SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number 1-13145
LASALLE PARTNERS INCORPORATED
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 36-4150422
------------------------- ---------------------------------
(State or other jurisdic- (IRS Employer Identification No.)
tion of corporation or
organization)
200 East Randolph Drive, Chicago, IL 60601
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/782-5800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ ] No [ X ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class August 28, 1997
----- ---------------
Common Stock ($0.01 par value) 16,200,000
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . 19
PART II OTHER INFORMATION
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 26
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 26
Item 5. Other Matters. . . . . . . . . . . . . . . . . . . . 26
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 28
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
COMBINED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(in thousands)
(UNAUDITED)
JUNE 30, DECEMBER 31,
1997 1996
---------- -----------
ASSETS
- ------
Current assets:
Cash and cash equivalents. . . . . . . . . $ 12,875 7,207
Trade receivables, net . . . . . . . . . . 52,796 87,283
Other receivables. . . . . . . . . . . . . 3,497 3,005
Prepaid expenses . . . . . . . . . . . . . 1,283 1,228
---------- ---------
Total current assets . . . . . . . 70,451 98,723
Property and equipment, at cost,
less accumulated depreciation of
$25,313 and $23,310 in 1997 and 1996,
respectively . . . . . . . . . . . . . . . 16,276 14,549
Intangibles resulting from
business acquisitions, net of
accumulated amortization of $3,783
and $2,287 in 1997 and 1996,
respectively . . . . . . . . . . . . . . . 51,025 23,735
Investments in real estate ventures. . . . . 14,885 13,687
Long-term receivables, net . . . . . . . . . 7,256 5,052
Other assets, net. . . . . . . . . . . . . . 1,786 868
---------- ----------
$ 161,679 156,614
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Accounts payable and
accrued liabilities. . . . . . . . . . . $ 22,192 34,228
Accrued compensation . . . . . . . . . . . 17,715 26,016
Borrowings under short-term
credit facility. . . . . . . . . . . . . 16,900 6,500
Current maturities of long-term
notes payable. . . . . . . . . . . . . . 8,854 9,064
---------- ----------
Total current liabilities. . . . . 65,661 75,808
Long-term notes payable (note 7):
Subordinated loans, less current
maturities . . . . . . . . . . . . . . . 34,107 34,106
Long-term credit facility,
less current maturities. . . . . . . . . 17,555 21,445
---------- ----------
51,662 55,551
Other long-term liabilities. . . . . . . . . 1,497 1,008
---------- ----------
Commitments and contingencies
Total liabilities. . . . . . . . . 118,820 132,367
Partners' capital. . . . . . . . . . . . . . 42,859 24,247
---------- ----------
$ 161,679 156,614
========== ==========
See accompanying notes to combined financial statements.
<PAGE>
<TABLE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
COMBINED STATEMENTS OF EARNINGS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(in thousands except share data)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------ ------------------------
1997 1996 1997 1996
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenue:
Fee based services . . . . . . . . . . . . . . . . . . $ 62,539 33,337 96,783 60,071
Equity in earnings from unconsolidated ventures. . . . 345 784 1,739 873
Construction operations, net . . . . . . . . . . . . . 205 311 410 622
Other income . . . . . . . . . . . . . . . . . . . . . 322 299 498 450
-------- -------- -------- --------
Total revenue. . . . . . . . . . . . . . . . . . 63,411 34,731 99,430 62,016
Expenses:
Compensation and benefits. . . . . . . . . . . . . . . 38,341 24,346 65,558 47,673
Operating, administration and other. . . . . . . . . . 13,687 8,831 23,987 16,883
Depreciation and amortization. . . . . . . . . . . . . 2,180 1,134 3,954 2,245
-------- -------- -------- --------
Total expenses . . . . . . . . . . . . . . . . . 54,208 34,311 93,499 66,801
-------- -------- -------- --------
Operating profits (loss) . . . . . . . . . . . . 9,203 420 5,931 (4,785)
Interest expense . . . . . . . . . . . . . . . . . . . . 1,881 1,104 3,576 2,041
-------- -------- -------- --------
Earnings before provision (benefit)
for income taxes . . . . . . . . . . . . . . . 7,322 (684) 2,355 (6,826)
Net provision (benefit) for income taxes . . . . . . . . 382 (39) 134 (389)
-------- -------- -------- --------
Net earnings (loss). . . . . . . . . . . . . . . $ 6,940 (645) 2,221 (6,437)
======== ======== ======== ========
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
COMBINED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
PERIODS ENDED JUNE 30, 1997 AND DECEMBER 31, 1996
(in thousands)
(UNAUDITED)
GENERAL LIMITED
PARTNERS PARTNERS OTHER TOTAL
-------- -------- -------- --------
Partners' capital (deficit),
January 1, 1996. . . . . . $(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 . . . . . . 1,142 1,079 -- 2,221
Distributions. . . . . . (6,702) (5,634) -- (12,336)
Acquisition of Galbreath
common stock . . . . . -- 29,292 -- 29,292
Effect of cumulative
translation
adjustments. . . . . . -- -- (565) (565)
-------- -------- -------- --------
Partners' capital (deficit),
June 30, 1997. . . . . . . $(50,657) 92,982 534 42,859
======== ======== ======== ========
See accompanying notes to combined financial statements.
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(in thousands)
(UNAUDITED)
1997 1996
-------- --------
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . $ 2,221 (6,437)
Reconciliation of net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . 3,954 2,245
Equity in earnings from unconsolidated
ventures . . . . . . . . . . . . . . . . . . (1,739) (873)
Provision for loss on receivables and
other assets . . . . . . . . . . . . . . . . 1,497 7
Distributions from real estate ventures . . . 1,569 1,259
Loss (gain) on disposition of property
and equipment. . . . . . . . . . . . . . . . (14) 7
Changes in:
Receivables. . . . . . . . . . . . . . . . . . 39,744 18,431
Prepaid expenses and other assets. . . . . . . (934) 124
Accounts payable, accrued liabilities and
accrued compensation . . . . . . . . . . . . (36,311) (17,535)
-------- --------
Net cash provided by (used in)
operating activities . . . . . . . . . . 9,987 (2,772)
Cash flows provided by (used in) investing
activities:
Capital additions - property and equipment . . . (2,004) (7,603)
Proceeds from dispositions - property
and equipment . . . . . . . . . . . . . . . . . 33 57
Cash balances assumed in Galbreath
acquisition. . . . . . . . . . . . . . . . . . 3,209 --
Investments in real estate ventures:
Capital contributions and advances to
real estate ventures . . . . . . . . . . . . (2,305) (4,126)
Distributions, repayments of advances
and sale of investments. . . . . . . . . . . 2,777 256
-------- --------
Net cash provided by (used in)
investing activities . . . . . . . . . . 1,710 (11,416)
Cash flows provided by (used in) financing
activities:
Net borrowings under short-term credit
facility . . . . . . . . . . . . . . . . . . . 10,400 18,900
Net borrowings under long-term credit
facility . . . . . . . . . . . . . . . . . . . (4,099) 2,200
Distributions to partners. . . . . . . . . . . . (12,336) (10,611)
-------- --------
Net cash provided by (used in)
financing activities . . . . . . . . . . (6,035) 10,489
Effects of foreign currency translation
on cash balances . . . . . . . . . . . . . . . . 6 --
-------- --------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . . . 5,668 (3,699)
Cash and cash equivalents, beginning of period . . 7,207 8,322
-------- --------
Cash and cash equivalents, end of period . . . . . $ 12,875 4,623
======== ========
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
Supplemental disclosure of cash flow information:
Combined interest paid was $1,325 and $53 for the periods ended
June 30, 1997 and 1996, respectively.
On April 22, 1997, the Company acquired the common stock of Galbreath
(note 3) in exchange for a 17.5% limited partnership interest valued at
$29,292. Identifiable operating assets and liabilities and investments in
real estate ventures totaled $11,681, $15,921 and $1,500, respectively, in
addition to cash of $3,209 as of the acquisition date. The Company
incurred transaction related expenses of $436. The increase in these
assets and liabilities, excluding cash acquired, and the resulting goodwill
of $29,259 have not been reflected in the changes in cash flow above.
See accompanying notes to combined financial statements.
<PAGE>
LA SALLE PARTNERS LIMITED PARTNERSHIP AND SUBSIDIARIES
LA SALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(in thousands)
(UNAUDITED)
Readers of this quarterly report should refer to the Company's audited
financial statements for the year ended December 31, 1996, which are
included in the Prospectus which constitutes a part of the Registrant's
Registration Statement on form S-1 (333-25741) filed with the Securities
and Exchange Commission, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial
statements have been omitted from this report.
(1) ORGANIZATION
LaSalle Partners Limited Partnership ("LPL") and LaSalle Partners
Management Limited Partnership ("LPML"), two Delaware limited partnerships
(collectively, the "Company"), 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 Company, DEL-LPL Limited
Partnership and DEL-LPAML Limited Partnership (collectively "DEL"),
respectively.
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 Company admitted Alex. Brown Kleinwort Benson Realty
Advisors Corporation ("ABKB") as an additional limited partner. Effective
March 31, 1995, ABKB changed its name to KB-LPL, Inc. 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 Company. Pursuant to an agreement reached with
Dresdner in May, 1996, DEL re-purchased KB-LPL, Inc.'s ownership in the
Company through DEL/LaSalle Finance Company, L.L.C. ("DEL/LaSalle"), a
wholly-owned subsidiary, during the first quarter of 1997.
On April 22, 1997, the Company acquired the outstanding common stock
of The Galbreath Company and The Galbreath Company of California, Inc.
(collectively, "Galbreath") in exchange for a 17.5% limited partner
interest (note 3). As of June 30, 1997, following the Galbreath merger,
DEL, directly and through DEL/LaSalle, and DSA had ownership interests of
approximately 62.3% and 20.2%, respectively.
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
Company. Such additional capital would be used by the Company to repay
subordinated notes payable, including Class A and Class B notes ("Dai-ichi
Notes"), to DSA. 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.
Provisions in the partnership agreements provide for the repayment of the
Class
<PAGE>
A notes payable to DSA to be made directly by the Company. The
Company's 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 Company are generally
allocated to the partners in accordance with their ownership interests in
effect during each year.
In connection with the initial public offering of 4,000,000 shares of
LaSalle Partners Incorporated ("LPI") common stock, all of the partnership
interests in the Company were contributed to LPI, pursuant to agreements
among the general and limited partners, in exchange for an aggregate of
12,200,000 shares of common stock. The contribution occurred immediately
prior to the closing of the offering which occurred on July 22, 1997. The
4,000,000 shares were offered at $23 per share, aggregating $83,560, net of
offering costs. $63,490 of the proceeds were used to retire the Dai-ichi
Notes and the long-term credit facility along with related interest.
The Company will be subject to a reorganization as part of the
incorporation of LPI. Due to the existence of a paired share arrangement
between LPL and LPML and between the DEL partnerships, as well as the
existence of identical ownership before and after the incorporation of the
Company, such transactions will 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 positions and results of operations
of the Company at their historical cost basis.
(2) INTERIM INFORMATION
The combined financial statements as of June 30, 1997 and for the
three and six month periods ended June 30, 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 periods ended June 30, 1997 and 1996 are not
necessarily indicative of the results to be obtained for the full fiscal
year.
(3) ACQUISITION
On April 22, 1997, the Company acquired all of the common stock of
Galbreath, a property management, facility management and development
management company. In consideration for the stock, the Company issued a
17.5% limited partnership interest in the Company to the former
stockholders of Galbreath. 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 $29,259, including
transaction costs, of which $5,852 was allocated to management contracts
which are being amortized on a straight line basis over 8 years and $23,407
was allocated to goodwill which is being amortized on a straight line basis
over 40 years based on the Company's estimate of useful lives. Intangibles
resulting from business acquisitions in the accompanying Combined Balance
Sheets includes $29,016 at June 30, 1997 related to the Galbreath
acquisition.
<PAGE>
(4) BUSINESS SEGMENTS
The Company's 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, acquisitions and disposition needs of real estate owners;
and (iii) land acquisitions 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 represents total
revenue less direct and indirect allocable expenses. The Company's
allocate all expenses, other than interest and income taxes, as
substantially all expenses incurred benefit one or more of the segments.
Summarized unaudited financial information by business segment for
the three and six month periods ended June 30, 1997 and 1996 is as follows:
<PAGE>
<TABLE>
<CAPTION>
FOOTNOTE 4 - CONTINUED
SEGMENT OPERATING RESULTS
--------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
-------------------------- --------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
MANAGEMENT SERVICES:
Segment revenue:
Property management fees . . . . . . . $ 11,873 9,244 20,539 17,018
Leasing fees . . . . . . . . . . . . . 6,240 2,240 7,413 2,683
Facility management fees . . . . . . . 3,747 2,699 7,164 5,397
Development management fees. . . . . . 1,628 1,022 2,743 2,060
Intersegment sales . . . . . . . . . . 25 -- 50 100
Other income . . . . . . . . . . . . . 82 127 129 187
-------- -------- -------- --------
23,595 15,332 38,038 27,445
Operating expenses:
Operating and administrative
expenses . . . . . . . . . . . . . . 23,288 14,044 39,137 27,436
Depreciation and
amortization . . . . . . . . . . . . 929 329 1,441 666
-------- -------- -------- --------
Operating income (loss). . . . . . $ (622) 959 (2,540) (657)
======== ======== ======== ========
CORPORATE & FINANCIAL SERVICES:
Segment revenue:
Tenant representation. . . . . . . . . $ 8,094 4,227 11,503 7,108
Investment banking . . . . . . . . . . 5,300 771 5,912 1,064
Land fees. . . . . . . . . . . . . . . 1,088 1,195 1,795 1,493
Construction operations. . . . . . . . 205 311 410 622
Equity in earnings (losses) . . . . . 182 363 182 452
Intersegment sales . . . . . . . . . . 392 -- 392 --
Other income . . . . . . . . . . . . . 53 66 86 106
-------- -------- -------- --------
15,314 6,933 20,280 10,845
<PAGE>
FOOTNOTE 4 - CONTINUED
SEGMENT OPERATING RESULTS
--------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
-------------------------- --------------------------
1997 1996 1997 1996
-------- -------- -------- --------
Operating expenses:
Operating and administrative
expenses . . . . . . . . . . . . . . 10,741 7,796 19,505 14,834
Depreciation and
amortization . . . . . . . . . . . . 329 226 547 444
-------- -------- -------- --------
Operating income (loss). . . . . . $ 4,244 (1,089) 228 (4,433)
======== ======== ======== ========
INVESTMENT MANAGEMENT:
Segment revenue:
Advisory fees. . . . . . . . . . . . . $ 24,410 11,183 39,050 22,187
Acquisition fees . . . . . . . . . . . 159 756 664 1,061
Equity in income (losses). . . . . . . 163 421 1,557 421
Other income . . . . . . . . . . . . . 187 106 283 157
-------- -------- -------- --------
24,919 12,466 41,554 23,826
Operating expenses:
Operating and administrative
expenses . . . . . . . . . . . . . . 18,416 11,337 31,345 22,386
Depreciation and
amortization . . . . . . . . . . . . 922 579 1,966 1,135
-------- -------- -------- --------
Operating income (loss). . . . . . $ 5,581 550 8,243 305
======== ======== ======== ========
Total segment revenue. . . . . . . . . . . $ 63,828 34,731 99,872 62,116
Intersegment revenue
eliminations . . . . . . . . . . . . . . (417) -- (442) (100)
-------- -------- -------- --------
Total revenue. . . . . . . . . . . $ 63,411 34,731 99,430 62,016
======== ======== ======== ========
Total segment operating expenses . . . . . $ 54,625 34,311 93,941 66,901
Intersegment operating
expense eliminations . . . . . . . . . . (417) -- (442) (100)
-------- -------- -------- --------
Total operating expenses . . . . . $ 54,208 34,311 93,499 66,801
======== ======== ======== ========
Total operating income (loss). . . $ 9,203 420 5,931 (4,785)
======== ======== ======== ========
</TABLE>
<PAGE>
(5) PRO FORMA FINANCIAL INFORMATION
The following pro forma combined statements of earnings give effect
to the acquisition of the common stock of Galbreath, the incorporation of
the Company and the initial public offering, including the receipt and
application of the net proceeds therefrom to repay long-term indebtedness
and related interest, as if these events occurred on January 1, 1997. The
pro forma combined balance sheet gives effect to the incorporation of the
Company and the initial public offering, including the receipt and
application of the net proceeds therefrom to repay long-term indebtedness
and related interest, as if these events occurred on June 30, 1997.
The pro forma adjustments are based upon available information and
certain assumptions that management of the Company believes are reasonable.
The pro forma combined financial statements are not necessarily indicative
of what the actual financial position and results of operations would have
been as of June 30, 1997 and for the three and six months periods ended
June 30, 1997 had the Company completed the acquisition of the Galbreath
common stock and consummated the incorporation and offering transactions
as of the dates indicated nor does it purport to represent the future
financial position or results of operations of the Company.
<PAGE>
<TABLE>
<CAPTION>
FOOTNOTE 5 - CONTINUED
COMBINED BALANCE SHEET
JUNE 30, 1997
--------------------------------------------------------------------
ACTUAL INCORPORATION OFFERING
PARTNERSHIPS(1) TRANSACTION(2) ADJUSTMENTS(3) PRO FORMA
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents. . . . . . . . . $ 12,875 21,043 33,918
Trade receivables, net . . . . . . . . . . 52,796 52,796
Other receivables. . . . . . . . . . . . . 3,497 3,497
Prepaid expenses . . . . . . . . . . . . . 1,283 1,283
-------- -------- -------- --------
Total current assets . . . . . . . . 70,451 -- 21,043 91,494
Property and equipment . . . . . . . . . . . 16,276 16,276
Intangibles resulting from
business acquisitions. . . . . . . . . . . 51,025 51,025
Investments in real estate
ventures . . . . . . . . . . . . . . . . . 14,885 14,885
Long-term receivables, net . . . . . . . . . 7,256 7,256
Other assets, net. . . . . . . . . . . . . . 1,786 1,786
-------- -------- -------- --------
$161,679 -- 21,043 182,722
======== ======== ======== ========
<PAGE>
FOOTNOTE 5 - CONTINUED
COMBINED BALANCE SHEET
JUNE 30, 1997
--------------------------------------------------------------------
ACTUAL INCORPORATION OFFERING
PARTNERSHIPS(1) TRANSACTION(2) ADJUSTMENTS(3) PRO FORMA
--------------- -------------- -------------- ---------------
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Accounts payable and accrued
liabilities. . . . . . . . . . . . . . . $ 22,192 (2,001) 20,191
Accrued compensation . . . . . . . . . . . 17,715 17,715
Borrowings under short-term
credit facility. . . . . . . . . . . . . 16,900 16,900
Current maturities of long-term
notes payable. . . . . . . . . . . . . . 8,854 (8,854) --
-------- -------- -------- --------
Total current liabilities. . . . . . 65,661 -- (10,855) 54,806
Long-term notes payable (note 7):
Subordinated loans,
less current maturities. . . . . . . . . 34,107 (34,107) --
Long-term credit facility,
less current maturities. . . . . . . . . 17,555 (17,555) --
-------- -------- -------- --------
51,662 -- (51,662) --
Other long-term liabilities. . . . . . . . . 1,497 1,497
Commitments and contingencies. . . . . . . . -- --
-------- -------- -------- --------
Total liabilities. . . . . . . . . . 118,820 -- (62,517) 56,303
Partners' capital/stockholders' equity:
Common stock . . . . . . . . . . . . . . -- 122 40 162
Additional paid in capital . . . . . . . -- 42,737 83,520 126,257
Partners' capital. . . . . . . . . . . . 42,859 (42,859) --
-------- -------- -------- --------
Total partners' capital/
stockholders' equity . . . . . . . 42,859 -- 83,560 126,419
-------- -------- -------- --------
$161,679 -- 21,043 182,722
======== ======== ======== ========
<FN>
(1) Reflects the historical combined balance sheets of LaSalle Partners Limited Partnership and its subsidiaries
and LaSalle Partners Management Limited Partnership and its subsidiaries as of June 30, 1997.
(2) 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 Company.
(3) These adjustments give effect to the receipt of $83,560 of net proceeds from the issuance of 4,000,000
shares of common stock in the initial public offering which was effective July 16, 1997 and the use of those
proceeds to repay the Company's long-term notes payable including interest thereon.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FOOTNOTE 5 - CONTINUED
COMBINED STATEMENT OF EARNINGS
THREE MONTHS ENDED JUNE 30, 1997
-------------------------------------------------------------------
INCORPOR-
ACTUAL ATION OFFERING
PARTNER- GALBREATH ADJUST- ADJUST-
SHIPS (1) MERGER (2) MENTS (3) MENTS PRO FORMA
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue:
Fee based services . . . . . . . . . . . $ 62,539 1,633 64,172
Equity in earnings from unconsolidated
ventures . . . . . . . . . . . . . . . 345 -- 345
Construction operations, net . . . . . . 205 -- 205
Other income . . . . . . . . . . . . . . 322 121 443
-------- -------- -------- ------ --------
Total revenue. . . . . . . . . . . . . 63,411 1,754 -- -- 65,165
Expenses:
Compensation and benefits. . . . . . . . 38,341 1,425 39,766
Operating, administration and other. . . 13,687 653 188 (4) 14,528
Depreciation and amortization. . . . . . 2,180 151 2,331
-------- -------- -------- ------ --------
Total expenses . . . . . . . . . . . . 54,208 2,229 -- 188 56,625
-------- -------- -------- ------ --------
Operating profits. . . . . . . . . . . 9,203 (475) -- (188) 8,540
Interest expense . . . . . . . . . . . . . 1,881 -- (1,417)(5) 464
-------- -------- -------- ------ --------
Earnings before provision for
income taxes . . . . . . . . . . . . 7,322 (475) -- 1,229 8,076
Net provision for income taxes . . . . . . 382 -- 2,254 473 (3) 3,109
-------- -------- -------- ------ --------
Net earnings . . . . . . . . . . . . . $ 6,940 (475) (2,254) 756 4,967
======== ======== ======== ====== ========
Earnings (loss) per common share . . . . . $ 0.31
========
Shares used in computation of
earnings (loss) per share. . . . . . . . 16,200,000
==========
<PAGE>
FOOTNOTE 5 CONTINUED
COMBINED STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1997
-------------------------------------------------------------------
INCORPOR-
ACTUAL ATION OFFERING
PARTNER- GALBREATH ADJUST- ADJUST-
SHIPS (1) MERGER(2) MENTS (3) MENTS PRO FORMA
---------- ---------- ---------- ---------- ----------
Revenue:
Fee based services . . . . . . . . . . . $ 96,783 8,259 105,042
Equity in earnings from unconsolidated
ventures . . . . . . . . . . . . . . . 1,739 73 1,812
Construction operations, net . . . . . . 410 -- 410
Other income . . . . . . . . . . . . . . 498 787 1,285
-------- -------- -------- ------ --------
Total revenue. . . . . . . . . . . . . 99,430 9,119 -- -- 108,549
Expenses:
Compensation and benefits. . . . . . . . 65,558 5,993 71,551
Operating, administration and other. . . 23,987 2,363 375 (4) 26,725
Depreciation and amortization. . . . . . 3,954 663 4,617
-------- -------- -------- ------ --------
Total expenses . . . . . . . . . . . . 93,499 9,019 -- 375 102,893
-------- -------- -------- ------ --------
Operating profits. . . . . . . . . . . 5,931 100 -- (375) 5,656
Interest expense . . . . . . . . . . . . . 3,576 -- -- (2,847)(5) 729
-------- -------- -------- ------ --------
Earnings before provision for
income taxes . . . . . . . . . . . . 2,355 100 -- 2,472 4,927
Net provision for income taxes . . . . . . 134 33 778 952 (3) 1,897
-------- -------- -------- ------ --------
Net earnings . . . . . . . . . . . . . $ 2,221 67 (778) 1,520 3,030
======== ======== ======== ====== ========
Earnings (loss) per common share . . . . . $ 0.19
========
Shares used in computation of
earnings (loss) per share. . . . . . . . 16,200,000
==========
<PAGE>
FOOTNOTE 5 - CONTINUED
<FN>
(1) Reflects the historical combined statements of earnings of LaSalle Partners Limited Partnership and its
subsidiaries and LaSalle Partners Management Limited Partnership and its subsidiaries for the three month and six
month periods ended June 30, 1997.
(2) These adjustments give effect to the merger of Galbreath with the Company on April 22, 1997, as adjusted
for the tenant representation and investment banking units which were not acquired, as if the merger occurred on
January 1, 1997.
(3) The adjustment gives effect to the provision (benefit) for income taxes as though the Company and
Galbreath were taxable entities as of January 1, 1997 at an effective tax rate of 38.5%.
(4) The adjustment gives effect to the estimated incremental general and administrative costs associated with
operations as a public company as if the initial public offering occurred on January 1, 1997.
(5) The adjustment gives effect to the repayment of the Company's long-term notes payable, including interest
thereon, out of the proceeds of the initial public offering as if the initial public offering occurred on January
1, 1997.
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LaSalle Partner Limited Partnership ("LPL"), LaSalle Partners
Management Limited Partnership ("LPML") and their subsidiaries are referred
to herein collectively as the "Company". See note 1 to the financial
statements included in this report.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE AND SIX
MONTHS ENDED JUNE 30, 1996.
CONSOLIDATED RESULTS
The Company's total revenue grew $28.7 million, or 82.6%, to $63.4
million and $37.4 million, or 60.3%, to $99.4 million for the three and
six months ended June 30, 1997 from the prior year periods. The increases
are attributable to the continued improvement in real estate market
conditions which resulted in significant performance fees being generated
by the Investment Management segment on the disposition of certain assets
and a higher level of transactions in the Corporate and Financial Services
segment, as well as to the acquisition of CIN Property Management in
October 1996 and the merger with Galbreath in April 1997.
The Company's operating expenses grew $19.9 million, or 58.0%, to
$54.2 million, and $26.7 million, or 40.0%, to $93.5 million for the three
and six months ended June 30, 1997 from the prior year periods. These
increases are attributable to the acquisition of CIN Property Management,
the merger of Galbreath with the Company, increased staffing levels and
additional bonus accruals in connection with increased revenue generation.
In addition, corporate overhead and infrastructure costs of approximately
$2.0 million have been incurred in excess of the prior year six month
period as a result of new accounting systems implementation, increased
staffing to meet public company reporting requirements, and firmwide
technology services and system enhancements. These costs are allocated to
the segments based on a combination of headcount and usage factors.
During the second quarter of 1997, the Company continued its migration
to a centralized client billing and receivable system. The new system
provides management with additional resources to monitor and analyze the
client billing cycle and related client accounts. In connection with the
system conversion, the Company took charges of $1.5 million of non-billable
fees and commissions, $.4 million of uncollectible accounts and $.5 million
of non-billable expenses.
The Company's operating profits increased $8.8 million to $9.2 million
for the three months ended June 30, 1997 and increased $10.7 million to
$5.9 million for the six months ended June 30, 1997 compared to the prior
year periods.
Interest expense increased $.8 million to $1.9 million for the three
months ended June 30, 1997 and increased $1.5 million to $3.6 million for
the six months ended June 30, 1997 from the prior year periods. These
increases are 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.
Net earnings increased $7.6 million to $6.9 million for the three
months ended June 30, 1997 from a loss of $.6 million for the prior year
period. Net earnings increased $8.7 million to $2.2 million for the six
months ended June 30, 1997 from a loss of $6.4 million in the prior year
period.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
SEGMENT OPERATING RESULTS
MANAGEMENT SERVICES. The Management Services segment revenues, which
represented 37.2% and 38.2% of the Company's total revenue for the three
and six months ended June 30, 1997, increased $8.3 million to $23.6 million
for the three months ended June 30, 1997 and increased $10.6 million to
$38.0 million for the six months ended June 30, 1997 from the prior year
periods. The increase is related to the acquisition of Galbreath in April
1997 which generated second quarter property management fees of $2.0
million, leasing fees of $2.5 million and facility management fees of $.4
million on approximately 71.3 million square feet under management. In
addition, property management fees and leasing fees increased $1.4 million
and $2.0 million, respectively, for the three months ended June 30, 1997
and increased $2.3 million and $2.7 million, respectively, for the six
months ended June 30, 1997 compared to the prior year periods. These
increases are a result of the net addition of 6.1 million square feet of
new property management assignments, excluding the Galbreath portfolio in
1997. These increases were offset, in part, by the one time charge for
non-billable property management fees and leasing fees of $.8 million and
$.5 million, respectively, in conjunction with the implementation of a
centralized client billing and receivable system as discussed earlier.
Operating expenses increased $9.8 million to $24.2 million for the
three months ended June 30, 1997 and $12.5 million to $40.6 million for the
six months ended June 30, 1997 from the prior year periods. Of the second
quarter increase, $7.4 million is attributable to the acquisition of
Galbreath common stock, including personnel costs, amortization of the
excess purchase price and transition and integration costs. One time
charges of $.5 million were also taken in the three months ended June 30,
1997 related to the implementation of the centralized client billing and
receivable system. Increased corporate infrastructure costs of
approximately $.9 million for the six months ended June 30, 1997 were also
incurred as a result of increased staffing and technology enhancements.
The remaining increase is a result of increased compensation, relocation,
travel and marketing expenses associated with a national leasing and
business development group established during the latter half of 1996 as
well as increased staffing levels to manage the additional property and
facility management assignments.
The Management Services segment's operating results decreased $1.6
million to a loss of $.6 million for the three months ended June 30, 1997
and decreased $1.9 million to a loss of $2.5 million for the six months
ended June 30, 1997 from the prior year periods. Compared to its first
quarter results, the Management Services segment's operating results
strengthened by $1.3 million, even after total one time charges of $1.8
million and the Galbreath integration costs.
CORPORATE AND FINANCIAL SERVICES. The Corporate and Financial
Services segment revenues, which represented 23.5% and 20.0% of the
Company's total revenue for the three and six months ended June 30, 1997,
increased $8.4 million to $15.3 million for the three months ended June 30,
1997 and increased $9.4 million to $20.3 million for the six months ended
June 30, 1997 from the prior year periods. The increase is attributable to
an increased level of transactions in each of the tenant representation and
investment banking units.
Operating expenses for the Corporate and Financial Services segment
increased $3.0 million to $11.1 million for the three months ended June 30,
1997 and increased $4.8 million to $20.1 million for the six months ended
June 30, 1997 from the prior year periods. These increases in operating
expenses primarily represent an increased accrual for anticipated year end
bonuses for the tenant representation and investment banking units,
consistent with increased levels of revenue generated, increased staffing
levels in the Company's tenant representation unit and a $.4 million charge
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
associated with the implementation of a centralized client billing and
receivable system, as discussed earlier. In addition, increased corporate
infrastructure costs of approximately $.5 million for the six months ended
June 30, 1997 were incurred as a result of increased staffing and
technology enhancements.
The Corporate and Financial Services segment's operating income
increased $5.3 million to $4.2 million for the three months ended June 30,
1997 and increased $4.7 million to $.2 million for the six months ended
June 30, 1997 from the prior year periods.
INVESTMENT MANAGEMENT. The Investment Management segment revenues,
which represented 39.3% and 41.8% of the Company's total revenue for the
three and six months ended June 30, 1997, increased $12.5 million to $24.9
million for the three months ended June 30, 1997 and increased $17.7
million to $41.6 million for the six months ended June 30, 1997 from the
prior year periods. The increase for the three months ended June 30, 1997
is primarily attributable to performance fees generated on the disposition
of certain assets under management totaling $9.7 million, in addition to
revenues associated with the acquisition of CIN Property Management in
October 1996 which had revenue of $3.5 million in each of the two quarters
in 1997.
Operating expenses increased $7.4 million to $19.3 million for the
three months ended June 30, 1997 and increased $9.8 million to $33.3
million for the six months ended June 30, 1997 from the prior year periods.
These increases are primarily attributable to the additional compensation
and other direct operating expenses associated with the acquisition of CIN
Property Management totaling $5.8 million and an increased accrual for
anticipated year end bonuses, consistent with increased levels of revenue
generated. In addition, corporate infrastructure costs of approximately $.6
million for the six months ended June 30, 1997 were incurred as a result of
increased staffing and technology enhancements.
The Investment Management segment's operating income increased $5.0
million to $5.6 million for the three months ended June 30, 1997 and
increased $7.9 million to $8.2 million for the six months ended June 30,
1997 from the prior year periods. These increases are attributable to the
performance fees generated and the net income generated from CIN Property
Management.
PRO FORMA RESULTS
On a pro forma basis, the Company's total revenue for the three months
ended June 30, 1997 was $65.2 million compared to actual results of $63.4
million in the prior year period. Pro forma total revenue for the six
months ended June 30, 1997 was $108.5 million compared to $99.4 million for
the prior year period. 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, consistent with the Company's Management Services segment.
Pro forma operating profits for the three months ended June 30, 1997
were $8.5 million compared to $9.2 million for the prior year period. Pro
forma operating profits for the six months ended June 30, 1997 were $5.7
million compared to $5.9 million for the prior year period. These
decreases in operating profits on a pro forma basis are a result of an
operating loss for Galbreath for the three months ended June 30, 1997 and
incremental expense associated with public ownership for the three and six
months ended June 30, 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Pro forma net earnings for the three months ended June 30, 1997 were
$5.0 million compared to actual net earnings of $6.9 million for the prior
year period. Pro forma net earnings for the six months ended June 30, 1997
were $3.0 million compared to actual net earnings of $2.2 million for the
prior year period. The pro forma net earnings reflects the decrease in net
operating profits, the decrease in interest expense as a result of the
repayment of the Company's long term debt out of the proceeds of the
initial public offering and the tax effect as though the Company and
Galbreath were taxable entities for the entire period. Pro forma earnings
per share were $.31 and $.19 for the three and six month periods ended June
30, 1997 based on $16,200,000 shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows provided by operations totaled $10.0 million for the
six months ended June 30, 1997 compared to cash flows used in operations of
$2.8 million for the prior year period. The $12.8 million increase is
primarily attributable to the stronger earnings experienced in the six
months ended June 30, 1997 as discussed in the Results of Operations above.
Another significant factor is the increase in leasing commissions generated
in the fourth quarter of 1996 for both the Management Services and
Corporate and Financial Services segments which resulted in cash
collections in early 1997. The increase in cash related to these
collections has been partially offset by steady increases in year end
accounts payable and accrued compensation which were paid in early 1997.
In addition, with the sale of the construction operations on December 31,
1996, receivables of $21.8 million and accounts payable of $20.1 million as
of December 31, 1996 related to subcontractor expenses paid on behalf of
clients were collected or paid as of June 30, 1997. The resulting increase
in net cash flows of $1.7 million compares to a net use of cash for the six
months ended June 30, 1996 of $3.5 million.
As of June 30, 1997, the Company had a total net investment of $14.9
million in 33 separate property or fund co-investments. 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. In addition to its share of investment
returns, the Company may earn 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, 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.
Actual earnings before interest, taxes, depreciation and amortization
("EBITDA") increased $9.8 million to $11.4 million for the three months
ended June 30, 1997 and increased $12.4 million to $9.9 million for the six
months ended June 30, 1997 compared to the prior year periods. Calculated
on a pro forma basis, EBITDA was $10.9 million and $10.3 million for the
three and six months ended June 30, 1997.
Net cash provided by investing activities was $1.7 million for the six
months ended June 30, 1997 compared to a use of cash of $11.4 million for
the prior year period. The increase in net cash provided by investing
activities is a result of a $2.5 million increase in distributions from
real estate investments and a decrease in capital additions from the prior
year period of $5.6 million as a result of expenditures on furniture and
fixtures at the Company's new corporate headquarters in early 1996.
Investments made in real estate ventures for the six months ended June 30,
1997, which totaled $2.3 million, were $1.8 million lower than the prior
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
year period. In addition, the Company had committed $10.5 million for
future fundings of coinvestments. Finally, as a result of the merger of
Galbreath with the Company in April 1997, the Company experienced an
increase in cash balances of $3.2 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,
as amended, consists of a short-term facility and a 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 maintain
a certain level of net worth and meet earnings before interest, taxes,
depreciation and amortization targets. The Company's are 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 is in the process of
establishing a new facility through its existing lenders or a new lender.
There can be no assurance as to the terms and conditions of such new
facility.
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 June 30, 1997 totaled $16.9 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 June 30, 1997 totaled
$23.3 million.
At June 30, 1997, the Company also had outstanding $37.2 million in
subordinated debt owed to DSA 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 Dai-ichi
Notes are prepayable without penalty.
Net cash used in financing activities was $6.0 million for the six
months ended June 30, 1997 compared to net cash provided of $10.5 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. Distributions to partners increased by $1.7 million in
1997 compared to 1996. Consistent with prior practice, the Company made
distributions to its partners to cover the partners' estimated tax payment
obligations, in accordance with the Partnership agreements. The increase
in distributions over the prior year period is a result of increased
earnings for the period ended June 30, 1997 over the prior year period. An
additional distribution was made prior to the contribution of partnership
interests to LPI of $2.5 million for the estimated tax payment obligations
for partnership income earned prior to July 22, 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded)
Upon completion of the initial public offering, the Company repaid the
full amount of the indebtedness outstanding under the Dai-ichi Notes and
the long-term facility, including accrued interest. The Company plans to
increase its long-term debt periodically in order to continue to pursue
international expansion, strategic acquisitions and co-investments.
Additionally, the Company paid down outstanding balances under its short-
term facility subsequent to the initial public offering. The Company
believes, based on its current operating plans, that cash generated from
operations and available borrowings will be sufficient to meet its capital
and liquidity requirements for at least the next two years.
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 specialized in the interior build-out of
office and retail space for tenants in the Chicago and Los Angeles markets,
had 1996 revenue, which is 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.
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 fees to be received if
the Company achieves certain performance targets. Such incentive payments
are generally earned in the fourth quarter or when an asset is sold. 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 quarter of each calendar year, reports a small profit or loss in the
second and third quarters and records a substantial majority of the
Company's earnings in the fourth calendar quarter. The second quarter
results for 1997 were unusually strong compared to the second quarter
results of prior years as a result of performance fees recognized by the
Investment Management segment on the disposition of certain assets under
management as well as a higher level of transactions completed by the
tenant representation and investment banking units as compared to prior
years.
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.
<PAGE>
OTHER MATTERS
In connection with the initial public offering and the incorporation
of the Partnerships, 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, 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 financial condition (see pro forma
combined financial statements contained elsewhere herein).
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN 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 contributed 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 constituted a "transaction by any issuer not
involving any public offering" and thus was exempt from the registration
requirements of the Securities Act of 1933 (the "Act") under Section 4(2)
thereof.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Prior to the initial public offering the Registrant was a wholly-owned
subsidiary of LaSalle Partners Limited. Pursuant to a written consent
dated July 15, 1997, the sole shareholder of the Registrant took the
following actions: (i) elected Mr. Darryl Hartley-Leonard and Mr. Thomas C.
Theobald to serve as Class I and Class III Directors, respectively, (ii)
approved the Articles of Amendment and Restatement amending and restating
the Articles of Incorporation of the Corporation, and (iii) approved the
Company's 1997 Stock Award and Incentive Plan, Employee Stock Purchase Plan
and Stock Compensation Plan. The term of office of each of the other
directors (Stuart L. Scott, Robert C. Spoerri, William E. Sullivan, Daniel
W. Cummings, Charles K. Esler, Jr., Lizanne Galbreath, M.G. Rose, Lynne C.
Thurber and Earl E. Webb) continued after such consent.
ITEM 5. OTHER MATTERS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995:
Certain statements in this filing and elsewhere (such as in other
filings by the Registrant with the Securities and Exchange Commission,
press releases, presentations and communications by the Registrant or its
management and written and oral statements) may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance, achievements, plans and objectives of the Registrant to be
materially different from any future results, performance, achievements,
plans and objectives expressed or implied by such forward-looking
statements. Such factors are discussed in the Registrant's Registration
Statement (No. 333-25741), under "Risk Factors" and elsewhere, and in other
reports filed by the Registrant with the Securities and Exchange Commission
and include, among other things, the following: (i) the impact of general
economic conditions and the real estate economic climate on the
Registrant's business and results of operations; (ii) the risk that
property management and investment management agreements will be terminated
prior to expiration or not renewed; (iii) the dependence of the
Registrant's revenue from property management and leasing services on the
performance of the properties managed by the Registrant; (iv) the risks
inherent in pursuing a selective acquisition strategy; (v) the
concentration of the Registrant's business in properties in central
business districts; (vi) the risks associated with the co-investment
activities of the Registrant; (vii) the seasonal nature of the Registrant's
revenue, operating income and net earnings; and (viii) the competition
faced by the Registrant in a variety of business disciplines within the
commercial real estate industry. The Registrant expressly disclaims any
obligation or undertaking to update or revise any forward-looking
statements to reflect any change in Registrant expectations or results or
any changes in events.
<PAGE>
USE OF PROCEEDS:
On July 16, 1997, the Registrant's Registration Statement on Form S-1
(333-25741) relating to 4,600,000 shares of the Registrant's common stock,
$.01 par value per share ("Common Stock"), including 600,000 shares of
Common Stock subject to an over-allotment option granted to the
underwriters by a shareholder of the Registrant, was declared effective by
the Securities and Exchange Commission. The offering of 4,600,000 shares
of Common Stock at $23.00 per share (including the 600,000 shares subject
to the over-allotment option granted by a shareholder of the Registrant)
was completed on July 22, 1997. The Registrant did not receive any
proceeds from the sale of the shares subject to the over-allotment option.
The managing underwriters for the offering were Morgan Stanley & Co.
Incorporated, William Blair & Company and Montgomery Securities. Total
underwriting discounts and commissions paid by the Registrant were
$6,440,000. The Registrant estimates that the other costs and expense
incurred in connection with the offering will be approximately $2.0
million. No expense payments were made, directly or indirectly, to
directors or officers of the Registrant or their associates, persons owning
ten percent or more of the Common Stock or affiliates of the Registrant.
The net proceeds of the offering are estimated to be approximately $83.5
million. At the closing of the offering, $63.5 million of the net proceeds
were used to repay in full the Registrant's outstanding long-term notes
payable, including interest thereon. Subsequently, the Registrant used
$14.5 million to repay amounts outstanding on its working capital line of
credit. In addition, approximately $2.6 million of the net proceeds were
used for direct co-investment in real estate. The remaining net proceeds
were temporarily invested in Eurodollar time deposits. Except with respect
to the repayment of the Dai-ichi Notes (the holder of which is the owner of
greater than ten percent of the outstanding Common Stock) described in Part
I, Item 2, no proceeds were paid, directly or indirectly, to directors or
officers of the Registrant, persons owning ten percent or more of the
Common Stock or affiliates of the Registrant, except with respect to the
registration fee and related expenses in connection with the sale of the
shares subject to the over-allotment option.
<PAGE>
USE OF PROCEEDS:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of exhibits is set forth in the Exhibit Index which
immediately precedes the exhibits and which is incorporated by reference
herein.
(b) No reports on Form 8-K have been filed for the quarter covered
by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
LASALLE PARTNERS INCORPORATED
Dated: August 29, 1997 BY: /S/ WILLIAM E. SULLIVAN
------------------------------
William E. Sullivan
Executive Vice President and
Chief Financial Officer
(Authorized Officer,
Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Articles of Amendment and Restatement of
LaSalle Partners Incorporated.
3.2 Amended and Restated Bylaws of LaSalle
Partners Incorporated.
10.1 Fourth Amendment to Credit Agreement, First
Amendment to Borrowers' Security Agreement, First Amendment to Subsidiary
Security Agreement, and Consent and Release of Collateral Agreement, dated
as of July 9, 1997, among LaSalle Partners Management Limited Partnership,
LaSalle Partners Limited Partnership, Harris Trust and Savings Bank, and
LaSalle National Bank.
27.1 Financial Data Schedule.
<PAGE>
EXHIBIT 3.1
- -----------
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 "Corpora-
tion"), 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.
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 hold-
ers 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 re-
spect 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.
1
<PAGE>
(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 enti-
tled 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.
(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 out-
standing, 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 reclas-
sify any of the shares of capital stock shall include, without limitation,
subject to the provisions of this Charter, authority to classify or reclas-
sify 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 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;
2
<PAGE>
(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.
(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 other-
wise permitted by law.
3
<PAGE>
FIFTH: The following provisions are inserted for the manage-
ment 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
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.
4
<PAGE>
(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 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 stockhold-
ers, 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 empow-
ered 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 provi-
sions of the MGCL, this Charter, and the Bylaws of the Corporation; PRO-
VIDED, 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 stock-
holders 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 indemnifi-
cation 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 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 con-
nection 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.
5
<PAGE>
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 modifi-
cation.
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.
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 Direc-
tors, 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 Direc-
tors 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 per-
sons.
6
<PAGE>
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 notwith-
standing anything else contained in this 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 permissi
ble 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 Arti-
cles 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 resi-
dent agent is CSC-Lawyers 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
7
<PAGE>
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 7th day of July, 1997.
By: /s/ Robert C. Spoerri
------------------------
Name: Robert C. Spoerri
Title: President
Attest:
/s/ William E. Sullivan
-----------------------
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.
/s/ Robert C. Spoerri
------------------------
Name: Robert C. Spoerri
Title: President
8
<PAGE>
EXHIBIT 3.2
- -----------
AMENDED AND RESTATED BYLAWS
of
LASALLE PARTNERS INCORPORATED
-----------------------------
A Maryland Corporation
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - OFFICES
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 . . . . . . . . . . . . . . . . 1
Section 4. Quorum . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Proxies. . . . . . . . . . . . . . . . . . . . . 2
Section 6. Voting . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Nature of Business at Meetings of Stockholders . 2
Section 8. Record Date. . . . . . . . . . . . . . . . . . . 3
Section 9. Informal Action. . . . . . . . . . . . . . . . . 3
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Number and Election of Directors.. . . . . . . . 4
Section 2. Nomination of Directors. . . . . . . . . . . . . 4
Section 3. Vacancies. . . . . . . . . . . . . . . . . . . . 5
Section 4. Duties and Powers. . . . . . . . . . . . . . . . 5
Section 5. Organization . . . . . . . . . . . . . . . . . . 5
Section 6. Resignations and Removals of Directors . . . . . 6
Section 7. Meetings . . . . . . . . . . . . . . . . . . . . 6
Section 8. Quorum . . . . . . . . . . . . . . . . . . . . . 6
Section 9. Actions of Board . . . . . . . . . . . . . . . . 6
Section 10. Meetings by Means of Conference Telephone. . . . 6
Section 11. Committees . . . . . . . . . . . . . . . . . . . 6
Section 12. Compensation . . . . . . . . . . . . . . . . . . 7
ARTICLE IV - OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1. General. . . . . . . . . . . . . . . . . . . . . 7
Section 2. Election . . . . . . . . . . . . . . . . . . . . 7
Section 3. Voting Securities Owned by the Corporation . . . 7
Section 4. Chairman of the Board of Directors.. . . . . . . 8
Section 5. President. . . . . . . . . . . . . . . . . . . . 8
Section 6. Executive Vice Presidents. . . . . . . . . . . . 8
Section 7. Other Vice Presidents. . . . . . . . . . . . . . 8
Section 8. Secretary. . . . . . . . . . . . . . . . . . . . 9
Section 9. Treasurer. . . . . . . . . . . . . . . . . . . . 9
Section 10. Assistant Secretaries. . . . . . . . . . . . . . 9
Section 11. Assistant Treasurers . . . . . . . . . . . . . . 10
Section 12. Other Officers . . . . . . . . . . . . . . . . . 10
ARTICLE V - STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Form of Certificates . . . . . . . . . . . . . . 10
Section 2. Signatures . . . . . . . . . . . . . . . . . . . 10
Section 3. Lost, Destroyed, Stolen or
Mutilated Certificate. . . . . . . . . . . . . . 11
Section 4. Transfers. . . . . . . . . . . . . . . . . . . . 11
Section 5. Transfer and Registry Agents . . . . . . . . . . 11
Section 6. Beneficial Owners. . . . . . . . . . . . . . . . 11
ARTICLE VI - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Notices. . . . . . . . . . . . . . . . . . . . . 11
Section 2. Waivers of Notice. . . . . . . . . . . . . . . . 12
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ARTICLE VII - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 12
Section 1. Dividends. . . . . . . . . . . . . . . . . . . . 12
Section 2. Disbursements. . . . . . . . . . . . . . . . . . 12
Section 3. Fiscal Year. . . . . . . . . . . . . . . . . . . 12
Section 4. Corporate Seal . . . . . . . . . . . . . . . . . 12
ARTICLE VIII - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Power to Indemnify in Actions,
Suits or Proceedings . . . . . . . . . . . . . . 12
Section 2. Authorization of Indemnification.. . . . . . . . 13
Section 3. Directors' Reliance On Reports . . . . . . . . . 13
Section 4. Indemnification by a Court . . . . . . . . . . . 13
Section 5. Expenses Payable in Advance. . . . . . . . . . . 14
Section 6. Nonexclusivity of Indemnification
and Advancement of Expenses. . . . . . . . . . . 14
Section 8. Certain Definitions. . . . . . . . . . . . . . . 14
Section 9. Survival of Indemnification and
Advancement of Expenses. . . . . . . . . . . . . 15
Section 10. Limitation on Indemnification. . . . . . . . . . 15
Section 11. Indemnification of Employees and Agents. . . . . 15
ARTICLE IX - AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1. Amendments . . . . . . . . . . . . . . . . . . . 15
Section 2. Entire Board of Directors. . . . . . . . . . . . 15
ii
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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 Corpora-
tion 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 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 Direc-
tors, 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.
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SECTION 4. QUORUM. Except as otherwise required by law or by the
Charter, the holders of a majority of the capital stock issued and out-
standing 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 stockholder 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 "hereunto 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 Corpora-
tion 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 busi-
ness 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 Corporation (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 proce-
dures 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 Corporation.
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 Corporation not less than ninety (90) days nor more than one hundred
twenty (120) days prior to the anniversary date of the immediately preced-
ing 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 stockholder's notice as described above.
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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 Corporation 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 accor-
dance 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 proce-
dures, the Chairman shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be trans-
acted.
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 Direc-
tors 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 thirti-
eth day before the meeting; and (y) the record date for determining stock-
holders 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 unanimous
written consent which sets forth the action and is signed by each stock-
holder 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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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 direc-
tor'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 Corporation, 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 direc-
tors, (a) by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (b) by any stockholder of the Corporation
(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 require | meets, for a
nomination to be made by a stockholder, such stockholder must have given
timely notice thereof in proper written form to the Secretary of the
Corporation.
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 Corporation (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 anniver-
sary 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 stockholder'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 Corporation 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
4
<PAGE>
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 Corpora-
tion which are owned beneficially or of record by such stockholder, (iii) a
description of all arrangements or 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 stock-
holder, (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 accom-
panied 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
Corporation 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 remain-
ing 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 or common stock of the Corporation shall have the
right, voting separately as a class, 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
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.
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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.
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 other-
wise 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 present at any
meeting and not disqualified from voting, whether or not he or they consti-
tute 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.
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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 Chairman of the Board of Directors
(who must be a director), a President, a Secretary and a Treasurer. The
Board of Directors, in its discretion, may also choose one or more Execu-
tive 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 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 Chairman of the
Board of Directors, 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 resolu
tion, 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.
7
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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
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 requiring a seal, under the seal 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 or by
the Chairman of 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 Presi-
dent 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 Presi-
dents 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 or the Chairman
of 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 all the powers
of and be subject to all the restrictions upon the President.
SECTION 7. OTHER VICE PRESIDENTS. The Board of Directors, the Chair-
man 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 Corpora-
tion's affairs. The Chairman of the Board of Directors and the President
shall notify the Board of Directors of the appointment of any Vice Presi-
dents 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.
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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 Direc-
tors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board of Directors or the 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
Chairman of the Board of Directors 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
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 Chairman of the Board of Directors
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 Chairman of 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 Secre-
tary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
9
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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 Chairman of the
Board of Directors, the President, any 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 Corpo-
ration 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 desig-
nations, preferences, conversion and other rights, voting powers, restric-
tions, 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
authority of the Board of Directors to set the relative rights and prefer-
ences of a subsequent series, and shall otherwise be in such form, not
inconsistent with the Maryland General Corporation Law (the "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 Direc-
tors.
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.
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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 de-
stroyed. 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 certifi-
cate 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; provid-
ed, 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 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.
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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 at-
tends 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.
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 serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another corpora-
tion, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, penal-
ties, 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
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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 equiva-
lent, 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 circum-
stances 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 stockhold-
ers. 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.
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
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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 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 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
14
<PAGE>
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 beneficia-
ries.
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 representa-
tives) or advance expenses in connection with a proceeding (or part there-
of) 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. 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.
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EXHIBIT 10.1
- ------------
FOURTH AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO BORROWERS' SECURITY AGREEMENT,
FIRST AMENDMENT TO SUBSIDIARY SECURITY AGREEMENT, AND
CONSENT AND RELEASE OF COLLATERAL AGREEMENT
This Fourth Amendment to Credit Agreement, First Amendment to
Borrowers' Security Agreement, First Amendment to Subsidiary Security
Agreement and Consent and Release of Collateral Agreement (this
"Amendment") dated as of July 9, 1997 among LaSalle Partners Management
Limited Partnership, a Delaware Limited Partnership ("LPML"), LaSalle
Partners Limited Partnership, a Delaware Limited Partnership ("LPL") (LPL
and LPML are hereinafter referred to collectively as the "Borrowers" and
individually as a "Borrower"), the Lenders party hereto, and Harris Trust
and Savings Bank, as Agent;
W I T N E S S E T H:
WHEREAS, the Borrowers, Lenders and Harris Trust and Savings Bank, as
Agent, have heretofore executed and delivered a Credit Agreement dated as
of September 6, 1996 (as amended through the Third Amendment thereto dated
as of February 28, 1997, the "Credit Agreement"); and
WHEREAS, the Borrowers have requested that the Lenders consent to the
Transaction (as defined below) and to certain amendments to the Credit
Agreement; and
WHEREAS, each partner of each Borrower will assign all of its
interest in such Borrower to LaSalle Partners Incorporated, a Maryland
corporation ("LP Inc."), LPL will admit LaSalle Partners Corporate &
Financial Services, Inc., a Maryland corporation, as a new general partner,
LPML will admit LaSalle Partners Management Services, Inc., a Maryland
corporation, as a new general partner and LP Inc. will withdraw as a
general partner and be admitted as a limited partner of LPL and LPML
(collectively, the "Transaction"); and
WHEREAS, the parties hereto desire to amend, modify and waive the
Credit Agreement as provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be and hereby is amended, modified and waived as follows:
1. The defined terms "Net Operating Income" and "Supporting
Subsidiary" contained in Article I of the Credit Agreement are hereby
amended in their entirety and as so amended shall read as follows:
"Net Operating Income" means, for the Borrowers for
any period, their Net Income for such period before all extraordinary items
and all Interest Expense.
<PAGE>
"Supporting Subsidiary" means each Person which
executes a counterpart to the Subsidiary Security Agreement and complies
with the requirements of Section 4.3 hereof.
2. Section 5.1 of the Credit Agreement is hereby amended by
deleting the phrase "limited partnerships" appearing in the last sentence
thereof and inserting in its place the word "corporations."
3. Section 6.1(j) of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
(j) an updated Schedule II along with the
financial statements delivered under subsections (a) and (b) above, as
applicable, for any calendar quarter during which there is a change in any
of the facts specified in Schedule II, as then most recently updated.
4. Section 6.2 of the Credit Agreement is hereby amended by
deleting the phrase ", all such payments to be made exclusively from
capital contributions made to LPL and LPML by their partners" appearing in
the last sentence thereof.
5. Sections 6.13(a) of the Credit Agreement is hereby amended in
its entirety and as so amended shall read as follows:
(a) Short-term obligations of the United States
of America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America.
6. Section 6.16 of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
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 $11,100,000
1998 $12,300,000
7. Section 6.17 of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
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 date:
- 2 -
<PAGE>
DATE NET WORTH SHALL
NOT BE LESS THAN
December 31, 1996 $50,000,000
July 31, 1997 $72,000,000
December 31, 1997 $82,000,000
December 31, 1998 $92,000,000
8. Section 6.23 of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
Section 6.23. Distributions. LPML and LPL shall
not make any Distributions to any of their respective partners; provided,
however, LPML and LPL may make Distributions if immediately prior to and
after giving effect to any such Distribution a Default or Unmatured Default
shall not have occurred and be continuing.
9. Sections 5.14, 6.25, 6.26, 7.11, 7.12, 7.13, 7.15 and 7.16 of
the Credit Agreement are each hereby deleted in their entirety and inserted
in their place the following:
Section 5.14. [Intentionally omitted].
Section 6.25. [Intentionally omitted].
Section 6.26. [Intentionally omitted].
Section 7.11. [Intentionally omitted].
Section 7.12. [Intentionally omitted].
Section 7.13. [Intentionally omitted].
Section 7.15. [Intentionally omitted].
Section 7.16. [Intentionally omitted].
10. Section 7.17 of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
Section 7.17. At any time fewer than five of the
following individuals continue to be members of senior management of LP
Inc. (or one of its principal Subsidiaries) and active in the management of
LP Inc. (or one of its principal Subsidiaries): Stuart L. Scott, Robert C.
Spoerri, William E. Sullivan, Daniel W. Cummings, Charles K. Esler, Jr.,
Lizanne Galbreath, M.G. Rose, Lynn C. Thurber, and Earl E. Webb.
11. The Lenders and Agent each hereby consent to the Transaction.
- 3 -
<PAGE>
12. (a) Upon receipt of the payment in full of all Facility B
Loans and Facility C Loans the Lenders and Agent agree that all liens and
security interests in the following Collateral shall be released: (i) all
the collateral currently pledged under the Collateral Assignment of
Partnership Interests, as amended, the Subsidiary Collateral Assignment of
Partnership Interests, as amended, the Pledge Agreement, as amended, the
Subsidiary Pledge Agreement, the Floating Charge dated 15th January, 1997,
between LaSalle Partners International, an unlimited liability company
incorporated in England and Wales (Registered number 2547868) ("LaSalle
Partners International") and the Agent, the Mortgage of Shares dated
15th January, 1997 between LPI and the Agent, and the Mortgage of Shares
dated 15th January, 1997 between LaSalle Partners International and the
Agent and (ii) all equipment pledged under the Borrowers' Security
Agreement and Subsidiary Security Agreement. The Agent and Lenders shall
take all actions reasonably requested by the Borrowers to effect such
release, including public filings to evidence such release, it being
understood that notwithstanding the release of the lien on equipment and
other collateral pursuant to this Amendment, the Borrowers are not at this
time requesting the Agent to amend any UCC financing statements previously
filed to reflect such release (other than the termination of certain UCC
financing statements relating to the Borrowers). It being further
understood that any UCC financing statement previously filed does not
constitute a grant of a lien or security interest by either Borrower or any
Supporting Subsidiary on any such collateral.
(b) Each of the Borrowers' Security Agreement and the
Subsidiary Security Agreement is hereby amended to delete the text of
Section 1(a)(ii) and 5 and insert in their place the following:
[Intentionally omitted].
(c) Section 3(b) of the Borrowers' Security Agreement is
hereby amended by deleting the phrase (I) "or places of business other than
those listed on Schedule A" appearing in the eighth and ninth lines thereof
and (II) "or place of business" appearing in the tenth line thereof.
(d) Section 3(b) of the Subsidiary Security Agreement is
hereby amended by deleting the phrase (I) "; and no Debtor has any other
principal place of business other than those listed on Schedule B"
appearing in the eighth and ninth lines thereof and (II) "or place of
business" appearing in the tenth line thereof.
(e) Section 3(b) of the Subsidiary Security Agreement is
hereby further amended by replacing the phrase "immediately preceding
sentence" in the eleventh line thereof with the phrase "two immediately
preceding sentences."
(f) Section 3(g) of the Subsidiary Security Agreement is
hereby amended by inserting immediately after the word "Agreement"
appearing in the third line thereof the following: ",except that LaSalle
Partners Management (Ohio) Limited Partnership may transact business under
the trade name "Galbreath/LaSalle Partners."
13. Each Borrower represents and warrants to each Lender and the
Agent that (a) each of the representations and warranties set forth in
Article V of the Credit Agreement is true and correct on and as of the date
of this Amendment as if made on and as of the date
- 4 -
<PAGE>
hereof and as if each reference therein to the Credit Agreement referred to
the Credit Agreement as amended hereby; (b) no Default and no event that
with the giving of notice or passage of time, or both, would constitute a
Default has occurred and is continuing; and (c) without limiting the effect
of the foregoing, each Borrower's execution, delivery and performance of
this Amendment has been duly authorized, and this Amendment has been
executed and delivered by duly authorized officers of each Borrower.
14. This Amendment shall become effective upon the satisfaction of
all of the following conditions precedent:
(a) The Borrowers, the Lenders and the Agent shall have
executed and delivered this Amendment and the Supporting Subsidiaries and
LP International, a Wyoming Limited Liability Company shall have executed
the consent attached hereto;
(b) The Dai-Ichi Indebtedness shall have been paid in full or
shall be paid in full with the proceeds of the initial public offering of
common stock of LP Inc., the closing of which shall occur immediately
following the consummation of the Transaction, and all liens granted
securing the Dai-Ichi Indebtedness shall have been released or shall be
released immediately upon such payment;
(c) The Agent shall have received the favorable opinion of
counsel to the Borrowers;
(d) The Agent shall have received copies of the Articles of
Incorporation and bylaws of LP Inc., certified in each instance by its
Secretary;
(e) The Agent shall have received copies of the resolutions
of the Board of Directors of LP Inc. authorizing the Transaction;
(f) The Agent shall have received a copy of each amendment to
each Borrower's partnership agreement executed in connection with the
Transaction; and
(g) The Transaction shall have occurred or shall occur
simultaneously with the effectiveness of this Amendment.
Each Borrower has heretofore executed and delivered to the Agent
certain Security Agreements and each Borrower hereby acknowledges and
agrees that, notwithstanding the execution and delivery of this Amendment,
except as provided herein, the Security Agreements executed by it remain in
full force and effect and the rights and remedies of the Agent thereunder,
the obligations of each Borrower thereunder and the liens and security
interests created and provided for thereunder remain in full force and
effect and shall not be affected, impaired or discharged hereby. Nothing
herein contained shall in any manner affect or impair the priority of the
liens and security interests created and provided for by the Security
Agreements as to the indebtedness which would be secured thereby prior to
giving effect to this Amendment.
- 5 -
<PAGE>
This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each of
which when so executed shall be an original but all of which shall
constitute one and the same instrument. Except as specifically amended,
waived and modified hereby, all of the terms and conditions of the Credit
Agreement and the other Loan Documents shall remain unchanged and in full
force and effect. All references to the Credit Agreement in any document
shall be deemed to be references to the Credit Agreement as amended hereby.
All capitalized terms used herein without definition shall have the same
meaning herein as they have in the Credit Agreement. This Amendment shall
become effective upon execution by the parties hereto. This Amendment
shall be construed and governed by and in accordance with the internal laws
of the State of Illinois.
Dated as of the date first above written.
LASALLE PARTNERS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: /S/ BRIAN P. HAKE
Brian P. Hake
Its: Treasurer
LASALLE PARTNERS MANAGEMENT LIMITED PARTNERSHIP,
a Delaware limited partnership
By: /S/ CHARLES K. ESLER, JR.
Charles K. Esler, Jr.
Its: Chief Executive Officer
HARRIS TRUST AND SAVINGS BANK, in its
individual capacity as a Lender and as Agent
By: /S/ SCOTT F. GEIK
Scott F. Geik
Its: Vice President
LASALLE NATIONAL BANK
By: /S/ JAMES F. TURNER
James F. Turner
Its: First Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH
REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 12,875
<SECURITIES> 0
<RECEIVABLES> 56,293
<ALLOWANCES> 2,612
<INVENTORY> 0
<CURRENT-ASSETS> 70,451
<PP&E> 16,276
<DEPRECIATION> 25,313
<TOTAL-ASSETS> 161,679
<CURRENT-LIABILITIES> 65,661
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 42,859
<TOTAL-LIABILITY-AND-EQUITY> 161,679
<SALES> 96,783
<TOTAL-REVENUES> 99,430
<CGS> 92,002
<TOTAL-COSTS> 93,499
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,497
<INTEREST-EXPENSE> 3,576
<INCOME-PRETAX> 2,355
<INCOME-TAX> 134
<INCOME-CONTINUING> 2,221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,221
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
