impair the agreements of, any other Debtor hereunder or in any
manner impair the liens and security interests granted by any other Debtor
hereunder; and the Agent may proceed against the Collateral provided hereunder
by any one or more of the Debtors without proceeding against the other Debtors,
their respective properties or any other security or guaranty whatsoever.
Without limiting the generality of the foregoing, the requisite number of
Lenders (as determined in accordance with the terms of the Credit Agreement) may
at any time or from time to time release any Debtor from its obligations
hereunder or release any Collateral or effect any compromise with any Debtor,
and no such release or compromise shall in any manner impair or otherwise effect
the liens granted by, or the obligations of, the other Debtors hereunder. In
order to foreclose or otherwise realize hereon and to exercise the rights
granted the Agent hereunder and under applicable law, there shall be no
obligation on the part of the Agent, any Lender or any other holder of any of
the Obligations at any time to first resort for payment to any Debtor or any
other obligor on any of the Obligations or to any guaranty of the Obligations or
any portion thereof or to resort to any other collateral security, property,
liens or any other rights or remedies whatsoever, and the Agent shall have the
right to enforce this instrument irrespective of whether or not other
proceedings or steps are pending seeking resort to or realization upon or from
any of the foregoing.
Section 11. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. This
Agreement shall create a continuing security interest in the Collateral and
shall be binding upon the Debtors, their respective successors and assigns
and shall inure, together with the rights and remedies of the Agent and the
Lenders hereunder, to the benefit of the Agent, the Lenders, and their
successors and assigns; provided, however, that no Debtor may assign its
rights or delegate its duties hereunder without the Agent's prior written
consent. Without limiting the generality of the foregoing, and subject to
the provisions of Section 10.13 of the Credit Agreement, any Lender may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other person or entity, and such other person or entity
shall thereupon become vested with all the benefits in respect thereof
granted to such Lender herein or otherwise, subject, however, to the
provisions
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of the Credit Agreement. Each Debtor hereby releases the Agent and each
Lender from any liability for any act or omission relating to the
Collateral or this Agreement, except for the Agent's or such Lender's gross
negligence or willful misconduct.
(b) Except as otherwise specified herein, all notices hereunder shall
be in writing (including, without limitation, notice by telecopy) and shall
be given to the relevant party, and shall be deemed to have been made when
given to the relevant party, in accordance with Section 10.15 of the Credit
Agreement.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure or other realization
upon any Collateral subject to this Agreement or for the execution of any
trust or power hereof or for the appointment of a receiver, or for the
enforcement of any other remedy under or upon this Agreement; it being
understood and intended that no one or more of the Lenders shall have any
right in any manner whatsoever to affect, disturb or prejudice the lien and
security interest of this Agreement by its or their action or to enforce
any right hereunder, and that all proceedings at law or in equity shall be
instituted, had and maintained by the Agent in the manner herein provided
for the benefit of the Lenders.
(d) In the event that any provision hereof shall be deemed to be
invalid or unenforceable by reason of the operation of any law or by reason
of the interpretation placed thereon by any court, this Agreement shall be
construed as not containing such provision, but only as to such
jurisdictions where such law or interpretation is operative, and the
invalidity or unenforceability of such provision shall not affect the
validity of any remaining provisions hereof, and any and all other
provisions hereof which are otherwise lawful and valid shall remain in full
force and effect.
(e) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the
laws of the State of Illinois. All terms which are used in this Agreement
which are defined in the Code shall have the same meanings herein as said
terms do in the Code unless this Agreement shall otherwise specifically
provide. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning of any provision
hereof.
(f) This Agreement may be executed in any number of counterparts and
by different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same agreement.
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In Witness Whereof, each Debtor has caused this Agreement to be duly
executed and delivered as of the date first above written.
LaSalle Partners Limited Partnership,
a Delaware limited partnership
By /s/ Timothy M. McGarrity
-------------------------
Its Vice President, Treasurer and
----------------------------------
Assistant Secretary
------------------------------
LaSalle Partners Management Limited
Partnership, a Delaware limited
partnership
By /s/ Charles K. Esler, Jr.
----------------------------------
Its President, Managing Director,
----------------------------------
Treasurer and Secretary
-----------------------
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Accepted and agreed to in Chicago, Illinois as of the date first above
written.
Harris Trust and Savings Bank, as Agent
as aforesaid for the Lenders
By /s/ M. Elizabeth Gilliam
------------------------
Its Vice President
---------------
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EXHIBIT 10.03
Supporting Subsidiary Security Agreement
This Supporting Subsidiary Security Agreement (the "Agreement") dated as of
September 6, 1996 by and among the parties who have executed this Agreement
(such parties, along with any other parties who execute and deliver to the Agent
hereinafter identified and defined an agreement in the form attached hereto as
Schedule A, being herein referred to collectively as the "Debtors" and
individually as a "Debtor"), and Harris Trust and Savings Bank ("Harris") with
its mailing address 111 West Monroe Street, Chicago, Illinois 60690, acting as
agent hereunder for the Lenders hereinafter identified and defined (Harris
acting as such agent and any successor or successors to Harris acting in such
capacity being hereinafter referred to as the "Agent");
W I T N E S S E T H T H A T:
Whereas, the Debtors are subsidiaries or affiliates of either LaSalle
Partners Limited Partnership, a Delaware limited partnership ("LPL") or LaSalle
Partners Management Limited Partnership, a Delaware limited partnership ("LPML";
LPL and LPML are sometimes hereinafter referred to individually as a "Borrower"
and collectively as the "Borrowers");
Whereas, the Borrowers, Harris, individually and as agent, and LaSalle
National Bank have entered into a Credit Agreement dated as of September 6, 1996
(such Credit Agreement as the same may be amended, modified or restated from
time to time being hereinafter referred to as the "Credit Agreement"), pursuant
to which such lenders (Harris and the other lenders which are now or which from
time to time hereafter become party to the Credit Agreement being hereinafter
referred to collectively as the "Lenders" and individually as a "Lender") have
agreed, subject to certain terms and conditions, to extend credit and make
certain other financial accommodations available to the Borrowers;
Whereas, as a condition precedent to extending the credit facilities to the
Borrowers under the Credit Agreement, the Lenders have required, among other
things, that each Debtor grant to the Agent a lien on and security interest in
certain personal properties of such Debtor as collateral security for such
credit facilities and related obligations pursuant to this Agreement;
Whereas, the interdependent nature of the businesses of each of the Debtors
and the Borrowers is such that the viability of each Debtor is dependent upon
the continued success of the Borrowers and upon the continuation of the
<PAGE>
Borrowers' business relationships with such Debtor, and the continuation thereof
necessitates the Borrowers' access to credit and other financial accommodations
from the Lenders which the Lenders will only make available on the condition,
among others, that the Debtors execute and deliver this Agreement;
Whereas, each Debtor will directly and substantially benefit from credit
and other financial accommodations extended and to be extended by the Lenders to
the Borrowers; and
Now, Therefore, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Grant of Security Interest in the Collateral; Obligations
Secured.
(a) Each Debtor hereby grants to the Agent for the benefit of the Lenders a
security interest in and right of set-off against, and acknowledges and agrees
that the Agent has and shall continue to have for the benefit of the Lenders a
continuing security interest in and right of set-off against, any and all right,
title and interest of each Debtor, whether now owned or existing or hereafter
created, acquired or arising, in and to the following:
(i) Receivables. All of such Debtor's present and future rights to
payment for services rendered, whether or not evidenced by instruments or
chattel paper, and whether or not they have been earned by performance,
proceeds of any letters of credit on which such Debtor is named as
beneficiary, contract rights, chattel paper, instruments, documents, notes,
drafts, acceptances, insurance proceeds, and all such obligations
whatsoever owing to such Debtor, together with all instruments and all
documents of title representing any of the foregoing (the "Receivables");
and
(ii) Equipment. Equipment, whether now owned or existing or hereafter
created, acquired or arising, or in which such Debtor now has or hereafter
acquires any rights (the term "Equipment" means and includes all equipment,
machinery, tools, trade fixtures, furniture, furnishings, office equipment,
vehicles [including vehicles subject to a certificate of title law] and all
other goods now or hereafter used or usable in connection with
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such Debtor's business, together with all parts, accessories and attach
ments relating to any of the foregoing);
(iii) Deposits and Property in Possession. All deposit accounts
(whether general, specific or otherwise) maintained with the Agent or any
of the Lenders and all sums now or hereafter on deposit therein or payable
thereon, and any and all other property or interests in property which now
is or may from time to time hereafter come into the possession, custody or
control of the Agent or any of the Lenders, or any agent of any of them, in
any way and for any purpose (whether for safekeeping, custody, pledge,
transmission, collection or otherwise) but excluding all accounts of any
Debtor in a fiduciary capacity;
(iv) Records. Supporting evidence and documents relating to any of
the above-described property, including, without limitation, computer
programs, disks, tapes, and related electronic data processing media, and
all rights of such Debtor to retrieve the same from third parties, written
applications, credit information, account cards, payment records,
correspondence, delivery and installation certificates, invoice copies,
delivery receipts, notes and other evidences of indebtedness, insurance
certificates and the like, together with all books of account, ledgers and
cabinets in which the same are reflected or maintained, all whether now
existing or hereafter arising;
(v) Accessions and Additions. All accessions and additions to and
substitutions and replacements of any and all of the foregoing, whether
now existing or hereafter arising; and
(vi) Proceeds. All substitutions for and all replacements, proceeds of
the foregoing and, to the extent not otherwise included, all payments under
any insurance (whether or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing. For purposes of this
Agreement, the term "proceeds" includes whatever is receivable or received
when Receivables or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary
all of the foregoing being herein sometimes referred to as the "Collateral".
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(b) This Agreement is made and given to secure, and shall secure, the
payment and performance of (i) any and all indebtedness, obligations and
liabilities of either Borrower or any Debtor under or in connection with or
evidenced by (w) the Credit Agreement or (x) the Notes of either Borrower
heretofore or hereafter issued under the Credit Agreement and the
obligations of either Borrower to reimburse the Agent for the amount of all
drawings on all Letters of Credit issued for the account of either Borrower
pursuant to the Credit Agreement, and all other obligations of either
Borrower under any and all applications for such Letters of Credit or (y)
any of the Security Documents, in each case whether now existing or
hereafter arising (and whether arising before or after the filing of a
petition in bankruptcy), due or to become due, direct or indirect, absolute
or contingent, and howsoever evidenced, held or acquired and (ii) any and
all expenses and charges, legal or otherwise, suffered or incurred by the
Agent and the Lenders in collecting or enforcing any of such indebtedness,
obligations and liabilities or in realizing on or protecting or preserving
any security therefor, including, without limitation, the lien and security
interest granted hereby other than any of the foregoing that result from
the gross negligence or willful misconduct of the Agent or such Lender
(all of the indebtedness, obligations, liabilities, expenses and charges
described in clauses (i) and (ii) above being hereinafter referred to as
the "Obligations").
Section 2. Terms defined in Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms have
in the Credit Agreement. The term "Debtor" and "Debtors" as used herein shall
mean and include the Debtors collectively and also each individually, with all
grants, representations, warranties and covenants of and by the Debtors, or any
of them, herein contained to constitute joint and several grants, represen-
tations, warranties and covenants of and by the Debtors; provided, however, that
unless the context in which the same is used shall otherwise require, any grant,
representation, warranty or covenant contained herein related to the Collateral
shall be made by each Debtor only with respect to the Collateral owned by it or
represented by such Debtor as owned by it.
Section 3. Covenants, Agreements, Representations and Warranties. Each
Debtor hereby covenants and agrees with, and represents and warrants to, the
Agent and the Lenders that:
(a) Each Debtor is a limited partnership duly organized, validly
existing and in good standing under the laws of its state of formation, is
the sole and lawful owner of the Collateral and has full right, power and
authority to enter
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into this Agreement and to perform each and all of the matters and things
herein provided for; and the execution and delivery of this Agreement, and
the observance and performance of any of the matters and things herein set
forth, will not contravene or constitute a default under any provision of
law or any judgment, injunction, order or decree binding upon such Debtor
or any provision of such Debtor's partnership agreement or of any covenant,
indenture or agreement of or affecting such Debtor or any of their
respective properties, or result in the creation or imposition of any lien
or encumbrance on any of its property.
(b) The Collateral owned or leased by each Debtor is and will remain
in such Debtor's possession or control at the locations listed on Schedule
B attached hereto (collectively, the "Permitted Collateral Locations"). If
for any reason Collateral is at any time kept or located at locations other
than the Permitted Collateral Locations, the Agent shall nevertheless have
and retain a security interest therein. Each Debtor's chief executive
office is located at the location specified on Schedule B. Each Debtor
keeps and shall keep all of its books and records relating to Receivables
only, at 200 East Randolph Drive, Chicago, Illinois 60601; and no Debtor
has any other principal place of business other than those listed on
Schedule B. No Debtor will maintain an executive office or place of
business at a location other than those specified pursuant to the
immediately preceding sentence without first providing the Agent thirty
(30) days' prior written notice of such Debtor's intent to do so; provided,
however, that each Debtor will at all times maintain its chief executive
office in the contiguous continental United States of America.
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary or
involuntary, except for the security interest of the Agent therein and the
Liens permitted under Section 6.15 of the Credit Agreement.
(d) Except as permitted by the Credit Agreement, no Debtor will,
without the Agent's prior written consent, sell, assign, mortgage, lease or
otherwise dispose of the Collateral or any interest therein. Provided that
no Event of Default has occurred and is continuing the Debtors shall be
entitled to receive and retain the proceeds of any such sale up to $100,000
for all such Debtors in any calendar year. If the Debtors receive any such
proceeds in excess of $100,000 per calendar year, the Debtors shall notify
the Agent and if the Lenders so direct, apply such proceeds to repay
outstanding Facility A Loans and
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reduce the Facility A Commitments by such amount. The Agent shall, upon a
Debtor's request, provide a release of its lien on any Collateral sold or
otherwise disposed of by such Debtor in accordance with the first sentence of
this paragraph.
(e) Each Debtor will insure the Collateral which is insurable against such
risks and hazards as other companies similarly situated insure against, and
including in any event loss or damage by fire, theft, burglary, pilferage, loss
in transit and such other hazards as the Agent may reasonably specify, in
amounts and under policies containing loss payable clauses to the Agent as its
interest may appear (and, if the Agent requests, naming the Agent and the
Lenders as additional insureds therein) by insurers reasonably acceptable to the
Agent. All premiums on such insurance shall be paid by the Debtors and the
policies of such insurance (or certificates therefor) delivered to the Agent.
All insurance required hereby shall provide that any loss shall be payable
notwithstanding any act or negligence of the relevant Debtor, shall provide that
no cancellation thereof shall be effective until at least thirty (30) days after
receipt by the relevant Debtor and the Agent of written notice thereof, and
shall be satisfactory to the Agent in all other respects. Each Debtor may retain
any proceeds of such insurance arising out of the loss, damage, or destruction
of the Collateral owned or leased by it so long as no Event of Default (as
hereinafter defined) shall have occurred and be continuing or shall arise after
giving effect to such loss, damage, or destruction. During the existence of any
Event of Default, each Debtor will immediately pay over such proceeds of
insurance to the Agent which shall thereafter be applied to the reduction of the
Obligations (whether or not then due) or held as collateral security therefor,
as the Agent may then determine and as otherwise provided for in the Credit
Agreement. All insurance proceeds shall be subject to the lien and security
interest of the Agent. Each Debtor hereby authorizes the Agent, at the Agent's
option, to adjust, compromise and settle any losses under any insurance afforded
at any time during the existence of any Event of Default, and such Debtor does
hereby irrevocably constitute the Agent, its officers, agents and attorneys, as
such Debtor's attorneys-in-fact, with full power and authority to effect such
adjustment, compromise and/or settlement and to endorse any drafts drawn by an
insurer of the Collateral or any part thereof and to do everything necessary to
carry out such purposes and to receive and receipt for any unearned premiums due
under policies of such insurance.
(f) Each Debtor will at all reasonable times allow the Agent, any Lender
and their respective representatives free access to and right of inspection of
the Collateral.
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(g) No Debtor has invoiced Receivables or otherwise transacted business,
and does not invoice Receivables or otherwise transact business, under any trade
names other than its name set forth on the signature pages of this Agreement. No
Debtor will change its name or transact business under any other trade name, in
each case without first giving the Agent thirty (30) days' prior written notice
of its intent to do so.
(h) Each Debtor agrees to execute and deliver to the Agent such further
agreements and assignments or other instruments and documents and to do all such
other things as the Agent may reasonably deem necessary or appropriate to assure
the Agent its security interest hereunder, including such financing statement or
statements or amendments thereof or supplements thereto or other instruments and
documents as the Agent may from time to time reasonably require in order to
comply with the Uniform Commercial Code as enacted in the State of Illinois and
any successor statute(s) thereto (the "Code"). Each Debtor hereby agrees that a
carbon, photographic or other reproduction of this Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Agent without notice thereof to such Debtor wherever the Agent in its sole
discretion desires to file the same. In the event for any reason the law of any
jurisdiction other than Illinois becomes or is applicable to the Collateral or
any part thereof, or to any of the Obligations, each Debtor agrees to execute
and deliver all such instruments and documents and to do all such other things
as the Agent in its sole discretion deems necessary or appropriate to preserve,
protect and enforce the security interest of the Agent under the law of such
other jurisdiction. Each Debtor agrees to mark its books and records to reflect
the security interest of the Agent in the Collateral. Without limiting the
generality of the foregoing, each Debtor will: (i) at the request of the Agent,
either turn over possession to the Agent or mark conspicuously each negotiable
document and each chattel paper included in the Collateral and each of the
records pertaining to the Collateral with a legend, in form and substance
satisfactory to the Agent, indicating that such document, chattel paper or
Collateral is subject to the security interest granted hereby; (ii) if any
Receivable owned by such Debtor in an amount greater than $10,000 shall be or
becomes evidenced by a promissory note or other instrument (other than checks
received in payment of obligations under Receivables) or chattel paper, deliver
and pledge to the Agent hereunder such note, instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Agent; and (iii) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices as the Agent or any
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Lender may reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby.
(i) After the occurrence and during the continuance of an Event of Default
or the occurrence of an event which with the lapse of time or the giving of
notice would be an Event of Default under Section 7.6 of the Credit Agreement,
on failure of a Debtor to perform any of the covenants and agreements herein
contained, the Agent may at its option perform the same and in so doing may
expend such sums as the Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums,
the payment of any taxes, liens and encumbrances, expenditures made in defending
against any adverse claims and all other expenditures which the Agent may be
compelled to make by operation of law or which the Agent may make by agreement
or otherwise for the protection of the security hereof. All such sums and
amounts so expended shall be repayable by such Debtor immediately without
notice or demand, shall constitute additional Obligations secured hereunder and
shall bear interest from the date said amounts are expended at the rate per
annum (computed on the basis of a 360-day year for the actual number of days
elapsed) determined by adding 2% to the Domestic Rate as from time to time in
effect with any change in such rate per annum as so determined by reason of a
change in such Domestic Rate to be effective on the date of such change in said
Domestic Rate (such rate per annum as so determined being hereinafter referred
to as the "Default Rate"). No such performance of any covenant or agreement by
the Agent on behalf of a Debtor, and no such advancement or expenditure
therefor, shall relieve such Debtor of any default under the terms of this
Agreement or in any way obligate the Agent or any Lender to take any further or
future action with respect thereto. The Agent is hereby authorized to charge any
depository or other account of any Debtor maintained with the Agent but
excluding all accounts of any Debtor in a fiduciary capacity for the amount of
such sums and amounts so expended.
Section 4. Special Provisions Re: Receivables.
(a) Except as otherwise provided in this subsection (a), each Debtor shall
continue to collect, at its own expense, all amounts due or to become due such
Debtor under the Receivables. In connection with such collections, a Debtor may
take such action as such Debtor may deem necessary or advisable to enforce
collection of the Receivables; provided, however, that the Agent shall have the
right at any time, upon the occurrence and during the continuance of an Event of
Default and upon written notice to the Debtors of its intention to do so,
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to notify (and, if requested by the Agent, the Debtors shall notify) the account
debtors or obligors under any Receivables, or other obligations in which a
security interest is granted hereby, of the assignment of such Receivables or
obligations to the Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to such Debtor thereunder directly
to the Agent and, upon such notification and at the expense of such Debtor, to
enforce collection of any such Receivables or obligations through legal
proceedings or otherwise, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Debtor might
have done, and to do so in the Agent's own name or in the name of others
(including, without limitation, such Debtor). After receipt by a Debtor of the
notice from the Agent referred to in the proviso to the preceding sentence: (i)
all amounts and proceeds (including instruments) received by a Debtor in respect
of the Receivables, or other obligations in which a security interest is granted
hereby, shall be received in trust for the benefit of the Agent hereunder, shall
be segregated from other funds of such Debtor and shall be forthwith paid over
to the Agent in the same form as so received (with any necessary endorsement) to
be held as collateral and either released to such Debtor so long as no Event of
Default shall have occurred and be continuing or if an Event of Default shall
have occurred and be continuing, applied as provided in the Credit Agreement;
and (ii) no Debtor shall adjust, settle or compromise the amount or payment of
any Receivable, or other obligations in which a security interest is granted
hereby, or release wholly or partly any account debtor or obligor thereof, or
allow any credit or discount thereon.
Section 5. Special Provisions Re: Equipment.
(a) Each Debtor will at its own cost and expense maintain, keep and
preserve the Equipment in good repair, working order and condition, ordinary
wear and tear excepted, and, without limiting the foregoing, make all necessary
and proper repairs, replacements and additions to the Equipment so that the
efficiency thereof shall be fully preserved and maintained.
(b) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, sell obsolete,
worn out or unusable Equipment which is concurrently replaced with similar
Equipment at least equal in quality and condition to that sold and owned by such
Debtor free of any lien, charge or encumbrance other than the security interest
granted hereby and any liens permitted under Section 6.15 of the Credit
Agreement.
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(c) Upon the Agent's request, each Debtor shall at its own cost and
expense cause the lien of the Agent in and to any portion of the Collateral
subject to a certificate of title law to be duly noted on such certificate of
title or to be otherwise filed in such manner as is prescribed by law in order
to perfect such lien and will cause all such certificates of title and evidences
of lien to be deposited with the Agent.
(d) No material portion of the Equipment is or will be attached to real
estate in such a manner that the same may become a fixture.
Section 6. Power of Attorney. In addition to any other powers of attorney
contained herein, each Debtor hereby appoints the Agent, its nominee, or any
other person whom the Agent may designate as such Debtor's attorney in fact,
with full power upon the occurrence and during the continuation of an Event of
Default hereunder to sign such Debtor's name on verifications of accounts, to
send requests for verification of Receivables to such Debtor's customers and
account debtors, to endorse such Debtor's name on any checks, notes, acceptan-
ces, money orders, drafts and any other forms of payment or security that may
come into the Agent's possession, to sign such Debtor's name on any invoice or
bill of lading relating to any Receivables, on claims to enforce collection of
any Receivable, on notices to and drafts against customers and account debtors,
on schedules and assignments of Receivables, on notices of assignment and on
public records, to notify the post office authorities to change the address for
delivery of such Debtor's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Debtor and to do all
things necessary to carry out this Agreement. Such Debtor hereby ratifies and
approves all acts of any such attorney and agrees that neither the Agent nor any
such attorney will be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law other than their gross negligence or willful
misconduct. The foregoing power of attorney, being coupled with an interest, is
irrevocable until the Obligations have been fully paid and satisfied and the
commitments of the Lenders to extend credit to or for the account of the Debtors
under the Credit Agreement have terminated. The Agent may file one or more
financing statements disclosing its security interest in any or all of the
Collateral without a Debtor's signature appearing thereon. Each Debtor also
hereby grants the Agent a power of attorney to execute any such financing
statements, or amendments and supplements to financing statements, on behalf of
such Debtor without notice thereof to such Debtor, which power of attorney is
coupled with an interest and is irrevocable until the Obligations have been
fully paid and satisfied and the commitments
10
<PAGE>
of the Lenders to extend credit to or for the account of each Borrower under the
Credit Agreement have terminated.
Section 7. Defaults and Remedies.
(a) The occurrence of any event or the existence of any condition which is
specified as an "Default" under the Credit Agreement shall constitute an "Event
of Default" hereunder.
(b) Upon the occurrence and during the continuation of any Event of
Default hereunder, the Agent shall have, in addition to all other rights
provided herein or by law, the rights and remedies of a secured party under the
Code (regardless of whether the Code is the law of the jurisdiction where the
rights or remedies are asserted and regardless of whether the Code applies to
the affected Collateral), and further the Agent may, without demand and without
advertisement, notice, hearing or process of law, all of which each Debtor
hereby waives, at any time or times, sell and deliver any or all Collateral held
by or for it at public or private sale, for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent deems advisable, in its sole
discretion. In addition to all other sums due the Agent or any Lender hereunder,
each Debtor shall pay the Agent and any Lender all costs and expenses incurred
by the Agent or such Lender, including attorneys' fees and court costs, in
obtaining, liquidating or enforcing payment of Collateral or the Obligations or
in the prosecution or defense of any action or proceeding by or against the
Agent, such Lender or any Debtor concerning any matter arising out of or
connected with this Agreement or the Collateral or the Obligations, including,
without limitation, any of the foregoing arising in, arising under or related to
a case under the United States Bankruptcy Code (or any successor statute). Any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Debtors in accordance with Section
12(b) hereof at least ten (10) days before the time of sale or other event
giving rise to the requirement of such notice; provided, however, no
notification need be given to a Debtor if such Debtor has signed, after an Event
of Default hereunder has occurred, a statement renouncing any right to
notification of sale or other intended disposition. The Agent shall not be
obligated to make any sale or other disposition of the Collateral regardless of
notice having been given. The Agent or any Lender may be the purchaser at any
such sale. Each Debtor hereby waives all of its rights of redemption from any
such sale. Subject to the provisions of applicable law, the Agent may postpone
or cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such
11
<PAGE>
sale may, without further notice, be made at the time and place to which the
sale was postponed or the Agent may further postpone such sale by announcement
made at such time and place.
(c) Without in any way limiting the foregoing, upon the occurrence and
during the continuation of any Event of Default hereunder, the Agent shall have
the right, in addition to all other rights provided herein or by law, to take
physical possession of any and all of the Collateral and anything found therein,
the right for that purpose to enter without legal process any premises where the
Collateral may be found (provided such entry be done lawfully), and the right to
maintain such possession on each Debtor's premises (each Debtor hereby agreeing
to lease such premises without cost or expense to the Agent or its designee if
the Agent so requests) or to remove the Collateral or any part thereof to such
other places as the Agent may desire. Upon the occurrence and during the
continuation of any Event of Default hereunder, each Debtor shall, upon the
Agent's demand, assemble the Collateral and make it available to the Agent at a
place designated by the Agent. If the Agent exercises its right to take
possession of the Collateral, each Debtor shall also at its expense perform any
and all other steps requested by the Agent to preserve and protect the security
interest hereby granted in the Collateral, such as placing and maintaining signs
indicating the security interest of the Agent, appointing overseers for the
Collateral and maintaining Collateral records.
(d) Without in any way limiting the foregoing, each Debtor hereby grants
to the Agent and the Lenders a royalty-free irrevocable license and right to use
all of such Debtor's patents, patent applications, patent licenses, trademarks,
trademark registrations, trademark licenses, trade names, trade styles, and
similar intangibles in connection with any foreclosure or other realization by
the Agent or the Lenders on all or any part of the Collateral. The license and
right granted the Agent and the Lenders hereby shall be without any royalty or
fee or charge whatsoever.
(e) Failure by the Agent to exercise any right, remedy or option under
this Agreement or any other agreement between any Debtor and the Agent or
provided by law, or delay by the Agent in exercising the same, shall not operate
as a waiver; and no waiver shall be effective unless it is in writing, signed by
the party against whom such waiver is sought to be enforced and then only to the
extent specifically stated. Neither the Agent or any Lender, nor any party
acting as attorney for the Agent or any Lender, shall be liable hereunder for
any acts or omissions or for any error of judgment or mistake of fact or law
other than their
12
<PAGE>
gross negligence or willful misconduct. The rights and remedies of the Agent and
the Lenders under this Agreement shall be cumulative and not exclusive of any
other right or remedy which the Agent or the Lenders may have. For purposes of
this Agreement, an Event of Default shall be construed as continuing after its
occurrence until the same is waived in writing by the Lenders or the Required
Lenders, as the case may be, in accordance with the Credit Agreement.
Section 8. Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default hereunder shall, when received by the Agent
in cash or its equivalent, be applied by the Agent in reduction of the
Obligations in accordance with the terms of the Credit Agreement. Each Debtor
shall remain liable to the Agent and the Lenders for any deficiency. Any surplus
remaining after the full payment and satisfaction of the Obligations shall be
returned to the Debtors or to whomsoever the Agent reasonably determines is
lawfully entitled thereto.
Section 9. Continuing Agreement. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Obligations, both for principal and interest, have been fully paid and
satisfied and the commitments of the Lenders to extend credit to or for the
account of either Borrower under the Credit Agreement have terminated. Upon such
termination of this Agreement, the Agent shall, upon the request and at the
expense of the Debtors, forthwith release its security interest hereunder.
Section 10. The Agent. In acting under or by virtue of this Agreement, the
Agent shall be entitled to all the rights, authority, privileges and immunities
provided in Article IX of the Credit Agreement, all of which provisions of said
Article IX are incorporated by reference herein with the same force and effect
as if set forth herein in their entirety. The Agent hereby disclaims any
representation or warranty to the Lenders concerning the perfection of the
security interest granted hereunder or in the value of any of the Collateral.
Section 11. Primary Security; Obligations Absolute. The lien and security
herein created and provided for stand as direct and primary security for the
Obligations. No application of any sums received by the Agent in respect of the
Collateral or any disposition thereof to the reduction of the Obligations or any
portion thereof shall in any manner entitle any Debtor to any right, title or
interest in or to the Obligations or any collateral security therefor, whether
by subrogation or otherwise, unless and until all Obligations have been fully
paid
13
<PAGE>
and satisfied and the commitments of the Lenders to extend credit or otherwise
make financial accommodations available to or for the account of each Borrower
under the Credit Agreement have expired or otherwise have been terminated. Each
Debtor acknowledges and agrees that the lien and security hereby created and
provided for are absolute and unconditional and shall not in any manner be
affected or impaired by any acts or omissions whatsoever of the Agent, any
Lender or any other holder of any of the Obligations, and without limiting the
generality of the foregoing, the lien and security hereof shall not be impaired
by any acceptance by the Agent, any Lender or any holder of any of the
Obligations of any other security for or guarantors upon any of the Obligations
or by any failure, neglect or omission on the part of the Agent, any Lender or
any other holder of any of the Obligations to realize upon or protect any of the
Obligations or any collateral security therefor. Without limiting the
restrictions contained in Sections 10.13 and 10.14 of the Credit Agreement, the
lien and security hereof shall not in any manner be impaired or affected by (and
the Agent and the Lenders, without notice to anyone, are hereby authorized to
make from time to time) any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration, substitution, exchange,
change in, modification or disposition of any of the Obligations, or of any
collateral security therefor, or of any guaranty thereof or of any obligor
thereon. The Lenders may at their discretion at any time grant credit to the
Borrowers, or any of them individually, without notice to any Debtor in such
amounts and on such terms as the Lenders may elect without in any manner
impairing the lien and security hereby created and provided for. No release,
compromise or discharge of any Debtor hereunder or with respect to any of the
Obligations or any Collateral provided by such Debtor shall release or
discharge, or impair the agreements of, any other Debtor hereunder or in any
manner impair the liens and security interests granted by any other Debtor
hereunder; and the Agent may proceed against the Collateral provided hereunder
by any one or more of the Debtors without proceeding against the other Debtors,
their respective properties or any other security or guaranty whatsoever.
Without limiting the generality of the foregoing, the requisite number of
Lenders (as determined in accordance with the terms of the Credit Agreement) may
at any time or from time to time release any Debtor from its obligations
hereunder or release any Collateral or effect any compromise with any Debtor,
and no such release or compromise shall in any manner impair or otherwise effect
the liens granted by, or the obligations of, the other Debtors hereunder. In
order to foreclose or otherwise realize hereon and to exercise the rights
granted the Agent hereunder and under applicable law, there shall be no
obligation on the part of the Agent, any Lender or any other holder of any of
the Obligations at any time to first resort for payment to any Borrower or any
other
14
<PAGE>
obligor on any of the Obligations or to any guaranty of the Obligations or any
portion thereof or to resort to any other collateral security, property, liens
or any other rights or remedies whatsoever, and the Agent shall have the right
to enforce this instrument irrespective of whether or not other proceedings or
steps are pending seeking resort to or realization upon or from any of the
foregoing.
Section 12. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. This Agreement
shall create a continuing security interest in the Collateral and shall be
binding upon the Debtors, their respective successors and assigns and shall
inure, together with the rights and remedies of the Agent and the Lenders
hereunder, to the benefit of the Agent, the Lenders, and their successors and
assigns; provided, however, that no Debtor may assign its rights or delegate its
duties hereunder without the Agent's prior written consent. Without limiting
the generality of the foregoing, and subject to the provisions of Section 10.13
and 10.14 of the Credit Agreement, any Lender may assign or otherwise transfer
any indebtedness held by it secured by this Agreement to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise,
subject, however, to the provisions of the Credit Agreement. Each Debtor hereby
releases the Agent and each Lender from any liability for any act or omission
relating to the Collateral or this Agreement, except for the Agent's or such
Lender's gross negligence or willful misconduct.
(b) Except as otherwise specified herein, all notices hereunder shall be in
writing (including, without limitation, notice by telecopy) and shall be given
to the relevant party, and shall be deemed to have been made when given to the
relevant party, in accordance with Section 10.15 of the Credit Agreement.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure or other realization upon any
Collateral subject to this Agreement or for the execution of any trust or power
hereof or for the appointment of a receiver, or for the enforcement of any other
remedy under or upon this Agreement; it being understood and intended that no
one or more of the Lenders shall have any right in any manner whatsoever to
affect, disturb or prejudice the lien and security interest of this Agreement by
its or their action or to enforce any right hereunder, and that all proceedings
at law or in equity shall be instituted, had and maintained by the Agent in the
manner herein provided for the benefit of the Lenders.
15
<PAGE>
(d) Notwithstanding anything herein to the contrary, the right of recovery
against each Debtor under this Security Agreement shall not exceed the Maximum
Liability Amount. For purposes of this paragraph, the term "Maximum Liability
Amount" shall mean $1.00 less than the amount of the lowest claim on this
Security Agreement which would render it void or voidable under applicable law
against such Debtor.
(e) In the event that any provision hereof shall be deemed to be invalid
or unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision, but only as to such jurisdictions where such law
or interpretation is operative, and the invalidity or unenforceability of such
provision shall not affect the validity of any remaining provisions hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
(f) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. All terms which are used in this Agreement which are
defined in the Code shall have the same meanings herein as said terms do in the
Code unless this Agreement shall otherwise specifically provide. The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.
(g) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same agreement.
16
<PAGE>
In Witness Whereof, each Debtor has caused this Agreement to be duly
executed and delivered as of the date first above written.
LaSalle Partners Management (Arizona)
Limited Partnership, an Arizona
limited partnership
By: LaSalle Partners Management Limited
Partnership, a Delaware limited partnership
Its: General Partner
By /s/ Charles K. Esler, Jr.
--------------------------
Name: Charles K. Esler, Jr.
Its: President, Managing Director,
Treasurer and Secretary
Lasalle Partners (Georgia) Limited Partnership,
a Georgia limited partnership
By: LaSalle Partners Limited Partnership,
a Delaware limited partnership
Its: General Partner
By: /s/ Timothy M. McGarrity
-------------------------
Name: Timothy M. McGarrity
Its: Vice President, Treasurer and
Assistant Secretary
S-1
<PAGE>
LaSalle Construction Limited Partnership,
a Delaware limited partnership
By: LaSalle Construction Corporation,
an Illinois corporation
Its: General Partners
By: /s/ Ronald P. Vander Weele
--------------------------
Name: Ronald P. Vander Weele
Its: Senior Vice President
LaSalle Advisors Limited, a Delaware
limited partnership
By: LaSalle Partners Limited Partnership,
a Delaware limited partnership
Its: General Partner
By: /s/ Timothy M. McGarrity
-------------------------
Name: Timothy M. McGarrity
Its: Vice President, Treasurer
and Assistant Secretary
ABKB/LaSalle Securities Limited Partnership,
a Maryland limited partnership
By: ABKB/LaSalle Securities, Inc., a
Maryland corporation
Its: General Partners
By: /s/ Ronald P. Vander Weele
---------------------------
Name: Ronald P. Vander Weele
Its: Senior Vice President
S-2
<PAGE>
LaSalle Partners (New York) Limited Partnership,
By: LaSalle Partners Incorporated, a
New York corporation
Its: General Partners
By: /s/ Charles K. Esler
---------------------
Name: Charles K. Esler
Its: President
LaSalle Partners (Colorado) Limited Partnership,
a Colorado limited partnership
By: /s/ Kenneth R. Gillis
----------------------
Name: Kenneth R. Gillis
Its: General Partner
LaSalle Partners Management (Illinois)
Limited Partnership, an Illinois
limited partnership
By: /s/ Jon R. Andersen
--------------------
Name: Jon R. Andersen
Its: General Partner
LSPAM (California) Limited Partnership,
a California limited partnership
By: LaSalle Partners Asset Management of
California, Inc., a California corporation
Its: General Partner
By: /s/ Charles K. Esler, Jr.
--------------------------
Name: Charles K. Esler, Jr.
Its: President
S-3
<PAGE>
LPAML-COPUB Limited Partnership,
a Delaware limited partnership
By: LPAML-COPUB Corporation, a
Delaware corporation
Its: General Partner
By: /s/ Charles K. Esler, Jr.
--------------------------
Name: Charles K. Esler, Jr.
Its: President
LPAML Colorado Limited Partnership,
a Colorado limited partnership
By: /s/ Lilly A. Barnett
---------------------
Name: Lilly A. Barnett
Its: General Partner
LaSalle Partners Development Limited,
a Delaware limited partnership
By: LaSalle Partners Management Limited
Partnership, a Delaware limited partnership
Its: General Partner
By: /s/ Charles K. Esler, Jr.
--------------------------
Name: Charles K. Esler, Jr.
Its: President
LaSalle Partners Management (Ohio) Limited
Partnership, an Illinois limited partnership
By: /s/ Cynthia K. Bucco
---------------------
Name: Cynthia K. Bucco
Its: General Partner
S-4
<PAGE>
LaSalle Partners Management Limited
Partnership, a Florida limited partnership
By: /s/ Robert N. Rea
------------------
Name: Robert N. Rea
Its: General Partner
S-5
<PAGE>
LSP Services (California) Limited Partnership,
a California limited partnership
By: LaSalle Partners of California, Inc., a
California corporation
Its: General Partner
By: /s/ Stuart L. Scott
--------------------
Name: Stuart L. Scott
Its: President
LaSalle Partners (Illinois) Limited Partnership,
an Illinois limited partnership
By: /s/ Stuart L. Scott
--------------------
Name: Stuart L. Scott
Its: President
S-6
<PAGE>
Accepted and agreed to in Chicago, Illinois as of the date first above written.
Harris Trust And Savings Bank, as Agent
as aforesaid for the Lenders
By: /s/ M. Elizabeth Gilliam
-------------------------
Its: Vice President
---------------
S-7
<PAGE>
Exhibit 10.04
Pledge And Security Agreement
This Pledge and Security Agreement (the "Agreement") is dated as of
September 6, 1996, made by LaSalle Partners Management Limited Partnership, a
Delaware limited partnership ("LPML") and LaSalle Partners Limited Partnership,
a Delaware limited partnership ("LPL") (LPL and LPML are hereinafter referred to
collectively as the "Grantors" and individually as a "Grantor") and Harris Trust
and Savings Bank ("Harris") with its mailing address 111 West Monroe Street,
acting as agent hereunder for the Lenders hereinafter identified and defined
(Harris acting as such agent and any successor or successors to Harris acting in
such capacity being hereinafter referred to as the "Agent");
W i t n e s s e t h T h a t:
Whereas, the Grantors, Harris, individually and as agent, and LaSalle
National Bank, have entered into a Credit Agreement dated as of September 6,
1996 (such Credit Agreement as the same may be amended, modified or restated
from time to time being hereinafter referred to as the "Credit Agreement"),
pursuant to which such lenders (Harris and the other lenders which are now or
which from time to time hereafter become party to the Credit Agreement being
hereinafter referred to collectively as the "Lenders" and individually as a
"Lender") have agreed, subject to certain terms and conditions, to extend credit
and make certain other financial accommodations available to the Grantors;
Whereas, as a condition precedent to extending the credit facilities to the
Grantors under the Credit Agreement, the Lenders have required, among other
things, that the Grantors grant to the Agent a lien on and security interest in
certain personal properties of the Grantors as collateral security for such
credit facilities and related obligations pursuant to this Agreement;
Now, Therefore, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Grant of Security Interest. Each Grantor hereby grants to the Agent
for the benefit of the Lenders a lien on and security interest in, and
acknowledges and agrees that the Agent has and shall continue to have a
continuing lien on and security interest in, any and all right, title and
interest of such Grantor, whether now owned or existing or hereafter created,
acquired or arising, in and to the following: (a) all promissory notes and other
instruments payable to or otherwise acquired by such Grantor and any and all
rights in and to any and all agreements and collateral securing or relating
thereto and the shares of the capital stock of the issuers, each as listed and
described on Schedule A attached hereto and made a part hereof as such Schedule
may from time to time be amended as hereinafter set forth, and all substitutions
and additions to such shares, notes or instruments (herein, the "Pledged
Securities"), (b) all dividends, distributions and sums distributable or payable
from, upon or in respect of the Pledged Securities, (c) all
<PAGE>
other rights and privileges incident to the Pledged Securities, and (d) all
proceeds and products of the foregoing (all of the foregoing being hereinafter
referred to collectively as the "Collateral"). This pledge and assignment
constitutes an assignment of the rights of each Grantor with respect to the
Collateral only and not an assignment of any duties or obligations either
Grantor may have with regard to the management of, or the giving of advice to,
the issuers of the Pledged Securities.
2. Obligations Hereby Secured. The lien and security interest granted and
provided for herein is made and given to secure, and shall secure, the payment
and performance of (a) the Obligations (as defined in the Credit Agreement) and
(b) any and all expenses and charges, legal or otherwise, suffered or incurred
by the Agent or any Lender in collecting or enforcing any of such indebtedness,
obligations and liabilities or in realizing on or protecting or preserving any
security therefor, including, without limitation, the lien and security interest
granted hereby other than any of the foregoing that result from the gross
negligence or willful misconduct of the Agent or such Lender (all of the
foregoing being hereinafter referred to as the "Obligations").
3. Covenants, Agreements, Representations and Warranties. Each Grantor
hereby covenants and agrees with, and represents and warrants to, the Agent and
Lenders that:
(a) Each Grantor is a limited partnership duly organized and validly
existing in good standing under the laws of the State of Delaware, is the sole
and lawful legal, record and beneficial owner of the Collateral, and has full
right, power and authority to enter into this Agreement and to perform each and
all of the matters and things herein provided for. The execution and delivery of
this Agreement, and the observance and performance of the matters and things
herein set forth, will not (i) contravene or constitute a default under any
provision of law, or any judgment, injunction, order or decree binding upon
either Grantor, or any provision of either Grantor's partnership agreement, or
any covenant, indenture or agreement of or affecting either Grantor or any of
their respective property, or (ii) result in the creation or imposition of any
lien or encumbrance on any property of either Grantor except for the lien and
security interest in the Collateral granted to the Lender pursuant to this
Agreement and except as permitted under Section 6.15(g) of the Credit Agreement.
Each Grantor's chief executive office is located at 200 East Randolph, Chicago,
Illinois 60601, and neither Grantor shall move its chief executive office
without first providing the Agent 30 days prior written notice of such Grantor's
intent to do so, provided that each Grantor shall at all times maintain its
chief executive office in the United States of America and, with respect to any
such new location, such Grantor shall have taken all action requested by the
Agent to maintain the lien and security interest of the Agent in the Collateral
at all times fully perfected and in full force and effect.
(b) The certificates, if any, for all shares of the Pledged Securities
shall be delivered by the Grantors to the Agent duly endorsed in blank for
transfer or accompanied by an appropriate assignment or assignments or an
appropriate undated stock power or powers, in every case sufficient to transfer
title thereto. The Agent may at any time after the occurrence and during the
continuance of a Default cause to be transferred into its name or into the name
of its
<PAGE>
nominee or nominees any and all of the shares of the Pledged Securities. The
Agent shall at all times have the right to exchange the certificates
representing the Pledged Securities for certificates of smaller or larger
denominations. The Grantors have delivered the only executed original of the
Pledged Securities to the Agent, the same has not been amended or modified in
any respect, the unpaid principal balance of each Pledged Security that
constitutes a note or instrument as of the date hereof is as set forth on
Schedule A hereto; and there is not any defense, set-off or counterclaim to the
obligation of the obligor thereon to pay the principal of and interest on each
Pledged Security that constitutes a note or instrument as and when the same
becomes due and payable. The Grantors have delivered to the Agent true and
correct copies of all instruments and documents securing the Pledged Securities
or setting forth terms and conditions applicable thereto (collectively the "Loan
Documents") and the same have not been amended or modified in any respect
(except for amendments and modifications reflected in written instruments,
copies of which have heretofore been delivered to the Agent). To the best
knowledge of the Grantor, each obligor under a Pledged Security that constitutes
a note or instrument is in full compliance with their respective obligations
thereunder and the applicable Loan Documents, and no default has occurred and
existing thereunder.
(c) The Pledged Securities have been validly issued and are fully paid and
nonassessable. There are no outstanding commitments or other obligations of the
issuer of any of the Pledged Securities to issue, and no options, warrants or
other rights of any person or entity to acquire, any share of any class or
series of capital stock of such issuer. Each Grantor further agrees that in the
event that such Grantor shall acquire any additional capital stock of any class
or series of such issuer, such Grantor shall forthwith pledge and deposit
hereunder, or cause to be pledged and deposited hereunder, all such additional
shares of such capital stock (other than directors' qualifying shares as
required by law).
(d) The Collateral and every part thereof is and will be free and clear of
all security interests, liens (including, without limitation, mechanics',
laborers' and statutory liens), attachments, levies and encumbrances of every
kind, nature and description and whether voluntary or involuntary, except for
the security interest of the Agent therein and the Liens permitted under Section
6.15 of the Credit Agreement. Each Grantor shall warrant and defend the
Collateral against any claims and demands of all persons or entities at any time
claiming the same or any interest in the Collateral adverse to the Agent. Each
Grantor has the right to vote the Collateral and there are no restrictions upon
the voting rights associated with, or the transfer of, any of the Collateral,
except as provided by federal and state laws applicable to the sale of
securities generally or as otherwise disclosed to the Lender in writing.
(e) None of the Collateral constitutes margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System).
(f) Except as permitted in Section 6.11 or Section 6.15(g) of the Credit
Agreement, neither Grantor shall, without the Agent's prior written consent,
sell, assign, pledge, encumber, or otherwise dispose of the Collateral or any
interest therein.
<PAGE>
(g) Each Grantor shall promptly pay when due all taxes, assessments and
governmental charges and levies upon or against such Grantor or the Collateral,
in each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith by appropriate proceedings which prevent foreclosure on or other
realization upon any of the Collateral and such Grantor shall have established
adequate reserves therefor.
(h) Each Grantor agrees to execute and deliver to the Agent such further
agreements, assignments, instruments and documents and to do all such other
things as the Agent or any Lender may deem necessary or appropriate to assure
the Agent its lien and security interest hereunder, including such assignments,
stock powers, financing statements, instruments and documents as the Agent or
any Lender may from time to time require in order to comply with the Uniform
Commercial Code as enacted in the State of Illinois and any successor statute(s)
thereto (the "Code"). Each Grantor hereby agrees that a carbon, photographic or
other reproduction of this Agreement or any such financing statement is
sufficient for filing as a financing statement by the Agent without notice
thereof to either Grantor wherever the Agent in its sole discretion desires to
file the same. In the event for any reason the law of any jurisdiction other
than Illinois becomes or is applicable to the Collateral or any part thereof, or
to any of the Obligations, each Grantor agrees to execute and deliver all such
agreements, assignments, instruments and documents and to do all such other
things as the Agent or any Lender in their sole discretion deems necessary or
appropriate to preserve, protect and enforce the lien and security interest of
the Agent under the law of such other jurisdiction. Each Grantor agrees to mark
its books and records to reflect the lien and security interest of the Agent in
the Collateral.
(i) If, as and when a Grantor delivers any securities, notes or
instruments for pledge hereunder in addition to those listed on Schedule A
hereto, such Grantor shall furnish to the Agent a duly completed and executed
amendment to such Schedule in substantially the form (with appropriate
insertions) of Schedule B hereto reflecting the securities pledged hereunder
after giving effect to such addition.
(j) After the occurrence and during the continuance of a Default or the
occurrence of an event which with the lapse of time or the giving of notice
would be a Default under Section 7.6 of the Credit Agreement, on failure of a
Grantor to perform any of the covenants and agreements herein contained, the
Agent may, at its option, perform the same and in so doing may expend such sums
as the Agent may deem advisable in the performance thereof, including, without
limitation, the payment of any taxes, liens and encumbrances, expenditures made
in defending against any adverse claims, and all other expenditures which the
Agent may be compelled to make by operation of law or which the Agent may make
by agreement or otherwise for the protection of the security hereof. All such
sums and amounts so expended shall be repayable by the Grantors immediately
without notice or demand, shall constitute additional Obligations secured
hereunder and shall bear interest from the date said amounts are expended at the
rate per annum applicable to past due Domestic Rate Loans (as defined in the
Credit Agreement). No such performance of any covenant or agreement by the
Agent on behalf of a
<PAGE>
Grantor, and no such advancement or expenditure therefor, shall relieve such
Grantor of any default under the terms of this Agreement or in any way obligate
the Agent or any Lender to take any further or future action with respect
thereto. The Agent, in making any payment hereby authorized, may do so
according to any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim. The Agent, in
performing any act hereunder, shall be the sole judge of whether a Grantor is
required to perform same under the terms of this Agreement. The Agent is hereby
authorized to charge any depository or other account of either Grantor
maintained with the Agent but excluding all accounts of any Grantor in a
fiduciary capacity for the amount of such sums and amounts so expended.
(k) The Grantors will cause each obligor of a Pledged Security to fully
and completely observe and perform all of its covenants and agreements under the
Pledged Security and Loan Documents and will not amend, modify or waive any of
same in any manner which materially adversely affects the Pledged Securities or
the Agent's interest therein. Each Grantor agrees that it will not release any
collateral or guarantors for any Pledged Security or otherwise take any action
which would impair the value or collectability of the Collateral or any part
thereof. Each Grantor further agrees to promptly deliver to the Agent notice of
any default under any Pledged Security.
4. Special Provisions re: Voting Rights, Dividends and Principal
Payments. Unless and until a Default has occurred and thereafter until notified
by the Agent pursuant to Section 6(a) hereof:
(a) Each Grantor shall be entitled to exercise all voting and/or
consensual powers pertaining to such Grantor's Collateral or any part thereof
for all purposes not inconsistent with the terms of this Agreement or any other
document evidencing or otherwise relating to any of the Obligations.
(b) Each Grantor shall be entitled to receive and retain all dividends
which are paid in cash out of earned surplus of the issuer of the relevant
Pledged Securities; but, except as permitted by the Credit Agreement, all
dividends paid upon or in respect of the Collateral and all stock or other
property distributed in respect thereof representing stock or liquidating
dividends or a distribution or return of capital upon or in respect of the
Collateral or any part thereof or resulting from a split-up or reclassification
of the Collateral or any part thereof or received in addition to, in
substitution of or in exchange for the Collateral or any part thereof as a
result of a merger, consolidation or otherwise, shall be paid, delivered or
transferred, as appropriate, directly to the Agent immediately upon the receipt
thereof by a Grantor and shall when received by the Agent be applied by the
Agent in reduction of the Obligations to the extent required by the Credit
Agreement.
(c) All sums due and to become due on the Pledged Securities that
constitute notes or instruments shall be remitted directly to the Agent for
application in reduction of the
<PAGE>
indebtedness hereby secured in such order and manner and at such times as
provided in the Credit Agreement; provided, however, that the Lenders agree that
unless and until a Default or an Unmatured Default occurs hereunder the
applicable Grantor may collect and receive and retain for its own use regularly
scheduled installment payments of principal and of interest on the Pledged
Securities that constitute notes or instruments.
(d) In order to permit a Grantor to exercise such voting and/or consensual
powers which it is entitled to exercise under subsection (a) above and to
receive such distributions which such Grantor is entitled to receive and retain
under subsection (b) above, the Agent will, if necessary, upon the written
request of a Grantor, from time to time execute and deliver to such Grantor
appropriate proxies and dividend orders.
(e) In order to permit the Agent to receive all cash and other property to
which it may be entitled under subsection (b) or (c) above, each Grantor shall,
if necessary, upon the written request of the Agent, from time to time execute
and deliver to the Agent appropriate dividend orders.
5. Power of Attorney. Each Grantor hereby appoints the Agent, and each
of its nominees, officers, agents, attorneys, and any other person whom the
Agent may designate, as such Grantor's attorney-in-fact, with full power and
authority upon the occurrence and during the continuation of a Default to ask,
demand, collect, receive, receipt for, sue for, compound and give acquittance
for any and all sums or properties which may be or become due, payable or
distributable in respect of the Collateral or any a part thereof, with full
power to settle, adjust or compromise any claim thereunder or therefor as fully
as such Grantor could itself do, to endorse such Grantor's name on any
assignments, stock powers, or other instruments of transfer and on any checks,
notes, acceptances, money orders, drafts and any other forms of payment or
security that may come into the Agent's possession and on all documents of
satisfaction, discharge or receipt required or requested in connection
therewith, and, in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the name of such Grantor, or otherwise,
which the Agent or any Lender may deem necessary or appropriate to collect or
otherwise realize upon all or any part of the Collateral, or effect a transfer
thereof, or which may be necessary or appropriate to protect and preserve the
right, title and interest of the Agent in and to such Collateral and the
security intended to be afforded hereby. Each Grantor hereby ratifies and
approves all acts of any such attorney and agrees that neither the Agent nor any
such attorney will be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law other than their gross negligence or willful
misconduct. The Agent may file one or more financing statements disclosing its
security interest in all or any part of the Collateral without a Grantor's
signature appearing thereon, and each Grantor also hereby grants the Agent a
power of attorney to execute any such financing statements, and any amendments
or supplements thereto, on behalf of such Grantor without notice thereof to such
Grantor. The foregoing powers of attorney, being coupled with an interest, are
irrevocable until the Obligations have been fully paid and satisfied and all
agreements of the Agent or any Lender to extend credit to or for the account of
either Grantor under the Credit Agreement have expired or otherwise have been
terminated.
<PAGE>
6. Defaults and Remedies.
(a) If a Default shall have occurred and be continuing, all rights of each
Grantor to receive and retain the distributions which it is entitled to receive
and retain pursuant to Section 4(b) hereof shall, at the option of the Agent,
cease and thereupon become vested in the Agent which, in addition to all other
rights provided herein or by law, shall then be entitled solely and exclusively
to receive and retain the distributions which such Grantor would otherwise have
been authorized to retain pursuant to Section 4(b) hereof and all rights of such
Grantor to exercise the voting and/or consensual powers which it is entitled to
exercise pursuant to Section 4(a) hereof shall, at the option of the Agent,
cease and thereupon become vested in the Agent which, in addition to all other
rights provided herein or by law, shall then be entitled solely and exclusively
to exercise all voting and other consensual powers pertaining to the Collateral
and to exercise any and all rights of conversion, exchange or subscription and
any other rights, privileges or options pertaining thereto as if the Agent were
the absolute owner thereof including, without limitation, the right to exchange,
at its discretion, the Collateral or any part thereof upon the merger,
consolidation, reorganization, recapitalization or other readjustment of the
respective issuer thereof or upon the exercise by or on behalf of any such
issuer or the Agent of any right, privilege or option pertaining to the
Collateral or any part thereof and, in connection therewith, to deposit and
deliver the Collateral or any part thereof with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Agent may determine.
(b) Upon the occurrence and during the continuation of any Default, the
Agent shall have, in addition to all other rights provided herein or by law, the
rights and remedies of a secured party under the Code (regardless of whether the
Code is the law of the jurisdiction where the rights or remedies are asserted
and regardless of whether the Code applies to the affected Collateral), and
further the Agent may, without demand and without advertisement, notice, hearing
or process of law, all of which each Grantor hereby waives, at any time or
times, sell and deliver any or all Collateral held by or for it at public or
private sale, for cash, upon credit or otherwise, at such prices and upon such
terms as the Agent deems advisable, in its sole discretion. In the exercise of
any such remedies, the Agent may sell all the Collateral as a unit even though
the sales price thereof may be in excess of the amount remaining unpaid on the
Obligations. The Agent is authorized at any sale or other disposition of the
Collateral, if it deems it advisable so to do, to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing for their own account for investment, and not with a view to the
distribution or resale of any of the Collateral. In addition to all other sums
due the Agent and Lenders hereunder, each Grantor shall pay the Agent all costs
and expenses incurred by the Agent, including attorneys' fees and court costs,
in obtaining, liquidating or enforcing payment of Collateral or the Obligations
or in the prosecution or defense of any action or proceeding by or against the
Agent or a Grantor concerning any matter arising out of or connected with this
Agreement or the Collateral or the Obligations, including, without limitation,
any of the foregoing arising in, arising under or related to a case under the
United States Bankruptcy Code (or any successor statute). Any requirement of
reasonable notice shall be met if such notice is personally served on or mailed,
postage prepaid, to the Grantors in accordance
<PAGE>
with Section 11(b) hereof at least 10 days before the time of sale or other
event giving rise to the requirement of such notice; provided however, no
notification need be given to a Grantor if such Grantor has signed, after a
Default has occurred, a statement renouncing any right to notification of sale
or other intended disposition. The Agent shall not be obligated to make any sale
or other disposition of the Collateral regardless of notice having been given.
The Agent may be the purchaser at any such sale or other disposition of the
Collateral or any part thereof. Each Grantor hereby waives all of its rights of
redemption from any sale or other disposition of the Collateral or any part
thereof. Subject to the provisions of applicable law, the Agent may postpone or
cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, be made at the time and place to which the sale was postponed or
the Agent may further postpone such sale by announcement made at such time and
place.
(c) The powers conferred upon the Agent hereunder are solely to protect
its interest in the Collateral and shall not impose on it any duty to exercise
such powers. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equivalent to that which the Agent accords
its own property, consisting of similar type securities, it being understood,
however, that the Agent shall have no responsibility for (a) ascertaining or
taking any action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Collateral, whether or not the Agent
has or is deemed to have knowledge of such matters, (b) taking any necessary
steps to preserve rights against any parties with respect to any Collateral, or
(c) initiating any action to protect the Collateral against the possibility of a
decline in market value. This Agreement constitutes an assignment of rights
only and not an assignment of any duties or obligations of either Grantor in any
way related to the Collateral, and the Agent shall have no duty or obligation to
discharge any such duty or obligation.
(d) Failure by the Agent to exercise any right, remedy or option under
this Agreement or any other agreement between a Grantor and the Agent or
provided by law, or delay by the Agent in exercising the same, shall not operate
as a waiver; and no waiver by the Agent or any Lender shall be effective unless
it is in writing and then only to the extent specifically stated. Neither the
Agent nor any party acting as attorney for the Agent shall be liable for any
acts or omissions or for any error of judgment or mistake of fact or law other
than their gross negligence or willful misconduct. The rights and remedies of
the Agent under this Agreement shall be cumulative and not exclusive of any
other right or remedy which the Agent may have.
7. Application of Proceeds. All cash proceeds received by the Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall when received by the Agent in cash or its
equivalent, be applied by the Agent in reduction of the Obligations to the
extent required by the Credit Agreement. Any surplus of such cash or cash
proceeds held by the Agent and remaining after payment in full of all the
Obligations, and termination of this Agreement, shall be paid over to the
Grantor or to whomsoever may be lawfully entitled to receive such surplus.
<PAGE>
The Grantors shall remain liable to the Agent and Lenders for any deficiency.
8. Continuing Agreement. This Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect until all of the
Obligations, both for principal and interest, have been fully paid and satisfied
and all agreements of the Lenders to extend credit to or for the account of
either Grantor under the Credit Agreement have expired or otherwise have been
terminated. Upon such termination of this Agreement, the Agent shall, upon the
request and at the expense of the Grantors, forthwith release its security
interest hereunder.
9. The Agent. In acting under or by virtue of this Agreement, the Agent
shall bc entitled to all the rights, authority, privileges and immunities
provided in the Credit Agreement all of which provisions of the Credit Agreement
(including, without limitation, Article IX thereof) are incorporated by
reference herein with the same force and effect as if set forth herein. The
Agent hereby disclaims any representation or warranty to the Lenders concerning
the perfection of the security interest granted hereunder or the value of the
Collateral.
10. Primary Security; Obligations Absolute. The lien and security herein
created and provided for stand as direct and primary security for the
Obligations. No application of any sums received by the Agent in respect of the
Collateral or any disposition thereof to the reduction of the Obligations or any
portion thereof shall in any manner entitle any Grantor to any right, title or
interest in or to the Obligations or any collateral security therefor, whether
by subrogation or otherwise, unless and until all Obligations have been fully
paid and satisfied and the commitments of the Lenders to extend credit or
otherwise make financial accommodations available to the Grantors under the
Credit Agreement have expired or otherwise have been terminated. Each Grantor
acknowledges and agrees that the lien and security hereby created and provided
for are absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Agent, any Lender or any
other holder of any of the Obligations, and without limiting the generality of
the foregoing, the lien and security hereof shall not be impaired by any
acceptance by the Agent, any Lender or any holder of any of the Obligations of
any other security for or guarantors upon any of the Obligations or by any
failure, neglect or omission on the part of the Agent, any Lender or any other
holder of any of the Obligations to realize upon or protect any of the
Obligations or any collateral security therefor. Without limiting the
restrictions contained in Section 10.13 and 10.14 of the Credit Agreement, the
lien and security hereof shall not in any manner be impaired or affected by (and
the Agent and the Lenders, without notice to anyone, are hereby authorized to
make from time to time) any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration, substitution, exchange,
change in, modification or disposition of any of the Obligations, or of any
collateral security therefor, or of any guaranty thereof or of any obligor
thereon. The Lenders may at their discretion at any time grant credit to the
Grantors, or any of them individually, without notice to any Grantor in such
amounts and on such terms as the Lenders may elect without in any manner
impairing the lien and security hereby created and provided for. No release,
compromise or discharge of any Grantor hereunder or with respect to any of the
Obligations or any Collateral provided by such Grantor shall release or
discharge, or impair the agreements of, any other Grantor hereunder or in any
manner impair the liens and
<PAGE>
security interests granted by any other Grantor hereunder; and the Agent may
proceed against the Collateral provided hereunder by any one or more of the
Grantors without proceeding against the other Grantors, their respective
properties or any other security or guaranty whatsoever. Without limiting the
generality of the foregoing, the requisite number of Lenders (as determined in
accordance with the terms of the Credit Agreement) may at any time or from time
to time release any Grantor from its obligations hereunder or release any
Collateral or effect any compromise with any Grantor, and no such release or
compromise shall in any manner impair or otherwise effect the liens granted by,
or the obligations of, the other Grantors hereunder. In order to foreclose or
otherwise realize hereon and to exercise the rights granted the Agent hereunder
and under applicable law, there shall be no obligation on the part of the Agent,
any Lender or any other holder of any of the Obligations at any time to first
resort for payment to any Borrower or any other obligor on any of the
Obligations or to any guaranty of the Obligations or any portion thereof or to
resort to any other collateral security, property, liens or any other rights or
remedies whatsoever, and the Agent shall have the right to enforce this
instrument irrespective of whether or not other proceedings or steps are pending
seeking resort to or realization upon or from any of the foregoing.
11. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. All of the
rights, privileges, remedies and options given to the Agent hereunder shall
inure to the benefit of its successors and assigns, and all the terms,
conditions, covenants, agreements, representations and warranties of and in this
Agreement shall bind the Grantors and their respective legal representatives,
successors and assigns, provided that neither Grantor may assign its rights or
delegate its duties hereunder without the Agent and Lenders' prior written
consent. Each Grantor hereby releases the Agent from any liability for any act
or omission relating to the Collateral or this Agreement, except for the Agent's
gross negligence or willful misconduct.
(b) Except as otherwise specified herein, all notices hereunder shall be
in writing (including, without limitation, notice by telecopy) and shall be
given to the relevant party at its address or telecopier number set forth below,
or such other address or telecopier number as such party may hereafter specify
by notice to the other given by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder shall be addressed:
to the Grantors at: to the Agent at:
LaSalle Partners Limited Harris Trust and Savings Bank
200 East Randolph 111 West Monroe Street
Chicago, Illinois 60601 Chicago, Illinois 60690
Attention: Mr. Timothy McGarrity Attention: Emerging Majors
Telecopy: (312) 782-4339 Telecopy: (312) 461-2591
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a
<PAGE>
confirmation of such telecopy has been received by the sender, (ii) if given by
mail, five (5) days after such communication is deposited in the mail, certified
or registered with return receipt requested, addressed as aforesaid, or (iii) if
given by any other means, when delivered at the addresses specified in this
Section.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the enforcement of any remedy under or upon
this Agreement; it being understood and intended that no one or more of the
Lenders shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Agreement by its or their action or to enforce any
right hereunder, and that all proceedings at law or in equity shall be
instituted, had and maintained by the Agent in the manner herein provided and
for the benefit of the Lenders.
(d) All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement. The term
"Grantor" and "Grantors" as used herein shall mean and include the Grantors
collectively and also each individually, with all grants, representations,
warranties and covenants of and by the Grantors, or any of them, herein
contained to constitute joint and several grants, representations, warranties
and covenants of and by the Grantors; provided, however, that unless the context
in which the same is used shall otherwise require, any grant, representation,
warranty or covenant contained herein related to the Collateral shall be made by
each Grantor only with respect to the Collateral owned by it or represented by
such Grantor as owned by it.
(e) In the event that any provision hereof shall be deemed to be invalid
or unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision, but only as to such locations where such law or
interpretation is operative, and the invalidity or unenforceability of such
provision shall not affect the validity of any remaining provisions hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
(f) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. All terms which are used in this Agreement which are
defined in the Code shall have the same meanings herein as said terms do in the
Code unless this Agreement shall otherwise specifically provide. The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.
(g) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same instrument. Each
Grantor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Grantor to the Agent, and it shall not be
necessary for the Agent to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.
<PAGE>
(h) Each Grantor hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois state court sitting in the City of Chicago for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each Grantor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
form. Each Grantor, the Agent and the Lenders each hereby irrevocably waives any
and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
<PAGE>
In Witness Whereof, the Grantor has caused this Agreement to be duly
executed and delivered the day and year first above written.
LaSalle Partners Limited Partnership,
a Delaware Limited Partnership
By /s/ Timothy M. McGarrity
-------------------------------------------------------
Its Vice President, Treasurer and Assistant Secretary
-----------------------------------------------------
LaSalle Partners Management Limited,
Partnership, a Delaware Limited Partnership
By /s/ Charles K. Esler
-------------------------------------------------------
Its President, Managing Director, Treasurer and Secretary
-----------------------------------------------------
<PAGE>
Acknowledged and Agreed to as of the date first written above.
Harris Trust and Savings Bank, as Agent
By /s/ M. Elizabeth Gilliam
--------------------------------------
Its Vice President
-------------------------------------
<PAGE>
Exhibit 10.05
Collateral Assignment of Partnership Interests
This Collateral Assignment of Partnership Interests (the "Assignment") is
dated as of September 6, 1996, made by LaSalle Partners Management Limited
Partnership, a Delaware limited partnership ("LPML") and LaSalle Partners
Limited Partnership, a Delaware limited partnership ("LPL") (LPL and LPML are
hereinafter referred to collectively as the "Assignors" and individually as an
"Assignor") and Harris Trust and Savings Bank ("Harris") with its mailing
address 111 West Monroe Street, Chicago, Illinois 60690 acting as agent
hereunder for the Lenders hereinafter identified and defined (Harris acting as
such agent and any successor or successors to Harris acting in such capacity
being hereinafter referred to as the "Agent");
Witnesseth That:
Whereas, the Assignors, Harris, individually and as Agent, and LaSalle
National Bank, have entered into a Credit Agreement dated as of September 6,
1996 (such Credit Agreement as the same may be amended, modified or restated
from time to time being hereinafter referred to as the "Credit Agreement"),
pursuant to which such lenders (Harris and the other lenders which are now or
which from time to time hereafter become party to the Credit Agreement being
hereinafter referred to collectively as the "Lenders" and individually as a
"Lender") have agreed, subject to certain terms and conditions, to extend credit
and make certain other financial accommodations available to the Assignors;
Whereas, as a condition precedent to extending the credit facilities to the
Assignors under the Credit Agreement, the Lenders have required, among other
things, that the Assignors grant to the Agent a lien on and security interest in
certain properties of the Assignors as collateral security for such credit
facilities and related obligations pursuant to this Agreement;
Now, Therefore, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Assignment of Partnership Interest. Each Assignor does hereby assign and
transfer to the Agent for the benefit of the Lenders and acknowledges and agrees
that the Agent for the benefit of the Lenders has and shall continue to have a
security interest in (i) all right, title and interest of such Assignor, whether
now owned or hereafter acquired in and to each partnership and limited liability
company identified on Schedule A attached hereto and made a part hereof as such
Schedule may from time to time be amended as hereinafter set forth, and each
successor to each such partnership or limited liability company (such
partnerships, limited liability companies and successors being hereinafter
referred to collectively as the "Partnerships" and individually as a
"Partnership"), (ii) all payments and distributions of whatever kind or
character and whether in cash or other property at any time made, owing or
payable to such Assignor from, in respect of or on account of its interests
(whether now owned or hereafter acquired) in each of the Partnerships, whether
due or to become due and whether representing profits, distributions pursuant to
complete or partial liquidation or dissolution of such Partnership,
distributions representing the complete or partial redemption of such Assignor's
interest in such Partnership or the complete or partial withdrawal of such
Assignor from such Partnership,
<PAGE>
repayment of capital contributions, payment of management fees or commissions,
or otherwise, and the right to receive, receipt for, use and enjoy all such
payments and distributions, and all proceeds thereof, in every case whether now
existing or hereafter acquired or arising, and (iii) all proceeds of any of the
foregoing (all of the foregoing rights, interests, properties, and privileges
assigned and in which a security interest is granted pursuant hereto being
hereinafter collectively called the "Assigned Interests"). This pledge and
assignment constitutes an assignment of the rights of each Assignor with respect
to the Assigned Interests only and not an assignment of any duties or
obligations any Assignor may have with regard to the management of, or the
giving of advice to, the Partnerships. Notwithstanding anything herein to the
contrary, the Agent and Lenders acknowledge that the Agent does not by reason of
this assignment and pledge, and is not hereby granted the right, to become a
substituted partner in place of the relevant Assignor.
2. Obligations Hereby Secured. This Assignment is made and given to secure,
and shall secure, the payment and performance of (a) the Obligations (as defined
in the Credit Agreement) and (b) any and all expenses and charges, legal or
otherwise, suffered or incurred by the Agent or any Lender in collecting or
enforcing any of such indebtedness, obligations and liabilities or in realizing
on or protecting or preserving any security therefor, including, without
limitation, the lien and security interest granted hereby other than any of the
foregoing that result from the gross negligence or willful misconduct of the
Agent or such Lender (all of the foregoing being hereinafter referred to as the
"Obligations").
3. Covenants, Agreements, Representations and Warranties. Each Assignor
hereby covenants and agrees with, and represents and warrants to, the Agent and
Lenders that:
(a) Each Assignor is a limited partnership duly organized and validly
existing in good standing under the laws of the State of Delaware, is the sole
and lawful legal, record and beneficial owner of the Assigned Interests, and has
full right, power and authority to enter into this Agreement and to perform each
and all of the matters and things herein provided for. The execution and
delivery of this Agreement, and the observance and performance of the matters
and things herein set forth, will not (i) contravene or constitute a default
under any provision of law, or any judgment, injunction, order or decree binding
upon either Assignor, or any provision of either Assignor's partnership
agreement, or any covenant, indenture or agreement of or affecting either
Assignor or any of their respective property, or (ii) result in the creation or
imposition of any lien or encumbrance on any property of either Assignor except
for the lien and security interest in the Assigned Interests granted to the
Lender pursuant to this Agreement and except as permitted under Section 6.15(g)
of the Credit Agreement. Each Assignor's chief executive office is located at
200 East Randolph, Chicago, Illinois 60601, and neither Assignor shall move its
chief executive office without first providing the Agent 30 days prior written
notice of either Assignor's intent to do so, provided that each Assignor shall
at all times maintain its chief executive office in the United States of America
and, with respect to any such new location, either Assignor shall have taken all
action requested by the Agent to maintain the lien and security interest of the
Agent in the Assigned Interests at all times fully perfected and in full force
and effect.
<PAGE>
(b) The Assigned Interests and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and encumbrances
of every kind, nature and description and whether voluntary or involuntary,
except for the security interest of the Agent therein and the Liens permitted
under Section 6.15 of the Credit Agreement. Each Assignor shall warrant and
defend the Assigned Interests against any claims and demands of all persons or
entities at any time claiming the same or any interest in the Assigned Interests
adverse to the Agent. Each Assignor has the right to vote the Assigned Interests
and there are no restrictions upon the voting rights associated with, or the
transfer of, any of the Assigned Interests, except as provided by federal and
state laws applicable to the sale of securities generally or as otherwise
disclosed to the Lender in writing.
(c) Except as permitted under Sections 6.15(g) and 6.11 of the Credit
Agreement, neither Assignor shall, without the Agent's prior written consent,
sell, assign, pledge, encumber, or otherwise dispose of the Assigned Interests
or any interest therein.
(d) Each Assignor shall promptly pay when due all taxes, assessments and
governmental charges and levies upon or against such Assignor or the Assigned
Interests, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith by appropriate proceedings which prevent foreclosure on or other
realization upon any of the Assigned Interests and such Assignor shall have
established adequate reserves therefor.
(e) Each Assignor agrees to execute and deliver to the Agent such further
agreements, assignments, instruments and documents and to do all such other
things as the Agent or any Lender may deem necessary or appropriate to assure
the Agent its lien and security interest hereunder, including such assignments,
stock powers, financing statements. instruments and documents as the Agent or
any Lender may from time to time require in order to comply with the Uniform
Commercial Code as enacted in the State of Illinois and any successor statute(s)
thereto (the "Code"). Each Assignor hereby agrees that a carbon, photographic or
other reproduction of this Agreement or any such financing statement is
sufficient for filing as a financing statement by the Agent without notice
thereof to either Assignor wherever the Agent in its sole discretion desires to
file the same. In the event for any reason the law of any jurisdiction other
than Illinois becomes or is applicable to the Assigned Interests or any part
thereof, or to any of the Obligations, each Assignor agrees to execute and
deliver all such agreements, assignments, instruments and documents and to do
all such other things as the Agent or any Lender in their sole discretion deems
necessary or appropriate to preserve, protect and enforce the lien and security
interest of the Agent under the law of such other jurisdiction. Each Assignor
agrees to mark its books and records to reflect the lien and security interest
of the Agent in the Assigned Interests.
(f) If, as and when an Assignor assigns any partnership interests hereunder
in addition to those listed on Schedule A hereto, such Assignor shall furnish to
the Agent a duly completed and executed amendment to such Schedule in
substantially the form (with appropriate insertions) of Schedule B hereto
reflecting the securities pledged hereunder after giving effect to such
addition.
<PAGE>
(g) After the occurrence and during the continuance of a Default or the
occurrence of an event which with the lapse of time or the giving of notice
would be a Default under Section 7.6 of the Credit Agreement, on failure of an
Assignor to perform any of the covenants and agreements herein contained, the
Agent may, at its option, perform the same and in so doing may expend such sums
as the Agent may deem advisable in the performance thereof, including, without
limitation, the payment of any taxes, liens and encumbrances, expenditures made
in defending against any adverse claims, and all other expenditures which the
Agent may be compelled to make by operation of law or which the Agent may make
by agreement or otherwise for the protection of the security hereof. All such
sums and amounts so expended shall be repayable by the Assignors immediately
without notice or demand, shall constitute additional Obligations secured
hereunder and shall bear interest from the date said amounts are expended at the
rate per annum applicable to past due Domestic Rate Loans (as defined in the
Credit Agreement). No such performance of any covenant or agreement by the Agent
on behalf of an Assignor, and no such advancement or expenditure therefor, shall
relieve such Assignor of any default under the terms of this Agreement or in any
way obligate the Agent or any Lender to take any further or future action with
respect thereto. The Agent, in making any payment hereby authorized, may do so
according to any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim. The Agent, in
performing any act hereunder, shall be the sole judge of whether an Assignor is
required to perform same under the terms of this Agreement. The Agent is hereby
authorized to charge any depository or other account of either Assignor
maintained with the Agent excluding all accounts of either Assignor in a
fiduciary capacity for the amount of such sums and amounts so expended.
(h) Each Assignor further warrants to and agrees with the Agent as follows:
(i) that said Partnerships are valid and existing entities of the type
listed on Schedule A and are duly organized and existing under applicable law;
and
(ii) that the copies of the Organizational Agreements (as defined
below) for the Partnerships heretofore delivered to the Agent are true and
correct copies thereof and have not been amended or modified in any respect,
except for such amendments or modifications as are attached to the copies
thereof delivered to the Agent.
(i) The Assignor will not, without the prior written consent of the Agent,
consent to any amendment or modification to any of the Organizational Agreements
which would in any manner materially adversely affects or impairs the Assigned
Interests or reduce or dilute the rights of the Assignor with respect to any of
the Partnerships, any of such done without such prior written consent to be null
and void. The Assignor will send to the Agent copies of all notices and
communications with respect to each Partnership alleging the existence of a
default by Assignor in the performance of any of its obligations under any
Organizational Agreement. The Assignor agrees that it will promptly notify the
Agent of any litigation which might materially or adversely affect the Assignor
or a Partnership or any of their respective properties and of any material
adverse change in the operations, business properties, assets or conditions,
financial or otherwise, of the Assignor or any Partnership. The Assignor will
promptly perform all of its
<PAGE>
material obligations under each Organizational Agreement. After the occurrence
and during the continuance of a Default or the occurrence of an event which with
the lapse of time or the giving of notice would be a Default under Section 7.6
of the Credit Agreement, in the event Assignor fails to pay or perform any
material obligation arising under any Organizational Agreement or otherwise
related to any Partnership, the Agent may, but need not, pay or perform such
obligation at the expense and for the account of the Assignor and all funds
expended for such purposes shall constitute Obligations which the Assignor
promises to pay to the Agent together with interest thereon at the rate per
annum determined by adding 2% to the rate from time to time announced by the
Agent as its prime commercial rate (with any change in the interest rate hereon
resulting from a change in such prime commercial rate to be and become effective
as of and on the date of the relevant change in such prime commercial rate).
4. Special Provisions re: Partnership Distributions. Each Assignor hereby
authorizes and directs the Partnerships and any other party at any time holding
funds due such Assignor and constituting part of the Assigned Interests whether
or not a default has occurred hereunder or in respect of the Obligations, to
make all distributions or payments now due or hereafter to become due to such
Assignor in respect of or constituting part of the Assigned Interests directly
to the Agent if the Agent should at any time so demand and agree that such
payment or distribution to the Agent as aforesaid shall be a good receipt and
acquittance to such Assignor to the extent so made. All proceeds in respect of
and all distributions or payments constituting part of the Assigned Interests at
any time received by the Agent may be retained by the Agent as additional
collateral security hereunder or may be applied by the Agent to the Obligations
at such time or times and in such order as the Agent may deem proper, whether or
not the Obligations be then due or otherwise adequately secured. Anything to the
contrary contained herein notwithstanding, so long as a Partnership has not
received written notice from the Agent to the contrary, such Assignor shall be
entitled to receive from such Partnership, and such Partnership shall be
entitled to distribute directly to such Assignor, so much of the ordinary net
earnings of the Partnership as such Assignor shall be entitled to pursuant to
the terms of the agreement under which such Partnership has been formed (each
such agreement being hereinafter referred to as "Organizational Agreement")
(subject to the provisions of the Credit Agreement such distributions to in no
event include distributions in complete or partial liquidation of such
Partnership or the interest of such Assignor therein or distributions out of the
proceeds of any sale of such Partnership's property other than the sale of
obsolete or worn out personal property which has been replaced by such
Partnership with property of equal utility or out of the proceeds of any loan to
a Partnership secured by the Partnership's property or out of the proceeds of
any insurance carried on the Partnership's property).
5. Power of Attorney. Each Assignor hereby appoints the Agent, and each of
its nominees, officers, agents, attorneys, and any other person whom the Agent
may designate, as such Assignor's attorney-in-fact, with full power and
authority upon the occurrence and during the continuation of a Default to ask,
demand, collect, receive, receipt for, sue for, compound and give acquittance
for any and all sums or properties which may be or become due, payable or
distributable in respect of the Assigned Interests or any a part thereof, with
full power to settle, adjust or compromise any claim thereunder or therefor as
fully as such Assignor could itself do, to endorse such Assignor's name on any
assignments, or other instruments of transfer and on any checks, notes,
acceptances, money orders, drafts and any other forms of payment
<PAGE>
or security that may come into the Agent's possession and on all documents of
satisfaction, discharge or receipt required or requested in connection
therewith, and, in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the name of such Assignor, or
otherwise, which the Agent or any Lender may deem necessary or appropriate to
collect or otherwise realize upon all or any part of the Assigned Interests, or
effect a transfer thereof, or which may be necessary or appropriate to protect
and preserve the right, title and interest of the Agent in and to such Assigned
Interests and the security intended to be afforded hereby. Each Assignor hereby
ratifies and approves all acts of any such attorney and agrees that neither the
Agent nor any such attorney will be liable for any acts or omissions nor for any
error of judgment or mistake of fact or law other than their gross negligence or
willful misconduct. The Agent may file one or more financing statements
disclosing its security interest in all or any part of the Assigned Interests
without a Assignor's signature appearing thereon, and each Assignor also hereby
grants the Agent a power of attorney to execute any such financing statements,
and any amendments or supplements thereto, on behalf of such Assignor without
notice thereof to such Assignor. The foregoing powers of attorney, being coupled
with an interest, are irrevocable until the Obligations have been fully paid and
satisfied and all agreements of the Agent or any Lender to extend credit to or
for the account of either Assignor under the Credit Agreement have expired or
otherwise have been terminated.
6. Defaults and Remedies.
(a) If a Default shall have occurred and be continuing, all rights of each
Assignor to receive and retain the distributions which it is entitled to receive
and retain shall, at the option of the Agent, cease and thereupon become vested
in the Agent which, in addition to all other rights provided herein or by law,
shall then be entitled solely and exclusively to receive and retain the
distributions which such Assignor would otherwise have been authorized to retain
pursuant to Section 4 hereof and all rights of such Assignor to exercise the
voting and/or consensual powers which it is entitled to exercise pursuant to
Section 4 hereof shall, at the option of the Agent, cease and thereupon become
vested in the Agent which, in addition to all other rights provided herein or by
law, shall then be entitled solely and exclusively to exercise all voting and
other consensual powers pertaining to the Assigned Interests and to exercise any
and all rights of conversion, exchange or subscription and any other rights,
privileges or options pertaining thereto as if the Agent were the absolute owner
thereof including, without limitation, the right to exchange, at its discretion,
the Assigned Interests or any part thereof upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the respective issuer
thereof or upon the exercise by or on behalf of any such issuer or the Agent of
any right, privilege or option pertaining to the Assigned Interests or any part
thereof and, in connection therewith, to deposit and deliver the Assigned
Interests or any part thereof with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the Agent
may determine.
(b) Upon the occurrence and during the continuation of any Default, the
Agent shall have, in addition to all other rights provided herein or by law, the
rights and remedies of a secured party under the Code (regardless of whether the
Code is the law of the jurisdiction where the rights or remedies are asserted
and regardless of whether the Code applies to the affected Assigned Interests),
and further the Agent may, without demand and without
<PAGE>
advertisement, notice, hearing or process of law, all of which each Assignor
hereby waives, at any time or times, sell and deliver any or all Assigned
Interests held by or for it at public or private sale, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems advisable, in
its sole discretion. In the exercise of any such remedies, the Agent may sell
all the Assigned Interests as a unit even though the sales price thereof may be
in excess of the amount remaining unpaid on the Obligations. The Agent is
authorized at any sale or other disposition of the Assigned Interests, if it
deems it advisable so to do, to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing for their own
account for investment, and not with a view to the distribution or resale of any
of the Assigned Interests. In addition to all other sums due the Agent and
Lenders hereunder, each Assignor shall pay the Agent all costs and expenses
incurred by the Agent, including attorneys' fees and court costs, in obtaining,
liquidating or enforcing payment of Assigned Interests or the Obligations or in
the prosecution or defense of any action or proceeding by or against the Agent
or an Assignor concerning any matter arising out of or connected with this
Agreement or the Assigned Interests or the Obligations, including, without
limitation, any of the foregoing arising in, arising under or related to a case
under the United States Bankruptcy Code (or any successor statute). Any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Assignors in accordance with
Section 11(b) hereof at least 10 days before the time of sale or other event
giving rise to the requirement of such notice; provided however, no notification
need be given to an Assignor if such Assignor has signed, after a Default has
occurred, a statement renouncing any right to notification of sale or other
intended disposition. The Agent shall not be obligated to make any sale or other
disposition of the Assigned Interests regardless of notice having been given.
The Agent may be the purchaser at any such sale or other disposition of the
Assigned Interests or any part thereof. Each Assignor hereby waives all of its
rights of redemption from any sale or other disposition of the Assigned
Interests or any part thereof. Subject to the provisions of applicable law, the
Agent may postpone or cause the postponement of the sale of all or any portion
of the Assigned Interests by announcement at the time and place of such sale,
and such sale may, without further notice, be made at the time and place to
which the sale was postponed or the Agent may further postpone such sale by
announcement made at such time and place.
EACH ASSIGNOR AGREES THAT IF ANY PART OF THE ASSIGNED INTEREST IS SOLD AT ANY
PUBLIC OR PRIVATE SALE, THE AGENT MAY ELECT TO SELL ONLY TO A BUYER WHO WILL
GIVE FURTHER ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE BANK,
RESPECTING COMPLIANCE WITH THE REQUIREMENTS OF THE FEDERAL SECURITIES ACT OF
1933, AS AMENDED, AND A SALE SUBJECT TO SUCH CONDITION SHALL BE DEEMED
COMMERCIALLY REASONABLE.
EACH ASSIGNOR FURTHER AGREES THAT IN ANY SALE OF ANY PART OF THE ASSIGNED
INTEREST, THE AGENT IS HEREBY AUTHORIZED TO COMPLY WITH ANY LIMITATION OR
RESTRICTION IN CONNECTION WITH SUCH SALE AS IT MAY BE ADVISED BY COUNSEL IS
NECESSARY IN ORDER TO AVOID ANY VIOLATION OF APPLICABLE LAW (INCLUDING, WITHOUT
LIMITATION, COMPLIANCE WITH SUCH PROCEDURES AS MAY RESTRICT THE NUMBER OF
PROSPECTIVE BIDDERS AND PURCHASERS AND/OR FURTHER RESTRICT SUCH PROSPECTIVE
BIDDERS OR PURCHASERS TO PERSONS WHO WILL REPRESENT AND AGREE THAT THEY ARE
PURCHASING FOR THEIR OWN ACCOUNT FOR INVESTMENT AND NOT WITH A VIEW TO THE
DISTRIBUTION OR RESALE OF SUCH COLLATERAL), OR IN ORDER TO OBTAIN ANY REQUIRED
APPROVAL OF THE SALE OR OF THE PURCHASER BY ANY GOVERNMENTAL REGULATORY
AUTHORITY OR OFFICIAL, AND THE ASSIGNOR FURTHER AGREES THAT SUCH COMPLIANCE
SHALL NOT RESULT IN SUCH
<PAGE>
SALE BEING CONSIDERED OR DEEMED NOT TO HAVE BEEN MADE IN A COMMERCIALLY
REASONABLE MANNER, NOR SHALL THE BANK BE LIABLE OR ACCOUNTABLE TO THE ASSIGNOR
FOR ANY DISCOUNT ALLOWED BY REASON OF THE FACT THAT SUCH COLLATERAL IS SOLD IN
COMPLIANCE WITH ANY SUCH LIMITATION OR RESTRICTION.
(c) The powers conferred upon the Agent hereunder are solely to protect its
interest in the Assigned Interests and shall not impose on it any duty to
exercise such powers. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Assigned Interests in its possession
if the Assigned Interests are accorded treatment substantially equivalent to
that which the Agent accords its own property, consisting of similar type
securities, it being understood, however, that the Agent shall have no
responsibility for (a) ascertaining or taking any action with respect to any
matters relating to any Assigned Interests, whether or not the Agent has or is
deemed to have knowledge of such matters, (b) taking any necessary steps to
preserve rights against any parties with respect to any Assigned Interests, or
(c) initiating any action to protect the Assigned Interests against the
possibility of a decline in market value. This Agreement constitutes an
assignment of rights only and not an assignment of any duties or obligations of
either Assignor in any way related to the Assigned Interests, and the Agent
shall have no duty or obligation to discharge any such duty or obligation.
(d) Failure by the Agent to exercise any right, remedy or option under this
Agreement or any other agreement between an Assignor and the Agent or provided
by law, or delay by the Agent in exercising the same, shall not operate as a
waiver; and no waiver by the Agent or any Lender shall be effective unless it is
in writing and then only to the extent specifically stated. Neither the Agent
nor any party acting as attorney for the Agent shall he liable for any acts or
omissions or for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct. The rights and remedies of the
Agent under this Agreement shall be cumulative and not exclusive of any other
right or remedy which the Agent may have.
7. Application of Proceeds. All cash proceeds received by the Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Assigned Interests shall when received by the Agent in cash or its
equivalent, be applied by the Agent in reduction of the Obligations to the
extent required by the Credit Agreement. Any surplus of such cash or cash
proceeds held by the Agent and remaining after payment in full of all the
Obligations, and termination of this Agreement, shall be paid over to the
Assignor or to whomsoever may be lawfully entitled to receive such surplus. The
Assignors shall remain liable to the Agent and Lenders for any deficiency.
8. Continuing Agreement. This Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect until all of the
Obligations, both for principal and interest, have been fully paid and satisfied
and all agreements of the Lenders to extend credit to or for the account of
either Assignor under the Credit Agreement have expired or otherwise have been
terminated. Upon such termination of this Agreement, the Agent shall, upon the
request and at the expense of the Assignors, forthwith release its security
interest and assignment hereunder.
9. The Agent. In acting under or by virtue of this Agreement, the Agent
shall be entitled to all the rights, authority, privileges and immunities
provided in the Credit Agreement all of
<PAGE>
which provisions of the Credit Agreement (including, without limitation, Article
IX thereof) are incorporated by reference herein with the same force and effect
as if set forth herein. The Agent hereby disclaims any representation or
warranty to the Lenders concerning the perfection of the security interest
granted hereunder or the value of the Assigned Interests.
10. Primary Security; Obligations Absolute. The security interest and
assignment herein created and provided for stand as direct and primary security
for the Obligations. No application of any sums received by the Agent in respect
of the Assigned Interests or any disposition thereof to the reduction of the
Obligations or any portion thereof shall in any manner entitle any Assignor to
any right, title or interest in or to the Obligations or any collateral security
therefor, whether by subrogation or otherwise, unless and until all Obligations
have been fully paid and satisfied and the commitments of the Lenders to extend
credit or otherwise make financial accommodations available to the Assignors
under the Credit Agreement have expired or otherwise have been terminated. Each
Assignor acknowledges and agrees that the security interest and assignment
hereby created and provided for are absolute and unconditional and shall not in
any manner be affected or impaired by any acts or omissions whatsoever of the
Agent, any Lender or any other holder of any of the Obligations, and without
limiting the generality of the foregoing, the security interest and assignment
hereof shall not be impaired by any acceptance by the Agent, any Lender or any
holder of any of the Obligations of any other security for or guarantors upon
any of the Obligations or by any failure, neglect or omission on the part of the
Agent, any Lender or any other holder of any of the Obligations to realize upon
or protect any of the Obligations or any collateral security therefor. Without
limiting the restrictions contained in Section 10.13 and 10.14 of the Credit
Agreement, the security interest and assignment hereof shall not in any manner
be impaired or affected by (and the Agent and the Lenders, without notice to
anyone, are hereby authorized to make from time to time) any sale, pledge,
surrender, compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition of
any of the Obligations, or of any collateral security therefor, or of any
guaranty thereof or of any obligor thereon. The Lenders may at their discretion
at any time grant credit to the Assignors, or any of them individually, without
notice to any Assignor in such amounts and on such terms as the Lenders may
elect without in any manner impairing the lien and security hereby created and
provided for. No release, compromise or discharge of any Assignor hereunder or
with respect to any of the Obligations or any Assigned Interests provided by
such Assignor shall release or discharge, or impair the agreements of, any other
Assignor hereunder or in any manner impair the security interests and
assignments granted by any other Assignor hereunder; and the Agent may proceed
against the Assigned Interests provided hereunder by any one or more of the
Assignors without proceeding against the other Assignors, their respective
properties or any other security or guaranty whatsoever. Without limiting the
generality of the foregoing, the requisite number of Lenders (as determined in
accordance with the terms of the Credit Agreement) may at any time or from time
to time release any Assignor from its obligations hereunder or release any
Assigned Interests or effect any compromise with any Assignor, and no such
release or compromise shall in any manner impair or otherwise effect the liens
granted by, or the obligations of, the other Assignors hereunder. In order to
foreclose or otherwise realize hereon and to exercise the rights granted the
Agent hereunder and under applicable law, there shall be no obligation on the
part of the Agent, any Lender or any other holder of any of the Obligations at
any time to first resort for payment to any Borrower or any other obligor on
<PAGE>
any of the Obligations or to any guaranty of the Obligations or any portion
thereof or to resort to any other collateral security, property, liens or any
other rights or remedies whatsoever, and the Agent shall have the right to
enforce this instrument irrespective of whether or not other proceedings or
steps are pending seeking resort to or realization upon or from any of the
foregoing.
11. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. All of the
rights, privileges, remedies and options given to the Agent hereunder shall
inure to the benefit of its successors and assigns, and all the terms,
conditions, covenants, agreements, representations and warranties of and in this
Agreement shall bind the Assignors and their respective legal representatives,
successors and assigns, provided that neither Assignor may assign its rights or
delegate its duties hereunder without the Agent and Lenders' prior written
consent. Each Assignor hereby releases the Agent from any liability for any act
or omission relating to the Assigned Interests or this Agreement, except for the
Agent's gross negligence or willful misconduct.
(b) Except as otherwise specified herein, all notices hereunder shall be in
writing (including, without limitation, notice by telecopy) and shall be given
to the relevant party at its address or telecopier number set forth below, or
such other address or telecopier number as such party may hereafter specify by
notice to the other given by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder shall be addressed:
to the Assignors at: to the Agent at:
LaSalle Partners Limited Harris Trust and Savings Bank
200 East Randolph 111 West Monroe Street
Chicago, Illinois 60601 Chicago, Illinois 60690
Attention: Mr. Timothy McGarrity Attention: Emerging Majors
Telecopy: (312) 782-4339 Telecopy: (312) 461-2591
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the addresses specified in this Section.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the enforcement of any remedy under or upon
this Agreement; it being understood and intended that no one or more of the
Lenders shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Agreement by its or their action or to enforce any
right hereunder, and that all proceedings at law or in equity shall be
instituted, had and maintained by the Agent in the manner herein provided and
for the benefit of the Lenders.
(d) All capitalized terms used herein without definition shall have the
same meanings
<PAGE>
herein as such terms have in the Credit Agreement. The term "Assignor" and
"Assignors" as used herein shall mean and include the Assignors collectively and
also each individually, with all grants, representations, warranties and
covenants of and by the Assignors, or any of them, herein contained to
constitute joint and several grants, representations, warranties and covenants
of and by the Assignors; provided, however, that unless the context in which the
same is used shall otherwise require, any grant, representation, warranty or
covenant contained herein related to the Assigned Interests shall be made by
each Assignor only with respect to the Assigned Interests owned by it or
represented by such Assignor as owned by it.
(e) In the event that any provision hereof shall be deemed to be invalid or
unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision, but only as to such locations where such law or
interpretation is operative, and the invalidity or unenforceability of such
provision shall not affect the validity of any remaining provisions hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
(f) This Assignment constitutes an assignment of the rights of the Assignor
with respect to the Partnerships only and not an assignment of any duties or
obligations of the Assignor with respect thereto; and by its acceptance hereof,
the Agent does not undertake to perform or discharge and shall not be
responsible or liable for the performance or discharge of any such duties or
responsibilities.
(g) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. All terms which are used in this Agreement which are
defined in the Code shall have the same meanings herein as said terms do in the
Code unless this Agreement shall otherwise specifically provide. The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.
(h) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same instrument. Each
Assignor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Assignor to the Agent, and it shall not be
necessary for the Agent to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.
(i) Each Assignor hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois state court sitting in the City of Chicago for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each Assignor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
form. Each Assignor, the Agent and the Lenders each hereby irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
<PAGE>
hereby.
<PAGE>
In Witness Whereof, the Assignor has caused this Agreement to be duly
executed and delivered the day and year first above written.
LaSalle Partners Limited Partnership
a Delaware Limited Partnership
By
------------------------------
Its
------------------------------
LaSalle Partners Limited Partnership
Partnership, a Delaware Limited
Partnership
By
------------------------------
Its
------------------------------
<PAGE>
Acknowledged and Agreed to as of the date first above written
Harris Trust and Savings Bank, as Agent
By
---------------------------------
Its
---------------------------------
<PAGE>
Schedule A
Partnership Interests
<TABLE>
<CAPTION>
Name of Type of Jurisdiction Of Percent Of Capital
Partnership Organization Organization Ownership Contribution
<S> <C> <C> <C> <C>
Income Parking Limited Illinois $750,000
Fund Limited Partnership
Partnership
LPMD-I Limited Delaware 31.1182% $771,446
Investors L.P. Partnership
</TABLE>
<PAGE>
Schedule B
Amendment to Collateral Assignment of Partnership Interests
This Amendment to Collateral Assignment of Partnership Interests (the
"Amendment") is dated as of ________________, __________, among LaSalle Partners
Limited Partnership, a Delaware Limited Partnership, LaSalle Partners Management
Limited Partnership, a Delaware Limited Partnership and Harris Trust and Savings
Bank, as Agent. Reference is hereby made to that certain Collateral Assignment
of Partnership Interests (the "Assignment") dated as of September 6, 1996, made
by LaSalle Partners Limited Partnership, a Delaware Limited Partnership and
LaSalle Partners Management Limited Partnership, a Delaware Limited Partnership.
Capitalized terms not otherwise defined herein shall have the meaning set forth
in the Assignment.
Subsequent to the delivery of the Assignment, certain partnership interests
or limited liability company interests have been added as Assigned Interests
under the Assignment. As a result of such addition, Schedule A of the Assignment
does not accurately describe the partnership interests and limited liability
company interests currently held by the Agent as collateral under the
Assignment.
The Assignors now desires to amend Schedule A to the Assignment to reflect
such addition, and this instrument shall constitute an agreement between the
Assignors and the Agent amending the Assignment in the respects, but only in the
respects, hereinafter set forth:
1. Schedule A of the Assignment shall be and hereby is amended, and as so
amended it shall be restated in its entirety to read as set forth on Annex A
attached hereto.
2. As collateral security for the Obligations, each Assignor hereby grants
to the Agent for the benefit of the Lenders a continuing lien on and security
interest in, and acknowledges and agrees that the Agent has and shall continue
to have a continuing lien on and security interest in, all interests of each
organization listed and described on Annex A attached hereto and all the other
properties, rights, interests and privileges comprising the Assigned Interests
(as such term is defined in the Assignment after giving effect to this
Amendment), to the same extent and with the same force and effect as if the
interests described on Annex A had originally been included on Schedule A to the
Assignment. The foregoing granting clause is in addition to and supplemental of
and not in substitution for the granting clause contained in the Assignment.
Neither the Assignors nor the Agent intends by this Amendment to in any way
impair or otherwise affect the lien and security interest of the Assignment on
such of the Assigned Interests which were subject to the Assignment prior to
giving effect to this Amendment.
3. Each Assignor hereby repeats and reaffirms all of its covenants,
agreements, representations and warranties contained in the Assignment, each and
all of which shall be applicable to all of the properties, rights, interests and
privileges subject to the lien and security interest of the Assignment after
giving effect to this Amendment. Each Assignor hereby certifies that no Default
or event which with the giving of notice or the lapse of time, or both, would
constitute a Default exists under the Assignment after giving effect to this
Amendment.
<PAGE>
4. No reference to this Amendment need be made in any note, instrument or
other document at any time referring to the Assignment, any reference in any of
such items to the Assignment to be deemed a reference to the Assignment as
modified hereby. All references in the Assignment to the term "Assigned
Interests" shall be deemed a reference to such terms as defined in the
Assignment after giving effect to this Amendment.
5. Except as specifically modified hereby, all the terms and conditions of
the Assignment shall stand and remain unchanged and in full force and effect.
IN WITNESS WHEREOF, each Assignor has caused this Amendment to be duly
executed and delivered the day and year first above written.
LASALLE PARTNERS LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By /s/ Timothy M. McGarrity
---------------------------------
Its Vice President, Treasurer and
---------------------------------
Assistant Secretary
LASALLE PARTNERS MANAGEMENT LIMITED
PARTNERSHIP,
a Delaware Limited Partnership
By /s/ Charles K. Esler, Jr.
---------------------------------
Its President, Managing Director,
---------------------------------
Treasurer and Secretary
Accepted and agreed to in Chicago, Illinois, as of the date first above
written.
HARRIS TRUST AND SAVINGS BANK, as Agent
By /s/ M. Elizabeth Gilliam
---------------------------------
Its Vice President
---------------------------------
<PAGE>
Exhibit 10.06
SUBSIDIARY COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
This Collateral Assignment of Partnership Interests (the "Assignment") is
dated as of September 6, 1996, made by the parties who have executed this
Agreement (such parties, along with any other parties who execute and deliver to
the Agent hereinafter identified and defined an agreement in the form attached
hereto as Schedule B being herein are referred to collectively as the
"Assignors" and individually as an "Assignor") and Harris Trust and Savings Bank
("Harris") with its mailing address 111 West Monroe Street, Chicago, Illinois
60690 acting as agent hereunder for the Lenders hereinafter identified and
defined (Harris acting as such agent and any successor or successors to Harris
acting in such capacity being hereinafter referred to as the "Agent");
W I T N E S S E T H T H A T:
WHEREAS, the Assignors are subsidiaries or affiliates of either LaSalle
Partners Limited Partnership, a Delaware limited partnership ("LPL") or LaSalle
Partners Management Limited Partnership, a Delaware limited partnership ("LPML";
LPL and LPML are sometimes hereinafter referred to individually as a "Borrower"
and collectively as the "Borrowers");
WHEREAS, the Borrowers, Harris, individually and as Agent, and LaSalle
National Bank, have entered into a Credit Agreement dated as of September 6,
1996 (such Credit Agreement as the same may be amended, modified or restated
from time to time being hereinafter referred to as the "Credit Agreement"),
pursuant to which such lenders (Harris and the other lenders which are now or
which from time to time hereafter become party to the Credit Agreement being
hereinafter referred to collectively as the "Lenders" and individually as a
"Lender") have agreed, subject to certain terms and conditions, to extend credit
and make certain other financial accommodations available to the Assignors;
WHEREAS, as a condition precedent to extending the credit facilities to the
Borrowers under the Credit Agreement, the Lenders have required, among other
things, that the Assignors grant to the Agent a lien on and security interest in
certain properties of the Assignors as collateral security for such credit
facilities and related obligations pursuant to this Agreement;
WHEREAS, the interdependent nature of the businesses of each of the
Assignors and the Borrowers is such that the viability of each Assignor is
dependent upon the continued success of the Borrowers and upon the continuation
of the Borrowers' business relationships with such Assignor, and the
continuation thereof necessitates the Borrowers' access to credit and other
financial accommodations from the Lenders which the Lenders will only make
available on the condition, among others, that the Assignors execute and deliver
this Agreement;
WHEREAS, each Assignor will directly and substantially benefit from credit
and other financial accommodations extended and to be extended by the Lenders to
the Borrowers; and
NOW, THEREFORE, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
<PAGE>
1. Assignment of Partnership Interest. Each Assignor does hereby assign
and transfer to the Agent for the benefit of the Lenders and acknowledges and
agrees that the Agent for the benefit of the Lenders has and shall continue to
have a security interest in (i) all right, title and interest of such Assignor,
whether now owned or hereafter acquired in and to each partnership and limited
liability company identified on Schedule A attached hereto and made a part
hereof as such Schedule may from time to time be amended as hereinafter set
forth, and each successor to each such partnership or limited liability company
(such partnerships, limited liability companies and successors being hereinafter
referred to collectively as the "Partnerships" and individually as a
"Partnership"), (ii) all payments and distributions of whatever kind or
character and whether in cash or other property at any time made, owing or
payable to such Assignor from, in respect of or on account of its interests
(whether now owned or hereafter acquired) in each of the Partnerships, whether
due or to become due and whether representing profits, distributions pursuant to
complete or partial liquidation or dissolution of such Partnership,
distributions representing the complete or partial redemption of such Assignor's
interest in such Partnership or the complete or partial withdrawal of such
Assignor from such Partnership, repayment of capital contributions, payment of
management fees or commissions, or otherwise, and the right to receive, receipt
for, use and enjoy all such payments and distributions, and all proceeds
thereof, in every case whether now existing or hereafter acquired or arising,
and (iii) all proceeds of any of the foregoing (all of the foregoing rights,
interests, properties, and privileges assigned and in which a security interest
is granted pursuant hereto being hereinafter collectively called the "Assigned
Interests"). This pledge and assignment constitutes an assignment of the rights
of each Assignor with respect to the Assigned Interests only and not an
assignment of any duties or obligations any Assignor may have with regard to the
management of, or the giving of advice to, the Partnerships. Notwithstanding
anything herein to the contrary, the Agent and Lenders acknowledge that the
Agent does not by reason of this assignment and pledge, and is not hereby
granted the right, to become a substituted partner in place of the relevant
Assignor.
2. Obligations Hereby Secured. This Assignment is made and given to
secure, and shall secure, the payment and performance of (a) the Obligations (as
defined in the Credit Agreement) and (b) any and all expenses and charges, legal
or otherwise, suffered or incurred by the Agent or any Lender in collecting or
enforcing any of such indebtedness, obligations and liabilities or in realizing
on or protecting or preserving any security therefor, including, without
limitation, the lien and security interest granted hereby other than any of the
foregoing that result from the gross negligence or willful misconduct of the
Agent or such Lender (all of the foregoing being hereinafter referred to as the
"Obligations").
3. Covenants, Agreements, Representations and Warranties. Each Assignor
hereby covenants and agrees with, and represents and warrants to, the Agent and
Lenders that:
(a) Each Assignor is a limited partnership duly organized and validly
existing in good standing under the laws of its state of formation, is the sole
and lawful legal, record and beneficial owner of the Assigned Interests, and has
full right, power and authority to enter into this Agreement and to perform each
and all of the matters and things herein provided for. The execution and
delivery of this Agreement, and the observance and performance of the matters
and things herein set forth, will not (i) contravene or constitute a default
under any provision of law, or any judgment, injunction, order or decree binding
upon such Assignor, or any
2
<PAGE>
provision of such Assignor's partnership agreement, or any covenant, indenture
or agreement of or affecting such Assignor or any of their respective property,
or (ii) result in the creation or imposition of any lien or encumbrance on any
property of such Assignor except for the lien and security interest in the
Assigned Interests granted to the Lender pursuant to this Agreement and except
as permitted under Section 6.15(g) of the Credit Agreement. Each Assignor's
chief executive office is located at 200 East Randolph, Chicago, Illinois 60601,
and no Assignor shall move its chief executive office without first providing
the Agent 30 days prior written notice of such Assignor's intent to do so,
provided that each Assignor shall at all times maintain its chief executive
office in the United States of America and, with respect to any such new
location, such Assignor shall have taken all action requested by the Agent to
maintain the lien and security interest of the Agent in the Assigned Interests
at all times fully perfected and in full force and effect.
(b) The Assigned Interests and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and encumbrances
of every kind, nature and description and whether voluntary or involuntary,
except for the security interest of the Agent therein and the Liens permitted
under Section 6.15 of the Credit Agreement. Each Assignor shall warrant and
defend the Assigned Interests against any claims and demands of all persons or
entities at any time claiming the same or any interest in the Assigned Interests
adverse to the Agent. Each Assignor has the right to vote the Assigned Interests
and there are no restrictions upon the voting rights associated with, or the
transfer of, any of the Assigned Interests, except as provided by federal and
state laws applicable to the sale of securities generally or as otherwise
disclosed to the Lender in writing.
(c) Except as permitted under Section 6.11 or Section 6.15(g) of the
Credit Agreement, no Assignor shall, without the Agent's prior written consent,
sell, assign, pledge, encumber, or otherwise dispose of the Assigned Interests
or any interest therein.
(d) Each Assignor shall promptly pay when due all taxes, assessments and
governmental charges and levies upon or against such Assignor or the Assigned
Interests, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith by appropriate proceedings which prevent foreclosure on or other
realization upon any of the Assigned Interests and such Assignor shall have
established adequate reserves therefor.
(e) Each Assignor agrees to execute and deliver to the Agent such further
agreements, assignments, instruments and documents and to do all such other
things as the Agent or any Lender may deem necessary or appropriate to assure
the Agent its lien and security interest hereunder, including such assignments,
stock powers, financing statements, instruments and documents as the Agent or
any Lender may from time to time require in order to comply with the Uniform
Commercial Code as enacted in the State of Illinois and any successor statute(s)
thereto (the "Code"). Each Assignor hereby agrees that a carbon, photographic or
other reproduction of this Agreement or any such financing statement is
sufficient for filing as a financing statement by the Agent without notice
thereof to such Assignor wherever the Agent in its sole discretion desires to
file the same. In the event for any reason the law of any jurisdiction other
than Illinois becomes or is applicable to the Assigned Interests or any part
3
<PAGE>
thereof, or to any of the Obligations, each Assignor agrees to execute and
deliver all such agreements, assignments, instruments and documents and to do
all such other things as the Agent or any Lender in their sole discretion deems
necessary or appropriate to preserve, protect and enforce the lien and security
interest of the Agent under the law of such other jurisdiction. Each Assignor
agrees to mark its books and records to reflect the lien and security interest
of the Agent in the Assigned Interests.
(f) If, as and when an Assignor assigns any partnership interests
hereunder in addition to those listed on Schedule A hereto, such Assignor shall
furnish to the Agent a duly completed and executed amendment to such Schedule in
substantially the form (with appropriate insertions) of Schedule C hereto
reflecting the securities pledged hereunder after giving effect to such
addition.
(g) After the occurrence and during the continuance of a Default or the
occurrence of an event which with the lapse of time or the giving of notice
would be a Default under Section 7.6 of the Credit Agreement, on failure of an
Assignor to perform any of the covenants and agreements herein contained, the
Agent may, at its option, perform the same and in so doing may expend such sums
as the Agent may deem advisable in the performance thereof, including, without
limitation, the payment of any taxes, liens and encumbrances, expenditures made
in defending against any adverse claims, and all other expenditures which the
Agent may be compelled to make by operation of law or which the Agent may make
by agreement or otherwise for the protection of the security hereof. All such
sums and amounts so expended shall be repayable by the Assignors immediately
without notice or demand, shall constitute additional Obligations secured
hereunder and shall bear interest from the date said amounts are expended at the
rate per annum applicable to past due Domestic Rate Loans (as defined in the
Credit Agreement). No such performance of any covenant or agreement by the Agent
on behalf of an Assignor, and no such advancement or expenditure therefor, shall
relieve such Assignor of any default under the terms of this Agreement or in any
way obligate the Agent or any Lender to take any further or future action with
respect thereto. The Agent, in making any payment hereby authorized, may do so
according to any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim. The Agent, in
performing any act hereunder, shall be the sole judge of whether an Assignor is
required to perform same under the terms of this Agreement. The Agent is hereby
authorized to charge any depository or other account of any Assignor maintained
with the Agent excluding all accounts of any Assignor in a fiduciary capacity
for the amount of such sums and amounts so expended.
(h) Each Assignor further warrants to and agrees with the Agent as
follows:
(i) that said Partnerships are valid and existing entities of the
type listed on Schedule A and are duly organized and existing under
applicable law; and
(ii) that the copies of the Organizational Agreements (as defined
below) for the Partnerships heretofore delivered to the Agent are true
and correct copies thereof and have not been amended or modified in
any respect, except for such
4
<PAGE>
amendments or modifications as are attached to the copies thereof
delivered to the Agent.
(i) Each Assignor will not, without the prior written consent of the
Agent, consent to any amendment or modification to any of the Organizational
Agreements which would in any manner materially adversely affect or impair the
Assigned Interests or reduce or dilute the rights of the Assignor with respect
to any of the Partnerships, any of such done without such prior written consent
to be null and void. Each Assignor will send to the Agent copies of all notices
and communications with respect to each Partnership alleging the existence of a
default by such Assignor in the performance of any of its obligations under any
Organizational Agreement. Each Assignor agrees that it will promptly notify the
Agent of any litigation which might materially or adversely affect the Assignor
or a Partnership or any of their respective properties and of any material
adverse change in the operations, business properties, assets or conditions,
financial or otherwise, of the Assignor or any Partnership. Each Assignor will
promptly perform all of its material obligations under each Organizational
Agreement. After the occurrence and during the continuance of a Default or the
occurrence of an event which with the lapse of time or the giving of notice
would be a Default under Section 7.6 of the Credit Agreement, in the event such
Assignor fails to pay or perform any material obligation arising under any
Organizational Agreement or otherwise related to any Partnership, the Agent may,
but need not, pay or perform such obligation at the expense and for the account
of such Assignor and all funds expended for such purposes shall constitute
Obligations which such Assignor promises to pay to the Agent together with
interest thereon at the rate per annum determined by adding 2% to the rate from
time to time announced by the Agent as its prime commercial rate (with any
change in the interest rate hereon resulting from a change in such prime
commercial rate to be and become effective as of and on the date of the relevant
change in such prime commercial rate).
4. Special Provisions re: Partnership Distributions. Each Assignor hereby
authorizes and directs the Partnerships and any other party at any time holding
funds due such Assignor and constituting part of the Assigned Interests whether
or not a default has occurred hereunder or in respect of the Obligations, to
make all distributions or payments now due or hereafter to become due to such
Assignor in respect of or constituting part of the Assigned Interests directly
to the Agent if the Agent should at any time so demand and agree that such
payment or distribution to the Agent as aforesaid shall be a good receipt and
acquittance to such Assignor to the extent so made. All proceeds in respect of
and all distributions or payments constituting part of the Assigned Interests at
any time received by the Agent may be retained by the Agent as additional
collateral security hereunder or may be applied by the Agent to the Obligations
at such time or times and in such order as the Agent may deem proper, whether or
not the Obligations be then due or otherwise adequately secured. Anything to the
contrary contained herein notwithstanding, so long as a Partnership has not
received written notice from the Agent to the contrary, such Assignor shall be
entitled to receive from such Partnership, and such Partnership shall be
entitled to distribute directly to such Assignor, so much of the ordinary net
earnings of the Partnership as such Assignor shall be entitled to pursuant to
the terms of the agreement under which such Partnership has been formed (each
such agreement being hereinafter referred to as "Organizational Agreement")
(subject to the provisions of the Credit Agreement such distributions to in no
event include distributions in complete or partial liquidation of such
Partnership or the interest of such Assignor therein or distributions out of the
proceeds of any sale of such Partnership's property other than the sale of
obsolete or worn out personal property
5
<PAGE>
which has been replaced by such Partnership with property of equal utility or
out of the proceeds of any loan to a Partnership secured by the Partnership's
property or out of the proceeds of any insurance carried on the Partnership's
property).
5. Power of Attorney. Each Assignor hereby appoints the Agent, and each
of its nominees, officers, agents, attorneys, and any other person whom the
Agent may designate, as such Assignor's attorney-in-fact, with full power and
authority upon the occurrence and during the continuation of a Default to ask,
demand, collect, receive, receipt for, sue for, compound and give acquittance
for any and all sums or properties which may be or become due, payable or
distributable in respect of the Assigned Interests or any a part thereof, with
full power to settle, adjust or compromise any claim thereunder or therefor as
fully as such Assignor could itself do, to endorse such Assignor's name on any
assignments, or other instruments of transfer and on any checks, notes,
acceptances, money orders, drafts and any other forms of payment or security
that may come into the Agent's possession and on all documents of satisfaction,
discharge or receipt required or requested in connection therewith, and, in its
discretion, to file any claim or take any other action or proceeding, either in
its own name or in the name of such Assignor, or otherwise, which the Agent or
any Lender may deem necessary or appropriate to collect or otherwise realize
upon all or any part of the Assigned Interests, or effect a transfer thereof, or
which may be necessary or appropriate to protect and preserve the right, title
and interest of the Agent in and to such Assigned Interests and the security
intended to be afforded hereby. Each Assignor hereby ratifies and approves all
acts of any such attorney and agrees that neither the Agent nor any such
attorney will be liable for any acts or omissions nor for any error of judgment
or mistake of fact or law other than their gross negligence or willful
misconduct. The Agent may file one or more financing statements disclosing its
security interest in all or any part of the Assigned Interests without an
Assignor's signature appearing thereon, and each Assignor also hereby grants the
Agent a power of attorney to execute any such financing statements, and any
amendments or supplements thereto, on behalf of such Assignor without notice
thereof to such Assignor. The foregoing powers of attorney, being coupled with
an interest, are irrevocable until the Obligations have been fully paid and
satisfied and all agreements of the Agent or any Lender to extend credit to or
for the account of either Borrower under the Credit Agreement have expired or
otherwise have been terminated.
6. Defaults and Remedies.
(a) If a Default shall have occurred and be continuing, all rights of each
Assignor to receive and retain the distributions which it is entitled to receive
and retain shall, at the option of the Agent, cease and thereupon become vested
in the Agent which, in addition to all other rights provided herein or by law,
shall then be entitled solely and exclusively to receive and retain the
distributions which such Assignor would otherwise have been authorized to retain
pursuant to Section 4 hereof and all rights of such Assignor to exercise the
voting and/or consensual powers which it is entitled to exercise pursuant to
Section 4 hereof shall, at the option of the Agent, cease and thereupon become
vested in the Agent which, in addition to all other rights provided herein or by
law, shall then be entitled solely and exclusively to exercise all voting and
other consensual powers pertaining to the Assigned Interests and to exercise any
and all rights of conversion, exchange or subscription and any other rights,
privileges or options pertaining thereto as if the Agent were the absolute owner
thereof including, without limitation, the right to exchange, at its discretion,
the Assigned Interests or any part thereof upon the
6
<PAGE>
merger, consolidation, reorganization, recapitalization or other readjustment of
the respective issuer thereof or upon the exercise by or on behalf of any such
issuer or the Agent of any right, privilege or option pertaining to the Assigned
Interests or any part thereof and, in connection therewith, to deposit and
deliver the Assigned Interests or any part thereof with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Agent may determine.
(b) Upon the occurrence and during the continuation of any Default, the
Agent shall have, in addition to all other rights provided herein or by law, the
rights and remedies of a secured party under the Code (regardless of whether the
Code is the law of the jurisdiction where the rights or remedies are asserted
and regardless of whether the Code applies to the affected Assigned Interests),
and further the Agent may, without demand and without advertisement, notice,
hearing or process of law, all of which each Assignor hereby waives, at any time
or times, sell and deliver any or all Assigned Interests held by or for it at
public or private sale, for cash, upon credit or otherwise, at such prices and
upon such terms as the Agent deems advisable, in its sole discretion. In the
exercise of any such remedies, the Agent may sell all the Assigned Interests as
a unit even though the sales price thereof may be in excess of the amount
remaining unpaid on the Obligations. The Agent is authorized at any sale or
other disposition of the Assigned Interests, if it deems it advisable so to do,
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing for their own account for investment, and not
with a view to the distribution or resale of any of the Assigned Interests. In
addition to all other sums due the Agent and Lenders hereunder, each Assignor
shall pay the Agent all costs and expenses incurred by the Agent, including
attorneys' fees and court costs, in obtaining, liquidating or enforcing payment
of Assigned Interests or the Obligations or in the prosecution or defense of any
action or proceeding by or against the Agent or an Assignor concerning any
matter arising out of or connected with this Agreement or the Assigned Interests
or the Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case under the United States Bankruptcy Code
(or any successor statute). Any requirement of reasonable notice shall be met if
such notice is personally served on or mailed, postage prepaid, to the Assignors
in accordance with Section 1l(b) hereof at least 10 days before the time of sale
or other event giving rise to the requirement of such notice; provided however,
no notification need be given to an Assignor if such Assignor has signed, after
a Default has occurred, a statement renouncing any right to notification of sale
or other intended disposition. The Agent shall not be obligated to make any sale
or other disposition of the Assigned Interests regardless of notice having been
given. The Agent may be the purchaser at any such sale or other disposition of
the Assigned Interests or any part thereof. Each Assignor hereby waives all of
its rights of redemption from any sale or other disposition of the Assigned
Interests or any part thereof. Subject to the provisions of applicable law, the
Agent may postpone or cause the postponement of the sale of all or any portion
of the Assigned Interests by announcement at the time and place of such sale,
and such sale may, without further notice, be made at the time and place to
which the sale was postponed or the Agent may further postpone such sale by
announcement made at such time and place.
EACH ASSIGNOR AGREES THAT IF ANY PART OF THE ASSIGNED INTEREST IS SOLD AT
ANY PUBLIC OR PRIVATE SALE, THE AGENT MAY ELECT TO SELL ONLY TO A BUYER WHO
WILL GIVE FURTHER ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE
BANK, RESPECTING COMPLIANCE WITH THE REQUIREMENTS OF THE FEDERAL SECURITIES
ACT OF 1933, AS AMENDED, AND A SALE SUBJECT
7
<PAGE>
TO SUCH CONDITION SHALL BE DEEMED COMMERCIALLY REASONABLE.
EACH ASSIGNOR FURTHER AGREES THAT IN ANY SALE OF ANY PART OF THE ASSIGNED
INTEREST, THE AGENT IS HEREBY AUTHORIZED TO COMPLY WITH ANY LIMITATION OR
RESTRICTION IN CONNECTION WITH SUCH SALE AS IT MAY BE ADVISED BY COUNSEL IS
NECESSARY IN ORDER TO AVOID ANY VIOLATION OF APPLICABLE LAW (INCLUDING,
WITHOUT LIMITATION, COMPLIANCE WITH SUCH PROCEDURES AS MAY RESTRICT THE
NUMBER OF PROSPECTIVE BIDDERS AND PURCHASERS AND/OR FURTHER RESTRICT SUCH
PROSPECTIVE BIDDERS OR PURCHASERS TO PERSONS WHO WILL REPRESENT AND AGREE
THAT THEY ARE PURCHASING FOR THEIR OWN ACCOUNT FOR INVESTMENT AND NOT WITH
A VIEW TO THE DISTRIBUTION OR RESALE OF SUCH COLLATERAL), OR IN ORDER TO
OBTAIN ANY REQUIRED APPROVAL OF THE SALE OR OF THE PURCHASER BY ANY
GOVERNMENTAL REGULATORY AUTHORITY OR OFFICIAL, AND THE ASSIGNOR FURTHER
AGREES THAT SUCH COMPLIANCE SHALL NOT RESULT IN SUCH SALE BEING CONSIDERED
OR DEEMED NOT TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE MANNER, NOR
SHALL THE BANK BE LIABLE OR ACCOUNTABLE TO THE ASSIGNOR FOR ANY DISCOUNT
ALLOWED BY REASON OF THE FACT THAT SUCH COLLATERAL IS SOLD IN COMPLIANCE
WITH ANY SUCH LIMITATION OR RESTRICTION.
(c) The powers conferred upon the Agent hereunder are solely to protect its
interest in the Assigned Interests and shall not impose on it any duty to
exercise such powers. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Assigned Interests in its possession
if the Assigned Interests are accorded treatment substantially equivalent to
that which the Agent accords its own property, consisting of similar type
securities, it being understood, however, that the Agent shall have no
responsibility for (a) ascertaining or taking any action with respect to any
matters relating to any Assigned Interests, whether or not the Agent has or is
deemed to have knowledge of such matters, (b) taking any necessary steps to
preserve rights against any parties with respect to any Assigned Interests, or
(c) initiating any action to protect the Assigned Interests against the
possibility of a decline in market value. This Agreement constitutes an
assignment of rights only and not an assignment of any duties or obligations of
either Assignor in any way related to the Assigned Interests, and the Agent
shall have no duty or obligation to discharge any such duty or obligation.
(d) Failure by the Agent to exercise any right, remedy or option under this
Agreement or any other agreement between an Assignor and the Agent or provided
by law, or delay by the Agent in exercising the same, shall not operate as a
waiver; and no waiver by the Agent or any Lender shall be effective unless it is
in writing and then only to the extent specifically stated. Neither the Agent
nor any party acting as attorney for the Agent shall be liable for any acts or
omissions or for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct. The rights and remedies of the
Agent under this Agreement shall be cumulative and not exclusive of any other
right or remedy which the Agent may have.
7. Application of Proceeds. All cash proceeds received by the Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Assigned Interests shall when received by the Agent in cash or its
equivalent, be applied by the Agent in reduction of the Obligations to the
extent required by the Credit Agreement. Any surplus of such cash or cash
proceeds held by the Agent and remaining after payment in full of all the
Obligations, and termination of this Agreement, shall be paid over to the
Assignor or to whomsoever may be lawfully entitled to receive such surplus. The
Assignors shall remain liable to the Agent and Lenders for any deficiency.
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8. Continuing Agreement. This Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect until all of the
Obligations, both for principal and interest, have been fully paid and satisfied
and all agreements of the Lenders to extend credit to or for the account of
either Borrower under the Credit Agreement have expired or otherwise have been
terminated. Upon such termination of this Agreement, the Agent shall, upon the
request and at the expense of the Assignors, forthwith release its security
interest and assignment hereunder.
9. The Agent. In acting under or by virtue of this Agreement, the Agent
shall be entitled to all the rights, authority, privileges and immunities
provided in the Credit Agreement all of which provisions of the Credit Agreement
(including, without limitation, Article IX thereof) are incorporated by
reference herein with the same force and effect as if set forth herein. The
Agent hereby disclaims any representation or warranty to the Lenders concerning
the perfection of the security interest granted hereunder or the value of the
Assigned Interests.
10. Primary Security; Obligations Absolute. The security interest and
assignment herein created and provided for stand as direct and primary security
for the Obligations. No application of any sums received by the Agent in respect
of the Assigned Interests or any disposition thereof to the reduction of the
Obligations or any portion thereof shall in any manner entitle any Assignor to
any right, title or interest in or to the Obligations or any collateral security
therefor, whether by subrogation or otherwise, unless and until all Obligations
have been fully paid and satisfied and the commitments of the Lenders to extend
credit or otherwise make financial accommodations available to the Assignors
under the Credit Agreement have expired or otherwise have been terminated. Each
Assignor acknowledges and agrees that the security interest and assignment
hereby created and provided for are absolute and unconditional and shall not in
any manner be affected or impaired by any acts or omissions whatsoever of the
Agent, any Lender or any other holder of any of the Obligations, and without
limiting the generality of the foregoing, the security interest and assignment
hereof shall not be impaired by any acceptance by the Agent, any Lender or any
holder of any of the Obligations of any other security for or guarantors upon
any of the Obligations or by any failure, neglect or omission on the part of the
Agent, any Lender or any other holder of any of the Obligations to realize upon
or protect any of the Obligations or any collateral security therefor. Without
limiting the restrictions contained in Section 10.13 and 10.14 of the Credit
Agreement, the security interest and assignment hereof shall not in any manner
be impaired or affected by (and the Agent and the Lenders, without notice to
anyone, are hereby authorized to make from time to time) any sale, pledge,
surrender, compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition of
any of the Obligations, or of any collateral security therefor, or of any
guaranty thereof or of any obligor thereon. The Lenders may at their discretion
at any time grant credit to the Assignors, or any of them individually, without
notice to any Assignor in such amounts and on such terms as the Lenders may
elect without in any manner impairing the lien and security hereby created and
provided for. No release, compromise or discharge of any Assignor hereunder or
with respect to any of the Obligations or any Assigned Interests provided by
such Assignor shall release or discharge, or impair the agreements of, any other
Assignor hereunder or in any manner impair the security interests and
assignments granted by any other Assignor hereunder; and the Agent may proceed
against the Assigned Interests provided hereunder by any one or more of the
Assignors without proceeding against the other Assignors, their respective
properties or any
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other security or guaranty whatsoever. Without limiting the generality of the
foregoing, the requisite number of Lenders (as determined in accordance with the
terms of the Credit Agreement) may at any time or from time to time release any
Assignor from its obligations hereunder or release any Assigned Interests or
effect any compromise with any Assignor, and no such release or compromise shall
in any manner impair or otherwise effect the liens granted by, or the
obligations of, the other Assignors hereunder. In order to foreclose or
otherwise realize hereon and to exercise the rights granted the Agent hereunder
and under applicable law, there shall be no obligation on the part of the Agent,
any Lender or any other holder of any of the Obligations at any time to first
resort for payment to any Borrower or any other obligor on any of the
Obligations or to any guaranty of the Obligations or any portion thereof or to
resort to any other collateral security, property, liens or any other rights or
remedies whatsoever, and the Agent shall have the right to enforce this
instrument irrespective of whether or not other proceedings or steps are pending
seeking resort to or realization upon or from any of the foregoing.
11. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. All of the
rights, privileges, remedies and options given to the Agent hereunder shall
inure to the benefit of its successors and assigns, and all the terms,
conditions, covenants, agreements, representations and warranties of and in this
Agreement shall bind the Assignors and their respective legal representatives,
successors and assigns, provided that no Assignor may assign its rights or
delegate its duties hereunder without the Agent and Lenders' prior written
consent. Each Assignor hereby releases the Agent from any liability for any act
or omission relating to the Assigned Interests or this Agreement, except for the
Agent's gross negligence or willful misconduct.
(b) Except as otherwise specified herein, all notices hereunder shall be in
writing (including, without limitation, notice by telecopy) and shall be given
to the relevant party at its address or telecopier number set forth below, or
such other address or telecopier number as such party may hereafter specify by
notice to the other given by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder shall be addressed:
to the Assignors at: to the Agent at:
LaSalle Partners Limited Harris Trust and Savings Bank
200 East Randolph 111 West Monroe Street
Chicago, Illinois 60601 Chicago, Illinois 60690
Attention: Mr. Timothy McGarrity Attention: Emerging Majors
Telecopy: (312) 782-4339 Telecopy: (312) 461-2591
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the addresses specified in this Section.
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(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the enforcement of any remedy under or upon
this Agreement; it being understood and intended that no one or more of the
Lenders shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Agreement by its or their action or to enforce any
right hereunder, and that all proceedings at law or in equity shall be
instituted, had and maintained by the Agent in the manner herein provided and
for the benefit of the Lenders.
(d) All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement. The term
"Assignor" and "Assignors" as used herein shall mean and include the Assignors
collectively and also each individually, with all grants, representations,
warranties and covenants of and by the Assignors, or any of them, herein
contained to constitute joint and several grants, representations, warranties
and covenants of and by the Assignors; provided, however, that unless the
context in which the same is used shall otherwise require, any grant,
representation, warranty or covenant contained herein related to the Assigned
Interests shall be made by each Assignor only with respect to the Assigned
Interests owned by it or represented by such Assignor as owned by it.
(e) Notwithstanding anything herein to the contrary, the right of recovery
against each Assignor under this Assignment Agreement shall not exceed the
Maximum Liability Amount. For purposes of this paragraph, the term "Maximum
Liability Amount" shall mean $1.00 less than the amount of the lowest claim on
this Assignment Agreement which would render it void or voidable under
applicable law against such Assignor.
(f) In the event that any provision hereof shall be deemed to be invalid or
unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision, but only as to such locations where such law or
interpretation is operative, and the invalidity or unenforceability of such
provision shall not affect the validity of any remaining provisions hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
(g) This Assignment constitutes an assignment of the rights of each
Assignor with respect to the Partnerships only and not an assignment of any
duties or obligations of each Assignor with respect thereto; and by its
acceptance hereof, the Agent does not undertake to perform or discharge and
shall not be responsible or liable for the performance or discharge of any such
duties or responsibilities.
(h) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. All terms which are used in this Agreement which are
defined in the Code shall have the same meanings herein as said terms do in the
Code unless this Agreement shall otherwise specifically provide. The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.
(i) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same instrument. Each
Assignor acknowledges that this Agreement is and
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shall be effective upon its execution and delivery by such Assignor to the
Agent, and it shall not be necessary for the Agent to execute this Agreement or
any other acceptance hereof or otherwise to signify or express its acceptance
hereof.
(j) Each Assignor hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois state court sitting in the City of Chicago for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each Assignor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
form. Each Assignor, the Agent and the Lenders each hereby irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
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<PAGE>
In Witness Whereof, each Assignor has caused this Agreement to be duly
executed and delivered the day and year first above written.
LaSalle Advisors Limited, a Delaware limited
partnership
By: LaSalle Partners Limited Partnership, a
Delaware limited partnership, its
general partner
By /s/ Timothy McGarrity
---------------------
Its Vice President, Treasurer and
-----------------------------
Assistant Secretary
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It is Acknowledged and Agreed to as of the date first written above.
Harris Trust and Savings Bank, as Agent
By /s/ M. Elizabeth Gilliam
-------------------------
Its Vice President
---------------
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Exhibit 10.07
Guaranty Agreement
This Agreement dated as of this 6th day of September, 1996, by the parties
who have executed this Guaranty (such parties, along with any other parties who
execute and deliver to the Agent hereinafter identified and defined an agreement
in the form attached hereto as Exhibit A, being herein referred to collectively
as the "Guarantors" and individually as a "Guarantor").
W i t n e s s e t h:
Whereas, the Guarantors are subsidiaries or affiliates of either LaSalle
Partners Limited Partnership, a Delaware limited partnership ("LPL") or LaSalle
Partners Management Limited Partnership, a Delaware limited partnership ("LPML";
LPL and LPML are sometimes hereinafter referred to individually as a "Borrower"
and collectively as the "Borrowers"); and
Whereas, the Borrowers, Harris Trust and Savings Bank ("Harris"),
individually and as agent (Harris acting as such agent and any successor or
successors to Harris in such capacity being hereinafter referred to as the
"Agent") and various other lenders have entered into a Credit Agreement dated as
of even date herewith (such Credit Agreement as the same may from time to time
hereafter be modified or amended being hereinafter referred to as the "Credit
Agreement") pursuant to which Harris and other lenders which are now or which
may from time to time hereafter become parties thereto (Harris and such other
lenders being hereinafter referred to collectively as the "Lenders" and
individually as a "Lender") have extended various credit facilities to the
Borrowers (the Agent and the Lenders being hereinafter referred to collectively
as the "Guaranteed Creditors" and individually as a "Guaranteed Creditor"); and
Whereas, the interdependent nature of the businesses of each of the
Guarantors and the Borrowers is such that the viability of each Guarantor is
dependent upon the continued success of the Borrowers and upon the continuation
of the Borrowers' business relationships with such Guarantor, and the
continuation thereof necessitates the Borrowers' access to credit and other
financial accommodations from the Lenders which the Lenders will only make
available on the condition, among others, that the Guarantors execute and
deliver this Guaranty; and
Whereas, each Guarantor will directly and substantially benefit from credit
and other financial accommodations extended and to be extended by the Lenders to
the Borrowers; and
Now, therefore, for value received, and in consideration of advances made
or to be made, or credit accommodations given or to be given, to the Borrowers
by the Lenders from time to time, each Guarantor hereby makes the following
representations and warranties to the Guaranteed Creditors and hereby covenants
and agrees with the Guaranteed Creditors as follows:
1. Each Guarantor hereby jointly and severally guarantees to the
Guaranteed Creditors, the due and punctual payment of (i) any and all
indebtedness, obligations and liabilities owing to the Guaranteed Creditors, and
any of them, by either Borrower under or in connection with or evidenced by (w)
the Credit Agreement or (x) all notes issued by either Borrower under the Credit
Agreement and any and all notes issued in extension or renewal thereof or in
substitution or replacement therefor (collectively, the "Notes") or (y) any
instrument or document executed by a Borrower or Guarantor granting to the Agent
a lien on
<PAGE>
and security interest in any personal property of a Borrower or Guarantor (the
"Collateral Documents,") or in each case whether now existing or hereafter
arising (and whether arising before or after the filing of a petition in
bankruptcy), due or to become due, direct or indirect, absolute or contingent,
and howsoever evidenced, held or acquired, (ii) the obligations of the Borrowers
to reimburse the Guaranteed Creditors, and any of them, for the amount of all
drawings on all letters of credit (the "Letters of Credit") issued for the
account of the Borrowers pursuant to the Credit Agreement, and all other
obligations of the Borrowers under any and all applications for such Letters of
Credit (each an "Application"; the Notes, the Letters of Credit, the Credit
Agreement, the Applications, the Collateral Documents and any guaranty or
security agreement executed by another subsidiary or affiliate of either
Borrower in connection with the Credit Agreement being hereinafter collectively
referred to as the "Credit Documents") and (iii) any and all expenses and
charges, legal or otherwise, suffered or incurred by the Guaranteed Creditors,
and any of them, in collecting or enforcing any of such indebtedness,
obligations and liabilities or in realizing on or protecting or preserving any
security therefor other than any of the foregoing that result from the gross
negligence or willful misconduct of the Agent or such Lender. The indebtedness,
obligations and liabilities described in the immediately preceding clauses (i),
(ii) and (iii) are hereinafter referred to as the "indebtedness hereby
guaranteed". In case of failure by either Borrower punctually to pay any
indebtedness hereby guaranteed, each Guarantor hereby jointly and severally
agrees to make such payment or to cause such payment to be made punctually as
and when the same shall become due and payable (whether at stated maturity, by
acceleration or otherwise) and following the lapse of any grace period expressly
applicable to such default in payment, and as if such payment were made by such
Borrower.
2. Each Guarantor further jointly and severally agrees to pay all
expenses, legal and/or otherwise (including court costs and reasonable
attorneys' fees), paid or incurred by any Guaranteed Creditor in endeavoring to
collect the indebtedness hereby guaranteed, or any part thereof, and in
protecting, defending or enforcing this guaranty in any litigation, bankruptcy
or insolvency proceedings or otherwise.
3. Each Guarantor agrees that upon demand made at any time after default
in payment of any indebtedness hereby guaranteed and the lapse of any grace
period expressly applicable to such default in the Credit Agreement, such
Guarantor will then pay to the Agent for the benefit of the Guaranteed Creditors
the full amount of the indebtedness hereby guaranteed whether or not any one or
more of the other Guarantors shall then or thereafter pay any amount whatsoever
in respect to their obligations hereunder.
4. Each of the Guarantors agrees that such Guarantor will not exercise or
enforce any right of exoneration, contribution, reimbursement, recourse or
subrogation available to such Guarantor against any person liable for payment of
the indebtedness hereby guaranteed, or as to any security therefor, unless and
until the full amount owing to the Guaranteed Creditors of the indebtedness
hereby guaranteed has been paid and any commitment by the Guaranteed Creditors
to extend any indebtedness hereby guaranteed shall have terminated and each
Letter of Credit shall have expired. The payment by any Guarantor of any amount
or amounts to the Guaranteed Creditors pursuant hereto shall not in any way
entitle any such Guarantor, either at law, in equity or otherwise, to any right,
title or interest (whether by way of subrogation or otherwise) in and to the
indebtedness hereby guaranteed or any part thereof or any collateral security
therefor or any other rights or remedies in any way relating thereto or in and
to any
2
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amounts theretofore, then or thereafter paid or applicable to the payment
thereof howsoever such payment may be made and from whatsoever source such
payment may be derived unless and until all of the indebtedness hereby
guaranteed and all costs and expenses suffered or incurred by the Guaranteed
Creditors in enforcing this Guaranty have been paid in full and any commitment
by the Guaranteed Creditors to extend any indebtedness hereby guaranteed shall
have terminated and each Letter of Credit shall have expired.
5. Each Guaranteed Creditor may, without any notice whatsoever to any of
the Guarantors, sell, assign, or transfer all of the indebtedness hereby
guaranteed, or any part thereof, or grant participations therein as permitted by
the Credit Agreement, and in that event each and every immediate and successive
assignee, transferee, or holder of or participant in all or any part of the
indebtedness hereby guaranteed, shall have the right to enforce this Guaranty,
by suit or otherwise, for the benefit of such assignee, transferee, holder or
participant, as fully as if such assignee, transferee, holder or participant
were herein by name specifically given such rights, powers and benefits; but
each Guaranteed Creditor shall have an unimpaired right to enforce this Guaranty
for its own benefit or any such participant, as to so much of the indebtedness
hereby guaranteed that it has not sold, assigned or transferred. Without
limiting the generality of the foregoing, and subject to the provisions of
Section 10.13 and 10.14 of the Credit Agreement, any Lender may assign or
otherwise transfer any of the indebtedness hereby guaranteed or held by it to
any other person or entity, and such other person or entity shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise, subject, however, to the provisions of the Credit
Agreement.
6. This Guaranty is a continuing, absolute and unconditional Guaranty,
and shall remain in full force and effect until written notice of its
discontinuance executed by the Borrowers and all the Guarantors shall be
actually received by the Guaranteed Creditors and also until any and all of said
indebtedness hereby guaranteed which was created or existing before receipt of
such notice shall be fully paid and any commitment by the Guaranteed Creditors
to extend any indebtedness hereby guaranteed shall have terminated and each
Letter of Credit shall have expired. The dissolution of any of the Guarantors
shall not terminate this Guaranty until notice of such dissolution shall have
been actually received by the Guaranteed Creditors, nor until all of said
indebtedness hereby guaranteed, created or existing or committed to be extended
in each case before receipt of such notice shall be fully paid and each Letter
of Credit issued before receipt of such notice shall have expired. The
Guaranteed Creditors may at any time or from time to time release any Guarantor
from its obligations hereunder or effect any compromise with any Guarantor and
no such release or compromise shall in any manner impair or otherwise affect the
obligations hereunder of the other Guarantors. No release, compromise, or
discharge of any one or more of the Guarantors shall release, compromise or
discharge the obligations of the other Guarantors hereunder.
7. In case of the dissolution, liquidation or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against either Borrower or any of the Guarantors, all of the indebtedness hereby
guaranteed which is then existing shall, at the option of the Required Lenders
(as defined in the Credit Agreement), immediately become due or accrued and
payable from the Guarantors.
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8. The liability hereunder shall in no wise be affected or impaired by
(and the Guaranteed Creditors are hereby expressly authorized to make from time
to time, without notice to any of the Guarantors), any sale, pledge, surrender,
compromise, settlement, release, renewal, extension, indulgence, alteration,
substitution, exchange, change in, modification or other disposition of any of
said indebtedness hereby guaranteed, either express or implied, or of any Credit
Document or any other contract or contracts evidencing any thereof, or of any
security or collateral therefor or any guaranty thereof. The liability hereunder
shall in no way be affected or impaired by any acceptance by the Guaranteed
Creditors of any security for or other guarantors upon any of said indebtedness
hereby guaranteed, or by any failure, neglect or omission on the part of the
Guaranteed Creditors to realize upon or protect any of said indebtedness hereby
guaranteed, or any collateral or security therefor, or to exercise any lien upon
or right of appropriation of any moneys, creditors or property of either
Borrower, possessed by the Guaranteed Creditors, toward the liquidation of said
indebtedness hereby guaranteed, or any application of payments or credits
thereon. The Guaranteed Creditors shall have the exclusive right to determine
how, when and what application of payments and credits, if any, shall be made on
said indebtedness hereby guaranteed, or any part of same. In order to hold any
Guarantor liable hereunder, there shall be no obligation on the part of the
Guaranteed Creditors at any time, to resort for payment to either Borrower or to
any other Guarantor, or to any other Person, its properties or estate or to any
other guaranty of any indebtedness hereby guaranteed or to resort to any
collateral, security, property, liens or other rights or remedies whatsoever,
and the Guaranteed Creditors shall have the right to enforce this Guaranty
against any Guarantor irrespective of whether or not other proceedings or steps
are pending seeking resort to or realization upon or from any of the foregoing.
9. In the event the requisite Guaranteed Creditors shall at any time in
their discretion permit a substitution of Guarantors hereunder or a party shall
wish to become Guarantor hereunder, such substituted or additional Guarantor
shall, upon executing an agreement in the form attached hereto as Exhibit A,
become a party hereto and be bound by all the terms and conditions hereof to the
same extent as though such Guarantor had originally executed this Guaranty and
in the case of a substitution, in lieu of the Guarantor being replaced. No such
substitution shall be effective absent the written consent of the requisite
Guaranteed Creditors nor shall it in any manner affect the obligations of the
other Guarantors hereunder.
10. All diligence in collection or protection, and all presentment,
demand, protest and/or notice, as to any and everyone, whether or not the
Borrowers or the Guarantors or others, of dishonor and of default and of non-
payment and of the creation and existence of any and all of said indebtedness
hereby guaranteed, and of any security and collateral therefor, and of the
acceptance of this Guaranty, and of any and all extensions of credit and
indulgence hereunder, are expressly waived.
11. No act of commission or omission of any kind, or at any time, upon the
part of the Guaranteed Creditors in respect to any matter whatsoever, shall in
any way affect or impair this Guaranty.
12. The Guarantors waive any and all defenses, claims and discharges of
either Borrower, or any other obligor, pertaining to the indebtedness hereby
guaranteed, except the defense of discharge by payment in full. Without limiting
the generality of the foregoing, the
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<PAGE>
Guarantors will not assert, plead or enforce against the Guaranteed Creditors
any defense of waiver, release, discharge in bankruptcy, statute of limitations,
res judicata, statute of frauds, antideficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to a
Borrower or any other person liable in respect of any of the indebtedness hereby
guaranteed, or any setoff available against the Guaranteed Creditors to a
Borrower or any such other person, whether or not on account of a related
transaction. The Guarantors agree that the Guarantors shall be and remain
jointly and severally liable for any deficiency remaining after foreclosure of
any mortgage or security interest securing the indebtedness hereby guaranteed,
whether or not the liability of the Borrowers or any other obligor for such
deficiency is discharged pursuant to statute or judicial decision.
13. If any payment applied by the Guaranteed Creditors to the indebtedness
hereby guaranteed is thereafter set aside, recovered, rescinded or required to
be returned for any reason (including, without limitation, the bankruptcy,
insolvency or reorganization of a Borrower or any other obligor), the
indebtedness hereby guaranteed to which such payment was applied shall for the
purposes of this Guaranty be deemed to have continued in existence,
notwithstanding such application, and this Guaranty shall be enforceable as to
such of the indebtedness hereby guaranteed as fully as if such application had
never been made.
14. The liability of the Guarantors under this Guaranty is in addition to
and shall be cumulative with all other liabilities of the Guarantors after the
date hereof to the Guaranteed Creditors as a Guarantor of the indebtedness
hereby guaranteed, without any limitation as to amount, except as set forth in
Section 17 hereof and unless the instrument or agreement evidencing or creating
such other liability specifically provides to the contrary.
15. Any invalidity or unenforceability of any provision or application of
this Guaranty shall not affect other lawful provisions and applications hereof,
and to this end the provisions of this Guaranty are declared to be severable.
Without limiting the generality of the foregoing, any invalidity or
unenforceability against any Guarantor of any provision or application of the
Guaranty shall not affect the validity or enforceability of the provisions or
application of this Guaranty as against the other Guarantors.
16. Each of the Guarantors jointly and severally agrees to pay to the
Agent for the benefit of the Guaranteed Creditors all costs and expenses, legal
and/or otherwise, (including court costs and reasonable attorneys' fees)
suffered or incurred by the Guaranteed Creditors in enforcing or endeavoring to
enforce the Guarantors' obligations hereunder, or any part thereof, and in
protecting, defending or enforcing the Guarantors' obligations hereunder in any
litigation, bankruptcy or insolvency proceedings or otherwise.
17. Notwithstanding anything herein to the contrary, the right of recovery
against each Guarantor under this Guaranty shall not exceed the Maximum
Liability Amount. For purposes of this Section, the term "Maximum Liability
Amount" shall mean $1.00 less than the amount of the lowest claim on this
Guaranty which would render it void or voidable under applicable law against
such Guarantor.
18. Any demand for payment on this Guaranty or any other notice required
or desired to be given hereunder to any Guarantor shall be deemed to have been
validly served, given or
5
<PAGE>
delivered to such Guarantor when given to such Guarantor or when given to the
Borrowers in accordance with the Credit Agreement.
19. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW
OF THE STATE OF ILLINOIS (without regard to principles of conflicts of laws) in
which state it shall be performed by the Guarantors and may not be waived,
amended, released or otherwise changed except by a writing signed by the
requisite Guaranteed Creditors. This Guaranty and every part thereof shall be
effective upon delivery to the Agent, without further act, condition or
acceptance by the Guaranteed Creditors, shall be binding upon the Guarantors and
upon the legal representatives, successors and assigns of the Guarantors, and
shall inure to the benefit of the Guaranteed Creditors, their successors, legal
representatives and assigns. The Guarantors waive notice of the Guaranteed
Creditors' acceptance hereof. This Guaranty may be executed in counterparts and
by different parties hereto on separate counterparts each of which shall be an
original, but all together to be one and the same instrument.
20. PERSONAL JURISDICTION. (a) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED
IN SUBSECTION (b), THE GUARANTEED CREDITORS AND THE GUARANTORS AGREE THAT ALL
DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS GUARANTY, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY
BY STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS BUT EACH OF THE
GUARANTEED CREDITORS AND THE GUARANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, ILLINOIS.
EACH OF THE GUARANTORS WAIVES IN ALL DISPUTES ANY OBJECTION THAT SUCH GUARANTOR
MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE OR ANY OBJECTION
THAT SUCH GUARANTOR MAY HAVE THAT ANY ONE OR MORE OF THE OTHER GUARANTORS HAVE
NOT BEEN JOINED IN SUCH PROCEEDING.
(b) OTHER JURISDICTIONS. EACH OF THE GUARANTORS AGREES THAT THE GUARANTEED
CREDITORS SHALL HAVE THE RIGHT TO PROCEED AGAINST EACH AND ANY OF THE GUARANTORS
OR THEIR PROPERTY ("PROPERTY") IN A COURT IN ANY LOCATION TO ENABLE THE
GUARANTEED CREDITORS TO REALIZE ON PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE GUARANTEED CREDITORS, WHETHER OR NOT
PROCEEDING SEPARATELY AGAINST A GUARANTOR OR ITS PROPERTY OR JOINTLY AGAINST ANY
ONE OR MORE OTHER GUARANTORS OR THEIR PROPERTY. EACH OF THE GUARANTORS AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT
IN ACCORDANCE WITH THIS PROVISION BY THE GUARANTEED CREDITORS TO REALIZE ON
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
GUARANTEED CREDITORS. EACH OF THE GUARANTORS WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE GUARANTEED CREDITORS HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.
6
<PAGE>
In Witness Whereof, the Guarantors have caused this Guaranty to be executed
and delivered as of the date first above written.
LaSalle Partners Management (Arizona) Limited
Partnership, an Arizona limited partnership
By: LaSalle Partners Management Limited
Partnership, a Delaware limited partnership
Its: General Partner
By: /s/ Charles K. Esler, Jr.
--------------------------
Name: Charles K. Esler, Jr.
Its: President, Managing
Director, Treasurer and
Secretary
LaSalle Partners (Georgia) Limited Partnership, a
Georgia limited partnership
By: LaSalle Partners Limited Partnership, a
Delaware limited partnership
Its: General Partner
By: /s/ Timothy M. McGarrity
-------------------------
Name: Timothy M. McGarrity
Its: Vice President, Treasurer
and Assistant Secretary
LaSalle Construction Limited Partnership, a
Delaware limited partnership
By: LaSalle Construction Corporation, an Illinois
corporation
Its: General Partners
By: /s/ Ronald P. Vander Weele
---------------------------
Name: Ronald P. Vander Weele
Its: Senior Vice President
7
<PAGE>
LaSalle Advisors Limited, a Delaware limited
partnership
By: LaSalle Partners Limited Partnership, a
Delaware limited partnership
Its: General Partner
By: /s/ Timothy M. McGarrity
---------------------------------
Name: Timothy M. McGarrity
Its: Vice President, Treasurer
and Assistant Secretary
ABKB/LaSalle Securities Limited Partnership, a
Maryland limited partnership
By: ABKB/LaSalle Securities, Inc., a
Maryland corporation
Its: General Partners
By: /s/ Ronald P. Vander Weele
---------------------------------
Name: Ronald P. Vander Weele
Its: Senior Vice President
LASALLE PARTNERS (NEW YORK) LIMITED PARTNERSHIP
By: LaSalle Partners Incorporated, a New
York corporation
Its: General Partners
By: /s/ Charles K. Esler
---------------------------------
Name: Charles K. Esler
Its: President
8
<PAGE>
LaSalle Partners Management (Illinois) Limited
Partnership, an Illinois limited partnership
By: /s/ Jon R. Andersen
---------------------------------------
Name: Jon R. Andersen
Its: General Partner
LSPAM (California) Limited Partnership, a
California limited partnership
By: LaSalle Partners Asset Management of
California, Inc., a California corporation
Its: General Partner
By: /s/ Charles K. Esler, Jr.
---------------------------------
Name: Charles K. Esler, Jr.
Its: President
LPAML-COPUB Limited Partnership, a
Delaware limited partnership
By: LPAML-COPUB Corporation, a Delaware
corporation
Its: General Partner
By: /s/ Charles K. Esler, Jr.
---------------------------------
Name: Charles K. Esler, Jr.
Its: President
LPAML Colorado Limited Partnership, a
Colorado limited partnership
By: /s/ Lilly A. Barnett
---------------------------------------
Name: Lilly A. Barnett
Its: General Partner
9
<PAGE>
LaSalle Partners Development Limited, a
Delaware limited partnership
By: LaSalle Partners Management Limited
Partnership, a Delaware limited partnership
Its: General Partner
By: /s/ Charles K. Esler, Jr.
---------------------------------
Name: Charles K. Esler. Jr.
Its: President
LP International, a Limited Liability Company
By:________________________________________
Its:_______________________________________
LaSalle Partners Management (Ohio) Limited
Partnership, an Illinois limited partnership
By: /s/ Cynthia K. Bucco
----------------------------------------
Name: Cynthia K. Bucco
Its: General Partner
LaSalle Partners Management Limited
Partnership, a Florida limited partnership
By: /s/ Robert N. Rea
----------------------------------------
Name: Robert N. Rea
Its: General Partner
10
<PAGE>
LSP Services (California) Limited Partnership, a
California limited partnership
By: LaSalle Partners of California, Inc., a
California corporation
Its: General Partner
By: /s/ Stuart L. Scott
----------------------------
Name: Stuart L. Scott
Its: President
LaSalle Partners (Illinois) Limited Partnership,
an Illinois limited partnership
By: /s/ Stuart L. Scott
----------------------------------
Name: Stuart L. Scott
Its: President
11
<PAGE>
12
<PAGE>
Exhibit 10.08
================================================================================
DEL-LPL LIMITED PARTNERSHIP
AND DEL-LPAML LIMITED PARTNERSHIP,
LASALLE PARTNERS LIMITED PARTNERSHIP
AND LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP,
THE GALBREATH COMPANY AND
THE GALBREATH COMPANY OF CALIFORNIA, INC.
GALBREATH HOLDING LLC,
and
THE STOCKHOLDERS OF THE GALBREATH COMPANY
AND GALBREATH COMPANY OF CALIFORNIA, INC.
________________________________________
CONTRIBUTION AND EXCHANGE AGREEMENT
________________________________________
Dated as of April 22, 1997
<PAGE>
CONTRIBUTION AND EXCHANGE AGREEMENT
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. DEFINITIONS........................................................... 3
2. THE TRANSACTION....................................................... 9
2.1 Contribution and Exchange....................................... 9
2.2 Closing......................................................... 10
2.3 Closing Deliveries.............................................. 10
3. REPRESENTATIONS AND WARRANTIES OF THE DEL
PARTNERSHIPS AND THE LA SALLE PARTNERSHIPS............................ 14
3.1 Organization and Standing....................................... 14
3.2 Capitalization.................................................. 17
3.3 Financial Statements............................................ 18
3.4 No Undisclosed Liabilities...................................... 19
3.5 Absence of Certain Changes, Events or
Conditions...................................................... 20
3.6 Litigation, Etc................................................. 20
3.7 Trademarks, Etc................................................. 21
3.8 Compliance...................................................... 22
3.9 Labor Matters................................................... 23
3.10 No Conflict With Other Documents................................ 23
3.11 Authority....................................................... 24
3.12 Contracts....................................................... 25
3.13 Clients......................................................... 27
3.14 Tax Matters..................................................... 28
3.15 Title to Properties; Absence of Liens and
Encumbrances, Etc............................................... 30
3.16 Pension and Employee Benefit Plans.............................. 32
3.17 Insurance....................................................... 38
3.18 No Pending Transactions......................................... 39
3.19 Disclosure...................................................... 39
3.20 Transactions with Affiliates.................................... 39
3.21 Environmental Matters........................................... 40
3.22 Investment Intent............................................... 46
4. REPRESENTATIONS AND WARRANTIES OF THE GALBREATH
COMPANIES AND G-LLC................................................... 47
4.1 Organization and Standing; Subsidiaries......................... 47
4.2 Capitalization of the Galbreath Companies....................... 49
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
4.3 Financial Statements............................................. 51
4.4 No Undisclosed Liabilities....................................... 52
4.5 Absence of Certain Changes, Events or
Conditions....................................................... 52
4.6 Fixed Assets; Real Estate........................................ 53
4.7 Litigation, Etc.................................................. 53
4.8 Trademarks, Etc.................................................. 54
4.9 Compliance....................................................... 55
4.10 Labor Matters.................................................... 55
4.11 No Conflict With Other Documents................................. 56
4.12 Authority........................................................ 57
4.13 G-LLC Authorization.............................................. 57
4.14 Contracts........................................................ 58
4.15 Clients.......................................................... 59
4.16 Tax Matters...................................................... 60
4.17 Title to Properties; Absence of Liens and
Encumbrances, Etc................................................ 64
4.18 Pension and Employee Benefit Plans............................... 65
4.19 Insurance........................................................ 73
4.20 Environmental Matters............................................ 74
4.21 No Pending Transactions.......................................... 77
4.22 Disclosure....................................................... 78
4.23 Transactions with Affiliates..................................... 78
4.24 Investment Intent................................................ 79
4.25 Consent to Other Matters......................................... 80
5. PRECLOSING COVENANTS OF THE DEL PARTNERSHIPS AND
LA SALLE PARTNERSHIPS.................................................. 80
5.1 Conduct of Business.............................................. 80
5.2 Amendment of La Salle Partnership Agreements..................... 82
5.3 Information...................................................... 82
5.4 Consents......................................................... 83
5.5 Employee Matters................................................. 83
6. PRECLOSING COVENANTS OF THE GALBREATH COMPANIES
AND THE STOCKHOLDERS................................................... 83
6.1 Conduct of Business.............................................. 84
6.2 Information...................................................... 86
6.3 Consents......................................................... 87
6.4 Corporate Transactions........................................... 87
6.5 Employee Matters................................................. 88
6.6 Restructuring.................................................... 89
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7. CONDITIONS TO THE LA SALLE PARTNERSHIPS'
OBLIGATIONS............................................................ 93
7.1 Representations, Warranties and Covenants........................ 94
7.2 Binding Court Order.............................................. 94
8. CONDITIONS TO THE GALBREATH COMPANIES', G-LLC'S
AND THE STOCKHOLDERS' OBLIGATIONS...................................... 95
8.1 Representations, Warranties and Covenants........................ 95
8.2 No Binding Court Order........................................... 96
9. POST-CLOSING COVENANTS................................................. 96
9.1 Tax Matters...................................................... 96
9.2 Interest in Mapley............................................... 98
9.3 Management Committee; Board of Directors......................... 99
10. INDEMNIFICATION........................................................ 100
10.1 Indemnification by the DEL Partnership
and La Salle Partnerships........................................ 100
10.2 Indemnification by the Stockholders.............................. 101
10.3 Limitations on Indemnification................................... 102
10.4 Notice and Defense............................................... 103
10.5 Insurance........................................................ 105
11. PUBLIC ANNOUNCEMENTS................................................... 106
12. SURVIVAL; NO RIGHT OF CONTRIBUTION POST CLOSING........................ 106
13. BROKERS AND ADVISORS................................................... 107
14. EXPENSES; DAMAGES...................................................... 108
15. NOTICES................................................................ 109
16. REPRESENTATIVE......................................................... 111
17. CONSENT TO JURISDICTION AND SERVICE.................................... 113
18. TERMINATION............................................................ 114
19. ENTIRE AGREEMENT....................................................... 114
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
20. GENERAL................................................................ 115
</TABLE>
iv
<PAGE>
Page
----
EXHIBITS
Exhibit A -- Exchange of Capital Stock for Units
Exhibit B -- Amendment to Agreement of Limited Partnership of LPML
Exhibit C -- Amendment to Agreement of Limited Partnership of LPL
Exhibit D -- Closing Balance Sheet
Exhibit E -- Liquidity Agreement
Exhibit F -- Galbreath Management and LaSalle Management
Exhibit G -- Stockholders' Holdings of the Galbreath
Companies' Capital Stock
Exhibit H -- Lizanne Galbreath Employment Agreement
Exhibit I -- Registration Rights Agreement
Exhibit J -- License Agreement
Exhibit K -- Consent of The Galbreath Companies
v
<PAGE>
CONTRIBUTION AND EXCHANGE AGREEMENT
CONTRIBUTION AND EXCHANGE AGREEMENT (this "Agreement") dated as of April
22, 1997, by and among DEL-LPL Limited Partnership, a Delaware limited
partnership ("DEL-LPL"), and DEL-LPAML Limited Partnership, a Delaware limited
partnership ("DEL-LPAML" and together with DEL-LPL, the "DEL Partnerships"), La
Salle Partners Limited Partnership, a Delaware limited partnership ("LPL"), La
Salle Partners Management Limited Partnership, a Delaware limited partnership
("LPML" and together with LPL, the "La Salle Partnerships"). The Galbreath
Company, an Ohio corporation ("Galbreath Ohio"), and The Galbreath Company of
California, Inc., a California corporation ("Galbreath California" and together
with Galbreath Ohio, the "Galbreath Companies"), Galbreath Holdings, LLC, a
Delaware limited liability company ("G-LLC"), and Lizanne Galbreath ("LG") and
the other stockholders of the Galbreath Companies (the "Stockholders").
Introduction
The Stockholders are contributing to G-LLC all of the outstanding Galbreath
Capital Stock (as defined below). At the Closing (as defined below) G-LLC will
contribute the Galbreath Capital Stock to LPL and LPML, respectively, in
<PAGE>
exchange for Units in LPL and LPML in the amounts set forth on Exhibit A (the
"Exchange").
In connection with and as a condition to the contribution and exchange, (a)
G-LLC is entering into the LPL and LPML Partnerships by execution of the Fourth
Amendments to the Amended and Restated Agreements of Limited Partnerships of
each of LPL and LPML in the forms of Exhibits B and C, (b) G-LLC and the DEL
Partnerships are entering into a Put Agreement in the form of Exhibit D pursuant
to which G-LLC has certain rights to put its Units to the DEL Partnerships, (c)
the La Salle Partnerships and LG are entering into an Employment Agreement in
the form of Exhibit G, (d) The DEL Partnerships, LP-Inc. (as defined below), the
La Salle Partnerships and G-LLC are entering into a Registration Rights
Agreement in the form of Exhibit H and (e) G-LLC and the La Salle Partnerships
are entering into a License Agreement permitting the use of the Galbreath name
in the form of Exhibit I.
Immediately prior to the Closing, the Galbreath Companies will grant to
certain employees the right to receive stock in the Galbreath Companies, which
rights will be assumed by the La Salle Partnerships and will be satisfied by the
issuance of Units or stock of the successor corporation to the La Salle
Partnerships. In the event that Units
2
<PAGE>
are issued, the employees will contribute those units immediately upon receipt
to a new limited liability company to be formed by the Galbreath Companies prior
to the Closing.
The DEL Partnerships, the La Salle Partnerships, the Galbreath Companies,
G-LLC and the Stockholders wish to enter into this Agreement setting for the
terms and conditions of the foregoing transactions.
In consideration of the foregoing and of the covenants, agreements,
representations and warranties hereinafter contained, the DEL Partnerships, the
La Salle Partnerships, the Galbreath Companies, G-LLC and the Stockholders
hereby agree as follows:
1. DEFINITIONS.
1.1 An "Affiliate" shall have the meaning given that term under the
rules and regulations promulgated pursuant to the Securities Act.
1.2 "Amendments to the La Salle Partnership Agreements" shall mean
the documents attached hereto as Exhibit B and C.
1.3 "CERCLA" shall have the meaning given to that term in Section
3.21(a)(iv).
1.4 "CERCLIS" shall have the meaning given to that term in Section
3.21(d).
3
<PAGE>
1.5 "Closing" shall have the meaning given to that term in Section
2.2.
1.6 "Closing Balance Sheet" shall mean the unaudited pro forma
balance sheet of the Galbreath Companies as of the Closing, attached hereto as
Exhibit D.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.8 "DEL-LPL" shall mean DEL-LPL Limited Partnership, a Delaware
limited partnership.
1.9 "DEL-LPMAL" shall mean DEL-LPAML Limited Partnership, a Delaware
limited partnership.
1.10 "DEL Partnerships" shall mean DEL-LPL and DEL-LPAML.
1.11 "DEL Partnership Agreements" shall mean the Third Amended and
Restated Agreements of Limited Partnership of DEL-LPL and DEL-LPAML as amended
by Amendment dated January 1, 1994, Second Amendment dated November 30, 1994,
and Third Amendment dated as of December 1, 1996.
1.12 "Environmental Laws" shall have the meaning given to that term
in Section 3.21(a)(iv).
1.13 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.14 "Exchange" shall have the meaning given to that term in Section
2.1.
4
<PAGE>
1.15 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.16 "Exchange Agreement" shall mean that certain agreement of even
date herewith by and among the DEL Partnerships and Galbreath LPL Holdings LLC.
1.17 "Excluded Liabilities" shall have the meaning given that term in
Section 6.6(c).
1.18 "Excluded Property" shall have the meaning given that term in
Section 6.6(a).
1.19 "Expiration Date" shall have the meaning given that term in
Section 12.
1.20 "Galbreath California" shall mean Galbreath Company of California,
Inc., a California corporation.
1.21 "Galbreath California Common Stock" shall have the meaning set
forth in Section 4.2.
1.22 "Galbreath California Non-Voting Common Stock" shall have the
meaning set forth in Section 4.2.
1.23 "Galbreath Capital Stock" shall have the meaning set forth in
Section 4.2.
1.24 "Galbreath Companies" shall mean Galbreath Ohio and Galbreath
California.
1.25 "Galbreath Companies' Documents" shall have the meaning given to
that term in Section 7.2(d).
5
<PAGE>
1.26 "Galbreath Disclosure Schedule" shall have the meaning given to
that term in Section 4.1.
1.27 "Galbreath Financial Statements" shall have the meaning given to
that term in Section 4.3.
1.28 "Galbreath Management" shall mean the individuals listed on
Exhibit F.
1.29 "Galbreath Material Adverse Effect" shall have the meaning give
to that term in Section 4.1.
1.30 "Galbreath Ohio" shall mean The Galbreath Company, an Ohio
corporation.
1.31 "Galbreath Ohio Common Stock" shall have the meaning given to
that term in Section 4.2.
1.32 "Galbreath Ohio Non-Voting Common Stock" shall have the meaning
given to that term in Section 4.2.
1.33 "Galbreath Plans" shall have the meaning given to that term in
Section 4.18(a).
1.34 "Galbreath Properties" shall have the meaning given to that
term in Section 4.20(a).
1.35 "Galbreath Qualified Plans" shall have the meaning given to that
term in Section 4.18(b).
1.36 "Galbreath Subsidiaries" shall have the meaning given to that
term in Section 4.1.
1.37 "La Salle Disclosure Schedule" shall have the meaning given to
that term in Section 3.1.
6
<PAGE>
1.38 "La Salle Documents" shall have the meaning given to that term
in Section 8.2(e).
1.39 "La Salle Financial Statements" shall have the meaning given to
that term in Section 3.3.
1.40 "La Salle Management" shall have those persons constituting the
La Salle Management Committee on the date of this Agreement. Such persons are
listed on Exhibit F hereto.
1.41 "La Salle Material Adverse Effect" shall have the meaning given
to that term in Section 3.1.
1.42 "La Salle Partnerships" shall mean LPL and LPML.
1.43 "La Salle Partnership Agreements" shall mean the Amended and
Restated Agreements of Limited Partnership of LPL and LPML, which, prior to
Closing, shall be amended by the Amendments thereto, attached hereto as
Exhibits B and C, respectively.
1.44 "La Salle Plans" shall have the meaning given that term in
Section 3.16(a).
1.45 "La Salle Properties" shall have the meaning given to that term
in Section 3.21(a)(i).
1.46 "La Salle Qualified Plans" shall have the meaning given to that
term in Section 3.16(b).
7
<PAGE>
1.47 "La Salle Subsidiaries" shall have the meaning given to that
term in Section 3.1.
1.48 "Liquidity Agreement" shall mean the agreement attached hereto
as Exhibit E.
1.49 "LP-Inc." shall mean La Salle Partners Incorporated, a Maryland
corporation.
1.50 "LPL" shall mean La Salle Partners Limited Partnership, a
Delaware limited partnership.
1.51 "LPML" shall mean La Salle Partners Management Limited
Partnership, a Delaware limited partnership.
1.52 "Materials of Environmental Concern" shall have the meaning
given to that term in Section 3.21(a)(iii).
1.53 "Release" shall have the meaning given to that term in Section
3.21(a)(ii).
1.54 "Representative" shall have the meaning given to that term in
Section 16.
1.55 "Restructuring" shall have the meaning given to that term in
Section 6.6.
1.56 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.57 "Transaction Documents" shall include this Agreement, the
Liquidity Agreement, the License Agreement, the Registration Rights Agreement,
the Exchange Agreement,
8
<PAGE>
the La Salle Partnership Agreements and the Employment Agreements between the La
Salle Partnerships and Lizanne Galbreath.
1.58 "Taxes" shall have the meaning given to that term in Section
3.14.
1.59 "Units" shall mean limited partnership units in LPL or LPML, as
that case may be, as more fully described in the La Salle Limited Partnership
Agreements.
2. THE TRANSACTION.
Subject to the terms and conditions of this Agreement, the DEL
Partnerships, the La Salle Partnerships, the Galbreath Companies, G-LLC and the
Stockholders agree to effect the following transactions at the Closing:
2.1 Contribution and Exchange. Prior to the Closing, the Stockholders
will contribute to G-LLC all of the Galbreath Capital Stock held by them. At the
Closing, the Stockholders will cause G-LLC to contribute all of the Galbreath
Capital Stock owned by it to LPL and LPML in exchange for Units as set forth on
Exhibit A (the "Exchange"). In order to effect the Exchange, (i) G-LLC will
deliver to LPL and LPML, respectively, at the Closing certificates evidencing
the shares of Galbreath Capital Stock owned by them, duly endorsed or
accompanied by duly
9
<PAGE>
executed stock powers, and (ii) G-LLC shall execute the La Salle Partnership
Agreements.
2.2 Closing.
-------
The closing (the "Closing") of the transactions contemplated by this
Agreement shall take place at the offices of the La Salle Partnerships at 200 E.
Randolph Drive, Chicago, Illinois, beginning at 10:00 a.m. Chicago time, on
April 22, 1997, or at such other time and place as may be agreed upon by the La
Salle Partnerships and the Stockholders.
2.3 Closing Deliveries.
------------------
(a) Documents to be Delivered by the Stockholders. At the
Closing, G-LLC and the Stockholders shall deliver to the La Salle Partnerships
the following documents:
(i) A certificate or certificates, dated the date of the
Closing, in such detail as the La Salle Partnerships may reasonably
request, signed by the Chief Financial Officer or the Chief Executive
Officer of the Galbreath Companies certifying that the representations and
warranties of the Galbreath Companies contained in Section 4 of this
Agreement are true and correct in all material respects at and
10
<PAGE>
as of the date of the Closing, that the Galbreath Companies have performed
all obligations, and complied with all covenants in all material respects
required by this Agreement to be performed or complied with by them prior
to the Closing, and that the Closing Balance Sheet confirms performance of
the Galbreath Companies' covenant to deliver at the Closing at least
$1,200,000, of stockholders' equity, cash of at least $750,000, and no
liability for borrowed money (subject to the adjustments footnoted on such
balance sheet).
(ii) Opinions, dated the date of the Closing, of Howard,
Darby & Levin, and Baker & Hostetler LLP, special counsel to the Galbreath
Companies and the Stockholders, in form and substance reasonably
satisfactory to the La Salle Partnerships.
(iii) The Employment Agreement in the form of Exhibit H
duly executed by LG.
(iv) The License Agreement in the form of Exhibit J duly
executed by G-LLC.
(v) The certificates representing the Galbreath Capital
Stock, duly endorsed for transfer.
11
<PAGE>
(vi) Evidence reasonably satisfactory to the La Salle
Partnerships of the transfer to the Galbreath Companies of the partnership
interest in Galbreath Middle-Atlantic Partnership owned by Tricor, Inc.,
free and clear of any liens and encumbrances.
(vii) Evidence reasonably satisfactory to the La Salle
Partnerships of the repayment or extinguishing of all outstanding debt of
the Galbreath Companies.
(viii) The La Salle Partnership Agreements, joined in by
G-LLC.
(ix) The Exchange Agreement.
(b) Documents to be Delivered by the La Salle Partnerships. At
the Closing, the La Salle Partnerships shall deliver to the Representative the
following documents:
(i) A certificate or certificates, dated the date of the
Closing, in such detail as the Representative may reasonably request,
signed by the Chief Operating Officer or the Chief Financial Officer of the
La Salle Partnerships, certifying that the representations and warranties
of the La Salle Partnerships contained
12
<PAGE>
in Section 3 of this Agreement are true and correct in all material
respects at and as of the date of the Closing, and that the La Salle
Partnerships have performed all obligations, and complied with all
covenants, in all material respects required by this Agreement to be
performed or complied with by them prior to the Closing.
(ii) An opinion, dated the date of the Closing, of Piper &
Marbury L.L.P., special counsel to the La Salle Partnerships, in form and
substance reasonably satisfactory to the Representative.
(iii) The Amendments to the La Salle Partnership
Agreements in the forms of Exhibits B and C duly executed as required for
effectiveness.
(iv) The Employment Agreement in the form of Exhibit H
duly executed by the La Salle Partnerships.
(v) The License Agreement in the form of Exhibit J duly
executed by the La Salle Partnerships.
13
<PAGE>
(vi) The Registration Rights Agreement in the form of
Exhibit I duly executed by the DEL Partnerships, LP-Inc. and the La Salle
Partnerships.
3. REPRESENTATIONS AND WARRANTIES OF THE DEL PARTNERSHIPS AND THE
LA SALLE PARTNERSHIPS.
The DEL Partnerships and the La Salle Partnerships hereby jointly and
severally represent and warrant to the Galbreath Companies and the Stockholders,
as follows:
3.1 Organization and Standing.
-------------------------
Each of the DEL Partnerships and the La Salle Partnerships is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware and has full partnership power to carry on its
business as it is now being conducted and to own or hold under lease the
properties and assets it now owns or holds under lease. LaSalle Partners
Incorporated ("LP-Inc.") is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland and has full
corporate power to carry on its business as it is now being conducted and to own
or hold under lease the properties and assets it now owns or holds under lease.
Copies of the charter documents and by-laws of LP-Inc. have been delivered to
the Galbreath companies,
14
<PAGE>
and such copies are complete, correct and in full force and effect. Copies of
the entire DEL Partnership Agreements and La Salle Partnership Agreements have
been delivered to the Galbreath Companies, and such copies are complete and
correct and in full force and effect. The DEL Partnerships together own
directly or indirectly 1,246,081 Units of the outstanding partnership interests
of the La Salle Partnerships. The La Salle Partnerships have delivered to the
Stockholders a disclosure schedule (the "La Salle Disclosure Schedule") which
sets forth a true and complete listing of all of the subsidiaries of LPL and
LPML of which 50% or more of the partnership interests or capital stock is
directly or indirectly owned by any of the La Salle Partnerships and any other
corporation, partnership or business entity in which the La Salle Partnerships
directly or indirectly own an equity investment of greater than $100,000
(collectively, the "La Salle Subsidiaries") and each subsidiary of the DEL
Partnerships and indicates which La Salle Subsidiaries are wholly-owned. Except
as set forth on the La Salle Disclosure Schedule, such shares of capital stock
or partnership interests are validly issued, fully paid and non-assessable and
are owned by the La Salle Partnerships free and clear of any claims, liens,
charges or encumbrances. Except as set forth on the La Salle
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Disclosure Schedule, each of the La Salle Subsidiaries is wholly-owned by the La
Salle Partnerships and none of the La Salle Subsidiaries is a party to or bound
by any options, calls, contracts or commitments of any character relating to any
issued or unissued stock or any other equity issued or to be issued by it.
Copies of the charter, by-laws and other constitutive documents of the La Salle
Subsidiaries have been made available to the Galbreath Companies, and to the
knowledge of La Salle Management, such copies are complete and correct and in
full force and effect. Each of the La Salle Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, and each has full corporate or partnership
power to carry on its business as it is now being conducted and to own or hold
under lease the properties and assets it now owns or holds under lease. Except
as set forth on the La Salle Disclosure Schedule, the DEL Partnerships do not
own any equity interest in any entity other than the La Salle Partnerships and
DEL/LaSalle Finance Company L.L.C., a Delaware limited liability company of
which the DEL Partnerships own 100% of the equity interest. Except as set forth
on the La Salle Disclosure Schedule, such interests are validly issued, fully
paid and non-
16
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assessable and are owned by the DEL Partnerships free and clear of any claims,
liens, charges or encumbrances. Each of the DEL Partnerships, the La Salle
Partnerships, the La Salle Subsidiaries and LP-Inc. are duly qualified to do
business and are in good standing as foreign entities in all jurisdictions where
the character of their properties or the nature of their respective activities
makes such qualification necessary and where the failure to be so qualified
would have a material adverse effect on the business or financial condition of
the DEL Partnerships, the La Salle Partnerships, the La Salle Subsidiaries and
LP-Inc. on a consolidated basis ("La Salle Material Adverse Effect").
3.2 Capitalization.
--------------
The entire outstanding general and limited partnership interests of
LPL and LPML consist of 1,648,966 Units. The La Salle Disclosure Schedule sets
forth a true and complete list of the names of each holder of general and
limited partnership interests of each of the DEL Partnerships and each of the La
Salle Partnerships, including the number and percentage of units held by each
holder. The outstanding limited partnership interests in each of the DEL
Partnership and the La Salle Partnerships are referred to collectively as the
"La Salle Units."
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<PAGE>
LP-Inc.'s authorized capital stock consists of 10,000,000 shares of Common
Stock, par value $.01 per share (the "LP-Inc. Common Stock"), of which __ shares
are issued and outstanding. All of the La Salle Units have been duly and
validly issued and are fully-paid, and free from any preemptive or similar
rights. When issued to the Stockholders at Closing, the Units will be duly and
validly issued and fully paid, and free from any preemptive or similar rights.
Except as set forth on the La Salle Disclosure Schedule, neither the DEL
Partnerships or the La Salle Partnerships are neither party to or bound by any
options or calls, of any character relating to any issued or unissued La Salle
Units or any other equity security issued or to be issued by them or any of the
DEL Subsidiaries or the La Salle Subsidiaries.
3.3 Financial Statements.
--------------------
The La Salle Partnerships have delivered to the Galbreath Companies
copies of the DEL Partnerships' and La Salle Partnerships' audited consolidated
financial statements for the fiscal year ended December 31, 1994, 1995 and 1996
(collectively, the "La Salle Financial Statements"). These financial statements
are true and complete in all material respects, have been prepared in accordance
with generally accepted accounting principles consistently
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<PAGE>
followed throughout the periods covered by such statements (except as may be
stated in the explanatory notes to such statements), and present fairly the
consolidated financial position and results of operations of the DEL
Partnerships and the La Salle Partnerships, respectively, at the dates of such
statements and for the periods covered thereby. The DEL Partnerships have
delivered to the Galbreath Companies true and correct copies of the DEL
Partnerships' and the La Salle Partnerships' pro forma consolidated financial
statements for the fiscal year ended December 31, 1996 giving effect to the DEL
Partnerships' acquisition from Alex. Brown Kleinwort Benson Realty Advisors
Corporation ("ABKB") of the limited partnership interests of the La Salle
Partnerships held by ABKB and related transactions as if such transactions had
occurred at the beginning of such year.
3.4 No Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in the
consolidated balance sheets included within the La Salle Financial Statements
(including the explanatory notes to such statements), at the dates of such
statements, the DEL Partnerships, the La Salle Partnerships and the La Salle
Subsidiaries had no material liabilities or obligations (whether accrued,
absolute or contingent), of
19
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the character which, under generally accepted accounting principles, should be
shown, disclosed or indicated in a balance sheet of the DEL Partnerships or a
consolidated balance sheet of the La Salle Partnerships or explanatory notes or
information supplementary thereto.
3.5 Absence of Certain Changes, Events or Conditions.
Since December 31, 1996, there has not been any change in the La Salle
Partnerships' consolidated financial position, results of operations, assets,
liabilities, net worth or business, other than changes which have not had a La
Salle Material Adverse Effect. Since December 31, 1996, the La Salle
Partnerships have not experienced any event or condition of any character
(whether or not covered by insurance) which has caused a La Salle Material
Adverse Effect.
3.6 Litigation, Etc.
Except as described on the La Salle Disclosure Schedule, there is no
litigation, proceeding or governmental investigation pending or, to the
knowledge of La Salle Management, threatened or in prospect against or relating
to the DEL Partnerships, the La Salle Partnerships or the La Salle Subsidiaries,
their respective properties or businesses, or their ability to consummate the
transac-
20
<PAGE>
tions contemplated by this Agreement, which are not covered by insurance
(subject to applicable deductibles and retainages) or which would reasonably be
expected to have a La Salle Material Adverse Effect or prevent or materially
delay the consummation of such transactions. Except as disclosed on the La
Salle Disclosure Schedule, neither of the DEL Partnerships, the La Salle
Partnerships nor any of the La Salle Subsidiaries is subject to or bound by any
order of any court, regulatory commission, board or administrative body entered
in any proceeding to which it is a party or of which La Salle Management has
knowledge which would reasonably be expected to cause a La Salle Material
Adverse Effect.
3.7 Trademarks, Etc.
The DEL Partnerships, the La Salle Partnerships and the La Salle
Subsidiaries own or possess the right to use all of the patents, trademarks,
service marks, trade names, copyrights, licenses, franchises and permits
relating to such intellectual property rights, necessary for the present and
currently planned future conduct of their respective businesses. All material
patents, trademarks, service marks, trade names and copyrights owned by or
licensed by or to the DEL Partnerships, the La Salle Partnerships or the La
Salle Subsidiaries, and other agreements
21
<PAGE>
pertaining to any of the foregoing to which the DEL Partnerships, the La Salle
Partnerships or the La Salle Subsidiaries is a party or bound, have been
identified and listed on the La Salle Disclosure Schedule. The DEL
Partnerships, the La Salle Partnerships and the La Salle Subsidiaries have not
received any notice or allegation that, and do not have any knowledge or reason
to believe that, (i) any of the items listed on such schedule is being infringed
upon by others or (ii) their respective operations conflict with or infringe
upon any patent, patent application, trademark, service mark, trade name or
copyright of others.
3.8 Compliance.
To the knowledge of La Salle Management, the DEL Partnerships, the La
Salle Partnerships and the La Salle Subsidiaries have all licenses, permits,
approvals and other authorizations, and have made all filings and registrations,
that are necessary in order to enable them to conduct their businesses in all
material respects. The La Salle Disclosure Schedule fairly and accurately
summarizes or lists all material licenses, permits, approvals, authorizations
and regulatory matters relating to the business or products of the La Salle
Partnerships and the La Salle Subsidiaries. To the knowledge of La Salle
Management, the DEL Partnerships, the La Salle Partnerships
22
<PAGE>
and the La Salle Subsidiaries are in compliance in all material respects with
all applicable laws, regulations and ordinances, the violation of which would
have a La Salle Material Adverse Effect.
3.9 Labor Matters.
The La Salle Partnerships and the La Salle Subsidiaries have no
collective bargaining or other agreement with or relating to their employees.
Except as set forth on the La Salle Disclosure Schedule, no labor dispute,
strike, work stoppage, employee action or labor relations problem of any kind
which has affected or may affect the La Salle Partnerships, any of the La Salle
Subsidiaries or any of their respective businesses or operations has occurred
since December 31, 1996, or currently is pending or, to the knowledge of La
Salle Partnerships' Management, threatened. The DEL Partnerships have no
employees.
3.10 No Conflict With Other Documents.
Except as described in the La Salle Disclosure Schedule, neither the
execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will result in any violation, default,
termination, right of termination or modification of, or be in conflict with,
the DEL Partnership Agreements, the La Salle Partnership Agreements or any terms
of any contract, instru-
23
<PAGE>
ment, obligation or other document to which either of the DEL Partnerships, the
La Salle Partnerships or the La Salle Subsidiaries is a party, or any judgment,
decree or order applicable to any of the DEL Partnerships, the La Salle
Partnerships or the La Salle Subsidiaries, or result in the creation of any
lien, charge or encumbrance upon any of their properties or assets.
3.11 Authority.
The DEL Partnerships and the La Salle Partnerships have all requisite
power and authority to execute, deliver and perform this Agreement and the other
Transaction Documents. The DEL Partnerships and the La Salle Partnerships have
duly authorized, executed and delivered this Agreement and the Other Transaction
Documents and this Agreement and the other Transaction Documents have been duly
authorized by the Board of Directors of the La Salle Partnerships, and this
Agreement and the other Transaction Documents are valid, legally binding and
enforceable obligations of the DEL Partnerships, the La Salle Partnerships and
LP-Inc. (as to the Registration Rights Agreement only) except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws or (b) general principles of equity. The DEL
Partnership Agreements and the La Salle Partnership Agree-
24
<PAGE>
ments have been duly executed and delivered on behalf of the partners thereto,
and such agreements are valid, legally binding and enforceable obligations of
the DEL Partnerships and the La Salle Partnerships, respectively, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws or (b) general principles of equity.
3.12 Contracts.
Except as shown on the La Salle Disclosure Schedule, neither of the
DEL Partnerships, the La Salle Partnerships nor any of the La Salle Subsidiaries
is a party to or subject to: (a) any employment contract with any officer,
consultant, director or employee; (b) any plan or contract or arrangement
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing, or the like; (c) any lease of real or personal
property with a remaining term in excess of one year or calling for yearly lease
payments in excess of $100,000; (d) any agreement for the purchase, sale or
other disposition of any materials, equipment, supplies or inventory in an
amount in excess of $100,000 for a particular contract, except individual
purchase or sales orders from suppliers having a term of less than three months
incurred in the ordinary course of business; (e) any instrument creating a
25
<PAGE>
lien or evidencing or related to indebtedness for borrowed money; (f) any
franchise, manufacturer's representative, distributorship or similar agreement;
(g) any material contract containing covenants not to enter into or consummate
the transactions contemplated hereby or which will be terminated or modified by
the carrying out of such transactions; (h) any agreement relating to the
provision of property management, tenant representation, agency leasing or other
similar services by the La Salle Partnerships or the La Salle Subsidiaries; or
(i) any other material contract or agreement not of the type covered by any of
the other specific items of this section. Each of the contracts, instruments,
and other documents described on the La Salle Disclosure Schedule is valid and
in full force and effect, and a true and complete copy thereof has been made
available to the Stockholders. The DEL Partnerships, the La Salle Partnerships
and each of the La Salle Subsidiaries is not in default, or to the knowledge of
La Salle Management, alleged to be in default, in any material respect under any
contract, instrument, obligation or other document to which it is a party or by
which it is bound, which could reasonably be expected to have a La Salle
Material Adverse Effect. Except as shown on the La Salle Disclosure Schedule,
the consummation of the transactions contemplated
26
<PAGE>
by this Agreement will not cause a default under, or provide any right of
termination with respect to, any contract, instrument, obligation or other
document to which any of the DEL Partnerships, the La Salle Partnerships or any
of the La Salle Subsidiaries is a party or by which any of the DEL Partnerships,
the La Salle Partnerships or any of the La Salle Subsidiaries is bound, which
could reasonably be expected to have a La Salle Material Adverse Effect. To the
knowledge of La Salle Management, no party with whom the DEL Partnerships, the
La Salle Partnerships or any of the La Salle Subsidiaries has an agreement is in
default thereunder in any material respect that could reasonably be expected to
have a La Salle Material Adverse Effect.
3.13 Clients.
The La Salle Disclosure Schedule lists the 10 largest property
management and tenant representation clients for the fiscal year ended December
31, 1996, which schedule also lists the amount of the net revenues of the La
Salle Partnerships and the La Salle Subsidiaries applicable to each client so
listed. The DEL Partnerships have no clients. Except as disclosed on the La
Salle Disclosure Schedule, and except for clients with whom La Salle's
relationship to date has been for specific assignments and
27
<PAGE>
therefore does not contemplate the rendering of ongoing services, the DEL
Partnerships, the La Salle Partnerships, and the La Salle Subsidiaries have
received no notice and La Salle Management has no actual knowledge that, and La
Salle Management does not have actual knowledge that, any such client will not
continue to do business with the La Salle Partnerships or the La Salle
Subsidiaries subsequent to the closing of the transactions contemplated by this
Agreement.
3.14 Tax Matters.
The DEL Partnerships and the La Salle Partnerships qualify for
treatment under Subchapter K of the Code. Except as set forth on the La Salle
Disclosure Schedule, the provisions made for Taxes on the December 31, 1996
consolidated balance sheet of the La Salle Partnerships and the La Salle
Subsidiaries contained in the La Salle Financial Statements referred to in
Section 3.3 of this Agreement are sufficient for the payment of all unpaid Taxes
of the La Salle Partnerships and the La Salle Subsidiaries, whether or not
disputed. The federal income tax returns of the LaSalle Partnerships and the La
Salle Subsidiaries have never been audited by the Internal Revenue Service.
Except as set forth on the La Salle Disclosure Schedule, there are no proposed
additional Taxes, interest or penalties with
28
<PAGE>
respect to any year examined or not yet examined. No deficiency or addition to
Taxes, interest or penalties exists against the La Salle Partnerships or the La
Salle Subsidiaries. The La Salle Partnerships have made available to the
Galbreath Companies true and complete copies of the federal and state income tax
returns of the La Salle Partnerships and the La Salle Subsidiaries for the five
years ended December 31, 1995, together with true and complete copies as filed
of all reports of any taxing authority relating to examinations thereof which
have been delivered to the La Salle Partnerships or any La Salle Subsidiary.
Except as set forth in the La Salle Disclosure Schedule, each such tax return
and all other tax returns of the La Salle Partnerships and the La Salle
Subsidiaries filed after December 31, 1995 were prepared in accordance with
applicable law and properly reflect the liability for Taxes of the La Salle
Partnerships and the La Salle Subsidiaries to the jurisdictions to which such
return is made for the period covered thereby. Except as set forth on the La
Salle Disclosure Schedule, neither the DEL Partnerships, the La Salle
Partnerships nor any of the La Salle Subsidiaries have entered into any
agreements extending the statute of limitations with respect to any Taxes.
29
<PAGE>
For purposes of this Agreement, "Tax" means any of the Taxes and
"Taxes" means, with respect to any person or entity (A) all income taxes
(including any tax on or based upon net income, or gross income, or income as
specially defined, or earnings or profits, or selected items of income, earnings
or profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties or other taxes, fees, assessments or charges of
any kind whatsoever, together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
on such person or entity and (B) any liability for the payment of any amount of
the type described in the immediately preceding clause (A) as a result of being
a "transferee" (within the meaning of Section 6901 of the Code or any other
applicable law) of another person or entity or a member of an affiliated or
combined group.
3.15 Title to Properties; Absence of Liens and Encumbrances, Etc.
The DEL Partnerships, La Salle Partnerships and the La Salle
Subsidiaries have good and marketable title to
30
<PAGE>
or a valid leasehold interest in all their properties and assets, real and
personal (including those reflected in the December 31, 1996 consolidated
balance sheets contained in the La Salle Financial Statements except as sold or
otherwise disposed of in the ordinary course of business since the date
thereof), in each case free and clear of all liens and encumbrances, except (i)
liens and encumbrances reflected in such financial statements or in the notes to
such financial statements or securing debt reflected as liabilities on such
financial statements, (ii) liens for current taxes and assessments not in
default or which are being contested in good faith, (iii) mechanics', carriers',
workmen's, repairmen's, statutory or common law liens relating to payments that
are not delinquent or which are being contested in good faith and (iv)
imperfections of title, easements and encumbrances, liens, rights of way,
variances and other matters or limitations of any kind, if any, which would not
result in a material adverse effect on the DEL Partnerships' or the La Salle
Partnerships' use of the property affected. Except as set forth in the La Salle
Disclosure Schedule, the DEL Partnerships have good and marketable title to the
general partnership units in the La Salle Partnerships held by them, free and
clear of all liens and encumbrance. Except as is not reasonably expect-
31
<PAGE>
ed to cause a La Salle Material Adverse Effect, neither the DEL Partnerships,
the La Salle Partnerships nor any of the La Salle Subsidiaries has received any
notice of violation of any applicable zoning laws, orders, regulations, or
requirements relating to its operations or its properties which has not been
remedied. The La Salle Management has no knowledge of any threatened or
impending condemnation of any properties of the La Salle Partnerships or the La
Salle Subsidiaries by any governmental authority.
3.16 Pension and Employee Benefit Plans.
(a) Except as shown on the La Salle Disclosure Schedule, there
are no plans (other than multiemployer plans as defined in Section 3(37) of
ERISA) for pension, profit sharing, deferred compensation, severance pay,
bonuses, or any other form of retirement or deferred benefit, or for any health,
accident or other welfare benefit, including without limitation, employee
benefit plans as defined in Section 3(3) of ERISA and all other material
employee benefit arrangements, obligations, customs, or practices, which are
sponsored or maintained by any of the La Salle Partnerships or the La Salle
Subsidiaries and under which any current or former employee of the La Salle
Partnerships or the La Salle Subsidiaries is entitled to any benefit or is
entitled to participate (collectively the
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"La Salle Plans"). The DEL Partnerships have made available to the Galbreath
Companies true and complete copies of each of the La Salle Plans, all trust
agreements, insurance contracts, investment management agreements and other
agreements currently in effect with respect to the La Salle Plans, written
descriptions of all material non-written agreements relating to the La Salle
Plans (including without limitation non-written agreements with current or
former employees for post-employment health or other welfare benefits), all
reports regarding the La Salle plans received by the La Salle Partnerships, La
Salle Subsidiaries or La Salle Management within the three years preceding the
date of this Agreement from plan actuaries, administrators or consultants
concerning the testing of a La Salle Plan for compliance with the qualification
requirements of the Code, all notices within the three years preceding the date
of this Agreement received from any governmental agency or entity regarding any
La Salle Plan, all documents relating to the funding (including the latest
actuarial report), termination or attempted termination of any La Salle Plan
which is subject to Title IV of ERISA, and all summary plan descriptions
currently in effect with respect to the La Salle Plans. Each of the La Salle
Plans complies, in form and in operation, with applicable law. All
33
<PAGE>
required governmental filings have been made with respect to the La Salle Plans.
Except as set forth on the La Salle Disclosure Schedule, the La Salle
Partnerships, La Salle Subsidiaries and La Salle Management have no knowledge of
any material pending investigations, proceedings or other matters concerning the
La Salle Plans before the Internal Revenue Service, the Department of Labor or
the Pension Benefit Guaranty Corporation. There are no pending threatened
claims by or disputes with any participants or former participant in the La
Salle Plans, other than benefit claims by participants made in the normal
course of operating the La Salle Plans. Except as set forth on the La Salle
Disclosure Schedule, the La Salle Partnerships, La Salle Subsidiaries and La
Salle Management have no knowledge of any facts which could give rise to any
claims against the La Salle Plans or against any La Salle Partnerships, La
Salle Subsidiaries or fiduciary of any La Salle Plan other than benefit claims
by participants expected in the normal course of operating the La Salle Plans
and claims which would not result in a La Salle Material Adverse Effect. None
of the La Salle Partnerships, La Salle Subsidiaries or, to the knowledge of the
La Salle Partnerships, La Salle Subsidiaries or La Salle Management, any other
fiduciary of any La Salle Plan has given notice to
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their fiduciary liability insurer of any claims or potential claims against them
with respect to any La Salle Plan. True and correct copies of the annual
reports of the La Salle Plans filed with the Department of Labor and the
Internal Revenue Service for the last three years for which such reports have
become due, and all audited financial statements of the La Salle Plans for the
plan years ended in 1993, 1994, and 1995 have been made available to the
Galbreath Companies. No "prohibited transaction" as defined in Section 406(a)
and (b) of the ERISA, or as defined in Section 4975 of the Code, has occurred
with respect to any La Salle Plan, except transactions exempt under Section 408
of ERISA or Section 4975(d) of the Code. Each La Salle Plan (including without
limitation a plan covering retirees or beneficiaries of retirees) may be
terminated or amended by the plan sponsor, in any manner and at any time,
without the consent of any person covered by such plan and without any further
liability for benefits that may be accrued or expenses that may be incurred
after the date of such termination or amendment, other than benefits required
under Section 4980B of the Code or Sections 601 through 608 of ERISA if paid
100% by the participant or beneficiary.
(b) Each of the La Salle Plans which is intended to qualify
under Section 401 of the Code is desig-
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nated on the La Salle Disclosure Schedule as being a qualified plan (the La
Salle Plans so designated being hereinafter referred to as the "La Salle
Qualified Plans"). Each La Salle Qualified Plan is qualified under Section
401(a) of the Code and is the subject of a currently effective determination
letter from the Internal Revenue Service confirming such qualification. Any
operational defect or violation that will or might disqualify a La Salle
Qualified Plan can be remedied under the Internal Revenue Service Closing
Agreement Program, Voluntary Compliance Resolution Program or Administrative
Policy Regarding Self-Correction without resulting in a La Salle Material
Adverse Effect. True and correct copies of all currently effective
determination letters from the Internal Revenue Service with respect to the La
Salle Qualified Plans have been made available to the Galbreath Companies.
(c) With respect to each La Salle Plan, none of the La Salle
Partnerships or La Salle Subsidiaries has incurred any accumulated funding
deficiency within the meaning of ERISA, has obtained a waiver of any minimum
funding requirements imposed by ERISA or Code in respect of such La Salle Plan,
has incurred any liability in connection with the termination of or withdrawal
from a La Salle Plan subject to Title IV of ERISA, has otherwise incurred
36
<PAGE>
any liability to the Pension Benefit Guaranty Corporation in connection with any
La Salle Plan (except liability under Section 4007 of ERISA), has ceased
operations at any facility or has withdrawn from any La Salle Plan in a manner
that would give rise to liability under Section 4062, 4063 or 4064 of ERISA, or
has failed to pay all premiums due to the Pension Benefit Guaranty Corporation
under Section 4007 or ERISA. No "reportable event," as such term is defined in
Section 4043 of ERISA and in regulations issued thereunder, has occurred with
respect to the La Salle Plans since the effective date of ERISA, other than
events with respect to which the Department of Labor has waived the requirement
of 30 days' notice. During the period from January 1, 1992 to the date hereof,
none of the La Salle Partnerships or the La Salle Subsidiaries has any liability
with respect to any pension plan subject to Title IV of ERISA, and the benefit
liabilities (as defined in Section 4001(a)(16) of ERISA) under each La Salle
Plan that is a Title IV plan, calculated using the actuarial assumptions that
would be used by the Pension Benefit Guaranty Corporation in the event of plan
termination, do not exceed the fair market value of plan assets.
(d) None of the La Salle Partnerships or La Salle Subsidiaries
is obligated to make payments to any
37
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multiemployer plan (as defined by Section 3(37) of ERISA) and none of the DEL
Partnerships, the La Salle Partnerships or the La Salle Subsidiaries is or could
be deemed to be an employer with respect to any multiemployer plan for purposes
of Title IV or ERISA.
(e) None of the La Salle Partnerships or La Salle Subsidiaries
has any liability (including a contingent liability) with respect to any
employee benefit plan or arrangement which is not a La Salle Plan.
3.17 Insurance.
The La Salle Disclosure Schedule summarizes the insurance currently
carried by the DEL Partnerships, the La Salle Partnerships and the La Salle
Subsidiaries in respect of their respective properties and operations,
including, without limitation, general liability, umbrella liability,
contractual liability, employers' liability, automobile liability, workers'
compensation, property and casualty, business interruption and other insurance.
To the knowledge of the La Salle Management, all such insurance continues to be
in full force and effect, and the La Salle Partnerships and the La Salle
Subsidiaries are in compliance with all requirements and provisions thereof.
Neither the DEL Partnerships nor the La Salle Partnerships have any reason to
believe that such insurance coverage will not be
38
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renewed upon the expiration thereof at premiums substantially equivalent to
those currently being paid.
3.18 No Pending Transactions.
-----------------------
Except contemplated by this Agreement or as disclosed on the La Salle
Disclosure Schedule, none of the DEL Partnerships, the La Salle Partnerships or
the La Salle Subsidiaries is a party to or bound by or the subject of any
agreement, undertaking or commitment (i) to merge or consolidate with, or
acquire all or substantially all of the property and assets of, any other
corporation or person or (ii) to sell, lease or exchange all or substantially
all of its property and assets to any other corporation or person.
3.19 Disclosure.
----------
No representation or warranty made by the DEL Partnerships or the La
Salle Partnerships in this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained herein or therein not misleading.
3.20 Transactions with Affiliates.
----------------------------
Except as disclosed on the La Salle Disclosure Schedule, neither of
the La Salle Partnerships nor any of the La Salle Subsidiaries is a party to any
transaction
39
<PAGE>
(other than the employment agreements set forth in the La Salle Disclosure
Schedule or agreements on terms no less favorable to the Company than could be
obtained from independent third parties) with any (i) current partner or officer
of the La Salle Partnerships or any of the La Salle Subsidiaries, or (ii) any
parent, spouse, child, brother or sister of any such partner or officer or (iii)
any corporation or partnership of which any such partner, officer or family
relation is an officer, director, partner or greater than 10% stockholder (based
on percentage ownership of voting stock) or (iv) any Affiliate of any such
persons or entities, including, without limitation, any transaction involving a
contract, agreement or other arrangement providing for the employment of,
furnishing of materials, products or services by, rental of real or personal
property from, or otherwise requiring payments to, any such person or entity.
3.21 Environmental Matters.
(a) As used in this Section 3.21, the following terms shall have
the meanings indicated:
(i) The "La Salle Properties" means any real property or
facility currently or previously owned, leased or operated by the La Salle
Partnerships or the La Salle Subsidiaries,
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directly or indirectly. The DEL Partnerships do not and have not owned,
leased or operated any real property or facility.
(ii) "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment of any Materials of Environmental
Concern, including the abandonment or discarding of barrels, containers,
and other receptacles containing any Materials of Environmental Concern.
(iii) "Materials of Environmental Concern" means any
substance regulated under Environmental Laws, including but not limited to
asbestos and asbestos-containing materials, polychlorinated biphenyls,
petroleum and its fractions, radioactive materials, and any substance
defined as solid waste, hazardous waste, hazardous substances, regulated
substances, pollutants or contaminants, toxic substances, hazardous
chemicals, hazardous air pollutants, toxic chemicals, hazardous materials,
extremely hazardous substances, toxic waste, or terms of similar meaning
under Environmental Laws.
41
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(iv) "Environmental Laws" means any statute, regulation,
rule, ordinance, code, common law, order or judgment of any applicable
federal, state, local or foreign jurisdiction relating to pollution, the
protection of the environment, natural resources or human health, including
by way of example and not by way of limitation, the Clean Air Act, the
Clean Water Act, the Resource Conservation and Recovery Act ("RCRA"); the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"); the Toxic Substances Control Act ("TSCA"); the Hazardous
Materials Transportation Act; and the Emergency Planning and Community
Right to Know Act, all as currently amended.
(b) The La Salle Disclosure Schedule lists all material reports,
audits, assessments, studies, inspections, evaluations, surveys, corrective
action plans, remedial action plans, and other similar documents in the
possession or control of the DEL Partnerships, the La Salle Partnerships
relating to the environmental conditions of any of the La Salle Properties (as
defined above).
(c) The La Salle Disclosure Schedule lists all material
agreements, judgments, orders or similar
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documents which obligate any of the DEL Partnerships, the La Salle Partnerships
or the La Salle Subsidiaries to indemnify third parties in connection with
Materials of Environmental Concern at any property, or which obligate any of the
DEL Partnerships, the La Salle Partnerships or the La Salle Subsidiaries to
investigate, assess, clean up, remediate, abate, monitor or otherwise address
Materials of Environmental Concern at any property.
(d) Except as set forth on the La Salle Disclosure Schedule or
that would not reasonably be expected to have a La Salle Material Adverse
Effect, none of the La Salle Properties is listed on or has been proposed for
listing on the National Priorities List CERCLA, is listed on the Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS"), or, to the knowledge of La Salle Management, is listed on any state
or local list of potentially contaminated properties.
(e) Except as set forth on the La Salle Disclosure Schedule or
that would not reasonably be expected to have a La Salle Material Adverse
Effect, none of the DEL Partnerships, the La Salle Partnerships or the La Salle
Subsidiaries has received any request for information from any governmental
entity pertaining to the environmental condition of any property, or the use,
generation, trans-
43
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portation, treatment, storage, disposal or other management of Materials of
Environmental Concern;
(f) Except as set forth on the La Salle Disclosure Schedule,
none of the DEL Partnerships, the La Salle Partnerships or the La Salle
Subsidiaries has received notice of potential liability for environmental
conditions at any of the La Salle Properties.
(g) Except as set forth on the La Salle Disclosure Schedule or
that would not reasonably be expected to have a La Salle Material Adverse
Effect, no environmental approvals, clearances or consents are required under
applicable law from any governmental agency or authority in order for the
parties to this Agreement to consummate the transactions contemplated herein.
(h) Except as would not have La Salle Material Adverse Effect,
or as disclosed on the La Salle Disclosure Schedule,
(i) to the knowledge of La Salle Management, there has
been no material Release at, on, under or from any of the La Salle
Properties;
(ii) to the knowledge of La Salle Management, all
underground storage tanks owned or operated by the La Salle Partnerships or
the
44
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La Salle Subsidiaries are properly registered and meet all applicable
standards for release detection, corrosion protection and spill and
overfill protection;
(iii) there are no administrative, civil or criminal
proceedings, demands, suits, complaints, citations, notices of violation or
claims pending, or to the knowledge of the La Salle Management, threatened,
against the La Salle Partnerships or the La Salle Subsidiaries in
connection with Materials of Environmental Concern at or the environmental
condition of any of the La Salle Properties; in connection with activities
at, or on, any of the La Salle Properties affecting the environment, health
or safety; or to the knowledge of La Salle Management, in connection with a
Release at any other property.
(iv) The DEL Partnerships, the La Salle Partnerships and
the La Salle Subsidiaries are in material compliance with Environmental
Laws.
45
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3.22 Investment Intent.
In connection with the transactions contemplated by this Agreement,
each of the La Salle Partnerships hereby represents and warrants that:
(a) the officers of, and advisors to, such partnership have had
the opportunity to ask questions, of, and receive answers from, executive
officers of the Galbreath Companies concerning the business and operations of
the Galbreath Companies and the terms and conditions of this Agreement, and has
had access to additional information which such officers or advisors considered
necessary for evaluating an investment in the Galbreath Companies.
(b) such partnership acknowledges that it must bear the economic
risks of the shares of Galbreath Capital Stock to be contributed to such
partnership under this Agreement; and
(c) the officers of, and advisors to, such partnership have
sufficient experience in financial and business matters to enable such officers
and advisors to be capable of evaluating the merits and the risks of the
exchange of the Galbreath Capital Stock contemplated by this Agreement and such
partnership's prospective investment in the Galbreath Companies.
46
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF THE GALBREATH COMPANIES AND G-
LLC.
The Galbreath Companies and G-LLC hereby jointly and severally
represent and warrant to the DEL Partnerships and the La Salle Partnerships as
follows:
4.1 Organization and Standing; Subsidiaries.
---------------------------------------
Galbreath Ohio is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio, and Galbreath California
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. G-LLC is a limited liability company duly
organized, validly existing and good standing under the laws of the State of
Delaware. Each of the Galbreath Companies and G-LLC has full corporate power to
carry on its business as it is now being conducted and to own or hold under
lease the properties and assets it now owns or holds under lease. The Galbreath
Companies have delivered to the La Salle Partnerships a disclosure schedule
prior to the date hereof (the "Galbreath Disclosure Schedule"), which sets forth
a true and complete listing, after giving effect to the Restructuring, of all of
the Galbreath Companies' subsidiaries of which 50% or more of the capital stock
is directly or indirectly owned by the Galbreath Companies and any other
corporation, partnership
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<PAGE>
or business entity in which the Galbreath Companies directly or indirectly own
an equity investment of greater than $50,000 (collectively, the "Galbreath
Subsidiaries") and indicates which Galbreath Subsidiaries are wholly-owned.
Except as set forth on the Galbreath Disclosure Schedule, the Galbreath
Subsidiaries' shares owned by the Galbreath Companies are validly issued, fully
paid and non-assessable and are owned by the Galbreath Companies free and clear
of any claims, liens, charges or encumbrances. Except as otherwise provided on
the Galbreath Disclosure Schedule, each Galbreath Subsidiary is a wholly-owned
subsidiary of the Galbreath Companies and none of the Galbreath Subsidiaries is
a party to or bound by any options, calls, contracts or commitments of any
character relating to any issued or unissued stock or any other equity security
issued or to be issued by it. Copies of the charter documents and by-laws of
the Galbreath Companies, G-LLC, and each of the Galbreath Subsidiaries have been
delivered or made available to the La Salle Partnerships, and to the knowledge
of Galbreath Management, such copies are complete and correct and in full force
and effect. Each of the Galbreath Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and each has full corpo-
48
<PAGE>
rate power to carry on its business as it is now being conducted and to own or
hold under lease the properties and assets it now owns or holds under lease.
The Galbreath Companies, G-LLC and each of the Galbreath Subsidiaries are duly
qualified to do business in all jurisdictions where the character of their
respective properties or the nature of their respective activities makes such
qualification necessary and where the failure to be so qualified would have a
material adverse effect on the business or financial condition of the Galbreath
Companies and any of the Galbreath Subsidiaries on a consolidated basis except
that occurrences due as a result of the announcement of the execution of this
Agreement or the transactions proposed to be consummated by this Agreement shall
be excluded from consideration for purposes of the effect of an action or an
inaction on the Galbreath Companies and the Galbreath Subsidiaries on a
consolidated basis (a "Galbreath Material Adverse Effect").
4.2 Capitalization of the Galbreath Companies.
-----------------------------------------
Galbreath Ohio's authorized capital stock consists of 75 shares of
Class A Common Stock, without par value (the "Galbreath Ohio Capital Stock"), of
which 10 shares are issued and outstanding, and 675 shares of Class B Common
Stock, without par value (the "Galbreath Ohio Non-
49
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Voting Common Stock"), of which 90 shares are issued and outstanding. Galbreath
California's entire authorized capital stock consists of 100 shares of Class A
Common Stock, without par value (the "Galbreath California Common Stock"), 10
shares of which are issued and outstanding, and 900 shares of Class B Common
Stock, no par value (the "Galbreath California Non-Voting Common Stock"), of
which 90 shares are issued and outstanding. Galbreath Ohio has granted to
certain employees of Galbreath Ohio irrevocable rights to receive an aggregate
of 19.7477 shares of Galbreath Ohio Non-Voting Common Stock. The Galbreath
Ohio Common Stock, the Galbreath Ohio Non-Voting Stock, the Galbreath California
Common Stock and the Galbreath California Non-Voting Common Stock are referred
to collectively as the "Galbreath Capital Stock". All issued and outstanding
interests of G-LLC are owned by the Stockholders. All such issued and
outstanding shares of Galbreath Capital Stock have been duly and validly issued
and are fully paid and non-assessable, free of any preemptive rights, and are
owned by the Stockholders in the amounts indicated under their respective names
on Exhibit E. Each of the Stockholders has good and marketable title to the
Galbreath Capital Stock owned by such Stockholder, free of any liens,
restrictions or encumbrances of any kind. Other than as
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<PAGE>
described above, neither the Galbreath Companies nor any of the Stockholders is
a party to or bound by any options, calls, contracts or commitments of any
character relating to any issued or unissued stock or any other equity security
issued or to be issued by the Galbreath Companies.
4.3 Financial Statements.
--------------------
The Galbreath Companies have delivered to the La Salle Partnerships
copies of the Galbreath Companies' audited consolidated financial statements
for the fiscal years ended December 31, 1994, 1995 and 1996 (the "Galbreath
Financial Statements"). The Galbreath Financial Statements are true and
complete in all material respects, have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
period covered by such statements (except as may be stated in the explanatory
notes to such statements), and present fairly the consolidated financial
position and results of operations of the Galbreath Companies at the dates of
such statements and for the periods covered thereby. Attached hereto as Exhibit
D is the Closing Balance Sheet, reflects stockholders' equity of at least
$1,200,000, cash of at least $750,000, and no liability for borrowed money
(subject to the adjustments footnoted on such balance sheet).
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<PAGE>
4.4 No Undisclosed Liabilities.
--------------------------
Except as and to the extent reflected or reserved against in the
consolidated balance sheets included within the Galbreath Financial Statements
(including the explanatory notes to such statements), at the date of such
statements, the Galbreath Companies and the Galbreath Subsidiaries had no
material liabilities or obligations (whether accrued, absolute or contingent),
of the character which, under generally accepted accounting principles, should
be shown, disclosed or indicated in a consolidated balance sheet of the
Galbreath Companies or explanatory notes or information supplementary thereto.
4.5 Absence of Certain Changes, Events or Conditions.
------------------------------------------------
Since December 31, 1996, there has not been any change in the
Galbreath Companies' consolidated financial position, results of operations,
assets, liabilities, net worth or business, other than changes which have not
had a Galbreath Material Adverse Effect. Since December 31, 1996, the Galbreath
Companies and the Galbreath Subsidiaries have not experienced any event or
condition of any character (whether or not covered by insurance) which has
caused a Galbreath Material Adverse Effect.
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<PAGE>
4.6 Fixed Assets; Real Estate.
-------------------------
The Galbreath Companies have previously delivered the depreciation
schedule for the fixed assets shown on the balance sheet included in the
December 31, 1996 financial statements referred to in Section 4.3. Neither of
the Galbreath Companies owns any real estate or acts as a general partner of,
or owns a general partnership interest in, an entity that holds title to, or
operates, real property.
4.7 Litigation, Etc.
----------------
Except as described on the Galbreath Disclosure Schedule, there is no
litigation, proceeding or governmental investigation pending or, to the
knowledge of the Galbreath Management, threatened against or relating to the
Galbreath Companies or the Galbreath Subsidiaries, their respective properties
or businesses, or the transactions contemplated by this Agreement, which are not
covered by insurance (subject to applicable deductibles and retainages) or
which would reasonably be expected to have a Galbreath Material Adverse Effect
or prevent or materially delay the consummation of such transactions. Except as
disclosed on the Galbreath Disclosure Schedule, neither of the Galbreath
Companies nor any of the Galbreath Subsidiaries is subject to or bound by any
order of any court,
53
<PAGE>
regulatory commission, board or administrative body entered in any proceeding to
which it is a party or of which Galbreath Management has knowledge which would
reasonably be expected to cause a Galbreath Material Adverse Effect.
4.8 Trademarks, Etc.
----------------
The Galbreath Companies and the Galbreath Subsidiaries own or possess
the right to use all of the trademarks, service marks, trade names, copyrights,
licenses, franchises and permits relating to such intellectual property rights,
necessary for the conduct of their respective businesses. All material
trademarks, service marks, trade names and copyrights owned by or licensed by or
to the Galbreath Companies or the Galbreath Subsidiaries, and other agreements
pertaining to any of the foregoing to which any of the Galbreath Companies or
the Galbreath Subsidiaries is a party or bound, have been identified and listed
on the Galbreath Disclosure Schedule. Except as disclosed on the Galbreath
Disclosure Schedule, the Galbreath Companies and the Galbreath Subsidiaries
have not received any notice or allegation that, and do not have any knowledge
or reason to believe that, (i) any of the items listed on such schedule is being
infringed upon by others or (ii) their respective operations conflict with or
in-
54
<PAGE>
fringe upon any patent, patent application, trademark, service mark, trade name
or copyright of others.
4.9 Compliance.
----------
To the knowledge of Galbreath Management, the Galbreath Companies and
the Galbreath Subsidiaries have all governmental licenses, permits, approvals
and other authorizations, and have made all filings and registrations that are
necessary in order to enable them to conduct their businesses in all material
respects. To the knowledge of Galbreath Management, the Galbreath Disclosure
Schedule fairly and accurately summarizes or lists all material licenses,
permits, approvals, authorizations and regulatory matters relating to the
business of the Galbreath Companies and the Galbreath Subsidiaries. The
Galbreath Companies and the Galbreath Subsidiaries have complied and are in
compliance in all material respects with all applicable laws, regulations and
ordinances, the violation of which would have a Galbreath Material Adverse
Effect.
4.10 Labor Matters.
-------------
The Galbreath Companies heretofore made available to the La Salle
Partnerships a copy of each collective bargaining or other agreement with or
relating to the employees of the Galbreath Companies or of any of the
Galbreath Subsidiaries. Except as set forth on the
55
<PAGE>
Galbreath Disclosure Schedule, no labor dispute, strike, work stoppage, employee
action or labor relations problem of any kind which has affected or may affect
the Galbreath Companies, any of the Galbreath Subsidiaries or any of their
respective businesses or operations has occurred since December 31, 1996, or
currently is pending or, to the knowledge of the Galbreath Management,
threatened.
4.11 No Conflict With Other Documents.
--------------------------------
Except as described on the Galbreath Disclosure Schedule, neither the
execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will result in any violation, default,
termination, right of termination or modification of, or be in conflict with,
(a) the Galbreath Companies' charter documents or By-laws, or (b) any terms of
any contract, instrument, obligation or other document to which either of the
Galbreath Companies or any of the Galbreath Subsidiaries is a party, or any
judgment, decree or order applicable to the Galbreath Companies or any of the
Galbreath Subsidiaries, or result in the creation of any right of purchase,
lien, charge or encumbrance upon any of the properties or assets of the
Galbreath Companies or any of the Galbreath Subsidiaries, so as to have in the
case of each of the documents
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<PAGE>
referred to under (b) above, as a Galbreath Material Adverse Effect.
4.12 Authority.
---------
The execution, delivery and performance of this Agreement by the
Galbreath Companies have been duly authorized and approved by the Board of
Directors of the Galbreath Companies, and this Agreement is a valid, legally
binding and enforceable obligation of the Galbreath Companies, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to the
rights and remedies of creditors generally or (ii) general principles of
equity. This Agreement, the Exchange and the other transactions contemplated
hereunder have been approved unanimously by the stockholders of the Galbreath
Companies, and all corporate authorizations required for consummation of the
transactions contemplated by this Agreement have been received and continue to
be in full force and effect.
4.13 G-LLC Authorization.
-------------------
Each of the Stockholders has full power and authority to enter into
this Agreement and to agree to the exchange of shares of Galbreath Capital Stock
for Units of the La Salle Partnerships as contemplated hereby. This
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<PAGE>
Agreement has been duly executed and delivered by each of the Stockholders and
constitutes a valid and legally binding and enforceable obligation of each of
the Stockholders. At the Closing, the Stockholders will transfer to the La
Salle Partnerships all of the issued and outstanding Galbreath Capital Stock
free and clear of all liens and encumbrances.
4.14 Contracts.
---------
Except as shown on the Galbreath Disclosure Schedule, neither the
Galbreath Companies nor any of the Galbreath Subsidiaries is a party to or
subject to: (a) any employment contract with any officer, consultant, director
or employee; (b) any plan or contract or arrangement providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit sharing,
or the like; (c) any contract or agreement with any labor union; (d) any lease
of real or personal property with a remaining term in excess of one year or
calling for yearly lease payments in excess of $50,000; (e) any agreement for
the purchase, sale or other disposition of any materials, equipment, supplies or
inventory in an amount in excess of $50,000 for a particular contract, except
individual purchase or sales orders from suppliers having a term of less than
three months incurred in the ordinary course of business; (f) any
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<PAGE>
instrument creating a lien or evidencing or related to indebtedness for borrowed
money; (g) any agreement relating to the provision of property management,
tenant representation, agency, leasing or other services by the Galbreath
Companies or the Galbreath Subsidiaries or (h) any other material contract or
agreement not of the type covered by any of the other specific items of this
section. Each of the contracts, instruments, and other documents described on
the Galbreath Disclosure Schedule is valid and in full force and effect, and a
true and complete copy thereof heretofore have been made available to the La
Salle Partnerships. To the knowledge of Galbreath Management, the Galbreath
Companies and each of the Galbreath Subsidiaries is not in default, or alleged
to be in default, in any material respect under any of the contracts,
instruments, obligations or other documents to which it is a party or by which
it is bound. To the knowledge of Galbreath Management, no party with whom the
Galbreath Companies or any of the Galbreath Subsidiaries has an agreement is in
default thereunder in any material respect.
4.15 Clients.
-------
The Galbreath Disclosure Schedule lists the 10 largest clients of the
Galbreath Companies and the Galbreath Subsidiaries for the fiscal year ended
Decem-
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<PAGE>
ber 31, 1996 which schedule also lists the amount of the net revenues of the
Galbreath Companies and the Galbreath Subsidiaries applicable to each client so
listed. Except as disclosed on the Galbreath Disclosure Schedule, and except
for clients with whom the Galbreath Companies' relationship to date has been
for specific assignments and therefore does not contemplate the rendering of
ongoing services, the Galbreath Companies have received no notice that and
Galbreath Management has no actual knowledge that, any such client will not
continue to do business with the Galbreath Companies or the Galbreath
Subsidiaries subsequent to the closing of the transactions contemplated by this
Agreement.
4.16 Tax Matters.
-----------
The Galbreath Companies and the Galbreath Subsidiaries have paid all
material Taxes due from and payable by them prior to the date hereof and will
pay, prior to the Closing, all material Taxes due from and payable by them prior
to the Closing or adequate provision shall have been made for such Taxes on the
Galbreath Financial Statements. The Galbreath Companies and the Galbreath
Subsidiaries have filed and will, prior to the Closing, file all returns,
declarations of estimated tax, tax reports, information returns and statements
required to be filed by them prior
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<PAGE>
to the Closing (other than those for which extensions shall have been granted
prior to Closing) relating to any Taxes will respect to any income, properties
or operations of Galbreath Companies and the Galbreath Subsidiaries prior to
Closing (collectively, "Returns"). Except as set forth on the Galbreath
Disclosure Schedule, as of the time of filing, the Returns were prepared in
accordance with applicable law and correctly reflected (and, as to any Returns
not filed as of the date hereof, will correctly reflect) the facts regarding the
income, business, assets, operations, activities and status of Galbreath
Companies and the Galbreath Subsidiaries and any other information required to
be shown therein. The Galbreath Companies and the Galbreath Subsidiaries have
timely paid all Taxes that have been shown as due and payable on the Returns
that have been filed. The Galbreath Companies have provided to the La Salle
Partnerships true and complete copies of the Federal and state income tax
returns of the Galbreath Companies and the Galbreath Subsidiaries for the five
years ended December 31, 1995, together with true and complete copies as filed
of all reports of any taxing authority relating to examinations thereof which
have been delivered to the Galbreath Companies or any Galbreath Subsidiary.
Except as disclosed on the Galbreath Disclosure Schedule,
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<PAGE>
the Galbreath Companies and the Galbreath Subsidiaries (A) have made provision
on the Galbreath Financial Statements for the period ending December 31, 1996
and March 31, 1997 for all Taxes payable for any periods that end on or before
December 31, 1996 for which no Returns have yet been filed and for any periods
that begin on or before March 1, 1997 and end after such date to the extent such
Taxes are attributable to the portion of any period ending on March 31, 1997
and (B) have made provision on its books and records for all Taxes payable for
any periods that end on or before the date of the Closing for which no Returns
have then been filed and for any periods that begin on or before the date of the
Closing and end after such date to the extent such Taxes are attributable to the
portion of any such period ending on such date. The Galbreath Companies and the
Galbreath Subsidiaries are not delinquent in the payment of any Taxes nor, other
than set forth in the Galbreath Disclosure Schedule, have they requested any
extension of time within which to file any Return, which Return has not since
been filed. With respect to all Tax Returns of Galbreath Companies and the
Galbreath Subsidiaries, the statute of limitations for the assessment of Taxes
has expired with respect to all periods ending on or before January 1, 1993 (for
federal and state income tax purpos-
62
<PAGE>
es), and, to Galbreath Management's knowledge, there are no anticipated or
pending Tax audits of any Returns of the Galbreath Companies and the Galbreath
Subsidiaries. Except as set forth on the Galbreath Disclosure Schedule, no
deficiency or addition to Taxes, interest or penalties exists against the
Galbreath Companies and the Galbreath Subsidiaries (or any member of any
affiliated or combined group of which Galbreath Companies could be liable).
Except as set forth on the Galbreath Disclosure Schedule, the Galbreath
Companies and the Galbreath Subsidiaries have not been granted, nor does there
exist, any extension, waiver or agreement for the extension of time for the
assessment or payment of any Tax by the Galbreath Companies and the Galbreath
Subsidiaries. Each of the Galbreath Companies has made a valid election,
accepted by the Internal Revenue Service, under Section 1362(a) of the Code to
be taxed as an "S corporation" and has qualified to be treated under Section
1361 of the Code as an S corporation for Federal income tax purposes for all
periods beginning May 1, 1987 through the date hereof and will be treated as an
S corporation from the date hereof through the close of business on the day
before the Closing. Each of the Galbreath Companies has qualified for and made
corresponding elections under the tax laws of every state in which
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<PAGE>
Galbreath Companies is subject to Tax for each of such taxable years. The
Galbreath Companies and the Galbreath Subsidiaries have not made an election
to be treated as a "consenting corporation" under Section 341(f) of the Code.
4.17 Title to Properties; Absence of Liens and Encumbrances, Etc.
------------------------------------------------------------
The Galbreath Companies and the Galbreath Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their properties
and assets, real and personal (including those reflected in the consolidated
balance sheets contained in the Galbreath Financial Statements except as sold or
otherwise disposed of in the ordinary course of business since the date
thereof), in each case free and clear of all liens and encumbrances, except (i)
liens and encumbrances reflected in such financial statements or in the notes to
such financial statements or securing debt reflected as liabilities on such
financial statements, (ii) liens for current taxes and assessments not in
default or which are being contested in good faith, (iii) mechanics', carriers',
workmen's, repairmen's, statutory or common law liens relating to payments that
are not delinquent or which are being contested in good faith and (iv)
imperfections of title, easements and encumbrances, liens, rights of way,
variances and other matters or limi-
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<PAGE>
tations of any kind, if any, which would not result in a material adverse effect
on the Galbreath Companies' or the Galbreath Subsidiaries' use of the property
affected. Except as is not reasonably expected to cause a Galbreath Material
Adverse Effect, neither the Galbreath Companies nor any of the Galbreath
Subsidiaries has received any notice of violation of any applicable zoning laws,
orders, regulations, or requirements relating to its operations or its
properties which has not been remedied. The Galbreath Management has no
knowledge of any threatened or impending condemnation of any properties of the
Galbreath Companies or the Galbreath Subsidiaries by any governmental authority.
The Galbreath Companies are the sole owners of or have the right to use all
assets necessary to the conduct of their businesses as currently conducted.
4.18 Pension and Employee Benefit Plans.
(a) Except as shown on the Galbreath Disclosure Schedule, there
are no plans (other than multiemployer plans as defined in Section 3(37) of
ERISA or plans providing welfare benefits for which the Galbreath Companies or
the Galbreath Subsidiaries pass on the expense or are otherwise 100% reimbursed)
for pension, profit sharing, deferred compensation, severance pay, bonuses,
stock options, stock purchases, or any other form of re-
65
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tirement or deferred benefit, or for any health, accident or other welfare
benefit, including, without limitation, employee benefit plans as defined in
Section 3(3) of ERISA and all other material employee benefit arrangements,
obligations, customs or practices, which are sponsored or maintained by any of
the Galbreath Companies or the Galbreath Subsidiaries and under which any
current or former employee of the Galbreath Companies (including, without
limitation, any former employee of The Galbreath Company, Inc.) or the Galbreath
subsidiaries, is entitled to any benefit or is entitled to participate
(collectively, the "Galbreath Plans"). The Galbreath Companies have delivered
or made available to the DCL Partnerships true and complete copies of each of
the Galbreath Plans, all trust agreements, insurance contracts, investment
management agreements and other agreements currently in effect with respect to
the Galbreath Plans, written descriptions of all material non-written agreements
relating to the Galbreath Plans (including, without limitation, nonwritten
agreements with current or former employees for post-employment health or other
welfare benefits other than benefits for which the beneficiary pays 100% of the
premium or the Galbreath Companies' cost), all reports regarding the Galbreath
Plans received by the Galbreath Companies,
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Galbreath Subsidiaries or Galbreath Management within the three years preceding
the date of this Agreement from plan actuaries, administrators or consultants
concerning the testing of a Galbreath Plan for compliance with the qualification
requirements of the Code, all notices within the three years preceding the date
of this Agreement received from any governmental agency or entity regarding any
Galbreath Plan, all documents relating to the funding (including the latest
actuarial report), termination or attempted termination of any Galbreath Plan
which is subject to Title IV of ERISA, and all summary plan descriptions
currently in effect with respect to the Galbreath Plans. Each of the Galbreath
Plans complies, in form and in operation, with applicable law. All required
governmental filings have been made with respect to the Galbreath Plans. Except
as set forth on the Galbreath Disclosure Schedule, the Galbreath Companies, the
Galbreath Subsidiaries and Galbreath Management have no knowledge of any
material pending investigations, proceedings or other matters concerning the
Galbreath Plans before the Internal Revenue Service, the Department of Labor or
the Pension Benefit Guaranty Corporation. There are no pending or threatened
claims by or disputes with any participants or former participants in the
Galbreath Plans, other than
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benefit claims by participants made in the normal course of operating the
Galbreath Plans. Except as set forth on the Galbreath Disclosure Schedule, the
Galbreath Companies, Galbreath Subsidiaries and Galbreath Management have no
knowledge of any facts which could give rise to any claims against the Galbreath
Plans or against any Galbreath Companies, Galbreath Subsidiaries or fiduciary of
any Galbreath Plan other than benefit claims by participants expected in the
normal course of operating the Galbreath Plans and claims which would not result
in a Galbreath Material Adverse Effect. None of the Galbreath Companies, the
Galbreath Subsidiaries or, to the knowledge of the Galbreath Companies,
Galbreath Subsidiaries or Galbreath Management, any other fiduciary of any
Galbreath Plan has given notice to their fiduciary liability insurer of any
claims or potential claims against it with respect to any Galbreath Plan. True
and correct copies of the annual reports of the Galbreath Plans filed with the
Department of Labor and the Internal Revenue Service for the last three plan
years for which such reports have become due, and all audited financial
statements of the Galbreath Plans for the plan years ended in 1993, 1994, and
1995 previously have been made available to the DEL Participants. No
"prohibited transaction" as defined in Section 406(a) and (b) of
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ERISA, or as defined in Section 4975 of the Code, has occurred with respect to
any Galbreath Plan, except transactions exempt under Section 408 of ERISA or
Section 4975(d) of the Code. Except with respect to certain Settlement
Agreements set forth on the Galbreath Disclosure Schedule, each Galbreath Plan
(including without limitation a plan covering retirees or beneficiaries of
retirees) may be terminated or amended by the plan sponsor, in any manner and at
any time, without the consent of any person covered by such plan and without any
further liability for benefits that may be accrued or expenses that may be
incurred after the date of such termination or amendment, other than benefits
required under Section 4980B of the Code or Sections 601 through 608 of ERISA if
paid 100% by the participant or beneficiary.
(b) Each of the Galbreath Plans which is intended to qualify
under Section 401 of the Code is designated on the Galbreath Disclosure Schedule
as being a qualified plan (the Galbreath Plans so designated being hereinafter
referred to as the "Galbreath Qualified Plans"). Each Galbreath Qualified Plan
is qualified under Section 401(a) of the Code and is the subject of a currently
effective determination letter from the Internal Revenue Service confirming such
qualification. Any operational
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defect or violation that will or might disqualify a Galbreath Qualified Plan can
be remedied under the Internal Revenue Service Closing Agreement Program,
Voluntary Compliance Resolution Program or Administrative Policy Regarding Self-
Correction without resulting in a Galbreath Material Adverse Effect. True and
correct copies of all currently effective determination letters from the
Internal Revenue Service with respect to the Galbreath Qualified Plans have been
made available to the DEL Partnerships.
(c) With respect to each Galbreath Plan, none of the Galbreath
Companies or the Galbreath Subsidiaries has incurred any accumulated funding
deficiency within the meaning of ERISA, has obtained a waiver of any minimum
funding requirements imposed by ERISA or the Code in respect of such Galbreath
Plan, has incurred any liability in connection with the termination of or
withdrawal from a Galbreath Plan subject to Title IV of ERISA, has otherwise
incurred any liability to the Pension Benefit Guaranty Corporation in connection
with any Galbreath Plan (except liability under Section 4007 of ERISA), has
ceased operations at any facility or has withdrawn from any Galbreath Plan in a
manner that would give rise to liability under Section 4062, 4063 or 4064 of
ERISA, or has failed to pay all premiums due to the Pension Benefit Guaranty
Corpora-
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tion under Section 4007 or ERISA. No "reportable event," as such term is
defined in Section 4043 of ERISA and in regulations issued thereunder, has
occurred with respect to the Galbreath Plans since the effective date of ERISA,
other than events with respect to which the Department of Labor has waived the
requirement of 30 days' notice. Except as shown on the Galbreath Disclosure
Schedule, none of the Galbreath Companies or Galbreath Subsidiaries has any
liability with respect to any pension plan subject to Title IV of ERISA, and the
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) under each
Galbreath Plan that is a Title IV plan, calculated using the actuarial
assumptions that would be used by the Pension Benefit Guaranty Corporation in
the event of plan termination, do not exceed the fair market value of plan
assets.
(d) Except as disclosed in the Galbreath Disclosure Schedule,
none of the Galbreath Companies or the Galbreath Subsidiaries has contributed or
is or was obligated to make payments, in each case with respect to any current
or former employees, to any multiemployer pension plan as defined by Section
3(37) of ERISA. The multiemployer plans listed or is required to be listed on
the Galbreath Disclosure Schedule shall be referred to hereinafter as the
"Multiemployer Plans." The Galbreath
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Companies and Galbreath Subsidiaries have made all contributions to the
Multiemployer Plans as required by law and by the applicable collective
bargaining agreements. The Galbreath Companies will use their best efforts in
good faith to provide to the DEL Partnerships as promptly as such information is
made available by the Multi-employer Plan a schedule showing, with respect to
each Multiemployer Plan, the amount of potential withdrawal liability of the
Galbreath Companies or the Galbreath Subsidiaries, calculated by each
Multiemployer Plan as of its last valuation date. To their knowledge and the
knowledge of Galbreath Management, the Galbreath Companies and Galbreath
Subsidiaries have not incurred any liability under Title IV of the ERISA as a
result of any complete or partial withdrawal from the Multiemployer Plan. To
the knowledge of the Galbreath Companies, Galbreath Subsidiaries and Galbreath
Management, no event has occurred or circumstances exists (other than the
transactions contemplated under this Agreement) that presents a risk of the
occurrence of any future withdrawal form, or the termination, reorganization, or
insolvency of, a Multiemployer Plan.
(e) None of (i) the aggregate amount of liability of the
Galbreath Companies and Galbreath Subsidiaries with respect to employee benefits
for retired em-
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ployees and their beneficiaries (ii) the aggregate liability of the Galbreath
Companies and Galbreath Subsidiaries with respect to any Galbreath Plan subject
to Title IV of ERISA (including any liability which may be incurred in
connection with the termination of such plan), will cause a Galbreath Material
Adverse Effect.
(f) None of the Galbreath Companies or Galbreath Subsidiaries
has any liability (including a contingent liability) with respect to any
employee benefit plan or arrangement which is not a Galbreath Plan or
Multiemployer Plan except plans providing welfare benefits for which the
Galbreath Companies or Galbreath Subsidiaries pass on the expense or are
otherwise 100% reimbursed.
4.19 Insurance.
The Galbreath Disclosure Schedule summarizes the insurance currently
carried by the Galbreath Companies and the Galbreath Subsidiaries in respect of
their respective properties and operations, including, without limitation,
general liability, umbrella liability, contractual liability, employers'
liability, automobile liability, workers' compensation, property and casualty,
business interruption and other insurance. To the knowledge of Galbreath
Management, all such insurance continues to be in full force and effect, and the
Galbreath Companies and the Galbreath
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Subsidiaries are in compliance with all requirements and provisions thereof.
The Galbreath Companies has no reason to believe that any such insurance
coverage will not be renewed upon the expiration thereof at premiums
substantially equivalent to those currently being paid.
4.20 Environmental Matters.
(a) As used in this Section 4.20, the "Galbreath Properties"
means any real property or facility currently or previously owned, leased or
operated by the Galbreath Companies or the Galbreath Subsidiaries, directly or
indirectly.
(b) The Galbreath Disclosure Schedule lists all material
reports, audits, assessments, studies, inspections, evaluations, surveys,
corrective action plans, remedial action plans, and other similar documents in
the possession or control of the Galbreath Companies relating to the
environmental conditions of any of the Galbreath Properties.
(c) The Galbreath Disclosure Schedule lists all material
agreements, judgments, orders or similar documents which obligate either of the
Galbreath Companies or any of the Galbreath Subsidiaries to indemnify third
parties in connection with Materials of Environmental Concern at any property,
or which obligate either of the
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Galbreath Companies or any of the Galbreath Subsidiaries to investigate, assess,
clean up, remediate, abate, monitor or otherwise address Materials of
Environmental Concern at any property.
(d) Except as set forth on the Galbreath Disclosure Schedule or
that would not reasonably be expected to have a Galbreath Material Adverse
Effect, none of the Galbreath Properties is listed on or has been proposed for
listing on the National Priorities List promulgated CERCLA, is listed on the
CERCLIS, or, to the knowledge of Galbreath Management, is listed on any state or
local list of potentially contaminated properties.
(e) Except as set forth on the Galbreath Disclosure Schedule or
that would not reasonably be expected to have a Galbreath Material Adverse
Effect, neither of the Galbreath Companies nor any of the Galbreath Subsidiaries
has received any request for information from any governmental entity pertaining
to the environmental condition of any property, or the use, generation,
transportation, treatment, storage, disposal or other management of Materials of
Environmental Concern.
(f) Except as set forth on the Galbreath Disclosure Schedule or
that would not reasonably be expected to have a Galbreath Material Adverse
Effect, neither of
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the Galbreath Companies nor any of the Galbreath Subsidiaries has received
notice of potential liability for environmental conditions at any of the
Galbreath Properties or with respect to any other property.
(g) Except as set froth on the Galbreath Disclosure Schedule or
that would not reasonably be expected to have a Galbreath Material Adverse
Effect, to the knowledge of Galbreath Management, no environmental approvals,
clearances or consents are required under applicable law from any governmental
agency or authority in order for the parties to this Agreement to consummate the
transactions contemplated herein.
(h) Except as would not have a Galbreath Material Adverse
Effect, or as disclosed on the Galbreath Disclosure Schedule,
(i) to the knowledge of Galbreath Management, there has
been no material Release at, on, under or from any of the Galbreath
Properties;
(ii) to the knowledge of Galbreath Management, all
underground storage tanks owned or operated by the Galbreath Companies or
the Galbreath Subsidiaries are properly registered and meet all applicable
standards for release
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detection, corrosion protection and spill and overfill protection;
(iii) there are no administrative, civil or criminal
proceedings, demands, suits, complaints, citations, notices of violation or
claims pending, or to the knowledge of the Galbreath Management threatened,
against the Galbreath Companies or the Galbreath Subsidiaries in connection
with Materials of Environmental Concern at, or the environmental condition
of any of the Galbreath Properties; in connection with activities at or on
any of the Galbreath Properties affecting the environment, health or
safety; or to the knowledge of Galbreath Management, in connection with a
Release at any other property.
(iv) The Galbreath Companies and the Galbreath Subsidiaries
are in material compliance with Environmental Laws.
4.21 No Pending Transactions.
Except for the transactions contemplated by this Agreement or as
disclosed on the Galbreath Disclosure Schedule, neither the Galbreath Companies
nor any of the Galbreath Subsidiaries is a party to or bound by or the subject
of any agreement, undertaking or commitment (i) to
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merge or consolidate with, or acquire all or substantially all of the property
and assets of, any other corporation or person or (ii) to sell, lease or
exchange all or substantially all of its property and assets to any other
corporation or person.
4.22 Disclosure.
No representation or warranty made by the Galbreath Companies in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
contained herein or therein not misleading.
4.23 Transactions with Affiliates.
Except as disclosed on the Galbreath Disclosure Schedule, neither the
Galbreath Companies nor any of the Galbreath Subsidiaries is a party to any
transaction (other than the employment agreements set forth in the Galbreath
Disclosure Schedule or agreements on terms no less favorable to the Galbreath
Companies than could be obtained from an independent third party) with any (i)
current officer or director of the Galbreath Companies or any of the Galbreath
Subsidiaries, (ii) any parent, spouse, child, brother or sister of any such
officer or director or (iii) any corporation or partnership of which any such
officer or director or any such family relation is an officer, director, part-
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ner or greater than 10% stockholder (based on percentage ownership of voting
stock) or (iv) any Affiliate of any such persons or entities, including, without
limitation, any transaction involving a contract, agreement or other arrangement
providing for the employment of, furnishing of materials, products or services
by, rental of real or personal property from, or otherwise requiring payments
to, any such person or entity.
4.24 Investment Intent.
In connection with the transactions contemplated by this Agreement,
each of the Stockholders and G-LLC hereby represents and warrants that:
(a) such Stockholder, or such Stockholder's representative, had
the opportunity to ask questions of, and receive answers from, executive
officers of the La Salle Partnerships concerning the terms and conditions of
this Agreement and has had access to any additional information which such
Stockholder considered necessary for evaluating an investment in the Units;
(b) such Stockholder has been advised and understands that he
must bear the economic risks of the Units to be issued hereunder for an
indefinite period of time because the Units are subject to the restrictions upon
transfer contained in the La Salle Partnership Agreements
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and, therefore, may not be sold unless such sale is made in compliance with the
provisions of such Agreements; and
(c) such Stockholder, together with such Stockholder's
representative, has sufficient knowledge and experience in financial and
business matters to enable such Stockholder, together with such Stockholder's
representative, to be capable of evaluating the merits and the risks of the
exchange of the Units for the Galbreath Capital Stock contemplated by this
Agreement and such Stockholders' prospective investment in the La Salle
Partnerships.
4.25 Consent to Other Matters.
G-LLC and the Stockholders shall have consented to all of the matters
set forth in the Consent of The Galbreath Companies attached hereto as Exhibit
K.
5. PRECLOSING COVENANTS OF THE DEL PARTNERSHIPS AND LA SALLE
PARTNERSHIPS.
The La Salle Partnerships covenant to the Stockholders that, except as
otherwise consented to in writing by the Stockholders after the date of this
Agreement and prior to Closing:
5.1 Conduct of Business.
With respect to each of the DEL Partnerships and the La Salle
Partnerships and each of the La Salle Subsidiaries (a) its business will be
conducted in the ordinary
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course; (b) it will use all reasonable efforts to preserve its business
organization intact, to keep available the service of its officers and employees
and to preserve the goodwill of clients, suppliers and others doing business
with it; (c) it will not acquire or agree to acquire by merging or consolidating
with, purchasing substantially all of the assets of, or otherwise, any business
or any corporation, partnership, association or other business organization or
division thereof; (d) no change shall be made in its partnership agreement,
charter documents, by-laws or other constitutive documents; (e) no change shall
be made in the number of limited partnership units or shares or terms of its
authorized, issued or outstanding limited partnership interests or capital
stock, nor shall it enter into or grant any options, calls, contracts, or
commitments of any character relating to any issued or unissued limited
partnership units or capital stock; (f) no dividend or other distribution or
payment shall be declared or paid in respect of its limited partnership units or
capital stock; and (g) no other action shall be taken that would if taken after
the Closing require the consent of the Stockholders pursuant to the DEL
Partnerships or the La Salle Partnership Agreements.
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5.2 Amendment of La Salle Partnership Agreements.
--------------------------------------------
The La Salle Partnerships will take such action as may be necessary to
enter into the amendments to the La Salle Partnership Agreements set forth in
Exhibits B and C.
5.3 Information.
-----------
The La Salle Partnerships and the La Salle Subsidiaries will give to
the Galbreath Companies and to the Galbreath Companies' officers, accountants,
counsel and other representatives full access, during normal business hours upon
reasonable notice throughout the period prior to the Closing, to all the
properties, books, contracts, commitments and records of the La Salle
Partnerships and the La Salle Subsidiaries. The La Salle Partnerships and the La
Salle Subsidiaries will furnish to the Galbreath Companies during such period
all such information concerning the La Salle Partnerships and the La Salle
Subsidiaries and their business and properties as the Galbreath Companies may
reasonably request. If requested by the Galbreath Companies, the La Salle
Partnerships will use their reasonable efforts to cause to be made available to
the Galbreath Companies and their accountants the work papers and other
information utilized by the La Salle Partnerships' accoun-
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tants in the preparation of the financial statements of the La Salle
Partnerships and the La Salle Subsidiaries.
5.4 Consents.
--------
The DEL Partnerships and the La Salle Partnerships will take all
necessary corporate or other action, and use all reasonable efforts to complete
all filings and obtain all governmental and other consents and approvals,
required for consummation of the transactions contemplated by this Agreement.
5.5 Employee Matters.
----------------
Through the date of the Closing, there will be no material change in
the operations of the La Salle Plans or in the documents constituting or
affecting the La Salle Plans.
6. PRECLOSING COVENANTS OF THE GALBREATH COMPANIES AND THE
STOCKHOLDERS.
The Galbreath Companies and the Stockholders covenant to the La Salle
Partnerships that, except for the Restructuring or as otherwise set forth in the
Galbreath Disclosure Schedule or as otherwise consented to in writing by the La
Salle Partnerships after the date of this Agreement and prior to Closing:
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6.1 Conduct of Business.
-------------------
With respect to each of the Galbreath Companies and each of the
Galbreath Subsidiaries except for actions taken to effect the Restructuring, (a)
its business will be conducted in the ordinary course; (b) except as may be
otherwise required by applicable law or regulation, it will not enter into,
adopt or amend any employee pension, profit-sharing, retirement, insurance,
incentive compensation, severance or similar plan, agreement or arrangement,
enter into or amend any employment contracts, or increase the salaries or
compensation of its executive officers or, other than ordinary increases in
salaries in accordance with past practices, of other employees; (c) it shall not
incur any liability for borrowed money, encumber any of its assets or enter into
any agreements relating to the incurrence of additional debt; (d) it will use
all reasonable efforts to preserve its business organization intact, to keep
available the service of its officers and employees and to preserve the goodwill
of clients, suppliers and others doing business with it; (e) it will not acquire
or agree to acquire by merging or consolidating with, purchasing substantially
all of the assets of, or otherwise, any business or any corporation,
partnership, association or other business organization or division thereof; (f)
it
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will not enter into or amend any contract or agreement with any labor union or
any lease of real estate or personal property other than leases entered into or
amended in the ordinary course of business in a manner consistent with past
practices calling for yearly lease payments not in excess of $50,000; (g) it
will not enter into any agreement for the purchase, sale or other disposition,
or purchase, sell or dispose of, any equipment, supplies, inventory, investments
or other assets other than in the ordinary course of business in a manner
consistent with past practice; (h) unless approved by the La Salle Partnerships
in writing, it will not enter into any agreement that commits either of the
Galbreath Companies or the Galbreath Subsidiaries to any further financial or
performance obligations unless such agreement is terminable without penalty on
notice of 90 days or less; (i) it will not compromise or write off any material
account receivable other than by collection of the full recorded amount thereof
other than in the ordinary course of business in a manner consistent with past
practice; (j) no change shall be made in its charter documents or by-laws; (k)
no change shall be made in the number of shares or terms of its authorized,
issued or outstanding capital stock, nor shall it enter into or grant any
options, calls, contracts or commitments of any
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character relating to any issued or unissued capital stock; and (l) no dividend
or other distribution or payments shall be declared or paid in respect of its
capital stock, except for any distributions or assignments necessary to effect
the Restructuring.
6.2 Information.
-----------
The Galbreath Companies and the Galbreath Subsidiaries will give to
the La Salle Partnerships and to the La Salle Partnerships' officers,
accountants, counsel and other representatives full access, during normal
business hours upon reasonable notice throughout the period prior to the
Closing, to all the properties, books, contracts, commitments and records of
the Galbreath Companies and the Galbreath Subsidiaries. The Galbreath Companies
and the Galbreath Subsidiaries will furnish to the La Salle Partnerships during
such period all such information concerning the Galbreath Companies and the
Galbreath Subsidiaries and their business and properties as the La Salle
Partnerships may reasonably request. If requested by the La Salle Partnerships,
the Galbreath Companies will use their reasonable efforts to cause to be made
available to the La Salle Partnerships and the La Salle Partnerships'
accountants the work papers and other information utilized by the Galbreath
Companies' accountants in the preparation of the
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financial statements of the Galbreath Companies and the Galbreath Subsidiaries.
6.3 Consents.
--------
The Galbreath Companies and the Stockholders agree to take all
necessary corporate or other action and to use their all reasonable efforts to
complete all filings and obtain all governmental and other consents and
approvals required for consummation of the transactions contemplated by this
Agreement.
6.4 Corporate Transactions.
----------------------
From the date of this Agreement until April 28, 1997, neither the
Galbreath Companies nor any of the Stockholders will seek the affiliation of the
Galbreath Companies with any entity other than the La Salle Partnerships and
neither will negotiate or entertain any offer with respect to the sale of part
or all of the Galbreath Capital Stock or substantially all of the Galbreath
Companies' assets. Neither the Galbreath Companies nor any of the Stockholders
will, nor will the Galbreath Companies or any of the Stockholders permit any
Galbreath Subsidiary to, nor will the Galbreath Companies or any of the
Stockholders authorize or permit any officer, director or employee of the
Galbreath Companies to, or authorize any investment banker, attorney, accountant
or other representative re-
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tained by the Galbreath Companies or any of the Galbreath Subsidiaries or
Stockholders to, solicit or encourage (including by way of furnishing
information) any inquiries or the making of any proposal that is reasonably
expected may lead to the acquisition of part or all of the Galbreath Capital
Stock or substantially all of its assets by any person other than the La Salle
Partnerships.
6.5 Employee Matters.
----------------
(a) Through the date of the Closing, there will be no material
change in the operations of the Galbreath Plans or in the documents
constituting or affecting the Galbreath Plans.
(b) Prior to the Closing, the Galbreath Companies and Galbreath
Subsidiaries will make available to the La Salle Partnerships, La Salle
Subsidiaries and their agents, employees, accountants and other representatives,
upon their reasonable request, such actuarial, payroll, financial, personnel and
related information as necessary or appropriate for the purpose of preparing for
the administration of the Galbreath Plans, the La Salle Plans and the payroll
records after the Closing with respect to employees affected by the
transactions contemplated hereunder.
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6.6 Restructuring.
-------------
(a) On or prior to the Closing Date, the Stockholders shall cause
the Galbreath Companies to sell, assign or otherwise convey (the
"Restructuring"), to an entity controlled by the Stockholders, all of the
Galbreath Companies' right, title and interest in and to the following assets
(and all obligations and liabilities relating to such assets):
(i) cash, in an amount that will leave at least the amount
of case shown on the Closing Balance Sheet,
(ii) 10% partnership interest in Colonial Village Center
Associates, General Partnership,
(iii) New York's tenant representation business (including,
among other things, all contracts, agreements and accounts receivable
primarily relating to such business),
(iv) capital stock in Galbreath Asset Advisors, Inc.,
(v) capital stock in DWA Fed Oak Inc.,
(vi) 16% partnership interest in Galbreath Denver L.P.,
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(vii) 99% partnership interest in Galbreath Columbus Circle
Development Associates L.P.,
(viii) capital stock of Galbreath Columbus Circle
Development Corp.,
(ix) the Galbreath name,
(x) any carried interest in any property received in
connection with any properties owned or developed by Alliance Commercial
Properties, Ltd., pursuant to the co-investment agreement,
(xi) any carried interest in the One Christina property,
(xii) the Co-investment Agreement, dated December 23, 1995,
among Galbreath-Ohio, Richard W. Stone, William Hoeg and the entity being
formed by Messrs. Stone and Hoeg,
(xiii) any carried interest in the Page Mill property,
(xiv) Indemnity and Contribution Agreement, dated as of
April 22, 1997, among the Galbreath Companies, the Stockholders, E. Gerry
Dudley, Jack R. Norris and Daniel M. Sliger, and
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(xv) certain other assets and liabilities necessary to
effect the distributions to G-LLC as set forth on the Closing Balance
Sheet, including without limitation, those assets and liabilities set forth
on Section 6.6 of the Galbreath Disclosure Schedule (together with (i) -
(xiv) above, the "Excluded Property").
(b) In the event that an assignment in connection with the
Restructuring of any right, title or interest in, to or under any contract,
license, lease or other agreement or any claim or right to any benefit arising
thereunder or resulting therefrom, without the consent of a third party thereto,
would constitute a breach thereof, or in any way adversely affect the rights of
the Galbreath Company or the Stockholders thereunder, and such consent is not
obtained, then this Agreement shall not constitute an agreement to assign such
contract, license, lease or other agreement and in such event, the Stockholders
and the La Salle Partnerships shall cooperate (to the extent permitted by law or
the terms of any applicable agreement) in a mutually agreeable arrangement under
which the Stockholders would, to the extent possible, obtain the benefits and
assume the obligations with respect to such asset, in accordance with this
Agreement, including sub-
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contracting, sub-licensing, or sub-leasing to the Stockholders, or under which
the La Salle Partnerships would or would cause the Galbreath Company to enforce
for the benefit of the Stockholders, with the Stockholders assuming the La Salle
Partnerships' or the Galbreath Company's obligations, any and all rights of La
Salle Partnerships or the Galbreath Company against a third party thereto. The
La Salle Partnerships shall or shall cause the Galbreath Company to, without
further considerations therefor, pay and remit to the Stockholders promptly all
monies, right and other considerations received in respect of the Stockholders'
performance of such obligations. If and when any such consent shall be obtained
or such contract, license, lease or other agreement shall otherwise become
assignable, the La Salle Partnerships shall or shall cause the Galbreath Company
to promptly assign all of its rights and obligations thereunder to the
Stockholders (or to their designee) without payment of further consideration and
the Stockholders shall, without the payment of any further consideration
therefor, assume such rights and obligations and La Salle Partnerships shall be
relieved of any and all liability hereunder. The Stockholders and the La Salle
Partnerships agree to use their reasonable best efforts to obtain the consent of
such other party to the assignment of
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any of the Excluded Property to the Stockholders in all cases in which such
consent is or may be required for such assignment.
(c) Prior to the Closing, the Stockholders shall assume, remove,
extinguish or cause to be assumed, removed or extinguished all obligations and
liabilities of the Company including those arising out of the Excluded Property
(the "Excluded Liabilities"). After the Closing, all Excluded Liabilities shall
be liabilities of the Stockholders.
(d) The Stockholders shall cause the consolidated stockholders'
equity of the Galbreath Companies at the Closing to be not less than $1,200,000,
and shall leave at least $750,000 in cash, and no liabilities for borrowed
money, in the Galbreath Companies (subject to the adjustments footnoted on the
Closing Balance Sheet).
7. CONDITIONS TO THE LA SALLE PARTNERSHIPS' OBLIGATIONS.
Unless waived by the La Salle Partnerships in writing in their sole
discretion, all obligations of the La Salle Partnerships under this Agreement
are subject to the fulfillment, prior to or at the Closing, of each of the
following conditions:
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7.1 Representations, Warranties and Covenants.
The representations and warranties of the Stockholders contained in
Section 4 of this Agreement shall be true at and as of the date of the Closing,
shall be deemed made again at and as of such date and be true as so made again;
the Galbreath Companies and the Stockholders shall have performed all
obligations or complied with all covenants required by this Agreement to be
performed or complied with by them prior to the Closing, and the La Salle
Partnerships shall have received from the Galbreath Companies and the
Stockholders a certificate or certificates in such reasonable detail as the La
Salle Partnerships may reasonably request, signed by the Chief Operating Officer
or Chief Executive Officer of the Galbreath Companies and by the Representatives
on behalf of the Stockholders and dated the date of Closing, to the foregoing
effect. The Galbreath Companies, G-LLC and the Stockholders shall have made the
closing deliveries set forth in Section 2.3(a).
7.2 Binding Court Order.
There shall not be in effect any binding court order against the
Galbreath Companies, G-LLC, the DEL Partnerships, the La Salle Partnerships, or
their respective officers or directors, or any of the Stockholders,
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which restrains or prohibits any of the transactions contemplated by this
Agreement.
8. CONDITIONS TO THE GALBREATH COMPANIES', G-LLC'S AND THE
STOCKHOLDERS' OBLIGATIONS.
Unless waived by the Galbreath Companies in writing in its sole discretion,
all obligations of the Galbreath Companies, G-LLC and the Stockholders under
this Agreement are subject to the fulfillment, prior to or at the Closing, of
each of the following conditions:
8.1 Representations, Warranties and Covenants.
The representations and warranties of the La Salle Partnerships
contained in Section 3 of this Agreement shall be true at and as of the date of
the Closing, shall be deemed made again at and as of such date and be true as so
made again; the La Salle Partnerships shall have performed all obligations or
complied with in all materials respects all covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing; and the
Galbreath Companies and the Stockholders shall have received from the La Salle
Partnerships a certificate or certificates in such reasonable detail as the
Galbreath Companies may reasonably request, signed by the Chief Operating
Officer or Chief Financial Officer of the La Salle Partnerships and dated the
date of Closing, to the
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foregoing effect. The DEL Partnerships and the La Salle Partnerships shall have
made the closing deliveries set forth in Section 2.3(b).
8.2 No Binding Court Order.
There shall not be in effect any binding court order against the
Galbreath Companies, G-LLC, the DEL Partnerships, the La Salle Partnerships, or
their respective officers or directors, or any of the Stockholders, which
restrains or prohibits any of the transactions contemplated by this Agreement.
9. POST-CLOSING COVENANTS.
9.1 Tax Matters.
(a) The DEL Partnerships and the La Salle Partnerships shall be
responsible for all transfer, excise, stamp, sale, use, recording or similar
taxes or fees arising out of the sale, transfer, conveyance or assignment of the
Galbreath Capital stock by G-LLC to the La Salle Partnerships.
(b) The Stockholders shall cause the Galbreath Companies, G-LLC
and the Galbreath Subsidiaries to file when due all Returns that are required to
be filed by the Galbreath Companies, G-LLC and the Galbreath Subsidiaries for
taxable years or periods ending on or before the Closing, and the La Salle
Partnerships shall file or cause
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to be filed when due all other Returns that are required to be filed by or with
respect to the Galbreath Companies, G-LLC and the Galbreath Subsidiaries.
(c) (i) Notwithstanding any other provision of this Agreement,
including, without limitation, Section 10.3, the Stockholders shall be
liable for and shall indemnify the La Salle Partnerships, the La Salle
Subsidiaries and each of their respective Affiliates for (A) any loss or
damage resulting from any misrepresentation made in Section 4.16, (B) Taxes
of the Galbreath Companies, G-LLC and the Galbreath Subsidiaries for any
taxable years or periods that end on or before the Closing and, with
respect to any taxable years or periods beginning before and ending after
the Closing, the portion of such taxable years ending on and including the
Closing, including any taxes that become payable by reason of the
conversion of the Galbreath Companies from S corporations to C
corporations, and (C) all claims, actions, suits, proceedings, demands,
assessments, judgments, costs, attorneys' fees and expenses of any nature
related to the foregoing.
(ii) For purposes of subparagraph (i) above, whenever it is
necessary to determine
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the liability for Taxes of the Galbreath Companies, G-LLC and the Galbreath
Subsidiaries for a portion of a taxable year or period that begins before
and ends after the Closing, the determination of such Taxes for the portion
of the year or period ending on, and the portion of the year or period
beginning after, the Closing, shall be determined using the closing of
books method described in Section 1362(e)(1) of the Code.
(iii) Except as set forth in Section 4.16 and in Section
12, the indemnification obligations set forth in subparagraph (i) above
shall not be limited in any way and shall survive the Closing under this
Agreement. In making a claim for indemnification hereunder, the La Salle
Partnerships, the La Salle Partnership, the La Salle Subsidiaries and the
Stockholders shall follow the procedures set forth in Section 10.4.
9.2 Interest in Mapley.
The parties agree that after the Closing, any property, payment,
proceeds, etc. received by Galbreath-Ohio in connection with its residual
carried interest in the Mapley project pursuant to which Galbreath-Ohio,
together with a consortium, submitted a bid to provide ser-
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viced accommodation for the Social Security Prime Project in the United Kingdom,
such property shall be distributed as follows:
(a) fifteen percent (15%) to Galbreath-Ohio's partner in the
Mapley project, Andy Simon; and
(b) the remainder in equal portions to Galbreath-Ohio and G-LLC.
9.3 Management Committee; Board of Directors.
So long as G-LLC owns directly or indirectly at least 10% of the total
outstanding shares of LP-Inc. Common Stock or 5% of the total outstanding Units,
G-LLC shall have the right to appoint one member of the DEL Partnerships' and
La Salle Partnerships' Management Committee and Board of Directors. G-LLC
initially appoints LG to these positions.
The LaSalle Partnerships shall be responsible for the withholding tax
liability of The Galbreath Company in connection with the granting of rights to
certain employees to receive stock in The Galbreath Company. The liability of
The La Salle Partnership with respect to this liability is limited to $1
million.
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10. INDEMNIFICATION.
10.1 Indemnification by the DEL Partnership and La Salle
Partnerships.
Each of the DEL Partnerships and the La Salle Partnerships hereby
jointly and severally covenants and agrees to indemnify and hold harmless the
Stockholders and their respective successors and assigns at all times from and
after the date of Closing against and in respect of the following:
(a) (i) any damage or loss resulting from any
misrepresentation, breach of warranty, or non-fulfillment of any agreement
or covenant on the part of the DEL Partnerships or the La Salle
Partnerships under this Agreement, (ii) any damage or loss resulting from
any breach of the representations and warranties of the DEL Partnerships or
the La Salle Partnerships set forth in Section 3.14, (iii) any damage or
loss resulting from undisclosed liabilities of the DEL Partnerships or the
La Salle Partnerships of which La Salle Management had actual knowledge
arising from operations prior to Closing, and (iv) any damage or loss
resulting from fraud or intentional misrepresentation on the part of the
DEL Partnerships or the La Salle Partnerships.
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(b) all claims, actions, suits, proceedings, demands,
assessments, judgments, costs, attorneys' fees and expenses of any nature
incident to any of the matters indemnified against pursuant to this Section
10.1.
10.2 Indemnification by the Stockholders.
In consideration of the La Salle Partnerships effecting the Exchange,
each of the Stockholders and G-LLC hereby severally and not jointly covenants
and agrees to indemnify and hold harmless the DEL Partnerships, La Salle
Partnerships, the Galbreath Companies and each of their respective successors
and assigns, at all times from and after the date of Closing against and in
respect of the following:
(a) (i) any damage or loss resulting from any misrepresentation,
breach of warranty or non-fulfillment of any agreement or covenant on the part
of the Galbreath Companies or G-LLC under this Agreement, (ii) any damage or
loss resulting from undisclosed liabilities of the Galbreath Companies of which
Galbreath Management had actual knowledge arising from operations prior to
Closing, (iii) any damage or loss resulting from the litigation entitled
National City Bank N.A. vs. The Galbreath Company, Kudatzky vs. The Galbreath
Company, and the claim made against the Galbreath Companies by Wegco referred to
in
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item 2 of Schedule 4.8 of the Galbreath Disclosure Schedule, (iv) any damage or
loss arising out of the purchase of the La Salle Partnership of the stock of
Tricor, Inc., and (v) any damage or loss resulting from fraud or intentional
misrepresentation on the part of the Galbreath Companies.
(b) all claims, actions, suits, proceedings, demands,
assessments, judgments, costs, attorneys' fees and expenses of any nature
incident to any of the matters indemnified against pursuant to this Section
10.2.
10.3 Limitations on Indemnification.
(a) The following limitations shall apply to indemnification by
the La Salle Partnerships, the DEL Partnerships, G-LLC and Stockholders under
this Section 10:
(i) Except as set forth in Section 9.1(c)(i),
indemnification under the provisions of this Section 10 shall be the
parties' exclusive remedy for any and all breaches of this Agreement.
(ii) Indemnification under this Section 10 shall be limited
to the actual dollar amount of damages and shall not be determined on the
basis of a multiple of loss of revenue or earnings.
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(iii) The aggregate damages payable by either the
Stockholders as a group or the DEL Partnerships and the La Salle
Partnerships as a group under this Section 10 shall be limited to 30% of
the value of the Units issued on the Exchange, except that such limit shall
not be applicable to claims arising under Section 9.1(b), 10.1(a)(ii)-(iv),
Section 10.2(a)(ii), (iii), (iv) or (v).
(b) Any and all indemnification obligations under this Section
10 may be satisfied by payment in the form of Units or capital stock of the
corporate successor to the La Salle Partnerships.
10.4 Notice and Defense.
The parties seeking indemnification (the "Indemnified Parties") shall
notify the other parties (the "Indemnifying Parties") of any such asserted
liability, damage, loss or expense claimed to give rise to indemnification
hereunder. Thereafter, the Indemnifying Parties shall have, at their election,
the right to compromise or defend any such matter at their sole cost and
expense through counsel chosen by the Indemnifying Parties and approved by the
Indemnified Parties; provided, however, that any such compromise or defense
shall be conducted in a
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manner which is reasonable and not contrary to the interests of the Indemnified
Parties and the Indemnified Parties shall in all events have a right to veto any
such compromise or defense which is unreasonable or which would jeopardize in
any material respect any assets or business of the Indemnified Parties or any of
its Affiliates or increase the potential liability of, or create a new liability
for, the Indemnified Parties or any of its Affiliates, and provided further,
that the Indemnifying Parties shall in all events indemnify the Indemnified
Parties and its Affiliates against any damage resulting from the manner in which
such matter is compromised or defended, including any failure to pay any such
claim while such litigation is pending. In the event that the Indemnifying
Parties do so undertake to compromise and defend, the Indemnifying Parties shall
notify the Indemnified Parties of their intention to do so. Each party agrees
in all cases to cooperate with the defending party and its or his counsel in the
compromise of or defending of any such liabilities or claims. In addition, the
non-defending party shall at all times be entitled to monitor such defense
through the appointment, at their own cost and expense, of advisory counsel of
their own choosing. In connection with any proceeding under this Section 10,
the DEL Partnerships, the
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La Salle Partnerships, G-LLC and the Stockholders shall each be obligated to
appoint a representative to act on their behalves in connection with any
discussions or other interaction with each other. Each party in all events
shall be entitled to deal solely with the representative so appointed. If no
such representative is appointed and one party receives conflicting demands or
notices from the other, the receiving party shall be entitled to conduct its own
defense of any asserted liability, damage, cost and expense and to seek
reimbursement and indemnity from the other party as provided herein.
10.5 Insurance.
The amount of any damage or loss suffered by an Indemnified Party
shall be reduced by any third party insurance or other indemnification benefits
which such party or its representatives receive in respect of or as a result of
such damage or loss (net of any costs and expenses incurred in connection with
obtaining such benefits). If any damage or loss for which indemnification has
been paid hereunder is subsequently reduced by any third party insurance payment
or other indemnification recovery from a third party, the amount of the
reduction shall be remitted to the Indemnified Party as appropriate (net of any
costs
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and expenses incurred in connection with obtaining such benefits).
11. PUBLIC ANNOUNCEMENTS.
The DEL Partnerships and the La Salle Partnerships on the one hand,
and the Galbreath Companies and the Stockholders, on the other hand, will
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to such
consultation. Prior to Closing, neither the DEL Partnerships and the La Salle
Partnerships, on the one hand, nor the Galbreath Companies and the Stockholders,
on the other hand, shall issue any such press release or make any such public
statement without the other's prior consent.
12. SURVIVAL; NO RIGHT OF CONTRIBUTION POST CLOSING.
The representations, warranties and agreements made by the parties in
this Agreement and in any other certificates and documents delivered in
connection herewith, including the indemnification obligations set forth in
Section 10 hereof, shall survive the Closing under this Agreement, until the
date of issuance of the audited 1997
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financial statements of the La Salle Partnerships or any successors or entities
thereto (which shall not be later than March 31, 1998 (the "Expiration Date));
provided, however, that this Section 12 shall not apply to (a) any claim for
indemnification of which notice is given under Section 10.4 prior to the
Expiration Date; and (b) Sections 9, 11, 12, 13, 14, 15, 16, 17 and the last
sentence of Section 20, which provisions shall survive forever. The
representations and warranties contained in Section 4.16 shall continue in full
force and effect until all applicable statutes of limitations, including waivers
and extensions, have expired with respect to each matter addressed therein, and
if no statute of limitations exists, forever thereafter. Following the Closing,
G-LLC and the Stockholders shall have no right of contribution or similar action
against the Galbreath Companies for any claim arising under, or in connection
with, this Agreement.
13. BROKERS AND ADVISORS.
Except for William Blair & Company, which has acted as financial
advisor to the La Salle Partnerships in connection with the transactions
contemplated by this Agreement, and except for E&Y Kenneth Leventhal, which has
acted as financial advisor to the Galbreath Companies and the Stockholders in
connection with the transaction contem-
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plated by this Agreement, the La Salle Partnerships on the one hand, the
Galbreath Companies and each of the Stockholders, on the other hand, represent
and warrant to each other that the transactions contemplated by this Agreement
have been negotiated directly between them and their respective counsel, without
the intervention of any person as a result of any action by them in such a
manner as to give rise to a valid claim against any party hereto for a brokerage
commission, finder's fee, counseling or advisory fee, or like payment, and each
agrees to indemnify the opposite party against any such liability arising from
or through it.
14. EXPENSES; DAMAGES.
Pending the Closing, each party to this Agreement shall pay all of its
respective expenses relating to the transactions contemplated by this Agreement,
including fees and disbursements of its counsel, accountants, investment
bankers, and financial advisors; provided that: (a) any consulting, brokerage or
investment banking fees, including fees payable to E&Y Kenneth Leventhal,
whether by the Galbreath Companies, G-LLC or the Stockholders, shall be expenses
of, and paid by, the Stockholders.
(b) In the event the DEL Partnerships or the La Salle
Partnerships materially breach this Agreement,
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prior to Closing, the DEL Partnerships or the La Salle Partnerships, as
applicable, shall pay to the Stockholders within five days of such termination
or breach $2,000,000 as minimum damages.
(c) In the event the Stockholders materially breach their
obligations under this Agreement prior to Closing, the Galbreath Companies shall
pay to the La Salle Partnerships within five days of such breach $2,000,000 as
minimum damages.
(d) Nothing in this Section 14 shall be deemed a payment of
liquidated damages or an election of remedies, and either party may seek from
the other actual damages from the other.
15. NOTICES.
All notices, requests, demands and other communications under or in
connection with this Agreement shall be in writing, and
(a) if to the La Salle Partnerships, shall be addressed to:
La Salle Partners Limited
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: William E. Sullivan,
Executive Vice President
and Chief Financial Officer
Facsimile: (312) 228-0980
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with a copy to:
Robert K. Hagan
Hagan & Associates
Suite 4322
200 E. Randolph Drive
Chicago, Illinois 60601
Facsimile: (312) 782-4339
(b) if to the Galbreath Companies, shall be addressed to:
The Galbreath Company
437 Madison Avenue, 38th Floor
New York, New York 10022
Attention: Lizanne Galbreath, Chairman
and Chief Executive Officer
Facsimile: (212) 843-0034
with a copy to
Scott F. Smith
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 841-1010
and if to the Stockholders, shall be through a single notice addressed to
Lizanne Galbreath at the above address. All such notices, requests, demands or
communications shall be mailed postage prepaid, certified mail, return receipt
requested, delivery personally, or sent by confirmed facsimile transmission, and
shall be sufficient and effective when received at the address so specified.
Any party may change the address at which it is to receive notice by like
written notice to the other.
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16. REPRESENTATIVE.
(a) By execution and delivery of this Agreement, each of the
Stockholders hereby appoints and designates Lizanne Galbreath as his or her
representative (the "Representative") to act on behalf of each such Stockholder
in connection with the transactions contemplated by this Agreement and hereby
designates and appoints the Representative as attorney-in-fact to take such
actions and execute such documents on behalf of each such Stockholder as may be
required hereunder, including, without limitation, the following:
(i) any amendment or modification to or waiver of this
Agreement as may be necessary or appropriate in the view of the
Representative, other than any amendment or modification decreasing the
amount or changing the form of the consideration to be received by such
Stockholders;
(ii) any and all documents required to be executed and
delivered by such Stockholders pursuant to this Agreement in order to
effect the transactions contemplated by this Agreement, including any
required endorsement of stock certificates;
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(iii) receive and provide receipt for all payments required
to be made to the Stockholders under this Agreement and distribute such
payments as appropriate to the Stockholders; and
(iv) any and all actions required to be taken by such
Stockholders in connection with any claim for indemnity pursuant to the
provisions of Section 9, 10 or 11 of this Agreement or any other claim made
by the La Salle Partnerships pursuant to the provisions of this Agreement.
(b) It is acknowledged by the Stockholders appointing the
Representative that the designation of the Representative as attorney-in-fact is
coupled with an interest and is therefore irrevocable and binding upon such
Stockholders notwithstanding the death, incapacity or dissolution of any such
Stockholder. If any such event shall occur prior to the completion of the
transactions contemplated by this Agreement, the Representative is,
nevertheless, to the extent that he is legally able to do so, authorized and
directed to complete all transactions and act pursuant to this authority as if
such event had not occurred. The La Salle Partnerships are entitled to deal
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<PAGE>
solely with the Representative in connection with this Agreement and are
entitled to rely upon the provisions hereof and the authority granted to the
Representative to act on behalf of the Stockholders named herein.
17. CONSENT TO JURISDICTION AND SERVICE.
The DEL Partnerships, the La Salle Partnerships, LP-Inc., the
Galbreath Companies, G-LLC and the Stockholders each irrevocably agree and
consent to the non-exclusive personal jurisdiction of the courts of Delaware and
the courts of the United States of America located in the State of Delaware for
the purpose of any action, suit or proceeding arising out of or related to this
Agreement. The Galbreath Companies, G-LLC and the Stockholders each hereby
appoint Lizanne Galbreath as their authorized agent upon which process may be
served in any such action, suit or proceeding. Each party will take at its
expense any and all action, including the filing of any and all documents and
instruments, that may be necessary to establish and continue such appointment in
full force and effect. Service of process on the authorized agent and written
notice of such service to such party in the manner and to the address shown in
Section 15 shall be deemed in every respect effective service of process upon
such party.
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The DEL Partnerships, the La Salle Partnerships, LP-Inc., the
Galbreath Companies, G-LLC and the Stockholders each hereby irrevocably waives
any objection which it may now or hereafter have to the laying of venue as
provided in this Section, and further irrevocably waives any claim that any
action, suit, proceeding, controversy or claim brought in accordance with this
Section was brought in an inconvenient forum.
18. TERMINATION.
The parties, by mutual written consent, may terminate this Agreement
at any time prior to the Closing and, unless otherwise specifically provided in
such consent, any such termination shall be without liability on the part of any
party hereto.
19. ENTIRE AGREEMENT.
This Agreement (including the exhibits hereto and the lists, schedules
and documents delivered pursuant hereto, which are a part hereof) is intended
by the parties to and does constitute the entire agreement of the parties with
respect to the transactions contemplated by this Agreement. Except for the
Confidentiality Agreement by and between The Galbreath Company and La Salle
Partners Limited dated January 24, 1997, and the non-solicitation letter
agreement dated March 24, 1997, both of which shall remain
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in full force and effect, this Agreement supersedes any and all prior
understandings, written or oral, between the parties, and this Agreement may be
amended, modified, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the amendment,
modification, waiver, discharge or termination is sought.
20. GENERAL.
The paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns, but nothing herein, express or implied, is
intended to or shall confer any rights, remedies or benefits upon person other
than the parties hereto. This Agreement may not be assigned by any party
hereto. This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware.
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IN WITNESS WHEREOF, the DEL Partnerships, the La Salle Partnerships,
the Galbreath Companies, G-LLC and the Stockholders have caused this Agreement
to be duly executed and their respective seals to be hereunto affixed as of the
date first above written.
WITNESS: DEL-LPL LIMITED PARTNERSHIP
_____________________________ By: /s/ Robert C. Spoerri (SEAL)
------------------------
WITNESS: DEL-LPAML
_____________________________ By: /s/ Charles K. Esler (SEAL)
------------------------
WITNESS: LA SALLE PARTNERS LIMITED
PARTNERSHIP
_____________________________ By: /s/ William E. Sullivan (SEAL)
------------------------
WITNESS: LA SALLE PARTNERS MANAGEMENT
LIMITED PARTNERSHIP
_____________________________ By: /s/ Charles K. Esler (SEAL)
------------------------
ATTEST: THE GALBREATH COMPANY
_____________________________ By: /s/ Lizanne Galbreath (SEAL)
------------------------
[Corporate Seal]
ATTEST: THE GALBREATH COMPANY OF
CALIFORNIA, INC.
_____________________________ By: /s/ Lizanne Galbreath (SEAL)
------------------------
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ATTEST: GALBREATH HOLDINGS LLC
_____________________________ By: /s/ Lizanne Galbreath (SEAL)
-----------------------------
[Corporate Seal]
WITNESS: STOCKHOLDERS
_____________________________ /s/ Lizanne Galbreath Megrue (SEAL)
---------------------------------
Lizanne Galbreath Megrue, as trustee
for the separate trust for the
benefit of Lizanne Galbreath Megrue,
John W. Galbreath, III and Laurie
Galbreath Nichols under the
Irrevocable Trust created by Daniel
M. Galbreath on April 12, 1995.
_____________________________ /s/ Lizanne Galbreath (SEAL)
---------------------------------
Lizanne Galbreath
/s/ Lizanne Galbreath
_____________________________ Attorney In Fact For (SEAL)
---------------------------------
Laurie Galbreath Nichols
/s/ Lizanne Galbreath
_____________________________ Attorney In Fact For (SEAL)
---------------------------------
John W. Galbreath, III
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Exhibit 10.09
DATED 8th October 1996
- --------------------------------------------------------------------------------
BRITISH COAL CORPORATION
- and -
LA SALLE PARTNERS INTERNATIONAL
- --------------------------------------------------------------------------------
AGREEMENT
for the sale and purchase of shares in
CIN PROPERTY MANAGEMENT LIMITED
- --------------------------------------------------------------------------------
Herbert Smith
Exchange House
Primrose Street
London EC2A 2HS
Tel: 0171 374-8000
Fax: 0171 496-0043
Ref: 223/C411/30334034
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Clause Headings Page
<S> <C> <C>
1. INTERPRETATION 1
2. SALE AND PURCHASE 7
3. CONSIDERATION 7
4. CONDITIONS 7
5. ACTION PENDING COMPLETION 8
6. VENDOR'S UNDERTAKING 12
7. COMPLETION ACCOUNTS 12
8. COMPLETION 14
9. WARRANTIES AND UNDERTAKINGS 17
10. PURCHASER'S WARRANTIES AND UNDERTAKINGS 26
11. PENSION SCHEMES 27
12. TAX ADMINISTRATION AND GROUP RELIEF 29
13. ANNOUNCEMENTS 32
14. MISCELLANEOUS 32
15. COSTS 33
16. NOTICES 33
17. GOVERNING LAW, JURISDICTION AND 34
SERVICE OF PROCESS
</TABLE>
i
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SCHEDULE 1 PART 1 DETAILS OF THE COMPANY
PART 2 DETAILS OF THE SUBSIDIARY
SCHEDULE 2 WARRANTIES
SCHEDULE 3 PROPERTIES
SCHEDULE 4 DETAILS OF NEW BUSINESS PREMISES
SCHEDULE 5 INTELLECTUAL PROPERTY RIGHTS
SCHEDULE 6 BASIS OF PREPARATION OF COMPLETION
ACCOUNTS
DOCUMENTS IN AGREED TERMS
Director's Resignation Letter
Management Agreements
Deed of Guarantee (Management Agreements)
Tax Deed
Agreement for Leases of 6th floor, 33 Cavendish Square and Ancillary Property
Documentation
Articles of Association
Resolutions
Opinion Letter
Supplemental Name and Logo Agreement
Management Agreement Side Letters
ii
<PAGE>
THIS AGREEMENT is made on 8th October 1996
BETWEEN:
(1) BRITISH COAL CORPORATION of Charles House, 5-11 Lower Regent Street, St.
James's, London SW1Y 4LR (the "Vendor"); and
(2) LASALLE PARTNERS INTERNATIONAL an unlimited company incorporated in England
and Wales (registered number 2547868) and whose registered office is as
Regent Arcade House, 19-25 Argyll Street, London W1V 1AA (the "Purchaser").
RECITALS:
(A) CIN Property Management Limited (the "Company") was incorporated in England
on 2nd April 1991 under the Companies Act 1985 with registered number
2597050 and is a private company listed by shares. Further details of the
Company, its authorized and issued share capital and the names of its
present directors and secretary are set out in Part 1 of Schedule 1.
(B) The company named in Part 2 of Schedule 1 (the "Subsidiary") is the only
subsidiary of the Company. Further details of the Subsidiary, its
authorized and issued share capital and the names of its present directors
and secretary are set out in Part 2 of Schedule 1.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement and in the Schedules the following definitions are used:
"Accounts" means the audited unconsolidated balance sheet of each of the
Company and Subsidiary as at the Accounts Date and the audited
unconsolidated profit and loss accounts of the Subsidiary in respect of the
accounting reference period ended on the Accounts Date;
"Accounts Date" means 31st March, 1996;
"Agreement for Leases" means the agreement in the agreed terms pursuant to
which the Company is to hold the New Business Premises and of which further
details are set out at Schedule 4;
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"Ancillary Property Documentation" means the option to surrender the lease
of the 5th floor, 33 Cavendish Square and ancillary car park spaces; and a
licence for the two basement car parking spaces;
"Articles of Association" means the Memorandum and Articles of Association
of the Company in the agreed terms to be adopted pursuant to clause 5.3.2;
"Business" means the business of property investment fund management
carried on by the Company;
"Business Premises" means those properties currently used or occupied by
the Company in connection with the Business, brief particulars of which are
set out in Schedule 3;
"CIN Management" means the company with registered number 1905816 (which
was re-registered as unlimited on 20th August 1996);
"Companies Act" means the Companies Act 1985;
"Completion" means completion of the sale and purchase of the Shares in
accordance with clause 8;
"Completion Accounts" means a consolidated balance sheet as at the date of
Completion and a consolidated profit and loss account for the period from
Ist April 1996 to the date of Completion for the Group, each prepared on
the basis set out in clause 7 and Schedule 6;
"Completion Date" means the close of business on the date on which
Completion takes place;
"Controlling Shares" means 5,767 issued ordinary shares of (Pounds)1 each
in the capital of the Company;
"Disclosed Schemes" means the British Coal Staff Superannuation Scheme and
the Mineworkers' Pension Scheme;
"Disclosure Letter" means the letter from the Vendor to the Purchaser
delivered immediately before the making of this Agreement;
"Encumbrance" means any option, charge, mortgage, lien, equity, rights of
preemption or any other third party rights;
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"Environment" means the natural and man-made environment and all or any of
the following media namely air, water and land including air within
buildings and air within other natural or man-made structures above or
below ground;
"Environmental Law" means all laws, regulations, directives, statutes,
subordinate legislation, common law and other national and local laws all
judgements, orders, instructions or awards of any court or competent
authority and all codes of practice and guidance notes which relate to the
Environment or human health or the health of animals or plants, including
the Environmental Protection Act 1990, the Environment Act 1995, the
Planning (Hazardous Substances) Act 1990, the Water Resources Act 1991, the
Water Industry Act 1991, the Control of Pollution Act 1974, the Clean Air
Acts, the Control of Industrial Major Accident Hazards Regulations 1984 and
the Control of Substances Hazardous to Health Regulations 1988 but not the
Town and Country Planning Acts or any other enactment relating to the use,
development and enjoyment of land and buildings;
"Group" means the Company and the Subsidiary, and "Group Company" means
either of them;
"Information Memorandum" means the information memorandum relating to the
Company issued by HSBC Investment Bank plc and dated June 1996;
"Initial Shares" means 118 issued ordinary shares of (Pounds)1 each in the
capital of the Company;
"Intellectual Property Rights" means the intellectual property rights
details of which are set out in Schedule 5;
"IMRO" means the Investment Management Regulatory Organization;
"Leases" means the leases under which the Business Premises are held and of
which brief particulars are set out in Schedule 3;
"Losses" means all losses, liabilities, costs (including without limitation
reasonable legal costs), charges, expenses, actions, proceedings, claims
and demands;
"Management Agreements" means the two agreements to be entered into at
Completion between respectively (i) the Company (1), the Vendor (2) and
Coal Staff Superannuation Scheme Trustees Limited (3) and (ii) the Company
(1), the Vendor (2) and Mineworkers' Pension Scheme Trustees Limited (3)
each in the agreed terms;
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"Management Agreement Side Letters" means letters to be given at Completion
on behalf of the Trustees, in each case in the agreed terms;
"New Business Premises" means those properties to be used or occupied by
the Company in connection with its business pursuant to the Agreement for
Leases, brief particulars of which are set out in paragraphs 1 to 3 of
Schedule 4;
"Opinion Letter" means the opinion letter from Hagan & Associates;
"Option to Surrender" means an option to surrender the lease of 5th floor,
33 Cavendish Square and ancillary car parking license to be entered into at
Completion between Coal Pension Properties Limited and the Company in the
agreed terms;
"Properties" means the leasehold properties listed in Schedule 3;
"Purchaser's Accountants" means KPMG 1 Puddle Dock, London EC4V 3PD;
"Purchaser's Group" means the Purchaser and its subsidiary undertakings and
any parent undertaking of the Purchaser or any subsidiary undertaking of
such parent undertaking;
"Purchaser's Solicitors" means Slaughter and May of 35 Basinghall Street,
London EC2V 5DB;
"relevant claim" means a claim by the Purchaser in respect of any of he
Warranties or in relation to any misrepresentation;
"Resolutions" means the resolutions in the agreed terms to be passed
pursuant to clause 8.2.1(H);
"Restructuring Date" means 11th July 1996 being the date on which the
property division of CIN Management was transferred to the Company;
"Section 179 Liability" means any liability of the Company under section
179 of the TCGA arising as a result of the sale of the Shares by the Vendor
to the Purchaser pursuant to this Agreement as respects any asset
transferred to the Company pursuant to the hivedown (as defined in sub-
clause 9.21) or as respects the transfer of the shares in the Subsidiary to
the Company;
"Shares" means the 5,885 issued ordinary shares of (Pounds)1 each in the
capital of the Company;
"Subsidiary" means C1N Property Services Limited;
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"Supplemental Agreement" means the agreement to be entered into upon
Completion relating to the use by the Company of the name 'CIN La Salle';
"taxation" or "tax" means (save as used in Warranty 10.13) the following UK
taxes:
(i) income tax (including income tax required to be deducted or withheld
from or accounted for in respect of any payment), corporation tax,
advance corporation tax, capital gains tax, inheritance tax, value
added tax, customs duties, excise duties, stamp duty, stamp duty
reserve tax, national insurance and other similar contributions; and
(ii) any other taxes, levies, duties, charges, imposts or withholdings
corresponding to, similar to, replaced by or replacing any of them;
together with any interest, penalty or fine in connection with any such
taxation or failure to file any tax return;
"Taxes Act" means the Income and Corporation Taxes Act 1988;
"Tax Deed" means the tax deed in the agreed terms between the Vendor and
the Purchaser;
"Tax Warranties" means the warranties contained in paragraph 10 in Schedule
2;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"Trustees" means Coal Staff Superannuation Scheme Trustees Limited and
Mineworkers' Pension Scheme Trustees Limited;
"Vendor Solicitors" means Herbert Smith of Exchange House, Primrose Street,
London EC2A 2HS; and
"Warranties" means the warranties contained in Schedule 2.
1.2 In this Agreement, words and expressions defined in the Companies Act shall
bear the same meaning as in that Act.
1.3 In this Agreement, save where she context otherwise requires:
1.3.1 words in the singular shall include the plural, and vice versa;
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1.3.2 the masculine gender shall be deemed to include the feminine and
neutral and vice versa;
1.3.3 a reference to a person shall include a reference to a firm, a body
corporate, an unincorporated association or to a person's executors
or administrators;
1.3.4 a reference to a clause, sub-clause, Schedule (other than to a
schedule to a statutory provision) shall be a reference to a
clause, sub-clause, Schedule (as the case may be) of or to this
Agreement;
1.3.5 if a period of time is specified and dates from a given day or the
day of an act or event, it shall be calculated exclusive of that
day;
1.3.6 references to any English legal term for any action, remedy, method
or judicial proceeding, legal document, legal status, court,
official or any legal concept or thing shall in respect of any
jurisdiction other than England be deemed to include what most
nearly approximates in that jurisdiction to the English legal term;
1.3.7 a person shall be deemed to be connected with another if that
person is connected with another within the meaning of section 839
of the Taxes Act;
1.3.8 references to writing shall include any modes of reproducing words
in a legible and non-transitory form;
1.3.9 a reference to a balance sheet or profit and loss account shall
include reference to any note forming part of it;
1.3.10 references to documents "in the agreed terms" shall be to documents
agreed between the parties, annexed to this Agreement and
initialled for identification by or on behalf of the Vendor and the
Purchaser; and
1.3.11 the headings in this Agreement are for convenience only and shall
not affect the interpretation of any provision of this Agreement.
1.4 The definitions adopted in the recitals and introductory statements
preceding this clause apply throughout this Agreement and the Schedules.
1.5 Where any of the Warranties is qualified by the expression "so far as the
Vendor is aware" or by reference to the knowledge of the Vendor or by an
expression of similar import, for the purpose of such expression or
expressions only the Vendor shall be deemed to mean Mr. Philip Hutchinson,
Director - Legal Affairs and Secretary of British Coal Corporation, Mr. Ian
Forrest - Head of Privatization at
6
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British Coal Corporation; Mr. Martin Pollard - Head of Taxation at British
Coal Corporation; Mr. Ivan Yeannan - Managing Director of the Company and
Mr. Peter Manley - Director of the Company having made all reasonable
enquiry and any such Warranty or Warranties are given only on the basis of
matters of which those persons are aware or which are within the knowledge
of those persons. For the avoidance of doubt, none of such persons shall
be personally liable in respect of any of the Warranties by reason of the
provisions of this sub-clause 1.5.
2. SALE AND PURCHASE
2.1 The Vendor is the beneficial owner and shall sell with full title guarantee
and the Purchaser shall purchase the Shares.
2.2 The Shares shall be sold free from any option, charge, lien, equity,
encumbrance, rights of pre-emption or any other third party rights and
together with all rights attached to them at the date of this Agreement or
subsequently becoming attached to them.
2.3 The Vendor hereby waives and agrees to procure the waiver of any
restrictions on transfer (including pre-emption rights) which may exist in
relation to the Shares under the articles of association of the Company or
otherwise.
3. CONSIDERATION
3.1 The total consideration for the sale of the Shares shall be the payment at
the date of Completion to the Vendor of (Pounds)9,650,000 in cash.
3.2 The consideration payable to the Vendor pursuant to sub-clause 3.1 shall be
deemed to be reduced insofar as possible by an amount equal to the
aggregate amount (if any) paid by the Vendor to the Purchase under or
pursuant to the Warranties or the Tax Deed or pursuant to clauses 9.21 or
9.24.
4. CONDITIONS
4.1 Completion of this Agreement is conditional upon satisfaction of the
following conditions or their satisfaction subject only to Completion of
this Agreement:
4.1.1 IMRO consenting (or being deemed to have consented) to the change of
control of the Company pursuant to this Agreement and giving such
other consents and permissions as are required by the Company in
order to continue to carry on business immediately following
Completion;
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4.1.2 confirmation that the Management Agreement and the Management
Agreement Side Letters to which the relevant Trustee is a party has
been executed by the relevant Trustee and will be held in escrow by
the Vendor's Solicitors to the order of the relevant Trustee until
Completion.
4.2 The parties hereby undertake to use all reasonable endeavors to ensure the
satisfaction of the conditions set out in clause 4.1. Without prejudice to
the foregoing, it is agreed that all submissions and requests to, and
requests and inquiries from IMRO shall be dealt with by the Vendor and the
Purchaser in consultation with each other and the Vendor and the Purchaser
shall promptly co-operate with and provide all necessary information and
assistance reasonably required by IMRO upon being requested to do so by the
other or by IMRO.
4.3 The party responsible for satisfaction of each condition shall promptly
give notice to the other party of satisfaction of the relevant condition
within two business days of becoming aware of the same. If the conditions
in clause 4.1 are not satisfied on or before 30th November 1996, save as
expressly provided, this Agreement shall lapse and no party shall have any
claim against any other under it, save for any claim arising from breach of
the undertaking contained in clause 4.2.
5. ACTION PENDING COMPLETION
5.1 The Vendor shall procure that pending Completion:
5.1.1 the Company and the Subsidiary will carry on business only in the
ordinary course, save in so far as agreed in writing by the
Purchaser;
5.1.2 the Purchaser and its agents will upon reasonable notice, be allowed
reasonable access to, and to take copies of, the books and records
of the Company and the Subsidiary including without limitation, the
statutory books, minute books, leases, licenses, contracts, details
of receivables, intellectual property, know-how, supplier lists and
customer lists in the possession or control of the Company or the
Subsidiary. Provided that the obligations of the Vendor under this
clause shall not extend to allowing access to information which is
subject to legally binding obligations of confidentiality in favour
of third parties;
5.1.3 such representatives and advisers as the Purchaser requests may be
designated to work with the Vendor with regard to the management and
operations of the Company and the Subsidiary. The Vendor will
consult and will cause the Company and the Subsidiary to consult
with such representatives and advisers with respect to any action
which may materially affect the business of the Company or the
Subsidiary taken as a whole. The Vendor
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<PAGE>
will furnish and will cause the Company and the Subsidiary to
provide to such representatives and advisers such information as
they may reasonably request for this purpose; and
5.1.4 each of the Company and the Subsidiary uses its best endeavors to
maintain in force all insurance policies in force at the date
hereof.
5.2
5.2.1 Without prejudice to the generality of clause 5.1, the Vendor shall
collaborate fully with the Purchaser in relation to all material
matters concerning the running of the Company and the Subsidiary
between the date of this Agreement and Completion and during that
period shall procure that the Company and the Subsidiary shall not
without the prior written consent of the Purchaser, such consent not
to be unreasonably withheld or delayed:
(A) save as required by, or contemplated in, this Agreement, incur
or enter into or amend any agreement or commitment other than
in the ordinary course of business or incur any financial
obligation or borrowings so as to place any additional material
burden on the Company or the Subsidiary,
(B) save as required by, or contemplated in, this Agreement, incur
or enter into or amend any contract or commitment which is not
capable of being terminated without compensation at any time
with three months' notice or less or which is not in the
ordinary course of business which involves or may involve total
annual expenditure in excess of (Pounds)10,000;
(C) incur or enter into or amend any Encumbrance, contract or
commitment relating to any of the Properties or their
management or the terms payable therefor;
(D) save as required by, or contemplated in, this Agreement, make
any material amendment to the terms and conditions of
employment (including without limitation, remuneration, pension
entitlements and other benefits) of any of the employees of the
Company and the Subsidiary, provide or agree to provide any
gratuitous payment or benefit to any such person or any of
their dependents, or dismiss any employee or engage or appoint
any additional employee;
(E) save as required by, or contemplated in, this Agreement,
acquire or agree to acquire or dispose of or agree to dispose
of any asset, in each case, involving consideration,
expenditure or liabilities in
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<PAGE>
excess of (Pounds) 1,000;
(F) acquire or agree to acquire any share, shares or other interest
in any company, partnership or other venture;
(G) take steps to procure payment by any debtor generally in
advance of the date on which receivables are usually payable in
accordance with the standard terms of business of the Company
or (if different) the period extended to any particular debtor
in which to make payment;
(H) delay making payment to any trade creditors generally beyond
the date on which payable of the relevant trade debt should be
paid in accordance with the credit period authorized by the
relevant creditors (or, if different, the period extended by
creditors in which to make payment);
(I) amend any insurance contract or fail to notify any insurance
claim in accordance with the provisions of the relevant policy
or settle any such claim below the amount claimed;
(J) save as required by this Agreement create, allot or issue any
share or loan capital of the Company;
(K) declare, make or pay any dividend or other distributions to
shareholders.
5.3
5.3.1 After satisfaction of the conditions in sub-clause 4.1, and as near
as practicable but prior to the Completion Date:
(A) the Purchaser or the Purchasers Solicitors shall (on behalf of
the Purchaser and LP International Inc., a Delaware Corporation
and a member of the Purchaser's Group) deliver by telegraphic
transfer to the Vendor or the Vendor's Solicitors the sum of
(Pounds)193,492 as consideration for the Initial Shares and the
Vendor shall thereafter transfer 59 of the Initial Share to the
Purchaser and the remaining 59 Initial Shares to LP
International Inc., and
(B) the Vendor shall thereafter procure that the directors of the
Company shall approve the transfers of the Initial Shares for
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registration and the entry of the transferees in the register of
members of the Company, in each case subject only to the
transfers being subsequently presented duly stamped;
5.3.2 Following the transfer of the Initial Shares and their registration
in each case in accordance with sub-clause 5.3.1 the Vendor shall
procure that the Company:
(A) adopts the Articles of Association; and
(B) re-registers as an unlimited company in accordance with section
49 of the Companies Act.
5.4 The Purchaser undertakes to indemnify and keep indemnified the Vendor
against:
5.4.1 all Losses arising as a result of the re-registration of the Company
as unlimited pursuant to sub-clause 5.3.2, including, without
limitation as a result of the application of Section 74 of
Insolvency Act 1986, unless and to the extent that the same arise in
relation to a matter which constitutes a breach of the Warranties;
and
5.4.2 if there is a transfer of the Initial Shares by the Purchaser to the
Vendor pursuant to sub-clause 8.4.1:
(A) any payment by the Vendor of stamp duty on such transfer; and
(B) any liability of the Vendor for corporation tax on chargeable
gains arising in respect of the disposal of the Initial Shares
by the Vendor to the Purchaser pursuant to clause 5.3.1. The
due date of payment of any amount under this paragraph (B) is
the date falling two business days before the date on which the
Vendor would be liable to pay such corporation tax to the
Inland Revenue without incurring any penalties or interest;
provided that the indemnities in subclauses 5.4.1 and 5.4.2 will not apply
if the parties fail to complete the Agreement due to a breach of contract
by the Vendor (other than under warranty 17.8) after the date hereof.
5.5 If the Vendor subsequently disposes of a sufficient number of shares of the
Company to represent 2% of the share capital of the Company, the Vendor
shall pay to the Purchaser an amount equal to the payment that was made by
the Purchaser under paragraph (B) of sub-clause 5.4.2. The due date of
payment of any amount under this clause 5.5 shall be the date on which the
Vendor would have to account for any
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<PAGE>
corporation tax on chargeable gains arising on such subsequent disposal
(assuming for these purposes that such subsequent disposal would give rise
to such a liability to corporation tax) without incurring any interest or
penalties.
6. VENDOR'S UNDERTAKING
The Vendor undertakes to procure that the annual discretionary bonuses
payable to employees of the Company in respect of the period 1 January 1996
to and including the date of Completion are paid on or about Completion in
accordance with the arrangements notified in writing by the Vendor to the
Purchaser prior to the date hereof.
7. COMPLETION ACCOUNTS
7.1 The provisions of this clause 7 shall have effect in respect of the
Completion Accounts.
7.2 The Purchaser shall procure that the Company shall prepare a draft of the
Completion Accounts as soon as practicable following Completion and in any
event within 45 days from Completion. For the avoidance of doubt, and
without prejudice to the obligations of the Purchaser under this clause
7.2, the directors of the Company shall be responsible for the preparation
of the Completion Accounts although they or the Company shall not be
personally liable or owe any duty of care to the Vendor or the Purchaser in
respect of the same. Once prepared, the Purchaser shall procure that the
draft Completion Accounts shall forthwith be delivered to the Trustees, the
Vendor and to the Vendor's Accountants, Messrs. Ernst & Young.
7.3 The Vendor shall forthwith instruct Messrs. Ernst & Young to undertake a
review of the draft Completion Accounts within 30 days from receipt of the
draft Completion Accounts. If Ernst & Young consider that such draft
Completion Accounts have been prepared in accordance with the provisions of
this Agreement they shall notify the Vendor and the Purchaser of such fact
within the 30 day period, the Purchaser shall procure that such Completion
Accounts are approved by and signed on behalf of the board of the Company
as soon as practicable thereafter. If Ernst & Young do not consider that
such draft Completion Accounts have been prepared in accordance with the
provisions of this Agreement, they shall notify the Company within such 30
day period of the reasons therefor and specify the adjustments which, in
their opinion, should be made to the draft Completion Accounts in order to
comply with the requirements of this Agreement and the parties shall (in
consultation with Messrs Ernst & Young and the Purchaser's Accountants)
meet and discuss the objections of Messrs Ernst & Young and reach agreement
upon the adjustments (if any) required to be made to the draft Completion
Accounts.
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7.4 If Messrs Ernst & Young are satisfied with the draft Completion Accounts
(either as originally submitted or after adjustments have been agreed) or
if Messrs Ernst & Young fail to notify the Purchaser of their non-
acceptance of the draft Completion Accounts within the 30 day period
referred to in clause 7.3, then the draft Completion Accounts
(incorporating any agreed adjustments) shall constitute the Completion
Accounts for the purpose of this Agreement. The Purchaser shall procure
that such Completion Accounts are approved by and signed on behalf of the
board of the Company as soon as practicable thereafter.
7.5 If the Vendor and the Purchaser do not reach agreement within 15 days of
Messrs. Ernst & Young's notice of non-acceptance under clause 7.3, then the
matters in dispute shall be referred, on the application of either party,
for determination by an independent firm of internationally recognized
chartered accountants to be agreed upon by the Vendor and the Purchaser or,
failing agreement within a further period of 15 days, to be selected by the
President for the time being of the Institute of Chartered Accountants in
England and Wales. The following terms of reference shall apply:
7.5.1 the Purchaser's Accountants and Messrs. Ernst & Young shall each
promptly prepare a written statement on the matters in dispute which
(together with the relevant documents) shall be submitted to such
independent firm for determination and copied to the other party;
7.5.2 in giving such determination, the firm shall state what adjustments
(if any) are necessary to the draft Completion Accounts in order so
comply with the requirements of this Agreement;
7.5.3 any such firm shall act as an expert (and not as an arbitrator) in
making any such determination which shall be final and binding on
the parties; and
7.5.4 the costs of such firm shall be borne by the Vendor and/or the
Purchaser in whole or in part as such firm may determine, in its
sole discretion, to be fair and reasonable.
7.6 As soon as all matters in dispute are finally determined pursuant to clause
7.5 the Purchaser shall procure that the Company prepare a revised version
of the Completion Accounts incorporating the adjustments under clause 7.5.2
and that such Completion Accounts are approved and signed as aforesaid.
7.7 The Purchaser shall procure that the signed Completion Accounts are sent to
the Vendor and to the Trustees.
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7.8 The Purchaser and, if applicable, the Vendor, shall procure that there is
provided to Messrs. Ernst & Young all reasonable assistance for the
purposes of carrying out their review including (without limitation) access
upon reasonable notice and during normal working hours to all working
papers relevant to the preparation of the Completion Accounts and to the
accounting records of the Company and the Subsidiary as well as providing
all of the information and explanations which Messrs. Ernst & Young
consider reasonably necessary for the purpose of their review.
7.9 The Vendor is obliged pursuant to clause 4 of the Customer Agreements dated
the 11th July, 1996 between the Company and each of the Trustees
respectively to reimburse the net expenses of the Company. The purpose of
the Completion Accounts is to determine such net expenditure.
7.10 Except as provided in clause 7.5.4 each of the Vendor and the Purchaser
shall bear its own costs in connection with this clause 7, and those of its
advisers.
7.11 The Completion Accounts be prepared on the basis set out in Schedule 6.
8. COMPLETION
8.1 Completion shall take place at the offices of the Vendor's Solicitors on
the fifth business day after the last of the conditions set out in clause 4
is satisfied, or such other place and/or time as the parties shall agree.
8.2 At Completion:
8.2.1 the Vendor shall deliver or cause to be delivered to the Purchaser
or the Purchaser's Solicitors:
(A) evidence to the reasonable satisfaction of the Purchaser of the
authority of any person executing this Agreement and any other
agreed form document hereunder and any other party thereto
(other than the Purchaser) on the Vendor's behalf;
(B) duly executed transfers to the Purchaser and/or nominee of the
Controlling Shares, together with a definitive share
certificate for them in the name of the Vendor or its nominee;
(C) the written resignations of the non-executive directors of the
Company shown as resigning in Schedule 1 executed as a deed in
the agreed terms;
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(D) the certificates of incorporation, common seals, all statutory
and minute books (which shall be written up to, but not
including, the date of Completion) and share certificate books
of the Company and the Subsidiary together with an unused share
certificate forms;
(E) all the deeds relating to the title of the Company or the
Subsidiary to each of the Properties;
(F) notices of resignation of the existing auditors of the Company
and of the Subsidiary;
(G) an original copy of each of the Management Agreements and
Management Agreement Side Letters executed by the Vendor, the
relevant Trustee and the Company (as relevant) together with
evidence that both the Trustees and the Secretary of State for
Trade and Industry have approved the identify of the Purchaser;
(H) a copy of a resolution in the agreed terms of the manners of
the Company increasing the authorized share capital of the
Company to (Pounds)1,000,000 divided into 1,000,000 Ordinary
Shares of (Pounds)1 each;
(I) evidence to the reasonable satisfaction of the Purchaser of the
due fulfillment of the provisions of clause 5.3 and sub-clause
8.2.2;
(J) the Tax Deed duly executed by the Vendor;
(K) the Agreement for Leases and the Ancillary Property
Documentation duly executed by the Company and by Coal Pension
Properties Limited; and
(L) the Supplemental Agreement executed by the Vendor who shall use
its best endeavors to procure the execution thereof by the
other parties thereto.
8.2.2 the Vendor undertakes to the Purchaser to procure that the following
business is transacted at meetings of the directors of the Company
and where relevant of the Subsidiary:
(A) the directors of the Company shall approve the transfers of the
Controlling Shares for registration and the entry of the
transferee in the register of members of the Company, in each
case subject only to the transfers being subsequently presented
duly stamped;
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(B) the situation of the registered office of the Company and of
the Subsidiary shall be changed to 5th Floor, 33 Cavendish
Square, London W1A 21NE;
(C) the accounting reference date of the Company and of the
Subsidiary shall be changed to 31st December 1996;
(D) any person nominated by the Purchaser for appointment as a
director of the Company or of the Subsidiary shall be so
appointed;
(E) KPMG shall be appointed to replace the existing auditors of the
Company and of the Subsidiary;
(F) the directors of the Company shall approve the Management
Agreements, Management Agreement Side Letters and the Agreement
for Leases and the Ancillary Property Documentation for
execution;
(G) the directors of the Company shall approve the application for
the subscription by the Purchaser for such number of Ordinary
Shares of (Pounds)1 each in the capital of the Company as the
Purchaser shall specify in the letter referred to in clause
8.2.3(C) and allot the said Ordinary Shares of (Pounds)1 each
to the Purchaser; and
(H) the directors of the Company will approve the entering into by
the Company of a subordinated loan with the Purchaser on
standard IMRO terms and the making by the Company of drawings
thereunder.
8.2.3 the Purchaser shall deliver to the Vendor:
(A) evidence to the reasonable satisfaction of the Vendor of the
authority of any person executing this Agreement and any other
agreed form document hereunder on the Purchaser's behalf;
(B) the amount referred to in sub-clause 3.1 (less the amount paid
under sub-clause 5.3.1) by means of CHAPS automated transfer to
the Vendor's bank account at Bank of England Sort Code 10-00-00
British Coal Corporation Central Account, Account Number
51022990;
(C) a letter applying for Ordinary Shares of (Pounds)1 each in the
capital of the Company for cash at par together with the
subscription monies in respect of same; and
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(D) a deed of guarantee in the agreed terms duly executed by La Salle
Partners Limited in favour of each of the Trustees guaranteeing
the performance of the Company's obligations under each of the
Management Agreements together with the Opinion Letter.
8.3 If the provisions of sub-clauses 8.2.1 and 8.2.2 are not complied with in
all material respects by the Vendor on or by the Completion Date, the
Purchaser shall be entitled (in addition to and without prejudice to all
other rights or remedies available to it including the right to claim
damages) by written notice to the Vendor served on such date:
8.3.1 to elect to terminate this Agreement; or
8.3.2 to effect Completion so far as practicable having regard to the
defaults which have occurred; or
8.3.3 to fix a new date for Completion (not being more than one month
after the agreed date for Completion) in which case the foregoing
provisions of this clause 8.3 shall apply to Completion as deferred
but provided such deferral may only occur once.
8.4 If the Purchaser elects to terminate this Agreement in accordance with sub-
clause 8.3.1 or 9.20 or if this Agreement lapses under sub-clause 4.3 or if
it terminates for any other reason prior to Completion:
8.4.1 the Purchaser shall immediately on such termination or lapsing,
transfer the Initial Shares to the Vendor or as it may direct upon
the Vendor re-paying to the Purchaser (Pounds)193,492 for the
Initial Shares; and
8.4.2 by way of reducing the Purchaser's exposure the Vendor undertakes to
the Purchaser to take reasonable steps effectively to limit the
liabilities of the Purchaser as soon as reasonably practicable after
the transfer referred to in sub- clause 8.4.1 has been completed,
including, if appropriate, transferring the entire business of the
Company to an entity with limited liability and resolving to put the
Company into members voluntary winding-up.
9. WARRANTIES AND UNDERTAKINGS
9.1 The Vendor warrants and represents to the Purchaser in the terms of the
Warranties and further warrants and represents to the Purchaser that the
Warranties (other than Warranty 17.8 (Key Employees) which shall be
repeated on the basis set out therein) will be true and accurate in all
material respects immediately prior to Completion
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by reference to facts and circumstances then existing as if they had been
given immediately prior to Completion.
9.2 The Vendor accepts that the Purchaser is entering into this Agreement in
reliance upon each of the Warranties.
9.3 Subject to the other provisions of this clause 9, the Purchaser shall be
entitled to claim both before and after the date of Completion that any of
the Warranties has or had been breached.
9.4 The Vendor undertakes to disclose in writing to the Purchaser anything
which is a breach or would be inconsistent with any of the Warranties (in
the case of Warranty 17.8 (Key Employees) immediately and (in any other
case) as soon as reasonably practicable.
9.5 The Vendor undertakes (if any claim is made against the Vendor in
connection with the sale of the Shares to the Purchaser) not to make any
claim against the Company or the Subsidiary or any director, or employees
of the Company or the Subsidiary on whom it may have relied before agreeing
to any terms of this Agreement or the Tax Deed or authorising any statement
in the Disclosure Letter, unless the person who was so relied upon has
acted fraudulently.
9.6 Each of the Warranties shall be construed as a separate warranty and is
given subject to the matters fairly disclosed in the Disclosure Letter and
to any other matter or thing hereafter done or omitted to be done pursuant
to the terms of this Agreement.
9.7 No relevant claim (other than a claim in respect of any of the Tax
Warranties) shall be made unless written notice containing reasonable
details of the relevant claim is served on the Vendor within 18 months from
the Completion Date. No relevant claim under the Tax Warranties or a claim
under the Tax Deed shall be made unless notice is given to the Vendor
before the seventh anniversary of the Completion Date.
9.8 A relevant claim or a claim under the Tax Deed shall not be enforceable
against the Vendor and shall be deemed to have been withdrawn unless legal
proceedings in connection with it are commenced within six months after
written notice of it is first served on the Vendor.
9.9 The aggregate amount of the liability of the Vendor in respect of all
relevant claims and all claims under the Tax Deed (other than a claim n
respect of a Section 179 Liability a "s.179 claim") shall not exceed
(Pounds)9,650,000.
9.10 No liability shall attach to the Vendor in respect of relevant claims or in
respect of claims under the Tax Deed (other than a s.179 claim) unless the
aggregate amount
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of the liability of the Vendor in respect of all such relevant claims and
claims under the Tax Deed (other than a s.179 claim) shall exceed
(Pounds)50,000, (in which event the Vendor's liability shall, subject as
hereinafter provided be for the total amount of the relevant claims and
claims under the Tax Deed and shall not be limited to the excess) and no
relevant claim or claim under the Tax Deed (other than a s. 179 claim shall
be made unless the individual claim exceeds (Pounds)10,000, and for these
purposes where two or more claims arise from the same matter or
circumstance they shall be treated as one claim.
9.11 The Vendor shall not be liable in respect of a relevant claim:
9.11.1 If it would not have arisen but for anything voluntarily done or
omitted to be done after Completion by the Purchaser or any person
controlling or under the control of or under the same control as
the Purchaser (for the purpose of section 416 of the Taxes Act or
the Company or the Subsidiary or any of their respective employees,
agents or successors in title otherwise than in the ordinary course
of business or otherwise than pursuant to any agreement or other
arrangements made by the relevant person as at the date hereof or
the date of Completion;
9.11.2 to the extent that it arises or is increased as a result only of:
(A) an increase in the rates of taxation after the date of
Completion; or
(B) any change in generally accepted accounting practice or change
by the Company in its accounting practice or methods after the
date of Completion; or
(C) the passing of any legislation, or making of any subordinate
legislation or delivery of any judgment or any change in the
published practice or any tax authority with retrospective
effect after the date of Completion;
9.11.3 to the extent that the amount of such relevant claim (less costs or
recovery) is recoverable by the Purchaser or the Company or the
Subsidiary from its insurers under a policy of insurance in force
at the date of Completion;
9.11.4 to the extent that it relates to:
(A) any matter specifically provided for or included as a
liability in the Accounts or in the Completion Accounts (and,
in the case of the Completion Accounts, in respect of which
reimbursement is made
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by the Vendor pursuant to the Customer Agreements referred to in
clause 7.9); or
(B) to the extent that Mr. Bruce Blossom or, Mr. Van Stults had
actual knowledge prior to the Purchaser's execution of this
Agreement (A) of the circumstances to which the relevant claim
relates and (B) that the circumstances to which the relevant
claim relates amounted to a breach of any of the Warranties;
9.11.5 to the extent that:
(A) the relevant claim is in respect of a liability for taxation
which would not have arisen but for a disclaimer of capital
allowances or a revision to a claim therefor where such revision
or disclaimer is caused or made by the Company or the Subsidiary
after the date of Completion (other than at the request of the
Vendor); or
(B) the relevant claim is in respect of a liability for taxation in
respect of income, profits or gains which were actually earned,
accrued or received by the Company or the Subsidiary but were not
reflected in the Accounts or the Completion Accounts; or
(C) the relevant claim is in respect of a liability for taxation
which would not have arisen or would have been reduced or
eliminated but for a failure or omission on the part of the
Company or the Subsidiary after Completion to make any claim or
election or give any notice or consent or do any other thing the
making or giving or doing of which was taken into account in
computing the provision or reserve for taxation in the Accounts
and which was disclosed in paragraph 10.6 of Section C of the
Disclosure Letter; or
(D) any tax relief of the Company or the Subsidiary incurred in or in
respect of a period ended on or before Completion is available to
relieve or mitigate the liability for taxation giving rise to the
relevant claim; or
(E) the relevant claim is in respect of a liability for taxation
which would not have arisen but for a change of accounting
reference date effected on or after Completion; or
(F) the relevant claim would not have arisen but for anything done
pursuant to clause 5.3;
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9.11.6 for a breach of Warranty 10.16, to the extent that the relevant
claim is other than in respect of taxation.
9.12 In accordance with clause 14.2 the rights or benefits of or under the
Warranties may be assigned (together with any cause of action arising in
connection with any Warranty) by Purchaser to its successors in title or to
another member of the Purchaser's Group.
9.13
9.13.1 Where the Purchaser or the Company or the Subsidiary is entitled to
recovery from some other person any sum in respect of any matter or
event which could give rise to a relevant claim, the Purchaser
shall or shall procure that the Company or the Subsidiary shall use
his reasonable endeavors to recover that sum (keeping the Vendor at
all times fully and promptly informed of the conduct of such
recovery), and any sum recovered will reduce the amount of the
relevant claim (and, in the event of the recovery being delayed
until after the relevant claim has been satisfied by the Vendor,
shall be paid to the Vendor, after deduction of all costs and
expenses of the recovery).
9.13.2 Without prejudice to the provisions of sub-clause 9.13.1, if the
Vendor has paid to the Purchaser any amount in respect of a
relevant claim and the Purchaser or the Company or the Subsidiary
subsequently receives or recovers from any person other than the
Vendor a sum which is referable to such claim, the Purchaser shall
forthwith repay to the Vendor the net amount so received or
recovered up to the amount which had been paid by the Vendor in
respect of such claim and the amount so repaid shall be deemed
never to have been paid by the Vendor for the purposes of
determining the liability of the Vendor pursuant to clauses 9.9 and
9.10.
9.14
9.14.1 Subject to 9.14.2, the Purchaser shall and shall procure that the
Company and/or the Subsidiary shall:
(A) within ten business days notify the Vendor in writing if the
Purchaser or the Company or the Subsidiary becomes aware of
any matter which is reasonably likely to, and of the fact that
the matter is reasonably likely to, give rise to a relevant
claim (a "Matter") (provided that no failure of the Purchaser
to give notice to the Vendor in accordance with this clause
shall release the Vendor from liability under a relevant claim
except to the extent that the Vendor
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suffers a liability or increased liability under a relevant claim
by reason of such failure to give notice);
(B) at all times disclose in writing to the Vendor all information
and documents relating to the Matter;
(C) take such action as the Vendor may reasonably require to avoid,
resist, contest or compromise the Matter; and
(D) without the prior written consent of the Vendor, not settle, make
any admission of liability, compromise nor, provide information
to, or correspond with, the other party to, any Matter;
Provided that:
(E) the Vendor shall indemnify the Purchaser and keep the Purchaser
indemnified in respect of any action or proceedings to be taken
pursuant to this clause 9.14;
(F) the Vendor shall keep the Purchaser informed of (and shall
promptly answer the Purchaser's inquiries in relation to) any
proceedings conducted by the Vendor pursuant to paragraph (C);
(G) The Vendor shall, prior to the commencement of any such action or
proceedings and from time to time thereafter as may reasonably be
requested by the Purchaser, demonstrate to the reasonable
satisfaction of the Purchaser that it is able to satisfy and
discharge its obligation in respect of such indemnity and the
matter giving rise to the relevant action or proceedings; and
(H) the failure by the Purchaser to act under this clause 9.14 shall
not limit or affect the Purchaser's rights and remedies in
respect of the matter save to the extent any such failure results
in, or increases, the liability of the Vendor in respect of such
matter.
9.14.2 Sub-clause 9.14.1 shall not apply in relation to any Matter in
respect of a relevant claim under the Tax Warranties, in which case
clause 10 of the Tax Deed shall apply.
9.15 The provision of this clause apply notwithstanding any other provision of
this Agreement or its Schedules to the contrary and shall not be discharged
or cease to have effect in consequence of any provision of this Agreement.
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9.16 The Purchaser hereby acknowledges that without prejudice to any liability
for fraudulent misrepresentation, it does not enter into this Agreement in
reliance on any warranties, representations, covenants or undertakings
howsoever or to whosoever made, except in so far as such are embodied in
the Warranties, representations, covenants and undertakings on the part of
the Vendor contained in this Agreement.
9.17 The Vendor expressly disclaims all liability and responsibility for any
opinion, projection or forecast contained within the Information Memorandum
or within any written information provided to the Purchaser and its
advisers.
9.18 If a relevant claim for which the Vendor is liable relates to a liability
for taxation or if the Vendor has any liability under the Tax Deed the
Vendor may, so far as it is possible under law and within any applicable
time limit at its option and wholly or partly instead of making a payment
in respect of such claim or liability under the Tax Deed surrender or
procure the surrender (without payment) to the Company or Subsidiary of
group relief (as defined in section 402 of the Taxes Act) or advance
corporation tax or a tax refund relating to an accounting period (as
defined in Section 102 of the Finance Act 1989) in order to eliminate or
reduce such liability for taxation which has given rise to the relevant
claim or liability under the Tax Deed. The Purchaser shall procure that the
Company or the Subsidiary shall take as soon as reasonably practicable (and
in any event within any applicable statutory time limit) all such steps as
may be required by the Vendor to facilitate or permit the surrender of
group relief or advance corporation tax or a tax refund mentioned above.
9.19 If any relevant claim arises by reason of a liability of the Group which is
contingent when it is notified to the Vendor, the Vendor will not be
obliged to make any payment to the Purchaser until such time as the
contingent liability ceases to be contingent and becomes an actual
liability. Provided always that is such contingent claim is notified to
the Vendor in accordance with the provisions at this clause 9, the time
limits in clause 9.7 and 9.8, shall only apply from the date the said
liability ceases to be contingent.
9.20 The Purchaser agrees that is shall have no right to rescind or otherwise
terminate this Agreement (whether for misrepresentation or otherwise) after
the date hereof, save:
(A) in the case of fraudulent misrepresentation by the Vendor;
(B) as provided in clause 8.3; or
(C) in the event of a breach of Warranty 17.8 (Key Employees),
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in which case the Purchaser shall be entitled by written notice
to the Vendor prior to Completion to terminate this Agreement.
9.21 The Vendor undertakes to the Purchaser (for itself and as agent and trustee
for the Company) to indemnify and shall keep the Purchaser and the Company
indemnified, against any Losses the Purchaser or the Company shall suffer
or incur resulting directly or indirectly from the arrangements for the
transfer of the property division of CIN Management to the company (the
"hivedown") or any steps undertaken by the parties pursuant thereto being
challenged following the administration or winding-up of CIN Management or
for any other reason whatsoever provided that (i) the Purchaser shall
notify the Vendor of any such claims relating to the hivedown within seven
years from Restructuring Date and no claim may be made in relation to the
indemnity thereafter and (ii) the provisions of clause 9.14.1 shall apply,
mutatis mutandis, to any claims made against the Company in relation to the
hivedown.
9.22 Where any facts or circumstances could give rise to a relevant claim and to
a claim under the Tax Deed, the Vendor shall not be liable in respect of
both those claims, and accordingly the relevant claim shall not be pursued
to the extent that recovery is made under the Tax Deed and vice versa.
9.23 Any payment made under clause 9.21, clause 5.4, clause 11.7 or clause 9.2.4
shall be made free and clear of all taxation whatsoever save only for any
deductions or withholdings required by law. If any deductions or
withholdings are required by law to be made in respect of any such payment
or if any such payment is (or, but for the set off of any available tax
relief, would be) subject to any taxation in the hands of the payee the
payer shall be liable to pay to the payee such further sums as shall ensure
that the aggregate of the sums paid or payable under this clause 9.23 and
the payment in question shall, after deducting therefrom all deductions or
withholdings from, or taxation liabilities (including taxation liability
which would have arisen but for the set off of any available tax relief) in
respect of such aggregate amount, leave the payee with the same amount as
it would have been entitled to receive under clause 9.21, clause 5.4,
clause 11.7, or clause 9.24 (as the case may be) in the absence of any such
deductions, withholdings or taxation liabilities.
9.24
9.24.1 The Vendor undertakes to the Purchaser (as agent and trustee for
the Company and the Subsidiary) that the Vendor shall indemnify and
keep the Company and the Subsidiary indemnified against:
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(A) all Losses arising out of any breach by the Company or the
Subsidiary of any intellectual property rights belonging to
any other person;
(B) all Losses arising out of the use by the Company or the
Subsidiary of any computer hardware, IT equipment or computer
networks and facilities that only CIN Management was entitled
to use;
(C) the costs of all licenses and other sums payable by the
Company or the Subsidiary in order to obtain the same rights
and benefits and connection with the running of the Business
as they would have enjoyed had all the licenses, contracts and
arrangements relating to computer hardware, software, IT
equipment and computer networks and facilities entered into by
CIN Management had been validly assigned to the Company or the
Subsidiary (as the case may be) on the Restructuring Date.
9.24.2 The indemnity in clause 9.24.1 (the "IT Indemnity") shall be
subject to the following:
(A) no claim under sub-paragraph (A) and (B) of the IT Indemnity
shall be made unless written notice containing reasonable
details of the claim is served on the Vendor within 18 months
from the Completion Date;
(B) no claim under sub-paragraph (C) of the IT Indemnity shall be
made unless written notice containing reasonable details of
the claim is served on the Vendor within 9 months from the
Completion Date;
(C) no liability shall attach to the Vendor in respect of claims
under the IT Indemnity unless the aggregate amount of the
liability of the Vendor in respect of all such claims exceed
(Pounds)5,000 (in which event the Vendor's liability shall,
subject as herein provided, be for the total amount of such
claims and not merely the excess);
(D) the Purchaser shall procure that the Company and the
Subsidiary use all reasonable endeavours to avoid or mitigate
any costs the subject matter of sub-paragraph (C) of the IT
Indemnity;
(E) the provisions of clause 9.24.1 shall apply, mutatis mutandis
to any claim against the Company or the Subsidiary which is
reasonably likely to give rise to a claim under sub-paragraphs
(A) and (B) of the IT Indemnity;
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(F) the Vendor shall not be liable, in respect of a claim under
the IT Indemnity in the circumstances provided in clause
9.11.4(A);
(G) the Purchaser acknowledges that the IT Indemnity does not
extend to sums payable to Mentor as the Company seeks to use
the Mentor system for managing the portfolios of clients other
than the Trustees or to any payments to Gandalf as a result of
the change of control clause in the Gandalf Maintenance
Contract.
10. PURCHASER'S WARRANTIES AND UNDERTAKINGS
10.1 The Purchaser warrants to the Vendor that:
10.1.1 the Purchaser has full power and authority to enter into and
perform this Agreement and all agreements in the agreed terms to
which it is a party and the provisions of this Agreement and those
documents, when executed, will constitute valid and binding
obligations on the Purchaser;
10.1.2 the execution and delivery of, and the performance by the Purchaser
of its obligations under, this Agreement and all agreements in the
agreed terms to which it is a party will neither:
(A) result in a breach of any provision of its Memorandum or
Articles of Association; nor
(B) result in a breach of any order, judgement or decree of any
court or governmental agency to which the Purchaser is a party
or by which the Purchaser is bound;
10.1.3 save, as provided in clause 4, all consents, permissions, approvals
and agreements of third parties which are necessary for the
Purchaser to obtain in order to enter into and perform this
Agreement have been unconditionally obtained in writing and have
been disclosed in writing to the Vendor; and
10.1.4 neither it nor any of its employees, agents or advisers is aware of
any fact or matter which would or may constitute a breach of any of
the above.
10.2 The Purchaser undertakes to the Vendor that it shall, preserve for a period
of at least six years from Completion all books, records and documents of
or relating to the Company and of the Subsidiary existing and held by them
at Completion. The Purchaser shall permit and allow access to such books,
records and documents and the right to inspect the same and make copies
thereof to the employees, agents and professional advisers of the Vendor
upon reasonable notice (and in any event within
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7 days of written notice being given), during normal business hours, and
subject to the prior agreement of recipients to keep disclosed information
confidential (unless otherwise required by law). Such right of access,
inspection and copying by the Vendor, its employees, agents and advisers of
the Company's books, records and documents shall be subject to:
(A) the Purchaser's prior consent (not to be unreasonably
withheld);
(B) the Vendor providing to the Purchase a satisfactory
explanation of its requirements to inspect such documents; and
(C) any obligation of confidentiality owed by the Company or the
Subsidiary to any third party;
and all such documents which are relevant to the inquiry of the
Vendor shall be made available to it by the Purchaser.
10.3
10.3.1 For the purposes of this sub-clause 10.3.1 "interested" shall bear
the same meaning as in Part VI of the Companies Act.
10.3.2 The Purchaser is acting as principal and not as agent or broker for
any other person and immediately following its purchase of the
Shares hereunder, no person other than the Purchaser or its nominee
will be interested in the Shares.
10.4 All written information supplied by the Purchaser to the Vendor or to HSBC
Investment Bank plc in connection with (a) the Purchaser's presentation to
the evaluation group, (b) the Purchaser's indicative offer and accompanying
written submissions and (c) the Purchaser's submissions pursuant to, and as
required by, the Information Memorandum were when given, and (save as may
have been otherwise disclosed to the Vendor or to HSBC Investment Bank
prior to the date hereof) remains true and accurate in all material
respects.
11. PENSION SCHEMES
11.1 The Purchaser acknowledges the statutory duties of the Company and the
Subsidiary to their respective employees who are contributory members of
the Disclosed Schemes at Completion (hereinafter referred to in this clause
as "Transferring Members") contained in Schedule 5 to the Coal Industry Act
1994 and undertakes to the Vendor that it shall procure that each of the
Company and the Subsidiary complies fully with such duties which, inter
alia, shall include offering to
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Transferring Members membership of the Industry-Wide Coal Staff
Superannuation Scheme or the Industry-Wide Mineworkers' Pension Scheme as
the case may be (each hereinafter referred to in this clause as the "IWS")
with effect from Completion.
11.2 The Purchaser shall procure that those Transferring Members who accept the
offer of membership of an IWS shall be in contracted-out employment (as
defined in section 8 of the Pension Schemes Act 1993) in relation to the
IWS.
11.3 The Purchaser shall procure that each of the Company and the Subsidiary
shall do all things necessary in order to become an Employer (for the
purposes of The Industry-Wide Coal Staff Superannuation Scheme Regulations
1994 No. 2973 and The Industry-Wide Mineworkers' Scheme Regulations 1994
No. 2974 as appropriate) (hereinafter referred to in this clause as the
"IWS Regulations") as appropriate.
11.4 The Purchaser shall procure that each of the Company and the Subsidiary
fulfills all the obligations of an Employer in accordance with the
provisions of the applicable IWS Regulations and does not do or omit to do
anything whereby the position of either IWS as an exempt approved scheme
under Chapter XIV of the Taxes Act would or might be prejudiced.
11.5 The Purchaser shall procure that each of the Company and the Subsidiary
complies with all the requirements of The Coal Industry (Protected Persons)
Pensions Regulations 1994 No. 3070 (hereinafter referred to in this clause
as the "Protection Regulations") applicable to it as an employer or former
employer of protected persons within the meaning of the Protection
Regulations.
11.6 The Purchaser shall procure that each of the Company and the Subsidiary
shall as soon as practicable after Completion apply to become a member of
Coal Staff Superannuation Scheme Co-ordinator Limited or, as the case may
be, Mineworkers' Pension Scheme Co-ordinator respectively (each hereinafter
referred to in this clause as a "Co-ordinator Company") in accordance with
the Memorandum and Articles of Association of the relevant Co-ordinator
Company.
11.7 The Purchaser hereby agrees fully and effectively to indemnify and keep
indemnified the Vendor at all times from and against all losses,
liabilities, charges, costs, expenses, actions, proceedings and demands
incurred as a result of any claim or action brought by any Transferring
Members in relation to any breach by the Company or the Subsidiary of the
duties contained in Schedule 5 to the Coal Industry Act 1994.
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12. TAX ADMINISTRATION AND GROUP RELIEF
12.1 The Vendor or its duly authorized agent shall (at its own expense) prepare
and cause to be submitted to the appropriate tax authority, all tax returns
of the Company and the Subsidiary for all accounting periods ended on or
before the Accounts Date to the extent that the same have not been prepared
before Completion. The Vendor or its duly authorized agent shall be
responsible for all correspondence and for reaching agreement with the
appropriate authority in relation to all tax returns of the Company and the
Subsidiary for all accounting periods ending on or before the Accounts Date
Provided always that the Vendor shall give the Purchaser or its advisers 30
days to review and comment on such returns prior to their submission and
shall take into account all reasonable representations made by Purchaser
thereon;
12.2 The Purchaser or its duly authorised agent shall (at its own expense)
prepare and cause to be submitted to the appropriate tax authority tax
returns of the Company and the Subsidiary for the accounting period of the
Company and the Subsidiary in which Completion occurs provided always that
the Purchaser shall procure that the Company and the Subsidiary shall give
the Vendor or its advisers 30 days to review and comment on such returns
prior to their submission, shall take into account all reasonable
representations made by the Vendor thereon;
12.3 The purchaser or its duly authorized agent shall be responsible for all
discussions and correspondence with the relevant tax authority in respect
of any matter relating to the tax returns referred to in sub-clause 12.2
above provided always that no such discussions shall take place nor
correspondence be submitted relating to any matters which give rise to or
could give rise to a liability in respect of which the Purchaser would be
entitled to make a claim against the Vendor under the Tax Deed or the Tax
Warranties (other than of a routine and immaterial nature) other than in
terms agreed in advance by the Vendor, such agreement not to be
unreasonably withheld or delayed;
12.4 The Purchaser shall procure that the Company and the Subsidiary (as
appropriate) shall as soon as reasonably practicable (following a written
request from the Vendor) and in any event within the relevant time limits
(provided the Vendor's request is received by the Purchaser five business
days before the expiry of such time limits) make such claims, surrenders
and elections and give such consents as are taken into account in the
returns mentioned in sub-clause 12.1;
12.5 The Purchaser shall procure that the Company and the Subsidiary provide to
the Vendor or its duly authorized agent and the Vendor shall provide to the
Purchaser or its duly authorized agent during all reasonable hours, subject
to two business days prior notice, such access to and copies of such books,
accounts and records as are
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necessary and reasonable to enable the parties to perform their rights and
obligations under this clause 12;
12.6 The provisions of this clause 12.6 shall apply notwithstanding any other
provisions of this clause 12.
12.6.1 The Purchaser agrees that the Vendor or its duly authorised agent
shall deal with each and every matter (in so far as possible in the
name of the Vendor acting on behalf of the Company) relating to any
potential Section 179 Liability, including, but not limited to, any
correspondence relating thereto and any questions of valuation in
relation to the assets deemed to be disposed of (a "Section 179
Matter").
12.6.2 The Purchaser further agrees that it shall not and shall procure
that the Company shall not enter into any discussions or
correspondence with the Inland Revenue in relation to any Section
179 Matter without the prior written consent of the Vendor and that
the Purchaser shall do nothing and shall procure that the Company
does nothing which might prejudice the Vendor's position in
relation to any Section 179 Matter.
12.6.3 Without prejudice to the generality of sub-clause 12.6.2, the
Purchaser further agrees that, in relation to any tax returns
referred to in clause 12.2 or any correspondence referred to in
clause 12.3, if such tax return or correspondence is to be
submitted prior to the agreement between the Vendor and the Inland
Revenue in relation to the Section 179 Liability (if any), such tax
return or correspondence shall not be in any way inconsistent with
the Vendor's position in relation to any Section 179 Matter (as
notified by the Vendor to the Purchaser) and, if such tax return or
correspondence is to be submitted following such agreement, such
tax return or correspondence is to be submitted following such
agreement, such tax return or correspondence shall reflect such
agreement in so far as such tax return or correspondence relates to
any Section 179 Matter.
12.6.4 The Vendor agrees that it shall give the Purchaser advance notice
(of at least two complete business days) of any discussions or
correspondence (other than of an immaterial nature) relating to any
Section 179 Matter and that it shall make full and accurate
disclosure to the Inland Revenue of all facts relating to any
potential Section 179 Liability and that it shall keep the
Purchaser fully informed of all matters and progress in respect of
agreeing with the Inland Revenue the potential Section 179
Liability (including providing copies of all correspondence and any
other documents or papers insofar as they relate thereto).
30
<PAGE>
12.6.5 Further, the Vendor agrees that nothing in this clause 12.6 shall
require the Purchaser or the Company to do anything which could
constitute an unlawful or fraudulent act or a misrepresentation.
12.7 VAT
12.7.1 The Vendor shall as soon as is practicable apply to HM Customs and
Excise for the exclusion of the Company from any VAT group of the
Company and the Subsidiary are members prior to Completion for the
purposes of section 43 of the Value Added Tax Act of 1994 (the "VAT
Group").
12.7.2 The Purchaser shall give all such reasonable assistance and co-
operation as shall be necessary for the purpose of supporting the
Vendor's application referred to in clause 12.7.1 above.
12.7.3 To the extent that the Relevant Output Tax exceeds the Relevant
Input Tax the Purchaser shall procure that the Company and/or the
Subsidiary shall pay the difference to the Representative Member to
the extent that such amount has not already been paid to the
Representative Member by the Company or the Subsidiary. Any amount
payable under this sub-clause 12.7.3 shall be paid two business
days before the date on which the Representative Member is first
liable to account to HM Customs and Excise for such amount.
12.7.4 To the extent that the Relevant Input Tax exceeds the Relevant
Output Tax, the Vendor shall procure that the Representative Member
shall pay the difference to the Company and/or the Subsidiary (as
the case may be) to the extent that such amount has not already
been paid by the Representative Member obtaining credit for and/or
receiving a payment of such amount.
12.7.5 For the purposes of this sub-clause 12.7 "Relevant Output Tax"
means output tax in respect of supplies, acquisitions or
importations made by the Company or the Subsidiary (regardless of
whether they are treated as made, for VAT purposes, by the
Representative Member under a s.43 of the Value Added Tax Act 1994)
for which account is to be made to HM Customs and Excise by the
Representative Member or any member of the VAT Group (other than
the Company or the Subsidiary) for any prescribed accounting period
of the VAT Group comprising any period of time before the exclusion
of the Company and the Subsidiary from the VAT Group.
12.7.6 For the purposes of this sub-clause 12.7 "Relevant Input Tax" means
that input tax incurred for the prescribed accounting period in
question in respect
31
<PAGE>
of which the Representative Member is allowed a credit or deduction
by virtue of supplies made to and acquisitions or importations made
by the Company or the Subsidiary (regardless of whether they are
treated, for VAT purposes, as made by the Representative Member
under s.43 of Value Added Tax Act 1994).
13. ANNOUNCEMENTS
Neither party shall release any announcement, or despatch any circular,
relating to this Agreement unless and until the form and content of such
announcement or circular have been submitted to, and agreed by, the other
party hereto provided that nothing in this clause shall prohibit either
party from making any announcement or despatching any circular as required
by law or the rules of any regulatory body of which it is a member in which
case, the announcement shall only be released or the circular dispatched
after consultation with the other party and after taking into account the
reasonable requirements of the other party as to the content of such
announcement or circular.
14. MISCELLANEOUS
14.1 This Agreement shall be binding and enure for the benefit of the successors
and permitted assigns of the parties.
14.2 The benefit of this Agreement may be assigned by either party to any
company of which it is a subsidiary undertaking or to any other company
which is its subsidiary undertaking or a subsidiary undertaking of its
parent undertaking (but not otherwise) but so that the assignor shall
remain liable for its obligations hereunder and provided further that if
any such assignee ceases to be the parent undertaking of subsidiary
undertaking of such parent undertaking of the Purchase or the Vendor, as
the case may be, the Purchaser or the Vendor, as the case may be shall,
prior to such cessation, procure that such assignee shall transfer back to
the Purchaser the benefit of this Agreement.
14.3 In relation to its subject-matter, this Agreement, together with the
documents in the agreed terms, any side letters given on the date hereof
and any notification under clause 6 represents the entire understanding and
constitutes the whole agreement, between the parties and, save as provided
in this Agreement, no party has relied on any representation made by any
other party who is not a party to this Agreement.
14.4 So far as it remains to be performed this Agreement shall continue in full
force and effect notwithstanding Completion.
32
<PAGE>
14.5 To the extent that any provision of this Agreement, or of any other
arrangement of which it forms part, is a restriction or information
provision for the purposes of the restrictive Trade Practices Act 1976
("RTPA") by virtue of which this Agreement or any such arrangement is
registrable under the RTPA, no such restriction or provision shall take
effect until the day after particulars of this Agreement or, as the case
may be, that arrangement, have been furnished to the Director General of
Fair Trading in accordance with the RTPA.
15. COSTS
The parties shall pay their own costs in connection with the preparation
and negotiation of this Agreement and the documents in the agreed terms.
16. NOTICES
16.1 A notice, approval, consent or other communication in connection with this
Agreement:
16.1.1 must be writing;
16.1.2 in the case of the Vendor as addressee, must be marked for the
attention of The Company Secretary;
16.1.3 in the case of the Purchaser as addressee, must be marked for the
attention of The Company Secretary, copied to Mr. Bruce Bossom and
to Mr. Van Stults at LaSalle Advisors Limited; and
16.1.4 must be left at the address of the addressee, or sent by prepaid
ordinary post (airmail if posted to or from a place outside the
United Kingdom) to the address of the addressee or sent by
facsimile to the facsimile number of the addressee which is
specified in this clause or if the addressee notifies another
address or facsimile number in England and Wales then to that
address or facsimile number.
The address and facsimile number of each party and La Salle
Advisors Limited is:
Vendor British Coal Corporation - Attn: The Corporation
Secretary
Address: Charles House, 5-11 Lower Regent Street, St. James's,
London, SW1Y 4LR
Facsimile: 0171 766 4010
33
<PAGE>
Purchaser La Salle Partners International
Address: 5th floor, 33 Cavendish Square, London W1A 2NF
Facsimile: 0171 734 1155
La Salle Advisors Limited
Address: 200 East Randolph Drive, Chicago, Illinois 60601, USA
Facsimile: (312) 228-0355
16.2 A notice, approval, consent or other communication shall take effect from
the time it is received (or, if earlier, the time it is deemed to be
received in accordance with sub-clause 16.3) unless a later time is
specified in it.
16.3 A letter or facsimile is deemed to be received:
16.3.1 in the case of a posted letter, unless actually received earlier on
the third (seventh, if posted to or from a place outside the United
Kingdom) day after posting;
16.3.2 in the case of facsimile, on production of a transmission report
from the machine from which the facsimile was sent which indicates
that the facsimile was sent in its entirety to the facsimile number
of the recipient.
17. GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
17.1 This Agreement shall be governed by, and construed in accordance with,
English law.
17.2 Each party irrevocably agrees for the benefit of the other party that the
Courts of England shall have exclusive jurisdiction in relation to any
claim, dispute or difference concerning this Agreement and any matter
arising therefrom.
17.3 Each party irrevocably waives any right that it may have to object to an
action being brought in those Courts, to claim that the action has been
brought in an inconvenient forum, or to claim that those Courts do not have
jurisdiction.
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<PAGE>
17.4 Each party agrees that without preventing any other mode of service, any
document in an action (including, but not limited to, any writ of summons
or other originating process or any third or other party notice) may be
served on any party by being delivered to or left for that party at its
address for service on any party by being delivered to or left for that
party at its address for service of notices under clause 16 and each party
undertakes to maintain such an address at all times in the United Kingdom
and to notify the other party in advance of any change from time to time of
the details of such address in accordance with the manner prescribed for
service of notices under clause 16.
IN WITNESS of which the parties have executed this Agreement on the date first
mentioned above.
35
<PAGE>
EXHIBIT 10.10
================================================================================
ASSET PURCHASE AGREEMENT
dated as of December 31, 1996
by and among
LASALLE CONSTRUCTION LIMITED PARTNERSHIP
("Seller"),
LASALLE PARTNERS LIMITED
("LaSalle"),
CLUNE CONSTRUCTION COMPANY, L.P.
("Buyer")
and
MICHAEL T. CLUNE
("Clune")
CONSTRUCTION MANAGEMENT BUSINESS OF
LASALLE CONSTRUCTION LIMITED
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
Definitions
<TABLE>
<CAPTION>
<S> <C>
1.1 Definitions....................................................... 1
"Affiliate"........................................................... 1
"Agreement"........................................................... 1
"Assignment and Assumption Agreement"................................. 1
"Asset Liabilities"................................................... 1
"Business"............................................................ 1
"Buyer"............................................................... 1
"Closing Date" and "Closing".......................................... 1
"Code"................................................................ 1
"Contracts"........................................................... 2
"CPI"................................................................. 2
"Employees"........................................................... 2
"Equipment Leases".................................................... 2
"ERISA"............................................................... 2
"Excess Payments"..................................................... 2
"Excluded Assets"..................................................... 2
"Excluded Liabilities"................................................ 2
"GAAP"................................................................ 2
"Losses".............................................................. 2
"Net Earnings"........................................................ 2
"Payables"............................................................ 2
"Person".............................................................. 2
"Pre-Tax Net Cash Flow"............................................... 2
"Purchased Assets".................................................... 2
"Receivables"......................................................... 3
"Seller".............................................................. 3
"Seller's Auditors"................................................... 3
"Subleases"........................................................... 3
ARTICLE 2
Purchase and Sale
2.1 Agreements to Purchase and Sell................................ 3
2.2 Excluded Assets................................................ 4
2.3 Assumed Liabilities............................................ 4
2.4 Excluded Liabilities........................................... 5
2.5 Procedures for Purchased Assets not Transferable............... 5
ARTICLE 3
Purchase Price; Closing Adjustments
3.1 Purchase Price................................................ 6
3.2 Payments at Closing........................................... 6
3.2.1 Initial Consideration......................................... 6
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
3.2.2 Net Unit Redemption Payment.................................... 6
3.3 Receivable Collection.......................................... 6
3.4 Income and Expenses............................................ 7
3.4.1 Pre-Closing Income............................................. 7
3.4.2 Pre-Paid Income and Expenses................................... 7
3.5 Additional Consideration....................................... 7
3.6 Purchase Option................................................ 7
ARTICLE 4
Closing
4.1 Closing Date................................................... 8
4.2 Transactions at Closing........................................ 8
4.2.1 Transfer of Purchase Assets.................................... 8
4.2.2 Payment of Purchase Price and Assumption of
Assumed Liabilities............................................ 8
4.2.3 Registrations and Listings..................................... 8
4.2.4 Equipment Leases............................................... 9
4.2.5 Computer Programs and Software................................. 9
ARTICLE 5
Representations, Warranties, Agreements and
Covenants of Seller and LaSalle
5.1 Organization................................................... 9
5.2 Due Authorization.............................................. 9
5.3 Title.......................................................... 10
5.4 Litigation..................................................... 10
5.5 Brokers........................................................ 10
5.6 Employees...................................................... 10
5.7 ERISA.......................................................... 10
5.8 "As is, where is".............................................. 10
ARTICLE 6
Representations, Warranties, Agreements and
Covenants of Buyer
6.1 Organization................................................... 11
6.2 Due Authorization.............................................. 11
6.3 Consents....................................................... 11
6.4 Litigation..................................................... 11
6.5 No Broker...................................................... 12
ARTICLE 7
Employees' Pension and Other Benefit Plans
7.1 Employees...................................................... 12
7.2 Employee Benefit Plans......................................... 13
</TABLE>
ii
<PAGE>
ARTICLE 8
Pre-Closing Covenants of Seller and Buyer
<TABLE>
<CAPTION>
<S> <C>
8.1 Partnership and Other Actions.................................. 13
8.2 Consents and Approvals......................................... 13
8.3 Access to Information.......................................... 14
ARTICLE 9
Conditions
9.1 Conditions to Obligations of Seller............................ 14
9.1.1 Performance of Agreements and Conditions....................... 14
9.1.2 Representations and Warranties True............................ 14
9.1.3 Opinion of Counsel............................................. 14
9.1.4 Payment of Purchase Price...................................... 14
9.1.5 No Court Order................................................. 14
9.1.6 Subleases...................................................... 14
9.1.7 Board Approval................................................. 14
9.2 Conditions to Obligations of Buyer............................. 15
9.2.1 Performance of Agreements and Covenants........................ 15
9.2.2 Representations and Warranties True............................ 15
9.2.3 Opinion of Counsel............................................. 15
9.2.4 No Court Order................................................. 15
9.2.5 Subleases...................................................... 15
9.2.6 Blake E. Brasher............................................... 15
ARTICLE 10
Post Closing Covenants of Seller
10.1 Bonding........................................................ 15
10.2 Cash Management and Working Capital............................ 16
10.3 Referrals...................................................... 17
10.4 New Office Lease............................................... 17
10.5 Administrative Service......................................... 17
ARTICLE 11
Post-Closing Covenants of Buyer
11.1 Assumed Liabilities............................................ 18
11.2 Availability of Records........................................ 18
11.3 Use of Trade or Service Marks.................................. 18
11.4 Tax Matters.................................................... 19
11.5 Operating Covenants............................................ 19
ARTICLE 12
Default Rights Regarding Clune.................... 22
ARTICLE 13
Indemnification and Survival
13.1 Indemnification by Seller...................................... 22
13.2 Indemnification by Buyer....................................... 23
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 14
Termination
14.1 Termination of Agreement................................... 23
14.1.1 Mutual Consent.................................... 23
14.1.2 By Seller......................................... 23
14.1.3 By Buyer.......................................... 23
14.2 Written Notice............................................. 24
14.3 Continuing Confidentiality................................. 24
ARTICLE 15
Miscellaneous
15.1 Assignment................................................. 24
15.2 Announcements.............................................. 24
15.3 Confidentiality............................................ 24
15.4 Expenses................................................... 24
15.5 Severability............................................... 24
15.6 Entire Agreement........................................... 25
15.7 No Third Party Beneficiaries............................... 25
15.8 Waiver..................................................... 25
15.9 Governing Law.............................................. 25
15.10 Headings................................................... 25
15.11 Counterparts............................................... 25
15.12 Choice of Forum............................................ 25
15.13 Further Documents.......................................... 25
15.14 Notices.................................................... 25
15.15 Survival................................................... 26
15.16 Construction............................................... 26
15.17 Nonrecourse Loan........................................... 26
</TABLE>
iv
<PAGE>
SCHEDULES
---------
Schedule 2.1(d) Contracts
Schedule 2.2(c) Receivables
Schedule 2.4(a) Payables
Schedule 2.4(b) Claims for Defective Work
Schedule 4.2.4 Equipment Leases
Schedule 6.4 Litigation
Schedule 7.1 Current Employees
Schedule 10.5 Services provided by LaSalle Partners to Buyer
EXHIBITS
--------
Exhibit A - Assignment and Assumption Agreement
Exhibit B - Subleases
Exhibit C - Note
Exhibit D - Security Agreement
Exhibit E - UCC-1 Financing Statement
Exhibit F - 1996 Business Plan
Exhibit G - Example of Additional Consideration
Exhibit H - Opinion of Counsel to Buyer
Exhibit I - Opinion of Counsel to Seller
Exhibit J - Working Capital Note
Exhibit K - Calculation of l995 Net Earnings
v
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of December 31, 1996, is entered into by and
between LASALLE CONSTRUCTION LIMITED PARTNERSHIP, a Delaware limited partnership
("Seller"), LASALLE PARTNERS LIMITED, a Delaware limited partnership
("LaSalle"), CLUNE CONSTRUCTION COMPANY, L.P. a Delaware limited partnership
("Buyer"), and MICHAEL T. CLUNE, an Illinois resident ("Clune").
WHEREAS, LaSalle owns Seller, and Seller is in the business, inter
alia, of providing general contracting services for the construction of interior
tenant space in commercial buildings in Chicago and Los Angeles (the
"Business"); and,
WHEREAS, Seller desires to sell certain assets of the Business on the
terms and conditions set forth below; and
WHEREAS, the Business is currently managed by Clune, and Clune has
organized Buyer to purchase such assets from Seller on the terms and conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements and provisions herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
-----------
1.1 Definitions. The following terms have the following meanings when used
herein:
"Affiliate" means with respect to any Person, any other Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such Person. Affiliates of Buyer shall include, without
limitation, Clune and Dublin Construction Company.
"Agreement" means this Asset Purchase Agreement, including all Schedules
and Exhibits hereto, as it may be amended from time to time in accordance with
its terms.
"Assignment and Assumption Agreement" means the Assignment and Assumption
Agreement and Bill of Sale in the form of Exhibit A attached hereto.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Business" has the meaning set forth in the recitals hereof.
"Buyer" has the meaning set forth in the recitals hereof.
1
<PAGE>
"Closing Date" and "Closing" refer to the date, time, and place for the
closing of the transactions described in this Agreement and the closing referred
to in Section 4.1.
"Code" means the Internal Revenue code of 1986, as amended.
"Contracts" has the meaning set forth in Section 2.1.
"CPI" means the Consumer Price Index for All Urban Consumers (CPI-U), All
Items, U.S. City Average (1982-1984 equals 100), published by the United States
Department of Labor, Bureau of Labor Statistics.
"Employees" has the meaning set forth in Section 7.1.
"Equipment Leases" means the equipment leases listed on Schedule 4.2.4.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Payments" has the meaning set forth in Section 11.5(g).
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"GAAP" means generally accepted accounting principles consistently applied
from period to period and throughout any period.
"Losses" has the meaning set forth in Section 12.1.
"Net Earnings" for any year means the net earnings of Buyer for such year
as determined from the annual audited financial statements of Buyer delivered
pursuant to Section 11.5 of this Agreement, before giving effect to (i) all
interest payable or paid under the Note, (ii) depreciation and amortization, and
(iii) state and federal income taxes. An example of how Net Earnings were for
calendar year 1995, after deduction for such items, is set forth on Exhibit K.
"Payables" means all accounts, obligations and notes payable of the
Business which are listed on Schedule 2.4(a). With respect to each project which
the Business has in progress on the Closing Date, Seller and Buyer have
estimated the portion of the project which has been completed prior to Closing
and have included on Schedule 2.4(a) the amount of Payables which are
attributable to such portion of the project, whether or not an invoice has been
issued with respect thereto. Buyer and Seller agree that Schedule
2
<PAGE>
2.4 (a) (Accounts Payable Listing by Vendor) is a good faith estimate of the
Payables prepared by Buyer as of the Closing date. Buyer agrees to prepare an
updated and final version of this listing for review and acceptance by Seller no
later than January 28, 1997.
"Person" means any individual, corporation, partnership, joint venture,
trust or unincorporated organization or government or any agency or political
subdivision thereof.
"Pre-Tax Net Cash Flow" for any year means Net Earnings for such year, less
interest payable under the Note for such year. Pre-Tax Net Cash Flow shall be
determined prior to any deduction for capital expenditures incurred by Buyer or
Excess Payments.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Receivables" means all rights to payment, accounts, obligations and notes
receivable of the Business which are listed on Schedule 2.2(c). With respect to
each project which the Business has in progress on the Closing Date, Seller and
Buyer have estimated the portion of the project which has been completed prior
to Closing and have included on Schedule 2.2(c) the amount of Receivables which
are attributable to such portion of the project, whether or not an invoice has
been issued with respect thereto. Buyer and Seller agree that Schedule 2.2 (c)
(Account Receivable Sub-ledger) is a good faith estimate of the Receivables
prepared by Buyer as of the Closing date. Buyer agrees to prepare an updated and
final version of this listing for review and acceptance by Seller no later than
January 28, 1997.
"Seller" has the meaning set forth in recitals hereof.
"Seller's Auditors" has the meaning set forth in Section 3.3.
"Subleases" means the subleases set forth in Exhibit B attached hereto.
ARTICLE 2
Purchase and Sale.
------------------
2.1 Agreements to Purchase and Sell. Subject to the terms and conditions
and upon the basis of the agreements, representations and warranties contained
herein, at the Closing on the Closing Date Seller shall sell, transfer, convey,
assign and deliver to Buyer, and Buyer shall purchase and accept from Seller,
all right, title, and interest of Seller in and to all of the properties, assets
and rights of any kind, whether tangible or intangible, real or personal, of
Seller used primarily in the Business and existing on the Closing Date except
for the Excluded Assets (collectively, the "Purchased Assets"), including,
without limitation:
3
<PAGE>
(a) all assets and supplies owned by Seller for use primarily in the
Business as of the Closing;
(b) all stock in trade, work-in-process and inventory relating
primarily to the Business;
(c) all records, customer lists and business files of Seller relating
primarily to the Business;
(d) all rights and interest of Seller to or in all agreements, options
contracts and bids which are listed on Schedule 2.1(d) (the "Contracts");
(e) all licenses, approvals, certificates, permits, franchises, or
other evidence of authority issued by a Federal, state, local or foreign
governmental agency or authority relating primarily to the Business to the
extent assignable.
(f) all furniture and equipment used primarily in the Business; and
(g) all computer programs and software used primarily in the Business
to the extent Seller is legally permitted to transfer such programs and
software.
Promptly after Closing, Buyer and Seller shall jointly prepare a list of all
furniture and equipment which is included as a part of the Purchased Assets.
2.2 Excluded Assets. The Seller shall not sell, transfer or assign, and the
Buyer shall not purchase, the following assets of the Seller (such assets being
collectively referred to hereinafter as the "Excluded Assets"):
(a) all rights of Seller arising under this Agreement and the
consummation of the transactions contemplated hereby;
(b) all cash, bank deposits and marketable securities;
(c) all Receivables, except to the extent they are expressly
transferred to Buyer pursuant to the terms set forth below;
(d) all corporate minute books, stock records and tax returns of
Seller and such other similar corporate books and records of Seller as may exist
on the Closing Date; provided however, that Buyer shall be entitled to obtain
copies of such other records of Seller relating to the Purchased Assets as Buyer
may reasonably require in connection with the operation of the Business or use
of the Purchase Assets subsequent to the Closing;
(e) all interests in and to the names "LaSalle", "LaSalle Partners"
and "LaSalle Construction" and all variants thereof and
4
<PAGE>
all rights to the use of such names as trademarks; all listings pertaining to
Seller and Seller's Affiliates in all telephone books and directories; and
stationery, forms, labels, shipping material, catalogs, brochures, art work,
photographs and advertising and promotional materials related to Seller or
Seller's Affiliates;
(f) Seller's leases at 11 South LaSalle Street in Chicago, Illinois
and at 355 South Grand Avenue in Los Angeles, California (the "Leases");
(g) all rights to refunds of taxes; and
(h) all property, wherever situated, not primarily used in the
Business, without limitation, all property used by Seller's Project Management
Group.
2.3 Assumed Liabilities. On the Closing Date, subject to the provisions
of Section 2.4 hereof, Buyer shall assume all liabilities and obligations of
Seller relating to the Business except for the Excluded Liabilities
(collectively, the "Assumed Liabilities"), including, without limitation:
(a) all the obligations of Seller under the Contracts and any other
agreements, options, contracts, leases (excluding the Leases), instruments,
purchase orders, sales orders, and commitments (including outstanding bids) of
Seller related to the Business;
(b) any sales, use, transfer or other tax (other than income tax) or
recording cost imposed upon the sale or transfer of the Purchased Assets
pursuant to this Agreement to the extent imposed by law on the Buyer;
(c) all claims, including warranty claims for defective work or breach
of contract (i) performed by the Business prior to the Closing Date to the
extent Clune or his project managers had actual knowledge of any defective work
or breach of contract and did not disclose it to Seller in writing prior to the
date hereof, and (ii) performed by the Business after the Closing Date;
(d) the obligations assumed by Buyer pursuant to Section 7 hereof; and
(e) any termination and severance pay for all Employees for which
Buyer is liable under Section 7.1.
2.4 Excluded Liabilities. The Buyer does not assume and will not become
responsible for any of the following liabilities and obligations of the Seller
(collectively, the "Excluded Liabilities"):
(a) any Payables, except to the extent they are
5
<PAGE>
expressly transferred to the Buyer pursuant to the terms hereof; and
(b) any claims for defective work or breach of contract performed by
the Business prior to Closing except for claims arising out of defective work or
breach of contract which Clune or his project managers had actual knowledge of
and did not disclose on Schedule 2.4(b) or to LaSalle in writing prior to the
date hereof.
2.5 Procedures for Purchased Assets not Transferable. If any of the
Contracts or any other property or rights included in the Purchased Assets are
not assignable or transferable by virtue of the provisions thereof or under
applicable law without the consent of some party or parties, Seller shall use
all commercially reasonable efforts to obtain such consents after the execution
of this Agreement, but prior to the Closing Date, and Clune shall use all
commercially reasonable efforts to assist in that endeavor. If any such consent
cannot be obtained prior to the Closing Date and the Closing occurs, this
Agreement and the related instruments of transfer shall not constitute an
assignment or transfer thereof and the Buyer shall not assume Seller's
obligations with respect thereto, but Seller shall use all commercially
reasonable efforts to obtain such consent as soon as possible after the Closing
Date or otherwise obtain for Buyer the practical benefit of such property or
rights and Clune shall use all commercially reasonable efforts to assist in that
endeavor. Until such consent is obtained, Buyer shall perform on behalf of
Seller all obligations under the applicable agreement after Closing, and Buyer
shall be entitled to all benefits received by Seller in connection therewith.
ARTICLE 3
Purchase Price; Closing Adjustments.
3.1 Purchase Price. The total purchase price for the Purchased
Assets shall be an amount equal to (i) $9,100,000 (the "Initial Consideration"),
(ii) the assumption of the Assumed Liabilities, and (iii) the Additional
Consideration (defined below).
3.2 Payments at Closing
3.2.1 Initial Consideration. The Initial Consideration shall be paid
at Closing as follows; (i) Buyer shall pay Seller at Closing an amount equal to
the Net Unit Redemption Payment (defined below) which shall be applied against
the Initial Consideration, and (ii) the balance of the Initial Consideration
shall be paid by execution and delivery of a promissory note (the "Note") in the
form of Exhibit C attached hereto. The Note shall be secured by a pledge (the
"Pledge") in the form of Exhibit D attached hereto. The Pledge shall be
perfected by a UCC-1 financing statement in the
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form of Exhibit E attached hereto (the "UCC-1 Financing Statement"), which shall
be filed with the Illinois Secretary of State. (The Note, Pledge and UCC-1
Financing Statement are herein referred to as the "Loan Documents.")
3.2.2 Net Unit Redemption Payment. At Closing Clune shall withdraw
as a partner from DEL-LPL Limited Partnership and DEL-LPML Limited Partner
(collectively referred to herein as "DEL"), and Seller shall cause DEL to redeem
all of Clune's partnership units in DEL (the "Units") pursuant to the terms of
the DEL Partnership Agreement, as amended. The amount payable to Clune pursuant
thereto, net of any outstanding loans from DEL to Clune, shall be known as the
"Net Unit Redemption Payment." (As of the date hereof, the Net Unit Redemption
Payment would be $85,859.95.) Under the terms of the DEL Partnership Agreement
with DEL, the Net Unit Redemption Payment is paid partly in cash (in the amount
of $25,759.15) and partly in a promissory note from DEL to Clune (in the amount
of $60,100.80). The cash portion of the Net Unit Redemption Payment shall be
paid in cash by Buyer to Seller at Closing, and the promissory note shall be
assigned to Buyer and then to Seller at Closing. In addition, any outstanding
call options for units in DEL which are held by Clune shall be terminated at
Closing, and Clune shall have no right to purchase any additional units in DEL
prior to Closing. Clune shall also resign from Seller and LaSalle as of Closing,
and neither Seller nor LaSalle shall have any obligation to pay Clune any
termination or severance payments as a result of the termination of his
employment with Seller or LaSalle; provided, however, if Seller shall receive at
least $1,465,000 in Net Earnings from LaSalle Construction Limited for calendar
year 1996, Seller shall pay Clune at, least one hundred percent (100%) of his
target bonus for 1996 which is payable in January of 1997.
3.3 Receivable Collection. Buyer and Seller cooperate with each other
to enable Seller to collect all Receivables and pay all Payables when due. If
Buyer receives payment on any Receivable after Closing, Buyer shall promptly
remit such payment to Seller. Any amounts collected from any third party shall
be applied first to the earliest receivable which is then owed by such third
party (unless a dispute exists with regard to such receivable) and then to each
successive' invoice until the Receivables shall have been paid in full. From and
after the Closing Date, Buyer shall use the same collection methods customarily
used by Buyer in the collection of its own accounts to assist Seller in the
collection of the Receivables (except Buyer shall have no obligation to commence
litigation or place any account receivable with any third party for collection).
Seller shall have the right to commence litigation or use other reasonable means
to collect any such Receivables for the period prior to January 1, 1996, and
Buyer shall reasonably cooperate with Seller's efforts to collect such
Receivables. Seller shall indemnify and hold Buyer harmless from any and all
claims and liabilities arising out of such collection efforts.
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3.4 Income and Expenses.
3.4.1 Pre-Closing Income. Seller shall be entitled to all Net Earnings
from Seller's business, including the construction management business and the
project management business, which is attributable to work performed in calendar
year 1996, and Buyer guaranties that the amount of such Net Earnings shall be
equal to the greater of (i) $1,465,000 or (ii) the Net Earnings from such
business for calendar year 1996 as set forth on the books of the Seller as of
December 31, 1996. (An estimate of such net income is set forth in the business
plan of Seller for calendar year 1996 which is attached hereto as Exhibit F.) If
Seller has not received such amount by April 30, 1997, Buyer shall pay Seller on
April 30, 1997, the difference between such amount and what Seller has received
by such date; and Seller shall assign to Buyer all remaining Receivables and all
remaining Payables for calendar year 1996.
3.4.2 Pre-Paid Income and Expenses. If Seller has collected any
payments or deposits for work to be done by the Business after the Closing Date,
Seller shall give Buyer a credit for such funds at Closing; and, if Seller has
paid any expenses for work to be done by the Business after the Closing Date,
Buyer shall give Seller a credit at Closing for such expenses.
3.5 Additional Consideration. At maturity or prepayment in full of
the Note, Buyer shall pay Seller additional cash consideration (the "Additional
Consideration") in an amount equal to the excess of the value of Buyer at such
time determined in accordance with the methodology described in Section 3.6 over
the amount of principal and interest then due to Seller other than by reason of
this Section 3.5; provided, however, in no event shall the Additional
Consideration exceed an amount that, when combined with all other cash payments
with respect to the Initial Consideration (including principal and interest
payments on the Note) and payments for the administrative services as set forth
below (but excluding payments pursuant to Section 3.3 above) received by Seller
(determined, with respect to any capital gains, on an after-tax basis with
Seller being assumed to have a capital gains tax rate equal to the highest
capital gains tax rate in effect from time to time), discounted at the Discount
Rate (defined below) from the payment dates to the date of Closing, will equal
$9,100,000. An example of how the Additional Consideration will be calculated is
attached hereto as Exhibit G. The Discount Rate shall equal 12.5% if the Note is
paid in full prior to the fifth anniversary of the Closing, 12.75% if the Note
is paid in full on or after the fifth anniversary of the Closing and prior to
the seventh anniversary of the Closing, and 13.25% if the Note is paid in full
on or after the seventh anniversary of the Closing. Buyer's obligation to pay
the Additional Consideration shall be secured by the Pledge and UCC-1 Financing
Statement.
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3.6 Purchase Option. Seller shall have the option to acquire up to
forty-nine and 9/10 percent (49.9%) of the ownership interest in Buyer on the
carrier of the tenth anniversary of the Closing or the prepayment of the Note.
Seller shall give Buyer written notice of the exercise of its option at least
thirty (30) days prior to the tenth anniversary of the Closing or the prepayment
of the Note, as the case may be; and Buyer shall give Seller at least sixty (60)
days prior written notice of its intention to prepay the Note. The Purchase
price shall equal the percentage of Buyer being purchased by Seller multiplied
by the value of Buyer at the time of the purchase, as determined by an
independent appraiser experienced in the valuation of similar businesses,
mutually acceptable to Seller and Buyer. If Buyer and Seller cannot agree on the
appraisal within thirty (30) days after Seller delivers notice exercising its
option, either party may apply to the American Arbitration Association for the
appointment of the appraiser, whose determination shall be final and binding on
the parties. If Seller exercises its purchase option, Buyer shall have the right
to apply all or part of the outstanding principal and any accrued interest on
the Note and/or the Additional Consideration towards such purchase price, with
any excess of the purchase price over these amounts to be paid by Seller in
cash. If Buyer has multiple classes of equity, Seller's option set forth in this
paragraph shall be to purchase up to forty-nine and 9/10 percent (49.9%) of each
class based on the appraiser's valuation of each such class. In connection with
the sale of the ownership interest to Seller, Buyer shall make representations
and warranties which are customary in similar transactions including those being
made by Seller herein and representations regarding knowledge of undisclosed
liabilities.
ARTICLE 4
Closing.
4.l Closing Date. The Closing hereunder shall take place at the
office of Seller, 200 East Randolph Drive, Chicago, Illinois 60601, at such
place as Seller and Buyer may agree; provided, however, the Closing shall be
deemed effective as of 11:59 p.m. on December 31, 1996.
4.2 Transactions at Closing. At the Closing, and on the basis of the
representations, warranties, covenants and agreements made herein and in the
exhibits hereto and in the certificates and other instruments delivered pursuant
hereto, and subject to the terms and conditions hereof;
4.2.1 Transfer of Purchased Assets. Seller shall transfer and convey
or cause to be transferred and convey to Buyer all of the Purchased Assets,
delivering to Buyer the Assignment and Assumption Agreement, and such other
good and sufficient instruments of transfer and conveyance as shall be necessary
to vest in Buyer all right and title in and to all of the Purchased
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Assets. In addition, Seller shall deliver (a) the certificate required by
Section 9.2.2. (b) the opinion required by Section 9.2.3., (c) UCC, judgment
and tax lien searches showing no liens or encumbrances on the Purchased Assets,
and (d) the Subleases.
4.2.2 Payment of Purchase Price and Assumption of Assumed Liabilities.
In consideration for the sale and transfer of the Purchased Assets, Buyer shall
pay to Seller an amount equal to the Net Unit Redemption Payment, execute and
deliver to Seller the Note, Pledge and UCC-1 Financing Statement, and execute
and deliver to Seller the Assignment and Assumption Agreement, whereby Buyer
assumes the Assumed Liabilities. In addition, Buyer shall deliver (a) the
certificate required by Section 9.1.2, (b) the opinion required by Section
9.1.3., (c) UCC, judgment and tax lien searches showing no liens or encumbrances
on the assets of Buyer, and (d) the Subleases.
4.2.3 Registrations and Listings. Buyer shall at its sole cost and
expense cause all registrations and listings for the Purchased Assets, including
any cars and telephones, to be transferred to Buyer as soon as possible after
Closing. Seller shall assist Buyer in making such transfers, including
assigning to Buyer any automobile registrations in Seller's possession.
4.2.4 Equipment Leases. At Closing, Seller shall assign to Buyer the
Equipment Leases, and Buyer shall assume all of Seller's obligations thereunder
accruing from and after Closing.
4.2.5 Computer Programs and Software. To the extent Seller has any
computer programs or software which is used primarily with the Purchased Assets
and can be legally assigned to Seller, Seller shall assign all of its right,
title and interest in such programs and software to Buyer at Closing.
ARTICLE 5
Representations, Warranties, Agreements and
Covenants of Seller and LaSalle
Seller and LaSalle represent and warrant to, and agree with, Buyer as
follows:
5.1 Organization. Seller is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware,
duly qualified to transact business as a foreign limited partnership in such
jurisdictions where the nature of the Business makes such qualification
necessary, except as to jurisdictions where the failure to qualify could not
reasonably be expected to have a material adverse effect on Seller, and with all
requisite partnership power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. LaSalle is a
limited partnership duly organized, validly existing
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and in good standing under the laws of the State of Delaware, duly qualified to
transact business as a foreign limited partnership in such jurisdictions where
the nature of its business makes such qualification necessary, except as to
jurisdictions where the failure to qualify could not reasonably be expected to
have a material adverse effect on LaSalle, and with all requisite partnership
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
5.2 Due Authorization. Seller has full power and authority to
execute, deliver and perform this Agreement, the Assignment and Assumption
Agreement and the Subleases, and the execution and delivery of this Agreement,
the Assignment and Assumption Agreement and the Subleases and the performance of
all obligations hereunder and thereunder have been duly authorized by Seller.
The signing, delivery and performance of this Agreement, the Assignment and
Assumption Agreement and the Subleases by Seller is not prohibited or limited
by, and will not result in the breach of or a default under, any provision of
the partnership agreement of Seller, or of any agreement or instrument binding
on Seller, or any applicable order, writ injunction or decree of any court of
governmental instrumentality, and will not result in any lien, encumbrance or
charge on any of the Purchased Assets. This Agreement has been, and on the
Closing Date, the Assignment and Assumption Agreement and the Subleases will
have been, duly executed and delivered by Seller and constitutes, or, in the
case of the Assignment and Assumption Agreement and the Subleases will have
been, duly executed and delivered by Seller and constitutes, or, in the case of
the Assignment and Assumption Agreement and the Subleases will constitute, the
legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms except as enforceability may be limited
or affected by applicable bankruptcy, insolvency, moratorium, reorganization or
other laws of general application relating to or affecting creditors' rights
generally. LaSalle has full power and authority to execute, deliver and perform
this Agreement, and the execution and delivery of this Agreement and the
performance of all obligations hereunder have been duly authorized by LaSalle.
The signing, delivery and performance of this Agreement by LaSalle is not
prohibited or limited by, and will not result in the breach of or a default
under, any provision of the partnership agreement of LaSalle, or of any
agreement or instrument binding on LaSalle, or any applicable order, writ
injunction or decree of any court or governmental instrumentality, and will not
result in any lien encumbrance or charge on any of the Purchased Assets. This
Agreement has been duly executed and delivered by LaSalle and constitutes the
legal, valid and binding obligations of LaSalle enforceable against LaSalle in
accordance with its terms except as enforceability may be limited or affected by
applicable bankruptcy, insolvency, moratorium, reorganization or other laws of
general application relating to or affecting creditors' rights generally.
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5.3 Title. Upon delivery to Buyer of the Assignment and Assumption
Agreement Buyer will receive good and valid title to all of the Purchased
Assets, free and clear of all liens (except for tax liens for taxes not yet due
and payable), encumbrances, charges and claims of every kind.
5.4 Litigation. There is no litigation proceeding or claim pending
or, to the best of Seller's or LaSalle's knowledge, threatened relating to or
affecting Seller's or LaSalle's ability to sell the Business or perform its
obligations hereunder.
5.5 Brokers. Seller has not engaged any order or any other person who
would be entitled to any brokerage fee or commission in respect of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
5.6 Employees. Seller shall pay all wages, bonuses and other
benefits to the Employees which accrue prior to Closing in accordance with
Seller's customary policies and procedures; provided, however, in no event shall
Seller be liable for any severance or termination payments to the Employees.
Seller has in effect no policies or agreements which would give rise to an
entitlement on the part of the Employees to receive such payments.
5.7 ERISA. Neither (a) the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein (including without
limitation the exercise by Seller and LaSalle of their contractual rights
hereunder, and the performance by Seller and LaSalle of their obligations under
Section 10.3 hereof or the other provisions of this Agreement) nor (b) to
Seller's actual knowledge, the retention of Buyer to render services in respect
of any property or project for which LaSalle, Seller or their Affiliates are
managers or advisors will violate any provision of ERISA or any rules or
regulations promulgated thereunder.
5.8 "As is, where is". EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS ARTICLE 5, SELLER AND LASALLE ARE MAKING NO REPRESENTATION OR WARRANTY AS
TO THE PURCHASED ASSETS OR THE BUSINESS AND BUYER ACKNOWLEDGES AND AGREES THAT
EXCEPT AS OTHERWISE PROVIDED HEREIN SELLER IS SELLING AND CONVEYING THE
PURCHASED ASSETS AND THE BUSINESS ON AN "AS IS, WHERE IS" BASIS.
ARTICLE 6
Representations, Warranties, Agreements and Covenants of Buyer
Buyer represents and warrants to, and agrees with, Seller as follows:
6.1 Organization. Buyer is a limited partnership duly
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qualified, validly existing and in good standing under the laws of the State of
Delaware, duly qualified to transact business as a foreign limited partnership
in all jurisdictions except where the failure to be so qualified could not
reasonably be expected to have a material adverse effect on Buyer, and with all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted; provided, however, Buyer is not
yet qualified to do business in the State of California but shall promptly
qualify after Closing.
6.2 Due Authorization. Buyer has full power and authority to execute,
deliver and perform this Agreement, the Assignment and Assumption Agreement, the
Loan Documents and the Subleases, and the execution and delivery of this
Agreement, the Assignment and Assumption Agreement, the Loan Documents and the
Subleases and the performance of all obligations hereunder and thereunder have
been duly authorized by Buyer. The signing, delivery and performance of this
Agreement, the Assignment and Assumption Agreement, the Loan Documents and the
Subleases by Buyer is not prohibited or limited by, and will not result in the
breach of or a default under any provision of the partnership agreement of Buyer
or of any order, writ, injunction or decree of any court or governmental
instrumentality, and will not result in any lien, encumbrance or charge on any
of the Purchased Assets. This Agreement has been, and on the Closing Date the
Assignment and Assumption Agreement, the Loan Documents and the Subleases will
have been, duly executed and delivered by Buyer and constitutes, or, in the case
of the Assignment and Assumption Agreement, the Loan Documents and the Subleases
will constitute, the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with their respective terms except as enforceability
may be limited or affected by applicable bankruptcy, insolvency, moratorium,
reorganization or other laws of general application relating to or affecting
creditors' rights generally. Clune has full power and authority to execute,
delivery and perform this Agreement. The signing, delivery and performance of
this Agreement by Clune is not prohibited or limited by, and will not result in
the breach of or a default under any order, writ, injunction or decree of any
court or governmental instrumentality, and will not result in any lien,
encumbrance or charge on any of the Purchased Assets. This Agreement has been
duly executed and delivered by Clune and constitutes the legal, valid and
binding obligation of Clune enforceable against Clune in accordance with its
terms except as enforceability may be limited or affected by applicable
bankruptcy, insolvency, moratorium, reorganization or other laws of general
application relating to or effecting creditors' rights generally.
6.3 Consents. No notice to, filing with, authorization of, exemption
by, or consent of, any person, entity or public authority is required for Buyer
or Clune to consummate the transactions contemplated hereby.
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6.4 Litigation. There is no litigation, proceeding or claim pending
or, to the best of Buyers or Clune's knowledge, threatened relating to or
affecting Buyer's or Clune's ability to purchase or operate the Business or
assume the Assumed Liabilities relating thereto or perform their obligations
hereunder. To the best of Clune's knowledge, except as disclosed in Schedule
6.4, there is no litigation pending or threatened with respect to the Business,
and Clune is not aware of any claims for defective work by the Business.
6.5 No Broker. Buyer and Clune have not engaged any broker or any
other person who would be entitled to any brokerage fee or commission in respect
of the execution and delivery this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE 7
Employees' Pension and Other Benefit Plans.
7.l Employees.
(a) Employees. Schedule 7.1 is a list of all of Seller's current
employees who work at or are employed in connection with the Business but does
not include Seller's project management group (the "Employees"). Buyer agrees to
offer employment to all of the Employees.
(b) Offers of Employment. The Employees shall remain on Seller's
payroll records until the Closing Date (except for those Employees terminated
with cause by Seller and those who voluntarily resign or retire), and shall be
paid by Seller all amounts of wages, bonuses and other remuneration (other than
accrued personal, sick and vacation pay, all of which are assumed by Buyer)
including without limitation, discretionary bonuses payable to such Employees
with respect to periods on or prior to the Closing Date pursuant to their
employment agreements, together with any work is compensation claims or amounts
payable to such Employees in connection with events occurring prior to the
Closing Date, Buyer agrees to offer employment effective as of the Closing Date,
on terms and conditions substantially equivalent to those on which they are
currently employed, to all Employees except for those who, prior to the Closing
Date, (i) are terminated with cause by Seller or (ii) voluntarily resign or
retire. Seller shall give Buyer, credit after Closing for up to $20,000 in
personal, sick or vacation days accrued prior to Closing which are taken by the
Employees after Closing. Such credit shall be used to offset Buyer's outstanding
obligations under the Working Capital Not (defined below); provided, however, if
there are no such outstanding obligations, such credit shall be paid to Buyer in
cash as and when such days are taken by the Employees.
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(c) Payments. Buyer shall be responsible for and shall pay all
severance payments (if any) due to Employees as a result of the termination of
their employment with Seller at Closing; provided, however, Seller shall be
responsible for and shall pay all severance payments (if any) due to Employees
which Seller terminates prior to Closing pursuant to the preceeding paragraph.
Buyer shall also give all Employees credit or compensation for all accrued sick
days and personal days.
(d) LPISC. If any employees of LPISC who work for the Business are
terminated as a result of the transactions set forth herein, Buyer shall be
solely responsible for any severance payments or other benefits payable as a
result thereof, provided, however, Seller represents that it is not aware of any
such employees.
7.2 Employee Benefit Plans.
(a) 401(k) Plan. Prior to the Closing Date or as soon as reasonably
practicable thereafter, Seller shall contribute to LaSalle's 401(k) plan (the
"LaSalle 401(k) Plan") an amount equal to the salary deferral contributions (if
any) of each Employee who participates in the LaSalle 401(k) Plan plus related
matching contributions through the Closing Date, and LaSalle shall cause the
LaSalle 401(k) Plan to be amended to provide that such Employees shall be fully
vested in their account balances determined after taking into account the
contributions described in the preceding clause.
(b) Welfare Benefits. Buyer shall have no responsibility or liability
for any benefit, obligation or expense under any welfare plan (as that term is
defined in Section 3 (1) of ERISA) that is maintained or contributed to by
Seller for the benefit of Seller's employees and retired employees (the "LaSalle
Welfare Plans") including coverage pursuant to Section 4980B of the Code and
Part 6 of Title I of ERISA (COBRA), and Seller shall have no responsibility or
liability for any benefit, obligation or expense under any welfare plan that may
be established, maintained or contributed to by Buyer for the benefit of
Employees for periods after the Closing Date. LaSalle shall keep the LaSalle
Welfare Plans as applied to Employees of Seller in full force and effect through
the Closing Date, and Employees shall remain covered under the LaSalle Welfare
Plans for all claims and expenses under such plans that relate to, or arise out
of, any event occurring on or prior to the Closing Date, regardless of when such
claims are filed.
ARTICLE 8
Pre-Closing Covenants of Seller and Buyer.
8.1 Partnership and Other Actions. Each of Seller and Buyer shall
take all necessary action required to fulfill its obligations
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under this Agreement, the Assignment and Assumption Agreement, the Loan
Documents, the Subleases and the transactions contemplated hereby and thereby.
8.2 Consents and Approvals. Each of Seller and Buyer shall use its
commercially reasonable efforts to obtain all necessary consents and approvals
to the performance of its obligations under this Agreement, the Assignment and
Assumption Agreement, the Loan Documents and the Subleases and the transactions
contemplated hereby and thereby. Each of Seller and Buyer shall make and
filings, applications, statements and reports to all Federal or state government
agencies or entities which are required to be made prior to the Closing Date by
or on behalf of Seller or Buyer pursuant to any applicable statute, rule or
regulation in connection with this Agreement, the Assignment and Assumption
Agreement, the Loan Documents and the Subleases and the transactions
contemplated hereby and thereby.
8.3 Access to Information. Seller and Buyer will permit
representatives of the other party from and after the date hereof up to the
Closing Date to have access at all reasonable times to the books, accounts,
records, properties, operations and facilities of every kind pertaining to the
Business, and will furnish the other party with such financial and operating
data in the possession of the other party as either party shall from time to
time reasonably request, subject to any confidentiality agreements entered into
by either party; and each party shall cooperate with the other party in any due
diligence which the other party elects to perform.
ARTICLE 9
Conditions
9.1 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
fulfillment at or prior to Closing of the following conditions (any one or more
of which may be waived in whole or in part by Seller):
9.1.1 Performance of Agreements and Conditions. All agreements and
conditions to be performed and satisfied by Buyer hereunder on or prior to the
Closing Date shall have been duly performed and satisfied in all material
respects.
9.1.2 Representations and Warranties True. The representations and
warranties of Buyer contained in this Agreement shall be true in all material
respects on and as of the Closing Date, with the same effect as though made on
and as of the Closing Date, and there shall be delivered to Seller on the
Closing Date a certificate, in form and substance reasonably satisfactory to
Seller duly signed by Buyer, to that effect.
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9.1.3 Opinion of Counsel. Seller shall have received from Winston &
Strawn, counsel to Buyer, an opinion dated the Closing Date and in form and
substance reasonably satisfactory to Seller and its counsel covering the matters
contained or provided for in Exhibit H.
9.1.4 Payment of Purchase Price. Buyer shall have paid the Purchase
Price and assumed the Assumed Liabilities as provided in Section 4.2.2.
9.1.5 No Court Order. No court shall have been entered in any action
or proceeding instituted by any party which enjoins, restraints, or prohibits
this Agreement or the complete consummation of the transactions as contemplated
by this Agreement.
9.1.6 Subleases. Buyer and Seller shall have entered into the
Subleases and shall work diligently together after Closing to obtain consents to
the Subleases.
9.1.7 Board Approval. Seller shall have obtained all approvals
required on its part for this Agreement, the Assignment and Assumption
Agreement, the Subleases and the transactions contemplated thereby. Seller
shall notify Buyer no later than the execution of this Agreement whether it has
obtained such approvals.
9.2 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
fulfillment at or prior to the Closing of the following conditions (any one or
more of which may be waived in whole or in part by Buyer):
9.2.1 Performance of Agreements and Covenants. All agreements and
conditions to be performed and satisfied by Seller hereunder on or prior to the
Closing Date shall have been duly performed and satisfied in all material
respects.
9.2.2 Representations and Warranties True. The representations and
warranties of Seller contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date and there shall be delivered by Seller on the Closing
Date a certificate, in form and substance reasonably satisfactory to Buyer, duly
signed by an officer of Seller, to that effect.
9.2.3 Opinion of Counsel. Buyer shall have received from Hagan &
Associates, counsel to Seller, an opinion dated the Closing Date in the form and
substance reasonably satisfactory to Buyer and its counsel covering the matters
contained in Exhibit I.
9.2.4 No Court Order. No court order shall have been entered in any
action a proceeding instituted by any party which enjoins, restrains, or
prohibits this Agreement or the complete
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consummation of the transactions as contemplated by this Agreement.
9.2.5 Subleases. Buyer and Seller shall have entered into the
Subleases and shall work diligently together after Closing to obtain consents to
the Subleases.
9.2.6 Blake E. Brasher. One of the Employees is Blake E. Brasher
("Brasher") who is a unit holder in DEL. At the Closing, Brasher shall withdraw
from DEL and redeem all of his units in DEL, and LaSalle shall cause DEL to pay
Brasher the net unit redemption price for his units in the amount of $15,853.42
in accordance with the DEL Partnership Agreement, as amended (i.e., $6,741.31
shall be paid in cash and $9,112.11 shall be paid in the form of a note from DEL
to Brasher). In addition, all outstanding options held by Brasher for the
purchase of units in DEL shall be canceled, and Brasher shall not have any right
to purchase additional units in DEL prior to Closing.
ARTICLE 10
Post-Closing Covenants of Seller
10.1 Bonding. Seller acknowledges that Buyer's ability to obtain bonds for
projects undertaken by Buyer is a critical aspect of Buyer's ability to conduct
and promote the Business. Buyer has agreed to the Purchase Price on the grounds
that LaSalle will assist Buyer in obtaining bonding facility similar to the one
which is currently in existence for Seller. For the three (3) year period
following the Closing Date or until the Note matures or is prepaid, whichever is
earlier, LaSalle shall assist Buyer by giving credit support, on the terms and
conditions set forth below, in obtaining bonds for projects undertaken by Buyer
which require payment or performance bonds provided Buyer shall have used its
best efforts to avoid having to provide bonds on any projects. For projects for
which bonds are required, Buyer shall submit a complete package of relevant
information to LaSalle for review and assessment of the financial and business
risks. LaSalle shall have the absolute right, in its sole discretion to decline
to provide bonding assistance on any project or to require whatever contract
modifications it reasonably deems necessary before agreeing to provide such
assistance. Notwithstanding the foregoing right, it is the intent of Seller to
assist Buyer in obtaining bonds for projects of similar character and business
risk as those projects of the Business completed during the previous two years.
In no case shall LaSalle be responsible for any fees payable to any bonding
company in connection with such bonds. For projects which LaSalle has agreed to
give assistance in obtaining bonds, LaSalle shall have the right to approve all
contract documents prior to signing and to require that the Seller maintain
whatever system LaSalle reasonably deems necessary to ensure proper
administration and accounting for the project through completion and release of
the bonds, including, but not limited to, the payment of construction costs
through a
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title company construction escrow. In the event LaSalle becomes liable for any
claim in connection with any such bonds, Buyer shall immediately, at its option,
either reimburse LaSalle for such liability or increase the principal amount of
the Note if the Note has not previously been prepaid or matured by acceleration
or otherwise.
10.2 Cash Management and Working Capital. As long as LaSalle is
assisting, or is obligated to assist, in providing bonds as set forth in Section
10.1 above, LaSalle shall (i) be in charge of cash management for Buyer and
provide all cash management services in connection therewith and (ii) provide
Buyer with a revolving line of credit (the "Working Capital Loan") which shall
be used solely for Buyer's working capital purposes and borrowings under which
shall from time to time be made and repaid without premium or penalty at the
election of Buyer; provided however, the aggregate amount outstanding at any
time under such line of credit shall not exceed $1,000,000. As part of the cash
management services LaSalle shall have the right to sweep all of Buyer's cash
each night into a LaSalle account, provided LaSalle shall refund such cash to
Buyer as and when needed by Buyer in the operation of its Business and LaSalle
shall not have any rights of off-set against such cash unless Buyer defaults
under the Note or the Working Capital Note; provided that, without respect to
the existence of any such default, in no event may LaSalle exercise set-off
rights against Buyer's cash representing payments made to Buyer in respect a
construction contracts to the extent of the amount of such payments as to which
Buyer is obligated to make payments to subcontractors under such construction
contracts (it being understood that Buyer's ability to make timely payments to
subcontractors is essential to its business and any interference with such
ability will result in substantial damage to Buyer). On a monthly basis, a more
frequently if reasonably requested by Buyer, LaSalle shall provide Buyer with an
accounting of its cash management activities performed on behalf of Buyer. The
Working Capital Loan shall bear interest at the rate charged to LaSalle from
time to time under its principal line of credit for 30-day LIBOR loans, which
interest shall be due and payable monthly in arrears on the first day of each
month; provided, however, Buyer shall receive a monthly credit, against the
aggregate interest owed by Buyer to LaSalle with respect to any calendar month,
for any interest earned by LaSalle during such month on funds of Buyer held by
LaSalle pursuant to the cash sweep set forth above. The Working Capital Loan
shall be evidenced by a note in the form or Exhibit J attached hereto (the
"Working Capital Note") and shall be secured by the Pledge and UCC-1 Financing
Statement. The principal amount of the Working Capital Loan and all accrued
interest thereon shall become immediately due and payable, and LaSalle shall
have no obligation to make any further advances an the Working Capital Loan, if
(a) LaSalle allows a third party to provide Buyer with the cash management
services described below, or (b) Buyer defaults in any of its obligations to
Seller or LaSalle, which default is not cured within five (5) days if it is
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a monetary default or thirty (30) days after notice from LaSalle if it is a non-
monetary default. In addition, LaSalle shall not be obligated to make any
further advances on the Working Capital Loan if there is any material adverse
change in Buyer, including, without limitation, a material adverse change in the
financial condition of Buyer, the filing of any material litigation against
Buyer or any material adverse change in the prospects or business of Buyer as
determined by LaSalle in its good faith discretion.
If at some time, Seller is providing neither bonding assistance
pursuant to Section 10.1 above, nor a Working Capital Loan pursuant to this
section, Buyer may request that a third party assume cash management
responsibilities provided the third party is a financial institution with
expertise in managing cash for construction companies. Seller shall, in its
reasonable discretion, approve or decline the request in writing based on a
consideration of the capabilities of the proposed third-party manager, and the
financial reporting, internal accounting and cash management controls and
procedures of the Buyer and the third party at such time.
10.3 Referrals. As long as the Note is outstanding and there is no
default thereunder, LaSalle agrees upon request of Buyer to (a) include Buyer on
the list of bidders for any interior tenant improvement work in the Chicago or
Los Angeles metropolitan areas for which LaSalle or any of its affiliates is
seeking bids unless, for any reason, LaSalle's client requests that Buyer not be
included on the list of bidders or including Buyer on the list of bidders would
violate any applicable laws and (b) recommend the selection of Buyer for such
work as long as Buyer's bid is competitive and its experience is comparable to
the other bidders. In particular, LaSalle will include Buyer on the list of
bidders for the following: Amoco-Cantera, KPMG-Chicago, Commonwealth Edison-
Chicago and Bank of America Chicago. Notwithstanding the foregoing, LaSalle
shall have the obligation to include Buyer on the list of bidders only for any
projects that are renovations or interior construction excluding base build-out.
10.4 New Office Lease. If the landlord for the new premises which
Buyer moves to upon its vacation of the office space currently being occupied by
the Business at 11 South LaSalle Street in Chicago, Illinois, requires a letter
of credit as security for Buyer's obligations under the lease, including in
respect of any tenant improvements which will be made as part of such lease (the
"Letter of Credit"), LaSalle will assist Buyer in obtaining the Letter of Credit
by providing a guaranty thereof. LaSalle shall only be obligated to provide
such guaranty if requested during the first year after Closing, and LaSalle's
guaranty of the Letter of Credit, if necessary, will be for an amount not to
exceed $300,000 and for a period of time not to exceed three (3) years or the
length of time the Note is outstanding, whichever is shorter. Buyer shall
immediately reimburse LaSalle for payments which LaSalle is
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required to make as a result of any draws on the Letter of Credit, and Buyer's
obligation to reimburse LaSalle shall be secured by the Pledge and UCC-1
Financing Statement LaSalle's obligation to provide the guaranty of the Letter
of Credit shall terminate if Buyer defaults in any of its obligations to Seller
or LaSalle.
10.5 Administrative Services. As long as Buyer is not in default of any of
its obligations to Seller or LaSalle, Buyer may purchase one or more of the
administrative services listed on Schedule 10.5 from LaSalle during the term of
the Note, provided LaSalle is providing such services for its own administrative
purposes at such time. Buyer shall reimburse LaSalle monthly for the cost of
such services at the rates set forth on Schedule 10.5, provided Seller may
reasonably increase such rates on January 1st of each year, commencing January
1, 1998. If there is a material change in the amount of such services which
Buyer requires due to material changes in the size of Buyer, Buyer and LaSalle
shall agree on a reasonable adjustment in such rate. In no event while the Note
is outstanding, however, shall Buyer pay LaSalle less than $220,000 per annum
for administrative services, regardless of the actual amount of administrative
services used by Buyer, provided such minimum amount of $220,000 shall be
increased each January 1st, commencing January 1, 1998, by the percentage
increase in the CPI for the preceding calendar year. Any services provided by
LaSalle pursuant to this paragraph shall be comparable to the services being
provided to LaSalle for its own account.
ARTICLE II
Post-Closing Covenants of Buyer.
--------------------------------
11.1 Assumed Liabilities. Buyer agrees to keep a list describing in detail
any Assumed Liabilities paid by Buyer and to retain all documentation supporting
actual payment of each such Assumed Liability. Buyer will submit such list and
such documentation to Seller within thirty (30) days after the end of each
calendar quarter until all such Assumed Liabilities have been paid, satisfied or
discharged by Buyer.
11.2 Availability of Records. After the Closing, Buyer shall make available
to Seller as reasonably requested by Seller, its agents and representatives, any
taxing authority, and any governmental authority all information, records or
documents relating to the Business or the employees of Seller for all periods
prior to Closing and shall preserve all such information, records and documents
until the later of (i) six (6) years after the Closing, (ii) the expiration of
all statutes of limitations for taxes for periods prior to the Closing or
extensions thereof applicable to Seller for tax information, records or
documents or (iii) the required retention period for all government contract
information, records or documents. Buyer shall also make available to Seller, as
reasonably requested by Seller, personnel responsible
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for preparing or maintaining information, records and documents, in connection
with tax matters, governmental contracts, litigation or potential litigation,
including without limitation, claims for workers' compensation, general
insurance liability and automobile insurance liability. Prior to destroying any
material records related to Seller for the period prior to the Closing Date,
Buyer shall notify Seller thirty (30) days in advance of any such proposed
destruction of its intent to destroy, such records, and Buyer will permit Seller
to retain any such records. With respect to any litigation and claims which are
Excluded Liabilities, Buyer shall, at Seller's expense, render all reasonable
assistance which Seller may request in defending such litigation or claim and
shall make available to Seller personnel most knowledgeable about the matter in
question (to the extent possible without disruption of Buyer's business).
11.3 Use of Trade of Service Marks. Buyer shall not use or permit its
employees or affiliates to use the name "LaSalle," "LaSalle Partners" or
"LaSalle Construction" or any other corporate, trade or service marks or names
owned or heretofore used by Seller or any of Seller's Affiliates; provided that
Buyer may, in connection with its marketing disclose that it was formally part
of LaSalle Construction and may display Seller's brochures, art work,
photographs and advertising and promotional materials which are specifically for
completed jobs of Seller performed by Buyer's employees provided (i) Buyer puts
a sticker on such brochures indicating that Buyer is not part of Seller and (ii)
Buyer may only use Seller's materials for up to sixty (60) days from the Closing
Date.
11.4 Tax Matters. Without limiting the generality of Section 11.2, after
the closing, the Buyer, on the one hand, and the Seller, on the other hand,
shall provide each other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any tax return, any audit or
other examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for taxes, and each will retain and, upon the
request of the other, provide the other with, any records or information which
may be relevant to such return audit, examination or proceedings. Such
assistance shall include making employees available on a mutually convenient
basis to provide additional information and explanation of any material to be
provided hereunder and shall include furnishing to or permitting the copying by
the requesting party of any records, returns, schedules, documents, workpapers
or other relevant materials which might reasonably be expected to be of use in
connection with such return, audit, examination or proceedings. The party
requesting assistance hereunder shall reimburse the party whose assistance is
requested for the reasonable out-of-pocket expenses incurred by it in providing
such assistance, but shall not be required to reimburse the party providing such
assistance with respect to time of employees made available pursuant to this
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Section 11.4.
11.5 Operating Covenants. As long as the Note, any other obligations of
Buyer to Seller or LaSalle, or any credit commitment from LaSalle to or on
behalf of Buyer is outstanding, Buyer shall perform and observe the following
covenants and restrictions:
(a) If Clune shall die or become permanently disabled, the Note and such
other obligations shall become immediately due and payable, and Seller
shall have the right to immediately exercise its remedies under the
Pledge and any other security for the Note. Buyer may elect at any
time, however, to obtain a key man life insurance policy for Clune in
which case such key man life insurance policy shall be pledged to
Seller as security for the Note, and the proceeds of such insurance
shall be used to repay the Note. For purposes of this paragraph,
Clune shall be deemed permanently disabled if Clune cannot supervise
the business of Buyer and contract new business, which determination
shall be made by LaSalle in its reasonable discretion within thirty
(30) days after the occurrence of any event rendering Clune disabled
and shall be made solely on the basis of facts known to LaSalle within
such thirty (30) day period.
(b) Seller shall have the right to inspect the books and records of Buyer
at any reasonable time upon reasonable prior notice provided Seller
shall maintain the confidentiality of the information in such books
and records.
(c) Buyer shall provide Seller with quarterly and annual financial
statements of Buyer and its Affiliates, which shall be prepared in
accordance with GAAP. The quarterly financial statements shall be
certified by a principal officer of Buyer, and the annual financial
statements shall be certified by KPMG Peat Marwick (or such other Big
Six accounting firm selected by Buyer and reasonably approved by
Seller). The quarterly financial statements shall be provided within
(30) days after the end of each calendar quarter, and the annual
financial statements shall be provided within ninety (90) days after
the end of each calendar year.
(d) Buyer shall not engage in any business activities other than the
business of serving as general contractor for the construction of
interior tenant improvements in Chicago, Illinois, and Los Angeles,
California, without Seller's prior written consent.
(e) Buyer shall maintain such insurance as Seller may reasonably require,
including without limitation,
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property insurance, general liability insurance and automobile
insurance. Such insurance shall be in such amounts and with such
coverages as Seller may reasonably require. Buyer may select from
insurance companies with an A.M. Best Rating of "A minus XII" or
better to provide such insurance. All such liability insurance shall
name Seller and LaSalle as additional insureds (and Buyer's liability
policies shall provide that they are primary and non-contributory with
respect to Seller), and all such property insurance shall name LaSalle
as a loss payee, as its interest may appear. All such insurance shall
provide that it may not be terminated or canceled without at least
thirty (30) days prior written notice to Seller.
(f) Buyer shall not incur any indebtedness other than (i) indebtedness to
trade creditors in the ordinary course of business, (ii) credit
facilities approved by Seller in its sole discretion, (iii) the Note,
and (iv) Working Capital Loan or any replacement line of credit in an
amount not in excess of $1,000,000; and Buyer shall not pledge or
encumber any of its assets except for pledges or encumbrances in favor
of Seller or LaSalle pursuant to the terms hereof.
(g) Except as set forth in this paragraph, Buyer shall not make any
payments, dividends or distributions in respect of Buyer's equity
interest to its owners or make any Excess Payments (as defined below).
Provided Buyer has paid Seller all interest on the Note which has
accrued for previous calendar years and has paid any principal
payments which are required to be amended under the Note for previous
calendar years, and provide Buyer has repaid any payments made by
LaSalle on the Letter of Credit and the payments made by LaSalle in
connection with any bonds obtained for Buyer, and provided there is no
outstanding default under the Note, Working Capital Loan or in any
other payment obligation of Buyer to Seller or LaSalle, Buyer may,
commencing in calendar year 1998, pay dividends or make distributions
to its owners (the "Excess Payments") up to an amount equal to (i) the
Pre-Tax Cash Flow of Buyer for the previous year, less (ii) the
portion thereof required to be used to make principal prepayments on
the Note during such year (i.e., the 30% share payable to Seller);
provided that, at the option of Buyer, all or any portion of the
amounts permitted to be dividended, distributed or paid out as Excess
Payments in any year may instead by dividended, distributed or paid
out at any time in any subsequent year without diminishing the amounts
otherwise permitted to be dividended, distributed or paid out as
Excess Payments in such subsequent year. In addition, notwithstanding
any
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other provision in this Agreement to the contrary, any amount which is
from time to time permitted to be dividend, distributed or paid out as
an Excess Payment may, at Buyer's option, instead be paid out by Buyer
to its officers, employees or Affiliates as bonuses or compensation.
Neither Seller nor LaSalle shall have, and each hereby waives, any
direct or indirect claims against the recipient of a dividend,
distribution, bonus, compensation or Excess Payment permitted by this
Agreement (or against any partners, officers, directors or
shareholders of Buyer or its Affiliates) arising out of the
declaration, payment or receipt of such dividend, distribution, bonus,
compensation or Excess Payment.
(h) Without the prior written consent of Seller, Buyer shall not sell,
assign, transfer or exchange all or any material portion of its
assets, and Buyer shall not merge, consolidate, liquidate or dissolve.
(i) In order to assess the business risk to Buyer of possible over
reliance on any particular client, without the prior written consent
of Seller, which shall not be unreasonably withheld, Buyer shall not
enter into any contract in any year which is expected to result in
gross revenue to Buyer in excess of ten percent (10%) of the total
gross revenue which the Buyer expects to earn in such year.
(k) By November 15th of each year, Buyer shall deliver to Seller Buyer's
business plan for the following year, which business plan shall be in
substantially the form of Exhibit F. Such business plan shall be
subject to the written approval of Seller, which approval shall not be
unreasonably withheld; provided, however, it shall be deemed
reasonable for Seller to withhold its approval of a business plan
reflecting a projected net margin (i.e., Net Earnings divided by net
construction management fees, as defined and shown on the audited
financial statements of Buyer) or less than twenty percent (20%);
provided, further, that if projected revenues in the business plan for
the following year are at least 12.5% greater than anticipated actual
revenues for the current year (which with respect to November and
December of each year shall be estimated in good faith by Buyer), and
the projected net margin, as described above, in such plan is at least
20%, Seller shall only be entitled to disapprove the business plan on
the basis that the underlying assumptions, exclusive of any
assumptions relating to the compensation payable to Buyer's employees
or Affiliates, are not reasonable in light of prior actual experience
or forecasted business conditions. Seller shall notify Buyer within
ten (10) business days after receipt of the
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proposed business plan whether it has approved or disapproved the
proposed business plan and, if it has disapproved the proposed
business plan, its reasons for doing so. If Seller has disapproved
the proposed business plan, Buyer and Seller shall work diligently
together to prepare a business plan which has been approved by Seller
by December 15th. Buyer shall use reasonable efforts to operate its
business in accordance with such approved business plan.
ARTICLE 12
Default Rights Regarding Clune
------------------------------
In addition to breach of any obligation hereunder, the occurrence of any
one or more of the following events shall constitute an "Event of Default" by
Buyer hereunder:
(a) One or more changes in the management of Buyer occurs which results in
the aggregate in a material diminution of Clune's responsibilities for
Buyer;
(b) Clune fails to devote substantially all of his business time and
efforts to the Business or Clune devotes substantial time or effort to
any other business without Seller's prior written consent.
(c) Without the prior written consent of Seller, Clune sells, assigns,
transfers pledges or encumbers 20% or more of the equity interests in
Buyer or the right to receive distributions from Buyer, or Clune fails
to own directly or indirectly at least 80% of the equity interests in
Buyer free and clear of all encumbrances.
If any Event of Default shall have occurred and be continuing, Seller and
LaSalle may, without notice, terminate their obligations hereunder, declare the
Note and Working Capital Note immediately due and payable and exercise any
rights or remedies provided to Seller or LaSalle under the Pledge Agreement
and/or at law or equity. In no event, however, shall LaSalle or Seller have the
right to use the name "Clune" if LaSalle or Seller exercises any of its rights
under the Pledge Agreement.
ARTICLE 13
Indemnification and Survival
----------------------------
13.1 Indemnification by Seller. Seller and LaSalle agree to indemnify and
hold harmless Buyer and its Affiliates at all times against and in respect of
losses, liabilities, costs and expenses (including reasonable attorneys' fees)
(collectively, "Losses" ) which are caused by (i) any breach of the
representations, warranties, covenants and agreements of Seller and LaSalle set
forth in this Agreement; (ii) any Excluded Liability; or (iii)
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except as set forth in this Agreement, the operation of the Business prior to
the Closing Date. Buyer shall promptly notify Seller in writing of all matters
which may give rise to the right to indemnification hereunder, it being
understood that if Seller does not receive notice of any matter known to Buyer
and as to which Buyer or its Affiliates are entitled to indemnification
hereunder in time to contest the determination of any such liability which is
susceptible to being successfully contested, Seller shall not be obligated to
indemnify Buyer or its Affiliates with respect thereto. Seller shall notify
Buyer in writing within thirty (30) days after receipt of such whether Seller
and LaSalle agree that the matter is covered by the indemnity set forth herein.
If Seller agrees that the matter is covered by the indemnity set forth herein,
Buyer shall not admit any liability with respect to, or settle, compromise or
discharge any such matter covered by this Section 13.1 without Seller's prior
written consent; and Seller shall have the right, with the consent of Buyer,
which shall not be unreasonably withheld, to settle all indemnification matters
related to claims by third parties which are susceptible to being settled, and
to defend (without the consent of Buyer) through counsel of its own choosing, at
its own expense any action which may be brought by a third party in connection
therewith, provided, however, that Buyer shall have the right to have its
counsel participate fully in such defense at its own expense. Buyer and Seller
shall keep each other reasonable access to books and records and otherwise
cooperate with all reasonable requests of each informed of all settlement
negotiations with third parties and of the Progress of any litigation with third
parties. Buyer and Seller shall permit each other in connection with any
indemnificable matter resulting from a claim by a third party.
13.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless
Seller at all times against and in respect of all Losses which arise out of or
are based on (i) any breach of the representations, warranties, covenants and
agreements of Buyer set forth in this Agreement; (ii) any Assumed Liability; or
(iii) the operation of the Business on or after the Closing Date. Seller shall
promptly notify Buyer in writing of all matters which may give rise to the right
to indemnification hereunder, it being understood that if Buyer does not receive
notice of any matter known to Seller and as to which Seller is entitled to
indemnification hereunder in time to contest the determination of any such
liability which is susceptible to being successfully contested, Buyer shall not
be obligated to indemnify Seller with respect thereto. Buyer shall notify
Seller in writing within thirty (30) days after receipt of such notice whether
Buyer agrees that the matter is covered by the indemnify set forth herein. If
Buyer agrees that the matter is covered by the indemnity set forth herein,
Seller shall not admit any liability with respect to, or settle, compromise or
discharge any such matter covered by this Section 13.2 without Buyer's prior
written consent, and Buyer shall have the right, with the consent of Seller,
which shall not be
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unreasonably withheld, to settle all indemnifiable mattes related to claims by
third parties which re susceptible to being settled, and to defend without the
consent of Seller) through counsel of its own choosing, at its own expense, any
action which may be brought by a third paty in connection therewith, provided,
however, that Seller shall have the right to have its counsel participate fully
in such defense at its own expense. Buyer and Seller shall each other informed
of all settlement negotiations with third partis. Buyer and Seller shall permit
each other reasonable access to books and records and otherwise cooperate with
all reasonable requests of each other in connection with any indemnifiable
matter resulting from a claim by a third party.
ARTICLE 14
Termination.
14.1 Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing Date.
14.1.1 Mutual Consent. With the mutual consent of Buyer and Seller,
or
14.1.2 By Seller. By Seller, if by the Closing Date any of the
conditions provided in Section 9.1 shall have been satisfied, complied with or
performed in any material respect, and Seller shall not have waived such failure
of satisfaction, noncompliance or nonperformance; or
14.13 By Buyer. By Buyer, if by the Closing Date nay of the
conditions provided in Section 9.2 shall not have been satisfied, complied with
or performed in any material respect, and Buyer shall not have waived such
failure of satisfaction, noncompliance or nonperformance.
14.2 Written Notice. In the event of any termination pursuant to
Section 14.1 (other than pursuant to Section 14.1.1), written notice setting
forth the reasons therefor shall forthwith be given by the terminating party to
the other.
14.3 Continuing Confidentiality. If this Agreement shall be
terminated as herein set forth, Buyer agrees that it will remain obligated
under, and will comply with, the provisions of Section 15.3.
ARTICLE 15
Miscellaneous.
15.1 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns; provided,
however, Buyer and Clune may not assign their rights or obligations under this
Agreement without the
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consent of Seller; and Seller and LaSalle may not assign their rights and
obligations hereunder, except to an Affiliate or a successor entity, without the
consent of Buyer. In the case of such assignment, the assigning party shall
remain liable for all the obligations and liabilities of the assigning party
arising from or assumed under this Agreement or arising from the transactions
contemplated hereunder.
15.2 Announcements. Prior to Closing each party shall keep the terms
of this Agreement confidential except any disclosure which Seller or Buyer in
its good faith judgment believes is required by law (in which case the party
making the disclosure will use all commercially reasonable efforts to consult
with the other party prior to making any such disclosure) and except that Seller
may announce to its employees that the Business is being sold. After Closing
either party may announce the sale of the Business to Buyer but not the other
terms hereof, which announcement shall be subject to the reasonable approval of
the other party.
15.3 Confidentiality. Except as required by applicable law, all
information related to the Business shall be maintained in strict confidence by
Buyer and its employees, advisors and agents prior to Closing. Except as
required by applicable law, all information related to the Buyer's business
shall be maintained in strict confidence by Seller, LaSalle and their respective
employees, advisors and agents.
15.4 Expenses. Each party shall bear its own expenses with respect to
the transactions contemplated by this Agreement; provided, however, if any
litigation is instituted between the parties hereto in connection with this
Agreement, the losing party in such litigation shall pay the reasonable
attorneys' fees and court costs of the prevailing party in such litigation. Any
sale, transfer, use or other tax (other than income tax) or recording cost
incurred upon the sale or transfer of the Purchased Assets shall be the
liability of the party upon which such tax is imposed by law.
15.5 Severability. Each of the provisions contained in this Agreement
shall be severable, and the unenforceability of one shall not affect the
enforceability of any others or of the remainder of this Agreement.
15.6 Entire Agreement. This Agreement may not be amended,
supplemented or otherwise modified except by an instrument in writing signed by
all of the parties hereto. This Agreement and the documents to be executed and
delivered pursuant hereto contain the entire agreement of the parties hereto
with respect to the transactions covered hereby, superseding all negotiations,
prior discussions and preliminary agreements made prior to the date hereof.
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15.7 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and their respective affiliates and no
provision of this Agreement shall be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or other right.
15.8 Waiver. The failure of any party to enforce any condition or
part of this Agreement at any time shall not be construed as a waiver of that
condition or part, nor shall it forfeit any rights to future enforcement
thereof.
15.9 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Illinois without regard
to the conflicts of laws provisions thereof.
15.10 Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
15.11 Counterparts. More than one counterpart of this Agreement may be
executed by the parties hereto, and each fully executed counterpart shall be
deemed any original.
15.12 Choice of Forum. Buyer and Seller agree that any suit, action or
proceeding brought by either party against the other party to this Agreement in
connection with or arising out of this Agreement shall be brought solely in the
state or federal courts located in Chicago, Illinois, and that such courts have
exclusive jurisdiction over any matters with respect to this Agreement.
15.13 Further Documents. Each of Buyer and Seller will, at the request
of another party, execute and deliver to such other party all such further
instruments, assignments, assurances and other documents as such other party may
reasonably request in connection with the carrying out of this Agreement and the
transactions contemplated hereby.
15.14 Notices. All communications, notices and consents provided for
herein shall be in writing and be given in person or by means of telex,
facsimile or other means of wire transmission (with request for assurance of
receipt in a manner typical with respect to communications of that type) or by
mail, and shall become effective (x) on delivery if given in person, (y) on the
date of transmission if sent by telex, facsimile or other means of wire
transmission, or (z) three business days after being deposited in the United
States mails, with proper postage and documentation, for first-class registered
or certified mail, prepaid.
Notices shall be addressed as follows:
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If to Buyer or Clune, to:
Clune Construction Company L.P.
11 South LaSalle Street
Chicago, Illinois 60603
Attention: Michael T. Clune
Facsimile Number: (312) 419-8139
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Gregory S. Murray
Facsimile Number: (312) 558-5700
If to Seller or LaSalle, to:
LaSalle Partners Limited
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Paul R. Sorensen
Facsimile Number: (312) 228-0980
with a copy to:
Hagan & Associates
200 East Randolph Drive
Suite 4322
Chicago, Illinois 60601
Attn: R.K. Hagan
Facsimile Number: (312) 228-0982
provided, however, that is any party shall have designated a difference address
by notice to the others, then to the last address so designated.
15.15 Survival. All of the terms, covenants, representations and
warranties contained in this Agreement shall survive the Closing.
15.16 Construction. The language in all parts of this Agreement shall
be construed, in all cases, according to its fair meaning. The parties
acknowledge that each party and its counsel have reviewed and revised this
Agreement and that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
15.17 Nonrecourse Loan. No recourse under or in respect of this
Agreement, the Note or the obligations created or evidenced
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hereby or thereby shall be taken against the assets of Clune or the partners of
Seller or Buyer; provided, however, this section shall not be deemed to relieve
either LaSalle or Clune of their explicit contractual obligations hereunder
(such obligations of Clune being only those set forth in Section 3.2.2);
provided, further, in no event shall Clune be deemed to have personal liability
for repayment of the Note, the Working Capital Note or any other obligations of
Buyer hereunder or contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
LASALLE PARTNERS LIMITED,
a Delaware limited partnership
By:/s/ Timothy McGarrity
------------------------------
Name: Timothy McGarrity
-----------------------
Title: Vice President
---------------------
LASALLE CONSTRUCTION LIMITED PARTNERSHIP
a Delaware limited partnership
By: LaSalle Construction Corporation,
its general partner
By: /s/ Timothy McGarrity
-----------------------------
Name: Timothy McGarrity
---------------------
Title: Vice President
--------------------
CLUNE CONSTRUCTION COMPANY, L.P.
a Delaware limited partnership
By: Dubline Construction Corp.,
its general partner
By: /s/ Michael T. Clune
---------------------------
Name: Michael T. Clune
Title: President
/s/ Michael T. Clune
-------------------------------
MICHAEL T. CLUNE
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Exhibit 10.11
LASALLE PARTNERS INCORPORATED
1997 STOCK AWARD AND INCENTIVE PLAN
<PAGE>
LASALLE PARTNERS INCORPORATED
1997 STOCK AWARD AND INCENTIVE PLAN
Section Page
- ------- ----
1. Purpose; Types of Awards; Construction...................... __
2. Definitions................................................. __
3. Administration.............................................. __
4. Eligibility................................................. __
5. Stock Subject to the Plan................................... __
6. Specific Terms of Awards.................................... __
7. Change in Control Provisions................................ __
8. Loan Provisions............................................. __
9. Special Non-Employee Director Options....................... __
10. General Provisions.......................................... __
i
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LASALLE PARTNERS INCORPORATED
1997 STOCK AWARD AND INCENTIVE PLAN
1. Purpose; Types of Awards; Construction.
The purpose of the 1997 Stock Award and Incentive Plan of LaSalle
Partners Incorporated (the "Plan") is to afford an incentive to directors
(including non-employee directors), selected employees and independent
contractors of LaSalle Partners Incorporated (the "Company"), or any Subsidiary
or Affiliate which now exists or hereafter is organized or acquired, to acquire
a proprietary interest in the Company, to continue as directors, employees or
independent contractors, as the case may be, to increase their efforts on behalf
of the Company and to promote the success of the Company's business in the
interest of its stockholders. Pursuant to Section 6 of the Plan, there may be
granted Stock Options (including "incentive stock options" and "nonqualified
stock options"), stock appreciation rights and limited stock appreciation rights
(either in connection with options granted under the Plan or independently of
options), restricted stock, restricted stock units, dividend equivalents,
performance shares and other stock- or cash-based awards. Section 9 of the Plan
contains provisions governing certain special grants of Options to non-employee
directors of the Company. The Plan also provides the authority to make loans to
purchase shares of common stock of the Company. From and after the consummation
of the "Initial Public Offering", as hereunder defined, the Plan is designed to
comply with the requirements of Regulation G (12 C.F.R. (S)207) regarding the
purchase of shares on margin, the requirements for "performance-based
compensation" under Section 162(m) of the Code and the conditions for exemption
from short-swing profit recovery rules under Rule 16b-3 of the Exchange Act, and
shall be interpreted in a manner consistent with the requirements thereof.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity if, at the time of granting of
an Award or a Loan, (i) the Company, directly or indirectly, owns at least 20%
of the combined voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity or (ii) such entity, directly or
indirectly, owns at least 20% of the combined voting power of all classes of
stock of the Company .
<PAGE>
(b) "Award" means any Option, SAR (including a Limited SAR),
Restricted Stock, Restricted Stock Unit, Dividend Equivalent, Performance Share
or Other Stock-Based Award or Other Cash-Based Award granted under the Plan.
(c) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(d) "Beneficiary means the person, persons, trust or trusts
which have been designated by a Grantee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under the Plan upon his or her death, or, if there is no designated Beneficiary
or surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Control" means a change in control of the Company
which will be deemed to have occurred if:
(i) any "person," as such term is used in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof except that such term shall not include (A) the Company or any
of its subsidiaries, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
affiliates, (C) an underwriter temporarily holding securities pursuant
to an offering of such securities, (D) any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Stock, or (E) any person or
group as used in Rule 13d-1(b) under the Exchange Act, is or becomes
the Beneficial Owner, as such term is defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates other
than in connection with the acquisition by the Company or its
affiliates of a business) representing 50% or more of the combined
voting power of the Company's then outstanding securities;
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(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board,
and any new director (other than (A) a director designated by a person
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii), or (iv) of this Section
2(f) or (B) other than a director whose initial assumption of office
is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose election by the Board or
nomination for election by the Company's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) in combination with the
ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary of the
Company, at least 75% of the combined voting power of the securities
of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no person (as defined
above) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly
from the Company or its affiliates other than in connection with the
acquisition by the Company or its affiliates of a business)
representing 25% or more of the combined voting power of the Company's
then outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
3
<PAGE>
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets (or any transaction
having a similar effect) other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 75% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
(g) "Change in Control Price" means the higher of (i) the
highest price per share paid in any transaction constituting a Change in Control
or (ii) the highest Fair Market Value per share at any time during the 60-day
period preceding or following a Change in Control.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Committee" means the Board or the committee established by
the Board to administer the Plan from and after the consummation of the Initial
Public Offering, the composition of which shall at all times satisfy the
provisions of Rule 16b-3. With respect to the period prior to consummation of
the Initial Public Offering, references to the "Committee" shall be deemed to
refer to the Board.
(j) "Company" means LaSalle Partners Incorporated, a corporation
organized under the laws of the State of Maryland, or any successor corporation.
(k) "Dividend Equivalent" means a right, granted to a Grantee
under Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award, and may be paid currently or on a deferred basis.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(m) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined
4
<PAGE>
by such methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of Stock as of a particular date shall mean (i) the
closing sales price per share of Stock on the national securities exchange on
which the Stock is principally traded, for the last preceding date on which
there was a sale of such Stock on such exchange, or (ii) if the shares of Stock
are then traded in an over-the-counter market, the average of the closing bid
and asked prices for the shares of Stock in such over-the-counter market for the
last preceding date on which there was a sale of such Stock in such market, or
(iii) if the shares of Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the Committee,
in its sole discretion, shall determine.
(n) "Grantee" means a person who, as an employee or independent
contractor of the Company, a Subsidiary or an Affiliate, has been granted an
Award or Loan under the Plan.
(o) "Initial Public Offering" shall mean the initial public
offering of shares of Stock of the Company, as more fully described in the
Registration Statement on Form S-1 initially filed with the Securities and
Exchange Commission on April 24, 1997, as such Registration Statement may be
amended from time to time.
(p) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(q) "Limited SAR" means a right granted pursuant to Section 6(c)
which shall, in general, be automatically exercised for cash upon a Change in
Control.
(r) "Loan" means the proceeds from the Company borrowed by a
Plan participant under Section 8 of the Plan.
(s) "NQSO" means any Option that is designated as a nonqualified
stock option.
(t) "Option" means a right, granted to a Grantee under Section
6(b) and Section 9, to purchase shares of Stock. An Option may be either an ISO
or an NQSO, provided that, ISO's may be granted only to employees of the Company
or a Subsidiary.
5
<PAGE>
(u) "Other Cash-Based Award" means cash awarded under Section
6(h), including cash awarded as a bonus or upon the attainment of specified
performance criteria or otherwise as permitted under the Plan.
(v) "Other Stock-Based Award" means a right or other interest
granted to a Grantee under Section 6(h) that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or related
to, Stock, including, but not limited to (1) unrestricted Stock awarded as a
bonus or upon the attainment of specified performance criteria or otherwise as
permitted under the Plan, and (2) a right granted to a Grantee to acquire Stock
from the Company for cash and/or a promissory note containing terms and
conditions prescribed by the Committee.
(w) "Performance Share" means an Award of shares of Stock to a
Grantee under Section 6(h) that is subject to restrictions based upon the
attainment of specified performance criteria.
(x) "Plan" means this LaSalle Partners Incorporated 1997 Stock
Award and Incentive Plan, as amended from time to time.
(y) "Restricted Stock" means an Award of shares of Stock to a
Grantee under Section 6(d) that may be subject to certain restrictions and to a
risk of forfeiture.
(z) "Restricted Stock Unit" means a right granted to a Grantee
under Section 6(e) to receive Stock or cash at the end of a specified deferral
period, which right may be conditioned on the satisfaction of specified
performance or other criteria.
(aa) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act, including any successor to such Rule.
(ab) "Stock" means shares of the common stock, par value $0.01
per share, of the Company.
(ac) "SAR" or "Stock Appreciation Right" means the right,
granted to a Grantee under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to the
date
6
<PAGE>
of exercise of the right, with payment to be made in cash, Stock, or property as
specified in the Award or determined by the Committee.
(ad) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an Award,
each of the corporations (other than the last corporation in the unbroken chain)
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
3. Administration.
The Plan shall be administered by the Committee. The Committee shall
have the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards and make Loans; to determine the
persons to whom and the time or times at which Awards shall be granted and Loans
shall be made; to determine the type and number of Awards to be granted and the
amount of any Loan, the number of shares of Stock to which an Award may relate
and the terms, conditions, restrictions and performance criteria relating to any
Award or Loan; and to determine whether, to what extent, and under what
circumstances an Award may be settled, cancelled, forfeited, exchanged, or
surrendered; to make adjustments in the terms and conditions of, and the
criteria and performance objectives (if any) included in, Awards and Loans in
recognition of unusual or non-recurring events affecting the Company or any
Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles; to designate Affiliates; to construe and
interpret the Plan and any Award or Loan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to determine the terms and provisions of
the Award Agreements and any promissory note or agreement related to any Loan
(which need not be identical for each Grantee); and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
7
<PAGE>
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, Affiliate or Grantee (or any person
claiming any rights under the Plan from or through any Grantee) and any
stockholder.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Award
granted or Loan made hereunder.
4. Eligibility.
Subject to the conditions set forth below, Awards and Loans may be
granted to directors (including non-employee directors), selected employees and
independent contractors of the Company and its present or future Subsidiaries
and Affiliates, in the discretion of the Committee. In determining the persons
to whom Awards and Loans shall be granted and the type of any Award or the
amount of any Loan (including the number of shares to be covered by such Award),
the Committee shall take into account such factors as the Committee shall deem
relevant in connection with accomplishing the purposes of the Plan.
5. Stock Subject to the Plan.
The maximum number of shares of Stock reserved for the grant of Awards
under the Plan shall be 2,215,000 shares of Stock, subject to adjustment as
provided herein. No more than 75,000 of the total shares available for grant
may be awarded to a single individual in a single year. Such shares may, in
whole or in part, be authorized but unissued shares or shares that shall have
been or may be reacquired by the Company in the open market, in private
transactions or otherwise. If any shares subject to an Award are forfeited,
cancelled, exchanged or surrendered or if an Award otherwise terminates or
expires without a distribution of shares to the Grantee, the shares of stock
with respect to such Award shall, to the extent of any such forfeiture,
cancellation, exchange, surrender, termination or expiration, again be available
for Awards under the Plan; provided that, in the case of forfeiture,
cancellation, exchange or surrender of shares of Restricted Stock or Restricted
Stock Units with respect to which dividends or Dividend Equivalents have been
paid or accrued, the number of
8
<PAGE>
shares with respect to such Awards shall not be available for Awards hereunder
unless, in the case of shares with respect to which dividends or Dividend
Equivalents were accrued but unpaid, such dividends and Dividend Equivalents are
also forfeited, cancelled, exchanged or surrendered. Upon the exercise of any
Award granted in tandem with any other Awards or Awards, such related Awards or
Awards shall be cancelled to the extent of the number of shares of Stock as to
which the Award is exercised and, notwithstanding the foregoing, such number of
shares shall no longer be available for Awards under the Plan.
In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Grantees under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock which may thereafter be issued in
connection with Awards, (ii) the number and kind of shares of Stock issued or
issuable in respect of outstanding Awards, and (iii) the exercise price, grant
price, or purchase price relating to any Award; provided that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code.
6. Specific Terms of Awards.
(a) General. The term of each Award shall be for such period
as may be determined by the Committee. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Stock, or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments. In addition to the foregoing, the Committee may impose on any
Award or the exercise thereof, at the date of grant or thereafter, such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine.
9
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(b) Options. The Committee is authorized to grant Options to
Grantees on the following terms and conditions:
(i) Type of Award. The Award Agreement evidencing the
grant of an Option under the Plan shall designate the Option as an ISO
or an NQSO.
(ii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee;
provided that, in the case of an ISO, such exercise price shall be not
less than the Fair Market Value of a share on the date of grant of
such Option, and in no event shall the exercise price for the purchase
of shares be less than par value. The exercise price for Stock
subject to an Option may be paid in cash or by an exchange of Stock
previously owned by the Grantee, or a combination of both, in an
amount having a combined value equal to such exercise price. A
Grantee may also elect to pay all or a portion of the aggregate
exercise price by having shares of Stock with a Fair Market Value on
the date of exercise equal to the aggregate exercise price withheld by
the Company or sold by a broker-dealer under circumstances meeting the
requirements of 12 C.F.R. (S)220 or any successor thereof.
(iii) Term and Exercisability of Options. The date on
which the Committee adopts a resolution expressly granting an Option
shall be considered the day on which such Option is granted; provided
that, Option grants in connection with the Initial Public Offering
shall be deemed to have been granted on the date of consummation of
the Initial Public Offering. Options shall be exercisable over the
exercise period (which shall not exceed ten years from the date of
grant), at such times and upon such conditions as the Committee may
determine, as reflected in the Award Agreement; provided that, the
Committee shall have the authority to accelerate the exercisability of
any outstanding Option at such time and under such circumstances as
it, in its sole discretion, deems appropriate. An Option may be
exercised to the extent of any or all full shares of Stock as to which
the Option has become exercisable, by giving written notice of such
exercise to the Committee or its designated agent.
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(iv) Termination of Employment, etc. An Option may not be
exercised unless the Grantee is then in the employ of, or then
maintains an independent contractor relationship with, the Company or
a Subsidiary or an Affiliate (or a company or a parent or subsidiary
company of such company issuing or assuming the Option in a
transaction to which Section 424(a) of the Code applies), and unless
the Grantee has remained continuously so employed, or continuously
maintained such relationship, since the date of grant of the Option;
provided that, the Award Agreement may contain provisions extending
the exercisability of Options, in the event of specified terminations,
to a date not later than the expiration date of such Option.
(v) Other Provisions. Options may be subject to such other
conditions including, but not limited to, restrictions on
transferability of the shares acquired upon exercise of such Options,
as the Committee may prescribe in its discretion or as may be required
by applicable law.
(c) SARs and Limited SARs. The Committee is authorized to
grant SARs and Limited SARs to Grantees on the following terms and conditions:
(i) In General. Unless the Committee determines otherwise,
an SAR or a Limited SAR (1) granted in tandem with an NQSO may be
granted at the time of grant of the related NQSO or at any time
thereafter or (2) granted in tandem with an ISO may only be granted at
the time of grant of the related ISO. An SAR or Limited SAR granted
in tandem with an Option shall be exercisable only to the extent the
underlying Option is exercisable.
(ii) SARs. An SAR shall confer on the Grantee a right to
receive an amount with respect to each share subject thereto, upon
exercise thereof, equal to the excess of (1) the Fair Market Value of
one share of Stock on the date of exercise over (2) the grant price of
the SAR (which in the case of an SAR granted in tandem with an Option
shall be equal to the exercise price of the underlying Option, and
which in the case of any other SAR shall be such price as the
Committee may determine).
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(iii) Limited SARs. A Limited SAR shall confer on the
Grantee a right to receive with respect to each share subject thereto,
automatically upon the occurrence of a Change in Control, an amount
equal in value to the excess of (1) the Change in Control Price (in
the case of a LSAR granted in tandem with an ISO, the Fair Market
Value), of one share of Stock on the date of such Change in Control
over (2) the grant price of the Limited SAR (which in the case of a
Limited SAR granted in tandem with an Option shall be equal to the
exercise price of the underlying Option, and which in the case of any
other Limited SAR shall be such price as the Committee determines);
provided that, in the case of a Limited SAR granted to a Grantee who
is subject to the reporting requirements of Section 16(a) of the
Exchange Act (a "Section 16 Individual"), such Section 16 Individual
shall only be entitled to receive such amount if such Limited SAR has
been outstanding for at least six (6) months as of the date of the
Change in Control.
(d) Restricted Stock. The Committee is authorized to grant
Restricted Stock to Grantees on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be
subject to such restrictions on transferability and other
restrictions, if any, as the Committee may impose at the date of grant
or thereafter, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Such
restrictions may include factors relating to the increase in the value
of the Stock or to individual or Company performance such as the
attainment of certain specified individual, divisional or Company-wide
performance goals, sales volume increases or increases in earnings per
share. Except to the extent restricted under the Award Agreement
relating to the Restricted Stock, a Grantee granted Restricted Stock
shall have all of the rights of a stockholder including, without
limitation, the right to vote Restricted Stock and the right to
receive dividends thereon.
(ii) Forfeiture. Upon termination of employment with or
service to the Company, or upon termination of the independent
contractor relationship, as the case may be, during the applicable
restriction period, Restricted Stock and any accrued but
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unpaid dividends or Dividend Equivalents that are at that time subject
to restrictions shall be forfeited; provided that, the Committee may
provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in whole or in
part in the event of terminations resulting from specified causes, and
the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are
registered in the name of the Grantee, such certificates shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company
shall retain physical possession of the certificate.
(iv) Dividends. Dividends paid on Restricted Stock shall
be either paid at the dividend payment date, or deferred for payment
to such date as determined by the Committee, in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends. Stock distributed in connection with a stock split or
stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other
property has been distributed.
(e) Restricted Stock Units. The Committee is authorized to
grant Restricted Stock Units to Grantees, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Stock or cash, as
determined by the Committee, will occur upon expiration of the
deferral period specified for Restricted Stock Units by the Committee.
In addition, Restricted Stock Units shall be subject to such
restrictions as the Committee may impose, at the date of grant or
thereafter, which restrictions may lapse at the expiration of the
deferral period or at earlier or later specified times, separately or
in combination, in installments or otherwise, as the Committee may
determine. Such restrictions may include factors relating to the
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increase in the value of the Stock or to individual or Company
performance such as the attainment of certain specified individual,
divisional or Company-wide performance goals, sales volume increases
or increases in earnings per share.
(ii) Forfeiture. Upon termination of employment or
termination of the independent contractor relationship during the
applicable deferral period or portion thereof to which forfeiture
conditions apply, or upon failure to satisfy any other conditions
precedent to the delivery of Stock or cash to which such Restricted
Stock Units relate, all Restricted Stock Units that are then subject
to deferral or restriction shall be forfeited; provided that, the
Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock Units will be
waived in whole or in part in the event of termination resulting from
specified causes, and the Committee may in other cases waive in whole
or in part the forfeiture of Restricted Stock Units.
(f) Stock Awards in Lieu of Cash Awards. The Committee is
authorized to grant Stock as a bonus, or to grant other Awards, in lieu of
Company commitments to pay cash under other plans or compensatory arrangements.
Stock or Awards granted hereunder shall have such other terms as shall be
determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Grantees. The Committee may provide, at the date of
grant or thereafter, that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, or other
investment vehicles as the Committee may specify, provided that Dividend
Equivalents (other than freestanding Dividend Equivalents) shall be subject to
all conditions and restrictions of the underlying Awards to which they relate.
(h) Performance Shares and Other Stock- or Cash-Based Awards.
The Committee is authorized to grant to Grantees Performance Shares and/or Other
Stock-Based Awards or Other Cash-Based Awards as an element of or supplement to
any other Award under the Plan, as deemed by the Committee to be consistent with
the purposes of the Plan. Such Awards may be granted with value and payment
contingent upon performance of the Company or any other
14
<PAGE>
factors designated by the Committee, or valued by reference to the performance
of specified Subsidiaries or Affiliates.
The Committee shall determine the terms and conditions of such Awards
at the date of grant or, to the extent permitted by Section 162(m) of the Code,
thereafter; provided, that performance objectives for each year shall be
established by the Committee not later than the latest date permissible under
Section 162(m) of the Code. Such performance objectives may be expressed in
terms of one or more financial or other objective goals. Financial goals may be
expressed, for example, in terms of sales, earnings per share, stock price,
return on equity, net earnings growth, net earnings, related return ratios, cash
flow, earnings before interest, taxes, depreciation and amortization (EBITDA),
return on assets or total stockholder return. Other objective goals may include
the attainment of various productivity and long-term growth objectives,
including, without limitation reductions in the Company's overhead ratio and
expense to sales ratios. Any criteria may be measured in absolute terms or as
compared to another corporation or corporations. To the extent applicable, any
such performance objective shall be determined (i) in accordance with the
Company's audited financial statements and generally accepted accounting
principles and reported upon by the Company's independent accountants or
(ii) so that a third party having knowledge of the relevant facts could
determine whether such performance objective is met. Performance objectives
shall include a threshold level of performance below which no Award payment
shall be made, levels of performance above which specified percentages of target
Awards shall be paid, and a maximum level of performance above which no
additional Award shall be paid. Performance objectives established by the
Committee may be (but need not be) different from year-to-year and different
performance objectives may be applicable to different Grantees.
7. Change in Control Provisions. The following provisions shall
apply in the event of a Change of Control unless otherwise determined by the
Committee or the Board in writing at or after the grant of an Award, but prior
to the occurrence of such Change in Control:
(a) any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and vested; and
(b) the restrictions, deferral limitations, payment conditions,
and forfeiture conditions applicable to any other Award granted under the Plan
shall lapse and such Awards shall be deemed fully vested, and any perfor-
15
<PAGE>
mance conditions imposed with respect to Awards shall be deemed to be fully
achieved.
(c) the value of all outstanding Awards shall, to the extent
determined by the Committee at or after grant, be cashed out on the basis of the
Change of Control Price as of the date the Change of Control occurs or such
other date as the Committee may determine prior to the Change of Control.
8. Loan Provisions. Subject to the provisions of the Plan and all
applicable federal and state laws, rules and regulations (including the
requirements of Regulation G (12 C.F.R. (S)207)), the Committee shall have the
authority to make Loans to Grantees (on such terms and conditions as the
Committee shall determine), to enable such Grantees to purchase shares in
connection with the realization of Awards under the Plan. Loans shall be
evidenced by a promissory note or other agreement, signed by the borrower, which
shall contain provisions for repayment and such other terms and conditions as
the Committee shall determine.
9. Special Non-Employee Director Options.
(a) Automatic Options. In addition to any other Award granted
hereunder, non-employee directors of the Company will be granted the Options
described in clauses (i), (ii) and (iii) of this Section 9 (a) (the "Automatic
Options"):
(i) On the first business day following the effective
date of the Initial Public Offering (the "Initial Grant Date"), each
director who is a non-employee director on such date (a "Current
Director") shall be granted automatically, without action by the
Committee, an Option to purchase 5,000 shares of Stock.
(ii) Each non-employee director (a "New Director") who,
after the Initial Grant Date, is elected to the Board for the first
time by the stockholders, will at the time such non-employee director
is elected and duly qualified, be granted automatically, without
action by the Committee, an Option to purchase 5,000 shares of Stock.
(iii) On the first business day following the 1998 annual
stockholders' meeting of the Company, each continuing Current Director
and each continuing New Director will be granted automatically,
without action by the Committee, an Option to purchase 1,000 shares of
Stock. In addition, on the first business day following each annual
meeting of the stockholders thereafter, each non-employee director
(other than a New Director) who is continuing service as a member of
the Board, will be granted automatically, without action by the
Committee, an Option to purchase 1,000 shares of Stock.
(b) Elected Options. Each non-employee director may, at least
six months prior to each anniversary of his election to the Board, irrevocably
elect to receive, in lieu of the annual directors' retainer payable to such
non-employee director with respect to the one year period commencing on such
anniversary date, an Option (an "Elected Option") to purchase shares of Stock.
With respect to the annual retainer payable to a New Director with respect to
his or her first year of Board service, such an election must be made within
five (5) days of his or her election to the Board and prior to the performance
of any significant service with respect to such first year. The number of
shares of Stock covered by such Elected Option will be an amount equal to the
annual cash retainer, net of the aggregate exercise price of the Option shares,
divided by the Fair Market Value of the Stock on the date of grant.
(c) Terms and Conditions of Options. Automatic Options and
Elected Options shall be subject to the following specific terms and conditions
(and shall otherwise be subject to all other provisions of the Plan not in
conflict with this Section 9):
(i) Each Automatic Option and each Elected Option shall
be a NQSO.
(ii) The exercise price of Automatic Options shall be
equal to the Fair Market Value of the shares of Stock subject to
such Automatic Options on the date of grant and the exercise
price of Elected Options shall be one (1) dollar.
(iii) Automatic Options shall be exercisable as to twenty
percent (20%) of the Stock subject thereto on the first
anniversary of the date of grant, and shall become exercisable as
to an additional twenty percent (20%) of such shares on each of
the second, third, fourth and fifth anniversaries of such date of
grant. Automatic Options shall be exercisable for a period of ten
(10) years from the date of grant of such Options; provided that,
the exercise period shall be subject to earlier termination in
accordance with the provisions of Section 6 (b) (iv) hereof.
Elected Options shall be exercisable for a period ending ten (10)
years from the December 31st of the year in which the retainer
was earned.
10. General Provisions.
(a) Approval of Shareholders. The Plan shall take effect upon
its adoption by the Board but the Plan (and any grants of Awards made prior to
the shareholder approval mentioned herein) shall be subject to ratification by
the holder(s) of a majority of the issued and outstanding shares of voting
securities of the Company entitled to vote, which ratification must occur within
twelve (12) months of the date that the Plan is adopted by the Board. In the
event that the shareholders of the Company do not ratify the Plan at a meeting
of the shareholders at which such issue is considered and voted upon, then upon
such event the Plan and all rights hereunder shall immediately terminate and no
Grantee (or any permitted transferee thereof) shall have any remaining rights
under the Plan or any Award Agreement entered into in connection herewith.
(b) Nontransferability. Awards shall not be transferable by a
Grantee except by will or the laws of descent and distribution or, if then
permitted under Rule 16b-3, pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder, and shall be exercisable during
the lifetime of a Grantee only by such Grantee or his guardian or legal
representative.
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<PAGE>
(c) No Right to Continued Employment, etc. Nothing in the Plan
or in any Award or Loan granted or any Award Agreement, promissory note or other
agreement entered into pursuant hereto shall confer upon any Grantee the right
to continue in the employ of or to continue as an independent contractor of the
Company, any subsidiary or any Affiliate or to be entitled to any remuneration
or benefits not set forth in the Plan or such Award Agreement, promissory note
or other agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary or Affiliate to terminate such Grantee's
employment or independent contractor relationship.
(d) Taxes. The Company or any Subsidiary or Affiliate is
authorized to withhold from any Award granted, any payment relating to an Award
under the Plan, including from a distribution of Stock, or any other payment to
a Grantee, amounts of withholding and other taxes due in connection with any
transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company and Grantees to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof in satisfaction of a
Grantee's tax obligations.
(e) Amendment and Termination of the Plan. The Board may at any
time and from time-to-time alter, amend, suspend, or terminate the Plan in whole
or in part; provided that, no amendment which requires stockholder approval in
order for the Plan to continue to comply with Rule 16b-3, shall be effective
unless the same shall be approved by the requisite vote of the stockholders of
the Company entitled to vote thereon. Notwithstanding the foregoing, no
amendment shall affect adversely any of the rights of any Grantee, without such
Grantee's consent, under any Award or Loan theretofore granted under the Plan.
(f) No Rights to Awards or Loans; No Stockholder Rights. No
Grantee shall have any claim to be granted any Award or Loan under the Plan, and
there is no obligation for uniformity of treatment of Grantees. Except as
provided specifically herein, a Grantee or a transferee of an Award shall have
no rights as a stockholder with respect to any shares covered by the Award until
the date of the issuance of a stock certificate to him for such shares.
(g) Unfunded Status of Awards. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Grantee pursuant to an Award, nothing
17
<PAGE>
contained in the Plan or any Award shall give any such Grantee any rights that
are greater than those of a general creditor of the Company.
(h) No Fractional Shares. No fractional shares of Stock shall
be issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(i) Regulations and Other Approvals.
(I) The obligation of the Company to sell or deliver Common
Stock with respect to any Award granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(II) Each Award is subject to the requirement that, if at
any time the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Common Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or the
issuance of Common Stock, no such Award shall be granted or payment made or
Common Stock issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions not acceptable to the Committee.
(III) In the event that the disposition of Common Stock
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Common Stock shall be restricted against transfer to the
extent required by the Securities Act or regulations thereunder, and the
Committee may require a Grantee receiving Common Stock pursuant to the Plan, as
a condition precedent to receipt of such Common Stock, to represent to the
Company in writing that the Common Stock acquired by such Grantee is acquired
for investment only and not with a view to distribution.
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<PAGE>
(j) Governing Law. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Maryland without giving effect to the conflict of laws principles thereof.
(k) Effective Date; Plan Termination. The Plan shall take
effect upon its adoption by the Board (the "Effective Date"), but the Plan (and
any grants of Awards made prior to the stockholder approval mentioned herein),
shall be subject to the approval of the holder(s) of a majority of the issued
and outstanding shares of voting securities of the Company entitled to vote,
which approval must occur within twelve months of the date the Plan is adopted
by the Board. In the absence of such approval, such Awards shall be null and
void. Notwithstanding the foregoing, the effectiveness of the Plan and the
validity of any Award or Loan granted hereunder is conditioned upon the
consummation of the Initial Public Offering, and shall be of no force and effect
if the Initial Public Offering is not consummated.
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<PAGE>
Exhibit 10.12
FORM OF
LASALLE PARTNERS INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. LaSalle Partners Incorporated, a Maryland corporation
(the "Company"), hereby adopts this Employee Stock Purchase Plan (the "Plan").
The purpose of the Plan is to provide an opportunity for the employees of the
Company and any designated subsidiaries to purchase shares of the Common Stock
of the Company through voluntary automatic payroll deductions, thereby
attracting, retaining and rewarding such persons and strengthening the mutuality
of interest between such persons and the Company's stockholders. The Plan is
effective January 1, 1998.
2. Shares Subject to Plan. An aggregate of __________ shares (the
"Shares") of Common Stock of the Company may be sold pursuant to the Plan. Such
Shares may be authorized but unissued Common Stock, treasury shares or Common
Stock purchased in the open market. If there is any change in the outstanding
shares of Common Stock by reason of a stock dividend or distribution, stock
split, recapitalization, combination or exchange of shares, or a merger,
consolidation or other corporate reorganization in which the Company is the
surviving corporation, the number of Shares available for sale shall be
equitably adjusted by the Committee appointed to administer the Plan to give
proper effect to such change.
<PAGE>
3. Administration. The Plan shall be administered by a committee
(the "Committee") which shall be the Compensation Committee of the Board of
Directors or another committee consisting of not less than two directors of the
Company appointed by the Board of Directors, none of whom shall participate in
the Plan and all of whom shall qualify as disinterested persons within the
meaning of the Securities and Exchange Commission Regulation (S) 240.16b-3 or
any successor regulation. The Committee is authorized, subject to the provisions
of the Plan, to establish such rules and regulations as it deems necessary for
the proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and any
Shares made available hereunder as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all participants and their legal representatives. No member of the
Board, no member of the Committee and no employee of the Company shall be liable
for any act or failure to act hereunder, by any other member or employee or by
any agent to whom duties in connection with the administration of this Plan have
been delegated or, except in circumstances involving his or her bad faith, gross
negligence or fraud, for any act or failure to act by the member or employee.
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<PAGE>
4. Eligibility. All regular employees of the Company, and of each
qualified subsidiary of the Company designated for participation by the Board of
Directors, other than:
(a) employees who have been employed less than one year; or
(b) employees whose customary employment is 20 hours or less per
week; or
(c) employees whose customary employment is for not more than 5
months per year; or
(d) employees described in paragraph 8(a) below; or
(e) employees who have not reached the age of majority in their state
of residence;
shall be eligible to participate in the Plan. For the purposes of this Plan,
the term "qualified subsidiary" means any subsidiary, 50% or more of the total
combined voting power of all classes of stock in which is now owned or hereafter
acquired by the Company or any such qualified subsidiary.
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<PAGE>
5. Participation. An eligible employee may elect to participate in
the Plan as of any "Enrollment Date". Enrollment Dates shall occur on the first
day of an Offering Period (as defined in paragraph 8). Any such election shall
be made by completing and forwarding to the Company an enrollment and payroll
deduction authorization form prior to such Enrollment Date, authorizing payroll
deductions in such amount as the employee may request but in no event less than
the minimum nor more than the maximum amount as the Committee shall determine.
A participating employee may increase or decrease his payroll deductions as of
any subsequent Enrollment Date by completing and forwarding to the Company a
revised payroll deduction authorization form; provided, that changes in payroll
deductions shall not be permitted to the extent that they would result in total
payroll deductions below the minimum or above the maximum amount as is specified
by the Committee. An eligible employee may not initiate, increase or decrease
payroll deductions as of any date other than an Enrollment Date except by
withdrawing from the Plan as provided in paragraph 7.
6. Payroll Deduction Accounts. The Company shall establish on its
books and records a "Payroll Deduction Account" for each participating employee,
and shall credit all payroll deductions made on behalf of each employee pursuant
to paragraph 5 to his or her Payroll Deduction Account. No interest shall be
credited to any Payroll Deduction Account.
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<PAGE>
7. Withdrawals. An employee may withdraw from an Offering Period at
any time by completing and forwarding a written notice to the Company. Upon
receipt of such notice, payroll deductions on behalf of the employee shall be
discontinued commencing with the immediately following payroll period. Unless
the withdrawal form is submitted at least three days before the last trading day
of the month, the amount credited to the employee's Payroll Deduction Amount
will be applied to purchase stock. Except as provided in the previous sentence,
amounts credited to the Payroll Deduction Account of any employee who withdraws
shall be refunded to the employee as soon as practicable after the withdrawal.
The employee may resume participation in the Plan at the next Enrollment Date,
by filing a new election in accordance with paragraph 5 at least two weeks prior
to the Enrollment Date.
8. Offering Periods. The Plan shall be implemented by consecutive
six-month Offering Periods with a new Offering Period commencing on the first
trading day on or after the first day of each January and July during the term
of the Plan, or on such other date as the Committee shall determine, and
continuing thereafter to the end of such period, subject to termination in
accordance with paragraph 17 hereof. "Trading day" shall mean a day on which the
New York Stock Exchange is open for trading. The Committee shall have the power
to change the duration of Offering Periods (including the commencement dates
thereof) with respect to future offerings. The last trading day of each
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<PAGE>
Offering Period prior to the termination of the Plan (or such other trading date
as the Committee shall determine) shall constitute the purchase dates (the
"Share Purchase Dates") on which each employee for whom a Payroll Deduction
Account has been maintained shall purchase the number of Shares determined under
paragraph 9(a). Nothwithstanding the foregoing, the Company shall not permit the
exercise of any right to purchase Shares
(a) to an employee who, immediately after the right is granted,
would own shares possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or any subsidiary;
or
(b) which would permit an employee's rights to purchase shares
under this Plan, or under any other qualified employee stock purchase
plan maintained by the Company or any subsidiary, to accrue at a rate in
excess of $25,000 in fair market value (as determined on the first day of
the offering period) for each calendar year.
For the purposes of subparagraph (a), the provisions of Section 424 (d) of the
Internal Revenue Code shall apply in determining the stock ownership of an
employee, and the shares which an employee may purchase under outstanding rights
or options shall be treated as shares owned by the employee.
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<PAGE>
9. Purchase of Shares.
------------------
(a) Subject to the limitations set forth in paragraphs 7 and 8,
each employee participating in an offering shall purchase as many
whole Shares (plus any fractional interest in a Share) as may be
purchased with the amounts credited to his or her Payroll Deduction
Account seven days prior to the Share Purchase Date (or such other
date as the Committee shall determine) (the "Cutoff Date").
Employees may purchase Shares only through payroll deductions, and
cash contributions shall not be permitted.
(b) The "Purchase Price" for Shares purchased under the Plan
shall be not less than the lesser of (i) an amount equal to 85% of the
closing price of shares of Common Stock at the beginning of the Offering
Period or (ii) an amount equal to 85% of the closing price of shares of
Common Stock on the Share Purchase Date. For these purposes, the closing
price shall be as reported on the New York Stock Exchange Composite
Transactions list as reported in the Wall Street Journal, Midwest Edition.
The Committee shall have the authority to establish a different Purchase
Price as long as any such Purchase Price complies with the provisions of
Section 423 of the Code.
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<PAGE>
(c) On each Share Purchase Date, the amount credited to each
participating employee's Payroll Deduction Account as of the immediately
preceding Cutoff Date shall be applied to purchase as many whole Shares
(plus any fractional interest in a Share) as may be purchased with such
amount at the applicable Purchase Price. Any amount remaining in an
employee's Payroll Deduction Account as of the relevant Cutoff Date in
excess of the amount that may properly be applied to the purchase of Shares
shall remain credited to employee's Payroll Deduction Account for the next
Offering Period, unless the Committee directs that the amount be refunded
to the employee.
10. Brokerage Accounts or Plan Share Accounts. By enrolling in the
Plan, each participating employee shall be deemed to have authorized the
establishment of a brokerage account on his or her behalf at a securities
brokerage firm selected by the Committee. Alternatively, the Committee may
provide for Plan share accounts for each participating employee to be
established by the Company or by an outside entity selected by the Committee
which is not a brokerage firm. Shares purchased by an employee pursuant to the
Plan shall be held in the employee's brokerage or Plan share account ("Plan
Share Account") in his or her name, or if the employee so indicates on his or
her payroll deduction authorization form, in the employee's name
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<PAGE>
jointly with a member of the employee's family, with right of survivorship.
11. Rights as Stockholder. An employee shall have no rights as a
stockholder with respect to Shares subject to any rights granted under this Plan
until payment for such Shares has been completed at the close of business on the
relevant Share Purchase Date.
12. Certificates. Certificates for Shares purchased under the Plan
will not be issued automatically. However, certificates for whole Shares
purchased shall be issued as soon as practicable following an employee's written
request. A reasonable charge may be imposed for the issuance of such
certificates. Fractional interests in Shares shall be carried forward in an
employee's Plan Share Account until they equal one whole Share or until the
termination of the employee's participation in the Plan, in which event an
amount in cash equal to the value of such fractional interest shall be paid to
the employee in cash. If a share certificate is issued to an employee, the
employee will be required to notify the Company of his disposition of such
shares, if his disposition occurs within time periods established by the
Company.
13. Termination of Employment. If a participating employee's
employment is terminated for any reason, if an em-
-9-
<PAGE>
ployee dies, if an employee is granted a leave of absence of more than 90 days
duration, or if an employee otherwise ceases to be eligible to participate in
the Plan, payroll deductions on behalf of the employee shall be discontinued and
any amounts then credited to the employee's Payroll Deduction Account shall be
refunded to the employee as soon as practicable.
14. Rights Not Transferable. Rights granted under this Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during an employee's lifetime only
by the employee.
15. Employment Rights. Neither participation in the Plan, nor the
exercise of any right granted under the Plan, shall be made a condition of
employment, or of continued employment with the Company or any subsidiary.
Participation in the Plan does not limit the right of the Company or any
subsidiary to terminate a participating employee's employment at any time or
give any right to an employee to remain employed by the Company or any
subsidiary in any particular position or at any particular rate of remuneration.
16. Application of Funds. All funds received by the Company for
Shares sold by the Company on any Share Purchase Date pursuant to this Plan may
be used for any corporate purpose.
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<PAGE>
17. Amendments and Termination. The Board of Directors may amend the
Plan at any time, provided that no such amendment shall be effective unless
approved within 12 months after the date of the adoption of such amendment by
the affirmative vote of stockholders holding shares of Common Stock entitled to
a majority of the votes represented by all outstanding shares of Common Stock
entitled to vote if such stockholder approval is required for the Plan to
continue to comply with the requirements of Securities and Exchange Commission
Regulation (S) 240.16b-3 and Section 423 of the Internal Revenue Code. The Board
of Directors may suspend the Plan or discontinue the Plan at any time. Upon
termination of the Plan, all payroll deductions shall cease and all amounts then
credited to the participating employees' Payroll Deduction Accounts shall be
equitably applied to the purchase of whole Shares then available for sale, and
any remaining amounts shall be promptly refunded to the participating employees.
18. Applicable Laws. This Plan, and all rights granted hereunder,
are intended to meet the requirements of an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code, as from time to time amended, and the
Plan shall be construed and interpreted to accomplish this intent. Sales of
Shares under the Plan are subject to, and shall be accomplished only in
accordance with, the requirements of all applicable securities and other laws.
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<PAGE>
19. Expenses. Except to the extent provided in paragraph 12, all
expenses of administering the Plan, including expenses incurred in connection
with the purchase of Shares in the open market for sale to participating
employees, shall be borne by the Company and its subsidiaries.
20. Stockholder Approval. The Plan was adopted by the Board of
Directors on _________, 19__, subject to stockholder approval. The Plan and any
action taken hereunder shall be null and void if stockholder approval is not
obtained at the next annual meeting of stockholders.
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<PAGE>
Exhibit 10.14
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of
the 22nd day of April, 1997, by and among La Salle Partners Incorporated (the
"Company"), a Maryland corporation formed to succeed to the business currently
conducted by La Salle Partners Limited Partnership ("LPL") and La Salle Partners
Management Limited Partnership ("LPML" and, together with LPL, "La Salle
Partnerships"), DEL-LPL Limited Partnership, a Delaware limited partnership
("DEL-LPL"), DEL-LPAML Limited Partnership, a Delaware limited partnership
("DEL-LPML" and, together with DEL-LPL, the "DEL Partnerships"), DSA-LSPL, Inc.,
a Delaware corporation ("DSA"), DSA-LSAM, Inc., a Delaware corporation ("DSA
II"; DSA, DSA II and their permitted assignees are sometimes collectively
referred to herein as the "DSA Parties"), and Galbreath Holdings LLC ("G-LLC,"
which, together with its permitted assignees, is referred to as the "Galbreath
Parties" and, with the DEL Partnerships and the DSA Parties, is collectively
referred to as the "Holders").
INTRODUCTION:
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DEL-LPL, DSA and G-LLC are parties to LPL's Amended and Restated
Partnership Agreement (the "LPL Agreement"), and DEL-LPAML, DSA II and G-LLC are
parties to LPML's Amended and Restated Partnership (the "LPML Agreement"; the
LPL Agreement and the LPML Agreement are sometimes collectively referred to
herein as the "La Salle Partnership Agreements" and each as a "La Salle
Partnership Agreement"). Pursuant to the La Salle Partnership Agreements, the
Holders collectively own all of the issued and outstanding partnership units
(the "Units") of the La Salle Partnerships.
The La Salle Partnerships, the DEL Partnerships and the DSA Parties
are parties to that certain Registration Rights Agreement dated as of November
30, 1994 (the "1994 Registration Rights Agreement");
The La Salle Partnerships are currently planning to incorporate their
businesses into the Company and subsidiaries of the Company and to issue common
stock in an underwritten public offering (the "IPO Transactions"). As part of
the IPO Transactions, the Units will be exchanged for shares of Common Stock of
the Company;
The DEL Partnerships, the DSA Parties and the La Salle Partnerships
desire to terminate the 1994 Registration Rights Agreement and enter into this
Agreement in order to take account of the IPO Transactions and to provide
identical registration rights to the DEL Partnerships, the DSA Parties and the
Galbreath Parties.
Accordingly, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the meaning ascribed to them below:
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"Affiliate" shall have the definition given to that term in Rule 12b-2
under the Exchange Act.
"Closing on the IPO Transaction" shall mean closing on a firm
commitment underwritten public offering of Common Stock.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of the
Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so described in
Section 9.
"Restricted Stock" shall mean the Common Stock owned by a Holder at
the time of Closing on the IPO, but excluding shares of Common Stock which (a)
have been registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with the
registration statement covering them, or (b) have been publicly sold pursuant to
Rule 144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 9.
2. Termination of 1994 Registration Rights Agreement; Effectiveness.
Upon Closing of the IPO Transaction:
(a) The 1994 Registration Rights Agreement shall be deemed
terminated and of no further force and effect; and
(b) The provisions of this Agreement shall become effective
without further action by any of the parties hereto.
3. Restrictive Legend. Each certificate representing Common Stock
shall, except as otherwise provided in this Section 3 or in Section 4, be
stamped or otherwise imprinted with a legend substantially in the following
form:
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"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SHARES HAVE BEEN
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
A certificate shall not bear such legend if, in the opinion of counsel
reasonably satisfactory to the Company, the securities being transferred may be
so transferred without registration under the Securities Act, including, but not
by way of limitation, pursuant to Rule 144(k) under the Securities Act.
4. Notice of Proposed Transfer; Right of First Offer. The provisions
of this Section 4 will apply to any proposed transfer of any Common Stock by a
Holder to a party other than (a) to any party to this Agreement; (b) to an
Affiliate of the transferring Holder; (c) to a party which, based on the
reasonable inquiry of the transferring Holder, will own after the transfer less
than five percent (5%) of the outstanding Common Stock of the Company unless
such party is one of the category of persons listed in Rule 13d-1 under the
Exchange Act, which person acquires such Common Stock in the ordinary course of
its business and not with the purpose nor with the effect of changing or
influencing the control of the Company, nor in connection with or as a
participant in any transaction having such purpose or effect; (d) to a purchaser
pursuant to the provisions of Rule 144 under the Securities Act, other than Rule
144(k); or (e) to an underwriter in a firm commitment underwriting pursuant to
Section 5 or 6 hereof (each of the transfers described in (a) through (e) of
this Section 4 being referred to as an "Exempted Transaction"). If a Holder
proposes to make a transfer that would not constitute an Exempted Transaction,
such Holder shall give written notice to the Company of its desire to effect
such transfer. Each such notice shall describe the manner of the proposed
transfer (including the consideration to be received) and, if requested by the
Company, shall be accompanied by an opinion of counsel reasonably satisfactory
to the Company to the effect that the proposed transfer may be effected without
registration under the Securities Act; provided, however, that no such opinion
of counsel shall be required (a) under the circumstance described in Section 5
or 6; or (b) for a transfer to one or more partners of the transferor (in the
case of a transferor that is a partnership) or to an affiliated corporation (in
the case of a transferor that is a corporation). Following receipt of such
notice of transfer, the Company shall have ten (10) business days in which to
elect to purchase all, but not less than all, of the Common Stock proposed to be
transferred, at a price equal to the average of the closing price of the Common
Stock on the national securities exchange on which it is then traded for the
five (5) trading days prior to the Holder's notice to the Company. If the
Company does not elect to purchase the Holder's Common Stock, the Holder shall
be entitled to transfer such stock in accordance with the terms of its notice.
Each certificate for Common Stock transferred as above provided shall bear the
legend set forth in Section 3, except that such certificate shall not bear such
legend if (i) such transfer is in accordance with the provisions of Rule 144 (or
any other rule permitting public sale without registration under the Securities
Act) or (ii) the opinion counsel referred to above is to the further effect that
the transferee and any subsequent transferee (other than an
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<PAGE>
affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 4 shall apply to all Common Stock owned by the
Holders, regardless of whether the certificates representing such Common Stock
are required to bear the legend prescribed by Section 3 in accordance with the
provisions of that Section.
5. Required Registration. (a) At any time after twelve (12) months
from the date of this Agreement, each of the DEL Partnerships, the DSA Parties,
and the Galbreath Parties (a "Requesting Holder") may request the Company to
file a registration statement under the Securities Act covering the registration
for sale of all or any portion of the shares of Restricted Stock held by such
Requesting Holder in the manner specified in such notice, provided that the
shares of Restricted Stock for which registration has been requested shall
constitute at least 20% of the total shares of Restricted Stock originally
issued to such holder if such Requesting Holder shall request the registration
of less than all shares of Restricted Stock then held by such Requesting Holder
(or any lesser percentage if the reasonably anticipated aggregate price to the
public of such public offering would exceed $5,000,000). Notwithstanding
anything to the contrary contained herein, no request may be made under this
Section 5 within 120 days after the effective date of a registration statement
filed by the Company (i) upon request of a party hereto or (ii) in which the
Holders shall have been entitled to join pursuant to Section 6, and (in either
such event) in which there shall have been effectively registered all shares of
Restricted Stock as to which registration shall have been requested.
(b) Following receipt of any notice under this Section 5, the
Company shall immediately notify in writing all Holders from whom notice has not
been received and shall use its best efforts to effect the registration under
the Securities Act, for public sale in accordance with the method of disposition
specified in such notice from Requesting Holders, the number of shares of
Restricted Stock specified in such notice (and in all notices received by the
Company from other Holders within 30 days after the giving of such notice by the
Company, all of whom shall be deemed to be Requesting Holders hereunder). If
such method of disposition shall be an underwritten public offering, the
Requesting Holder which made the request first in time may designate the
managing underwriter of such offering, subject to the approval of the Company,
which approval shall not be unreasonably withheld or delayed.
(c) In the event that there shall be more than one Requesting
Holder, or if the Company determines to include the shares of Common Stock in
such Registration Statement pursuant to Section 5(e), then, if the registration
requested involves an underwritten public offering, the managing underwriter of
such offering shall determine whether existing market conditions permit the
inclusion in the registration of all shares of Restricted Stock which the
parties hereto wish to include in such registration pursuant to Section 5(a) and
5(b). If, in the opinion of such managing underwriter, the number of shares of
Restricted Stock to be included in such registration exceeds the largest number
(the "Maximum Sale Number") that can be sold in an orderly manner in such
offering within the price range acceptable to the parties requesting
registration, the managing underwriter shall so advise the Company. In such
case, subject to Section 5(e) hereof, the Company shall include in such
registration the Maximum Sale
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<PAGE>
Number, allocated, first, to the shares to be registered by the Company for sale
for its own account; second, to the shares of Restricted Stock proposed to be
registered by the Requesting Holder who made the registration request first in
time; and thereafter among the shares proposed to be registered by the other
Requesting Holders pro rata in accordance with the aggregate number of shares of
Restricted Stock proposed to be registered by them.
(d) Each of the DEL Partnerships, the DSA Parties and the
Galbreath Parties shall have the right (subject to the provisions of Section
5(c)) to effect only two demand registrations pursuant to this Agreement,
provided, however, that any demand registration that is effected pursuant to
the request of a Holder which includes fewer than the entire number of shares or
Restricted Stock requested by such Holder shall not be deemed a demand
registration for purposes of the limitation to two demands. For purposes of this
Agreement, the DEL Partnerships shall be deemed to be one entity, the DSA
Parties shall be deemed to be one entity and the Galbreath Parties shall be
deemed to be one entity.
(e) The Company shall be entitled to include in any registration
statement referred to in this Section 5, for sale in accordance with the method
of disposition specified by the Requesting Holders, shares of Common Stock to be
sold by the Company for its own account. If, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten public
offering), such inclusion would cause the number of shares of Common Stock
registered to exceed the Maximum Sale Number, then the Company will nevertheless
have the right to include such shares of Common Stock for its own account if the
Board of Directors of the Company certifies to Requesting Holders that the
Company has a bona fide need to raise capital in the amount represented by the
shares of Common Stock requested to be included for its own account. In such
case, the Company shall include in such registration the Maximum Sale Number,
allocated, first, to the Company shares; second, to the shares to be sold by the
Requesting Holder who made the registration request first in time; and
thereafter among the other Requesting Holders, determined pro rata in accordance
with the aggregate number of shares of Restricted Stock proposed to be
registered by them. Except as provided in this Section 5(e) and except for
registration statements on Form S-4, S-8 or any successor thereto, the Company
will not file with the Commission any other registration statement with respect
to its Common Stock, for its own account, from the date of receipt of a notice
from a Requesting Holder pursuant to this Section 5 until the completion of the
period of distribution of the registration contemplated thereby.
6. Incidental Registration. If the Company at any time after twelve
(12) months after the date of this Agreement (other than pursuant to Section 5)
proposes to register any of its Common Stock under the Securities Act for sale
to the public, whether for its own account or for the account of other
shareholders or both (except with respect to registration statements on Form S-
4, S-8 or another form not available for registering the Restricted Stock for
sale to the public), each such time it will give written notice to all holders
of Restricted Stock of its intention so to do. Upon the written request of any
such holder, received by the Company within 30 days after the giving of any such
notice by the Company, to have any of its shares of Registered Stock registered
(which request shall state the intended method of disposition
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<PAGE>
thereof), the Company will use its best efforts to cause the shares of
Restricted Stock as to which registration shall have been so requested to be
included in the shares to be covered by the registration statement proposed to
be filed by the Company, all to the extent requisite to permit the sale or other
disposition by the holder (in accordance with its written request) of such
shares of Restricted Stock so registered. The Company shall be entitled to
include shares of Common Stock for its own account in any registration statement
referred to in this Section 6, for sale in accordance with the method of
distribution specified by the requesting holder of Restricted Securities, if
such registration statement is being filed at the request of such holder. In
the event that any registration effected pursuant to this Section 6 shall
involve, in whole or in part, a firm commitment underwritten public offering of
Common Stock, the number of shares of Restricted Stock to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would materially and adversely
affect the distribution of the securities to be sold by the Company therein. In
the event of such reduction, the Company shall include in such registration,
first, the shares to be registered by the Company for sale for its own account;
second, the shares of restricted stock proposed to be sold by a holder who
requested the registration, if the registration is filed at the request of a
holder; and, third, the shares of all other holders (or if the registration is
not filed at the request of a holder, all holders), including the Holders, pro
rata in accordance with the aggregate number of shares of restricted stock (or,
in the case of the Holders, shares of Restricted Stock) proposed to be
registered by them.
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 6 without thereby incurring
any liability to the holders of Restricted Stock.
7. Registration Procedures. (a) If and whenever the Company is
required by the provisions of Section 5 or 6 to use its best efforts to effect
the registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant
to Section 5, shall be on Form S-1, S-3, if available, or other form of
general applicability satisfactory to the managing underwriter selected as
therein provided) with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as hereinafter
provided);
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above and
comply with the provisions of the Securities Act with respect to the
disposition of all shares of Restricted Stock covered by such registration
statement in accordance with the
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<PAGE>
sellers or sellers' intended method of disposition set forth in such
registration statement for such period;
(iii) furnish to each seller of shares of Restricted Stock
and to each underwriter such number of copies of the registration statement
and the prospectus included therein (including each preliminary
prospectus), including any supplements thereto, and other documents as such
persons reasonably may request in order to facilitate the public sale or
other disposition of the Restricted Stock covered by such registration
statement;
(iv) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Restricted Stock or, in the case of an underwritten public offering, the
managing underwriter reasonably shall request, provided, however, that the
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to list the Restricted Stock
covered by such registration statement with any securities exchange on
which the Common Stock of the Company is then listed;
(vi) immediately notify each seller of shares of
Restricted Stock and each underwriter under such registration statement, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, or if it is necessary to amend or supplement such prospectus to
comply with the law, in which case each seller of Restricted Stock and each
underwriter therefore shall immediately cease delivery of such prospectus
and the Company will, at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement or an
amendment to such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares of Restricted Stock or
securities, such prospectus, as amended or supplemented, will comply with
the law;
(vii) if the offering is underwritten and at the request of
any seller of Restricted Stock, use its best efforts to furnish on the date
that Restricted Stock is delivered to the underwriters for sale pursuant to
such registration: (i) an opinion dated such date of counsel representing
the Company for the purposes of such registration, addressed to the
underwriters and to such
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<PAGE>
seller, stating that such registration statement has become effective under
the Securities Act and that (A), to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement, the
related prospectus and each amendment or supplement thereto comply as to
form in all material respects with the requirements of the Securities Act
(except that such counsel need not express any opinion as to financial
statements contained therein) and (C) to such other effects as reasonably
may be requested by counsel for the underwriters or by such seller or its
counsel and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters and to
such seller, in such form as is customary in the securities business for
such an offering with respect to such registration as such underwriters
reasonably may request;
(viii) as necessary to satisfy applicable due diligence
requirements, make available for inspection by each seller of Restricted
Stock, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, subject to reasonable agreements
regarding confidentiality, financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant or agent, in connection
with such registration statement; and
(ix) issue to any underwriter to which any holder of
shares of Restricted Stock may sell such shares of Restricted Stock in
connection with any such registrations (and to any direct or indirect
transferee of any such underwriter or to such holder, if such registered
offering is not underwritten) certificates evidencing such shares of
Restricted Stock without any legend restricting the transferability of the
shares of Restricted Stock.
(b) For purposes of Section 7(a) and 7(b) and of Section 5(c),
the period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock covered thereby and
120 days after the effective date thereof.
(c) In connection with each registration hereunder, the sellers
of Restricted Stock will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws.
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(d) In connection with the preparation and filing of each
registration statement registering shares of Restricted Stock under the
Securities Act, the Company shall give the holders of shares of Restricted Stock
on whose behalf such shares of Restricted Stock are to be so registered and
their underwriters, if any, and their respective counsel and accountants, the
opportunity to review such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto.
(e) In connection with each registration pursuant to Section 5
or 6 covering an underwritten public offering, the Company and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature;
provided, however, that no seller shall be required to make any representations,
warranties or covenants relating to the Company and that the Company shall make
such representations, warranties and covenants.
8. Expenses. (a) All expenses incurred by the Company in complying
with Sections 5 and 6, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of insurance and
fees and disbursements not to exceed $50,000 for one counsel for the sellers of
Restricted Stock, but excluding any Selling Expenses, are called "Registration
Expenses." All underwriting discounts and selling commissions applicable to the
sale of Restricted Stock are called "Selling Expenses."
(b) The Company will pay all Registration Expenses in accordance
with each registration statement under Section 5 and 6. All Selling Expenses in
connection with each registration statement under Section 5 or 6 shall be borne
by the participating sellers in proportion to the number of shares sold by each,
or by such participating sellers other than the Company (except to the extent
the Company shall be a seller) as they may agree.
9. Indemnification and Contribution. (a) In the event of a
registration of any of the Restricted Stock under the Securities Act pursuant to
Section 5 or 6, the Company will indemnify and hold harmless each seller of such
Restricted Stock thereunder, each officer, director, partner, agent and employee
of seller, each underwriter (as defined in the Securities Act) of such
Restricted Stock thereunder and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act, the Exchange Act, or other foreign,
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement under which such Restricted Stock was registered under the Securities
Act pursuant to Section 5 or 6, any preliminary prospectus or final prospectus
contained therein, or any amendment thereof or
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supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus, and provided further that, with respect to any untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus, such indemnity in this subsection (a) shall not inure to the benefit
of any seller or underwriter if the person asserting any such loss, claim,
damage or liability who purchased the Common Shares which are the subject
thereof did not receive a copy of an amended preliminary prospectus or final
prospectus (or final prospectus as amended or supplemented) at or prior to the
written confirmation of the sale of such Common Shares to such person and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact made in such preliminary prospectus was corrected in the amended
preliminary prospectus or final prospectus (or final prospectus as amended and
supplemented).
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Section 5 or 6, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Section 5 or 6, any
preliminary prospectus or final prospectus contained therein, or any amendment
thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that such seller will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus, and provided, further, however, that the
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim,
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damage, liability or expense which is equal to the proportion that the public
offering price of the shares sold by such seller under such registration
statement bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the proceeds by such seller from the
sale of Restricted Stock covered by such registration statement net of all
underwriting discounts and commissions.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to such indemnified party other than under this Section 9 and shall
relieve it only for any liability which it may have to such indemnified party
under this Section 9 if and to the extent the indemnifying party is prejudiced
by such omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with one counsel so selected, provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Restricted Stock exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 9 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 9 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 9, then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
that such holder is responsible for the portion represented by the percentage
that the public offering price of all securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the
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Company is responsible for the remaining portion; provided, however, that, in
any such case, (A) no such holder will be required to contribute any amount in
excess of the public offering price of all such Restricted Stock offered by it
pursuant to such registration statement net of all underwriting discounts and
commissions; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
10. Changes in Common Stock. If, and as often as, there is any
fundamental change in the Common Stock by way of a stock split, stock dividend,
combination or reclassification or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof as may be required so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock as so changed.
11. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the shares of Restricted Stock to the public without registration,
at all times after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents filed by the Company as such
holder may reasonably request in writing in availing itself of any rule or
regulation of the Commission allowing such holder to sell any Restricted Stock
without registration.
12. Representations and Warranties of the Company. Effective upon
the effectiveness of this Agreement pursuant to Section 2, the Company
represents and warrants to the DEL Partnerships, the DSA Parties and the
Galbreath Parties as follows:
(a) The execution, delivery and performance of this Agreement by
the Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Charter or Bylaws of the Company or any provision of any
indenture, agreement or other instrument to which it or any of its properties
or assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other
12
<PAGE>
instrument or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
13. Miscellaneous.
(a) All covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including without
limitation permitted transferees of any Restricted Stock), whether so expressed
or not; provided, however, that notwithstanding the foregoing, and except as
provided below, no Holder shall have the right to sell, assign or otherwise
transfer any of its rights hereunder, whether or not in connection with a
transfer of Restricted Stock, without the express written consent of the
Company, which may be withheld by the Company in its sole discretion.
Notwithstanding anything else to the contrary in this Section 13(a):
(i) any party hereto shall have the right to assign its
rights hereunder to an Affiliate in connection with the transfer of
Restricted Stock to that Affiliate; and
(ii) the Galbreath Parties shall have the right to assign
their rights hereunder to Lizanne Galbreath in connection with the transfer
of Restricted Stock to her, in which event the term "Restricted Stock" as
applied to Lizanne Galbreath shall be deemed to include any shares of
Common Stock transferred to her by Galbreath-LPL Holdings, LLC, a Delaware
limited liability company, after the date hereof, a well as any shares of
Common Stock held by her that would otherwise be deemed to be Restricted
Stock under Section 1.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by telecopier or
telex, addressed to such party as follows:
if to the Company, to:
La Salle Partners Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Chief Financial Officer
Fax: (312) 782-4339
13
<PAGE>
with a copy to:
Hagan & Associates
200 East Randolph Drive
Chicago, Illinois 60601
Attn: R.K. Hagan, Esquire
Fax: (312) 782-4339
if to DEL-LPL Limited Partnership or DEL-LPALM Limited Partnership,
to:
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Chief Financial Officer
Fax: (312) 782-4339
with a copy to:
Hagan & Associates
200 East Randolph Drive
Chicago, Illinois 60601
Attn: R.K. Hagan, Esquire
Fax: (312) 782-4339
if to DSA-LSPL, Inc. or DSA-LSAM, Inc., to:
c/o Dai-Ichi Life (U.S.A.), Inc.
399 Park Avenue, 24th Floor
New York, New York 10022
Attn: Director
Fax: (212) 308-7582
with a copy to:
O'Melveny & Myers L.L.P.
153 East 53rd Street, Suite 5400
New York, New York 10022-2611
Attn: Ko-Yung Tung
Fax: (212) 326-2061
14
<PAGE>
if to Galbreath Holdings LLC, to:
437 Madison Avenue, 38th Floor
New York, New York 10022
Attn: Lizanne Galbreath
Fax: (212) 843-0034
with a copy to:
Scott F. Smith
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10119
Fax: (212) 841-1010
or subsequent transferee at such address as may have been furnished to the
Company in writing by such party or subsequent holder, or at such other address
or addresses as shall have been furnished in writing to the Company (in the case
of a holder of Restricted Stock) or to the holders of Restricted Stock (in the
case of the Company) in accordance with the provisions of this paragraph.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
(d) This Agreement may not be amended or modified in any way
that could adversely affect a Holder without the Holder's prior written consent,
and no provision hereof may be waived, without the written consent of the
Company and the holders of at least two-thirds of the outstanding shares of
Restricted Stock.
(e) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f) The obligations of the Company to register shares of
Restricted Stock under Section 5 or 6 shall terminate as to any of the DEL
Parties, the DSA Parties or the Galbreath Parties, on the later of (i) the date
on which the Company delivers to such party an opinion of counsel reasonably
acceptable to such party to the effect that such party is no longer an Affiliate
of the Company; or (ii) the first date on which the shares of Restricted Stock
owned by such party constitute less than eight percent (8%) of the outstanding
shares of Common Stock of the Company, which termination shall be effective
without any further action by any party hereto. Notwithstanding the foregoing,
the Company agrees that the provisions of Section 6 shall remain in effect, or
shall become effective again following such termination, as applicable (and
without further action by any party hereto) in the event that the Company grants
"piggyback" registration rights to a holder of shares of Common Stock other than
pursuant to
15
<PAGE>
this Agreement, with the result that the Holders shall have rights under Section
6 during any period in which another holder of shares of Common Stock shall have
"piggyback" registration rights.
(g) Notwithstanding the provisions of Section 8(a), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for
not more than three periods not to exceed an aggregate of 90 days in any 12-
month period if there exists at the time material nonpublic information relating
to the Company which, in the reasonable opinion of the Board of Directors of the
Company, should not be disclosed.
(h) From and after the date of this Agreement, the Company shall
not, without the prior written consent of the holders of at least two-thirds of
the outstanding shares of Restricted Stock, enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder (a) to include such securities in any
registration filed under Section 5 or 6 of this Agreement, unless under the
terms of such agreement such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of its
securities will not reduce the amount of the shares of Restricted Stock of the
holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the date
the Company receives a request from holders pursuant to Section 5 or within 120
days of the effective date of any registration effected pursuant to Section 5.
(i) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
16
<PAGE>
LA SALLE PARTNERS INCORPORATED
By: /s/ William E. Sullivan
-------------------------
Title________________________
DEL-LPL LIMITED PARTNERSHIP
By: /s/ Robert C. Spoerri
-------------------------
Title________________________
DEL-LPAML LIMITED PARTNERSHIP
By: /s/ Charles K. Esler
-------------------------
Title________________________
DSA-LSPL, INC.
By: /s/ Naoki Fukuda
-------------------------
Title________________________
DSA-LSAM, INC.
By: /s/ Naoki Fukuda
-------------------------
Title________________________
GALBREATH HOLDINGS LLC
By: /s/ Lizanne Galbreath
-------------------------
Title________________________
17
<PAGE>
Exhibit 10.16
EXECUTION
This Consent Agreement (this "Agreement"), dated as of April 15, 1997, is
by and among DSA-LSPL, INC. ("DSA-LSPL"), DSA-LSAM, INC. ("DSA-LSAM"; and
together with DSA-LSPL, the "Dai-Ichi Entities"), DEL-LPL Limited Partnership
("DEL-LPL"), DEL-LPAML Limited Partnership ("DEL-LPAML"; and together with DEL-
LPL the "DEL Partnerships"), DEL/LaSalle Finance Company, L.L.C. ("DEL Finance";
and together with the DEL Partnerships, the "DEL Parties"), LaSalle Partners
Limited Partnership ("LPL") and LaSalle Partners Management Limited Partnership
("LPML"; and together with LPL, the "Lower Tier Partnerships").
RECITALS
WHEREAS, the DEL Parties propose to reorganize the Lower Tier Partnerships
by (i) organizing a corporation under the laws of the State of Maryland to be
names LaSalle Partners Incorporated ("LPI"), (ii) requiring each partner of the
Lower Tier Partnerships to contribute all of its respective partnership
interests in the Lower Tier Partnerships into LPI in exchange for shares of
LPI's capital stock, and (iii) transferring all of the businesses of the Lower
Tier Partnerships and their respective subsidiaries through mergers, transfers
of ownership interests and transfers of assets and liabilities, all as more
fully set forth in a Plan of Reorganization (collectively, the
"Reorganization");
WHEREAS, prior to the Reorganization, the DEL Partnerships propose to enter
into a transaction (the "Galbreath Transaction") concerning The Galbreath
Company and Galbreath Company of California, Inc. (the "Galbreath Companies")
pursuant to the terms of a Letter of Intent dated March 24, 1997 entered into by
LPL (on its behalf and on behalf of its affiliates) and Lizanne Galbreath (on
her own behalf and on behalf of the other shareholders of the Galbreath
Companies);
WHEREAS, pursuant to Section 4.1(e) of the Amended and Restated Agreement
of Limited Partnership of LPL dated as of November 30, 1994 (the "LPL
Partnership Agreement") and Section 4.1(e) of the Amended and Restated
Agreement of Limited Partnership of LPML dated as of November 30, 1994 (the
"LPML Partnership Agreement"; and together with LPL Partnership Agreement, the
"Lower Tier Partnership Agreements"), the DEL Partnerships have a right to
purchase up to 492,291 partnership units of the Lower Tier Partnerships at
prices set forth therein, which prices are below the estimated current market
value of such partnership units (such rights, the "DEL Purchase Rights");
WHEREAS, in connection with the Reorganization, the DEL Partnerships seek
to receive certain shares (the "DEL Exchange Shares") of LPI common stock (the
"Common Stock") in exchange for the termination of the DEL Purchase Rights (such
exchange, the "Exchange");
<PAGE>
WHEREAS, the DEL Parties and the Galbreath Companies have agreed that the
value of the Galbreath Companies is equal to a percentage amount (the "Galbreath
Companies Percentage Value") up to 18% of the fully diluted value of the Lower
Tier Partnerships and the Galbreath Companies combined;
WHEREAS, the DEL Parties and the Galbreath Companies have agreed that, in
the event the Galbreath Transaction has been consummated, upon the issuance of
the DEL Exchange Shares to the DEL Parties, in order to avoid dilution to the
interest in the Lower Tier Partnerships held by the Galbreath Companies, LPI
shall issue additional shares in connection with the Galbreath Transaction (the
"Addition Galbreath Shares") equal to the Galbreath Companies Percentage Value
multiplied by the sum of (x) the number of DEL Exchange Shares and (y) the
number of the Additional Galbreath Shares (such issuance, the "Additional
Galbreath Issuance");
WHEREAS, the DEL Parties propose to consummate an underwritten initial
public offering of certain shares of common stock of LPI immediately after the
Reorganization (the "IPO") and propose to use Morgan Stanley & Co. and William
Blair & Company as underwriters in connection with the IPO (the "Underwriters");
WHEREAS, the DEL Parties have requested the consent of the Dai-Ichi
Entities to the proposed Reorganization, Exchange, Additional Galbreath Issuance
and IPO; and
WHEREAS, the Dai-Ichi Entities are willing to provide such consent subject
to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual provisions and covenants
hereinafter contained and for other good and valuable consideration, the parties
hereto agree as follows:
1. Consent. Each of the Dai-Ichi Entities hereby consents to the
Reorganization, Exchange, Additional Galbreath Issuance and IPO, subject to the
terms and conditions provided herein.
2. Plan of Reorganization. The Plan of Reorganization and other documents
relating to the reorganization (the "Reorganization Documents") shall provide
that the Dai-Ichi Entities shall receive (x) not less than 20.03% (in the event
the Galbreath Transaction has been consummated) and (y) not less than 24.43% (in
the event the Galbreath Transaction has not been consummated) of the aggregate
number of shares of Common Stock outstanding after the Reorganization (in each
case, not taking into account the Exchange, the Additional Galbreath Issuance or
the IPO). The Reorganization Documents shall otherwise be in form and substance
reasonably satisfactory to the Dai-Ichi Entities.
2
<PAGE>
3. Capital Account Adjustment. Prior to the Reorganization, the
correlation between the Capital Account (as such term is used in the Lower Tier
Partnership Agreements) and the percentage of shares of Common Stock the
Dai-Ichi Entities shall receive in connection with the Reorganization shall be
satisfactory to the Dai-Ichi Entities.
4. Exchange. The number of DEL Exchange Shares issued pursuant to the
Exchange shall not exceed the number determined in accordance with the formula
set forth in Attachment I hereto.
5. Organizational Documents of LPI. The Certificate of Incorporation and
the By-Laws of LPI shall be in form and substance reasonably satisfactory to the
Dai-Ichi Entities.
6. Effectiveness of Reorganization, Etc. The Reorganization shall become
effective only after the Underwriters have agreed to purchase Common Stock in
connection with the IPO in accordance with the terms and conditions set forth
herein. The Reorganization shall not cause any adverse tax or other adverse
consequences (except as otherwise expressly consented to hereunder) to either of
the Dai-Ichi entities or any of its affiliates.
7. IPO Terms. The IPO shall be completed on or prior to November 15, 1997,
shall result in the listing of the Common Stock on The New York Stock Exchange
and shall raise net proceeds in an amount not less than the aggregate
outstanding principal and interest on the Second Amended and Restated Class A
Subordinated Promissory Notes and the Amended and Restated Class B Subordinated
Promissory Notes each dated August 27, 1996 and issued by LPL and LPML to
DSA-LSPL and DSA-LSAM, respectively (the "Class A Notes" and the "Class B Notes"
respectively; collectively, the "Notes"). The net proceeds from the IPO shall
first be applied toward repayment of the outstanding principal and interest on
the Notes. The public offering price per share of Common Stock shall not be less
than a price equivalent to a per unit value of the partnership units of the
combined Lower Tier Partnerships of (x) $82.61 (in the event the Galbreath
Transaction has been consummated) and (y) $81.78 (in the event the Galbreath
Transaction has not been consummated). Upon completion of the IPO, the Dai-Ichi
Entities shall hold in the aggregate (x) no less than 13.30% (in the event the
Galbreath Transaction has been consummated) and (y) no less than 15.15% (in the
event the Galbreath Transaction has not been consummated) of the outstanding
number of shares of Common Stock. No shareholder of LPI may participate in any
secondary offering of its shares of Common Stock in connection with the IPO,
except that DEL Finance may, pursuant to any exercise of each Underwriter's
"greenshoe" option, if any, sell to the Underwriters additional shares of Common
Stock held by DEL Finance in an amount not exceeding 15% of the number of shares
issued by LPI pursuant to the IPO. All net proceeds of any such secondary
offering of Common Stock by DEL Finance shall be applied toward repayment of
indebtedness owed by DEL Finance to Dresdner Bank AG. The only class of shares
that LPI may issue pursuant to the Reorganization or the IPO shall be the Common
Stock.
3
<PAGE>
8. Registration Rights. Prior to the Reorganization, the Dai-Ichi
Entities and LPI shall have entered into an agreement (the "Registration Rights
Agreement") reasonably satisfactory to such parties which agreement shall
include customary terms and conditions and provide that upon completion of the
IPO, the Dai-Ichi Entities shall have the following rights with respect to the
Common Stock held by them:
(i) Demand: two demand registration rights exercisable at any time
after eighteen months from the date of the IPO, at the cost of
LPI, with priority over holders of piggyback registration
rights;
(ii) Piggyback: unlimited piggyback registration rights providing for
LPI to use its best efforts to include shares of Common Stock
held by the Dai-Ichi Entities in any registration of Common
Stock after the IPO, pro rata with all stockholders exercising
piggyback registration rights; and
(iii) Rule 144 Rights: rights to sell Common Stock pursuant to Rule
144 under the Securities Act of 1933, as amended, subject to
contractual lock-up agreements applicable to the Dai-Ichi
Entities and the DEL Parties.
9. Transfers. Except as may be consented to by the parties hereto or as
may be required by law or pursuant to a contractual lock-up agreement applicable
to the Dai-Ichi Entities and the DEL Parties (which agreement shall not provide
any restriction after six months from the completion of the IPO as required by
the Underwriters and LPI), there shall be no restriction on the ability of the
Dai-Ichi Entities to transfer their shares of Common Stock. Notwithstanding the
foregoing there shall be no restriction on the right of the Dai-Ichi Entities to
transfer all or a portion of the Common Stock held by them to Dai-Ichi Life
(U.S.A.), Inc. or any one or more of its direct or indirect wholly owned
subsidiaries.
10. Periodic Meetings. Prior to the Reorganization, LPI and the Dai-Ichi
Entities shall have entered into an agreement reasonably satisfactory to such
parties pursuant to which the Dai-Ichi Entities and its advisors shall be
provided an opportunity to hold periodic meetings with such offers of LPI as the
Dai-Ichi Entities shall request for the purpose of discussing matters relating
to the operation and financial condition of LPI.
11. Trainees. Prior to the Reorganization, LPI and the Dai-Ichi Entities
shall have entered into an agreement reasonably satisfactory to such parties
providing employees of The Dai-Ichi Mutual Life Insurance Company and/or its
affiliates with the right to place employee-trainees at LPI in accordance with
the terms of Article VIII of the Lower Tier Partnership Agreements.
12. Assignment by Dai-Ichi Entities. Each of the Dai-Ichi Entities may
assign its rights hereunder to any of its affiliates. Each of the DEL Parties
may assign its
4 EXECUTION
<PAGE>
rights hereunder to any of its affiliates, provided that neither DEL Party may
delegate any of its obligations hereunder without the express written consent of
the Dai-Ichi Entities. Neither Lower Tier Partnership may assign its rights or
obligations hereunder without the express written consent of the Dai-Ichi
Entities.
13. Law to Govern: Other Provisions. This Agreement shall be governed and
construed in accordance with the internal laws of the State of Illinois. No
failure or delay by any party or any of its representatives in exercising any
right, power or privilege shall operate as a waiver thereof nor shall any single
or partial exercise preclude any other or further exercise of any right, power
or privilege. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
* * * * * * *
5 EXECUTION
<PAGE>
DEL-LPL LIMITED PARTNERSHIP
By: /s/ Robert C. Spoerri
------------------------
DEL-LPAML LIMITED PARTNERSHIP
By:
------------------------
DSA-LSPL, INC.
By:
------------------------
Name:
Title:
DSA-LSAM, INC.
By:
------------------------
Name:
Title:
LASALLE PARTNERS LIMITED
PARTNERSHIP
By: DEL-LPL LIMITED PARTNERSHIP,
Its General Partner
By: /s/ Robert C. Spoerri
------------------------
LASALLE PARTNERS MANAGEMENT
LIMITED PARTNERSHIP
By: DEL-LPAML LIMITED PARTNERSHIP,
Its General Partner
By:
------------------------
S-1 EXECUTION
<PAGE>
EXHIBIT 10.17
EXECUTION
This Consent Agreement (this "Agreement"), dated as of April 22, 1997, is
by and among all of the Stockholders (the "Stockholders") of the Galbreath
Company, an Ohio corporation, and Galbreath Company of California, Inc., a
California corporation (collectively, the "Galbreath Companies"), Galbreath
Holdings, LLC, a Delaware limited liability company ("Galbreath LLC" and,
together with the Stockholders, the "Galbreath Parties"), DEL-LPL Limited
Partnership ("DEL-LPL"), DEL-LPAML Limited Partnership ("DEL-LPAML" and,
together with DEL-LPL, the "DEL Partnerships"), DEL/LaSalle Finance Company,
L.L.C. ("DEL Finance" and, together with the DEL Partnerships, the "DEL
Parties"), LaSalle Partners Limited Partnership ("LPL") and LaSalle Partners
Management Limited Partnership ("LPML" and, together with LPL, the "Lower Tier
Partnerships").
INTRODUCTION
The DEL Parties propose to reorganize the Lower Tier Partnerships by (i)
organizing a corporation under the laws of the State of Maryland to be named
LaSalle Partners Incorporated ("LPI"), (ii) requiring each partner of the Lower
Tier Partnerships to contribute all of its respective partnership interests in
the Lower Tier Partnership into LPI in exchange for shares of LPI's capital
stock, and (iii) transferring all of the businesses of the Lower Tier
Partnerships and their respective subsidiaries through mergers, transfers, of
ownership interests and transfers of assets and liabilities, all as more fully
set forth in a Plan of Reorganization (collectively, the "Reorganization");
Pursuant to Section 4.1 (e) of the Amended and Restated Agreement of
Limited Partnership of LPL dated as of November 30, 1994 (the "LPL Partnership
Agreement") and Section 4.1 (e) of the Amended and Restated Agreement of Limited
Partnership of LPML dated as of November 30, 1994 (the "LPML Partnership
Agreement"; and together with the LPL Partnership Agreement, the "Lower Tier
Partnership Agreements"), the DEL Partnerships have a right to purchase up to
492,291 partnership units of the Lower Tier Partnerships at prices set forth
therein, which prices are below the estimated current market value of such
partnership units (such rights, the "DEL Purchase Rights");
In connection with the Reorganization, the DEL Partnerships seek to receive
certain shares (the "DEL Exchange Shares") of LPI common stock (the "Common
Stock") in exchange for the termination of the DEL Purchase Rights (such
exchange, the "Exchange");
The DEL Parties and the Galbreath Parties have agreed that the value of the
Galbreath Companies is equal to a percentage amount (the "Galbreath Companies
Percentage Value") up to 18% of the fully diluted value of the Lower Tier
Partnerships and the Galbreath Companies combined;
<PAGE>
The DEL Parties propose to consummate an underwritten initial public
offering of certain shares of common stock of LPI immediately after the
Reorganization (the "IPO") and propose to use Morgan Stanley & Co. and William
Blair & Company as underwriters in connection with the IPO (the "Underwriters");
The DEL Parties have requested the consent of the Galbreath Parties to the
proposed Reorganization, Exchange, and IPO; and
The Galbreath Parties are willing to provide such consent subject to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual provisions and covenants
hereinafter contained and for other good and valuable consideration, the parties
hereto agree as follows:
1. Consent. Each of the Galbreath Parties hereby consents to the
Reorganization, Exchange and IPO, subject to the terms and conditions provided
herein.
2. Plan of Reorganization. The Plan of Reorganization and other documents
relating the reorganization (the "Reorganization Documents") shall provide that
the Galbreath Parties shall receive not less than 18% (including shares held by
Galbreath-LPL Holdings, LLC) of the aggregate number of shares of Common Stock
outstanding after the Reorganization (in each case, not taking into account the
Exchange, or the IPO). The Reorganization Documents shall otherwise be in form
and substance reasonably satisfactory to the Galbreath Parties.
3. Capital Account Adjustment. Prior to the Reorganization, the
correlation between the Capital Account (as such term is used in the Lower Tier
Partnership Agreements) and the percentage of shares of Common Stock the
Galbreath Parties shall receive in connection with the Reorganization shall be
satisfactory to the Galbreath Parties.
4. Exchange. The number of DEL Exchange Shares issued pursuant to the
Exchange shall not exceed the number determined in accordance with the formula
set forth in Attachment I hereto.
5. Organizational Documents of LPI. The Certificate of Incorporation and
the By-Laws of LPI shall be in form and substance reasonably satisfactory to the
Galbreath Parties.
6. Effectiveness of Reorganization, Etc. The Reorganization shall become
effective only after the Underwriters have agreed to purchase Common Stock in
connection with the IPO in accordance with the terms and conditions set forth
herein. The Reorganization shall not cause any adverse tax or other adverse
consequences (except as otherwise expressly consented to hereunder) to either of
the Galbreath Parties or any of its affiliates.
2
<PAGE>
7. IPO Terms. The IPO shall be completed on or prior to November 15,
1997, shall result in the listing of the Common Stock on The New York Stock
Exchange and shall raise net proceeds in an amount not less than the aggregate
outstanding principal and interest on the Second Amended and Restated Class A
Subordinated Promissory Notes and the Amended and Restated Class B Subordinated
Promissory Notes each dated August 27, 1996 and issued by LPL and LPML to
DSA-LSPL and DSA-LSAM, respectively (the "Class A Notes" and the "Class B Notes"
respectively; collectively, the "Notes"). The net proceeds from the IPO shall
first be applied toward the repayment of the outstanding principal and interest
on the Notes. The public offering price per share of Common Stock shall not be
less than a price equivalent to a per unit value of the partnership units of the
combined Lower Tier Partnerships of $82.61. No shareholder of LPI may
participate in any secondary offering of its shares of Common Stock in
connection with the IPO, except that DEL Finance may, pursuant to any exercise
of each Underwriter's "greenshoe" option, if any, sell to the Underwriters
additional shares of Common Stock held by DEL Finance in an amount not exceeding
15% of the number of shares issued by LPI pursuant to the IPO. All net proceeds
of any such secondary offering of Common Stock by DEL Finance shall be applied
toward repayment of indebtedness owed by DEL Finance to Dresdner Bank AG. The
only class of shares that LPI may issue pursuant to the Reorganization or the
IPO shall be the Common Stock.
8. Transfers. Except as may be consented to by the parties hereto or as
may be required by law or pursuant to a contractual lock-up agreement applicable
to the Galbreath Parties and the Del Parties (which agreement shall not provide
any restriction after six months from the completion of the IPO as required by
the Underwriters and LPI), there shall be no restriction on the ability of the
Galbreath Parties to transfer their shares of Common Stock. Notwithstanding the
foregoing there shall be no restriction on the right of the Galbreath Parties to
transfer all or a portion of the Common Stock held by them to Dai-Ichi Life
(U.S.A.), Inc. or any one or more of its direct or indirect wholly owned
subsidiaries.
9. Periodic Meetings. Prior to the Reorganization, LPI and the Galbreath
Parties shall have entered into an agreement reasonably satisfactory to such
parties pursuant to which the Galbreath Parties and its advisors shall be
provided an opportunity to hold periodic meetings with such officers of LPI as
the Galbreath Parties shall request for the purpose of discussing matters
relating to the operation and financial condition of LPI.
10. Assignment by Galbreath Parties. Each of the Galbreath Parties may
assign its rights hereunder to any of its affiliates. Each of the DEL Parties
may assign its rights hereunder to any of its affiliates, provided that neither
DEL Party may delegate any of its obligations hereunder without the express
written consent of the Galbreath Parties. Neither Lower Tier Partnership may
assign its rights or obligations hereunder without the express written consent
of the Galbreath Parties.
11. Law to Govern; Other Provisions. This Agreement shall be governed and
construed in accordance with the internal laws of the State of Delaware. No
failure or
3
<PAGE>
delay by any party or any of its representatives in exercising any right, power
or privilege shall operate as a waiver thereof nor shall any single or partial
exercise preclude any other or further exercise of any right, power or
privilege. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
* * * * * *
4
<PAGE>
DEL-LPL LIMITED PARTNERSHIP
By: /s/ Robert C. Spoerri
------------------------------------
DEL-LPAML LIMITED PARTNERSHIP
By: /s/ Charles K. Esler
------------------------------------
STOCKHOLDERS
By: /s/ Lizanne Galbreath Megrue
------------------------------------
Lizanne Galbreath Megrue, as trustee
for the separate trust for the
benefit of Lizanne Galbreath Megrue,
John W. Galbreath, III and Laurie
Galbreath Nichols under the
Irrevocable Trust created by Daniel
M. Galbreath, created April 13,
1995.
By: /s/ Lizanne Galbreath
------------------------------------
Lizanne Galbreath
GALBREATH HOLDINGS, LLC
By: /s/ Lizanne Galbreath
-----------------------------------
Name:
Title:
5
<PAGE>
LASALLE PARTNERS LIMITED
PARTNERSHIP
By: DEL-LPL LIMITED PARTNERSHIP,
its General Partner
By: /s/ Robert C. Spoerri
---------------------
LASALLE PARTNERS MANAGEMENT
LIMITED PARTNERSHIP
By: DEL-LPAML LIMITED PARTNERSHIP,
its General Partner
By: /s/ Charles K. Esler
---------------------
6
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
------------------------------
The following entities are the principal subsidiaries of LaSalle Partners
Incorporated:
LaSalle Advisors Capital Management, Inc.
LaSalle Partners Management Services, Inc.
LaSalle Partners Corporate & Financial Services, Inc.
LaSalle Partners International, Inc.
<PAGE>
EXHIBIT 23.01
The Board of Directors
LaSalle Partners Incorporated:
We consent to the use of our reports included herein and to the reference to our
firm under the headings "Selected Financial Data" and "Experts" in the
Prospectus.
Chicago, Illinois KPMG Peat Marwick LLP
June 20, 1997
<PAGE>
Exhibit 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-25741 of LaSalle Partners Incorporated on Form S-1 of our report regarding
The Galbreath Company and Affiliates dated April 7, 1997 (except for Note 9 as
to which the date is April 22, 1997), appearing in the Prospectus, which is part
of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
June 20, 1997
<PAGE>
EXHIBIT 23.05
CONSENT
-------
I hereby consent to the use of my name as a nominee for the Board of
Directors of LaSalle Partners Incorporated in the Prospectus forming part of the
Registration Statement on Form S-1 (the "Registration Statement") and for use of
this consent for filing as an Exhibit to the Registration Statement.
/s/ Darryl Hartley-Leonard
--------------------------
Dated: June 17, 1997
-----------------
<PAGE>
Exhibit 23.06
CONSENT
-------
I hereby consent to the use of my name as a nominee for the Board of
Directors of LaSalle Partners Incorporated in the Prospectus forming part of the
Registration Statement on Form S-1 (the "Registration Statement") and for use of
this consent for filing as an Exhibit to the Registration Statement.
/s/ Thomas C. Theobald
Dated: May 25, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> The schedule contains summary financial information extracted from the
Combined Balance Sheets as of March 31, 1997 of LaSalle Partners Limited
Partnership and Subsidiaries and LaSalle Partners Management Limited Partnership
and Subsidiaries and the related Combined Statements of Earnings for the Three
Months then Ended 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,094
<SECURITIES> 0
<RECEIVABLES> 52,052
<ALLOWANCES> 2,900
<INVENTORY> 0
<CURRENT-ASSETS> 65,377
<PP&E> 38,704
<DEPRECIATION> 24,295
<TOTAL-ASSETS> 124,075
<CURRENT-LIABILITIES> 51,334
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 124,075
<SALES> 0
<TOTAL-REVENUES> 36,019
<CGS> 0
<TOTAL-COSTS> 39,291
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,140
<INTEREST-EXPENSE> 1,695
<INCOME-PRETAX> (4,967)
<INCOME-TAX> (248)
<INCOME-CONTINUING> (4,719)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,719)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
