UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 22, 1998
LASALLE PARTNERS INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-13145 36-4150422
- ------------------------ ------------------------ ---------------
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation Identification
or organization) No.)
200 East Randolph Drive, Chicago, IL 60601
------------------------------------ ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (312) 782-5800
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
TABLE OF CONTENTS
ITEM 5. Other Events
ITEM 7. Financial Statements and Exhibits
<PAGE>
ITEM 5. OTHER EVENTS
As previously reported, LaSalle Partners Incorporated (the "LaSalle
Partners") has entered into agreements for the acquisition of all of the
equity interests of the companies that, following the reorganization
transactions described herein (the "Integration"), will own substantially
all of the assets of and be engaged in the worldwide property and asset
management, advisory and other real estate related businesses currently
conducted under the name "Jones Lang Wootton" (the "JLW Businesses"). The
transactions associated with the acquisition and the Integration are
referred to as the "Transactions." The purchase agreements, dated as of
October 21, 1998 (as amended, the "Purchase Agreements"), have been entered
into by, among others, LaSalle Partners and certain of its subsidiaries and
current and prospective shareholders of certain companies (the "JLW Parent
Companies") which hold all of the equity interest of the companies that,
directly or through subsidiaries,conduct the JLW Businesses (such JLW
Companies together with the JLW Parent Companies, the "JLW Companies"). A
special meeting of LaSalle Partners stockholders (the "Special Meeting")
will be called for the purpose of voting on (i) the issuance of up to
14,254,116 shares of common stock, par value $.01 per share ("LaSalle
Partners Common Stock"), of LaSalle Partners in connection with the
Transactions (the "Share Issuance"), (ii) an amendment to the LaSalle
Partners Articles of Amendment and Restatement to change the name of
LaSalle Partners to "Jones Lang LaSalle Incorporated" in connection with
the closing of the Transactions (the "Charter Amendment") and (iii) an
amendment to the LaSalle Partners 1997 Stock Award and Incentive Plan to
increase the number of shares issuable thereunder to 4,160,000 from
2,215,000 (the "Stock Plan Amendment"). The closing of the Transaction is
subject to a number of conditions, certain of which are described below.
As a result, no assurance can be given that the Transactions will be
completed. A preliminary proxy statement relating to the Special Meeting
has been filed with the Securities and Exchange Commission but has not yet
been sent to the stockholders of LaSalle Partners. This Current Report
does not constitute the solicitation of any vote with respect to the
Transactions or the other matters to be considered in connection with the
Transactions.
The Board of Directors of LaSalle Partners has unanimously approved
the Share Issuance, the Charter Amendment and the Stock Plan Amendment.
Members of the Board of Directors who are employed by LaSalle Partners have
delivered to the representatives of the JLW Sellers irrevocable proxies to
vote all of the shares of LaSalle Partners Common Stock owned by such
members in favor of the Share Issuance, the Charter Amendment and the Stock
Plan Amendment. The shares owned by such members represent approximately
23% of the issued and outstanding shares of LaSalle Partners Common Stock
entitled to vote.
This Current Report on Form 8-K ("Current Report") provides
information regarding, among other things, the Transactions, the JLW
Businesses and the combined entity comprising LaSalle Partners and the JLW
Companies following the closing of the Transactions ("Jones Lang LaSalle").
In order to effect the Transactions, LaSalle Partners has made an
exchange offer to the direct and indirect beneficial owners of the JLW
Parent Companies (the "JLW Shareholders") relating to the shares of LaSalle
Partners Common Stock to be issued to the JLW Shareholders in connection
with the Transactions. This Current Report assumes that the exchange offer
has been accepted by all the JLW Shareholders and that all agreements to be
executed by the JLW Shareholders to effect the Transactions have been
executed by such JLW Shareholders. Such execution by the JLW Shareholders
is a condition to the consummation of the Transactions.
Galbreath Holdings, LLC has made a demand under the Registration
Rights Agreements, dated as of April 22, 1997, by and among LaSalle
Partners, DEL-LPL Limited Partnership ("DEL-LPL"), DEL-LPAML Limited
Partnership ("DEL-LPAML" and, together with DEL-LPL, the "Employee
Partnerships"), DSA-LSPL, Inc., DSA-LSAM, Inc. and Galbreath Holdings, LLC
<PAGE>
(the "Registration Rights Agreement"), that a registration statement be
filed with respect to 1,150,000 shares of the LaSalle Partners Common Stock
held by it. The other parties to the Registration Rights Agreement may
request that all or a portion of the shares of LaSalle Partners Common
Stock held by them be included in the registration statement. The other
parties to the Registration Rights Agreement have been notified of the
request made by Galbreath Holdings, LLC, but have not yet indicated whether
they plan to exercise their participation rights. In the near future,
LaSalle Partners expects to file a registration statement related to the
above request. A copy of the Registration Rights Agreement was filed as
Exhibit 10.14 to the LaSalle Partners Registration Statement No. 333-25741.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
filing and elsewhere (such as in reports, other filings with the Securities
and Exchange Commission (the "SEC"), press releases, presentations,
communications by LaSalle Partners or its management and written and oral
statements) may constitute "forward-looking statements" within the meaning
of the United States 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 LaSalle Partners (and
after the closing of the Transactions (the "Closing"), Jones Lang LaSalle)
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 (i) the LaSalle Partners
Registration Statement (No. 333-25741) under the caption "Risk Factors" and
elsewhere, (ii) the LaSalle Partners Annual Report on Form 10-K for the
year ended December 31, 1997 (the "LaSalle Partners 10-K") in Item 1,
"Business," Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere, (iii) the LaSalle
Partners Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
(the "LaSalle Partners First Quarter 10-Q") under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and elsewhere, (iv) the LaSalle Partners Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 (the "LaSalle Partners Second Quarter 10-
Q") under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere, (v) the LaSalle
Partners Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 (the "LaSalle Partners Third Quarter 10-Q"), (vi) the LaSalle Partners
Current Report on Form 8-K, dated August 31, 1998, (vii) the LaSalle
Partners Current Report on Form 8-K, dated October 1, 1998 (the "LaSalle
Partners October 1 Current Report"), (viii) the LaSalle Partners Current
Report on Form 8-K, dated October 22, 1998, (ix) this Current Report under
the captions "The Transactions," "The Purchase Agreements," "JLW
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the JLW Companies" and elsewhere, and (x) other reports filed
by LaSalle Partners with the SEC. LaSalle Partners expressly disclaims any
obligation or undertaking to update or revise any forward-looking
statements to reflect any changes in events or circumstances or in LaSalle
Partners' expectations or results. Statements in this Current Report
regarding parties other than LaSalle Partners are based upon
representations of such other parties.
THE TRANSACTIONS
The following summaries of certain principal terms of the Purchase
Agreements and related agreements do not purport to be complete and are
qualified in their entirety by reference to the applicable agreement which
is attached as an exhibit hereto and are hereby incorporated by reference
herein.
<PAGE>
DESCRIPTION OF THE TRANSACTIONS
GENERAL. The JLW Companies operate their businesses in four distinct
geographical regions: Europe, Asia, Australia and North America. However,
there are independent ownership structures between and within the regions.
An English partnership ("JLW England") owns the JLW Businesses operating in
Europe (except for Scotland and the Republic of Ireland) and North America,
a Scottish partnership ("JLW Scotland") owns the JLW Businesses operating
in Scotland and an Irish partnership ("JLW Ireland") owns the JLW
Businesses operating in the Republic of Ireland. In Asia, there are two
holding companies, JLW Pacific Limited ("JLW Pacific") and JLW Asia
Holdings Limited ("JLW Holdings"), the shares of which are held in trust
(the "Procon Trust") by Procon International Limited ("Procon"), as trustee
for the benefit of certain senior executives of the JLW Companies operating
in Asia. In Australasia, there are also two holding companies, JLW
Australia Pty Limited ("JLW Australia") and Jones Lang Wootton Holdings
Limited ("JLW (NZ) Holdings"), the shares of which are owned by JLW
Holdings Pty Limited, a corporation owned by senior executives of the JLW
Businesses in Australia, in the case of JLW Australia ("JLW Australia
Parent"), and JLW (New Zealand) Holdings Pty Limited, a corporation owned
by senior executives of the JLW Businesses in New Zealand ("JLW (NZ)
Holdings Parent"), in the case of JLW (NZ) Holdings. In addition, the
international hotels and services businesses of the JLW Companies are
conducted through one holding company in Asia, Benbridge Singapore Pte
Limited ("Benbridge Singapore"), which holds the shares of JLW Transact
(Thailand) Co. Limited ("Transact Thailand"), JLW Transact Pte Limited
("Transact Singapore") and JLW Transact Limited ("Transact HK")
(collectively, "JLW Asia Transact"), and through two holding companies in
Australasia, Benbridge NZ Limited ("Benbridge (NZ)") and Benbridge
Australia Pty Limited ("Benbridge (AUS)"), which hold the shares of JLW
Transact Limited ("Transact NZ"), Jones Lang Wootton Transact Pty Ltd.
("Transact (NSW)"), Jones Lang Wootton Transact (Vic) Pty Ltd. ("Transact
(Vic)") and Jones Lang Wootton Transact (Qld) Pty Limited ("Transact
(Qld)") (collectively, "JLW Australasia Transact" and, together with JLW
Asia Transact, "JLW Transact"). The shares of JLW Transact are held in
trust for certain beneficiaries, including the senior executives thereof
(the "Transact Beneficiaries").
As a result of substantially independent ownership structures among
and within the Regions, historical financial reporting has been presented
for the following five separate ownership groups: the JLW Businesses in
Europe (which includes the JLW Businesses in North America but excludes the
JLW Businesses in Scotland and the Republic of Ireland) (the "JLW Europe
Group"), the JLW Businesses in Scotland (the "JLW Scotland Group"), the JLW
Businesses in the Republic of Ireland (the "JLW Ireland Group"), the JLW
Businesses in Asia (excluding JLW Pacific Limited and its subsidiaries, the
"JLW Asia Group") and the JLW Businesses in Australasia (the "JLW
Australasia Group"). Financial information and a discussion of results of
operations for each group are provided in "Unaudited Pro Forma Consolidated
Financial Statements--The JLW Companies," "JLW Management's Discussion and
Analysis of Financial Condition and Results of Operations of the JLW
Companies" and the financial statements for each of the groups located
elsewhere in this Current Report.
In order to facilitate the business combination with LaSalle Partners,
JLW England, JLW Scotland, JLW Ireland and certain other JLW Companies and
their affiliates will undertake the Integration, subject to the
satisfaction of the conditions precedent contained in the Purchase
Agreements.
<PAGE>
The Transactions will take place as follows:
EUROPE/USA. In accordance with a plan of integration (the "Europe/USA
Integration Plan") and certain related agreements:
. certain European executives of the JLW Companies, former
partners of JLW England and widows of former partners of JLW England will
subscribe for shares in a recently formed corporation, Salta Limited
("NewCo 4"), then exchange such shares for shares in Jones Lang Wootton
("NewCo 1");
. the outstanding shares of common stock (the "JLW USA Shares")
of Jones Lang Wootton USA Inc., the holding company for the United States
operations of the JLW Businesses ("JLW USA"), and JLW Supply Company, the
holding company for the continental European operations of the JLW
Businesses ("JLW Supply"), will cease to be held as assets of JLW England;
- JLW Nominees Limited, an English corporation which holds
the JLW USA Shares in trust for certain partners of JLW England, will
distribute the JLW USA Shares to the partners of JLW England receiving
shares in NewCo 1; and
- the trustees for the beneficial owners of JLW Supply will
transfer the outstanding shares of JLW Supply to the partners of JLW
England, and certain European executives of the JLW Companies will
subscribe for shares in JLW Supply;
. the trustees who are currently the legal owners of JLW
Continuation Ltd. ("JLW Continuation"), an English corporation which is a
partner of JLW England, will transfer the outstanding share capital of JLW
Continuation to certain Dutch partners of JLW England and Dutch senior
executives of subsidiaries of JLW England.
. the partners of JLW England will transfer all the remaining
assets of JLW England (excluding some or all of the available cash) to
NewCo 1 in exchange for the issue of the entire share capital of NewCo 1 to
certain of such partners;
. the partners of JLW Scotland will transfer all the assets of
JLW Scotland (excluding some or all of the available cash) to a recently
formed corporation, JLW (Scotland) Corporate ("NewCo 2"), in exchange for
the entire issued share capital thereof; and
. the partners of JLW Ireland will transfer substantially all of
the assets of JLW Ireland to a recently formed corporation, Slaneyglen
Company ("NewCo 3"), in exchange for the entire issued share capital
thereof.
Shortly after the completion of the Europe/USA Integration Plan, and
subject to the terms and conditions of the applicable Purchase Agreement,
LaSalle Partners will acquire the shares of NewCo 1, NewCo 2, NewCo 3, JLW
USA, JLW Supply and JLW Continuation from the owners thereof.
NewCo 1, NewCo 2, NewCo 3, JLW USA, JLW Supply and JLW Continuation
are collectively referred to herein as the "JLW Europe/USA Parent
Companies." JLW England, JLW Scotland and JLW Ireland are collectively
referred to herein as the "JLW Partnerships."
ASIA AND AUSTRALASIA. Subject to the terms and conditions of the
Purchase Agreements, in accordance with a plan of integration (the
"Asia/Australasia Integration Plan") and certain related agreements:
. JLW Australia will transfer the minority shareholdings it has
in various JLW Companies in Asia and Australasia to certain other JLW
Companies in Asia and Australasia, respectively.
<PAGE>
Shortly after the completion of the Asia/Australasia Integration Plan,
and subject to the terms and conditions of the applicable Purchase
Agreements, LaSalle Partners will acquire:
. the entire issued share capital of JLW Pacific and JLW Holdings
from Procon;
. 73.99% of the issued share capital of Transact Thailand, and
the entire issued share capital of Transact Singapore and Transact HK from
Benbridge Singapore;
. the entire issued share capital of JLW Australia from JLW
Australia Parent and the entire issued share capital of JLW (NZ) Holdings
from JLW (NZ) Holdings Parent; and
. the entire issued share capital of (a) Transact NZ from
Benbridge (NZ) and (b) Transact (NSW), Transact (Vic) and Transact (Qld)
from Benbridge (AUS).
JLW Pacific, JLW Holdings, Transact Thailand, Transact Singapore and
Transact HK are collectively referred to herein as the "JLW Asia Parent
Companies." JLW Australia, JLW (NZ) Holdings, Transact (NZ), Transact
(NSW), Transact (Vic) and Transact (Qld) are collectively referred to
herein as the "JLW Australasia Parent Companies."
The JLW Europe/USA Parent Companies, the JLW Asia Parent Companies and
the JLW Australasia Parent Companies comprise the JLW Parent Companies.
Procon and Benbridge Singapore are collectively referred to herein as the
"JLW Asia Sellers." JLW Australia Parent, Benbridge (AUS), JLW (NZ)
Holdings Parent and Benbridge (NZ) are collectively referred to herein as
the "JLW Australasia Sellers." The JLW Partnerships, the JLW Asia Sellers
and the JLW Australasia Sellers are collectively referred to herein as the
"JLW Sellers."
CONSIDERATION
GENERAL. LaSalle Partners will deliver, or cause to be delivered, as
set forth below, (i) up to 14,254,116 shares of LaSalle Partners Common
Stock (subject to reduction pursuant to a post-closing net worth adjustment
as summarized under the caption "The Purchase Agreements--Consideration
Adjustment"), (ii) an amount of cash equal to the value of 111,084 shares
of LaSalle Partners Common Stock (determined by multiplying 111,084 by the
average closing price of LaSalle Partners Common Stock as reported on the
composite transactions tape of the New York Stock Exchange, Inc. (the
"NYSE") for the five trading days immediately preceding and including the
date of the commencement of the Integration (such price, the "Five-Day
Average Closing Price") and (iii) an additional $2.7 million in cash (the
"Additional Australasia Cash Payment"). Assuming the net worth
requirements are met and that the Five Day Average Closing Price is equal
to $28-5/16 (the closing price of LaSalle Partners Common Stock on November
20, 1998), approximately 12,481,792 shares of LaSalle Partners Common Stock
(the "Consideration Shares") and $5.8 million in cash consideration would
be issued or paid to or for the account of the JLW Shareholders in exchange
for their interest in the JLW Parent Companies. The remaining 1,772,324
shares will be placed in a trust (the "ESOT") for the benefit of certain
current and former employees of the JLW Companies and certain related
parties (the "ESOT Shares"). The ESOT Shares, subject to certain vesting
requirements, will be allocated during the period following the Closing and
ending on December 31, 2000. The shares issuable in the Transactions would
represent approximately 46.8% of the shares of LaSalle Partners Common
Stock issued and outstanding immediately following the Closing.
<PAGE>
<TABLE>
Assuming the foregoing, the consideration will be paid as follows:
<CAPTION>
Shares of
LaSalle
Partners Cash Percentage
Common Value of Consider- of Total
Stock Shares ation Value Consideration
---------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
NewCo 1, JLW Supply,
JLW USA and
JLW Continuation . . . . . 6,451,022 $182,644,560 $1,845,239 $184,489,799 45.1%
NewCo 2 . . . . . . . . . . 264,508 7,488,883 75,651 7,564,534 1.8
NewCo 3 . . . . . . . . . . 508,009 14,383,005 145,271 14,528,276 3.6
JLW Asia Group. . . . . . . 3,770,793 106,760,577 1,078,904 107,839,481 26.3
JLW Australasia Group . . . 1,487,460 42,113,711 2,700,000 44,813,711 10.9
---------- ------------ ---------- ------------ -----
Total . . . . . . . . . 12,481,792 353,390,736 5,845,065 359,235,801 87.7%
ESOT. . . . . . . . . . . . 1,772,324 50,178,923 -- 50,178,923 12.3%
---------- ------------ ---------- ------------ -----
Grand Total . . . . . . 14,254,116 $403,569,659 $5,845,065 $409,414,724 100.0%
========== ============ ========== ============ =====
</TABLE>
<PAGE>
Pursuant to the Purchase Agreements, 50% of the first 35,700
Consideration Shares and 20% of any additional Consideration Shares
allocated to each JLW Shareholder (the "Forfeiture Shares") will be placed
in escrow and will be subject to forfeiture in the event of the cessation
of employment of such JLW Shareholder under certain circumstances or, if
such JLW Shareholder is not a natural person, the director, officer,
employee or partner of the JLW Businesses who owns or holds an interest
(beneficial or otherwise), direct or indirect, in such JLW Shareholder or
through which such JLW Shareholder will acquire shares of stock in the JLW
Parent Companies in the Integration (a "Related JLW Owner"). In addition,
a portion of each JLW Shareholder's Consideration Shares and a portion of
the ESOT Shares will be deposited with an escrow agent (the "Indemnity
Escrow Agent") under (i) to facilitate the post-closing net worth
adjustments (an aggregate of 1,241,683 Consideration Shares and ESOT Shares
(the "Adjustment Shares")) and (ii) to secure the JLW Shareholders'
indemnification obligations under an escrow agreement to be established
under the Purchase Agreements (the "Escrow Agreement") (an aggregate of
750,000 Consideration Shares and ESOT Shares (the "Indemnification
Shares")). The remaining Consideration Shares (the "Initial Distribution
Shares") allocated to each JLW Shareholder will be issued directly to each
JLW Shareholder at Closing.
AUSTRALASIA. Pursuant to the applicable Purchase Agreement, each JLW
Australasia Seller will sell to LaSalle Partners the shares of the JLW
Australasia Parent Companies owned by such JLW Australasia Seller in
exchange for a convertible note. Such convertible notes will be redeemable
for an aggregate of 1,487,460 shares of LaSalle Partners Common Stock. The
JLW Australasia Sellers have directed LaSalle Partners, in lieu of the
issuance of a portion of such convertible notes to the JLW Australasia
Sellers, to issue such portion of such convertible notes to certain of the
direct and indirect beneficial owners of the JLW Australasia Parent
Companies (the "JLW Australasia Shareholders"), provided, that JLW
Australia Parent will retain a convertible note in the principal amount of
$1,986,113, which is redeemable for 80,247 shares of LaSalle Partners
Common Stock. The convertible notes issued to the JLW Australasia
Shareholders and JLW Australia Parent will be redeemed for LaSalle Partners
Common Stock on the date of the Closing (the "Closing Date"). The
convertible notes issued to the JLW Sellers and the JLW Australasia
Shareholders are referred to herein as the "Convertible Notes."
EMPLOYEE STOCK OWNERSHIP TRUST. At the Closing, the ESOT Shares will
be issued to or on behalf of the ESOT administered by representatives of
the JLW Shareholders (the "Shareholders' Representatives"), of which
1,571,441 ESOT Shares will be directly deposited with the trustee for the
ESOT (the "ESOT Trustee"), and 91,988 ESOT Shares (the "ESOT
Indemnification Shares") and 108,895 ESOT Shares (the "ESOT Adjustment
Shares") will be deposited in escrow as Indemnification Shares and
Adjustments Shares, respectively, on behalf of the ESOT. Such ESOT
Indemnification Shares and ESOT Adjustment Shares, if, when and to the
extent released from the escrow will be delivered to the ESOT Trustee. See
"The Purchase Agreements--Employee Trusts." Subject to the terms of the
ESOT, the ESOT Shares received by the ESOT Trustee will be allocated over a
period immediately following the Closing and ending December 31, 2000, to
certain current and former employees of the JLW Companies and certain
related parties prior to the Closing (and certain related persons) selected
by the Shareholders' Representatives. ESOT Shares are anticipated to be
allocated as follows: 915,542 shares at Closing, 246,415 shares on
December 31, 1999 and 610,367 shares on December 31, 2000.
<PAGE>
FORFEITURE PROVISIONS. Pursuant to the Purchase Agreements, 50% of
the first 35,700 Consideration Shares and 20% of any additional
Consideration Shares allocated to each JLW Shareholder will be placed in
escrow and will be subject to forfeiture in the event of cessation of
employment as described below. The JLW Shareholders have executed a
Sellers' Contribution and Coordination Agreement (the "SCCA") which, among
other things, sets out the provisions governing the forfeiture of
Forfeiture Shares if a JLW Shareholder or, if applicable, its Related JLW
Owner ceases to be employed by Jones Lang LaSalle, as well as the mechanism
by which forfeited Forfeiture Shares will be reallocated among the
remaining JLW Shareholders. No Forfeiture Shares will be returned to Jones
Lang LaSalle, if forfeited pursuant to the SCCA.
Immediately, in cases of death and disability giving rise to cessation
of employment, or in December 2000 in all other cases, representatives
appointed by the JLW Shareholders will determine whether any JLW
Shareholder or any Related JLW Owner who has ceased to be employed by Jones
Lang LaSalle has left on terms causing such person to be deemed a "Bad
Leaver" under the SCCA. A "Bad Leaver" is defined under the SCCA to
include someone who has breached his or her contract of employment with
Jones Lang LaSalle or joined a competitor of Jones Lang LaSalle, or whose
departure is not in the best interests of Jones Lang LaSalle. If a JLW
Shareholder is determined to be a Bad Leaver, such JLW Shareholder's
Forfeiture Shares will be forfeited and allocated to the other JLW
Shareholders pro rata to their entitlement to Forfeiture Shares. The
forfeiture provisions in the SCCA will cease to apply upon the earliest of
(i) December 31, 2000, (ii) the day on which a tender offer for Jones Lang
LaSalle is recommended by the board of directors of Jones Lang LaSalle (the
"Jones Lang LaSalle Board"), or (iii) the dissolution of Jones Lang
LaSalle.
DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE TRANSACTIONS
DIRECTORS. In connection with the Transactions, effective upon
closing, the bylaws of Jones Lang LaSalle (the "Amended Bylaws") will be
amended and restated to provide that the number of directors comprising the
Jones Lang LaSalle Board as of the Closing and until the earlier of (a) the
first business day after the fifth annual meeting of the stockholders of
Jones Lang LaSalle following the Closing and (b) June 1, 2003 (the
"Transition Period") will be fourteen. As of the Closing, seven of such
directors will have been designated by LaSalle Partners (the "LaSalle
Partners Directors") and seven of such directors will have been designated
by the Sellers' Representatives (the "JLW Directors"). Three of the
LaSalle Partners Directors and three of the JLW Directors are required to
be independent. Four of the LaSalle Partners Directors and four of the JLW
Directors are currently executive officers of LaSalle Partners or the JLW
Companies, respectively. The initial LaSalle Partners Directors will be
Messrs. Stuart L. Scott, Robert C. Spoerri, M.G. Rose, Daniel W. Cummings,
Darryl Hartley-Leonard, Thomas C. Theobald and John R. Walter, each of whom
is an existing director of LaSalle Partners. The initial JLW Directors
will include Messrs. Christopher A. Peacock and Michael J. Smith, each of
whom is an executive officer of the JLW Business. The additional JLW
Employee Directors, who must be independent directors, are currently being
selected. The current members of the LaSalle Partners Board not designated
to continue to serve on the Jones Lang LaSalle Board have agreed to resign,
effective upon the Closing. See "The Purchase Agreements--Directors and
Executive Officers of Jones Lang LaSalle."
<PAGE>
The Purchase Agreements and the Amended Bylaws provide that for a
period of at least two years immediately following the Closing, or until
earlier removal, disqualification, resignation, retirement, death or
incapacity, (i) Mr. Stuart L. Scott, the current Chairman and Chief
Executive Officer of LaSalle Partners, will hold the position of Chairman
of the Board and Chief Executive Officer of Jones Lang LaSalle and (ii) Mr.
Christopher A. Peacock, the current Chief Executive Officer of the
International Board of the JLW Companies, will hold the position of
President, Deputy Chief Executive Officer and Chief Operating Officer of
Jones Lang LaSalle. If at any time during the Transition Period, the
position of Chairman of the Board and Chief Executive Officer of Jones Lang
LaSalle or President, Deputy Chief Executive Officer and Chief Operating
Officer of Jones Lang LaSalle becomes vacant, such vacancy will be filled
be a majority vote of the entire Jones Lang LaSalle Board. As used herein,
"entire Jones Lang LaSalle Board" means the total number of directors Jones
Lang LaSalle would have if there were no vacancies. During the two-year
period immediately following the Closing, the Chairman of the Board and
Chief Executive Officer of Jones Lang LaSalle and President, Deputy Chief
Executive Officer and Chief Operating Officer of Jones Lang LaSalle must be
selected from the officers or employees of LaSalle Partners immediately
prior to the Closing ("LaSalle Partners Employees") and the partners,
officers or employees of the JLW Businesses immediately prior to the
Closing ("JLW Employees"). During such period, if the office of the
Chairman and Chief Executive Officer of Jones Lang LaSalle is held by a
LaSalle Partners Employee, then the office of President, Deputy Chief
Executive Officer and Chief Operating Officer of Jones Lang LaSalle must be
held by a JLW Employee and (ii) if the office of Chairman of the Board and
Chief Executive Officer of Jones Lang LaSalle is held by a JLW Employee,
then the office of President, Deputy Chief Executive Officer and Chief
Operating Officer of Jones Lang LaSalle must be held by a LaSalle Partners
Employee.
During the Transition Period, the Chairman of the Board and Chief
Executive Officer, and the President, Deputy Chief Executive Officer and
Chief Operating Officer of Jones Lang LaSalle may only be removed from
office by a majority vote of the entire Jones Lang LaSalle Board, provided,
that neither Mr. Scott nor Mr. Peacock may be removed from such respective
positions with or without cause, prior to the second anniversary of the
Closing, unless such removal is approved by at least two-thirds of the
entire Jones Lang LaSalle Board.
During the Transition Period, the affirmative vote of at least 75% of
the entire Jones Lang LaSalle Board will be required to alter or amend, or
adopt any provision inconsistent with, or repeal, in whole or in part, the
provisions of the Amended Bylaws containing the foregoing provisions.
<PAGE>
ANTICIPATED ACCOUNTING TREATMENT
To the extent that the existing owners of the JLW Businesses (the
"Current JLW Owners") receive cash consideration, the Additional
Australasia Cash Payment, Initial Distribution Shares, Indemnification
Shares and Adjustment Shares (including such shares issuable upon
redemption of Convertible Notes) in exchange for direct or indirect
ownership interests in the JLW Parent Companies in connection with the
Transactions, such exchanges will be accounted for using the purchase
method of accounting in accordance with Accounting Principles Board Opinion
No. 16, BUSINESS COMBINATIONS ("APB Opinion No. 16"). Such cash
consideration and the fair market value of the aggregate Initial
Distribution Shares, Indemnification Shares and Adjustment Shares
(including any such shares issuable upon redemption of the Convertible
Notes), plus any capitalizable transaction costs, will be compared to the
fair value of identifiable net assets acquired and the difference will be
allocated to goodwill and amortized on a straight-line basis over such
periods as permitted by United States Generally Accepted Accounting
Principles ("US GAAP"). To the extent that Current JLW Owners receive
Forfeiture Shares and to the extent that persons other than Current JLW
Owners ("New JLW Owners") receive cash consideration, Initial Distribution
Shares, Indemnification Shares, Adjustment Shares and Forfeiture Shares in
exchange for direct or indirect ownership interests in the JLW Parent
Companies in connection with the Transactions and to the extent ESOT Shares
are allocated, such exchanges or allocations will be accounted for as
compensation in accordance with Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB Opinion No. 25"). Such cash
consideration and the fair market value of the aggregate Initial
Distribution Shares, Indemnification Shares, Adjustment Shares and
Forfeiture Shares will be recorded as compensation expense or deferred
compensation expense. Deferred compensation expense will be amortized on a
straight-line basis over the related forfeiture or vesting periods. See
"Unaudited Pro Forma Consolidated Financial Statements."
THE PURCHASE AGREEMENTS
The following summary of certain terms of the Purchase Agreements does
not purport to be complete and is qualified in its entirety by reference to
the Purchase Agreements, filed as exhibits hereto. All capitalized terms
used in this section but not defined shall have the meanings ascribed to
them in the applicable Purchase Agreement.
CONSIDERATION
At the closing of the Transactions, LaSalle Partners will deliver (i)
an aggregate of 14,254,116 shares (including the ESOT Shares) of LaSalle
Partners Common Stock (subject to reduction pursuant to the post-closing
net worth adjustments described below), (ii) the cash consideration in an
amount of cash equal to the value of 111,084 shares of LaSalle Partners
Common Stock (determined by multiplying 111,084 by the Five Day Average
Closing Price) and (iii) the Additional Australasia Cash Payment.
12,481,792 of these shares and all of the cash consideration will be issued
or paid to or for the account of the JLW Shareholders in exchange for their
interests in the JLW Companies and distributed as provided in the Purchase
Agreements. See "The Transactions--Consideration." The remaining 1,772,324
shares will be placed in the ESOT.
<PAGE>
CONSIDERATION ADJUSTMENT
The Consideration Shares issuable to each JLW Shareholder will be
subject to reduction if NewCo 1, JLW Supply, JLW USA, JLW Continuation and
their subsidiaries (the "JLW England Companies"), (ii) NewCo 2 and its
subsidiaries, (iii) NewCo 3 and its subsidiaries, (iv) the JLW Asia Parent
Companies and their subsidiaries or (v) the JLW Australasia Parent
Companies and their subsidiaries do not have the required net worth as of
Closing. The aggregate net worth required for such companies is $40
million, subject to adjustment in the event that the commencement of the
Integration (the "Integration Commencement") occurs after January 15, 1999.
In order to facilitate the net worth adjustments, an aggregate of 1,241,683
Adjustment Shares will be deposited with the Indemnity Escrow Agent.
The Adjustment Shares will be deposited with the Indemnity Escrow
Agent as follows: (i) the shareholders of the JLW England Companies (the
"JLW England Shareholders") and the related ESOT sub trust will deposit
697,736 Adjustment Shares (the "JLW England Adjustment Shares"), (ii) the
shareholders of NewCo 2 (the "JLW Scotland Shareholders") and the related
ESOT sub trust will deposit 22,456 Adjustment Shares (the "JLW Scotland
Adjustment Shares"), (iii) the shareholders of NewCo 3 (the "JLW Ireland
Shareholders") and the related ESOT sub trust will deposit 44,642
Adjustment Shares (the "JLW Ireland Adjustment Shares"), (iv) the JLW Asia
Shareholders and the related ESOT sub trust will deposit 329,750 Adjustment
Shares (the "Asia Region Adjustment Shares") and (v) the JLW Australasia
Shareholders and the related ESOT sub trust will deposit 147,099 Adjustment
Shares (the "Australasia Region Adjustment Shares"). Each of the JLW
England Shareholders, the JLW Scotland Shareholders, the JLW Ireland
Shareholders, the JLW Asia Shareholders and the JLW Australasia
Shareholders is referred to herein as a "Shareholder Group" and each of the
JLW England Adjustment Shares, the JLW Scotland Adjustment Shares, the JLW
Ireland Adjustment Shares, the Asia Region Adjustment Shares and the
Australasia Region Adjustment Shares, as separate groups, are referred to
herein as "Shareholder Group Adjustment Shares."
As soon as practicable, but in no event later than 50 days following
the Closing Date, Jones Lang LaSalle will prepare a combined or
consolidated balance sheet as of the close of the business day prior to the
Closing Date (the "Closing Balance Sheets"), with a related calculation of
Closing Net Worth (as defined below), with respect to each of (i) the JLW
England Companies, (ii) NewCo 2, (iii) NewCo 3, (iv) the JLW Asia Parent
Companies and (v) the JLW Australasia Parent Companies and, combined or
consolidated profit and loss accounts, statements of cash flows, statements
of movement on reserves and statements of total recognized gains and losses
(the "Closing Financial Statements" and, collectively with the Closing
Balance Sheets and the Closing Net Worth calculations, the "Closing
Statements") for the period from January 1, 1998 to the Closing Date (or
for such other period(s) as may be required as described below), for each
of (A) the JLW England Companies, (B) NewCo 2, (C) NewCo 3, (D) the JLW
Asia Parent Companies and (E) the JLW Australasia Parent Companies.
The Shareholders' Representatives will have 25 days after receipt of
such Closing Statements to object thereto. The Shareholders'
Representatives and LaSalle Partners will have 15 days from notice of any
objection by the Shareholders' Representatives to resolve any differences
after such objection. If the Shareholders' Representatives fail to object
within 25 days, such Closing Statements will be deemed to have been
accepted. If all differences are not resolved, any remaining differences
will be referred to a neutral auditor for final resolution. If, following
acceptance of the Closing Statements and resolution of any conflicts, the
Closing Net Worth of the JLW England Companies, NewCo2, NewCo 3, the JLW
Asia Parent Companies or the JLW Australasia Parent Companies is determined
<PAGE>
to be less than $22,476,000, $724,000, $1,440,000, $10,624,000 or
$4,736,000, respectively (each, a "Minimum Closing Net Worth") (the amount
of each such deficiency being referred to herein as a "Shareholder Group
Adjustment Amount" and, in the aggregate, the "Adjustment Amount"), then
the number of Shareholder Group Adjustment Shares to be delivered to each
Shareholder Group and the related ESOT sub trust, respectively, will be
reduced by the number of shares of LaSalle Partners Common Stock equal to
the quotient obtained by dividing the respective Shareholder Group
Adjustment Amount by an amount (the "Adjustment Shares Conversion Amount")
equal to 92.5% of the average closing price of LaSalle Partners Common
Stock (as reported on the composite transaction tape of the NYSE) for the
five-trading-day period that includes the two trading days immediately
preceding, the trading day including and the two trading days immediately
following the day (the "Final Closing Statements Determination Date") on
which the final Closing Statements are agreed to by the parties or finally
determined by the neutral auditor. However, if such quotient exceeds the
number of Shareholder Group Adjustment Shares allocated to any Shareholder
Group and the related ESOT sub trust (such excess number of shares being
referred to herein as the "Shareholder Group Share Deficit"), then the
Shareholder Group Adjustment Shares issuable to the other Shareholder
Groups and the related ESOT sub trusts will be reduced by an aggregate
number equal to the Shareholder Group Share Deficit, apportioned among the
Shareholder Groups and the related ESOT sub trusts pro rata on the basis of
the respective number of Shareholder Group Adjustment Shares allocated to
the Shareholder Groups and the related ESOT sub trusts. If such reduction
reduces to zero the number of Shareholder Group Adjustment Shares issuable
to any other Shareholder Group and the related ESOT sub trust, any
remaining Shareholder Group Share Deficit will be deducted from any
Shareholder Group Adjustment Shares then remaining issuable to the
remaining Shareholder Groups and the related ESOT sub trusts pro rata on
the basis of the Shareholder Group Adjustment Shares then remaining
issuable to each of them. The adjustments described in this paragraph are
referred to herein as the "Net Worth Adjustments."
Following the Net Worth Adjustments, each JLW England Shareholder, JLW
Scotland Shareholder and JLW Ireland Shareholder, and the related ESOT sub
trust, will be entitled to receive such JLW Shareholder's or ESOT sub
trust's pro rata share of any then remaining JLW England Adjustment Shares,
JLW Scotland Adjustment Shares or JLW Ireland Adjustment Shares,
respectively (determined on the basis of the ratio which the Initial
Distribution Shares and Forfeiture Shares issuable to such JLW Shareholder
(or, in the case of an ESOT sub trust, the number of ESOT Shares deposited
in the applicable ESOT sub trust) bears to the aggregate number of Initial
Distribution Shares and Forfeiture Shares issuable to all JLW England
Shareholders, JLW Scotland Shareholders and JLW Ireland Shareholders, as
applicable, together with the number of ESOT Shares that are deposited with
the related ESOT sub trusts). The allocation of the Asia Region Adjustment
Shares and Australasia Region Adjustment Shares remaining issuable after
the Net Worth Adjustments will be determined by the Shareholders'
Representatives and included in a written notice (the "Allocation Notice")
provided to LaSalle Partners and the Indemnity Escrow Agent by the
Shareholders' Representatives within 30 days following the Final Closing
Statements Determination Date (the "Allocation Notice Delivery Period"). In
the event that the number of Shareholder Group Adjustment Shares issuable
to any Shareholder Group and the related ESOT sub trust would be required
to be reduced pursuant to the Net Worth Adjustments, the Shareholder's
Representatives may, during the Allocation Notice Delivery Period, (i) pay,
on behalf of some or all of the JLW Shareholders in such Shareholder Group
and the related ESOT sub trust, up to an amount in cash equal to the
applicable Shareholder Group Adjustment Amount or (ii) surrender to Jones
Lang LaSalle an equivalent number of Initial Distribution Shares (based on
a per share value equal to the Adjustment Shares Conversion Amount) in
which case the applicable Adjustment Shares Conversion Amount will be
reduced pro rata. Each Shareholder Group Adjustment Amount will be reduced
by an amount equal to any such cash payment and the value of any Initial
Distribution Shares so surrendered (based on a per share value equal to the
<PAGE>
Adjustment Shares Conversion Amount). At the end of the Allocation Notice
Delivery Period, any Adjustment Shares that have become subject to a
reduction pursuant the Net Worth Adjustments (after giving effect to any
cash payment or surrender of Initial Distribution Shares) will be delivered
to Jones Lang LaSalle by the Indemnity Escrow Agent.
If the Net Worth Adjustments (after giving effect to any cash payment
or surrender of Initial Distribution Shares) result in a reduction in
Adjustment Shares that exceeds the aggregate number of Adjustment Shares
(such excess amount being referred to herein as the "Adjustment Shares
Deficit"), then in addition to the elimination of the Adjustment Shares
(and return of such Adjustment Shares to LaSalle Partners by the Indemnity
Escrow Agent), each JLW Shareholder and the ESOT Trustee will be obligated
to return to the transfer agent and registrar for LaSalle Partners Common
Stock (the "Transfer Agent") for cancellation certificates representing
Initial Distribution Shares received by such JLW Shareholder and ESOT
Shares received by the ESOT Trustee. The Transfer Agent will cancel each
such certificate and issue to each JLW Shareholder and the ESOT Trustee a
new certificate representing such JLW Shareholder's Initial Distribution
Shares or ESOT Shares, less such JLW Shareholder's and ESOT sub trust's pro
rata share (on the basis of the Initial Distribution Shares and Forfeiture
Shares issued to all JLW Shareholders and ESOT Shares issued to the ESOT)
of the Adjustment Shares Deficit (based on a per share value equal to the
Adjustment Shares Conversion Amount). In the event that the Initial
Distribution Shares received by the JLW Shareholders are not sufficient to
satisfy the Adjustment Shares Deficit, the JLW Shareholders are required to
cause the escrow agent appointed to hold the Forfeiture Shares (the
"Forfeiture Shares Escrow Agent") or the Indemnity Escrow Agent with
respect to the Forfeiture Shares of the JLW Asia Shareholders to return to
the Transfer Agent for cancellation certificates representing such
Forfeiture Shares. The Transfer Agent will cancel such certificates and
issue to the Forfeiture Shares Escrow Agent or the Indemnity Escrow Agent,
as applicable, a new certificate representing such Forfeiture Shares, less
the number of Forfeiture Shares required to satisfy the Adjustment Shares
Deficit.
In the event that (i) the final Closing Net Worth of the JLW England
Companies and their subsidiaries exceeds the Minimum Closing Net Worth of
the JLW England Companies, (ii) the final Closing Net Worth of NewCo 2 and
its subsidiaries exceeds the Minimum Closing Net Worth of NewCo 2, (iii)
the final Closing Net Worth of NewCo 3 and its subsidiaries exceeds the
Minimum Closing Net Worth of NewCo 3, (iv) the final Closing Net Worth of
the JLW Asia Parent Companies and their subsidiaries exceeds the Minimum
Closing Net Worth of the JLW Asia Parent Companies or (v) the final Closing
Net Worth of the JLW Australasia Parent Companies and their subsidiaries
exceeds the Minimum Closing Net Worth of the JLW Australasia Parent
Companies, then, within 60 days of the Final Closing Statements
Determination Date, LaSalle Partners will pay to the JLW England
Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders, JLW Asia
Shareholders or JLW Australasia Shareholders, as applicable, an amount
equal to such excess (unless such excess was otherwise paid or distributed
to them), by delivery of cash in the amount of such excess by wire transfer
to an account or accounts designated by the Shareholders' Representatives.
<PAGE>
In the event that the Integration Commencement takes place later than
January 15, 1999, the Closing Financial Statements for the JLW England
Companies, NewCo 2, NewCo 3, the JLW Asia Parent Companies and the JLW
Australasia Parent Companies and their respective subsidiaries will each
include both (i) a profit and loss account for the year ended December 31,
1998 and (ii) a pro forma profit and loss account (to take into account a
revised compensation expense with respect to certain individuals and
associated tax benefits or charges) for the period beginning on January 1,
1999 and ending on the business date next preceding the Closing Date (the
"1999 Income Statements," with such period being sometimes referred to
herein as the "1999 Stub Period"). Based on the 1999 Income Statements
included in the final Closing Statements, the Minimum Closing Net Worth of
the JLW England Companies, NewCo 2, NewCo 3, the JLW Asia Parent Companies
and the JLW Australasia Parent Companies, respectively, will, subject to
certain exceptions, be increased by any pro forma profit on ordinary
activities after taxation, or decreased by any pro forma loss on ordinary
activities after taxation for the 1999 Stub Period as shown on each
Shareholder Group's respective Closing Financial Statements.
"Closing Net Worth" means, in respect of a specified group of
companies, the sum of the book values of all assets of such companies,
minus the sum of all liabilities of such companies, determined in each case
on a consolidated or combined basis (as applicable) in accordance with
certain accounting principles agreed upon pursuant to the Purchase
Agreements (the "Agreed Generally Accepted Accounting Principles") based on
the applicable Closing Balance Sheet. Notwithstanding the foregoing, for
purposes of calculating such Closing Net Worth: (a) the applicable Closing
Balance Sheets will include, among other things, accruals (if not satisfied
in full) for (i) Liabilities (as defined in the Purchase Agreements) to
former partners of JLW England, JLW Ireland and JLW Scotland, (ii)
Liabilities relating to the Jones Lang Wootton (Hong Kong) Annuity Scheme,
(iii) Transfer Taxes (as defined in the Purchase Agreements) payable by any
of such companies in connection with the Integration and the other
transactions contemplated by the Purchase Agreements, (iv) other Tax
Liabilities (as defined in the Purchase Agreements) of any such companies
relating to the Integration and the other transactions contemplated by the
Purchase Agreements, and (v) out-of-pocket fees and expenses (including,
without limitation, legal, financial advisory and accounting) payable by
any of such companies in connection with the Integration and the other
transactions contemplated by the Purchase Agreements; and (b) there shall
be added to the assets of the applicable group of companies to the extent
paid prior to Closing or accrued on the applicable Closing Balance Sheet,
an amount equal to (i) any Transfer Taxes of a type described in clause
(iii) above, whether so accrued or previously paid (or payable by LaSalle
Partners and deemed accrued or accrued as provided below) to the extent
that the total of such Transfer Taxes so accrued or paid is less than or
equal to $3 million in the aggregate for all JLW Europe/USA Parent
Companies, JLW Asia Parent Companies and JLW Australasia Parent Companies
<PAGE>
and their respective subsidiaries and (ii) any out-of-pocket fees and
expenses of a type described in clause (v) above, whether accrued or
previously paid (or payable by LaSalle Partners and deemed accrued or
accrued as provided below), to the extent that the total of such fees and
expenses is less than or equal to $12 million in the aggregate for all JLW
Europe/USA Parent Companies, JLW Asia Parent Companies and JLW Australasia
Parent Companies and their respective subsidiaries (it being understood
that the credits for any such Transfer Taxes or fees and expenses so
previously paid or accrued shall be allocated among the Closing Balance
Sheets in such manner as the Shareholders' Representatives shall specify),
provided that the amount required to be added back to the assets of the
applicable group of companies shall be net of any associated tax benefits
to such group of companies as included on the applicable Closing Balance
Sheet. For the purpose of determining such Closing Net Worth, there shall
be pro forma accruals on the applicable Closing Balance Sheets (a) in an
aggregate amount equal to any Transfer Taxes paid or payable by LaSalle
Partners in connection with the Integration or the transactions
contemplated by the Purchase Agreements (to the extent not already accrued
for on any Closing Balance Sheet) and (b) in an aggregate amount equal to
the aggregate amount of any out-of-pocket fees and expenses (including,
without limitation, legal, financial advisory and accounting fees and
expenses) that are (i) attributable to any JLW Partnership, JLW Europe/USA
Parent Company, JLW Asia Parent Company or JLW Australasia Parent Company
or any of their respective subsidiaries in connection with the Integration
or the transactions contemplated by the Purchase Agreements but (ii) have
not been accrued on any Closing Balance Sheet and (iii) are payable by
LaSalle Partners. Any such pro forma accruals shall be apportioned among
the five Closing Balance Sheets in such manner as the Shareholders'
Representatives shall specify.
REPRESENTATIONS AND WARRANTIES
The Purchase Agreements contain various representations and warranties
made jointly and severally by the JLW Companies (provided, that in the case
of the JLW Asia Parent Companies and the JLW Australasia Parent Companies,
such representations and warranties will not give rise to any right to
indemnification against such companies and are made only to the extent that
it is lawful for such companies to do so), and severally and not jointly by
certain JLW Shareholders who are also members of management (the
"Management Shareholders") (provided, that in the case of the Management
Shareholders, such representations and warranties are limited to the
Management Shareholders' knowledge and no Management Shareholder will have
any liability with respect to any representation and warranty unless the
Closing occurs). Such representations and warranties relate to, among other
things: (i) ownership and sale of shares of stock in the JLW Parent
Companies (the "JLW Shares") and claims to assets of the JLW Companies;
(ii) due organization and valid existence of each of the JLW Parent
Companies and the JLW Sellers and certain similar corporate matters; (iii)
the capitalization of each of the JLW Parent Companies; (iv) the name,
jurisdiction of incorporation and capitalization of each of the JLW
Companies; (v) the authorization, execution, delivery and enforceability of
the Purchase Agreements, the consummation of the Transactions and related
matters; (vi) the absence of violations and defaults under charters or
bylaws and any instruments or laws; (vii) the absence of consents or
approvals; (viii) financial statements; (ix) the absence of undisclosed
liabilities; (x) the absence of certain events and material adverse changes
since June 30, 1998; (xi) real property; (xii) intangible property rights;
(xiii) material contracts; (xiv) licenses; (xv) Year 2000 and Euro
compliance; (xvi) significant clients; (xvii) operation of the JLW
Businesses; (xviii) insurance matters; (xix) labor relations; (xx) employee
benefit matters; (xxi) litigation; (xxii) compliance with laws; (xxiii) tax
compliance and other tax matters; (xxiv) environmental matters; (xxv) list
of personnel and related matters; (xxvi) absence of untrue statements or
omissions of material facts supplied for inclusion in an offering circular
<PAGE>
relating to the shares of LaSalle Partners Common Stock to be issued in
connection with the Transactions (the "Offering Circular"), or the proxy
statement (the "Proxy Statement") to be delivered to LaSalle Partners
Stockholders in connection with a special meeting of LaSalle Partners
Stockholders at which LaSalle Partners Stockholders are to consider and
vote upon certain matters relating to the Transactions (the "Special
Meeting"); (xxvii) Integration matters; (xxviii) related party
transactions; (xxix) activities of newly formed subsidiaries; (xxx) absence
of action which would require registration of Consideration Shares under
the Securities Act of 1933, as amended (the "Securities Act"); (xxxi)
opinion of financial advisor; and (xxxii) certain fees.
The Purchase Agreements also contain representations and warranties of
LaSalle Partners related to, among other things: (i) LaSalle Partners and
its subsidiaries' due organization, valid existence and good standing and
certain similar corporate matters; (ii) subsidiaries and affiliates of
LaSalle Partners; (iii) the authorization, execution, delivery and
enforceability of the Purchase Agreements, the consummation of the
Transactions and related matters; (iv) the absence of conflicts under
charters or bylaws and violations of any instruments or laws caused by the
Transactions (but not including the Integration); (v) the possession of
required consents and approvals; (vi) various documents and financial
statements it has filed with the SEC and the accuracy of the information
contained therein; (vii) the absence of undisclosed liabilities; (viii) the
absence of certain events and material adverse changes since June 30, 1998;
(ix) licenses; (x) insurance matters; (xi) labor relations; (xii) employee
benefit matters; (xiii) litigation; (xiv) compliance with laws; (xv) tax
compliance and other tax matters; (xvi) opinion of financial advisor;
(xvii) certain fees; (xviii) absence of untrue statements or omissions of
material facts in the Offering Circular or the Proxy Statement (excluding
information included therein that relates to any JLW Shareholder, JLW
Seller or JLW Company); and (xix) the approval of the Transactions by the
LaSalle Partners Board and the inapplicability of "fair price" and similar
laws under the MGCL. The representations and warranties of LaSalle Partners
do not survive the Closing.
The Purchase Agreement relating to the JLW Asia Companies filed as an
exhibit to this Current Report (the "JLW Asia Purchase Agreement") and the
Purchase Agreement relating to the JLW Australasia Companies filed as an
exhibit to this Current Report (the "JLW Australasia Purchase Agreement")
also contain representations and warranties made jointly and severally by
the JLW Asia Sellers and the JLW Australasia Sellers, respectively,
relating to, among other things: (i) ownership and sale of JLW Shares; (ii)
authorization; (iii) the absence of certain material violations; (iv) the
possession of required consents or approvals; (v) certain investment
matters; and (vi) Regulation S under the Securities Act.
CERTAIN COVENANTS
GENERAL. Subject to certain exceptions, pursuant to the Purchase
Agreements, from the date of the Purchase Agreements until the Closing,
each of LaSalle Partners and the JLW Parent Companies has agreed to conduct
its respective business only in the ordinary and usual course and
substantially in the same manner as previously conducted. During such
period, each of LaSalle Partners and the JLW Parent Companies also will
(and the JLW Seller which is the parent thereof will cause such JLW Parent
Company to), and will cause each of their respective subsidiaries to, use
commercially reasonable efforts to preserve intact the existing
relationships with its clients and perform all acts to be performed by it
pursuant to the Purchase Agreements, the other Transaction documents and
certain documents relating to the Integration.
<PAGE>
The Purchase Agreements also contemplate that, subject to certain
exceptions, from the date of the Purchase Agreements until the Closing,
neither LaSalle Partners, the JLW Parent Companies nor any of their
subsidiaries will take any action that would result in the respective
representations and warranties of LaSalle Partners, the JLW Sellers, the
JLW Companies and the Management Shareholders under the Purchase Agreements
or of the JLW Shareholders under the agreements pursuant to which JLW
Shareholders are deemed to become parties to the Purchase Agreements (the
"Joinder Agreements") being untrue in any material respect or any of the
conditions to the Closing not being satisfied. Specifically, neither
LaSalle Partners, the JLW Parent Companies, nor any of their respective
subsidiaries may, among other things: (i) amend their respective
organizational documents; (ii) subject to certain exceptions, incur any
indebtedness or guarantee any indebtedness, or make any loans, advances or
capital contributions to, or investments in, any other entity; (iii)
acquire any material assets of or equity interests in any other entity;
(iv) subject to certain exceptions, pay any claims or obligations; (v) pay,
discharge or satisfy any material lien; (vi) permit or allow any of its
material properties or assets to be subjected to any lien; (vii) waive any
rights of material value or sell or transfer any of its respective
properties or assets; (viii) enter into any employment or severance
agreement with any partner, officer, director, shareholder or employee who
would receive annual compensation in excess of $100,000; (ix) enter into or
amend any bonus, pension, profit sharing or other plan in respect of the
compensation payable or to become payable to any of its officers, directors
or employees; (x) make any pension, retirement, profit sharing, bonus or
other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit; (xi)
declare, pay or make any dividend or other distribution in respect of its
issued share capital, or redeem, purchase or otherwise acquire any of its
issued share capital; (xii) issue, allot or sell any equity securities or
issue, grant or sell any right of any kind that calls for the issuance of
any equity securities; (xiii) make any change in any accounting or tax
principles, practices or methods; (xiv) make any material tax election or
settle or compromise any material income tax liability; (xv) terminate,
amend or fail to perform any obligations under any material agreement;
(xvi) enter into any material joint venture or partnership; or (xvii)
settle any material lawsuits, claims, investigations or proceedings.
ADDITIONAL COVENANTS
JLW COMPANIES AND JLW SELLERS. Each of JLW England, JLW Scotland and
JLW Ireland has also agreed to cause its respective Closing Net Worth to be
positive on the Closing Date. The JLW Asia Parent Companies and the JLW
Asia Sellers, and the JLW Australasia Parent Companies and the JLW
Australasia Sellers, have agreed to cause the Closing Net Worth of the JLW
Asia Parent Companies and the JLW Australasia Parent Companies,
respectively, to be positive on the Closing Date. The JLW Asia Sellers and
the JLW Australasia Sellers have agreed that, other than pursuant to
certain exceptions, following the Closing Date, no JLW Asia Seller or JLW
Australasia Seller is permitted to make, or to allow certain subsidiaries
that are being retained by the JLW Asia Sellers or the JLW Australasia
Sellers (the "Continuing Affiliates") to make, use of the names "Jones Lang
Wootton" or "JLW" or associated marks, or any confusingly similar names or
marks, and each such JLW Seller and Continuing Affiliate will have to
remove such words from its corporate title.
LASALLE PARTNERS. LaSalle Partners has agreed to use commercially
reasonable efforts to cause the Consideration Shares to be approved for
listing on the NYSE, subject to official notice of issuance, on or prior to
the date of the commencement of the Integration (the "Integration
Commencement Date"), and to cause the Special Meeting to be held for the
purpose of voting on the approval of: (i) the Share Issuance; (ii) the
Charter Amendment and (iii) the Stock Plan Amendment (collectively, the
"Proposed Actions").
<PAGE>
The approval of the Proposed Actions by the stockholders of LaSalle
Partners is a condition to the consummation of the Transactions. See "-
Conditions to the Transactions." It is expected that, as required by the
Purchase Agreements, the Proxy Statement will include the approval and
recommendation of the LaSalle Partners Board in favor of the Proposed
Actions, and unless the LaSalle Partners Board modifies or withdraws such
recommendation, LaSalle Partners will be obligated to use all reasonable
efforts to solicit from its stockholders proxies in favor of the Proposed
Actions and to take all other actions advisable to secure the requisite
vote or consent of stockholders required by Maryland law and the NYSE. The
LaSalle Partners Board may modify or withdraw such recommendation, but only
if and to the extent that (i) a "LaSalle Partners Acquisition Proposal" has
been made prior to the time that the LaSalle Partners Board determines to
withdraw or modify its recommendation, (ii) the LaSalle Partners Board
reasonably concludes in good faith, based on advice from its outside
counsel, that the failure to make such withdrawal or modification would
violate the fiduciary duties of the LaSalle Partners Board under applicable
law, and (iii) LaSalle Partners has delivered to the Shareholders'
Representatives, at least two business days prior to such withdrawal or
modification, a written notice advising the Shareholders' Representatives
that LaSalle Partners has received a LaSalle Partners Acquisition Proposal,
identifying the person making such LaSalle Partners Acquisition Proposal,
setting forth the material terms and conditions of such LaSalle Partners
Acquisition Proposal and indicating that the LaSalle Partners Board
proposes to withdraw or modify its recommendation. "LaSalle Partners
Acquisition Proposal" means any offer or proposal for, or any indication of
interest in, a merger, consolidation or other business combination
involving LaSalle Partners, other than the transactions contemplated by the
Purchase Agreements.
LaSalle Partners has agreed to assume certain indemnification
obligations and provide certain guarantees, as specified in the Purchase
Agreements.
STOCK OPTIONS
Pursuant to the Purchase Agreements, to the extent that LaSalle
Partners issues or grants (i) any stock options or other stock based
incentive awards or (ii) any cash-based awards granted under a stock based
incentive plan (the awards referred to in (i) and (ii) being sometimes
referred to herein as "Stock Options") to any employees of LaSalle
Partners, which employees were so employed prior to the Closing Date (other
than any new employees hired after June 30, 1998), at any time after
June 30, 1998 and prior to the third anniversary of the Closing Date,
LaSalle Partners will cause an equivalent number of Stock Options to be
issued or granted, on or about the time of such grant or issuance (or, in
the case of Stock Options granted or issued prior to the Closing Date, as
soon as reasonably practicable after the Closing Date) to employees of
Jones Lang LaSalle or any subsidiary thereof who were employees of the JLW
Companies immediately prior to the Closing Date.
INDEMNIFICATION OF DIRECTORS
Pursuant to the Purchase Agreements, for a period of three years
following the Closing Date, LaSalle Partners may not amend any charter,
bylaw or other constitutional document of any JLW Company, in each case as
in effect at June 30, 1998, in such a way as to remove or reduce any right
to indemnification thereunder in favor of any director, partner or officer
thereof.
<PAGE>
OTHER OFFERS
JLW COMPANIES. From the date of the Purchase Agreements until the
termination of the Purchase Agreements, the JLW Sellers and the JLW Parent
Companies may not, and will cause each JLW Company which is a direct or
indirect subsidiary thereof not to, and will not permit the partners,
directors, officers, employees, agents and advisors of the JLW Sellers and
the JLW Companies to, directly or indirectly, (i) take any action to
solicit, initiate or knowingly encourage any "JLW Acquisition Proposal" or
(ii) engage in negotiations with, disclose any non-public information
relating to any JLW Seller or JLW Company or afford access to the
properties, books or records of any JLW Seller or JLW Company, to any
person that may be considering making, or has made, a JLW Acquisition
Proposal. Any JLW Company may, however, respond to inquiries with respect
to a JLW Acquisition Proposal for the sole purpose of informing the
inquiring person that no discussions of any kind may occur while such
discussions are prohibited by the Purchase Agreements. "JLW Acquisition
Proposal" means any offer or proposal for, or any indication of interest
in, a merger, consolidation or other business combination involving any of
the JLW Sellers or the JLW Companies, other than the transactions
contemplated by the Purchase Agreements.
LASALLE PARTNERS. From the date of the Purchase Agreements until the
termination of the Purchase Agreements, LaSalle Partners may not, and will
cause its directors, officers, employees, agents and advisors not to,
directly or indirectly, (i) take any action to solicit, initiate or
knowingly encourage any "LaSalle Partners Acquisition Proposal" or (ii)
engage in negotiations with, disclose any non-public information relating
to LaSalle Partners or afford access to the properties, books or records of
LaSalle Partners to, any person that may be considering making, or has
made, a LaSalle Partners Acquisition Proposal. LaSalle Partners may,
however, engage in any such actions with any person who has made a LaSalle
Partners Acquisition Proposal, as well as take such other actions as are
customarily undertaken in connection with the negotiation and evaluation of
a LaSalle Partners Acquisition Proposal, if the LaSalle Partners Board
reasonably concludes in good faith based on advice from its outside counsel
that the failure to take such action would violate the fiduciary duties of
the LaSalle Partners Board under applicable law. Prior to any such
negotiations or other actions, however, the person making the LaSalle
Partners Acquisition Proposal must enter into a confidentiality agreement
with LaSalle Partners on customary terms. LaSalle Partners must keep the
Shareholders' Representatives fully informed on a current basis of the
status and details of any LaSalle Partners Acquisition Proposal and any
request for information. LaSalle Partners and the LaSalle Partners Board
are not prohibited from talking and disclosing to LaSalle Partners'
stockholders a position with respect to a LaSalle Partners Acquisition
Proposal by a third party to the extent required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or from making such
disclosure to the LaSalle Partners' stockholders which, in the judgment of
the LaSalle Partners Board based on the advice of outside counsel, is
required under applicable law.
DIRECTORS AND EXECUTIVE OFFICERS OF JONES LANG LASALLE
DIRECTORS. The Amended Bylaws provide that the number of directors
comprising the Jones Lang LaSalle Board during the Transition Period will
be 14. As of the Closing, seven of such directors will have been designated
by LaSalle Partners and seven of such directors will have been designated
by certain representatives of the JLW Sellers (the "Sellers'
Representatives"). The initial LaSalle Partners Directors will include four
executive officers of LaSalle Partners (the "LaSalle Partners Employee
Directors") and three Independent Directors (the "LaSalle Partners
Independent Directors") and the JLW Directors will include four executive
officers of the JLW Companies (the "JLW Employee Directors") and three
Independent Directors (the "JLW Independent Directors"), at least one of
which JLW Independent Director shall have his or her primary place of
business or residence outside of the United Kingdom. The initial LaSalle
<PAGE>
Partners Employee Directors will be Mr. Stuart L. Scott, Mr. Robert C.
Spoerri, Mr. M.G. Rose and Mr. Daniel W. Cummings. The initial LaSalle
Partners Independent Directors will be Mr. Darryl Hartley-Leonard, Mr.
Thomas C. Theobald and Mr. John R. Walter. The initial JLW Employee
Directors will be Mr. Christopher A. Peacock and Mr. Michael J. Smith each
of whom is an executive officer of the JLW Companies. The two additional
JLW Employee Directors and the initial JLW Independent Directors are
currently being selected.
If, prior to the Closing, any LaSalle Partners Director or JLW
Director declines or is unable to serve, LaSalle Partners or the Sellers'
Representatives, as the case may be, will designate another individual to
serve in such designees' place, subject to the requirement that at least
three of the LaSalle Partners Directors and three of the JLW Directors are
required to be independent directors and subject to the approval of the
Sellers' Representatives (in the case of the LaSalle Partners Directors) or
LaSalle Partners (in the case of the JLW Directors) which approval may not
be unreasonably withheld or delayed. LaSalle Partners will cause the
individuals designated by the Sellers' Representatives as the initial JLW
Directors to be appointed as directors of LaSalle Partners immediately
following the Closing.
The initial designation of the JLW Directors among the three classes
of directors comprising the Jones Lang LaSalle Board will be agreed to by
LaSalle Partners and the Sellers' Representatives, provided that the
LaSalle Partners Directors and the JLW Directors will be divided as equally
as is feasible among such classes. During the Transition Period, each
standing committee of the Jones Lang LaSalle Board will be constituted of
an equal number of LaSalle Partners Directors (who will be selected by a
committee of the Jones Lang LaSalle Board made up of employees of LaSalle
Partners prior to the Closing and their designees (the "LaSalle Partners
Nominating Committee")) and JLW Directors (who will be selected by a
committee of the Jones Lang LaSalle Board made up of employees of the JLW
Companies prior to the Closing and their designees (the "JLW Nominating
Committee")).
The number of directors comprising the full Jones Lang LaSalle Board
may at any time be increased to fifteen by a resolution approved by the
LaSalle Partners Nominating Committee and the JLW Nominating Committee and
by a majority of the entire Jones Lang LaSalle Board. At any time when a
fifteenth director is in office, the LaSalle Partners Nominating Committee
and the JLW Nominating Committee may, acting as a single committee, appoint
the fifteenth director as an additional member of any committee of the
Jones Lang LaSalle Board, which appointment must be approved by a majority
of the members of the LaSalle Partners Nominating Committee and a majority
of the members of the JLW Nominating Committee.
During the Transition Period, the LaSalle Partners Employee Directors
in office from time to time, together with two or more LaSalle Partners
Independent Directors selected by such LaSalle Partners Employee Directors,
will constitute the LaSalle Partners Nominating Committee with the powers
and duties delegated to such committee in the Amended Bylaws, and the JLW
Employee Directors in office from time to time, together with two or more
JLW Independent Directors selected by such JLW Employee Directors will
constitute the JLW Nominating Committee with the powers and duties
delegated to such committee in the Amended Bylaws. Except as otherwise set
forth in the Amended Bylaws, the LaSalle Partners Nominating Committee and
the JLW Nominating Committee (collectively, the "Nominating Committees")
will exercise all power and authority of the Jones Lang LaSalle Board with
respect to the designation of persons as the nominees of the Jones Lang
LaSalle Board for election to, or designating persons to fill vacancies on,
the Jones Lang LaSalle Board. Any director elected by the Jones Lang
LaSalle Board to replace any JLW Director must be nominated by the JLW
Nominating Committee, and any director elected by the Jones Lang LaSalle
Board to replace any LaSalle Partners Director must be nominated by the
LaSalle Partners Nominating Committee.
<PAGE>
During the Transition Period, prior to each meeting of the
stockholders of Jones Lang LaSalle at which the term of office of any
LaSalle Partners Director is expiring or at which any replacement for a
LaSalle Partners Director is to be elected, the LaSalle Partners Nominating
Committee may designate a nominee for election to such position (which
designee must be reasonably acceptable to the JLW Nominating Committee),
and prior to each meeting of the stockholders of Jones Lang LaSalle at
which the term of office of any JLW Director is expiring or at which any
replacement for a JLW Director is to be elected, the JLW Nominating
Committee may designate a nominee for election to such position (which
designee must be reasonably acceptable to the LaSalle Partners Nominating
Committee). At all times during the Transition Period, at least three
LaSalle Partners Directors and at least three JLW Directors must at all
times be Independent Directors and at least one JLW Independent Director
must at all times have his primary place of business and residence outside
of the United Kingdom.
During the Transition Period, if any LaSalle Partners Director is
removed from the Jones Lang LaSalle Board, becomes disqualified, resigns,
retires, dies or otherwise cannot continue to serve as a member of the
Jones Lang LaSalle Board, the LaSalle Partners Nominating Committee will
have the exclusive power to designate a person to fill such vacancy, and if
any JLW Director is removed from the Jones Lang LaSalle Board, becomes
disqualified, resigns, retires or otherwise cannot continue to serve as a
member of the Jones Lang LaSalle Board, the JLW Nominating Committee will
have the exclusive authority on behalf of the entire Jones Lang LaSalle
Board to appoint a designee to fill such vacancy, in each case subject to
the approval of a majority of the directors then remaining in office.
During the Transition Period, in the event that the number of members
constituting the Jones Lang LaSalle Board is increased to fifteen as set
forth in the Purchase Agreements, the LaSalle Partners Nominating Committee
and the JLW Nominating Committee, acting as a single committee will elect
as a director a person other than a past or present employee or executive
officer of LaSalle Partners or the JLW Parent Companies and certain
affiliates of such an employee or executive officer (an "Independent
Director") to fill such vacancy. Such Independent Director must be approved
by a majority of the members of the LaSalle Partners Nominating Committee,
a majority of the members of the JLW Nominating Committee and a majority of
the entire Jones Lang LaSalle Board. Prior to any meeting of the
stockholders of Jones Lang LaSalle at which the term of office of such
fifteenth director is expiring or at which a replacement for such director
is to be elected, the LaSalle Partners Nominating Committee and the JLW
Nominating Committee, acting as a single committee, will designate a
nominee for such position which Independent Director must be approved by a
majority of the members of the LaSalle Partners Nominating Committee and a
majority of the members of the JLW Nominating Committee. During the
Transition Period, neither the Jones Lang LaSalle Board nor any committee
thereof will nominate (or cause there to be nominated) any person to
replace such fifteenth director who has not been so designated by the
Nominating Committees. In the event that such fifteenth director is removed
from the Jones Lang LaSalle Board, becomes disqualified, resigns, retires,
dies or otherwise cannot continue to serve as a member of the Jones Lang
LaSalle Board, the LaSalle Partners Nominating Committee and the JLW
Nominating Committee, acting as a single committee, will have exclusive
power on behalf of the Jones Lang LaSalle Board to designate a person to
fill such vacancy and will jointly, acting as a single committee, designate
an Independent Director to serve in such position. Such Independent
Director must be approved by a majority of the members of the LaSalle
Partners Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of the directors then remaining in
office.
<PAGE>
EXECUTIVE OFFICERS. The Purchase Agreements and the Amended Bylaws
provide that for a period of at least two years immediately following the
Closing, or until earlier removal, disqualification, resignation,
retirement, death or incapacity, (i) Mr. Stuart L. Scott will hold the
position of Chairman of the Board and Chief Executive Officer of Jones Lang
LaSalle and (ii) Mr. Christopher A. Peacock will hold the position of
President, Deputy Chief Executive Officer and Chief Operating Officer of
Jones Lang LaSalle. If at any time during the Transition Period, the
position of Chairman of the Board and Chief Executive Officer of Jones Lang
LaSalle or President, Deputy Chief Executive Officer and Chief Operating
Officer of Jones Lang LaSalle becomes vacant, such vacancy will be filled
by a majority vote of the entire Jones Lang LaSalle Board. During the two-
year period immediately following the Closing, the Chairman of the Board
and Chief Executive Officer of Jones Lang LaSalle and President, Deputy
Chief Executive Officer and Chief Operating Officer of Jones Lang LaSalle
must be selected from the LaSalle Partners Employees and the JLW Employees.
During such period, (i) if the office of the Chairman and Chief Executive
Officer of Jones Lang LaSalle is held by a LaSalle Partners Employee, then
the office of President, Deputy Chief Executive Officer and Chief Operating
Officer of Jones Lang LaSalle must be held by a JLW Employee and (ii) if
the office of Chairman of the Board and Chief Executive Officer of Jones
Lang LaSalle is held by a JLW Employee, then the office of President,
Deputy Chief Executive Officer and Chief Operating Officer of Jones Lang
LaSalle must be held by a LaSalle Partners Employee.
During the Transition Period, the Chairman of the Board and Chief
Executive Officer, and the President, Deputy Chief Executive Officer and
Chief Operating Officer of Jones Lang LaSalle may only be removed from
office by a majority vote of the entire Jones Lang LaSalle Board, provided,
that neither Mr. Scott nor Mr. Peacock may be removed from such respective
positions with or without cause, prior to the second anniversary of the
Closing, unless such removal is approved by at least two-thirds of the
entire Jones Lang LaSalle Board. As used herein, "entire Jones Lang LaSalle
Board" means the total number of directors Jones Lang LaSalle would have if
there were no vacancies.
During the Transition Period, the affirmative vote of at least 75% of
the entire Jones Lang LaSalle Board will be required to alter or amend, or
adopt any provision inconsistent with, or repeal, in whole or in part, the
articles of the Amended Bylaws containing the foregoing provisions.
EMPLOYEE TRUSTS
At or prior to the Closing Date, LaSalle Partners will establish the
ESOT for the purpose of holding the ESOT Shares deposited therein by
LaSalle Partners for distribution to certain current and former employees
of the JLW Companies. The ESOT Trustee has not been finally determined.
The fees and expenses of the ESOT Trustee will be paid by Jones Lang
LaSalle.
The ESOT Trustee may not allocate, distribute or dispose of trust
assets without the prior written instructions of the Shareholders'
Representatives or their designees and will execute, in its capacity as
trustee, a stockholder agreement which contains comparable provisions to
the stockholder agreements (the "Stockholder Agreements"), described herein
under the caption "The Stockholder Agreements," to be entered into by each
JLW Shareholder and, if applicable, Related JLW Owner, as appropriately
modified. The ESOT Trustee must vote consistently with the terms of the
stockholder agreement applicable to the trust. In any voting matter for
which such agreement does not prescribe how the trust shares are to be
voted, such shares must be voted in the same proportions as the shares of
LaSalle Partners Common Stock that are voted in respect of such matter.
<PAGE>
Except as provided below, the Shareholders' Representatives'
discretion will be absolute as to the identity of beneficiaries, the number
of shares allocated to each and the timing of such allocations and the
related distributions, subject to (i) limitation (subject to failure of
certain vesting conditions) on the aggregate number of shares in each sub
trust and sub-sub trust and (ii) restrictions on timing and amount of
allocations and distributions referred to below. Without LaSalle Partners'
consent (which will not be unreasonably withheld), no shares may be
allocated or distributed to any person who received Consideration Shares in
the Transactions, if such allocation or distribution would adversely affect
LaSalle Partners' tax or accounting position.
Allocations may only be made by the ESOT Trustee (following written
instructions from the Shareholders' Representatives) on the Closing Date,
December 31, 1999 and December 31, 2000. No allocations may be made after
December 31, 2000. Certain allocations may be made subject to one or more
vesting conditions in relation to all or a portion of the allocated shares.
The vesting conditions of the ESOT Agreements (as defined in the Purchase
Agreements) will generally replicate the forfeiture arrangements described
in "The Transactions--Consideration--Forfeiture Provisions." Any shares
with respect to which the vesting conditions are not met will be subject to
reallocation (free of any vesting conditions) on December 31, 2000. ESOT
Shares are anticipated to be allocated as follows: 915,542 shares at
Closing, 246,415 shares on December 31, 1999 and 610,367 shares on
December 31, 2000.
ESOT Indemnification Shares and ESOT Adjustment Shares may be
distributed at any time after receipt from the Indemnity Escrow Agent. Any
prospective beneficiary of ESOT Shares will first be required to execute a
stockholder agreement in a form reasonably satisfactory to LaSalle Partners
and the Shareholders' Representatives which will contain comparable
provisions to the Stockholder Agreements, as appropriately modified.
CONDITIONS TO THE TRANSACTIONS
CONDITIONS TO THE JLW SHAREHOLDERS' AND LASALLE PARTNERS' OBLIGATIONS
TO CONSUMMATE THE TRANSACTIONS. The Purchase Agreements subject the
obligations of LaSalle Partners and the JLW Shareholders, Related JLW
Owners, JLW Sellers and JLW Parent Companies to perform their respective
obligations under the Purchase Agreements, the other Operative Agreements
(as defined in the Purchase Agreements) and the Integration Agreements (as
defined in the Purchase Agreements) to the satisfaction or waiver by
LaSalle Partners, the Sellers' Representatives and the Shareholders'
Representatives on or before the Integration Commencement Date or the
Closing Date, as specified, of certain conditions, including the following:
(i) on the Integration Commencement Date and on the Closing Date, there
being no effective order of any nature issued by a court or other
governmental authority of competent jurisdiction directing that the
Transactions or any of them not be consummated; (ii) on the Integration
Commencement Date and on the Closing Date, there being no pending action or
investigation ("Action") by any government authority (or by any other
entity any Action which has a reasonable likelihood of success) (A)
challenging or seeking to restrain or prohibit the Integration or the
Transactions or seeking to obtain in connection with the Integration or the
Transactions any damages that would reasonably be expected to have a
LaSalle Partners Material Adverse Effect or a JLW Material Adverse Effect,
(B) seeking to prohibit or limit the ownership or operation by LaSalle
Partners or the JLW Companies of any material portion of their respective
businesses or assets or (C) seeking to prohibit LaSalle Partners from
exercising its rights under or otherwise enjoying the benefits of the other
Operative Agreements; (iii) on the Integration Commencement Date, all
authorizations or expirations of applicable waiting periods imposed by any
governmental authority, necessary for the consummation of the Transactions,
<PAGE>
having been obtained or filed or having occurred and being in effect,
except where the failure of which to be obtained or filed or to have
occurred and be in effect would not have or reasonably be expected to have
a LaSalle Partners Material Adverse Effect or a JLW Material Adverse Effect
or result in a violation of any criminal laws; (iv) on the Integration
Commencement Date, there having been obtained or received and in effect
certain enumerated consents and all consents from third persons (other than
government authorities) to the Integration or the Transactions that may be
required under any contracts or licenses to which LaSalle Partners, any JLW
Partnership or any JLW Company is a party or bound with respect to which
the failure to obtain or receive would have or would reasonably be expected
to have a LaSalle Partners Material Adverse Effect or a JLW Material
Adverse Effect; (v) on or before the Integration Commencement Date, the
Share Issuance, the Charter Amendment and the Stock Plan Amendment having
been approved by the requisite vote of the LaSalle Partners stockholders;
(vi) on or before the Closing Date, the transactions contemplated by the
Integration Plan and the Integration Agreements (other than certain post-
closing actions) having been consummated in accordance with the terms and
conditions of the Integration Plan and the Integration Agreements, and the
Integration having been consummated in all material respects in accordance
with all applicable laws; (vii) on or prior to the Integration Commencement
Date, each JLW Shareholder and each Related JLW Owner listed on the Final
Master Shareholder List having duly executed and delivered to LaSalle
Partners (A) a Joinder Agreement, (B) a Stockholder Agreement and (C) the
Escrow Agreement; and (viii) the Articles of Amendment and Restatement of
LaSalle Partners and the amendment to the Articles of Incorporation of LACM
having become effective; and (ix) JLW Australia Parent's having entered
into a stockholder agreement, in form and substance, reasonably acceptable
to LaSalle Partners.
As used herein, a "JLW Material Adverse Effect" means (i) an
individual or cumulative material adverse change in, or effect on, the
business, properties, assets, liabilities, financial condition or results
of operations of the JLW Companies, taken as a whole, (ii) an individual or
cumulative event or development that is reasonably expected to have a
material adverse change in or effect on the business, properties, assets,
liabilities, financial condition or results of operations of the JLW
Companies, taken as a whole, or (iii) any adverse change which would
prevent any JLW Shareholder, JLW Partnership or JLW Parent Company from
consummating the Transactions. A "LaSalle Partners Material Adverse
Effect" means (i) an individual or cumulative material adverse change in,
or effect on, the business, properties, assets, liabilities, financial
condition or results of operations of LaSalle Partners, (ii) an individual
or cumulative event or development that is reasonably expected to have a
material adverse change in or effect on the business, properties, assets,
liabilities, financial condition or results of operations of LaSalle
Partners, or (iii) any adverse change which would prevent LaSalle Partners
from consummating the Transactions.
ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF LASALLE PARTNERS. The
Purchase Agreements subject the obligation of LaSalle Partners to perform
its obligations relating to the Closing under the Purchase Agreements and
the other Operative Agreements to the satisfaction or waiver by LaSalle
Partners on or before the Integration Commencement Date or the Closing
Date, as specified, of certain additional conditions, including the
following: (i) the representations and warranties of the JLW Shareholders,
the Related JLW Owners, the JLW Sellers, the JLW Parent Companies and the
Management Shareholders set forth in the Purchase Agreements, the other
Operative Agreements and the Integration Agreements being true and correct
in all material respects at and as of the Integration Commencement Date,
with the same force and effect as though made at and as of the Integration
Commencement Date; (ii) the representations and warranties of (A) the JLW
Sellers, the JLW Parent Companies and the Management Shareholders set forth
<PAGE>
in Section 3.1 of the Purchase Agreements, (B) certain JLW Sellers set
forth in Article IIIA of each of the JLW Asia Purchase Agreement and the
JLW Australasia Purchase Agreement and (C) the JLW Shareholders and the
Related JLW Owners contained in the applicable Joinder Agreements being
true and correct in all respects as of the Closing Date; (iii) on the
Integration Commencement Date and the Closing Date, respectively,certain
parties affiliated with the JLW Companies, the JLW Shareholders and the
Related JLW Owners, respectively, having performed and complied in all
material respects with all their obligations and agreements under the
Purchase Agreements and the other Operative Agreements to be performed or
complied with at or prior to the Integration Commencement Date or the
Closing Date, respectively; (iv) LaSalle Partners having received
certificates, dated the Integration Commencement Date and the Closing Date,
respectively, signed by each of the JLW Sellers, JLW Parent Companies and
the Management Shareholders certifying to the fulfillment of the conditions
set forth in clauses (i), (ii) and (iii) of this paragraph; (v) on the
Closing Date, LaSalle Partners having received opinions of counsel to the
JLW Sellers and the JLW Parent Companies as to such matters as LaSalle
Partners shall reasonably request, dated the Closing Date; (vi) with
certain exceptions, on the Integration Commencement Date, all amounts owed
by any JLW Shareholder, any spouse or descendant of a JLW Shareholder, any
controlled affiliate of any of the foregoing parties and any other entity
in which any of the foregoing parties has a material interest
(collectively, "Related Parties" and each a "Related Party") or any persons
in which such Related Party has a material interest having been paid in
full; (vii) on the Integration Commencement Date, since June 30, 1998,
there having been no JLW Material Adverse Effect; (viii) the Jones Lang
Wootton Annuity Scheme having been terminated in a manner reasonably
acceptable to LaSalle Partners; (ix) LaSalle Partners having received a
general release from each Continuing Affiliate; and (x) certain liens of
the JLW Australasia Companies (as defined herein) having been paid,
discharged or satisfied in full; and (ix) JLW Australia Parent's having
entered into a stockholder agreement, in form and substance, reasonably
acceptable to LaSalle Partners.
ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE JLW SHAREHOLDERS. The
Purchase Agreements subject the obligation of each of the JLW Shareholders,
Related JLW Owners, JLW Sellers and JLW Companies to perform their
respective obligations relating to the Closing under the Purchase
Agreements, the other Operative Agreements and the Integration Agreements
to the satisfaction or waiver on or before the Integration Commencement
Date or the Closing Date, as specified, by the Sellers' Representatives and
the Shareholders' Representatives of certain conditions, including the
following: (i) on the Integration Commencement Date, each representation
and warranty of LaSalle Partners made in the Purchase Agreements being true
and correct in all material respects at and as of the Integration
Commencement Date, with the same force and effect as though made at and as
of the Integration Commencement Date; (ii) on the Integration Commencement
Date and the Closing Date, respectively, LaSalle Partners having performed
and complied in all material respects with all its obligations and
agreements under the Purchase Agreements and the other Operative Agreements
to be complied with at or prior to the Integration Commencement Date and
the Closing Date, respectively; (iii) the Shareholders' Representatives
having received certificates, dated the Integration Commencement Date and
the Closing Date, respectively, signed by an executive officer of LaSalle
Partners certifying to the fulfillment of the conditions set forth in
clauses (i) and (ii) of this paragraph; (iv) on the Closing Date, the
Sellers' Representatives having received opinions of counsel to LaSalle
Partners as to such matters as the Sellers' Representatives and the
Shareholders' Representatives shall reasonably request, dated the Closing
Date; (v) on the Integration Commencement Date, the Sellers'
Representatives having received a certificate from LaSalle Partners, in
form and substance reasonably satisfactory to counsel to the JLW Parent
Companies from the Department of Assessments and Taxation of Maryland,
evidencing the good standing of LaSalle Partners under the laws of Maryland
<PAGE>
and its current payment of taxes; (vi) on or before the Integration
Commencement Date, the Consideration Shares having been approved for
listing on the NYSE, subject to official notice of issuance; (vii) on or
before the Integration Commencement Date, each LaSalle Partners Employee
Stockholder who is a former partner in the Employee Partnerships having
executed and delivered to LaSalle Partners a DEL Stockholder Agreement;
(viii) on or before the Integration Commencement Date, LaSalle Partners
having executed and delivered to JLW England, JLW Scotland, and JLW
Ireland, respectively, an Indemnification Agreement Guarantee (as defined
in the Purchase Agreements); (ix) on the Integration Commencement Date,
since June 30, 1998, there having been no LaSalle Partners Material Adverse
Effect; (x) the JLW Directors having been elected to the Jones Lang LaSalle
Board (and the only other directors on the Jones Lang LaSalle Board being
the LaSalle Partners Directors), effective immediately following the
Closing, and Mr. Christopher A. Peacock and Mr. Michael J. Smith having
been elected to the offices of President, Deputy Chief Executive Officer
and Chief Operating Officer and Deputy Chairman, respectively, of Jones
Lang LaSalle; and (xi) the Amended Bylaws having been adopted and not
rescinded, modified or amended.
TERMINATION OF THE PURCHASE AGREEMENTS
At any time prior to the Closing, each Purchase Agreement, Joinder
Agreement and the other Operative Agreements may be terminated: (a) by
mutual consent of LaSalle Partners and the Sellers' Representatives; (b) by
either the Sellers' Representatives or LaSalle Partners if the Closing has
not occurred on or before March 31, 1999, unless such failure is due to the
failure of the party seeking to terminate such Purchase Agreement (or the
failure of any JLW Party (as defined in the Purchase Agreements), JLW
Shareholder or Related JLW Owner in the case of termination by the Sellers'
Representatives) to fulfill any obligation, covenant or agreement of such
party set forth in any Purchase Agreement, any other Operative Agreement or
any Integration Agreement; (c) by either the Sellers' Representatives or
LaSalle Partners if the Closing has not occurred on or before September 30,
1999, regardless of whether the party seeking to terminate is in breach of
the Purchase Agreement; (d) by either the Sellers' Representatives or
LaSalle Partners if any court of competent jurisdiction or other government
authority has issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Transactions and such
order, decree, ruling or other action has become final and nonappealable;
(e) by either the Sellers' Representatives or LaSalle Partners (provided,
that the JLW Shareholders, the Related JLW Owners or the JLW Parties, in
the case of termination by the Sellers' Representatives, or LaSalle
Partners, in the case of termination by LaSalle Partners, is not then in
material breach of any representation, warranty or covenant in such
Purchase Agreement) in the event of certain types of material breaches of
any of the representations, warranties or covenants in such Purchase
Agreement on the part of the other party, which breach is not cured within
60 days following written notice of such breach; (f) by either the Sellers'
Representatives or LaSalle Partners, if the LaSalle Partners stockholders
do not approve or revoke or rescind approval of the Proposed Actions set
forth in the Proxy Statement; (g) by the Sellers' Representatives, if the
LaSalle Partners Board has not approved and recommended, or withdrawn or
modified in a manner adverse to the JLW Parties, its approval or
recommendation of the Transactions or failed to call and hold the Special
Meeting; (h) by LaSalle Partners or the Sellers' Representatives, if the
Put Right (as defined in the Purchase Agreements) or Call Right (as defined
in the Purchase Agreements) has not been exercised during the Exercise
Period (as defined in the Purchase Agreements); or (i) by LaSalle Partners
if a Final Master Shareholder List has not been delivered to and accepted
by LaSalle Partners on or prior to the Commitment Date, provided that
LaSalle Partners gives written notice of such termination to the Sellers'
Representatives within two business days thereafter.
<PAGE>
In the event of any termination, the Transactions will be terminated
and abandoned, without further action by any party and no party will have
any liability or obligation with respect to any other party, except (i) as
provided below with respect to expense reimbursement and termination fees,
(ii) with respect to the confidentiality agreement entered into among the
parties and (iii) for wilful breach by such party of the Purchase
Agreements, provided, that in the case of wilful breach by certain parties
affiliated with the JLW Companies, LaSalle Partners will not be entitled to
recover any damages or obtain any similar relief from any JLW Shareholder,
Related JLW Owner, Sellers' Representative or Shareholders' Representative
(other than in their capacity as a partner of any JLW Partnership but only
to the extent and subject to the limitations described below) or JLW
Company. In cases of wilful breach by certain parties affiliated with the
JLW Companies, damages or similar relief to which LaSalle Partners might be
entitled by reason of any such wilful breach will be obtained solely from
the JLW Sellers. LaSalle Partners will have the right, however, to assert
any equitable remedies available to LaSalle Partners prior to termination
of the Purchase Agreements as a result of a breach or violation of the
Purchase Agreements or any applicable Joinder Agreement.
TERMINATION FEES AND EXPENSES
The Purchase Agreements provide that expenses incurred in connection
with the Purchase Agreements and the Transactions will generally be borne
by the party incurring such expense. If, however, the Purchase Agreements
are terminated because either (i) the stockholders of LaSalle Partners do
not approve the Share Issuance, the Charter Amendment or the Stock Plan
Amendment or (ii) the LaSalle Partners Board has not approved and
recommended, or withdrawn or modified in a manner adverse to certain
parties affiliated with the JLW Companies, its approval or recommendation
of the Transactions, LaSalle Partners will be obligated to pay to the
Shareholders' Representatives on behalf of the JLW Sellers an aggregate
termination fee in the amount of $12,000,000, of which $7,347,979 would be
payable to the JLW Partnerships, $3,178,866 would be payable to the JLW
Asia Sellers and $1,473,155 would be payable to the JLW Australasia
Sellers.
AMENDMENT AND WAIVER
At any time prior to the Closing Date, LaSalle Partners, the Sellers'
Representatives and the Shareholders' Representatives may: (a) amend any
Purchase Agreement; (b) extend the time for the performance of any
obligation or other act to be performed pursuant to any Purchase Agreement;
(c) waive any inaccuracies in the representations and warranties contained
in any Purchase Agreement or in any document delivered pursuant thereto;
and (d) waive compliance with any of the agreements or conditions contained
in the Purchase Agreements. None of the Purchase Agreements may be amended
except by an instrument signed by LaSalle Partners and by the Sellers'
Representatives and the Shareholders' Representatives on behalf of all of
the JLW Sellers, the JLW Companies, the JLW Shareholders and the Related
JLW Owners. Any agreement to an extension or waiver will be valid if in an
instrument in writing signed by LaSalle Partners and the Shareholders'
Representatives.
<PAGE>
THE INDEMNITY AND ESCROW AGREEMENT
The following summary of certain terms of the Escrow Agreement does
not purport to be complete and is qualified in its entirety by reference to
the Escrow Agreement filed as an exhibit hereto. All capitalized terms
used in this section but not defined shall have the meanings ascribed to
them in the Escrow Agreement.
GENERAL
As a condition and inducement to LaSalle Partners' willingness to
enter into the Purchase Agreements, LaSalle Partners, each JLW Shareholder
and Related JLW Owner and the Escrow Agent will enter into the Escrow
Agreement. On the Closing Date, LaSalle Partners will deposit the
Indemnification Shares, including the ESOT Indemnification Shares, and the
Adjustment Shares including the ESOT Adjustment Shares, with the Indemnity
Escrow Agent for the purpose of securing the indemnification obligations of
the JLW Shareholders and Related JLW Owners and facilitating the closing
Net Worth Adjustments. In addition, LaSalle Partners will deposit the
Forfeiture Shares issuable to the JLW Asia Shareholders with the Indemnity
Escrow Agent to secure their indemnification obligations with respect to
certain claims.
INDEMNITY
During the term of the Escrow Agreement, LaSalle Partners and its
subsidiaries (other than the JLW Companies) and their respective directors,
officers, employees and agents (collectively, the "Indemnified Persons")
will be indemnified, defended and held harmless from and against any and
all liabilities and against all claims in respect thereof (individually a
"Loss" and, collectively, "Losses") arising out of or relating to:
. (i) any breach by any JLW Seller of any representation or
warranty of such JLW Seller contained in Article III of any Purchase
Agreement or in certain certificates delivered to LaSalle Partners, (ii)
subject to certain limitations, all taxes of the JLW Partnerships and the
JLW Companies (whether or not shown as due on any tax return) attributable
to any taxable year or period ending on or before the Closing Date, except
for taxes which are reserved for and shown on the finally determined
Closing Balance Sheets (the "Final Closing Balance Sheets") and (iii) any
claim for indemnification against Jones Lang LaSalle made pursuant to
certain indemnification agreements, but only to the extent that the claim
that gave rise to such indemnification claim arose out of or was related to
the allocation of consideration among the JLW Shareholders (a claim for
indemnification based on (A) a breach referred to in clause (i) or clause
(iii) above or (B) in respect of any such taxes referred to in clause (ii)
above, an "Entity Misrepresentation Claim");
. any intentional and willful breach by any Management
Shareholder of any representation or warranty of such Management
Shareholder contained in the Purchase Agreements or in any certificate
delivered by each such Management Shareholder (a claim for indemnification
based on such a misrepresentation or breach of warranty, a "Management
Misrepresentation Claim");
. any breach by any JLW Shareholder or Related JLW Owner of any
representation or warranty of such JLW Shareholder or Related JLW Owner
contained in any Joinder Agreement (a claim for indemnification based on
such a breach, an "Individual Shareholder Misrepresentation Claim");
. any breach by any JLW Seller or JLW Parent Company of any
covenant or agreement of such party contained in any Purchase Agreement (a
claim for indemnification based on such a breach, an "Entity Covenant
Claim");
<PAGE>
. any breach by any JLW Shareholder or Related JLW Owner of any
covenant or agreement of such JLW Shareholder or Related JLW Owner
contained in any Joinder Agreement (a claim for indemnification based on
such a breach, a "Shareholder Covenant Claim");
. certain claims specified in the Escrow Agreement in each case
to the extent such matter is not accrued against in any Final Closing
Balance Sheet (each such claim, a "Specified Claim");
Each JLW Shareholder and, if applicable, Related JLW Owner (jointly
and severally between such shareholder and its Related JLW Owner) severally
agrees to indemnify, defend and hold harmless the Indemnified Persons from
and against:
. all taxes of each JLW Shareholder and, if applicable, Related
JLW Owner and any social security contributions or similar employment tax
imposed on any of the JLW Companies and any taxes required to be withheld
as a result of or in connection with the income of or the payment or
transfer of consideration to, each such JLW Shareholder and/or Related JLW
Owner (but excluding any transfer taxes), but in each case only to the
extent such taxes are not reserved for and shown on the Final Closing
Balance Sheets (a claim for indemnification based on such taxes, an
"Employment Tax Claim");
. any transfer taxes arising out of or in connection with any
transaction between the JLW Shareholder and/or such Related JLW Owner, on
the one hand, and LaSalle Partners, the JLW Sellers or the JLW Companies,
on the other hand, contemplated by the Purchase Agreements (including the
Integration) or the Escrow Agreement, but only to the extent that aggregate
amount of transfer taxes indemnifiable by all JLW Shareholders and Related
JLW Owners exceeds the greater of (i) $3.0 million and (ii) the amount
reserved for and shown on the Final Closing Balance Sheets (a claim for
indemnification based on such taxes, a "Transfer Tax Claim");
. all expenses incurred in connection with enforcing arbitrator
awards pursuant to the Escrow Agreement ("Indemnification Expenses");
Certain JLW Shareholders (and Related JLW Owners) specified in the
Escrow Agreement jointly and severally agree to indemnify, defend and hold
harmless the Indemnified Persons from and against all taxes of JLW (NZ)
Holdings Parent and JLW Australia Parent for any taxable year or taxable
period ending on or before the Closing Date, except to the extent reserved
for and shown on the Final Closing Balance Sheets (a claim for
indemnification based on such taxes, a "Holding Company Tax Claim");
Each JLW Shareholder (and Related JLW Owner) that is a shareholder of
JLW Continuation agrees severally (but jointly and severally between each
such shareholder and its Related JLW Owner) to indemnify, defend and hold
harmless the Indemnified Persons from and against all taxes of JLW
Continuation for any taxable year or taxable period occurring on or before
the Closing Date (a claim for indemnification based on such taxes, a "JLW
Continuation Tax Claim" and, collectively with any Employment Tax Claim,
Holding Company Tax Claim and Transfer Tax Claim, a "Tax Claim");
Certain JLW Shareholders (and Related JLW Owners) specified in the
Escrow Agreement severally (but jointly and severally between each such JLW
Shareholder and its Related JLW Owner) agree to indemnify, defend and hold
harmless the Indemnified Persons from and against all liabilities arising
out of or in connection with the Jones Lang Wootton Retired Partners Deed,
dated 18th February 1994, as amended, except to the extent reserved for and
shown on the applicable Final Closing Balance Sheet; and
<PAGE>
Certain JLW Shareholders (and Related JLW Owners) specified in the
Escrow Agreement severally (but jointly and severally between each such JLW
Shareholder and its Related JLW Owner) agree to indemnify, defend and hold
harmless the Indemnified Persons from and against all liabilities arising
out of or in connection with the Trust Deed and Rules dated April 1, 1994,
establishing the Jones Lang Wootton (Hong Kong) Annuity Scheme and any
liabilities arising out of any claims by ex-directors of JLW Hong Kong to
profit shares pursuant to their rights as creditors thereof, except to the
extent reserved for and shown on the applicable Final Closing Balance
Sheet.
Each JLW Asia Shareholder and JLW Australasia Shareholder,
respectively, and such JLW Asia Shareholder's or JLW Australasia
Shareholders' Related JLW Owner, if any (jointly and severally between such
JLW Asia Shareholder or JLW Australasia Shareholder and its Related JLW
Owner), will, severally and not jointly, indemnify, defend and hold
harmless the Indemnified Persons from any and all losses and expenses
arising out of or relating to (i) any breach by any JLW Asia Seller or JLW
Australasia Seller, respectively, of any representation or warranty of any
JLW Asia Seller or JLW Australasia Seller, respectively, under Article IIIA
of the JLW Asia Purchase Agreement or the JLW Australasia Purchase
Agreement, respectively, and (ii) any breach by any JLW Asia Seller or JLW
Australasia Seller, respectively, of any covenant or agreement of any JLW
Asia Seller or JLW Australasia Seller, respectively, under Article I (other
than Section 1.4 through 1.9) or Article IIIA of the JLW Asia Purchase
Agreement or the JLW Australasia Purchase Agreement, respectively. For
purposes of the Escrow Agreement: (A) any claim under clause (i) of the
immediately preceding sentence will be deemed an Individual Shareholder
Misrepresentation Claim, (B) any claim under clause (ii) of the immediately
preceding sentence will be deemed a Shareholder Covenant Claim, and (C) the
several liability of each JLW Asia Shareholder and JLW Australasia
Shareholder (in each case together with its Related JLW Owner, if any) will
be based on such JLW Asia Shareholder's or JLW Australasia Shareholder's
respective pro rata share of the losses and expenses subject to
indemnification under the Escrow Agreement, which pro rata share will be
based on the proportion that the number of Initial Distribution Shares and
Forfeiture Shares allocated to such JLW Asia Shareholder or JLW Australasia
Shareholder under the JLW Asia Purchase Agreement or JLW Australasia
Purchase Agreement, respectively, bears to the aggregate number of Initial
Distribution Shares and Forfeiture Shares, respectively, allocated to all
JLW Asia Shareholders and JLW Australasia Shareholders under such
agreements.
The sole monetary recourse of any Indemnified Person for any losses or
expenses arising from any Entity Misrepresentation Claim or Entity Covenant
Claim (a "Non-Recourse Claim") will be from and to the extent of the
Indemnification Shares together with any distributions, other than cash
dividends, with respect to such Indemnification Shares (the "Escrow Fund").
Such limitation will not, however, preclude equitable remedies that may
exist for fraud. Subject to certain exceptions, to the extent that
Indemnified Persons incur losses or expenses relating to any Entity
Misrepresentation Claims and the Specified Claims, the Indemnified Persons
will be entitled to indemnification only with respect to any such claim for
such losses and expenses which individually exceeds $100,000 and in any
event only if the aggregate amount of all such claims by all Indemnified
Persons exceeds $5.0 million, in which case the Indemnified Persons will be
indemnified for the full amount of all such claims. For purposes of the
Escrow Agreement, the Indemnification Shares shall be deemed to have a
value of $32.215.
The Forfeiture Shares issuable to the JLW Asia Shareholders will be
available in accordance with the terms set forth in the Escrow Agreement
solely to satisfy the indemnification obligations of the JLW Asia
Shareholders and their Related JLW Owners to the extent a claim is made
against the Escrow Fund for any Entity Misrepresentation Claim arising out
of or relating to any Asian Title Claim (as defined in the Escrow
Agreement).
<PAGE>
With respect to any Individual Shareholder Misrepresentation Claim or
Shareholder Covenant Claim, each JLW Shareholder and, if applicable, the
Related JLW Owner breaching any representation, warranty or covenant
contained in such shareholder's Joinder Agreement or other Operative
Agreement to which such shareholder is a party (jointly and severally
between themselves) will be severally liable for any losses and expenses
arising out of or relating to any such breach without regard to any minimum
claim amount. With respect to any Management Misrepresentation Claim, each
Management Shareholder who has intentionally and willfully breached any
representation or warranty will be severally liable for any losses and
expenses arising out of or relating to such breach but only to the extent
that such breach would reasonably be expected to have a JLW Material
Adverse Effect.
The Indemnified Persons are not required to make a claim against the
Escrow Fund with respect to any claim other than a Non-Recourse Claim and
may bring separate claims against a JLW Shareholder (and, if applicable,
Related JLW Owner) and the Escrow Fund with respect to such claims.
However, the Escrow Fund will not be available for losses and expenses
incurred as a result of any breach of any covenant contained in any
Stockholder Agreement as to which a JLW Shareholder (and, if applicable,
Related JLW Owner) will be individually liable. The maximum liability of a
JLW Shareholder (and, if applicable, Related JLW Owner) generally cannot
exceed the aggregate value of the consideration received or to be received
by such JLW Shareholder.
No Entity Misrepresentation Claim, Management Misrepresentation Claim
or Entity Covenant Claim may be asserted unless notice of such claim is
given prior to (i) the date which is five (5) business days prior to
December 31, 2000 with respect to any Asian Title Claim asserted in respect
of the Asia Region Forfeiture Shares (as defined in the Escrow Agreement)
and (ii) the 450th day after the Closing Date with respect to other claims.
Claims with respect to any Shareholder Misrepresentation Claim, Shareholder
Covenant Claim or Tax Claim may be asserted at any time.
VOTING
The Indemnify Escrow Agent will maintain for each JLW Shareholder and
the ESOT a subaccount (a "Subaccount") reflecting each JLW Shareholder's
and the ESOT's interest in the Indemnification Shares or other property
constituting the Escrow Fund from time to time. The Indemnity Escrow Agent
will (to the extent legally permissible) vote the Indemnification Shares
allocated to a JLW Shareholder's subaccount in accordance with the
applicable provisions of the Stockholder Agreement to which such JLW
Shareholder is a party. If the Stockholder Agreement to which a JLW
Shareholder is a party does not contain instructions as to how such
Indemnification Shares will be voted, the Escrow Agent will vote such
Indemnification Shares in accordance with the joint written instructions of
LaSalle Partners and such JLW Shareholders. The Indemnity Escrow Agent
will (to the extent legally permissible) vote the Indemnification Shares
allocated to the subaccount of the ESOT in proportion to the vote of the
other Indemnification Shares.
ARBITRATION
All controversies subject to indemnification pursuant to the Escrow
Agreement will be finally settled (i) exclusively by arbitration between
LaSalle Partners and the Shareholders' Representatives with respect to all
claims subject to indemnification relating to the Escrow Fund, or (ii)
except with respect to claims under the Stockholder Agreements, exclusively
by arbitration between LaSalle Partners and the individual JLW Shareholder
or JLW Shareholders and/or, if applicable, Related JLW Owner or Related JLW
Owners with respect to all other claims subject to indemnification pursuant
to the Escrow Agreement.
<PAGE>
THE STOCKHOLDER AGREEMENTS
The following summary of certain terms of the Stockholder Agreements
does not purport to be complete and is qualified in its entirety by
reference to the form of Stockholder Agreement filed as an exhibit hereto.
All capitalized terms used in this section and not defined shall have the
meanings ascribed to them in the Stockholder Agreements.
GENERAL
As a condition and inducement to LaSalle Partners' willingness to
enter into the Purchase Agreements, LaSalle Partners and each JLW
Shareholder and, if applicable, the Related JLW Owner, will enter into a
Stockholder Agreement. Unless otherwise agreed, the term of the Stockholder
Agreements will commence upon the Closing of the Transactions (the
"Effective Date") and will terminate on the date (the "Termination Date")
that is the earliest to occur of (i) the first business day immediately
following the fifth annual meeting of stockholders of Jones Lang LaSalle
following the Effective Date and (ii) June 1, 2003.
STOCKHOLDER COVENANTS
Each Stockholder Agreement provides that during the period commencing
on the Closing Date and ending on the Termination Date (the "Covenant
Period"), the JLW Shareholder and, if applicable, the Related JLW Owner
party to such Stockholder Agreement will not, and will cause each Person
controlled, directly or indirectly, by such JLW Shareholder or Related JLW
Owner, as the case may be (a "Controlled Affiliate"), not to, among other
things (i) make, or in any way cause or participate in, any "solicitation"
of "proxies" or become a "participant" in any "election contest" with
respect to Jones Lang LaSalle; (ii) seek to advise, encourage or influence
any person or entity with respect to the voting of any (A) Jones Lang
LaSalle Common Stock, (B) other securities of Jones Lang LaSalle entitled
to vote generally for the election of directors of Jones Lang LaSalle or
(C) securities of Jones Lang LaSalle convertible into or exchangeable for
or exercisable for any of the foregoing (collectively, "Voting
Securities"); (iii) execute any written consent with respect to Jones Lang
LaSalle or any Voting Securities (except as otherwise permitted or required
by such Stockholder Agreement); (iv) initiate, propose or otherwise
participate in the solicitation of stockholders for the approval of any
stockholder proposals with respect to Jones Lang LaSalle, or induce or
attempt to induce any other individual or entity to initiate, propose or
solicit any such stockholder proposal; (v) seek election to or seek to
place a representative on the Jones Lang LaSalle Board; (vi) in any manner,
agree or seek to deposit any Voting Securities in any voting trust or any
similar arrangement except as permitted or required by such Stockholder
Agreement; (vii) act in concert with any other person to acquire, hold or
dispose of any voting Securities; (viii) encourage the formation of any
group which owns, seeks or offers to acquire beneficial ownership of any
securities of Jones Lang LaSalle or rights to acquire such securities or
which seeks or offers to affect control of Jones Lang LaSalle for the
purpose of circumventing such Stockholder Agreement or provisions of the
Purchase Agreements relating to corporate governance; (ix) with certain
exceptions, take certain actions to solicit or encourage any form of
business combination involving Jones Lang LaSalle; (x) take any action
challenging the validity or enforceability of any covenant or agreement
contained in such Stockholder Agreement; or (xi) encourage or finance any
person in connection with any of the foregoing.
<PAGE>
TRANSFER RESTRICTIONS
The Stockholder Agreements impose various restrictions on the sale,
assignment, pledge, hypothecation, encumbrance, gift or other disposition
or transfer ("Transfer") of Consideration Shares. Both during and after the
period commencing on the Closing Date and ending one year from the Closing
Date (the "No Sale Period"), any Transfer of Consideration Shares owned by
the JLW Shareholder party to a Stockholder Agreement must either be
pursuant to an effective registration statement under the Securities Act or
be in accordance with provisions in such JLW Shareholder's Joinder
Agreement.
During the No Sale Period, each Stockholder Agreement prohibits the
JLW Shareholder and, if applicable, the Related JLW Owner party to such
agreement from Transferring or permitting the Transfer of any Consideration
Shares except for: (i) a Transfer to certain permitted transferees who
agree in writing to be bound by the terms of such Stockholder Agreement;
(ii) certain Transfers to another JLW Shareholder or certain permitted
transferees; (iii) a pledge or grant of a security interest in any or all
Consideration Shares owned by the JLW Shareholder to a bona fide financial
institution as security for a bona fide loan made to the JLW Shareholder by
such financial institution, provided, however, that such financial
institution must agree to certain restrictions on its ability to foreclose
upon and sell the Consideration Shares; (iv) pursuant to any tender or
exchange offer made pursuant to Section 14(d) of the Exchange Act,
provided, that the Jones Lang LaSalle Board has either (A) recommended that
stockholders of Jones Lang LaSalle accept such offer, and which
recommendation has not been withdrawn, or (B) expressed no opinion and
remains neutral toward such offer, in accordance with Rule 14a-2 of the
Exchange Act or otherwise; (v) pursuant to (A) a merger or consolidation in
which Jones Lang LaSalle is acquired, (B) a sale of all or substantially
all of Jones Lang LaSalle's assets to another person or (C) any other
Transfer approved by the Jones Lang LaSalle Board; (vi) pursuant to a
registration statement; or (vii) a Transfer to Jones Lang LaSalle or any of
its subsidiaries.
Following the No Sale Period, the following transfer restrictions
continue to apply: (i) the JLW Shareholder or, if applicable, any Related
JLW Owner, may not effect a Transfer of Consideration Shares pursuant to
any tender or exchange offer made pursuant to Section 14(d) of the Exchange
Act except pursuant to the conditions described in (iv) of the immediately
preceding paragraph, (ii) unless the Transfer is effected in a brokers'
transaction pursuant to the provisions of paragraph (f) of Rule 144 under
the Securities Act or in a bona fide sale on a foreign securities exchange
that would otherwise comply with such paragraph if such paragraph were
applicable to such sale, the JLW Shareholder or Related JLW Owner, as the
case may be, must take all reasonable actions to assure that such Transfer
is not to a person or group that would hold Voting Securities representing
5% or more of the total Voting Securities then outstanding following such
Transfer, and (iii) any Transfer must be either (A) a bona fide sale
transaction to a person as to which such JLW Shareholder or Related JLW
Owner, if any, does not have a familial relationship, a direct or indirect
ownership interest greater than 5%, or the right to control the disposition
of Consideration Shares held by such person or (B) to another JLW
Shareholder or a permitted transferee. Notwithstanding (iii)(A) above, the
Stockholder Agreement permits a bona fide gift to a charitable institution
unrelated to the transferor, provided that such charitable institution
agrees in writing to be bound by the terms of the Stockholder Agreement.
<PAGE>
VOTING PROVISIONS
During the Covenant Period, each Stockholder Agreement requires that
the JLW Shareholder and, if applicable, the Related JLW Owner that is party
thereto take, and cause each Controlled Affiliate that holds Voting
Securities to take, any and all actions within such JLW Shareholder's,
Related JLW Owner's or Controlled Affiliate's power as a stockholder of
Jones Lang LaSalle or, if applicable, and subject to any applicable
fiduciary or legal limitations, as a director or officer of Jones Lang
LaSalle, so as to cause the composition of the Jones Lang LaSalle Board to
be as set forth in the Purchase Agreements. The JLW Shareholder, Related
JLW Owner or Controlled Affiliate also must vote all Voting Securities with
respect to which he, she, or it has voting power in accordance with the
recommendation or direction of the Jones Lang LaSalle Board on all
stockholder proposals and on all matters relating to any merger or
consolidation involving Jones Lang LaSalle, any sale of all or
substantially all of Jones Lang LaSalle's assets or any similar
transactions, as to which such proposals or matters the Jones Lang LaSalle
Board has recommended against approval.
REGISTRATION RIGHTS
During the Covenant Period, subject to certain exceptions, if Jones
Lang LaSalle proposes to file a registration statement under the Securities
Act with respect to an offering on its own account or for the account of
others and intends to register Voting Securities owned by current
directors, officers and employees of Jones Lang LaSalle who were partners
in the Employee Partnerships ("DEL Registrable Securities"), then current
directors, officers and employees of Jones Lang LaSalle, or any direct or
indirect subsidiary thereof, who were partners, directors, officers or
employees of the JLW Companies and who hold Consideration Shares (such
shares in the hands of such persons being referred to herein as "JLW
Registrable Securities") will have the right to register such JLW
Registrable Securities in such offering in accordance with the terms of
such offering.
If JLW Registrable Securities are to be registered pursuant to the
Stockholder Agreements, Jones Lang LaSalle will take certain steps and use
its best efforts to expedite the registration and facilitate the public
sale or other disposition of the JLW Registrable Securities covered by the
registration statement. If the registration effected pursuant to the
Stockholder Agreements involves a firm commitment underwritten public
offering of Jones Lang LaSalle Common Stock, the total number of JLW
Registrable Securities and DEL Registrable Securities that may be included
therein may be subject to limits specified by the managing underwriter.
Under such circumstances, the Stockholder Agreements provide for allocation
of the securities to be sold between holders of JLW Registrable Securities
and holders of DEL Registrable Securities.
STOCKHOLDER AGREEMENTS OF FORMER EMPLOYEE PARTNERSHIPS UNITHOLDERS
It is a condition to the consummation of the Transactions that current
director, officer and employee of LaSalle Partners or any subsidiary of
LaSalle Partners who is a former partner of the Employee Partnerships
("LaSalle Partners Employee Stockholder") will execute an agreement (a "DEL
Stockholder Agreement") that contains all the stockholder covenants, as
well as the voting and registration rights provisions, contained in the
Stockholder Agreements.
<PAGE>
The DEL Stockholder Agreements also contain restrictions with respect
to the Transfer of shares of LaSalle Partners Common Stock received upon
the dissolution of the Employee Partnerships. These restrictions apply
throughout the term of the DEL Stockholder Agreement (which term is defined
similarly to the Covenant Period with respect to the Stockholder
Agreements). In particular, during the term of a DEL Stockholder Agreement,
the following transfer restrictions will apply:
(i) no Transfer of such shares may be made pursuant to any tender
or exchange offer made pursuant to Section 14(d) of the Exchange Act, if
the Jones Lang LaSalle Board has recommended that stockholders of Jones
Lang LaSalle not accept such offer.
(ii) reasonable actions must be taken to assure that a Transfer is
not to a person or group that would hold Voting Securities representing 5%
or more of the total Voting Securities then outstanding after the Transfer,
unless the Transfer is effected in a brokers' transaction pursuant to the
provisions of paragraph (f) of Rule 144 under the Securities Act, in a bona
fide sale on a foreign securities exchange that would otherwise comply with
such paragraph if such paragraph were applicable to such sale, or in an
underwritten public offering pursuant to an effective registration
statement under the Securities Act; and
(iii) in the case of Transfers to certain related parties, the
transferees must agree in writing to be bound by the terms of such DEL
Stockholder Agreement.
BUSINESS OF THE JLW COMPANIES
OVERVIEW
The JLW Companies provide a wide range of real estate advisory,
transactional and asset management services to a broad variety of local,
national and international clients in many industrial and service business
areas and in both the private and public sectors. These services cover many
types of commercial real estate, including hotel, industrial, office and
retail property. At August 1, 1998, the JLW Companies had an aggregate of
approximately 4,000 employees (excluding on-site personnel responsible for
the maintenance of properties on behalf of clients) based in 87 offices and
were represented in 32 countries. In 1997, the JLW Companies generated
actual revenue of $416.0 million. Giving effect to the Integration and
combination of the JLW Companies, they generated pro forma combined total
revenue of $436.0 million. See "Unaudited Pro Forma Consolidated Financial
Statements--The JLW Companies."
The JLW Companies operate their businesses in four distinct
geographical regions (each, a "Region"): Europe, Asia, Australasia and
North America. However, as a result of substantially independent ownership
structures among and within the Regions, historical financial reporting has
been presented for the following five separate groups: the JLW Businesses
in Europe (including North America and excluding Ireland and Scotland), the
JLW Businesses in Scotland, the JLW Businesses in the Republic of Ireland,
the JLW Businesses in Asia (excluding JLW Pacific and its subsidiaries) and
the JLW Businesses in Australasia. Financial information and a discussion
of results of operations for each group are provided in the "Unaudited Pro
Forma Consolidated Financial Statements--The JLW Companies," "JLW
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the JLW Companies" and the financial statements for each of
the groups located elsewhere in this Current Report. Although the North
America operations are wholly owned by JLW England, and are therefore
consolidated with JLW Europe Group historical financial statements, the
North America Region is discussed separately herein.
<PAGE>
HISTORICAL DEVELOPMENT OF THE JLW BUSINESSES
The geographic expansion of the original English partnership, JLW
England, began in 1958. At that time, JLW England, having two offices in
London with nearly 80 employees and ten partners, opened operations in
Sydney and Melbourne, Australia. The Australian business expanded by
opening offices in other cities and in New Zealand. The JLW Companies in
Australasia (excluding JLW Australasia Transact, the "JLW Australasia
Companies") currently have 13 offices across Australia and two offices in
New Zealand. At August 1, 1998, the JLW Australasia Companies had a total
of approximately 612 employees. In 1997, the JLW Australasia Companies
generated total revenue of approximately $62.5 million.
In Europe, initial expansion was made into Scotland in 1962 and
Ireland in 1965 with the establishment of JLW Scotland and JLW Ireland.
These two entities are separately-owned partnerships in which the partners
of JLW England initially had a majority interest. With the admittance of
additional local partners, JLW England's interests in JLW Scotland and JLW
Ireland were reduced to minority interests. The JLW Companies' expansion
into continental Europe through JLW England began in Belgium in 1965
followed by Holland in 1970, France in 1972 and Germany in 1974. At
August 1, 1998, the JLW Companies in the Europe Region had 42 offices in
19 countries with a total of 1,981 employees. The Europe Region (i.e. JLW
England, JLW Scotland and JLW Ireland and excluding North America) is
currently the largest of the four Regions and in 1997 generated combined
total revenue of approximately $229.8 million.
The expansion into the Asia Region began in 1973 with the opening of
the Hong Kong and Singapore offices by the JLW Australasia Companies. Since
1973, the Asia Region has grown to a total of 16 offices in 9 countries,
concentrated in southeast Asia but including China, India and Japan and at
August 1, 1998, had 957 employees. In 1997, the JLW Companies in the Asia
Region generated total revenue of approximately $76.0 million.
The expansion into the North America Region began in 1975 with the
opening of the New York office. Since 1975, the North America Region has
grown to a total of 13 offices in 10 cities and at August 1, 1998, had
approximately 420 employees. In 1997, the JLW Companies in the North
America Region generated total revenue of approximately $47.7 million.
The majority of the growth in each Region has been through internal
expansion rather than by acquisition. Historically, offices in new
countries were set up and led by an experienced JLW Company professional,
often a partner from an established JLW Company, who hired local staff.
This policy brought important advantages in the form of a "one-firm"
culture of shared values, ethics, professionalism and cross-regional co-
operation. JLW England also stimulated and rewarded the development of the
JLW Businesses outside England by progressively ceding equity to local
partners with the result being that JLW England no longer has an interest
in the JLW Companies operating in Asia (the "JLW Asia Companies") or the
JLW Australasia Companies, and has only a minority interest in JLW Scotland
and JLW Ireland.
The result of the historical development described above is that the
JLW Companies form an international business that operates on a regional
basis. Each Region has its own executive management in order to ensure that
effective operational control is exercised by local executives.
The JLW Companies face competition in each Region from a number of
regional competitors, some of whom have combined with United States-based
real estate firms to enhance their competitiveness and geographic scope.
<PAGE>
SERVICES
The following is an overview of the principal services provided by the
JLW Companies. These services can be classified into three general
categories, (i) advice ("Advisory"), (ii) market transactions ("Markets")
or (iii) asset management ("Asset Management") as follows (although,
historically, the JLW Companies have not reported their financial results
based on such categories):
ADVISORY
. Valuation/appraisal
. Investment management
. Corporate real estate services
. Finance
. Consulting and research
ASSET MANAGEMENT
. Property management
. Facilities management
. Project management
MARKETS
. Property sales and acquisitions
. Agency leasing for landlords
. Tenant leasing
Not all of these services are provided directly by all of the offices
comprising the JLW Companies. Some services, notably advisory services, are
provided from regional centers serving multiple countries. Others, notably
agency leasing for landlords, are typically provided on a local basis. A
brief description of what is involved in the core services is given below.
ADVISORY
The JLW Companies' advisory services are designed to provide clients
with independent advice as a basis for making real estate decisions. Advice
is typically based on information derived from research and market
knowledge. The JLW Companies perform advisory services both as individual
services and as part of broader assignments such as market transactions or
asset restructurings.
VALUATION/APPRAISAL
Valuation advice (known in some countries as appraisal) is significant
to the JLW Companies both as a stand-alone service and as a component of
other services provided to real estate investors, occupiers and financing
sources. Such advice may involve valuing a single property or a worldwide
portfolio of multiple property types. The JLW Companies have valuation
specialists capable of providing valuation advice to clients in nearly
every developed country.
Compensation for valuation services is generally negotiated for each
assignment based on its scale and complexity and will typically relate in
part to the value of the assets valued. During 1997, the JLW Companies
valued over $180 billion of commercial property, investment grade
residential property and land for purposes including acquisition, disposal,
debt and equity financing, mergers and acquisitions, securities offerings
and privatization. Clients reflect this diversity and include occupiers,
investors and financing sources from the public and private sectors.
<PAGE>
INVESTMENT MANAGEMENT
The JLW Companies provide real estate investment portfolio management
services to institutional investors, primarily pension funds. Such services
are focused on research-based analysis of market trends and identification
of properties to buy, sell or restructure in order to maximize performance
consistent with clients' individual requirements. The JLW Companies'
investment management professionals also actively manage client property
assets, including the retention of service suppliers to acquire and sell
client properties. While the JLW Companies' investment management
professionals often retain JLW Company professionals to provide necessary
Markets and Asset Management services, they will also retain third-party
service suppliers to provide such services when appropriate.
The value of funds under management by the JLW Companies was
approximately $6.2 billion worldwide at December 31, 1997, of which $5.4
billion were managed in London by the JLW Europe Companies. Based on a
survey published by Professional Pensions in January 1998, management of
the JLW Companies believes that the JLW Europe Companies are the largest
independent real estate investment manager in the United Kingdom in terms
of the total value of property funds under management. Compensation for
investment management services is typically related to the value of the
portfolio under management or to the value of related transactions.
CORPORATE REAL ESTATE SERVICES ("CRES")
The JLW Companies provide a wide range of advisory services to
corporate users of real estate. These services include advice on
relocation, lease or buy decisions, redevelopment, disposal, highest and
best use, property portfolio strategy, corporate real estate finance and
asset strategies. CRES professionals involve specialists from other service
areas within the JLW Companies as appropriate. CRES seeks to lower its
clients' real estate costs and risks and to maximize the flexibility and
effectiveness of the real estate they occupy. CRES has secured long-term
relationships and strategic alliances with a number of multinational
clients with large and complex needs and also has national clients
requiring local services.
Compensation for CRES is generally negotiated on a case by case basis
depending upon the assignment and typically depends on the time involved,
the complexity of the work and the value of the real estate assets
involved.
FINANCE
JLW Company professionals provide advice regarding financing
alternatives, assist in securing financing for property development or
acquisition, and participate in creating securitized real estate funds.
Specialist teams based in London and Warsaw provide these services in
Europe and a specialist team based in New York provides these services in
the United States. Working with JLW Company investment management
specialists, professionals in the finance division in London have
participated in launching investment funds and marketing them to
institutional investors. Compensation for financing services is typically
related to the value of funds raised or to consulting time involved.
<PAGE>
CONSULTING AND RESEARCH
In many cases, research is a critical element of advice delivered to
JLW Company clients. At January 1, 1998, the JLW Companies employed
approximately 135 research specialists organized regionally in Hong Kong,
Singapore, London, New York and Sydney and supported by local, country-
based research specialists. Research focuses on issues such as the impact
on real estate of urban and demographic trends, new technology, competition
among cities and regions, and the European monetary union. Research centers
provide fee-earning consulting services regarding these and a wide range of
other subjects, using teams of research specialists, market professionals
in office, retail, hotel, industrial or leisure property sectors and
professionals in other disciplines, as appropriate. Compensation for
consulting services is negotiated on a case by case basis and typically
depends on the time involved and market value of information supplied.
MARKETS
The Markets service area includes two principal types of service:
capital transactions (sales and purchases of real estate, sometimes
including the arrangement of financing); and leasing transactions (serving
as leasing agent for real estate owners or representing tenants in their
search for real estate). During 1997, the JLW Companies were involved in
sales and purchases of real estate assets with a total value of more than
$19.5 billion. These included sales and purchases of office, hotel,
industrial, residential and retail properties in which the JLW Companies
acted on behalf of investors or owner-occupiers. The JLW Companies leased
over 60 million square feet of office, industrial and retail space in 1997,
representing owners or tenants.
PROPERTY SALES AND ACQUISITIONS
Investment sale or acquisition assignments are typically conducted on
behalf of institutional investors (including pension funds and insurance
companies), developers, property companies, banks, hotel companies, private
investors or public bodies. Owner-occupier sale or acquisition assignments
are typically conducted on behalf of corporations, banks, retailers, hotel
operators or leisure firms and are primarily carried out by agency or
investment professionals specializing in the relevant property sector, and
may involve sale-and-leaseback transactions. Owner-occupier sales and
acquisitions sometimes result from advisory assignments carried out by
consultants in CRES or in specialist retail, hotel, industrial or leisure
property units.
The JLW Company investment professionals use their knowledge of active
local and international investors to carry out targeted sales or
acquisition efforts on behalf of investor or owner-occupier clients whose
objective is to dispose of or acquire real estate assets. When working for
a seller, the JLW Companies develop marketing materials, contact
prospective purchasers, perform financial analyses, negotiate and structure
transactions. In working with a purchaser, the JLW Companies assess
alternatives, compare values, calculate returns, review financing sources,
negotiate and structure transactions and, on occasion, arrange financing.
The JLW Companies' transactional sale and purchase businesses operate
in all countries where the JLW Companies are represented and an investment
market exists, and also in some countries where they are not represented
locally.
Sale and purchase services are generally compensated in relation to
the capital value of a purchase or sale transaction and may contain an
element of incentive-based fees.
<PAGE>
AGENCY LEASING FOR LANDLORDS
The JLW Companies have been engaged to lease many leading real estate
developments in Europe, Asia, Australasia and North America on behalf of
their owners. The JLW Companies' agency leasing services are organized
mainly on a country or city basis and are offered in the vast majority of
cities in which the JLW Companies have offices. In accordance with market
practice, in the great majority of the countries outside of the United
States where the JLW Companies operate, most of the JLW Companies' leasing
activities are unrelated to the properties they manage. The JLW Companies
may be appointed on an exclusive, "sole agency" basis, or as a joint
leasing agent, in co-operation or competition with other agents. JLW
Company professionals providing leasing services typically specialize by
use, i.e., industrial, office or retail property.
Clients are typically investors, property companies, developers or
public bodies. Compensation for agency leasing services varies widely
according to local market practice but is typically related to the rent
payable by obtained tenants and may contain an element of incentive-based
fees.
TENANT LEASING
Tenant leasing services are often provided in connection with CRES or
retail consultancy services provided by other JLW Company professionals.
The JLW Companies represent clients in a wide range of tenant leasing
assignments, sometimes involving headquarter relocation or office
consolidation. JLW Company professionals also assist clients in selecting
offices, distribution centers or retail outlets in countries where the
client has decided to expand or relocate.
Clients for tenant leasing transactions typically include corporations
or retailers with local, national or international needs. Compensation for
tenant leasing transactions is generally related to the rental cost of
property leased.
ASSET MANAGEMENT
The objectives of the JLW Companies in this service area are to
maximize the value and return to investors of their real property
investments and to optimize the cost-effectiveness of occupancy for owner-
occupiers and tenants.
PROPERTY MANAGEMENT
The JLW Companies' property management services are intended to
achieve high occupancy levels and maximize tenant satisfaction while
minimizing owners' costs. The JLW Companies managed approximately 250
million square feet of space in over 5,000 office, retail, industrial and
residential properties at December 31, 1997. During 1997, properties
managed by the JLW Companies yielded over $3.0 billion of annual rental
income to their owners.
The JLW Companies provide property management services for landlords
mainly on a national basis. Property management services are offered in
most countries where the JLW Companies have a well-established and
substantial presence in order to capitalize on the economies of scale
involved in providing such services. In March 1998, the JLW Companies in
North America acquired Northwest Asset Management Company in the United
States, adding approximately 10 million square feet to their property
management portfolio, and in August 1998, the JLW Europe Companies acquired
Laese de Centros Comerciales SA, adding 18 shopping centers in Spain and
Portugal to the JLW Europe Companies' property management portfolio.
<PAGE>
Clients are typically institutional investors, pension funds and
property companies, including many with substantial real estate portfolios.
Compensation for property management services is typically related to the
annual rental income of leased properties whether as portfolios of
properties or individual buildings.
FACILITIES MANAGEMENT
The JLW Companies provide wide-ranging facility management services,
including advice on procurement and technical services, to corporations and
institutions which outsource their real estate management services. This is
a recently offered service area for the JLW Companies and it is offered
only in Australia, New Zealand, Hong Kong, Singapore, the United Kingdom
and the United States.
Clients are typically corporations. The JLW Companies are typically
compensated for facility management services on a negotiated annual
contract basis depending on the scope of the services provided, often with
incentives for achieving pre-determined objectives.
PROJECT MANAGEMENT
The JLW Companies provide teams to manage development, redevelopment,
renovation and leasehold improvement projects. Full project management
services are offered in Belgium, Germany, Hong Kong, the United Kingdom and
the United States. Project management services are offered in Singapore and
China (in China with personnel from the Hong Kong office). Limited services
are offered in France and the Netherlands. Clients are typically investors,
developers, owner-occupiers and tenants. Compensation for project
management services typically depends on the size and scope of the services
provided.
INTERNATIONAL SERVICE DELIVERY
In order to better serve international corporate and hotel clients, an
"International Corporate Real Estate Services" and an "International
Hotels" group were formed. Additionally, in order to capitalize on
increasingly international capital flows, the JLW Companies recently formed
an "International Investment Management" group.
INTERNATIONAL CORPORATE REAL ESTATE SERVICES
In order to coordinate regional CRES activities and ensure that a
consistent level of quality service is delivered to clients whose needs are
multi-regional, a small international CRES team was created in London in
1994. International CRES now has a second senior director, based in
Chicago, strengthening its capacity to compete for international business
from United States corporations.
In the eighteen months ended March 31, 1998, the JLW Companies
undertook approximately 1,700 individual CRES assignments for approximately
470 corporate clients worldwide. Approximately fifty of the CRES clients
have awarded JLW Companies regional or global mandates. CRES revenue
accrues to the country or regional CRES operations where the advisory
services are provided or where the real estate involved is located.
<PAGE>
INTERNATIONAL HOTELS
The JLW Companies have over 90 dedicated hotel professionals, based
primarily in London, Frankfurt, New York, Los Angeles, Sydney, Brisbane,
Auckland, Jakarta and Singapore. They provide a wide range of services to
operators, investors and financing sources in the hotel industry on a
global basis. Over the last five years, the JLW Companies have carried out
hotel transaction mandates worldwide worth approximately $5.0 billion. In
1997 and in previous years, the JLW Companies' hotel business operated
mainly on a regional basis. Beginning in January 1998, the regionally
operated international hotels business of the JLW Companies were brought
together under a single management team. In June 1998, the JLW Companies
launched a joint venture with Host Marriott Corporation ("Host Marriott")
to acquire hotel properties in Asia.
INTERNATIONAL INVESTMENT MANAGEMENT
The JLW Companies recently appointed an International Chairman of
Investment Management to coordinate regionally organized investment
management centers, to transfer experience between them and to extend their
activities into new markets. This activity is in its early stages.
EUROPE REGION
OVERVIEW
Europe is the largest Region as measured by total revenue. In 1997,
the JLW Companies in the Europe Region recognized total revenue of $229.8
million, accounting for approximately 55% of combined total revenue for the
JLW Companies. See "Unaudited Pro Forma Consolidated Financial Statements."
At August 1, 1998, the JLW Companies in the Europe Region had 42 offices in
19 countries including the United Kingdom and countries in Central and
Eastern Europe. Operationally, the Europe Region includes Scotland and
Ireland, although the JLW Companies in Scotland and Ireland are separately
owned and managed by JLW Scotland and JLW Ireland, respectively, and
excludes North America, although the JLW Companies operating in North
America are owned by JLW England.
The JLW Companies in the Europe Region provide all of the services
summarized under the caption "Services" above, although not all of these
services are offered in each country in the Region. In addition, the Europe
Region is served by several London-based cross-border service lines
including retail, CRES and investment services. These service lines are
offered by teams of individuals that are able to provide pan-European
advice and services across the rapidly integrating European market. To
support the wide range of services offered in the Europe Region, there is a
dedicated pan-European research unit in London. This unit manages regional
market research and information and provides consultancy advice to clients.
Service lines are developed to meet the requirements of clients and the
market according to the different conditions that exist in each of the
countries comprising the Europe Region.
The JLW Companies in England and Ireland have approximately $5.9
billion of real estate funds under management. The JLW Companies in the
Europe Region manage more than 105 million square feet of space in
approximately 3,800 properties yielding annual rental income to their
owners of more than $1.9 billion. In 1997, the JLW Companies in the Europe
Region valued property of all kinds throughout Europe worth approximately
$80 billion, leased approximately 34 million square feet of property space
and bought or sold more than $10 billion worth of real estate assets on
behalf of clients.
<PAGE>
The JLW Companies in the Europe Region have offices in the following
countries:
. Austria . Israel . Romania
. Belgium . Italy . Russia
. Czech Republic . Luxembourg . Spain
. France . Netherlands . Sweden
. Germany . Poland . Ukraine
. Hungary . Portugal . United
. Ireland Kingdom
All offices provide services on a local, national or regional basis,
except for the offices in Israel and Sweden, whose function is to market
services (especially European) to local investors and occupiers.
COUNTRIES
The JLW Companies in the principal countries in the Europe Region had
approximately the following revenue, offices and employees:
Number of
Employees
and
1997 Revenue Number of Partners
Country (in millions) Offices (1) (1) (2)
- ------- ------------- ----------- ---------
United Kingdom. . . . . . . $110 7 914
Germany . . . . . . . . . . 32 7 260
France. . . . . . . . . . .. 22 4 168
Netherlands . . . . . . . .. 17 4 154
Belgium/Luxembourg. . . . .. 14 3 97
Ireland . . . . . . . . . .. 9 1 50
Scotland. . . . . . . . . .. 9 2 78
Other Europe. . . . . . . . 10 14 229
---- --- -----
Total fee based
service revenue. . . . 223 -- --
Interest income . . . . . . 2 -- --
Other revenue . . . . . . . 5 -- --
---- --- -----
Total . . . . . . . . . $230 42 1,950
==== === =====
- --------------------
(1) At August 1, 1998.
(2) Number of employees excludes approximately 411 on-site
personnel whose compensation is recovered from clients.
NORTH AMERICA REGION
The JLW Companies commenced operations in the North America Region in
1975 with the opening of the New York office. In 1997, the North America
Region's total revenue of approximately $47.7 million accounted for
approximately 12% of pro forma combined total revenue for the JLW
Companies. As of August 1, 1998, the North America Region had 12 offices in
the U.S. and one in Canada and a total of approximately 365 employees
(excluding approximately 132 on-site personnel responsible for maintenance
and cleaning of properties on behalf of clients). See "Unaudited Pro Forma
Consolidated Financial Statements." The JLW Companies in the North America
Region provide all of the services described under the caption "Services"
above. During 1997, the JLW Companies in the North America Region acted on
sales and acquisition transactions with an aggregate value of $1.6 billion,
<PAGE>
leased more than 5.6 million square feet of property space on behalf of
clients and valued property with an aggregate value of approximately $4.5
billion. At December 31, 1997, the JLW Companies in the North America
Region managed approximately 18 million square feet of space in 50
properties for clients yielding annual rental income to their owners of
$230.0 million.
The JLW Companies in the North America Region are also able to provide
investment management services including various services in the
securitized real estate area including development of REIT joint venture
products for overseas clients, REIT securities management and raising
equity for REITs in foreign markets.
Principal clients in 1997 included institutional investors (insurance
companies, pension funds and investment funds), banks and corporations. The
majority of revenue was from United States clients, but foreign-owned
clients included Asian and European banks and corporations.
ASIA REGION
OVERVIEW
Asia is the second largest Region in terms of total revenue, with 1997
total revenue of approximately $76.0 million comprising approximately 18%
of pro forma combined total revenue for the JLW Companies. See "Unaudited
Pro Forma Consolidated Financial Statements." The Asia Region comprises 16
offices in 9 countries, including Hong Kong, Indonesia and Singapore, which
together account for approximately 94% of the Asia Region's total fee based
revenue. The JLW Asia Companies provide a wide range of services in Hong
Kong, Indonesia, Singapore and Thailand and also operate in India, Japan,
the Philippines, the People's Republic of China and Vietnam. The JLW Asia
Companies earn revenue in Indonesia pursuant to an agreement (the
"Technical Services Agreement") with PT Procon Indah, a locally owned
Indonesian company. Pursuant to the Technical Services Agreement, the JLW
Asia Companies provide the management teams and personnel to perform
services in Indonesia.
Although not all services provided by the JLW Companies are currently
offered in each country within the Asia Region, most services can be
provided from one of the three principal offices in Hong Kong, Indonesia
and Singapore, with the exception of finance services and investment
management services.
To support the services provided by the JLW Asia Companies, national
and regional research units provide market research and consulting advice
to clients. Service lines are adapted to meet the requirements of clients
and the market according to the different conditions that exist in each of
the countries comprising the Asia Region.
During 1997, the JLW Asia Companies acted on capital transactions with
an aggregate value of over $4.8 billion, leased approximately 9.6 million
square feet of property space on behalf of clients and valued properties
with an aggregate value of over $67 billion. At the end of 1997, the JLW
Asia Companies managed over 75 million square feet of space in more than
600 properties yielding annual rental income to their owners of
approximately $300 million.
The client base of the JLW Asia Companies is predominantly local and
includes developers, corporations and individual investors.
<PAGE>
COUNTRIES
The JLW Companies in the principal countries in the Asia Region have
approximately the following revenue, number of offices and employees:
Number of
1997 Revenue Number of Employees
Country (in millions) Offices (1) (1) (2)
- ------- ------------- ----------- ---------
Hong Kong . . . . . . . . . $ 52 3 393
Indonesia (3) . . . . . . . -- 3 197
Singapore . . . . . . . . . 17 1 165
Other Asia (4). . . . . . . 5 9 202
---- ---- ----
Total fee based
service revenue . . . 74 -- --
Other income. . . . . . . . 2 -- --
---- ---- ----
Total . . . . . . . . . $ 76 16 957
==== ==== ====
- ------------
(1) At August 1, 1998.
(2) Number of employees excludes approximately 2,700 on-site
personnel whose compensation is recovered from clients.
(3) The JLW Businesses in Indonesia are not consolidated in the
ownership structure of the JLW Asia Companies due to the local ownership of
the Indonesian businesses as required by local law. Revenue recognized by
the JLW Companies' Hong Kong operations under the Technical Services
Agreement totaled $4.8 million in 1997. See "JLW Management's Discussion
and Analysis of Financial Condition and Results of Operations of the JLW
Companies--The JLW Asia Group."
(4) Number of offices and employees includes four offices and
approximately 23 employees of the JLW Companies in India and Japan the
results of which are not currently consolidated with those of other JLW
Companies in the Asia Region.
AUSTRALASIA REGION
OVERVIEW
The JLW Australasia Companies have been represented in Australasia
since 1958. They presently provide a broad range of leasing, property sales
and acquisitions, valuation, asset management and other real estate
services and products in Australia and New Zealand, but do not currently
provide investment management services. Clients include institutional
investors, government agencies, public companies and private investors. The
JLW Australasia Companies had total revenue of approximately $62 million in
1997, comprising approximately 15% of the pro forma combined total revenue
of the JLW Companies. See "Unaudited Pro Forma Consolidated Financial
Statements." There are 15 offices across Australasia. In 1997, the JLW
Australasia Companies in the Australasia Region worked on capital
transactions with an aggregate value of approximately $2.0 billion and
leased over 12 million square feet of property space on behalf of clients.
Representing collectively one of the Australasia Region's leading property
management specialists, at the end of 1997, the JLW Australasia Companies
managed over 55 million square feet of space in over 860 properties
yielding annual rental income to their owners of over $700 million. During
1997, the JLW Australasia Companies valued property assets of over $30
billion.
<PAGE>
To take advantage of the current trend of outsourcing of real estate
services by major institutions and corporations, the JLW Australasia
Companies have developed a facilities management division. This division
was established during the course of 1997 and has entered into contracts
with clients independently and through a joint venture with a third party.
COUNTRIES
The JLW Australasia Companies have approximately the following
revenue, offices and employees:
Number of Number of
1997 Revenue Offices Employees
Country (in millions) (1) (2) (1) (2)
- ------- ------------- --------- ---------
Australia . . . . . . . . . $ 57 13 575
New Zealand . . . . . . . . 3 2 37
---- ---- ----
Total fee based
service revenue . . . 60 -- --
Other income. . . . . . . . 2 -- --
---- ---- ----
Total . . . . . . . . . $ 62 15 612
==== ==== ====
- --------------------
(1) At August 1, 1998.
(2) Number of employees excludes approximately 400 on-site
personnel whose compensation is recovered from clients.
TRANSACT
JLW Transact specializes in real estate services relating to hotels,
including sales, consulting, valuation, asset management and research. JLW
Transact has seven offices, with approximately 50 employees, in Australia,
New Zealand and Asia, and prior to January 1, 1998, was managed by a
committee of executives from Sydney, Brisbane and Singapore. Since
January 1, 1998, JLW Transact has been managed on a global basis as part of
the international hotel business.
During 1997, JLW Transact had total revenue of $7 million. An
agreement has recently been signed to co-manage with Host Marriott the
acquisition of up to $500 million of equity investments in distressed
hotels in the Asia Region.
Principal clients of JLW Transact include government agencies,
institutional investors, corporations, hotel groups and private investment
companies and individuals.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
JONES LANG LASALLE
The following Unaudited Pro Forma Consolidated Financial Statements
are derived from the historical financial statements of LaSalle Partners,
the JLW Companies and the worldwide commercial property management and
leasing, facilities management and project management operations and United
States retail property management operations of Lend Lease Corporation
Limited ("Lend Lease") conducted through Compass Management and Leasing,
Inc. and certain affiliates (the "Compass Businesses"), acquired by LaSalle
Partners in October 1998. The Unaudited Pro Forma Jones Lang LaSalle
Consolidated Statements of Earnings for the nine months ended September 30,
1998 and the year ended December 31, 1997 give effect to the acquisition of
<PAGE>
the Compass Businesses, and the Transactions, including the Integration, as
if they had occurred on January 1, 1997. In addition, the "Pro Forma
LaSalle Partners" column in the Unaudited Pro Forma Jones Lang LaSalle
Consolidated Statement of Earnings for the year ended December 31, 1997
gives effect to (i) the acquisition by LaSalle Partners of The Galbreath
Company ("Galbreath") on April 22, 1997, as adjusted for the tenant
representation and investment banking units which were not acquired, (ii)
the provision for income taxes as though LaSalle Partners and Galbreath
were taxable entities as of January 1, 1997 with an effective tax rate of
38.5%, (iii) estimated incremental general and administrative costs
associated with operations as a public company and (iv) the repayment of
LaSalle Partners' long-term debt out of the proceeds of LaSalle Partners'
initial public offering on July 21, 1997, as if all of these events
occurred on January 1, 1997. The Unaudited Pro Forma Jones Lang LaSalle
Consolidated Balance Sheet as of September 30, 1998 combines the historical
unaudited consolidated and combined statements of each of LaSalle Partners,
the Compass Businesses and the JLW Companies as if the acquisition of the
Compass Businesses and the Transactions, including the Integration, had
occurred on that date after giving effect to pro forma adjustments
described in the accompanying notes. The Unaudited Pro Forma Consolidated
Financial Statements should be read in conjunction with the historical
financial statements of LaSalle Partners, the Compass Businesses, and the
JLW Companies and the notes thereto, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" of LaSalle Partners
included in the LaSalle Partners 10-K and the LaSalle Partners Third
Quarter 10-Q, the LaSalle Partners October 1 Current Report, and the
LaSalle Partners Current Report on Form 8-K, dated October 22, 1998, which
are incorporated herein by reference, "JLW Management's Discussion and
Analysis of Financial Condition and Results of Operations of the JLW
Companies" included elsewhere herein, and the other financial information
included elsewhere herein.
Pursuant to the various Purchase Agreements, LaSalle Partners will
issue shares of LaSalle Partners Common Stock and cash consideration to (i)
Current JLW Owners; (ii) New JLW Owners who will become direct or indirect
equity owners of the JLW Parent Companies prior to or as part of the
Integration; and (iii) the ESOT, from which shares of LaSalle Partners
Common Stock will be allocated to current and former employees of the JLW
Companies ("ESOT Beneficiaries") during 1999 and 2000, subject to certain
vesting and other requirements. Assuming the net worth requirements are met
and that the Five Day Average Closing Price will be $28-5/16 (the closing
price of LaSalle Partners Common Stock on November 20, 1998), approximately
11,083,983 shares and $5.4 million in cash consideration will be issued to
Current JLW Owners, approximately 1,397,809 shares and $0.4 million in cash
consideration will be issued to New JLW Owners, and approximately 1,772,324
shares will be issued to the ESOT. ESOT Shares are anticipated to be
allocated as follows: 915,542 shares at Closing, 246,415 shares at
December 31, 1999 and 610,367 shares at December 31, 2000.
Included in the 14,254,116 Consideration Shares and ESOT Shares to be
issued pursuant to the Purchase Agreements are 750,000 Indemnification
Shares, 1,241,683 Adjustment Shares and 4,605,227 Forfeiture Shares.
Pursuant to the JLW Australasia Purchase Agreement, LaSalle Partners
will issue Convertible Notes to the JLW Australasia Shareholders and JLW
Australia Parent in exchange for their JLW Shares redeemable at the
election of LaSalle Partners and the JLW Australasia Shareholders and JLW
Australia Parent, respectively, for Forfeiture Shares, Adjustment Shares,
Indemnification Shares and Initial Distribution Shares, provided, that none
of the Consideration Shares to be issued to JLW Australia Parent will be
Forfeiture Shares. As LaSalle Partners expects to exercise its right to
redeem all Convertible Notes for the aforementioned shares immediately upon
issuance of the Convertible Notes, the pro forma financial statements
included herein account for the issuance of shares to the JLW Australasia
Group's Current JLW Owners as of the Closing.
<PAGE>
On a pro forma basis for Jones Lang LaSalle, the basic and diluted
loss per common share were $(1.85) and $(2.50) for the nine months ended
September 30, 1998 and the year ended December 31, 1997, respectively,
compared to basic earnings per common share for pro forma LaSalle Partners
and the Compass Businesses for those periods of $.10 and $1.03,
respectively. The diluted earnings per common share for pro forma LaSalle
Partners and the Compass Businesses for those periods were $.10 and $1.02,
respectively. No Forfeiture Shares, Indemnification Shares, unallocated
ESOT Shares or options on LaSalle Partners Common Stock issuable in
connection with the acquisition of the Compass Businesses were included in
the pro forma Jones Lang LaSalle diluted weighted average shares
outstanding because, due to operating losses, inclusion of such common
stock equivalents would be anti-dilutive. In accordance with the accounting
policies discussed in the following paragraphs, merger-related nonrecurring
compensation expense totaling $50.0 million and $102.2 million has been
reflected in the Pro Forma Jones Lang LaSalle Consolidated Statement of
Earnings for the nine months ended September 30, 1998 and for the year
ended December 31, 1997, respectively. In addition, the results of the JLW
Companies for the nine months ended September 30, 1998 include
approximately $15.3 million in merger-related nonrecurring costs related to
the Integration and the Transactions (like amounts incurred during 1997
were immaterial).
The anticipated accounting treatment for the Transactions is guided by
both APB Opinion No. 16 and APB Opinion No. 25. All cash consideration,
Convertible Notes and Consideration Shares issued to Current JLW Owners,
excluding Forfeiture Shares, in connection with the Transactions will be
accounted for using the purchase method of accounting in accordance with
APB Opinion No. 16. The purchase price will be calculated based on (i) the
aggregate of the fair market value of the Initial Consideration Shares,
Indemnification Shares, Adjustment Shares and Convertible Notes, valued at
the five-day average closing stock price surrounding the date the terms of
the Transactions were substantially complete, discounted for
transferability restrictions, (ii) the cash consideration paid to the
Current JLW Owners, and (iii) any capitalizable transaction costs. The
total value of consideration will be compared to the fair value of the
identifiable net assets acquired and the difference will be allocated to
goodwill and amortized on a straight-line basis over an estimated useful
life of 40 years.
The Forfeiture Shares issuable to Current JLW Owners, the ESOT Shares
and the cash consideration, Initial Distribution Shares, Indemnification
Shares, Adjustment Shares and Forfeiture Shares issuable to the New JLW
Owners in connection with the Transactions will be accounted for as
compensation expense in accordance with APB Opinion No. 25 at the date of
issuance to New JLW Owners or the date that ESOT Shares are specifically
allocated. Initial Distribution Shares and Indemnification Shares not
subject to vesting restrictions that are issued to New JLW Owners or
allocated from the ESOT will be treated as compensation expense at closing
or as allocated in the ESOT. Compensation expense related to Forfeiture
Shares or to Initial Distribution Shares and Indemnification Shares which
are subject to vesting provisions will be recorded as deferred compensation
at the time of issuance to New JLW Owners or allocation from the ESOT and
amortized on a straight-line basis over the forfeiture or vesting period.
<PAGE>
Compensation expense associated with the Forfeiture Shares issued to
Current JLW Owners and associated with all Consideration Shares issued to
New JLW Owners and the ESOT Shares is calculated as of the date such shares
are issued to Current JLW Owners, New JLW Owners or allocated from the
ESOT, as the case may be, based on the closing stock price on that date.
For purposes of the pro forma financial statements included herein, all
compensation expense has been calculated based on the closing price of $28-
5/16 per share of LaSalle Partners Common Stock on November 20, 1998. The
actual amount of compensation expense will vary depending on the price per
share of LaSalle Partners Common Stock on the relevant dates and will
increase or decrease as a result of fluctuations in such price per share.
For purposes of the pro forma financial statements included herein,
all shares anticipated to be allocated from the ESOT during 1999 and 2000
are assumed to have been allocated during 1997 and 1998, respectively,
based on the same timing of allocation and based on a closing price of $28-
5/16 per share of LaSalle Partners Common Stock. Accordingly, only those
shares assumed to have been allocated from the ESOT through September 30,
2000 and the related amortization of compensation expense under the
forfeiture or vesting provisions have been included in the pro forma
financial statements. The actual amount of compensation expense will vary
depending on the price per share of LaSalle Partners Common Stock at each
allocation date.
For purposes of the pro forma financial statements included herein,
the following principal assumptions have been made:
. No claims exist which may be made against the Indemnification
Shares. Accordingly, Indemnification Shares are accounted for in the
purchase price or as compensation expense as of their issuance or
allocation date.
. Based on the JLW Companies' balance sheets at September 30,
1998 included elsewhere herein, the Adjustment Shares to be returned to
LaSalle Partners total approximately 601,411 shares with the remaining
640,272 Adjustment Shares being distributed to the Current JLW Owners, New
JLW Owners and the ESOT in accordance with their original allocation. These
shares have been included in the calculation of the purchase price and
compensation expense in the attached pro forma financial statements.
. Under the forfeiture restrictions, Forfeiture Shares deemed to
be related to a Bad Leaver will be reallocated among the remaining JLW
Shareholders. Under APB Opinion No. 25, the compensation expense associated
with reallocated shares will need to be remeasured based on the closing
stock price on the date of reallocation. As the forfeiture status will not
be determined and reallocated until December 31, 2000, the Forfeiture
Shares related to all employees that leave Jones Lang LaSalle will continue
to be amortized over their original amortization schedule through December
31, 2000 and compensation expense adjusted at that date. The pro forma
financial statements do not assume any reallocation of shares or changes in
stock price through December 31, 2000.
<PAGE>
. The Indemnification Shares and Adjustment Shares which are
deposited with the Indemnity Escrow Agent at Closing on behalf of the New
JLW Owners and the ESOT reflect shares of LaSalle Partners Common Stock
which are contingently returnable and accounted for similarly to a variable
stock award plan. Accordingly, the compensation expense associated with
those Consideration Shares will be adjusted quarterly to reflect changes in
the price per share of LaSalle Partners Common Stock until such shares are
released from the escrow. For purposes of the pro forma financial
statements included herein, the closing price per share of LaSalle Partners
Common Stock on November 20, 1998 has been used and held constant;
therefore, no adjustments to compensation expense have been assumed.
. The Forfeiture Shares of the JLW Asia Shareholders are being
deposited with the Indemnity Escrow Agent in lieu of the Forfeiture Shares
Escrow Agent and will also be contingently returnable and, accordingly,
accounted for similarly to a variable award stock plan. The compensation
expense related to the Forfeiture Shares will continue to be amortized
through December 31, 2000 for accounting purposes, pending any claim
against those shares, and the deferred compensation balance will be
adjusted on a quarterly basis to reflect changes in the price per share of
LaSalle Partners Common Stock. The pro forma financial statements included
herein assume that no claims will be made against these Forfeiture Shares
and that the stock price throughout the pro forma period is equal to with
the closing stock price on November 20, 1998. Accordingly, no adjustments
have been made for changes in stock price for the pro forma periods.
On a pro forma basis for LaSalle Partners and the Compass Businesses
combined, basic earnings per common share were $.10 and $1.03 for the nine
months ended September 30, 1998 and the year ended December 31, 1997,
respectively, compared to LaSalle Partners' results for those periods of
$.54 and $1.28, respectively. Diluted earnings per common share on a pro
forma basis for LaSalle Partners and the Compass Businesses combined were
$.10 and $1.02 for the nine months ended September 30, 1998 and the year
ended December 31, 1997, respectively, compared to LaSalle Partners'
results for those periods of $.53 and $1.27, respectively. The Compass
Businesses have been combined with LaSalle Partners Management Services,
Inc. ("LPMS"), an operating subsidiary of LaSalle Partners conducting the
property management and leasing, facilities management and development
management businesses of LaSalle Partners. The regional infrastructures
for LPMS and the Compass Businesses are highly duplicative. Costs savings,
the extent of which will be dependent on the successful integration of the
two businesses, have not been reflected in the following pro forma
statements of earnings.
The pro forma adjustments are based upon available information and
certain assumptions that LaSalle Partners management believes are
reasonable under the circumstances. These pro forma statements may not be
indicative of the results of operations that actually would have occurred
if the acquisition of the Compass Businesses and the Transactions,
including the Integration, had been consummated on the date indicated and
do not purport to represent the future financial position or results of
operations of Jones Lang LaSalle.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED STATEMENT OF EARNINGS
Nine Months Ended September 30, 1998
(in thousands, except per share data)
<CAPTION>
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Historical ------------------------- LaSalle ------------------------ LaSalle
LaSalle Historical Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based
services. . . . . $186,067 60,077 -- 246,144 325,300 -- 571,444
Equity in net
earnings from
unconsolidated
ventures. . . . . 2,340 -- -- 2,340 -- -- 2,340
Other income . . . 1,702 1,308 -- 3,010 8,773 -- 11,783
-------- -------- -------- -------- -------- -------- --------
Total revenue . . 190,109 61,385 -- 251,494 334,073 -- 585,567
Operating expenses:
Compensation and
benefits. . . . . 116,775 36,282 -- 153,057 187,939 -- 340,996
Operating, admin-
istrative and
other . . . . . . 50,057 20,203 -- 70,260 104,090 -- 174,350
Merger-related
nonrecurring (3)
charges . . . . . -- -- -- -- 15,290 49,970 65,260
Depreciation and (4) (5)
amortization. . . 8,177 13,813 (12,627) 15,314 9,475 2,386 27,175
(6)
5,951 -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating
expenses . . . . 175,009 70,298 (6,676) 238,631 316,794 52,356 607,781
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss) . . . . . 15,100 (8,913) 6,676 12,863 17,279 (52,356) (22,214)
(7)
Interest expense. . 992 5,700 (5,700) 10,129 895 11,024
(8)
9,137
-------- -------- -------- -------- -------- -------- --------
<PAGE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED STATEMENT OF EARNINGS - CONTINUED
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Historical ------------------------- LaSalle ------------------------ LaSalle
LaSalle Historical Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
Net earnings (loss)
before provision
(benefit) for
income taxes . . 14,108 (14,613) 3,239 2,734 16,384 (52,356) (33,238)
Provision (benefit) (9) (10)
for income taxes . 5,432 (3,970) (390) 1,072 11,086 11
(11)
-- -- -- -- -- (1,791) 10,378
Minority interest . -- -- -- -- 818 -- 818
-------- -------- -------- -------- -------- -------- --------
Net earnings
(loss). . . . . $ 8,676 (10,643) 3,629 1,662 4,480 (50,576) (44,434)
======== ======== ======== ======== ======== ======== ========
Basic earnings
(loss) per
common share . . . $ 0.54 0.10 (1.85)
======== ======== ========
Basic weighted
average shares (12)
outstanding. . . . 16,210,340 16,210,340 23,956,533
========== ========== ==========
Diluted earnings
(loss) per
common share . . . $ 0.53 0.10 (1.85)
======== ======== ========
Diluted weighted
average shares (13) (14)
outstanding. . . . 16,403,225 16,410,161 23,956,533
========== ========== ==========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
Consolidated Statement of Earnings
For the Nine Months Ended September 30, 1998
(1) The "Historical" columns represent the unaudited statement of
earnings of LaSalle Partners as of September 30, 1998 and the combined
unaudited statement of earnings of the Compass Businesses as of September
30, 1998.
(2) The JLW Companies Pro Forma Combined column represents the
combination of the JLW Companies giving effect to the elimination of
intercompany transactions and the Integration, but prior to the acquisition
of the JLW Companies by LaSalle Partners. See the Unaudited Pro Forma JLW
Companies Combined Statement of Earnings included elsewhere herein.
(3) The adjustment gives effect to aggregate compensation expense
incurred in connection with the Transactions attributable to the Initial
Consideration Shares, Indemnification Shares and Adjustment Shares (assumed
to be issued for purposes of the pro forma financial statements) of LaSalle
Partners Common Stock and cash consideration either issued or paid to New
JLW Owners and ESOT Shares allocated from the ESOT during the pro forma
period and the amortization of deferred compensation associated with shares
of LaSalle Partners Common Stock issued to Current JLW Owners and New JLW
Owners or allocated from the ESOT during the pro forma period which are
subject to forfeiture or vesting provisions.
(4) The adjustment gives effect to the reversal of the Compass
Businesses' historical amortization expense related to goodwill and other
intangible assets (i.e., management contracts) resulting from the
acquisition of the Compass Businesses by Lend Lease.
(5) The adjustment gives effect to the amortization of goodwill
associated with the combination of the JLW Companies with LaSalle Partners
over the expected useful life of 40 years.
(6) The adjustment gives effect to the amortization of intangibles (i.e.,
management contracts) and goodwill associated with the acquisition of the
Compass Businesses by LaSalle Partners over the expected useful lives of 8
years and 40 years, respectively.
(7) The adjustment gives effect to the elimination of interest expense
related to the Compass Businesses' $102.0 million note payable to its
parent which was repaid in connection with the acquisition.
(8) The adjustment gives effect to borrowings on LaSalle Partners' new
long-term and existing credit facilities of $180.0 million at an interest
rate of LIBOR plus .875% used to fund the acquisition of the Compass
Businesses.
(9) The adjustment gives effect to the provision (benefit) for income
taxes based on net earnings before provision for income taxes and the
merger-related nonrecurring charges as though LaSalle Partners and the
Compass Businesses were taxable entities as of January 1, 1997 with an
estimated effective tax rate of 39.2%.
(10) The adjustment gives effect to the provision (benefit) for income
taxes based on net earnings before provision for income taxes and the
merger-related nonrecurring charges as though Jones Lang LaSalle was a
taxable entity as of January 1, 1997 at an effective tax rate of 38.0%.
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
Consolidated Statement of Earnings
For the Nine Months Ended September 30, 1998
(11) The adjustment gives effect to the benefit for income taxes
associated with the portion of the merger-related nonrecurring charges
which are expected to be deductible for tax purposes.
(12) Basic weighted average shares outstanding give effect to 7,105,921
weighted average Initial Distribution Shares and 640,272 Adjustment Shares
assumed to be issued in connection with the Transactions.
(13) Diluted weighted average shares outstanding give effect to options on
LaSalle Partners Common Stock issued in connection with the acquisition of
the Compass Businesses.
(14) Diluted weighted average shares outstanding do not give effect to any
issuances of Forfeiture Shares, Indemnification Shares, unallocated ESOT
Shares or options on LaSalle Partners Common Stock issued in connection
with the acquisition of the Compass Businesses because, due to operating
losses, the inclusion of such shares as common stock equivalents would be
anti-dilutive.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended December 31, 1997
(in thousands, except per share data)
<CAPTION>
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Pro Forma ------------------------- LaSalle ------------------------ LaSalle
LaSalle Pro Forma Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(2) Adjustments Combined Combined(3) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based
services. . . . . $227,762 83,856 -- 311,618 428,769 -- 740,387
Equity in net
earnings from
unconsolidated
ventures. . . . . 3,311 -- -- 3,311 -- -- 3,311
Other income . . . 1,911 948 -- 2,859 7,242 -- 10,101
-------- -------- -------- -------- -------- -------- --------
Total revenue . . 232,984 84,804 -- 317,788 436,011 -- 753,799
Operating expenses:
Compensation and
benefits. . . . . 127,210 46,053 -- 173,263 231,598 -- 404,861
Operating, admin-
istrative and
other . . . . . . 61,367 23,251 -- 84,618 155,197 -- 239,815
Merger-related
nonrecurring (4)
charges . . . . . -- -- -- -- -- 102,202 102,202
Depreciation and (5) (6)
amortization. . . 9,756 10,772 (9,094) 19,368 12,297 3,181 34,846
(7)
7,934
-------- -------- -------- -------- -------- -------- --------
Total operating
expenses . . . . 198,333 80,076 (1,160) 277,249 399,092 105,383 781,724
-------- -------- -------- -------- -------- -------- --------
Operating income
(loss) . . . . . 34,651 4,728 1,160 40,539 36,919 (105,383) (27,925)
(8)
Interest expense. . 1,000 3,825 (3,825) 13,100 1,436 -- 14,536
(9)
12,100
-------- -------- -------- -------- -------- -------- --------
<PAGE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED STATEMENT OF EARNINGS - CONTINUED
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Pro Forma ------------------------- LaSalle ------------------------ LaSalle
LaSalle Pro Forma Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(2) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
Net earnings (loss)
before provision
(benefit) for
income taxes . . 33,651 903 (7,115) 27,439 35,483 (105,383) (42,461)
Provision (benefit) (10) (11)
for income taxes . 12,956 1,689 (3,889) 10,756 12,419 (473)
(12)
-- -- -- -- -- (6,656) 16,046
Minority interest . -- -- -- -- 549 -- 549
-------- -------- -------- -------- -------- -------- --------
Net earnings
(loss). . . . . $ 20,695 (786) (3,226) 16,683 22,515 (98,254) (59,056)
======== ======== ======== ======== ======== ======== ========
Basic earnings
(loss) per
common share . . . $ 1.28 1.03 (2.50)
======== ======== ========
Basic weighted
average shares (13)
outstanding. . . . 16,200,000 16,200,000 23,648,412
========== ========== ==========
Diluted earnings
(loss) per
common share . . . $ 1.27 1.02 (2.50)
======== ======== ========
Diluted weighted
average shares (14) (15)
outstanding. . . . 16,329,555 16,337,102 23,648,412
========== ========== ==========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED STATEMENT OF EARNINGS
Year ended December 31, 1997
(in thousands, except per share data)
(1)Pro forma LaSalle Partners results give effect to (i) the acquisition
by LaSalle Partners of Galbreath on April 22, 1997, as adjusted for the
tenant representation and investment banking units which were not acquired,
as if such acquisition had occurred on January 1, 1997, (ii) the provision
for income taxes as though LaSalle Partners and Galbreath were taxable
entities as of January 1, 1997 with an effective tax rate of 38.5%, (iii)
estimated incremental general and administrative costs associated with
operations as a public company and (iv) the repayment of LaSalle Partners'
long-term debt out of the proceeds of the initial public offering as if the
offering had occurred on January 1, 1997. Reference is made to the LaSalle
Partners October 1 Current Report for a complete description of the pro
forma presentation and related adjustments for the year ended December 31,
1997 included herein.
(2)The Compass Businesses Pro Forma Combined column represents the
combined results of Compass Management and Leasing, Inc., The Yarmouth
Property Management Group, Inc. and the Australian property management
businesses of Lend Lease on a pro forma basis for the year ended December
31, 1997, as if Lend Lease had control of those businesses as of January 1,
1997. Reference is made to the LaSalle Partners October 1 Current Report,
for a complete description of the pro forma presentation and related
adjustments.
(3)The JLW Companies Pro Forma Combined column represents the
combination of the JLW Companies giving effect to the elimination of
intercompany transactions and the Integration, prior to the acquisition of
the JLW Companies by LaSalle Partners. See the Unaudited Pro Forma JLW
Companies Combined Statement of Earnings included elsewhere in this Current
Report.
(4)The adjustment gives effect to aggregate compensation expense
incurred in connection with the Transactions associated with Initial
Distribution Shares, Forfeiture Shares, Indemnification Shares and
Adjustment Shares (assumed to be issued for purposes of the pro forma
financial statements) of LaSalle Partners Common Stock and cash
consideration either issued or paid to New JLW Owners or allocated from the
ESOT during the pro forma period and the amortization of deferred
compensation associated with shares of LaSalle Partners Common Stock issued
to Current JLW Owners and New JLW Owners and allocated from the ESOT during
the pro forma period which are subject to forfeiture or vesting provisions.
(5)The adjustment gives effect to the reversal of the Compass
Businesses' historical amortization expense related to goodwill and other
intangible assets (i.e., management contracts) resulting from the
acquisition of the Compass Businesses by Lend Lease.
(6)The adjustment gives effect to the amortization of goodwill
associated with the combination of the JLW Companies with LaSalle Partners
over the expected useful life of 40 years.
(7)The adjustment gives effect to the amortization of intangibles (i.e.,
management contracts) and goodwill associated with the acquisition of the
Compass Businesses by LaSalle Partners over the expected useful lives of 8
years and 40 years, respectively.
(8)The adjustment gives effect to the elimination of interest expense
related to the Compass Businesses' $102.0 million note payable to its
parent which was repaid in connection with the acquisition.
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED STATEMENT OF EARNINGS
Year ended December 31, 1997
(in thousands, except per share data)
(9)The adjustment gives effect to borrowings on LaSalle Partners' new
long-term and existing credit facilities of $180.0 million at an interest
rate of LIBOR plus .875% used to fund the acquisition of the Compass
Businesses.
(10)The adjustment gives effect to the provision (benefit) for income
taxes as though LaSalle Partners and the Compass Businesses were taxable
entities as of January 1, 1997 with an estimated effective tax rate of
39.2%.
(11)The adjustment gives effect to the provision (benefit) for income
taxes based on net earnings before provision for income taxes and the
merger-related nonrecurring charges as though Jones Lang LaSalle was a
taxable entity as of January 1, 1997 with an estimated effective tax rate
of 38.0%.
(12)The adjustment gives effect to the benefit for income taxes
associated with the portion of the merger-related nonrecurring charges
which are expected to be deductible for tax purposes.
(13)Basic weighted average shares outstanding give effect to 6,808,140
weighted average Initial Distribution Shares and 640,272 Adjustment Shares
assumed will be issued in connection with the Transactions.
(14)Diluted weighted average shares outstanding give effect to options on
LaSalle Partners Common Stock issued in connection with the acquisition of
the Compass Businesses.
(15)Diluted weighted average shares outstanding do not give effect to any
issuances of Forfeiture Shares, Indemnification Shares, unallocated ESOT
Shares or options on LaSalle Partners Common Stock issued in connection
with the acquisition of the Compass Businesses because, due to operating
losses, the inclusion of such shares as common stock equivalents would be
anti-dilutive.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED BALANCE SHEET
As of September 30, 1998
(in thousands)
<CAPTION>
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Historical ------------------------- LaSalle ------------------------ LaSalle
LaSalle Historical Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash (3) (4)
equivalents . . . $ 15,214 9,684 825 25,723 5,540 (5,445) 25,418
(5)
(400)
Trade receivables, (3)
net . . . . . . . 69,616 12,645 (355) 81,906 88,900 -- 170,806
(3)
Due from affiliate -- 113 (113) -- -- -- --
Notes receivable . 16,144 -- -- 16,144 -- -- 16,144
Other receivables. 6,489 -- -- 6,489 30,374 -- 36,863
(6)
Prepaid expenses . 2,006 504 (504) 2,006 8,317 -- 10,323
(6)
Other assets . . . -- -- 948 948 -- -- 948
Deferred tax (6)
benefit . . . . . 5,104 -- 3,488 8,592 1,513 -- 10,105
-------- -------- -------- -------- -------- -------- --------
Total current
assets. . . . 114,573 22,946 4,289 141,808 134,644 (5,845) 270,607
<PAGE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED BALANCE SHEET - CONTINUED
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Historical ------------------------- LaSalle ------------------------ LaSalle
LaSalle Historical Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
Property and equipment,
at cost, less
accumulated
depreciation . . . 23,360 4,105 27,465 31,894 -- 59,359
Goodwill and intangibles
resulting from business
acquisitions, net (6) (7)
of amortization. . 53,120 121,162 176,315 229,435 4,000 127,241 360,676
(6)
(121,162)
Investment in (6)
Compass Businesses -- -- (184,075) -- -- -- --
(8)
184,075
Investment in (4)
JLW Businesses . . -- -- -- -- -- 154,939 --
(7)
(154,939)
Investment in real
estate ventures. . 50,965 -- -- 50,965 821 -- 51,786
Long-term receivables,
net. . . . . . . . 8,014 -- -- 8,014 6,246 -- 14,260
Deferred income (6) (7)
taxes. . . . . . . -- 6,314 (6,314) -- 5,904 5,283 11,187
Deferred compen- (5)
sation . . . . . . -- -- -- -- -- 132,867 132,867
Prepaid pension (7)
asset. . . . . . . -- -- -- -- 9,247 13,600 22,847
(6)
Other assets, net . 2,845 3,777 (3,227) 3,395 2,320 -- 5,715
-------- -------- -------- -------- -------- -------- --------
Total assets. . . $252,877 158,304 49,901 461,082 195,076 273,146 929,304
======== ======== ======== ======== ======== ======== ========
<PAGE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED BALANCE SHEET - CONTINUED
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Historical ------------------------- LaSalle ------------------------ LaSalle
LaSalle Historical Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
and accrued (6) (4)
liabilities . . . $ 27,150 6,471 2,806 40,822 84,778 9,000 135,810
(8) (7)
4,075 1,210
(3)
320
Accrued compen- (6) (7)
sation. . . . . . 32,822 5,202 5,334 43,443 4,613 10,192 58,248
(3)
85
(3)
Due to parent. . . -- 1,996 (1,996) -- -- -- --
Income taxes
payable. . . . . -- -- -- -- 5,111 -- 5,111
(6) (7)
Other liabilities. 6,296 3,225 750 10,208 41,370 2,500 54,078
(3)
(63)
Current maturities of (3)
long-term debt. . -- 102,000 (102,000) -- 16,305 -- 16,305
-------- -------- -------- -------- -------- -------- --------
Total current
liabilities. . . 66,268 118,894 (90,689) 94,473 152,177 22,902 269,552
Long-term (8)
credit facility. . 28,442 180,000 208,442 -- -- 208,442
Deferred tax (7)
liability. . . . . -- -- -- -- 3,768 5,168 8,936
Other long-term
liabilities. . . . 1,134 -- -- 1,134 12,029 -- 13,163
Minority interest . -- -- -- -- 861 -- 861
-------- -------- -------- -------- -------- -------- --------
Total liabilities. 95,844 118,894 89,311 304,049 168,835 28,070 500,954
<PAGE>
UNAUDITED PRO FORMA JONES LANG LASALLE
CONSOLIDATED BALANCE SHEET - CONTINUED
Pro
Forma
Pro Jones
The Compass Businesses Forma JLW Companies Lang
Historical ------------------------- LaSalle ------------------------ LaSalle
LaSalle Historical Acquisition Partners Pro Forma Acquisition Consoli-
Partners(1) Combined(2) Adjustments Combined Combined(2) Adjustments dated
----------- ----------- ----------- ---------- ----------- ----------- ----------
Stockholders' equity (6) (4)
Common stock . . . 162 3 (3) 162 -- 71 298
(5)
65
Additional paid-in (3) (4)
capital . . . . . 122,696 52,695 104,011 122,696 -- 140,423 424,546
(6) (5)
(156,706) 161,427
Unallocated ESOT (5)
shares. . . . . . -- -- -- -- -- (8) (8)
Retained earnings/ (6) (5)
deficit . . . . . 33,003 (13,288) 13,288 33,003 -- (29,017) 3,986
Foreign exchange
translation (7)
reserve . . . . . -- -- -- -- (1,644) 1,644 --
Predecessor's (7)
partners' capital -- -- -- -- 27,885 (27,885) --
Accumulated other
comprehensive (7)
income. . . . . . 1,172 -- -- 1,172 -- (1,644) (472)
-------- -------- -------- -------- -------- -------- --------
Total stockholders'
equity . . . . . 157,033 39,410 (39,410) 157,033 26,241 245,076 428,350
-------- -------- -------- -------- -------- -------- --------
Total liabilities
and stockholders'
equity. . . . . $252,877 158,304 49,901 461,082 195,076 273,146 929,304
======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
Consolidated Balance Sheet
As of September 30, 1998
(1) The "Historical" columns represent the unaudited consolidated
balance sheet of LaSalle Partners as of September 30, 1998 and the
unaudited combined balance sheet of the Compass Businesses as of September
30, 1998.
(2) The JLW Companies Pro Forma Combined column represents the
combination of the JLW Companies giving effect to the elimination of
intercompany transactions and the Integration, but not the acquisition of
the JLW Companies by LaSalle Partners. See the Unaudited Pro Forma JLW
Companies Combined Balance Sheet included elsewhere herein.
(3) The adjustment gives effect to the distribution of certain
related party assets and liabilities of the Compass Businesses to Lend
Lease and the repayment of intercompany debt which was made in connection
with the acquisition of the Compass Businesses by LaSalle Partners pursuant
to the terms of the purchase agreement relating to the acquisition of the
Compass Businesses.
(4) The adjustment represents the aggregate value of the
consideration accounted for as purchase price under APB Opinion No. 16
($154.9 million, including transaction-related costs of $9.0 million). The
value of the aggregate consideration is comprised of $5.4 million in cash
and 7,120,829 shares of LaSalle Partners Common Stock, including 5,955,435
Initial Distribution Shares, 584,715 Indemnification Shares and 580,679
Adjustment Shares (assumed to be issued for purposes of the pro forma
financial statements). Management has estimated the fair value of the stock
consideration to be $154.9 million. Such estimated fair value was based
upon the average stock price of LaSalle Partners Common Stock for the five-
day period that includes the two trading days immediately preceding, the
trading day and the two trading days immediately following the date of
substantial completion of negotiations regarding the principal terms of the
Transactions, discounted for transferability restrictions applicable to
such shares.
(5) The adjustment gives effect to the issuance of 5,703,646 shares
of LaSalle Partners Common Stock and a cash payment of $0.4 million which
are accounted for as compensation expense or deferred compensation in
accordance with APB Opinion No. 25 at Closing, which adjustments include
the Forfeiture Shares issuable to Current JLW Owners, the Consideration
Shares issuable to New JLW Owners, the cash consideration paid to the
Shareholders' Representatives on behalf of the New JLW Owners at Closing
and the ESOT Shares allocated at Closing.
(6) These adjustments give effect to the allocation of the purchase
price of the Compass Businesses of $184.1 million to identifiable assets
and liabilities at their estimated fair values. The excess purchase price
of $176.3 million was allocated to management contracts ($35.3 million) and
goodwill ($141.0 million), and is being amortized on a straight-line basis
over 8 years and 40 years, respectively, based on an estimate of their
useful lives. The estimate of useful lives was based on the nature and
terms of management contracts acquired, the Compass Businesses' existing
client relationships, operating history and market presence, and LaSalle
Partners' operating experience within the industry. Due to the nature and
expected recovery of assets and settlement of liabilities, historical
stated value approximates fair value.
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
Consolidated Balance Sheet
As of September 30, 1998
(7) These adjustments give effect to the allocation of the portion
of the consideration accounted for as purchase price under APB Opinion No.
16 ($154.9 million, including transaction related costs of $9.0 million),
and to identifiable assets and liabilities at their estimated fair values.
The excess purchase price of $127.2 million was allocated to goodwill,
which is being amortized on a straight-line basis over 40 years based on
LaSalle Partners' estimate of its useful life. LaSalle Partners' estimate
of useful lives was based on the JLW Businesses' existing client
relationships, operating history and expansive market presence, and LaSalle
Partners' operating experience within the industry.
(8) These adjustments represent the total consideration paid by
LaSalle Partners for the Compass Businesses of $184.1 million, including
transaction related costs of $4.1 million, which was primarily funded by
proceeds from LaSalle Partners' new acquisition facility and its existing
revolving credit facility.
<PAGE>
THE JLW COMPANIES
The following Unaudited Pro Forma JLW Companies Combined Financial
Statements are derived from the historical financial statements of each of
JLW England (Jones Lang Wootton (The English Partnership and
subsidiaries)), JLW Scotland (Jones Lang Wootton-Scotland and its
subsidiary undertaking), JLW Ireland (Jones Lang Wootton-Irish Practice),
the JLW Asia Group (JLW Asia Holdings Limited), and the JLW Australasia
Companies (the JLW Australasia Group), which historically have had
substantially independent ownership structures. The Unaudited Pro Forma JLW
Companies Combined Financial Statements have been presented in accordance
with US GAAP.
The Unaudited Pro Forma JLW Companies Combined Statements of Earnings
for the nine months ended September 30, 1998 and the year ended
December 31, 1997 give effect to the Integration as if it had occurred on
January 1, 1997. The Unaudited Pro Forma JLW Companies Combined Balance
Sheet as of September 30, 1998 combines the historical unaudited combined
statements of each of the JLW Companies as if the Integration had occurred
on that date after giving effect to pro forma adjustments described in the
accompanying notes. The Unaudited Pro Forma JLW Companies Combined
Financial Statements should be read in conjunction with the historical
financial statements of each of the JLW Companies and the notes thereto and
"JLW Management's Discussion and Analysis of Financial Condition and
Results of Operations of the JLW Companies" included elsewhere herein. In
addition, the Unaudited Pro Forma JLW Companies Combined Financial
Statements, after taking into consideration the combination and integration
adjustments, were utilized in preparing the Unaudited Pro Forma
Consolidated Financial Statements of Jones Lang LaSalle.
The pro forma adjustments are based upon available information and
certain assumptions that the JLW Companies' management believe are
reasonable under the circumstances. These pro forma statements may not be
indicative of the results of operations that actually would have occurred
if the Integration had been consummated on the date indicated and do not
purport to represent the future financial position or results of operations
of the JLW Companies.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED STATEMENT OF EARNINGS
Nine Months Ended September 30, 1998
(in thousands)
<CAPTION>
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based (2)
services. . . . . $221,074 39,462 40,850 6,587 8,663 316,636 8,664 325,300
Interest (2)
income. . . . . . 1,745 25 72 123 38 2,003 365 2,368
Other (2)
income. . . . . . 4,974 1,585 959 73 -- 7,591 (62) 6,405
(3)
(1,124)
-------- -------- -------- -------- -------- -------- -------- --------
Total revenue . . 227,793 41,072 41,881 6,783 8,701 326,230 7,843 334,073
Operating expenses:
Compensation (2)
and benefits. . . 116,186 17,128 23,311 1,995 2,429 161,049 2,312 187,939
(4)
24,578
Operating, admin-
istrative and (2)
other . . . . . . 62,670 18,734 14,047 1,274 1,365 98,090 4,720 104,090
(3)
1,280
Merger-related
nonrecurring (2)
charges(6). . . . 8,315 2,509 3,331 219 575 14,949 341 15,290
Depreciation (2)
and amortization. 6,085 919 1,440 208 252 8,904 571 9,475
-------- -------- -------- -------- -------- -------- -------- --------
Total operating
expenses . . . . 193,256 39,290 42,129 3,696 4,621 282,992 33,802 316,794
-------- -------- -------- -------- -------- -------- -------- --------
Operating income
(loss) . . . . . . 34,537 1,782 (248) 3,087 4,080 43,238 (25,959) 17,279
(2)
Interest expense. . 484 82 194 7 38 805 90 895
-------- -------- -------- -------- -------- -------- -------- --------
<PAGE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED STATEMENT OF EARNINGS - CONTINUED
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
Net earnings
(loss) before
provision for
income taxes . . 34,053 1,700 (442) 3,080 4,042 42,433 (26,049) 16,384
Provision for (2)
income taxes . . . 1,485 1,522 654 25 65 3,751 414 11,086
(5)
6,921
(2)
Minority interest . 1,277 -- -- -- -- 1,277 (459) 818
-------- -------- -------- -------- -------- -------- -------- --------
Net earnings
(loss) . . . . . $ 31,291 178 (1,096) 3,055 3,977 37,405 (32,925) 4,480
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JLW COMPANIES
Combined Statement of Earnings
For the Nine Months Ended September 30, 1998
(1) Represents the unaudited consolidated or combined statement of
earnings of each of the JLW Companies for the nine months ended September
30, 1998.
(2) These adjustments give effect to the gross revenue and expenses
of certain businesses which will be wholly-owned on a combined basis
subsequent to the Integration, which were historically accounted for under
either the cost or equity method of accounting.
(3) These adjustments give effect to the elimination of
intercompany activity by and among each of the groups.
(4) The adjustment gives effect to new market-based compensation
packages which will be implemented in accordance with the Transactions and
will include a base salary and target bonus in replacement of previously
received profits distributions and/or dividends.
(5) The adjustment gives effect to the provision for income taxes
as though the JLW Companies were taxable entities as of January 1, 1997
with an estimated effective tax rate of 35.0%.
(6) Represents the costs incurred by the JLW Companies related to
the Integration and the Transactions.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED STATEMENT OF EARNINGS
Year ended December 31, 1997
(in thousands)
<CAPTION>
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based (2)
services. . . . . $252,895 60,522 73,843 9,042 9,223 405,525 23,244 428,769
Interest (2)
income. . . . . . 1,532 150 293 102 78 2,155 347 2,502
Other (2)
income. . . . . . 4,555 1,777 1,874 98 -- 8,304 (2,427) 4,740
(3)
(1,137)
-------- -------- -------- -------- -------- -------- -------- --------
Total revenue . . 258,982 62,449 76,010 9,242 9,301 415,984 20,027 436,011
Operating expenses:
Compensation (4)
and benefits. . . 122,709 23,337 35,872 2,301 3,110 187,329 35,081 231,598
(2)
9,188
Operating, admin-
istrative and (2)
other . . . . . . 88,117 28,440 24,739 1,539 1,735 144,570 13,059 155,197
(3)
(2,432)
Depreciation (2)
and amortization. 7,854 1,340 1,841 284 353 11,672 625 12,297
-------- -------- -------- -------- -------- -------- -------- --------
Total operating
expenses . . . . 218,680 53,117 62,452 4,124 5,198 343,571 55,521 399,092
-------- -------- -------- -------- -------- -------- -------- --------
Operating income. . 40,302 9,332 13,558 5,118 4,103 72,413 (35,494) 36,919
(2)
Interest expense. . 649 340 225 12 60 1,286 150 1,436
-------- -------- -------- -------- -------- -------- -------- --------
<PAGE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED STATEMENT OF EARNINGS - CONTINUED
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
Net earnings
(loss) before
provision for
income taxes . . 39,653 8,992 13,333 5,106 4,043 71,127 (35,644) 35,483
Provision for (2)
income taxes . . . 3,493 2,918 2,195 46 80 8,732 1,054 12,419
(5)
2,633
(2)
Minority interest . 1,450 -- -- -- -- 1,450 (901) 549
-------- -------- -------- -------- -------- -------- -------- --------
Net earnings
(loss) . . . . . $ 34,710 6,074 11,138 5,060 3,963 60,945 (38,430) 22,515
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JLW COMPANIES
Combined Statement of Earnings
For the year ended December 31, 1997
(1) Represents the unaudited consolidated or combined statement of
earnings of each of the JLW Companies for the year ended December 31, 1997.
(2) These adjustments give effect to the gross revenue and expenses
of certain businesses which will be wholly-owned on a combined basis
subsequent to the Integration, which were historically accounted for under
either the cost or equity method of accounting.
(3) These adjustments give effect to the elimination of
intercompany activity by and among each of the groups.
(4) The adjustment gives effect to new market-based compensation
packages which will be implemented in accordance with the Transactions and
will include a base salary and target bonus in replacement of previously
received profits distributions and/or dividends.
(5) The adjustment gives effect to the provision for income taxes
as though the JLW Companies were taxable entities as of January 1, 1997
with an estimated effective tax rate of 35.0%.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED BALANCE SHEET
As of September 30, 1998
(in thousands)
<CAPTION>
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash (2)
equivalents . . . $ 19,885 -- 3,584 2,992 1,852 28,313 5,540 5,540
(4)
(28,313)
Trade receivables, (2)
net . . . . . . . 64,655 12,944 11,332 2,362 3,584 94,877 (1,997) 88,900
(3)
(3,980)
(2)
Other receivables. 17,334 1,824 10,644 185 -- 29,987 387 30,374
Prepaid (2)
expenses. . . . . 5,039 178 2,014 204 236 7,671 646 8,317
Deferred tax
benefit . . . . . 1,377 136 -- -- -- 1,513 -- 1,513
-------- -------- -------- -------- -------- -------- -------- --------
Total current
assets . . . . 108,290 15,082 27,574 5,743 5,672 162,361 (27,717) 134,644
Property and
equipment, at
cost, less
accumulated (2)
depreciation . . . 21,871 1,336 4,785 1,151 1,004 30,147 1,747 31,894
Intangibles resulting
from business
acquisitions,
net of amorti-
zation . . . . . . 3,989 11 -- -- -- 4,000 -- 4,000
Investments in
real estate (2)
ventures . . . . . 350 500 419 -- -- 1,269 (448) 821
<PAGE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED BALANCE SHEET - CONTINUED
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
Long-term
receivables, net . 6,246 -- -- -- -- 6,246 -- 6,246
Deferred (2)
tax asset. . . . . 3,943 1,886 -- -- -- 5,829 75 5,904
Prepaid pension
asset. . . . . . . 9,247 -- -- -- -- 9,247 -- 9,247
(2)
Other assets, net . 1,036 41 -- -- 1,109 2,186 134 2,320
-------- -------- -------- -------- -------- -------- -------- --------
Total assets. . . $154,972 18,856 32,778 6,894 7,785 221,285 (26,209) 195,076
======== ======== ======== ======== ======== ======== ======== ========
LIABILITIES
Current liabilities:
Accounts payable
and accrued (2)
liabilities . . . $ 42,135 6,778 3,773 718 1,491 54,895 3,134 84,778
(3)
(3,537)
(4)
30,286
Accrued compen- (4)
sation. . . . . . -- -- -- -- 502 502 4,111 4,613
(2)
Taxation . . . . . 1,953 1,181 806 61 -- 4,001 1,110 5,111
(2)
Other liabilities. 24,397 4,467 10,600 747 117 40,328 1,042 41,370
Current maturities of
long-term debt. . 11,823 159 4,102 149 72 16,305 -- 16,305
-------- -------- -------- -------- -------- -------- -------- --------
Total current
liabilities. . . 80,308 12,585 19,281 1,675 2,182 116,031 36,146 152,177
Deferred tax (2)
liability. . . . . 3,110 64 231 -- 355 3,760 8 3,768
Other long-term (2)
liabilities. . . . 7,837 967 2,634 -- 156 11,594 435 12,029
Minority (2)
interests. . . . . 2,219 -- -- -- -- 2,219 (1,358) 861
-------- -------- -------- -------- -------- -------- -------- --------
Total liabilities 93,474 13,616 22,146 1,675 2,693 133,604 35,231 168,835
<PAGE>
UNAUDITED PRO FORMA JLW COMPANIES
COMBINED BALANCE SHEET - CONTINUED
Combina- Pro
Historical JLW (1) tion Forma
------------------------------------------------------ and JLW
JLW Integra- Com-
Austra- JLW tion panies
JLW lasia Asia JLW JLW Adjust- Com-
England Companies Group Scotland Ireland Total ments bined
-------- --------- ------- -------- -------- -------- --------- --------
Partners' capital
JLW predecessor (2)
capital. . . . . . 61,552 6,797 10,632 5,062 5,169 89,212 350 27,885
(3)
922
(4)
(62,599)
JLW foreign
exchange trans- (2)
lation reserve . . (54) (1,557) -- 157 (77) (1,531) (106) (1,644)
(3)
(7)
-------- -------- -------- -------- -------- -------- -------- --------
Total partners'
capital. . . . . 61,498 5,240 10,632 5,219 5,092 87,681 (61,440) 26,241
-------- -------- -------- -------- -------- -------- -------- --------
Total liabilities
and partners'
capital. . . . . $154,972 18,856 32,778 6,894 7,785 221,285 (26,209) 195,076
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JLW COMPANIES
Combined Balance Sheet
As of September 30, 1998
(1) Represents the unaudited consolidated or combined balance
sheets of each of the JLW Companies as of September 30, 1998.
(2) These adjustments give effect to the gross assets and
liabilities of certain businesses which will be wholly-owned on a combined
basis subsequent to the Integration, which were historically accounted for
under either the equity or cost method of accounting.
(3) These adjustments give effect to the elimination of
intercompany balances by and among each of the groups.
(4) These adjustments give effect to accrued compensation and
partner distributions which will be paid prior to the Closing, and the
reclassification of cash overdrafts to current liabilities which result
from such pro forma payments.
<PAGE>
JLW MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF THE JLW COMPANIES
The information set forth below should be read in conjunction with the
financial statements of the JLW Companies and the notes thereto set forth
in Item 7 of this Current Report.
THE JLW COMPANIES-OVERVIEW
General
The JLW Companies operate their businesses in four distinct
geographical Regions: Europe, Asia, Australasia and North America. However,
as a result of substantially independent ownership structures among and
within the Regions, historical financial reporting has been presented for
the following five separate groups: the JLW Europe Group (which includes
the JLW Businesses in North America but excludes the JLW Businesses in
Scotland and the Republic of Ireland), the JLW Scotland Group, the JLW
Ireland Group, the JLW Asia Group and the JLW Australasia Group. The JLW
Companies have coordinated operations such that the JLW Businesses in
England, continental Europe, Scotland, and Ireland work together as one
Region, even though the JLW Businesses in England and continental Europe
are owned by JLW England and the JLW Businesses in Scotland and Ireland are
owned by JLW Scotland and JLW Ireland, respectively, with each having
substantially different partners.
The JLW Companies have historically operated as partnerships or in a
manner resembling partnerships even though in certain jurisdictions the
businesses are structured as corporations. As such, the profits of the
various partnerships and companies have been paid to the owners and certain
senior executives as profit distributions, bonuses or dividends according
to the business structure and tax regime in which the business operates. As
a result, compensation paid to owners and senior executives and reflected
as compensation expense may not reflect the equivalent "market-based"
compensation, and the results of each Region, and of the businesses within
each Region, may not be comparable. New market-based compensation packages
will be implemented in connection with the Transactions and will include a
base salary and target bonus in replacement of previously received profit
distributions and/or dividends. All compensation subsequent to the
Integration will be recorded as compensation expense and profit
distributions and dividends will no longer be made. Therefore, future
compensation expense will be materially higher than the amounts reflected
in the historical financial statements. See "Unaudited Pro Forma
Consolidated Financial Statements--The JLW Companies."
Since JLW England, JLW Scotland and JLW Ireland are structured as
partnerships, the profits attributable to partners are taxable as personal
income and the financial statements for the JLW Europe Group, the JLW
Scotland Group and the JLW Ireland Group do not reflect income tax on the
profits of the partnerships. As a result of the Integration, these
partnerships will be incorporated and the resultant entities will become
subject to taxation as corporations. See "The Transactions--Description of
the Transactions" and "Unaudited Pro Forma Consolidated Financial
Statements--The JLW Companies."
As a result of the Integration and the Transactions, the JLW Companies
incurred professional fees of $15.3 million (including $0.3 million charged
to JLW Transact, accounted for under the equity method of accounting) which
has been allocated among the Regions and is included in operating expenses
for the nine months ended September 30, 1998.
<PAGE>
The revenue generated by the JLW Companies is seasonal, with revenue
from transaction based activities being stronger toward the end of the
year. This is due to the year end focus on the completion of transactions,
which is consistent with the real estate industry generally. The JLW
Companies' non-variable operating expenses, which are treated as expenses
when incurred during the year, are relatively constant on a quarterly
basis. As a result of the foregoing, combined operating income of the JLW
Companies tends to be lowest in the first quarter and highest in the fourth
quarter.
The functional currency of each of the businesses is generally the
local currency while the reporting currency used in this Current Report and
to be used in the future is the US Dollar. In the discussions herein
relating to results of operations, consideration has been given to the
impact of currency exchange rate fluctuations on the translation of results
of foreign entities into the reporting currency. Other than such
translation effects, the respective JLW Companies' historical exposure to
exchange rate fluctuations has been limited as revenue and expenses have
been predominantly earned and incurred in local currency with net earnings
distributed in local currency to the partners, owners and senior executives
of the respective JLW Companies as bonuses, dividends or profit sharing.
Due to the limited flow of funds between countries or regions there have
been no formal currency management policies.
Certain of the JLW Companies conduct operations in a number of
European countries which are intending to join the first phase of European
monetary union on January 1, 1999. Those countries joining the monetary
union will be adopting a single currency, the Euro, in place of their
existing national currencies. The JLW Europe Group does not expect that the
cost of ensuring that existing systems and commercial software are able to
process functions in the Euro will have a material impact on the business,
operations or financial condition of the JLW Companies as a whole.
The JLW Companies do not include the separately owned company which
operates under the "Jones Lang Wootton" name in Malaysia ("JLW Malaysia").
JLW Malaysia operates under the terms of a license agreement with JLW
Pacific, an entity which is being acquired under the Transactions. This
license agreement allows JLW Malaysia exclusive use of the names "Jones
Lang Wootton" and "JLW" in Malaysia and prevents the JLW Companies from
using the names "Jones Lang Wootton" and "JLW" in Malaysia. The license can
be terminated on twelve months' notice by JLW Malaysia but cannot be
terminated by the JLW Companies.
YEAR 2000
The Year 2000 issue presents a number of risks to the JLW Companies.
The JLW Companies rely heavily upon their computer systems and would have
difficulty processing transactions, paying invoices or engaging in similar
business activities without the use of their computer systems. The JLW
Companies are also exposed to risks associated with non-compliant systems
owned and operated by outside parties. For example, failures related to
non-compliant embedded technology may cause core property systems to fail.
As a result, building tenants may be able to cancel their leases, the owner
may be subject to fines or penalties under terms of leases and owners may
be unable to compensate the JLW Companies for services rendered. These
events could have a material adverse affect on the business, operating
results and financial condition of the JLW Companies. Although the JLW
Companies are not aware of any threatened claims related to Year 2000, the
JLW Companies may be subject to litigation arising from such claims and,
depending on the outcome, such litigation could have a material adverse
affect on the business, operating results and financial condition of the
JLW Companies. Furthermore, to the extent that third party suppliers to the
JLW Companies are not Year 2000 compliant, and are consequently unable to
provide the services or deliver the products that they currently provide or
deliver, there could be a material adverse impact on the business,
operating results and financial condition of the JLW Companies. There can
be no assurance that the JLW Companies will be able to successfully
contract with new suppliers with sufficient capacity to service the JLW
Companies on acceptable terms.
<PAGE>
In recognition of the importance of computer systems to the JLW
Companies, procedures have been introduced on a local and global basis to
ensure that systems are substantially Year 2000 compliant.
In general, the JLW Companies in each country have been responsible
for their own information technology requirements and for the
implementation of policies and procedures to ensure that both the
information technology ("IT") and non-IT systems will be Year 2000
compliant. The JLW Companies in each country are aware of the Year 2000
issue and appreciate the reliance they place upon computer systems to
manage their business. The JLW Companies in each country have undertaken
assessment of the extent of the procedures required to become fully Year
2000 compliant and identified those elements of their systems which require
renovation or replacement. Where necessary these systems are being replaced
with Year 2000 compliant software or hardware. The JLW Companies in each
country anticipate having completed implementation of Year 2000 compliant
systems for critical business systems, data communication and
telecommunication equipment by mid-year 1999.
On a global basis, a senior executive in the JLW Europe Group has been
appointed to manage the risks of systems not being Year 2000 compliant.
This senior executive is responsible for managing the process from the
initial awareness and assessment phases, which are principally complete,
through the renovation, validation and implementation phases. Based upon
the assessment of the risks involved, personnel have also been appointed to
oversee Year 2000 compliance activity with respect to management of client
properties, in addition to JLW facilities.
As part of the procedures being employed to deal with Year 2000
issues, contingency plans are to be created on a local and global basis to
deal with possible worst-case scenarios of systems failures stemming from
Year 2000 non-compliance. These contingency plans will assist the JLW
Companies in the effort to minimize their potential exposure to Year 2000
problems. It is anticipated that the plans will be established by mid-year
1999.
THE JLW EUROPE GROUP
OVERVIEW
The JLW Europe Group offers a wide range of real estate services,
including property sales and acquisitions (the largest component of which
is investment sales and acquisitions), leasing, property and facilities
management, CRES, project management, investment management, valuation,
consulting and research. Historically, transactional work has been the main
component of the JLW Europe Group's business.
JLW England is structured as a partnership. Accordingly, the
compensation of partners of JLW England is reflected as distributions of
profit. Although such distributions represent a combination of an equity
distribution and compensation for partners, the distributions are not
accounted for as compensation expense. Had any portion of such distribution
been accounted for as compensation expense, operating expenses for the JLW
Europe Group would have been higher. The JLW Businesses in continental
Europe and North America operate as corporate entities with compensation of
senior executives included in compensation expense because these amounts
are paid as salaries and bonuses rather than profit distributions. As a
result, operating expenses as a percentage of revenue for JLW England are
not comparable to those for the rest of the JLW Europe Group. In connection
with the Transactions, the partners of JLW England and owners and senior
executives of the rest of the JLW Europe Group will enter into new
employment contracts and all compensation will be paid as salary and
bonuses at market rates. Therefore, future compensation expense will be
materially higher than the amounts reflected in the historical financial
statements. See "Unaudited Pro Forma Consolidated Financial Statements--The
JLW Companies."
<PAGE>
Income taxes with respect to the income of JLW England are payable by
the partners personally and are not reflected in the financial statements
of the JLW Europe Group. Other JLW Businesses within the JLW Europe Group
operate as corporate entities which are subject to taxation. As a result of
the Transactions, JLW England will be incorporated and will become subject
to taxation as a corporation. See "Unaudited Pro Forma Consolidated
Financial Statements--The JLW Companies."
The financial results of the JLW Europe Group are closely related to
the property markets in which it operates. Almost half of the JLW Europe
Group's business is in the United Kingdom where there are signs of a
slowdown in the economy which may impact the property sector. As a result,
the level of activity in the property market in the United Kingdom may be
lower than that experienced over the last two years. However, the property
markets of most continental European economies, which account for more than
a third of the JLW Europe Group's revenue, have not experienced this
slowdown and North America currently has a moderately active property
market.
The JLW Europe Group conducts business in a variety of functional
currencies. When using the US Dollar as a reporting currency, the financial
results of the JLW Europe Group are sensitive to exchange rate
fluctuations. The functional currencies of the JLW Europe Group are
generally the local currency in which each business operates. The main
currencies other than the Pound Sterling and US Dollar in which the JLW
Europe Group derives revenue are the German Mark, Dutch Guilder, French
Franc, and Belgian Franc (the "Continental European Currencies"). The
average exchange rate of the Pound Sterling appreciated by approximately
2.5% relative to the US Dollar during the nine month period ended
September 30, 1998, compared with the prior year period. Measured during
the same interval, the average exchange rate of the Continental European
Currencies was relatively stable against the US Dollar. In 1997, the Pound
Sterling appreciated by less than 5% relative to the US Dollar compared
with 1996, while the Continental European Currencies depreciated by
approximately 15.0%. In 1996, the Pound Sterling remained relatively
constant compared to the US Dollar and the Continental European Currencies
depreciated by approximately 4.0% relative to the US Dollar compared with
1995. As a consequence of such exchange rate fluctuations, the reported
results, which are in US Dollars, may not reflect the underlying
performance of the JLW Europe Group.
The JLW Europe Group conducts its businesses with systems utilizing
commercial software purchased from suppliers and customized software.
Efforts to ensure that such systems, data communication and
telecommunications equipment are Year 2000 compliant are being coordinated
on a global basis by the JLW Companies. See "--The JLW Companies--
Overview--Year 2000."
RESULTS OF OPERATIONS
The information below is presented in accordance with US GAAP.
<PAGE>
<TABLE>
THE JLW EUROPE GROUP
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------------------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(in thousands)
REVENUE
JLW England. . . . . . . . . . . $ 99,581 78,530 109,635 83,256 75,275
Continental Europe . . . . . . . 77,627 59,548 95,519 94,961 87,923
North America. . . . . . . . . . 43,866 30,146 47,741 36,046 29,318
-------- -------- -------- -------- --------
Operating revenue . . . . . . . . 221,074 168,224 252,895 214,263 192,516
Interest income. . . . . . . . . 1,745 1,051 1,532 1,290 1,378
Other income . . . . . . . . . . 4,974 1,797 4,555 1,884 2,528
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . 227,793 171,072 258,982 217,437 196,422
OPERATING EXPENSES (1)
JLW England. . . . . . . . . . . 68,944 53,602 79,844 62,019 63,757
Continental Europe . . . . . . . 74,461 58,367 90,731 89,362 84,082
North America. . . . . . . . . . 49,851 31,090 48,105 34,027 29,650
-------- -------- -------- -------- --------
Total operating expenses. . . . . 193,256 143,059 218,680 185,408 177,489
-------- -------- -------- -------- --------
OPERATING INCOME. . . . . . . . . 34,537 28,013 40,302 32,029 18,933
Interest expense . . . . . . . . 484 520 649 804 1,253
-------- -------- -------- -------- --------
Earnings before provision
for income taxes and
minority interest. . . . . . . . 34,053 27,493 39,653 31,225 17,680
Net provision/(benefit)
for income taxes. . . . . . . . 1,485 (284) 3,493 3,844 3,410
Minority interest. . . . . . . . 1,277 454 1,450 59 223
-------- -------- -------- -------- --------
Net earnings. . . . . . . . . . . $ 31,291 27,323 34,710 27,322 14,047
======== ======== ======== ======== ========
<FN>
- ----------------
(1) Operating expenses for the nine months ended September 30, 1998 include costs related to the
Integration and the Transactions totaling $8.3 million.
</TABLE>
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUE
The JLW Europe Group's total revenue increased by $56.7 million, or
33.2%, to $227.8 million for the nine months ended September 30, 1998 from
$171.1 million in the prior year period. The increase was due primarily to
the strength of the underlying business and the gain of approximately $3.8
million on a partial disposal of an investment in a joint venture.
For the nine months ended September 30, 1998, JLW England accounted
for $99.6 million, or 45.0%, of the JLW Europe Group's operating revenue,
while continental Europe accounted for $77.6 million, or 35.1%, and North
America accounted for $43.9 million, or 19.9%. For the nine months ended
September 30, 1997, JLW England accounted for $78.5 million, or 46.7%, of
the JLW Europe Group's operating revenue, while continental Europe
accounted for $59.5 million, or 35.4%, and North America accounted for
$30.1 million, or 17.9%.
Operating revenue generated by JLW England increased by $21.1 million,
or 26.8%, to $99.6 million for the nine months ended September 30, 1998
from $78.5 million in the prior year period. The increase in revenue was
attributable to an active property market with growing occupier demand,
rising rents and increased acquisitions by United Kingdom investors, which
led to increased revenue from investment sales and acquisitions, leasing
and property management.
Operating revenue generated in continental Europe increased by $18.1
million, or 30.4%, to $77.6 million for the nine months ended September 30,
1998 from $59.5 million in the prior year period. The functional currencies
in which the majority of the JLW Europe Group's continental Europe revenue
was derived remained relatively stable against the US Dollar for the nine
months ended September 30, 1998 compared with the prior year period.
Revenue, as reported in functional currency, improved in the four markets
from which the majority of the JLW Europe Group's continental Europe
revenue was derived. Such markets were Germany, which experienced a revenue
increase of 20.2%, France, which experienced a revenue increase of 37.1%,
Holland, which experienced a revenue increase of 22.0%, and Belgium
(inclusive of Luxembourg), which experienced a revenue increase of 29.8%
for the nine months ended September 30, 1998, as compared with the prior
year period. The increase in revenue in these countries resulted mainly
from increased office and industrial leasing, investment sales and
acquisition transactions, valuation (particularly in France) and property
management (especially in France and Belgium) as a result of improving
property markets in most of continental Europe.
Operating revenue generated in the North American market increased by
$13.7 million, or 45.5%, to $43.9 million for the nine months ended
September 30, 1998 from $30.1 million in the prior year period. The
increase in revenue resulted primarily from a substantial increase in
leasing, CRES, valuation and investment sales and the acquisition in
February 1998 of Northwest Asset Management, Inc., a United States west
coast provider of real estate management services, which added
approximately 10 million square feet of property under management to the
JLW Europe Group's property under management in North America.
<PAGE>
OPERATING EXPENSES
The JLW Europe Group's operating expenses increased by $50.2 million,
or 35.1%, to $193.3 million for the nine months ended September 30, 1998
from $143.1 million in the prior year period. The increase in operating
expenses was primarily a result of increased personnel and related costs
associated with higher levels of business activity. Because some of the JLW
Europe Group's operating expense items include a significant variable
component, higher costs tend to accompany an increase in revenue. This is
particularly the case in continental Europe and North America where, as a
result of the use of incentive-based compensation, increases in revenue
generally result in corresponding increases in personnel costs.
Additionally, merger related nonrecurring charges of approximately $8.3
million have been reflected in results for the nine months ended
September 30, 1998. As a percentage of operating revenue, operating
expenses increased to 87.4% for the nine months ended September 30, 1998
from 85.0% in the prior year period.
For the nine months ended September 30, 1998, JLW England accounted
for $68.9 million, or 35.7%, of the JLW Europe Group's operating expenses,
while continental Europe accounted for $74.5 million, or 38.5%, and North
America accounted for $49.9 million, or 25.8%. For the nine months ended
September 30, 1997, JLW England accounted for $53.6 million, or 37.5%,
while continental Europe accounted for $58.4 million, or 40.8%, of the JLW
Europe Group's operating expenses, and North America accounted for $31.1
million, or 21.7%.
JLW England's operating expenses as a percentage of operating revenue
increased to 69.2% for the nine months ended September 30, 1998 from 68.3%
in the prior year period as cost increases followed the upward trend in fee
business. The increased cost base largely reflects rising staff levels and
an increased provision for annual staff bonuses, together with $3.6 million
in professional fees related to the Integration and the Transactions.
In continental Europe, operating expenses decreased to 95.9% of
operating revenue for the nine months ended September 30, 1998 from 98.0%
in the prior year period. Continental Europe results reflect a charge of
$2.8 million related to the Integration and the Transactions.
In North America, operating expenses increased by $18.8 million, or
60.3%, to $49.9 million for the nine months ended September 30, 1998 from
$31.1 million in the prior year period, due primarily to increased salary
and compensation costs from an increase in staff and increased commissions
from organic growth, the acquisition of Northwest Asset Management, Inc.,
additional office rental charges and North America's portion of Integration
and Transaction related costs totaling $2.0 million for the nine months
ended September 30, 1998 allocated to each region by the International
Board of the JLW Companies. Operating expenses increased to 113.6% of
operating revenue for the nine months ended September 30, 1998 from 103.1%
in the prior year period.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Europe Group's operating income increased by $6.5 million,
or 23.3%, to $34.5 million for the nine months ended September 30, 1998
from $28.0 million in the prior year period. As a percentage of total
revenue, operating income decreased to 15.2% for the nine months ended
September 30, 1998 from 16.4% in the prior year period.
For the nine months ended September 30, 1998, JLW England accounted
for $30.7 million, or 110.0%, of the JLW Europe Group's operating income
(exclusive of interest income and other income), while continental Europe
accounted for $3.2 million, or 11.5%, and North America experienced an
operating loss of $6.0 million or (21.5)%. For the nine months ended
September 30, 1997, JLW England accounted for $24.9 million, or 99.1%, of
the JLW Europe Group's operating income (exclusive of interest revenue and
<PAGE>
other income), while continental Europe accounted for $1.2 million, or
4.7%, and North America experienced an operating loss of $0.9 million, or
(3.8)%.
INTEREST EXPENSE
Interest expense was constant at $0.5 million for the nine months
ended September 30, 1998 and the prior year period.
PROVISION FOR INCOME TAXES
Income tax payments for JLW England are the responsibility of the
partners at a personal level. Accordingly, provision for income taxes
reflects only those taxes paid by JLW Europe Group corporate entities in
North America and Europe. Provision for income taxes increased by $1.8
million to $1.5 million for the nine months ended September 30, 1998 from a
benefit of $0.3 million in the prior year period. The corporate tax charges
and effective tax rates were impacted by the recognition of deferred tax
credits of $2.5 million for the nine months ended September 30, 1998 and
$2.1 million in the prior year period. The effective tax rate for the JLW
Europe Group increased to 4.4% for the nine months ended September 30, 1998
from a benefit of 1.0% in the prior year period.
NET EARNINGS
Based upon the factors discussed above, net earnings increased by $4.0
million, or 14.5%, to $31.3 million (net of minority interest of $1.3
million) for the nine months ended September 30, 1998 from $27.3 million
(net of minority interest of $0.5 million) in the prior year period. Net
earnings for the nine months ended September 30, 1998 as a percentage of
total revenue decreased to 13.7% for the nine months ended September 30,
1998, compared to 16.0% in the prior year period. Minority interest
consists of earnings derived from two companies in which the JLW England
Group does not own a 100% interest: Jones Lang Wootton International
Limited, in which the JLW Europe Group owns a 66.7% interest, and Jones
Lang Wootton Secs, a Luxembourg-based real estate entity in which the JLW
Europe Group owns a 90% interest. The increase in the minority interest to
$1.3 million for the nine months ended September 30, 1998 compared with
$0.5 million in the prior year period was due to the gain recorded by Jones
Lang Wootton International Limited on the disposal of a portion of its
interest in a joint venture.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
REVENUE
The JLW Europe Group's total revenue increased by $41.5 million, or
19.1%, to $259.0 million in 1997 from $217.4 million in 1996. The increase
was due primarily to the strength of the underlying business. The increase
was partially offset by adverse exchange rate movements as an appreciation
of the Pound Sterling relative to the US Dollar in 1997 compared with 1996
was more than offset by depreciation of the Continental European
Currencies.
In 1997, JLW England accounted for $109.6 million, or 43.4%, of the
JLW Europe Group's operating revenue, while continental Europe accounted
for $95.5 million, or 37.8%, and North America accounted for $47.7 million,
or 18.9%. In 1996, JLW England accounted for $83.3 million, or 38.9%, of
the JLW Europe Group's operating revenue, while continental Europe
accounted for $95.0 million, or 44.3%, and North America accounted for
$36.0 million, or 16.8%.
Operating revenue generated by JLW England increased by $26.4 million,
or 31.7%, to $109.6 million in 1997 from $83.3 million in 1996. The
increase in revenue was attributable to strength in the economy which led
to increased revenue from investment sales and acquisition transactions and
also from property management services, valuation and consulting, part of
which can be attributed to the merger with Richard Main & Co., a property
management specialist in the City of London.
<PAGE>
Operating revenue generated in continental Europe increased by $0.6
million, or 0.6%, to $95.5 million in 1997 from $95.0 million in 1996.
Revenue, as reported in functional currencies, increased in the four
markets from which the majority of the JLW Europe Group's continental
Europe revenue was derived. Such markets were Germany, which experienced a
revenue increase of 1.8%, France, which experienced a revenue increase of
15.7%, Holland, which experienced a revenue increase of 17.1% and Belgium
(inclusive of Luxembourg), which experienced a revenue increase of 19.0%.
In 1997, favorable economic conditions in most of continental Europe, as
reflected in improving property markets, resulted in increased volume of
business across most of the JLW Europe Group's service lines. Revenue
growth was achieved mainly from investment sales and acquisition
transactions, office and retail leasing, CRES and valuation. The increase
in revenue was partially offset by a depreciation of the Continental
European Currencies relative to the US Dollar by approximately 15% in 1997
compared with 1996.
Operating revenue generated in the North America Region increased by
$11.7 million, or 32.4%, to $47.7 million in 1997 from $36.0 million in
1996. As with JLW England and continental Europe, the majority of the
improvement was achieved through increased transactional business,
particularly investment sales, and tenant representation and leasing for
investors, and also through increased CRES activity.
OPERATING EXPENSES
The JLW Europe Group's operating expenses increased by $33.3 million,
or 17.9%, to $218.7 million in 1997 from $185.4 million in 1996. The
increase in operating expenses was a result primarily of increased
compensation expense, especially in continental Europe and North America,
attributable to increased business activity and competitive labor markets
in North America. This increase occurred despite depreciation of the
Continental European Currencies relative to the US Dollar by approximately
15.0% in 1997 compared with 1996, which more than offset a 4.8%
appreciation of the Pound Sterling. As a percentage of operating revenue,
operating expenses remained constant at 86.5%.
In 1997, continental Europe accounted for $90.7 million, or 41.5%, of
the JLW Europe Group's operating expenses, while JLW England accounted for
$79.8 million, or 36.5%, and North America accounted for $48.1 million, or
22.0%. In 1996, continental Europe accounted for $89.4 million, or 48.2%,
of the JLW Europe Group's operating expenses, while JLW England accounted
for $62.0 million, or 33.5%, and North America accounted for $34.0 million,
or 18.4%.
JLW England's operating expenses increased by $17.8 million, or 28.7%,
to $79.8 million in 1997 from $62.0 million in 1996. The cost increase
reflects the additional operating expense due to the merger with Richard
Main, an increase in staff bonuses, and substantial investment in
information technology. JLW England's portion of integration, international
management and transaction costs allocated to each region by the
International Board of the JLW Companies increased by approximately $2.4
million, which also contributed to the increase in operating expenses. As a
percentage of operating revenue, operating expenses decreased to 72.8% in
1997 from 74.5% in 1996 as a result of revenue growth and the fixed nature
of operating expenses incurred by JLW England.
In continental Europe, operating expenses increased by $1.4 million to
95.0% of operating revenue in 1997 from 94.1% in 1996. This was primarily
attributable to the high degree of variable costs, where increases in
revenue generally result in corresponding increases in personnel costs.
<PAGE>
In North America, operating expenses increased by $14.1 million, or
41.4%, to $48.1 million in 1997 from $34.0 million in 1996, due primarily
to the disposal of Jones Lang Wootton Realty Advisors at the end of 1996
and the resultant increase in costs, which had previously been shared with
the joint venture partner, a 15% increase in the number of employees and
increases in revenue which resulted in higher compensation expense. In
North America, operating expenses increased to 100.8% of operating revenue
in 1997 from 94.4% in 1996.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Europe Group's operating income increased by $8.3 million,
or 25.8%, to $40.3 million in 1997 from $32.0 million in 1996. As a
percentage of total revenue, operating income increased to 15.6% in 1997
from 14.7% in 1996.
In 1997, JLW England accounted for $29.8 million, or 87.1%, of the JLW
Europe Group's operating income (exclusive of interest revenue and other
income), while continental Europe accounted for $4.8 million, or 14.0%, and
North America experienced an operating loss of $0.4 million or (1.1)%. In
1996, JLW England accounted for $21.2 million, or 73.6%, of the JLW Europe
Group's operating income (exclusive of interest revenue and other income),
while continental Europe accounted for $5.6 million, or 19.4%, and North
America accounted for $2.0 million, or 7.0%.
INTEREST EXPENSE
Interest expense decreased by $0.2 million, or 19.3%, to $0.6 million
in 1997 from $0.8 million in 1996. The decrease was principally a result of
a decrease in net borrowings, reflecting strong operating cash flow.
PROVISION FOR INCOME TAXES
Provision for income taxes reflects taxes paid by corporate entities
in North America and Europe. Provision for income taxes decreased by $0.4
million, or 9.1%, to $3.5 million in 1997 from $3.8 million in 1996. The
effective tax rate for the JLW Europe Group decreased to 8.8% in 1997 from
12.3% in 1996, due to higher pre-tax earnings by JLW England (taxes on the
income of which are payable by the partners personally) and lower pre-tax
earnings in North America.
NET EARNINGS
Based upon the factors discussed above, net earnings increased by $7.4
million, or 27.0%, to $34.7 million (net of minority interest of $1.5
million) in 1997 from $27.3 million (net of minority interest of $0.1
million) in 1996. The increase in minority interest was due to the gain
recorded by Jones Lang Wootton International Limited on the disposal of a
portion of its interest in a joint venture. Net earnings in 1997
represented 13.4% of total revenue, compared with 12.6% in 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
REVENUE
The JLW Europe Group's total revenue increased by $21.0 million, or
10.7%, to $217.4 million in 1996 from $196.4 million in 1995. The majority
of the increase was due to the strength of, and growth in, the underlying
business with only a minor change attributable to currency movements.
In 1996, JLW England accounted for $83.3 million, or 38.9%, of the JLW
Europe Group's operating revenue, while continental Europe accounted for
$95.0 million, or 44.3%, and North America accounted for $36.0 million, or
16.8%. In 1995, JLW England accounted for $75.3 million, or 39.1%, of the
JLW Europe Group's operating revenue while continental Europe accounted for
$87.9 million, or 45.7%, and North America accounted for $29.3 million, or
15.2%.
<PAGE>
Operating revenue generated by JLW England increased by $8.0 million,
or 10.6%, to $83.3 million in 1996 from $75.3 million in 1995. This was due
primarily to an improvement in the property market which resulted in
increasing property values and higher volume of business, especially retail
leasing, investment sales and acquisition transactions and advisory
services.
In continental Europe, operating revenue increased by $7.0 million, or
8.0%, to $95.0 million in 1996 from $87.9 million in 1995. The Continental
European Currencies depreciated relative to the US Dollar by approximately
4.0% in 1996 compared with 1995. Revenue, as reported in functional
currencies, increased in three out of the four markets from which the
majority of the JLW Europe Group's continental European revenue was
derived. Such markets were Germany, which experienced a revenue increase of
18.4%, Holland, which experienced a revenue increase of 18.0%, and Belgium
(inclusive of Luxembourg), which experienced a revenue increase of 5.8%.
This was generally attributable to strengthening transactions markets,
which resulted in increased revenue from investment sales and acquisition
transactions, leasing, especially industrial and retail space and property
management. In Belgium, revenue increases from investment sales and
acquisitions outweighed declines from other services. Revenue increases in
France were minimal as increased revenue from investment sales and
acquisition transactions and valuation was offset by reductions in revenue
from leasing and property management services.
Operating revenue in North America increased by $6.7 million, or
22.9%, to $36.0 million in 1996 from $29.3 million in 1995. Strong United
States economic performance and a healthy business climate in 1996
sustained favorable conditions for real estate services. The overall
increase in revenue of the JLW Businesses in North America compared with
1995 was due principally to leasing, investment sales transactions,
property management, CRES, and the sale of Jones Lang Wootton Realty
Advisors, which resulted in additional income of $1.4 million.
OPERATING EXPENSES
The JLW Europe Group's operating expenses increased by $8.0 million,
or 4.5%, to $185.4 million in 1996 from $177.5 million in 1995. The
increase in operating expenses was due primarily to staff growth and
related compensation costs. The level of operating expenses as a percentage
of operating revenue decreased to 86.5% in 1996 from 92.2% in 1995.
In 1996, JLW England accounted for $62.0 million, or 33.5%, of the JLW
Europe Group's operating expenses while continental Europe accounted for
$89.4 million, or 48.2%, and North America accounted for $34.0 million, or
18.4%. In 1995, JLW England accounted for $63.8 million, or 35.9%, of the
JLW Europe Group's operating expenses, while continental Europe accounted
for $84.1 million, or 47.4%, and North America accounted for $29.7 million,
or 16.7%.
JLW England's operating expenses as a percentage of operating revenue
decreased to 74.5% in 1996 from 84.7% in 1995 as a result of revenue growth
and the relatively fixed nature of operating expenses.
In continental Europe, operating expenses as a percentage of operating
revenue decreased to 94.1% in 1996 from 95.6% in 1995.
In North America, operating expenses decreased to 94.4% of operating
revenue in 1996 from 101.1% in 1995. Operating expenses increased in
absolute terms due to the continued expansion of the business, but
decreased as a percentage of operating revenue because of improving market
conditions and rising fees, which outpaced increases in compensation.
<PAGE>
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Europe Group's operating income increased to $32.0 million
in 1996 from $18.9 million in 1995. As a percentage of total revenue,
operating income increased to 14.7% in 1996 from 9.6% in 1995.
In 1996, JLW England accounted for $21.2 million, or 73.6%, of the JLW
Europe Group's operating income (exclusive of interest revenue and other
income), while continental Europe accounted for $5.6 million, or 19.4%, and
North America accounted for $2.0 million, or 7.0%. In 1995, JLW England
accounted for $11.5 million, or 76.6%, of the JLW Europe Group's operating
income (exclusive of interest revenue and other income), while continental
Europe accounted for $3.8 million, or 25.6%, and North America experienced
an operating loss of $0.3 million, or (2.2)%.
INTEREST EXPENSE
Interest expense decreased by $0.5 million, or 35.8%, to $0.8 million
in 1996 from $1.3 million in 1995. The decrease was principally a result of
a reduction in net borrowings, reflecting strong operating cash flow.
PROVISION FOR INCOME TAXES
Provision for income taxes increased by $0.4 million, or 12.7%, to
$3.8 million in 1996 from $3.4 million in 1995. The effective tax rate
decreased to 12.3% from 19.3%, due to higher relative pretax earnings by
JLW England.
NET EARNINGS
Based upon the factors discussed above, net earnings increased by
$13.3 million, or 94.5%, to $27.3 million in 1996 from $14.0 million (net
of minority interest of $0.2 million) in 1995. Net earnings in 1996
represented 12.6% of total revenue, compared with 7.2% in the previous
year.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the JLW Europe Group has financed its operations with
internally generated funds, undistributed partner profits and short-term
borrowings. Net cash balances (available cash net of borrowing) were $8.1
million at September 30, 1998 compared with $12.2 million for the prior
year period. Net cash balances were $18.0 million at year end 1997,
compared with $4.2 million at 1996 and net borrowings of $1.6 million at
year end 1995.
The JLW Europe Group's principal source of liquidity has been cash
generated from operations. The net cash inflow from operating activities
totaled $25.4 million for the nine months ended September 30, 1998 compared
with $31.4 million in the prior year period and $47.0 million in 1997
compared with $31.0 million in 1996 and $25.0 million in 1995. The $6.0
million reduction in cash generated from operating activities for the nine
months ended September 30, 1998 compared with the prior year period was due
primarily to a $23.1 million increase in receivables, reflecting increased
revenue, which was offset by a $21.5 million increase in payables. In 1997,
the increase in net cash flow generated from operating activities resulted
primarily from increased operating profits and improved management of
working capital. In 1997, the net change in working capital of $10.4
million was attributable primarily to a $7.0 million increase in payables,
the largest element of which was accrued bonuses within North America. Due
to increased revenue levels in North America and a very competitive labor
market, the bonus pool was increased in order to retain quality staff. In
1996, the increase in net cash flow generated from operating activities
resulted from higher operating profits and was further increased by an
increase in payables of $9.5 million, but reduced by a $12.6 million
increase in receivables.
<PAGE>
Cash used in investing activities was $4.9 million for the nine months
ended September 30, 1998 compared with $7.0 million in the prior year
period, $8.6 million in 1997, $6.1 million in 1996 and $8.9 million in
1995. The $2.1 million reduction in cash used in investing activities for
the nine months ended September 30, 1998 compared with the prior year
period was due primarily to the receipt of $4.1 million from the sale of
investments offset by a $2.0 million increase in payments to acquire
tangible and intangible fixed assets. The $2.5 million increase in
investing activities in 1997 compared with 1996 is primarily attributable
to increased investment in office equipment and motor vehicles as the
number of offices and personnel increased. The decrease of $2.7 million in
1996 compared with 1995 was attributable primarily to high expenditure in
1995 on office automation and the lease of additional office space. The JLW
Europe Group received a cash inflow of $4.1 million for the nine months
ended September 30, 1998 and $2.5 million in 1997 from the sale of the JLW
Europe Group's investment in a joint venture and $2.2 million in 1996 from
the sale of other investments. Based on existing operating plans (excluding
any changes resulting from the Transactions) the JLW Europe Group's
management expects the JLW Europe Group's capital expenditures in the
remainder of 1998 and 1999 to be consistent with historical levels.
Cash used in financing activities was $22.4 million for the nine
months ended September 30, 1998 compared with $21.8 million in the prior
year period and $31.2 million in 1997 compared with $25.9 million in 1996
and $9.2 million in 1995. Borrowings as at September 30, 1998 were $11.8
million, compared to $3.9 million at September 30, 1997. This increase of
$7.9 million was offset by short term investments of $8.9 million. For the
nine months ended September 30, 1998, the companies in the JLW Europe Group
based in the United States and Germany increased their borrowings by $3.9
million and $0.7 million, respectively, compared with the prior year period
while the companies in France reduced borrowings by $2.1 million,
reflecting general operating conditions. JLW England had an increase in
borrowings of $5.3 million for the nine months ended September 30, 1998
compared with the prior year period, primarily reflecting the use of funds
for expenditures incurred in connection with the Transactions. JLW
England's profit distributions to partners represent the largest component
of the JLW Europe Group's financing activities. Such payments to partners
reflect a mix of current and prior year profits and have increased since
1995 as a result of the improved financial performance of the JLW Europe
Group. Profit distributions to JLW England partners were $30.8 million for
the nine months ended September 30, 1998 compared with $15.7 million in the
prior year period and $24.0 million in 1997 compared with $18.5 million in
1996 and $16.0 million in 1995. Borrowing represents another significant
component of the JLW Europe Group's financing activities. Funds used to
reduce borrowings amounted to $7.0 million in each of 1997 and 1996, while
in 1995 borrowing increased by $8.6 million. The JLW Europe Group's credit
facilities are unsecured and arranged on a country by country basis.
INFLATION
Inflation has not had a significant impact on the results of the JLW
Europe Group for any of the three years ended December 31, 1997 or the nine
months ended September 30, 1998. During these periods, inflation rates
within the JLW Europe Group's major markets of the United Kingdom, Germany,
France, Holland, Belgium and North America have not exceeded 4.5% per
annum. The JLW Europe Group's principal exposure to relatively high
inflation is through its offices in Central and Eastern Europe, which
accounted for less than 3.0% of the JLW Europe Group's revenue.
<PAGE>
THE JLW SCOTLAND GROUP
Overview
The JLW Scotland Group was established in 1962 and offers a wide range
of real estate services, including leasing, property management, investment
agency (acquisition and sale of properties), property development advice,
professional services (valuation and rent reviews) and building consultancy
services (building surveys, tenant fit out and project management) to
corporations and other real estate owners, users and investors worldwide.
JLW Scotland is structured as a partnership. Accordingly, profit
distributions to partners are not included in compensation expense. In
connection with the Transactions, the partners of JLW Scotland will enter
into new employment contracts and all compensation will be paid as salary
and bonuses at market rates. Therefore, future compensation expense will be
materially higher than the amounts reflected in the historical financial
statements. See "Unaudited Pro Forma Consolidated Financial Statements--The
JLW Companies."
Income taxes are payable by the partners personally and are not
reflected in the financial statements of the JLW Scotland Group. As a
result of the Transactions, JLW Scotland will be incorporated and will
become subject to taxation as a corporation. See "Unaudited Pro Forma
Consolidated Financial Statements--The JLW Companies."
The financial results of the JLW Scotland Group are closely related to
the United Kingdom property market which is, in turn, linked to the United
Kingdom economy. There are signs of a slow down in the economy which may
impact the property market. As a result, the level of activity in the
property market in the United Kingdom may be lower than that experienced
over the last two years.
As a result of the Integration and the Transactions, the JLW Companies
incurred professional fees of which $0.2 million were charged to the JLW
Scotland Group and are included in operating expense for the nine months
ended September 30, 1998.
The functional currency of the JLW Scotland Group is the Pound
Sterling. The average exchange rate of the Pound Sterling relative to the
US Dollar appreciated by approximately 2% for the nine-month period ended
September 30, 1998 compared with the prior year period, appreciated by less
than 5% in 1997 compared with 1996 and remained relatively constant in 1996
compared with 1995. As a consequence of such exchange rate fluctuations,
the reported results, which are in US Dollars, may not reflect the
underlying performance of the JLW Scotland Group.
The JLW Scotland Group conducts its business primarily with systems
utilizing commercial software purchased from suppliers and customized
software. Efforts to ensure that such systems, data communication and
telecommunications equipment are Year 2000 compliant are being coordinated
on a global basis by the JLW Companies. See "--The JLW Companies--
Overview--Year 2000." The JLW Scotland Group has determined that its
software, systems and equipment are expected to be substantially Year 2000
compliant and that completion of Year 2000 compliance is not expected to
have a material impact on the business, operations or financial condition
of the JLW Scotland Group.
RESULTS OF OPERATIONS
The information below is presented in accordance with US GAAP.
<PAGE>
<TABLE>
THE JLW SCOTLAND GROUP
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------------------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(in thousands)
REVENUE
Operating revenue. . . . . . . . $ 6,587 6,366 9,042 5,618 4,894
Interest income. . . . . . . . . 123 56 102 57 35
Other income . . . . . . . . . . 73 52 98 86 89
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . 6,783 6,474 9,242 5,761 5,018
OPERATING EXPENSES
Compensation and benefits. . . . 1,995 1,628 2,301 1,973 1,814
Operating, administrative
and other (1). . . . . . . . . 1,493 901 1,539 1,430 1,278
Depreciation and amortization. . 208 167 284 206 281
-------- -------- -------- -------- --------
Total operating expenses. . . . . 3,696 2,696 4,124 3,609 3,373
-------- -------- -------- -------- --------
OPERATING INCOME. . . . . . . . . 3,087 3,778 5,118 2,152 1,645
Interest expense . . . . . . . . 7 10 12 13 6
-------- -------- -------- -------- --------
Earnings before provision
for income taxes . . . . . . . . 3,080 3,768 5,106 2,139 1,639
Net provision for income taxes . 25 34 46 36 43
-------- -------- -------- -------- --------
Net earnings. . . . . . . . . . . $ 3,055 3,734 5,060 2,103 1,596
======== ======== ======== ======== ========
<FN>
- ----------------
(1) Operating, administrative and other expenses for the nine months ended
September 30, 1998 include costs related to the Integration and the
Transactions totaling $0.2 million.
</TABLE>
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUE
The JLW Scotland Group's total revenue increased by $0.3 million, or
4.8%, to $6.8 million for the nine months ended September 30, 1998 from
$6.5 million in the prior year period. This increase was attributable
primarily to a strong property market and, in particular, strong conditions
in the Edinburgh agency market.
OPERATING EXPENSES
The JLW Scotland Group's operating expenses increased by $1.0 million,
or 37.1%, to $3.7 million for the nine months ended September 30, 1998 from
$2.7 million in the prior year period. This increase was due primarily to
an increase in personnel costs as a result of an increase in staff
consistent with increased business activity, recognition of performance-
related staff bonuses, costs incurred associated with the Integration and
the Transactions and general inflationary factors. Additionally, other
operating costs in 1997 were relatively low on account of the deferral of
costs associated with an unusually high level of work-in-progress at the
balance sheet date. As a percentage of operating revenue, operating
expenses increased to 56.1% for the nine months ended September 30, 1998
from 42.3% in the prior year period. This increase was attributable in part
to the rise in costs noted above and in part to a moderation in the rate of
revenue growth compared with the first nine months of 1997, when the JLW
Scotland Group realized particularly high revenue in the investment market.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Scotland Group's operating income decreased to $3.1 million
for the nine months ended September 30, 1998 from $3.8 million for the
prior year period.
NET EARNINGS
Due to interest expense and corporate taxes being immaterial for the
nine month periods ended September 30, 1998 and 1997, net earnings
approximated operating income at $3.1 million and $3.7 million,
respectively. Net earnings for the nine months ended September 30, 1998
represented 45.0% of total revenue, compared with 57.7% in the prior year
period.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
REVENUE
The JLW Scotland Group's total revenue increased by $3.4 million, or
60.4%, to $9.2 million in 1997 from $5.8 million in 1996. This increase was
attributable primarily to an active property market and, in particular,
strong conditions in the investment market where there was a substantial
increase in the value of sales and acquisitions carried out by the JLW
Scotland Group in 1997 compared with 1996.
<PAGE>
OPERATING EXPENSES
The JLW Scotland Group's operating expenses increased by $0.5 million,
or 14.3%, to $4.1 million in 1997 from $3.6 million in 1996. This increase
was due primarily to growth in personnel costs of $0.3 million, which
reflected higher levels of incentive compensation due to the exceptional
performance in the period. Other operating expenses also increased as a
result of the significant upturn in business activity. In addition, JLW
Scotland Group's portion of integration, international management and
Transaction costs allocated to each region by the International Board
contributed to the increase in expenses in 1997 compared with 1996. As a
percentage of operating revenue, operating expenses decreased to 45.6% in
1997 from 64.2% in 1996. This decrease reflected the semi-variable nature
of operating expenses, including personnel costs, as operating costs
excluded profit distributions to partners.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Scotland Group's operating income more than doubled to $5.1
million in 1997 from $2.2 million in 1996.
NET EARNINGS
Based upon the factors discussed above, and due to interest expense
and corporate taxes being immaterial, net earnings approximated operating
income at $5.1 million in 1997 and $2.1 million in 1996 and in 1997
represented 54.8% of total revenue, compared with 36.5% in 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
REVENUE
The JLW Scotland Group's total revenue increased by $0.8 million, or
14.8%, to $5.8 million in 1996 from $5.0 million in 1995. The increase was
due primarily to a strong performance in the investment sector and
generally improving market conditions which had a favorable impact on the
transactional business.
OPERATING EXPENSES
The JLW Scotland Group's operating expenses increased by $0.2 million,
or 7.0%, to $3.6 million in 1996 from $3.4 million in 1995. The increase in
expenses was due primarily to increased salary levels and increases in
other operating expenses as a result of the increase in business activity.
As a percentage of operating revenue, operating expenses decreased to 64.2%
in 1996 from 68.9% in 1995. This decrease reflected the semi-variable
nature of the JLW Scotland Group's operating expenses, including personnel
costs, which increased at a slower rate than revenue.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, operating income increased by $0.6 million, or 30.8%, to $2.2
million in 1996 from $1.6 million in 1995.
NET EARNINGS
Based upon the factors discussed above, and due to interest expense
and corporate taxes being immaterial, net earnings approximated operating
income at $2.1 million in 1996 and $1.6 million in 1995 and in 1996
represented 36.5% of total revenue, compared with 31.8% in 1995.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the JLW Scotland Group has financed its operations with
internally generated funds, undistributed partner profits and short-term
borrowings. Net cash balances (available cash net of borrowings) were $2.8
million at September 30, 1998 compared with $2.0 million at September 30,
1997, $2.5 million at year end 1997 and $0.7 million at year end 1996. The
JLW Scotland Group had nominal borrowing at year end 1995.
The JLW Scotland Group's principal source of liquidity has been cash
generated from operations. Net cash inflows from operating activities
totaled $3.3 million for the nine months ended September 30, 1998, $3.4
million for the nine months ended September 30, 1997, $4.5 million in 1997,
$2.5 million in 1996 and $1.6 million in 1995. The increases from 1995 to
1996 and 1996 to 1997 were attributable primarily to increased operating
income in 1996 and 1997. Offsetting these increases, except in 1996, were
increases in working capital, particularly an increase of $0.8 million in
1997. This increase in working capital was primarily a result of an
increase in year end receivables, which were $1.1 million higher at year
end 1997 than at year end 1996, reflecting an increase in revenue in the
final quarter of 1997 compared with the prior year period.
Cash used in investing activities was $0.5 million for the nine months
ended September 30, 1998 compared with $0.2 million in the prior year
period and $0.2 million in 1997, $0.3 million in 1996 and $0.2 million in
1995. These funds have been spent primarily on the replacement of motor
vehicles and office machinery. Based on existing operating plans (excluding
any changes expected as a result of the Transactions), the JLW Scotland
Group's management expects the JLW Scotland Group's capital expenditures in
the remainder of 1998 and 1999 to be consistent with historical levels.
Cash used in financing activities was $2.6 million for the nine months
ended September 30, 1998 compared with $1.8 million in the prior year
period and $2.3 million in 1997 compared with $1.6 million in 1996 and $1.9
million in 1995. The main cash outflow has been payments to partners which
increased to $2.7 million for the nine months ended September 30, 1998
compared with $1.9 million in the prior year period and increased to $2.4
million in 1997 from $1.5 million in 1996 due to the increase in net
earnings in 1997. The $0.8 million increase in payments to partners for the
nine months ended September 30, 1998 compared with the prior year period is
a result of the improved financial performance of the JLW Scotland Group,
which permitted an acceleration of payments to partners. The payments to
partners in 1996 decreased by $0.4 million to $1.5 million from $1.9
million in 1995 due to a change in the phasing of payments in 1995. For
each of the nine month periods ended September 30, 1998 and 1997 and in the
years ended December 31, 1997 and 1995, borrowings increased by amounts not
exceeding $0.1 million. In 1996, borrowings were reduced by $0.1 million.
The JLW Scotland Group has an unsecured credit facility of
approximately $0.4 million.
INFLATION
Inflation has not materially affected the results of the JLW Scotland
Group for any of the three years ended December 31, 1997, 1996 and 1995 or
the nine months ended September 30, 1998, as inflation rates in the United
Kingdom during such periods were less than 4.5% per annum.
<PAGE>
THE JLW IRELAND GROUP
OVERVIEW
The JLW Ireland Group was established in the Republic of Ireland in
1964 and offers a wide range of real estate services, including investment
acquisition and disposition, valuation (including corporate and funds),
office, industrial and retail agency (including leasing, sales and rent
reviews), advisory services (including project consultancy and valuation),
strategic advice and property management.
JLW Ireland is structured as a partnership; therefore, profit
distributions to partners are not included in compensation expense. In
connection with the Transactions, the partners of JLW Ireland will enter
into new employment contracts and all compensation will be paid as salary
and bonuses at market rates. Therefore, future compensation expense will be
materially higher than the amounts reflected in the historical financial
statements. See "Unaudited Pro Forma Consolidated Financial Statements--The
JLW Companies."
Income taxes are payable by the partners personally and are not
reflected in the financial statements of the JLW Ireland Group. As a result
of the Transactions, JLW Ireland will be incorporated and will become
subject to taxation as a corporation. See "Unaudited Pro Forma Consolidated
Financial Statements--The JLW Companies."
The property market in the Republic of Ireland has improved in recent
years. This is partly a result of growth of the economy, which has led to
increased tenant demand, company expansion and a readily available supply
of funds for investment.
As a result of the Integration and the Transactions, the JLW Companies
incurred professional fees, of which $0.6 million were charged to the JLW
Ireland Group and are included in operating, administrative and other
expenses for the nine months ended September 30, 1998.
The functional currency of the JLW Ireland Group is the Irish Punt.
The average exchange rate of the Irish Punt relative to the US Dollar
depreciated by 6.7% for the nine month period ended September 30, 1998
compared with the corresponding period in 1997, depreciated by 7.5% in 1997
compared with 1996, and depreciated by 0.4% in 1996 compared with 1995. As
a consequence of such exchange rate fluctuations, the reported results,
which are in US Dollars, may not reflect the underlying performance of the
JLW Ireland Group.
The JLW Ireland Group conducts its business primarily with systems
utilizing commercial software purchased from suppliers and customized
software. Efforts to ensure that such systems, data communication and
telecommunications equipment are Year 2000 compliant and are being
coordinated on a global basis by the JLW Companies. See "--The JLW
Companies--Overview--Year 2000." The JLW Ireland Group has determined that
its accounting systems are not Year 2000 compliant and plans to replace
these systems before June 1999 at an estimated cost of $0.1 million. Other
software, systems and equipment are expected to be substantially Year 2000
compliant, and completion of Year 2000 compliance is not expected to have a
material impact on the business, operations or financial condition of the
JLW Ireland Group.
RESULTS OF OPERATIONS
The information below is presented in accordance with US GAAP.
<PAGE>
<TABLE>
THE JLW IRELAND GROUP
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------------------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(in thousands)
REVENUE
Operating revenue. . . . . . . . $ 8,663 6,282 9,223 9,466 6,953
Interest income. . . . . . . . . 38 23 78 21 --
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . 8,701 6,305 9,301 9,487 6,953
OPERATING EXPENSES
Compensation and benefits. . . . 2,429 2,335 3,110 3,230 3,144
Operating, administrative
and other (1). . . . . . . . . 1,940 1,242 1,735 1,750 1,769
Depreciation and amortization. . 252 266 353 266 189
-------- -------- -------- -------- --------
Total operating expenses. . . . . 4,621 3,843 5,198 5,246 5,102
-------- -------- -------- -------- --------
OPERATING INCOME. . . . . . . . . 4,080 2,462 4,103 4,241 1,851
Interest expense . . . . . . . . 38 57 60 82 21
-------- -------- -------- -------- --------
Earnings before provision
for income taxes . . . . . . . . 4,042 2,405 4,043 4,159 1,830
Net provision for income taxes . 65 57 80 69 55
-------- -------- -------- -------- --------
Net earnings. . . . . . . . . . . $ 3,977 2,348 3,963 4,090 1,775
======== ======== ======== ======== ========
<FN>
- ----------------
(1) Operating, administrative and other expenses for the nine months ended
September 30, 1998 include costs related to the Integration and the
Transactions totaling $0.6 million.
</TABLE>
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUE
The JLW Ireland Group's total revenue increased by $2.4 million, or
38.0%, to $8.7 million for the nine months ended September 30, 1998 from
$6.3 million in the prior year period. This increase occurred despite a
6.7% depreciation in the exchange rate of the Irish Punt relative to the US
Dollar for the nine month period ended September 30, 1998 compared with the
prior year period as there was a 47.9% increase in revenue reported in
local currency. Improvements in the Irish economy and the property market,
both of which benefitted from lower interest rates, had a significant
effect on the level of demand for property which impacted positively on the
JLW Ireland Group's principal service lines.
OPERATING EXPENSES
The JLW Ireland Group's operating expenses increased by $0.8 million,
or 20.2%, to $4.6 million for the nine months ended September 30, 1998 from
$3.8 million in the prior year period. This increase was due primarily to
the inclusion of costs in respect of the Transactions for the nine months
ended September 30, 1998. As a percentage of operating revenue, operating
expenses decreased to 53.1% for the nine months ended September 30, 1998
from 61.2% in the prior year period. This decrease was due primarily to the
47.9% increase in revenue (calculated in local currency), while the JLW
Ireland Group's costs, which are relatively fixed in nature, increased by
28.9% (calculated in local currency); excluding the transaction costs, the
increase in local currency would have been 12.8%.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Ireland Group's operating income increased by $1.6 million,
or 65.7%, to $4.1 million for the nine months ended September 30, 1998 from
$2.5 million in the prior year period. As a percentage of total revenue,
operating income increased to 46.9% for the nine months ended September 30,
1998 from 39.0% in the prior year period.
NET EARNINGS
Net earnings approximated operating income at $4.0 million for the
nine months ended September 30, 1998 and $2.3 million in the prior year
period.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
REVENUE
The JLW Ireland Group's total revenue decreased by $0.2 million, or
2.0%, to $9.3 million in 1997 from $9.5 million in 1996. The decrease was
due to a 7.5% depreciation in the exchange rate of the Irish Punt relative
to the US Dollar as total revenue reported in local currency increased by
6.0% in 1997 compared with 1996. Improvements in the Irish economy and the
property market, both of which benefitted from lower interest rates, had a
significant effect on the level of demand for property which impacted
positively on the JLW Ireland Group's principal service lines.
OPERATING EXPENSES
The JLW Ireland Group's operating expenses remained constant in 1997
compared with 1996 at $5.2 million. Operating expenses reported in local
currency increased by 7.1% in 1997 compared with 1996, primarily due to an
increase in depreciation expense related to new motor vehicles acquired in
1997. As a percentage of operating revenue, operating expenses increased to
56.4% in 1997 from 55.4% in 1996. Operating expenses, the main component of
which is personnel expenses, are relatively fixed.
<PAGE>
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Ireland Group's operating income decreased by $0.1 million,
or 3.3%, to $4.1 million in 1997 from $4.2 million in 1996. As a percentage
of total revenue, operating income decreased to 44.1% in 1997 from 44.7% in
1996. The reduction principally reflects the fixed nature of the majority
of the operating expenses and a relatively constant level of employees.
NET EARNINGS
Net earnings approximated operating income at $4.0 million in 1997 and
$4.1 million in 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
REVENUE
The JLW Ireland Group's total revenue increased by $2.5 million, or
36.4%, to $9.5 million in 1996 from $7.0 million in 1995. The increase in
revenue was due primarily to the strength of the Irish property market.
This strength resulted in increases in the aggregate value of property
sales and acquisitions transactions completed, the aggregate value of
properties valued and the amount of property space leased. Total revenue
was not significantly impacted by exchange rate fluctuations as the Irish
Punt was broadly unchanged relative to the US Dollar, depreciating by 0.4%
in 1996 compared with 1995.
OPERATING EXPENSES
The JLW Ireland Group's operating expenses increased by $0.1 million,
or 2.8%, to $5.2 million in 1996 from $5.1 million in 1995. The
corresponding increase in local currency was 3.2%. As a percentage of
operating revenue, operating expenses decreased to 55.4% in 1996 from 73.4%
in 1995. The reduction principally reflects the fixed nature of the
majority of the JLW Ireland Group's operating expenses and a relatively
stable number of employees, notwithstanding the increase in revenue in 1996
compared with 1995.
OPERATING INCOME
Based on the factors discussed under revenue and operating expenses
above, the JLW Ireland Group's operating income more than doubled, to $4.2
million in 1996 from $1.9 million in 1995. As a percentage of total
revenue, operating income increased to 44.7% in 1996 from 26.6% in 1995.
NET EARNINGS
Net earnings approximated operating income at $4.1 million in 1996 and
$1.8 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the JLW Ireland Group has financed its operations with
internally generated funds, undistributed partner profits and short-term
borrowings. Net cash balances (available cash net of borrowings) were $1.8
million at September 30, 1998 compared with $0.6 million in the prior year
period. Net cash balances were $0.7 million at year end 1997 compared with
net cash balances of $1.2 million in 1996 and net borrowings of $0.9
million in 1995.
<PAGE>
The JLW Ireland Group's principal source of liquidity has been cash
generated from operations. Net cash inflows from operating activities
totaled $3.7 million for the nine months ended September 30, 1998 compared
with $2.4 million in the prior year period, $3.5 million in 1997, $4.8
million in 1996 and $2.4 million in 1995. The $1.4 million increase in cash
generated from operating activities for the nine months ended September 30,
1998 compared with the prior year period was due primarily to a $1.6
million increase in operating income and an increase in accounts payable
offset by an increase in accounts receivable. In 1997, the decrease in net
cash flow generated from operating activities resulted primarily from lower
operating income and a $0.1 million increase in receivables caused by
increased accrued income and slower collections. In 1996, the increase in
net cash flow generated from operating activities resulted from higher
operating profits and improved management of working capital with payables
increasing by $0.7 million due to the increase in business activity and
higher staff bonus accruals, partly offset by an increase of $0.2 million
in receivables. In 1995, payables increased by $0.4 million due to
increased business activity and receivables decreased by $0.1 million
resulting in an increase in working capital of $0.5 million.
Cash used in investing activities totaled $0.1 million for the nine
months ended September 30, 1998 compared to $0.5 million in the prior year
period due to a reduction in expenditure on fixed assets. In 1997, cash
used in investing activities was $0.5 million, compared with $0.1 million
in 1996 and $0.4 million in 1995. These amounts relate to the replacement
of fixed assets including motor vehicles and office equipment. Capital
expenditures generally relate to the replacement of existing assets. Based
on existing operating plans (excluding any changes expected as a result of
the Transactions), the JLW Ireland Group's management expects the JLW
Ireland Group's capital expenditures in the remainder of 1998 and 1999 to
be consistent with historical levels.
Cash used in financing activities was $2.6 million for the nine months
ended September 30, 1998 compared with $2.4 million in the prior year
period, $3.4 million in 1997, $3.6 million in 1996 and $2.0 million in
1995. Financing activities consist primarily of profit distributions to
partners which generally reflect a mix of current and prior year profits.
Partners' profit distributions were $2.6 million for the nine months ended
September 30, 1998, compared with $2.3 million in the prior year period,
and $3.3 million in 1997 compared with $2.5 million in 1996 and $2.1
million in 1995. The yearly increases in such profit distributions from
1995 through 1997 resulted from the improved financial performance of the
JLW Ireland Group. The JLW Ireland Group's financing activities also
include borrowings under short-term credit facilities. Funds used to repay
borrowings amounted to $0.9 million in 1996 compared with a $0.2 million
increase in borrowings in 1995. In addition, the JLW Ireland Group had
capital payments under capital leases of approximately $0.1 million in each
of the nine month periods ended September 30, 1998 and 1997 and the years
ended December 31, 1997, 1996 and 1995. The JLW Ireland Group has an
unsecured short-term credit facility of $1.4 million to cover short-term
funding requirements. This facility was utilized in 1997, 1996 and 1995.
Borrowings reached annual peaks in the December 1997 quarter at $0.3
million, in the March 1996 quarter at $1.2 million, and in the December
1995 quarter at $1.6 million.
INFLATION
Inflation has not significantly affected the results of the JLW
Ireland Group for any of the three years ended December 31, 1997, 1996 and
1995 or the nine months ended September 30, 1998, as annual inflation rates
in the Republic of Ireland have been less than 2.5%.
<PAGE>
THE JLW ASIA GROUP
OVERVIEW
The JLW Asia Group, through its operating subsidiaries, provides a
range of real estate advisory, transactional and asset management services
to a variety of local and international clients in almost every industrial
and service sector for many types of real estate. The JLW Asia Group
provides a wide range of real estate services in Hong Kong, Indonesia,
Singapore and Thailand. The JLW Asia Group also operates in the
Philippines, the People's Republic of China and Vietnam. The JLW Asia Group
earns revenue in Indonesia pursuant to the Technical Services Agreement
with PT Procon Indah, a locally owned Indonesian company. Pursuant to the
Technical Services Agreement, the JLW Asia Group provides the management
teams and personnel to perform services in Indonesia. The JLW Asia Group
conducts business in Thailand through a 49% interest in JLW (Thailand)
Limited.
The JLW Asia Companies are all structured as corporate entities.
Profits of the JLW Asia Companies have historically been paid to senior
executives through a combination of salary and bonus, which are included in
compensation expense, dividends and a royalty payment in respect of a name
license held by JLW Pacific, an entity which although it is outside the JLW
Asia Group is also being acquired by LaSalle Partners in the Transactions.
These royalty payments are included in other operating expenses. The entire
royalty payment is distributed to owners and senior executives of the JLW
Asia Group. In connection with the Transactions, owners and senior
executives of the JLW Asia Companies have entered or will enter into new
employment contracts and all compensation will be paid in the form of
salary and bonuses at market rates. Therefore, future compensation expense
will be different from the amounts reflected in the historical financial
statements. See "Unaudited Pro Forma Consolidated Financial Statements--The
JLW Companies."
In the years ended December 31, 1996 and 1997, JLW Transact was
accounted for under the equity method of accounting by the JLW Australasia
Companies and the JLW Asia Companies.
During 1997 and 1998, Southeast and East Asia were impacted by
financial turmoil which was initially reflected in rapid depreciation of
exchange rates relative to the US Dollar. This led to falling stock market
indices and asset values and reduced economic growth prospects. Several
property markets were affected by speculative developments resulting in an
oversupply of completed or partially completed space. Property prices fell
along with prices of other investments and asset values. These events are
referred to hereinafter as the "Asian Crisis."
As a result of the Integration and the Transactions, the JLW Companies
incurred professional fees of which $3.3 million were charged to the JLW
Asia Group, and are included in operating expenses for the nine months
ended September 30, 1998.
The currency depreciation impacted most economies in the Region except
China and Hong Kong, where exchange rates between the local currencies and
the US Dollar have been maintained. However, the decade old system in which
several Southeast Asian currencies were more or less fixed to the US Dollar
collapsed in July 1997, when the Thai Baht was allowed to "float." This
triggered pressure on the Indonesian Rupiah and Philippine Peso. The
resulting currency devaluations and higher interest rates negatively
impacted property prices.
<PAGE>
The Asian Crisis has reduced economic growth in 1998 and, as economic
growth is generally a significant factor affecting property markets, demand
for property is generally weaker than in recent years. It is unlikely that
a recovery will occur in the demand for property until stability returns to
financial markets which may facilitate a more positive outlook for stock
markets and economic growth. However, also important to a recovery in Asian
property markets will be the adjustment to the current significant
oversupply of space in many markets which is likely to take time to
correct. The short-term outlook for real estate in Asia is therefore for
depressed rents and capital values. The length and severity of the downturn
is likely to vary in different markets within the Region.
The functional currencies of the JLW Asia Group are generally the
local currency in which each business operates, except in Indonesia, where,
until the end of 1997, much of the business was transacted in US Dollars.
The Hong Kong Dollar has been pegged to the US Dollar and therefore
exchange rate movements have not historically had a direct impact on the
results of operations in Hong Kong. The average exchange rate of the
Singapore Dollar relative to the US Dollar depreciated by 13.7% for the
nine month period ended September 30, 1998 compared with the prior year
period, depreciated by 5.6% in 1997 compared with 1996, and appreciated by
1.0% in 1996 compared with 1995. As a consequence of such exchange rate
fluctuations, the reported results, which are in US Dollars, may not
reflect the underlying performance of the JLW Asia Group.
The JLW Asia Companies conduct their businesses primarily with systems
utilizing commercial software purchased from suppliers and customized
software. Efforts to ensure that such systems, data communication and
telecommunications equipment are Year 2000 compliant are being coordinated
on a global basis by the JLW Companies. See "--The JLW Companies--
Overview--Year 2000." The JLW Asia Group has determined that its software,
systems and equipment are expected to be substantially Year 2000 compliant
and that completion of Year 2000 compliance is not expected to have a
material impact on the business, operations or financial condition of the
JLW Asia Group.
RESULTS OF OPERATIONS
The information below is presented in accordance with US GAAP.
<PAGE>
<TABLE>
THE JLW ASIA GROUP
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------------------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(in thousands)
REVENUE
Operating revenue. . . . . . . . $ 40,850 55,759 73,843 59,753 58,120
Interest income. . . . . . . . . 72 125 293 192 377
Income from interest in
associated undertakings . . . . -- -- -- 480 189
Other income . . . . . . . . . . 959 1,471 1,874 1,856 1,032
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . 41,881 57,355 76,010 62,281 59,718
OPERATING EXPENSES
Compensation and benefits. . . . 23,311 26,327 35,872 29,411 28,070
Operating, administrative
and other (1) . . . . . . . . . 16,879 18,927 24,135 19,915 20,970
Loss from interest in
associated undertakings . . . . 499 848 604 -- --
Depreciation and amortization. . 1,440 1,335 1,841 1,683 1,610
-------- -------- -------- -------- --------
Total operating expenses. . . . . 42,129 47,437 62,452 51,009 50,650
-------- -------- -------- -------- --------
OPERATING (LOSS) INCOME . . . . . (248) 9,918 13,558 11,272 9,068
Interest expense. . . . . . . . 194 69 225 426 279
-------- -------- -------- -------- --------
Earnings (loss) before
provision for income taxes . . . (442) 9,849 13,333 10,846 8,789
Net provision for income taxes. 654 1,621 2,195 1,493 904
-------- -------- -------- -------- --------
Net earnings (loss) . . . . . . . $ (1,096) 8,228 11,138 9,353 7,885
======== ======== ======== ======== ========
<FN>
- ----------------
(1) Operating, administrative and other expenses for the nine months ended
September 30, 1998 include costs related to the Integration and the
Transactions totaling $3.3 million.
</TABLE>
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUE
The JLW Asia Group's total revenue decreased by $15.5 million, or
27.0%, to $41.9 million for the nine months ended September 30, 1998 from
$57.4 million in the prior year period. The results were affected by both
movements in foreign exchange rates and the performance of the underlying
economies and property markets.
For the nine months ended September 30, 1998, Hong Kong operations
accounted for $32.1 million, or 78.7%, of the JLW Asia Group's operating
revenue, while Singapore accounted for $8.1 million, or 19.9%. For the nine
months ended September 30, 1997, Hong Kong operations accounted for $40.3
million, or 72.3%, of the JLW Asia Group's operating revenue, while
Singapore operations accounted for $11.8 million, or 21.2%.
Operating revenue in Hong Kong decreased by $8.2 million, or 20.2%, to
$32.1 million for the nine months ended September 30, 1998 from $40.3
million in the prior year period. The results for the nine months ended
September 30, 1998 were adversely affected by weak market conditions and
declining rents and asset values, which led to significantly reduced sales
and leasing revenue. Revenue from property management increased slightly.
Operating revenue in Singapore decreased by $3.7 million, or 31.6%, to
$8.1 million for the nine months ended September 30, 1998 from $11.8
million in the prior year period. The results for the nine months ended
September 30, 1998 were adversely affected by the Asian Crisis and the
13.7% depreciation of the local currency relative to the US Dollar. These
developments caused a degree of uncertainty in the market and negatively
impacted business sentiment, resulting in decreased revenue from most
services.
OPERATING EXPENSES
The JLW Asia Group's operating expenses decreased by $5.3 million, or
11.2%, to $42.1 million for the nine months ended September 30, 1998 from
$47.4 million in the prior year period. Operating expenses as a percentage
of operating revenue increased to 103.1% for the nine months ended
September 30, 1998 from 85.1% in the prior year period. This increase
reflects the relatively fixed nature of operating expenses.
For the nine months ended September 30, 1998, Hong Kong operations
accounted for $32.6 million, or 77.3%, of the JLW Asia Group's operating
expenses, while Singapore operations accounted for $7.4 million, or 17.6%.
For the nine months ended September 30, 1997, Hong Kong operations
accounted for $33.8 million, or 71.2%, of the JLW Asia Group's operating
expenses, while Singapore operations accounted for $11.0 million, or 23.1%.
Operating costs in Hong Kong decreased by $1.2 million, or 3.4%, to
$32.6 million for the nine months ended September 30, 1998. Operating costs
in Hong Kong decreased due to a reduction in staff bonuses as a result of
reduced profitability offset by an allocation of costs related to the
Transactions as previously discussed. Operating costs as a percentage of
operating revenue increased to 101.4% for the nine months ended
September 30, 1998 from 83.8% in the prior year period.
Operating costs in Singapore decreased by $3.6 million, or 32.6%, to
$7.4 million for the nine months ended September 30, 1998, primarily due to
a reduction in the number of staff offset by an allocation of costs related
to the Transactions as previously discussed. Operating costs as a
percentage of operating revenue increased to 91.2% for the nine months
ended September 30, 1998 from 92.7% in the prior year period.
<PAGE>
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Asia Group's operating income decreased by $10.2 million, or
102.5%, to a loss of $0.2 million for the nine months ended September 30,
1998 from income of $9.9 million in the prior year period.
INTEREST EXPENSE
Interest expense increased by $0.1 million for the nine months ended
September 30, 1998. The increase is principally a result of reduced
operating cash flow which resulted in an increase in net borrowings.
PROVISION FOR INCOME TAXES
Provision for income taxes decreased by $1.0 million, or 59.7%, to
$0.7 million for the nine months ended September 30, 1998 from $1.6 million
in the prior year period. The tax expense recorded in 1998 primarily
reflected the impact of non-deductible expenses associated with the
Transactions. Excluding the impact of these non-deductible amounts, the
effective tax rate would have been 34.3% versus 16.5% in the prior year
period. This increase in the effective tax rate reflected changes in both
the amount and geographical distribution of the JLW Asia Group's operating
income compared with the prior year period. The overall effective tax rate
for the JLW Asia Group depends on the relative level of profits from each
of the JLW Asia Companies and the relative contribution from the Indonesian
operations (which is recognized as a management fee on an after-tax basis).
For the nine months ended September 30, 1998, a substantial reduction in
profits generated by the JLW Asia Companies overall and the reduction of
income from the Indonesian operations resulted in a higher effective tax
rate than in the prior year period.
NET EARNINGS
As a result of the factors discussed above, net earnings decreased by
$9.3 million, to a net loss of $1.1 million for the nine months ended
September 30, 1998 from net earnings of $8.2 million in the prior year
period.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
REVENUE
The JLW Asia Group's total revenue increased by $13.7 million, or
22.0%, to $76.0 million in 1997 from $62.3 million in 1996. The increase
was due primarily to an increase in total space leased in 1997 compared
with 1996 and to increases in investment sales and acquisition
transactions, valuation and the number of properties managed as well as to
the opening of a new office in the Philippines.
In 1997, Hong Kong operations accounted for $51.9 million, or 70.3%,
of the JLW Asia Group's operating revenue, while Singapore accounted for
$16.6 million, or 22.5%. In 1996, Hong Kong operations accounted for $37.3
million, or 62.4%, of the JLW Asia Group's operating revenue, while
Singapore accounted for $16.1 million, or 26.9%.
Operating revenue in Hong Kong increased by $14.6 million, or 39.1%,
to $51.9 million in 1997 from $37.3 million in 1996. The increase was due
to a significant increase in both property prices and the volume of
transactions during most of the year, prior to a significant slow down
following the onset of the Asian Crisis. As property prices rose through
the first half of 1997, there was an increase in valuation, investment
sales and acquisition transactions, leasing transactions and property
management, from which revenues increased as a result of new assignments
and higher fees.
<PAGE>
Operating revenue in Singapore increased by $0.5 million, or 3.1%, to
$16.6 million in 1997 from $16.1 million in 1996 due to a substantial
increase in revenue from investment transactions offset by reduced revenues
from most other services, notably residential leasing. The 1997 results
from Singapore operations were adversely affected by the Asian Crisis and
the effects of measures introduced in May 1996 by the Singaporean
government to curb speculation in the property market. The depreciation of
the local currency also caused a degree of uncertainty in the market and
negatively impacted business sentiment.
Operating revenue in Indonesia decreased by $0.9 million, or 15.5%, to
$4.9 million in 1997 from $5.8 million in 1996. The functional currency of
the Indonesian business had been the US Dollar; therefore, the depreciation
of the Indonesian Rupiah did not have a direct impact on the JLW Asia
Group's revenue in 1997. However, the Asian Crisis negatively impacted the
property market in Indonesia leading to lower occupier demand, increasing
vacancy rates and falling rents.
OPERATING EXPENSES
The JLW Asia Group's operating expenses increased by $11.5 million, or
22.5%, to $62.5 million in 1997 from $51.0 million in 1996. The primary
reason for the increase in operating costs was the combined effect of
increased incentive compensation and increased staffing levels. Operating
expenses include a portion of the profit distributions to owners with
between 10% to 20% of such distributions accounted for as compensation
expense and the remainder accounted for as dividends and royalty payments.
Royalty payments accounted for approximately 4% of total operating expenses
and are included in the operating, administrative and other category of
operating expenses. Operating expenses as a percentage of operating revenue
decreased to 84.7% in 1997 from 85.3% in 1996.
In 1997, Hong Kong operations accounted for $44.6 million, or 71.4%,
of the JLW Asia Group's operating expenses, while Singapore accounted for
$15.3 million, or 24.5%. In 1996, Hong Kong operations accounted for $34.7
million, or 68.0%, of the JLW Asia Group's operating expenses, while
Singapore operations accounted for $15.2 million, or 29.8%.
Operating expenses in Hong Kong increased by $9.9 million, or 28.5%,
to $44.6 million in 1997 from $34.7 million in 1996. This was attributable
primarily to higher compensation expense associated with the increased
revenue and the opening of new residential outlets which contributed to a
rise in staff numbers and administrative costs. Operating expenses as a
percentage of operating revenue decreased to 85.9% in 1997 from 93.0% in
1996.
Operating expenses in Singapore increased by $0.1 million, or 0.7%, to
$15.3 million in 1997 from $15.2 million in 1996. This increase was
primarily attributable to higher rental charges on office space. Operating
expenses as a percentage of operating revenue decreased to 92.2% in 1997
from 94.4% in 1996.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Asia Group's operating income increased by $2.3 million, or
20.4%, to $13.6 million in 1997 from $11.3 million in 1996. Operating
income decreased as a percentage of total revenue to 17.9% in 1997 from
18.1% in 1996.
INTEREST EXPENSE
Interest expense decreased by $0.2 million, or nearly 50%, to $0.2
million in 1997 from $0.4 million in 1996. The decrease was principally a
result of a decrease in net borrowings which resulted from strong operating
cash flow.
<PAGE>
PROVISION FOR INCOME TAXES
Provision for income taxes increased by $0.7 million, or approximately
47%, to $2.2 million in 1997 from $1.5 million in 1996. The effective rate
of tax increased to 16.5% in 1997 from 13.9% in 1996. This increase was due
to the relative contribution from the Indonesian operations (which is
recognized as a management fee on an after tax basis) which decreased by
$0.9 million in 1997, compared with 1996.
NET EARNINGS
As a result of the factors discussed above, net earnings increased by
$1.7 million, or 18.1%, to $11.1 million in 1997 from $9.4 million in 1996.
Net earnings represented 14.7% of total revenue in 1997 compared with 15.1%
in 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
REVENUE
The JLW Asia Group's total revenue increased by $2.6 million, or 4.4%,
to $62.3 million in 1996 from $59.7 million in 1995. The main growth area
for the JLW Asia Group was consulting (both building and research).
Consulting revenue increased by $1.4 million, or 46.6%, to $4.4 million in
1996 from $3.0 million in 1995. Revenue from property management and
valuation also increased. Revenue from office, residential and industrial
sales and leasing all declined marginally and the total volume of space
leased decreased slightly in 1996 compared to 1995.
In 1996, Hong Kong operations accounted for $37.3 million, or 62.4%,
of the JLW Asia Group's operating revenue, while Singapore accounted for
$16.1 million, or 26.9%. In 1995, Hong Kong operations accounted for $35.9
million, or 61.8%, of the JLW Asia Group's operating revenue, while
Singapore accounted for $16.4 million, or 28.2%.
Operating revenue in Hong Kong increased by $1.4 million, or 3.9%, to
$37.3 million in 1996 from $35.9 million in 1995. The revenue increase
resulted primarily from project management and consulting as the market
recovered from weakness in 1995 caused partly by the government's
introduction of anti-speculation measures in 1994. Revenue from property
management and valuation increased, but revenue from office leasing and
investment sales and acquisitions declined.
Operating revenue in Singapore decreased by $0.3 million, or 1.8%, to
$16.1 million in 1996 from $16.4 million in 1995. The 1996 results were
adversely impacted by government measures aimed at reducing property price
escalation and limiting foreigners' freedom to borrow Singapore Dollars.
OPERATING EXPENSES
The JLW Asia Group's operating expenses increased by $0.3 million, or
0.6%, to $51.0 million in 1996 from $50.7 million in 1995. The primary
reason for the increase in operating expenses was higher compensation
expenses. Operating expenses as a percentage of operating revenue decreased
to 85.3% in 1996 from 87.3% in 1995.
In 1996, Hong Kong operations accounted for $34.7 million, or 68.0%,
of the JLW Asia Group's operating expenses, while Singapore accounted for
$15.2 million, or 29.8%. In 1995, Hong Kong operations accounted for $34.2
million, or 67.5%, of the JLW Asia Group's operating expenses, while
Singapore accounted for $14.8 million, or 29.2%.
Operating expenses in Hong Kong increased by $0.5 million, or 1.5%, to
$34.7 million in 1996 due primarily to an increase in administrative
expenses. Operating expenses as a percentage of operating revenue decreased
to 93.0% in 1996 from 95.3% in 1995.
<PAGE>
Operating expenses in Singapore increased by $0.4 million, or 2.7%, to
$15.2 million in 1996 primarily as a result of higher rental, marketing and
depreciation expense. Operating expenses as a percentage of operating
revenue increased to 94.4% in 1996 from 90.2% in 1995.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Asia Group's operating income increased by $2.2 million, or
24.2%, to $11.3 million in 1996 from $9.1 million in 1995. As a percentage
of total revenue, operating income increased to 18.1% in 1996 from 15.2% in
1995.
INTEREST EXPENSE
Interest expense increased by $0.1 million to $0.4 million in 1996
from $0.3 million in 1995. The increase was principally a result of higher
net borrowings in 1996.
PROVISION FOR INCOME TAXES
Provision for income taxes increased by $0.6 million, or 66.7%, to
$1.5 million in 1996 from $0.9 million in 1995. The effective tax rate
increased to 13.9% in 1996 from 10.2% in 1995 due to a change in the
estimate for tax in Singapore in 1995 which resulted in higher taxation in
1996.
NET EARNINGS
As a result of the factors discussed above, net earnings increased by
$1.5 million, or 19.0%, to $9.4 million in 1996 from $7.9 million in 1995.
Net earnings in 1996 represented 15.1% of total revenue compared with 13.2%
in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the JLW Asia Group has financed its operations with
internally generated funds, undistributed profits and short-term
borrowings. Net cash balances (available cash net of borrowings) were $0.5
million in overdraft at September 30, 1998 compared with $5.4 million for
the prior year period. Net cash balances were $6.2 million at year end 1997
compared with $4.0 million at year end 1996 and $6.1 million at year end
1995.
Due to the impact of the Asian Crisis on the JLW Asia Group, the net
cash flow from operating activities was an outflow of $3.6 million for the
nine months ended September 30, 1998, compared with a net cash inflow of
$11.0 million in the prior year period. The decrease in cash flows of $14.6
million was attributable primarily to a $9.3 million decrease in net
earnings and a $4.1 million increase related to working capital. Prior to
the Asian Crisis, the JLW Asia Group's principal source of liquidity was
cash generated from operations. Net cash inflows from operating activities
totaled $20.0 million in 1997, $7.3 million in 1996 and $10.0 million in
1995. The increase in 1997 was attributable primarily to increased net
earnings and improvements in working capital management which resulted in a
$7.1 million decrease in receivables offset by a $0.9 million decrease in
payables, taxation and other current liabilities compared with 1996. In
1996, the $2.7 million decrease in net cash flow provided by operating
activities was primarily a result of an increase in year end receivables
which were $4.3 million higher at year end 1996 than at year end 1995 as a
result of the increase in revenue in the final quarter of 1996.
<PAGE>
Cash used in investing activities was $0.3 million for each of the
nine month periods ended September 30, 1998 and 1997, $0.4 million in 1997,
$1.1 million in 1996 and $0.1 million in 1995. The gross level of funds
spent on the replacement of office machinery and motor vehicles and
leasehold improvements was $0.7 million in 1997, $2.6 million in 1996 and
$1.2 million in 1995. Based on existing operating plans (excluding any
changes resulting from the Transactions), the JLW Asia Group's management
expects the JLW Asia Group's capital expenditures in the remainder of 1998
to be consistent with historical levels. Given the unsettled business
conditions in Asia due to the Asian Crisis, management has not yet
determined what the level of capital expenditures will be for the JLW Asia
Group in 1999.
Cash used in financing activities was an outflow of $1.1 million for
the nine months ended September 30, 1998, compared with an outflow of $9.3
million in the prior year period and outflows of $17.3 million in 1997,
$8.3 million in 1996 and $13.2 million in 1995. The main cash outflow has
been distributions to owners which have fluctuated with the financial
performance of the JLW Asia Group. The distributions to owners decreased to
$1.9 million for the nine months ended September 30, 1998, compared with
$7.9 million in the prior year period due to weaker financial performance
and restricted liquidity. In 1997, the distributions to owners increased to
$14.8 million from $7.6 million in 1996 due to the increase in net
earnings. The distributions to owners decreased by $4.8 million to $7.6
million in 1996 from $12.4 million in 1995. The reduction in dividends paid
in 1996 was due to the lack of liquid resources available for that period.
Capital lease repayments accounted for $1.2 million of the cash used in
financing activities for the nine month period ended September 30, 1998 and
$0.9 million in the prior year period, $1.5 million in 1997, $1.6 million
in 1996 and $1.2 million in 1995. For the nine months ended September 30,
1998, in order to finance its operations, the JLW Asia Group increased its
overdraft by $2.3 million and utilized $5.5 million of short-term deposits.
In 1996, the JLW Asia Group financed operations with long-term borrowings
of $1.2 million, but made net repayments of $0.8 million on its long-term
loan facility during 1997. The JLW Asia Group had short-term unsecured
credit facilities of $5.0 million throughout the period.
INFLATION
For each of the three years ended December 31, 1997, 1996 and 1995,
the JLW Asia Group's main markets of Hong Kong and Singapore experienced
inflation at a maximum rate of 7.2% per annum. Prior to the Asian Crisis,
the majority of the JLW Asia Group's business in Indonesia had been
conducted in US Dollars and hence inflation in that country had not had a
material impact on the financial results of the JLW Asia Group. Due to the
Asian Crisis, however, inflation in Indonesia increased to 75.5% for the
nine months to September 30, 1998 and the extent of transactions in US
Dollars decreased.
<PAGE>
THE JLW AUSTRALASIA GROUP
OVERVIEW
The JLW Australasia Companies have been represented in Australasia
since 1958. They presently provide real estate services including advisory,
commercial, industrial and retail sales and leasing, property management
and facilities management in Australia and New Zealand. Clients include
institutional investors, government departments, public companies, property
trusts and private investors.
JLW Australia has a beneficial interest in JLW Transact, the
international hotel business which provides sales, asset management and
advisory services in the Asia and Australasia Regions. JLW Transact was
formed as two joint venture companies: Jones Lang Wootton Transact Pty
Limited (in Australia) in 1991 and JLW Transact Limited (in New Zealand) in
1994. JLW Australia owned 60% of these companies and the principals of an
existing hotel business in Australia owned 40%. At the beginning of 1996
these businesses were restructured and developed on a regional basis across
the Asia and Australasia Regions. The revised participation for JLW
Australia is held through discretionary trusts and direct shareholding
interests. As a result of the Transactions, the JLW Transact business will
be acquired and the trust ownership discontinued such that the various JLW
Transact companies will become wholly-owned subsidiaries of Jones Lang
LaSalle. The sole exception to this will be Transact Thailand which will be
73.99% owned by Jones Lang LaSalle (49% directly from Benbridge Singapore
and 24.99% indirectly via its purchase of JLW Holdings). The remaining
26.01% will be held through local Thai companies to comply with Thai legal
requirements.
JLW Transact was included in the consolidated financial statements of
the JLW Australasia companies for the year ended December 31, 1995. In the
years ended December 31, 1996 and 1997, JLW Transact was accounted for
under the equity method of accounting by the JLW Australasia Companies and
the JLW Asia Companies.
Economic conditions in Australasia during 1995 to 1997 were relatively
stable with economic growth combined with low inflation and falling
unemployment. These conditions have resulted in steady property markets in
the period. The Asia Crisis is having an impact on the Australasia Region
as growth rates have slowed and the Australian Dollar depreciated against
the US Dollar in the first nine months of 1998.
The JLW Australasia Companies are all structured as corporate
entities. Profits of the business have historically been paid to the owners
through a combination of salary, benefits and dividends. Senior executives
(excluding owners) have historically been compensated through a combination
of salary, benefits and profit share. In connection with the Transactions,
owners and senior employees have entered or will enter into new employment
contracts such that all compensation will be paid as salary, benefits and
bonuses at market rates. As a result, future compensation expense will be
materially higher than the amounts reflected in the historical financial
statements for the nine months ended September 30, 1998 and 1997 and the
years ended December 31, 1997, 1996 and 1995. In the pro forma financial
statements for the year ended December 31, 1997 and for the nine months
ended September 30, 1998, accruals have been made to reflect bonuses at
market rates. In addition, the pro forma financial statements for the year
ended December 31, 1997 also include accruals for market salaries. See
"Unaudited Pro Forma Consolidated Financial Statements--The JLW Companies."
As a result of the Integration and the Transactions, the JLW Companies
incurred professional fees, of which $2.5 million were charged to the JLW
Australasia Companies and are included in operating expenses for the nine
months ended September 30, 1998.
<PAGE>
The Australian Dollar is the predominant functional currency of the
Australasia Group. The exchange rate of the Australian Dollar relative to
US Dollar depreciated by 15.0% for the nine month period ended
September 30, 1998 compared to the prior year period, depreciated by 7.6%
in 1997 compared to 1996 and appreciated by 7.2% in 1996 compared to 1995.
As a consequence of such exchange rate fluctuations, the reported results,
which are in US Dollars, may not reflect the underlying performance of the
JLW Australasia Group.
The JLW Australasia Companies conduct their businesses primarily with
systems utilizing commercial software purchased from suppliers and
customized software. Efforts to ensure such systems, data communication and
telecommunications equipment are Year 2000 compliant are being coordinated
on a global basis by the JLW Companies. See "--The JLW Companies--
Overview--Year 2000." The JLW Australasia Companies have a process in place
to identify Year 2000 risks. Management has determined that their property
database is not Year 2000 compliant and plan to replace this system during
1999. Other software, systems and equipment are expected to be
substantially Year 2000 compliant, and completion of Year 2000 compliance
is not expected by management to have a material impact on the business
operations or financial condition of the JLW Australasia Companies.
RESULTS OF OPERATIONS
The information below is presented in accordance with US GAAP.
<PAGE>
<TABLE>
THE JLW AUSTRALASIA GROUP
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------------------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(in thousands)
REVENUE
Operating revenue. . . . . . . . $ 39,462 42,959 60,522 60,281 57,968
Interest income. . . . . . . . . 25 101 150 94 77
Other income . . . . . . . . . . 1,585 1,504 1,777 1,229 1,289
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . 41,072 44,564 62,449 61,604 59,334
OPERATING EXPENSES
Compensation and benefits. . . . 17,128 18,349 23,337 25,287 23,519
Operating, administrative
and other (1) . . . . . . . . . 21,243 20,811 28,440 29,648 32,458
Depreciation and amortization. . 919 1,014 1,340 1,405 1,348
-------- -------- -------- -------- --------
Total operating expenses. . . . . 39,290 40,174 53,117 56,340 57,325
-------- -------- -------- -------- --------
OPERATING INCOME. . . . . . . . . 1,782 4,390 9,332 5,264 2,009
Interest expense. . . . . . . . 82 260 340 674 687
-------- -------- -------- -------- --------
Earnings before
provision for income taxes . . . 1,700 4,130 8,992 4,590 1,322
Net provision for income taxes. 1,522 1,317 2,918 1,560 16
-------- -------- -------- -------- --------
Net earnings. . . . . . . . . . . $ 178 2,813 6,074 3,030 1,306
======== ======== ======== ======== ========
<FN>
- ----------------
(1) Operating, administrative and other expenses for the nine months ended
September 30, 1998 include costs related to the Integration and the
Transactions totaling $2.5 million.
</TABLE>
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUE
The JLW Australasia Group's total revenue decreased by $3.5 million,
or 7.8%, to $41.1 million for the nine months ended September 30, 1998
compared with $44.6 million in the prior year period. The decrease was due
primarily to a 15.0% depreciation in the exchange rate of the Australian
Dollar relative to the US Dollar for the nine months ended September 30,
1998 compared with the prior year period. Operating revenue decreased by
$3.5 million, or 8.1%, to $39.5 million for the nine months ended September
30, 1998 from $43.0 million in the prior year period. This decrease was
attributable primarily to the depreciation of the local currency as total
revenue reported in local currency increased by 8.4%, due to marked
improvements in the property management markets and sales and investment
fees from a significant development project. These increases in local
currency were in part offset by decreased activity in the retail sector and
a deterioration in investor sentiment, partly resulting from the negative
impact of the Asian Crisis.
OPERATING EXPENSES
The JLW Australasia Group's operating expenses decreased by $0.9
million, or 2.2%, to $39.3 million in the nine months ended September 30,
1998 compared to $40.2 million in the prior year period principally as a
result of the 15.0% depreciation of the local currency relative to the US
Dollar which was offset by the recognition of $2.5 million for Integration
and Transaction costs. When Integration and Transaction costs are excluded,
operating expenses reported in local currency increased by 7.7%. This
increase was due primarily to increases in accrued compensation costs.
Owners are compensated through a combination of salary, benefits and
dividends. Senior executives (excluding owners) have historically been
compensated through a combination of salary, benefits and profit share.
Operating expenses include only the portion of profit distributions paid as
profit share to senior executives. Excluding Integration and Transaction
costs, operating expenses as a percentage of total revenue remained
relatively constant at 89.6% for the nine months ended September 30, 1998
compared to 90.1% in the prior year period.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Australasia Group's operating income decreased by $2.6
million, or 59.4%, to $1.8 million for the nine months ended September 30,
1998 from $4.4 million in the prior year period. As a percentage of total
revenue, operating income decreased to 4.3% for the nine months ended
September 30, 1998 compared to 9.9% in the prior year period.
INTEREST EXPENSE
Interest expense decreased by $0.2 million to $0.1 million for the
nine months ended September 30, 1998 from $0.3 million in the prior year
period.
PROVISION FOR INCOME TAXES
Provision for income taxes remained relatively constant at $1.5
million for the nine months ended September 30, 1998 compared to $1.3
million for the prior year period. The effective tax rate increased to
89.5% for the nine months ended September 30, 1998 from 31.9% in the prior
year period principally due to the non-deductibility of the majority of the
$2.5 million Integration and Transaction costs and the $0.8 million of non-
taxable dividends received from Singapore in the nine months ended
September 30, 1997 compared to no dividends received in the nine months
ended September 30, 1998.
<PAGE>
NET EARNINGS
As a result of the factors discussed above, net earnings decreased to
$0.2 million for the nine months ended September 30, 1998 from $2.8 million
in the prior year period.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
REVENUE
The JLW Australasia Group's total revenue remained relatively constant
at $62.4 million in 1997 compared to $61.6 million in 1996. Total revenue,
as reported in local currency, increased by 9.8% largely due to improved
economic conditions. This increase was substantially offset by a 7.6%
depreciation in the exchange rate of the Australian Dollar relative to the
US Dollar. The increase in revenue in the functional currency resulted
primarily from increased development activity, particularly in the
industrial markets, an increase in outsourcing and facilities management
assignments in the property management markets and an investment market
which continued to be strong in terms of sales volume. These conditions
resulted in higher volumes of investment sales and property management
assignments.
OPERATING EXPENSES
The JLW Australasia Group's operating expenses decreased by $3.2
million, or 5.7%, to $53.1 million in 1997 from $56.3 million in 1996. The
decrease was the result of the depreciation in the exchange rate of the
Australian Dollar relative to the US Dollar, as operating expenses in local
currency increased by 2.1%. Operating expenses as a percentage of operating
revenue decreased to 87.8% in 1997 from 93.5% in 1996.
Owners of the JLW Australasia Group are compensated through a
combination of salaries, benefits and dividends. Senior executives
(excluding owners) have historically been compensated through a combination
of salary, benefits and profit share. Operating costs include only the
portion of profit distributions paid as profit share. Had operating costs
included dividends paid to owners, operating expenses for 1997 relative to
1996 would have increased at a higher rate.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Australasia Group's operating income nearly doubled to $9.3
million in 1997 from $5.3 million in 1996. As a percentage of total
revenue, operating income increased to 14.9% in 1997 from 8.5% in 1996.
INTEREST EXPENSE
Interest expense decreased by $0.4 million, or 49.6%, to $0.3 million
in 1997 from $0.7 million in 1996 due to a reduction in borrowings.
PROVISION FOR INCOME TAXES
Provision for income taxes increased by $1.4 million, or 87.1%, to
$2.9 million in 1997 from $1.6 million in 1996. The effective tax rate
decreased to 32.5% in 1997 from 34.0% in 1996. The decrease in the
effective rate is due primarily to the 1996 tax charge, which was $0.1
million higher due to a change in estimate for tax in the 1995 year.
NET EARNINGS
As a result of the factors discussed above, net earnings increased by
$3.1 million to $6.1 million in 1997 from $3.0 million in 1996. Net
earnings represented 9.7% of total revenue, compared with 4.9% in the
previous year.
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
REVENUE
The JLW Australasia Group's total revenue increased $2.3 million, or
3.8%, to $61.6 million in 1996 from $59.3 million in 1995. The increase was
the result of a 7.2% appreciation in the exchange rate of the Australian
Dollar relative to the US Dollar in 1996 compared with 1995 as revenue
reported in local currency decreased by 3.2%. The decrease in revenue
reported in local currency was largely attributable to a change in
corporate structure as JLW Transact was no longer consolidated in the JLW
Australasia Group financial statements after 1995 as a result of the change
in the ownership interest in JLW Transact to entities related to the JLW
Asia Group. Excluding the deconsolidation of JLW Transact, revenue reported
in local currency increased by 4.5% primarily as a result of increased
activity in the investment market as Asian investors and Australian
institutions increased their volume of acquisition and sales transactions.
OPERATING EXPENSES
The JLW Australasia Group's operating expenses remained relatively
constant with a decrease of $1.0 million, or 1.7%, to $56.3 million in 1996
from $57.3 million in 1995. The decrease occurred despite the 7.2%
appreciation in the exchange rate of the Australian Dollar relative to the
US Dollar as operating expenses reported in local currency decreased by
8.3%. This decrease was primarily attributable to JLW Transact no longer
being consolidated in the JLW Australasia Group accounts after 1995.
Operating costs as a percentage of operating revenue decreased to 93.5% in
1996 from 98.9% in 1995 as a result of a 4.0% increase in operating revenue
compared with a 1.7% decrease in operating expenses.
OPERATING INCOME
Based upon the factors discussed under revenue and operating expenses
above, the JLW Australasia Group's operating income more than doubled to
$5.3 million in 1996 from $2.0 million in 1995. As a percentage of total
revenue, operating income increased to 8.5% in 1996 from 3.4% in 1995.
INTEREST EXPENSE
Interest expense remained relatively constant at $0.7 million for 1996
and 1995.
PROVISION FOR INCOME TAXES
Provision for income taxes increased to $1.6 million in 1996 from a
nominal amount in 1995. The effective rate of tax on profit from ordinary
activities increased to 34.0% in 1996 from 1.2% in 1995. The $1.6 million
increase in provision for income taxes was primarily due to increased
underlying profits, changes in the estimate of tax for both 1996 and 1995
and a change in the corporate tax rate which resulted in a tax gain of $0.1
million.
NET EARNINGS
As a result of the factors discussed above, net earnings more than
doubled, to $3.0 million in 1996 from $1.3 million in 1995. Net earnings
represented 4.9% of total revenue in 1996, compared with 2.2% in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historically the JLW Australasia Group has financed its operations
with internally generated funds, undistributed profits and short-term
borrowings. Net borrowings (available cash net of borrowings) were $0.2
million in overdraft at September 30, 1998 compared to $0.3 million in
overdraft for the prior year period. Net cash at year end 1997 was $3.7
million compared with $2.9 million at year end 1996. At December 31, 1995
the JLW Australasia Group had net borrowings of $2.1 million.
<PAGE>
The JLW Australasia Group's principal source of liquidity generally
has been cash generated from its operating activities. Net cash flows from
operating activities reflected a use of cash of $1.6 million for the nine
months ended September 30, 1998, compared with an inflow of $6.3 million in
the prior year period, an inflow of $9.3 million in 1997 and an inflow of
$5.3 million in 1996. The level of cash generated from operating activities
is impacted by the level of operating profits, the amount of tax paid and
movements in working capital. The $7.8 million reduction in cash generated
from operating activities for the nine months ended September 30, 1998
compared with the prior year period was due primarily to a decrease in
payables of $3.8 million, an increase in receivables of $3.0 million, an
increase in tax paid of $1.3 million and a decrease in dividends received
of $1.0 million. The $3.9 million increase in cash generated from operating
activities in 1997 compared with 1996 was primarily due to a $4.1 million
increase in operating income. In 1997, the tax payment was $2.0 million
compared with a $0.9 million tax payment in 1996.
Historically, the JLW Australasia Group has financed its operations
through internally generated funds, undistributed profits and short-term
borrowings. However, this was not the case for the nine months ended
September 30, 1998, as discussed above, and in 1995, when $1.6 million and
$1.8 million, respectively, were used in operating activities. In 1995 the
use of cash in operating activities was due to weaker operating
performance, a $2.1 million increase in working capital due to a $1.1
million decrease in accrued expenses, a $0.9 million increase in
receivables and a $2.7 million tax payment due on 1994 profits.
Cash used in investing activities generated a net inflow of $0.2
million for the nine months ended September 30, 1998 compared with an
outflow of $0.3 million in the prior year period and outflows of $0.7
million in 1997 and 1996 and $1.6 million in 1995. Capital expenditure was
$0.7 million lower for the nine months ended September 30, 1998 compared
with the prior year period because of the financing of motor vehicles and
computers through operating leases rather than capital leases. Capital
expenditures were higher in 1995 due to an upgrade of computers. It is
expected that, with the exception of a networking project, operating leases
will be used to obtain computers in the future, and hence such outlays will
not involve capital expenditure. In 1997 and 1996, expenditures on capital
equipment were approximately $1.1 million and receipts from fixed asset
sales were approximately $0.5 million. Based on current operating plans
(excluding any changes resulting from the Transactions), the JLW
Australasia Group's management expects the JLW Australasia Group's capital
expenditures in the remainder of 1998 and 1999 to be consistent with
historical levels with the exclusion of 1998 which includes approximately
$1.2 million for a networking project.
In 1995 and 1996, the JLW Australasia Group had a $4.5 million and
$4.8 million credit facility, respectively. The size of the facility was
reduced to $2.0 million in 1997. The facility is secured by a registered
mortgage debenture with respect to all the Australian assets of the JLW
Australasia Companies.
Cash used in financing activities was $2.4 million for the nine months
ended September 30, 1998 compared with $8.9 million in the prior year
period, $7.8 million in 1997, $1.7 million in 1996 and $0.1 million in
1995. The level of cash used or generated in financing activities is
impacted by payments for capital leases, movements in borrowings and
transfers to and from deposit accounts. For the nine months ended September
30, 1998 the decrease of $6.6 million in cash used in financing activities
compared with the prior year period is primarily attributable to the
repayment of the short-term loan of $2.4 million during 1997, a $2.2
million reduction in funds transferred to deposit from the prior year
period, and a decrease in dividends paid of $2.1 million. For the nine
months ended September 30, 1998, $1.8 million was transferred to deposits
while in the prior year period $4.0 million was transferred to deposit and
<PAGE>
$2.4 million of borrowings were repaid. In 1995, in order to finance its
operations, the JLW Australasia Group utilized its credit facility
resulting in net borrowings of $2.1 million at year end. In 1996 a review
of the financing structure was undertaken and, in order to finance the JLW
Australasia Group's operations, the credit facility was in part replaced by
a short-term loan facility of $2.4 million which was substantially repaid
in 1997. This repayment, together with the repayment of capital leases,
dividends paid of $5.3 million and the other facilities, resulted in a net
cash outflow from financing activities of $7.8 million in 1997. Capital
lease repayments accounted for $0.7 million for the nine months ended
September 30, 1998 and in the prior year period, $1.2 million in 1997, $0.3
million in 1996 and $1.0 million in 1995.
INFLATION
Inflation has not significantly affected the results of the JLW
Australasia Group. Inflation rates in Australia have not exceeded 5.21% for
each of the three years ended December 31, 1997, 1996 and 1995 or the nine
month period ended September 30, 1998.
<PAGE>
COMPARATIVE PER SHARE DATA
The following tables present comparative net income and book value per
share data of (i) LaSalle Partners on a historical basis for the nine
months ended September 30, 1998 and on a pro forma basis for the year ended
December 31, 1997, (ii) LaSalle Partners and the Compass Businesses on a
pro forma equivalent basis, (iii) the combined JLW Companies and (iv) the
JLW Companies on a pro forma combined basis assuming to the extent
applicable that the Transactions had been effective as of January 1, 1997
for comparative net income (loss) per common share and on September 30,
1998 for book value per share. No common stock dividends have been paid by
LaSalle Partners. The JLW Companies have historically operated as
partnerships or in a manner resembling partnerships even though in certain
jurisdictions the businesses are structured as corporations. As such, the
profits of the various partnerships and companies have been paid to the
owners and certain senior executives as bonuses, dividends or partner
profit distributions according to the business structure and tax regime in
which the business operates. The pro forma information related to the JLW
Businesses gives effect to the Transactions accounted for as described
under "The Transactions--Anticipated Accounting Treatment" and is based on
the aggregate consideration set forth elsewhere herein. This table should
be read in conjunction with the consolidated financial statements of
LaSalle Partners and the notes thereto, in the LaSalle Partners 10-K and
the LaSalle Partners Third Quarter 10-Q, both incorporated herein by
reference, as well as the LaSalle Partners October 1 Current Report
incorporated herein by reference, the financial statements of the JLW
Companies, included elsewhere herein, and the Unaudited Pro Forma Jones
Lang LaSalle Consolidated Financial Statements, including the notes
thereto, included elsewhere herein.
Nine months
ended Year ended
September 30, December 31,
1998 1997
------------- ------------
NET INCOME (LOSS) PER COMMON SHARE (1):
LaSalle Partners Historical/
Pro Forma (2)
Basic (3) . . . . . . . . . . . . . . $ 0.54 1.28
======== ========
Diluted (4) . . . . . . . . . . . . . $ 0.53 1.27
======== ========
LaSalle Partners/Compass Businesses
Pro Forma Equivalent Combined (5)
Basic (3) . . . . . . . . . . . . . . $ 0.10 1.03
======== ========
Diluted (6) . . . . . . . . . . . . . $ 0.10 1.02
======== ========
JLW Companies Combined Historical (7)
Basic . . . . . . . . . . . . . . . . N/A N/A
Diluted . . . . . . . . . . . . . . . N/A N/A
JLW Companies Pro Forma Equivalent
Combined (8)
Basic (9) . . . . . . . . . . . . . . $ (5.95) (10.17)
======== ========
Diluted (10). . . . . . . . . . . . . $ (5.95) (10.17)
======== ========
- ----------------
(1) Historical net income (loss) per common share is computed by dividing
net income (loss) by the sum of the weighted average number of shares
outstanding during the period.
<PAGE>
(2) Net income (loss) per common share for LaSalle Partners reflects
actual historical results for the period ended September 30, 1998 and pro
forma results for the year ended December 31, 1997, giving effect to (i)
the acquisition by LaSalle Partners of Galbreath, on April 22, 1997, as
adjusted for the tenant representation and investment banking units which
were not acquired, (ii) the provision for income taxes as though LaSalle
Partners and Galbreath were taxable entities as of January 1, 1997 with an
effective tax rate of 38.5%, (iii) estimated incremental general and
administrative costs associated with operations as a public company and
(iv) the repayment of LaSalle Partners' long-term debt out of the proceeds
of LaSalle Partners' initial public offering on July 21, 1997 as if all of
these events occurred on January 1, 1997.
(3) Based on 16,210,340 and 16,200,000 weighted average shares
outstanding as of September 30, 1998 and December 31, 1997, respectively.
(4) Based on 16,403,225 and 16,329,555 weighted average shares
outstanding as of September 30, 1998 and December 31, 1997, respectively.
(5) Combined information reflects pro forma results for LaSalle Partners
and the Compass Businesses as if the acquisition had been effective on
January 1, 1997.
(6) Based on 16,410,161 and 16,337,102 weighted average shares
outstanding as of September 30, 1998 and December 31, 1997, respectively,
including the options on LaSalle Partners Common Stock issued in connection
with the acquisition of the Compass Businesses.
(7) The JLW Companies have been comprised of a series of partnerships,
corporations and other legal entities which have historically not had a
common unit of ownership. The presentation of net earnings per share on an
historical basis would, therefore, not be meaningful.
(8) Pro forma equivalent combined information reflects the aggregate of
the JLW Companies pro forma combined net earnings and acquisition
adjustments as included in the Unaudited Pro Forma Jones Lang LaSalle
Consolidated Statements of Earnings, included elsewhere herein.
(9) Based on 7,746,193 and 7,448,415 weighted average shares outstanding
as of September 30, 1998 and December 31, 1997, respectively. See Footnotes
12 and 14 to the Unaudited Pro Forma Jones Lang LaSalle Consolidated
Statements of Earnings for each of the nine months ended September 30, 1998
and the year ended December 31, 1997, respectively.
(10) For purposes of calculating weighted average diluted shares
outstanding, no Forfeiture Shares, Indemnification Shares, ESOT Adjustment
Shares, ESOT Indemnification Shares or ESOT Shares subject to vesting
(where such shares have been allocated from the ESOT) were included because
due to operating losses, inclusion of common stock equivalents would be
anti-dilutive.
<PAGE>
September 30, December 31,
1998 1997
------------- ------------
BOOK VALUE PER COMMON SHARE (1):
LaSalle Partners Historical (2) . $ 9.68 9.07
======== ========
Pro Forma Equivalent
Combined (2). . . . . . . . $ 9.68 N/A
========
JLW Companies Combined
Historical (3) . . . . . . . . .. N/A N/A
Pro Forma Equivalent
Combined (4) . . . . . . . . $ 21.16 N/A
========
- ----------------
(1) Historical book value per common share is computed by dividing
stockholders' equity by the number of shares of the respective companies'
common stock outstanding at the balance sheet date. The pro forma
equivalent combined book values per common share are based on the number of
shares that are expected to be issued to the JLW Shareholders in the
Transactions, so that the pro forma per share amounts are equated to the
respective pro forma book value for one share of LaSalle Partners Common
Stock.
(2) Based on 16,230,358 and 16,200,000 shares issued and outstanding of
LaSalle Partners Common Stock as of September 30, 1998 and December 31,
1997, respectively.
(3) The JLW Companies have been comprised of a series of partnerships,
corporations and other legal entities which have historically not had a
common unit of ownership. The presentation of book value per common share
on an historical basis would, therefore, not be meaningful.
(4) Based on 12,824,475 shares assumed to be issued and outstanding as of
September 30, 1998, which includes the 12,481,792 Consideration Shares
issuable at Closing and the 915,542 ESOT Shares to be allocated at closing,
less the Adjustment Shares (including ESOT Adjustment Shares) assumed to be
returned to Jones Lang LaSalle as a result of the post-closing net worth
adjustments (giving effect to the net worth of the JLW Companies as of
September 30, 1998). See "The Purchase Agreements Consideration
Adjustment."
DIVIDENDS PER COMMON SHARE
Since its incorporation, LaSalle Partners has not declared or paid
dividends to its stockholders. Prior to incorporation, LaSalle Partners
operated as a partnership and distributed a substantial portion of its
profits to its partners annually. The JLW Companies have been comprised of
a series of partnerships, corporations and other legal entities which have
historically distributed substantially all net profits to their owners
annually. The presentation of dividends per common share on an historical
or pro forma basis would, therefore, not be meaningful.
<PAGE>
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements
INDEX TO FINANCIAL STATEMENTS
JONES LANG WOOTTON (The English Partnership and subsidiaries):
Independent Auditors' Report. . . . . . . . . . . . . . .
Consolidated Profit and Loss Accounts for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Consolidated Statements of Movements on Partners' Funds
for the Nine Months Ended September 30, 1998 and
Years Ended December 31, 1997, 1996 and 1995. . . . . .
Consolidated Balance Sheets as of September 30, 1998 and
December 31, 1997 and 1996. . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Consolidated Statements of Total Recognized Gains and
Losses for the Nine Months Ended September 30, 1998
and 1997 and Years Ended December 31, 1997, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . . .
Reconciliations of Movements in Partners' Funds for
the Nine Months Ended September 30, 1998 and 1997
and Years Ended December 31, 1997, 1996 and 1995. . . .
Notes to the Accounts . . . . . . . . . . . . . . . . . .
JONES LANG WOOTTON--SCOTLAND:
Independent Auditors' Report. . . . . . . . . . . . . . .
Consolidated Profit and Loss Accounts for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Statement of Total Recognized Gains and Losses for the
Nine Months Ended September 30, 1998 and 1997 and
Years Ended December 31, 1997, 1996 and 1995. . . . . .
Consolidated Balance Sheets at September 30, 1998
and December 31, 1997 and 1996. . . . . . . . . . . . .
Consolidated Statement of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Statement of Movements on Funds for the Nine Months
Ended September 30, 1998 and Years Ended December 31,
1997, 1996 and 1995 . . . . . . . . . . . . . . . . . .
Notes to the Accounts . . . . . . . . . . . . . . . . . .
JONES LANG WOOTTON--IRISH PRACTICE:
Independent Auditors' Report. . . . . . . . . . . . . . .
Combined Profit and Loss Accounts for the Nine Months
to September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Combined Balance Sheets as at September 30, 1998 and
as at December 31, 1997 and 1996. . . . . . . . . . . .
Combined Statements of Total Recognized Gains and Losses
for the Nine Months to September 30, 1998 and 1997 and
Years Ended December 31, 1997, 1996 and 1995. . . . . .
Combined Statements of Movements in Partners' Funds
for the Nine Months to September 30, 1998 and 1997
and Years Ended December 31, 1997, 1996 and 1995. . . .
Combined Statements of Cash Flows for the Nine Months
to September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Notes to the Combined Financial Statements. . . . . . . .
<PAGE>
JLW ASIA HOLDINGS LIMITED:
Independent Auditors' Report. . . . . . . . . . . . . . .
Group Profit and Loss Accounts for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Group Balance Sheets as at September 30, 1998,
December 31, 1997 and 1996. . . . . . . . . . . . . . .
Group Cash Flow Statements for the Nine Months Ended
September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Group Statements of Total Recognized Gains and Loss
for the Nine Months Ended September 30, 1998 and 1997
and Years Ended December 31, 1997, 1996 and 1995. . . .
Reconciliation of Shareholders' Funds for the
Nine Months Ended September 30, 1998 and 1997
and Years Ended December 31, 1997, 1996 and 1995. . . .
Notes to the Group Financial Statements . . . . . . . . .
JLW PROPERTY CONSULTANTS PTE LTD:
Independent Auditors' Report. . . . . . . . . . . . . . .
JLW AUSTRALASIA GROUP:
Independent Auditors' Report. . . . . . . . . . . . . . .
Combined Profit and Loss Accounts for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Statement of Movements on Reserves for the Nine Months
Ended September 30, 1998 and Years Ended December 31,
1997, 1996 and 1995 . . . . . . . . . . . . . . . . . .
Combined Balance Sheets as at September 30, 1998,
December 31, 1997 and 1996. . . . . . . . . . . . . . .
Combined Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997 and Years Ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . .
Combined Statements of Total Recognized Gains and
Losses for the Nine Months Ended September 30, 1998
and 1997 and Years Ended December 31, 1997, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . . .
Reconciliation of Movements in Combined Shareholders'
Funds for the Nine Months Ended September 30, 1998
and Years Ended December 31, 1997 and 1996. . . . . . .
Notes to the Accounts . . . . . . . . . . . . . . . . . .
COMPASS GROUP:
Independent Auditors' Report. . . . . . . . . . . . . . .
Combined Balance Sheets as of September 30, 1998 and
December 31, 1997 . . . . . . . . . . . . . . . . . . .
Combined Statements of Operations for the Nine Months
Ended September 30, 1998 and for the Period June 11,
1997 to September 30, 1997 and for the Period
June 11, 1997 to December 31, 1997. . . . . . . . . . .
Combined Statements of Stockholders' Equity for the
Nine Months Ended September 30, 1998 and for the
Period June 11, 1997 to December 31, 1997 . . . . . . .
Combined Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and for the Period June 11,
1997 to September 30, 1997 and for the Period
June 11, 1997 to December 31, 1997. . . . . . . . . . .
Notes to the Combined Financial Statements. . . . . . . .
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
Financial Statements
Years ended December 31, 1997, 1996 and 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT TO THE PARTNERS OF
JONES LANG WOOTTON
We have audited the accompanying consolidated balance sheets of Jones
Lang Wootton ("the Firm") and its subsidiaries as of December 31, 1997 and
1996, and the related consolidated profit and loss accounts, consolidated
statements of cash flows and consolidated statements of movements on
partners' funds for each of the years in the three year period ended
December 31, 1997. These consolidated financial statements are the
responsibility of the Partners. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United Kingdom and the United States of America.
Those standards require that we plan and perform audits to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Jones Lang Wootton and its subsidiaries as of December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the
years in the three year period ended December 31, 1997 in conformity with
accounting principles generally accepted in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States. Application of accounting principles generally
accepted in the United States would have affected the results of operations
for each of the years in the three year period ended December 31, 1997 and
the determination of Partners' funds as of December 31, 1997 and 1996, to
the extent summarized in Note 27 to the accounts.
Deloitte & Touche
Chartered Accountants
London, United Kingdom
November 23, 1998
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FEE INCOME. . . . . . . . 2 221,074 168,224 252,895 214,263 192,516
Administrative expenses . (183,908) (142,005) (217,501) (185,321) (177,375)
Merger-related
non-recurring charges . (8,315) -- -- -- --
---------- ---------- ---------- ---------- ----------
OPERATING PROFIT. . . . . 3 28,851 26,219 35,394 28,942 15,141
Gain on sale of investment
in associated company . 3,850 -- 2,348 -- --
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
INTEREST . . . . . . . . 32,701 26,219 37,742 28,942 15,141
Investment income . . . . 4 2,540 2,482 3,395 2,844 3,560
Interest payable and
similar charges . . . . 5 (484) (520) (649) (804) (1,253)
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION . . . . . . . . 2 34,757 28,181 40,488 30,982 17,448
Tax on profit on ordinary
activities. . . . . . . 6 (4,023) (1,802) (3,300) (3,478) (2,756)
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION . . . . . . . . 30,734 26,379 37,188 27,504 14,692
Minority interests. . . . (1,277) (454) (1,450) (59) (223)
---------- ---------- ---------- ---------- ----------
PROFIT FOR THE PERIOD . . 29,457 25,925 35,738 27,445 14,469
========== ========== ========== ========== ==========
<FN>
All activities derive from continuing operations.
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF MOVEMENTS ON PARTNERS' FUNDS
Nine months ended 30 September 1998
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Corporate
Foreign profit
exchange Annuit- and loss
Other translation ants' Partners' accounts
Reserves reserves balances balances reserves Total
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT 1 JANUARY
1995 . . . . . . . . . . 1,333 835 357 15,856 11,310 29,691
Profit/(loss) for
the year. . . . . . . . -- -- 628 15,343 (1,502) 14,469
Transfer to corporate
reserves in respect
of work in progress . . -- -- -- (4,409) 4,409 --
Partner drawings. . . . . -- -- (892) (15,135) -- (16,027)
Foreign exchange trans-
lation differences. . . (11) 447 2 (52) (133) 253
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT 31 DECEMBER
1995 . . . . . . . . . . 1,322 1,282 95 11,603 14,084 28,386
Profit for the year . . . -- -- 887 23,333 3,225 27,445
Goodwill on disposal
of a business . . . . . 56 -- -- -- -- 56
Partner drawings. . . . . -- -- (462) (18,042) -- (18,504)
Foreign exchange trans-
lation differences. . . 142 (1,741) 50 1,692 1,748 1,891
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT 31 DECEMBER
1996 . . . . . . . . . . 1,520 (459) 570 18,586 19,057 39,274
Profit for the year . . . -- -- 1,242 29,318 5,178 35,738
Annuitants buyout,
transferred from
partners' balances. . . -- -- 8,685 (8,685) -- --
Goodwill written off to
reserves (note 23). . . (401) -- -- -- -- (401)
Partner drawings. . . . . -- -- (1,298) (22,678) -- (23,976)
Foreign exchange trans-
lation differences. . . (61) (519) 14 (724) (712) (2,002)
---------- ---------- ---------- ---------- ---------- ----------
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF MOVEMENTS ON PARTNERS' FUNDS - CONTINUED
Corporate
Foreign profit
exchange Annuit- and loss
Other translation ants' Partners' accounts
Reserves reserves balances balances reserves Total
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT 31 DECEMBER
1997 . . . . . . . . . . 1,058 (978) 9,213 15,817 23,523 48,633
Unaudited profit/(loss)
for the period. . . . . -- -- 1,680 33,034 (5,257) 29,457
Annuitants buyout,
transferred from
partners' balances. . . -- -- 840 (840) -- --
Partner drawings. . . . . -- -- (1,065) (29,783) -- (30,848)
Foreign exchange trans-
lation differences. . . 35 280 319 547 711 1,892
---------- ---------- ---------- ---------- ---------- ----------
UNAUDITED BALANCE AT
30 SEPTEMBER 1998. . . . 1,093 (698) 10,987 18,775 18,977 49,134
========== ========== ========== ========== ========== ==========
<FN>
Other reserves are not distributable and represent the net amount of capital reserves and goodwill arising on
consolidation to date together with legal reserves in certain subsidiaries.
Corporate profit and loss account reserves represent the amounts retained within the corporate entities
consolidated in these accounts.
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited
30 September
Note 1998 1997 1996
---- ------------- ---------- ----------
<S> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets . . . . . . . . 7 3,079 439 662
Tangible assets . . . . . . . . . 8 21,871 19,301 17,079
Investments . . . . . . . . . . . 9 350 528 764
---------- ---------- ----------
25,300 20,268 18,505
---------- ---------- ----------
CURRENT ASSETS
Work in progress. . . . . . . . . 2,131 2,468 2,184
Trade debtors due beyond one year 7,282 282 116
Debtors . . . . . . . . . . . . . 10 84,897 77,073 74,572
Cash on bank and in hand. . . . . 19,885 21,242 14,844
---------- ---------- ----------
114,195 101,065 91,716
Creditors: amounts falling due
within one year . . . . . . . . 11 (80,305) (68,750) (69,347)
---------- ---------- ----------
Net current assets. . . . . . . . 33,890 32,315 22,369
---------- ---------- ----------
Total assets less
current liabilities . . . 59,190 52,583 40,874
Creditors: amounts falling due
after more than one year. . . . 12 (5,623) (240) (202)
Provision for liabilities and
charges . . . . . . . . . . . . 14 (2,214) (2,335) (1,372)
MINORITY INTERESTS
Minority interests. . . . . . . . (2,219) (1,375) (26)
---------- ---------- ----------
49,134 48,633 39,274
========== ========== ==========
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED BALANCE SHEETS - CONTINUED
Unaudited
30 September
Note 1998 1997 1996
---- ------------- ---------- ----------
PARTNERS' FUNDS
Other reserves. . . . . . . . . . 1,093 1,058 1,520
Foreign exchange translation
reserve . . . . . . . . . . . . (698) (978) (459)
Annuitant balances. . . . . . . . 10,987 9,213 570
Partner balances. . . . . . . . . 18,775 15,817 18,586
Corporate reserves. . . . . . . . 18,977 23,523 19,057
---------- ---------- ----------
49,134 48,633 39,274
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM
OPERATING ACTIVITIES . . 15 25,800 33,443 48,948 31,328 26,625
---------- ---------- ---------- ---------- ----------
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received . . . . 1,745 1,051 1,532 1,290 1,378
Interest paid . . . . . . (484) (520) (647) (704) (1,152)
Interest element of
finance lease rental
payments. . . . . . . . -- -- (2) (100) (101)
Amounts distributed
from investments. . . . 1,433 1,413 1,413 1,126 1,430
Dividends paid to
minority interests. . . -- -- -- (215) (229)
---------- ---------- ---------- ---------- ----------
Net cash inflow from
returns on investments
and servicing of finance 2,694 1,944 2,296 1,397 1,326
---------- ---------- ---------- ---------- ----------
TAXATION
UK corporation tax paid . (959) (182) (193) (206) (590)
Overseas tax paid . . . . (2,175) (3,805) (4,017) (1,555) (2,403)
---------- ---------- ---------- ---------- ----------
TAX PAID. . . . . . . . . (3,134) (3,987) (4,210) (1,761) (2,993)
---------- ---------- ---------- ---------- ----------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire
intangible fixed assets (1,409) -- -- (733) --
Payments to acquire
tangible fixed assets . (8,334) (7,682) (11,474) (8,333) (10,286)
Receipts from sales of
tangible fixed assets . 689 657 767 790 1,427
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
Payments to acquire
fixed asset investments -- (18) (18) -- --
Receipts from sales of
fixed asset investments 4,107 -- 2,492 2,154 --
---------- ---------- ---------- ---------- ----------
Net cash outflow from
capital expenditure and
financial investment. . (4,947) (7,043) (8,233) (6,122) (8,859)
---------- ---------- ---------- ---------- ----------
ACQUISITIONS
Payments to acquire
investments in
subsidiaries. . . . . . 18 -- -- (401) -- --
---------- ---------- ---------- ---------- ----------
Net cash outflow from acquisitions -- -- (401) -- --
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO PARTNERS
Partners' drawings. . . . (30,848) (15,744) (23,976) (18,504) (16,027)
---------- ---------- ---------- ---------- ----------
Net cash outflow from
distributions to
partners. . . . . . . . (30,848) (15,744) (23,976) (18,504) (16,027)
---------- ---------- ---------- ---------- ----------
Net cash (outflow)/inflow
before financing. . . . (10,435) 8,613 14,424 6,338 72
---------- ---------- ---------- ---------- ----------
FINANCING
Capital element of finance
lease rental payments . (5) (285) (280) (433) (484)
Repayment of bank loan. . -- -- -- -- (1,299)
---------- ---------- ---------- ---------- ----------
Net cash outflow from
financing . . . . . . . (5) (285) (280) (433) (1,783)
---------- ---------- ---------- ---------- ----------
(DECREASE)/INCREASE
IN CASH . . . . . . . . 16,17 (10,440) 8,328 14,144 5,905 (1,711)
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit for the period . . . . . . 29,457 25,925 35,738 27,445 14,469
Currency translation differences
on foreign currency net
investments. . . . . . . . . . . 1,892 (2,862) (2,002) 1,891 253
---------- ---------- ---------- ---------- ----------
Total recognized gains and losses
relating to the year. . . . . . 31,349 23,063 33,736 29,336 14,722
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
RECONCILIATIONS OF MOVEMENTS IN PARTNERS' FUNDS
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit for the period . . . . . . 29,457 25,925 35,738 27,445 14,469
Distributions to Partners . . . . (30,848) (15,744) (23,976) (18,504) (16,027)
---------- ---------- ---------- ---------- ----------
(1,391) 10,181 11,762 8,941 (1,558)
Other recognized gains and
losses relating to the period . 1,892 (2,862) (2,002) 1,891 253
Goodwill written back on
disposal of a business. . . . . -- -- -- 56 --
Goodwill written off
(see note 23) . . . . . . . . . -- -- (401) -- --
---------- ---------- ---------- ---------- ----------
Net addition to partners' funds . 501 7,319 9,359 10,888 (1,305)
Opening partners' funds . . . . . 48,633 39,274 39,274 28,386 29,691
---------- ---------- ---------- ---------- ----------
Closing partners' funds . . . . . 49,134 46,593 48,633 39,274 28,386
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Jones Lang Wootton, through its operational subsidiaries, provides a
full range of advisory, transactional and asset management services to a
wide variety of local and international clients in almost every industry
and service sector for all types of real estate. The main geographical
markets are the UK, Europe and North America.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention and in accordance with accounting principles generally accepted
in the United Kingdom.
BASIS OF CONSOLIDATION
The financial statements incorporate the results of the Jones Lang
Wootton partnership and its subsidiary undertakings for the years ended 31
December 1997, 31 December 1996 and 31 December 1995.
The financial statements consolidate all the interests of the Partners
of the English Partnership of Jones Lang Wootton, although not all partners
have an equal interest therein.
INTERIM INFORMATION
The consolidated financial statements as at 30 September 1998 and for
the nine month periods ended 30 September 1998 and 1997 are unaudited;
however, in the opinion of management, all adjustments (consisting solely
of normal recurring adjustments) necessary for a fair presentation of the
consolidated financial statements for these interim periods have been
included. The results for the periods ended 30 September 1998 and 1997 are
not necessarily indicative of the results to be obtained for the full
fiscal year.
ACQUISITIONS AND DISPOSALS
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the Firm's share of
net tangible assets. Where the cost of acquisition exceeds the values
attributable to such net assets, the difference is treated as purchased
goodwill. Purchased goodwill arising on acquisitions prior to 1 January
1998 is written off directly to reserves in the year of acquisition.
Amounts arising on acquisitions after that date are capitalized and
amortized over a period of ten years, the expected useful life.
The profit or loss on the disposal of a previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business.
FEE INCOME
Revenue is recognized upon substantial completion of the underlying
contract, excluding VAT. All trading arises from the provision by the Firm
of advice on all aspects of commercial real estate and other services,
including surveying, property management and related services.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
INTANGIBLE FIXED ASSETS
Intangible fixed assets are stated at cost less accumulated
amortization and are amortized over the expected useful life of the assets
held. The expected useful life of the assets currently held is four years.
DEPRECIATION
Depreciation is provided annually on the various categories of fixed
assets using the following expected useful lives:
Motor vehicles --on written down value 2-5 years
Office machinery and fixtures --on cost greater than $825 3-10 years
Office machinery and fixtures --on cost less than $825 1 year
Computer equipment --on cost 3-4 years
Short leasehold improvements --on cost 3-10 years
Leasehold property is amortized equally over the length of the lease.
No depreciation is provided on fine art.
TAXATION
Taxation is provided on the taxable profits of the corporate entities
within the Firm. No current or deferred taxation is provided on the
profits attributable to the partners as the liability for taxation falls on
the individual partners.
DEFERRED TAXATION
Deferred taxation is provided at the anticipated tax rates on timing
differences arising from the inclusion of items of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future.
INVESTMENTS
Except as stated below, investments held as fixed assets are stated at
cost less provision for any permanent diminution in value.
In the consolidated accounts, shares in associated undertakings are
accounted for using the equity method of accounting. The consolidated
profit and loss account includes the Firm's share of pre-tax profits and
losses and attributable taxation of the associated undertakings. In the
consolidated balance sheet, the investment in associated undertakings is
shown as the Firm's share of the separable net assets, of the associated
undertakings.
Investment income includes the share of profits of Jones Lang Wootton
Scotland and Jones Lang Wootton Ireland attributable to certain partners in
Jones Lang Wootton who participate in the profit of those firms for the
benefit of all partners in Jones Lang Wootton.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
WORK IN PROGRESS
Work in progress represents work done by the Firm but not yet
substantially complete and not yet billed. Work in progress is included in
the accounts at the lower of cost including attributable overheads, and net
realisable value.
LEASES
Assets held under finance leases are capitalized at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
PENSION COSTS
The Firm operates a variety of schemes including defined benefit and
defined contribution schemes:
(i) UK Schemes
DEFINED BENEFIT SCHEME--J.L.W. SUPPLY COMPANY
The expected cost of providing pensions, as calculated periodically by
professionally qualified actuaries, is charged to the profit and loss
account so as to spread the cost over the service lives of the employees in
the scheme, in such a way that the pension cost is a substantially level
percentage of current and expected future pensionable payroll.
DEFINED CONTRIBUTION SCHEME--PROPERTY MANAGEMENT RESOURCES LIMITED
Retirement benefits to employees are provided by a defined
contribution scheme. Contributions payable to the scheme in respect of
each accounting period are charged to the profit and loss account.
(ii) Overseas Schemes
The pension charges relating to overseas schemes are determined in
accordance with local best practice and regulations in the countries
concerned.
FOREIGN EXCHANGE
Transactions of companies within the Firm denominated in foreign
currencies are translated at the rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the rates ruling at
that date. These translation differences are dealt with in the profit and
loss account.
The balance sheets of foreign subsidiaries are translated at the
closing rates of exchange and the profit and loss accounts and cash flow
statements at average rates. The differences arising from the translation
of the opening net investment in subsidiaries at the closing rates and the
profit and loss accounts at average rates are taken direct to reserves.
Where foreign currency borrowings have been used to finance Firm
investments, the exchange gains or losses arising on the translation of the
foreign borrowings are offset as a reserve movement against the exchange
differences arising on the retranslation of the net investments.
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
The functional currency of Jones Lang Wootton and its subsidiaries is generally the local currency,
accordingly its transactions are measured in the local currency and the results of its subsidiaries are translated
upon consolidation into sterling according to the above accounting policy. The reporting currency for the
purposes of these financial statements is the United States dollar and the sterling consolidated financial
statements have been translated using the closing rate of exchange for the balance sheet and the weighted average
rate of exchange for the profit and loss account. The opening capital and reserves have been translated using the
rate at January 1, 1995. All differences arising as a result of this translation have been taken directly to the
foreign exchange translation reserve.
2. ANALYSES OF TURNOVER, PROFIT BEFORE TAX AND NET ASSETS
TURNOVER
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
United Kingdom. . . . . . . . . . 99,581 78,530 109,635 83,256 75,275
CONTINENTAL EUROPE:
France. . . . . . . . . . . . . . 17,693 13,159 21,769 21,475 22,220
Germany . . . . . . . . . . . . . 22,570 19,255 31,888 36,097 31,997
Holland . . . . . . . . . . . . . 14,694 12,371 17,349 17,135 15,250
Belgium . . . . . . . . . . . . . 10,783 8,520 13,805 13,393 13,847
Other Continental European
countries . . . . . . . . . . . 11,887 6,243 10,708 6,861 4,609
---------- ---------- ---------- ---------- ----------
Total Continental Europe. . . 77,627 59,548 95,519 94,961 87,923
---------- ---------- ---------- ---------- ----------
North America . . . . . . . . . . 43,866 30,146 47,741 36,046 29,318
---------- ---------- ---------- ---------- ----------
Total . . . . . . . . . . . . 221,074 168,224 252,895 214,263 192,516
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
United Kingdom. . . . . . . . . . 33,475 27,575 33,331 22,576 12,728
CONTINENTAL EUROPE:
France. . . . . . . . . . . . . . 1,117 (577) 1,079 (1,013) (513)
Germany . . . . . . . . . . . . . (3,209) (1,434) 59 2,834 2,331
Holland . . . . . . . . . . . . . 2,488 1,617 1,619 2,319 910
Belgium . . . . . . . . . . . . . 985 81 1,014 552 1,019
Other Continental European
countries . . . . . . . . . . . 1,984 1,509 1,009 771 47
---------- ---------- ---------- ---------- ----------
Total Continental Europe. . . 3,365 1,196 4,780 5,463 3,794
---------- ---------- ---------- ---------- ----------
North America . . . . . . . . . . (2,083) (590) 2,377 2,943 926
---------- ---------- ---------- ---------- ----------
Total . . . . . . . . . . . . 34,757 28,181 40,488 30,982 17,448
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
NET ASSETS
Unaudited
nine months
ended
30 September
1998 1997 1996
------------- ---------- ----------
United Kingdom. . . . . . . . 33,601 33,184 26,523
CONTINENTAL EUROPE:
France. . . . . . . . . . . . 2,071 821 (1,874)
Germany . . . . . . . . . . . 159 2,984 3,490
Holland . . . . . . . . . . . 5,669 3,804 3,920
Belgium . . . . . . . . . . . 14 274 146
Other Continental European
countries . . . . . . . . . 2,975 1,588 1,239
---------- ---------- ----------
Total Continental
Europe. . . . . . . . . 10,888 9,471 6,921
---------- ---------- ----------
North America . . . . . . . . 4,645 5,978 5,830
---------- ---------- ----------
Total . . . . . . . . . . 49,134 48,633 39,274
========== ========== ==========
3. OPERATING PROFIT
1997 1996 1995
---------- ---------- ----------
Operating profit is stated
after including:
(a) Other operating income:
Gross rents receivable 344 330 346
========== ========== ==========
(b) Staff costs:
Wages and salaries . . 105,818 93,096 84,160
Social security costs. 12,989 12,672 13,034
Other pension costs
(note 19). . . . . . 3,300 2,261 2,326
---------- ---------- ----------
122,107 108,029 99,520
========== ========== ==========
No. No. No.
---------- ---------- ----------
Average number of persons
employed:
Technical and adminis-
tration . . . . . . . . . 2,216 2,004 1,939
========== ========== ==========
(c) Other operating
charges. . . . . . . 88,332 71,576 71,929
========== ========== ==========
(d) Depreciation and other
amounts written off
tangible fixed assets:
Own assets . . . . . . 7,326 5,894 5,961
Assets held under
finance leases . . . 80 152 311
========== ========== ==========
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
4. INVESTMENT INCOME
1997 1996 1995
---------- ---------- ----------
Income from interests in
associated companies. . . . 600 821 1,720
Income from Jones Lang
Wootton Scotland. . . . . . 934 375 295
Income from Jones Lang
Wootton Ireland . . . . . . 329 358 167
Other interest receivable
and similar income. . . . . 1,532 1,290 1,378
---------- ---------- ----------
3,395 2,844 3,560
========== ========== ==========
5. INTEREST PAYABLE AND SIMILAR CHARGES
1997 1996 1995
---------- ---------- ----------
Bank loans, overdrafts and
other loans . . . . . . . . 647 704 1,152
Finance charges--finance
leases. . . . . . . . . . . 2 100 101
---------- ---------- ----------
649 804 1,253
========== ========== ==========
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
1997 1996 1995
---------- ---------- ----------
United Kingdom corporation
tax based on the profit
for the year. . . . . . . . 1,817 309 447
Overseas taxation . . . . . . 1,483 3,169 2,309
---------- ---------- ----------
3,300 3,478 2,756
========== ========== ==========
The tax charge is disproportionately low as no taxation is provided on
the profits attributable to the partners in accordance with the Firm's
accounting policies.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
7. INTANGIBLE FIXED ASSETS
Contract
Rights
----------
COST
At 1 January 1996 . . . . . . . . . . . . . . . . . . . --
Additions . . . . . . . . . . . . . . . . . . . . . . . 733
Foreign exchange translation differences. . . . . . . . 30
-----
At 31 December 1996 . . . . . . . . . . . . . . . . . . 763
-----
Foreign exchange translation differences. . . . . . . . --
-----
At 31 December 1997 . . . . . . . . . . . . . . . . . . 763
-----
ACCUMULATED AMORTIZATION
At 1 January 1996 . . . . . . . . . . . . . . . . . . . --
Charge for the year . . . . . . . . . . . . . . . . . . 102
Foreign exchange translation differences. . . . . . . . (1)
-----
At 31 December 1996 . . . . . . . . . . . . . . . . . . 101
Charge for the year . . . . . . . . . . . . . . . . . . 215
Foreign exchange translation differences. . . . . . . . 8
-----
At 31 December 1997 . . . . . . . . . . . . . . . . . . 324
-----
NET BOOK VALUE
At 31 December 1997 . . . . . . . . . . . . . . . . . . 439
=====
At 31 December 1996 . . . . . . . . . . . . . . . . . . 662
=====
At 31 December 1995 . . . . . . . . . . . . . . . . . . --
=====
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
8. TANGIBLE FIXED ASSETS
<CAPTION>
Office
machinery, Improve-
computer ments
equipment to short Short
Motor and leasehold leasehold
Vehicles fixtures Fine Art premises property Total
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
COST
At 1 January 1996 . . . . . 12,351 32,783 311 4,791 417 50,653
Foreign exchange trans-
lation differences. . . . 677 615 31 113 50 1,486
Additions . . . . . . . . . 3,405 4,911 -- 8 75 8,399
Disposals . . . . . . . . . (2,277) (3,681) -- (1,296) -- (7,254)
---------- ---------- ---------- ---------- ---------- ----------
At 31 December 1996 . . . . 14,156 34,628 342 3,616 542 53,284
Foreign exchange trans-
lation differences. . . . (984) (2,775) (13) (94) (20) (3,886)
Additions . . . . . . . . . 3,833 7,385 -- 256 -- 11,474
Disposals . . . . . . . . . (2,445) (12,578) -- (3) -- (15,026)
---------- ---------- ---------- ---------- ---------- ----------
At 31 December 1997 . . . . 14,560 26,660 329 3,775 522 45,846
---------- ---------- ---------- ---------- ---------- ----------
ACCUMULATED DEPRECIATION
At 1 January 1996 . . . . . 7,088 25,969 -- 2,611 231 35,899
Foreign exchange trans-
lation differences. . . . 387 518 -- (36) 28 897
Charge for the year . . . . 2,130 3,461 -- 394 61 6,046
Disposals . . . . . . . . . (1,760) (3,577) -- (1,300) -- (6,637)
---------- ---------- ---------- ---------- ---------- ----------
At 31 December 1996 . . . . 7,845 26,371 -- 1,669 320 36,205
Foreign exchange trans-
lation differences. . . . (539) (2,102) -- (37) (10) (2,688)
Charge for the year . . . . 2,489 4,541 -- 313 63 7,406
Disposals . . . . . . . . . (1,843) (12,532) -- (3) -- (14,378)
---------- ---------- ---------- ---------- ---------- ----------
At 31 December 1997 . . . . 7,952 16,278 -- 1,942 373 26,545
---------- ---------- ---------- ---------- ---------- ----------
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Office
machinery, Improve-
computer ments
equipment to short Short
Motor and leasehold leasehold
Vehicles fixtures Fine Art premises property Total
---------- ---------- ---------- ---------- ---------- ----------
NET BOOK VALUE
At 31 December 1997 . . . . 6,608 10,382 329 1,833 149 19,301
========== ========== ========== ========== ========== ==========
At 31 December 1996 . . . . 6,311 8,257 342 1,947 222 17,079
========== ========== ========== ========== ========== ==========
At 1 January 1996 . . . . . 5,263 6,814 311 2,180 186 14,754
========== ========== ========== ========== ========== ==========
<FN>
The net book value of the Firm's fixed assets includes motor vehicles amounting to $41 (31 December 1996--
$310) in respect of assets held under finance leases.
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
9. INVESTMENTS
1997 1996
---------- ----------
NET BOOK VALUE
Associates. . . . . . . . . . . . . . . . 462 708
Other investments . . . . . . . . . . . . 66 56
---------- ----------
528 764
========== ==========
INVESTMENTS IN ASSOCIATES
1997 1996
---------- ----------
Global Realty Advisers. . . . . . . . . . 189 200
GRA (Bermuda) Limited . . . . . . . . . . 252 486
Jones Lang Wootton Realty Advisors. . . . -- --
JLW & WAE Residential . . . . . . . . . . 21 22
---------- ----------
462 708
========== ==========
Share of
post acqui-
sition
Cost reserves Total
---------- ---------- ----------
At 1 January 1996 . . . . . 20 2,728 2,748
Profit for the year . . . . -- 821 821
Profits distributed . . . . -- (664) (664)
Disposals . . . . . . . . . -- (2,154) (2,154)
Foreign exchange
retranslation . . . . . . 2 (45) (43)
---------- ---------- ----------
At 31 December 1996 . . . . 22 686 708
Profit for the year . . . . -- 600 600
Profits distributed . . . . -- (680) (680)
Disposals . . . . . . . . . -- (144) (144)
Foreign exchange
retranslation . . . . . . (1) (21) (22)
---------- ---------- ----------
At 31 December 1997 . . . . 21 441 462
========== ========== ==========
OTHER INVESTMENTS OTHER THAN LOANS:
At 1 January 1996 . . . . . . . . . . . . . . . . . . . 48
Foreign exchange retranslation. . . . . . . . . . . . . 8
----------
At 31 December 1996 . . . . . . . . . . . . . . . . . . 56
Additions . . . . . . . . . . . . . . . . . . . . . . . 18
Foreign exchange retranslation. . . . . . . . . . . . . (8)
----------
At 31 December 1997 . . . . . . . . . . . . . . . . . . 66
==========
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
10. DEBTORS
1997 1996
---------- ----------
Trade debtors . . . . . . . . . . . . . . 57,372 57,248
Other debtors:
Due within one year . . . . . . . . . . 9,222 9,277
Due after more than one year. . . . . . 524 594
Prepayments and accrued income. . . . . . 9,955 7,453
---------- ----------
77,073 74,572
========== ==========
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1997 1996
---------- ----------
Bank loans and overdrafts (note 13) . . . 3,232 10,637
Obligations under finance leases (note 21) 5 270
Taxation and social security. . . . . . . 14,582 14,769
Other creditors . . . . . . . . . . . . . 9,325 9,113
Accruals and deferred income. . . . . . . 41,606 34,558
---------- ----------
68,750 69,347
========== ==========
12. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1997 1996
---------- ----------
Obligation under finance leases (note 21) 7 35
Other creditors . . . . . . . . . . . . . 233 167
---------- ----------
240 202
========== ==========
13. BORROWINGS
J.L.W. Supply Company has given guarantees to the bankers of some of
its subsidiary companies in order to secure otherwise unsecured loan and
credit facilities. The amount of each guarantee and the subsidiary to
which it relates are listed below:
Amount of
loan/overdraft
at 31 December
Subsidiaries 1997
- ------------ --------------
French Francs 25,000,000 Jones Lang Wootton SA France 1,060
Spanish Pesetas150,000,000 Jones Lang Wootton SA Spain --
Sterling 50,000 Jones Lang Wootton Poland --
-----
1,060
=====
At 31 December 1997, J.L.W. Supply Company has given an indemnity of
[Pound/Sterling]250 ($411 at year end exchange rates) on behalf of UK
subsidiary companies of the firm and guarantees of [Pound/Sterling]712
($1,172 at year end exchange rates) in respect of overseas related parties.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
14. PROVISIONS FOR LIABILITIES AND CHARGES
Charged
Balance at to profit Balance at
31 December Exchange and loss 31 December
1996 differences account 1997
------------ ----------- ---------- ------------
Provision for
computer soft-
ware upgrade . -- 3 820 823
Insurance
fund . . . . . 1,201 (45) 116 1,272
Pension-back
service pro-
vision re
Jones Lang
Wootton BV,
Holland. . . . 171 (16) 85 240
------ ------ ------ ------
1,372 (58) 1,021 2,335
====== ====== ====== ======
The insurance fund relates to the underwriting of insurance and
reinsurance business by Orchid Insurance Limited. Additional information
on Orchid Insurance Limited is given in note 25.
No deferred tax liability has been provided as the Firm has an overall
deferred tax asset, which has not been recognized.
15. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
1997 1996 1995
---------- ---------- ----------
Operating profit. . . . . . 35,394 28,942 15,141
Depreciation and amortization
charges . . . . . . . . . 7,621 6,148 6,272
(Profit)/loss on sale of
tangible fixed assets . . (119) (173) 2,347
Increase in work in progress (367) (272) (132)
Increase in provisions for
liabilities and charges . 1,021 176 363
Increase in debtors . . . . (7,848) (10,854) (2,120)
Increase in creditors . . . 13,077 7,864 4,764
Goodwill written back to
reserves on disposal of a
business. . . . . . . . . -- 56 --
Foreign exchange trans-
action differences. . . . 169 (559) (10)
---------- ---------- ----------
Net cash inflow from
operating activities. . . 48,948 31,328 26,625
========== ========== ==========
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
16. ANALYSIS OF NET FUNDS
Other
non-
Cash cash Exchange
1995 flow changes movement 1996
-------- -------- -------- -------- --------
Cash in
hand and
at bank. . 14,987 (1,040) -- 897 14,844
Overdraft . (16,555) 6,945 -- (1,027) (10,637)
-------- -------- -------- -------- --------
(1,568) 5,905 -- (130) 4,207
Finance
leases . . (641) 433 (66) (31) (305)
-------- -------- -------- -------- --------
Total . . . (2,209) 6,338 (66) (161) 3,902
======== ======== ======== ======== ========
Other
non-
Cash cash Exchange
1996 flow changes movement 1997
-------- -------- -------- -------- --------
Cash in
hand and
at bank. . 14,844 7,177 -- (779) 21,242
Overdraft . (10,637) 6,967 -- 438 (3,232)
-------- -------- -------- -------- --------
4,207 14,144 -- (341) 18,010
Finance
leases . . (305) 280 -- 13 (12)
-------- -------- -------- -------- --------
Total . . . 3,902 14,424 -- (328) 17,998
======== ======== ======== ======== ========
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
17. RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1997 1996 1995
---------- ---------- ----------
Increase/(decrease) in cash
in the year . . . . . . . . . . 14,144 5,905 (1,711)
Cash inflow from decrease in
debt and lease financing. . . . 280 433 1,783
---------- ---------- ----------
Change in net funds resulting
from cash flows . . . . . . . . 14,424 6,338 72
New finance leases. . . . . . . . -- (66) (136)
Translation difference. . . . . . (328) (161) (160)
---------- ---------- ----------
Movement in net funds in the year 14,096 6,111 (224)
Net funds at start of year. . . . 3,902 (2,209) (1,985)
---------- ---------- ----------
Net funds at end of year. . . . . 17,998 3,902 (2,209)
========== ========== ==========
18. ACQUISITION OF A BUSINESS
1997
-----
NET ASSETS ACQUIRED
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . 401
=====
SATISFIED BY
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . 401
=====
19. PENSION COSTS
THE FIRM OPERATES A NUMBER OF PENSION SCHEMES.
The main UK Scheme is operated by J.L.W. Supply Company ("the
Company"). This scheme is a defined benefit scheme providing benefits
based on final pensionable pay. The pension scheme is set up under a trust
and the assets of the scheme are, therefore, held separately from those of
the Company.
The pension cost charged to the profit and loss account is calculated
by the actuary so as to spread the cost of pensions over the employees'
working lives with the Company. The pension costs are based on the most
recent actuarial valuation which was completed with an effective date of 31
December 1997. The actuarial method used was the projected unit funding
method. The most significant assumptions for their effect on the pension
costs are those relating to the rate of return on the investments of the
scheme and the rate of increase in salaries and pensions. The investment
return used was 7.5 per cent per annum. The rate of earnings increase used
was 5.5 per cent per annum and pensions were assumed to increase at the
rate of 3.5 per cent per annum in payment.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
The pension costs charged to the profit and loss account for the year
in respect of the Company was $28 (1996--$52; 1995--$131).
The actuarial valuation at 31 December 1997 showed that the market
value of the scheme's assets was $91,369 and the actuarial value of those
assets represented 139% of the liability for benefits, under the valuation
method, for service to the valuation date and based on salaries projected
to retirement or earlier exit.
OTHER SCHEMES OPERATED BY THE FIRM ARE AS FOLLOWS:
Property Management Resources Limited ("PMR") operates a defined
contribution pension scheme. The assets of the scheme are held separately
from PMR in an independently administered fund. The pension cost charge
represents contributions payable by PMR to the fund and amounted to $567 in
1997 (1996--$458; 1995--$415). There were no prepaid contributions at the
balance sheet date.
OVERSEAS COMPANIES
The element of total pension cost relating to foreign schemes,
excluding the Jones Lang Wootton USA Inc. ("JLW USA") scheme includes
$2,081 for the year (1996--$1,812; 1995--$1,837) where the charge has been
determined in accordance with local best practice and regulations in
Holland, Belgium, France, Germany and Luxembourg. JLW USA operates a
401(k) pension and profit sharing plan which covers substantially all of
JLW USA's employees. The pension expense relating to this scheme in 1997
was $624 (1996--$397; 1995--$358).
20. OPERATING LEASE COMMITMENTS
At 31 December 1997 and 1996, the Firm was committed to making the
following payments during the next year in respect of operating leases:
1997 1997 1996 1996
Land and Office Land and Office
Buildings Equipment Buildings Equipment
--------- --------- --------- ---------
Lease which expire:
Within one year 987 535 1,350 832
Within two to
five years . . 4,474 1,371 4,434 1,460
After five
years. . . . . 7,875 166 7,217 222
------- ------- ------- -------
13,336 2,072 13,001 2,514
======= ======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
21. OBLIGATIONS UNDER FINANCE LEASES
1997 1996
-------- --------
The minimum lease payments to which the
Firm was committed at December 31 were
as follows:
Due within one year . . . . . . . . . . . 5 306
Due within two to five years. . . . . . . 7 70
------- -------
12 376
Less: interest allocated to future periods -- (71)
------- -------
12 305
======= =======
Due within one year . . . . . . . . . . . 5 270
Due after more than one year. . . . . . . 7 35
------- -------
12 305
======= =======
22. CAPITAL COMMITMENTS
1997 1996
-------- --------
Contracted for but not provided . . . . . 1,619 1,600
======= =======
23. ACQUISITION OF A BUSINESS
The Firm, through its subsidiary Jones Lang Wootton European Holdings
Limited acquired the business of the partners of Global ABMP on 1 October
1997, for consideration of $401.
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . 401
-------
Cash paid . . . . . . . . . . . . . . . . . . . . . . . 401
=======
24. RELATED PARTY TRANSACTIONS
At 31 December 1997, prepayments include $1,586 (1996--$157) due from
the Jones Lang Wootton Retirement Benefits Scheme.
At 31 December 1997, other debtors due within one year includes $1,097
(1996--$442) due from Jones Lang Wootton Scotland, $334 (1996--$395) due
from Jones Lang Wootton Ireland, and $1,070 (1996--$2,742) due from other
entities in the Jones Lang Wootton organization in which the Firm has no
shareholding.
At 31 December 1997, other creditors include $214 (1996--$169) due to
Jones Lang Wootton Scotland $115 (1996--$nil) due to Jones Lang Wootton
Ireland and $1,050 (1996--$818) due to other entities in the Jones Lang
Wootton organization in which the Firm has no shareholding.
The Firm is taking advantage of the exemption granted by paragraph
3(a) of Financial Reporting Standard No. 8 "Related Party Disclosures" not
to disclose transactions with group companies which are related parties.
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
25. ADDITIONAL INFORMATION ON SUBSIDIARIES AND ASSOCIATED UNDERTAKINGS
<CAPTION>
Country of Proportion
incorporation/ of ordinary
registration shares held
Subsidiaries and operation Activity %
- ------------ -------------- -------- -----------
<S> <C> <C> <C>
DIRECT HOLDINGS
J.L.W. Supply Company England Service company 100
Jones Lang Wootton USA Inc USA Surveying Services 100
INDIRECT HOLDINGS
Jones Lang Wootton European
Holdings Limited England Holding company 100
J.L.W. European Holdings Limited Channel Islands Holding company 100
Orchid Insurance Limited Channel Islands Insurance underwriting 100
JLW Resources England Employment company 100
Property Management Resources Limited England Staff services provider 100
JLW Staff Resources (formerly
Jones Lang Wootton Country) England Dormant company 100
JLW Finance Limited England Financial services 100
J.L.W. Pension Trustees England Trustee company 100
J.L.W. Nominees Limited England Nominee company 100
J.L.W. Second Nominees Limited England Nominee company 100
Jones Lang Wootton England Dormant company 100
Jones Lang Wootton Fund
Management Limited England Dormant company 100
Jones Lang Wootton Europe Limited England Dormant company 100
J.L.W. Jones Limited England Surveying services 100
J.L.W. Building Surveying Services England Dormant company 100
Jones Lang Wootton Country
(formerly JLW Development Services) England Dormant company 100
J.L.W. Estate Management Services England Dormant company 100
Wootton Asset Managers Limited England Dormant company 100
Jones Lang Wootton Insurance Services England Dormant company 100
Jones Lang Wootton European
Services Limited England Surveying services 100
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Country of Proportion
incorporation/ of ordinary
registration shares held
Subsidiaries and operation Activity %
- ------------ -------------- -------- -----------
JLW Canadian Holdings Inc. Canada Holding company 100
Jones Lang Wootton SA Belgium Surveying services 100
Jones Lang Wootton GmbH Germany Surveying services 100
Jones Lang Wootton SA Spain Surveying services 100
Jones Lang Wootton SA France Surveying services 100
Jones Lang Wootton Property
Management Services SARL France Surveying services 100
JLW Services SARL France Surveying services 100
Balay Prenot Jones Lang Wootton SA France Surveying services 100
Jones Lang Wootton AB Sweden Surveying services 100
Jones Lang Wootton SRL Italy Surveying services 100
Jones Lang Wootton BV Holland Surveying services 100
Jones Lang Wootton Secs Luxenburg Surveying services 90
Wonderment NV Curacao Holding company 100
Wonderment BV Holland Holding company 100
Jones Lang Wootton Kft Hungary Surveying services 100
Jones Lang Wootton GmbH Austria Surveying services 100
Jones Lang Wootton Sp.z o.o. Poland Surveying services 100
Jones Lang Wootton Services Romania Srl Romania surveying services 100
Jones Lang Wootton KK Japan Surveying services 66.7
Jones Lang Wootton International Limited Bermuda Global investment advice 66.7
JLW Real Estate Securities, Inc. USA Surveying services 100
JLW Realty Inc. USA Holding company 100
JLW Holdings USA Inc. USA Holding company 100
Jones Lang Wootton Canada Inc. Canada Surveying services 100
ASSOCIATED UNDERTAKINGS
Global Realty Advisers Bermuda Surveying services 33.3
GRA (Bermuda) Limited Bermuda Holding company 16.7
JLW & WAE Residential England Surveying services 50
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Global Realty Advisers is a partnership and all other associated
undertakings are incorporated.
The Firm also owns 100% of the preference shares in JLW Canadian
Holdings Inc.
Certain partners in Jones Lang Wootton have an interest in the results
of Jones Lang Wootton Scotland and Jones Lang Wootton Ireland. Their
interest is held for the benefit of all partners in Jones Lang Wootton.
26. SIGNIFICANT POST BALANCE SHEET EVENTS
On 31 March 1998, the Firm, through its subsidiary, Jones Lang Wootton
USA, Inc., acquired all of the issued and outstanding capital stock of
Northwest Asset Management Company, Inc. ("NAMCO"), a California
Corporation (subsequently renamed Jones Lang Wootton California, Inc.), for
a purchase price of approximately $2.8 million, of which $1.4 million was
paid in cash and the remaining $1.4 million, after closing adjustments, is
required to be paid in three equal installments on 13 March 1999, 2000 and
2001.
On 26 June 1998, an agreement was entered into by Jones Lang Wootton
International Limited to dispose of the remaining part of its investment in
GRA (Bermuda) Limited. The consideration of $4,016 gives rise to a gain of
$3,727 after providing for disposal costs. This gain accrues to a
Bermudian resident company and no tax liability will arise in that company
as a result of the disposal.
27. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements are prepared in accordance with
UK GAAP which differs in certain significant respects form US GAAP. The
principal differences that affect the consolidated profit for the year and
the partners' funds are explained below and the approximate effect is shown
below the explanations.
GOODWILL
Under UK GAAP, goodwill arising on business combinations prior to
January 1, 1998 treated as acquisitions may be written-off against retained
profits. Under US GAAP, goodwill may not be written-off to retained
profits and must be capitalized and amortized over its expected useful life
but not in excess of 40 years. Accordingly, the adjustments to reflect
this differing treatment in these financial statements is to amortize
goodwill over a period of ten years, the expected useful life.
PENSIONS
Under UK GAAP, pension costs are accounted for in accordance with the
rules set out in the UK Accounting Standards Board Statement Accounting
Practice No. 24, where the expected cost of providing pensions, as
calculated by actuaries, is charged to the profit and loss so as to spread
the cost over the service lives of the employees under the scheme. The
differences between UK GAAP and US GAAP occur primarily in the way the
actuarial assumptions are made and the methods used to calculate market
values for the pension plan assets. The adjustment under US GAAP relates
to the recognition of the pension surplus over the expected working
lifetime of active members after taking account of the transition asset
arising upon adoption of the US Financial Accounting Standards Board's
Statement of Financial Accounting Standard No. 87.
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
DEFERRED TAXATION
Under UK GAAP, taxation is provided for at the anticipated tax rates on timing differences arising from the
inclusion of income and expenditure in tax computations in periods different from those in which they are included
in financial statements to the extent that it is probable that a liability or asset will crystallise in the
future. Under US GAAP, deferred taxation is provided for on all temporary differences under the liability method
subject to a valuation allowance on deferred tax assets where applicable.
<CAPTION>
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net income as reported in
accordance with UK GAAP . . . . 29,457 25,925 35,738 27,445 14,469
Adjustments:
Deferred income tax . . . . . . . 2,538 2,086 (193) (366) (654)
Goodwill amortization . . . . . . (179) (175) (233) (226) (225)
Net periodic pension (cost)/
benefit . . . . . . . . . . . . (525) (513) (602) 469 457
---------- ---------- ---------- ---------- ----------
Net income as reported in
accordance with US GAAP . . . . 31,291 27,323 34,710 27,322 14,047
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
CONSOLIDATED BALANCE SHEET
Unaudited
30 September
1998 1997 1996
------------- ---------- ----------
Partners' funds as
reported in accordance
with UK GAAP . . . . . . . . . 49,134 48,633 39,274
Deferred income tax . . . . . . 2,210 (311) (163)
Goodwill. . . . . . . . . . . . 910 1,050 1,223
Pension scheme. . . . . . . . . 9,244 9,464 10,499
-------- -------- --------
Partners' funds as
reported in accordance
with US GAAP. . . . . . . . . 61,498 58,836 50,833
======== ======== ========
CONSOLIDATED STATEMENTS OF CASH FLOWS
The consolidated statements of cash flows prepared under UK GAAP
differ in certain presentational respects from the format required under
Statement of Cash Flows ("SFAS") 95. Under UK GAAP, a reconciliation of
operating profit to cash flows from operating activities is presented in a
note, and cash paid for interest and income taxes are presented separately
from cash flows from operating activities.
Under SFAS 95, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Summary consolidated cash flow information as presented in accordance with SFAS 95:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash was provided by (used in):
Operating activities. . . . . . . . . . . 25,360 31,400 47,034 30,964 24,958
Investing activities. . . . . . . . . . . (4,947) (7,043) (8,634) (6,122) (8,859)
Financing activities. . . . . . . . . . . (22,443) (21,835) (31,223) (25,882) (9,182)
---------- ---------- --------- --------- ---------
Net increase/(decrease) in cash . . . . . (2,030) 2,522 7,177 (1,040) 6,917
Exchange movement . . . . . . . . . . . . 673 (1,259) (779) 897 (237)
Cash at the beginning of the period . . . 21,242 14,844 14,844 14,987 8,307
---------- ---------- --------- --------- ---------
Cash at the end of the period . . . . . . 19,885 16,107 21,242 14,844 14,987
========== ========== ========= ========= =========
A reconciliation between the consolidated statement of cash flows presented in accordance with UK GAAP and US
GAAP is set out below:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- --------- --------- ---------
OPERATING ACTIVITIES
Net cash inflow from operating activities
(UK GAAP) . . . . . . . . . . . . . . . 25,800 33,443 48,948 31,328 26,625
Interest received . . . . . . . . . . . . 1,745 1,051 1,532 1,290 1,378
Interest paid . . . . . . . . . . . . . . (484) (520) (647) (704) (1,152)
Interest element of finance lease rentals -- -- (2) (100) (101)
Amounts distributed from investments. . . 1,433 1,413 1,413 1,126 1,430
Dividends paid to minority shareholders . -- -- -- (215) (229)
Tax paid. . . . . . . . . . . . . . . . . (3,134) (3,987) (4,210) (1,761) (2,993)
---------- ---------- --------- --------- ---------
Net cash provided by operating activities 25,360 31,400 47,034 30,964 24,958
========== ========== ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Summary consolidated cash flow information as presented in accordance with SFAS 95:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTING ACTIVITIES
Net cash outflow from capital
expenditure and financial investment
(UK GAAP) . . . . . . . . . . . . . . . (4,947) (7,043) (8,233) (6,122) (8,859)
ACQUISITIONS
Payments to acquire investments in
subsidiaries (UK GAAP). . . . . . . . . -- -- (401) -- --
-------- -------- -------- -------- --------
Net cash used in investing activities
(US GAAP) . . . . . . . . . . . . . . . (4,947) (7,043) (8,634) (6,122) (8,859)
======== ======== ======== ======== ========
FINANCING ACTIVITIES
Net cash outflow from financing
(UK GAAP) . . . . . . . . . . . . . . . (5) (285) (280) (433) (1,783)
Partners' drawings. . . . . . . . . . . . (30,848) (15,744) (23,976) (18,504) (16,027)
Increase/(decrease) in overdraft. . . . . 8,410 (5,806) (6,967) (6,945) 8,628
-------- -------- -------- -------- --------
Net cash used in financing activities
(US GAAP) . . . . . . . . . . . . . . . (22,443) (21,835) (31,223) (25,882) (9,182)
======== ======== ======== ======== ========
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
In addition to the adjustments made, the following reclassifications
have been made between the UK GAAP balance sheet and the US GAAP balance
sheet that follow.
TRADE RECEIVABLES
Included in trade receivables are the following balances:
30 September
1998 1997 1996
------------- -------- --------
Trade debtors . . . . . . . . . 56,588 57,372 57,248
Unbilled fee income . . . . . . 5,936 1,974 924
Work in progress. . . . . . . . 2,131 2,468 2,184
-------- -------- --------
Trade receivables reported
in accordance with
US GAAP . . . . . . . . . . . 64,655 61,814 60,356
======== ======== ========
Unbilled fee income is included in "prepayment and accrued income" in
the UK GAAP balance sheet.
OTHER NON-CURRENT ASSETS
Other non-current assets in the US GAAP balance sheet comprises
debtors due after one year in the UK GAAP balance sheet and the pension
scheme asset arising under US GAAP.
OTHER CURRENT LIABILITIES
Other current liabilities comprises:
30 September
1998 1997 1996
------------- -------- --------
Obligations under finance
leases. . . . . . . . . . . . 2 5 270
Other creditors . . . . . . . . 9,202 9,325 9,113
Other taxes . . . . . . . . . . 15,193 12,514 11,752
-------- -------- --------
Other current liabilities
reported in accordance
with US GAAP. . . . . . . . . 24,397 21,844 21,135
======== ======== ========
Other taxes include social security, payroll taxes, value added and
other sales taxes, which under UK GAAP are included in taxation and social
security. Under US GAAP, taxation includes only the corporate tax
liabilities.
The following balance sheets and profit and loss accounts have been
prepared in accordance with US GAAP and reflect the preceding adjustments
and reclassifications.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
BALANCE SHEET
30 September
1998 1997 1996
------------- -------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . 19,885 21,242 14,844
Trade receivables, net. . . . . 64,655 61,814 60,356
Other receivables . . . . . . . 17,334 9,222 9,277
Prepaid expenses. . . . . . . . 5,039 7,981 6,529
Deferred tax asset. . . . . . . 1,377 1,209 698
-------- -------- --------
Total current assets. . . . 108,290 101,468 91,704
Property and equipment, at cost,
less accumulated depreciation
of $28,887, $26,545 and
$36,205 in 1998, 1997 and
1996, respectively. . . . . . 21,871 19,301 17,079
Intangibles resulting from
business acquisitions, net
of accumulated amortization
of $1,680, $1,616 and $1,549
in 1998, 1997 and 1996,
respectively. . . . . . . . . 3,690 1,050 1,223
Other intangible assets, net
of accumulated amortization
of $464, $324 and $101 in
1998, 1997 and 1996,
respectively. . . . . . . . . 299 439 662
Investments . . . . . . . . . . 350 528 764
Deferred tax asset. . . . . . . 3,943 1,746 2,603
Trade receivables--long-term. . 6,246 282 116
Other assets. . . . . . . . . . 10,283 9,988 11,093
-------- -------- --------
Total assets. . . . . . . . 154,972 134,802 125,244
======== ======== ========
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
BALANCE SHEET
30 September
1998 1997 1996
------------- -------- --------
LIABILITIES AND PARTNERS' FUNDS
CURRENT LIABILITIES
Accounts payable and
accrued liabilities . . . . . 42,135 41,606 34,558
Taxation. . . . . . . . . . . . 1,953 2,068 3,017
Other liabilities . . . . . . . 24,397 21,844 21,135
Borrowings. . . . . . . . . . . 11,823 3,232 10,637
-------- -------- --------
Total current liabilities . 80,308 68,750 69,347
Deferred tax liability. . . . . 3,110 3,266 3,464
Other long-term liabilities . . 7,837 2,575 1,574
-------- -------- --------
Total liabilities . . . . . 91,255 74,591 74,385
MINORITY INTERESTS. . . . . . . 2,219 1,375 26
PARTNERS' FUNDS
Partners' balances and
other reserves. . . . . . . . 50,565 50,284 50,077
Annuitant balances. . . . . . . 10,987 9,213 570
Effects of cumulative trans-
lation adjustments. . . . . . (54) (661) 186
-------- -------- --------
Total partners' funds . . . 61,498 58,836 50,833
-------- -------- --------
Total liabilities and
Partners' funds . . . . . 154,972 134,802 125,244
======== ======== ========
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
PROFIT AND LOSS ACCOUNT
Nine months Nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUE
Operating revenue . . . . . . . . . . . . 221,074 168,224 252,895 214,263 192,516
Interest revenue. . . . . . . . . . . . . 1,745 1,051 1,532 1,290 1,378
Other income. . . . . . . . . . . . . . . 4,974 1,797 4,555 1,884 2,528
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . . . 227,793 171,072 258,982 217,437 196,422
OPERATING EXPENSES
Compensation and benefits . . . . . . . . 116,186 88,529 122,709 107,560 99,063
Operating, administrative and other . . . 62,670 49,113 88,117 71,474 71,929
Merger-related non-recurring charges. . . 8,315 -- -- -- --
Depreciation and amortization . . . . . . 6,085 5,417 7,854 6,374 6,497
-------- -------- -------- -------- --------
Total operating expenses. . . . . . . 193,256 143,059 218,680 185,408 177,489
-------- -------- -------- -------- --------
OPERATING INCOME. . . . . . . . . . . . . 34,537 28,013 40,302 32,029 18,933
Interest expense. . . . . . . . . . . . . 484 520 649 804 1,253
-------- -------- -------- -------- --------
EARNINGS BEFORE PROVISION FOR INCOME TAX. 34,053 27,493 39,653 31,225 17,680
Provision for income taxes. . . . . . . . 4,023 1,802 3,300 3,478 2,756
Deferred tax expense/(benefit). . . . . . (2,538) (2,086) 193 366 654
-------- -------- -------- -------- --------
1,485 (284) 3,493 3,844 3,410
-------- -------- -------- -------- --------
NET EARNINGS AFTER TAXATION,
BEFORE MINORITY INTEREST. . . . . . . . 32,568 27,777 36,160 27,381 14,270
Minority interest . . . . . . . . . . . . 1,277 454 1,450 59 223
-------- -------- -------- -------- --------
NET INCOME. . . . . . . . . . . . . . . . 31,291 27,323 34,710 27,322 14,047
======== ======== ======== ======== ========
<FN>
Earnings per share information has not been presented as the firm is not a corporate entity.
</TABLE>
<PAGE>
JONES LANG WOOTTON - SCOTLAND
FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE PARTNERS OF JONES LANG WOOTTON - SCOTLAND
We have audited the accompanying consolidated balance sheets of Jones
Lang Wootton - Scotland and its subsidiary undertaking as of December 31,
1997 and 1996, and the related consolidated profit and loss accounts, and
consolidated statements of total recognised gains and losses, cash flows
and movements on funds for each of the three years in the period ended 31
December 1997. These consolidated financial statements are the
responsibility of the partners. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with United Kingdom auditing
standards which do not differ in any significant respect from United States
generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Jones Lang Wootton - Scotland and its subsidiary undertaking as at 31
December 1997 and 1996, and the consolidated results of their operations
and their consolidated cash flows for each of the three years in the period
ended 31 December 1997 in conformity with accounting principles generally
accepted in the United Kingdom, which differ in certain respects from those
followed in the United States (see note 15 of notes to the financial
statements).
Ernst & Young
Glasgow, Scotland
20 October 1998
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FEE INCOME. . . . . . . . 1 6,587 6,366 9,042 5,618 4,894
Administrative expenses . (3,414) (2,677) (4,046) (3,546) (3,285)
Merger-related
non-recurring charges . (219) -- -- -- --
---------- ---------- ---------- ---------- ----------
OPERATING PROFIT. . . . . 2 2,954 3,689 4,996 2,072 1,609
Profit on disposal of
tangible fixed assets. . 10 33 20 23 1
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
INTEREST . . . . . . . . 2,964 3,722 5,016 2,095 1,610
Investment income . . . . 3 123 56 102 57 35
Interest payable and
similar charges . . . . 4 (7) (10) (12) (13) (6)
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION . . . . . . . . 3,080 3,768 5,106 2,139 1,639
Tax on profit on ordinary
activities. . . . . . . 5 (25) (34) (46) (36) (43)
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION TRANSFERRED
TO RESERVES. . . . . . . 3,055 3,734 5,060 2,103 1,596
========== ========== ========== ========== ==========
<FN>
All activities derive from continuing operations.
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
Nine months ended September 30, 1998 and 1997 and
years ended December 31, 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit for the period . . . . . . 3,055 3,734 5,060 2,103 1,596
Currency translation differences
on foreign currency net
investments. . . . . . . . . . . 157 (149) (98) 187 (8)
---------- ---------- ---------- ---------- ----------
Total recognised gains and losses
relating to the period. . . . . 3,212 3,585 4,962 2,290 1,588
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited
30 September
Note 1998 1997 1996
---- ------------- ---------- ----------
<S> <C> <C> <C> <C>
FIXED ASSETS
Tangible assets . . . . . . . . . 6 1,151 863 953
Business investment . . . . . . . 7 -- -- 2
---------- ---------- ----------
1,151 863 955
---------- ---------- ----------
CURRENT ASSETS
Work in progress. . . . . . . . . 185 128 69
Debtors . . . . . . . . . . . . . 8 2,566 2,478 1,451
Cash at bank and in hand. . . . . 2,992 2,642 662
---------- ---------- ----------
5,743 5,248 2,182
Creditors: amounts falling due
within one year . . . . . . . . 9 (1,675) (1,447) (1,041)
---------- ---------- ----------
Net current assets. . . . . . . . 4,068 3,801 1,141
---------- ---------- ----------
Total assets less
current liabilities . . . 5,219 4,664 2,096
========== ========== ==========
CAPITAL AND RESERVES
Partner balances. . . . . . . . . 4,367 4,160 1,319
Corporate reserves. . . . . . . . 695 602 590
Foreign exchange trans-
lation reserve . . . . . . . . . 157 (98) 187
---------- ---------- ----------
5,219 4,664 2,096
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine months ended September 30, 1998 and 1997 and
years ended December 31, 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM
OPERATING ACTIVITIES . . 10 3,267 3,378 4,498 2,506 1,634
---------- ---------- ---------- ---------- ----------
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received . . . . 123 56 95 37 45
Interest paid . . . . . . (7) (10) (12) (13) (6)
---------- ---------- ---------- ---------- ----------
Net cash inflow from
returns on investments
and servicing of finance 116 46 83 24 39
---------- ---------- ---------- ---------- ----------
TAXATION
UK corporation tax paid . (36) (29) (43) (50) (47)
---------- ---------- ---------- ---------- ----------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire
tangible fixed assets . (560) (369) (351) (421) (188)
Receipts from sales of
tangible fixed assets . 96 216 120 126 16
---------- ---------- ---------- ---------- ----------
Net cash outflow from
capital expenditure and
financial investment. . (464) (153) (231) (295) (172)
---------- ---------- ---------- ---------- ----------
<PAGE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
DISTRIBUTIONS TO PARTNERS
Partners' drawings. . . . (2,657) (1,879) (2,394) (1,530) (1,913)
---------- ---------- ---------- ---------- ----------
Net cash outflow from
distributions to
partners. . . . . . . . (2,657) (1,879) (2,394) (1,530) (1,913)
---------- ---------- ---------- ---------- ----------
Net cash inflow/(outflow)
before financing. . . . 226 1,363 1,913 655 (459)
Net cash outflow
from financing. . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
INCREASE/(DECREASE)
IN CASH . . . . . . . . 11/12 226 1,363 1,913 655 (459)
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
STATEMENT OF MOVEMENTS ON FUNDS
Nine months ended 30 September 1998
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Corporate
profit Foreign
and loss exchange
Partners' account translation
Balances reserves reserves Total
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
BALANCE AT 1 JANUARY 1995 . . . . . . . . . . . . . . 1,191 470 -- 1,661
Profit for the year . . . . . . . . . . . . . . . . . 1,564 32 -- 1,596
Partner drawings. . . . . . . . . . . . . . . . . . . (1,913) -- -- (1,913)
Foreign exchange translation differences. . . . . . . 5 (5) (8) (8)
-------- -------- -------- --------
BALANCE AT 31 DECEMBER 1995 . . . . . . . . . . . . . 847 497 (8) 1,336
Profit for the year . . . . . . . . . . . . . . . . . 2,066 37 -- 2,103
Partner drawings. . . . . . . . . . . . . . . . . . . (1,530) -- -- (1,530)
Foreign exchange translation differences. . . . . . . (64) 56 195 187
-------- -------- -------- --------
BALANCE AT 31 DECEMBER 1996 . . . . . . . . . . . . . 1,319 590 187 2,096
Profit for the year . . . . . . . . . . . . . . . . . 5,024 36 -- 5,060
Partner drawings. . . . . . . . . . . . . . . . . . . (2,394) -- -- (2,394)
Foreign exchange translation differences. . . . . . . 211 (24) (285) (98)
-------- -------- -------- --------
BALANCE AT 31 DECEMBER 1997 . . . . . . . . . . . . . 4,160 602 (98) 4,664
Profit for the period . . . . . . . . . . . . . . . . 2,982 73 -- 3,055
Partner drawings. . . . . . . . . . . . . . . . . . . (2,657) -- -- (2,657)
Foreign exchange translation differences. . . . . . . (118) 20 255 157
-------- -------- -------- --------
BALANCE AT 30 SEPTEMBER 1998
(unaudited) . . . . . . . . . . . . . . . . . . . . 4,367 695 157 5,219
======== ======== ======== ========
<FN>
Corporate profit and loss account reserves represent the amounts retained within the corporate entity
consolidated in these financial statements.
</TABLE>
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Jones Lang Wootton - Scotland provides a full range of advisory,
transactional and asset management services to a wide variety of local and
international clients in almost every industry and service sector for all
types of real estate.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention and in accordance with applicable accounting standards in the
United Kingdom, modified as appropriate for the circumstances of a
partnership.
BASIS OF CONSOLIDATION
The financial statements incorporate the results of the Jones Lang
Wootton - Scotland partnership and its subsidiary undertaking, JLW
(Scotland) Service Company.
INTERIM INFORMATION
The consolidated financial statements as at 30 September 1998 and for
the nine month periods ended 30 September 1998 and 1997 are unaudited.
However, in the opinion of partners, all adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation of the
consolidated financial statements for these interim periods have been
included. The results for the period ended September 30, 1998 are not
necessarily indicative of the results to be obtained for the full fiscal
year.
FEE INCOME
Revenue is recognised upon completion of the underlying contract,
excluding VAT. All trading arises from the provision by Jones Lang Wootton
- - Scotland of advice on all aspects of commercial real estate and other
services, including surveying, property management and related services.
DEPRECIATION
Depreciation is provided annually on the various categories of fixed
assets using the following rates:
Motor vehicles --on written down value 25%
Office machinery and fixtures --on cost 20%
Leasehold improvements --on cost over the
outstanding
period of the
lease
TAXATION
Taxation is provided on the taxable profits of the corporate entity
within Jones Lang Wootton - Scotland. No current or deferred taxation is
provided on the profits attributable to the partners as the liability for
taxation falls on the individual partners.
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
DEFERRED TAXATION
Deferred taxation is provided for the corporate entity at the
anticipated tax rates on timing differences arising from the inclusion of
items of income and expenditure in tax computations in periods different
from those in which they are included in financial statements to the extent
that it is probable that a liability or asset will crystallise in the
future.
INVESTMENTS
Investments held as fixed assets are stated at cost less provision for
any permanent diminution in value.
WORK IN PROGRESS
Work in progress represents work done by the firm and not yet billed
and is included in the accounts at the lower of cost including attributable
overheads, and net realisable value.
LEASES
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
PENSION COSTS
Eligible employees of JLW (Scotland) Service Company participate in a
defined benefit pension scheme, the assets of which are held in a separate
trustee administered fund. Costs are charged to the profit and loss account
so as to spread the cost over the service lives of the participating
employees. Additional funding may be made at the partners' discretion.
Partners make their own provision for pensions by contributing to
personal pension arrangements.
FOREIGN EXCHANGE
The functional currency of Jones Lang Wootton - Scotland and its
subsidiary undertaking is the local currency (Sterling) and its
transactions are measured in that currency. The reporting currency for the
purposes of these financial statements is the United States dollar and the
Sterling consolidated financial statements have been translated using the
closing rate of exchange for the balance sheet and the weighted average
rate of exchange for the profit and loss account. The opening capital and
reserves have been translated using the rate at January 1, 1995. All
differences arising as a result of this translation have been taken
directly to the foreign exchange translation reserve.
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
2. OPERATING PROFIT
Operating profit is stated after including:
1997 1996 1995
-------- -------- --------
(a) Other operating income:
Gross rents receivable . 64 62 62
Directors' fees. . . . . 34 24 27
-------- -------- --------
98 86 89
======== ======== ========
(b) Staff costs:
Wages and salaries . . . 2,096 1,803 1,654
Social security costs. . 205 170 160
-------- -------- --------
2,301 1,973 1,814
======== ======== ========
No No No
-------- -------- --------
Average number of persons
employed:
Technical and adminis-
tration . . . . . . . . . 56 55 53
======== ======== ========
(c) Operating lease rentals. 335 314 316
======== ======== ========
(d) Depreciation and other
amounts written off
tangible fixed assets
Own tangible fixed
assets and business
investments . . . . . 304 228 282
======== ======== ========
(e) Auditors' remuneration . 21 14 16
======== ======== ========
3. INVESTMENT INCOME
1997 1996 1995
-------- -------- --------
Other interest receivable
and similar income. . . . . 102 57 35
======== ======== ========
4. INTEREST PAYABLE AND SIMILAR CHARGES
1997 1996 1995
-------- -------- --------
Bank loans, overdrafts
and other loans. . . . . . . 12 13 6
======== ======== ========
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
1997 1996 1995
-------- -------- --------
United Kingdom corporation
tax based on the profit for
the year for the corporate
entity . . . . . . . . . . . 46 36 43
======== ======== ========
The tax charge is disproportionately low as no taxation is provided on
the profits attributable to the partners in accordance with the firm's
accounting policies.
6. TANGIBLE FIXED ASSETS
Office
machinery,
computer Improve-
equip- ments to
Motor ment & leasehold
vehicles fixtures premises Total
-------- ---------- --------- ----------
COST
At 1 January
1996 . . . . . . . 981 1,013 112 2,106
Foreign exchange
translation
differences. . . . 101 112 12 225
Additions . . . . . 258 163 -- 421
Disposals . . . . . (301) (101) -- (402)
-------- -------- -------- --------
At 31 December
1996 . . . . . . . 1,039 1,187 124 2,350
Foreign exchange
translation
differences. . . . (43) (49) (5) (97)
Additions . . . . . 220 131 -- 351
Disposals . . . . . (256) -- -- (256)
-------- -------- -------- --------
At 31 December
1997 . . . . . . . 960 1,269 119 2,348
-------- -------- -------- --------
ACCUMULATED
DEPRECIATION;
At 1 January
1996 . . . . . . . 425 828 83 1,336
Foreign exchange
translation
differences. . . . 40 86 10 136
Charge for the
year . . . . . . . 132 83 9 224
Disposals . . . . . (198) (101) -- (299)
-------- -------- -------- --------
At 31 December
1996. . . . . . . 399 896 102 1,397
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Office
machinery,
computer Improve-
equip- ments to
Motor ment & leasehold
vehicles fixtures premises Total
-------- ---------- --------- ----------
Foreign exchange
translation
differences. . . . (17) (37) (4) (58)
Charge for the
year . . . . . . . 193 100 9 302
Disposals . . . . . (156) -- -- (156)
-------- -------- -------- --------
At 31 December
1997 . . . . . . . 419 959 107 1,485
-------- -------- -------- --------
NET BOOK VALUE:
At 31 December
1997 . . . . . . . 541 310 12 863
======== ======== ======== ========
At 31 December
1996 . . . . . . . 640 291 22 953
======== ======== ======== ========
7. INVESTMENTS
1997 1996
-------- --------
NET BOOK VALUE:
Business investment . . . . . . . . . . . -- 2
======== ========
Other investments other
than loans:
At 1 January 1997 . . . . . . . . . . . 2
Amortization. . . . . . . . . . . . . . (2)
--------
At 31 December 1997 . . . . . . . . . . --
========
8. DEBTORS
1997 1996
-------- --------
Trade debtors . . . . . . . . . . . . . . 2,094 1,152
Other debtors due within one year . . . . 95 18
Prepayments and accrued income. . . . . . 289 281
-------- --------
2,478 1,451
======== ========
9. CREDITORS--AMOUNTS FALLING DUE WITHIN ONE YEAR
1997 1996
-------- --------
Bank overdraft. . . . . . . . . . . . . . 111 9
Trade creditors . . . . . . . . . . . . . 162 219
Other taxes and social security costs . . 530 354
Corporation tax . . . . . . . . . . . . . 70 67
Accruals and deferred income. . . . . . . 494 364
Other creditors . . . . . . . . . . . . . 80 28
-------- --------
1,447 1,041
======== ========
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
10. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
1997 1996 1995
-------- -------- --------
Operating profit. . . . . . 4,996 2,072 1,609
Depreciation and amortization
charges . . . . . . . . . 304 228 282
(Increase)/decrease in work
in progress . . . . . . . (62) (6) 20
Increase in debtors . . . . (1,082) (175) (286)
Increase in creditors . . . 342 387 9
-------- -------- --------
Net cash inflow from
operating activities. . . 4,498 2,506 1,634
======== ======== ========
11. ANALYSIS OF NET FUNDS
Cash Exchange
1996 flow movement 1995
-------- -------- -------- --------
Cash in hand and
at bank. . . . . . . 662 595 49 18
Overdraft . . . . . . (9) 60 (2) (67)
-------- -------- -------- --------
653 655 47 (49)
======== ======== ======== ========
Cash Exchange
1997 flow movement 1996
-------- -------- -------- --------
Cash in hand and
at bank. . . . . . . 2,642 2,016 (36) 662
Overdraft . . . . . . (111) (103) 1 (9)
-------- -------- -------- --------
2,531 1,913 (35) 653
======== ======== ======== ========
12. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1997 1996 1995
-------- -------- --------
Increase/(decrease) in cash
in the year . . . . . . . . . . 1,913 655 (459)
Translation difference. . . . . . (35) 47 7
-------- -------- --------
Movement in net funds in the year 1,878 702 (452)
Net funds at start of year. . . . 653 (49) 403
-------- -------- --------
Net funds/(debt) at end of year . 2,531 653 (49)
======== ======== ========
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
13. OPERATING LEASE COMMITMENTS
At 31 December 1997 and 1996, the firm was committed to making the
following payments during the next year in respect of operating leases:
Land and buildings
----------------------
1997 1996
-------- --------
Lease which expire:
Within one year . . . . . . . . . . . . . -- --
Within two to five years. . . . . . . . . 97 102
After five years. . . . . . . . . . . . . 206 214
-------- --------
303 316
======== ========
14. PENSION COSTS
The company participates in the Jones Lang Wootton Retirement Benefits
Scheme which provides benefits based on final pensionable pay. The pension
scheme is set up under trust and the assets of the scheme are therefore
held separately from those of the participating companies. The scheme is
non-contributory.
Employees of the company represent only a small proportion of the
total membership of the scheme and contributions are based on pension costs
for the membership as a whole. There were no contributions paid to the
scheme on behalf of the employees of the company in each of the three years
ended 31 December 1995, 1996 and 1997.
15. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United Kingdom (UK GAAP)
which differs in certain significant respects from accounting principles
generally accepted in the United States (US GAAP). However, there are no
significant differences between UK GAAP and US GAAP in respect of the
income statements and balance sheets included in these accounts.
CONSOLIDATED STATEMENTS OF CASH FLOWS:
The consolidated statements of cash flows prepared under UK GAAP
differ in certain presentational respects from the format required under US
GAAP. Under UK GAAP, a reconciliation of operating profit to cash flows
from operating activities is presented in a note, and cash paid for
interest and income taxes are presented separately from cash flows from
operating activities.
Under US GAAP, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Summary consolidated cash flow information as presented in accordance with US GAAP:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CASH WAS PROVIDED BY/(USED IN):
Operating activities. . . . . . . 3,347 3,395 4,538 2,480 1,626
Investing activities. . . . . . . (464) (153) (231) (295) (172)
Financing activities. . . . . . . (2,624) (1,847) (2,291) (1,590) (1,846)
-------- -------- -------- -------- --------
Net increase/(decrease) in cash . 259 1,395 2,016 595 (392)
Exchange movement . . . . . . . . 91 (58) (36) 49 7
Cash at the beginning of
the period. . . . . . . . . . . 2,642 662 662 18 403
-------- -------- -------- -------- --------
Cash at the end of the period . . 2,992 1,999 2,642 662 18
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
A reconciliation between the consolidated statement of cash flows presented in accordance with UK GAAP and US
GAAP is set out below:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net cash inflow from operating
activities (UK GAAP) . . . . . . 3,267 3,378 4,498 2,506 1,634
Interest received . . . . . . . . 123 56 95 37 45
Interest paid . . . . . . . . . . (7) (10) (12) (13) (6)
Tax paid. . . . . . . . . . . . . (36) (29) (43) (50) (47)
-------- -------- -------- -------- --------
Net cash provided by
operating activities. . . . . . 3,347 3,395 4,538 2,480 1,626
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Net cash outflow from
capital expenditure,
financial investment and
acquisitions (UK GAAP) . . . . . (464) (153) (231) (295) (172)
-------- -------- -------- -------- --------
Net cash used in investing
activities (US GAAP) . . . . . . (464) (153) (231) (295) (172)
======== ======== ======== ======== ========
FINANCING ACTIVITIES:
Net cash outflow from
financing (UK GAAP). . . . . . . -- -- -- -- --
Partners' drawings. . . . . . . . (2,657) (1,879) (2,394) (1,530) (1,913)
Increase/(decrease) in overdraft. 33 32 103 (60) 67
-------- -------- -------- -------- --------
Net cash used in financing
activities (US GAAP). . . . . . (2,624) (1,847) (2,291) (1,590) (1,846)
======== ======== ======== ======== ========
</TABLE>
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
16. BALANCE SHEETS AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP
The following balance sheets and profit and loss accounts have been
presented in accordance with US GAAP.
BALANCE SHEET:
Unaudited
30 September
1998 1997 1996
------------- -------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents . . . 2,992 2,642 662
Trade receivables, net. . . . . 2,362 2,342 1,409
Other receivables . . . . . . . 185 95 18
Prepaid expenses. . . . . . . . 204 169 93
-------- -------- --------
Total current assets. . . . 5,743 5,248 2,182
Property and equipment,
at cost less accumulated
depreciation of $1,485 and
$1,593 in 1997 and 1998,
respectively . . . . . . . . . 1,151 863 953
Investments . . . . . . . . . . -- -- 2
-------- -------- --------
Total assets. . . . . . . . 6,894 6,111 3,137
======== ======== ========
LIABILITIES AND PARTNERS' FUNDS
CURRENT LIABILITIES:
Accounts payable and
accrued liabilities. . . . . . 718 656 583
Taxation. . . . . . . . . . . . 61 70 67
Other liabilities . . . . . . . 747 610 382
Borrowings. . . . . . . . . . . 149 111 9
-------- -------- --------
Total current liabilities . 1,675 1,447 1,041
Deferred tax liability. . . . . -- -- --
Other long-term liabilities . . -- -- --
PARTNERS' FUNDS:
Partners' balances and
other reserves . . . . . . . . 5,062 4,762 1,909
Effects of cumulative
translation adjustments. . . . 157 (98) 187
-------- -------- --------
Total partners' funds . . . 5,219 4,664 2,096
-------- -------- --------
Total liabilities and
partners' funds. . . . . . 6,894 6,111 3,137
======== ======== ========
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
PROFIT AND LOSS ACCOUNTS:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REVENUE:
Operating revenue . . . . . . . . 6,587 6,366 9,042 5,618 4,894
Interest revenue. . . . . . . . . 123 56 102 57 35
Other income. . . . . . . . . . . 73 52 98 86 89
-------- -------- -------- -------- --------
Total revenue . . . . . . . . 6,783 6,474 9,242 5,761 5,018
OPERATING EXPENSES:
Compensation and benefits . . . . 1,995 1,628 2,301 1,973 1,814
Operating, administrative
and other. . . . . . . . . . . . 1,274 901 1,539 1,430 1,278
Merger-related non-recurring
charges. . . . . . . . . . . . . 219 -- -- -- --
Depreciation and amortization . . 208 167 284 206 281
-------- -------- -------- -------- --------
Total operating expenses. . . 3,696 2,696 4,124 3,609 3,373
-------- -------- -------- -------- --------
OPERATING INCOME. . . . . . . . . 3,087 3,778 5,118 2,152 1,645
Interest expense. . . . . . . . . 7 10 12 13 6
-------- -------- -------- -------- --------
EARNINGS BEFORE PROVISION FOR
INCOME TAX . . . . . . . . . . . 3,080 3,768 5,106 2,139 1,639
Provision for income taxes. . . . 25 34 46 36 43
-------- -------- -------- -------- --------
NET EARNINGS AFTER TAXATION
BEFORE MINORITY INTEREST . . . . 3,055 3,734 5,060 2,103 1,596
Minority interest . . . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
NET INCOME. . . . . . . . . . . . 3,055 3,734 5,060 2,103 1,596
======== ======== ======== ======== ========
</TABLE>
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
The following reclassifications have been made between the UK GAAP
balance sheets and the US GAAP balance sheets.
TRADE RECEIVABLES
Included in trade receivables are the following balances:
Unaudited
30 September
1998 1997 1996
------------- -------- --------
Trade debtors . . . . . . . . . 2,156 2,094 1,152
Unbilled fee income . . . . . . 21 120 188
Work in progress. . . . . . . . 185 128 69
-------- -------- --------
Trade receivables reported
in accordance with
US GAAP . . . . . . . . . . . 2,362 2,342 1,409
======== ======== ========
Unbilled fee income is included in prepayments and accrued income in
the UK GAAP balance sheet.
OTHER CURRENT LIABILITIES
Other current liabilities comprises:
Unaudited
30 September
1998 1997 1996
------------- -------- --------
Other creditors . . . . . . . . 265 80 28
Other taxes . . . . . . . . . . 482 530 354
-------- -------- --------
Other current liabilities
reported in accordance
with US GAAP. . . . . . . . . 747 610 382
======== ======== ========
Other taxes include social security, payroll taxes, value added and
other sales taxes, which under UK GAAP are included in taxation and social
security. Under US GAAP, taxation includes only the corporate tax
liabilities.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT TO THE PARTNERS OF
JONES LANG WOOTTON - IRISH PRACTICE
We have audited the accompanying combined balance sheets of Jones Lang
Wootton - Irish Practice as of 31 December 1997 and 1996, the related
combined profit and loss accounts, combined statements of cash flows,
combined statements of total recognized gains and losses and combined
statements of movements in partners' funds for each of the years in the
three year period ended 31 December 1997. These combined financial
statements are the responsibility of the Partners. Our responsibility is
to express an opinion on these combined financial statements based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in Ireland and the United Kingdom and the United States
of America. Those standards require that we plan and perform audits to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of Jones
Lang Wootton - Irish Practice as of 31 December 1997 and 1996, and the
results of its operations and its cash flows for each of the years in the
three year period ended 31 December 1997, in conformity with accounting
principles generally accepted in Ireland and the United Kingdom.
Accounting principles generally accepted in Ireland and the United
Kingdom vary in certain significant respects from accounting principles
generally accepted in the United States of America. Application of
accounting principles generally accepted in the United States of America
would have affected the results of operations for each of the years in the
three year period ended 31 December 1997 and the determination of partners'
funds as of 31 December 1997 and 1996 to the extent summarized in Notes 19
and 20 to the combined financial statements.
Deloitte & Touche
Chartered Accountants and Registered Auditors
Dublin
24 November 1998
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FEE INCOME. . . . . . . . 8,663 6,282 9,223 9,466 6,953
Administrative expenses . (4,248) (4,015) (5,420) (5,421) (5,258)
Merger-related
non-recurring charges . (575) -- -- -- --
---------- ---------- ---------- ---------- ----------
OPERATING PROFIT. . . . . 3,840 2,267 3,803 4,045 1,695
Profit on disposal of
tangible fixed assets. . -- 13 13 -- 5
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
INTEREST . . . . . . . . 3,840 2,280 3,816 4,045 1,700
Interest receivable . . . 38 23 78 21 --
Interest payable and
similar charges . . . . (38) (57) (60) (82) (21)
---------- ---------- ---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION . . . . . . . . 2 3,840 2,246 3,834 3,984 1,679
Tax on profit on ordinary
activities. . . . . . . 4 -- -- (4) (4) --
---------- ---------- ---------- ---------- ----------
PROFIT AFTER
TAXATION . . . . . . . . 3,840 2,246 3,830 3,980 1,679
========== ========== ========== ========== ==========
DISTRIBUTABLE TO:
Former partners and
dependents . . . . . . . 89 99 135 87 48
proprietary partners-
transferred to
partners' funds. . . . . 14 3,751 2,147 3,695 3,893 1,631
========== ========== ========== ========== ==========
<FN>
All activities derive from continuing operations.
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED BALANCE SHEETS
As of 30 September 1998 and as of 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited
30 September
Notes 1998 1997 1996
----- ------------- ---------- ----------
<S> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets . . . . . . . . 5 1,288 1,443 1,220
---------- ---------- ----------
CURRENT ASSETS
Work in progress. . . . . . . . . 6 -- -- --
Debtors and prepayments . . . . . 7 3,909 2,611 2,438
Cash at bank and in hand. . . . . 1,852 676 1,211
---------- ---------- ----------
5,761 3,287 3,649
Creditors: Amounts falling due
within one year . . . . . . . . 8 2,182 (1,288) (1,549)
---------- ---------- ----------
Net current assets. . . . . . 3,579 1,999 2,100
---------- ---------- ----------
Total assets less current
liabilities . . . . . . . . 4,867 3,442 3,320
Creditors: Amounts falling due
after more than one year. . . . (156) (247) (441)
---------- ---------- ----------
4,711 3,195 2,879
========== ========== ==========
PARTNERS' FUNDS
Revaluation reserve . . . . . . . 14 285 285 --
Foreign exchange translation
reserve . . . . . . . . . . . . 14 (47) (275) 204
Partner balances. . . . . . . . . 14 3,336 3,185 2,675
Provision for annuitants. . . . . 14 1,137 -- --
---------- ---------- ----------
4,711 3,195 2,879
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Profit distributable to:
Proprietary partners. . . . . . 3,751 2,147 3,695 3,893 1,631
Former partners and
dependents. . . . . . . . . . 89 99 135 87 48
-------- -------- -------- -------- --------
3,840 2,246 3,830 3,980 1,679
Unrealized surplus on
revaluation of
leasehold interest. . . . . . . -- -- 299 -- --
Foreign exchange translation
difference. . . . . . . . . . . 228 (397) (479) 142 62
-------- -------- -------- -------- --------
Total recognized gains
and losses. . . . . . . . . 4,068 1,849 3,650 4,122 1,741
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF MOVEMENTS IN PARTNERS' FUNDS
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Opening funds . . . . . . . . . . 3,195 2,879 2,879 1,297 1,609
Profit for the periods. . . . . . 3,751 2,147 3,695 3,893 1,631
Drawings. . . . . . . . . . . . . (2,466) (2,215) (3,308) (2,499) (2,038)
Cash introduced . . . . . . . . . 3 -- 123 46 33
Unrealized surplus on
revaluation of lease-
hold interest . . . . . . . . . -- -- 285 -- --
Foreign exchange translation
difference. . . . . . . . . . . 228 (397) (479) 142 62
-------- -------- -------- -------- --------
Closing funds . . . . . . . . . . 4,711 2,414 3,195 2,879 1,297
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF CASH FLOWS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Notes 1998 1997 1997 1996 1995
----- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM
OPERATING ACTIVITIES . . 11 3,730 2,402 3,531 4,856 2,379
---------- ---------- ---------- ---------- ----------
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received . . . . 38 23 78 21 --
Interest paid . . . . . . (16) (24) (18) (18) (18)
Interest element of
finance lease rental
payments . . . . . . . . (22) (33) (42) (64) (3)
---------- ---------- ---------- ---------- ----------
Net cash (outflow)/inflow from
returns on investments
and servicing of finance -- (34) 18 (61) (21)
---------- ---------- ---------- ---------- ----------
TAXATION
Corporation tax paid. . . -- -- (7) -- --
---------- ---------- ---------- ---------- ----------
TAX PAID. . . . . . . . . -- -- (7) -- --
---------- ---------- ---------- ---------- ----------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire
tangible fixed assets . (77) (536) (556) (97) (420)
Receipts from sales of
tangible fixed assets . 25 69 79 9 28
---------- ---------- ---------- ---------- ----------
Net cash outflow from
capital expenditure and
financial investment. . (52) (467) (477) (88) (392)
---------- ---------- ---------- ---------- ----------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF CASH FLOWS
Nine months ended 30 September 1998
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
Notes 1998 1997 1997 1996 1995
----- ------------- ------------- ---------- ---------- ----------
DISTRIBUTIONS
Partners' drawings less
cash introduced. . . . . (2,463) (2,215) (3,185) (2,453) (2,005)
Former partners and
dependents . . . . . . . (89) (99) (135) (87) (48)
---------- ---------- ---------- ---------- ----------
NET CASH OUTFLOW FROM
DISTRIBUTIONS. . . . . . (2,552) (2,314) (3,320) (2,540) (2,053)
---------- ---------- ---------- ---------- ----------
NET CASH INFLOW/OUTFLOW
BEFORE FINANCING . . . . 1,126 (413) (255) 2,167 (87)
---------- ---------- ---------- ---------- ----------
FINANCING
Capital element of
finance lease rental
payments . . . . . . . . (92) (89) (118) (114) (76)
---------- ---------- ---------- ---------- ----------
NET CASH OUTFLOW FROM
FINANCING. . . . . . . . (92) (89) (118) (114) (76)
---------- ---------- ---------- ---------- ----------
INCREASE/(DECREASE)
IN CASH . . . . . . . . 13 1,034 (502) (373) 2,053 (163)
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Jones Lang Wootton - Irish Practice, provides advice on all aspects of
commercial real estate. Substantially all of the turnover arises from
services provided in the Republic of Ireland.
ACCOUNTING CONVENTION
The combined financial statements have been prepared under the
historical cost convention, as modified by the revaluation of an operating
leasehold interest, and in accordance with accounting principles generally
accepted in Ireland and the United Kingdom.
BASIS OF COMBINATION
The combined financial statements represent a combination of the
financial statements of the Irish Partnership of Jones Lang Wootton and two
corporate entities being, Utrillo Limited and Jones Lang Wootton
Property Management Services. These corporate entities are under the
control of the Irish Partnership of Jones Lang Wootton - Irish Practice.
Transactions and balances in respect of property management services,
including monies held on behalf of clients and staff costs of certain staff
employed on behalf of property management clients are not reflected within
the financial statements.
INTERIM INFORMATION
The financial information as at 30 September 1998 and for the nine
month periods ended 30 September 1998 and 1997 are unaudited. In the
opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair presentation of the financial
information for these interim periods have been included. The results for
the periods ended 30 September 1998 and 1997 are not necessarily indicative
of the results to be obtained for the full fiscal years.
PARTNERS' REMUNERATION
Remuneration of proprietary partners, including pension contributions
and remuneration payable by corporate entities, is treated as partners'
drawings and not charged in determining the profit for the year.
Remuneration of salaried partners is included within administration
expenses. Amounts owing to or from salaried partners are included within
creditors and debtors.
FEE INCOME
Revenue is recognised upon substantial completion of the underlying
engagement.
DEPRECIATION
Depreciation is provided on tangible assets using the following rates:
Leasehold property - Period of lease
Office furniture and fittings - 12-1/2% straight line
Motor vehicles - 25% reducing balance
Computer and other equipment - 25% straight line
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
TAXATION
Corporation tax is provided on the taxable profits of the corporate
entities. The taxation payable on partnership profit is a personal
liability of the partners and no current or deferred taxation is provided
on the profits attributable to the partners.
DEFERRED TAXATION
Deferred taxation is provided at the anticipated tax rates on timing
differences arising from the inclusion of items of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future.
WORK IN PROGRESS
Work in progress is included in respect of engagements which are not
dependent on future events and which have not been substantially completed.
Work in progress is valued at the lower of cost, including attributable
overheads, and net realisable value.
LEASED ASSETS
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
PENSION COSTS
Eligible employees participate in defined benefit pension schemes, the
assets of which are held in separate trustee administered funds. Costs are
charged to the profit and loss account so as to spread the cost over the
service lives of the participating employees.
FOREIGN EXCHANGE
The functional currency is Irish pounds and the transactions are
recorded in Irish pounds. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated at the rates at
that date. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction, all differences being dealt with in
the profit and loss account.
The reporting currency for the purposes of these financial statements
is the United States dollar. The Irish pound combined financial statements
have been translated using the closing rate of exchange for the balance
sheet and the weighted average rate of exchange for the profit and loss
account and movements in partners funds. The opening partners' funds have
been translated using the rate at 1 January 1995. All differences arising
as a result of translation have been taken directly to the foreign exchange
translation reserve.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
2. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
1997 1996 1995
-------- -------- --------
The profit is stated
after crediting:
Rents receivable. . . . . . . . 57 61 61
-------- -------- --------
and charging:
Depreciation:
-own assets. . . . . . . . . . . 224 132 168
-assets held under finance
leases. . . . . . . . . . . . 129 134 21
Interest payable and similar
charges:
-bank overdraft. . . . . . . . . 18 18 18
-finance charges on
leased assets. . . . . . . . . 42 64 3
Operating lease charges . . . . . 261 282 280
======== ======== ========
3. STAFF COSTS
1997 1996 1995
-------- -------- --------
Wages and salaries. . . . . . . . 2,899 2,975 2,833
Social security costs . . . . . . 251 240 218
Pension costs . . . . . . . . . . 169 190 244
-------- -------- --------
3,319 3,405 3,295
======== ======== ========
Comprising:
Jones Lang Wootton & Jones Lang
Wootton Property Management
Services. . . . . . . . . . . . 2,440 2,520 2,409
Utrillo Limited. . . . . . . . . 879 885 886
-------- -------- --------
3,319 3,405 3,295
======== ======== ========
Average number of employees:
(excluding proprietary partners) No. No. No.
- -------------------------------- -------- -------- --------
Technical and administration:
Jones Lang Wootton &
Jones Lang Wootton
Property Management
Services. . . . . . . . . . . 47 46 47
Utrillo Limited . . . . . . . . 36 36 36
-------- -------- --------
83 82 83
======== ======== ========
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
4. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
1997 1996 1995
-------- -------- --------
Based on the profit for the year:
Corporation tax on
corporate entities. . . . . . 4 4 --
======== ======== ========
No taxation is provided on the profits of the partnership in
accordance with the accounting policies as such taxation is a personal
liability of the partners.
There are no differences which give rise to material deferred tax
timing differences.
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
5. TANGIBLE FIXED ASSETS
<CAPTION>
Office
Furniture Computers
Motor and and other Leasehold
Vehicles Fittings Equipment Interest Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
COST OR VALUATION
At 1 January 1996 . . . . . . . . . . . 337 1,384 758 -- 2,479
Additions . . . . . . . . . . . . . . . 192 108 55 -- 355
Disposals . . . . . . . . . . . . . . . (48) (412) (107) -- (567)
Foreign exchange translation
differences . . . . . . . . . . . . . 26 65 41 -- 132
---------- ---------- ---------- ---------- ----------
At 31 December 1996 . . . . . . . . . . 507 1,145 747 -- 2,399
Additions . . . . . . . . . . . . . . . 386 79 91 -- 556
Disposals . . . . . . . . . . . . . . . (216) -- (1) -- (217)
On revaluation. . . . . . . . . . . . . -- -- -- 285 285
Foreign exchange translation
differences . . . . . . . . . . . . . (88) (185) (122) -- (395)
---------- ---------- ---------- ---------- ----------
At 31 December 1997 . . . . . . . . . . 589 1,039 715 285 2,628
---------- ---------- ---------- ---------- ----------
ACCUMULATED DEPRECIATION
At 1 January 1996 . . . . . . . . . . . 176 711 517 -- 1,404
Charge for the year . . . . . . . . . . 60 127 79 -- 266
Disposals . . . . . . . . . . . . . . . (34) (417) (107) -- (558)
Foreign exchange translation
differences . . . . . . . . . . . . . 12 27 28 -- 67
---------- ---------- ---------- ---------- ----------
At 31 December 1996 . . . . . . . . . . 214 448 517 -- 1,179
Charge for the year . . . . . . . . . . 124 136 93 -- 353
Disposals . . . . . . . . . . . . . . . (151) -- -- -- (151)
Foreign exchange translation
differences . . . . . . . . . . . . . (32) (77) (87) -- (196)
---------- ---------- ---------- ---------- ----------
At 31 December 1997 . . . . . . . . . . 155 507 523 -- 1,185
---------- ---------- ---------- ---------- ----------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Office
Furniture Computers
Motor and and other Leasehold
Vehicles Fittings Equipment Interest Total
---------- ---------- ---------- ---------- ----------
NET BOOK VALUE
At 31 December 1997
Cost. . . . . . . . . . . . . . . . . . 434 532 192 -- 1,158
Valuation . . . . . . . . . . . . . . . -- -- -- 285 285
-------- -------- -------- -------- --------
434 532 192 285 1,443
======== ======== ======== ======== ========
At 31 December 1996 . . . . . . . . . . 293 697 230 -- 1,220
======== ======== ======== ======== ========
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
The leasehold premises, which are held under an operating lease, were
valued as at 31 December 1997 by Harrington Bannon, Chartered Valuation
Surveyors, on an open market value basis reflecting existing use.
The net book value of fixed assets includes an amount of US$380 (1996:
US$578) in respect of assets held under finance leases.
6. WORK IN PROGRESS
There is no material work in progress at the balance sheet dates.
7. DEBTORS
1997 1996
-------- --------
Trade debtors . . . . . . . . . . . . 1,481 1,455
Prepayments and accrued income. . . . 1,130 983
-------- --------
2,611 2,438
======== ========
8. CREDITORS: (Amounts falling due within one year)
1997 1996
-------- --------
Bank overdraft. . . . . . . . . . . . 19 8
Taxation and social security. . . . . 328 457
Accruals. . . . . . . . . . . . . . . 816 950
Obligations under finance leases
(note 10) . . . . . . . . . . . . . 125 134
-------- --------
1,288 1,549
======== ========
9. CREDITORS: (Amounts falling due after more than one year)
1997 1996
-------- --------
Obligations under finance leases
(note 10) . . . . . . . . . . . . . 247 441
======== ========
10. LEASE OBLIGATIONS
Net lease obligations to third parties under finance leases were as
follows:
1997 1996
-------- --------
The minimum lease payments to which the
practice was committed at 31 December
were as follows:
Due within one year . . . . . . . 151 181
Due within two to five years. . . 268 498
-------- --------
419 679
Less: Interest allocated to
future periods. . . . . . . . . . . . (47) (104)
-------- --------
372 575
======== ========
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
1997 1996
-------- --------
The leases expire:
Within one year . . . . . . . . . . . 125 134
After more than one year. . . . . . . 247 441
-------- --------
372 575
======== ========
At 31 December 1997 there were commitments to make annual payments of
US$249 in respect of an operating lease on a property, which expires after
five years. Under the terms of the lease the annual rental payments are due
for review on 1 November 1999.
11. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
1997 1996 1995
-------- -------- --------
Operating profit. . . . . . . . . 3,803 4,045 1,695
Depreciation. . . . . . . . . . . 353 266 189
(Increase)/decrease in debtors. . (586) (157) 82
(Decrease)/increase in creditors. (39) 702 413
-------- -------- --------
Net cash inflow from
operating activities. . . . . . . 3,531 4,856 2,379
======== ======== ========
12. ANALYSIS OF NET FUNDS
Exchange Exchange
Cash Move- Cash Move-
1995 flow ment 1996 flow ment 1997
---- ---- ------- ---- ---- -------- ----
Cash in
hand and
at bank. . . 17 1,139 55 1,211 (360) (175) 676
Overdraft . . (912) 914 (10) (8) (13) 2 (19)
----- ----- ----- ----- ----- ----- -----
(895) 2,053 45 1,203 (373) (173) 657
Finance
leases . . . (401) (145) (29) (575) 118 85 (372)
----- ----- ----- ----- ----- ----- -----
Total . . .(1,296) 1,908 16 628 (255) (88) 285
====== ===== ===== ===== ===== ===== =====
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
13. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1997 1996 1995
------ ------ -------
(Decrease)/increase in cash
in the year . . . . . . . . . (373) 2,053 (163)
Cash outflow from decrease
in lease financing. . . . . . 118 113 75
------ ------ -------
Change in net funds resulting
from cash flows . . . . . . . (255) 2,166 (88)
New finance leases. . . . . . . -- (258) (403)
Translation difference. . . . . (88) 16 (21)
------ ------ ------
Movement in net funds
in the year . . . . . . . . . (343) 1,924 (512)
Net funds at start of year. . . 628 (1,296) (784)
------ ------ -------
Net funds at end of year. . . . 285 628 (1,296)
====== ====== ======
14. PARTNERS' FUNDS
Foreign
exchange Revalua- Provision
translation tion Partners for
reserves reserves balances annuitants Total
----------- -------- -------- ---------- -------
At 1 January
1995. . . . . . . -- -- 1,609 -- 1,609
Profit for year . . -- -- 1,631 -- 1,631
Partners drawings
net of cash
introduced . . . . -- -- (2,005) -- (2,005)
Foreign exchange
translation
differences. . . . 62 -- -- -- 62
------ ------ ------ ------ ------
At 31 December
1995 . . . . . . . 62 -- 1,235 -- 1,297
Profit for year . . -- -- 3,893 -- 3,893
Partners drawings
net of cash
introduced . . . . -- -- (2,453) -- (2,453)
Foreign exchange
translation
differences. . . . 142 -- -- -- 142
------ ------ ------ ------ ------
At 31 December
1996 . . . . . . . 204 -- 2,675 -- 2,879
Profit for year . . -- -- 3,695 -- 3,695
Partners drawings
net of cash
introduced . . . . -- -- (3,185) -- (3,185)
Foreign exchange
translation
differences. . . . (479) -- -- -- (479)
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Foreign
exchange Revalua- Provision
translation tion Partners for
reserves reserves balances annuitants Total
----------- -------- -------- ---------- -------
Unrealized surplus
on revaluation
of leasehold
interest . . . . . -- 285 -- -- 285
------ ------ ------ ------ ------
At 31 December
1997. . . . . . . (275) 285 3,185 -- 3,195
Profit for nine
months . . . . . . -- -- 3,751 -- 3,751
Partners drawings
net of cash
introduced . . . . -- -- (2,463) -- (2,463)
Foreign exchange
translation
differences. . . . 228 -- -- -- 228
Provision for
annuitants . . . . -- -- (1,137) 1,137 --
------ ------ ------ ------ ------
At 30 September
1998 . . . . . . . (47) 285 3,336 1,137 4,711
====== ====== ====== ====== ======
15. COMMITMENTS
The partnership has commitments to a former partner and a dependent of
a former partner to pay annuities. The annuities are dependent on, and
calculated on, profits for each year. In the case of the dependent the
annuity also depends on the life span of the annuitant. No provision is
included in the financial statements for any annuities payable in
subsequent years based on profits of subsequent years as they cannot be
determined with reasonable accuracy. Subsequent to 31 December 1997 a
conditional agreement has been reached with annuitants for US$1,137. This
agreement is conditional upon the completion of the merger with LaSalle
Partners.
16. PENSION COMMITMENTS
Jones Lang Wootton Partnership and Utrillo Limited operate separate
defined benefit schemes, which provide benefits based on final pensionable
salaries for eligible employees and salaried partners.
The contributions are based on the advice of independent actuaries
obtained at three yearly intervals, using the attained age method of
funding.
The last actuarial valuation of the partnership pension scheme was at
1 January 1998. The principal assumption in the valuation was that, over
the long term, the net return on investments will exceed the future salary
increases by 2% per annum. The actuarial report of the partnership scheme
disclosed that the actuarial value of the scheme's assets was US$3,148 and
the actuarial accrued liability was US$1,647. The standard contribution
rate as a percentage of salaries is 14.2%. The actuary has recommended that
the future contribution rate until the next triennial valuation be 4% of
salaries.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
The last actuarial valuation of the Utrillo Limited scheme was at 1
August 1996. The principal assumption was that, over the long term, the net
return on investments would exceed future salary increases by 2% per annum.
The Utrillo Limited actuarial report disclosed that the actuarial value of
the scheme's assets was US$138 and the actuarial accrued liability was
US$87. The actuary recommended a funding rate of 9.6% of the pensionable
salaries until the next triennial valuation.
The following are reflected in the financial statements:
1997 1996 1995
------ ------ ------
Pension costs . . . . . . . . . 169 190 244
====== ====== ======
Prepaid pension costs included
in prepayments and accrued
income. . . . . . . . . . . . 70 53
====== ======
Accrued pension costs
included in accruals. . . . . -- --
====== ======
17. RELATED PARTY DISCLOSURES
Trade debtors includes US$41 (1996: US$40) due from Jones Lang Wootton
English partnership.
The English partnership of Jones Lang Wootton share, through their UK
representatives, as Irish proprietary partners in the profits of the
combined entities. Included within partners funds are amounts attributable
to the English partnership in respect of their profit share.
18. INFORMATION REGARDING CORPORATE ENTITIES
The corporate entities which are wholly owned and controlled by Jones
Lang Wootton - Irish Practice are:
Country of
Company Incorporation Activity
- ------- ------------- --------
Utrillo Limited . . . . . . Ireland Staff services
provider
Jones Lang Wootton Property
Management Services . . . . Ireland Property management
services provider
JLW Financial Services
Limited . . . . . . . . . . Ireland Dormant company
JLW Limited . . . . . . . . Ireland Dormant company
Jones Lang Wootton Limited. Ireland Dormant company
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
19. SIGNIFICANT DIFFERENCES BETWEEN IRISH/UK GAAP AND US GAAP
The combined financial statements are prepared in accordance with
Irish/UK GAAP which differs in certain significant respects from US GAAP.
Ireland and the UK adopt common accounting standards. The principal
differences that affect the combined profit for the years and the partners'
funds are explained below and the approximate effect is shown below the
explanations.
PENSIONS
Under Irish/UK GAAP, pension costs are accounted for in accordance
with the rules set out in Standard Statement of Accounting Practice No. 24,
where the expected cost of providing pensions, as calculated by actuaries,
is charged to the profit and loss so as to spread the cost of pensions over
the service lives of the employees under the scheme. The differences
between Irish/UK GAAP and US GAAP occur primarily in the way the actuarial
assumptions are made and the methods used to calculate market values for
the pension plan assets. The adjustment under US GAAP relates to the
recognition of the pension surplus over the expected working lifetime of
active members after taking account of the transition asset arising upon
adoption of the US Financial Accounting Standards Board's Statement of
Financial Accounting Standard No. 87.
REVALUATION OF ASSETS
Irish/UK GAAP permits tangible fixed assets to be recorded at a
valuation, with depreciation charged to the profit and loss account based
on revalued amounts. Under US GAAP there is a specific requirement for
tangible fixed assets to be recorded at cost.
DEFERRED TAXATION
Under Irish/UK GAAP, taxation is provided for at the anticipated tax
rates on timing differences arising from the inclusion of income and
expenditure in tax computations in periods different from those in which
they are included in financial statements to the extent that it is probable
that a liability or asset will crystallise in the future. Under US GAAP,
deferred taxation is provided for on all temporary differences under the
liability method subject to a valuation allowance on deferred tax assets
where applicable.
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
EFFECT ON DIFFERENCES
The effect on profit in the combined financial statements of significant differences between Irish/UK GAAP
and US GAAP is as follows:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit after taxation under
Irish/UK GAAP . . . . . . . . . 3,840 2,246 3,830 3,980 1,679
Adjustments:
Employee pension costs. . . . . 188 159 209 175 151
Depreciation. . . . . . . . . . 14 -- -- -- --
Deferred taxation . . . . . . . (65) (57) (76) (65) (55)
------ ------ ------ ------ ------
Net earnings as reported in
accordance with US GAAP . . . . 3,977 2,348 3,963 4,090 1,775
====== ====== ====== ====== ======
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
The effect on partners' funds of significant differences between
Irish/UK GAAP and US GAAP is as follows:
Unaudited
nine months
ended
30 September
1998 1997 1996
------------- ------ ------
Partners' funds in accordance
with Irish/UK GAAP. . . . . . . 4,711 3,195 2,879
Adjustments:
Unrealized surplus on
revaluation of leasehold
interest and amortization . . . (284) (285) --
Employee pension costs . . . . . 1,020 784 694
Deferred taxation. . . . . . . . (355) (273) (239)
------ ------ ------
Partners' funds as reported in
accordance with US GAAP. . . . . 5,092 3,421 3,334
====== ====== ======
COMBINED STATEMENTS OF CASH FLOWS
The combined statements of cash flows prepared under Irish/UK GAAP
differ in certain presentational respects from the format required under
Statement of Cash flows ("SFAS") 95. Under Irish/UK GAAP, a reconciliation
of operating profit to cash flows from operating activities is presented in
a note, and cash paid for interest and income taxes are presented
separately from cash flows from operating activities.
Under SFAS 95, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
Summary combined cash flow information as presented in accordance with
SFAS 95:
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash was provided by (used in):
Operating activities . . . . . . 3,730 2,368 3,542 4,795 2,358
Investing activities . . . . . . (52) (467) (477) (88) (392)
Financing activities . . . . . . (2,595) (2,401) (3,425) (3,568) (1,956)
------ ------ ------ ------ ------
Net increase/(decrease)
in cash. . . . . . . . . . . . . 1,083 (500) (360) 1,139 10
Exchange movement . . . . . . . . 93 (148) (175) 55 --
Cash at the beginning of
the period. . . . . . . . . . . 676 1,211 1,211 17 7
------ ------ ------ ------ ------
Cash at the end of the period . . 1,852 563 676 1,211 17
====== ====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
A reconciliation between the combined statement of cash flows presented in accordance with Irish/UK GAAP and
US GAAP is set out below:
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating activities:
Net cash inflow from operating
activities (Irish/UK GAAP). . . 3,730 2,402 3,531 4,856 2,379
Interest received. . . . . . . . 38 23 78 21 --
Interest paid. . . . . . . . . . (16) (24) (18) (18) (18)
Interest element of finance
lease rentals . . . . . . . . . (22) (33) (42) (64) (3)
Tax paid . . . . . . . . . . . . -- -- (7) -- --
------ ------ ------ ------ ------
Net cash provided by operating
activities (US GAAP) . . . . . . 3,730 2,368 3,542 4,795 2,358
====== ====== ====== ====== ======
Investing activities:
Net cash outflow from capital
expenditure (Irish/UK GAAP) . . (52) (467) (477) (88) (392)
------ ------ ------ ------ ------
Net cash provided by (used in)
in investing activities
(US GAAP). . . . . . . . . . . . (52) (467) (477) (88) (392)
====== ====== ====== ====== ======
Financing activities:
Net cash outflow from financing
(Irish/UK GAAP) . . . . . . . . (92) (89) (118) (114) (76)
Partners drawings. . . . . . . . (2,552) (2,314) (3,320) (2,540) (2,053)
Increase/(decrease) in
overdraft . . . . . . . . . . . 49 2 13 (914) 173
------ ------ ------ ------ ------
Net cash used in financing
activities (US GAAP) . . . . . . (2,595) (2,401) (3,425) (3,568) (1,956)
====== ====== ====== ====== ======
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
20. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP
The following combined balance sheet and profit and loss accounts have
been prepared in accordance with US GAAP and reflect the adjustments
detailed in Note 19:
BALANCE SHEET
Unaudited
nine months
ended
30 September
1998 1997 1996
------------- ------ ------
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . 1,852 676 1,211
Trade receivables, net. . . . . . 3,584 2,387 2,265
Prepaid expenses. . . . . . . . . 236 154 120
------ ------ ------
Total current assets. . . . . 5,672 3,217 3,596
Property and equipment, at cost,
less accumulated depreciation
of US$1,185 and US$1,179 in
1997 and 1996, respectively . . 1,004 1,158 1,220
Other non current assets. . . . . 1,109 853 746
------ ------ ------
Total assets. . . . . . . . . 7,785 5,228 5,562
====== ====== ======
LIABILITIES AND PARTNERS' FUNDS
CURRENT LIABILITIES
Accounts payable and accrued
liabilities . . . . . . . . . . 1,491 702 912
Taxation. . . . . . . . . . . . . -- -- 4
Other liabilities . . . . . . . . 117 61 51
Employee entitlements . . . . . . 502 505 574
Borrowings. . . . . . . . . . . . 72 20 8
------ ------ ------
Total current liabilities . . 2,182 1,288 1,549
Deferred tax liability. . . . . . 355 273 238
Other long term liabilities . . . 156 246 441
------ ------ ------
Total liabilities. . . . . . . 2,693 1,807 2,228
====== ====== ======
Partners' balances. . . . . . . . 4,032 3,743 3,099
Foreign exchange translation
reserve . . . . . . . . . . . (77) (322) 235
Provision for annuitants. . . . . 1,137 -- --
------ ------ ------
Total partners' funds . . . . 5,092 3,421 3,334
====== ====== ======
Total liabilities and
partners' funds . . . . . . 7,785 5,228 5,562
====== ====== ======
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
INCOME STATEMENT
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REVENUE
Operating revenue . . . . . . . . 8,663 6,282 9,223 9,466 6,953
Interest revenue. . . . . . . . . 38 23 78 21 --
------ ------ ------ ------ ------
Total revenue . . . . . . . . 8,701 6,305 9,301 9,487 6,953
------ ------ ------ ------ ------
OPERATING EXPENSES
Compensation and benefits . . . . 2,429 2,335 3,110 3,230 3,144
Operating, administrative
and other . . . . . . . . . . . 1,365 1,242 1,735 1,750 1,769
Merger-related nonrecurring
charges . . . . . . . . . . . . 575 -- -- -- --
Depreciation. . . . . . . . . . . 252 266 353 266 189
------ ------ ------ ------ ------
Total operating expenses. . . 4,621 3,843 5,198 5,246 5,102
------ ------ ------ ------ ------
OPERATING INCOME. . . . . . . . . 4,080 2,462 4,103 4,241 1,851
Interest expense. . . . . . . . . 38 57 60 82 21
------ ------ ------ ------ ------
EARNINGS BEFORE PROVISION
FOR TAXATION. . . . . . . . . . 4,042 2,405 4,043 4,159 1,830
Provision for income tax -- -- 4 4 --
Deferred taxation expense . . . . 65 57 76 65 55
------ ------ ------ ------ ------
NET EARNINGS. . . . . . . . . . . 3,977 2,348 3,963 4,090 1,775
====== ====== ====== ====== ======
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
In addition to the adjustments made as presented in Note 19, the
following reclassifications have been made between the Irish/UK GAAP
balance sheet and the US GAAP balance sheet in note 20 to the accounts.
TRADE RECEIVABLES:
Included in trade receivables are the following balances:
Unaudited
30 September
1998 1997 1996
------------- ------ ------
Trade debtors . . . . . . . . . 3,357 1,481 1,455
Unbilled fee income . . . . . . 227 906 810
Work in progress. . . . . . . . -- -- --
------ ------ ------
Trade receivables reported
in accordance with
US GAAP . . . . . . . . . . . 3,584 2,387 2,265
====== ====== ======
Unbilled fee income is included in prepayments and accrued income in
the Irish/UK GAAP balance sheet.
OTHER NON-CURRENT ASSETS:
Other non-current assets in the US GAAP balance sheet comprises the
pension scheme asset under US GAAP.
Unaudited
30 September
1998 1997 1996
------------- ------ ------
Other current liabilities
comprise:
Obligations under finance
leases. . . . . . . . . . . . 136 125 134
Other creditors . . . . . . . . 922 249 325
Other taxes . . . . . . . . . . 433 328 453
------ ------ ------
Other current liabilities
reported in accordance with
US GAAP . . . . . . . . . . . . 1,491 702 912
====== ====== ======
Other taxes include social security, payroll taxes, value added tax,
which under Irish/UK GAAP are included in taxation and social security.
Under US GAAP, taxation includes only the corporate tax liabilities.
<PAGE>
JLW ASIA HOLDINGS LIMITED
FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of JLW Asia Holdings Limited
We have audited the accompanying Group balance sheets of JLW Asia
Holdings Limited and subsidiaries as of 31 December 1997 and 1996, and the
related Group profit and loss accounts, Group statements of total
recognized gains and losses, reconciliations of shareholders' funds and
cash flows for each of the years in the three-year period ended 31
December 1997. These Group financial statements are the responsibility of
the Group's management. Our responsibility is to express an opinion on
these Group financial statements based on our audits. We did not audit the
financial statements of JLW Property Consultants Pte Ltd and its
subsidiaries, a wholly-owned subsidiary, which statements reflect total
assets constituting 20 percent and 27 percent in 1997 and 1996,
respectively, and total turnover constituting 21 percent, 25 percent and 26
percent in 1997, 1996, and 1995, respectively, of the related Group totals.
Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the amounts
included for JLW Property Consultants Pte Ltd and its subsidiaries, is
based solely on the report of the other auditors.
We conducted our audits in accordance with auditing standards
generally accepted in Hong Kong, which are substantially equivalent to
auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of the other
auditors, the Group financial statements referred to above present fairly,
in all material respects, the financial position of JLW Asia Holdings
Limited and subsidiaries as of 31 December 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the
three-year period ended 31 December 1997, in conformity with generally
accepted accounting principles in the United Kingdom as explained in note 1
to the financial statements.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States. Application of accounting principles generally
accepted in the United States would have affected results of operations for
each of the years in the three-year period ended 31 December 1997 and
shareholders' funds as of 31 December 1997 and 1996, to the extent
summarized in note 22 to the Group financial statements.
KPMG Peat Marwick
Certified Public Accountants
Hong Kong
12 November 1998
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
GROUP PROFIT AND LOSS ACCOUNTS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FEE INCOME. . . . . . . . . 2 42,381 60,322 76,796 65,371 63,936
Administrative expenses . . (36,091) (47,383) (61,821) (54,157) (52,156)
Merger-related
non-recurring charges. . . (3,331) -- -- -- --
Fees, salaries and allow-
ances in respect of
profit sharing arrangements 6 (3,262) (4,995) (4,430) (3,383) (4,255)
Other operating income. . . 960 1,445 2,087 2,190 1,059
Income from interest in
associated undertaking . . 8 56 143 369 752 --
------ ------ ------ ------ ------
OPERATING PROFIT. . . . . . 3 713 9,532 13,001 10,773 8,584
Profit/(loss) on sale
of fixed assets. . . . . . (24) 53 62 207 (2)
Bank interest receivable. . 72 155 293 192 382
Interest payable. . . . . . (219) (69) (225) (482) (323)
------ ------ ------ ------ ------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION. . . . . . 542 9,671 13,131 10,690 8,641
Tax on profit on
ordinary activities. . . . 5 (737) (1,592) (2,162) (1,467) (880)
------ ------ ------ ------ ------
PROFIT/(LOSS) FOR THE
PERIOD . . . . . . . . . . (195) 8,079 10,969 9,223 7,761
RETAINED PROFIT AS AT
BEGINNING OF PERIOD. . . . 16 12,716 16,554 16,554 14,971 19,593
DISTRIBUTIONS IN RESPECT
OF PROFIT SHARING
ARRANGEMENTS . . . . . . . 6 (1,889) (7,871) (14,807) (7,640) (12,383)
------ ------ ------ ------ ------
RETAINED PROFIT AS AT
END OF PERIOD. . . . . . . 16 10,632 16,762 12,716 16,554 14,971
====== ====== ====== ====== ======
<FN>
All activities derive from continuing operations.
</TABLE>
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
GROUP BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited
30 September 31 December 31 December
Note 1998 1997 1996
---- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FIXED ASSETS
Tangible assets . . . . . . . . . . . . . 7 4,913 5,111 6,104
Interest in associated undertaking. . . . 8 384 597 567
------ ------ ------
5,297 5,708 6,671
------ ------ ------
CURRENT ASSETS
Debtors . . . . . . . . . . . . . . . . . 9 23,201 20,194 27,700
Cash at bank and in hand. . . . . . . . . 3,691 8,743 6,172
------ ------ ------
26,892 28,937 33,872
Creditors: amounts falling due
within one year . . . . . . . . . . . . 10 19,511 20,072 20,452
------ ------ ------
Net current assets. . . . . . . . . . . . 7,381 8,865 13,420
------ ------ ------
Total assets less current liabilities . . 12,678 14,573 20,091
Creditors: amounts falling due after
more than one year. . . . . . . . . . . 11 1,815 1,649 3,386
Deferred taxation . . . . . . . . . . . . 14 231 193 151
------ ------ ------
10,632 12,731 16,554
====== ====== ======
CAPITAL AND RESERVES
Called up share capital . . . . . . . . . 15 -- -- --
Exchange fluctuation reserve. . . . . . . 16 -- 15 --
Profit and loss account . . . . . . . . . 16 10,632 12,716 16,554
------ ------ ------
Equity shareholders' funds. . . . . . . . 10,632 12,731 16,554
====== ====== ======
</TABLE>
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
GROUP CASH FLOW STATEMENTS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET CASH (OUTFLOW)/INFLOW
FROM OPERATING ACTIVITIES. 17(a) (1,650) 11,224 20,694 8,929 12,752
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Finance lease charges . . . (124) (83) (107) (349) (254)
Interest received . . . . . 72 155 293 192 382
Interest paid . . . . . . . (219) (69) (225) (482) (323)
------ ------ ------ ------ ------
(1,921) 11,227 20,655 8,290 12,557
TAXATION
Tax paid. . . . . . . . . . (1,796) (465) (877) (1,060) (2,163)
------ ------ ------ ------ ------
(3,717) 10,762 19,778 7,230 10,394
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire
fixed assets. . . . . . . (492) (557) (744) (2,563) (1,173)
Receipts from sales of
fixed assets. . . . . . . 202 285 320 1,478 1,031
------ ------ ------ ------ ------
(4,007) 10,490 19,354 6,145 10,252
EQUITY DIVIDENDS PAID
Distributions in respect of
profit sharing arrangements
paid . . . . . . . . . . . (1,889) (7,871) (14,807) (7,640) (12,383)
MANAGEMENT OF LIQUID
RESOURCES
Decrease/(increase) in
short term deposits. . . . 17(b) 5,489 (850) (2,684) 2,048 3,351
------ ------ ------ ------ ------
<PAGE>
JLW ASIA HOLDINGS LIMITED
GROUP CASH FLOW STATEMENTS (CONTINUED)
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- ---------- ---------- ----------
NET CASH FLOW BEFORE
FINANCING. . . . . . . . . (407) 1,769 1,863 553 1,220
FINANCING
New long-term loans . . . . 17(b) -- -- -- 1,220 --
Repayment of long-term
loans. . . . . . . . . . . 17(b) (305) (444) (820) -- (43)
Repayments of capital
elements of finance
lease rentals. . . . . . . 17(b) (1,161) (946) (1,494) (1,574) (1,238)
------ ------ ------ ------ ------
(DECREASE)/INCREASE IN CASH 17(c) (1,873) 379 (451) 199 (61)
====== ====== ====== ====== ======
<PAGE>
</TABLE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
GROUP STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(Loss)/profit for the period. (195) 8,079 10,969 9,223 7,761
Exchange difference on
retranslation of
net assets . . . . . . . . . 16 (15) 122 15 (15) 15
------ ------ ------ ------ ------
Total recognized gains and
losses relating to the
period . . . . . . . . . . . (210) 8,201 10,984 9,208 7,776
====== ====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
RECONCILIATION OF SHAREHOLDERS' FUNDS
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total recognized gains
and losses . . . . . . . . . (210) 8,201 10,984 9,208 7,776
Distributions in respect
of profit sharing
arrangements . . . . . . . . 6 (1,889) (7,871) (14,807) (7,640) (12,383)
------ ------ ------ ------ ------
Total movements during the
period . . . . . . . . . . . (2,099) 330 (3,823) 1,568 (4,607)
Shareholders' funds at
beginning of period. . . . . 16 12,731 16,554 16,554 14,986 19,593
------ ------ ------ ------ ------
Shareholders' funds at end
of period. . . . . . . . . . 16 10,632 16,884 12,731 16,554 14,986
====== ====== ====== ====== ======
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
JLW Asia Holdings Limited, through its operational subsidiaries,
provides a full range of advisory, transactional and asset management
services to a wide variety of local and international clients in almost
every industry and service sector for all types of real estate. The Group's
main geographical markets are Hong Kong, Singapore and Thailand, where a
full range of services are provided. The Group also operates in
Philippines, PRC, Vietnam and Myanmar, and earns significant income in the
form of a technical services fee by providing a full range of services in
Indonesia.
BASIS OF PREPARATION
The accounts are prepared under the historical cost convention.
The accounts are prepared in accordance with accounting principles
generally accepted in the United Kingdom and comply with applicable United
Kingdom accounting standards. The accounts do not necessarily contain all
disclosures required by the Companies Acts.
These accounts were approved by the Board of Directors on 12 November
1998.
INTERIM INFORMATION
The Group's financial statements as of 30 September 1998 and for the
nine-month period then ended are unaudited, however, in the opinion of
management, include all adjustments (consisting solely of normal recurring
accruals) necessary for the presentation of the financial position and
results of operations for the interim period. The results for the nine-
month period ended 30 September 1998 are not necessarily indicative of the
results to be obtained for the full year.
BASIS OF CONSOLIDATION
The Group accounts consolidate the accounts of JLW Asia Holdings
Limited and all its subsidiary undertakings as at 31 December 1997 and 1996
and 30 September 1998, and for the years ended 31 December 1997, 1996, and
1995, and the nine months ended 30 September 1998 and 1997.
JLW Australia Pty. Limited, a member of the JLW Holdings Pty. Limited
Group owns 10% of the voting shares of Jones Lang Wootton Limited and JLW
Property Consultants Pte Limited. It also owns one "E" share in Jones Lang
Wootton Limited. Although JLW Australia Pty. Limited owns these shares any
participation in the profits of either Jones Lang Wootton Limited and JLW
Property Consultants Pte Limited are totally at the discretion of JLW Asia
Holdings Limited management. Therefore these accounts consolidate 100% of
the results and net assets of these subsidiary undertakings and do not
recognize any minority interest. Management of JLW Australia Pty. Limited
have confirmed that this minority interest will be excluded from the
consolidated accounts of JLW Holdings Pty. Limited for the year ended 31
December 1997, 1996 and 1995 and the nine months ended 30 September 1998
and 1997.
The Group has a dominant influence over the control and voting rights
in the board of JLW (Thailand) Limited. For this reason, the company is
accounted for as a subsidiary company of JLW Asia Holdings Limited. The
Group's legal shareholding in this company is 49%. The Group has full
control over the company.
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
The Group accounts include the Group's in substance beneficial
ownership share of the profits and net assets of the JLW Transact Group on
an equity accounting basis.
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the Group's share of
net tangible assets. Where the cost of acquisition differs from the values
attributable to such net assets, the difference is treated as purchased
goodwill and is written off directly to reserves in the year of
acquisition.
The profit or loss on the disposal of a previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business.
FEE INCOME
Revenue is recognized upon substantial completion of the underlying
contract, excluding VAT where applicable. All trading arises from the
provision by the Group companies of advice on all aspects of commercial
real estate and other services, including property management and related
services.
DEPRECIATION
Depreciation is provided annually on the cost less residual value of
various categories of fixed assets on a straight-line basis using the
following rates:
Motor vehicles . . . . . . . . . . . . . . . . 20%
Office furniture and equipment . . . . . . . . 20%
Computer equipment . . . . . . . . . . . . . . 25%-33-1/3%
Leasehold improvements . . . . . . . . . . . . Over the term of
the lease
TAXATION
Taxation is provided on the taxable profits of the companies within
the Group.
DEFERRED TAXATION
Deferred taxation is provided on timing differences, arising from the
different treatment of items for accounts and taxation purposes, which are
expected to reverse in the future and give rise to a tax liability,
calculated at rates at which it is estimated that tax will arise.
INVESTMENTS
Investments are stated at cost less provision for any permanent
diminution in value.
LEASES
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to income in equal amounts over
the lease term.
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
FOREIGN EXCHANGE
Transactions denominated in foreign currencies are translated into the
reporting currency at the rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated at the rates ruling at that date. These
translation differences are dealt with in the profit and loss account.
The functional currencies of JLW Asia Holdings Limited and its
subsidiaries and associate undertaking are each of their respective local
currencies. For purposes of preparing the Group financial statements, gains
or losses that result from translating each of these financial statements
expressed in their functional currency to United States dollars, the
reporting currency of the Group, are included as a separate component of
capital and reserves and entitled "Exchange fluctuation reserve".
PROFIT SHARING ARRANGEMENTS
The entitlement to cash distributions in respect of profit sharing
arrangements are recognized as and when they become payable (note 6).
2. TURNOVER AND SEGMENTAL ANALYSIS
Turnover represents letting and sales commissions, valuation, project,
management and other consulting fees. The directors are of the opinion that
these activities are closely linked and not subject to significantly
different risks or rates of growth. As a result it would not be meaningful
to analyze the Group's results into classes of business.
The Group operates within different geographical markets and turnover
and Group profit/(loss) and net assets are analyzed as follows:
30 September 1998 (unaudited)
Hong Singa-
Kong pore Others Total
------ ------ ------ ------
Turnover. . . . . . . . 32,141 8,109 2,131 42,381
====== ====== ====== ======
Profit / (loss) on
ordinary activities
before taxation . . . 1,463 415 (1,336) 542
====== ====== ====== ======
Net assets. . . . . . . 6,955 1,325 2,352 10,632
====== ====== ====== ======
30 September 1997 (unaudited)
Hong Singa-
Kong pore Others Total
------ ------ ------ ------
Turnover. . . . . . . . 40,300 11,848 8,174 60,322
====== ====== ====== ======
Profit on ordinary
activities before
taxation. . . . . . . 6,715 701 2,255 9,671
====== ====== ====== ======
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
31 December 1997
Hong Singa-
Kong pore Others Total
------ ------ ------ ------
Turnover. . . . . . . . 51,864 16,545 8,387 76,796
====== ====== ====== ======
Profit on ordinary
activities before
taxation . . . . . . . 8,754 1,459 2,918 13,131
====== ====== ====== ======
Net assets. . . . . . . 5,832 1,184 5,715 12,731
====== ====== ====== ======
31 December 1996
Hong Singa-
Kong pore Others Total
------ ------ ------ ------
Turnover. . . . . . . . 37,325 16,142 11,904 65,371
====== ====== ====== ======
Profit on ordinary
activities before
taxation . . . . . . . 3,614 1,063 6,013 10,690
====== ====== ====== ======
Net assets. . . . . . . 6,150 1,788 8,616 16,554
====== ====== ====== ======
31 December 1995
Hong Singa-
Kong pore Others Total
------ ------ ------ ------
Turnover. . . . . . . . 35,918 16,416 11,602 63,936
====== ====== ====== ======
Profit on ordinary
activities before
taxation . . . . . . . 1,667 1,864 5,110 8,641
====== ====== ====== ======
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
3. OPERATING PROFIT
Operating profit is stated after charging:
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Depreciation of owned assets. . . 388 447 593 513 506
Depreciation of assets held
under finance leases and
hire purchase contracts. . . . . 1,119 1,052 1,331 1,350 1,329
Finance lease charges . . . . . . 124 83 107 349 254
Operating lease rentals
-land and buildings. . . . . . . 6,112 6,121 6,816 6,501 6,285
-plant and machinery . . . . . . 335 108 287 31 --
====== ====== ====== ====== ======
4. DIRECTORS' REMUNERATION
Emoluments of the directors were as follows:
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
Fees, salaries and allowances in
respect of profit sharing
arrangements. . . . . . . . . . 1,023 2,112 2,412 1,624 2,842
Benefits. . . . . . . . . . . . . 491 482 772 881 1,132
---------- ---------- ---------- ---------- ----------
1,514 2,594 3,184 2,505 3,974
========== ========== ========== ========== ==========
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
The taxation charge is made up as follows:
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
Provision for tax on profits. . . 680 1,437 2,012 1,165 868
(Over)/under provision in
respect of prior year. . . . . . -- -- (47) (1) 6
------ ------ ------ ------ ------
680 1,437 1,965 1,164 874
Deferred taxation (note 14) . . . 38 85 77 125 6
------ ------ ------ ------ ------
718 1,522 2,042 1,289 880
Associated undertaking (note 8) . 19 70 120 178 --
------ ------ ------ ------ ------
737 1,592 2,162 1,467 880
====== ====== ====== ====== ======
The Group has no liability to UK corporation tax.
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
6. PROFIT SHARING ARRANGEMENTS
The profits of the Group are the subject of a profit sharing
arrangement whereby management participate in those profits. Cash
distributions are made in respect of these arrangements in the following
forms:
(a) Fees, salaries and allowances
These are paid to management in agreed amounts and in substance are
advances in respect of the relevant person's ultimate profit share.
(b) Distributions
In substance the distributions totalling US$14,807, US$7,640,
US$12,383, US$1,889 and US$7,871 for the years ended 31 December 1997, 1996
and 1995 and the nine months ended 30 September 1998 and 1997 respectively
represent cash distributions of profit sharing arrangements for the senior
management of the Group. In general these arrangements take the form of a
dividend payment by the relevant subsidiary undertaking to the holding
company, which pays a corresponding dividend to its "B" shareholder (note
15) who acts as a trustee in respect of the profit sharing arrangements
with senior management of the relevant entities and others. These profit
sharing arrangements set out the extent to which each relevant member of
management will participate in the profits of each relevant entity.
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
7. TANGIBLE ASSETS
31 December 1997
<CAPTION>
Office
Leasehold furniture
improve- and Computer Motor
ment equipment equipment vehicles Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
COST:
At 1 January 1997 . . . . . . . . . . . 4,578 2,769 2,145 1,572 11,064
Exchange adjustments. . . . . . . . . . (160) (585) (98) (212) (1,055)
Additions . . . . . . . . . . . . . . . 308 167 720 525 1,720
Disposals . . . . . . . . . . . . . . . -- (1) (42) (667) (710)
------ ------ ------ ------ ------
At 31 December 1997 . . . . . . . . . . 4,726 2,350 2,725 1,218 11,019
------ ------ ------ ------ ------
DEPRECIATION:
At 1 January 1997 . . . . . . . . . . . 1,800 992 1,578 590 4,960
Exchange adjustments. . . . . . . . . . (88) (334) (67) (35) (524)
Provided during the year. . . . . . . . 928 414 412 170 1,924
Disposals . . . . . . . . . . . . . . . -- (1) (42) (409) (452)
------ ------ ------ ------ ------
At 31 December 1997 . . . . . . . . . . 2,640 1,071 1,881 316 5,908
====== ====== ====== ====== ======
Net book value at 31 December 1997. . . 2,086 1,279 844 902 5,111
====== ====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
December 31, 1996
<CAPTION>
Office
Leasehold furniture
improve- and Computer Motor
ment equipment equipment vehicles Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
COST:
At 1 January 1996 . . . . . . . . . . . 3,930 2,221 1,961 3,292 11,404
Exchange adjustments. . . . . . . . . . (12) -- 4 24 16
Additions . . . . . . . . . . . . . . . 665 1,679 469 708 3,521
Disposals . . . . . . . . . . . . . . . (5) (1,131) (289) (2,452) (3,877)
------ ------ ------ ------ ------
At 31 December 1996 . . . . . . . . . . 4,578 2,769 2,145 1,572 11,064
------ ------ ------ ------ ------
DEPRECIATION:
At 1 January 1996 . . . . . . . . . . . 967 1,808 1,535 1,388 5,698
Exchange adjustments. . . . . . . . . . (12) 7 3 7 5
Provided during the year. . . . . . . . 873 341 326 323 1,863
Disposals . . . . . . . . . . . . . . . (28) (1,164) (286) (1,128) (2,606)
------ ------ ------ ------ ------
At 31 December 1996 . . . . . . . . . . 1,800 992 1,578 590 4,960
====== ====== ====== ====== ======
Net book value at 31 December 1996. . . 2,778 1,777 567 982 6,104
====== ====== ====== ====== ======
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
The net book value of the Group's fixed assets amounted to US$3.5
million and US$4.0 million at 31 December 1997 and 1996, respectively, in
respect of assets held under finance leases and hire purchase contracts.
8. INTEREST IN ASSOCIATED UNDERTAKING
These accounts include a share of profits of the JLW Transact Group
for the years ended 31 December 1997 and 1996 as follows:
31 December 31 December
1997 1996
------------- -------------
Percentage held . . . . . . . . . . . . . 35% 35%
Share of net assets brought forward . . . 567 --
Share of profits before tax . . . . . . . 369 752
Share of taxation . . . . . . . . . . . . (120) (178)
Dividends received. . . . . . . . . . . . (218) --
Exchange difference . . . . . . . . . . . (1) (7)
------ ------
597 567
====== ======
It should be noted that the above shareholdings of the JLW Transact
Group were legally owned by five companies in trust for the proprietors of
the JLW Asia Holdings Limited Group. These five companies are owned by the
beneficial owners of JLW Asia Holdings Limited. These owners have confirmed
that they consider that their shareholdings in the JLW Transact Group are
in substance beneficially owned by JLW Asia Holdings Limited and it is
therefore appropriate to equity account for the above profits of the JLW
Transact Group in the accounts of JLW Asia Holdings Limited.
The entities which have been combined to calculate the profits and net
assets of the JLW Transact Group are as follows:
Company Place of incorporation
- ------- ----------------------
Jones Lang Wootton Transact Pty Limited . Australia
Jones Lang Wootton Transact (VIC)
Pty Limited . . . . . . . . . . . . . . Australia
Jones Lang Wootton Transact (QLD)
Pty Limited . . . . . . . . . . . . . . Australia
JLW Transact Limited. . . . . . . . . . . New Zealand
JLW Transact Limited. . . . . . . . . . . Hong Kong
JLW Transact Pte Limited. . . . . . . . . Singapore
JLW Transact (Thailand) Co. Limited . . . Thailand
The business of the JLW Transact Group is consultancy and agency
services in respect of hotels.
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
9. DEBTORS
31 December 31 December
1997 1996
------------- -------------
Trade debtors . . . . . . . . . . . . . 10,116 13,535
Investments in transferable
corporate club memberships. . . . . . 365 287
Amounts owed by related parties . . . . 6,807 9,036
Amounts due from directors. . . . . . . -- 2,268
Other debtors . . . . . . . . . . . . . 2,703 2,526
Prepayments and accrued income. . . . . 203 48
------ ------
20,194 27,700
====== ======
The amounts due from directors do not constitute directors' loans and
are of the nature of current accounts.
There is no amount included above which is due after more than one
year from the balance sheet date.
10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
31 December 31 December
Note 1997 1996
---- ------------- -------------
Current installments
due on loans . . . . . . . . 12 405 488
Bank overdraft. . . . . . . . 10 198
Obligations under finance
leases and hire purchase
contracts. . . . . . . . . . 13 2,086 1,173
Trade creditors . . . . . . . 1,035 754
Amounts owed to related
parties. . . . . . . . . . . 2,534 3,632
Amounts due to directors. . . 1,971 1,242
Taxation. . . . . . . . . . . 2,099 1,011
Other creditors . . . . . . . 4,291 5,841
Accruals and deferred income. 5,641 6,113
------ ------
20,072 20,452
====== ======
11. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
31 December 31 December
Note 1997 1996
---- ------------- -------------
Loans . . . . . . . . . . . . 12 202 732
Obligations under finance
leases and hire purchase
contracts . . . . . . . . . 13 1,447 2,654
------ ------
1,649 3,386
====== ======
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
12. LOANS
31 December 31 December
Note 1997 1996
---- ------------- -------------
Amounts falling due in one year
or less or on demand . . . . . . 10 405 488
------ ------
Amounts falling due:
Between one and two years. . . . 202 488
Between two and five years . . . -- 244
In five years or more. . . . . . -- --
------ ------
11 202 732
====== ======
607 1,220
====== ======
13. OBLIGATIONS UNDER LEASES AND HIRE PURCHASE CONTRACTS
Net amounts due under finance leases and hire purchase contracts:
31 December 31 December
Note 1997 1996
---- ------------- -------------
Amounts payable:
Within one year . . . . . 10 2,086 1,173
Between two and five years 11 1,447 2,654
------ ------
3,533 3,827
====== ======
Annual commitments under non-cancellable operating leases are as
follows:
31 December 31 December
1997 1996
------------- -------------
Operating leases which expire:
Within one year . . . . . . . . . . . 1,546 2,475
Between two and five years. . . . . . 11,673 13,475
Over five years . . . . . . . . . . . -- --
------ ------
13,219 15,950
====== ======
14. DEFERRED TAXATION
31 December 31 December
1997 1996
------------- -------------
At beginning of period. . . . . . . . . 151 25
Exchange adjustment . . . . . . . . . . (35) 1
Arising during the period . . . . . . . 77 125
------ ------
At end of period. . . . . . . . . . . . 193 151
====== ======
Deferred taxation provided in the accounts represents tax on the
excess of depreciation or capital allowances over depreciation. There is no
significant unprovided deferred tax.
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
15. SHARE CAPITAL
31 December
1997 and
1996
$
-----------
Authorized:
100 'A' class ordinary shares of US$1 . . . . . . . . . 100
100 'B' class ordinary shares of US$1 . . . . . . . . . 100
100 'C' class ordinary shares of US$1 . . . . . . . . . 100
100 'D' class ordinary shares of US$1 . . . . . . . . . 100
100 'E' class ordinary shares of US$1 . . . . . . . . . 100
100 'F' class ordinary shares of US$1 . . . . . . . . . 100
100 'G' class ordinary shares of US$1 . . . . . . . . . 100
100 'H' class ordinary shares of US$1 . . . . . . . . . 100
100 'I' class ordinary shares of US$1 . . . . . . . . . 100
100 'J' class ordinary shares of US$1 . . . . . . . . . 100
100 'K' class ordinary shares of US$1 . . . . . . . . . 100
100 'L' class ordinary shares of US$1 . . . . . . . . . 100
100 'M' class ordinary shares of US$1 . . . . . . . . . 100
100 'N' class ordinary shares of US$1 . . . . . . . . . 100
100 '0' class ordinary shares of US$1 . . . . . . . . . 100
100 'P' class ordinary shares of US$1 . . . . . . . . . 100
100 'Q' class ordinary shares of US$1 . . . . . . . . . 100
100 'R' class ordinary shares of US$1 . . . . . . . . . 100
100 'S' class ordinary shares of US$1 . . . . . . . . . 100
100 'T' class ordinary shares of US$1 . . . . . . . . . 100
100 'U' class ordinary shares of US$1 . . . . . . . . . 100
100 'V' class ordinary shares of US$1 . . . . . . . . . 100
100 'W' class ordinary shares of US$1 . . . . . . . . . 100
100 'X' class ordinary shares of US$1 . . . . . . . . . 100
100 'Y' class ordinary shares of US$1 . . . . . . . . . 100
100 'Z' class ordinary shares of US$1 . . . . . . . . . 100
400 unclassified ordinary shares of USS$1 . . . . . . . 400
-----
3,000
=====
ALLOTTED, CALLED UP AND FULLY PAID:
4 "A" class ordinary shares of US$1 . . . . . . . . . . 4
1 "B" class ordinary shares of US$1 . . . . . . . . . . 1
--
5
==
The "A" shares are the only shares in the capital of the company which
confer on the holders a right to vote at any general meeting of the
company, and any such holders are entitled to one vote for each share held.
"A" shares carry no right to any dividend declared or payable. "A" shares
carry no right to any participation, over and above repayment of capital,
in surplus assets or profits of the company upon a reduction of capital or
on a winding up.
The "B" share carries no voting rights, but is the only share in issue
which carries the right to dividend and to the participation in surplus
assets or profits upon reduction of capital or on a winding up.
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
16. RESERVES
Exchange Profit
fluctuation and loss
reserve account Total
----------- -------- ---------
At 31 December 1995 . . . 15 14,971 14,986
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . (15) -- (15)
Retained profit for the
year . . . . . . . . . . -- 1,583 1,583
------ ------ ------
At 31 December 1996 . . . -- 16,554 16,554
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . 122 -- 122
Retained profit for the
nine-month period. . . . -- 208 208
------ ------ ------
At 30 September 1997. . . 122 16,762 16,884
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . (107) -- (107)
Retained loss for the
three-month period . . . -- (4,046) (4,046)
------ ------ ------
At 31 December 1997 . . . 15 12,716 12,731
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . (15) -- (15)
Retained loss for the
period . . . . . . . . . -- (2,084) (2,084)
------ ------ ------
At 30 September 1998. . . -- 10,632 10,632
====== ====== ======
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
17. NOTES TO THE STATEMENT OF CASH FLOWS
(a) RECONCILIATION OF OPERATING PROFIT TO NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating profit. . . . . . . . . 713 9,532 13,001 10,773 8,584
Finance lease charges . . . . . . 124 83 107 349 254
Depreciation. . . . . . . . . . . 1,507 1,499 1,924 1,863 1,835
Income from interest in
associated undertaking . . . . . (56) (143) (369) (752) --
Dividend received from
associated undertaking . . . . . 250 81 218 -- --
(Increase)/decrease in debtors. . (3,007) 470 7,506 (3,513) 3,658
Increase/(decrease) in trade
creditors. . . . . . . . . . . . 2,134 (638) (1,638) (1,609) 490
(Decrease)/increase in accrued
expenses and deferred income . . (3,294) 93 (472) 1,802 (2,167)
Exchange difference . . . . . . . (21) 247 417 16 98
------ ------ ------ ------ ------
Net cash (outflow)/inflow from
operating activities . . . . . . (1,650) 11,224 20,694 8,929 12,752
====== ====== ====== ====== ======
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
(b) Analysis of net debt
30 September 1998 (unaudited)
Other
At Exchange non-cash At
1 January Cash Differ- move- 30 September
1998 Flow ences ments 1998
---------- ------ -------- -------- -------------
Cash at bank
and in hand. . . . 3,176 389 29 -- 3,594
Bank overdrafts . . (10) (2,262) (2) -- (2,274)
------- ------- ------- ------- -------
Cash. . . . . . . . 3,166 (1,873) 27 -- 1,320
Short term
deposits*. . . . . 5,567 (5,489) 19 -- 97
Loans . . . . . . . (607) 305 (1) -- (303)
Finance leases. . .(3,533) 1,161 (60) (1,022) (3,454)
------- ------- ------- ------- -------
4,593 (5,896) (15) (1,022) (2,340)
======= ======= ======= ======= =======
30 September 1997 (unaudited)
Other
At Exchange non-cash At
1 January Cash Differ- move- 30 September
1997 Flow ences ments 1997
---------- ------ -------- -------- -------------
Cash at bank
and in hand. . . . 3,388 327 33 -- 3,748
Bank overdrafts . . (198) 52 -- -- (146)
------- ------- ------- ------- -------
Cash. . . . . . . . 3,190 379 33 -- 3,602
Short term
deposits*. . . . . 2,784 850 4 -- 3,638
Loans . . . . . . .(1,220) 444 (23) -- (799)
Finance leases. . .(3,827) 946 (5) (798) (3,684)
------- ------- ------- ------- -------
927 2,619 9 (798) 2,757
======= ======= ======= ======= =======
31 December 1997
Other
At Exchange non-cash At
1 January Cash Differ- move- 31 December
1997 Flow ences ments 1997
---------- ------ -------- -------- -------------
Cash at bank
and in hand. . . . 3,388 (639) 427 -- 3,176
Bank overdrafts . . (198) 188 -- -- (10)
------- ------- ------- ------- -------
Cash. . . . . . . . 3,190 (451) 427 -- 3,166
Short term
deposits*. . . . . 2,784 2,684 99 -- 5,567
Loans . . . . . . .(1,220) 820 (207) -- (607)
Finance leases. . .(3,827) 1,494 (224) (976) (3,533)
------- ------- ------- ------- -------
927 4,547 95 (976) 4,593
======= ======= ======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
31 December 1996
Other
At Exchange non-cash At
1 January Cash Differ- move- 31 December
1996 Flow ences ments 1996
---------- ------ -------- -------- -------------
Cash at bank
and in hand. . . . 3,490 (98) (4) -- 3,388
Bank overdrafts . . (490) 297 (5) -- (198)
------- ------- ------- ------- -------
Cash. . . . . . . . 3,000 199 (9) -- 3,190
Short term
deposits*. . . . . 4,851 (2,048) (19) -- 2,784
Loans . . . . . . . -- (1,220) -- -- (1,220)
Finance leases. . .(4,437) 1,574 (6) (958) (3,827)
------- ------- ------- ------- -------
3,414 (1,495) (34) (958) 927
======= ======= ======= ======= =======
31 December 1995
Other
At Exchange non-cash At
1 January Cash Differ- move- 31 December
1995 Flow ences ments 1995
---------- ------ -------- -------- -------------
Cash at bank
and in hand. . . . 3,142 393 (45) -- 3,490
Bank overdrafts . . (36) (454) -- -- (490)
------- ------- ------- ------- -------
Cash. . . . . . . . 3,106 (61) (45) -- 3,000
Short term
deposits*. . . . . 8,270 (3,351) (68) -- 4,851
Loans . . . . . . . (43) 43 -- -- --
Finance leases. . .(3,630) 1,238 4 (2,049) (4,437)
------- ------- ------- ------- -------
7,703 (2,131) (109) (2,049) 3,414
======= ======= ======= ======= =======
- --------------
* Short term deposits are included within cash at bank and in hand in
the balance sheet.
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
(c) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September ----------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(Decrease) increase in cash . (1,873) 379 (451) 199 (61)
Cash inflow from increase
in loans . . . . . . . . . . -- -- -- (1,220) --
Repayment of long-term
loans. . . . . . . . . . . . 305 444 820 -- 43
Repayment of capital
elements of finance
lease rentals. . . . . . . . 1,161 946 1,494 1,574 1,238
Cash (inflow)/outflow
from short term deposits . . (5,489) 850 2,684 (2,048) (3,351)
------- ------- ------- ------- -------
Change in net debt resulting
from cash flows. . . . . . . 17(b) (5,896) 2,619 4,547 (1,495) (2,131)
Other . . . . . . . . . . . . (1,022) (798) (976) (958) (2,049)
Exchange differences. . . . . (15) 9 95 (34) (109)
------- ------- ------- ------- -------
MOVEMENT IN NET DEBT. . . . . (6,933) 1,830 3,666 (2,487) (4,289)
NET DEBT AT BEGINNING
OF PERIOD. . . . . . . . . . 17(b) 4,593 927 927 3,414 7,703
------- ------- ------- ------- -------
NET DEBT AT END OF PERIOD . . 17(b) (2,340) 2,757 4,593 927 3,414
======= ======= ======= ======= =======
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
(d) MAJOR NON-CASH TRANSACTIONS
The Group entered into finance lease arrangements in respect of assets
with a total capital value at the inception of the leases of US$976,
US$958, US$2,049, US$1,022 and US$798 in the years ended 31 December 1997,
1996 and 1995 and the nine month periods ended 30 September 1998 and 1997
respectively.
18. CAPITAL COMMITMENTS
The Group had no significant capital commitments as at 31 December
1997 and 1996.
19. CONTINGENT LIABILITIES
In 1996, a legal action has been taken by a customer of JLW (Thailand)
Limited in connection with lease agreement and wrongful acts. A
compensation of US$890 is being claimed by the customer. The case is still
under consideration of the court. The company's management considered that
no material liabilities are likely to arise as a result of the legal action
and no provision has therefore been made in the accounts.
In 1997 and the nine months in 1998, the Group has given an indemnity
of US$77 and US$71 respectively in respect of a guarantee given by a
shareholder relating to banking facilities extended to a related company.
The Group has been granted a bank guarantee facility which is secured
by a lien over a time deposit of US$128, US$149 and US$128 in 1997, 1996
and the nine months in 1998 respectively.
As of 30 September 1998, the group had a number of Hong Kong employees
who have completed the required number of years of service under the
Employment Ordinance in Hong Kong (the "Ordinance") to be eligible for long
service payments on termination of their employment. The group is only
liable to make such payments if the termination of employment meets the
circumstances which are specified in the Ordinance. Had the employment of
all eligible Hong Kong employees been terminated on 30 September 1998 and
long service payments been paid under the Ordinance, the maximum potential
exposure would have been approximately US$964. No provision has been made
in the financial statements as at 30 September 1998. Prior to 1 July 1998,
full provision had been made in the financial statements. During the period
ended 30 September 1998, US$901 was credited to the profit and loss account
to write it back.
20. OTHER RELATED PARTY TRANSACTIONS
The Group is part of an international organization of entities
operating under the JLW umbrella. It entered into material transactions
with related parties as follows:
JLW PACIFIC LIMITED
During the years ended 31 December 1997, 1996 and 1995, name
license fee of US$2,436, US$1,920 and US$2,065 respectively were payable by
the Group to JLW Pacific Limited based on annual percentage of Group's
turnover charged to respective Group companies' turnover. The amounts of
US$2,202 and US$3,475 remained payable as at 31 December 1997 and 1996
respectively.
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
JLW LONDON
There is an International Board Development Fund established in
and held by JLW London for the purposes of financing international
projects. Contributions made by the Group during the years ended December
31, 1997, 1996 and 1995 were US$436, US$180 and US$207 respectively.
PT PROCON INDAH
The Group provides technical advisory services to the PT Procon
Indah Group in Indonesia. Under a technical advisory services agreement
fees were due from PT Procon Indah amounting to US$4,808, US$5,836 and
US$4,851 for the years 1997, 1996 and 1995 respectively. The amount of the
fees is calculated as a percentage of the net profit after tax of PT Procon
Indah and its subsidiaries. The amounts outstanding in respect of such fees
as at 31 December 1997 and 1996 were US$5,486 and US$7,170 respectively.
21. SUBSIDIARY UNDERTAKINGS
The following is a list of JLW Asia Holdings Limited's principal
subsidiary undertakings throughout the period covered by these financial
statements:
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Place of Particulars of issued Legal Effective Rights to Principal
Name of company incorporation and paid up capital holding holding dividend activities
- --------------- ------------- --------------------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
JLW Property
Consultants
Pte Ltd. Singapore 100 "A" shares of S$1 each 90% 100% No Property consulting,
100 "B" shares of S$1 each -- -- Yes valuation, property
300 "C" shares of S$1 each 100% 100% Yes management and
400 "D" shares of S$1 each -- -- Yes agency services
100 "E" shares of S$1 each -- -- Yes
JLW (Thailand)
Limited Thailand 1,000 "A" preference shares 100% 100% Yes-99% Real estate agency,
of Baht 100 each property consulting
18,600 "A" ordinary shares 100% 100% Yes-0.5% and valuation
of Baht 100 each
20,400 "B" ordinary shares -- 100% Yes-0.5%
of Baht 100 each
Jones Lang
Wootton Limited Hong Kong 100 "A" shares of HK$1 each 90% 100% No Real estate agency,
1 "E" share of HK$1 each 100% 100% Yes property consulting
1 "Y" share of HK$1 each 100% 100% Yes and valuation
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The Group's accounting policies conform with UK GAAP which differ in
certain material respects from US GAAP. Differences that have a significant
effect on net profit/(loss) and shareholders' funds are set out below.
GOODWILL ARISING ON CONSOLIDATION
Under UK GAAP, positive or negative goodwill arising on acquisition of
subsidiaries or associated companies are reflected in reserves in the year
of acquisition.
Under US GAAP, an entity is required to record all purchased
identifiable intangible assets prior to allocating any residual difference
between purchase consideration and the fair value of net assets acquired to
goodwill. Negative goodwill is required to be first applied to reduce the
carrying value of long term assets acquired. Any remaining positive or
negative goodwill is amortised over its estimated useful life, generally
not to exceed 40 years. The effect of this difference was not material to
the periods presented.
DEFERRED INCOME TAXES
Under UK GAAP, deferred taxation is calculated under the liability
method in respect of the taxation effect arising from all timing
differences that are expected with reasonable probability to crystallise in
the foreseeable future. Tax deferred or accelerated by the effect of timing
differences is accounted for to the extent that it is probable that a
liability or asset will crystallise. Net deferred tax debits are not
carried forward as assets, except to the extent that recoverability is
assured beyond reasonable doubt.
US GAAP generally requires that deferred taxation be provided for all
future taxable temporary differences regardless of when reversal is
anticipated. The recognition of deferred tax assets on future deductible
temporary differences, including tax loss carry forwards, is required if
realization of such future benefits is more likely than not. There is no
material difference between US GAAP and the Group's treatment of deferred
income taxes in accordance with UK GAAP for the periods presented.
LONG SERVICE PAYMENTS
Under UK GAAP, the Group accrued a liability for severance payments
payable upon the involuntary termination of eligible employees in
compliance with the local statutory requirements related to its
subsidiaries in Hong Kong. This accrual was made for periods ending on or
before 30 June 1998.
Under US GAAP, accrual for involuntary termination benefits may only
be recorded as a liability when management commits the Group to a specific
plan of termination, such plan is communicated to employees and changes to
the plan are unlikely. The tax effect of this difference was not material.
CONSOLIDATION OF FINANCIAL STATEMENTS OF INVESTEE COMPANIES
Under UK GAAP, a company is considered a subsidiary if its parent
controls the composition of its board of directors, controls more than half
of the company's voting power or holds more than half of its share capital.
Additionally, an entity is allowed to consolidate the financial statements
of a subsidiary company, where the parent company's ability to control the
subsidiary's assets and operations is by contract.
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Under US GAAP, consolidation of the financial statements of a subsidiary company into the consolidated
financial statements of its parent company is generally required if the parent company has a controlling financial
interest in the subsidiary. Ownership of more than 50% of the company's voting shares is normally required to
evidence control although in limited circumstances consolidation may be required where the parent owns less than
50% of the company's voting shares. As the investee is in a net loss position and the company has committed to
fund such losses in excess of its investment, there is no effect on the results of operations.
Effect on profit/(loss) for the period of significant differences between UK GAAP and US GAAP is as follows:
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit/(loss) for the period
in accordance with UK GAAP . . . (195) 8,079 10,969 9,223 7,761
Adjustments:
Provision for long service
payments. . . . . . . . . . . (901) 149 169 130 124
------- ------- ------- ------- -------
Approximate net income/(loss)
for the period in accordance
with US GAAP . . . . . . . . . . (1,096) 8,228 11,138 9,353 7,885
======= ======= ======= ======= =======
Effect on shareholders' funds of significant differences between UK GAAP and US GAAP is as follows:
Unaudited Unaudited 31 December
30 September 30 September-------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
Shareholders' funds in accordance
with UK GAAP . . . . . . . . . . 10,632 16,884 12,731 16,554 14,986
Adjustments:
Provision for long service
payments. . . . . . . . . . . -- 881 901 732 602
------- ------- ------- ------- -------
Approximate shareholders' funds
in accordance with US GAAP . . . 10,632 17,765 13,632 17,286 15,588
======= ======= ======= ======= =======
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended December 31, 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
The consolidated statements of cash flows prepared under UK GAAP
differ in certain presentational respects from the format required under
Statement of Financial Accounting Standards ("SFAS") No.95. Under UK GAAP,
a reconciliation of operating profit to cash flows from operating
activities is presented in a note, and cash paid for interest and income
taxes are presented separately from cash flows from operating activities.
Under SFAS No.95, cash flows from operating activities are based on
net profit, include interest and income taxes, and are presented on the
face of the statement.
<PAGE>
<TABLE> JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Summary consolidated cash flow information as presented in accordance with SFAS No. 95 is as follows:
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash was provided by (used in):
Operating activities. . . . . . . (3,625) 10,977 20,021 7,347 10,044
Investing activities. . . . . . . (290) (272) (424) (1,085) (142)
Financing activities. . . . . . . (1,091) (9,313) (17,309) (8,286) (13,210)
------- ------- ------- ------- -------
Net (decrease)/increase in cash . (5,006) 1,392 2,288 (2,024) (3,308)
Exchange movement . . . . . . . . 46 37 526 (28) (113)
Cash and cash equivalents at
the beginning of the period. . . 8,544 5,730 5,730 7,782 11,203
------- ------- ------- ------- -------
Cash and cash equivalents
at the end of the period . . . . 3,584 7,159 8,544 5,730 7,782
======= ======= ======= ======= =======
A reconciliation between the statement of cash flows presented in accordance with UK GAAP and US GAAP is set
out below:
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
OPERATING ACTIVITIES
New cash (outflow)/inflow
from operating activities
(UK GAAP). . . . . . . . . . . . (1,650) 11,224 20,694 8,929 12,752
Interest received . . . . . . . . 72 155 293 192 382
Interest paid . . . . . . . . . . (219) (69) (225) (482) (323)
Interest element of finance
lease rentals. . . . . . . . . . (124) (83) (107) (349) (254)
Other US GAAP adjustments . . . . 92 215 243 117 (350)
Tax paid. . . . . . . . . . . . . (1,796) (465) (877) (1,060) (2,163)
------- ------- ------- ------- -------
Net cash provided by/(used in)
operating activities. . . . . . (3,625) 10,977 20,021 7,347 10,044
======= ======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTING ACTIVITIES
Net cash outflow from capital
expenditure, financial investment
and acquisitions (UK GAAP) . . . (290) (272) (424) (1,085) (142)
------- ------- ------- ------- -------
Net cash used in investment
activities (US GAAP) . . . . . . (290) (272) (424) (1,085) (142)
======= ======= ======= ======= =======
FINANCING ACTIVITIES
Net cash outflow form
financing (UK GAAP). . . . . . . (1,466) (1,390) (2,314) (354) (1,281)
Dividend paid . . . . . . . . . . (1,889) (7,871) (14,807) (7,640) (12,383)
Increase/(decrease) in overdraft. 2,264 (52) (188) (292) 454
------- ------- ------- ------- -------
Net cash used in financing
activities (US GAAP) . . . . . . (1,091) (9,313) (17,309) (8,286) (13,210)
======= ======= ======= ======= =======
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP.
The following balance sheets and profit and loss accounts have been
prepared in accordance with US GAAP and reflect the adjustments detailed in
note 22 to the financial statements and certain other reclassifications.
BALANCE SHEET
Unaudited 31 December
30 September -------------------
1998 1997 1996
------------- ------- -------
ASSETS
CURRENT ASSETS
Current assets
Cash and cash equivalents . . . 3,584 8,544 5,730
Trade receivables, net. . . . . 11,332 9,518 12,011
Other receivables . . . . . . . 10,644 10,657 15,306
Prepaid expenses. . . . . . . . 2,014 203 48
-------- -------- --------
Total current assets. . . . 27,574 28,922 33,095
-------- -------- --------
Property and equipment, at cost,
less accumulated depreciation of
$6,507, $5,546 and $4,141 at
30 September 1998, 31 December
1997 and 1996, respectively . 4,785 4,977 5,719
Interest in associated
undertakings. . . . . . . . . -- -- 548
Investments . . . . . . . . . . 419 346 287
------- ------- -------
Total assets. . . . . . . . 32,778 34,245 39,649
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities. . . . . . . . . . 3,773 5,742 5,668
Taxation. . . . . . . . . . . . 806 2,132 1,037
Other liabilities . . . . . . . 10,600 8,569 10,615
Borrowings. . . . . . . . . . . 4,102 2,392 1,761
-------- -------- --------
Total current liabilities. . 19,281 18,835 19,081
Deferred tax liability. . . . . 231 193 151
Other long term liabilities . . 2,634 1,585 3,131
-------- -------- --------
Total liabilities . . . . . 22,146 20,613 22,363
-------- -------- --------
STOCKHOLDERS' EQUITY
Issued share capital. . . . . . -- -- --
Retained earnings . . . . . . . 10,632 13,617 17,286
Effects of cumulative translation
adjustments . . . . . . . . . -- 15 --
-------- -------- --------
Total stockholders' equity. 10,632 13,632 17,286
-------- -------- --------
Total liabilities and
stockholders' equity . . 32,778 34,245 39,649
======== ======== ========
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
PROFIT AND LOSS ACCOUNTS
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenue . . . . . . . . 40,850 55,759 73,843 59,753 58,120
Other income. . . . . . . . . . . 959 1,471 1,874 1,856 1,032
Interest revenue. . . . . . . . . 72 125 293 192 377
Income from interest
in associated undertakings. . . -- -- -- 480 189
------- ------- ------- ------- -------
Total revenue . . . . . . . . 41,881 57,355 76,010 62,281 59,718
------- ------- ------- ------- -------
OPERATING EXPENSES
Compensation and benefits . . . . 23,311 26,327 35,872 29,411 28,070
Operating, administrative
and other . . . . . . . . . . . 13,548 18,927 24,135 19,915 20,970
Merger-related non-recurring
charges . . . . . . . . . . . . 3,331 -- -- -- --
Depreciation and amortization . . 1,440 1,335 1,841 1,683 1,610
Loss from interest in
associated undertakings . . . . 499 848 604 -- --
------- ------- ------- ------- -------
Total operating expenses. . . 42,129 47,437 62,452 51,009 50,650
------- ------- ------- ------- -------
Operating income (loss) . . . . . (248) 9,918 13,558 11,272 9,068
Interest expense. . . . . . . . . 194 69 225 426 279
------- ------- ------- ------- -------
Earnings (loss) before
provision for income tax. . . . (442) 9,849 13,333 10,846 8,789
Provision for income taxes. . . . 616 1,554 2,118 1,368 898
Deferred tax expense. . . . . . . 38 67 77 125 6
------- ------- ------- ------- -------
Net income (loss) . . . . . . . . (1,096) 8,228 11,138 9,353 7,885
======= ======= ======= ======= =======
</TABLE>
<PAGE>
INDEPENDENT AUDITORS REPORT
The Board of Directors of
JLW Property Consultants
Pte Ltd.
We have audited the consolidated financial statements of JLW Property
Consultants Pte Ltd and its subsidiary companies (the "Company") as of
December 31, 1997 and 1996 and the related profit and loss accounts and
cash flow statements for each of the years in the three-year period ended
December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in Singapore, the Company's local standards, that are
substantially equivalent to auditing standards generally accepted in the
United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the overall financial
statements presentation.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
JLW Property Consultants Pte Ltd and its subsidiary companies as of
December 31, 1996 and 1997, and the results of their operations and their
cash flows for each of the years in the three-years period ended
December 31, 1997, in conformity with generally accepted accounting
principles in Singapore.
COOPERS & LYBRAND
Certified Public Accountants
Singapore, 12 March 1998
<PAGE>
JLW AUSTRALASIA GROUP
FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
<PAGE>
INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS OF
JLW HOLDINGS PTY LIMITED
The Board of Directors and Stockholders
We have audited the combined balance sheets of the "JLW Australasia
group" as at 31 December 1996 and 1997, and the related combined profit and
loss accounts, combined statements of movements in reserves, total
recognized gains and losses and cash flows for each of the years in the
three year period ended 31 December 1997 as set out on pages F97 to F119.
These combined financial statements are the responsibility of the group's
management. Our responsibility is to express an opinion on these combined
financial statements.
We conducted our audits in accordance with auditing standards
generally accepted in Australia and in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these combined financial statements referred to above
present fairly, in all material respects, the combined financial position
of the "JLW Australasia group" as of 31 December 1996 and 1997, and the
combined results of its operations and its cash flows for each of the years
in the three year period ended 31 December 1997, in conformity with
generally accepted accounting principles in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States. Application of accounting principles generally
accepted in the United States would have affected the results of operations
and shareholders' equity for each of the years in the three year period
ended 31 December 1997, to the extent summarized in Note 22 and Note 23 to
the combined financial statements.
ERNST & YOUNG
Sydney
23 November 1998
<PAGE>
<TABLE>
JLW AUSTRALASIA GROUP
COMBINED PROFIT AND LOSS ACCOUNTS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FEE INCOME. . . . . . . . . . 1 39,462 42,959 60,522 60,281 57,968
Administrative expenses . . . (34,560) (39,660) (52,833) (56,485) (57,028)
Merger-related non-recurring
charges . . . . . . . . . . (2,509) -- -- -- --
------- ------- ------- ------- -------
OPERATING PROFIT. . . . . . . 2 2,393 3,299 7,689 3,796 940
Investment income . . . . . . 3 122 1,316 1,895 1,688 1,035
Interest payable and
similar charges. . . . . . . 4 (82) (260) (340) (674) (687)
------- ------- ------- ------- -------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION. . . . . . . 2,433 4,355 9,244 4,810 1,288
Tax on profit on ordinary
activities . . . . . . . . 5 (2,168) (1,507) (2,933) (1,691) (322)
------- ------- ------- ------- -------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION . . . . . . . 265 2,848 6,311 3,119 966
Minority interests. . . . . . -- -- -- -- (54)
------- ------- ------- ------- -------
PROFIT FOR THE PERIOD . . . . 265 2,848 6,311 3,119 912
DIVIDENDS . . . . . . . . . . -- (2,096) (5,290) (944) (917)
------- ------- ------- ------- -------
PROFIT/(LOSS) FOR THE
PERIOD, ATTRIBUTABLE
TO JLW AUSTRALASIA . . . . . 265 752 1,021 2,175 (5)
======= ======= ======= ======= =======
<FN>
All activities derive from continuing operations.
</TABLE>
<PAGE>
JLW AUSTRALASIA GROUP
STATEMENT OF MOVEMENTS ON RESERVES
Nine months ended 30 September 1998 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, unless except stated otherwise)
Foreign
Exchange Profit
Translation and Loss
Reserve Account Total
----------- --------- ---------
BALANCE AT 1 JANUARY
1995. . . . . . . . . . -- 3,654 3,654
Loss for the year . . . . -- (5) (5)
Foreign exchange trans-
lation differences . . . (137) -- (137)
------- ------- -------
BALANCE AT 1 JANUARY
1996. . . . . . . . . . (137) 3,649 3,512
Profit for the year . . . -- 2,175 2,175
Foreign exchange trans-
lation differences . . . 269 -- 269
------- ------- -------
BALANCE AT 31 DECEMBER
1996. . . . . . . . . . 132 5,824 5,956
Profit for the year . . . -- 1,021 1,021
Foreign exchange trans-
lation differences . . . (1,198) -- (1,198)
------- ------- -------
BALANCE AT 31 DECEMBER
1997. . . . . . . . . . (1,066) 6,845 5,779
Profit for the year . . . -- 265 265
Foreign exchange trans-
lation differences . . . (576) -- (576)
------- ------- -------
Unaudited balance at
30 September 1998. . . . (1,642) 7,110 5,468
======= ======= =======
Corporate profit and loss account reserves represent the amounts
retained within the corporate entities combined in these accounts.
<PAGE>
JLW AUSTRALASIA GROUP
COMBINED BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
Unaudited 31 December
30 September --------------------
Note 1998 1997 1996
---- ------------- -------- --------
FIXED ASSETS
Tangible assets . . . . . 6 1,336 2,127 3,163
Investments . . . . . . . 7 439 1,061 936
------- ------- -------
1,775 3,188 4,099
------- ------- -------
CURRENT ASSETS
Debtors . . . . . . . . . 8 14,987 12,363 14,298
Cash at bank and in hand. -- 3,719 2,943
------- ------- -------
14,987 16,082 17,241
Creditors: amounts falling
due within one year. . . 9 (8,296) (10,950) (10,455)
------- ------- -------
Net current assets. . . . 6,691 5,132 6,786
------- ------- -------
Total assets less
current liabilities 8,466 8,320 10,885
Creditors: amounts falling
due after more than one
year. . . . . . . . . . 10 (417) (544) (2,801)
Provisions for liabilities
and charges. . . . . . . 12 (2,500) (1,916) (2,047)
MINORITY INTERESTS
Equity. . . . . . . . . . -- -- --
------- ------- -------
5,549 5,860 6,037
======= ======= =======
CAPITAL AND RESERVES
Called up share capital . 19 81 81 81
Foreign exchange trans-
lation reserve . . . . . (1,642) (1,066) 132
Profit and loss account . 7,110 6,845 5,824
------- ------- -------
Shareholders' Funds
-Equity. . . . . . . . . 5,549 5,860 6,037
======= ======= =======
<PAGE>
<TABLE>
JLW AUSTRALASIA GROUP
COMBINED STATEMENTS OF CASH FLOWS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net cash inflow (outflow) from
operating activities. . . . 13 1,037 6,701 10,151 5,980 466
------- ------- ------- ------- -------
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Dividends received. . . . . . 135 1,108 1,325 855 958
Interest received . . . . . . 25 101 150 94 77
Interest paid . . . . . . . . (13) (117) (144) (436) (401)
Interest element of finance
lease rental payments . . . (69) (143) (196) (238) (286)
Ordinary dividends paid . . . -- (2,125) (5,290) (944) (917)
------- ------- ------- ------- -------
Net cash outflow from returns
on investments and servicing
of financing . . . . . . . . 78 (1,176) (4,155) (669) (569)
------- ------- ------- ------- -------
TAXATION
Tax paid. . . . . . . . . . . (2,670) (1,392) (2,017) (926) (2,651)
------- ------- ------- ------- -------
<PAGE>
JLW AUSTRALASIA GROUP
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
Note 1998 1997 1997 1996 1995
---- ------------- ------------- -------- -------- --------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire tangible
fixed assets . . . . . . . . (78) (791) (1,055) (1,185) (1,820)
Receipts from sales of
tangible fixed assets. . . . 280 523 426 555 241
Payments to acquire investments -- -- (34) (48) --
------- ------- ------- ------- -------
Net cash inflow (outflow) from
capital expenditures and
financial investment . . . . 202 (268) (663) (678) (1,579)
------- ------- ------- ------- -------
Net cash inflow (outflow) before
financing. . . . . . . . . . (1,353) 3,865 3,316 3,707 (4,333)
------- ------- ------- ------- -------
FINANCING
Capital element of finance lease
rental payments . . . . . . (694) (673) (1,166) (279) (979)
Repayment of related party
payables. . . . . . . . . . -- -- -- -- (340)
Bank bills drawn/(repaid) . . -- (2,383) (2,383) 2,383 --
Funds (to)/from deposit . . . (1,831) (4,027) 1,009 (773) --
Proceeds from loan. . . . . . -- -- -- -- --
------- ------- ------- ------- -------
Net cash inflow (outflow)
from financing . . . . . . . (2,525) (7,083) (2,540) 1,331 (1,319)
------- ------- ------- ------- -------
INCREASE (DECREASE) IN CASH . 14,15 (3,878) (3,218) 776 5,038 (5,652)
======= ======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
JLW AUSTRALASIA GROUP
COMBINED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit for the period . . . . . . 265 2,848 6,311 3,119 912
Currency translation differences
on foreign currency net
investments. . . . . . . . . . . (576) (532) (1,198) 269 (137)
---------- ---------- ---------- ---------- ----------
Total recognized gains and losses
relating to the year. . . . . . (311) 2,316 5,113 3,388 775
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
JLW AUSTRALASIA GROUP
RECONCILIATIONS OF MOVEMENTS IN COMBINED SHAREHOLDERS' FUNDS
Nine months ended 30 September 1998 and 1997 and
years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<CAPTION> Unaudited Unaudited
nine months nine months
ended ended 31 December
30 September 30 September------------------------------------
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit for the period . . . . . . 265 2,848 6,311 3,119 912
Dividends . . . . . . . . . . . . -- (2,096) (5,290) (944) (917)
-------- -------- -------- -------- --------
265 752 1,021 2,175 (5)
Other recognised gains and
losses relating to the period . (576) (532) (1,198) 269 (137)
------- ------- ------- ------- -------
Net addition to shareholders'
funds . . . . . . . . . . . . . (311) 220 (177) 2,444 (142)
Opening shareholders' funds . . . 5,860 6,037 6,037 3,593 3,735
------- ------- ------- ------- -------
Closing shareholders' funds . . . 5,549 6,257 5,860 6,037 3,593
======= ======= ======= ======= =======
</TABLE>
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The "JLW Australasia Group", through its operational subsidiaries,
provides a full range of advisory, transactional and asset management vices
to a wide variety of local and international clients in almost every
industry and service sector for all types of real estate. The main
geographical markets are Australia and New Zealand.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention and in accordance with accounting standards applicable in the
United Kingdom.
BASIS OF COMPILATION
These accounts have been prepared in order to provide the directors of
JLW Holdings Pty Limited ("the Directors") with the results for the three
financial years ended 31 December 1997 and financial position of the
combined "JLW Australasia Group" as at 31 December 1996 and 1997.
The "JLW Australasia Group" is defined in note 21. The entities that
have been combined are those entities that are subject to common control.
BASIS OF COMBINATION
The financial information has been compiled from the audited financial
statements of Jones Lang Wootton Holdings Pty Limited "Australia", the
audited financial statements of Jones Lang Wootton Holdings Pty Limited
"New Zealand" and the combined JLW Transact group "Transact Group". The
companies which form part of these three groups are disclosed in note 21.
This information has been compiled as detailed below.
The results and financial position of Australia and New Zealand have
been combined. In doing so, no adjustments have been made to eliminate the
share capital of either company. In translating the results and financial
positions from foreign currencies, exchange rate movements have been taken
to the foreign exchange translation reserve assuming the group commenced
operations on 1 January 1995.
The extent to which companies included in the Transact group have been
included varies from year to year. The basis for inclusion is disclosed in
note 21.
JLW Australia Pty Limited, owns 10% of the voting stares of Jones Lang
Wootton Limited and JLW Property Consultants Pte Limited. It also owns one
"E" share in Jones Lang Wootton Limited. Although JLW Australia Pty
Limited own these shares any participation in the profits of either Jones
Lang Wootton Limited and JLW Property Consultants Pte Limited are totally
at the discretion of JLW Asia Holdings Limited management. Therefore, these
accounts exclude 100% of the results of these undertakings.
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
INTERIM INFORMATION
The combined financial statements as at 30 September 1998 and for the
nine month periods ended 30 September 1998 and 1997 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 periods ended 30 September 1998 and 1997 are not
necessarily indicative of the results to be obtained for the full fiscal
year.
ACQUISITIONS AND DISPOSALS
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the group's share of
net tangible assets. Where the cost of acquisition exceeds the values
attributable to such net assets, the difference is treated as purchased
goodwill and is written off directly to reserves in the year of
acquisition.
The profit or loss on the disposal of a previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business.
CASH
For the purposes of the statement of cash flows, cash includes cash on
hand and in banks, and money market investments readily convertible to cash
within 2 working days, net of outstanding bank overdraft.
RECOVERABLE AMOUNT
Non-current assets are not revalued to an amount above their
recoverable amount, and where carrying values exceed this recoverable
amount assets are written down. In determining recoverable amount the
expected net cash flows have not been discounted to their present values.
NON-CURRENT ASSETS
COST AND VALUATION
Property, plant and equipment are carried at cost.
Where assets have been revalued, the potential effect of the capital
gains tax on disposal has not been taken into account in the determination
of the revalued carrying amount. Where it is expected that a liability for
capital gains tax will arise, this expected amount is disclosed by way of
note.
The economic entity does not have a policy for regular revaluation of
non-current assets.
DEPRECIATION
Depreciation is provided on a straight line basis on all property,
plant and equipment, at rates calculated to allocate the cost less
estimated residual value at the end of the useful lives of the assets
against revenue over those estimated useful lives.
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
EMPLOYEE ENTITLEMENTS
Provision is made for annual leave entitlements on the portion of the
cumulative balance due that exceeds the annual entitlement of 20 days. Long
Service Leave is provided based on amounts vested at balance date. The
contributions made to superannuation funds are charged against profits. The
economic entity has no legal obligation to provide benefits to employees on
retirement.
INCOME RECOGNITION
PROPERTY SALES
Fee income is recognised on exchange of an unconditional contract of
sale.
LEASING
Fee income is recognised on the signing of lease agreement of date of
occupation.
VALUATION/CONSULTANCY INCOME
Fee income is recognised on issue of the report.
MANAGEMENT FEES
Fee income is recognised based on the date agreed in signed Management
Agreements.
FOREIGN EXCHANGE
Transactions of companies within the group denominated in foreign
currencies are translated at the rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the rates ruling at
that date. These translation differences are dealt with in the profit and
loss account.
The balance sheets of foreign entities are translated at the closing
rates of exchange and the profit and loss accounts and cash flow statements
at average rates. The differences arising from the translation of the
opening net investment in subsidiaries at the closing rates and the profit
and loss accounts at average rates are taken direct to reserves.
The functional currency of the group is the local currency,
accordingly its transactions are measured in the local currency and the
results are translated upon combination according to the above accounting
policy. The reporting currency for the purposes of these financial
statements is the United States dollar and the combined financial
statements have been translated using the closing rate of exchange for the
balance sheet and the weighted average rate of exchange for the profit and
loss account. The opening capital and reserves have been translated using
the rate at 1 January 1995. All differences arising as a result of this
translation have been taken directly to the foreign exchange translation
reserve.
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
TAXATION
Taxation is provided on the taxable profits of the corporate entities
within the group.
DEFERRED TAXATION
Deferred taxation is provided using the liability method on all timing
differences, including those relating to pensions and other post retirement
benefits, to the extent that they are expected to reverse in the future
without being replaced, calculated at the rate at which it is anticipated
the timing differences will reverse.
LEASES
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
2. OPERATING PROFIT
1997 1996 1995
-------- -------- --------
Operating profit is stated after including:
(a) Other operating income:
Profit/(loss) on sale of
tangible fixed assets . . . 317 193 109
Other revenue. . . . . . . . 129 104 90
------- ------- -------
446 297 199
======= ======= =======
(b) Staff costs:
Wages and salaries . . . . . 21,796 23,290 21,963
Superannuation . . . . . . . 1,541 1,997 1,556
------- ------- -------
23,337 25,287 23,519
======= ======= =======
No. No. No.
------- ------- -------
Average number of persons employed:
Technical and administration 614 630 621
======= ======= =======
(c) Other operating charges:
Other operating charges include
the following:
Auditor's remuneration . . 153 154 156
Other payments to auditors 118 130 124
Rental under operating leases
Other operating leases . 2,931 5,271 4,156
======= ======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
1997 1996 1995
-------- -------- --------
(d) Depreciation and other amounts
written off tangible fixed assets:
Owned assets . . . . . . . 337 361 430
Assets held under finance
leases . . . . . . . . . 1,108 1,032 992
======= ======= =======
3. INVESTMENT INCOME
1997 1996 1995
-------- -------- --------
Income from interests in associated
companies . . . . . . . . . . . 420 739 --
Income from related body corporates 1,325 855 958
Other interests receivable and
similar income. . . . . . . . . 150 94 77
------- ------- -------
1,895 1,688 1,035
======= ======= =======
4. INTEREST PAYABLE AND SIMILAR CHARGES
1997 1996 1995
-------- -------- --------
Bank loans, overdrafts and
other loans . . . . . . . . . . 144 436 401
Finance charges-finance
leases. . . . . . . . . . . . . 196 238 286
------- ------- -------
340 674 687
======= ======= =======
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
The taxation charge is made up of the following:
Based on the profit for the year 1997 1996 1995
- -------------------------------- -------- -------- --------
Corporate Tax--Australia and
New Zealand . . . . . . . . . . . 2,818 1,392 534
Gain from change in corporate
tax rate. . . . . . . . . . . . . -- -- (94)
Corporation tax (over)/under
provided in previous year . . . . (20) 124 (118)
Associated undertakings . . . . . . 135 175 --
------- ------- -------
Income tax expense attributable
to operating profit . . . . . . . 2,933 1,691 322
======= ======= =======
The corporation tax charge is high due to the incidence of expenditure
which does not qualify for tax relief, and due to the non recognition of
deferred tax assets. If full provision had been made for deferred tax for
the year, the tax charge would have been increased/(decreased) by:
Deferred tax liability. . . . . . 331 (81) 25
Deferred tax asset. . . . . . . . (69) 21 (331)
------- ------- -------
262 (60) (306)
======= ======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
6. TANGIBLE FIXED ASSETS
Office
machinery,
computer
equipment
Motor and
vehicles fixtures Total
-------- ----------- ---------
COST
At 1 January 1996 . . . 1,622 5,231 6,853
Foreign exchange trans-
lation differences. . 110 368 478
Additions . . . . . . . 62 1,123 1,185
Disposals . . . . . . . (354) (1,004) (1,358)
------- ------- -------
At 31 December 1996 . . 1,440 5,718 7,158
Foreign exchange trans-
lation differences. . (213) (1,093) (1,306)
Additions . . . . . . . 452 603 1,055
Disposals . . . . . . . (903) (638) (1,541)
------- ------- -------
At 31 December 1997 . . 776 4,590 5,366
------- ------- -------
ACCUMULATED DEPRECIATION
At 1 January 1996 . . . 632 2,562 3,194
Foreign exchange trans-
lation differences. . 44 183 227
Charge for the year . . 372 1,021 1,393
Disposals . . . . . . . (184) (635) (819)
------- ------- -------
At 31 December 1996 . . 864 3,131 3,995
Foreign exchange trans-
lation differences . . (103) (666) (769)
Charge for the year . . 293 1,152 1,445
Disposals . . . . . . . (795) (637) (1,432)
------- ------- -------
At 31 December 1997 . . 259 2,980 3,239
------- ------- -------
NET BOOK VALUE
At 31 December 1997 . . 517 1,610 2,127
======= ======= =======
At 31 December 1996 . . 576 2,587 3,163
======= ======= =======
The net book value of the group's fixed assets includes motor vehicles
amounting to $1,088 (31 December 1996 $1,631) in respect of assets held
under finance leases.
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
7. INVESTMENTS
1997 1996
------- -------
Net book value
Associates. . . . . . . . . . . . . . . . . . 979 888
Other investments . . . . . . . . . . . . . . 82 48
------- -------
1,061 936
======= =======
INVESTMENTS IN ASSOCIATES
1997 1996
------- -------
JLW Transact Group. . . . . . . . . . . . . . 979 888
======= =======
INVESTMENTS IN ASSOCIATES
Share of
post
acquisition
Cost reserves Total
------- ----------- ---------
At 1 January 1996. . . . . . . . . -- -- --
Investment in associates . . . 320 -- 320
Profit for the year. . . . . . . . -- 566 566
Foreign exchange translation . . . -- 2 2
------- ------- -------
At 31 December 1996. . . . . . . . 320 568 888
Profits for the year . . . . . . . -- 280 280
Profits distributed. . . . . . . . -- -- --
Foreign exchange translation . . . -- (189) (189)
------- ------- -------
At 31 December 1997. . . . . . . . 320 659 979
======= ======= =======
8. DEBTORS
31 December 31 December
1997 1996
--------------------------
Trade debtors . . . . . . . . . . . . . 11,023 12,002
Other debtors:
Due within one year . . . . . . . . . 1,118 1,777
Due after more than one year. . . . . -- 79
Prepayment and accrued income . . . . . 222 440
------- -------
12,363 14,298
======= =======
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1997 1996
------- -------
Bank loans and overdrafts . . . . . . . . . . -- --
Obligations under finance leases. . . . . . . 770 1,443
Corporation taxation. . . . . . . . . . . . . 1,819 1,039
Other creditors and accruals. . . . . . . . . 7,400 7,532
Amounts owed to related entities. . . . . . . 961 441
------- -------
10,950 10,455
======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
10. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1997 1996
------- -------
Obligation under finance leases . . . . . . . 544 1,037
Other creditors . . . . . . . . . . . . . . . -- 652
Amounts owed to related entities. . . . . . . -- 1,112
------- -------
544 2,801
======= =======
11. BORROWINGS
JLW Australia Pty Limited has a bank overdraft facility available to
the extent of $1,951 (1996: $4,766 subject to certain covenants being met.
This is secured by a registered mortgage debenture over all assets of the
wholly-owned controlled entities in the JLW Holdings Pty Limited
"Australia" economic entity.
12. PROVISIONS FOR LIABILITIES AND CHARGES
31 December 31 December
1997 1996
--------------------------
Employee Entitlements . . . . . . . . . 1,916 2,047
======= =======
Deferred Tax Liability Cumulative
Effect Provided . . . . . . . . . . . -- --
======= =======
Not Provided:
Deferred Tax Asset. . . . . . . . . . 871 1,202
Deferred Tax Liability. . . . . . . . (80) (149)
======= =======
13. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
1997 1996 1995
-------- -------- --------
Operating profit. . . . . . . . . 7,689 3,796 1,288
Depreciation and
amortisation charges. . . . . . 1,445 1,393 1,422
(Profit)/loss on sale of tangible
fixed assets. . . . . . . . . . (317) (193) (109)
Increase/(Decrease) in provisions
for liabilities and charges . . (84) 152 (1,132)
(Increase)/Decrease in debtors. . 926 2,249 (883)
Increase/(Decrease) in creditors. 1,153 (1,155) (53)
Foreign exchange transaction
differences . . . . . . . . . . (661) (262) (67)
------- ------- -------
Net cash inflow from
operating activities. . . . . . 10,151 5,980 466
======= ======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
14. ANALYSIS OF NET FUNDS
Cash
1996 flow 1995
-------- -------- --------
Cash in hand and at bank. . . . . 2,943 1,693 1,250
Overdraft . . . . . . . . . . . . -- 3,345 (3,345)
------- ------- -------
2,943 5,038 (2,095)
Bank bills. . . . . . . . . . . . (2,383) (2,383) --
Finance leases. . . . . . . . . . (2,480) 279 (2,759)
Short term deposits . . . . . . . 1,009 773 236
------- ------- -------
Total . . . . . . . . . . . . . (911) 3,707 (4,618)
======= ======= =======
Cash
1997 flow 1996
-------- -------- --------
Cash in hand and at bank. . . . . 3,719 776 2,943
Overdrafts. . . . . . . . . . . . -- -- --
------- ------- -------
3,719 776 2,943
Bank bills. . . . . . . . . . . . -- 2,383 (2,383)
Finance leases. . . . . . . . . . (1,314) 1,166 (2,480)
Short term deposits . . . . . . . -- (1,009) 1,009
------- ------- -------
Total . . . . . . . . . . . . . 2,405 3,316 (911)
======= ======= =======
15. RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1997 1996
------- -------
Increase/(decrease) in cash in the year . . . 776 5,038
Cash inflow from decrease in debt and
lease financing. . . . . . . . . . . . . . . 2,540 (1,331)
------- -------
Change in net funds resulting
from cash flows . . . . . . . . . . . . . 3,316 3,707
------- -------
Movement in net funds in the year . . . . . 3,316 3,707
Net funds at start of year. . . . . . . . . (911) (4,618)
------- -------
Net funds at end of year. . . . . . . . . . 2,405 (911)
======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
16. SUPERANNUATION COMMITMENTS
All employees in Australia are entitled after serving qualifying
period to benefits on retirement, disability or death from the JLW Staff
Superannuation Fund or the JLW Executive Superannuation Fund or other
complying superannuation funds. The Superannuation plans are accumulation
funds and provide benefits based on contributions and interest. Employees
may contribute to plans. These plans do not operate in New Zealand.
17. OPERATING LEASE COMMITMENTS
At 31 December 1997 and 1996 the group was committed to making the
following payments during the next year in respect of operating leases:
1997 1996
Buildings Buildings
--------- ---------
Lease which expire:
Within one year . . . . . . . . . . . -- --
Within two to five years. . . . . . . 15,759 21,914
After five years. . . . . . . . . . . -- --
------- -------
15,759 21,914
======= =======
18. OBLIGATIONS UNDER FINANCE LEASES
1997 1996
------- -------
The minimum lease payments to which
the group was committed at 31 December
were as follows:
Due within one year . . . . . . . . 856 1,654
Due within two to five years. . . . 591 1,124
------- -------
1,447 2,778
Less: interest allocated to
future periods. . . . . . . . . . . 133 299
------- -------
1,314 2,479
======= =======
Due within one year . . . . . . . . . . 770 1,443
Due after more than one year. . . . . . 544 1,036
------- -------
1,314 2,479
======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
19. CALLED UP SHARE CAPITAL
1997 1996
------- -------
AUTHORISED CAPITAL
JLW Holdings Pty Ltd (Australia). . . . 777 777
Jones Lang Wootton Holdings Pty Ltd
(New Zealand) . . . . . . . . . . . . 3 3
------- -------
780 780
======= =======
ISSUED CAPITAL
JLW Holdings Pty Ltd (Australia). . . 78 78
Jones Lang Wootton Holdings Pty Ltd
(New Zealand) . . . . . . . . . . . 3 3
------- -------
81 81
======= =======
20. RELATED PARTY TRANSACTIONS
JLW HOLDINGS PRY LIMITED
The following related party transactions occurred during the financial
year:
31 December 31 December 31 December
1997 1996 1995
------------- ------------- ------------
1) Related party dividends
and income
i) JLW Australia Pry
Limited received
from JLW (Hong
Kong) Ltd:
-dividend . . . . 138 243 177
------- ------- -------
ii) JLW Australia Pty Limited
received from JLW Property
Construction (Singapore)
Pte Limited:
-dividend. . . . . 999 427 781
------- ------- -------
iii) JLW Australia Pty Limited
received from JLW Transact
Pry Limited:
-dividend. . . . . 188 185 --
------- ------- -------
2) Interest paid on subordinated loans is at commercial rates of interest
and amounted to $99 (1996: $163, 1995: $172). These loans are subordinated
in favor of the National Australia Bank's financial accommodation only.
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
JONES LANG WOOTTON HOLDINGS LIMITED (NEW ZEALAND)
No related party debts have been written off or forgiven during the
year.
<PAGE>
<TABLE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
21. ADDITIONAL INFORMATION ON COMPANIES WITHIN THE JLW AUSTRALASIA GROUP
(i) JLW Holdings Pty Limited ("Australia") and its controlled entities
<CAPTION>
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- ------- --------------
<S> <C> <C> <C>
JLW Holdings Pty Limited. . . . Australia Holding Company 100%
JLW Australia Pty Limited . . . Australia Holding Company 100%
JLW (NSW) Pty Limited . . . . . Australia Property, sales,
leasing and
managing company
JLW (ACT) Pty Limited . . . . . Australia Property, sales,
leasing and
management company
JLW (VIC) Pty Limited . . . . . Australia Property, sales, 100%
leasing and
management company
JLW (QLD) Pty Limited . . . . . Australia Property, sales, 100%
leasing and
management company
JLW (SA) Pty Limited. . . . . . Australia Property, sales, 100%
leasing and
management company
JLW (WA) Pty Limited. . . . . . Australia Property, sales, 100%
leasing and
management company
JLW Strata Management Pty
Limited . . . . . . . . . . . Australia Property Management 100%
Services
JLW Management Services
Pty Limited . . . . . . . . . Australia Property Management 100%
Services
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- ------- --------------
JLW Property Fund Advisors
Pty Limited . . . . . . . . . Australia Property Licensing 100%
Company
JLW Corporate Property (VIC)
Pry Limited . . . . . . . . . Australia Dormant Company 100%
JLW Property Financial Services
Ltd . . . . . . . . . . . . . Australia Property Licensing 100%
Company
JLW Advisory Services Pty
Limited . . . . . . . . . . . Australia Property Advisory 100%
Services
JLW Corporate Facilities
Management Pty Limited. . . . Australia Dormant Company 100%
JLW Superannuation Pty Limited. Australia Superannuation Fund
Trustee 100%
JLW Nominees Pty Limited. . . . Australia Dormant Company 100%
JLW Advisory Corporate
Property Pty Limited. . . . . Australia Property Advisory 100%
Services
JLW Executive Superannuation
Pty Limited . . . . . . . . . Australia Superannuation Fund 100%
Trustee
JLW (TAS) Pty Limited . . . . . Australia Dormant Company 100%
JLW Fund Management Pty Limited Australia Dormant Company 100%
JLW International Fund
Management Pty Limited. . . . Australia Dormant Company 100%
Caylott Pty . . . . . . . . . . Australia Dormant Company 100%
Jones Lang Wootton Fund
Management Pty Limited. . . . Australia Dormant Company 100%
Jones Lang Wootton Inter-
national Fund Management
Pty Limited . . . . . . . . . Australia Dormant Company 100%
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
(ii) Jones Lang Wootton Holdings Pty Limited ("New Zealand") and its controlled entities.
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- ------- --------------
Jones Lang Wootton Holdings
Limited . . . . . . . . . . . New Zealand Property, sales, 100%
leasing and
management company
JLW Advisory Limited. . . . . . New Zealand Property Advisory
Services 100%
JLW International Fund
Management Limited. . . . . . New Zealand Dormant Company 100%
JLW Fund Management Limited . . New Zealand Dormant Company 100%
JLW Facilities Management
Limited . . . . . . . . . . . New Zealand Dormant Company 100%
Jones Lang Wootton Fund
Management Limited. . . . . . New Zealand Dormant Company 100%
Jones Lang Wootton Inter-
national Fund Management
Limited . . . . . . . . . . . New Zealand Dormant Company 100%
Jones Lang Wootton Limited. . . New Zealand Property, sales, 100%
leasing and
management company
(iii) Combined JLW "Transact Group"
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- ------- --------------
JLW Transact Pty
Ltd Australia. . . . . . . . . Australia Hotel Sales, Leasing Note 1
and Management
JLW Transact Ltd
New Zealand. . . . . . . . . . New Zealand Hotel Sales Leasing Note 1
and Management
JLW Transact Ltd
Hong Kong . . . . . . . . . . Hong Kong Hotel Sales Leasing Note 1
and Management
JLW Administration Pty Ltd. . . Australia Hotel Sales, Leasing Note 1
and Management
Transact Hotel & Tourism
Property (Singapore)
Pte Limited. . . . . . . . . . Singapore Hotel Sales, Leasing Note 1
and Management
JLW Transact Pte Limited
Indonesia. . . . . . . . . . . Indonesia Hotel Sales, Leasing Note 1
and Management
NOTE 1
JLW Administration Pty Limited and JLW Transact (New Zealand) are included as subsidiaries in the 1995
Australasia accounts. From 1st January 1996 the combined JLW "Transact Group" is included in the Australasia
accounts as an equity investment on the basis of percentage ownership (1996-37.75%: 1997- 35%).
</TABLE>
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements are prepared in accordance with
UK GAAP which differs in certain significant respects from US GAAP. The
principal differences that affect the consolidated profit for the year and
the retained earnings funds are explained below and the approximate effect
is shown below the explanations.
GOODWILL
Under UK GAAP, on the acquisition of a business, including an interest
in an associated undertaking, fair values are attributed to the group's
share of net tangible assets. Where the cost of acquisition exceeds the
values attributable to such net assets, the difference is treated as
purchased goodwill and is written off directly to reserves in the year of
acquisition. Under US GAAP, goodwill may not be written-off to retained
profits and must be capitalised and amortised over its expected useful life
but not in excess of 40 years. Accordingly, the adjustments to reflect this
differing treatment in these financial statements is to amortise goodwill
over a period of ten years, the expected useful life.
DEFERRED TAXATION
Under UK GAAP, taxation is provided for at the anticipated tax rates
on timing differences arising from the inclusion of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future. Under US GAAP, deferred
taxation is provided for on all temporary differences under the liability
method subject to a valuation allowance on deferred tax assets where
applicable.
EMPLOYEE ENTITLEMENTS
Under UK GAAP, provision is made for annual leave entitlements on the
portion of the cumulative balance due that exceeds the annual entitlement
of 20 days. Long Service Leave is provided based on amounts payable at
balance date. Under US GAAP, provision is made for long service leave and
annual leave estimated to be payable to employees on the basis of statutory
and contractual requirements.
<PAGE>
<TABLE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
COMBINED INCOME STATEMENTS
<CAPTION> Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Profit/(loss) for the period attributable
to JLW Australasia as reported in
accordance with UK GAAP . . . . 265 752 1,021 2,175 (5)
Adjustments:
Deferred income tax . . . . . . 644 192 14 130 306
Goodwill. . . . . . . . . . . . (35) (41) (55) (58) (83)
Employee entitlements . . . . . (696) (186) (196) (161) 171
------- ------- ------- ------- -------
Sub-total . . . . . . . . . . . . 178 717 784 2,086 389
------- ------- ------- ------- -------
Add dividends paid. . . . . . . . -- 2,096 5,290 944 917
------- ------- ------- ------- -------
Profit (loss) for the period
attributable to JLW Australasia
as reported in accordance with
US GAAP . . . . . . . . . . . . 178 2,813 6,074 3,030 1,306
======= ======= ======= ======= =======
</TABLE>
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
COMBINED BALANCE SHEETS
Unaudited
30 September
1998 1997 1996
------------- ------- -------
Shareholders' funds as reported
in accordance with UK GAAP . . . . . 5,549 5,860 6,037
Deferred income tax . . . . . . . . . 1,957 1,541 1,866
Goodwill. . . . . . . . . . . . . . . 11 49 119
Employee entitlements provisions. . . (2,277) (1,840) (2,033)
-------- -------- --------
Shareholders' funds as reported
in accordance with US GAAP . . . . . 5,240 5,610 5,989
======== ======== ========
COMBINED STATEMENTS OF CASH FLOWS
The combined statements of cash flows prepared under UK GAAP differ in
certain presentational respects from the format required under Statement of
Cash Flows ("SFAS") 95. Under UK GAAP, a reconciliation of operating profit
to cash flows from operating activities is presented in a note, and cash
paid for interest and income taxes are presented separately from cash flows
from operating activities.
Under SFAS 95, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
Summary consolidated cash flow information as presented in accordance
with SFAS 95:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
------------ ------------ -------- ----------------
Cash was provided
by (used in):
Operating
activities . . (1,555) 6,258 9,269 5,329 (1,837)
Investing
activities . . 202 (268) (663) (678) (1,579)
Financing
activities . . (2,366) (8,933) (7,830) (1,708) (141)
------- ------- ------- ------- -------
Net increase/
(decrease) in
cash . . . . . . (3,719) (2,943) 776 2,943 (3,557)
Cash at the
beginning of
the period . . . 3,719 2,943 2,943 -- 3,557
------- ------- ------- ------- -------
Cash at the end
of the period. . -- -- 3,719 2,943 --
======= ======= ======= ======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
A reconciliation between the consolidated statement of cash flows
presented in accordance with UK GAAP and US GAAP is set out below:
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
----------- ------------ ------- ------- -------
OPERATING ACTIVITIES
Net cash inflow from
operating activities
(UK GAAP). . . . . . 1,037 6,701 10,151 5,980 466
Dividends received. . 135 1,108 1,325 855 958
Interest received . . 25 101 150 94 77
Interest paid . . . . (13) (117) (144) (436) (401)
Interest element
of finance lease
rentals . . . . . . (69) (143) (196) (238) (286)
Tax paid. . . . . . . (2,670) (1,392) (2,017) (926) (2,651)
------- ------- ------- ------- -------
Net cash provided by
(used in) operating
activities . . . . . (1,555) 6,258 9,269 5,329 (1,837)
------- ------- ------- ------- -------
FINANCING ACTIVITIES
Net cash inflow/
(outflow) from
financing activities
(UK GAAP). . . . . . (2,525) (7,083) (2,540) 1,331 (1,319)
Bank overdraft. . . . 159 275 -- (2,095) 2,095
Dividends paid. . . . -- (2,125) (5,290) (944) (917)
------- ------- ------- ------- -------
Net cash used in
financing activities (2,366) (8,933) (7,830) (1,708) (141)
======= ======= ======= ======= =======
No differences exist between UK GAAP and US GAAP for investing
activities.
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP
The following balance sheet and profit and loss account have been
prepared in accordance with US GAAP and reflect the adjustments detailed in
note 22 to the accounts.
BALANCE SHEET
Unaudited
30 September
1998 1997 1996
------------- ------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . -- 3,719 2,943
Trade receivables, net. . . . . . . . 12,944 11,022 12,002
Other receivables . . . . . . . . . . 1,824 1,121 1,777
Prepaid expenses. . . . . . . . . . . 178 221 440
Deferred tax asset. . . . . . . . . . 136 56 88
------- ------- -------
Total current assets. . . . . . . 15,082 16,139 17,250
Property and equipment (net). . . . . 1,336 2,127 3,163
Intangibles resulting from
business acquisitions. . . . . . . . 11 49 119
Investments . . . . . . . . . . . . . 500 1,128 1,019
Deferred tax asset. . . . . . . . . . 1,886 1,497 1,845
Other . . . . . . . . . . . . . . . . 41 -- 79
------- ------- -------
Total assets. . . . . . . . . . . 18,856 20,940 23,475
======= ======= =======
LIABILITIES AND SHAREHOLDERS' FUNDS
CURRENT LIABILITIES
Bank loans and overdrafts . . . . . . 159 -- --
Accounts payable and accrued
liabilities . . . . . . . . . . . . 6,778 9,131 9,416
Taxation. . . . . . . . . . . . . . . 1,181 1,819 1,039
Other liabilities . . . . . . . . . . 4,467 3,070 3,038
------- ------- -------
Total current liabilities . . . . 12,585 14,020 13,493
Deferred tax liability. . . . . . . . 64 80 149
Other long term liabilities . . . . . 967 1,230 3,844
------- ------- -------
Total liabilities . . . . . . . . 13,616 15,330 17,486
MINORITY INTERESTS. . . . . . . . . . -- -- --
SHAREHOLDERS FUNDS
Issued capital. . . . . . . . . . . . 81 81 81
Retained earnings . . . . . . . . . . 6,716 6,538 5,754
Effects of cumulative trans-
lation adjustments . . . . . . . . . (1,557) (1,009) 154
------- ------- -------
Total Shareholders' funds . . . . 5,240 5,610 5,989
------- ------- -------
Total liabilities and
Shareholders' funds . . . . . . 18,856 20,940 23,475
======= ======= =======
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
PROFIT AND LOSS ACCOUNT
Unaudited Unaudited
nine months nine months
ended ended
30 September 30 September
1998 1997 1997 1996 1995
----------- ------------ ------- ------- -------
REVENUE
Operating revenue . . 39,462 42,959 60,522 60,281 57,968
Interest revenue. . . 25 101 150 94 77
Other income. . . . . 1,585 1,504 1,777 1,229 1,289
------- ------- ------- ------- -------
Total revenue. . . 41,072 44,564 62,449 61,604 59,334
OPERATING EXPENSES
Compensation and
benefits . . . . . . 17,128 18,349 23,337 25,287 23,519
Operating, adminis-
trative and other. . 18,734 20,811 28,440 29,648 32,458
Merger-related non-
recurring charges. . 2,509 -- -- -- --
Depreciation and
amortization . . . . 919 1,014 1,340 1,405 1,348
------- ------- ------- ------- -------
Total operating
expenses. . . . 39,290 40,174 53,117 56,340 57,325
------- ------- ------- ------- -------
OPERATING INCOME. . . 1,782 4,390 9,332 5,264 2,009
Interest expense. . . 82 260 340 674 687
------- ------- ------- ------- -------
Earnings before
provision for
income tax . . . . . 1,700 4,130 8,992 4,590 1,322
Provision for
income taxes . . . . 1,522 1,317 2,918 1,560 16
------- ------- ------- ------- -------
178 2,813 6,074 3,030 1,306
======= ======= ======= ======= =======
<PAGE>
COMPASS GROUP
Financial Statements
December 31, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders
The Compass Group:
We have audited the accompanying combined balance sheet of the Compass
Group (the "Company") as of December 31, 1997, and the related combined
statements of operations, stockholders' equity, and cash flows for the
period June 11, 1997 to December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of the
Compass Group as of December 31, 1997 and the results of their operations
and their cash flows for the period June 11, 1997 to December 31, 1997 in
conformity with generally accepted accounting principles.
Atlanta, Georgia
September 21, 1998, except
for note 12, which is as of
October 31, 1998
<PAGE>
<TABLE>
COMPASS GROUP
COMBINED BALANCE SHEETS
September 30, 1998 (unaudited) and December 31, 1997
<CAPTION>
September 30, December 31,
1998 1997
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
------
Cash and cash equivalents, including restricted cash of $232,096 and
$129,686 at September 30, 1998 and December 31, 1997, respectively. $ 9,684,243 2,990,367
Account receivables, net of allowance of $957,185 and $526,776 at
September 30, 1998 and December 31, 1997, respectively. . . . . . . 12,644,981 24,758,475
Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 112,813 --
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 503,956 276,191
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . 22,945,993 28,025,033
Property and equipment, at cost, less accumulated depreciation
of $2,972,002 and $1,785,970 at September 30, 1998 and
December 31, 1997, respectively . . . . . . . . . . . . . . . . . . 4,105,442 3,932,468
Intangibles resulting from business acquisitions,
net of accumulated amortization of $26,233,547 and $13,911,635
at September 30, 1998 and December 31, 1997, respectively . . . . . 121,162,395 136,805,787
Investments in unconsolidated subsidiaries. . . . . . . . . . . . . . 549,138 503,302
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 6,313,420 2,744,096
Other assets, net of amortization . . . . . . . . . . . . . . . . . . 3,227,416 3,889,775
------------ ------------
$158,303,804 175,900,461
============ ============
<PAGE>
COMPASS GROUP
COMBINED BALANCE SHEETS - CONTINUED
September 30, December 31,
1998 1997
------------- -------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued liabilities. . . . . . . . . . . . . . $ 6,470,546 10,598,480
Due to parent . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,996,471 2,387,912
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . -- 1,563,505
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 3,224,912 5,606,824
Accrued variable compensation . . . . . . . . . . . . . . . . . . . 5,202,500 9,450,463
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000,000 102,000,000
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . 118,894,429 131,607,184
Commitments and contingencies
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . 118,894,429 131,607,184
------------ ------------
Stockholders' equity:
Common stock-$l par, 3,100 shares authorized, issued, and outstanding;
$1.60 par, 100 shares authorized, 2 shares issued and outstanding 3,103 3,103
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . 52,694,681 46,807,811
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . (13,288,409) (2,517,637)
------------ ------------
Total stockholders' equity. . . . . . . . . . . . . . . . . 39,409,375 44,293,277
------------ ------------
$158,303,804 175,900,461
============ ============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
COMPASS GROUP
COMBINED STATEMENTS OF OPERATIONS
For the Nine Months ended September 30, 1998 (unaudited),
the Period June 11, 1997 to September 30, 1997 (unaudited),
and the Period June 11, 1997 to December 31, 1997
<CAPTION>
Nine months June 11, June 11,
ended 1997 to 1997 to
September 30, September 30, December 31,
1998 1997 1997
------------- ------------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Revenue
Fee-based services. . . . . . . . . . . . . . . . . . $ 60,076,713 25,285,307 48,587,947
Other income. . . . . . . . . . . . . . . . . . . . . 1,308,394 218,808 768,714
------------ ----------- ------------
Total revenue. . . . . . . . . . . . . . . . . . . 61,385,107 25,504,115 49,356,661
Operating expenses
Compensation and benefits . . . . . . . . . . . . . . 36,281,669 13,634,998 26,466,277
Operating, administrative, and other. . . . . . . . . 20,203,247 6,617,484 11,547,854
Depreciation and amortization . . . . . . . . . . . . 13,812,632 5,016,413 9,181,739
------------ ------------ ------------
Total operating expenses. . . . . . . . . . . 70,297,548 25,268,895 47,195,870
------------ ------------ ------------
Operating income (loss) . . . . . . . . . . . (8,912,441) 235,220 2,160,791
Interest expense. . . . . . . . . . . . . . . . . . . . 5,700,000 1,912,500 3,825,000
------------ ------------ ------------
Earnings (loss) before provision for
income taxes. . . . . . . . . . . . . . . . (14,612,441) (1,677,280) (1,664,209)
Net provision (benefit) for income taxes. . . . . . . . (3,970,148) (198,170) 54,455
------------ ------------ ------------
Net loss. . . . . . . . . . . . . . . . . . . $(10,642,293) (1,479,110) (1,718,664)
============ ============ ============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
COMPASS GROUP
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Nine Months ended September 30, 1998 (unaudited) and
the Period June 11, 1997 to December 31, 1997
<CAPTION>
Additional Retained
Common paid-in earnings
Stock capital (deficit) Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, June 11, 1997. . . . . $ 4,103 45,307,811 (798,973) 44,512,941
Acquisition of previously
unconsolidated associate. . . (1,000) -- -- (1,000)
Net loss. . . . . . . . . . . . -- -- (1,718,664) (1,718,664)
Capital contribution. . . . . . -- 1,500,000 -- 1,500,000
-------- ----------- ----------- ------------
Balance, December 31, 1997. . . 3,103 46,807,811 (2,517,637) 44,293,277
Net loss (unaudited). . . . . . -- -- (10,642,293) (10,642,293)
Capital contribution (unaudited) -- 5,886,870 -- 5,886,870
Capital distribution (unaudited) -- -- (128,479) (128,479)
--------- ------------ ------------ ------------
Balance, September 30, 1998
(unaudited) . . . . . . . . . $ 3,103 52,694,681 (13,288,409) 39,409,375
========= ============ ============ ============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
COMPASS GROUP
COMBINED STATEMENTS OF CASH FLOWS
For the Nine Months ended September 30, 1998 (unaudited) and the
Period June 11, 1997 to December 31, 1997
<CAPTION>
Nine months June 11, June 11,
ended 1997 to 1997 to
September 30, September 30, December 31,
1998 1997 1997
------------- ------------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . $(10,642,293) (1,479,110) (1,718,664)
Reconciliation of net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . 13,812,632 5,016,413 9,181,739
Changes in:
Restricted cash . . . . . . . . . . . . . . . . . . (102,410) (34,483) (84,095)
Receivables . . . . . . . . . . . . . . . . . . . . 12,000,681 (817,532) (3,063,915)
Prepaid expenses. other assets, and investment
in subsidiaries . . . . . . . . . . . . . . . . . (3,141,871) (2,723,370) (2,170,477)
Accounts payable. accrued liabilities,
and other liabilities . . . . . . . . . . . . . . (10,130,942) (1,926,526) 1,221,287
------------ ------------ ------------
Net cash (used in) provided by
operating activities. . . . . . . . . . . . 1,795,797 (1,964,608) 3,365,875
------------ ------------ ------------
Cash flows provided by (used in) investing activities:
Net capital (additions) deletions-property
and equipment . . . . . . . . . . . . . . . . . . . (571,281) 822,835 (347,080)
Capital contributions . . . . . . . . . . . . . . . . 5,886,870 1,500,000 1,500,000
Capital distributions . . . . . . . . . . . . . . . . (128,479) -- --
Acquisition of previously unconsolidated
associate . . . . . . . . . . . . . . . . . . . . . -- (1,000) (1,000)
------------ ------------ ------------
Net cash (used in) provided by
investing activities . . . . . . . . . . . 5,187,110 2,321,835 1,151,920
------------ ------------ ------------
Cash flows provided by (used in) financing
activities-repayment of advances from parent. . . . . (391,441) (4,144,911) (7,041,084)
------------ ------------ ------------
<PAGE>
COMPASS GROUP
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
Nine months June 11, June 11,
ended 1997 to 1997 to
September 30, September 30, December 31,
1998 1997 1997
------------- ------------- ------------
(unaudited) (unaudited)
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . 6,591,466 (3,787,684) (2,523,289)
Beginning cash and cash equivalents . . . . . . . . . . 2,860,681 5,383,970 5,383,970
------------ ------------ ------------
Ending cash and cash equivalents. . . . . . . . . . . . $ 9,452,147 1,596,286 2,860,681
============ ============ ============
Supplemental disclosures of cash flow information:
Cash paid for interest. . . . . . . . . . . . . . . . $ 9,350,000 -- --
============ ============ ============
Cash paid for income taxes. . . . . . . . . . . . . . $ 31,350 8,961,162 8,961,162
============ ============ ============
Effects of purchase accounting related to acquisition:
Increase (decrease) in:
Intangibles . . . . . . . . . . . . . . . . . . . . $136,118,806
Other assets. . . . . . . . . . . . . . . . . . . . 1,972,648
------------
138,091,454
------------
Taxes payable . . . . . . . . . . . . . . . . . . . 11,672,000
Notes payable . . . . . . . . . . . . . . . . . . . 102,000,000
Other liabilities . . . . . . . . . . . . . . . . . (2,027,735)
------------
111,644,265
------------
Net effect of purchase accounting related to acquisition $ 26,447,189
============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(1) ORGANIZATION
The accompanying combined financial statements of the Compass Group,
which consists of Compass Management & Leasing, Inc.; ERE Yarmouth Retail,
Inc. (formerly Compass Retail, Inc.); CJVS Inc.; Compass Management &
Leasing (UK) Ltd.; Compass Cayman; Compass Colorado, Inc.; The Yarmouth
Group Property Management, Inc. ("YGPM"); and Compass Management and
Leasing (Australia) Pty Limited ("Compass Australia")-(collectively
referred to herein as the "Company" or the "Compass Group"), present the
combined financial position of the Company as of December 31, 1997 and
September 30, 1998 (unaudited) and the results of operations and cash flows
for the period June 11, 1997 to September 30, 1997 (unaudited); the period
June 11, 1997 to December 31, 1997; and for the nine-month period ended
September 30, 1998 (unaudited). The accompanying combined financial
statements were prepared in anticipation of the purchase of the Company by
LaSalle Partners Incorporated ("LaSalle")-(note 12).
The office and industrial property and facilities management business
of Lend Lease Property Management (Australia) Pty Limited is to be
transferred to Compass Australia, which was incorporated in Australia in
August 1998. Since July 1, 1997 the commercial and industrial business had
been conducted as part of the Compass Australia division of Lend Lease
Property Management (Australia) Pty Limited.
YGPM, which was part of Yarmouth Holdings Limited, was acquired by
Lend Lease (U.S.) Inc. ("LLUS"), a wholly owned subsidiary of Lend Lease
Corporation Limited ("LLCL") in October 1993. This company has engaged in
the property management, leasing, and redevelopment/refurbishment of retail
shopping centers.
The remaining Compass Group entities were acquired by LLUS on June 10,
1997 from The Equitable Life Assurance Society ("Equitable"). The financial
statements of all the Compass Group are combined starting June 11, 1997.
The Company's principal business is providing property management,
facility management, and leasing services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Combination
Due to common control and management, the accompanying combined
financial statements reflect the combination of the financial statements of
each company mentioned in note (1). All material intercompany balances and
transactions have been eliminated in the combination.
(b) Concentration of Credit Risk
The Company's customers are not concentrated in any specific
geographic region, but are concentrated in office/industrial and retail
property management for which revenue was approximately 80% and 20%,
respectively, of the Company's fee-based service revenue for the period
June 11, 1997 to December 31, 1997. Two customers accounted for
approximately 38% of the Company's fee-based service revenue for the period
June 11, 1997 to December 31, 1997. An affiliate of the Company provides
investment advisory services, including but not limited to recommending
property managers, to a significant percentage of the Company's customers.
The Company provides reserves on accounts receivables based upon the
factors surrounding the credit risk of certain customers, historical trends
or other pertinent information.
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(c) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and,
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
(d) Cash Flows
For purposes of the combined statements of cash flows, the Company
considers highly liquid securities with a maturity of three months or less
to be cash equivalents.
(e) Impairment of Long-Lived Assets
The Company accounts for its long-lived assets under the provisions of
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of
(SFAS No. 121). This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying value of the assets exceed the fair value
of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of SFAS No. 121
did not have a material impact on the Company's financial position, results
of operations, or liquidity.
(f) Intangibles Resulting From Business Acquisitions
Intangibles resulting from business acquisitions are amortized on a
straight-line basis over the estimated lives of the related assets, which
is eight years for management contracts and 20 years for excess purchase
price over net assets acquired.
Intangibles resulting from business acquisitions consist of the
following at December 31, 1997:
Management contracts . . . . . . . . . . $ 97,132,087
Excess purchase price over net
assets acquired. . . . . . . . . . . . 53,585,335
Accumulated amortization . . . . . . . . (13,911,635)
------------
$ 136,805,787
============
(g) Fair Value of Financial Instruments
The Company's financial instruments include cash and cash equivalents,
receivables, accounts payable, and notes payable. The estimated fair value
of cash and cash equivalents, receivables, payables, and notes payable
approximates their carrying amounts due to the short maturity of these
instruments.
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(h) Foreign Currency Translation
The financial statements of entities outside the United States are
generally measured using the local currency as the functional currency. The
assets and liabilities of these subsidiaries are translated at the rates of
exchange at the balance sheet date. Income and expense are translated at
average monthly rates of exchange. The resultant translation adjustments
are immaterial. Gains and losses from foreign currency transactions are
included in net earnings.
(i) Revenue Recognition
Management fees are recognized in the period in which the services are
performed. Transaction commissions are recorded as income at the time the
related services are provided unless significant future contingencies
exist. Construction and development management fees are generally
recognized as billed, which approximates the percentage of completion
method of accounting. Incentive fees are recorded in accordance with
specific terms of each compensation agreement and are typically tied to
performance that is measured at year-end, the disposition of an asset, or
at the conclusion of a given project.
(j) Depreciation
Depreciation and amortization are calculated for financial reporting
purposes using the straight-line method based on the estimated useful lives
of the assets. Furniture and equipment are depreciated over five to ten
years. Computer equipment is depreciated from three to five years.
Leasehold improvements are amortized over the lease periods ranging from
one to ten years.
(k) Income Taxes
The Company's U.S. operations are reported in a combined federal
income tax return filed by LLUS. The Company computes its federal income
tax provision pursuant to a tax-sharing agreement with LLUS. The tax-
sharing agreement requires the Company's provision to be computed
essentially on a separate return basis. State and local income taxes are
provided on a separate company basis.
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
Deferred income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are calculated using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
(l) Interim Information
The combined financial statements as of September 30, 1998 and for the
nine months then ended and the combined financial statements for the period
June 11, 1997 to September 30, 1997 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 this interim period have been included. The results for the
interim period ended September 30, 1998 and for the period June 11, 1997 to
September 30, 1997 are not necessarily indicative of the results that would
be obtained for a full fiscal year.
(m) Postretirement Benefits
The Company accrues the cost of postretirement benefits as such
benefits are earned by eligible employees (note 6).
(3) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment at December 31, 1997 is summarized as
follows:
Furniture and equipment . . . . . . . $ 1,954,272
Computer equipment. . . . . . . . . . 2,066,087
Leasehold improvements. . . . . . . . 1,698,079
------------
5,718,438
Less accumulated depreciation . . . . (1,785,970)
------------
Property, plant, and equipment-net$ 3,932,468
============
Depreciation expense for the period June 11, 1997 to December 31, 1997
was $863,904.
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(4) NOTES PAYABLE
The Company's debt consists of two promissory notes payable to an
affiliate. The amounts outstanding on the notes, which totaled $102,000,000
at December 31, 1997, bear interest at 7.5% per annum payable quarterly.
Principal is due within 30 days after demand from the affiliate, or as
otherwise agreed upon between the parties.
(5) INCOME TAXES
The Company's provision for income taxes aggregated approximately
$54,000 for the period June 11, 1997 to December 31, 1997 and consisted of
the following:
Current Deferred Total
---------- ---------- ----------
U.S. Federal. . . . . $1,397,000 (1,392,000) 5,000
State and local . . . 491,000 (442,000) 49,000
---------- ---------- ----------
$1,888,000 (1,834,000) 54,000
========== ========== ==========
Income tax expense for the periods differed from the amounts computed
by applying the U.S. Federal income tax rate of 35% to earnings before
provision for income taxes as a result of the following:
Period from
June 11, 1997 to
December 31, 1997
--------------------
Computed "expected" tax expense (benefit) $(582,000) (35.0%)
Increase (reduction) in income taxes
resulting from:
State and local income taxes, net
of Federal income tax benefit 38,000 2.3
Amortization of goodwill 468,000 28.1
Other, net 130,000 7.8
--------- ------
$ 54,000 3.2%
========= ======
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
December 31,
1997
------------
Deferred tax assets:
Management contracts. . . . . . . . . . . .$ 1,375,000
Accrued expenses. . . . . . . . . . . . . . 855,000
Property and equipment. . . . . . . . . . . 340,000
Postretirement benefits . . . . . . . . . . 298,000
------------
2,868,000
Deferred tax liabilities-goodwill . . . . . . (124,000)
------------
$ 2,744,000
============
There is no valuation allowance for deferred tax assets as of
December 31, 1997. In assessing whether the deferred tax assets are
realisable, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversals of deferred tax liabilities, projected future taxable income, and
tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over
the periods during which the deferred tax assets are deductible, management
believes it is more likely than not that the Company will realize the
benefits of these deductible differences. The amount of the deferred tax
asset is considered realisable; however, it could be reduced in the near
term if estimates of future taxable income during the carryforward period
are reduced.
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(6) EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries participate in certain qualified and
nonqualified benefit plans sponsored by the Company or its subsidiaries
covering substantially all employees. These plans include 401(k)/investment
plans, a variable compensation plan, a money purchase pension plan, and a
postretirement plan.
(a) 401(k)/Investment Plans
The 401(k)/investment plans are contributory plans which cover all
salaried employees who have reached the age of 21 and have completed from
thirty days to one year of service. Generally, employees may elect annually
to contribute between 2% and 12% of their compensation. The Company matches
contributions up to 2.5% of the employee's compensation, subject to certain
limitations. The cost under this plan was $624,906 for the period June 11,
1997 to December 31, 1997.
(b) Variable Compensation Plan
The Company has a variable compensation plan which provides for
current and long-term payments to officers and employees based on stated
percentages of the Company's formula earnings as defined in the plan. The
cost under this plan was $5,842,473 for the period June 11, 1997 to
December 31, 1997.
(c) Money Purchase Pension Plan
The money purchase pension plan is a noncontributory plan that covers
all regular, full-time and parttime employees who have reached age 21 and
have completed six months of continuous service. The Company contributes 5%
of an employee's compensation up to, and 10% of an employee's compensation
above the Social Security Wage Base. When employees reach age 45, the
Company contributes 10% of an employee's entire pay. Contributions are made
quarterly based on an employee's earnings from date of eligibility. The
cost under this plan was $1,725,539 for the period June 11, 1997 to
December 31, 1997.
(d) Postretirement Benefits
Prior to June 11, 1997, the Company participated in the "Equitable
Real Estate Investment Management, Inc. Welfare Benefits Plan" to provide
health and life insurance benefits for certain grandfathered employees.
ERE's postretirement plan provides for a sharing of costs with retirees on
a sliding scale that is based on each participant's years of service at
retirement.
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
The cost of postretirement benefits for certain retirees and one
current employee is recognized in accordance with the provisions of
Statement of Financial Accounting Standards No. 106, Employer's Accounting
for Postretirement Benefits Other Than Pensions. The Company continues to
fund postretirement benefit costs on a pay-as-you-go basis and for 1997
made estimated postretirement benefit payments of $37,000. The accumulated
postretirement benefit obligation relating to the Company was $662,000 at
December 31, 1997 and the postretirement benefit cost was $10,000 for the
period from June 11, 1997 to December 31, 1997.
(7) TRANSACTIONS WITH AFFILIATES
During the period presented, the Company operated under a shared
services agreement with a former affiliate, Equitable Realty Portfolio
Management, Inc. ("ERPM"), under which the Company charged ERPM for
utilizing certain of its employees' computer facilities and other operating
expenses. For the period June 11, 1997 to December 31, 1997, the Company
charged ERPM approximately $1,015,500 for these services. Management
believes these charges are reasonable, but are not necessarily indicative
of incremental costs incurred to provide these services.
The Company utilizes the due to parent account to pay and receive
funds from its parent for items such as costs allocated to the Company by
the parent. The payable averaged $5,908,454 for the period June 11, 1997 to
December 31, 1997. Amounts due to parent at December 31, 1997 were
$2,387,912.
(8) OPERATING LEASES
The Company leases certain facilities, vehicles, and equipment under
various lease arrangements. Leases for equipment, offices, and vehicles
having an initial or remaining noncancelable term in excess of one year as
of December 31, 1997 require the following approximate minimum future
rental payments:
MINIMUM
YEAR RENTAL
---- ----------
1998. . . . . . . . . . . . . . . . . . . $ 3,455,000
1999. . . . . . . . . . . . . . . . . . . 2,290,000
2000. . . . . . . . . . . . . . . . . . . 2,169.000
2001. . . . . . . . . . . . . . . . . . . 1,650,000
2002. . . . . . . . . . . . . . . . . . . 1,361,000
Thereafter. . . . . . . . . . . . . . . . 5,752,000
-----------
Total . . . . . . . . . . . . . $16,677,000
===========
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
Rental expense for the period June 11, 1997 to December 31, 1997 was
$2,829,190.
(9) SEGMENTS
The Company maintains operations and provides services both within and
outside the United States. International revenue aggregated $2,299,382 for
the period June 11, 1997 to December 31, 1997. Identifiable assets of
international operations at December 31, 1997 aggregated $6,230,909.
(10) REVENUE
The Company derived fee-based revenue from the following categories:
June 11, 1997
to
December 31,
1997 (audited)
--------------
Non-affiliated companies:
Management fees . . . . . . . . . . . . . . . . . . . 16,699,503
Leasing fees. . . . . . . . . . . . . . . . . . . . . 8,185,513
Construction management . . . . . . . . . . . . . . . 2,496,842
Development fees. . . . . . . . . . . . . . . . . . . 4,618,673
Facilities management . . . . . . . . . . . . . . . . 7,301,035
----------
Total non-affiliated companies
fee-based revenue . . . . . . . . . . . . . 39,301,566
----------
Affiliated or formerly affiliated companies:
Management fees . . . . . . . . . . . . . . . . . . . 4,761,248
Leasing fees. . . . . . . . . . . . . . . . . . . . . 4,175,993
Construction management . . . . . . . . . . . . . . . 348,109
Development fees. . . . . . . . . . . . . . . . . . . 1,031
----------
Total affiliated or formerly affiliated
companies fee-based revenue . . . . . . . . 9,286,381
----------
Total fee-based revenue . . . . . . . . . . . 48,587,947
==========
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(11) COMMITMENTS AND CONTINGENCIES
The Company is a respondent in a number of legal proceedings. The
Company and its subsidiaries may also be subject to other claims and
assessments. In the opinion of management, the outcome of the proceedings
and other matters referred to above is not likely to have a material
adverse effect on the combined financial position, results of operations,
or liquidity of the Company.
(12) SUBSEQUENT EVENT
On October 1, 1998, LaSalle purchased the Company, excluding Compass
Australia, from Lend Lease Corporation Limited. The acquisition of Compass
Australia was completed on October 31, 1998. LaSalle paid $180.0 million in
cash for the companies. The purchase of the Company also includes
provisions for an earnout payment of up to $77.5 million over five years.
<PAGE>
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
A list of exhibits is set forth in the Exhibit Index which immediately
proceeds the exhibits and which is incorporated by reference herein.
<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 hereunto duly authorized.
LASALLE PARTNERS INCORPORATED
Date: December 9, 1998 By: /S/ WILLIAM E. SULLIVAN
----------------------------
William E. Sullivan
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
Exhibit 10.1 Purchase and Sale Agreement, dated as of October 21,
1998, as amended, with respect to the acquisition by LaSalle Partners of
the JLW Companies operating in Europe and the U.S.A. (the "Europe/USA
Agreement").
Exhibit 10.2 Purchase and Sale Agreement, dated as of October 21,
1998, as amended, with respect to the acquisition by LaSalle Partners of
the JLW Companies operating in Australia and New Zealand (the "Australasia
Agreement").
Exhibit 10.3 Purchase and Sale Agreement, dated as of October 21,
1998, as amended, with respect to the acquisition by LaSalle Partners of
the JLW Companies operating in Asia (the "Asia Agreement").
Exhibit 10.4 Form of Purchase and Sale Joinder Agreement, dated as of
October 21, 1998, by and among LaSalle Partners and each of the
shareholders selling equity interests in the JLW Parent Companies under the
Europe/USA Agreement.
Exhibit 10.5 Form of Purchase and Sale Joinder Agreement, dated as of
October 21, 1998, by and among LaSalle Partners and each of the
shareholders selling equity interests in the JLW Parent Companies under the
Australasia Agreement.
Exhibit 10.6 Form of Purchase and Sale Joinder Agreement, dated as of
October 21, 1998, by and among LaSalle Partners and each of the
shareholders selling equity interests in the JLW Parent Companies under the
Asia Agreement.
Exhibit 10.7 Form of Indemnity and Escrow Agreement, dated as of
October 21, 1998, by and among LaSalle Partners, certain subsidiaries of
LaSalle Partners and each of the shareholders selling equity interests in
the JLW Parent Companies under the Europe/USA Agreement, the Australasia
Agreement and the Asia Agreement.
Exhibit 10.8 Form of Stockholder Agreement, dated as of October 21,
1998, by and among LaSalle Partners and each of the persons receiving
shares of LaSalle Partners Common Stock under the Europe/USA Agreement, the
Australasia Agreement and the Asia Agreement
Exhibit 10.9 Form of Stockholder Agreement, dated as of October 21,
1998, by and among LaSalle Partners and each of the partners of DEL-LPL
Limited Partnership and DEL-LPAML Limited Partnership who is an employee of
LaSalle Partners and who will be receiving shares of LaSalle Partners
Common Stock in connection with the dissolution of DEL-LPL Limited
Partnership and DEL-LPAML Limited Partnership.
Exhibit 23.1 Consent of Deloitte & Touche
Exhibit 23.2 Consent of Ernst & Young
Exhibit 23.3 Consent of Deloitte & Touche
Exhibit 23.4 Consent of KPMG
Exhibit 23.5 Consent of Coopers & Lybrand
Exhibit 23.6 Consent of Ernst & Young
Exhibit 23.7 Consent of KPMG Peat Marwick LLP
EXHIBIT 10.1
- ------------
PURCHASE AND SALE AGREEMENT
(EUROPE/USA)
by and among
LASALLE PARTNERS INCORPORATED,
THE JONES LANG WOOTTON ENTITIES LISTED HEREIN,
The Persons named as "Management Shareholders" on the Signature Pages
hereto
and
The "Shareholders" and "Related JLW Owners"
who hereafter execute a Purchase and Sale Joinder
Agreement (Europe/USA)
dated as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF SHARES . . . . . . . . . 3
Section 1.1 Purchase and Sale of Shares . . . . . . 3
Section 1.2 Purchase Price. . . . . . . . . . . . . 3
Section 1.3 Escrow of Certain Consideration Shares. 4
Section 1.4 Consideration Adjustment. . . . . . . . 4
Section 1.5 Closing . . . . . . . . . . . . . . . . 11
Section 1.6 Deliveries by the Shareholders. . . . . 12
Section 1.7 Deliveries by Parent. . . . . . . . . . 13
Section 1.8 Representatives . . . . . . . . . . . . 13
Section 1.9 Corporate Governance Matters. . . . . . 15
Section 1.10 Integration . . . . . . . . . . . . . . 18
ARTICLE II
MATTERS RELATING TO THE
SHAREHOLDER TRANSACTION DOCUMENTS;
REALLOCATION . . . . . . . . . . . . . 18
Section 2.1 Signing Procedures. . . . . . . . . . . 18
Section 2.2 Permitted Reallocation of Consideration
and Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE JLW PARTNERSHIPS
AND THE MANAGEMENT SHAREHOLDERS. . . . . . . . . . . . . . . . 20
Section 3.1 Shares; Claims to Assets. . . . . . . . 20
Section 3.2 Corporate Organization. . . . . . . . . 21
Section 3.3 Capitalization of the Companies . . . . 21
Section 3.4 Subsidiaries and Affiliates . . . . . . 22
Section 3.5 Authorization . . . . . . . . . . . . . 23
Section 3.6 No Violation. . . . . . . . . . . . . . 24
Section 3.7 Consents and Approvals. . . . . . . . . 24
Section 3.8 Financial Statements. . . . . . . . . . 24
Section 3.9 No Undisclosed Liabilities. . . . . . . 26
Section 3.10 Absence of Certain Changes. . . . . . . 27
Section 3.11 Real Property . . . . . . . . . . . . . 27
Section 3.12 Intangible Property Rights. . . . . . . 27
Section 3.13 Certain Contracts . . . . . . . . . . . 30
Section 3.14 Licenses and Other Authorizations . . . 31
Section 3.15 Year 2000 and Euro Compliance . . . . . 31
Section 3.16 Clients . . . . . . . . . . . . . . . . 32
Section 3.17 Operation of the Businesses . . . . . . 32
Section 3.18 Insurance . . . . . . . . . . . . . . . 32
Section 3.19 Labor Relations . . . . . . . . . . . . 33
Section 3.20 Employee Benefit Plans. . . . . . . . . 33
Section 3.21 Litigation. . . . . . . . . . . . . . . 35
Section 3.22 Compliance with Law . . . . . . . . . . 35
Section 3.23 Taxes . . . . . . . . . . . . . . . . . 36
Section 3.24 Environmental Matters . . . . . . . . . 38
Section 3.25 Personnel . . . . . . . . . . . . . . . 39
Section 3.26 Disclosure Documents. . . . . . . . . . 39
Section 3.27 Integration Matters . . . . . . . . . . 39
Section 3.28 Related Party Transactions. . . . . . . 39
Section 3.29 Activities of NewCo 1, NewCo 2, NewCo 3
and Salta Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.30 Securities Laws Matters.. . . . . . . . 40
Section 3.31 Opinion of Financial Advisor. . . . . . 40
Section 3.32 Certain Fees. . . . . . . . . . . . . . 40
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . 40
Section 4.1 Corporate Organization. . . . . . . . . 40
Section 4.2 Capitalization. . . . . . . . . . . . . 40
Section 4.3 Subsidiaries and Affiliates . . . . . . 41
Section 4.4 Authorization . . . . . . . . . . . . . 41
Section 4.5 No Violation. . . . . . . . . . . . . . 42
Section 4.6 Consents and Approvals. . . . . . . . . 42
Section 4.7 SEC Reports and Financial Statements. . 43
Section 4.8 No Undisclosed Liabilities. . . . . . . 43
Section 4.9 Absence of Certain Changes or Events. . 43
Section 4.10 Licenses and Other Authorizations . . . 44
Section 4.11 Insurance . . . . . . . . . . . . . . . 44
Section 4.12 Labor Relations . . . . . . . . . . . . 44
Section 4.13 Parent Employee Benefit Matters.. . . . 44
Section 4.14 Litigation. . . . . . . . . . . . . . . 46
Section 4.15 Compliance with Law . . . . . . . . . . 46
Section 4.16 Taxes . . . . . . . . . . . . . . . . . 47
Section 4.17 Opinion of Financial Advisors . . . . . 47
Section 4.18 Certain Fees. . . . . . . . . . . . . . 47
Section 4.19 Disclosure Documents. . . . . . . . . . 48
Section 4.20 Other . . . . . . . . . . . . . . . . . 48
ARTICLE V
COVENANTS OF THE JLW PARTNERSHIPS
AND THE COMPANIES. . . . . . . . . . . . 48
Section 5.1 Operation of the Companies. . . . . . . 48
Section 5.2 Access. . . . . . . . . . . . . . . . . 51
Section 5.3 Consents. . . . . . . . . . . . . . . . 51
Section 5.4 Closing Net Worth.. . . . . . . . . . . 51
Section 5.5 Other Offers. . . . . . . . . . . . . . 51
Section 5.6 Integration Matters . . . . . . . . . . 52
Section 5.7 Nine-Month Financial Statements . . . . 52
ARTICLE VI
COVENANTS OF PARENT . . . . . . . . . . . 52
Section 6.1 Operation of Parent . . . . . . . . . . 52
Section 6.2 Access. . . . . . . . . . . . . . . . . 54
Section 6.3 Consents. . . . . . . . . . . . . . . . 55
Section 6.4 Listing of Consideration Shares.. . . . 55
Section 6.5 Stockholder Approval; Proxy . . . . . . 55
Section 6.6 Other Offers. . . . . . . . . . . . . . 55
Section 6.7 Employee Trust. . . . . . . . . . . . . 56
Section 6.8 Certain Stockholder Agreements. . . . . 57
Section 6.9 Guarantee of Indemnification
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.10 [Intentionally Left Blank]. . . . . . . 57
Section 6.11 Certain Instruments of Indemnification. 57
Section 6.12 Obtain Certain Releases . . . . . . . . 57
Section 6.13 Employee Stock Options. . . . . . . . . 57
Section 6.14 Director and Officer Indemnification. . 57
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . . 58
Section 7.1 No Injunction . . . . . . . . . . . . . 58
Section 7.2 No Litigation . . . . . . . . . . . . . 58
Section 7.3 HSR Act and Other Approvals . . . . . . 58
Section 7.4 Stockholders Vote . . . . . . . . . . . 59
Section 7.5 Other Closings. . . . . . . . . . . . . 59
Section 7.5 Consummation of the Integration . . . . 59
Section 7.6 Exercise of Put Right or Call Right . . 59
Section 7.7 Execution and Delivery of the other
Operative Agreements. . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.8 Amendments. . . . . . . . . . . . . . . 59
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT . . . . . . . 59
Section 8.1 Representations and Warranties Correct
as of the Integration Commencement Date . . . . . . . . . . . . . . 60
Section 8.2 Certain Representations and Warranties
Correct as of the Closing Date. . . . . . . . . . . . . . . . . . . 60
Section 8.3 Performance; No Default . . . . . . . . 60
Section 8.4 Delivery of Certificate . . . . . . . . 60
Section 8.5 Opinions of Counsel to the JLW
Partnerships and the Companies. . . . . . . . . . . . . . . . . . . 61
Section 8.6 Comfort Letter. . . . . . . . . . . . . 61
Section 8.7 Settlement of Related Party Accounts . 61
Section 8.8 No Material Adverse Effect. . . . . . . 61
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS. . . . . 61
Section 9.1 Representations and Warranties Correct
as of the Integration Commencement Date . . . . . . . . . . . . . . 61
Section 9.2 Performance; No Default . . . . . . . . 61
Section 9.3 Delivery of Certificate . . . . . . . . 62
Section 9.4 Opinions of Counsel to Parent . . . . . 62
Section 9.5 Good Standing Certificate . . . . . . . 62
Section 9.6 Listing of Consideration Shares . . . . 62
Section 9.7 Certain Stockholder Agreements. . . . . 62
Section 9.8 Indemnification Agreements. . . . . . . 62
Section 9.9 Inland Revenue Ruling . . . . . . . . . 62
Section 9.10 No Material Adverse Effect. . . . . . . 62
Section 9.11 Directors and Officers. . . . . . . . . 62
Section 9.12 Amendments. . . . . . . . . . . . . . . 63
ARTICLE X
TAX MATTERS . . . . . . . . . . . . . 63
Section 10.1 Allocation of Purchase Price. . . . . . 63
Section 10.2 Tax Returns . . . . . . . . . . . . . . 63
Section 10.3 Mutual Cooperation. . . . . . . . . . . 63
Section 10.4 Tax Covenant. . . . . . . . . . . . . . 64
ARTICLE XI
TERMINATION . . . . . . . . . . . . . 64
Section 11.1 Termination of Agreement. . . . . . . . 64
Section 11.2 Effect of Termination . . . . . . . . . 66
Section 11.3 Termination Fee . . . . . . . . . . . . 66
ARTICLE XII
SURVIVAL AND INDEMNIFICATION . . . . . . . . . 66
Section .12.1 Survival of Representations, Warranties
and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section .12.2 Indemnification of the Buyers . . . . . 67
ARTICLE XIII
MISCELLANEOUS. . . . . . . . . . . . . 67
Section 13.1 Further Efforts . . . . . . . . . . . . 67
Section 13.2 Expenses. . . . . . . . . . . . . . . . 67
Section 13.3 Press Releases and Announcements. . . . 67
Section 13.4 Entire Agreement; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 13.5 Amendment, Extension and Waiver . . . . 68
Section 13.6 Headings. . . . . . . . . . . . . . . . 68
Section 13.7 Notices . . . . . . . . . . . . . . . . 68
Section 13.8 Assignment. . . . . . . . . . . . . . . 71
Section 13.9 Applicable Law. . . . . . . . . . . . . 71
Section 13.10 Jurisdiction . . . . . . . . . . . . . 71
Section 13.11 Service of Process. . . . . . . . . . . 71
Section 13.12 Words in Singular and Plural Form . . . 71
Section 13.13 Counterparts. . . . . . . . . . . . . . 72
Section 13.14 [Intentionally Left Blank]. . . . . . . 72
Section 13.15 Restrictive Trade Practices Act . . . . 72
Section 13.16 WAIVER OF JURY TRIAL. . . . . . . . . . 72
ARTICLE XIV
CERTAIN DEFINITIONS . . . . . . . . . . . 72
Exhibit 1 Agreed Generally Accepted Accounting Principles
Exhibit 2 Determination of 1999 Compensation Expense
Exhibit 3 Form of DEL Stockholder Agreement
Exhibit 4 Form of Indemnification Agreement Guarantee
Exhibit 5 [Intentionally Left Blank]
Exhibit 6 Form of Instrument of Assumption
Exhibit 7 Form of Instrument of Assumption
Exhibit 8 Landlord Consents and Parent Guarantees
Exhibit 9 [Intentionally Left Blank]
Exhibit 10 JLW Businesses Employees deemed to have Knowledge
Exhibit 11 Parent Employees deemed to have Knowledge
Annex A Form of Purchase and Sale Joinder Agreement (Europe/USA)
Annex B Integration Plan and Integration Agreements
Annex C Form of Stockholder Agreement
Annex D Form of Indemnity and Escrow Agreement
Annex E [Intentionally Left Blank]
Annex F [Intentionally Left Blank]
Annex G Form of Stock Transfer Form
Annex H Form of Power of Attorney
Annex I Articles of Amendment and Restatement of Parent
Annex J [Intentionally Left Blank]
Annex K Amended and Restated Bylaws of Parent
Annex L Terms of the ESOT
Annex M [Intentionally Left Blank]
Annex N [Intentionally Left Blank]
Annex O Form of Comfort Letter
<PAGE>
INDEX OF DEFINED TERMS
Term Defined
in Section
1999 Income Statements. . . . . . . . . . . . . . . . . . . . . .1.4(p)
1999 Stub Period. . . . . . . . . . . . . . . . . . . . . . . . .1.4(p)
Action. . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Adjustment Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Adjustment Shares Conversion Amount . . . . . . . . . . . . . . .1.4(e)
Adjustment Shares Deficit . . . . . . . . . . . . . . . . . . . .1.4(l)
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Agreed Generally Accepted Accounting Principles . . . . . . . . .1.4(b)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Allocation Notice . . . . . . . . . . . . . . . . . . . . . . . .1.4(k)
Allocation Notice Delivery Period . . . . . . . . . . . . . . . .1.4(k)
Amended Parent Bylaws . . . . . . . . . . . . . . . . . . . . . .1.9(a)
Applicable Auditors . . . . . . . . . . . . . . . . . . . . . . .1.4(b)
Applicable Integration Agreements . . . . . . . . . . . . . . . .2.1(a)
Applicable Joinder Agreement. . . . . . . . . . . . . . . . . . .1.1(c)
Asia Region 1999 Income Statement . . . . . . . . . . . . . . . .1.4(p)
Asia Region Adjustment Amount . . . . . . . . . . . . . . . . . .1.4(h)
Asia Region Adjustment Shares . . . . . . . . . . . . . . . . . .1.4(a)
Asia Region Agreement . . . . . . . . . . . . . . . . . . . . .Preamble
Asia Region Balance Sheet . . . . . . . . . . . . . . . . . . . .1.4(b)
Asia Region Closing Net Worth . . . . . . . . . . . . . . . . . .1.4(b)
Asia Region Companies . . . . . . . . . . . . . . . . . . . . .Preamble
Asia Region Financial Statements. . . . . . . . . . . . . . . . .1.4(b)
Asia Region Share Deficit . . . . . . . . . . . . . . . . . . . .1.4(h)
Asia Region Shareholders. . . . . . . . . . . . . . . . . . Article XIV
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.17
Audited Financial Statements. . . . . . . . . . . . . . . . . . .3.8(a)
Australasia Region 1999 Income Statement. . . . . . . . . . . . .1.4(p)
Australasia Region Adjustment Shares. . . . . . . . . . . . . . .1.4(a)
Australasia Region Adjustment Amount. . . . . . . . . . . . . . .1.4(i)
Australasia Region Agreement. . . . . . . . . . . . . . . . . .Preamble
Australasia Region Balance Sheet. . . . . . . . . . . . . . . . .1.4(b)
Australasia Region Closing Net Worth. . . . . . . . . . . . . . .1.4(b)
Australasia Region Companies. . . . . . . . . . . . . . . . . .Preamble
Australasia Region Financial Statements . . . . . . . . . . . . .1.4(b)
Australasia Region Share Deficit. . . . . . . . . . . . . . . . .1.4(i)
Australasia Region Shareholders . . . . . . . . . . . . . . Article XIV
Australia Acquisition Sub . . . . . . . . . . . . . . . . . . .Preamble
Authorized Actions. . . . . . . . . . . . . . . . . . . . . . 1.8(b)(i)
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Business Day. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Call Notice . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1(a)
Call Right. . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1(a)
Cash Consideration. . . . . . . . . . . . . . . . . . . . . . . .1.1(c)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.5(a)
Closing Authorized Actions. . . . . . . . . . . . . . . . . . 1.8(b)(i)
Closing Balance Sheets. . . . . . . . . . . . . . . . . . . . . .1.4(b)
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . 1.5 (b)(ii)
Closing Financial Statements. . . . . . . . . . . . . . . . . . .1.4(b)
Closing Net Worth . . . . . . . . . . . . . . . . . . . . . Article XIV
Closing Statement Resolution Period . . . . . . . . . . . . . . .1.4(c)
Closing Statements. . . . . . . . . . . . . . . . . . . . . . . .1.4(b)
Closing Statements Objection. . . . . . . . . . . . . . . . . . .1.4(c)
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
Commitment Date . . . . . . . . . . . . . . . . . . . . . . . . .2.1(b)
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Company Disclosure Schedule . . . . . . . . . . . . . . . . Article XIV
Company Material Adverse Effect . . . . . . . . . . . . . . Article XIV
Company Subsidiaries. . . . . . . . . . . . . . . . . . . . Article XIV
Company Subsidiary. . . . . . . . . . . . . . . . . . . . . Article XIV
Compass Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
Computer Programs . . . . . . . . . . . . . . . . . . . . . Article XIV
Computer Systems. . . . . . . . . . . . . . . . . . . . . . . . . .3.15
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . 5.2
Consent . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Consideration . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Consideration Shares. . . . . . . . . . . . . . . . . . . . . . .1.1(c)
Contract(s) . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Controlled Affiliate. . . . . . . . . . . . . . . . . . . . Article XIV
Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
DEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
DEL Stockholder Agreement . . . . . . . . . . . . . . . . . . . . . 6.8
Designated Countries. . . . . . . . . . . . . . . . . . . . . . 3.12(c)
Designated JLW Shareholder(s) . . . . . . . . . . . . . . . . . .2.1(a)
Domestic Plan . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
English Courts. . . . . . . . . . . . . . . . . . . . . . . . . . 13.10
Environmental Laws. . . . . . . . . . . . . . . . . . . . . Article XIV
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . Article XIV
Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . .Preamble
Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
ESOT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Adjustment Shares. . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Escrow Shares. . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Euro Compliant. . . . . . . . . . . . . . . . . . . . . . . . . . .3.15
Europe/USA Region Shareholders. . . . . . . . . . . . . . . . .Preamble
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Exercise Period . . . . . . . . . . . . . . . . . . . . . . . . .1.1(a)
Fifteenth Director. . . . . . . . . . . . . . . . . . . . . . . .1.9(g)
Final Asia Region Closing Net Worth . . . . . . . . . . . . . . .1.4(c)
Final Australasia Region Closing Net Worth. . . . . . . . . . . .1.4(c)
Final Closing Balance Sheets. . . . . . . . . . . . . . . . . . .1.4(c)
Final Closing Financial Statements . . . . . . . . . . . . . . .1.4(c)
Final Closing Statements. . . . . . . . . . . . . . . . . . . . .1.4(c)
Final Closing Statements Determinate Date . . . . . . . . . . . .1.4(e)
Final JLW England Closing Net Worth . . . . . . . . . . . . . . .1.4(c)
Final JLW Ireland Closing Net Worth . . . . . . . . . . . . . . .1.4(c)
Final JLW Scotland Closing Net Worth. . . . . . . . . . . . . . .1.4(c)
Final Master Shareholder List . . . . . . . . . . . . . . . Article XIV
Final Return Date . . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
Financial Statement . . . . . . . . . . . . . . . . . . . . . . .3.8(a)
Foreign Plan. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Forfeiture Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Forfeiture Shares Escrow Agent. . . . . . . . . . . . . . . . . . . 1.2
Guernsey Insurance Laws . . . . . . . . . . . . . . . . . . Article XIV
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Illinois Courts . . . . . . . . . . . . . . . . . . . . . . . . . 13.10
Income Tax(es). . . . . . . . . . . . . . . . . . . . . . . Article XIV
Indemnification Agreement Guarantee . . . . . . . . . . . . . . . . 6.9
Indemnified Persons . . . . . . . . . . . . . . . . . . . . . . .1.8(b)
Independent Director. . . . . . . . . . . . . . . . . . . . Article XIV
Initial Consideration Shares. . . . . . . . . . . . . . . . . . . . 1.2
Initial Distribution Shares . . . . . . . . . . . . . . . . . . . . 1.2
Instruction Letter. . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
Intangible Property Rights. . . . . . . . . . . . . . . . . Article XIV
Integration . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Integration Agreements. . . . . . . . . . . . . . . . . . . . .Preamble
Integration Commencement Date . . . . . . . . . . . . . . . . 1.5(b)(i)
Integration Completion. . . . . . . . . . . . . . . . . . . . 1.5(b)(i)
Integration Completion Date . . . . . . . . . . . . . . . . . 1.5(b)(i)
Integration Escrow Agreement. . . . . . . . . . . . . . . . . . 1.10(b)
Integration Plan. . . . . . . . . . . . . . . . . . . . . . . .Preamble
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(c)
Interim Financial Statements. . . . . . . . . . . . . . . . . . .3.8(a)
Irish Companies Act . . . . . . . . . . . . . . . . . . . . . . .3.2(a)
Irish Registrar of Companies. . . . . . . . . . . . . . . . . . .3.2(a)
Irish Service Subsidiaries. . . . . . . . . . . . . . . . . Article XIV
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Acquisition Proposal. . . . . . . . . . . . . . . . . . . . . . 5.5
JLW Asia ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . . . 6.7
JLW Australasia ESOT Sub Trust. . . . . . . . . . . . . . . . . . . 6.7
JLW Businesses. . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Combined 9/30 Financial Statement Schedules . . . . . . Article XIV
JLW Combined 9/30 Income Statement Schedules. . . . . . . . . . . . 3.8
JLW Combined 9/30 Balance Sheet Schedules . . . . . . . . . Article XIV
JLW Combined Balance Sheet Schedules. . . . . . . . . . . . . . .3.8(a)
JLW Combined Financial Statement Schedules. . . . . . . . . . . .3.8(a)
JLW Combined Income Statement Schedules . . . . . . . . . . . . .3.8(a)
JLW Combined Interim Balance Sheet Schedules. . . . . . . . . . .3.8(a)
JLW Combined Year-End Balance Sheet Schedules . . . . . . . . . .3.8(a)
JLW Continuation. . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Directors . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
JLW Employee Directors. . . . . . . . . . . . . . . . . . . . . .1.9(b)
JLW Employees . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(h)
JLW England . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW England 1999 Income Statement . . . . . . . . . . . . . . . .1.4(p)
JLW England Adjustment Shares . . . . . . . . . . . . . . . . . .1.4(a)
JLW England Adjustment Amount . . . . . . . . . . . . . . . . . .1.4(e)
JLW England Balance Sheet . . . . . . . . . . . . . . . . . . . .1.4(b)
JLW England Closing Net Worth . . . . . . . . . . . . . . . . . .1.4(b)
JLW England ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . 6.7
JLW England Financial Statements. . . . . . . . . . . . . . . . .1.4(b)
JLW England Interim Financial Statements. . . . . . . . . . . . .3.8(a)
JLW England Share Deficit . . . . . . . . . . . . . . . . . . . .1.4(e)
JLW England Shareholders. . . . . . . . . . . . . . . . . . . . .1.4(a)
JLW Fees and Expenses . . . . . . . . . . . . . . . . . . . Article XIV
JLW Independent Directors . . . . . . . . . . . . . . . . . . . .1.9(b)
JLW Ireland . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Ireland 1999 Income Statement . . . . . . . . . . . . . . . .1.4(p)
JLW Ireland Adjustment Amount . . . . . . . . . . . . . . . . . .1.4(g)
JLW Ireland Adjustment Shares . . . . . . . . . . . . . . . . . .1.4(a)
JLW Ireland Balance Sheet . . . . . . . . . . . . . . . . . . . .1.4(b)
JLW Ireland Closing Net Worth . . . . . . . . . . . . . . . . . .1.4(b)
JLW Ireland ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . 6.7
JLW Ireland Financial Statements. . . . . . . . . . . . . . . . .1.4(b)
JLW Ireland Interim Financial Statements. . . . . . . . . . . . .3.8(a)
JLW Ireland Share Deficit . . . . . . . . . . . . . . . . . . . .1.4(g)
JLW Ireland Shareholders. . . . . . . . . . . . . . . . . . . . .1.4(a)
JLW Nominating Committee. . . . . . . . . . . . . . . . . . . . .1.9(d)
JLW Nominees. . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Parties . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Partnership(s). . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Scotland. . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Scotland 1999 Income Statement. . . . . . . . . . . . . . . .1.4(p)
JLW Scotland Adjustment Shares. . . . . . . . . . . . . . . . . .1.4(a)
JLW Scotland Adjustment Amount. . . . . . . . . . . . . . . . . .1.4(f)
JLW Scotland Balance Sheet. . . . . . . . . . . . . . . . . . . .1.4(b)
JLW Scotland Closing Net Worth. . . . . . . . . . . . . . . . . .1.4(b)
JLW Scotland ESOT Trustees. . . . . . . . . . . . . . . . . . . . . 6.7
JLW Scotland ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . 6.7
JLW Scotland Financial Statements . . . . . . . . . . . . . . . .1.4(b)
JLW Scotland Interim Financial Statements . . . . . . . . . . . .3.8(a)
JLW Scotland Share Deficit. . . . . . . . . . . . . . . . . . . .1.4(f)
JLW Scotland Shareholders . . . . . . . . . . . . . . . . . . . .1.4(a)
JLW Sellers . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Supply. . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Transfer Taxes. . . . . . . . . . . . . . . . . . . . . Article XIV
JLW USA . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW USA Shares. . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Joinder Agreement . . . . . . . . . . . . . . . . . . . . . . .Preamble
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
LACM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(a)
Leased Real Property. . . . . . . . . . . . . . . . . . . . . . 3.11(b)
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Listed Agreements . . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
Managed Properties. . . . . . . . . . . . . . . . . . . . . . . 3.24(a)
Management Shareholder(s) . . . . . . . . . . . . . . . . . . .Preamble
Materials of Environmental Concern. . . . . . . . . . . . . Article XIV
Minimum Asia Region Closing Net Worth . . . . . . . . . . . . . .1.4(h)
Minimum Australasia Region Closing Net Worth. . . . . . . . . . .1.4(i)
Minimum Closing Working Capital . . . . . . . . . . . . . . . . .1.4(j)
Minimum JLW England Closing Net Worth . . . . . . . . . . . . . .1.4(e)
Minimum JLW Ireland Closing Net Worth . . . . . . . . . . . . . .1.4(g)
Minimum JLW Scotland Closing Net Worth. . . . . . . . . . . . . .1.4(f)
Neutral Auditor . . . . . . . . . . . . . . . . . . . . . . . . .1.4(d)
NewCo 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
NewCo 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
NewCo 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Nine-Month Interim Financial Statements . . . . . . . . . . Article XIV
Nominating Committees . . . . . . . . . . . . . . . . . . . . . .1.9(d)
Non-Participating Designated JLW Shareholders . . . . . . . . . . . 2.2
NYSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Offering Memorandum . . . . . . . . . . . . . . . . . . . . Article XIV
Operative Agreements. . . . . . . . . . . . . . . . . . . . Article XIV
Other Authorized Actions. . . . . . . . . . . . . . . . . . . 1.8(b)(i)
Other Joinder Agreements. . . . . . . . . . . . . . . . . . Article XIV
Other Purchase Agreements . . . . . . . . . . . . . . . . . . .Preamble
Other Shareholder(s). . . . . . . . . . . . . . . . . . . . Article XIV
Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Parent Acquisition Proposal . . . . . . . . . . . . . . . . . . . . 6.6
Parent Articles of Incorporation. . . . . . . . . . . . . . . . . . 4.1
Parent Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . .1.1(c)
Parent Directors. . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Parent Disclosure Schedule. . . . . . . . . . . . . . . . . Article XIV
Parent Domestic Plan. . . . . . . . . . . . . . . . . . . . Article XIV
Parent Employee Directors . . . . . . . . . . . . . . . . . . . .1.9(b)
Parent Employees. . . . . . . . . . . . . . . . . . . . . . . . .1.9(h)
Parent Foreign Plan . . . . . . . . . . . . . . . . . . . . Article XIV
Parent Independent Directors. . . . . . . . . . . . . . . . . . .1.9(b)
Parent Interim Balance Sheet. . . . . . . . . . . . . . . . . . .4.8(a)
Parent Material Adverse Effect. . . . . . . . . . . . . . . Article XIV
Parent Nominating Committee . . . . . . . . . . . . . . . . . . .1.9(d)
Parent Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Parent Securities . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent Significant Subsidiary . . . . . . . . . . . . . . . Article XIV
Parent Stock Plans. . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent Subsidiaries . . . . . . . . . . . . . . . . . . . . Article XIV
Parent Subsidiary . . . . . . . . . . . . . . . . . . . . . Article XIV
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . Article XIV
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Post-Closing Integration Actions. . . . . . . . . . . . . . . . 1.10(a)
Preliminary Master Shareholder List . . . . . . . . . . . . . .Preamble
Proposed Actions. . . . . . . . . . . . . . . . . . . . . . . . .4.4(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . .6.5(b)
Put Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1(b)
Put Right . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1(b)
Real Property Leases. . . . . . . . . . . . . . . . . . . . . . 3.11(b)
Related JLW Owner . . . . . . . . . . . . . . . . . . . . . Article XIV
Related Parties . . . . . . . . . . . . . . . . . . . . . . Article XIV
Required Regulatory Approvals . . . . . . . . . . . . . . . . . . . 3.7
Required Securities Approvals . . . . . . . . . . . . . . . . . . . 4.6
SCCA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
SCCA Expenses Reserve . . . . . . . . . . . . . . . . . . . . . .1.8(d)
Scheduled Agreements. . . . . . . . . . . . . . . . . . . . . . 3.12(b)
Scottish Service Subsidiaries . . . . . . . . . . . . . . . Article XIV
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Securities Act. . . . . . . . . . . . . . . . . . . . . . . Article XIV
Sellers' Representative . . . . . . . . . . . . . . . . . . Article XIV
Shareholder Determination Date. . . . . . . . . . . . . . . Article XIV
Shareholder Transaction Documents . . . . . . . . . . . . . . . .2.1(a)
Shareholder(s). . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Shareholders' Representatives . . . . . . . . . . . . . . . Article XIV
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
significant clients . . . . . . . . . . . . . . . . . . . . . . 3.16(a)
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . .6.13
Stockholder Agreement . . . . . . . . . . . . . . . . . . . . .Preamble
Straddle Returns. . . . . . . . . . . . . . . . . . . . . . . . 10.2(b)
Sub Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
TCGA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . .11.3
Third Party Scheduled Agreement . . . . . . . . . . . . . . . . 3.12(b)
Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . Article XIV
Transition Period . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
UK Companies Act. . . . . . . . . . . . . . . . . . . . . . . . .3.2(a)
UK GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
UK Registrar of Companies . . . . . . . . . . . . . . . . . . . .3.2(a)
US Acquisition Sub. . . . . . . . . . . . . . . . . . . . . . .Preamble
US Acquisition Sub II . . . . . . . . . . . . . . . . . . . . .Preamble
US GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Year 2000 Compliant . . . . . . . . . . . . . . . . . . . . . . . .3.15
<PAGE>
PURCHASE AND SALE AGREEMENT (EUROPE/USA)
PURCHASE AND SALE AGREEMENT (EUROPE/USA), dated as of
October 21, 1998 (this "Agreement" or this "Europe/USA Region Agreement"),
by and among (i) LASALLE PARTNERS INCORPORATED, a Maryland corporation
("Parent"); (ii) JONES LANG WOOTTON, a limited partnership existing under
the laws of England ("JLW England"), JONES LANG WOOTTON, a partnership
existing under the laws of Scotland ("JLW Scotland"), and JONES LANG
WOOTTON, a partnership existing under the laws of Eire ("JLW Ireland")
(each of JLW England, JLW Scotland and JLW Ireland is individually referred
to herein as a "JLW Partnership" and collectively referred to herein as the
"JLW Partnerships"); (iii)JONES LANG WOOTTON, a corporation incorporated
under the laws of England ("NewCo 1"), J.L.W. (SCOTLAND) CORPORATE, a
corporation incorporated under the laws of Scotland ("NewCo 2"), SLANEYGLEN
COMPANY, a corporation incorporated under the laws of Eire ("NewCo 3"),
J.L.W. SUPPLY COMPANY, a corporation incorporated under the laws of England
("JLW Supply"), JONES LANG WOOTTON USA INC., a Delaware corporation ("JLW
USA"), and JLW CONTINUATION, LTD., a corporation incorporated under the
laws of England ("JLW Continuation") (each of NewCo 1, NewCo 2, NewCo 3,
JLW Supply, JLW USA and JLW Continuation is individually referred to herein
as a "Company" and collectively referred to herein as the "Companies");
(iv) the persons named as "Management Shareholders" on the signature pages
hereto (each a "Management Shareholder" and, collectively, the "Management
Shareholders"); and (v) the Persons listed as "Shareholders" on the
Preliminary Master Shareholder List, attached as Schedule A to the Company
Disclosure Schedule (the "Preliminary Master Shareholder List"), together
with any Related JLW Owners, who execute and deliver Joinder Agreements
(Europe/USA), in the form attached hereto as Annex A (each a "Joinder
Agreement"), and each of the other Shareholder Transaction Documents (as
hereinafter defined) (each Person listed as a Shareholder on the
Preliminary Master Shareholder List who duly executes and delivers (and
whose Related JLW Owner, if any, executes and delivers) each of the
Shareholder Transaction Documents is individually referred to herein as a
"Shareholder" and collectively referred to herein as the "Shareholders" or
the "Europe/USA Region Shareholders").
WHEREAS, in accordance with the plan of integration (the
"Integration Plan") and the related integration agreements (the
"Integration Agreements"), attached hereto as Annex B, prior to the
Closing: (i) JLW England and its partners will transfer substantially all
of the assets, properties and businesses of JLW England (which assets will
not include the issued and outstanding shares of JLW USA and JLW Supply and
their respective direct and indirect Subsidiaries) to NewCo 1, (ii) JLW
Scotland and its partners will transfer substantially all of the assets,
properties and businesses of JLW Scotland (including all of the issued
shares in the Scottish Service Subsidiaries) to NewCo 2, (iii) JLW Ireland
and its partners will transfer substantially all of the assets, properties
and businesses of JLW Ireland (including all of the issued shares in the
Irish Service Subsidiaries) to NewCo 3, (iv) JLW Nominees Limited, a
corporation incorporated under the laws of England ("JLW Nominees"), will
(after having prior to the date of this Agreement transferred to JLW USA,
in connection with this Agreement, all of the outstanding shares of Series
A Preferred Shares of JLW USA in exchange for a substantially equivalent
number of shares of common stock of JLW USA) transfer all of the issued and
outstanding shares of common stock of JLW USA ( the "JLW USA Shares") to
the beneficial owners thereof as set forth on the Final Master Shareholder
List, and (v) Robin Broadhurst, Michael Follett, David Larkin, Malcolm
Naish and Clive Pickford (the trustees for the beneficial owners of JLW
Supply) will transfer all of the issued and outstanding share capital of
JLW Supply to the beneficial owners thereof as set forth on the Final
Master Shareholder List;
WHEREAS, pursuant to the Integration Plan and the Integration
Agreements, upon completion of the Integration the Shareholders will
collectively own all of the issued share capital or capital stock, as
applicable, of the Companies (the "Shares");
WHEREAS, the Shareholders collectively desire to grant to
Parent an irrevocable right to purchase all, but not less than all, of the
Shares, all upon the terms and subject to the conditions set forth in this
Agreement and the other Operative Agreements;
WHEREAS, Parent desires to grant to the Shareholders an
irrevocable right to cause Parent to purchase all, but not less than all,
of the Shares, all upon the terms and subject to the conditions set forth
in this Agreement and the other Operative Agreements;
WHEREAS, as a condition of and inducement to Parent's
willingness to consummate the transactions contemplated hereby, Parent and
each Shareholder (and each Related JLW Owner, if applicable) will enter
into (i) a Stockholder Agreement, in the form attached hereto as Annex C
(the "Stockholder Agreement"), and (ii) an Indemnity and Escrow Agreement,
in the form attached hereto as Annex D (the "Escrow Agreement");
WHEREAS, as of the date hereof, Parent, JLLINT, Inc., an
Illinois corporation and an indirect wholly-owned subsidiary of Parent ("US
Acquisition Sub"), JLLIP, Inc., an Illinois corporation and an indirect
wholly-owned subsidiary of Parent ("US Acquisition Sub II"), and the other
parties named therein are entering into a Purchase and Sale Agreement (the
"Asia Region Agreement"), pursuant to which, upon the terms and subject to
the conditions set forth therein, (i) US Acquisition Sub II will acquire
all of the issued and outstanding share capital of JLW Pacific Limited, a
Cook Islands company, and (ii) US Acquisition Sub will acquire (except as
otherwise set forth therein) all of the issued and outstanding share
capital of each of JLW Asia Holdings Limited, a Cook Islands company, JLW
Transact (Thailand) Co. Limited, a Thailand company, JLW Transact Pte
Limited (Singapore), a Singapore company, and JLW Transact Limited (HK), a
Hong Kong company (the companies referred to in clauses (i) and (ii) above
whose shares are to be acquired are collectively referred to herein as the
"Asia Region Companies");
WHEREAS, as of the date hereof, Parent, US Acquisition Sub and
LPI (Australia) Holdings Pty Limited, a corporation organized under the
laws of the Australian Capital Territory and an indirect wholly-owned
subsidiary of Parent ("Australia Acquisition Sub"), and the other parties
named therein are entering into a Purchase and Sale Agreement (the
"Australasia Region Agreement" and, together with the Asia Region
Agreement, the "Other Purchase Agreements"), pursuant to which, upon the
terms and subject to the conditions set forth therein, (i) Australia
Acquisition Sub will acquire all of the issued and outstanding share
capital of each of JLW Australia Pty Limited, a New South Wales company,
Jones Lang Wootton Transact Pty Ltd., a New South Wales company, Jones Lang
Wootton Transact (VIC) Pty Ltd., a Victoria company, and Jones Lang Wootton
Transact (Qld) Pty Ltd., a Queensland company, and (ii) US Acquisition Sub
will acquire all of the issued and outstanding share capital of each of
Jones Lang Wootton Holdings Limited, a New Zealand company, and JLW
Transact Limited (New Zealand), a New Zealand company (the companies
referred to in clauses (i) and (ii) above whose shares are to be acquired
are collectively referred to herein as the "Australasia Region Companies");
WHEREAS, each member of the Board of Parent who is an employee
of Parent has executed and delivered to Chris Peacock and Mike Smith and
each or either of them, with full power of substitution, an irrevocable
proxy to vote all of the shares of Parent Common Stock (as hereinafter
defined) owned by such member in favor of the Proposed Actions (as
hereinafter defined) at the special meeting of stockholders of Parent to be
held in connection with the transactions contemplated by this Agreement and
the Other Purchase Agreements; and
WHEREAS, pursuant to this Agreement and the Other Purchase
Agreements, Parent has the right (and may be required) to acquire, directly
or indirectly, all of the asset and property management, advisory and other
real estate-related businesses of the JLW Partnerships, the Companies, the
Asia Region Companies and the Australasia Region Companies and their
respective Subsidiaries (such businesses being collectively referred to
herein as the "JLW Businesses"), including all such businesses currently
being carried on by the JLW Partnerships and their respective direct and
indirect Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein,
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1 Purchase and Sale of Shares. (a) Parent shall have the
right (the "Call Right"), exercisable by written notice (a "Call Notice")
from Parent to the Sellers' Representatives, at any time following the
Integration Completion and prior to midnight on the Business Day next
following the Integration Completion Date (the "Exercise Period"), to
purchase all, but not less than all, of the Shares from the respective
Shareholders upon the terms and subject to the conditions set forth herein.
(b) The Shareholders shall have the right (the "Put Right"),
exercisable by written notice (a "Put Notice") from the Sellers'
Representatives to Parent, at any time during the Exercise Period, to cause
Parent to purchase all, but not less than all, of the Shares owned by each
of them upon the terms and subject to the conditions set forth herein.
(c) If either (i) Parent exercises its Call Right by
delivering a Call Notice during the Exercise Period to the Sellers'
Representatives or (ii) the Shareholders exercise their Put Right by the
Sellers' Representatives delivering a Put Notice during the Exercise Period
to Parent, then upon the terms and subject to the conditions set forth
herein, at the Closing, each Shareholder shall sell, assign, transfer,
convey and deliver to Parent, and Parent shall purchase, acquire and accept
from each Shareholder, all of the Shares of the Companies owned by such
Shareholder as set forth in column 5 of Annex B to the Joinder Agreement to
which such Shareholder is a party (the "Applicable Joinder Agreement")
(except as otherwise specified herein, all references in this Agreement to
"Annex B" to an Applicable Joinder Agreement shall refer to the definitive
Annex B, as modified pursuant to Section 2.2 hereof), free and clear of all
Encumbrances (other than Encumbrances created by or through Parent) and
together with all benefits and rights attaching or accruing thereto, for
(A) the number of newly issued shares of common stock, $.01 par value per
share ("Parent Common Stock"), of Parent (the "Consideration Shares") set
forth in column 3 of Annex B to the Applicable Joinder Agreement subject to
adjustment in accordance with Sections 1.3 and 1.4 hereof; and (B) cash, in
United States dollars (the "Cash Consideration"), in the amount calculated
in accordance with the formula set forth in column 4 of Annex B to the
Applicable Joinder Agreement; it being agreed that the aggregate (and
maximum) number of Consideration Shares that will be issued pursuant to
this Agreement and the Applicable Joinder Agreements shall be 7,223,539.
Section 1 Purchase Price. Upon the terms and subject to the
conditions set forth herein, in consideration for the sale, assignment,
transfer, conveyance and delivery of the Shares owned by each Shareholder
to Parent at the Closing, Parent shall deliver, or cause to be delivered,
at Closing to (a) the Shareholders' Representatives, on behalf of such
Shareholder, (i) the number of shares of Parent Common Stock specified in
column 3(a) of Annex B to the Applicable Joinder Agreement (the "Initial
Distribution Shares"), which Initial Distribution Shares shall be issued in
the name of such Shareholder, (ii) the number of shares of Parent Common
Stock specified in column 3(b) of Annex B to the Applicable Joinder
Agreement (the "Forfeiture Shares" and, together with Initial Distribution
Shares, the "Initial Consideration Shares"), which Forfeiture Shares shall
be deposited in escrow with the escrow agent appointed pursuant to the SCCA
(the "Forfeiture Shares Escrow Agent") pursuant to the applicable
provisions of the SCCA and held and distributed in accordance with the
terms thereof, and (iii) the Cash Consideration, in United States dollars,
calculated in accordance with the formula set forth in column 4 of Annex B
to the Applicable Joinder Agreement, all of which Cash Consideration shall
be paid to and retained by the Shareholders' Representatives (on behalf of
such Shareholder) as a reserve for certain expenses as provided in Section
1.8(d) hereof, and (b) Harris Trust and Savings Bank (the "Escrow Agent")
(i) the number of shares of Parent Common Stock specified in column 3(c) of
Annex B to the Applicable Joinder Agreement to be deposited in escrow as
Escrow Shares pursuant to clause (b) of Section 1.3 hereof, and (ii) the
number of shares of Parent Common Stock specified in column 3(d) of Annex B
to the Applicable Joinder Agreement to be deposited in escrow as Adjustment
Shares pursuant to clause (a) of Section 1.3 hereof, which Escrow Shares
and Adjustment Shares shall be held and disposed of in accordance with the
applicable provisions of the Escrow Agreement and the applicable provisions
of this Agreement. The aggregate number of shares of Parent Common Stock
to be deposited with the Escrow Agent pursuant to clause (b)(i) of this
Section 1.2, clause (b)(i) of Section 1.2 of each of the Other Purchase
Agreements and clause (i) of the last sentence of Section 6.7 of this
Agreement and each of the Other Purchase Agreements shall be 750,000 shares
(the "Escrow Shares") and the aggregate number of shares of Parent Common
Stock to be deposited with the Escrow Agent pursuant to clause (b)(ii) of
this Section 1.2, clause (b)(ii) of Section 1.2 of each of the Other
Purchase Agreements and clause (ii) of the last sentence of Section 6.7 of
this Agreement and each of the Other Purchase Agreements shall be 1,241,683
shares (the "Adjustment Shares"); provided that the Forfeiture Shares
issuable pursuant to the Asia Region Agreement shall also be initially
deposited with the Escrow Agent as additional Escrow Shares to be held and
disposed of in accordance with the applicable provisions of the Escrow
Agreement.
Section 1 Escrow of Certain Consideration Shares. On the Closing
Date, Parent shall deliver to (a) the Escrow Agent a certificate (issued in
the name of the Escrow Agent or its nominee) representing the Adjustment
Shares (including the ESOT Adjustment Shares) for the purpose of securing
the consideration adjustment obligations, as set forth in Section 1.4 of
this Agreement and each of the Other Purchase Agreements, (b) the Escrow
Agent a certificate (issued in the name of the Escrow Agent or its nominee)
representing the Escrow Shares (including the ESOT Escrow Shares) for the
purpose of securing the indemnification obligations of the Shareholders and
the Other Shareholders, as set forth in the Escrow Agreement and (c) the
Forfeiture Shares Escrow Agent a certificate (issued in the name of the
Forfeiture Shares Escrow Agent or its nominee) representing the Forfeiture
Shares for the purpose of ensuring compliance with the forfeiture
provisions relating to the Shareholders, the Other Shareholders and the
Related JLW Owners, if any, contained in the SCCA. The Adjustment Shares
and the Escrow Shares shall be held by the Escrow Agent under the Escrow
Agreement pursuant to the terms thereof. The Adjustment Shares and the
Escrow Shares shall be held and disposed of solely for the purposes and in
accordance with the terms of this Agreement, the Other Purchase Agreements
and the Escrow Agreement. The Forfeiture Shares shall be held and disposed
of by the Forfeiture Shares Escrow Agent under the applicable provisions of
the SCCA.
Section 1 Consideration Adjustment. (a) Subject to the
completion of any adjustments required under this Section 1.4, (i) the
Shareholders listed on the Final Master Shareholder List as owning Shares
of NewCo 1, JLW USA, JLW Supply or JLW Continuation (the "JLW England
Shareholders") and the JLW England ESOT Sub Trust shall collectively be
entitled to receive 697,736 Adjustment Shares (the "JLW England Adjustment
Shares"), (ii) the Shareholders listed on the Final Master Shareholder List
as owning Shares of NewCo 2 (the "JLW Scotland Shareholders") and the JLW
Scotland ESOT Sub Trust shall collectively be entitled to receive 22,456
Adjustment Shares (the "JLW Scotland Adjustment Shares"), (iii) the
Shareholders listed on the Final Master Shareholder List as owning Shares
of JLW Ireland (the "JLW Ireland Shareholders") and the JLW Ireland ESOT
Sub Trust shall collectively be entitled to receive 44,642 Adjustment
Shares (the "JLW Ireland Adjustment Shares"), (iv) the Asia Region
Shareholders and the Asia Region ESOT Sub Trust shall collectively be
entitled to receive 329,750 Adjustment Shares (the "Asia Region Adjustment
Shares") and (v) the Australasia Region Shareholders and the Australasia
Region ESOT Sub Trust shall collectively be entitled to receive 147,099
Adjustment Shares (the "Australasia Region Adjustment Shares").
(b) As soon as practicable, but in no event later than 50
days following the Closing Date, Parent shall cause to be prepared and
delivered to the Shareholders' Representatives (i) a consolidated or
combined balance sheet, as applicable, in each case as of the close of
business on the Business Day immediately preceding the Closing Date,
audited by the independent certified public accountants who audited the
applicable Audited Financial Statements (or the Audited Financial
Statements of the applicable predecessor entity or entities) (the
"Applicable Auditors") of each of (A) NewCo 1, JLW Supply, JLW USA and JLW
Continuation, including their respective direct and indirect Subsidiaries
(the "JLW England Balance Sheet"), (B) NewCo 2, including its direct and
indirect Subsidiaries (the "JLW Scotland Balance Sheet"), (C) NewCo 3,
including its direct and indirect Subsidiaries (the "JLW Ireland Balance
Sheet"), (D) the Asia Region Companies, including their respective direct
and indirect Subsidiaries (the "Asia Region Balance Sheet"), and (E) the
Australasia Region Companies, including their respective direct and
indirect Subsidiaries (the "Australasia Region Balance Sheet" and, together
with the JLW England Balance Sheet, JLW Scotland Balance Sheet, JLW Ireland
Balance Sheet and Asia Region Balance Sheet, the "Closing Balance Sheets"),
(ii) the consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movement on reserves and statements
of total recognized gains and losses for the period from January 1, 1998 to
the Closing Date (or for such other period(s) as may be required pursuant
to Section 1.4(p) below) for each of (A) NewCo 1, JLW Supply, JLW USA and
JLW Continuation, including their respective direct and indirect
Subsidiaries (including their respective predecessors, as applicable) (the
"JLW England Financial Statements"), (B) NewCo 2, including its direct and
indirect Subsidiaries (including their respective predecessors, as
applicable) (the "JLW Scotland Financial Statements"), (C) NewCo 3,
including its direct and indirect Subsidiaries (including their respective
predecessors, as applicable) (the "JLW Ireland Financial Statements"), (D)
the Asia Region Companies, including their respective direct and indirect
Subsidiaries (the "Asia Region Financial Statements") and (E) the
Australasia Region Companies, including their direct and indirect
Subsidiaries (the "Australasia Region Financial Statements", and, together
with the JLW England Financial Statements, the JLW Scotland Financial
Statements, the JLW Ireland Financial Statements and the Asia Region
Financial Statements, the "Closing Financial Statements"), audited by the
Applicable Auditors for each of the foregoing, and (iii) a calculation of
the Closing Net Worth based on the applicable Closing Balance Sheet and
certified by the Applicable Auditors for each of (A) NewCo 1, JLW Supply,
JLW USA and JLW Continuation, including their respective direct and
indirect Subsidiaries (the "JLW England Closing Net Worth"), (B) NewCo 2,
including its direct and indirect Subsidiaries (the "JLW Scotland Closing
Net Worth"), (C) NewCo 3, including its direct and indirect Subsidiaries
(the "JLW Ireland Closing Net Worth"), (D) the Asia Region Companies,
including their respective direct and indirect Subsidiaries (the "Asia
Region Closing Net Worth"), and (E) the Australasia Region Companies,
including their respective direct and indirect Subsidiaries (the
"Australasia Region Closing Net Worth") (such calculations, together with
the Closing Financial Statements (if required for the purposes of Section
1.4(p) hereof) and the Closing Balance Sheets, the "Closing Statements").
The Closing Balance Sheets and the related Closing Financial Statements
shall be prepared in accordance with UK GAAP (but shall be denominated in
US dollars) in accordance with the accounting principles set forth in
Exhibit 1 hereto (collectively, the "Agreed Generally Accepted Accounting
Principles"), and the Closing Net Worth shall be calculated in accordance
with this Agreement. The Closing Balance Sheets and the related Closing
Financial Statements shall include footnotes converting various items
therein to US GAAP, in a manner consistent with the Audited Financial
Statements. The reasonable costs of auditing the Closing Balance Sheets and
the related Closing Financial Statements and certifying the related
calculations shall be paid by Parent but included as a current liability on
the Closing Balance Sheets (the allocation of such liability among such
balance sheets, to be determined by the Shareholders' Representatives); it
being the intent of the parties that such costs will thus be economically
borne by the Shareholders, the Other Shareholders and the ESOT. The scope
of such audit shall be consistent with the scope of the audit conducted in
preparing the Audited Financial Statements.
(c) In order to facilitate their review of the Closing
Statements, the Shareholders' Representatives and their authorized
representatives and advisors shall have access to (i) all relevant books
and records and (ii) all accountants' work papers used in connection with
the preparation of the Closing Balance Sheets and the Closing Financial
Statements, as well as to the accounting staff of Parent who prepared such
statements and the Applicable Auditors who audited such statements. Unless
the Shareholders' Representatives deliver written notice to Parent on or
prior to the 25th day after receipt of the Closing Statements of their
disagreement as to any item included in or omitted from the Closing
Statements (a "Closing Statements Objection"), which Closing Statements
Objection, if any, shall be required to include all such disagreements with
reasonable specificity to the extent practicable which the Shareholders'
Representatives will assert with respect to any such items, the parties
shall be deemed to have accepted and agreed to the Closing Statements. If
the Shareholders' Representatives so notify Parent of a Closing Statements
Objection, the Shareholders' Representatives and Parent shall, within 15
days following the date of such notice (the "Closing Statement Resolution
Period"), attempt to resolve their differences. Any resolution by them as
to any disputed amount shall be final and binding on the parties hereto.
The term "Final Closing Statements" shall mean the definitive Closing
Statements as agreed to (or deemed agreed to) by Parent and the
Shareholders' Representatives, or in the absence of such agreement, the
definitive Closing Statements including any adjustments resulting from the
determination made by the Neutral Auditor (in addition to those items
theretofore agreed to by Parent and the Shareholders' Representatives), the
term "Final Closing Balance Sheets" shall mean the definitive Closing
Balance Sheets included in such Final Closing Statements and, to the extent
applicable, the term "Final Closing Financial Statements" shall mean the
definitive profit and loss accounts included in such Final Closing
Statements. The terms "Final JLW England Closing Net Worth," "Final JLW
Scotland Closing Net Worth,""Final JLW Ireland Closing Net Worth," "Final
Asia Region Closing Net Worth" and "Final Australasia Region Closing Net
Worth" shall mean the definitive Closing Net Worth of (i) NewCo 1, JLW
Supply, JLW USA and JLW Continuation, (ii) NewCo 2, (iii) NewCo 3, (iv) the
Asia Region Companies and (v) the Australasia Region Companies,
respectively, including their respective direct and indirect Subsidiaries,
based on the applicable Final Closing Balance Sheets.
(d) If, at the conclusion of the Closing Statement Resolution
Period, Parent and the Shareholders' Representatives have not resolved all
disputes, then all amounts remaining in dispute shall, at the election of
either party, be submitted to Arthur Andersen (UK). (the "Neutral
Auditor"). Parent and the Shareholder's Representatives agree to execute,
if requested by the Neutral Auditor, a reasonable engagement letter, and
shall make available to the Neutral Auditor such books, records and other
information within their control as the Neutral Auditor may reasonably
request. All fees and expenses of the Neutral Auditor shall be borne by
Parent. The Neutral Auditor shall act as an expert, not as an arbitrator,
to determine only those issues remaining in dispute, based on the
presentations by Parent and the Shareholders' Representatives (and their
respective advisors) and, to the extent such Neutral Auditor shall deem
appropriate, on an independent investigation (but not an audit) of such
other relevant books and records, accountants' work papers and other
information as such Neutral Auditor deems reasonably necessary for the
purpose of resolving the issues in dispute. The Neutral Auditor shall be
instructed to make its determination within 30 days of its engagement,
which determination shall be set forth in a written statement delivered to
Parent and the Shareholders' Representatives and shall be final and binding
on the parties hereto and the ESOT Trustee.
(e) Subject to Section 1.4(k), if the Final JLW England
Closing Net Worth is less than US$22,476,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum JLW England Closing
Net Worth") (the amount of such deficiency being referred to herein as the
"JLW England Adjustment Amount"), then the number of JLW England Adjustment
Shares to be delivered to the JLW England Shareholders and the ESOT Trustee
on behalf of the JLW England ESOT Sub Trust shall be reduced by the number
of shares of Parent Common Stock equal to the quotient obtained by dividing
the JLW England Adjustment Amount by an amount (such amount being
hereinafter referred to as the "Adjustment Shares Conversion Amount") equal
to 92.5 percent of the average closing price of Parent Common Stock (as
reported on the New York Stock Exchange Composite Tape) for the five-
trading day period that includes the two trading days immediately
preceding, the trading day including and the two trading days immediately
following the day (the "Final Closing Statements Determination Date") on
which the Final Closing Statements are agreed to by the parties or finally
determined by the Neutral Auditor; provided that if such quotient exceeds
the number of JLW England Adjustment Shares (such excess number of shares
being referred to herein as the "JLW England Share Deficit"), then the JLW
Scotland Adjustment Shares, JLW Ireland Adjustment Shares, Asia Region
Adjustment Shares and Australasia Region Adjustment Shares shall be reduced
by an aggregate number equal to the JLW England Share Deficit, apportioned
among them pro rata on the basis of the number of Adjustment Shares
originally allocated herein to the JLW Scotland Shareholders, JLW Ireland
Shareholders, Asia Region Shareholders and Australasia Region Shareholders
(and the related ESOT Sub Trusts); provided, further, that if such
reduction or any subsequent reduction reduces to zero the number of
Adjustment Shares issuable to the JLW Scotland Shareholders, JLW Ireland
Shareholders, Asia Region Shareholders or Australasia Region Shareholders
(and the related ESOT Sub Trusts), any remaining JLW England Share Deficit
shall be deducted from any Adjustment Shares then remaining issuable to the
JLW Scotland Shareholders, JLW Ireland Shareholders, Asia Region
Shareholders or Australasia Region Shareholders (and the related ESOT Sub
Trusts) pro rata (on the basis of the Adjustment Shares then remaining
issuable to each such group).
(f) Subject to Section 1.4(k), if the Final JLW Scotland
Closing Net Worth is less than US$724,000, as such amount may be adjusted
pursuant to Section 1.4(p) below (the "Minimum JLW Scotland Closing Net
Worth") (the amount of such deficiency being referred to herein as the "JLW
Scotland Adjustment Amount"), then the number of JLW Scotland Adjustment
Shares to be delivered to the JLW Scotland Shareholders and the ESOT
Trustee on behalf of the JLW Scotland ESOT Sub Trust shall be reduced by
the number of shares of Parent Common Stock equal to the quotient obtained
by dividing the JLW Scotland Adjustment Amount by the Adjustment Shares
Conversion Amount; provided that if such quotient exceeds the number of JLW
Scotland Adjustment Shares (such excess number of shares being referred to
herein as the "JLW Scotland Share Deficit"), then the JLW England
Adjustment Shares, JLW Ireland Adjustment Shares, Asia Region Adjustment
Shares and Australasia Region Adjustment Shares shall be reduced by an
aggregate number equal to the JLW Scotland Share Deficit, apportioned among
them pro rata on the basis of the number of Adjustment Shares originally
allocated herein to the JLW England Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders and Australasia Region Shareholders (and the
related ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Ireland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW Scotland Share Deficit shall be
deducted from any Adjustment Shares then remaining issuable to the JLW
England Shareholders, JLW Ireland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of the Adjustment Shares then remaining issuable to each such
group).
(g) Subject to Section 1.4(k), if the Final JLW Ireland
Closing Net Worth is less than US$1,440,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum JLW Ireland Closing
Net Worth") (the amount of such deficiency being referred to herein as the
"JLW Ireland Adjustment Amount"), then the number of JLW Ireland Adjustment
Shares to be delivered to the JLW Ireland Shareholders and the ESOT Trustee
on behalf of the JLW Ireland ESOT Sub Trust shall be reduced by the number
of shares of Parent Common Stock equal to the quotient obtained by dividing
the JLW Ireland Adjustment Amount by the Adjustment Shares Conversion
Amount; provided that if such quotient exceeds the number of JLW Ireland
Adjustment Shares (such excess number of Shares being referred to herein as
the "JLW Ireland Share Deficit"), then the JLW England Adjustment Shares,
JLW Scotland Adjustment Shares, Asia Region Adjustment Shares and
Australasia Region Adjustment Shares shall be reduced by an aggregate
number equal to the JLW Ireland Share Deficit, apportioned among them pro
rata on the basis of the number of Adjustment Shares originally allocated
herein to the JLW England Shareholders, JLW Scotland Shareholders, Asia
Region Shareholders and Australasia Region Shareholders (and the related
ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Scotland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW Ireland Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW England
Shareholders, JLW Scotland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of the Adjustment Shares then remaining issuable to each such
group).
(h) Subject to Section 1.4(k), if the Final Asia Region
Closing Net Worth is less than US$10,624,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum Asia Region Closing
Net Worth") (the amount of such deficiency being referred to herein as the
"Asia Region Adjustment Amount"), then the number of Asia Region Adjustment
Shares to be delivered to the Asia Region Shareholders and the ESOT Trustee
on behalf of the JLW Asia ESOT Sub Trust shall be reduced by the number of
shares of Parent Common Stock equal to the quotient obtained by dividing
the Asia Region Adjustment Amount by the Adjustment Shares Conversion
Amount; provided that if such quotient exceeds the number of Asia Region
Adjustment Shares (such excess number of shares being referred to herein as
the "Asia Region Share Deficit"), then the JLW England Adjustment Shares,
JLW Scotland Adjustment Shares, JLW Ireland Adjustment Shares and
Australasia Region Adjustment Shares shall be reduced by an aggregate
number equal to the Asia Region Share Deficit, apportioned among them pro
rata on the basis of the number of Adjustment Shares originally allocated
herein to the JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders and Australasia Region Shareholders (and the related
ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining Asia Region Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW England
Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of Adjustment Shares then remaining issuable to each such
group).
(i) Subject to Section 1.4(k), if the Final Australasia
Region Closing Net Worth is less than US$4,736,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum Australasia Region
Closing Net Worth") (the amount of such deficiency being referred to
herein as the "Australasia Region Adjustment Amount"), then the number of
Australasia Region Adjustment Shares to be delivered to the Australasia
Region Shareholders and the ESOT Trustee on behalf of the JLW Australasia
ESOT Sub Trust shall be reduced by the number of shares of Parent Common
Stock equal to the quotient obtained by dividing the Australasia Region
Adjustment Amount by the Adjustment Shares Conversion Amount; provided that
if such quotient exceeds the number of Australasia Region Adjustment Shares
(such excess number of shares being referred to herein as the "Australasia
Region Share Deficit"), then the JLW England Adjustment Shares, JLW
Scotland Adjustment Shares, JLW Ireland Adjustment Shares and Asia Region
Adjustment Shares shall be reduced by an aggregate number equal to the
Australasia Region Share Deficit, apportioned among them pro rata on the
basis of the number of Adjustment Shares originally allocated herein to the
JLW England Shareholders, JLW Scotland Shareholders, JLW Ireland
Shareholders and Asia Region Shareholders (and the related ESOT Sub
Trusts); provided, further, that if such reduction or any subsequent
reduction reduces to zero the number of Adjustment Shares issuable to the
JLW England Shareholders, JLW Scotland Shareholders, JLW Ireland
Shareholders or Asia Region Shareholders (and the related ESOT Sub Trusts),
any remaining Australasia Region Share Deficit shall be deducted from any
Adjustment Shares then remaining issuable to the JLW England Shareholders,
JLW Scotland Shareholders, JLW Ireland Shareholders or Asia Region
Shareholders (and the related ESOT Sub Trusts) pro rata (on the basis of
the Adjustment Shares then remaining issuable to each such group).
(j) [Intentionally Left Blank]
(k) After giving effect to the adjustments set forth in
Sections 1.4(e)-(i) above, each JLW England Shareholder, JLW Scotland
Shareholder and JLW Ireland Shareholder (and the related ESOT Sub Trusts)
shall be entitled to receive such Shareholder's (or ESOT Sub Trust's) pro
rata share of any then remaining JLW England Adjustment Shares, JLW
Scotland Adjustment Shares or JLW Ireland Adjustment Shares, respectively.
Each such Shareholder's (or ESOT Sub Trust's) pro rata share shall be
determined on the basis of the ratio which the Initial Consideration Shares
issuable to such Shareholder pursuant to columns 3(a) and 3(b) of Annex B
to the Applicable Joinder Agreement (or, in the case of an ESOT Sub Trust,
the number of ESOT Shares deposited in such ESOT Sub Trust pursuant to
Section 6.7 of this Agreement and Section 6.7 of the Other Purchase
Agreements) bear to the aggregate number of Initial Consideration Shares
issuable to all JLW England Shareholders, JLW Scotland Shareholders or JLW
Ireland Shareholders, together with the number of ESOT Shares deposited
with the related ESOT Sub Trusts, as applicable. The allocation of the
Asia Region Adjustment Shares and Australasia Region Adjustment Shares
remaining issuable after the adjustments set forth in Sections 1.4(e)-(i)
above among the Asia Region Shareholders and Australasia Region
Shareholders (and the related ESOT Sub Trusts), respectively, shall be
determined by the Shareholders' Representatives and included in a written
notice (the "Allocation Notice") provided to Parent and the Escrow Agent by
the Shareholders' Representatives within 30 days following the Final
Closing Statements Delivery Date (the "Allocation Notice Delivery Period").
Notwithstanding anything to the contrary contained herein, in the event
that the number of JLW England Adjustment Shares, JLW Scotland Adjustment
Shares, JLW Ireland Adjustment Shares, Asia Region Adjustment Shares or
Australasia Region Adjustment Shares issuable, respectively, to the JLW
England Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders or Australasia Region Shareholders (and the
related ESOT Sub Trusts) would be required to be reduced pursuant to the
adjustments set forth in Sections 1.4(e)-(i) above, the Shareholder's
Representatives shall have the option, exercisable during the Allocation
Notice Delivery Period, to pay, on behalf of some or all of such JLW
England Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders and/or Australasia Region Shareholders (and the
related ESOT Sub Trusts), up to an amount in cash in United States dollars
equal to the JLW England Adjustment Amount, JLW Scotland Adjustment Amount,
JLW Ireland Adjustment Amount, Asia Region Adjustment Amount or Australasia
Adjustment Amount, as applicable, or to surrender to Parent an equivalent
number of Initial Distribution Shares (based on a per share value equal to
the Adjustment Shares Conversion Amount), in which case the applicable
Adjustment Amount shall be reduced pro tanto. Any such cash payment must
be in United States dollars and received by Parent prior to the end of the
Allocation Notice Delivery Period. Any such Initial Distribution Shares
shall be surrendered to and received by Parent during the Allocation Notice
Delivery Period, together with all necessary assignments and stock powers.
The Adjustment Amount shall be reduced by an amount equal to any such cash
payment and the value of any Initial Distribution Shares so surrendered,
provided, that for the purposes of this calculation, each Initial
Distribution Share shall be deemed to have a value equal to the Adjustment
Shares Conversion Amount. At the end of the Allocation Notice Delivery
Period, any Adjustment Shares that have become subject to a reduction
pursuant to Sections 1.4(e)-(i) (after giving effect to any payment or
surrender of Shares pursuant to this Section 1.4(k)) shall be returned to
Parent by the Escrow Agent.
(l) If the adjustments set forth in Sections 1.4(e)-(i) above
(after giving effect to any payment or surrender of Shares pursuant to
Section 1.4(k)) result in a reduction in Adjustment Shares that exceeds the
aggregate number of Adjustment Shares (such excess amount being referred to
herein as the "Adjustment Shares Deficit"), then in addition to the
elimination of the Adjustment Shares (and return of such Adjustment Shares
to Parent by the Escrow Agent), (A) each Shareholder and Other Shareholder
shall return, or cause to be returned, and (B) the ESOT Trustee shall
return, to the Transfer Agent for cancellation, certificates representing
Initial Distribution Shares received by such Shareholder or Other
Shareholder or ESOT Shares received by such ESOT Trustee, as the case may
be, as soon as practicable, but in any event no later than five Business
Days after notice from Parent following the expiration of the Allocation
Notice Delivery Period. The Transfer Agent shall cancel each such
certificate and issue to each Shareholder, Other Shareholder or ESOT
Trustee (on behalf of the applicable ESOT Sub Trust), as applicable, a new
certificate representing such Shareholder's or Other Shareholder's Initial
Distribution Shares or ESOT Shares, as the case may be, less such
Shareholder's, Other Shareholder's and the ESOT's pro rata share (on the
basis of the Initial Consideration Shares issued to all Shareholders and
Other Shareholders and ESOT Shares issued to the ESOT) of the Adjustment
Shares Deficit (based on a per share value equal to the Adjustment Shares
Conversion Amount). In the event that the Initial Distribution Shares held
by the Shareholders and the Other Shareholders are not sufficient to
satisfy their portion of the Adjustment Shares Deficit, the Shareholders
shall cause the Forfeiture Shares Escrow Agent under the SCCA or the Escrow
Agent with respect to the Forfeiture Shares of the Asia Region Shareholders
to return to the Transfer Agent for cancellation the certificate
representing the Forfeiture Shares, as soon as practicable, but in any
event no later than five Business Days after the expiration of the
Allocation Notice Delivery Period. The Transfer Agent shall cancel such
certificate and issue to the Forfeiture Shares Escrow Agent or the Escrow
Agent, as applicable, a new certificate representing the Forfeiture Shares,
less the number of Forfeiture Shares equal to the amount of the Adjustment
Shares Deficit that remains unsatisfied (based on a per share value equal
to the Adjustment Shares Conversion Amount). To assist in effectuating the
provisions of this Section 1.4(l), the Shareholders and ESOT Trustee hereby
consent to the entry of stop transfer orders with the Transfer Agent
against the transfer of any Initial Consideration Shares held by such
Shareholders and any ESOT Shares held by such ESOT Trustee that are
required to be returned to the Transfer Agent for cancellation pursuant to
the terms hereof, which stop transfer orders shall be withdrawn by Parent,
in each case, once the applicable Initial Consideration Shares, ESOT Shares
or Forfeiture Shares, as applicable, are so returned.
(m) Certificates representing the Adjustment Shares that may
be deliverable after the adjustments and reallocations, if any, described
in this Section 1.4 shall be delivered by Parent to the Shareholders, the
Other Shareholders and the ESOT Trustee on behalf of the applicable ESOT
Sub Trusts, as appropriate, within 10 Business Days following the end of
the Allocation Notice Delivery Period, together with any Adjustment Shares
Related Property (as defined in Section 4.1 of the Escrow Agreement). If
any provision of this Section 1.4 would require the Escrow Agent to deliver
a fraction of a share of Parent Common Stock to a Shareholder, Other
Shareholder or ESOT, Parent shall instead purchase such fraction of a share
from the Escrow Agent in exchange for a cash amount equal to the Adjustment
Shares Conversion Amount multiplied by such fraction, which cash amount
shall be paid over by the Escrow Agent to the applicable Shareholder, Other
Shareholder or ESOT Sub Trust in lieu of such fraction of a share.
(n) [Intentionally Left Blank]
(o) In the event that (i) the Final JLW England Closing Net
Worth exceeds the Minimum JLW England Closing New Worth, (ii) the Final JLW
Scotland Closing Net Worth exceeds the Minimum JLW Scotland Closing Net
Worth, (iii) the Final JLW Ireland Closing New Worth exceeds the Minimum
JLW Ireland Closing New Worth, (iv) the Final Asia Region Closing Net Worth
exceeds the Minimum Asia Region Closing Net Worth or (v) the Final
Australasia Region Closing Net Worth exceeds the Minimum Australasia Region
Closing Net Worth, Parent shall pay to the JLW England Shareholders, JLW
Scotland Shareholders, JLW Ireland Shareholders, Asia Region Shareholders
or Australasia Region Shareholders, as applicable, an amount equal to such
excess (unless such excess was otherwise paid or distributed to them), by
delivery of cash in the amount of such excess by wire transfer to an
account or accounts designated by the Shareholders' Representatives. Such
payment will be made within 60 days following the Final Closing Statements
Determination Date.
(p) In the event that the Integration Commencement takes
place later than January 15, 1999: (i) the JLW England Financial Statements
shall include both (A) a profit and loss account for the year ending
December 31, 1998 and (B) a profit and loss account for the period
beginning on January 1, 1999 and ending on the Closing Date (the "JLW
England 1999 Income Statement," with such period being sometimes referred
to herein as the "1999 Stub Period"), (ii) the JLW Scotland Financial
Statements shall include both (A) a profit and loss account for the year
ending December 31, 1998 and (B) a profit and loss account for the 1999
Stub Period (the "JLW Scotland 1999 Income Statement"), (iii) the JLW
Ireland Financial Statements shall include both (A) a profit and loss
account for the year ending December 31, 1998 and (B) a profit and loss
account for the 1999 Stub period (the "JLW Ireland 1999 Income Statement"),
(iv) the Asia Region Financial Statements shall include both (A) a profit
and loss account for the year ending December 31, 1998 and (B) a profit and
loss account for the 1999 Stub Period (the "Asia Region 1999 Income
Statement") and (v) the Australasia Region Financial Statements shall
include both (A) a profit and loss account for the year ending December 31,
1998 and (B) a profit and loss account for 1999 Stub Period (the
"Australasia Region 1999 Income Statement" and, together with the JLW
England 1999 Income Statement, the JLW Scotland 1999 Income Statement, the
JLW Ireland 1999 Income Statement and the Asia Region 1999 Income
Statement, the "1999 Income Statements"). The 1999 Income Statements shall
be prepared in accordance with the Agreed Generally Accepted Accounting
Principles, provided that compensation expense in respect of the persons
described in Exhibit 2 hereto shall be determined on a pro forma basis in
accordance with such Exhibit 2 and the associated pro forma tax benefit or
tax charge shall also be computed in accordance with such Exhibit 2. Based
on the 1999 Income Statements included in the Final Closing Statements: (i)
the Minimum JLW England Closing Net Worth shall be increased by any pro
forma profit on ordinary activities after taxation, or decreased by any pro
forma loss on ordinary activities after taxation for the 1999 Stub Period
as shown on such JLW England 1999 Income Statement, (ii) the Minimum JLW
Scotland Closing Net Worth shall be increased by any pro forma profit on
ordinary activities after taxation, or decreased by any pro forma loss on
ordinary activities after taxation, for the 1999 Stub Period as shown on
such JLW Scotland 1999 Income Statement, (iii) the Minimum JLW Ireland
Closing Net Worth shall be increased by any pro forma profit on ordinary
activities after taxation, or decreased by any pro forma loss on ordinary
activities after taxation, for the 1999 Stub Period as shown on such JLW
Ireland 1999 Income Statement, (iv) the Minimum Asia Region Closing Net
Worth shall be increased by any pro forma profit on ordinary activities
after taxation, or decreased by any pro forma loss on ordinary activities
after taxation, for the 1999 Stub Period as shown on such Asia Region 1999
Income Statement and (v) the Minimum Australasia Region Closing Net Worth
shall be increased by any pro forma profit on ordinary activities after
taxation, or decreased by any pro forma loss on ordinary activities after
taxation for the 1999 Stub Period as shown on such Australasia Region 1999
Income Statement.
Section 1 Closing. (a) Upon the terms and subject to the
conditions set forth herein, the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP in London, England, at 9:00 A.M.,
local time, on the Closing Date.
(b) The Integration, the Closing under this Agreement and the
closing of the transactions contemplated by the Other Purchase Agreements
shall, upon the terms and subject to the conditions set forth in the
Integration Agreements, this Agreement and the Other Purchase Agreements,
be consummated, if at all, in the following order and shall, for purposes
of this Agreement, be deemed effective as of the Closing Date:
On the third Business Day following the date on
which all of the conditions set forth in Articles VII, VIII and IX hereof
and in Articles VII, VIII and IX of each of the Other Purchase Agreements
(other than the conditions specified in Sections 7.5 and 7.6 hereof and
thereof and other than the conditions that by their terms relate to the
Closing Date) have been satisfied or waived, or such other time as Parent
and the Sellers' Representatives may mutually agree upon in writing (such
date being sometimes referred to herein as the "Integration Commencement
Date"), the JLW Parties, the Shareholders and the Related JLW Owners will
take (or cause to be taken) the actions contemplated to be taken under the
terms of the Integration Plan and the Integration Agreements, in the order
provided therein and on a basis such that (except as to any Post-Closing
Integration Actions) the Integration will be completed (the "Integration
Completion") no later than the third Business Day following the Integration
Commencement Date or as soon thereafter as practicable, but in no event
later than five Business Days after the Integration Commencement Date (the
date of such completion being sometimes referred to herein as the
"Integration Completion Date"); provided that prior to the commencement of
the Integration, Parent shall have delivered to the Sellers'
Representatives a certificate of acknowledgment that the conditions
precedent to the commencement of the Integration described above have been
so satisfied or waived; and
On the later to occur of (A) the Business Day next
following the receipt of the Call Notice or the Put Notice, as the case may
be, and (B) the date on which the conditions to the obligations of the
parties under this Agreement which relate to the Closing Date (other than
Section 7.5 hereof) and under both the Asia Region Agreement and
Australasia Region Agreement which relate to the Closing Date (as such term
is defined in the Asia Region Agreement and Australasia Region Agreement)
(other than Section 7.5 thereof) shall have been satisfied or waived, or
such other time as Parent and the Sellers' Representatives may mutually
agree upon in writing, the closing of the transactions contemplated by this
Agreement, the Asia Region Agreement and the Australasia Region Agreement
shall be consummated (the date of such consummation being sometimes
referred to herein as the "Closing Date").
Section 1 Deliveries by the Shareholders. At the Closing, the
Sellers' Representatives, on behalf of the Shareholders, or the
Shareholders shall deliver, or cause to be delivered, to Parent the
following:
share certificates representing all of the Shares, with
duly executed stock transfer forms in the applicable form of Annex G
hereto, and otherwise in a form reasonably acceptable to Parent for
transfer on the books of the relevant Companies;
all such other documents (including any necessary waivers
or consents) as may be required to enable Parent to be registered as the
holder of the Shares, including a power of attorney duly executed by each
Shareholder in the form of Annex H hereto;
the Common Seal (if applicable), Share Register and Share
Certificate Books (or similar instruments), with any unissued share
certificates, all minute books and other statutory books (which shall be
written-up to but not including the Closing) of each Company;
the original Certificate of Incorporation (or similar
organizational document) of each Company and Company Subsidiary other than
JLW USA, and a copy of the Certificate of Incorporation of JLW USA,
certified as of a date within 30 days of the Closing Date by the Secretary
of State of the State of Delaware;
executed counterparts of any Consents obtained pursuant
to Section 5.3 hereof and not previously delivered to Parent pursuant to
such Section;
the certificates referred to in clause (ii) of Section
8.4 hereof;
the opinions of counsel referred to in Section 8.5
hereof; and
all other previously undelivered documents, instruments
or writings required to be delivered by any JLW Party to Parent at or prior
to the Closing, pursuant to this Agreement or any other Operative
Agreement.
Section 1 Deliveries by Parent. (a) At the Closing, Parent shall
deliver, or cause to be delivered, to the Shareholders' Representatives, on
behalf of the Shareholders, the following:
duly executed stock certificates representing the
Initial Distribution Shares in the names specified in column 1 of Annex B
to the Applicable Joinder Agreements and in the denominations set forth in
column 3(a) thereof;
[Intentionally Left Blank]
[Intentionally Left Blank]
the SCCA Expenses Reserve in United States dollars
by wire transfer to an account designated by the Shareholders'
Representatives at least three Business Days prior to the Closing Date;
the executive officer certificate referred to in
clause (ii) of Section 9.3 hereof;
the opinions of counsel referred to in Section 9.4
hereof;
executed counterparts of any Consents obtained
pursuant to Section 6.3 hereof and not previously delivered to the Sellers'
Representatives pursuant to such Section;
a copy of the Articles of Amendment and Restatement
of Parent adopted pursuant to Section 1.9(a)(i)(A), in the form attached
hereto as Annex I, as certified by the Secretary of State of Maryland, and
a copy of the Amended Parent By-laws adopted pursuant to Section
1.9(a)(ii), as certified by the Secretary of Parent together with evidence
reasonably satisfactory to the Sellers' Representatives showing that the
JLW Directors shall have been elected to the Board (and that the only other
directors on the Board shall be the Parent Directors), effective
immediately following the Closing, and that Chris Peacock and Mike Smith
shall have been elected by the Board to the offices of President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent, and Deputy
Chairman of the Board of Parent, respectively, effective immediately
following the Closing; and
all other previously undelivered documents,
instruments or writings required to be delivered by Parent to the
Shareholders or the Sellers' Representatives at or prior to the Closing,
pursuant to this Agreement or any other Operative Agreement.
(b) At the Closing, Parent shall deliver, or cause to be
delivered, to the Escrow Agent, the following:
(i) a certificate issued in the name of the Escrow
Agent or its nominee representing the Adjustment Shares; and
(ii) a certificate issued in the name of the Escrow
Agent or its nominee representing the Escrow Shares.
(c) At the Closing, Parent shall deliver, or cause to be
delivered, to the Forfeiture Shares Escrow Agent, a certificate issued in
the name of the Forfeiture Shares Escrow Agent or its nominee representing
the Forfeiture Shares.
Section 1 Representatives. (a) The parties acknowledge and
agree that prior to the Shareholder Determination Date, the Shareholders,
the Other Shareholders, the Related JLW Owners and the ESOT Trustee (on
behalf of the ESOT) will execute a Sellers' Contribution and Coordination
Agreement (the "SCCA") relating to, among other things, the selection,
replacement, rights and obligations of the Sellers' Representatives and the
Shareholders' Representatives, which SCCA shall be in a form reasonably
acceptable to Parent. The SCCA as executed shall not be amended without
the consent of Parent, which consent will not be unreasonably withheld or
delayed.
(b) Each Shareholder, Related JLW Owner and JLW Party agrees
that:
Parent shall be able to rely conclusively on the
instructions or actions of (A) the Sellers' Representatives, or any of
them, as to any instructions or actions required or permitted to be taken
by the Sellers' Representatives hereunder or under any other Operative
Agreement or the SCCA when executed, which instructions or actions shall be
binding on each such Shareholder, Related JLW Owner and JLW Party (the
"Closing Authorized Actions"), and (B) the Shareholders' Representatives as
to the settlement of any claims of indemnification against the Escrow Fund
(as defined in the Escrow Agreement) by any Indemnified Persons (as defined
in the Escrow Agreement) pursuant to the Escrow Agreement, the resolution
of any dispute regarding Adjustment Shares under Section 1.4 or any other
actions expressly required or permitted to be taken by the Shareholders'
Representatives hereunder or under the SCCA or any of the Operative
Agreements (the "Other Authorized Actions" and, together with the Closing
Authorized Actions, the "Authorized Actions"). No party hereunder or the
Escrow Agent shall have any cause of action against Parent or any other
Indemnified Person to the extent Parent or any other such Indemnified
Person has relied upon such instructions or actions of the Sellers'
Representatives or the Shareholders' Representatives.
[Intentionally Left Blank]
The provisions of this Section 1.8 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any Shareholder,
Other Shareholder or any Related JLW Owner or ESOT Trustee may have against
the Sellers' Representatives or the Shareholders' Representatives for any
breach of the SCCA.
Remedies available at law for any breach of the
provisions of this Section 1.8 are inadequate. Therefore, Parent shall be
entitled to temporary and permanent injunctive relief without the necessity
of proving damages if Parent brings an action to enforce the provisions of
this Section 1.8.
The provisions of this Section 1.8 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of each Shareholder, Other Shareholder,
Related JLW Owner and ESOT Trustee, and any references in this Agreement to
a Shareholder or the Shareholders or a Related JLW Owner or the Related JLW
Owners shall mean and include the successors to the Shareholder's or
Shareholders' or the Related JLW Owner's or Related JLW Owners' rights
hereunder, whether pursuant to testamentary disposition, the laws of
descent and distribution or otherwise.
(c) In performing their functions and duties under this
Section 1.8, the Sellers' Representatives and Shareholders' Representatives
shall act solely as agents of the Shareholders, the Other Shareholders, the
Related JLW Owners and the ESOT and do not assume and shall not be deemed
to have assumed any obligation or relationship of agency, trustee or
fiduciary with or for Parent, the Companies, or any of their respective
Subsidiaries. The Sellers' Representatives and Shareholders'
Representatives shall have no liability to Parent, the Companies or any of
their respective Subsidiaries hereunder in their capacity as such.
(d) The Shareholders hereby agree that all of the Cash
Consideration that would have otherwise been payable to such Shareholders
pursuant to Section 1.2 of this Agreement and all or a portion of the Cash
Consideration that would have otherwise been payable to the Other
Shareholders pursuant to Section 1.2 of the Other Purchase Agreements and
to the Sellers under Section 1.1(a) of the Australasia Region Agreement
(the "SCCA Expenses Reserve") shall instead be retained by the
Shareholders' Representatives to be held and disbursed as provided in the
SCCA. Such SCCA Expenses Reserve shall be apportioned among the
Shareholders, such Other Shareholders and such Sellers pro rata based on
the aggregate amount of the Consideration Shares and the Cash Consideration
originally allocated to each of them. The Shareholders hereby authorize
Parent to deliver to the Shareholders' Representatives the SCCA Expenses
Reserve in lieu of paying the Cash Consideration to the Shareholders.
Section 1 Corporate Governance Matters. (a) As of the Closing,
(i) Parent shall use all reasonable efforts to cause (A) the Articles of
Amendment and Restatement of Parent attached hereto as Annex I to become
effective, (B) the Articles of Incorporation of LaSalle Advisors Capital
Management, Inc. ("LACM") to be amended to change its name to "LaSalle
Investment Management, Inc." and (C) the number of shares of Parent Common
Stock reserved for issuance under Parent's 1997 Stock Award and Incentive
Plan, as amended, to be increased to 4,160,000; and (ii) Parent shall cause
the Amended and Restated Bylaws of Parent to be amended and restated to
read in their entirety as set forth in Annex K hereto (the "Amended Parent
Bylaws").
(b) The number of directors comprising the full board of
directors of Parent (the "Board") as of the Closing and until the earlier
of (i) the first Business Day following the fifth annual meeting of the
stockholders of Parent following the Closing and (ii) June 1, 2003 (the
"Transition Period") shall be fourteen; provided that the number of
directors comprising the Board may at any time be increased to fifteen by a
resolution approved by the Parent Nominating Committee and the JLW
Nominating Committee (each as defined below) and by a majority of the
entire Board of Directors. As of the Closing, seven of such directors
shall have been designated by Parent (the "Parent Directors") and seven of
such directors shall have been designated by the Sellers' Representatives
(the "JLW Directors"). The Parent Directors shall include four executive
officers of Parent ("Parent Employee Directors," which term shall also be
deemed to refer to any replacement for a Parent Employee Director elected
in accordance with the applicable provisions of Article X of the Amended
Parent Bylaws) and three Independent Directors (the "Parent Independent
Directors," which term shall also be deemed to refer to any replacement for
a Parent Independent Director elected in accordance with the applicable
provisions of Article X of the Amended Parent Bylaws who shall be an
Independent Director) and the JLW Directors shall include four executive
officers of the JLW Businesses ("JLW Employee Directors," which term shall
also be deemed to refer to any replacement for a JLW Employee Director
elected in accordance with the applicable provisions of Article X of the
Amended Parent Bylaws) and three Independent Directors (the "JLW
Independent Directors" which term shall also be deemed to refer to any
replacement for a JLW Independent Director elected in accordance with the
applicable provisions of Article X of the Amended Parent Bylaws, who shall
be an Independent Director), at least one of which JLW Independent
Directors shall have his or her primary place of business and residence
outside of the United Kingdom. The initial Parent Employee Directors will
be Stuart L. Scott, M.G. Rose, Robert C. Spoerri and Daniel W. Cummings and
the initial Parent Independent Directors will be Darryl Hartley-Leonard,
Thomas C. Theobald and John R. Walter. The initial JLW Directors will be
selected by the Sellers' Representatives no later than 45 days following
the date of this Agreement and shall be subject to the approval of Parent,
which approval shall not be unreasonably withheld or delayed. If, prior to
the Closing, any Parent Director or JLW Director shall decline or be unable
to serve, Parent or the Sellers' Representatives, as the case may be, shall
designate another individual to serve in such director's place, subject to
the requirement that at least three of the Parent Directors and three of
the JLW Directors shall be Independent Directors and subject to the
approval of the Sellers' Representatives (in the case of the Parent
Directors) or Parent (in the case of the JLW Directors), as applicable,
which approval shall not be unreasonably withheld or delayed. Parent shall
cause the individuals designated by the Sellers' Representatives as the
initial JLW Directors to be appointed as directors of Parent immediately
following the Closing.
(c) The initial designation of the JLW Directors among the
three classes of directors comprising the Board shall be agreed among
Parent and the Sellers' Representatives, provided that the Parent Directors
and the JLW Directors shall be divided as equally as is feasible among such
classes. During the Transition Period, each standing committee of the
Board shall be constituted of an equal number of (i) Parent Directors, who
shall be selected by the Parent Nominating Committee, and (ii) JLW
Directors, who shall be selected by the JLW Nominating Committee.
Notwithstanding the foregoing, at any time when a Fifteenth Director (as
defined below) is in office, the Parent Nominating Committee and the JLW
Nominating Committee may, acting as a single committee, appoint the
Fifteenth Director as an additional member of any committee of the Board,
which appointment must be approved by a majority of the members of the
Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee.
(d) During the Transition Period, the Parent Employee
Directors in office from time to time, together with two or more Parent
Independent Directors selected by such Parent Employee Directors, shall
constitute a committee of the Board (the "Parent Nominating Committee")
with the powers and duties delegated to such committee in Article X of the
Amended Parent Bylaws, and the JLW Employee Directors in office from time
to time, together with two or more JLW Independent Directors selected by
such JLW Employee Directors, shall constitute a committee of the Board (the
"JLW Nominating Committee") with the powers and duties delegated to such
committee in Article X of the Amended Parent Bylaws. Except as otherwise
set forth in such Article X, the Parent Nominating Committee and the JLW
Nominating Committee (collectively, the "Nominating Committees") will
exercise all power and authority of the Board with respect to the
designation of persons as the nominees of the Board for election to, or
designating persons to fill vacancies on, the Board. Notwithstanding any
other provision hereof to the contrary, (i) it shall be a qualification for
any director elected by the Board to replace any JLW Director (whose term
is expiring or has expired or who shall have been removed or become
disqualified or who shall have resigned, retired, died or otherwise shall
fail to continue to serve as a director of Parent) that such replacement
director shall have been nominated by the JLW Nominating Committee, and
(ii) it shall be a qualification for any director elected by the Board to
replace any Parent Director (whose term is expiring or has expired or who
shall have been removed or become disqualified or who shall have resigned,
retired, died or otherwise shall fail to continue to serve as a director of
Parent) that such replacement director shall have been nominated by the
Parent Nominating Committee.
(e) During the Transition Period, prior to each meeting of
the stockholders at which the term of office of any Parent Director is
expiring or at which any replacement for a Parent Director is to be
elected, the Parent Nominating Committee may designate a nominee for
election to such position (which designee must be reasonably acceptable to
the JLW Nominating Committee), and prior to each meeting of the
stockholders at which the term of office of any JLW Director is expiring or
at which any replacement for a JLW Director is to be elected, the JLW
Nominating Committee may designate a nominee for election to such position
(which designee must be reasonably acceptable to the Parent Nominating
Committee); provided that at least three Parent Directors and at least
three JLW Directors shall at all times be Independent Directors; provided,
further, that at least one JLW Independent Director shall at all times have
his primary place of business and residence outside of the United Kingdom.
(f) During the Transition Period, if any Parent Director is
removed from the Board, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board, the Parent
Nominating Committee shall have the exclusive power to designate a person
to fill such vacancy, and if any JLW Director is removed from the Board,
becomes disqualified, resigns, retires, dies or otherwise cannot continue
to serve as a member of the Board, the JLW Nominating Committee shall have
the exclusive power to designate a person to fill such vacancy, in each
case, subject to the approval of a majority of directors then remaining in
office; provided that at least three Parent Directors and three JLW
Directors shall at all times be Independent Directors; provided, further,
that at least one JLW Independent Director shall at all times have his
primary place of business and residence outside of the United Kingdom.
(g) During the Transition Period, in the event that the
number of members constituting the Board is increased to fifteen in
accordance with Section 1.9(b) hereof, the Parent Nominating Committee and
the JLW Nominating Committee, acting as a single committee, shall elect an
Independent Director to fill such vacancy (the "Fifteenth Director"), which
Independent Director must be approved by a majority of the members of the
Parent Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of the entire Board. Prior to any
meeting of the stockholders at which the term of office of such Fifteenth
Director is expiring or at which a replacement for such director is to be
elected, the Parent Nominating Committee and the JLW Nominating Committee,
acting as a single committee, shall designate a nominee for such position,
which Independent Director must be approved by a majority of the members of
the Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee, and at such meeting of stockholders the nominations
shall not be closed or the vote taken until such nominee shall have been
nominated. During the Transition Period, neither the Board nor any
committee thereof shall nominate (or cause there to be nominated) any
person to replace such Fifteenth Director who has not been so designated by
the Nominating Committees. In the event that such Fifteenth Director is
removed from the Board, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board, the Parent
Nominating Committee and the JLW Nominating Committee, acting as a single
committee, shall have exclusive power on behalf of the Board to designate a
person to fill such vacancy and shall jointly, acting as a single
committee, designate an Independent Director to serve in such position,
which Independent Director must be approved by a majority of the members of
the Parent Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of directors then remaining in office.
(h) Stuart L. Scott shall hold the position of Chairman of
the Board and Chief Executive Officer of Parent for a period of at least
two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity.
Christopher Peacock shall hold the position of President, Deputy Chief
Executive Officer and Chief Operating Officer of Parent for a period of at
least two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity. If at any
time following the Closing, the position of Chairman of the Board and Chief
Executive Officer of Parent or President, Deputy Chief Executive Officer
and Chief Operating Officer of Parent becomes vacant, such vacancy shall be
filled by a majority vote of the entire Board of Directors; provided that
during the two-year period immediately following the Closing, the Chairman
of the Board and Chief Executive Officer of Parent and President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent shall be
selected from the officers or employees of Parent immediately prior to the
Closing ("Parent Employees") and the partners, officers or employees of the
JLW Businesses immediately prior to the Closing ("JLW Employees");
provided, further, that during such period, (i) if the office of the
Chairman and Chief Executive Officer of Parent is held by a Parent
Employee, then the office of President, Deputy Chief Executive Officer and
Chief Operating Officer of Parent shall be held by a JLW Employee and (ii)
if the office of Chairman of the Board and Chief Executive Officer of
Parent is held by a JLW Employee, then the office of President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent shall be held
by a Parent Employee. The Chairman of the Board and Chief Executive
Officer, the President, Deputy Chief Executive Officer and Chief Operating
Officer of Parent may only be removed from office by a majority vote of the
entire Board of Directors; provided that neither Mr. Scott nor Mr. Peacock
may be removed from such respective positions, with or without cause, prior
to the second anniversary of the Closing, unless such removal is approved
by at least two-thirds of the entire Board.
(i) During the Transition Period, the affirmative vote of at
least 75% of the entire Board of Directors shall be required to alter or
amend, or adopt any provision inconsistent with, or repeal, in whole or in
part, Article III, Article IV or Article X of the Amended Parent Bylaws.
(j) As used in this Section 1.9, "entire Board" means the
total number of directors Parent would have if there were no vacancies.
Section 1 Integration. (a) In order to accomplish and effect the
Integration, each of the JLW Parties, the Shareholders and the Related JLW
Owners will take (or cause to be taken) the actions contemplated to be
taken by such Persons under the terms of the Integration Plan and the
Integration Agreements, subject to satisfaction or waiver of the conditions
set forth therein, in the order provided therein and on a basis such that
(except as otherwise set forth below) the Integration Completion will occur
no later than the third Business Day or as soon thereafter as is
practicable following the Integration Commencement Date but in no event
later than five Business Days thereafter; provided that any action
identified in the Integration Plan and the Integration Agreements as being
a "post-closing action" (the "Post-Closing Integration Actions") may be
postponed until after the Closing Date; provided, further, that the JLW
Partnerships, the Shareholders and the Related JLW Owners shall have no
responsibility after the Closing Date with respect to the performance of
any Post-Closing Integration Actions contemplated to be taken by any
Company or Company Subsidiary under the Integration Plan and the
Integration Agreements.
(b) The JLW Partnerships, the Companies and the Shareholders
are entering into an Escrow Agreement in the form attached to Annex B
hereto (the "Integration Escrow Agreement"), pursuant to which certain
agreements, instruments and other documents described in the Integration
Plan have been or will be deposited with the Escrow Agents described
therein for the purpose of facilitating the implementation of the
Integration Plan.
ARTICLE II
MATTERS RELATING TO THE
SHAREHOLDER TRANSACTION DOCUMENTS;
REALLOCATION
Section 2.1 Signing Procedures. (a) The signing procedures set forth
in this Section 2.1 shall not commence until the satisfaction of any
applicable regulatory requirements, including, without limitation, the
approval (pursuant to Section 57 of the Financial Services Act 1986) as an
investment advertisement of the Offering Memorandum. Parent shall promptly
complete the preparation of such Offering Memorandum and in doing so shall
consult with the Shareholders' Representatives, the JLW Sellers, the
Companies and the financial advisers and counsel to the JLW Sellers in
connection therewith, and shall permit them to participate in the
preparation of such Offering Memorandum. As soon as reasonably practicable
after the satisfaction of the last such regulatory requirement, with
respect to each Person listed as a "Shareholder" on the Preliminary Master
Shareholder List and to each person listed as a "Shareholder" on the
Preliminary Master Shareholder List attached to each of the Other Purchase
Agreements (each a "Designated JLW Shareholder" and, collectively, the
"Designated JLW Shareholders"), (i) the applicable JLW Sellers will
distribute, or cause to be distributed, to such Designated JLW Shareholder
(A) a letter from one or more of the Management Shareholders on behalf of
the International Board of the JLW Businesses (and in each case in his or
their respective capacities as members of such International Board),
substantially in the form approved by Parent which letter shall include the
approval and recommendation of such International Board in favor of this
Agreement and the Other Purchase Agreements and the transactions
contemplated hereby and thereby, including but not limited to the sale of
Shares, (B) execution copies of the Integration Agreements (if any) to
which such Designated JLW Shareholder is contemplated to be a party
pursuant to the Integration Plan (the "Applicable Integration Agreements"),
and (C) an execution copy of a form of employment contract to be entered
into by such Designated JLW Shareholder or Related JLW Owner and a Company
or Company Subsidiary, in a form previously provided to Parent; and (ii)
Parent will distribute, or cause to be distributed, to such Designated JLW
Shareholder (A) a copy of the Offering Memorandum, (B) an execution copy of
each of the Applicable Joinder Agreement, the Stockholder Agreement and the
Escrow Agreement (the agreements referenced in clauses (i)(B), (i)(C) and
(ii)(B) above are collectively referred to herein as the "Shareholder
Transaction Documents"), and (C) a letter (the "Instruction Letter")
setting forth instructions for returning to Parent the agreements
referenced in clause (ii)(B) above as executed by such Designated JLW
Shareholder and Related JLW Owner, if applicable, which letter shall
provide that if such Designated JLW Shareholder desires to enter into such
agreements, then such agreements must be signed by such Designated JLW
Shareholder (and, if the Person named as the "Shareholder" in such
agreements is not a natural person, the Related JLW Owner), and received by
Parent by the 21st day(or such later date approved by Parent) the "Final
Return Date") after the date upon which the Shareholder Transaction
Documents are first distributed to the Designated JLW Shareholders (the
"Commencement Date"). The Instruction Letter shall also indicate the
method for a Shareholder to revoke such Shareholder's acceptance prior to
the Final Return Date. If requested by Parent, the signature of each
Shareholder shall be guaranteed or witnessed in accordance with local
practice or custom in the jurisdiction in which such signature is given;
provided that such practice or custom must be reasonably satisfactory to
Parent. Promptly following the Final Return Date, Parent shall sign each
of the Shareholder Transaction Documents properly completed, executed and
returned to Parent, and shall promptly return fully executed originals
thereof to the applicable Shareholders, together with copies thereof to the
Shareholders' Representatives.
(b) On or prior to the date (the "Commitment Date") falling
35 days (or such later date as Parent and the Shareholders' Representatives
may mutually agree upon in writing) after the Commencement Date, the
Shareholders' Representatives shall prepare and, subject to paragraph (c)
of this Section 2.1, deliver to Parent the Final Master Shareholder List.
Parent shall provide to the Shareholders' Representatives, in the course of
each day during the period between the Commencement Date and the Commitment
Date, a list of each Designated JLW Shareholder who has, by midday on the
previous day and pursuant to and in accordance with the instructions
provided in the Instruction Letter, executed and delivered to Parent the
documents referred to therein.
(c) If the Final Master Shareholder List delivered to Parent
is identical to the Preliminary Master Shareholder List, then Parent shall
be required to accept such Final Master Shareholder List. If the Final
Master Shareholder List does not include the name of each Designated JLW
Shareholder, the Shareholders' Representatives shall not be obligated to
deliver the Final Master Shareholder List. If the Final Master Shareholder
List does not include the name of each Designated JLW Shareholder, Parent
shall have the right to reject such list by written notice thereof
delivered to the Shareholders' Representatives. Notwithstanding any such
rejection by Parent of a Final Master Shareholder List, during the period
between the Commencement Date and the Commitment Date, the Shareholders'
Representatives shall be entitled to deliver a revised Final Master
Shareholder List, subject to Parent's right to reject such Final Master
Shareholder List in accordance with the third sentence of this Section
2.1(c). Parent shall acknowledge any acceptance by Parent of a Final
Master Shareholder List by delivering written notice of such acceptance
promptly to the Shareholders' Representatives. The parties acknowledge and
agree that the acceptance by Parent of a Final Master Shareholder List
which does not include the name of each Designated JLW Shareholder shall
not constitute a waiver by Parent of any inaccuracy or breach of any
representation or warranty contained herein or in any Joinder Agreement or
any rights of the Indemnified Persons under the Escrow Agreement.
Section 2.2 Permitted Reallocation of Consideration and Shares. In
the event that any Designated JLW Shareholders are not included on the
Final Master Shareholder List (collectively, the "Non-Participating
Designated JLW Shareholders"), the Consideration Shares and Cash
Consideration, if any, that were allocated to such Non-Participating
Designated JLW Shareholders on the Preliminary Master Shareholder List or
the Preliminary Master Shareholder Lists attached to the Other Purchase
Agreements, as the case may be, shall be reallocated, as follows:
Consideration Shares and Cash Consideration allocated to a Non-
Participating Designated JLW Shareholder that would have been a (i) JLW
England Shareholder, (ii) JLW Scotland Shareholder, (iii) JLW Ireland
Shareholder, (iv) Asia Region Shareholder or (v) Australasia Region
Shareholder, shall be reallocated among the other JLW England Shareholders,
JLW Scotland Shareholders, JLW Ireland Shareholders, Asia Region
Shareholders or Australasia Region Shareholders, as the case may be, pro
rata among such JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders, Asia Region Shareholders or Australasia Region
Shareholders, as the case may be (on the basis of the Initial Consideration
Shares issued to such Shareholders). As soon as practicable following the
Shareholder Determination Date, the Shareholders' Representatives, with the
cooperation of Parent, shall deliver, or cause to be delivered, to each
Shareholder and Other Shareholder a definitive Annex B to the Applicable
Joinder Agreement and Other Joinder Agreement, as applicable, reflecting
such reallocation. Any reallocation pursuant to this Section 2.2 shall be
reflected in an equivalent reallocation pursuant to the Integration
Agreement (if any) pursuant to which the relevant Shareholder receives his
or her Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE JLW PARTNERSHIPS
AND THE MANAGEMENT SHAREHOLDERS
The JLW Partnerships, jointly and severally, and the Management
Shareholders, severally and not jointly, make the representations and
warranties set forth below to Parent (the parties hereto agree that the
representations and warranties of each Management Shareholder set forth in
this Article III shall be expressly limited to such Management
Shareholder's Knowledge, and that, except to the extent provided in Section
11.2 hereof, no Management Shareholder shall have any liability with
respect to any such representation and warranty unless and until the
Closing occurs (except in such Management Shareholder's capacity as a
partner in any JLW Partnership but only to the extent and subject to the
limitations set forth in Section 11.2(c) hereof):
Section 3.1 Shares; Claims to Assets. (a) As of the date of this
Agreement (assuming that the Designated JLW Shareholders execute and
deliver the Shareholder Transaction Documents), the Designated JLW
Shareholders will be the only Persons entitled to receive any of the
Consideration Shares or the Cash Consideration upon completion of the
transactions contemplated hereby and by the other Operative Agreements.
Upon completion of the Integration, the Shares will comprise in the
aggregate the whole of the issued and outstanding capital stock of the
Companies. Upon completion of the Integration, no Person, other than the
Shareholders and their Related JLW Owners, if applicable, and then only to
the extent provided in Annex B to the Applicable Joinder Agreements or as
specifically provided for herein or in the other Operative Agreements, will
have any right or claim to any of the Consideration Shares, the Cash
Consideration or (other than as expressly provided in the Integration
Agreements or in this Agreement) other payment or consideration (with
respect to an ownership, partnership, trust or similar interest, right of
participation or otherwise) from any of the Companies or Company
Subsidiaries as a result of or in connection with the consummation of the
transactions contemplated by this Agreement, the Other Purchase Agreements,
the Operative Agreements and the Integration Agreements.
(b) Except as set forth in Section 3.1 of the Company
Disclosure Schedule, no current or former partner, shareholder, director,
officer or employee of any JLW Partnership, Company or Company Subsidiary
will, after giving effect to the Integration, including any Post-Closing
Integration Actions, own or have any rights in or to any of the specific
assets, properties or rights (other than cash permitted to be distributed
or paid in accordance with the Integration Agreements, this Agreement or
Annex B to an Applicable Joinder Agreement) of or used by any JLW
Partnership, Company or Company Subsidiary in the ordinary course of its
business.
Section 3.2 Corporate Organization. (a) Each of NewCo 1, JLW Supply
and JLW Continuation is duly incorporated and validly existing under the
laws of England; NewCo 2 is duly incorporated and validly existing under
the laws of Scotland; NewCo 3 is duly incorporated and validly existing
under the laws of Eire; and JLW USA is duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each Company (i)
has all requisite corporate power and authority to carry on its business as
contemplated to be conducted immediately after giving effect to the
Integration and to own the properties and assets to be owned by it
immediately after giving effect to the Integration and (ii) as of the
Closing Date will be duly qualified or licensed to do business as a foreign
Person (and, if applicable, in good standing) in all the jurisdictions in
which such qualification or licensing is required, except jurisdictions in
which the failure to be so qualified or licensed (and, if applicable, in
good standing) would not be reasonably expected to have a Company Material
Adverse Effect. True and complete copies of the certificate of
incorporation and bylaws or memorandum and articles of association (or
similar organizational documents), as applicable, and, in the case of NewCo
1, NewCo 2, JLW Supply and JLW Continuation, any other documents required
to be annexed thereto in accordance with Section 380(2) of the Companies
Act 1985 of Great Britain (the "UK Companies Act") or, in the case of NewCo
3, in accordance with Section 143 of the Companies Act, 1963 (the "Irish
Companies Act"), both as presently in effect, are attached to Section
3.2(a) of the Company Disclosure Schedule. In respect of each of NewCo 1,
JLW Supply and JLW Continuation, all filings required by law to be made
with the Registrar of Companies in England and Wales (the "UK Registrar of
Companies") have been made, and neither NewCo 1, JLW Supply nor JLW
Continuation has received any application or request for ratification of
its statutory registers or any notice that any of them is incorrect. In
respect of NewCo 3, all filings required by law to be made with the
Registrar of Companies in Ireland (the "Irish Registrar of Companies") have
been made and NewCo 3 has not received any application request for
ratification of its statutory registers or any notice that any of them are
incorrect.
(b) Each of the JLW Partnerships (i) is a partnership validly
constituted and existing under the laws of the country of its principal
place of business, possessing the power to sue and be sued in its
partnership name, and with the partnership power to own its assets and
carry on its business as it is currently being conducted and (ii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all the jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (and, if applicable, in good
standing) would not reasonably be expected to have a Company Material
Adverse Effect. True and complete copies of the deeds of partnership (or
similar organizational documents) of each JLW Partnership are attached to
Section 3.2(b) of the Company Disclosure Schedule.
Section 3.3 Capitalization of the Companies. (a) The authorized
share capital of NewCo 1 consists of 7,000,000 ordinary shares of
[pound/sterling].01 each, of which (i) as of the date hereof, 200 shares
are in issue and such shares in aggregate constitute the entire issued
share capital of NewCo 1 and (ii) as of the Closing Date, 5,324,157 shares
will be in issue and such shares will in aggregate constitute the entire
issued share capital of NewCo 1. The authorized share capital of NewCo 2
consists of 100 ordinary shares of [pound/sterling]1 each, of which (i) as
of the date hereof, 2 shares are in issue and such shares in aggregate
constitute the entire issued share capital of NewCo 2 and (ii) as of the
Closing Date, 267,180 shares will be in issue and such shares will in
aggregate constitute the entire issued share capital of NewCo 2. The
authorized share capital of NewCo 3 consists of 7,500,000 ordinary shares
of IR [pound/sterling]1 each, of which (i) as of the date hereof, 8 shares
are in issue and such shares in aggregate constitute the entire issued
share capital of NewCo 3 and (ii) as of the Closing Date, 538,296 shares
will be in issue and such shares will in aggregate constitute the entire
issued share capital of NewCo 3. The authorized share capital of JLW
Supply consists of 5,000,000 ordinary shares of [pound/sterling].01 each,
of which (i) as of the date hereof, 848,330 shares are in issue and such
shares in aggregate constitute the entire issued share capital of JLW
Supply and (ii) as of the Closing Date, 848,330 shares will be in issue and
such shares will in aggregate constitute the entire issued share capital of
JLW Supply. The authorized capital stock of JLW USA consists of (i) 10,000
shares of common stock, no par value per share, of which as of the date
hereof (and as of the Closing Date) 3,437.09 shares are (and will be)
issued and outstanding and no shares are (or will be) held in its treasury,
and (ii) 10,000 shares of preferred stock, of which 5,000 shares have been
designated as Series A Preferred Stock, $1,000 par value per share, of
which as of the date hereof (and as of the Closing Date) 5,000 shares of
such Series are (and will be) issued and held in its treasury, and no other
shares of such preferred stock are (or will be) issued. The authorized
share capital of JLW Continuation consists of 1,000,000 ordinary shares of
[pound/sterling].01 each, of which (i) as of the date hereof, 807,570
shares are in issue and such shares in aggregate constitute the entire
issued share capital of JLW Continuation and (ii) as of the Closing Date,
807,570 shares will be in issue and such shares will in aggregate
constitute the entire issued share capital of JLW Continuation. As of the
date hereof (and as of the Closing Date), all of the issued share capital
of each of NewCo 1, NewCo 2, NewCo 3, JLW Supply and JLW Continuation have
been (and will have been) validly issued and are (and will be) fully paid
up. As of the date hereof (and as of the Closing Date), all of the issued
and outstanding shares of capital stock of JLW USA have been (and will have
been) validly issued and are (and will be) fully paid and nonassessable.
The legal and beneficial owners of the issued share capital of each of
NewCo 1, New Co 2, New Co 3, JLW Supply and JLW Continuation as of the
date hereof are set forth in Section 3.3(a)(i) of the Company Disclosure
Schedule, and the legal and beneficial owners of the issued share capital
of each of such Companies as of the Closing Date shall be identified on the
Final Master Shareholder List. The issued and outstanding shares of JLW
USA are owned of record as of the date hereof by JLW Nominees on behalf of
the partners of JLW England identified in Section 3.3(a)(iii) of the
Company Disclosure Schedule, and the record and beneficial owners of such
shares as of the Closing Date shall be identified on the Final Master
Shareholder List.
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, there are no outstanding: (i) securities convertible
into or exchangeable for, directly or indirectly, any shares (including the
Shares) of capital stock, debentures or other securities of any Company or
Company Subsidiary; or (ii) except as provided in the Integration Plan and
the Integration Agreements, subscriptions, options, warrants, calls,
rights, contracts, commitments, understandings, restrictions or
arrangements relating to the issuance, allotment, sale, purchase, transfer
or voting of any shares (including the Shares) of capital stock, debentures
or other securities of any Company or Company Subsidiary. Except as set
forth in Section 3.3(b) of the Company Disclosure Schedule, no Company or
Company Subsidiary: (i) is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire, retire, cancel, reduce or
redeem any of its issued share capital, capital stock or other ownership
interests; and (ii) has any liability for dividends or other distributions
declared, accrued or unaccrued with respect to any of its issued share
capital or capital stock or in respect of any ownership, partnership, trust
or other participating interest therein.
Section 3.4 Subsidiaries and Affiliates. Section 3.4 of the Company
Disclosure Schedule sets forth the name, jurisdiction of incorporation or
formation and authorized, issued and outstanding capital stock of each
Company Subsidiary. Except as disclosed in Section 3.4 of the Company
Disclosure Schedule, no Company owns, directly or indirectly, any capital
stock or other equity securities of any Person or has any direct or
indirect equity or ownership interest or in any partnership, joint venture
or business. Except as set forth in Section 3.4 of the Company Disclosure
Schedule, all the outstanding share capital or capital stock, as
applicable, of each Company Subsidiary is owned, directly or indirectly, as
of the date hereof, by one or more JLW Partnerships and will be owned,
directly or indirectly, as of the Closing Date, by one or more Companies,
in each case free and clear of all Encumbrances, and has been validly
issued and is fully paid and, to the extent that the concept of
assessability of capital stock is potentially applicable, is nonassessable.
Each Company Subsidiary: (i) is duly organized or incorporated and validly
existing (and, if applicable) in good standing under the laws of its
jurisdiction of incorporation or formation; (ii) has all requisite
corporate or similar power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns; and
(iii) is duly qualified or licensed to do business as a foreign entity
(and, if applicable, in good standing) in all jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not have a Company Material Adverse Effect. True and
complete copies of the certificate of incorporation and bylaws or
memorandum and articles of association (or similar organizational
documents), as applicable, and, with respect to Company Subsidiaries that
have been incorporated in England or Ireland, any documents required to be
annexed thereto in accordance with the UK Companies Act or the Irish
Companies Act, as the case may be, as presently in effect, of each Company
Subsidiary have been previously provided to Parent. In respect of each
Company Subsidiary which has been incorporated under the laws of England,
all filings required by law to be made with the Registrar of Companies have
been made and none of such Company Subsidiaries has received any
application or request for ratification of its statutory registers or any
notice that any of them is incorrect. In respect of each Company
Subsidiary which has been incorporated under the laws of Eire, all filings
required by law to be made with the Irish Registrar of Companies have been
made and none of such Company Subsidiaries has received any application for
ratification of its statutory registers or any notices that any of them is
incorrect.
Section 3.5 Authorization. (a) Each Company has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Integration Agreements to which it
is a party and to consummate the transactions contemplated hereby and
thereby. Each Company has taken all corporate action necessary to
authorize and approve the execution and delivery by such Company of this
Agreement and each Integration Agreement to which it is a party, and no
other action on the part of the shareholders of such Company is required
for such Company to execute and deliver this Agreement and each Integration
Agreement to which it is a party, and to consummate the transactions
contemplated hereby and thereby. This Agreement and each Integration
Agreement has been duly and validly executed and delivered by each Company
which is a party thereto and constitute a valid and binding agreement of
each such Company, enforceable against each such Company in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding at
equity or in law.
(b) Except in each case as set forth in Section 3.5 of the
Company Disclosure Schedule, each JLW Partnership has all requisite
partnership power and authority to execute, deliver and perform its
obligations under this Agreement and the Integration Agreements to which it
is a party and to consummate the transactions contemplated hereby and
thereby. Except in each case as set forth in Section 3.5 of the Company
Disclosure Schedule, each JLW Partnership has taken all partnership action
necessary to authorize and approve the execution and delivery by such JLW
Partnership of this Agreement and each Integration Agreement to which it is
a party, and no other action on the part of the partners of such JLW
Partnership is required for such JLW Partnership to execute and deliver
this Agreement and each Integration Agreement to which it is a party, and
to consummate the transactions contemplated hereby and thereby. Except in
each case as set forth in Section 3.5 of the Company Disclosure Schedule,
this Agreement and each Integration Agreement has been duly and validly
executed and delivered by each JLW Partnership which is a party thereto and
constitute a valid and binding agreement of each such JLW Partnership,
enforceable against each such JLW Partnership in accordance with its terms,
except as enforcement may be affected or limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding at
equity or in law.
Section 3.6 No Violation. Neither the execution and delivery by any
JLW Party of this Agreement or any other Operative Agreement or Integration
Agreement to which it is a party, nor the consummation by any JLW
Partnership or Company of the transactions contemplated hereby or thereby,
shall: (i) violate or be in conflict with any provision of the certificate
of incorporation and bylaws or memorandum of articles of association (or
similar organizational documents), as applicable, of any Company or Company
Subsidiary or the deed of partnership (or other similar organizational
documents) of any JLW Partnership, Company or Company Subsidiary; (ii)
except as specified in Section 3.6 or 3.7 of the Company Disclosure
Schedule, violate, be in conflict with, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
under, cause or permit the acceleration of, or give rise to any right of
termination, imposition of fees or penalties under, any debt, Contract,
instrument or other obligation to which any JLW Partnership, Company or
Company Subsidiary is a party or by which its assets are bound or affected,
or result in the creation or imposition of any Lien upon any property or
assets (including any Encumbrance upon any Shares) of any JLW Partnership,
Company or Company Subsidiary; or (iii) violate any statute, law, judgment,
decree, order, regulation, rule or other similar authoritative matters
("Laws") of any foreign, federal, state or local governmental, quasi-
governmental, administrative, regulatory or judicial court, department,
commission, agency, board, bureau, instrumentality or other authority
("Authority"); except, in the case of clause (ii) or (iii) above, for any
of the same that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect or materially impair the
ability of any JLW Party to perform his, her or its obligations hereunder
or thereunder or prevent or materially delay the consummation of the
transactions contemplated hereby and thereby.
Section 3.7 Consents and Approvals. Except as set forth in Section
3.6 or 3.7 of the Company Disclosure Schedule, no Consents from or of any
third party or any Authority are necessary for execution and delivery of
this Agreement, the other Operative Agreements or the Integration
Agreements by any JLW Partnership or Company or the consummation by any JLW
Partnership or Company of the transactions contemplated hereby or thereby,
or to enable the Companies and the Company Subsidiaries to continue to
conduct the businesses currently conducted by the JLW Partnerships, JLW
USA, JLW Continuation and the Company Subsidiaries at their present
locations after the Closing Date in a manner which is consistent with that
in which such businesses are presently conducted, except for compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the approvals of (i) the Guernsey Financial Services
Commission, (ii) the Securities and Futures Authority, (iii) the National
Association of Securities Dealers, Inc., and (iv) the Ministry of
Enterprise and Employment pursuant to the Mergers and Takeovers (Control)
Act, 1973 to 1986 (the "Required Regulatory Approvals"); and except for
such other Consents as to which the failure to obtain, individually or in
the aggregate, would not be reasonably expected to have a Company Material
Adverse Effect or materially impair the ability of any JLW Party to perform
his, her or its obligations hereunder or thereunder or prevent or
materially delay the consummation of the transactions contemplated hereby
and thereby.
Section 3.8 Financial Statements. (a) Set forth in Section 3.8 of
the Company Disclosure Schedule are: (i) the audited consolidated or
combined (as applicable) balance sheets of (A) JLW England and its
Subsidiaries, (B) JLW Scotland and its Subsidiaries, (C) JLW Ireland and
its Subsidiaries, (D) the Asia Region Companies and their respective
Subsidiaries and (E) the Australasia Region Companies and their respective
Subsidiaries in each case as of December 31, 1997 and the related
consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movements on reserves and
statements of total recognized gains and losses for the year then ended
(including notes thereto and the accounting policies used in connection
therewith), all certified by independent certified public accountants,
whose reports thereon are included therein (the "Audited Financial
Statements"), (ii) the unaudited consolidated or combined (as applicable)
balance sheets of (A) JLW England and its Subsidiaries, (B) JLW Scotland
and its Subsidiaries, (C) JLW Ireland and its Subsidiaries, (D) the Asia
Region Companies and their respective Subsidiaries and (E) the Australasia
Region Companies and their respective Subsidiaries in each case as of June
30, 1998 and the related consolidated or combined (as applicable) profit
and loss accounts, statements of cash flows, statements of movements on
reserves and statements of total recognized gains and losses for the six-
month period then ended (collectively the "Interim Financial Statements"
(or, in the case JLW England and its Subsidiaries, the "JLW England Interim
Financial Statements" or, in the case of JLW Scotland and its Subsidiaries,
the "JLW Scotland Interim Financial Statements" or, in the case of JLW
Ireland and its Subsidiaries, the "JLW Ireland Interim Financial
Statements") and, collectively with the Audited Financial Statements, the
"Financial Statements"), (iii) the schedules combining the foregoing
balance sheets, so as to eliminate or adjust for (A) intercompany activity
between or among any one or more of (1) JLW England and its Subsidiaries,
(2) JLW Scotland and its Subsidiaries and (3) JLW Ireland and its
Subsidiaries, (B) intercompany activity between or among (x) any one or
more of such entities and (y) any one or more of the Asia Region Companies
and their respective Subsidiaries and (z) any one or more of the
Australasia Region Companies and their respective Subsidiaries and (C) the
gross-up of revenues and expenses (previously accounted for under the cost
or equity method of accounting) related to the businesses which will be
one-hundred percent owned as a result of the transactions contemplated by
this Agreement and the Other Purchase Agreements, in each case as of
December 31, 1997 (the "JLW Combined Year-End Balance Sheet Schedules") and
June 30, 1998 (the "JLW Combined Interim Balance Sheet Schedules" and,
collectively with the JLW Combined Year-End Balance Sheet Schedules, the
"JLW Combined Balance Sheet Schedules") and (iv) the schedules combining
the foregoing consolidated or combined (as applicable) profit and loss
accounts so as to eliminate or adjust for (A) intercompany activity between
or among any one or more of (1) JLW England and its Subsidiaries, (2) JLW
Scotland and its Subsidiaries, and (3) JLW Ireland and its Subsidiaries,
(B) intercompany activity between or among (x) any one or more of such
entities and (y) any one or more of the Asia Region Companies and their
respective Subsidiaries and (z) any one or more of the Australasia Region
Companies and their respective Subsidiaries and (C) the gross-up of
revenues and expenses (previously accounted for under the cost or equity
method of accounting) related to the businesses which will be one-hundred
percent owned as a result of the transactions contemplated by this
Agreement and the Other Purchase Agreements, in each case for the year
ended December 31, 1997 and the six-month period ended June 30, 1998 (the
"JLW Combined Income Statement Schedules" and, collectively with the JLW
Combined Balance Sheet Schedules, the "JLW Combined Financial Statement
Schedules"). The consolidated or combined (as applicable) financial
statements of (xx) JLW England and its Subsidiaries, (yy) JLW Scotland and
its Subsidiaries and (zz) JLW Ireland and its Subsidiaries included in each
case in the Financial Statements (including the notes thereto) fairly
present in all material respects the consolidated or combined (as
applicable) financial condition of the entities referred to therein as of
the respective dates and for the respective periods referred to therein
(subject, in the case of the financial statements as of and for the six
months ended, June 30, 1998, to normal year-end adjustments that will not
be material (in relation to the applicable financial statements) in amount
or effect) in conformity with UK GAAP consistently applied. The financial
statements referred to in the immediately preceding sentence have been
derived from the books and records of the entities referred to therein.
Certain notes to the financial statements referred to in such sentence
contain reconciliations of net income, partners' funds or shareholders'
equity (as applicable) and cash flows of such entities from UK GAAP to US
GAAP, and such net income, partners' funds or shareholders' equity (as
applicable) and cash flows of such entities as so reconciled are fairly
presented in all material respects as of the respective dates and for the
respective periods referred to therein (subject, in the case of any of the
same as of, and for the six months ended, June 30, 1998, to normal year-end
adjustments that will not be material (in relation to the applicable
financial statements) in amount or effect), in conformity with US GAAP.
The JLW Combined Balance Sheet Schedules and the JLW Combined Income
Statement Schedules include the appropriate combining adjustments
(including the eliminations and adjustments referred to in subclauses (A),
(B) and (C) of clauses (iii) and (iv) of the first sentence of this Section
3.8(a)) which have been properly applied to the historical amounts in the
compilation thereof).
The consolidated or combined (as applicable) financial
statements of (i) JLW England and its Subsidiaries, (ii) JLW Scotland and
its Subsidiaries and (iii) JLW Ireland and its Subsidiaries included in
each case in the Nine-Month Interim Financial Statements to be delivered
pursuant to Section 5.7 hereof will fairly present in all material respects
the consolidated or combined (as applicable) financial condition of the
entities referred to therein as of the respective dates and for the
respective periods referred to therein (subject to normal year-end
adjustments that will not be material (in relation to the applicable
financial statements) in amount or effect) in conformity with UK GAAP
consistently applied. The Nine-Month Interim Financial Statements will be
derived from the books and records of the entities referred to therein.
Certain notes to the Nine-Month Interim Financial Statements will contain
reconciliations of net income, partners' funds or shareholders' equity (as
applicable) and cash flows of such entities from UK GAAP to US GAAP, and
such net income, partners' funds or shareholders' equity (as applicable)
and cash flows of such entities as so reconciled will be fairly presented
in all material respects as of the date and for the period referred to
therein (subject to normal year-end adjustments that will not be material
(in relation to the applicable financial statements) in amount or effect),
in conformity with US GAAP. The JLW Combined 9/30 Balance Sheet Schedules
and the JLW Combined 9/30 Income Statement Schedules to be delivered
pursuant to Section 5.7 hereof will include the appropriate combining
adjustments (including the eliminations and adjustments referred to in
clauses (A), (B) and (C) in the definitions of JLW Combined 9/30 Balance
Sheet Schedules and JLW Combined 9/30 Income Statement Schedules) which
will be properly applied to the historical amounts in the compilation
thereof.
To the knowledge of each JLW Partnership, Company and
Company Subsidiary, the accounting books and records of each JLW
Partnership, Company and Company Subsidiary (i) are correct and complete in
all material respects (after taking into account adjustments made in the
ordinary course of business consistent with past practice necessary to
produce the applicable accounts); (ii) are properly maintained in all
material respects (in relation to each such entity) in a manner consistent
with past practice; and (iii) have recorded therein all the properties,
assets and liabilities of such entity required to be so recorded under
applicable generally accepted accounting standards.
Section 3.9 No Undisclosed Liabilities. There are no Liabilities of
any Company or Company Subsidiary of any kind whatsoever and no Management
Shareholder, JLW Partnership, Company or Company Subsidiary knows of any
valid basis for the assertion of any such Liabilities, and no existing
condition, situation or set of circumstances exists which could reasonably
be expected to result in a Liability, other than:
(a) Liabilities adequately and expressly reflected and
reserved for in the JLW England Interim Financial Statements, JLW Scotland
Interim Financial Statements or JLW Ireland Interim Financial Statements;
(b) Liabilities incurred in the ordinary and usual course of
business consistent with past practice since June 30, 1998;
(c) Liabilities set forth in Section 3.9(c) of the Company
Disclosure Schedule;
Liabilities disclosed in other sections of the Company
Disclosure Schedule in respect of representations and warranties set forth
in other sections of this Article III or not required to be disclosed in
other sections of the Company Disclosure Schedule by reason of materiality
or other specifically identified exceptions or exclusions set forth in such
representations and warranties;
Liabilities arising under (x) Contracts or Licenses
listed or disclosed in other sections of the Company Disclosure Schedule in
respect of representations or warranties set forth in other sections of
this Article III or (y) Contracts or Licenses not required to be listed or
described in other sections of the Company Disclosure Schedule in respect
of such representations and warranties by reason of materiality or other
specifically identified exceptions or exclusions set forth therein (other
than Liabilities arising out of breaches or violations of such Contracts or
Licenses); and
(f) Other Liabilities which, in any individual case, do not
exceed US$500,000.
Section 3.10 Absence of Certain Changes. Except as and to the extent
set forth in Section 3.10 of the Company Disclosure Schedule, since June
30, 1998, (a) each JLW Partnership, Company and Company Subsidiary has
conducted its businesses only in the ordinary and usual course of business
consistent with past practice and (b) (i) no individual or cumulative
material adverse change in the business, properties, assets, liabilities,
financial condition or results of operations of the Companies and the
Company Subsidiaries, taken as a whole, has occurred, (ii) no individual or
cumulative event or development has occurred that is reasonably expected in
the reasonable opinion of JLW England to have a material adverse change in
or effect on the business, properties, assets, liabilities, financial
condition or results of operations of the Companies and the Company
Subsidiaries, taken as a whole; and (iii) no JLW Partnership, Company or
Company Subsidiary has taken, or permitted to be taken, any action that, if
taken or permitted to be taken during the period from the date of this
Agreement through the Closing Date without the consent of Parent, would
constitute a breach of Section 5.1 hereof.
Section 3 Real Property. (a) Owned Real Property. No JLW
Partnership, Company or Company Subsidiary owns any real property.
(b) Real Property Leases. Section 3.11 of the Company
Disclosure Schedule contains a complete and correct list of all real
property leased (the "Leased Real Property") by any JLW Partnership,
Company or Company Subsidiary setting forth the address, landlord and
tenant for each such lease (collectively, the "Real Property Leases").
The JLW Partnerships have delivered to Parent correct and complete copies
of the Real Property Leases (including any amendments, modifications or
supplements thereto). Each Real Property Lease is in full force and
effect. No JLW Partnership, Company, Company Subsidiary or, to the
Knowledge of each JLW Partnership, Company and Company Subsidiary, any
other party is in default, violation or breach in any respect under any
covenant in any Real Property Lease, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute such a default, violation or breach in any respect under
any covenant in any Real Property Lease nor has any such default, violation
or breach been waived or acquiesced in, which default, breach or violation
in any such case would reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in Section 3.11 of the Company
Disclosure Schedule, no Company or Company Subsidiary has sublet to any
third party any portion of property covered by the Real Property Leases.
Section 3 Intangible Property Rights. (a) Section 3.12(a) of the
Company Disclosure Schedule sets forth a complete and accurate list of all
Patents and Trademark and Copyright registrations and applications, each as
owned by any JLW Partnership, Company or Company Subsidiary.
(b) Section 3.12(b) of the Company Disclosure Schedule
identifies all commercially significant license agreements relating to
Intangible Property Rights (excluding shrink wrap licenses and other
Licenses relating to commercially-available software) to which any JLW
Partnership, Company or Company Subsidiary is a party (the "Scheduled
Agreements"). Except as indicated in Section 3.12(b) of the Company
Disclosure Schedule, a true and complete copy of each Scheduled Agreement
(together with all amendments thereto) has been provided to Parent. Each
Scheduled Agreement between any JLW Partnership, Company, or Company
Subsidiary and any Person or Persons other than: (i) any other JLW
Partnership, Company, or Company Subsidiary or any Affiliate of any
thereof, (ii) any Asia Region Company, or any Subsidiary thereof, or any
Affiliate of any thereof, or (iii) any Australasia Region Company, or any
Subsidiary thereof, or Affiliate of any thereof (each a "Third Party
Scheduled Agreement") is a legal, valid, binding and enforceable obligation
of the JLW Partnership, Company or Company Subsidiary which is/are a party
or parties thereto and, to the Knowledge of each JLW Partnership, Company
and Company Subsidiary, the other parties thereto, except as enforceability
may be limited by bankruptcy, insolvency, reorganization and similar Laws
affecting creditors generally and by the availability of equitable
remedies. Except as indicated in Section 3.12(b) of the Company Disclosure
Schedule, no JLW Partnership, Company, Company Subsidiary or, to the
Knowledge of each JLW Partnership, Company and Company Subsidiary, any
other party, is in default, violation or breach in any material respect
under any Third Party Scheduled Agreement and no event has occurred and is
continuing that constitutes or with notice or the passage of time would
constitute, such a default, violation or breach in any material respect
under any Third Party Scheduled Agreement.
(c) Except as set forth in Section 3.12(c) of the Company
Disclosure Schedule, the JLW Partnerships, Companies and Company
Subsidiaries, together with the Asia Region Companies, the Subsidiaries
thereof, the Australasia Region Companies and the Subsidiaries thereof, on
a collective basis own or have the valid right to use and (except in the
case of the JLW Partnerships) will, as of the Integration Completion Date
(after giving effect to the Integration), own or have the valid right to
use (i) the trademark (or service mark) "Jones Lang Wootton" in connection
with the real estate agency, management and advisory business in the
following countries: Australia, France, Germany, Hong Kong, the
Netherlands, Ireland, Singapore, the United Kingdom and the United States
of America (the "Designated Countries"), (ii) the property management
software program known as "Credo," developed internally by JLW entities for
JLW England, and (iii) to the Knowledge of each JLW Partnership, Company,
or Company Subsidiary, any other Intangible Property Rights used in the
conduct of their businesses as of the date hereof and (except in the case
of the JLW Partnerships) thereof. Except as set forth on Schedule 3.12(c)
of the Company Disclosure Schedule, no JLW Partnership, Company or Company
Subsidiary has granted any mortgages, pledges, security interests, liens,
charges or options to acquire (collectively, "Interests") in any Intangible
Property Rights owned by it or in its rights under any License of
Intangible Property Rights to which it is a party or has Knowledge of any
Interests granted therein by any predecessor in interest which are still
effective. Except as set forth in Section 3.12(a) of the Company
Disclosure Schedule, no registration or application listed in Section
3.12(a) of the Company Disclosure Schedule (i) has been cancelled,
abandoned or has expired, (ii) is the subject of any existing or, to the
Knowledge of each JLW Partnership, Company and Company Subsidiary,
threatened opposition, interference, cancellation or other proceeding
before any Authority, in each case, as to which any JLW Partnership,
Company or Company Subsidiary has received written notice, and (iii) is, as
of the date hereof, standing in the record ownership of the entity listed
as record owner on Section 3.12(a) of the Company Disclosure Schedule.
Except as set forth in Section 3.12(c) of the Company Disclosure Schedule,
each trademark or service mark registration listed in Section 3.12(a) of
the Company Disclosure Schedule for the trademark (or service mark) "Jones
Lang Wootton" insofar as the same relates to the use thereof in connection
with the real estate agency, management and advisory business in the
Designated Countries, is valid as of the date hereof and will, as of the
Integration Completion Date (after giving effect to the Integration), be
valid; provided, however, that for the avoidance of doubt, this
representation and warranty shall not extend to the "globe logo device"
whether used alone, in connection with "Jones Lang Wootton", "JLW" or
otherwise.
(d) Except as set forth in Section 3.12(d) of the Company
Disclosure Schedule, to the Knowledge of each JLW Partnership, Company and
Company Subsidiary: (i) the operation of the businesses currently
conducted by the JLW Partnerships, Companies and Company Subsidiaries does
not infringe upon, or make unauthorized use of, any Intangible Property
Right of any third party (i.e., any Person or Persons other than the JLW
Partnerships, Companies, Company Subsidiaries, Asia Region Companies,
Australasia Region Companies or Subsidiaries or Affiliates of any thereof;
provided, that such Affiliates shall be Affiliates of Parent immediately
following the Closing) and (ii) there are no material unasserted claims for
past infringement or past unauthorized use by any JLW Partnership, the
Company or any Company Subsidiary of any third parties' (as defined above)
Intangible Property Rights during the past three (3) years. Except as set
forth in Section 3.12(d) of the Company Disclosure Schedule, there are no
claims as to which any JLW Partnership, Company or Company Subsidiary has
received written notice pending or, to the Knowledge of each JLW
Partnership, Company and Company Subsidiary, threatened against any JLW
Partnership, Company or Company Subsidiary in respect of infringement or
unauthorized use by any of them of any third parties' (as defined above)
Intangible Property Rights. Except as set forth in Section 3.12(d) of the
Company Disclosure Schedule, to the Knowledge of each JLW Partnership,
Company and Company Subsidiary, no third party (as defined above) is
infringing upon, or making unauthorized use of, any Intangible Property
Rights owned by any JLW Partnership, Company or Company Subsidiary. Except
as set forth in Section 3.12(d) of the Company Disclosure Schedule, no
claims alleging infringement or unauthorized use by third parties (as so
defined) of Intangible Property Rights owned or used by any JLW
Partnership, Company or Company Subsidiary have been made in writing by any
JLW Partnership, Company or Company Subsidiary within the past three (3)
years. Except as set forth in Section 3.12(d) of the Company Disclosure
Schedule, there is no action, suit, or arbitration as to which any JLW
Partnership, Company or Company Subsidiary has received written notice
pending or, to the Knowledge of each JLW Partnership, Company and Company
Subsidiary, threatened against any JLW Partnership, Company or Company
Subsidiary which relates to Intangible Property Rights owned or used by any
JLW Partnership, Company or Company Subsidiary or to any Scheduled
Agreement.
(e) Except as set forth in Section 3.12(e) of the Company
Disclosure Schedule, the operations of each JLW Partnership, Company and
Company Subsidiary have been and are being conducted in accordance with all
applicable Laws and other requirements of any Authority having jurisdiction
over any JLW Partnership, Company or Company Subsidiary, or any of their
respective properties, assets or business, which relate to data protection
including, but not limited to, the Data Protection Act of 1984 of England
and the Data Protection Act of 1988 of Ireland and, to the Knowledge of any
JLW Partnership, Company or Company Subsidiary, which relate to Intangible
Property, except for such matters as would not individually or in the
aggregate, have a Company Material Adverse Effect.
(f) Except as set forth in Section 3.12(f) of the Company
Disclosure Schedule, there are no settlements, judgments, decrees, or
orders currently in force, which restrict, in any material respect, any JLW
Partnership's, Company's or Company Subsidiary's rights to use any of the
Intangible Property Rights owned by any JLW Partnership, Company or Company
Subsidiary.
(g) No Consents from any Authority or any party to a
Scheduled Agreement are necessary for execution and delivery of this
Agreement, the other Operative Agreements or the Integration Agreements by
any JLW Partnership or Company or the consummation by any JLW Partnership
or Company of the transactions contemplated hereby and thereby.
(h) Except as set forth in Section 3.12(h) of the Company
Disclosure Schedule, no current or former partner, director, officer or, to
the Knowledge of any JLW Partnership, Company or Company Subsidiary, any
current or former employee of any JLW Partnership, Company or Company
Subsidiary will, after giving effect to the Integration, including any
Post-Closing Integration Actions, own or have any rights in or to any
Intangible Property Right owned or used by any JLW Partnership, Company or
Company Subsidiary in the ordinary course of its business.
(i) This Section 3.12 and Sections 3.5, 3.6, 3.8, 3.26, 3.27
and 3.28 contain the exclusive representations and warranties of the JLW
Partnerships, Companies and Management Shareholders concerning Intangible
Property Rights and Licenses relating thereto.
Section 3 Certain Contracts. (a) Section 3.13(a) of the Company
Disclosure Schedule lists all material Contracts, to which any JLW
Partnership, Company or Company Subsidiary is a party or by which it or any
of its properties or assets may be bound or affected ("Listed
Agreements"), which list includes each of the following types of Contracts
(whether or not material): (i) all property management contracts that
contributed US$250,000 or more during the year ended December 31, 1997 or
would reasonably be expected to contribute US$250,000 or more over the
twelve months ending December 31, 1998 to the revenue of the JLW
Partnerships, Companies and the Company Subsidiaries; (ii) all investment
advisory contracts that contributed US$250,000 or more during the year
ended December 31, 1997 or would reasonably be expected to contribute
US$250,000 or more over the 12 months ending December 31, 1998 to the
revenue of the JLW Partnerships, Companies and the Company Subsidiaries;
(iii) all personal property leases where the rent exceeded US$100,000
during the year ended December 31, 1997 or would reasonably be expected to
exceed US$250,000 over the term of the lease; (iv) all employment or other
compensation based contracts (including, without limitation, non-
competition, severance or indemnification agreements) which are currently
in effect or, upon Closing, will be in effect (in which event the contract
being replaced thereby need not be so listed, provided that no Company or
Company Subsidiary would have any Liability thereunder) for which any JLW
Partnership, Company or Company Subsidiary has or will have, as applicable,
any continuing obligations with (A) any current or former partner, officer
or director of any JLW Partnership, Company or Company Subsidiary (or any
company which is controlled by any such individual) other than any
Designated JLW Shareholder, and (B) any other employee of any of the same
whose annualized salary, bonus and other benefits exceeds US$100,000 per
annum (other than any Designated JLW Shareholder), and (v) any contract of
employment to be entered into by any JLW Partnership, Company or Company
Subsidiary with any Designated JLW Shareholder, (vi) all consulting
Contracts requiring the payment in excess of US$100,000 per annum or
US$100,000 over the 12 months ending December 31, 1998; (vii) union, guild
or collective bargaining contracts relating to, and any employee handbook
for, employees of any JLW Partnership, Company or Company Subsidiary;
(viii) instruments for borrowed money (including, without limitation, any
indentures, guarantees, loan agreements, sale and leaseback agreements, or
purchase money obligations incurred in connection with the acquisition of
property), involving more than US$100,000; (ix) agreements for acquisitions
or dispositions (by merger, purchase or sale of assets or stock or
otherwise) of material assets, as to which any JLW Partnership, Company or
Company Subsidiary has continuing obligations or rights; (x) joint venture
or partnership agreements; (xi) any Contract containing provisions that
specifically provide circumstances pursuant to which any JLW Partnership,
Company or Company Subsidiary may be required to return fees paid under
such Contract (other than as a result of breach or non-performance under
such Contract), which Liability could be expected to exceed US$100,000;
(xii) guarantees, suretyships, indemnification and contribution agreements;
and (xiii) Contracts for employment of any broker or finder in connection
with the transactions contemplated by this Agreement or the Other Purchase
Agreements or for any brokerage fees or commissions or finders' fees or for
any financial advisory or consulting fees in connection therewith. Except
as indicated in Section 3.13(a) of the Company Disclosure Schedule, a true
and complete copy of each Listed Agreement (together with all amendments
thereto) has been provided to Parent. Except as set forth in Section
3.13(a) of the Company Disclosure Schedule, each Listed Agreement is a
legal, valid, binding and enforceable obligation of the JLW Partnership,
Company or Company Subsidiary which is a party thereto and, to the
Knowledge of each JLW Partnership, Company or Company Subsidiary, the other
parties thereto, except as enforceability may be limited by bankruptcy,
insolvency, reorganization and similar Laws affecting creditors generally
and by the availability of equitable remedies. Except as set forth in
Section 3.13(a) of the Company Disclosure Schedule, no JLW Partnership,
Company, Company Subsidiary or, to the Knowledge of each JLW Partnership,
Company or Company Subsidiary, any other party, is in default, violation or
breach in any respect under any Listed Agreement, and no event has occurred
and is continuing that constitutes or with notice or the passage of time
would constitute, such a default, violation or breach in any respect under
any Listed Agreement, other than in each case such defaults violations or
breaches which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, no Contract or License restricts, in any material (in
relation to each such entity) respect, the ability of any JLW Partnership,
Company or Company Subsidiary to own, possess or use its assets or conduct
its operations in any geographic area.
Section 3 Licenses and Other Authorizations. Except as set forth in
Section 3.14 of the Company Disclosure Schedule, the JLW Partnerships, the
Companies and the Company Subsidiaries have received all Licenses of any
Authority material to the ownership or leasing of their respective
properties and to the conduct of the JLW Businesses as currently conducted
and, in the case of the Companies, after giving effect to the Integration,
as contemplated to be owned, leased or conducted following the Closing and
the Integration. Except as disclosed in Section 3.14 of the Company
Disclosure Schedule, all such Licenses are valid and in full force and
effect. The JLW Partnerships, Companies and the Company Subsidiaries are
operating in compliance with the conditions and requirements of such
Licenses and, except as disclosed in Section 3.14 of the Company Disclosure
Schedule, no proceeding is pending or, to the Knowledge of any JLW
Partnership, Company or Company Subsidiary, threatened, seeking the
revocation or limitation of any such Licenses. Assuming the related
Consents set forth in Section 3.6 or 3.7 of the Company Disclosure Schedule
have been obtained prior to the Closing Date, to the extent that any
transfers of such Licenses are provided for as part of the Integration or
the other transactions contemplated by this Agreement, such transfers will
be permitted, and none of such Licenses will be terminated or impaired or
become terminable as a result of the transactions contemplated hereby or by
the Other Operative Agreements or the Integration Agreements.
Section 3 Year 2000 and Euro Compliance. The JLW Partnerships have
instituted a plan to test whether the Computer Systems owned by or licensed
to any JLW Partnership, Company or Company Subsidiary will be Year 2000
Compliant or Euro Compliant. To the Knowledge of each JLW Partnership,
Company or Company Subsidiary, the sum of (i) the direct costs (excluding
any costs that would be incurred in the ordinary course of business absent
the need to become Year 2000 Compliant or Euro Compliant) of making the
Computer Systems owned by or leased to any JLW Partnership, Europe/USA
Region Company, Australasia Region Company or Asia Region Company, or any
of their respective Subsidiaries (but, for the avoidance of doubt,
excluding any Computer Systems that are owned by or leased to the owners of
or tenants located in, any Managed Properties) to become Year 2000
Compliant and, in the case of any JLW Partnership or Europe/USA Region
Company, or any of their respective Subsidiaries, Euro Compliant and (ii)
any payments, individually or in the aggregate, under the indemnification
obligation to the Australia and New Zealand Banking Group for Year 2000
problems pursuant to clause 23.5 of the Service Provider Agreement for the
Provision of Property Services dated May 5, 1998 between the Australia and
New Zealand Banking Group, JLW Australia and P&O Australia Limited, or
under any guarantee thereof, by any Australasia Region Company or
Subsidiary thereof, are not reasonably expected to exceed in the aggregate
the amount set forth in Section 3.15 of the Company Disclosure Schedule.
"Computer Systems" means, with respect to any Person, the computer
software, firmware, hardware (whether general or special purpose), and
other similar or related items of automated, computerized or software
system(s) that are owned by or licensed to such Person. "Year 2000
Compliant" means, with respect to any Computer Systems, the ability of such
Computer Systems (to the extent reasonably necessary in the ordinary work
of business) to process data, without material impairment as to
performance, involving dates prior to, during or after the year 2000.
"Euro Compliant" means, with respect to any Computer Systems, the ability
of such Computer Systems (to the extent reasonably necessary in the
ordinary work of business) to process data, without material impairment as
to performance, involving the single European currency (including without
limitation complying with the conversion and rounding rules set forth in
Council Regulation 11/03/97 upon the advent of the European Monetary
Union).
Section 3 Clients. Section 3.16(a) of the Company Disclosure
Schedule sets forth (a) on a country-by-country basis, the names of the ten
largest clients, as measured by combined revenue ("significant clients"),
of the JLW Partnerships, Companies and Company Subsidiaries during the 12-
month period ended December 31, 1997 or during the 6-month period ending on
June 30, 1998 and the aggregate amount for which each significant client
(as so defined) was invoiced during such period on a combined basis.
Except as set forth in Section 3.16(b) of the Company Disclosure Schedule,
no significant client (as so defined) (i) has ceased, or indicated to any
JLW Partnership, Company or Company Subsidiary that it shall cease, to use
the services of any JLW Partnership, Company or Company Subsidiary, (ii)
has substantially reduced or indicated to any JLW Partnership, Company or
Company Subsidiary that it shall substantially reduce, the use of the
services of any JLW Partnership, Company or Company Subsidiary or (iii) has
sought, or is seeking, to renegotiate the terms of any Contract under which
any JLW Partnership, Company or Company Subsidiary is providing services to
such significant client, including in each case after the consummation of
the transactions contemplated hereby and by the other Operative Agreements.
Except as disclosed in Section 3.16(b) to the Company Disclosure Schedule,
to the Knowledge of each JLW Partnership, Company or Company Subsidiary, no
significant client (as so defined) has otherwise threatened to take any
action described in the preceding sentence as a result of the consummation
of the transactions contemplated by this Agreement, any other Operative
Agreement or any Integration Agreement.
Section 3 Operation of the Businesses. Except as set forth in
Section 3.17 of the Company Disclosure Schedule and subject to the
completion of the Post-Closing Integration Actions, the JLW Partnerships,
Companies and the Company Subsidiaries have, and after Closing, the
Companies and Company Subsidiaries will have, all rights, properties and
assets, real, personal and mixed, tangible and intangible relating to or
used or held for use in the conduct of the businesses conducted by the JLW
Partnerships, Companies and Company Subsidiaries (the "Assets") during the
past 12 months (except inventory sold, cash disposed of, accounts
receivable collected, prepaid expenses realized, contracts partially or
fully performed, and properties or assets replaced by equivalent or
superior properties or assets (in each case in the ordinary and usual
course of business). To the Knowledge of each JLW Partnership, Company or
Company Subsidiary, all of the Assets are reasonably adequate for the
purposes for which they are currently used or held for use.
Section 3 Insurance. Section 3.18 of the Company Disclosure Schedule
contains (i) an accurate and complete list of all material policies of
property, fire, liability, worker's compensation and other forms of
insurance owned or held by each JLW Partnership, Company or Company
Subsidiary, and (ii) an accurate and complete list of each claim in excess
of US$100,000 relating to such policies made during the last 24 months.
To the Knowledge of each JLW Partnership, Company or Company Subsidiary,
such policies provide adequate insurance coverage consistent with industry
practice for the assets and operations of the JLW Partnerships, Companies
and Company Subsidiaries. All such policies are in full force and effect,
and all premiums with respect thereto covering all periods up to and
including the date of the Closing have been paid, and no notice of
cancellation or termination has been received with respect to any such
policy. Such policies shall not terminate or lapse prior to or on the
Closing Date by reason of the transactions contemplated by this Agreement,
any other Operative Agreement or any Integration Agreement. Section 3.18
of the Company Disclosure Schedule sets forth a list of third party risks
which are insured by a JLW Partnership, Company or Company Subsidiary and a
list of any claims made against or paid by the JLW Partnerships, Companies
or Company Subsidiaries.
Section 3 Labor Relations. Except to the extent set forth in Section
3.19 of the Company Disclosure Schedule: (a) no JLW Partnership, Company or
Company Subsidiary is a party to any collective bargaining agreements,
other Contracts, written work rules or practices agreed to with any labor
organization, employee association, works council or body of employee
representatives; (b) there is no unfair labor practice charge or complaint
against any JLW Partnership, Company or Company Subsidiary pending or, to
the Knowledge of each JLW Partnership, Company or Company Subsidiary,
threatened before the National Labor Relations Board or any similar foreign
Authority which in either case would reasonably be expected to have a
Company Material Adverse Effect; and (c) there is no labor strike, dispute,
slowdown, lockout or stoppage pending or, to the Knowledge of each JLW
Partnership, Company or Company Subsidiary, threatened against or affecting
any JLW Partnership, Company or Company Subsidiary which would reasonably
be expected to have a Company Material Adverse Effect.
Section 3 Employee Benefit Plans. (a) U.S. Employee Benefit Matters:
Section 3.20(a) of the Company Disclosure Schedule sets forth a true and
complete list of each Domestic Plan, whether formal or informal, written or
oral, and indicates which of such Domestic Plans is a "multiemployer plan,"
as such term is defined in section (3)(37) of the Employee Retirement
Income Security Act of 1974, as amended, ("ERISA"). No Domestic Plan that
is a "single employer plan," as such term is defined in section 3(41) of
ERISA, is subject to Section 302 or Title IV of ERISA. Except as set forth
in Section 3.20(a) of the Company Disclosure Schedule, with respect to each
Domestic Plan that is a single employer plan: (i) each such plan has been
established and maintained in compliance in all material respects with its
terms, including ERISA and the Code; (ii) with respect to each such plan
that is intended to be "qualified" within the meaning of Section 401(a) of
the Code, such plan has been determined by the IRS to be so qualified (and,
to the Knowledge of each JLW Partnership, Company or Company Subsidiary, no
fact or circumstance exists which would affect such qualification);
(iii) (A) no Company or Company Subsidiary has filed an application under
Rev. Proc. 98-22, 1998-12 I.R.B. (the Employee Plans Compliance Resolution
System) or any predecessor program thereto with respect to any Domestic
Plan, (B) any liabilities with respect of previous filings under such
programs have been satisfied in full, and (C) no fact or circumstance
exists that would necessitate such a filing to maintain the qualified
status of any Domestic Plan; (iv) no such plan has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Code; (v) to
the Knowledge of each JLW Partnership, Company or Company Subsidiary,
neither the Company nor any Company Subsidiary, nor any such plan or trust
created thereunder or any trustee or administrator thereof has engaged in a
transaction in connection with which any Company or Company Subsidiary, any
such plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any such plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to Section 4975 or 4976 of the Code; (vi) full
payment has been made, or will be made in accordance with Section 404(a)(6)
of the Code, of all amounts which any JLW Partnership, Company, Company
Subsidiary or ERISA Affiliate thereof is required to pay under the terms of
each such plan as of the last day of the most recent plan year thereof
ended prior to the date of this Agreement, and all such amounts properly
accrued through the Closing Date with respect to the current plan year
thereof will be paid by the applicable JLW Partnership, Company or Company
Subsidiary on or prior to the Closing Date or will be properly reflected on
the books and records of the applicable JLW Partnership, Company, Company
Subsidiary or ERISA Affiliate; (vii) no such plan provides medical,
surgical, hospitalization, death or similar benefits (whether or not
insured), with respect to current or former employees of any JLW
Partnership, Company or Company Subsidiary for periods extending beyond
their retirement or other termination of service (other than (A) coverage
mandated by applicable law, (B) death benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, (C)
deferred compensation benefits accrued as liabilities on the books and
records of such JLW Partnership, such Company or such sponsoring Company
Subsidiary or (D) benefits the full cost of which is borne by the current
or former employee (or his beneficiary)); and (viii) no amounts payable
under any such plans will fail to be deductible for Federal income tax
purposes by virtue of Section 162(m) or 280G of the Code. No JLW
Partnership, Company, Company Subsidiary or any ERISA Affiliate of any such
entity has an outstanding liability in respect of (i) a failure to make a
required contribution or payment to a multiemployer plan or (ii) a complete
or partial withdrawal under Section 4203 or 4205 of ERISA from a
multiemployer plan. No circumstance exists that presents a material risk
of a partial withdrawal from a multiemployer plan. To the Knowledge of the
JLW Partnerships or any of the Companies or Company Subsidiaries, no
circumstance exists that presents a material risk that any such plan will
go into reorganization.
(b) Non-U.S. Employee Benefit Matters: Section 3.20(b) of
the Company Disclosure Schedule sets forth a true and complete list of each
Foreign Plan, whether formal or informal, written or oral. Except to the
extent set forth in Schedule 3.20(b) of the Company Disclosure Schedule:
(i) each Foreign Plan required to be filed or registered with or approved
by any applicable governmental or regulatory body or authority has been so
filed, registered or approved and has been maintained in good standing with
such body or authority, and each such Foreign Plan is now and has always
been operated in full compliance in all material respects with all
applicable laws and regulations; (ii) no Foreign Plan is subject to the
provisions of ERISA; (iii) the fair market value of the assets of each
funded Foreign Plan, the liability of each insurer for any Foreign Plan
funded through insurance or the book reserve established for any Foreign
Plan together with any contributions accruing on or before the Closing
Date, in each case as shall be reflected in the books and records of such
JLW Partnership, such Company or such Company Subsidiary sponsoring such
Foreign Plan, are or will be sufficient, on a combined basis, to procure or
provide for the benefits determined on an ongoing basis accrued to the
Closing Date payable to all current and former participants of such Foreign
Plan according to the actuarial assumptions and valuations most recently
used to determine employer contributions to such Foreign Plan; and (iv)
full payment has been made or will be made, in accordance with applicable
law and the provisions of each Foreign Plan, of all amounts which any JLW
Partnership, Company or Company Subsidiary is required to pay on or prior
to the Closing Date under the terms of each Foreign Plan as of the last day
of the most recent plan year thereof ended prior to the date of this
Agreement, and all such amounts properly accrued through the Closing Date
with respect to the current plan year thereof ended prior to the date of
this Agreement, and all such amounts properly accrued through the Closing
Date with respect to the current plan year thereof will be paid by such JLW
Partnership, such Company or such Company Subsidiary on or prior to the
Closing Date or will be properly reflected on the books and records of such
JLW Partnership, such Company or such Company Subsidiary.
(c) Domestic Plans and Foreign Plans: Except to the extent
set forth in Section 3.20(c) of the Company Disclosure Schedule, (i) with
respect to each Domestic Plan that is a single employer plan and with
respect to each Foreign Plan, each JLW Partnership, Company or Company
Subsidiary has heretofore delivered to Parent true and complete copies of
each of the following documents: (A) a copy of such Domestic Plan and
Foreign Plan (including all amendments thereto), (B) a copy of the annual
report (which shall include non-discrimination tests, where applicable), if
required under ERISA or other applicable law, with respect to each such
Domestic Plan and Foreign Plan for the two most recently completed plan
years, (C) a copy of the actuarial report, if required under ERISA or other
applicable law, with respect to each such Domestic Plan and Foreign Plan
for the three most recently completed plan years, (D) a copy of the most
recent "summary plan description," together with each "summary of material
modifications," required under ERISA with respect to each Domestic Plan,
and any plan description, required under applicable law with respect to
each Foreign Plan, (E) if the Domestic Plan or Foreign Plan is funded
through a trust or any third-party funding vehicle, a copy of the trust or
other funding agreement (including all amendments thereto) and the latest
financial statements thereof, and (F) the most recent determination letter
received from the IRS with respect to such Domestic Plan that is intended
to be qualified under Section 401 of the Code, and the most recent letter,
certification or other document, if any, received from any applicable
governmental or regulatory body or authority evidencing the registration
and/or approval of any Foreign Plan required to be so registered or
approved; (ii) there are no pending or, to the Knowledge of each JLW
Partnership, Company and Company Subsidiary, threatened or anticipated
material claims by, on behalf of or against any of the Domestic Plans or
Foreign Plans, and no material litigation or administrative or other
proceeding (including, without limitation, any litigation or proceeding
under Title IV of ERISA) has occurred or, to the Knowledge of each JLW
Partnership, Company and Company Subsidiary, is threatened involving any
Domestic Plan or Foreign Plan, and (iii) the consummation of the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement shall not, either alone or in combination with
another event, except as set forth in Section 3.20(c) of the Company
Disclosure Schedule, (A) accelerate the time of payment or vesting or
increase the amount of compensation due any employee or officer of any JLW
Partnership, Company or Company Subsidiary, (B) entitle any current or
former employee or officer of any JLW Partnership, Company or Company
Subsidiary to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or (C) with
respect to any Domestic Plan that is a single employer plan, constitute a
prohibited transaction described in Section 406 of ERISA or Section 4975 of
the Code for which an exemption is not available.
Section 3 Litigation. Except as set forth in Section 3.21 of the
Company Disclosure Schedule, there is no Action, pending or, to the
Knowledge of each JLW Partnership, Company or Company Subsidiary,
threatened against or involving any JLW Partnership, Company or Company
Subsidiary which would reasonably be expected to have a Company Material
Adverse Effect, or which questions or challenges the validity of this
Agreement, any other Operative Agreement or any Integration Agreement or
any action taken or to be taken by any JLW Party pursuant to this
Agreement, any other Operative Agreement or any Integration Agreement or in
connection with the transactions contemplated hereby and thereby. No JLW
Partnership, Company or Company Subsidiary is a subject to any judgment,
order or decree entered in any Action which purports to limit in any
material respect, or which may have a material adverse effect on, its
business practices or its ability to acquire any property or conduct all or
any material portion of the businesses conducted by the JLW Partnerships,
the Companies and the Company Subsidiaries in any locality.
Section 3 Compliance with Law. (a) Except as set forth in Section
3.22(a) of the Company Disclosure Schedule, the operations of each JLW
Partnership, Company and Company Subsidiary have been and are being
conducted in accordance with all applicable Laws and other requirements of
any Authority, having jurisdiction over any JLW Partnership, Company or
Company Subsidiary, or any of their respective properties, assets or
business, including, without limitation, Article 85(i) or Article 86 of the
Treaty of Rome, all such Laws and requirements relating to antitrust, fair
trading and consumer protection, currency exchange, health, occupational
safety, employment practices, wages and hours, pension, insurance
(including, without limitation, the Guernsey Insurance Laws), securities
and trading-with-the-enemy matters and planning and development, except in
each case for such matters as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.22(b) of the Company
Disclosure Schedule, neither any JLW Partnership, Company or Company
Subsidiary, nor any of their respective Affiliates, nor any partner or
former partner, officer, employee or agent of any thereof, nor any other
person acting on their behalf, has, directly or indirectly, within the past
five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be
in a position to help or hinder any part of the JLW Businesses (or assist
any of such Persons in connection with any actual or proposed transaction
relating to any part of the JLW Businesses) (i) which subjected or might
have subjected any of such Persons to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which, if not given
in the past, would have had a Company Material Adverse Effect, (iii) which,
if not continued in the future, would have a Company Material Adverse
Effect or subject any of such Persons to suit or penalty in any private or
governmental litigation or proceeding or (iv) for the purpose of
establishing or maintaining any concealed fund or concealed bank account.
(c) To the Knowledge of any Management Shareholder, no JLW
Partnership, Company or Company Subsidiary is a party to any agreement,
arrangement or concerted practice or is carrying on any practice which in
whole or in part contravenes or is invalidated by or is required to be
registered under any anti-trust, fair trading, consumer protection or
analogous legislation in any jurisdiction in which the businesses are
carried on or assets are held and, in particular and without prejudice to
the generality of the foregoing, which contravenes Article 85(1) or Article
86 of the Treaty of Rome or which has been notified to the European
Commission for an exemption or a negative clearance. Except as set forth
in Section 3.23(c) of the Company Disclosure Schedule, to the Knowledge of
any Management Shareholder, no JLW Partnership, Company or Company
Subsidiary nor any partner of any JLW Partnership has received any formal
or informal communications or notification that any proceeding under any
applicable anti-trust, fair trading, consumer protection or similar
legislation in any jurisdiction have been initiated, nor any such
proceedings contemplated by any relevant Authority, nor has any claim been
made or threatened alleging any contravention of any such legislation.
Section 3 Taxes. Except as disclosed in Section 3.23 of the Company
Disclosure Schedule:
All Tax Returns required to be filed with respect to each
JLW Partnership, each Company, each Company Subsidiary or the affiliated,
combined or unitary group of which any JLW Partnership, any Company or any
Company Subsidiary is or was a member have been duly and timely filed,
except for those returns which, individually or in the aggregate, would not
have a Company Material Adverse Effect, and all such Tax Returns are true,
correct and complete, except for any deficiencies in respect of filed Tax
Returns which, individually or in the aggregate, would not have a Company
Material Adverse Effect. Each JLW Partnership, each Company and each
Company Subsidiary has duly and timely paid all Taxes and other charges
that are due with respect to all periods ending on or before June 30, 1998,
whether or not shown as due on any Tax Return, except for Taxes which have
been reserved for and shown on the JLW England Interim Financial
Statements, JLW Scotland Interim Financial Statements or JLW Ireland
Interim Financial Statements, as applicable. There are no Liens with
respect to Taxes (except for Liens with respect to real property Taxes not
yet due) upon any of the assets of any JLW Partnership, any Company or any
Company Subsidiary. No JLW Partnership, Company or Company Subsidiary is a
party to, is bound by, or has any obligation under, any Tax sharing,
allocation, indemnity or similar Contract, nor is liable for the Taxes of
any other person. Each JLW Partnership, each Company and each Company
Subsidiary has established due and sufficient reserves on the JLW England
Interim Financial Statements, JLW Scotland Interim Financial Statements or
JLW Ireland Interim Financial Statements, as applicable, for the payment of
all Taxes in accordance with UK GAAP.
All Tax deficiencies that have been asserted, proposed or
assessed in writing against or with respect to any JLW Partnership, any
Company or any Company Subsidiary by any taxing authority have been paid in
full or finally settled, and no issue (including with respect to transfer
pricing) has been raised in writing by any taxing authority in any
examination, audit or other proceeding that, by application of the same or
similar principles, reasonably could be expected to result in a material
proposed deficiency for any other period not so examined. There are no
outstanding Contracts, consents, waivers or arrangements extending the
statutory period of limitation applicable to any Tax Return or claim for,
or the period for the collection or assessment of, Taxes due from any JLW
Partnership, any Company or any Company Subsidiary for any taxable period.
No JLW Partnership, Company or Company Subsidiary has
been or is in violation (or with notice or lapse of time or both, would be
in violation) of any applicable Law relating to the payment or withholding
of Taxes (including, without limitation, withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under any foreign
Laws). Each JLW Partnership, each Company and each Company Subsidiary has
duly and timely withheld from employee salaries, wages and other
compensation and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable Laws.
No audit or other proceeding by any domestic or foreign
court, governmental or regulatory authority, or similar Person is pending
or, to the Knowledge of each JLW Partnership, Company and Company
Subsidiary, threatened with respect to any Taxes due from any JLW
Partnership, any Company or any Company Subsidiary or any Tax Return filed
or required to be filed by or relating to any JLW Partnership, any Company
or any Company Subsidiary. No JLW Partnership, Company or Company
Subsidiary shall be required to include any amount in income for any
taxable period ending after the Closing Date which is attributable to an
adjustment pursuant to Section 481(a) of the Code (or any similar
provisions under any foreign laws).
Section 3.23(e) of the Company Disclosure Schedule sets
forth the states, political subdivisions thereof and foreign countries in
which each JLW Partnership, Company or Company Subsidiary files or joins in
filing any consolidated, unitary, combined or similar Tax Returns (or have
such Tax Returns filed on their behalf). No claim has ever been made by an
authority in any jurisdiction where any JLW Partnership, any Company or any
Company Subsidiary has not filed Tax Returns that they are or may be
subject to taxation by that jurisdiction.
JLW USA has not been a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code, and
JLW USA is not a foreign person within the meaning of Section 1445(f)(3) of
the Code and the Treasury Regulation Section 1.1445-2(b).
To the Knowledge of each JLW Partnership, Company,
Company Subsidiary and Management Shareholder, no Tax imposed on or with
respect to the income or liability of any Shareholder is required to be
withheld as a result of any of the transfers, including the delivery of the
Consideration Shares, the Cash Consideration or any other payment or
consideration as a result of or in connection with the consummation of the
transactions contemplated by this Agreement and the other Operative
Agreements. Except for Taxes which are reserved for and shown on any Final
Closing Balance Sheet, no JLW Partnership, Company or Company Subsidiary
shall have liability for (i) Taxes (including, without limitation,
withholding Taxes) of any Shareholder or any partnership of which any
Shareholder is or was a partner, including, without limitation, JLW
England, JLW Scotland and JLW Ireland, or (ii) Taxes attributable to or
incurred in connection with the Integration.
None of the Companies or Company Subsidiaries has made an
election for U.S. federal tax purposes to be treated as a partnership or
entity other than a corporation.
Notwithstanding the foregoing, the representations and warranties contained
in this Section 3.23, insofar as they concern the Tax affairs of any JLW
Partnership or Shareholder in respect of any personal income or capital
gains Tax of any Shareholder, whether assessed on any JLW Partnership or
Shareholder, shall be deemed not to exist unless what would (in the absence
of this provision) have constituted a breach of one or more of those
representations and warranties results in a claim under Section 1.1 of the
Escrow Agreement.
Section 3 Environmental Matters. (a) This Section 3.24 and Sections
3.6, 3.8 and 3.26 contain the exclusive representations and warranties
concerning any environmental matters, including, but not limited to,
concerning any Environmental Laws or Materials of Environmental Concern.
Except as set forth in Section 3.24 of the Company Disclosure Schedule, and
except for any Action, claim or litigation which could not reasonably be
expected to have a Company Material Adverse Effect, no JLW Partnership,
Company or Company Subsidiary has received written notice of any Action
pending, nor to the Knowledge of each JLW Partnership, Company or Company
Subsidiary, has any Action, claim or litigation been asserted or
threatened against any JLW Partnership, Company or Company Subsidiary nor,
to the Knowledge of each JLW Partnership, Company or Company Subsidiary, is
any Action, claim or litigation pending or threatened against the
properties currently or formerly under management by any JLW Partnership,
Company or Company Subsidiary ("Managed Properties"), nor to the Knowledge
of each JLW Partnership, Company or Company Subsidiary, are there any
circumstances which could reasonably be expected to form the basis for such
claim against the Managed Properties, pertaining to: off-site disposal or
arranging for disposal or a release of Materials of Environmental Concern;
migration of Materials of Environmental Concern from Managed Properties;
any nuisance or trespass emanating from Managed Properties; violations of
any applicable Environmental Laws; releases of Materials of Environmental
Concern at or from current or former Managed Properties (including claims
for response costs); or third-party claims for personal injury or property
damage arising out of the release of or exposure to Materials of
Environmental Concern at or from the Managed Properties.
(b) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, the JLW Partnerships, the Companies and the Company
Subsidiaries are, and, to the Knowledge of each JLW Partnership, Company or
Company Subsidiary, the Managed Properties are, in compliance in all
respects with applicable Environmental Laws, except for such noncompliance
which could not reasonably be expected to have a Company Material Adverse
Effect.
(c) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, to the Knowledge of each JLW Partnership, Company and
Company Subsidiary, and except for any of the following which could not
reasonably be expected to have a Company Material Adverse Effect, (i) there
has been no material spill, disposal or release of any Materials of
Environmental Concern or substance on, at or from the Managed Properties,
except for any such spill, disposal or release that occurred in compliance
with applicable Environmental Laws (provided that, for purposes of this
Agreement, reporting of a spill, disposal or release does not make an
unauthorized spill, disposal or release in compliance with Environmental
Laws), (ii) none of the Managed Properties is listed or has been proposed
to be listed under any state, federal or foreign superfund or similar law
or is reasonably likely to be the subject of remediation requirements under
the U.K. Environmental Protection Act 1990 or with the Water Resources Act
1991, each as proposed to be amended by the Environment Act 1995 when the
relevant provisions of the Environment Act 1995 come into force (assuming
such provisions, and the draft regulations and guidelines relating thereto,
are brought into force substantially as they exist as of the date of this
Agreement), (iii) none of the Managed Properties is or was a treatment,
storage or disposal facility requiring a permit under any hazardous waste
law and (iv) the tenants under its management have occupied their premises
at the Managed Properties and operated their businesses at the Managed
Properties in compliance, in all material respects, with the Environmental
Laws.
(d) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, the JLW Partnerships, the Companies and the Company
Subsidiaries are not currently paying any fines, settlements, judgments,
assessments or remedial costs because of an alleged violation of or
liability under any Environmental Law or any past or present release or
presence of Materials of Environmental Concern at the Managed Properties,
nor, to the Knowledge of each JLW Partnership, Company or Company
Subsidiary, has any client party to any Contract with any JLW Partnership,
any Company or any Company Subsidiary asserted that any JLW Partnership,
Company or Company Subsidiary is liable for any such costs, except for any
such fines, settlements, judgments, assessments or remedial costs which
could not reasonably be expected to have a Company Material Adverse Effect.
Section 3 Personnel. Section 3.25 of the Company Disclosure Schedule
sets forth a list of all employees as of June 30, 1998 of each JLW
Partnership, Company and Company Subsidiary. Such list indicates as to
each such employee who is a Shareholder and each other such employee whose
current annualized salary, bonus and benefits exceed US$100,000: (a) date
of commencement of service and period of continuous employment; (b) job
title or brief job description and place of work; (c) any material
commitments or arrangements with such employees as to salary or bonuses, if
applicable, other than those commitments or arrangements set forth in
Section 3.13 of the Company Disclosure Schedule and; (d) as of the date
hereof, the names of any such employees who have given or received notice
to terminate their employment. Except as disclosed in Section 3.25 of the
Company Disclosure Schedule, to the Knowledge of each JLW Partnership,
Company or Company Subsidiary, since June 30, 1998, no partner, officer,
director or employee thereof has given notice or indicated his or her
intent to give notice of termination of employment, which termination,
together with any such other terminations, would be reasonably likely to
have a material adverse effect on the Companies and the Company
Subsidiaries taken as a whole.
Section 3 Disclosure Documents. None of the information included in
the Offering Memorandum or Proxy Statement supplied or to be supplied by
any Shareholder, JLW Partnership, Company or Company Subsidiary relating to
any Shareholder, Related JLW Owner, JLW Seller, Company, Asia Region
Company or Australasia Region Company, or any of their respective
Subsidiaries, including the SCCA or the Integration, for inclusion in the
Offering Memorandum and the Proxy Statement, as the case may be, will, in
the case of the Offering Memorandum, at the time of mailing to the
Shareholders, and, in the case of the Proxy Statement, either at the time
of mailing of the Proxy Statement to stockholders of Parent or at the time
of the meeting of such stockholders to be held in connection therewith,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 3 Integration Matters. Except as set forth in Section 3.27
of the Company Disclosure Schedule, the Integration, as it relates to the
Shareholders, Related JLW Owner, the JLW Partnerships, the Companies and
the Company Subsidiaries, will be completed in compliance in all material
respects with all applicable Laws and will not result in any material
Liability to any of the Companies, the Company Subsidiaries, Parent or
Parent's Affiliates (other than Liabilities of the JLW Partnerships which
are expressly assumed as part of the Integration). The copies of the
Integration Agreements and the Ancillary Documents (as defined in the
Integration Plan) heretofore delivered to and approved by Parent by or on
behalf of the Shareholders' Representatives are complete and correct copies
thereof. No part of the Integration constitutes a public offering under
the Companies Act or the Public Offering of Securities Regulation 1995 or
the Irish Companies Act, and, except as set forth in Section 3.27 of the
Company Disclosure Schedule, no document published, if any, or distributed
by the JLW Partnerships in connection with the Integration requires an
approval as an investment advertisement under Section 57 of the United
Kingdom Financial Services Act of 1986.
Section 3 Related Party Transactions. Section 3.28 of the Company
Disclosure Schedule contains an accurate listing of any current or former
partners, directors, officers or key employees of any JLW Partnership,
Company or Company Subsidiary and, to the Knowledge of any JLW Partnership,
Company or Company Subsidiary, any relatives of any of the foregoing, who
is, directly or indirectly, a party to any transaction (other than in
respect to compensation or travel expense account reimbursement in the
ordinary course of business consistent with past practice) with or has any
loan or obligation outstanding to or from any JLW Partnership, Company or
Company Subsidiary (or for which any of them is or may be liable under any
guarantee or otherwise). Section 3.28 of the Company Disclosure Schedule
sets forth a brief description of each such transaction, including without
limitation, any Contract providing for the furnishing of services (other
than employment contracts), or the rental of real or personal property
from, or otherwise requiring payments to, any such Person or to any
relative of any such Person.
Section 3 Activities of NewCo 1, NewCo 2, NewCo 3 and Salta Ltd. As
of the date hereof and the Integration Commencement Date, except for
obligations or liabilities incurred in connection with their incorporation
or organization and the transactions contemplated by this Agreement or
described in Section 3.29 of the Company Disclosure Schedule, the
Integration Agreements, the other Operative Documents and the SCCA, none of
NewCo 1, NewCo, or NewCo 3 or Salta Ltd., a corporation incorporated under
the laws of England, has or will have incurred, directly or indirectly, any
obligations or liabilities or engaged in any business activities of any
type or kind whatsoever or entered into any agreements or arrangements with
any Person.
Section 3 Securities Laws Matters. Neither any JLW Partnership,
Company, Company Subsidiary, nor any of their respective Affiliates, nor
any Person acting on its or their behalf has engaged, or will engage, in
any "directed selling efforts" (as defined in Regulation S) with respect to
the Consideration Shares.
Section 3 Opinion of Financial Advisor. The JLW Partnerships have
received the opinion of Peter J. Solomon Company Limited, financial advisor
to JLW Partnerships, to the effect that, as of the date of this Agreement,
the Consideration to be received by the Shareholders and the Other
Shareholders under this Agreement and the Other Purchase Agreements is, in
the aggregate, fair to such Shareholders and Other Shareholders from a
financial point of view.
Section 3 Certain Fees. Except as contemplated by the agreements
listed in Section 3.13(a)(xiii) of the Company Disclosure Schedule, no JLW
Partnership, Company or Company Subsidiary or any of their respective
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees or commissions or finders'
fees or for any financial advisory or consulting fees, in each case in
connection with the transactions contemplated by this Agreement or the
other Operative Agreements, including, without limitation, the Integration.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the JLW Parties that:
Section 4.1 Corporate Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maryland. Parent (i) has all requisite corporate power and
authority to carry on its businesses as they are now being conducted by it
and to own the properties and assets it now owns; and (ii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all the jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not be reasonably expected to have a Parent Material
Adverse Effect. True and complete copies of the Articles of Incorporation
of Parent ("Parent Articles of Incorporation") and the Amended and Restated
Bylaws of Parent ("Parent Bylaws"), as presently in effect, are attached to
Section 4.1 of the Parent Disclosure Schedule.
Section 4.2 Capitalization. The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock and 10,000,000 shares
of preferred stock, $.01 par value per share ("Parent Preferred Stock").
As of September 30, 1998, there were outstanding 16,230,358 shares of
Parent Common Stock, no shares of Parent Preferred Stock and no shares of
Parent Common Stock or Parent Preferred Stock were held in Parent's
treasury. In addition, as of September 30, 1998, 2,215,000 shares of
Parent Common Stock were reserved or registered for issuance under Parent's
Employee Stock Purchase Plan, as amended, 1997 Stock Award and Incentive
Plan, as amended, and Stock Compensation Program, as amended (collectively,
the "Parent Stock Plans"), and no shares of Parent Common Stock or Parent
Preferred Stock were specifically reserved or registered for any other
purposes. All of the issued and outstanding shares of Parent Common Stock
have been validly issued and are fully paid and non-assessable and free of
preemptive rights, and the Consideration Shares will be (when issued at the
Closing as contemplated by this Agreement) validly issued and fully paid
and non-assessable and free of pre-emptive rights. Except as set forth in
this Section 4.2, except for the obligation of Parent to issue
Consideration Shares and ESOT Shares under this Agreement and to issue
Consideration Shares (as defined under the Other Purchase Agreements) and
ESOT Shares under the Other Purchase Agreements, and except under the
Parent Stock Plans, including upon the exercise of options outstanding as
of September 30, 1998 to purchase an aggregate of 1,110,400 shares of
Parent Common Stock and any such options issued or granted subsequent to
September 30, 1998 ("Parent Options"), as of the date hereof, there are
outstanding, (i) no shares of capital stock or other voting securities of
Parent, (ii) no securities of Parent or any Parent Subsidiary convertible
into or exchangeable for shares of capital stock or voting securities of
Parent and (iii) no options or other rights to acquire from Parent or any
Parent Subsidiary, and no obligation of Parent or any Parent Subsidiary to
issue, any capital stock or, voting securities of Parent or securities
convertible into or exchangeable for capital stock or voting securities of
Parent (the items in clauses (i), (ii) and (iii) being referred to
collectively as the "Parent Securities"). Other than under the Parent
Stock Plans and as set forth in Section 4.2 of the Parent Disclosure
Schedule, there are no outstanding obligations of Parent or any Parent
Subsidiaries to repurchase, redeem or otherwise acquire any Parent
Securities.
Section 4.3 Subsidiaries and Affiliates. Except as set forth in
Section 4.3 of the Parent Disclosure Schedule, all the outstanding capital
stock or other equity interests of each Parent Significant Subsidiary is
owned, directly or indirectly, as of the date hereof by Parent and will be
owned, directly or indirectly, as of the Closing Date, by Parent, in each
case free and clear of all Encumbrances, and has been validly issued and is
fully paid and, to the extent that the concept of assessability of capital
stock is potentially applicable, is nonassessable. Each Parent Significant
Subsidiary: (i) is duly organized or incorporated and validly existing
(and, if applicable) in good standing under the laws of its jurisdiction of
incorporation or formation; (ii) has all requisite corporate or similar
power and authority to carry on its business as it is now being conducted
and to own the properties and assets it now owns; and (iii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not have a Parent Material Adverse Effect. True and
complete copies of the certificate of incorporation and bylaws or similar
charter documents, as presently in effect, of each Parent Significant
Subsidiary have been previously provided to the JLW Parties.
Section 4.4 Authorization (a) Parent has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and the other Operative Agreements and to carry out the
transactions contemplated hereby and thereby. The Board of Parent has
taken all corporate action (including all action of the Board) necessary to
authorize and approve the execution, delivery and performance of this
Agreement and the other Operative Agreements and no other corporate action
is required on the part of Parent to authorize the execution, delivery and
performance of this Agreement and the other Operative Agreements (including
without limitation the issuance of the Consideration Shares), subject only
to approval of (i) the amendment and restatement of the Parent Articles of
Incorporation as described in Section 1.9(a)(i)(A) hereof, (ii) the
issuance of the Consideration Shares and (iii) the amendments to Parent's
amended and restated stock incentive plan as described in Section
1.9(a)(i)(C) hereof (collectively, the "Proposed Actions"), in each case by
the affirmative vote of the holders of a majority of the shares of Parent
Common Stock present in person or represented by proxy at the meeting
contemplated by Section 6.5(a) hereof, and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by Parent, and this Agreement constitutes, and each
other Operative Agreement to which Parent is to be a party, when executed
and delivered by Parent, will constitute a valid and binding agreement of
Parent, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar Laws affecting creditors generally and by the availability of
equitable remedies.
(b) Each Parent Subsidiary that is a party to any Operative
Agreement (or other agreement or obligation to be executed and delivered
pursuant hereto) has all requisite corporate power and authority to
execute, deliver and perform its obligations under such Operative Agreement
(or other agreement or obligation) and such execution, delivery and
performance have been approved by all necessary corporate action. Any such
Operative Agreement (or other agreement or obligation) to be executed and
delivered by any such Parent Subsidiary will be, upon the execution and
delivery thereof by such Parent Subsidiary, duly and validly executed and
delivered and will constitute a valid and binding agreement of such Parent
Subsidiary, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar Laws affecting creditors generally and by the availability of
equitable remedies.
Section 4.5 No Violation. Neither the execution and delivery by
Parent of this Agreement nor any other Operative Agreement nor the
consummation by Parent of the transactions contemplated hereby or thereby
shall: (i) violate or be in conflict with any provision of the Parent
Articles of Incorporation, Parent Bylaws or the certificate of
incorporation or bylaws (or similar organizational documents) of any Parent
Subsidiary; (ii) except as specified in Section 4.5 or 4.6 of the Parent
Disclosure Schedule, violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, cause or permit the acceleration of, or give
rise to any right of termination, imposition of fees or penalties under any
debt, Contract, instrument or other obligation to which Parent or any
Parent Subsidiary is a party or by which their respective assets are bound,
or result in the creation or imposition of any Lien upon any property or
assets of Parent or any Parent Subsidiary; or (iii) violate any applicable
Law of any Authority; except, in the case of clauses (ii) and (iii) above,
for any of the same that, individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect or
materially impair the ability of Parent to perform its obligations
hereunder or thereunder or prevent or materially delay the consummation of
the transactions contemplated hereby and thereby.
Section 4.6 Consents and Approvals. Except as set forth in Section
4.5 or 4.6 of the Parent Disclosure Schedule, no Consents from or of any
third party or any Authority are necessary for execution and delivery of
this Agreement or the other Operative Agreements by Parent or the
consummation by Parent of the transactions contemplated hereby and thereby,
except for compliance with the HSR Act and the Required Regulatory
Approvals, except for (i) compliance with the rules and regulations of the
Dutch Security Act (Wet toezicht effectenverkeer 1995) and individual
dispensation from the Dutch Securities Board (Stichting toezicht
effectenverkeer) and (ii) compliance with Section 57 of the United Kingdom
Financial Services Act of 1986 in respect of the Offering Memorandum (the
"Required Securities Approvals"), and except for such other Consents as to
which the failure to obtain, individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect or
materially impair the ability of Parent to perform its obligations
hereunder or thereunder or prevent or materially delay the consummation of
the transactions contemplated hereby and thereby.
Section 4.7 SEC Reports and Financial Statements. Each periodic
report, registration statement and definitive proxy statement filed by
Parent with the SEC since July 17, 1997 (as such documents have since the
time of their filing been amended and each document filed between the date
hereof and the Closing, the "Parent SEC Reports"), which include all the
documents (other than preliminary material) that Parent was required to
file with the SEC since such date, as of their respective dates, complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, applicable to such Parent SEC Reports.
None of the Parent SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except for such statements, if
any, as have been modified by subsequent filings prior to the date hereof.
The financial statements of Parent and its Subsidiaries included in such
reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with US GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) and fairly present (subject in the
case of the unaudited statements, to normal, year-end audit adjustments
which are not material in amount or effect) the consolidated financial
position of Parent and its Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended.
Section 4.8 No Undisclosed Liabilities. There are no Liabilities of
Parent or any Parent Subsidiary of any kind whatsoever and Parent knows of
no valid basis for the assertion of any such Liabilities, and no existing
condition, situation or set of circumstances exists which could reasonably
be expected to result in a Liability, other than:
Liabilities adequately and expressly reflected and
reserved for on the unaudited consolidated balance sheet of Parent and the
Parent Subsidiaries as of June 30, 1998 (including the notes thereto)
contained in the Parent SEC Reports (the "Parent Interim Balance Sheet");
Liabilities incurred in the ordinary and usual course of
business consistent with past practice since June 30, 1998;
Liabilities set forth in Section 4.8(c) of the Parent
Disclosure Schedule; and
Liabilities which, individually or in the aggregate,
would not reasonably be expected to have a Parent Material Adverse Effect.
Section 4.9 Absence of Certain Changes or Events. Except as and to
the extent disclosed in the Parent SEC Reports and as and to the extent set
forth in Section 4.9 of the Parent Disclosure Schedule, since June 30,
1998, (a) Parent and each Parent Subsidiary has conducted its businesses
only in the ordinary and usual course of business consistent with past
practice and (b) (i) no individual or cumulative material adverse change in
or effect on the business, properties, assets, liabilities, financial
condition or results of operations of Parent and the Parent Subsidiaries,
taken as a whole, has occurred; (ii) no individual or cumulative event or
development has occurred that is reasonably expected to have a Parent
Material Adverse Effect; or (iii) neither Parent nor any Parent Subsidiary
has taken, or permitted to be taken, any action that, if taken or permitted
to be taken during the period from the date of this Agreement through the
Closing Date without the consent of the Sellers' Representatives, would
constitute a breach of Section 6.1 hereof. Parent has heretofore delivered
to the JLW Partnerships a true and correct copy of the Purchase Agreement,
dated as of August 31, 1998, by and among Parent, a Subsidiary of Parent,
Lend Lease Corporation Limited and certain Subsidiaries thereof, together
with all related exhibits and schedules (the "Compass Agreement"), and
except as set forth in Section 4.9 of the Parent Disclosure Schedule, the
transactions contemplated by the Compass Agreement have heretofore been
consummated in accordance with the terms of such agreement.
Section 4.10 Licenses and Other Authorizations. Parent and the
Parent Subsidiaries have received all Licenses of any Authority material to
the ownership or leasing of their respective properties and to the conduct
of their respective businesses as currently conducted. Except as disclosed
in Section 4.10 of the Parent Disclosure Schedule, all such Licenses are
valid and in full force and effect. Parent and the Parent Subsidiaries are
operating in material compliance with the conditions and requirements of
such Licenses and, except as disclosed in Section 4.10 of the Parent
Disclosure Schedule, no proceeding is pending or, to the Knowledge of
Parent, threatened, seeking the revocation or limitation of any such
Licenses. Assuming the related Consents set forth in Section 4.5 or 4.6 of
the Parent Disclosure Schedule have been obtained prior to the Closing
Date, none of such Licenses will be terminated or impaired or become
terminable as a result of the transactions contemplated hereby or by the
other Operative Agreements.
Section 4.11 Insurance. All material policies of property, fire,
liability, worker's compensation and other forms of insurance owned or held
by Parent or any Parent Subsidiary are in full force and effect, and all
premiums with respect thereto covering all periods up to and including the
date of the Closing have been paid, if due, and no notice of cancellation
or termination has been received with respect to any such policy. Such
policies shall not terminate or lapse prior to or on the Closing Date by
reason of the transactions contemplated by this Agreement or any other
Operative Agreement.
Section 4.12 Labor Relations. Except to the extent set forth in
Section 4.12 of the Parent Disclosure Schedule: (a) neither Parent nor any
Parent Subsidiary is a party to any collective bargaining agreements, other
Contracts, written work rules or practices agreed to with any labor
organization, employee association or works council or body of employee
representatives; (b) there is no unfair labor practice charge or complaint
against Parent or any Parent Subsidiary pending or, to the Knowledge of
Parent, threatened before the National Labor Relations Board or any similar
foreign Authority which in either case would reasonably be expected to have
a Parent Material Adverse Effect; and (c) there is no labor strike,
dispute, slowdown, lockout or stoppage pending or, to the Knowledge of
Parent, threatened against or affecting Parent or any Parent Subsidiary
which would reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.13 Parent Employee Benefit Matters. (a) U.S. Employee
Benefit Matters: Section 4.13(a) of the Company Disclosure Schedule sets
forth a true and complete list of each Parent Domestic Plan, whether formal
or informal, written or oral, and indicates which of such Parent Domestic
Plans is a "multiemployer plan," as such term is defined in section (3)(37)
of ERISA. No Parent Domestic Plan that is a "single employer plan," as
such term is defined in section 3(41) of ERISA, is subject to Section 302
or Title IV of ERISA. Except as set forth in Section 4.13(a) of the Parent
Disclosure Schedule, with respect to each Parent Domestic Plan that is a
single employer plan: (i) each such plan has been established and
maintained in compliance in all material respects with its terms, including
ERISA and the Code; (ii) with respect to each such plan that is intended to
be "qualified" within the meaning of Section 401(a) of the Code, such plan
has been determined by the IRS to be so qualified (and no fact or
circumstance exists which would affect such qualification); (iii) (A)
neither Parent nor any Parent Subsidiary has filed an application under
Rev. Proc. 98-22, 1998-12 I.R.B. (the Employee Plans Compliance Resolution
System) or any predecessor program thereto with respect to any Parent
Domestic Plan, (B) any liabilities with respect of previous filings under
such programs have been satisfied in full, and (C) no fact or circumstance
exists that would necessitate such a filing to maintain the qualified
status of any Parent Domestic Plan; (iv) no such plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code;
(v) neither Parent nor any Parent Subsidiary, nor any such plan or trust
created thereunder or any trustee or administrator thereof has engaged in a
transaction in connection with which Parent or any Parent Subsidiary, any
such plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any such plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to Section 4975 or 4976 of the Code; (vi) full
payment has been made, or will be made in accordance with Section 404(a)(6)
of the Code, of all amounts which Parent, any Parent Subsidiary or ERISA
Affiliate thereof is required to pay under the terms of each such plan as
of the last day of the most recent plan year thereof ended prior to the
date of this Agreement, and all such amounts properly accrued through the
Closing Date with respect to the current plan year thereof will be paid by
Parent or the applicable Parent Subsidiary on or prior to the Closing Date
or will be properly reflected on the books and records of Parent or the
applicable Parent Subsidiary or ERISA Affiliate; (vii) no such plan
provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured), with respect to current or former employees of
Parent or any Parent Subsidiary for periods extending beyond their
retirement or other termination of service (other than (A) coverage
mandated by applicable law, (B) death benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, (C)
deferred compensation benefits accrued as liabilities on the books and
records of Parent or such sponsoring Parent Subsidiary or (D) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary)); and (viii) no amounts payable under any such plans will fail
to be deductible for Federal income tax purposes by virtue of Section
162(m) or 280G of the Code. Neither Parent nor any Parent Subsidiary has
an outstanding liability in respect of (i) a failure to make a required
contribution or payment to a multiemployer plan or (ii) a complete or
partial withdrawal under Section 4203 or 4205 of ERISA from a multiemployer
plan. No circumstance exists that presents a material risk of a partial
withdrawal from a multiemployer plan. To the Knowledge of Parent and each
Parent Subsidiary, no circumstance exists that presents a material risk
that any such plan will go into reorganization.
(b) Non-U.S. Employee Benefit Matters: Section 4.13(b) of
the Parent Disclosure Schedule sets forth a true and complete list of each
Parent Foreign Plan, whether formal or informal, written or oral. Except
to the extent set forth in Section 4.13(a) of the Parent Disclosure
Schedule: (i) each Parent Foreign Plan required to be filed or registered
with or approved by any applicable governmental or regulatory body or
authority has been so filed, registered or approved and has been maintained
in good standing with such body or authority, and each such Parent Foreign
Plan is now and has always been operated in full compliance in all material
respects with all applicable laws and regulations; (ii) no Parent Foreign
Plan is subject to the provisions of ERISA; (iii) the fair market value of
the assets of each funded Parent Foreign Plan, the liability of each
insurer for any Parent Foreign Plan funded through insurance or the book
reserve established for any Parent Foreign Plan together with any
contributions accruing on or before the Closing Date, in each case as shall
be reflected in the books and records of Parent or the Parent Subsidiary
sponsoring such Parent Foreign Plan, are or will be sufficient, on a
combined basis, to procure or provide for the benefits determined on an
ongoing basis accrued to the Closing Date payable to all current and former
participants of such Parent Foreign Plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Parent Foreign Plan; and (iv) full payment has been
made or will be made, in accordance with applicable law and the provisions
of each Parent Foreign Plan, of all amounts which Parent or any Parent
Subsidiary is required to pay on or prior to the Closing Date under the
terms of each Parent Foreign Plan as of the last day of the most recent
plan year thereof ended prior to the date of this Agreement, and all such
amounts properly accrued through the Closing Date with respect to the
current plan year thereof ended prior to the date of this Agreement, and
all such amounts properly accrued through the Closing Date with respect to
the current plan year thereof will be paid by Parent or such Parent
Subsidiary on or prior to the Closing Date or will be properly reflected on
the books and records of Parent or such Parent Subsidiary.
(c) Parent Domestic Plans and Parent Foreign Plans: Except
to the extent set forth in Section 4.13(c) of the Parent Disclosure
Schedule, (i) with respect to each Parent Domestic Plan that is a single
employer plan and with respect to each Parent Foreign Plan, Parent has
heretofore delivered to Sellers' Representatives true and complete copies
of each of the following documents: (A) a copy of such Parent Domestic
Plan and Parent Foreign Plan (including all amendments thereto), (B) a copy
of the annual report (which shall include non-discrimination tests, where
applicable), if required under ERISA or other applicable law, with respect
to each such Parent Domestic Plan and Parent Foreign Plan for the two most
recently completed plan years, (C) a copy of the actuarial report, if
required under ERISA or other applicable law, with respect to each such
Parent Domestic Plan and Parent Foreign Plan for the three most recently
completed plan years, (D) a copy of the most recent "summary plan
description," together with each "summary of material modifications,"
required under ERISA with respect to each Parent Domestic Plan, and any
plan description, required under applicable law with respect to each Parent
Foreign Plan, (E) if the Parent Domestic Plan or Parent Foreign Plan is
funded through a trust or any third-party funding vehicle, a copy of the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof, and (F) the most recent determination
letter received from the IRS with respect to such Parent Domestic Plan that
is intended to be qualified under Section 401 of the Code, and the most
recent letter, certification or other document, if any, received from any
applicable governmental or regulatory body or authority evidencing the
registration and/or approval of any Parent Foreign Plan required to be so
registered or approved; (ii) there are no pending or, to the Knowledge of
Parent and each Parent Subsidiary, threatened or anticipated material
claims by, on behalf of or against any of the Parent Domestic Plans or
Parent Foreign Plans, and no material litigation or administrative or other
proceeding (including, without limitation, any litigation or proceeding
under Title IV of ERISA) has occurred or, to the Knowledge of Parent and
each Parent Subsidiary, is threatened involving any Parent Domestic Plan or
Parent Foreign Plan, and (iii) the consummation of the transactions
contemplated by this Agreement or any other Operative Agreement shall not,
either alone or in combination with another event, except as set forth in
Section 4.13(c) of the Parent Disclosure Schedule, (A) accelerate the time
of payment or vesting or increase the amount of compensation due any
employee or officer of Parent or any Parent Subsidiary, (B) entitle any
current or former employee or officer of Parent or any Parent Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (C) with respect to any Parent
Domestic Plan that is a single employer plan, constitute a prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available.
Section 4.14 Litigation. Except as set forth in Section 4.14 of the
Parent Disclosure Schedule, there is no Action, pending or, to the
Knowledge of Parent, threatened against or involving Parent or any Parent
Subsidiary which would reasonably be expected to have a Parent Material
Adverse Effect, or which questions or challenges the validity of this
Agreement or any other Operative Agreement or any action taken or to be
taken by Parent pursuant to this Agreement or any other Operative Agreement
or in connection with the transactions contemplated hereby and thereby.
Neither Parent nor any Parent Subsidiary is subject to any judgment, order
or decree entered in any Action which purports to limit in any respect, or
which may have a material adverse effect on, its business practices or its
ability to acquire any property or conduct all or any material portion of
the businesses conducted by Parent and the Parent Subsidiaries in any
locality.
Section 4.15 Compliance with Law. Except as set forth in Section
4.15 of the Parent Disclosure Schedule, the operations of Parent and each
Parent Subsidiary have been and are being conducted in accordance with all
applicable Laws and other requirements of any Authority having jurisdiction
over Parent or any Parent Subsidiary, or any of their respective
properties, assets or business, including, without limitation, all such
Laws and requirements relating to antitrust, consumer protection, currency
exchange, health, occupational safety, employment practices, wages and
hours, pension, securities, and trading-with-the-enemy matters and planning
and development, except for such matters as would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.16 Taxes. Except as set forth in Section 4.16 of the Parent
Disclosure Schedule:
(a) All Tax Returns required to be filed with respect to
Parent and the Parent Subsidiaries or the affiliated, combined or unitary
group of which Parent or any Parent Subsidiary is or was a member have been
duly and timely filed, except for those returns which, individually or in
the aggregate, would not have a Parent Material Adverse Effect, and all
such Tax Returns are true, correct and complete. Parent and each Parent
Subsidiary has duly and timely paid all Taxes and other charges that are
due, whether or not shown as due on any Tax Return, except for Taxes
reserved for on the financial statements of Parent and the Parent
Subsidiaries. There are no Liens with respect to Taxes (except for Liens
with respect to real property Taxes not yet due) upon any of the assets of
Parent or any Parent Subsidiary. None of Parent or any Parent Subsidiary
is a party to, is bound by, or has any obligation under, any Tax sharing,
allocation, indemnity or similar Contract, nor is liable for the Taxes of
any other person. Parent and the Parent Subsidiaries have established due
and sufficient reserves on the financial statements of Parent and the
Parent Subsidiaries for the payment of all Taxes in accordance with US
GAAP.
(b) All Tax deficiencies that have been asserted, proposed or
assessed in writing against or with respect to Parent or any Parent
Subsidiary by any taxing authority have been paid in full or finally
settled, and no issue (including with respect to transfer pricing) has been
raised in writing by any taxing authority in any examination, audit or
other proceeding that, by application of the same or similar principles,
reasonably could be expected to result in a material proposed deficiency
for any other period not so examined. There are no outstanding Contracts,
consents, waivers or arrangements extending the statutory period of
limitation applicable to any Tax Return or claim for, or the period for the
collection or assessment of, Taxes due from Parent or any Parent Subsidiary
for any taxable period.
(c) Neither Parent or any Parent Subsidiary has been or is in
violation (or with notice or lapse of time or both, would be in violation)
of any applicable Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections
1441 and 1442 of the Code or similar provisions under any foreign Laws).
Parent and each Parent Subsidiary has duly and timely withheld from
employee salaries, wages and other compensation and paid over to the
appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable Laws.
(d) No audit or other proceeding by any domestic or foreign
court, governmental or regulatory authority, or similar Person is pending
or, to the Knowledge of Parent and any Parent Subsidiary, threatened with
respect to any Taxes due from Parent or any Parent Subsidiary or any Tax
Return filed or required to be filed by or relating to Parent or any Parent
Subsidiary.
No claim has ever been made by an authority in any
jurisdiction where Parent or any Parent Subsidiary has not filed Tax
Returns that they are or may be subject to taxation by that jurisdiction.
Section 4.17 Opinion of Financial Advisors. Parent has received the
opinion of Morgan Stanley & Co. Incorporated, financial advisors to Parent,
to the effect that, as of the date of this Agreement, the Consideration to
be paid by Parent under this Agreement and the Other Purchase Agreements is
fair to Parent's stockholders from a financial point of view.
Section 4.18 Certain Fees. Except for Morgan Stanley & Co.
Incorporated and William Blair & Company, neither Parent nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees or commissions or finders'
fees in connection with the transactions contemplated by this Agreement or
the other Operative Agreements.
Section 4.19 Disclosure Documents. The Offering Memorandum and the
Proxy Statement will not, in the case of the Offering Memorandum, as of the
date thereof or, in the case of the Proxy Statement, either at the time of
the mailing of the Proxy Statement to the stockholders of Parent or at the
time of the meeting of such stockholders to be held in connection
therewith, contain any untrue statement of any material fact or omit to
state any material fact required to be stated therein or necessary to in
order to make the statements therein, in light of the circumstances under
which they are or were made, not misleading, provided that no
representation or warranty is made as to the information included therein
that relates to any Shareholder, Other Shareholder, JLW Seller, JLW Party,
Company, Asia Region Company or Australasia Region Company, or any of their
respective Subsidiaries, including, with respect to the Integration, this
Agreement, the Other Purchase Agreements or the transactions contemplated
hereby or thereby.
Section 4.20 Other. The Board of Parent has approved this Agreement,
the other Operative Agreements, the Other Purchase Agreements and the
transactions contemplated hereby and thereby and such approval is
sufficient to render inapplicable any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation
enacted under the laws of the State of Illinois or the State of Maryland
(including, without limitation, any of the provisions of Subtitle 6 or 7 of
the General Corporation Law of Maryland) to the purchase or sale of the
Consideration Shares pursuant to this Agreement, the Joinder Agreements,
the Other Purchase Agreements or the Other Joinder Agreements. As of the
date hereof, Parent has not adopted any "poison pill" or "shareholder
rights plan." As of the Closing Date, Parent will not have adopted a
"poison pill" or "shareholders rights plan" which would be applicable to
the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE JLW PARTNERSHIPS
AND THE COMPANIES
Section 5.1 Operation of the Companies. From the date hereof to the
Closing, except as described in Section 5.1 of the Company Disclosure
Schedule or as otherwise permitted by or provided in this Agreement, the
other Operative Agreements or the Integration Plan or the Integration
Agreements, or except as consented to in writing by Parent (which consent
shall not be unreasonably withheld or delayed), each of the JLW
Partnerships and the Companies agrees that:
(a) Such JLW Partnership or Company shall, and shall cause
each Company or Company Subsidiary which is a direct or indirect Subsidiary
thereof to, conduct its business only in the ordinary and usual course and
substantially in the same manner as heretofore conducted.
(b) Such JLW Partnership or Company shall perform all acts to
be performed by it pursuant to this Agreement, any other Operative
Agreements and the Integration Plan and the Integration Agreements and
shall refrain from taking any action (other than any action permitted by or
provided in this Agreement) that would result in the representations and
warranties of the JLW Partnerships and the Management Shareholders
hereunder or of the Shareholders under the Joinder Agreements becoming
untrue in any material respect or any of the conditions to Closing not
being satisfied.
Without limiting the generality of the foregoing, except as described in
Section 5.1 of the Company Disclosure Schedule or as otherwise permitted or
contemplated by this Agreement, the other Operative Agreements or the
Integration Plan or the Integration Agreements, or except as consented to
in writing by Parent (which consent will not be unreasonably withheld or
delayed), from the date hereof to the Closing, such JLW Partnership or
Company shall not, and shall cause each Company Subsidiary which is a
direct or indirect Subsidiary thereof not to:
amend its certificate of incorporation, bylaws or
memorandum and articles of association (or similar organizational
documents) or deed of partnership, as applicable, or adopt or pass further
regulations or resolutions inconsistent therewith;
other than in the ordinary course of business
consistent with past practice (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of any other Person (other than any Company
or Company Subsidiary), or (B) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to any
Company or Company Subsidiary), or enter into any material Contract;
acquire, by merging or consolidating with or by
purchasing equity interests in or assets of any other Person or otherwise,
any material assets of or any equity interests in any other Person;
pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (A) the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice, or as required
by their terms, of liabilities reflected or specifically reserved against
in or contemplated by the JLW England Interim Financial Statements, the JLW
Scotland Interim Financial Statements and the JLW Ireland Interim Financial
Statements; (B) claims, liabilities or obligations that are incurred after
the date thereof in the ordinary course of business consistent with past
practice or that are immaterial (in relation to each such entity) if not
incurred in the ordinary course of business or (C) the payment, discharge
or satisfaction in the ordinary course of business consistent with past
practice of obligations under (1) Contracts or Licenses listed or disclosed
in the Company Disclosure Schedule or not required to be listed or
disclosed therein by reason of materiality or other specifically identified
exceptions or exclusions set forth in such representations and warranties
or (2) Contracts or Licenses entered into after the date of this Agreement
in accordance with the limitations set forth in this Section 5.1;
pay, discharge or satisfy any material Lien, unless
required by the terms thereof or of the documents evidencing or governing
any related indebtedness;
permit or allow any of its respective material
properties or assets, real, personal or mixed, tangible or intangible, to
be subjected to any Lien, except for any Permitted Liens incurred in the
ordinary course of business consistent with past practice;
cancel any material debts or claims, or waive any
rights of material value or, sell, transfer or convey any of its respective
material properties or assets, real, personal or mixed, tangible or
intangible;
enter into any employment or severance agreement
with any partner, officer, director, shareholder or employee thereof who
receives or would receive annual compensation in excess of US$100,000;
enter into or amend any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement in respect of the
compensation payable or to become payable to any of its partners, officers,
directors, shareholders or employees (other than salary increases in the
ordinary course of business consistent with past practice to employees who
are not partners, officers, directors or shareholders of any of the JLW
Partnerships, Companies or Company Subsidiaries which, in the aggregate,
are not material and year-end bonuses in the ordinary course of business
consistent with past practice);
make any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit;
declare, pay or make, or set aside for payment or
making, any dividend or other distribution in respect of its partnership
interests, issued share capital or capital stock or other securities, as
applicable, or directly or indirectly redeem, purchase or otherwise acquire
any of its partnership interests, issued share capital or capital stock or
other securities, other than dividends paid or payable by a wholly owned
Company Subsidiary to a Company or another wholly owned Company Subsidiary;
issue, allot, create, grant or sell any of its
partnership interests, shares of capital stock or other equity securities
or issue, grant or sell any security, option, warrant, call, subscription
or other right of any kind, fixed or contingent, that directly or
indirectly calls for the issuance, allotment, sale, pledge or other
disposition of any of its partnership interests, issued share capital,
shares of capital stock or other equity securities;
make any change in any accounting or tax
principles, practices or methods, except as may be required by applicable
generally accepted accounting principles or applicable Law;
make any material tax election or settle or
comprise any material income tax liability;
terminate or amend or fail to perform any of its
obligations under any material Contract to which it is a party or by which
it or any of its assets are bound;
enter into any material joint venture or
partnership;
settle any material lawsuits, claims, actions,
investigations or proceedings; or
authorize or enter into any obligation or
commitment (or otherwise agree) to take any of the foregoing actions.
(c) Such JLW Partnership or Company shall, and shall cause
each Company Subsidiary which is a direct or indirect Subsidiary thereof
to, give prompt notice to Parent of (i) any Company Material Adverse
Effect, (ii) any change which makes it likely that any representation or
warranty set forth in this Agreement regarding the JLW Partnerships, the
Companies or the Company Subsidiaries will not be true in any material
respect at the Integration Commencement Date or the Closing, as applicable,
or would be likely to cause any condition to the obligations of any party
hereto to consummate the transactions contemplated by this Agreement not to
be satisfied or (iii) the failure of the JLW Partnerships or the Companies
to comply with or satisfy any covenant or agreement to be complied with or
satisfied by it pursuant to this Agreement, the other Operative Agreements
and the Integration Plan and Integration Agreements which would likely
cause a condition to the obligations of any party to effect the
transactions contemplated by this Agreement not to be satisfied.
(d) Such JLW Partnership or Company shall, and shall cause
each Company Subsidiary which is a direct or indirect Subsidiary thereof
to, use commercially reasonable efforts to take such action as may be
necessary to maintain, preserve, renew and keep in full force and effect
its existence and its material rights and franchises.
(e) Such JLW Partnership or Company shall, and shall cause
each Company Subsidiary which is a direct or indirect Subsidiary thereof
to, use commercially reasonable efforts to preserve intact the existing
relationships with its clients and employees and others with respect to the
businesses with which it has business relationships. Such JLW Partnership
or Company shall, and shall cause each Company Subsidiary which is a direct
or indirect Subsidiary thereof to, permit Parent to contact suppliers,
customers and employees in coordination with personnel of such JLW
Partnership, Company or Company Subsidiary for purposes of facilitating the
transactions contemplated hereby.
Notwithstanding anything to the contrary contained in
this Section 5.1, NewCo 1 shall not, and such JLW Partnership or Company
shall cause NewCo 1 not to, incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of any other Person, pursuant to or in
connection with Clause 6 of the Offer Letter attached as Document No. 3 to
Schedule 1 of the Integration Plan, in each case without the prior written
consent of Parent (which consent shall not be unreasonably withheld or
delayed).
Section 5.2 Access. Subject to compliance with applicable Law, upon
reasonable notice, each JLW Partnership and Company shall, and shall cause
each Company Subsidiary which is a direct or indirect Subsidiary thereof
to, give Parent and its counsel, financial advisors, auditors and other
authorized representatives reasonable access during normal business hours
to its offices, properties, books and records, furnish to Parent and its
counsel, financial advisors, auditors and other authorized representatives
such financial and operating data as such persons may reasonably request,
and instruct and request each of its partners, directors, officers,
employees, counsel and financial advisors (as applicable) to cooperate with
Parent in its investigation of the businesses of the JLW Partnerships,
Companies and Company Subsidiaries and in the planning for the combination
of the businesses of the Companies and Parent following the consummation of
the transactions contemplated hereby; provided that no investigation
pursuant to this Section shall affect any representation or warranty given
by the Management Shareholders and the JLW Partnerships hereunder or the
Shareholders or the Related JLW Owners of such Shareholders under the
Joinder Agreements. All information obtained pursuant to this Section 5.2,
or otherwise pursuant to this Agreement, shall be governed by the
Confidentiality Agreement, dated as of June 4, 1998, by and among Parent
and the various individuals and entities party thereto (the
"Confidentiality Agreement").
Section 5.3 Consents. The JLW Partnerships and the Companies shall,
unless otherwise agreed to by Parent, use commercially reasonable efforts
to obtain, prior to the Closing (a) all Consents required to consummate the
transactions contemplated by this Agreement, the other Operative Agreements
or the Integration Plan and the Integration Agreements (other than with
respect to Post-Closing Integration Actions), including, without
limitation, the Consents required by Sections 3.6 and 3.7 of the Company
Disclosure Schedule, and (b) such additional Consents as Parent or its
counsel shall reasonably determine to be necessary. All such Consents
shall be in writing and executed counterparts thereof shall be delivered to
Parent promptly after receipt thereof by any JLW Partnership or Company but
in no event later than the Integration Commencement Date.
Section 5.4 Closing Net Worth. JLW England, JLW Scotland and JLW
Ireland shall cause the Final JLW England Closing Net Worth, Final JLW
Scotland Closing Net Worth and Final JLW Ireland Closing Net Worth,
respectively, to be positive.
Section 5.5 Other Offers. From the date hereof until the termination
hereof, each of the JLW Partnerships and the Companies shall not, and shall
cause each Company Subsidiary which is a direct or indirect Subsidiary
thereof not to, and shall not permit the partners, directors, officers,
employees, agents and advisors of such JLW Partnership, Company or Company
Subsidiary to, directly or indirectly, (i) take any action to solicit,
initiate or knowingly encourage any JLW Acquisition Proposal or (ii) engage
in negotiations with, or disclose any nonpublic information relating to any
JLW Partnership, Company or Company Subsidiary or afford access to the
properties, books or records of any JLW Partnership, Company or Company
Subsidiary to, any Person that may be considering making, or has made, a
JLW Acquisition Proposal; provided, that any JLW Partnership or Company may
respond to inquiries with respect to a JLW Acquisition Proposal for the
sole purpose of informing the inquiring Person that no discussions of any
kind may occur while this Section 5.5 is in effect. Each of the JLW
Partnerships and Companies will, promptly (and in no event later than 24
hours after receipt of the relevant JLW Acquisition Proposal or request for
information) notify Parent in writing of the receipt of any JLW Acquisition
Proposal or request for information (which notice shall identify the Person
making the JLW Acquisition Proposal or request and set forth the material
terms and conditions thereof). For purposes of this Section 5.5, "JLW
Acquisition Proposal" means any offer or proposal for, or any indication of
interest in, a merger, consolidation or other business combination
involving any of the JLW Partnerships, the Companies or the Company
Subsidiaries or the acquisition of any equity interest in, or a substantial
portion of the assets of, any of the JLW Partnerships, the Companies or the
Company Subsidiaries, other than the transactions contemplated by this
Agreement and the Other Purchase Agreements.
Section 5.6 Integration Matters. Without the prior written consent
of Parent (which consent shall not be unreasonably withheld or delayed), no
JLW Party shall (i) amend the Integration Plan or any Integration
Agreement, (ii) extend the time for the performance of any of the
obligations thereunder, (iii) waive any inaccuracies in the representations
and warranties contained in any Integration Document, (iv) waive
compliance with any of the agreements or conditions contained therein, or
(v) enter into any agreement, arrangement or understanding other than as
set forth in the Integration Plan or Integration Agreements in respect of
the transactions contemplated thereby; provided, however, that the
foregoing shall not prohibit the Sellers' Representatives from waiving any
condition contained in any Integration Agreement that the Sellers'
Representatives could waive pursuant to Article VII or IX hereof.
Section 5.7 Nine-Month Financial Statements. The JLW Partnerships
and the Companies shall cause to be prepared and, as soon thereafter as
practicable but in no event later than November 16, 1998, deliver to Parent
the Nine-Month Interim Financial Statements and the JLW Combined 9/30
Financial Statement Schedules, in each case as contemplated by the
provisions of Section 3.8(b) hereof.
ARTICLE VI
COVENANTS OF PARENT
Section 6.1 Operation of Parent. From the date of hereof to the
Closing, except as described in Section 6.1 of the Parent Disclosure
Schedule or as otherwise permitted by or provided in this Agreement, the
other Operative Agreements or the Integration Plan or the Integration
Agreements, or except as consented to in writing by the Sellers'
Representatives (which consent shall not be unreasonably withheld or
delayed), Parent agrees that:
(a) Parent shall, and shall cause each Parent Subsidiary to,
conduct its business only in the ordinary and usual course and
substantially in the same manner as heretofore conducted.
(b) Parent shall perform all acts to be performed by it
pursuant to this Agreement, any other Operative Agreements and the
Integration Plan and the Integration Agreements and shall refrain from
taking any action (other than any action permitted by or provided in this
Agreement) that would result in the representations and warranties of
Parent hereunder becoming untrue in any material respect or any of the
conditions to Closing not be satisfied.
Without limiting the generality of the foregoing, except
as described in Section 6.1 of the Parent Disclosure Schedule or as
otherwise permitted or contemplated by this Agreement, the other Operative
Agreements or the Integration Plan or the Integration Agreements or except
as consented to in writing by the Sellers' Representatives (which consent
will not be unreasonably withheld or delayed), from the date hereof to the
Closing, Parent shall not, and shall cause each Parent Subsidiary not to:
amend its certificate of incorporation or bylaws
(or similar organizational documents) or adopt or pass further regulations
or resolutions inconsistent therewith;
other than in the ordinary course of business
consistent with past practice (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of any other Person (other than any Parent
Subsidiary), or (B) make any loans, advances or capital contributions to,
or investments in, any other Person (other than to any Parent Subsidiary),
or enter into any material Contract;
acquire, by merging or consolidating with or by
purchasing equity interests in or assets of any other Person or otherwise,
any material assets of or any equity interests in any other Person;
pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than (A) the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, or as required
by their terms, of liabilities reflected or specifically reserved against
in or contemplated by the Parent Interim Balance Sheet, (B) claims,
liabilities or obligations that are incurred after the date thereof in the
ordinary course of business consistent with past practice or that are
immaterial liabilities if not incurred in the ordinary course of business
or (C) the payment discharge or satisfaction in the ordinary course of
business consistent with past practice of obligations under any Contracts
or Licenses to which Parent or any Parent Subsidiary is bound as of the
date hereof or entered into after the date of this Agreement in accordance
with the limitations set forth in this Section 6.1;
pay, discharge or satisfy any material Lien unless
required by the terms thereof or the documents evidencing or governing any
related indebtedness;
permit or allow any of its respective material
properties or assets, real, personal or mixed, tangible or intangible, to
be subjected to any Lien, except for any Permitted Liens incurred in the
ordinary course of business consistent with past practice;
cancel any material debts or claims, or waive any
rights of material value or, sell, transfer or convey any of its respective
material properties or assets, real, personal or mixed, tangible or
intangible;
enter into any employment or severance agreement
with any partner, officer, director, shareholder or employee thereof who
receives or would receive annual compensation in excess of US$100,000;
enter into or amend any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement in respect of the
compensation payable or to become payable to any of its officers, directors
or employees (other than salary increases in the ordinary course of
business consistent with past practice to employees who are not officers or
directors of Parent which, in the aggregate, are not material and year-end
bonuses in the ordinary course of business consistent with past practice);
make any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit;
declare, pay or make, or set aside for payment or
making, any dividend or other distribution in respect of its capital stock
or other securities, or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock or other securities, other than
dividends paid or payable by a wholly owned Parent Subsidiary to Parent or
another wholly owned Parent Subsidiary;
other than pursuant to the Parent Stock Plans,
issue, allot, create, grant or sell any shares of its capital stock or any
equity security or issue, grant or sell any security, option, warrant,
call, subscription or other right of any kind, fixed or contingent, that
directly or indirectly calls for the issuance, allotment, sale, pledge or
other disposition of any shares of its capital stock or other equity
securities;
make any change in any accounting or tax
principles, practices or methods, except as may be required by applicable
generally accepted accounting principles or applicable Law;
make any material tax election or settle or
compromise any material income tax liability;
terminate or amend or fail to perform any of its
obligations under any material Contract to which it is a party or by which
it or any of its assets are bound;
enter into any material joint venture or
partnership;
settle any material lawsuits, claims, actions,
investigations or proceedings; or
authorize or enter into any obligations or
commitment (or otherwise agree) to take any of the foregoing actions.
(c) Parent shall, and shall cause each Parent Subsidiary to,
give prompt notice to the Sellers' Representatives of (i) any Parent
Material Adverse Effect, (ii) any change which makes it likely that any
representation or warranty set forth in this Agreement regarding Parent
will not be true in any material respect at the Integration Commencement
Date or the Closing, as applicable, or would be likely to cause any
condition to the obligations of any party hereto to consummate the
transactions contemplated by this Agreement not to be satisfied or (iii)
the failure of Parent to comply with or satisfy any covenant or agreement
to be complied with or satisfied by it pursuant to this Agreement and the
other Operative Agreements which would likely cause a condition to the
obligations of any party to effect the transactions contemplated by this
Agreement not to be satisfied.
(d) Parent shall, and shall cause each Parent Subsidiary to,
use commercially reasonable efforts to take such action as may be necessary
to maintain, preserve, renew and keep in full force and effect its
existence and its material rights and franchises.
(e) Parent shall, and shall cause each Parent Subsidiary to,
use commercially reasonable efforts to preserve intact the existing
relationships with its clients and employees and others with respect to the
businesses with which it has business relationships. Parent shall, and
shall cause each Parent Subsidiary to, permit the Shareholders'
Representatives or their designees to contact suppliers, customers and
employees in coordination with the personnel of Parent or such Parent
Subsidiary for purposes of facilitating the transactions contemplated
hereby.
Section 6.2 Access. Subject to compliance with applicable Law, upon
reasonable notice, Parent shall, and shall cause each Parent Subsidiary to,
give the JLW Partnerships and the Companies, their respective counsel,
financial advisors, auditors and other authorized representatives
reasonable access during normal business hours to its offices, properties,
books and records, furnish to the JLW Partnerships and the Companies, their
respective counsel, financial advisors, auditors and other authorized
representatives such financial and operating data as such persons may
reasonably request, and instruct and request each of its directors,
officers, employees, counsel and financial advisors (as applicable) to
cooperate with the JLW Partnerships and the Companies in their
investigation of the businesses of Parent and the Parent Subsidiaries and
in the planning for the combination of the businesses of the Companies and
Parent following the consummation of the transactions contemplated hereby;
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by the Parent hereunder. All information
obtained pursuant to this Section 6.2, or otherwise pursuant to this
Agreement shall be governed by the Confidentiality Agreement.
Section 6.3 Consents. Parent shall use, unless otherwise agreed by
the Sellers' Representatives, commercially reasonable efforts to obtain,
prior to the Closing, (a) all Consents required to consummate the
transactions contemplated by this Agreement and the other Operative
Agreements, including, without limitation, the Consents required by
Sections 4.5 and 4.6 of the Parent Disclosure Schedule, and (b) such
additional Consents as the JLW Partnerships or the Sellers' Representatives
or counsel to the JLW Partnerships shall reasonably determine to be
necessary. All such Consents shall be in writing and executed counterparts
thereof shall be delivered to the Sellers' Representatives promptly after
receipt thereof by Parent but in no event later than the Integration
Commencement Date.
Section 6.4 Listing of Consideration Shares. Parent shall use
commercially reasonable efforts to cause the Consideration Shares to be
approved for listing on the NYSE, subject to official notice of issuance,
on or prior to the Integration Commencement Date.
Section 6.5 Stockholder Approval; Proxy. (a) Parent shall, in
accordance with applicable Law and the Articles of Incorporation and Bylaws
of Parent, cause a special meeting of its stockholders to be duly called
and held for the purpose of voting (and will hold such a vote at such
meeting) on the approval of the Proposed Actions as promptly as practicable
following the Shareholder Determination Date.
(b) In connection with such meeting, Parent shall promptly
prepare and file with the SEC, and use its reasonable efforts to have
cleared by the SEC and after the Commitment Date mail to its stockholders,
a proxy statement (the "Proxy Statement") that complies as to form in all
material respects with all relevant provisions of the Exchange Act relating
to the meeting of Parent's stockholders to be held in connection with this
Agreement and includes (when so filed) such information as the Management
Shareholders shall reasonably request. Parent shall consult with the
Shareholder's Representatives, the JLW Partnerships, the Companies and the
financial advisers and counsel to the JLW Partnerships in connection with,
and shall permit them to participate in, the preparation of the Proxy
Statement. Parent shall promptly notify them of the receipt of comments of
the SEC with respect to the Proxy Statement and requests by the SEC for
amendments or supplements to the Proxy Statement or for additional
information, and shall promptly supply them with copies of all
correspondence between Parent (or its representatives) and the SEC (or its
staff) and shall permit such counsel to participate in all telephone
conferences or meetings with the SEC (or its staff) relating thereto.
(c) The Proxy Statement shall include the approval and
recommendation of the Board of Parent in favor of this Agreement and the
Other Purchase Agreements and the transactions contemplated hereby and
thereby, including the Proposed Actions, and unless Parent shall modify or
withdraw such recommendation, Parent shall use all reasonable efforts to
solicit from its stockholders proxies in favor of the foregoing and take
all other actions reasonably necessary or advisable to secure the requisite
vote or consent of stockholders required by Maryland law and the NYSE;
provided, that Parent may modify or withdraw such recommendation, but only
if and to the extent that (i) a Parent Acquisition Proposal has been made
prior to the time that the Board determines to withdraw or modify its
recommendation, (ii) the Board reasonably concludes in good faith, based on
advice from its outside counsel, that the failure to make such withdrawal
or modification would violate the fiduciary duties of the Board under
applicable Law, and (iii) Parent shall have delivered to the Shareholders'
Representatives, at least two Business Days prior to such withdrawal or
modification, a written notice advising the Shareholders' Representatives
that Parent has received a Parent Acquisition Proposal, identifying the
person making such Parent Acquisition Proposal, setting forth the material
terms and conditions of such Parent Acquisition Proposal and indicating
that the Board proposes to withdraw or modify its recommendation.
Section 6.6 Other Offers. From the date hereof until the termination
hereof, Parent shall not, and shall cause each of the Parent Subsidiaries
not to, and shall not permit the directors, officers, employees, agents and
advisors of Parent and any of the Parent Subsidiaries to, directly or
indirectly, (i) take any action to solicit, initiate or knowingly encourage
any Parent Acquisition Proposal or (ii) engage in negotiations with, or
disclose any nonpublic information relating to Parent or any of the Parent
Subsidiaries or afford access to the properties, books or records of Parent
or any of the Parent Subsidiaries to, any Person that may be considering
making, or has made, a Parent Acquisition Proposal; provided, however, that
Parent may engage in negotiations with, disclose nonpublic information
relating to Parent and any of the Parent Subsidiaries and afford access to
the properties, books and records of Parent and any of the Parent
Subsidiaries to, any Person who has made a Parent Acquisition Proposal and
take such other actions as are customarily undertaken in connection with
the negotiation and evaluation of a Parent Acquisition Proposal if and to
the extent that the Board reasonably concludes in good faith based on
advice from its outside counsel that the failure to take such action would
violate the fiduciary duties of the Board under applicable Law; provided
that, prior to any such negotiations, disclosure of non-public information,
affording of access or the taking of such other actions, such Person enters
into a confidentiality agreement with Parent on customary terms. Parent
will promptly (and in no event later than 24 hours after receipt of the
relevant Parent Acquisition Proposal or request for information) notify the
Shareholders' Representatives in writing of the receipt of any Parent
Acquisition Proposal or request for information (which notice shall
identify the Person making the Parent Acquisition Proposal or request and
set forth the material terms and conditions thereof). Parent will keep the
Shareholders' Representatives fully informed on a current basis of the
status and details of any Parent Acquisition Proposal and any request for
information. Parent shall, and shall cause the Parent Subsidiaries and the
directors and officers and financial and legal advisers of Parent and the
Parent Subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any Person heretofore
conducted with respect to any Parent Acquisition Proposal. Notwithstanding
any provision of this Section 6.6, nothing in this Section 6.6 shall
prohibit Parent or the Board from talking and disclosing to Parent's
stockholders a position with respect to a Parent Acquisition Proposal by a
third party to the extent required under the Exchange Act or from making
such disclosure to the Company's stockholders which, in the judgment of the
Board based on the advice of outside counsel, is required under applicable
Law; provided that nothing in this sentence shall affect the obligations of
Parent and the Board under any other provision of this Agreement. For
purposes of this Agreement, "Parent Acquisition Proposal" means any offer
or proposal for, or any indiction of interest in, a merger, consolidation
or other business combination involving Parent or any of the Parent
Subsidiaries or the acquisition of any equity interest in, or a substantial
portion of the assets of, Parent or any of the Parent Subsidiaries, other
than the transactions contemplated by this Agreement and the Other Purchase
Agreements.
Section 6.7 Employee Trust. At or prior to Closing, Parent shall
establish a trust (the "ESOT") for the purpose of holding 1,772,324 shares
of Parent Common Stock (which shall be deposited therein, collectively, by
Parent, US Acquisition Sub, US Acquisition Sub II and Australia Acquisition
Sub on or prior to the Closing Date) (the "ESOT Shares") for distribution
to certain JLW Employees. The trust agreement and the related agreements
required to establish the ESOT (the "ESOT Agreements") shall reflect the
terms set forth in Annex L attached hereto and such other terms as Parent
and the Sellers' Representatives shall mutually agree. The trustee of the
ESOT (the "ESOT Trustee") will be determined in accordance with and shall
have the rights and obligations specified in Annex L hereto and the ESOT
Agreements. The ESOT Agreements shall provide (to the extent set forth in
Annex L) for the creation of sub trusts within the ESOT for the benefit of
employees of specified Companies, Asian Region Companies and Australasia
Region Companies and the Subsidiaries thereof(each a "Sub Trust" or an
"ESOT Sub Trust", which Sub Trusts shall include a "JLW Australasia ESOT
Sub Trust," a "JLW Asia ESOT Sub Trust," a "JLW England ESOT Sub Trust," a
"JLW Scotland ESOT Sub Trust" and the "JLW Ireland ESOT Sub Trust"), which
Sub Trusts shall be controlled by one or more persons designated pursuant
to the SCCA. Parent and Sellers' Representatives agree to cooperate in
good faith to determine the additional requirements of the ESOT and to
negotiate in good faith the satisfactory resolution of such requirements
prior to Closing. The parties hereto agree that (i) 91,988 ESOT Shares
(the "ESOT Escrow Shares") shall be included in the Escrow Shares and (ii)
108,895 ESOT Shares (the "ESOT Adjustment Shares") shall be included in the
Adjustment Shares, in each case to be delivered to the Escrow Agent on
behalf of the ESOT pursuant to Section 1.3 hereof and Section 1.3 of each
of the Other Purchase Agreements.
Section 6.8 Certain Stockholder Agreements. Parent shall use
commercially reasonable efforts to solicit the execution and delivery by
each current director, officer and employee of Parent or any Parent
Subsidiary who is a former partner in DEL of, a stockholder agreement, in
the form attached hereto as Exhibit 3 (the "DEL Stockholder Agreement"), on
or prior to the Integration Commencement Date.
Section 6.9 Guarantee of Indemnification Agreements. Parent shall
cause, on or prior to the Integration Commencement Date, a Parent
Subsidiary with net assets of at least US$10 million to enter into a
guarantee (in the form attached hereto as Exhibit 4 (the "Indemnification
Agreement Guarantee"), of any payments that may become due by NewCo 1,
NewCo 2 or NewCo 3, as the case may be, to any JLW Partnership under the
indemnification in favor of the partners of the applicable JLW Partnership
contained in the Integration Agreements and, during the term of such
Indemnification Agreement Guarantee, Parent shall cause such Parent
Subsidiary to maintain net assets of at least US$10 million.
Section 6.10 [Intentionally Left Blank]
Section 6.11 Certain Instruments of Indemnification. On or prior to
the Closing Date, Parent shall execute and deliver the instruments of
assumption of indemnification obligations in the respective forms attached
hereto as Exhibit 6 and Exhibit 7.
Section 6.12 Obtain Certain Releases. Parent shall use commercially
reasonable efforts to obtain prior to the Integration Commencement Date,
from the landlords under the leases identified on Exhibit 8 hereto, consent
to the re-registration of JLW Supply as a limited liability company and the
incorporation of JLW England and JLW Ireland without the requirement for
personal guarantees by any partner of JLW England or JLW Ireland; provided
that nothing herein shall require Parent to pay additional amounts or post
any bonds. For purposes of this Section 6.12, "commercially reasonable
efforts" shall include the offering by Parent to the landlords specified in
Exhibit 8 of a guarantee, in form and substance reasonably acceptable to
Parent, from the Parent Subsidiary specified in Section 6.9 hereof.
Section 6.13 Employee Stock Options. To the extent that Parent or
any Parent Subsidiary issues or grants, or has issued or granted, (i) any
stock options, stock appreciation rights, bonus or restricted stock awards,
restricted stock units, performance shares or other stock based incentive
awards, whether issued under a formal stock based incentive plan or
otherwise, or (ii) any cash-based awards granted under a stock based
incentive plan (the awards referred to in (i) and (ii) being sometimes
referred to herein as "Stock Options") to any employees of Parent or any
Parent Subsidiary, which employees were so employed prior to the Closing
Date (other than any new employees after June 30, 1998) at any time after
June 30, 1998 and prior to the third anniversary of the Closing Date,
Parent shall cause at least an equivalent number of like Stock Options to
be issued or granted, on or about the time of such grant or issuance (or,
in the case of Stock Options granted or issued prior to the Closing Date,
as soon as reasonably practicable after the Closing Date) to employees of
Parent or any Subsidiary thereof who were employees of the JLW Businesses
immediately prior to the Closing Date.
Section 6.14 Director and Officer Indemnification. For a period of
three years following the Closing Date, Parent shall not amend any charter,
bylaw or other constitutional document of any Company or Company
Subsidiary, in each case as in effect at June 30, 1998, in such a way as to
remove or reduce any right to indemnification thereunder in favor of any
director, partner or officer thereof.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of Parent to purchase the Shares at the Closing
and to perform its other agreements under this Agreement and the other
Operative Agreements to be performed by it at the Closing, and the
obligations of the Shareholders to sell the Shares at the Closing and the
obligations of the JLW Partnerships, the Companies, the Company
Subsidiaries, the Shareholders and the Related JLW Owners to perform their
respective other agreements under this Agreement, the other Operative
Agreements and the Integration Agreements to be performed by them as part
of the Integration or at the Closing, as the case may be, shall be subject
to the satisfaction or waiver by Parent and the Sellers' Representatives
and the Shareholders' Representatives, in the case of actions to be taken
at the Closing, of the following conditions that are specified to be
satisfied on the Closing Date (or, in the case of Section 7.5, at (or
before) the time specified therein) or, in the case of actions to be taken
as part of the Integration, of the following conditions that are specified
to be satisfied on (or before) the Integration Commencement Date:
Section 7.1 No Injunctions or Restraints. On the Integration
Commencement Date and on the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court or other Authority of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated
as so provided.
Section 7.2 No Litigation. On the Integration Commencement Date and
on the Closing Date, there shall not be pending by any Authority any
Action (or by any other Person any Action which has a reasonable likelihood
of success), (i) challenging or seeking to restrain or prohibit the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement or seeking to obtain, in connection with the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement, any damages that would reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse
Effect, (ii) seeking to prohibit or limit the ownership or operation by
Parent, the Companies or any or all of them, or any of their respective
Subsidiaries, of any material portion of their respective businesses or
assets, or to compel Parent, the Companies or any or all of them, or any of
their respective Subsidiaries, to dispose of or hold separate any material
portion of such businesses or assets or (iii) seeking to prohibit Parent
from exercising its rights under or otherwise enjoying the benefits of the
other Operative Agreements.
Section 7.3 HSR Act and Other Approvals. (a) On the Integration
Commencement Date, (i) any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement and the Other
Purchase Agreements shall have expired or been terminated, (ii) the
Required Regulatory Approvals and the Required Securities Approvals shall
have been obtained or filed or shall have occurred and be in effect, and
(iii) all other authorizations, consents, orders or approvals of, or
regulations, declarations or filings with, or expirations of applicable
waiting periods imposed by, any Authority necessary for the consummation of
the transactions contemplated by this Agreement, any other Operative
Agreement or any Integration Agreement, including filings and consents
required pursuant to other applicable antitrust and competition Laws, shall
have been obtained or filed or shall have occurred and be in effect, except
where the failure of which to be obtained or filed or to have occurred and
be in effect, individually or in the aggregate, would not have or
reasonably be expected to have a Parent Material Adverse Effect or a
Company Material Adverse Effect or result in a violation of any criminal
laws.
(b) On the Integration Commencement Date, there shall have
been obtained or received and in effect (i) each of the Consents listed or
described on Schedule 7.3(b) of the Parent Disclosure Schedule, (ii) each
of the Consents listed or described on Schedule 7.3(b) of the Company
Disclosure Schedule and (iii) any other Consents from third Persons (other
than Authorities) to any of the transactions contemplated by this
Agreement, the other Operative Agreements or any Integration Agreements
that may be required under any Contract or License to which Parent, any JLW
Partnership or any Company, or any of their respective direct or indirect
Subsidiaries, is a party or by which any of such Persons is bound with
respect to which the failure to obtain or receive would, individually or in
the aggregate, have or reasonably be expected to have a Parent Material
Adverse Effect or a Company Material Adverse Effect.
Section 7.4 Stockholders Vote. On or prior to the Integration
Commencement Date, the Proposed Actions to be submitted for the approval of
the stockholders of Parent shall have been approved by the requisite vote
of Parent's stockholders.
Section 7.5 Other Closings. The consummation of the transactions
contemplated by each of the Other Purchase Agreements shall have occurred
concurrently with the Closing.
Section 7.6 Consummation of the Integration. On the Closing Date,
the transactions contemplated by the Integration Plan and the Integration
Agreements (other than the Post-Closing Integration Actions) shall have
been (or shall have theretofore been) consummated in accordance with the
terms and conditions of the Integration Plan and the Integration
Agreements, without modification of the terms thereof or waiver of any of
the conditions precedent thereto, unless Parent shall have consented
thereto in writing (which consent will not be unreasonably withheld or
delayed); and the Integration shall have been (or shall have theretofore
been) consummated in all material respects in accordance with all
applicable Laws).
Section 7.7 Exercise of Put Right or Call Right. On the Closing
Date, the Put Right shall have theretofore been exercised by delivery of
the Put Notice or the Call Right shall have theretofore been exercised by
delivery of the Call Notice, in accordance with Section 1.1 hereof.
Section 7.8 Execution and Delivery of the other Operative Agreements.
On the Integration Commencement Date, each Shareholder and each Related JLW
Owner listed on the Final Master Shareholder List and each Other
Shareholder and Related JLW Owner listed on the Final Master Shareholder
List attached to each of the Other Purchase Agreements shall have (or shall
have theretofore) duly executed and delivered to Parent: (i) a Joinder
Agreement or Other Joinder Agreement, as applicable, (ii) a Stockholder
Agreement and (iii) an Escrow Agreement.
Section 7.9 Amendments. The Articles of Amendment and Restatement of
Parent, in the form attached hereto as Annex I, shall have become
effective; the amendment to the Articles of Incorporation of LACM
contemplated by clause (a)(i)(B) of Section 1.9 hereof shall have become
effective.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT
The obligations of Parent to purchase the Shares at the Closing
and to perform its other agreements under this Agreement and the other
Operative Agreements to be performed by it as part of the Integration or at
the Closing, is subject to the satisfaction or waiver by Parent, in the
case of actions to be taken at the Closing, of the following conditions
that are specified to be satisfied on the Closing Date or, in the case of
actions to be taken as part of the Integration, of the following conditions
that are specified to be satisfied on the Integration Commencement Date:
Section 8.1 Representations and Warranties Correct as of the
Integration Commencement Date. On the Integration Commencement Date, the
representations and warranties of the Shareholders, the Related JLW Owners,
the JLW Partnerships and the Management Shareholders made herein, in the
other Operative Agreements or in the Integration Agreements and qualified
as to Company Material Adverse Effect shall be true and correct in all
respects at and as of the Integration Commencement Date, with the same
force and effect as though made at and as of the Integration Commencement
Date (except to the extent a representation or warranty speaks specifically
as of an earlier date, in which event the same shall be true and correct in
all respects as of such earlier date), except for any changes therein
permitted or contemplated by this Agreement. On the Integration
Commencement Date, each such representation and warranty not so qualified
shall be true and correct in all respects at and as of the Integration
Commencement Date, with the same force and effect as though made at and as
of the Integration Commencement Date (except to the extent a representation
or warranty speaks specifically as of an earlier date, in which event the
same shall be true and correct in all respects as of such earlier date),
and except for any changes therein permitted or contemplated by this
Agreement, except for such failures of such representations or warranties
to be true and correct in all respects as would not, individually or in the
aggregate, have or reasonably be expected to have a Company Material
Adverse Effect.
Section 8.2 Certain Representations and Warranties Correct as of the
Closing Date. On the Closing Date, the representations and warranties of
the JLW Partnerships and the Management Shareholders set forth in Section
3.1 hereof and the representations and warranties of the Shareholders and
the Related JLW Owners contained in the Applicable Joinder Agreements shall
be true and correct in all respects at and as of the Closing Date.
Section 8.3 Performance; No Default. (a) 82
On the Integration Commencement Date, the JLW Parties shall have performed
and complied in all material respects with all the obligations and
agreements required by this Agreement and the other Operative Agreements to
which they or any of them is a party to be performed or complied with by
the JLW Parties at or prior to the Integration Commencement Date.
(b) On the Closing Date, the JLW Parties shall have performed
and complied in all material respects with all the obligations and
agreements required by this Agreement and the other Operative Agreements to
which they or any of them is a party to be performed or complied with by
the JLW Parties at or prior to the Closing Date.
(c) On the Integration Commencement Date, the Shareholders
and the Related JLW Owners shall have complied in all material respects
with all obligations and agreements required by this Agreement and the
other Operative Agreements to be performed by them at or prior to the
Integration Commencement Date.
(d) On the Closing Date, the Shareholders and the Related JLW
Owners shall have complied in all material respects with all obligations
and agreements required by this Agreement and the other Operative
Agreements to be performed by them at or prior to the Closing Date.
Section 8.4 Delivery of Certificate. Each of the JLW Partnerships,
Companies and Management Shareholders shall have delivered to Parent (i) on
the Integration Commencement Date, a certificate, dated the Integration
Commencement Date, executed by it or him certifying to the fulfillment of
the conditions set forth in Sections 8.1, 8.3(a) and 8.3(c) hereof and (ii)
on the Closing Date, a certificate, dated the Closing Date, executed by it
or him certifying to the fulfillment of the conditions set forth in
Sections 8.2, 8.3(b) and 8.3(d) hereof, provided that, in the case of the
certification by each of the Management Shareholders, such certification
(x) shall be limited to the Knowledge of such Management Shareholder and
(y) shall not apply to representations and warranties set forth in Article
II or III of any Joinder Agreement (other than the representations and
warranties set forth in such Articles of the Joinder Agreement to which
such Management Shareholder is a party, which certification
(notwithstanding clause (x) above) shall not be limited to his Knowledge).
Section 8.5 Opinions of Counsel to the JLW Partnerships and the
Companies. On the Closing Date, the Sellers' Representatives shall have
delivered to Parent opinions of counsel to the JLW Partnerships and the
Companies as to such matters as Parent shall reasonably request, which
opinions shall be in a form reasonably satisfactory to counsel to Parent.
Section 8.6 Comfort Letter. Parent shall have received a comfort
letter, dated the date of the Proxy Statement and the date of Parent's
stockholders' meeting referred to in Section 6.5 hereof and on the
Integration Commencement Date, from each public accounting firm who has
issued a report on any of the Audited Financial Statements in each case in
form and substance reasonably satisfactory to Parent, regarding the
financial statements, in the respective forms set forth in Annex O hereto.
Section 8.7 Settlement of Related Party Accounts. On the
Integration Commencement Date, except as set forth in Section 8.7 to the
Company Disclosure Schedule, all amounts owed by any Related Parties, or
any Persons in which any such Related Party has a material interest, to any
Company or Company Subsidiary shall have been paid in full.
Section 8.8 No Material Adverse Effect. On the Integration
Commencement Date, since June 30, 1998, there shall have been no Company
Material Adverse Effect.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders to sell the Shares at the
Closing and the obligations of the JLW Partnerships, the Companies, the
Company Subsidiaries, the Shareholders and the Related JLW Owners to
perform their respective other agreements under this Agreement, the other
Operative Agreements and the Integration Agreements to be performed by them
as part of the Integration and at the Closing shall be subject to the
satisfaction or waiver by the Sellers' Representatives and the
Shareholders' Representatives, in the case of actions to be taken at the
Closing, of the following conditions that are specified to be satisfied on
the Closing Date or, in the case of actions to be taken as part of the
Integration, of the following conditions that are specified to be satisfied
on the Integration Commencement Date:
Section 9.1 Representations and Warranties Correct as of the
Integration Commencement Date. On the Integration Commencement Date, each
representation and warranty of Parent made herein and qualified as to
Parent Material Adverse Effect shall be true and correct in all respects at
and as of the Integration Commencement Date, with the same force and effect
as though made at and as of the Integration Commencement Date (except to
the extent a representation or warranty speaks specifically as of an
earlier date, in which event the same shall be true and correct in all
respects as of such earlier date), except for any changes therein permitted
or contemplated by this Agreement. On the Integration Commencement Date,
each such representation and warranty not so qualified shall be true and
correct in all respects at and as of the Integration Commencement Date,
with the same force and effect as though made at and as of the Integration
Commencement Date (except to the extent a representation or warranty speaks
specifically as of an earlier date, in which event the same shall be true
and correct in all respects as of such earlier date, except for any changes
therein permitted or contemplated by this Agreement and except for such
failures of such representations and warranties to be true and correct in
all respects as would not, individually or in the aggregate, have or
reasonably be expected to have a Parent Material Adverse Effect.
Section 9.2 Performance; No Default. (a) On the Integration
Commencement Date, Parent shall have performed and complied in all material
respects with all the obligations and agreements required by this Agreement
and the other Operative Agreements to be performed or complied with by it
at or prior to the Integration Commencement Date.
(b) On the Closing Date, Parent shall have performed and
complied in all material respects with all the obligations and agreements
required by this Agreement and the other Operative Agreements to be
performed or complied with by it at or prior to the Closing Date.
Section 9.3 Delivery of Certificate. Parent shall have delivered to
the Shareholders' Representatives (i) on the Integration Commencement Date,
a certificate, dated the Integration Commencement Date, executed by an
executive officer of Parent, certifying to the fulfillment of the
conditions set forth in Sections 9.1 and 9.2(a) hereof and (ii) on the
Closing Date, a certificate, dated the Closing Date, executed by an
executive officer of Parent, certifying to the fulfillment of the
conditions set forth in Section 9.2(b) hereof.
Section 9.4 Opinions of Counsel to Parent. On the Closing Date,
Parent shall have delivered to the Sellers' Representatives opinions of
counsel to Parent as to such matters as Sellers' Representatives and the
Shareholders' Representatives shall reasonably request, which opinions
shall be in a form reasonably satisfactory to counsel to the Sellers and
the Companies.
Section 9.5 Good Standing Certificate. On the Integration
Commencement Date, the Sellers' Representatives shall have received a
certificate from Parent, in form and substance reasonably satisfactory to
counsel to the Companies from the Department of Assessments and Taxation of
Maryland, evidencing the existence, good standing and organization of
Parent under the laws of Maryland and its current payment of taxes.
Section 9.6 Listing of Consideration Shares. On the Integration
Commencement Date, the Consideration Shares shall have been approved (or
theretofore approved) for listing on the NYSE, subject to official notice
of issuance, and a copy of the letter from the NYSE evidencing such
approval shall have been delivered to the Shareholders' Representatives.
Section 9.7 Certain Stockholder Agreements. On the Integration
Commencement Date, each current director, officer and employee of Parent or
any Parent Subsidiary who is a former partner in DEL shall have (or shall
have theretofore) executed and delivered to Parent a DEL Stockholder
Agreement.
Section 9.8 Indemnification Agreements. On the Integration
Commencement Date, Parent shall have (or shall have theretofore) caused the
Indemnification Agreement Guarantee to be executed and delivered as
contemplated by Section 6.9 hereof.
Section 9.9 Inland Revenue Ruling. On the Integration Commencement
Date, the following clearances shall have been obtained (or theretofore
obtained) from the UK Inland Revenue: (i) clearances under Section 707 of
Income and Corporation Taxes Act 1988 that no notice under Section 703(3)
of the Income and Corporation Taxes Act 1988 will be given with respect to
the sale of NewCo 1, NewCo 2, JLW Supply and JLW USA to Parent; and (ii)
clearance under Section 138 of the Taxation of Chargeable Gains Act 1992
("TCGA") that Section 137 of TCGA will not affect the operation of Section
135 of TCGA in relation to the sale of NewCo 1, NewCo 2, JLW Supply and JLW
USA to Parent.
Section 9.10 No Material Adverse Effect. On the Integration
Commencement Date, since June 30, 1998, there shall have been no Parent
Material Adverse Effect.
Section 9.11 Directors and Officers. The JLW Directors shall have
been elected to the Board (and the only other directors on the Board shall
be the Parent Directors), effective immediately following the Closing, and
Chris Peacock and Mike Smith shall have been elected to the offices of
President, Deputy Chief Executive Officer and Chief Operating Officer of
Parent and Deputy Chairman of the Board of Parent, respectively, effective
immediately following the Closing.
Section 9.12 Amendments. The Amended Parent Bylaws shall have been
adopted and not rescinded, modified or amended.
ARTICLE X
TAX MATTERS
Section 10.1 Allocation of Purchase Price. The final allocation of
the Consideration among the Shares of the Companies for all purposes
(including, tax and financial accounting purposes) shall be determined by
agreement between Parent and Sellers' Representatives. Parent and each JLW
Party shall file all Tax Returns (including amended returns and claims for
refund) and information reports in a manner consistent with such
allocation.
Section 10.2 Tax Returns. (a) The Shareholders' Representatives or
their duly authorized agents shall prepare and timely file all outstanding
Tax Returns of the Companies and Company Subsidiaries for taxable periods
ending on or before the Closing on a basis which is, where applicable,
consistent with that used in the preparation of the Tax Return of (in each
case) the relevant Company or Company Subsidiary for any immediately
preceding taxable period, save where to do so would be contrary to law.
Parent shall provide or procure that the Companies and Company Subsidiaries
provide any assistance reasonably requested by the Shareholders'
Representatives for that purpose, including access to the books, accounts
and records of the Companies and Company Subsidiaries. The Shareholders'
Representatives shall notify Parent in writing that a Tax Return must be
submitted at least twenty Business Days prior to the submission and Parent
shall be entitled, on giving reasonable notice to the Shareholders'
Representatives, to review any Tax Return prior to submission. Parent
shall provide or procure that the Companies and Company Subsidiaries cause
those Tax Returns to be authorized, signed and submitted to the appropriate
authority without amendment or with such amendments as Parent and the
Shareholders' Representatives shall agree unless, in the opinion of Parent,
there is no reasonable basis for any position taken on such returns or the
signing or filing of such return would subject Parent, the Companies, the
Company Subsidiaries or any of their officers, directors, employees, agents
or Affiliates to fines, penalties or similar charges.
(b) Parent shall prepare and file or cause to be prepared and
filed those Tax Returns which relate to taxable periods of the Companies
and Company Subsidiaries commencing on or before the Closing and ending
after the Closing ("Straddle Returns") on a basis which is, where
applicable, consistent with that used in the preparation of the Tax Return
of (in each case) the relevant Company or Company Subsidiary for any
immediately preceding taxable period, save where to do so would be contrary
to law. Parent shall notify the Shareholders' Representatives in writing
that a Straddle Return must be submitted at least twenty Business Days
prior to the submission and the Shareholders' Representatives shall be
entitled, on giving reasonable notice to Parent, to review any Straddle
Return prior to submission. Parent shall make any changes as reasonably
requested by the Shareholders' Representatives or their duly authorized
agent provided such changes would not have a material adverse effect to
Parent. None of the Shareholders or any of their respective Affiliates
shall otherwise amend, refile or in any other way modify any Tax Return
relating in whole or in part to any Company or Company Subsidiary or the
JLW Businesses with respect to any taxable period ending on or before the
Closing Date without the prior written consent of Parent.
Section 10.3 Mutual Cooperation. Subject to Section 10.2 hereof and
the Escrow Agreement, Parent, on the one hand, and each Shareholder, on the
other, shall cooperate fully at such time and to the extent reasonably
requested by the other party in connection with the preparation and filing
of any Tax Return or the conduct of any audit, dispute, proceeding, suit or
action concerning any Tax. Such cooperation shall include (i) the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to the preparation and filing of
such Tax Return, or any such audit, litigation or other proceeding, (ii)
explanation of any material provided hereunder, (iii) the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any Tax Return by any of Parent, Shareholders, Companies or
Company Subsidiaries, or in connection with an audit, proceeding, suit or
action respecting any Tax, and (iv) the use of the parties' commercially
reasonable efforts to obtain any documentation from an Authority or a third
party that may be necessary or helpful in connection with the foregoing.
Section 10.4 Tax Covenant. It is the intent of the parties that the
purchase and sale of the Shares as contemplated in this Agreement be
treated as a taxable transaction for United States Federal Income tax
purposes. If prior to the Closing, Parent determines that such purchase
and sale may not be so treated, then Parent and each JLW Party shall work
together in good faith to modify the transactions contemplated hereby, if
feasible, to effectuate such intent.
ARTICLE XI
TERMINATION
Section 11.1 Termination of Agreement. This Agreement and the
Applicable Joinder Agreements and the other Operative Agreements may be
terminated at any time prior to the Closing:
(a) by mutual consent of the Sellers' Representatives and
Parent;
(b) by either the Sellers' Representatives or Parent if (i)
the Closing shall not have occurred on or before March 31, 1999, provided,
however, that the right to terminate this Agreement pursuant to this clause
(i) shall not be available to (A) the Sellers' Representatives if the
failure of any JLW Party, Shareholder or Related JLW Owner of any
Shareholder (if applicable) to fulfill any obligation, covenant or
agreement of such JLW Party, Shareholder or Related JLW Owner under this
Agreement, any other Operative Agreement, any Integration Agreement or
Applicable Joinder Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date and (B) Parent if
the failure of Parent to fulfill any obligation, covenant or agreement of
Parent under this Agreement or any other Operative Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before
such date or (ii) if the Closing shall not have occurred on or before
September 30, 1999;
(c) by either the Sellers' Representatives or Parent in the
event any court of competent jurisdiction or other Authority of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree or ruling or other
action shall have become final and nonappealable;
(d) by Parent (provided, that Parent is not then in material
breach of any of its representations, warranties or covenants in this
Agreement) if there shall have been a material breach of any of the
representations, warranties or covenants of any Shareholder or Related JLW
Owner (if applicable) or JLW Party in this Agreement, any other Operative
Agreement or any Integration Agreement, which breach (x) would result in a
failure of a condition set forth in Section 8.1, 8.2 or 8.3 of this
Agreement and (y) cannot be or has not been cured within 60 days following
written notice thereof to the Sellers' Representatives and the party
committing such breach (which notice shall specify in reasonable detail the
nature of such breach);
(e) by the Sellers' Representatives (provided that the
Shareholders, the Related JLW Owners (if applicable), or the JLW Parties
are not then in material breach of any of their respective representations,
warranties, agreements or covenants in this Agreement, any other Operative
Agreement or any Integration Agreement) if there shall have been a material
breach by Parent of any of its representations, warranties, agreements or
covenants in this Agreement, which breach (x) would result in a failure of
a condition set forth in Section 9.1 or 9.2 of this Agreement and (y)
cannot be or has not been cured within 60 days following written notice
thereof to Parent (which notice shall specify in reasonable detail the
nature of such breach);
(f) by either the Sellers' Representatives or Parent, if, at
the meeting of Parent's stockholders (including any adjournment or
postponement thereof) called pursuant to Section 6.5 hereof, the requisite
vote of the stockholders of Parent to approve the Proposed Actions shall
not have been obtained (or, if obtained, thereafter revoked or rescinded);
by the Sellers' Representatives, in the event that the
Board of Parent shall have (i) not approved and recommended, or withdrawn
or modified in a manner adverse to the JLW Parties its approval or
recommendation of, the transactions contemplated by this Agreement, the
Applicable Joinder Agreements, the Other Purchase Agreements and the Other
Joinder Agreements (including the Proposed Actions), or any of them or (ii)
failed to call and hold the special meeting of the stockholders of Parent
at which the Proposed Actions are presented to and voted upon by the
stockholders of Parent in accordance with Section 6.5;
by Parent if the Final Master Shareholder List shall not
have been delivered to and accepted by Parent on or prior to the Commitment
Date, provided that Parent gives written notice of such termination to the
Shareholders' Representatives within two Business Days thereafter;
by Parent if the condition set forth in Section 9.9
hereof shall not have been satisfied or waived on or prior to November 30,
1998;
by either the Sellers' Representatives or Parent, if the
Put Right or Call Right shall not have been exercised during the Exercise
Period; or
by Parent or the Sellers' Representatives at any time
prior to the mailing of the final Proxy Statement, if the pro forma
consolidated balance sheet of Parent and the Companies, the Asia Region
Companies and the Australasia Region Companies as of June 30, 1998 (which
balance sheet assumes that the transactions contemplated by this Agreement
and the Other Purchase Agreements had occurred on June 30, 1998) included
in the final Proxy Statement, and the pro forma consolidated financial
statements of Parent and the Companies, the Asia Region Companies and the
Australasia Region Companies for the six months ended June 30, 1998 and the
year ended December 31, 1997 (which statements assume that the transactions
contemplated by this Agreement and the Other Purchase Agreements had
occurred on January 1, 1997) included therein, shall in each case not be
substantially the same as those contained in the Offering Memorandum, other
than as a result of (i) the inclusion of (A) financial information relating
to the transactions contemplated by the Compass Agreement and the financial
statements of the entities or businesses acquired pursuant to the Compass
Agreement or (B) the financial statements of the applicable entities for
the nine months ended September 30, 1998 (rather than for the six months
ended June 30, 1998), or (ii) changes which are not material or, if
material, are reasonably acceptable to Parent and the Sellers'
Representatives.
In addition, (i) this Agreement and the Applicable Joinder
Agreements and the other Operative Agreements shall terminate automatically
(without any action on the part of the Sellers' Representatives or Parent)
in the event that either or both of the Other Purchase Agreements shall
have terminated or been terminated pursuant to and in accordance with
Section 11.1(f) or Section 11.1(g) thereof and (ii) this Agreement and the
Applicable Joinder Agreements and the Other Operative Agreements shall
terminate automatically (without any action on the part of the Sellers'
Representatives or Parent) in the event that either or both of the Other
Purchase Agreements shall have terminated or been terminated pursuant to
and in accordance with any subsection of Section 11.1 thereof other than
Section 11.1(f) and Section 11.1(g).
Section 11.2 Effect of Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 11.1 hereof, written
notice thereof shall forthwith be given to the other parties and the
transactions contemplated by this Agreement and the Applicable Joinder
Agreements shall be terminated and abandoned, without further action by
Parent, the Sellers' Representatives or any other party hereto. If the
transactions contemplated by this Agreement and the Applicable Joinder
Agreements are so terminated and abandoned as provided herein:
(a) Notwithstanding any such termination, Sections 11.2,
11.3, 13.2, 13.9, 13.10, 13.11 and 13.15 hereof shall remain in full force
and effect;
(b) The Confidentiality Agreement shall remain in full force
and effect; and
(c) No party hereto shall have any liability or further
obligation to any other party to this Agreement or the Applicable Joinder
Agreements, except (i) as stated in subparagraphs (a) and (b) of this
Section 11.2 or (ii) for any wilful breach of this Agreement or the
Applicable Joinder Agreements, provided that, in the case of wilful breach
by any JLW Party, Parent shall not be entitled to recover any damages or
obtain any similar relief from any Shareholder, Related JLW Owner, Sellers'
Representative or Shareholders' Representative (other than in their
capacity as a partner of any JLW Partnership but only to the extent and
subject to the limitations described below) or Company or Company
Subsidiary, it being agreed and acknowledged that (x) damages or similar
relief to which Parent might be entitled by reason of any such wilful
breach shall be obtained solely from the JLW Partnerships and (y) that,
notwithstanding anything to the contrary set forth herein, no assets of any
partner (whether general or limited) of any JLW Partnership will be
available for purposes of recovering damages or obtaining any similar
relief, and no judgment or execution entered in any suit, action or
preceding shall be entered or enforced against such assets, other than, in
any case involving any such partner, in respect of the interests of such a
partner in the partnership property held by the applicable JLW Partnership
for the relevant partnership business, it being further acknowledged and
agreed that any recourse under such circumstances shall be limited to the
partnership property so held, and that no other recourse for purposes of
recovering damages or similar relief will be permitted or sought; provided
that the foregoing shall not limit any equitable remedies available to
Parent prior to termination of this Agreement as a result of a breach or
violation of this Agreement or any Applicable Joinder Agreement.
Section 11.3 Termination Fee. Notwithstanding any other provision of
this Agreement, if this Agreement and each of the Other Purchase Agreements
is terminated pursuant to Section 11.1(f) or 11.1(g) hereof and thereof or
clause (i) of the last sentence of Section 11.1 hereof or thereof, Parent
shall promptly pay to the Shareholders' Representatives on behalf of the
JLW Partnerships US$7,347,979 (the "Termination Fee").
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
Section 12.1 Survival of Representations, Warranties and Covenants.
None of the representations and warranties of Parent contained in this
Agreement or any other Operative Agreement, or any instrument delivered
pursuant hereto or thereto, shall survive the Closing. All representations
and warranties of the Shareholders, the Related JLW Owners, the Management
Shareholders and the JLW Partnerships contained in this Agreement or any
other Operative Agreement, or any instrument delivered pursuant hereto or
thereto, shall survive the Closing for the period specified in the Escrow
Agreement. The covenants and agreements of Parent contained in this
Agreement or any other Operative Agreement, or any instrument delivered
pursuant hereto or thereto, shall not survive the Closing, unless such
covenants or agreements specify terms or are contemplated to be performed
in whole or in part on or after the Closing, in which case any such
covenants or agreements shall survive for such specified terms or until
performed in full. The covenants and agreements of the JLW Parties
contained herein and the Shareholders and the Related JLW Owners in the
Applicable Joinder Agreements or any other Operative Agreement shall
survive the Closing without limitation as to time unless such covenants or
agreements specify a term, in which case such covenants or agreements shall
survive for such specified term. The right to indemnification under the
Escrow Agreement with respect to representations, warranties, covenants and
obligations in this Agreement, the Applicable Joinder Agreement and the
Other Joinder Agreements shall not be affected by any investigation
conducted or Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement, the
Applicable Joinder Agreement and the Other Joinder Agreements or the
Closing Date, with respect to the accuracy or inaccuracy of, or compliance
with, any such representation, warranty, covenant or obligation. The
waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification under the Escrow
Agreement with respect to such representations, warranties, covenants and
obligations.
Section 12.2 Indemnification of the Buyers. Parent and the other
Indemnified Persons shall be indemnified, defended and held harmless from
and against any and all Liabilities and against all claims in respect
thereof to the extent, and subject to the terms, conditions and
limitations, set forth in the Escrow Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Further Efforts. Each of the parties to this Agreement
shall: (i) promptly make any filings required by them or any of their
subsidiaries, and thereafter make any other submissions required under all
applicable Laws with respect to the transactions contemplated hereby and by
the other Operative Agreements; and (ii) use commercially reasonable
efforts to promptly take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this
Agreement and the other Operative Agreements. In addition, in the event of
any Action relating hereto or to the transactions contemplated by this
Agreement and by the other Operative Agreements, the parties to this
Agreement agree to cooperate and use commercially reasonable efforts to
defend against and respond thereto.
Section 13.2 Expenses. Subject to Section 11.3 hereof and except as
otherwise expressly provided herein or therein, each of the JLW Parties and
Parent shall pay its own legal, accounting and other miscellaneous expenses
incident to this Agreement, the other Operative Agreements and the
Integration Agreements and the transactions contemplated hereby and
thereby; provided, that the JLW Parties may cause any of their expenses to
be paid or assumed by one or more of the Companies, so long as each such
payment or assumption is identified and reflected in the Final Closing
Statements.
Section 13.3 Press Releases and Announcements. After the date of
this Agreement and prior to the Closing, no party to this Agreement shall
directly or indirectly make or cause to be made any public announcement or
disclosure, or issue any notice with respect to this Agreement or any other
Operative Agreement or the transactions contemplated by this Agreement and
the other Operative Agreements without the prior consent of the Sellers'
Representatives, in the case of Parent, and Parent, in the case of any JLW
Parties; provided, that any party to this Agreement may make any public
announcement or disclosure which is with the advice of counsel, required by
applicable Law or regulations or applicable stock exchange requirements.
Section 13.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the other Operative Agreements, the schedules and
the other writings referenced herein or therein and the Confidentiality
Agreement (a) constitute the entire understanding and agreement of the
parties hereto and thereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between
such parties and (b) are not intended to confer upon any Person other than
the parties any rights or remedies hereunder.
Section 13.5 Amendment, Extension and Waiver. At any time prior to
the Closing Date, Parent, the Sellers' Representatives and the
Shareholders' Representatives may (a) amend this Agreement, (b) extend the
time for the performance of any of the obligations or other acts of the
parties hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (d) waive compliance with any of the agreements or conditions contained
herein. This Agreement may not be amended except by an instrument in
writing signed by Parent and by the Sellers' Representatives and the
Shareholders' Representatives on behalf of all of the Sellers and the
Companies and all of the Shareholders and Related JLW Owners. Any
agreement on the part of a party hereto to any extension or waiver under
this Section 13.5 shall be valid only if set forth in an instrument in
writing signed by Parent and the Shareholders' Representatives.
Section 13.6 Headings. The Article and Section headings contained
herein are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 13.7 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier, or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed received)
to the parties at the addresses set forth below (or to such other addresses
or, in the case of copies, to such other Persons as shall be set forth in
notices given in accordance with the provisions hereof). Such notices
shall be deemed given: at the time personally delivered, if delivered by
hand with receipt acknowledged; upon transmission thereof by the sender
and issuance by the transmitting machine of a confirmation slip that the
number of pages constituting the notice have been transmitted without
error, if telecopied, and the second business day after timely delivery to
the courier, if sent by air courier.
(i) If to the JLW Partnerships or the Companies, to:
Jones Lang Wootton (an English partnership)
22 Hanover Square
London W1A 2BN
England
Attn: Clive Pickford
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Jones Lang Wootton (a Scottish partnership)
23 Charlotte Square
Edinburgh EH2 4DF
Scotland
Attn: A.R. Irvine
Telephone: 44-131-225-8344
Fax: 44-131-225-2147
and to:
Jones Lang Wootton (an Irish partnership)
10-11 Molesworth Street
Dublin 2
Ireland
Attn: P.S. McCaffrey
Telephone: 353-1-679-4622
Fax: 353-1-679-5147
(ii) If to the Sellers' Representatives, to:
Chris Peacock
c/o Jones Lang Wootton
22 Hanover Square
London W1A 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Mike Smith
c/o Jones Lang Wootton
22 Hanover Square
London W1A 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
(iii) If to the Shareholders' Representatives, to:
Robert Orr
c/o Jones Lang Wootton
22 Hanover Square
London WIA 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Gerry Kipling
c/o Jones Lang Wootton Ltd
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Ken Winterschladen
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-2-9323-5888
Fax: 61-2-9232-8120
(iv) If to a Shareholder or Management Shareholder, to such
Shareholder or Management Shareholder at the address, telephone
number or fax number set forth on the Applicable Joinder Agreement to which
such Shareholder or Management Shareholder is a party.
(v) In the case of (i), (ii), (iii) and (iv) above, with a copy
(which shall not constitute notice) given in the manner prescribed above,
to:
Richard Jones
c/o Jones Lang Wootton
9 Queen Victoria Street
London EC4N 4YY
England
Telephone: 44-171-248-6040
Fax: 44-171-454-8888
and to:
Christopher Radford
c/o Jones Lang Wootton Ltd
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Andrew Martin
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-3-9672-6666
Fax: 61-3-9600-1715
and to:
Slaughter and May
35 Basinghall Street
London EC2V
Attn: Andrew McClean, Esq.
Telephone: (171) 600-1200
Fax: (171) 600-0289
and to:
Sidley & Austin
875 Third Avenue
New York, NY 10022
Attn: James D. Johnson, Esq.
Telephone: (212) 906-2000
Fax: (212) 906-2021
(vi) If to Parent:
LaSalle Partners Incorporated
200 East Randolph Street
Chicago, Illinois 60601
Attn: Chief Executive Officer
Telephone: (312) 782-5800
Fax: (312) 228-0980
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Rodd M. Schreiber, Esq.
Telephone: (312) 407-0700
Fax: (312) 407-0411
and to:
Hagan & Associates
200 East Randolph Street
Suite 4322
Chicago, Illinois 60601
Attn: Robert K. Hagan
Telephone: (312) 228-2994
Fax: (312) 228-0982
Section 13.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned
by any party without the written consent of the other parties.
Section 13.9 Applicable Law. Except as otherwise specified in this
Agreement, this Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Illinois, without giving effect
to the conflict of laws provisions thereof.
Section 13.10 Jurisdiction. Subject to the arbitration provisions
set forth in Section 7.1 of the Escrow Agreement, each of the parties
hereto hereby expressly and irrevocably submits to the non-exclusive
personal jurisdiction of the United States District Court for the Northern
District of Illinois and to the jurisdiction of any other competent court
of the State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441, and to the non-exclusive
jurisdiction of the High Court of England and Wales in London (the "English
Courts"), in connection with all disputes arising out of or in connection
with this Agreement or the transactions contemplated hereby and agrees not
to commence any litigation relating thereto except in such courts; provided
that if the aforementioned Illinois Courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal court located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each of the parties hereto agrees that each
of the other parties shall have the right to bring any action or proceeding
for enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
Section 13.11 Service of Process. Each party irrevocably consents to
the service of process outside the territorial jurisdiction of the courts
referred to in Section 13.10 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified in or pursuant to Section 13.7 hereof. However, the
foregoing shall not limit the right of a party to effect service of process
on the other party by any other legally available method.
Section 13.12 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 13.13 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 13.14 [Intentionally Left Blank]
Section 13.15 Restrictive Trade Practices Act. Notwithstanding any
other provision of this Agreement, or the arrangement of which it forms a
part, no provision of this arrangement which is of such a nature as to make
the arrangement liable to registration under the UK Restrictive Trade
Practices Act 1976 shall take effect until the day after that on which
particulars thereof have been duly furnished to the Director General of
Fair Trading pursuant to said Act. This Section 13.15 shall not apply if
this arrangement is non-notifiable within the meaning of section 27A of
said Act.
Section 13.16 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO
THE FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
ARTICLE IV
CERTAIN DEFINITIONS
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Authority of any nature,
civil, criminal, regulatory or otherwise, in law or in equity.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such first mentioned
Person.
"Asia Region Shareholders" means, collectively, the Persons
named as "Shareholders" on the Preliminary Master Shareholder List under
the Asia Region Agreement who have duly executed and delivered to Parent
the Joinder Agreement (Asia) and each of the other Operative Agreements.
"Australasia Region Shareholders" means, collectively, the
Persons on the Preliminary Master Shareholder List under the Australasia
Region Agreement who have duly executed and delivered to Parent the Joinder
Agreement (Australasia) and each of the other Operative Agreements.
"Business Day" means any day (other than a Saturday or Sunday)
on which banks are permitted to be open and transact business in Chicago,
Illinois and London, England.
"Closing Net Worth" means, in respect of a specified group of
companies, the sum of the book values of all assets of such companies,
minus the sum of all liabilities of such companies, determined in each case
on a consolidated or combined basis (as applicable) in accordance with the
Agreed Generally Accepted Accounting Principles based on the applicable
Closing Balance Sheet, or applicable Final Closing Balance Sheet, as
applicable. Notwithstanding the foregoing, for purposes of calculating
such Closing Net Worth: (a) the applicable Closing Balance Sheets or Final
Closing Balance Sheets shall include, among other things, accruals (if not
satisfied in full) for (i) Liabilities to former partners of JLW England,
JLW Ireland and JLW Scotland, (ii) Liabilities relating to the Jones Lang
Wootton (Hong Kong) Annuity Scheme, (iii) Transfer Taxes payable by any of
such companies in connection with the Integration and the other
transactions contemplated by this Agreement and the Other Purchase
Agreements, (iv) other Tax Liabilities of any such companies relating to
the Integration and the other transactions contemplated by this Agreement
and the Other Purchase Agreements, and (v) out-of-pocket fees and expenses
(including, without limitation, legal, financial advisory and accounting)
payable by any of such companies in connection with the Integration and the
other transactions contemplated by this Agreement and the Other Purchase
Agreements; and (b) there shall be added to the assets of the applicable
group of companies to the extent paid prior to Closing or accrued on the
applicable Closing Balance Sheet or Final Closing Balance Sheet, an amount
equal to (i) any Transfer Taxes of a type described in clause (iii) above
("JLW Transfer Taxes"), whether so accrued or previously paid (or payable
by Parent or any Parent Subsidiaries and deemed accrued or accrued as
provided below), to the extent that the total of such JLW Transfer Taxes so
accrued or paid is less than or equal to US$3 million in the aggregate for
all Companies, Asia Region Companies and Australasia Region Companies and
their respective Subsidiaries and (ii) any out-of-pocket fees and expenses
of a type described in clause (v) above ("JLW Fees and Expenses"), whether
accrued or previously paid (or payable by Parent or any Parent Subsidiaries
and deemed accrued or accrued as provided below), to the extent that the
total of such fees and expenses is less than or equal to US$12 million in
the aggregate for all Companies, Asia Region Companies and Australasia
Region Companies and their respective Subsidiaries (it being understood
that the credits for any such JLW Transfer Taxes or JLW Fees and Expenses
so previously paid or accrued shall be allocated among the Closing Balance
Sheets (or Final Closing Balance Sheets) in such manner as the
Shareholders' Representatives shall specify); provided that the amount
required to be added back to the assets of the applicable group of
companies shall be net of any associated tax benefits to such group of
companies as included on the applicable Closing Balance Sheet (or Final
Closing Balance Sheet). For the purpose of determining such Closing Net
Worth, there shall be pro forma accruals on the applicable Closing Balance
Sheets and Final Closing Balance Sheets (a) in an aggregate amount equal to
any Transfer Taxes paid or payable by Parent or any of its Subsidiaries in
connection with the Integration or the transactions contemplated by this
Agreement and the Other Purchase Agreements (to the extent not already
accrued for on any Closing Balance Sheet or Final Closing Balance Sheet)
and (b) in an aggregate amount equal to the aggregate amount of any out-of-
pocket fees and expenses (including, without limitation, legal, financial
advisory and accounting fees and expenses) that are (i) attributable to any
JLW Partnership, Company, Asia Region Company or Australasia Region Company
or any of their respective Subsidiaries in connection with the Integration
or the transactions contemplated by this Agreement and the Other Purchase
Agreements but (ii) have not been accrued on any Closing Balance Sheet or
Final Closing Balance Sheet, as the case may be, and (iii) are payable by
Parent or any Parent Subsidiary. Any such pro forma accruals shall be
apportioned among the five Closing Balance Sheets (and corresponding Final
Closing Balance Sheets) in such manner as the Shareholders' Representatives
shall specify.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Disclosure Schedule" means the disclosure schedule
delivered by the Sellers' Representatives to Parent prior to the execution
of this Agreement.
"Company Material Adverse Effect" means (i) an individual or
cumulative material adverse change in or effect on the business,
properties, assets, liabilities, financial condition or results of
operations of the Companies, the Asia Region Companies and the Australasia
Region Companies and their respective Subsidiaries, taken as a whole, (ii)
an individual or cumulative event or development that is reasonably
expected to have a material adverse change in or effect on the business,
properties, assets, liabilities, financial condition or results of
operations of the Companies, the Asia Region Companies and the Australasia
Region Companies and their respective Subsidiaries, taken as a whole, or
(iii) any adverse change which would prevent any Shareholder, Other
Shareholder, JLW Seller, Company, Asia Region Company or Australasia Region
Company from consummating the transactions contemplated by this Agreement
and the Other Purchase Agreements.
"Company Subsidiary" or "Company Subsidiaries" means any direct
or indirect Subsidiary of a Company; provided, that, for purposes of this
Agreement and the other Operative Agreements, the following entities shall
be deemed to be Company Subsidiaries of JLW Supply: Jones Lang Wootton KK
(Japan) and Jones Lang Wootton International Limited (Bermuda).
"Consent" means any consent, approval, waiver, grant,
concession, Contract, License, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any
Person, including, without limitation, any Authority.
"Consideration" means, collectively, the Consideration Shares
and the Cash Consideration.
"Contract" or "Contracts" means any agreement, arrangement or
understanding, whether written or oral, including, without limitation, any
agreement to manage the operation and/or leasing of commercial or retail
property, mortgage, indenture, note, guarantee, lease, License, franchise
purchase agreement or sale agreement.
"Controlled Affiliate" means, with respect to any Shareholder
or, if applicable, Related JLW Owner, any Person controlled, directly or
indirectly, through one or more intermediaries, by such Shareholder or, if
applicable, such Related JLW Owner.
"DEL" means DEL-LPL Limited Partnership, a Delaware limited
partnership, or DEL-LPAML Limited Partnership, a Delaware limited
partnership, or both.
"Domestic Plan" shall mean each bonus, deferred compensation,
incentive compensation, stock purchase, stock option and other equity
compensation, employment, consulting, severance or termination pay,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, supplemental pension or retirement
plan, program, Contract, agreement or arrangement, and each other "employee
benefit plan" (within the meaning of Section 3(3) of ERISA) that is
sponsored, maintained or contributed to or required to be contributed to by
any Company or Company Subsidiary for the benefit of any employee or former
employee of any Company or Company Subsidiary and with respect to which any
Company or Company Subsidiary may incur liability, but excluding any such
plan, program, Contract, agreement or arrangement maintained outside the
United States (as described in Section 4(b)(4) of ERISA).
"Encumbrances" means all Liens and any other material
limitations or restrictions on rights of ownership (including any
restriction on the right to vote, sell or otherwise dispose of any share
capital or capital stock or other ownership interest) or other encumbrances
of any nature whatsoever.
"Environmental Laws" means all federal, national, interstate,
state, provincial, local and foreign Laws, legislation (whether, without
limitation, civil, criminal or administrative) statutes, treaties,
statutory instruments, directives, by-laws, judgments (including any
judgment of the European Court of Justice), regulations, notices, orders,
government circulars, codes of practice and guidance notes or decisions of
any competent regulatory body relating to pollution or protection of or
compensation of harm to human health, safety, or the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata), including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.
"ERISA Affiliate" means, with respect to any entity, any trade
or business, whether or not incorporated that, together with any such
entity would be deemed a "single employer" within the meaning of Section
4001(b)(1) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Final Master Shareholder List" means the definitive list of
Shareholders who, together with any Related JLW Owners, have executed and
delivered to Parent each of the Applicable Joinder Agreement, the
Stockholder Agreement, the Escrow Agreement, and any other documents,
instruments or writings required to be delivered by such Shareholders and
Related JLW Owners pursuant to this Agreement, which list is to be
delivered to Parent pursuant to Section 2.1 hereof and shall set forth with
respect to each Shareholder, (i) the name of such Shareholder and, if
applicable, the Related JLW Owner, (ii) the residence and citizenship of
such Shareholder and, if applicable, the Related JLW Owner, (iii) the
Shares (by Company) currently owned by or allocated to such Shareholder
and, if applicable, the Related JLW Owner (in the Integration), (iv) the
number of shares of Parent Common Stock issuable (other than Adjustment
Shares) in respect of such Shares, which shares shall be identified as
Initial Distribution Shares, Forfeiture Shares and Escrow Shares, and (v)
the Cash Consideration (or a formula for calculating such Cash
Consideration) payable to such Shareholder.
"Foreign Plan" shall mean each bonus, deferred compensation,
incentive compensation, stock purchase, stock option and other equity
compensation, employment, consulting, severance or termination pay,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement, or
supplemental pension or retirement plan, program, Contract, agreement or
arrangement, and each other employee benefit plan or perquisite that (i) is
sponsored, maintained or contributed to or required to be contributed to by
any Company or Company Subsidiary, for the benefit of any employee or
former employee of any Company or Company Subsidiary and with respect to
which any Company or Company Subsidiary may incur liability and (ii) is not
a Domestic Plan.
"Guernsey Insurance Laws" means The Companies (Guernsey) Law,
1994, as amended, and The Insurance Business (Guernsey) Law, 1986, as
amended.
"Income Tax" or "Income Taxes" means any federal, state, local
or foreign income, franchise or similar Tax.
"Independent Director" means any individual who is not (i) a
past or present employee or officer of Parent or any Europe/USA Region
Company, Asia Region Company or Australasia Region Company, or any of their
respective Affiliates, or (ii) any Affiliate of such an employee or
officer, except in each case as otherwise agreed by the Parent Nominating
Committee and the JLW Nominating Committee.
"Intangible Property Rights" means the following:
Patent Rights. All United States, international
and foreign patents and patent applications, and utility models
("Patents");
Trademarks. Common law and registered
trademarks, service marks and tradenames and all applications for
registration of the foregoing ("Trademarks");
Computer Programs. Computer programs, including
all source and object code, data compilations and collections of data,
whether machine-readable or otherwise (the "Computer Programs");
Copyrights. United States and foreign registered
and unregistered copyrights, applications for copyright registration,
including copyrights in Computer Programs, business information and
topography or semi-conductor chip product "mask works" ("Copyrights");
Personal Rights. Rights of publicity and privacy
including, without limitation, the right to use the names, likenesses,
signatures, voices, personal information and biographies of real persons;
and
Technology. Trade secrets and confidential
information, technology and know-how.
"Integration" means the series of actions contemplated to be
taken under the terms of the Integration Plan and the Integration
Agreements.
"Irish Service Subsidiaries" means the Company Subsidiaries
identified as "Irish Service Subsidiaries" in Section 3.4 of the Company
Disclosure Schedule.
"IRS" means the United States Internal Revenue Service.
"JLW Combined 9/30 Balance Sheet Schedules"means the schedules
combining the Nine-Month Interim Financial Statements, so as to eliminate
or adjust the (A) intercompany activity between or among any one or more of
(1) JLW England and its Subsidiaries, (2) JLW Scotland and its Subsidiaries
and (3) JLW Ireland and its Subsidiaries, (B) intercompany activity between
or among (x) any one or more of such entities and (y) any one or more of
the Asia Region Companies and their respective Subsidiaries and (z) any one
or more of the Australasia Region Companies and their respective
Subsidiaries and (C) the gross-up of revenues and expenses (previously
accounted for under the cost or equity method of accounting) related to the
businesses which will be one-hundred percent owned as a result of the
transactions contemplated by this Agreement and the Other Purchase
Agreements, in each case as of September 30, 1998.
"JLW Combined 9/30 Financial Statement Schedules" means,
collectively, the JLW Combined 9/30 Income Statement Schedules and the JLW
Combined 9/30 Balance Sheet Schedules.
"JLW Combined 9/30 Income Statement Schedules" means the
schedules combining the consolidated or combined (as applicable) profit and
loss accounts contained in the Nine-Month Interim Financial Statements, so
as to eliminate or adjust for (A) intercompany activity between or among
any one or more of (1) JLW England and its Subsidiaries, (2) JLW Scotland
and its Subsidiaries, and (3) JLW Ireland and its Subsidiaries, (B)
intercompany activity between or among (x) any one or more of such entities
and (y) any one or more of the Asia Region Companies and their respective
Subsidiaries and (z) any one or more of the Australasia Region Companies
and their respective Subsidiaries and (C) the gross-up of revenues and
expenses (previously accounted for under the cost or equity method of
accounting) related to the businesses which will be one-hundred percent
owned as a result of the transactions contemplated by this Agreement and
the Other Purchase Agreements, in each case for the nine months period
ended September 30, 1998.
"JLW Parties" means, collectively, the JLW Partnerships, the
Companies and the Management Shareholders, and any one of them is
individually referred to as a JLW Party.
"JLW Sellers" means, collectively, (i) each of the JLW
Partnerships, (ii) the Persons named as "Sellers" in the Asia Region
Agreement and (iii) the Persons named as "Sellers" in the Australasia
Region Agreement.
"Knowledge" means with respect to (i) any Management
Shareholder such Management Shareholder's actual knowledge without any
obligation to undertake any inquiry, (ii) JLW Partnerships, the Companies
and the Company Subsidiaries, the actual knowledge of the persons
identified on Exhibit 10 hereto after reasonable inquiry of the employees
of the JLW Partnerships, Companies and Company Subsidiaries who are
responsible for information technology and intellectual property matters,
regulatory matters, compliance with environmental laws, employee benefits
and labor matters and litigation matters and (iii) Parent and the Parent
Subsidiaries, the actual knowledge of the persons identified on Exhibit 11
hereto after reasonable inquiry of the employees of Parent and the Parent
Subsidiaries who are responsible for regulatory matters, employee benefits
and labor matters and litigation matters.
"Liabilities" shall mean any and all debts, losses,
liabilities, claims, damages, fines, costs, royalties, proceedings,
deficiencies or obligations (including those arising out of any Action,
such as any settlement or compromise thereof or judgment or award therein),
of any nature, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due, and whether or not resulting
from third-party claims, and any out-of-pocket costs and expenses
(including reasonable attorneys', accountants', or other fees and expenses
incurred in defending any Action or in investigating any of the same or in
asserting any rights hereunder).
"Licenses" means all licenses, permits, franchises and other
authorizations.
"Liens" means all mortgages, pledges, security interests,
liens, charges, options, conditional sales Contracts, claims, restrictions,
covenants, easements, rights of way, title defects or third party interests
or other Encumbrances or restrictions of any nature whatsoever.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, waste, toxic substances, hazardous substances,
dangerous substances, radioactive materials, asbestos, petroleum and
petroleum products and similar materials.
"Nine-Month Interim Financial Statements" means the unaudited
consolidated or combined (as applicable) balance sheets of (A) JLW England
and its Subsidiaries, (B) JLW Scotland and its Subsidiaries and (C) JLW
Ireland and its Subsidiaries, in each case as of September 30, 1998 and the
related consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movements on reserves and
statements of total recognized gains and losses for the nine month period
then ended.
"NYSE" means the New York Stock Exchange, Inc.
"Offering Memorandum" means the Offering Memorandum relating to
the transactions contemplated by the Operative Agreements (as defined
herein and as defined in each Other Purchase Agreement) to be delivered to
the Designated JLW Shareholders.
"Operative Agreements" means, collectively, this Agreement, the
Joinder Agreements, the Stockholder Agreements, the Escrow Agreement and
the Indemnification Agreement Guarantees.
"Other Joinder Agreements" means the Joinder Agreements (Asia)
and the Joinder Agreements (Australasia), in the forms attached to the Asia
Region Agreement and the Australasia Region Agreement, respectively.
"Other Shareholders" means, collectively, the Asia Region
Shareholders and the Australasia Region Shareholders.
"Parent Disclosure Schedule" means the disclosure schedule
delivered by Parent to the Shareholders' Representatives prior to the
execution of this Agreement.
"Parent Material Adverse Effect" means (i) an individual or
cumulative material adverse change in, or effect on, the business,
properties, assets, liabilities, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole, or (ii) an
individual or cumulative event or development that is reasonably expected
to have a material adverse change in or effect on the business, properties,
assets, liabilities, financial condition or results of operations of Parent
and its Subsidiaries, taken as a whole, or (iii) any adverse change which
would prevent Parent or any other Buyer (as defined in the Asia Region
Agreement or the Australasia Region Agreement) from consummating the
transactions contemplated by this Agreement and the Other Purchase
Agreements.
"Parent Domestic Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option and
other equity compensation, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, supplemental pension or
retirement plan, program, Contract, agreement or arrangement, and each
other "employee benefit plan" (within the meaning of section 3(3) of ERISA)
that is sponsored, maintained or contributed to or required to be
contributed to by Parent or a Parent Subsidiary for the benefit of any
employee or former employee of the Parent or Parent Subsidiary and with
respect to which any Parent or Parent Subsidiary may incur liability , but
excluding any such plan, program, Contract, agreement or arrangement that
is (i) maintained outside of the United States (as described in Section
4(b)(4) of ERISA) or (ii) benefitting any employee or former employee of
any Compass entity.
"Parent Foreign Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option and
other equity compensation, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement,
or supplemental pension or retirement plan, program, Contract, agreement or
arrangement, and each other employee benefit plan or perquisite that (i) is
sponsored, maintained or contributed to or required to be contributed to by
Parent or a Parent Subsidiary for the benefit of any employee of former
employee of Parent or Parent Subsidiary and with respect to which Parent or
Parent Subsidiary may incur liability and (ii) is not a Parent Domestic
Plan; provided, however, that, for purposes of this Agreement, the term
"Parent Foreign Plan" shall not include any such plan benefitting any
employee or former employee of any Compass entity.
"Parent Significant Subsidiary" means any Parent Subsidiary
that constitutes a "significant subsidiary" within the meaning of Rule 1-02
of Regulation S-X of the SEC.
"Parent Subsidiary" or "Parent Subsidiaries" means any direct
or indirect Subsidiary of Parent.
"Permitted Liens" means (i) liens shown on the Interim
Financial Statements or the Parent Interim Balance Sheet, as applicable, as
securing specified liabilities (with respect to which no default exists),
(ii) liens for current taxes not yet due and (iii) minor imperfections of
title and encumbrances, if any, which are not substantial in amount, do not
detract from the value of the property subject thereto or impair the
operations related thereto and have arisen only in the ordinary and usual
course of business consistent with past practice.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Related JLW Owner" means the director, officer, employee or
partner of a JLW Partnership, Company or Company Subsidiary both (i) who
owns or holds an interest (beneficial or otherwise), direct or indirect, in
any Shareholder or through which such Shareholder will acquire Shares in
the Integration and (ii) whose name is set forth opposite such
Shareholder's name on the Final Master Shareholder List.
"Related Parties" means any Shareholder, the Related JLW Owner
of such Shareholder (if applicable), the spouse of such Shareholder, the
spouse of such Related JLW Owner (if applicable), any descendant of such
Shareholder, any descendant of the Related JLW Owner (if applicable) and
any Controlled Affiliate of any of the foregoing Persons.
"Scottish Service Subsidiaries" means the Company Subsidiaries
identified as "Scottish Service Subsidiaries" in Section 3.4 of the Company
Disclosure Schedule.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Sellers' Representative" shall mean Chris Peacock and Mike
Smith or, after execution of the SCCA, any of their respective alternates
as provided in the SCCA.
"Shareholders' Representatives" shall mean Robert Orr, Ken
Winterschladen and Gerry Kipling, and Richard Jones, Christopher Radford
and Andrew Martin, as their respective alternates, pursuant to the SCCA.
"Shareholder Determination Date" means the date upon which the
Final Master Shareholder List is accepted by Parent.
"Subsidiary" or "Subsidiaries" means, with respect to any
Person, any other Person, the voting securities, other voting ownership or
voting partnership interests of which that are sufficient to elect at least
a majority of its board of directors or other governing body (or, if there
are not such voting interests, 50% or more of the equity interest of which)
at the time of determination, are owned directly or indirectly by such
first mentioned Person; provided that, for purposes of this definition, JLW
Supply and JLW USA shall be deemed to be a Subsidiary of JLW England.
"Tax" or "Taxes" means taxes of any kind, levies or other like
assessments, customs, duties, imposts, charges or fees, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real
or personal property, asset, document, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, withholding,
employment, social security, workers compensation, utility, severance,
production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed by or
payable to the United States, or any state, county, local or foreign
government or subdivision or agency thereof, imposed with respect to the
income, business, operations or assets of any Company or Company
Subsidiary, and in each instance such term shall include any interest,
penalties and additions to Tax attributable to any such Tax.
"Tax Return" means any return, report, information return,
schedule or other document (including any related or supporting
information) with respect to Taxes filed or required to be filed with any
Authority.
"Transfer Taxes" means any transfer, documentary, sales, use,
stamp, duties, recording, filing or other similar tax or fees (including
any penalties, interest or additions).
"UK GAAP" means generally accepted accounting principles, as in
effect in the United Kingdom.
"US GAAP" means generally accepted accounting principles, as in
effect in the United States.
<PAGE>
IN WITNESS WHEREOF, this Purchase and Sale Agreement
(Europe/USA) has been duly executed and delivered by each of the Management
Shareholders and the duly authorized officer of each of the JLW
Partnerships and Companies and Parent as of the day and year first above
written.
LASALLE PARTNERS INCORPORATED
By: /s/ William E. Sullivan
Name: William E. Sullivan
Title: Executive Vice President and Chief
Financial
Officer
JONES LANG WOOTTON, a limited partnership
existing under the laws of England
By: /s/ Clive Pickford
Name: Clive Pickford
Title: European Chairman
JONES LANG WOOTTON, a partnership existing
under the laws of Scotland
By: /s/ Andrew Irvine
Name: Andrew Irvine
Title: Senior Partner, Scotland
JONES LANG WOOTTON, a partnership existing
under the laws of Eire
By: /s/ Patrick McCaffrey
Name: Patrick McCaffrey
Title: Managing Partner
JONES LANG WOOTTON, a corporation existing
under the laws of England
By: /s/ Andrew Jenkins
Name: Andrew Jenkins
Title: Director
J.L.W. (SCOTLAND) CORPORATE
By: /s/ Andrew Irvine
Name: Andrew Irvine
Title: Managing Director
SLANEYGLEN COMPANY
By: /s/ Patrick McCaffrey
Name: Patrick McCaffrey
Title: Director
J.L.W. SUPPLY COMPANY
By: /s/ Clive Pickford
Name: Clive Pickford
Title: European Chairman, Director
JONES LANG WOOTTON USA INC.
By: /s/ Michael J. Smith
Name: Michael J. Smith
Title: Authorized Signatory
JLW CONTINUATION, LTD.
By: /s/ Andrew Jenkins
Name: Andrew Jenkins
Title: Director
<PAGE>
MANAGEMENT SHAREHOLDERS:
/s/ Mike Smith
Mike Smith
/s/ Chris Peacock
Chris Peacock
/s/ Robin Broadhurst
Robin Broadhurst
/s/ Chris Brown
Chris Brown
/s/ Michael Dow
Michael Dow
/s/ Gerry Kipling
Gerry Kipling
/s/ Peter Lee
Peter Lee
/s/ Robert Orr
Robert Orr
/s/ Clive Pickford
Clive Pickford
/s/ Ken Winterschladen
Ken Winterschladen
EXHIBIT 10.2
- ------------
PURCHASE AND SALE AGREEMENT
(AUSTRALASIA)
by and among
LASALLE PARTNERS INCORPORATED,
JLLINT, INC.,
LPI (AUSTRALIA) HOLDINGS PTY LIMITED,
THE JONES LANG WOOTTON ENTITIES LISTED HEREIN,
The Persons named as "Management Shareholders"
on the Signature Pages hereto
and
The "Shareholders" and "Related JLW Owners" who hereafter execute
a Purchase and Sale Joinder Agreement (Australasia)
dated as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
PURCHASE AND SALE OF SHARES;
CONVERSION OF CONVERTIBLE NOTES. . . . . . . . . . . . . 3
Section 1.1 Purchase and Sale of Shares . . . 3
Section 1.2 Redemption of Convertible Notes . 4
Section 1.3 Escrow of Certain Consideration
Shares. . . . . . . . . . . . . . 5
Section 1.4 Consideration Adjustment. . . . . 5
Section 1.5 Closing . . . . . . . . . . . . . 13
Section 1.6 Deliveries by the Sellers and
Shareholders. . . . . . . . . . . 14
Section 1.7 Deliveries by the Buyers. . . . . 15
Section 1.8 Representatives . . . . . . . . . 16
Section 1.9 Corporate Governance Matters. . . 17
Section 1.10 Integration . . . . . . . . . . . 21
ARTICLE II
MATTERS RELATING TO THE SHAREHOLDER
TRANSACTION DOCUMENTS; REALLOCATION. . . . . . . . . . . 21
Section 2.1 Signing Procedures. . . . . . . . 23
Section 2.2 Permitted Reallocation of
Consideration and Shares. . . . . 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS, THE COMPANIES AND
THE MANAGEMENT SHAREHOLDERS. . . . . . . . . . . . . . . 23
Section 3.1 Shares; Claims to Assets. . . . . 23
Section 3.2 Corporate Organization. . . . . . 24
Section 3.3 Capitalization of the Companies . 24
Section 3.4 Subsidiaries and Affiliates . . . 25
Section 3.5 Authorization . . . . . . . . . . 25
Section 3.6 No Violation. . . . . . . . . . . 26
Section 3.7 Consents and Approvals. . . . . . 26
Section 3.8 Financial Statements. . . . . . . 26
<PAGE>
Page
----
Section 3.9 No Undisclosed Liabilities. . . . 28
Section 3.10 Absence of Certain Changes. . . . 29
Section 3.11 Real Property . . . . . . . . . . 29
Section 3.12 Intangible Property Rights. . . . 30
Section 3.13 Certain Contracts . . . . . . . . 32
Section 3.14 Licenses and Other Authorizations 33
Section 3.15 Year 2000 and Euro Compliance . . 34
Section 3.16 Clients . . . . . . . . . . . . . 34
Section 3.17 Operation of the Businesses . . . 35
Section 3.18 Insurance . . . . . . . . . . . . 35
Section 3.19 Labor Relations . . . . . . . . . 35
Section 3.20 Employee Benefit Matters. . . . . 35
Section 3.21 Litigation. . . . . . . . . . . . 40
Section 3.22 Compliance with Law . . . . . . . 40
Section 3.23 Taxes . . . . . . . . . . . . . . 41
Section 3.24 Environmental Matters . . . . . . 44
Section 3.25 Personnel . . . . . . . . . . . . 45
Section 3.26 Disclosure Documents. . . . . . . 46
Section 3.27 Integration Matters . . . . . . . 46
Section 3.28 Related Party Transactions. . . . 46
Section 3.29 Securities Laws Matters . . . . . 46
Section 3.30 Opinion of Financial Advisor. . . 47
Section 3.31 Certain Fees. . . . . . . . . . . 47
ARTICLE IIIA
CERTAIN REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLERS . . . . . . . . . . . . . . 47
Section 3.1A Ownership and Sale of Shares. . . 47
Section 3.2A Authorization . . . . . . . . . . 47
Section 3.3A No Violation. . . . . . . . . . . 48
Section 3.4A Consents and Approvals. . . . . . 49
Section 3.5A Investment Matters. . . . . . . . 49
Section 3.6A Regulation S. . . . . . . . . . . 50
<PAGE>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT,
US ACQUISITION SUB AND AUSTRALIA ACQUISITION SUB . . . . 51
Section 4.1 Corporate Organization. . . . . . 51
Section 4.2 Capitalization. . . . . . . . . . 51
Section 4.3 Subsidiaries and Affiliates . . . 52
Section 4.4 Authorization . . . . . . . . . . 52
Section 4.5 No Violation. . . . . . . . . . . 53
Section 4.6 Consent and Approvals . . . . . . 54
Section 4.7 SEC Reports and
Financial Statements. . . . . . . 54
Section 4.8 No Undisclosed Liabilities. . . . 54
Section 4.9 Absence of Certain Changes
or Events . . . . . . . . . . . . 55
Section 4.10 Licenses and Other
Authorizations. . . . . . . . . . 55
Section 4.11 Insurance . . . . . . . . . . . . 55
Section 4.12 Labor Relations . . . . . . . . . 55
Section 4.13 Parent Employee Benefit Matters . 56
Section 4.14 Litigation. . . . . . . . . . . . 58
Section 4.15 Compliance with Law . . . . . . . 58
Section 4.16 Taxes . . . . . . . . . . . . . . 58
Section 4.17 Activities of US Acquisition Sub
and Australia Acquisition Sub . . 59
Section 4.18 Opinion of Financial Advisors . . 59
Section 4.19 Certain Fees. . . . . . . . . . . 59
Section 4.20 Disclosure Documents. . . . . . . 60
Section 4.21 Other . . . . . . . . . . . . . . 60
ARTICLE V
COVENANTS OF THE SELLERS AND THE COMPANIES . . . . . . . 60
Section 5.1 Operation of the Companies. . . . 60
Section 5.2 Access. . . . . . . . . . . . . . 63
Section 5.3 Consents. . . . . . . . . . . . . 63
Section 5.4 Closing Net Worth . . . . . . . . 64
Section 5.5 Other Offers. . . . . . . . . . . 64
Section 5.6 Integration Matters . . . . . . . 64
Section 5.7 Nine-Month Financial Statements . 64
<PAGE>
Page
----
Section 5.8 Intercompany Accounts . . . . . . 65
Section 5.9 Name Changes. . . . . . . . . . . 65
Section 5.10 Certain Charges . . . . . . . . . 65
Section 5.11 Stockholder Agreement . . . . . . 65
ARTICLE VI
COVENANTS OF PARENT . . . . . . . . . . . . . . . . . 65
Section 6.1 Operation of Parent . . . . . . . 65
Section 6.2 Access. . . . . . . . . . . . . . 68
Section 6.3 Consents. . . . . . . . . . . . . 68
Section 6.4 Listing of Consideration Shares . 68
Section 6.5 Stockholder Approval; Proxy . . . 68
Section 6.6 Other Offers. . . . . . . . . . . 69
Section 6.7 Employee Trust. . . . . . . . . . 70
Section 6.8 Certain Stockholder Agreements. . 70
Section 6.9 Certain Instruments of
Indemnification . . . . . . . . . 71
Section 6.10 Employee Stock Options. . . . . . 71
Section 6.11 Director and Officer
Indemnification . . . . . . . . . 71
Section 6.12 Note Purchase Agreement Matters . 71
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . . . . 71
Section 7.1 No Injunctions or Restraints. . . 72
Section 7.2 No Litigation . . . . . . . . . . 72
Section 7.3 HSR Act and Other Approvals . . . 72
Section 7.4 Stockholders Vote . . . . . . . . 73
Section 7.5 Other Closings. . . . . . . . . . 73
Section 7.6 Consummation of the Integration . 73
Section 7.7 Execution and Delivery of the
Other Operative Agreements. . . . 73
Section 7.8 Amendments. . . . . . . . . . . . 73
<PAGE>
Page
----
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE BUYERS. . . . . . . . . 73
Section 8.1 Representations and Warranties
Correct as of the Integration
Commencement Date . . . . . . . . 73
Section 8.2 Certain Representation and
Warranties Correct as of the
Closing Date. . . . . . . . . . . 74
Section 8.3 Performance; No Default . . . . . 74
Section 8.4 Delivery of Certificate . . . . . 74
Section 8.5 Opinions of Counsel to the
Sellers and the Companies . . . . 75
Section 8.6 Comfort Letter
Section 8.7 Settlement of Related Party
Accounts. . . . . . . . . . . . . 75
Section 8.8 No Material Adverse Effect. . . . 75
Section 8.9 Continuing Affiliate Releases . . 75
Section 8.10 Stockholder Agreement . . . . . . 75
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE
SELLERS AND THE SHAREHOLDERS . . . . . . . . . . . . . . 75
Section 9.1 Representations and Warranties
Correct as of the Integration
Commencement Date . . . . . . . . 75
Section 9.2 Performance; No Default . . . . . 76
Section 9.3 Delivery of Certificate . . . . . 76
Section 9.4 Opinions of Counsel to Parent . . 76
Section 9.5 Good Standing Certificate . . . . 76
Section 9.6 Listing of Consideration Shares . 76
Section 9.7 Certain Stockholder Agreements. . 76
Section 9.8 No Material Adverse Effect. . . . 76
Section 9.9 Directors and Officers. . . . . . 77
Section 9.10 Amendments. . . . . . . . . . . . 77
ARTICLE X
TAX MATTERS . . . . . . . . . . . . . . . . . 77
<PAGE>
Page
----
Section 10.1 Allocation of Purchase Price. . . 77
Section 10.2 Tax Returns . . . . . . . . . . . 77
Section 10.3 Mutual Cooperation. . . . . . . . 78
Section 10.4 Tax Covenant. . . . . . . . . . . 78
ARTICLE XI
TERMINATION . . . . . . . . . . . . . . . . . 78
Section 11.1 Termination of Agreement. . . . . 78
Section 11.2 Effect of Termination . . . . . . 80
Section 11.3 Termination Fee . . . . . . . . . 80
ARTICLE XII
SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . 81
Section 12.1 Survival of Representations,
Warranties and Covenants. . . . . 81
Section 12.2 Indemnification of the Buyers . . 81
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . 81
Section 13.1 Further Efforts . . . . . . . . . 81
Section 13.2 Expenses. . . . . . . . . . . . . 82
Section 13.3 Press Releases and
Announcements . . . . . . . . . . 82
Section 13.4 Entire Agreement; No Third
Party Beneficiaries . . . . . . . 82
Section 13.5 Amendment, Extension and
Waiver. . . . . . . . . . . . . . 82
Section 13.6 Headings. . . . . . . . . . . . . 82
Section 13.7 Notices . . . . . . . . . . . . . 82
Section 13.8 Assignment. . . . . . . . . . . . 85
Section 13.9 Applicable Law. . . . . . . . . . 85
Section 13.10 Jurisdiction. . . . . . . . . . . 85
Section 13.11 Service of Process. . . . . . . . 86
Section 13.12 Words in Singular and
Plural Form . . . . . . . . . . . 86
Section 13.13 Counterparts. . . . . . . . . . . 86
Section 13.14 Waiver of Jury Trial. . . . . . . 86
<PAGE>
Page
----
ARTICLE XIV
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . 86
Exhibit 1 Agreed Generally Accepted Accounting Principles
Exhibit 2 Determination of 1999 Compensation Expense
Exhibit 3 Form of DEL Stockholder Agreement
Exhibit 4 [Intentionally Left Blank]
Exhibit 5 Form of Instrument of Assumption
Exhibit 6 Form of Instrument of Assumption
Exhibit 7 Form of General Release
Exhibit 8 Persons deemed to have Knowledge for purposes of the Company
and the Company Subsidiaries
Exhibit 9 Persons deemed to have Knowledge for purposes of Parent
Annex A Form of Purchase and Sale Joinder Agreement (Australasia)
Annex B Integration Plan and Integration Agreements
Annex C Form of Stockholder Agreement
Annex D Form of Indemnity and Escrow Agreement
Annex E Sellers and Share Information
Annex F Form of Convertible Note
Annex G Form of Share Transfer Form
Annex H Form of Power of Attorney
Annex I Articles of Amendment and Restatement of Parent
Annex J [Intentionally Left Blank]
Annex K Amended and Restated Bylaws of Parent
Annex L Terms of ESOT
Annex M [Intentionally Left Blank]
Annex N [Intentionally Left Blank]
Annex O Form of Comfort Letter
<PAGE>
INDEX OF DEFINED TERMS
Terms Defined in Section
1936 Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23(r)
1997 Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23(r)
1999 Income Statements. . . . . . . . . . . . . . . . . . . . . .1.4(p)
1999 Stub Period. . . . . . . . . . . . . . . . . . . . . . . . .1.4(p)
Action. . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Adjustment Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Adjustment Shares Conversion Amount . . . . . . . . . . . . . . .1.4(e)
Adjustment Shares Deficit . . . . . . . . . . . . . . . . . . . .1.4(l)
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Agreed Generally Accepted Accounting Principles . . . . . . . . .1.4(b)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Allocation Notice . . . . . . . . . . . . . . . . . . . . . . . .1.4(k)
Allocation Notice Delivery Period . . . . . . . . . . . . . . . .1.4(k)
Amended Parent Bylaws . . . . . . . . . . . . . . . . . . . . . .1.9(a)
Applicable Auditors . . . . . . . . . . . . . . . . . . . . . . .1.4(b)
Applicable Integration Agreements . . . . . . . . . . . . . . . .2.1(a)
Applicable Joinder Agreement. . . . . . . . . . . . . . . . . . .1.1(b)
Applicable Trust. . . . . . . . . . . . . . . . . . . . . . Article XIV
Applicable Trust Deed . . . . . . . . . . . . . . . . . . . Article XIV
Asia Region 1999 Income Statement . . . . . . . . . . . . . . . .1.4(p)
Asia Region Adjustment Amount . . . . . . . . . . . . . . . . . .1.4(i)
Asia Region Adjustment Shares . . . . . . . . . . . . . . . . . .1.4(a)
Asia Region Agreement . . . . . . . . . . . . . . . . . . . . .Preamble
Asia Region Balance Sheet . . . . . . . . . . . . . . . . . . . .1.4(b)
Asia Region Closing Net Worth . . . . . . . . . . . . . . . . . .1.4(b)
Asia Region Companies . . . . . . . . . . . . . . . . . . . . .Preamble
Asia Region ESOT Trustees . . . . . . . . . . . . . . . . . . . . . 6.7
Asia Region Financial Statements. . . . . . . . . . . . . . . . .1.4(b)
Asia Region Sellers . . . . . . . . . . . . . . . . . . . . Article XIV
Asia Region Share Deficit . . . . . . . . . . . . . . . . . . . .1.4(i)
Asia Region Shareholders. . . . . . . . . . . . . . . . . . Article XIV
Asia-Related Equity Interests . . . . . . . . . . . . . . . Article XIV
ASIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.6(d)
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.17
Audited Financial Statements. . . . . . . . . . . . . . . . . . .3.8(a)
Australasia Interim Financial Statements. . . . . . . . . . . . .3.8(a)
Australasia Region 1999 Income Statement. . . . . . . . . . . . .1.4(p)
Australasia Region Adjustment Amount. . . . . . . . . . . . . . .1.4(e)
Australasia Region Adjustment Shares. . . . . . . . . . . . . . .1.4(a)
Australasia Region Agreement. . . . . . . . . . . . . . . . . .Preamble
Australasia Region Balance Sheet. . . . . . . . . . . . . . . . .1.4(b)
Australasia Region Closing Net Worth. . . . . . . . . . . . . . .1.4(b)
Australasia Region ESOT Trustees. . . . . . . . . . . . . . . . . . 6.7
Australasia Region Financial Statements . . . . . . . . . . . . .1.4(b)
Australasia Region Share Deficit. . . . . . . . . . . . . . . . .1.4(e)
Australasia Region Shareholders . . . . . . . . . . . . . . . .Preamble
Australia Acquisition Sub . . . . . . . . . . . . . . . . . . .Preamble
Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Authorized Actions. . . . . . . . . . . . . . . . . . . . . . . .1.8(b)
Benbridge (AUS) . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Benbridge (NZ). . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Business Day. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Buyer(s). . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Cash Consideration. . . . . . . . . . . . . . . . . . . . . . . .1.1(a)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.5(a)
Closing Authorized Actions. . . . . . . . . . . . . . . . . . . .1.8(b)
Closing Balance Sheets. . . . . . . . . . . . . . . . . . . . . .1.4(b)
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . .1.5(b)
Closing Financial Statements. . . . . . . . . . . . . . . . . . .1.4(b)
Closing Net Worth . . . . . . . . . . . . . . . . . . . . . Article XIV
Closing Statement Resolution Period . . . . . . . . . . . . . . .1.4(c)
Closing Statements. . . . . . . . . . . . . . . . . . . . . . . .1.4(b)
Closing Statements Objection. . . . . . . . . . . . . . . . . . .1.4(c)
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
Commitment Date . . . . . . . . . . . . . . . . . . . . . . . . .2.1(b)
Companies' Funds. . . . . . . . . . . . . . . . . . . . . . . . 3.20(c)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Company Disclosure Schedule . . . . . . . . . . . . . . . . Article XIV
Company Material Adverse Effect . . . . . . . . . . . . . . Article XIV
Company Subsidiary(ies) . . . . . . . . . . . . . . . . . . Article XIV
Compass Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
Computer Programs . . . . . . . . . . . . . . . . . . . . . Article XIV
Computer Systems. . . . . . . . . . . . . . . . . . . . . . . . . .3.15
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . 5.2
Consent . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Consideration . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Consideration Shares. . . . . . . . . . . . . . . . . . . . . . . . 1.2
Continuing Affiliate. . . . . . . . . . . . . . . . . . . . Article XIV
Contract(s) . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Controlled Affiliate. . . . . . . . . . . . . . . . . . . . Article XIV
Convertible Note. . . . . . . . . . . . . . . . . . . . . . . . .1.1(a)
Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Corporate Seller. . . . . . . . . . . . . . . . . . . . . . Article XIV
CRR provisions. . . . . . . . . . . . . . . . . . . . . . . . . 3.23(n)
DEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
DEL Stockholder Agreement . . . . . . . . . . . . . . . . . . . . . 6.8
Designated Countries. . . . . . . . . . . . . . . . . . . . . . 3.12(c)
Designated JLW Shareholder(s) . . . . . . . . . . . . . . . . . .2.1(a)
Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
English Courts. . . . . . . . . . . . . . . . . . . . . . . . . . 13.10
Environmental Laws. . . . . . . . . . . . . . . . . . . . . Article XIV
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . Article XIV
Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . .Preamble
Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
ESOT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Adjustment Shares. . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Escrow Shares. . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
ESOT Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Euro Compliant. . . . . . . . . . . . . . . . . . . . . . . . . . .3.15
Europe/USA Region Agreement . . . . . . . . . . . . . . . . . .Preamble
Europe/USA Region Companies . . . . . . . . . . . . . . . . . .Preamble
Europe/USA Region Shareholders. . . . . . . . . . . . . . . Article XIV
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Fifteenth Director. . . . . . . . . . . . . . . . . . . . . . . .1.9(g)
Final Asia Region Closing Net Worth . . . . . . . . . . . . . . .1.4(c)
Final Australasia Region Closing Net Worth. . . . . . . . . . . .1.4(c)
Final Closing Balance Statements. . . . . . . . . . . . . . . . .1.4(c)
Final Closing Financial Statements. . . . . . . . . . . . . . . .1.4(c)
Final Closing Statements. . . . . . . . . . . . . . . . . . . . .1.4(c)
Final Closing Statements Determination Date . . . . . . . . . . .1.4(e)
Final JLW England Closing Net Worth . . . . . . . . . . . . . . .1.4(c)
Final JLW Ireland Closing Net Worth . . . . . . . . . . . . . . .1.4(c)
Final JLW Scotland Closing Net Worth. . . . . . . . . . . . . . .1.4(c)
Final Master Shareholder List . . . . . . . . . . . . . . . Article XIV
Final Return Date . . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
Financial Statements. . . . . . . . . . . . . . . . . . . . . . .3.8(a)
Forfeiture Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Forfeiture Shares Escrow Agent. . . . . . . . . . . . . . . . . . . 1.2
Forfeiture Shares Escrow Agreement. . . . . . . . . . . . . . . . . 1.2
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Illinois Courts . . . . . . . . . . . . . . . . . . . . . . . . . 13.10
Income Tax(es). . . . . . . . . . . . . . . . . . . . . . . Article XIV
Independent Director. . . . . . . . . . . . . . . . . . . . Article XIV
Initial Consideration Shares. . . . . . . . . . . . . . . . . . . . 1.2
Initial Distribution Shares . . . . . . . . . . . . . . . . . . . . 1.2
Instruction Letter. . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
Intangible Property Rights. . . . . . . . . . . . . . . . . Article XIV
Integration . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Integration Agreements. . . . . . . . . . . . . . . . . . . . .Preamble
Integration Commencement Date . . . . . . . . . . . . . . . . . .1.5(b)
Integration Completion. . . . . . . . . . . . . . . . . . . . . .1.5(b)
Integration Completion Date . . . . . . . . . . . . . . . . . 1.5(b)(i)
Integration Escrow Agreement. . . . . . . . . . . . . . . . . . 1.10(b)
Integration Plan. . . . . . . . . . . . . . . . . . . . . . . .Preamble
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(c)
Interim Financial Statements. . . . . . . . . . . . . . . . . . .3.8(a)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Acquisition Proposal. . . . . . . . . . . . . . . . . . . . . . 5.5
JLW Asia ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . . . 6.7
JLW Australasia ESOT Sub Trust. . . . . . . . . . . . . . . . . . . 6.7
JLW Australia . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Australia Parent. . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Australia Stockholder Agreement . . . . . . . . . . . . . . . .5.11
JLW Businesses. . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Combined 9/30 Balance Sheet Schedules . . . . . . . . . Article XIV
JLW Combined 9/30 Financial Statement Schedules . . . . . . Article XIV
JLW Combined 9/30 Income Statement Schedules. . . . . . . . Article XIV
JLW Combined Balance Sheet Schedules. . . . . . . . . . . . . . .3.8(a)
JLW Combined Financial Statement Schedules. . . . . . . . . . . .3.8(a)
JLW Combined Income Statement Schedules . . . . . . . . . . . . .3.8(a)
JLW Combined Interim Balance Sheet Schedules. . . . . . . . . . .3.8(a)
JLW Combined Year-End Balance Sheet Schedules . . . . . . . . . .3.8(a)
JLW Continuation. . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Directors . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
JLW Employee Directors. . . . . . . . . . . . . . . . . . . . . .1.9(b)
JLW Employees . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(h)
JLW England . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW England 1999 Income Statement . . . . . . . . . . . . . . . .1.4(p)
JLW England Adjustment Amount . . . . . . . . . . . . . . . . . .1.4(f)
JLW England Adjustment Shares . . . . . . . . . . . . . . . . . .1.4(a)
JLW England Balance Sheet . . . . . . . . . . . . . . . . . . . .1.4(b)
JLW England Closing Net Worth . . . . . . . . . . . . . . . . . .1.4(b)
JLW England ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . 6.7
JLW England ESOT Trustees . . . . . . . . . . . . . . . . . . . . . 6.7
JLW England Financial Statements. . . . . . . . . . . . . . . . .1.4(b)
JLW England Share Deficit . . . . . . . . . . . . . . . . . . . .1.4(f)
JLW England Shareholders. . . . . . . . . . . . . . . . . . . . .1.4(a)
JLW Fees and Expenses . . . . . . . . . . . . . . . . . . . Article XIV
JLW Independent Directors . . . . . . . . . . . . . . . . . . . .1.9(b)
JLW Ireland . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Ireland 1999 Income Statement . . . . . . . . . . . . . . . .1.4(p)
JLW Ireland Adjustment Amount . . . . . . . . . . . . . . . . . .1.4(h)
JLW Ireland Adjustment Shares . . . . . . . . . . . . . . . . . .1.4(a)
JLW Ireland Balance Sheet . . . . . . . . . . . . . . . . . . . .1.4(b)
JLW Ireland Closing Net Worth . . . . . . . . . . . . . . . . . .1.4(b)
JLW Ireland ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . 6.7
JLW Ireland Financial Statements. . . . . . . . . . . . . . . . .1.4(b)
JLW Ireland Share Deficit . . . . . . . . . . . . . . . . . . . .1.4(h)
JLW Ireland Shareholders. . . . . . . . . . . . . . . . . . . . .1.4(a)
JLW Nominating Committee. . . . . . . . . . . . . . . . . . . . .1.9(d)
JLW (NZ) Holdings . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW (NZ) Holdings Parent. . . . . . . . . . . . . . . . . . . .Preamble
JLW Parties . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Partnerships. . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Scotland. . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Scotland 1999 Income Statement. . . . . . . . . . . . . . . .1.4(p)
JLW Scotland Adjustment Amount. . . . . . . . . . . . . . . . . .1.4(g)
JLW Scotland Adjustment Shares. . . . . . . . . . . . . . . . . .1.4(a)
JLW Scotland Balance Sheet. . . . . . . . . . . . . . . . . . . .1.4(b)
JLW Scotland Closing Net Worth. . . . . . . . . . . . . . . . . .1.4(b)
JLW Scotland ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . 6.7
JLW Scotland ESOT Trustees. . . . . . . . . . . . . . . . . . . . . 6.7
JLW Scotland Financial Statements . . . . . . . . . . . . . . . .1.4(b)
JLW Scotland Share Deficit. . . . . . . . . . . . . . . . . . . .1.4(g)
JLW Scotland Shareholders . . . . . . . . . . . . . . . . . . . .1.4(a)
JLW Sellers . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
JLW Supply. . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
JLW Transfer Taxes. . . . . . . . . . . . . . . . . . . . . Article XIV
JLW USA . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Joinder Agreement . . . . . . . . . . . . . . . . . . . . . . .Preamble
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
LACM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Leased Real Property. . . . . . . . . . . . . . . . . . . . . . 3.11(b)
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Listed Agreements . . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
Managed Properties. . . . . . . . . . . . . . . . . . . . . . . 3.24(a)
Management Shareholder(s) . . . . . . . . . . . . . . . . . . .Preamble
Materials of Environmental Concern. . . . . . . . . . . . . Article XIV
Minimum Asia Region Closing Net Worth . . . . . . . . . . . . . .1.4(i)
Minimum Australasia Region Closing Net Worth. . . . . . . . . . .1.4(e)
Minimum JLW England Closing Net Worth . . . . . . . . . . . . . .1.4(f)
Minimum JLW Ireland Closing Net Worth . . . . . . . . . . . . . .1.4(h)
Minimum JLW Scotland Closing Net Worth. . . . . . . . . . . . . .1.4(g)
Neutral Auditor . . . . . . . . . . . . . . . . . . . . . . . . .1.4(d)
NewCo 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
NewCo 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
NewCo 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Nine-Month Interim Financial Statements . . . . . . . . . . Article XIV
Nominating Committees . . . . . . . . . . . . . . . . . . . . . .1.9(d)
Non-Participating Designated JLW Shareholders . . . . . . . . . . . 2.2
NYSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Offering Memorandum . . . . . . . . . . . . . . . . . . . . Article XIV
Offshore Transaction. . . . . . . . . . . . . . . . . . . . . . .3.6(a)
Operative Agreements. . . . . . . . . . . . . . . . . . . . Article XIV
Other Authorized Actions. . . . . . . . . . . . . . . . . . . . .1.8(b)
Other Joinder Agreements. . . . . . . . . . . . . . . . . . Article XIV
Other Purchase Agreements . . . . . . . . . . . . . . . . . . .Preamble
Other Shareholders. . . . . . . . . . . . . . . . . . . . . Article XIV
Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Parent Acquisition Proposal . . . . . . . . . . . . . . . . . . . . 6.6
Parent Articles of Incorporation. . . . . . . . . . . . . . . . .4.1(a)
Parent Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(a)
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Parent Directors. . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Parent Disclosure Schedule. . . . . . . . . . . . . . . . . Article XIV
Parent Domestic Plan. . . . . . . . . . . . . . . . . . . . Article XIV
Parent Employee Directors . . . . . . . . . . . . . . . . . . . .1.9(b)
Parent Employees. . . . . . . . . . . . . . . . . . . . . . . . .1.9(h)
Parent Foreign Plan . . . . . . . . . . . . . . . . . . . . Article XIV
Parent Independent Directors. . . . . . . . . . . . . . . . . . .1.9(b)
Parent Interim Balance Sheet. . . . . . . . . . . . . . . . . . .4.8(a)
Parent Material Adverse Effect. . . . . . . . . . . . . . . Article XIV
Parent Nominating Committee . . . . . . . . . . . . . . . . . . .1.9(d)
Parent Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Parent Securities . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent Significant Subsidiary . . . . . . . . . . . . . . . Article XIV
Parent Stock Plans. . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Parent Subsidiary . . . . . . . . . . . . . . . . . . . . . Article XIV
Parent Subsidiaries . . . . . . . . . . . . . . . . . . . . . .Preamble
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . Article XIV
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Post-Closing Integration Actions. . . . . . . . . . . . . . . . 1.10(a)
Preliminary Master Shareholder List . . . . . . . . . . . . . .Preamble
Proposed Actions. . . . . . . . . . . . . . . . . . . . . . . . .4.4(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . .6.5(a)
Real Property Leases. . . . . . . . . . . . . . . . . . . . . . 3.11(b)
Related JLW Owner . . . . . . . . . . . . . . . . . . . . . Article XIV
Related Parties . . . . . . . . . . . . . . . . . . . . . . Article XIV
Required Regulatory Approvals . . . . . . . . . . . . . . . . . . . 3.7
Required Securities Consents. . . . . . . . . . . . . . . . . . . . 4.6
SCCA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
SCCA Expenses Reserve . . . . . . . . . . . . . . . . . . . . . .1.8(d)
Scheduled Agreements. . . . . . . . . . . . . . . . . . . . . . 3.12(b)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Securities Act. . . . . . . . . . . . . . . . . . . . . . . Article XIV
Seller(s) . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Sellers' Representatives. . . . . . . . . . . . . . . . . . Article XIV
SGA Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20(c)
Shareholder(s). . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Shareholder Determination Date. . . . . . . . . . . . . . . Article XIV
Shareholder Transaction Documents . . . . . . . . . . . . . . . .2.1(a)
Shareholder's Representatives . . . . . . . . . . . . . . . Article XIV
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Significant Clients . . . . . . . . . . . . . . . . . . . . . . . .3.16
Single Employer Plan. . . . . . . . . . . . . . . . . . . . . . 4.13(a)
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . .6.10
Stockholder Agreement . . . . . . . . . . . . . . . . . . . . .Preamble
Straddle Returns. . . . . . . . . . . . . . . . . . . . . . . . 10.2(b)
Sub Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Subsidiary(ies) . . . . . . . . . . . . . . . . . . . . . . Article XIV
Tax(es) . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . .11.3
Third Party Scheduled Agreement . . . . . . . . . . . . . . . . 3.12(b)
Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
Transact (AUS) Trust Beneficial Owners. . . . . . . . . . . . .Preamble
Transact (AUS) Trust Deed . . . . . . . . . . . . . . . . . . .Preamble
Transact (AUS) Trust Trustee. . . . . . . . . . . . . . . . . .Preamble
Transact (NSW). . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Transact (NZ) . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Transact (NZ) Trust Beneficial Owners . . . . . . . . . . . . .Preamble
Transact (NZ) Trust Deed. . . . . . . . . . . . . . . . . . . .Preamble
Transact (NZ) Trust Trustee . . . . . . . . . . . . . . . . . .Preamble
Transact (QLD). . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Transact (VIC). . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . Article XIV
Transition Period . . . . . . . . . . . . . . . . . . . . . . . .1.9(b)
Trustee Seller. . . . . . . . . . . . . . . . . . . . . . . Article XIV
UK GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
US GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Article XIV
US Acquisition Sub. . . . . . . . . . . . . . . . . . . . . . .Preamble
US Acquisition Sub II . . . . . . . . . . . . . . . . . . . . .Preamble
Year 2000 Compliant . . . . . . . . . . . . . . . . . . . . . . . .3.15
<PAGE>
PURCHASE AND SALE AGREEMENT(AUSTRALASIA)
PURCHASE AND SALE AGREEMENT (AUSTRALASIA), dated as of
October 21, 1998 (this "Agreement" or this "Australasia Region Agreement"),
by and among (i) LASALLE PARTNERS INCORPORATED, a Maryland corporation
("Parent"), JLLINT, INC., an Illinois corporation and an indirect wholly-
owned subsidiary of Parent ("US Acquisition Sub"), LPI (AUSTRALIA) HOLDINGS
PTY LIMITED (ACN 084 042 473), a corporation organized under the laws of
the Australian Capital Territory and an indirect wholly-owned subsidiary of
Parent ("Australia Acquisition Sub") (each of Parent, US Acquisition Sub
and Australia Acquisition Sub is individually referred to herein as a
"Buyer," and collectively referred to herein as the "Buyers"); (ii) JLW
HOLDINGS PTY LIMITED (ACN 008 564 654), a corporation organized under the
laws of the Australian Capital Territory ("JLW Australia Parent"), JLW (NEW
ZEALAND) HOLDINGS PTY LTD. (ACN 071 632 061), a corporation organized under
the laws of New South Wales ("JLW (NZ) Holdings Parent"), BENBRIDGE (NZ)
LIMITED, a corporation organized under the laws of New Zealand ("Benbridge
(NZ)"), as trustee (the "Transact (NZ) Trust Trustee") under the Deed of
Trust, dated March 6, 1997 (the "Transact (NZ) Trust Deed"), by Arthur
James Davis, as Settlor, and Benbridge (NZ), for the "Eligible
Beneficiaries" (as defined in the Transact (NZ) Trust Deed (the "Transact
(NZ) Trust Beneficial Owners")), and BENBRIDGE AUSTRALIA PTY LIMITED (ACN
075 214 747), a corporation organized under the laws of New South Wales
("Benbridge (AUS)"), as trustee (the "Transact (AUS) Trust Trustee") under
the Deed of Trust, dated February 11, 1997 (the "Transact (AUS) Trust
Deed"), by Arthur James Davis, as Settlor, and Benbridge (AUS), for the
"Eligible Beneficiaries" (as defined in the Transact (AUS) Trust Deed (the
"Transact (AUS) Trust Beneficial Owners")) (each of JLW Australia Parent,
JLW (NZ) Holdings Parent, the Transact (NZ) Trust Trustee and the Transact
(AUS) Trust Trustee is individually referred to herein as a "Seller," and
collectively referred to herein as the "Sellers"); (iii) JLW AUSTRALIA PTY
LIMITED (ACN 008 476 257), a corporation organized under the laws of the
Australian Capital Territory ("JLW Australia"), JONES LANG WOOTTON HOLDINGS
LIMITED, a corporation organized under the laws of New Zealand ("JLW (NZ)
Holdings"), JLW TRANSACT LIMITED, a corporation organized under the laws of
New Zealand ("Transact (NZ)"), JONES LANG WOOTTON TRANSACT PTY LTD. (ACN
075 217 462), a corporation organized under the laws of New South Wales
("Transact (NSW)"), JONES LANG WOOTTON TRANSACT (VIC) PTY LTD. (ACN 068 893
685), a corporation organized under the laws of Victoria ("Transact
(VIC)"), and JONES LANG WOOTTON TRANSACT (QLD) PTY LTD. (ACN 072 918 417),
a corporation organized under the laws of Queensland ("Transact (QLD)")
(each of JLW Australia, JLW (NZ) Holdings, Transact (NZ), Transact (NSW),
Transact (VIC) and Transact (QLD) is individually referred to herein as a
"Company" and collectively referred to herein as the "Companies" or the
"Australasia Region Companies"); (iv) the persons named as "Management
Shareholders" on the signature pages hereto (each a "Management
Shareholder" and, collectively, the "Management Shareholders"); and (v)
each of the Transact (NZ) Trust Beneficial Owners, the Transact (AUS) Trust
Beneficial Owners and the other Persons listed as "Shareholders" on the
Preliminary Master Shareholder List, attached as Schedule A to the Company
Disclosure Schedule (the "Preliminary Master Shareholder List"), together
with any Related JLW Owners, who execute and deliver Joinder Agreements
(Australasia), in the form attached hereto as Annex A (each a "Joinder
Agreement"), and each of the other Shareholder Transaction Documents (as
hereinafter defined) (each Person listed as a "Shareholder" on the
Preliminary Master Shareholder List who duly executes and delivers (and
whose Related JLW Owner, if any, executes and delivers) each of the
Shareholder Transaction Documents is individually referred to herein as a
"Shareholder" and collectively referred to herein as the "Shareholders" or
the "Australasia Region Shareholders").
WHEREAS, in accordance with the plan of integration (the
"Integration Plan") and the related integration agreements (the
"Integration Agreements"), attached hereto as Annex B, JLW Australia will
transfer: (i) to JLW Australia Parent, its entire equity interests in
Benbridge (AUS), (ii) to Benbridge (NZ), its entire equity interests in JLW
Transact (NZ), and (iii) to certain Asia Region Companies, the Asia-Related
Equity Interests, all as set forth more fully in the Integration Plan;
WHEREAS, the Sellers collectively are the legal owners of all
of the issued share capital of each of the Companies (the "Shares");
WHEREAS, the Sellers collectively desire to sell, and US
Acquisition Sub and Australia Acquisition Sub collectively desire to
purchase, all, but not less than all, of the Shares, all upon the terms and
subject to the conditions set forth in this Agreement and the other
Operative Agreements;
WHEREAS, as a condition of and inducement to the Buyers'
willingness to consummate the transactions contemplated hereby, Parent and
each Shareholder (and each Related JLW Owner, if applicable) will enter
into (i) a Stockholder Agreement, in the form attached hereto as Annex C
(the "Stockholder Agreement"), and (ii) an Indemnity and Escrow Agreement,
in the form attached hereto as Annex D (the "Escrow Agreement");
WHEREAS, as of the date hereof, Parent and the other parties
named therein are entering into a Purchase and Sale Agreement (the
"Europe/USA Region Agreement"), pursuant to which, upon the terms and
subject to the conditions set forth therein, Parent has the right (and may
be required) to acquire all of the issued and outstanding share capital of
each of Jones Lang Wootton, a corporation incorporated under the laws of
England ("NewCo 1"), J.L.W. (Scotland) Corporate, a corporation
incorporated under the laws of Scotland ("NewCo 2"), Slaneyglen Company, a
corporation incorporated under the laws of Eire ("NewCo 3"), JLW Supply, a
corporation incorporated under the laws of England ("JLW Supply"), Jones
Lang Wootton USA Inc., a Delaware corporation ("JLW USA"), and JLW
Continuation, a corporation incorporated under the laws of England ("JLW
Continuation") (collectively, the "Europe/USA Region Companies");
WHEREAS, as of the date hereof, Parent, US Acquisition Sub,
JLLIP, Inc., an Illinois corporation and an indirect wholly-owned
subsidiary of Parent ("US Acquisition Sub II"), and the other parties named
therein are entering into a Purchase and Sale Agreement (the "Asia Region
Agreement" and, together with the Europe/USA Region Agreement, the "Other
Purchase Agreements"), pursuant to which, upon the terms and subject to the
conditions set forth therein, (i) US Acquisition Sub II will acquire all of
the issued and outstanding share capital of JLW Pacific Limited, a Cook
Islands company, and (ii) US Acquisition Sub will acquire (except as
otherwise set forth therein) all of the issued and outstanding share
capital of each of JLW Asia Holdings Limited, a Cook Islands company, JLW
Transact (Thailand) Co. Limited, a Thailand company, JLW Transact Pte
Limited (Singapore), a Singapore company, and JLW Transact Limited (HK), a
Hong Kong company (the companies referred to in clauses (i) and (ii) above
whose shares are to be acquired are collectively referred to herein as the
"Asia Region Companies");
WHEREAS, each member of the Board of Parent who is an employee
of Parent has executed and delivered to Chris Peacock and Mike Smith and
each or either of them, with full power of substitution, an irrevocable
proxy to vote all of the shares of Parent Common Stock (as hereinafter
defined) owned by such member in favor of the Proposed Actions (as
hereinafter defined) at the special meeting of stockholders of Parent to be
held in connection with the transactions contemplated by this Agreement and
the Other Purchase Agreements; and
WHEREAS, pursuant to this Agreement and the Other Purchase
Agreements, Parent has the right (and may be required) to acquire, directly
or indirectly, all of the asset and property management, advisory and other
real estate-related businesses of the Companies, the Europe/USA Region
Companies and the Asia Region Companies and their respective Subsidiaries
(such businesses being collectively referred to herein as the "JLW
Businesses"), including all such businesses currently being carried on by
the JLW Partnerships and their respective direct and indirect Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein,
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES;
CONVERSION OF CONVERTIBLE NOTES
Section 1.1 Purchase and Sale of Shares. (a) Upon the terms and
subject to the conditions set forth herein, at the Closing, each of (i) JLW
Australia Parent and the Transact (AUS) Trust Trustee (on behalf of the
Transact (AUS) Trust Beneficial Owners) shall, assign, transfer, convey and
deliver to Australia Acquisition Sub, and Australia Acquisition Sub shall
(and Parent shall cause Australia Acquisition Sub to) purchase, acquire and
accept from each of JLW Australia Parent and the Transact (AUS) Trust
Trustee, all of the Shares of the Companies owned by such Seller as set
forth opposite such Seller's name in column 2 of Annex E hereto, free and
clear of all Encumbrances (other than the Liens described in Schedule 5.10
of the Company Disclosure Schedule and other than Encumbrances created by
or through Australia Acquisition Sub) and together with all benefits and
rights attaching or accruing thereto, and (ii) JLW (NZ) Holdings Parent and
the Transact (NZ) Trust Trustee (on behalf of the Transact (NZ) Trust
Beneficial Owners) shall sell, assign, transfer, convey and deliver to US
Acquisition Sub, and US Acquisition Sub shall (and Parent shall cause US
Acquisition Sub to) purchase, acquire and accept from each of JLW (NZ)
Holdings Parent and the Transact (NZ) Trust Trustee, all of the Shares of
the Companies owned by such Seller as set forth opposite such Seller's name
in column 2 of Annex E hereto, free and clear of all Encumbrances (other
than the Liens described in Schedule 5.10 of the Company Disclosure
Schedule and other than Encumbrances created by or through US Acquisition
Sub) and together with all benefits and rights attaching or accruing
thereto, in each case, for (A) a convertible note, in the form attached
hereto as Annex F (the "Convertible Note"), in the principal amount set
forth opposite such Seller's name in column 3 of Annex E hereto, subject to
adjustment in accordance with Sections 1.3 and 1.4 hereof, and (B) cash, in
United States dollars (the "Cash Consideration"), in the amount calculated
in accordance with the formula set forth opposite such Seller's name in
column 4 of Annex E hereto, all or a portion of which, calculated in
accordance with the formula set forth in column 4(b) of Annex E hereto,
shall be paid to and retained by the Shareholders' Representatives (on
behalf of such Seller) as a reserve for certain expenses as provided in
Section 1.8(d) hereof.
(b) Notwithstanding the provisions of Section 1.1(a) hereof,
each Seller acknowledges and agrees that (i) the Convertible Note otherwise
issuable to such Seller in respect of the Shares owned by it shall not be
issued to such Seller, but instead such Seller hereby directs US
Acquisition Sub or Australia Acquisition Sub, as applicable, to issue a
separate Convertible Note to each of the Shareholders (with the aggregate
principal amount of such notes being equal to the aggregate principal
amount of the Convertible Notes otherwise issuable to the Sellers, subject
to the proviso below), in each case in the principal amount set forth in
column 2 of Annex B to the Joinder Agreement to which such Shareholder is a
party (the "Applicable Joinder Agreement") (except as otherwise specified
herein, all references herein to "Annex B" to an Applicable Joinder
Agreement refer to the definitive Annex B, as modified pursuant to Section
2.2 hereof), pursuant to and in accordance with Section 1.2 hereof, in full
satisfaction of the applicable Buyer's obligation to issue a Convertible
Note to such Seller under Section 1.1(a) hereof; provided, that JLW
Australia Parent shall retain a Convertible Note in the principal amount of
US$1,986,089.
Section 1.2 Redemption of Convertible Notes. If either Australia
Acquisition Sub or US Acquisition Sub, as applicable, as the issuer of a
Convertible Note, or JLW Australia Parent or a Shareholder, as the holder
of such Convertible Note, exercises the right of redemption set forth in
such Convertible Note in accordance with the provisions of such Convertible
Note, then the entire principal amount of such Convertible Note shall be
redeemed and the redemption proceeds applied to the allotment of and
subscription for the number of newly issued shares of common stock, US$.01
par value per share ("Parent Common Stock"), of Parent, determined by
dividing the aggregate principal amount of such Convertible Note by the
Conversion Amount (as defined in the Convertible Note), which number of
shares of Parent Common Stock (the "Consideration Shares") shall be
specified in column 3 of Annex B to the Applicable Joinder Agreement,
subject to adjustment in accordance with Sections 1.3 and 1.4 hereof. Upon
such redemption, Australia Acquisition Sub or US Acquisition Sub, as
applicable, shall deliver, or cause to be delivered, to (and Parent shall
cause Australia Acquisition Sub or US Acquisition Sub, as applicable, to
deliver, or cause to be delivered, to): (a) the Shareholders'
Representatives, on behalf of such Shareholder and JLW Australia Parent,
(i) the number of shares of Parent Common Stock specified in column 3(a) of
Annex B to the Applicable Joinder Agreement (or, in the case of JLW
Australia Parent, specified in column 3(a) of Annex E hereto) (the "Initial
Distribution Shares"), which Initial Distribution Shares shall be issued in
the name of such Shareholder or JLW Australia Parent, as the case may be,
(ii) the number of shares of Parent Common Stock specified in column 3(b)
of Annex B to the Applicable Joinder Agreement (the "Forfeiture Shares"
and, together with Initial Distribution Shares, the "Initial Consideration
Shares"), which Forfeiture Shares shall be deposited in escrow with the
escrow agent appointed pursuant to the SCCA (the "Forfeiture Shares Escrow
Agent") pursuant to the applicable provisions of the SCCA and held and
distributed in accordance with the terms thereof and (b) Harris Trust and
Savings Bank (the "Escrow Agent") (i) the number of shares of Parent Common
Stock specified in column 3(c) of Annex B to the Applicable Joinder
Agreement (or, in the case of JLW Australia Parent, specified in column
3(c) of Annex E hereto), to be deposited in escrow as Escrow Shares
pursuant to clause (b) of Section 1.3 hereof and (ii) the number of shares
of Parent Common Stock specified in column 3(d) of Annex B to the
Applicable Joinder Agreement (or, in the case of JLW Australia Parent,
specified in column 3(d) of Annex E hereto) to be deposited in escrow as
Adjustment Shares pursuant to clause (a) of Section 1.3 hereof, which
Escrow Shares and Adjustment Shares shall be held and disposed of in
accordance with the applicable provisions of the Escrow Agreement and the
applicable provisions of this Agreement. The aggregate number of shares of
Parent Common Stock to be deposited with the Escrow Agent pursuant to
clause (b)(i) of this Section 1.2, clause (b)(i) of Section 1.2 of each of
the Other Purchase Agreements and clause (i) of the last sentence of
Section 6.7 of this Agreement and each of the Other Purchase Agreements
shall be 750,000 shares (the "Escrow Shares") and the aggregate number of
shares of Parent Common Stock to be deposited with the Escrow Agent
pursuant to clause (b)(ii) of this Section 1.2, clause (b)(ii) of Section
1.2 of each of the Other Purchase Agreements and clause (ii) of the last
sentence of Section 6.7 of this Agreement and each of the Other Purchase
Agreements shall be 1,241,683 shares (the "Adjustment Shares"); provided
that the Forfeiture Shares issuable pursuant to the Asia Region Agreement
shall also be initially deposited with the Escrow Agent as additional
Escrow Shares to be held and disposed of in accordance with the applicable
provisions of the Escrow Agreement. The aggregate (and maximum) number of
shares of Parent Common Stock to be issued to JLW Australia Parent and the
Shareholders under Section 1.2 of this Agreement shall be 1,487,460.
Section 1.3 Escrow of Certain Consideration Shares. Upon conversion
of the Convertible Notes, the Buyers collectively shall deliver to (a) the
Escrow Agent a certificate (issued in the name of the Escrow Agent or its
nominee) representing the Adjustment Shares (including the ESOT Adjustment
Shares) for the purpose of securing the consideration adjustment
obligations, as set forth in Section 1.4 of this Agreement and each of the
Other Purchase Agreements, (b) the Escrow Agent a certificate (issued in
the name of the Escrow Agent or its nominee) representing the Escrow Shares
(including the ESOT Escrow Shares) for the purpose of securing the
indemnification obligations of the Shareholders and the Other Shareholders,
as set forth in the Escrow Agreement and (c) the Forfeiture Shares Escrow
Agent a certificate (issued in the name of the Forfeiture Shares Escrow
Agent or its nominee) representing the Forfeiture Shares for the purpose of
ensuring compliance with the forfeiture provisions relating to the
Shareholders, the Other Shareholders and the Related JLW Owners, if any,
contained in the SCCA. The Adjustment Shares and the Escrow Shares shall
be held by the Escrow Agent under the Escrow Agreement pursuant to the
terms thereof. The Adjustment Shares and the Escrow Shares shall be held
and disposed of solely for the purposes and in accordance with the terms of
this Agreement, the Other Purchase Agreements and the Escrow Agreement.
The Forfeiture Shares shall be held and disposed of by the Forfeiture
Shares Escrow Agent under the applicable provisions of the SCCA.
Section 1.4 Consideration Adjustment. (a) Subject to the completion
of any adjustments required under this Section 1.4, (i) the Europe/USA
Region Shareholders listed on the Final Master Shareholder List under the
Europe/USA Region Agreement as owning Shares of NewCo 1, JLW USA, JLW
Supply or JLW Continuation (the "JLW England Shareholders") and the JLW
England ESOT Sub Trust shall collectively be entitled to receive 697,736
Adjustment Shares (the "JLW England Adjustment Shares"), (ii) the
Europe/USA Region Shareholders listed on the Final Master Shareholder List
under the Europe/USA Region Agreement as owning Shares of NewCo 2 (the "JLW
Scotland Shareholders") and the JLW Scotland ESOT Sub Trust shall
collectively be entitled to receive 22,456 Adjustment Shares (the "JLW
Scotland Adjustment Shares"), (iii) the Europe/USA Region Shareholders
listed on the Final Master Shareholder List under the Europe/USA Region
Agreement as owning Shares of JLW Ireland (the "JLW Ireland Shareholders")
and the JLW Ireland ESOT Sub Trust shall collectively be entitled to
receive 44,642 Adjustment Shares (the "JLW Ireland Adjustment Shares"),
(iv) the Asia Region Shareholders and the Asia Region ESOT Sub Trust shall
collectively be entitled to receive 329,750 Adjustment Shares (the "Asia
Region Adjustment Shares") and (v) the Australasia Region Shareholders and
the Australasia Region ESOT Sub Trust shall collectively be entitled to
receive 147,099 Adjustment Shares (the "Australasia Region Adjustment
Shares").
(b) As soon as practicable, but in no event later than 50
days following the Closing Date, Parent shall cause to be prepared and
delivered to the Shareholders' Representatives (i) a consolidated or
combined balance sheet, as applicable, in each case as of the close of
business on the Business Day immediately preceding the Closing Date,
audited by the independent certified public accountants who audited the
applicable Audited Financial Statements (or the Audited Financial
Statements of the applicable predecessor entity or entities) (the
"Applicable Auditors") of each of (A) NewCo 1, JLW Supply, JLW USA and JLW
Continuation, including their respective direct and indirect Subsidiaries
(the "JLW England Balance Sheet"), (B) NewCo 2, including its direct and
indirect Subsidiaries (the "JLW Scotland Balance Sheet"), (C) NewCo 3,
including its direct and indirect Subsidiaries (the "JLW Ireland Balance
Sheet"), (D) the Asia Region Companies, including their respective direct
and indirect Subsidiaries (the "Asia Region Balance Sheet"), and (E) the
Companies, including their respective direct and indirect Subsidiaries (the
"Australasia Region Balance Sheet" and, together with the JLW England
Balance Sheet, JLW Scotland Balance Sheet, JLW Ireland Balance Sheet and
Asia Region Balance Sheet, the "Closing Balance Sheets"), (ii) the
consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movement on reserves and statements
of total recognized gains and losses for the period from January 1, 1998 to
the Closing Date (or for such other period(s) as may be required pursuant
to Section 1.4(p) below) for each of (A) NewCo 1, JLW Supply, JLW USA and
JLW Continuation, including their respective direct and indirect
Subsidiaries (including their respective predecessors, as applicable) (the
"JLW England Financial Statements"), (B) NewCo 2, including its direct and
indirect Subsidiaries (including their respective predecessors, as
applicable) (the "JLW Scotland Financial Statements"), (C) NewCo 3,
including its direct and indirect Subsidiaries (including their respective
predecessors, as applicable) (the "JLW Ireland Financial Statements"), (D)
the Asia Region Companies, including their respective direct and indirect
Subsidiaries (the "Asia Region Financial Statements") and (E) the
Australasia Region Companies, including their direct and indirect
Subsidiaries (the "Australasia Region Financial Statements" and, together
with the JLW England Financial Statements, the JLW Scotland Financial
Statements, the JLW Ireland Financial Statements and the Asia Region
Financial Statements, the "Closing Financial Statements"), audited by the
Applicable Auditors for each of the foregoing, and (iii) a calculation of
the Closing Net Worth based on the applicable Closing Balance Sheet and
certified by the Applicable Auditors for each of (A) NewCo 1, JLW Supply,
JLW USA and JLW Continuation, including their respective direct and
indirect Subsidiaries (the "JLW England Closing Net Worth"), (B) NewCo 2,
including its direct and indirect Subsidiaries (the "JLW Scotland Closing
Net Worth"), (C) NewCo 3, including its direct and indirect Subsidiaries
(the "JLW Ireland Closing Net Worth"), (D) the Asia Region Companies,
including their respective direct and indirect Subsidiaries (the "Asia
Region Closing Net Worth"), and (E) the Companies, including their
respective direct and indirect Subsidiaries (the "Australasia Region
Closing Net Worth") (such calculations, together with the Closing Financial
Statements (if required for the purposes of Section 1.4(p) hereof) and the
Closing Balance Sheets, the "Closing Statements"). The Closing Balance
Sheets and the related Closing Financial Statements shall be prepared in
accordance with UK GAAP (but shall be denominated in US dollars) in
accordance with the accounting principles set forth in Exhibit 1 hereto
(collectively, the "Agreed Generally Accepted Accounting Principles"), and
the Closing Net Worth shall be calculated in accordance with this
Agreement. The Closing Balance Sheets and the related Closing Financial
Statements shall include footnotes converting various items therein to US
GAAP, in a manner consistent with the Audited Financial Statements. The
reasonable costs of auditing the Closing Balance Sheets and the related
Closing Financial Statements and certifying the related calculations shall
be paid by Parent, but included as a current liability on the Closing
Balance Sheets (the allocation of such liability among such balance sheets,
to be determined by the Shareholders' Representatives); it being the intent
of the parties that such costs will thus be economically borne by the
Shareholders, the Other Shareholders and the ESOT. The scope of such audit
shall be consistent with the scope of the audit conducted in preparing the
Audited Financial Statements.
(c) In order to facilitate their review of the Closing
Statements, the Shareholders' Representatives and their authorized
representatives and advisors shall have access to (i) all relevant books
and records and (ii) all accountants' work papers used in connection with
the preparation of the Closing Balance Sheets and the Closing Financial
Statements, as well as to the accounting staff of Parent who prepared such
statements and the Applicable Auditors who audited such statements. Unless
the Shareholders' Representatives deliver written notice to Parent on or
prior to the 25th day after receipt of the Closing Statements of their
disagreement as to any item included in or omitted from the Closing
Statements (a "Closing Statements Objection"), which Closing Statements
Objection, if any, shall be required to include all such disagreements with
reasonable specificity, to the extent practicable, which the Shareholders'
Representatives will assert with respect to any such items, the parties
shall be deemed to have accepted and agreed to the Closing Statements. If
the Shareholders' Representatives so notify Parent of a Closing Statements
Objection, the Shareholders' Representatives and Parent shall, within 15
days following the date of such notice (the "Closing Statement Resolution
Period"), attempt to resolve their differences. Any resolution by them as
to any disputed amount shall be final and binding on the parties hereto.
The term "Final Closing Statements" shall mean the definitive Closing
Statements as agreed to (or deemed agreed to) by Parent and the
Shareholders' Representatives, or in the absence of such agreement, the
definitive Closing Statements including any adjustments resulting from the
determination made by the Neutral Auditor (in addition to those items
theretofore agreed to by Parent and the Shareholders' Representatives),
the term "Final Closing Balance Sheets" shall mean the definitive Closing
Balance Sheets included in such Final Closing Statements and, to the extent
applicable, the term "Final Closing Financial Statements" shall mean the
definitive profit and loss accounts included in such Final Closing
Statements. The terms "Final JLW England Closing Net Worth," "Final JLW
Scotland Closing Net Worth," "Final JLW Ireland Closing Net Worth ," "Final
Asia Region Closing Net Worth" and "Final Australasia Region Closing Net
Worth" shall mean the definitive Closing Net Worth of (i) NewCo 1, JLW
Supply, JLW USA and JLW Continuation, (ii) NewCo 2, (iii) NewCo 3, (iv)
the Asia Region Companies and (v) the Companies, respectively, including
their respective direct and indirect Subsidiaries, based on the applicable
Final Closing Balance Sheets.
(d) If, at the conclusion of the Closing Statement Resolution
Period, Parent and the Shareholders' Representatives have not resolved all
disputes, then all amounts remaining in dispute shall, at the election of
either party, be submitted to Arthur Andersen (UK) (the "Neutral
Auditor"). Parent and the Shareholder's Representatives agree to execute,
if requested by the Neutral Auditor, a reasonable engagement letter, and
shall make available to the Neutral Auditor such books, records and other
information within their control as the Neutral Auditor may reasonably
request. All fees and expenses of the Neutral Auditor shall be borne by
Parent. The Neutral Auditor shall act as an expert, not as an arbitrator,
to determine only those issues remaining in dispute, based on the
presentations by Parent and the Shareholders' Representatives (and their
respective advisors) and, to the extent such Neutral Auditor shall deem
appropriate, on an independent investigation (but not an audit) of such
other relevant books and records, accountants' work papers and other
information as such Neutral Auditor deems reasonably necessary for the
purpose of resolving the issues in dispute. The Neutral Auditor shall be
instructed to make its determination within 30 days of its engagement,
which determination shall be set forth in a written statement delivered to
Parent and the Shareholders' Representatives and shall be final and binding
on the parties hereto and the ESOT Trustee.
(e) Subject to Section 1.4(k), if the Final Australasia
Region Closing Net Worth is less than US$4,736,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum Australasia Region
Closing Net Worth") (the amount of such deficiency being referred to herein
as the "Australasia Region Adjustment Amount"), then the number of
Australasia Region Adjustment Shares to be delivered to the Australasia
Region Shareholders and the ESOT Trustee on behalf of the JLW Australasia
ESOT Sub Trust shall be reduced by the number of shares of Parent Common
Stock equal to the quotient obtained by dividing the Australasia Region
Adjustment Amount by an amount (such amount being hereinafter referred to
as the "Adjustment Shares Conversion Amount") equal to 92.5 percent of the
average closing price of Parent Common Stock (as reported on the New York
Stock Exchange Composite Tape) for the five-trading day period that
includes the two trading days immediately preceding, the trading day
including and the two trading days immediately following, the day (the
"Final Closing Statements Determination Date") on which the Final Closing
Statements are agreed to by the parties or finally determined by the
Neutral Auditor; provided that if such quotient exceeds the number of
Australasia Region Adjustment Shares (such excess number of Shares being
referred to herein as the "Australasia Region Share Deficit"), then the JLW
England Adjustment Shares, JLW Scotland Adjustment Shares, JLW Ireland
Adjustment Shares and Asia Region Adjustment Shares shall be reduced by an
aggregate number equal to the Australasia Region Share Deficit, apportioned
among them pro rata on the basis of the number of Adjustment Shares
originally allocated herein to the JLW England Shareholders, JLW Scotland
Shareholders, JLW Ireland Shareholders and Asia Region Shareholders (and
the related ESOT Sub Trusts); provided, further, that if such reduction or
any subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders or Asia Region Shareholders (and the related ESOT Sub
Trusts), any remaining Australasia Region Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW England
Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders or Asia
Region Shareholders (and the related ESOT Sub Trusts) pro rata (on the
basis of the Adjustment Shares then remaining issuable to each such group).
(f) Subject to Section 1.4(k), if the Final JLW England
Closing Net Worth is less than US$22,476,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum JLW England Closing
Net Worth") (the amount of such deficiency being referred to herein as the
"JLW England Adjustment Amount"), then the number of JLW England Adjustment
Shares to be delivered to the JLW England Shareholders and the ESOT Trustee
on behalf of the JLW England ESOT Sub Trust shall be reduced by the number
of shares of Parent Common Stock equal to the quotient obtained by dividing
the JLW England Adjustment Amount by the Adjustment Shares Conversion
Amount; provided that if such quotient exceeds the number of JLW England
Adjustment Shares (such excess number of shares being referred to herein as
the "JLW England Share Deficit"), then the JLW Scotland Adjustment Shares,
JLW Ireland Adjustment Shares, Asia Region Adjustment Shares and
Australasia Region Adjustment Shares shall be reduced by an aggregate
number equal to the JLW England Share Deficit, apportioned among them pro
rata on the basis of the number of Adjustment Shares originally allocated
herein to the JLW Scotland Shareholders, JLW Ireland Shareholders, Asia
Region Shareholders and Australasia Region Shareholders (and the related
ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW Scotland Shareholders, JLW Ireland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW England Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW Scotland
Shareholders, JLW Ireland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of the Adjustment Shares then remaining issuable to each such
group).
(g) Subject to Section 1.4(k), if the Final JLW Scotland
Closing Net Worth is less than US$724,000, as such amount may be adjusted
pursuant to Section 1.4(p) below (the "Minimum JLW Scotland Closing Net
Worth") (the amount of such deficiency being referred to herein as the "JLW
Scotland Adjustment Amount"), then the number of JLW Scotland Adjustment
Shares to be delivered to the JLW Scotland Shareholders and the ESOT
Trustee on behalf of the JLW Scotland ESOT Sub Trust shall be reduced by
the number of shares of Parent Common Stock equal to the quotient obtained
by dividing the JLW Scotland Adjustment Amount by the Adjustment Shares
Conversion Amount; provided that if such quotient exceeds the number of JLW
Scotland Adjustment Shares (such excess number of Shares being referred to
herein as the "JLW Scotland Share Deficit"), then the JLW England
Adjustment Shares, JLW Ireland Adjustment Shares, Asia Region Adjustment
Shares and Australasia Region Adjustment Shares shall be reduced by an
aggregate number equal to the JLW Scotland Share Deficit, apportioned among
them pro rata on the basis of the number of Adjustment Shares originally
allocated herein to the JLW England Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders and Australasia Region Shareholders (and the
related ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Ireland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW Scotland Share Deficit shall be
deducted from any Adjustment Shares then remaining issuable to the JLW
England Shareholders, JLW Ireland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of the Adjustment Shares then remaining issuable to each such
group).
(h) Subject to Section 1.4(k), if the Final JLW Ireland
Closing Net Worth is less than US$1,440,000, as such amount may be adjusted
pursuant to Section 1.4(p) below (the "Minimum JLW Ireland Closing Net
Worth") (the amount of such deficiency being referred to herein as the "JLW
Ireland Adjustment Amount"), then the number of JLW Ireland Adjustment
Shares to be delivered to the JLW Ireland Shareholders and the ESOT Trustee
on behalf of the JLW Ireland ESOT SubTrust shall be reduced by the number
of shares of Parent Common Stock equal to the quotient obtained by dividing
the JLW Ireland Adjustment Amount by the Adjustment Shares Conversion
Amount; provided that if such quotient exceeds the number of JLW Ireland
Adjustment Shares (such excess number of shares being referred to herein as
the "JLW Ireland Share Deficit"), then the JLW England Adjustment Shares,
JLW Scotland Adjustment Shares, Asia Region Adjustment Shares and
Australasia Region Adjustment Shares shall be reduced by an aggregate
number equal to the JLW Ireland Share Deficit, apportioned among them pro
rata on the basis of the number of Adjustment Shares originally allocated
herein to the JLW England Shareholders, JLW Scotland Shareholders, Asia
Region Shareholders and Australasia Region Shareholders (and the related
ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Scotland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW Ireland Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW England
Shareholders, JLW Scotland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of Adjustment Shares then remaining issuable to each such
group).
(i) Subject to Section 1.4(k), if the Final Asia Region
Closing Net Worth is less than US$10,624,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum Asia Region Closing
Net Worth") (the amount of such deficiency being referred to herein as the
"Asia Region Adjustment Amount"), then the number of Asia Region Adjustment
Shares to be delivered to the Asia Region Shareholders and the ESOT Trustee
on behalf of the JLW Asia ESOT Sub Trust shall be reduced by the number of
shares of Parent Common Stock equal to the quotient obtained by dividing
the Asia Region Adjustment Amount by the Adjustment Shares Conversion
Amount; provided that if such quotient exceeds the number of Asia Region
Adjustment Shares (such excess number of shares being referred to herein as
the "Asia Region Share Deficit"), then the JLW England Adjustment Shares,
JLW Scotland Adjustment Shares, JLW Ireland Adjustment Shares and
Australasia Region Adjustment Shares shall be reduced by an aggregate
number equal to the Asia Region Share Deficit, apportioned among them pro
rata on the basis of the number of Adjustment Shares originally allocated
herein to the JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders and Australasia Region Shareholders (and the related
ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining Asia Region Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW England
Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of Adjustment Shares then remaining issuable to each such
group).
(j) [Intentionally Left Blank]
(k) After giving effect to the adjustments set forth in
Sections 1.4(e)-(i) above, each JLW England Shareholder, JLW Scotland
Shareholder and JLW Ireland Shareholder (and the related ESOT Sub Trusts)
shall be entitled to receive such Europe/USA Region Shareholder's (or ESOT
Sub Trust's) pro rata share of any then remaining JLW England Adjustment
Shares, JLW Scotland Adjustment Shares or JLW Ireland Adjustment Shares,
respectively. Each such Europe/USA Region Shareholder's (or ESOT Sub
Trust's) pro rata share shall be determined on the basis of the ratio which
the Initial Consideration Shares issuable to such Europe/USA Region
Shareholder pursuant to columns 3(a) and 3(b) of Annex B to the Applicable
Joinder Agreement (or, in the case of an ESOT Sub Trust, the number of ESOT
Shares deposited in such ESOT Sub Trust pursuant to Section 6.7 of this
Agreement and Section 6.7 of the Other Purchase Agreements) bear to the
aggregate number of Initial Consideration Shares issuable to all JLW
England Shareholders, JLW Scotland Shareholders or JLW Ireland
Shareholders, together with the number of ESOT Shares deposited with the
related ESOT Sub Trusts, as applicable. The allocation of the Australasia
Region Adjustment Shares and the Asia Region Adjustment Shares remaining
issuable after the adjustments set forth in Sections 1.4(e)-(i) above among
the Australasia Region Shareholders and Asia Region Shareholders (and the
related ESOT Sub Trusts), respectively, shall be determined by the
Shareholders' Representatives and included in a written notice (the
"Allocation Notice") provided to Parent and the Escrow Agent by the
Shareholders' Representatives within 30 days following the Final Closing
Statements Delivery Date (the "Allocation Notice Delivery Period").
Notwithstanding anything to the contrary contained herein, in the event
that the number of Australasia Region Adjustment Shares, JLW England
Adjustment Shares, JLW Scotland Adjustment Shares, JLW Ireland Adjustment
Shares or Asia Region Adjustment Shares issuable respectively to the
Australasia Region Shareholders, JLW England Shareholders, JLW Scotland
Shareholders, JLW Ireland Shareholders or Asia Region Shareholders (and the
related ESOT Sub Trusts) would be required to be reduced pursuant to the
adjustments set forth in Sections 1.4(e)-(i) above, the Shareholder's
Representatives shall have the option, exercisable during the Allocation
Notice Delivery Period, to pay, on behalf of some or all of such
Australasia Region Shareholders, JLW England Shareholders, JLW Scotland
Shareholders, JLW Ireland Shareholders and/or Asia Region Shareholders (and
the related ESOT Sub Trusts), up to an amount in cash in United States
dollars equal to the Australasia Region Adjustment Amount, JLW England
Adjustment Amount, JLW Scotland Adjustment Amount, JLW Ireland Adjustment
Amount or Asia Region Adjustment Amount, as applicable, or to surrender to
Parent an equivalent number of Initial Distribution Shares (based on a per
share value equal to the Adjustment Shares Conversion Amount), in which
case the applicable Adjustment Amount shall be reduced pro tanto. Any such
cash payment must be in United States dollars and received by Parent prior
to the end of the Allocation Notice Delivery Period. Any such Initial
Distribution Shares shall be surrendered to and received by Parent during
the Allocation Notice Delivery Period, together with all necessary
assignments and stock powers. The Adjustment Amount shall be reduced by an
amount equal to any such cash payment and the value of any Initial
Distribution Shares so surrendered; provided, that for the purposes of this
calculation, each Initial Distribution Share shall be deemed to have a
value equal to the Adjustment Shares Conversion Amount. At the end of the
Allocation Notice Delivery Period, any Adjustment Shares that have become
subject to a reduction pursuant to Sections 1.4(e) - (i) (after giving
effect to any payment or surrender of Shares pursuant to this Section
1.4(k)) shall be returned to Parent by the Escrow Agent.
(l) If the adjustments set forth in Sections 1.4(e)-(i) above
(after giving effect to any payment or surrender of Shares pursuant to
Section 1.4(k)) result in a reduction in Adjustment Shares that exceeds the
aggregate number of Adjustment Shares (such excess amount being referred to
herein as the "Adjustment Shares Deficit"), then in addition to the
elimination of the Adjustment Shares (and return of such Adjustment Shares
to Parent by the Escrow Agent), (A) each Shareholder and Other Shareholder
shall return, or cause to be returned, and (B) the ESOT Trustee shall
return, to the Transfer Agent for cancellation certificates representing
Initial Distribution Shares received by such Shareholder or Other
Shareholder or ESOT Shares received by such ESOT Trustee, as the case may
be, as soon as practicable, but in any event no later than five Business
Days after notice from Parent following the expiration of the Allocation
Notice Delivery Period. The Transfer Agent shall cancel each such
certificate and issue to each Shareholder, Other Shareholder or ESOT
Trustee (on behalf of the applicable ESOT Sub Trust), as applicable, a new
certificate representing such Shareholder's or Other Shareholder's Initial
Distribution Shares or ESOT Shares, as the case may be, less such
Shareholder's, Other Shareholder's and the ESOT's pro rata share (on the
basis of the Initial Consideration Shares issued to all Shareholders and
Other Shareholders and ESOT Shares issued to the ESOT) of the Adjustment
Shares Deficit (based on a per share value equal to the Adjustment Shares
Conversion Amount). In the event that the Initial Distribution Shares held
by the Shareholders and the Other Shareholders are not sufficient to
satisfy their portion of the Adjustment Shares Deficit, the Shareholders'
Representatives shall cause the Forfeiture Shares Escrow Agent under the
SCCA or the Escrow Agent with respect to the Forfeiture Shares of the Asia
Region Shareholders to return to the Transfer Agent for cancellation the
certificate representing the Forfeiture Shares, as soon as practicable, but
in any event no later than five Business Days after the expiration of the
Allocation Notice Delivery Period. The Transfer Agent shall cancel such
certificate and issue to the Forfeiture Shares Escrow Agent or the Escrow
Agent, as applicable, a new certificate representing the Forfeiture Shares,
less the number of Forfeiture Shares equal to the amount of the Adjustment
Shares Deficit that remains unsatisfied based on a per share value equal to
the Adjustment Shares Conversion Amount. To assist in effectuating the
provisions of this Section 1.4(l), the Shareholders and ESOT Trustee hereby
consent to the entry of stop transfer orders with the Transfer Agent
against the transfer of any Initial Consideration Shares held by such
Shareholders and any ESOT Shares held by such ESOT Trustee that are
required to be returned to the Transfer Agent for cancellation pursuant to
the terms hereof, which stop transfer orders shall be withdrawn by Parent,
in each case, once the applicable Initial Consideration Shares, ESOT Shares
or Forfeiture Shares, as applicable, are so returned.
(m) Certificates representing the Adjustment Shares that may
be deliverable after the adjustments and reallocations, if any, described
in this Section 1.4 shall be delivered by Parent to the Shareholders, the
Other Shareholders and the ESOT Trustee on behalf of the applicable ESOT
Sub Trusts, as appropriate, within 10 Business Days following the end of
the Allocation Notice Delivery Period together with any Adjustment Shares
Related Property (as defined in Section 4.1 of the Escrow Agreement). If
any provision of this Section 1.4 would require the Escrow Agent to deliver
a fraction of a share of Parent Common Stock to a Shareholder, Other
Shareholder or ESOT, Parent shall instead purchase such fraction of a share
from the Escrow Agent in exchange for a cash amount equal to the Adjustment
Shares Conversion Amount multiplied by such fraction, which cash amount
shall be paid over by the Escrow Agent to the applicable Shareholder, Other
Shareholder or ESOT Sub Trust in lieu of such fraction of a share.
(n) [Intentionally Left Blank]
(o) In the event that (i) the Final JLW England Closing Net
Worth exceeds the Minimum JLW England Closing Net Worth, (ii) the Final JLW
Scotland Closing Net Worth exceeds the Minimum JLW Scotland Closing Net
Worth, (iii) the Final JLW Ireland Closing Net Worth exceeds the Minimum
JLW Ireland Closing Net Worth, (iv) the Final Asia Region Closing Net Worth
exceeds the Minimum Asia Region Closing Net Worth or (v) the Final
Australasia Region Closing Net Worth exceeds the Minimum Australasia Region
Closing Net Worth, Parent shall pay to the JLW England Shareholders, JLW
Scotland Shareholders, JLW Ireland Shareholders, Asia Region Shareholders
or Australasia Region Shareholders, as applicable, an amount equal to such
excess (unless such excess is otherwise paid or distributed to them), by
delivery of cash in the amount of such excess by wire transfer to an
account or accounts designated by the Shareholders' Representatives. Such
payment will be made within 60 days following the Final Closing Statements
Determination Date.
(p) In the event that the Integration Commencement takes
place later than January 15, 1999: (i) the JLW England Financial Statements
shall include both (A) a profit and loss account for the year ending
December 31, 1998 and (B) a profit and loss account for the period
beginning on January 1, 1999 and ending on the Closing Date (the "JLW
England 1999 Income Statement," with such period being sometimes referred
to herein as the "1999 Stub Period"), (ii) the JLW Scotland Financial
Statements shall include both (A) a profit and loss account for the year
ending December 31, 1998 and (B) a profit and loss account for the 1999
Stub Period (the "JLW Scotland 1999 Income Statement"), (iii) the JLW
Ireland Financial Statements shall include both (A) a profit and loss
account for the year ending December 31, 1998 and (B) a profit and loss
account for the 1999 Stub period (the "JLW Ireland 1999 Income Statement"),
(iv) the Asia Region Financial Statements shall include both (A) a profit
and loss account for the year ending December 31, 1998 and (B) a profit and
loss account for the 1999 Stub Period (the "Asia Region 1999 Income
Statement") and (v) the Australasia Region Financial Statements shall
include both (A) a profit and loss account for the year ending December 31,
1998 and (B) a profit and loss account for 1999 Stub Period (the
"Australasia Region 1999 Income Statement" and, together with the JLW
England 1999 Income Statement, the JLW Scotland 1999 Income Statement, the
JLW Ireland 1999 Income Statement and the Asia Region 1999 Income
Statement, the "1999 Income Statements"). The 1999 Income Statements shall
be prepared in accordance with the Agreed Generally Accepted Accounting
Principles, provided that compensation expense in respect of the persons
described in Exhibit 2 hereto shall be determined on a pro forma basis in
accordance with such Exhibit 2 and the associated pro forma tax benefit or
tax charge shall also be computed in accordance with such Exhibit 2. Based
on the 1999 Income Statements included in the Final Closing Statements: (i)
the Minimum JLW England Closing Net Worth shall be increased by any pro
forma profit on ordinary activities after taxation, or decreased by any pro
forma loss on ordinary activities after taxation, for the 1999 Stub Period
as shown on such JLW England 1999 Income Statement, (ii) the Minimum JLW
Scotland Closing Net Worth shall be increased by any pro forma profit on
ordinary activities after taxation, or decreased by any pro forma loss on
ordinary activities after taxation, for the 1999 Stub Period as shown on
such JLW Scotland 1999 Income Statement, (iii) the Minimum JLW Ireland
Closing Net Worth shall be increased by any pro forma profit on ordinary
activities after taxation, or decreased by any pro forma loss on ordinary
activities after taxation, for the 1999 Stub Period as shown on such JLW
Ireland 1999 Income Statement, (iv) the Minimum Asia Region Closing Net
Worth shall be increased by any pro forma profit on ordinary activities
after taxation, or decreased by any pro forma loss on ordinary activities
after taxation, for the 1999 Stub Period as shown on such Asia Region 1999
Income Statement and (v) the Minimum Australasia Region Closing Net Worth
shall be increased by any pro forma profit on ordinary activities after
taxation, or decreased by any pro forma loss on ordinary activities after
taxation, for the 1999 Stub Period as shown on such Australasia Region 1999
Income Statement.
Section 1.5 Closing. (a) Upon the terms and subject to the
conditions set forth herein, the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP in London, England, at 9:00 A.M.,
local time, on the Closing Date.
(b) The Integration, the Closing under this Agreement and
the closing of the transactions contemplated by the Other Purchase
Agreements shall, upon the terms and subject to the conditions set forth in
the Integration Agreements, this Agreement and the Other Purchase
Agreements, be consummated, if at all, in the following order and shall,
for purposes of this Agreement, be deemed effective as of the Closing Date:
(i) On the third Business Day following the date on
which all of the conditions set forth in Articles VII, VIII and IX hereof
and in Articles VII, VIII and IX of each of the Other Purchase Agreements
(other than the conditions specified in Sections 7.5 and 7.6 hereof and
thereof and other than the conditions that by their terms relate to the
Closing Date) have been satisfied or waived, or such other time as Parent
and the Sellers' Representatives may mutually agree upon in writing (such
date being sometimes referred to herein as the "Integration Commencement
Date"), the JLW Parties, the Shareholders and the Related JLW Owners will
take (or cause to be taken) the actions contemplated to be taken under the
terms of the Integration Plan and the Integration Agreements, in the order
provided therein and on a basis such that (except as to any Post-Closing
Integration Actions) the Integration will be completed (the "Integration
Completion") no later than the third Business Day following the Integration
Commencement Date or as soon thereafter as practicable, but in no event
later than five Business Days after the Integration Commencement Date (the
date of such completion being sometimes referred to herein as the
"Integration Completion Date"); provided that prior to the commencement of
the Integration, Parent shall have delivered to the Sellers'
Representatives a certificate of acknowledgment that the conditions
precedent to the commencement of the Integration described above have been
so satisfied or waived; and
(ii) On the later to occur of (A) the Business Day next
following the receipt of the Call Notice or the Put Notice (as such terms
are defined in the Europe/USA Region Agreement) under the Europe/USA Region
Agreement, as the case may be, and (B) the date on which the conditions to
the obligations of the parties under this Agreement which relate to the
Closing Date (other than Section 7.5 hereof) and under both the Asia Region
Agreement and the Europe/USA Region Agreement which relate to the Closing
Date (as such term is defined in the Asia Region Agreement and the
Europe/USA Region Agreement), (other than Section 7.5 thereof) shall have
been satisfied or waived, or such other time as Parent and the Sellers'
Representatives may mutually agree upon in writing, the closing of the
transactions contemplated by this Agreement, the Asia Region Agreement and
the Europe/USA Agreement shall be consummated (the date of such
consummation being sometimes referred to herein as the "Closing Date").
Section 1.6 Deliveries by the Sellers and Shareholders. At the
Closing, the Sellers' Representatives, on behalf of the Sellers, or the
Sellers shall deliver, or cause to be delivered, to the applicable Buyers
the following:
(a) share certificates representing all of the Shares, with
duly executed share transfer forms in the form of Annex G hereto, and
otherwise in a form reasonably acceptable to the applicable Buyers for
registration on the share register of the relevant Companies;
(b) all such other documents (including any necessary waivers
or consents) as may be required to enable US Acquisition Sub or Australia
Acquisition Sub, as applicable, to be registered as the holder of the
Shares, including a power of attorney duly executed by each Seller in the
form of Annex H hereto;
(c) the Common Seal (if applicable), Share Register and Share
Certificate Books (or similar instruments), with any unissued share
certificates, all minute books and other statutory books (which shall be
written-up to but not including the Closing) of each Company;
(d) the original Certificate of Incorporation (or similar
organizational document) of each Company and Company Subsidiary certified
as of a date within 30 days of the Closing Date by the Australian
Securities and Investment Commission ("ASIC") or other similar Authority,
as the case may be;
(e) executed counterparts of any Consents obtained pursuant
to Section 5.3 hereof and not previously delivered to Buyers pursuant to
such Section;
(f) the certificates referred to in clause (ii) of Section
8.4 hereof;
(g) the opinions of counsel referred to in Section 8.5
hereof; and
(h) all other previously undelivered documents, instruments
or writings required to be delivered by any JLW Party to Buyers at or prior
to the Closing, pursuant to this Agreement or any other Operative
Agreement.
Section 1.7 Deliveries by the Buyers. (a) At the Closing, the Buyers
shall (and Parent shall cause Buyers to) deliver, or cause to be delivered
(and Parent shall cause Buyers to cause to be delivered), to the
Shareholders' Representatives, on behalf of the Sellers and the
Shareholders the following:
(i) Convertible Notes issued by US Acquisition Sub or
Australia Acquisition Sub, as applicable, in the names of each Shareholder
as specified in column 1 of Annex B to the Applicable Joinder Agreements
and in the respective principal amounts set forth in column 3 of Annex B to
the Applicable Joinder Agreements;
(ii) a Convertible Note issued by Australia Acquisition
Sub in the name of JLW Australia Parent as specified in Annex E;
(iii) the portion of the Cash Consideration payable to
each Seller in the respective amount calculated in accordance with the
formula set forth opposite each such Seller's name in column 4(a) of Annex
E hereto, by wire transfer to the account designated by such Seller at
least three Business Days prior to the Closing Date;
(iv) the SCCA Expenses Reserve in United States dollars
by wire transfer to an account designated by the Shareholders'
Representatives at least three Business Days prior to the Closing Date;
(v) the executive officer certificate referred to in
clause (ii) of Section 9.3 hereof;
(vi) the opinions of counsel referred to in Section 9.4
hereof;
(vii) executed counterparts of any Consents obtained
pursuant to Section 6.3 hereof and not previously delivered to the Sellers'
Representatives pursuant to such Section;
(viii) a copy of the Articles of Amendment and
Restatement of Parent adopted pursuant to Section 1.9(a)(i)(A), in the form
attached hereto as Annex I, as certified by the Secretary of State of
Maryland, and a copy of the Amended Parent By-laws adopted pursuant to
Section 1.9(a)(ii), as certified by the Secretary of Parent together with
evidence reasonably satisfactory to the Sellers' Representatives showing
that the JLW Directors shall have been elected to the Board (and that the
only other directors on the Board shall be the Parent Directors), effective
immediately following the Closing, and that Chris Peacock and Mike Smith
shall have been elected by the Board to the offices of President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent, and Deputy
Chairman of the Board of Parent, respectively, effective immediately
following the Closing; and
(ix) all other previously undelivered documents,
instruments or writings required to be delivered by the Buyers to the
Sellers or the Shareholders' Representatives at or prior to the Closing,
pursuant to this Agreement or any other Operative Agreement.
(b) Upon the conversion of the Convertible Notes, the
appropriate Buyers shall deliver or cause to be delivered (and Parent shall
cause such Buyers to deliver or cause to be delivered) to the Shareholders'
Representatives, the Initial Distribution Shares in the names specified in
column 1 of Annex B to the Applicable Joinder Agreements and in the
denominations set forth in column 3(a) of Annex B to the Applicable Joinder
Agreements.
(c) Upon the conversion of the Convertible Notes, the
appropriate Buyers shall deliver or cause to be delivered (and Parent shall
cause such Buyers to deliver or cause to be delivered) to the Escrow Agent,
the following:
(i) a certificate issued in the name of the Escrow
Agent or its nominee representing the Adjustment Shares; and
(ii) a certificate issued in the name of the Escrow
Agent or its nominee representing the Escrow Shares.
(d) Upon the conversion of the Convertible Notes, the
appropriate Buyers shall deliver or cause to be delivered (and Parent shall
cause such Buyers to deliver or cause to be delivered) to the Forfeiture
Shares Escrow Agent, a certificate issued in the name of the Forfeiture
Shares Escrow Agent or its nominee representing the Forfeiture Shares.
Section 1.8 Representatives. (a) The parties acknowledge and agree
that prior to the Shareholder Determination Date, the Sellers, the
Shareholders, the Other Shareholders, the Related JLW Owners and the ESOT
Trustee (on behalf of the ESOT) will execute a Sellers' Contribution and
Coordination Agreement (the "SCCA") relating to, among other things, the
selection, replacement, rights and obligations of the Sellers'
Representatives and the Shareholders' Representatives, which SCCA shall be
in a form reasonably acceptable to Parent. The SCCA as executed shall not
be amended without the consent of Parent, which consent will not be
unreasonably withheld or delayed.
(b) Each Shareholder, Related JLW Owner and JLW Party agrees
that:
(i) Parent shall be able to rely conclusively on the
instructions or actions of (A) the Sellers' Representatives, or any of
them, as to any instructions or actions required or permitted to be taken
by the Sellers' Representatives hereunder or under any other Operative
Agreement or the SCCA when executed, which instructions or actions shall be
binding on each such Shareholder, Related JLW Owner and JLW Party (the
"Closing Authorized Actions"), and (B) the Shareholders' Representatives as
to the settlement of any claims of indemnification against the Escrow Fund
(as defined in the Escrow Agreement) by any Indemnified Persons pursuant to
the Escrow Agreement, the resolution of any dispute regarding Adjustment
Shares under Section 1.4 or any other actions expressly required or
permitted to be taken by the Shareholders' Representatives hereunder or
under the SCCA or any of the Operative Agreements (the "Other Authorized
Actions" and, together with the Closing Authorized Actions, the "Authorized
Actions"). No party hereunder or the Escrow Agent shall have any cause of
action against Parent or any other Indemnified Person to the extent Parent
or any other such Indemnified Person has relied upon such instructions or
actions of the Sellers' Representatives or the Shareholders'
Representatives.
(ii) [Intentionally Left Blank]
(iii) The provisions of this Section 1.8 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any Seller,
Shareholder, Other Shareholder or any Related JLW Owner or ESOT Trustee may
have against the Sellers' Representatives or the Shareholders'
Representatives for any breach of the SCCA.
(iv) Remedies available at law for any breach of the
provisions of this Section 1.8 are inadequate. Therefore, the Buyers shall
be entitled to temporary and permanent injunctive relief without the
necessity of proving damages if the Buyers brings an action to enforce the
provisions of this Section 1.8.
(v) The provisions of this Section 1.8 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of each Seller, Shareholder, Other
Shareholder, Related JLW Owner and ESOT Trustee, and any references in this
Agreement to a Seller or Sellers, a Shareholder or the Shareholders or a
Related JLW Owner or the Related JLW Owners shall mean and include the
successors to the Seller's or Sellers', the Shareholder's or Shareholders'
or the Related JLW Owner's or Related JLW Owners' rights hereunder, whether
pursuant to testamentary disposition, the laws of descent and distribution
or otherwise.
(c) In performing their functions and duties under this
Section 1.8, the Sellers' Representatives and Shareholders' Representatives
shall act solely as agents of the Sellers, the Shareholders, the Other
Shareholders, the Related JLW Owners and the ESOT and do not assume and
shall not be deemed to have assumed any obligation or relationship of
agency, trustee or fiduciary with or for the Buyers, the Companies or any
of their respective Subsidiaries. The Sellers' Representatives and
Shareholders' Representatives shall have no liability to the Buyers, the
Companies or any of their respective Subsidiaries hereunder in their
capacity as such.
(d) The Sellers hereby agree that a portion of the Cash
Consideration that would have otherwise been payable to such Sellers
pursuant to clause (a) of Section 1.1 of this Agreement, calculated in
accordance with the formula set forth in column 4(a) of Annex E hereto, and
all of the Cash Consideration that would have been otherwise payable to the
Other Shareholders pursuant to Section 1.2 of the Other Purchase Agreements
(the "SCCA Expenses Reserve") shall instead be retained by the
Shareholders' Representatives to be held and disbursed as provided in the
SCCA. Such SCCA Expenses Reserve shall be apportioned among the Sellers
and such Other Shareholders pro rata based on the aggregate amount of the
Consideration Shares and the Cash Consideration originally allocated to
each of them. The Sellers hereby authorize Parent to deliver to the
Shareholders' Representatives the SCCA Expenses Reserve in lieu of paying
such portion of the Cash Consideration to the Sellers.
Section 1.9 Corporate Governance Matters. (a) As of the Closing,
(i) Parent shall use all reasonable efforts to cause (A) the Articles of
Amendment and Restatement of Parent attached hereto as Annex I to become
effective, (B) the Articles of Incorporation of LaSalle Advisors Capital
Management, Inc. ("LACM") to be amended to change its name to "LaSalle
Investment Management, Inc." and (C) the number of shares of Parent Common
Stock reserved for issuance under Parent's 1997 Stock Award and Incentive
Plan, as amended, to be increased to 4,160,000; and (ii) Parent shall cause
the Amended and Restated Bylaws of Parent to be amended and restated to
read in their entirety as set forth in Annex K hereto (the "Amended Parent
Bylaws").
(b) The number of directors comprising the full board of
directors of Parent (the "Board") as of the Closing and until the earlier
of (i) the first Business Day following the fifth annual meeting of the
stockholders of Parent following the Closing and (ii) June 1, 2003 (the
"Transition Period") shall be fourteen; provided that the number of
directors comprising the Board may at any time be increased to fifteen by a
resolution approved by the Parent Nominating Committee and the JLW
Nominating Committee (each as defined below) and by a majority of the
entire Board of Directors. As of the Closing, seven of such directors
shall have been designated by Parent (the "Parent Directors") and seven of
such directors shall have been designated by the Sellers' Representatives
(the "JLW Directors"). The Parent Directors shall include four executive
officers of Parent ("Parent Employee Directors," which term shall also be
deemed to refer to any replacement for a Parent Employee Director elected
in accordance with the applicable provisions of Article X of the Amended
Parent Bylaws) and three Independent Directors (the "Parent Independent
Directors," which term shall also be deemed to refer to any replacement for
a Parent Independent Director elected in accordance with the applicable
provisions of Article X of the Amended Parent Bylaws, who shall be an
Independent Director) and the JLW Directors shall include four executive
officers of the JLW Businesses ("JLW Employee Directors," which term shall
also be deemed to refer to any replacement for a JLW Employee Director
elected in accordance with the applicable provisions of Article X of the
Amended Parent Bylaws) and three Independent Directors (the "JLW
Independent Directors" which term shall also be deemed to refer to any
replacement for a JLW Independent Director elected in accordance with the
applicable provisions of Article X of the Amended Parent Bylaws, who shall
be an Independent Director), at least one of which JLW Independent
Directors shall have his or her primary place of business and residence
outside of the United Kingdom. The initial Parent Employee Directors will
be Stuart L. Scott, M.G. Rose, Robert C. Spoerri and Daniel W. Cummings and
the initial Parent Independent Directors will be Darryl Hartley-Leonard,
Thomas C. Theobald and John R. Walter. The initial JLW Directors will be
selected by the Sellers' Representatives no later than 45 days following
the date of this Agreement and shall be subject to the approval of Parent,
which approval shall not be unreasonably withheld or delayed. If, prior to
the Closing, any Parent Director or JLW Director shall decline or be unable
to serve, Parent or the Sellers' Representatives, as the case may be, shall
designate another individual to serve in such director's place, subject to
the requirement that at least three of the Parent Directors and three of
the JLW Directors shall be Independent Directors and subject to the
approval of the Sellers' Representatives (in the case of the Parent
Directors) or Parent (in the case of the JLW Directors), as applicable,
which approval shall not be unreasonably withheld or delayed. Parent shall
cause the individuals designated by the Sellers' Representatives as the
initial JLW Directors to be appointed as directors of Parent immediately
following the Closing.
(c) The initial designation of the JLW Directors among the
three classes of directors comprising the Board shall be agreed among
Parent and the Sellers' Representatives, provided that the Parent Directors
and the JLW Directors shall be divided as equally as is feasible among such
classes. During the Transition Period, each standing committee of the
Board shall be constituted of an equal number of (i) Parent Directors, who
shall be selected by the Parent Nominating Committee, and (ii) JLW
Directors, who shall be selected by the JLW Nominating Committee.
Notwithstanding the foregoing, at any time when a Fifteenth Director (as
defined below) is in office, the Parent Nominating Committee and the JLW
Nominating Committee may, acting as a single committee, appoint the
Fifteenth Director as an additional member of any committee of the Board,
which appointment must be approved by a majority of the members of the
Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee.
(d) During the Transition Period, the Parent Employee
Directors in office from time to time, together with two or more Parent
Independent Directors selected by such Parent Employee Directors, shall
constitute a committee of the Board (the "Parent Nominating Committee")
with the powers and duties delegated to such committee in Article X of the
Amended Parent Bylaws, and the JLW Employee Directors in office from time
to time, together with two or more JLW Independent Directors selected by
such JLW Employee Directors, shall constitute a committee of the Board (the
"JLW Nominating Committee") with the powers and duties delegated to such
committee in Article X of the Amended Parent Bylaws. Except as otherwise
set forth in such Article X, the Parent Nominating Committee and the JLW
Nominating Committee (collectively, the "Nominating Committees") will
exercise all power and authority of the Board with respect to the
designation of persons as the nominees of the Board for election to, or
designating persons to fill vacancies on, the Board. Notwithstanding any
other provision hereof to the Company of the Amended Parent Bylaws, (i) it
shall be a qualification for any director elected by the Board to replace
any JLW Director (whose term is expiring or has expired or who shall have
been removed or become disqualified or who shall have resigned, retired,
died or otherwise shall fail to continue to serve as a director of Parent)
that such replacement director shall have been nominated by the JLW
Nominating Committee, and (ii) it shall be a qualification for any director
elected by the Board to replace any Parent Director (whose term is expiring
or has expired or who shall have been removed or become disqualified or who
shall have resigned, retired, died or otherwise shall fail to continue to
serve as a director of Parent) that such replacement director shall have
been nominated by the Parent Nominating Committee.
(e) During the Transition Period, prior to each meeting of
the stockholders at which the term of office of any Parent Director is
expiring or at which any replacement for a Parent Director is to be
elected, the Parent Nominating Committee may designate a nominee for
election to such position (which designee must be reasonably acceptable to
the JLW Nominating Committee), and prior to each meeting of the
stockholders at which the term of office of any JLW Director is expiring or
at which any replacement for a JLW Director is to be elected, the JLW
Nominating Committee may designate a nominee for election to such position
(which designee must be reasonably acceptable to the Parent Nominating
Committee); provided that at least three Parent Directors and at least
three JLW Directors shall at all times be Independent Directors; provided,
further, that at least one JLW Independent Director shall at all times have
his primary place of business and residence outside of the United Kingdom.
(f) During the Transition Period, if any Parent Director is
removed from the Board, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board, the Parent
Nominating Committee shall have the exclusive power to designate a person
to fill such vacancy, and if any JLW Director is removed from the Board,
becomes disqualified, resigns, retires, dies or otherwise cannot continue
to serve as a member of the Board, the JLW Nominating Committee shall have
the exclusive power to designate a person to fill such vacancy, in each
case, subject to the approval of a majority of directors then remaining in
office; provided that at least three Parent Directors and three JLW
Directors shall at all times be Independent Directors; provided, further,
that one JLW Independent Director shall at all times have his primary place
of business and residence outside of the United Kingdom.
(g) During the Transition Period, in the event that the
number of members constituting the Board is increased to fifteen in
accordance with Section 1.9(b) hereof, the Parent Nominating Committee and
the JLW Nominating Committee, acting as a single committee, shall elect an
Independent Director to fill such vacancy (the "Fifteenth Director"), which
Independent Director must be approved by a majority of the members of the
Parent Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of the entire Board. Prior to any
meeting of the stockholders at which the term of office of such Fifteenth
Director is expiring or at which a replacement for such director is to be
elected, the Parent Nominating Committee and the JLW Nominating Committee,
acting as a single committee, shall designate a nominee for such position,
which Independent Director must be approved by a majority of the members of
the Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee, and at such meeting of stockholders the nominations
shall not be closed or the vote taken until such nominee shall have been
nominated. During the Transition Period, neither the Board nor any
committee thereof shall nominate (or cause there to be nominated) any
person to replace such Fifteenth Director who has not been so designated by
the Nominating Committees. In the event that such Fifteenth Director is
removed from the Board, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board, the Parent
Nominating Committee and the JLW Nominating Committee, acting as a single
committee, shall have exclusive power on behalf of the Board to designate a
person to fill such vacancy and shall jointly, acting as a single
committee, designate an Independent Director to serve in such position,
which Independent Director must be approved by a majority of the members of
the Parent Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of directors then remaining in office.
(h) Stuart L. Scott shall hold the position of Chairman of
the Board and Chief Executive Officer of Parent for a period of at least
two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity.
Christopher Peacock shall hold the position of President, Deputy Chief
Executive Officer and Chief Operating Officer of Parent for a period of at
least two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity. If at any
time following the Closing, the position of Chairman of the Board and Chief
Executive Officer of Parent or President, Deputy Chief Executive Officer
and Chief Operating Officer of Parent becomes vacant, such vacancy shall be
filled by a majority vote of the entire Board of Directors; provided that
during the two-year period immediately following the Closing, the Chairman
of the Board and Chief Executive Officer of Parent and President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent shall be
selected from the officers or employees of Parent immediately prior to the
Closing ("Parent Employees") and the partners, officers or employees of the
JLW Businesses immediately prior to the Closing ("JLW Employees");
provided, further, that during such period, (i) if the office of the
Chairman and Chief Executive Officer of Parent is held by a Parent
Employee, then the office of President, Deputy Chief Executive Officer and
Chief Operating Officer of Parent shall be held by a JLW Employee and (ii)
if the office of Chairman of the Board and Chief Executive Officer of
Parent is held by a JLW Employee, then the office of President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent shall be held
by a Parent Employee. The Chairman of the Board and Chief Executive
Officer, the President, Deputy Chief Executive Officer and Chief Operating
Officer of Parent may only be removed from office by a majority vote of the
entire Board of Directors; provided that neither Mr. Scott nor Mr. Peacock
may be removed from such respective positions, with or without cause, prior
to the second anniversary of the Closing, unless such removal is approved
by at least two-thirds of the entire Board.
(i) During the Transition Period, the affirmative vote of at
least 75% of the entire Board of Directors shall be required to alter or
amend, or adopt any provision inconsistent with, or repeal, in whole or in
part, Article III, Article IV or Article X of the Amended Parent Bylaws.
(j) As used in this Section 1.9, "entire Board" means the
total number of directors Parent would have if there were no vacancies.
Section 1.10 Integration. (a) In order to accomplish and
effect the Integration, each of the JLW Parties, the Shareholders and the
Related JLW Owners will take (or cause to be taken) the actions
contemplated to be taken by such Persons under the terms of the Integration
Plan and the Integration Agreements, subject to satisfaction or waiver of
the conditions set forth therein, in the order provided therein and on a
basis such that (except as otherwise set forth below) the Integration
Completion will occur no later than the third Business Day or as soon
thereafter as is practicable following the Integration Commencement Date
but in no event later than five Business Days thereafter; provided that any
action identified in the Integration Plan and the Integration Agreements as
being a "post-closing action" (the "Post-Closing Integration Actions") may
be postponed until after the Closing Date; provided, further, that the
Sellers, the Shareholders and the Related JLW Owners shall have no
responsibility after the Closing Date with respect to the performance of
any Post-Closing Integration Actions contemplated to be taken by any
Company or Company Subsidiary under the Integration Plan and the
Integration Agreements.
(b) Certain of the Sellers, the Companies and the
Shareholders are entering into an Escrow Agreement in the form attached to
Annex B hereto (the "Integration Escrow Agreement"), pursuant to which
certain agreements, instruments and other documents described in the
Integration Plan have been or will be deposited with the Escrow Agents
described therein for the purpose of facilitating the implementation of the
Integration Plan.
ARTICLE II
MATTERS RELATING TO THE SHAREHOLDER
TRANSACTION DOCUMENTS; REALLOCATION
Section 2.1 Signing Procedures. (a) The signing procedures set
forth in this Section 2.1 shall not commence until the satisfaction of any
applicable regulatory requirements. Parent shall promptly complete the
preparation of such Offering Memorandum and in doing so shall consult with
the Shareholders' Representatives, the JLW Sellers, the Companies and the
financial advisers and counsel to the JLW Sellers in connection therewith,
and shall permit them to participate in the preparation of such Offering
Memorandum. As soon as reasonably practicable after the satisfaction of
the last such regulatory requirement, with respect to each Person listed as
a "Shareholder" on the Preliminary Master Shareholder List and to each
person listed as a "Shareholder" on the Preliminary Master Shareholder List
attached to each of the Other Purchase Agreements (each a "Designated JLW
Shareholder" and, collectively, the "Designated JLW Shareholders"), (i) the
applicable JLW Sellers will distribute, or cause to be distributed, to such
Designated JLW Shareholder (A) a letter from one or more of the Management
Shareholders on behalf of the International Board of the JLW Businesses
(and in each case in his or their respective capacities as members of such
International Board), substantially in the form approved by Parent, which
letter shall include the approval and recommendation of such International
Board in favor of this Agreement and the Other Purchase Agreements and the
transactions contemplated hereby and thereby, including but not limited to
the sale of Shares, (B) execution copies of the Integration Agreements (if
any) to which such Designated JLW Shareholder is contemplated to be a party
pursuant to the Integration Plan (the "Applicable Integration Agreements"),
(C) an execution copy of a form of employment contract to be entered into
by such Designated JLW Shareholder or Related JLW Owner and a Company or
Company Subsidiary, in a form previously provided to Parent, and (D) an
execution copy of the convertible note purchase and loan agreement, in a
form reasonably satisfactory to Parent; and (ii) Parent will distribute, or
cause to be distributed, to such Designated JLW Shareholder (A) a copy of
the Offering Memorandum, (B) an execution copy of each of the Applicable
Joinder Agreement, the Stockholder Agreement and the Escrow Agreement (the
agreements referenced in clauses (i)(B), (i)(C), (i)(D) and (ii)(B) above
are collectively referred to herein as the "Shareholder Transaction
Documents"), and (C) a letter (the "Instruction Letter") setting forth
instructions for returning to Parent the agreements referenced in clause
(ii)(B) above as executed by such Designated JLW Shareholder, and Related
JLW Owner, if applicable, which letter shall provide that if such
Designated JLW Shareholder desires to enter into such agreements, then such
agreements must be signed by such Designated JLW Shareholder (and, if the
Person named as the "Shareholder" in such agreements is not a natural
person, the Related JLW Owner), and received by Parent by the 21st day or
such later date approved by Parent (the "Final Return Date") after the date
upon which the Shareholder Transaction Documents are first distributed to
the Designated JLW Shareholders (the "Commencement Date"). The Instruction
Letter shall also indicate the method for a Shareholder to revoke such
Shareholder's acceptance prior to the Final Return Date. If requested by
Parent, the signature of each Shareholder shall be guaranteed or witnessed
in accordance with local practice or custom in the jurisdiction in which
such signature is given; provided that such practice or custom must be
reasonably satisfactory to Parent. Promptly following the Final Return
Date, Parent shall sign each of the Shareholder Transaction Documents
properly completed, executed and returned to Parent, and shall promptly
return fully executed originals thereof to the applicable Shareholders,
together with copies thereof to the Shareholders' Representatives.
(b) On or prior to the date (the "Commitment Date") falling
35 days (or such later date as Parent and the Shareholders'
Representatives may mutually agree upon in writing) after the Commencement
Date, the Shareholders' Representatives shall prepare and, subject to
paragraph (c) of this Section 2.1, deliver to Parent the Final Master
Shareholder List. Parent shall provide to the Shareholders'
Representatives, in the course of each day during the period between the
Commencement Date and the Commitment Date, a list of each Designated JLW
Shareholder who has, by midday on the previous day and pursuant to and in
accordance with the instructions provided in the Instruction Letter,
executed and delivered to Parent the documents referred to therein.
(c) If the Final Master Shareholder List delivered to Parent
is identical to the Preliminary Master Shareholder List, then Parent shall
be required to accept such Final Master Shareholder List. If the Final
Master Shareholder List does not include the name of each Designated JLW
Shareholder, the Shareholders' Representatives shall not be obligated to
deliver the Final Master Shareholder List. If the Final Master Shareholder
List does not include the name of each Designated JLW Shareholder, Parent
shall have the right to reject such list by written notice thereof
delivered to the Shareholders' Representatives. Notwithstanding any such
rejection by Parent of a Final Master Shareholder List, during the period
between the Commencement Date and the Commitment Date, the Shareholders'
Representatives shall be entitled to deliver a revised Final Master
Shareholder List, subject to Parent's right to reject such Final Master
Shareholder List in accordance with the third sentence of this Section
2.1(c). Parent shall acknowledge any acceptance by Parent of a Final
Master Shareholder List by delivering written notice of such acceptance
promptly to the Shareholders' Representatives. The parties acknowledge and
agree that the acceptance by Parent of a Final Master Shareholder List
which does not include the name of each Designated JLW Shareholder shall
not constitute a waiver by Parent of any inaccuracy or breach of any
representation or warranty contained herein or in any Joinder Agreement or
any rights of the Indemnified Persons under the Escrow Agreement.
Section 2.2 Permitted Reallocation of Consideration and Shares. In
the event that any Designated JLW Shareholders are not included on the
Final Master Shareholder List (collectively, the "Non-Participating
Designated JLW Shareholders"), the Consideration Shares and Cash
Consideration, if any, that were allocated to such Non-Participating
Designated JLW Shareholders on the Preliminary Master Shareholder List or
the Preliminary Master Shareholder Lists attached to the Other Purchase
Agreements, as the case may be, shall be reallocated, as follows:
Consideration Shares and Cash Consideration allocated to a Non-
Participating Designated JLW Shareholder that would have been a (i) JLW
England Shareholder, (ii) JLW Scotland Shareholder, (iii) JLW Ireland
Shareholder, (iv) Asia Region Shareholder or (v) Australasia Region
Shareholder, shall be reallocated among the other JLW England Shareholders,
JLW Scotland Shareholders, JLW Ireland Shareholders, Asia Region
Shareholders or Australasia Region Shareholders, as the case may be, pro
rata among such JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders, Asia Region Shareholders or Australasia Region
Shareholders, as the case may be (on the basis of the Initial Consideration
Shares issued to such Shareholders). As soon as practicable following the
Shareholder Determination Date, the Shareholders' Representatives, with the
cooperation of Parent, shall deliver, or cause to be delivered, to each
Shareholder and Other Shareholder a definitive Annex B to the Applicable
Joinder Agreement and Other Joinder Agreement, as applicable, reflecting
such reallocation. Any reallocation pursuant to this Section 2.2 shall be
reflected in an equivalent reallocation pursuant to the Integration
Agreement (if any) pursuant to which the relevant Shareholder receives his
or her Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS, THE COMPANIES AND
THE MANAGEMENT SHAREHOLDERS
The Sellers, jointly and severally, the Companies, jointly and
severally, and the Management Shareholders, severally and not jointly, make
the representations and warranties set forth below to the Buyers (the
parties hereto agree that (i) the representations and warranties of each
Management Shareholder set forth in this Article III shall be expressly
limited to such Management Shareholder's Knowledge, and that, except to the
extent provided in Section 11.2 hereof, no Management Shareholder shall
have any liability with respect to any such representation and warranty
unless and until the Closing occurs, and (ii) the representations and
warranties of the Companies contained herein shall not give rise to as any
right to indemnification against such Companies and shall only be made to
the extent that it is lawful for the Companies to make such representations
and warranties).
Section 3.1 Shares; Claims to Assets. (a) As of the date of this
Agreement (assuming that the Designated JLW Shareholders execute and
deliver the Shareholder Transaction Documents), the only Persons entitled
to receive any of the Convertible Notes, Consideration Shares or the Cash
Consideration upon completion of the transactions contemplated hereby and
by the other Operative Agreements will be the Designated JLW Shareholders
and, in respect of the Cash Consideration, the Sellers. Upon completion of
the Integration, the Shares will comprise in the aggregate the whole of the
issued and outstanding share capital of the Companies. Upon completion of
the Integration, no Person, other than JLW Australia Parent, the
Shareholders and their Related JLW Owners, if applicable, and then only to
the extent provided in Annex B to the Applicable Joinder Agreements or as
specifically provided for herein or in the other Operative Agreements, will
have any right or claim to any of the Convertible Notes, Consideration
Shares or Cash Consideration or (other than as expressly provided in this
Agreement) other payment or consideration (with respect to an ownership,
partnership, trust or similar interest, right of participation or
otherwise) from any of the Companies or Company Subsidiaries as a result of
or in connection with the consummation of the transactions contemplated by
this Agreement, the Other Purchase Agreements and the Operative Agreements.
(b) Except as set forth in Section 3.1 of the Company
Disclosure Schedule, no current or former shareholder, director, officer or
employee of any Seller, Company or Company Subsidiary owns or has any
rights in or to any of the specific assets, properties or rights (other
than cash permitted to be distributed or paid in accordance with this
Agreement or Annex B to an Applicable Joinder Agreement) of or used by any
Company or Company Subsidiary in the ordinary course of its business.
Section 3.2 Corporate Organization. JLW Australia Parent is duly
incorporated and validly existing under the laws of the Australian Capital
Territory; Benbridge (AUS) is duly incorporated and validly existing under
the laws of New South Wales; JLW (NZ) Holdings Parent is duly incorporated
and validly existing under the laws of New South Wales; Benbridge (NZ) is
duly incorporated and validly existing under the laws of New Zealand; and
each Company is duly organized or incorporated and validly existing under
the laws of its jurisdiction of incorporation or formation. Each Company
(i) has all requisite corporate power and authority to carry on its
business as currently conducted and to own the properties and assets
currently owned by it and (ii) is duly qualified or licensed to do business
as a foreign Person (and, if applicable, in good standing) in all the
jurisdictions in which such qualification or licensing is required, except
jurisdictions in which the failure to be so qualified or licensed (and, if
applicable, in good standing) would not be reasonably expected to have a
Company Material Adverse Effect. True and complete copies of the
certificate of incorporation and bylaws or memorandum and articles of
association (or similar organizational documents), as applicable, and any
other documents required to be annexed thereto, of each Company, as
presently in effect, are attached to Section 3.2 of the Company Disclosure
Schedule.
Section 3.3 Capitalization of the Companies. (a) The capital
stock of (i) JLW (NZ) Holdings consists of 3,000 ordinary shares par value
NZ$1 per share of which 3,000 are issued and outstanding; (ii) Transact NZ
consists of 10,000 ordinary shares par value NZ$1 per share of which
10,000 are issued and outstanding; (iii) Transact NSW consists of 1 Class A
share issued at AUS$1; (iv) Transact VIC consists 100 Class A shares and
100 Class B shares issued at AUS$1 each; (v) Transact QLD consists of 2
ordinary shares issued at AUS$1 each; and (vi) JLW Australia consists of
1,000 Class A shares, 122,400 Class B shares, 10 Class C shares and 10
Class D shares issued at AUS$1 each. All of the Shares of the Companies
have been validly issued and were fully paid up on issue and, to the extent
that the concept of assessability of capital stock is potentially
applicable, are nonassessable, and the Sellers, collectively, are the legal
owners of all of the Shares of such Companies.
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, there are no outstanding: (i) securities convertible
into or exchangeable for, directly or indirectly, any shares (including the
Shares), debentures or other securities of any Company or Company
Subsidiary; or (ii) subscriptions, options, warrants, calls, rights,
contracts, commitments, understandings, restrictions or arrangements
relating to the issuance, allotment, sale, purchase, transfer or voting of
any share capital (including the Shares), debentures or other securities of
any Company or Company Subsidiary. Except as set forth in Section 3.3(b)
of the Company Disclosure Schedule, no Company or Company Subsidiary: (i)
is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire, retire, cancel, reduce or redeem any of its issued share
capital, capital stock or other ownership interests; and (ii) has any
liability for dividends or other distributions declared, accrued or
unaccrued with respect to any of its issued share capital or capital stock
or in respect of any ownership, partnership, trust or other participating
interest therein.
Section 3.4 Subsidiaries and Affiliates. Section 3.4 of the Company
Disclosure Schedule sets forth the name, jurisdiction of incorporation or
formation and authorized, issued and outstanding share capital of each
Company Subsidiary. Except as disclosed in Section 3.4 of the Company
Disclosure Schedule, no Company owns, directly or indirectly, any share
capital or other equity securities of any Person or has any direct or
indirect equity or ownership interest in any partnership, joint venture or
business. Except as set forth in Section 3.4 of the Company Disclosure
Schedule, all the outstanding share capital or capital stock, as
applicable, of each Company Subsidiary is owned, directly or indirectly, as
of the date hereof by one or more Companies and will be owned, directly or
indirectly, as of the Closing Date, by one or more Companies, in each case
free and clear of all Encumbrances, and has been validly issued and is
fully paid and, to the extent that the concept of assessability of capital
stock is potentially applicable, is nonassessable. Each Company
Subsidiary: (i) is duly organized or incorporated and validly existing
(and, if applicable, in good standing) under the laws of its jurisdiction
of incorporation or formation; (ii) has all requisite corporate or similar
power and authority to carry on its business as it is now being conducted
and to own the properties and assets it now owns; and (iii) is duly
qualified or licensed to do business as a foreign entity (and, if
applicable, in good standing) in all jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not have a Company Material Adverse Effect. True and
complete copies of the certificate of incorporation and bylaws or
memorandum and articles of association (or similar organizational
documents) and all documents required to be annexed thereto, as applicable,
as presently in effect, of each Company Subsidiary have been previously
provided to Parent.
Section 3.5 Authorization. Each Company has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and the Integration Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. Each Company
has taken all corporate action necessary to authorize and approve the
execution and delivery by such Company of this Agreement and each
Integration Agreement to which it is a party, and no other action on the
part of the shareholders of such Company is required for such Company to
execute and deliver this Agreement and each Integration Agreement to which
it is a party, and to consummate the transactions contemplated hereby and
thereby. This Agreement and each Integration Agreement has been duly and
validly executed and delivered by each JLW Party which is a party thereto
and constitute a valid and binding agreement of each such JLW Party,
enforceable against each such JLW Party in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding at
equity or in law.
Section 3.6 No Violation. Neither the execution and delivery by any
JLW Party of this Agreement or any other Operative Agreement or Integration
Agreement to which it is a party, nor the consummation by any Seller or
Company of the transactions contemplated hereby or thereby shall: (i)
violate or be in conflict with any provision of the certificate of
incorporation and bylaws or memorandum and articles of association (or
similar organizational documents), as applicable, of any Seller, Company,
or Company Subsidiary or any Applicable Trust Deed of any Seller; (ii)
except as specified in Section 3.6 or 3.7 of the Company Disclosure
Schedule, violate, be in conflict with, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
under, cause or permit the acceleration of, or give rise to any right of
termination, imposition of fees or penalties under, any debt, Contract,
instrument or other obligation to which any Seller, Company or Company
Subsidiary is a party or by which its assets are bound or affected, or
result in the creation or imposition of any Lien upon any property or
assets (including any Encumbrance upon any Shares) of any Seller, Company
or Company Subsidiary; or (iii) violate any statute, law, judgment, decree,
order, regulation, rule or other similar authoritative matters ("Laws") of
any foreign, federal, state or local governmental, quasi-governmental,
administrative, regulatory or judicial court, department, commission,
agency, board, bureau, instrumentality or other authority ("Authority");
except, in the case of clause (ii) or (iii) above, for any of the same
that, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect or materially impair the ability of
any JLW Party to perform his, her or its obligations hereunder or
thereunder or prevent or materially delay the consummation of the
transactions contemplated hereby and thereby.
Section 3.7 Consents and Approvals. Except as set forth in Section
3.6 or 3.7 of the Company Disclosure Schedule, no Consents from or of any
third party or any Authority are necessary for execution and delivery of
this Agreement, the other Operative Agreements or the Integration
Agreements by any JLW Party or the consummation by any JLW Party of the
transactions contemplated hereby or thereby, or to enable the Buyers, the
Companies and the Company Subsidiaries to continue to conduct the
businesses currently conducted by the Companies and the Company
Subsidiaries at their present locations after the Closing Date in a manner
which is consistent with that in which such businesses are presently
conducted, except for the approvals set forth in Section 3.7 of the Company
Disclosure Schedule (the "Required Regulatory Approvals"); and except for
such other Consents as to which the failure to obtain, individually or in
the aggregate, would not be reasonably expected to have a Company Material
Adverse Effect or materially impair the ability of any JLW Party to perform
his, her or its obligations hereunder or thereunder or prevent or
materially delay the consummation of the transactions contemplated hereby
and thereby.
Section 3.8 Financial Statements. (a) Set forth in Section 3.8 of
the Company Disclosure Schedule are: (i) the audited consolidated or
combined (as applicable) balance sheets of (A) JLW England and its
Subsidiaries, (B) JLW Scotland and its Subsidiaries, (C) JLW Ireland and
its Subsidiaries, (D) the Asia Region Companies and their respective
Subsidiaries and (E) the Australasia Region Companies and their respective
Subsidiaries in each case as of December 31, 1997 and the related
consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movements on reserves and
statements of total recognized gains and losses for the year then ended
(including notes thereto and the accounting policies used in connection
therewith), all certified by independent certified public accountants,
whose reports thereon are included therein (the "Audited Financial
Statements"), (ii) the unaudited consolidated or combined (as applicable)
balance sheets of (A) JLW England and its Subsidiaries, (B) JLW Scotland
and its Subsidiaries, (C) JLW Ireland and its Subsidiaries, (D) the Asia
Region Companies and their respective Subsidiaries and (E) the Australasia
Region Companies and their respective Subsidiaries in each case as of June
30, 1998 and the related consolidated or combined (as applicable) profit
and loss accounts, statements of cash flows, statements of movements on
reserves and statements of total recognized gains and losses for the six-
month period then ended (collectively the "Interim Financial Statements"
(or, in the case of the Companies and the Company Subsidiaries, the
"Australasia Interim Financial Statements") and, collectively with the
Audited Financial Statements, the "Financial Statements"), (iii) the
schedules combining the foregoing balance sheets, so as to eliminate or
adjust for (A) intercompany activity between or among any one or more of
(1) JLW England and its Subsidiaries, (2) JLW Scotland and its Subsidiaries
and (3) JLW Ireland and its Subsidiaries and (B) intercompany activity
between or among (x) any one or more of such entities and (y) any one or
more of the Asia Region Companies and their respective Subsidiaries, and
(z) any one or more of the Australasia Region Companies and their
respective Subsidiaries and (C) the gross-up of revenues and expenses
(previously accounted for under the cost or equity method of accounting)
related to the businesses which will be one-hundred percent owned as a
result of the transactions contemplated by this Agreement and the Other
Purchase Agreements, in each case as of December 31, 1997 (the "JLW
Combined Year-End Balance Sheet Schedules") and June 30, 1998 (the "JLW
Combined Interim Balance Sheet Schedules" and, collectively with the JLW
Combined Year-End Balance Sheet Schedules, the "JLW Combined Balance Sheet
Schedules") and (iv) the schedules combining the foregoing consolidated or
combined (as applicable) profit and loss accounts so as to eliminate or
adjust for (A) intercompany activity between or among any one or more of
(1) JLW England and its Subsidiaries, (2) JLW Scotland and its
Subsidiaries, and (3) JLW Ireland and its Subsidiaries, (B) intercompany
activity between or among (x) any one or more of such entities and (y) any
one or more of the Asia Region Companies and their respective Subsidiaries
and (z) any one or more of the Australasia Region and their respective
Subsidiaries and (C) the gross-up of revenues and expenses (previously
accounted for under the cost or equity method of accounting) related to the
businesses which will be one hundred percent owned as a result of the
transactions contemplated by this Agreement and the Other Purchase
Agreements, in each case for the year ended December 31, 1997 and the six-
month period ended June 30, 1998 (the "JLW Combined Income Statement
Schedules" and, collectively with the JLW Combined Balance Sheet Schedules,
the "JLW Combined Financial Statement Schedules"). The consolidated or
combined (as applicable) financial statements of the Australasia Region
Companies and their respective Subsidiaries included in the Financial
Statements (including the notes thereto) fairly present in all material
respects the consolidated or combined (as applicable) financial condition
of the entities referred to therein as of the respective dates and for the
respective periods referred to therein (subject, in the case of the
financial statements as of and for the six months ended, June 30, 1998, to
normal year-end adjustments that will not be material (in relation to the
applicable financial statements) in amount or effect) in conformity with UK
GAAP consistently applied. The financial statements referred to in the
immediately preceding sentence have been derived from the books and records
of the entities referred to therein. Certain notes to the financial
statements referred to in such sentence contain reconciliations of net
income, partners' funds or shareholders' equity (as applicable) and cash
flows of such entities from UK GAAP to US GAAP, and such net income,
partners' funds or shareholders' equity (as applicable) and cash flows of
such entities as so reconciled are fairly presented in all material
respects as of the respective dates and for the respective periods referred
to therein (subject, in the case of any of the same as of, and for the six
months ended, June 30, 1998, to normal year-end adjustments that will not
be material (in relation to the applicable financial statements) in amount
or effect), in conformity with US GAAP. The JLW Combined Balance Sheet
Schedules and the JLW Combined Income Statement Schedules include the
appropriate combining adjustments (including the eliminations and
adjustments referred to in subclauses (A), (B) and (C) of clauses (iii) and
(iv) of the first sentence of this Section 3.8(a)) which have been properly
applied to the historical amounts in the compilation thereof.
(b) The consolidated or combined (as applicable) financial
statements of the Companies and the Company Subsidiaries, included in each
case in the Nine-Month Interim Financial Statements to be delivered
pursuant to Section 5.7 hereof will fairly present in all material respects
the consolidated or combined (as applicable) financial condition of the
entities referred to therein as of the respective dates and for the
respective periods referred to therein (subject to normal year-end
adjustments that will not be material (in relation to the applicable
financial statements) in amount or effect) in conformity with UK GAAP
consistently applied. The Nine-Month Interim Financial Statements will be
derived from the books and records of the entities referred to therein.
Certain notes to the Nine-Month Interim Financial Statements will contain
reconciliations of net income, partners' funds or shareholders' equity (as
applicable) and cash flows of such entities from UK GAAP to US GAAP, and
such net income, partners' funds or shareholders' equity (as applicable)
and cash flows of such entities as so reconciled will be fairly presented
in all material respects as of the date and for the period referred to
therein (subject to normal year-end adjustments that will not be material
(in relation to the applicable financial statements) in amount or effect)
in conformity with US GAAP. The JLW Combined 9/30 Balance Sheet Schedules
and the JLW Combined 9/30 Income Statement Schedules to be delivered
pursuant to Section 5.7 hereof will include the appropriate combining
adjustments (including the eliminations and adjustments referred to in
clauses (A), (B) and (C) in the definitions of JLW Combined 9/30 Balance
Sheet Schedules and JLW Combined 9/30 Income Statement Schedules) which
will be properly applied to the historical amounts in the compilation
thereof.
(c) To the knowledge of each Seller, Company and Company
Subsidiary, the accounting books and records of each Company and Company
Subsidiary (i) are correct and complete in all material respects (after
taking into account adjustments made in the ordinary course of business
consistent with past practice necessary to produce the applicable
accounts); (ii) are properly maintained in all material respects (in
relation to each such entity) in a manner consistent with past practice;
and (iii) have recorded therein all the properties, assets and liabilities
of such entity required to be so recorded under applicable generally
accepted accounting standards.
Section 3.9 No Undisclosed Liabilities. There are no Liabilities of
any Company or Company Subsidiary of any kind whatsoever and no Management
Shareholder, Seller, Company or Company Subsidiary knows of any valid basis
for the assertion of any such Liabilities, and no existing condition,
situation or set of circumstances exists which could reasonably be expected
to result in a Liability, other than:
(a) Liabilities adequately and expressly reflected and
reserved for in the Australasia Interim Financial Statements;
(b) Liabilities incurred in the ordinary and usual course of
business consistent with past practice since June 30, 1998;
(c) Liabilities set forth in Section 3.9(c) of the Company
Disclosure Schedule;
(d) Liabilities disclosed in other sections of the Company
Disclosure Schedule in respect of representations and warranties set forth
in other sections of this Article III or not required to be disclosed in
other sections of the Company Disclosure Schedule by reason of materiality
or other specifically identified exceptions or exclusions set forth in such
representations and warranties;
(e) Liabilities arising under (x) Contracts or Licenses
listed or disclosed in other sections of the Company Disclosure Schedule in
respect of representations or warranties set forth in other sections of
this Article III or (y) Contracts or Licenses not required to be listed or
described in other sections of the Company Disclosure Schedule in respect
of such representations and warranties by reason of materiality or other
specifically identified exceptions or exclusions set forth therein (other
than Liabilities arising out of breaches or violations of such Contracts or
Licenses); and
(f) other Liabilities which, in any individual case, do not
exceed US$500,000.
Section 3.10 Absence of Certain Changes. Except as and to the extent
set forth in Section 3.10 of the Company Disclosure Schedule, since June
30, 1998, (a) each Company and Company Subsidiary has conducted its
businesses only in the ordinary and usual course of business consistent
with past practice and (b) (i) no individual or cumulative material adverse
change in the business, properties, assets, liabilities, financial
condition or results of operations of the Companies and the Company
Subsidiaries, taken as a whole, has occurred, (ii) no individual or
cumulative event or development has occurred that is reasonably expected in
the reasonable opinion of JLW Australia to have a material adverse change
in or effect on the business, properties, assets, liabilities, financial
condition or results of operations of the Companies and the Company
Subsidiaries, taken as a whole, and (iii) no Company or Company Subsidiary
has taken, or permitted to be taken, any action that, if taken or permitted
to be taken during the period from the date of this Agreement through the
Closing Date without the consent of Parent, would constitute a breach of
Section 5.1 hereof.
Section 3.11 Real Property.
(a) Owned Real Property. No Company or Company Subsidiary
owns any real property.
(b) Real Property Leases. Section 3.11 of the Company
Disclosure Schedule contains a complete and correct list of all real
property leased (the "Leased Real Property") by any Company or Company
Subsidiary setting forth the address, landlord and tenant for each such
lease (collectively, the "Real Property Leases"). The Sellers have
delivered to Parent correct and complete copies of the Real Property Leases
(including any amendments, modifications or supplements thereto). Each
Real Property Lease is in full force and effect. No Company, Company
Subsidiary or, to the Knowledge of each Seller, Company and Company
Subsidiary, any other party is in default, violation or breach in any
respect under any covenant in any Real Property Lease, and no event has
occurred and is continuing that constitutes or, with notice or the passage
of time or both, would constitute such a default, violation or breach in
any respect under any covenant in any Real Property Lease nor has any such
default, violation or breach been waived or acquiesced in, which default,
breach or violation in any such case would reasonably be expected to have a
Company Material Adverse Effect. Except as set forth in Section 3.11 of
the Company Disclosure Schedule, no Company or Company Subsidiary has
sublet to any third party any portion of property covered by the Real
Property Leases.
Section 3.12 Intangible Property Rights. (a) Section 3.12(a) of the
Company Disclosure Schedule sets forth a complete and accurate list of all
Patents and Trademark and Copyright registrations and applications, each as
owned by any Company or Company Subsidiary.
(b) Section 3.12(b) of the Company Disclosure Schedule
identifies all commercially significant license agreements relating to
Intangible Property Rights (excluding shrink wrap licenses and other
Licenses relating to commercially-available software) to which any Company
or Company Subsidiary is a party (the "Scheduled Agreements"). Except as
indicated in Section 3.12(b) of the Company Disclosure Schedule, a true and
complete copy of each Scheduled Agreement (together with all amendments
thereto) has been provided to Parent. Each Scheduled Agreement between any
Company, or Company Subsidiary and any Person or Persons other than: (i)
any other Company, or Company Subsidiary or any Affiliate of any thereof,
(ii) any Europe/USA Region Company, or any Subsidiary thereof, or any
Affiliate of any thereof, or (iii) any Asia Region Company, or any
Subsidiary thereof, or Affiliate of any thereof (each a "Third Party
Scheduled Agreement") is a legal, valid, binding and enforceable obligation
of the Company or Company Subsidiary which is/are a party or parties
thereto and, to the Knowledge of each Seller, Company and Company
Subsidiary, the other parties thereto, except as enforceability may be
limited by bankruptcy, insolvency, reorganization and similar Laws
affecting creditors generally and by the availability of equitable
remedies. Except as indicated in Section 3.12(b) of the Company Disclosure
Schedule, no Company, Company Subsidiary or, to the Knowledge of each
Seller, Company and Company Subsidiary, any other party, is in default,
violation or breach in any material respect under any Third Party Scheduled
Agreement and no event has occurred and is continuing that constitutes or
with notice or the passage of time would constitute, such a default,
violation or breach in any material respect under any Third Party Scheduled
Agreement.
(c) Except as set forth in Section 3.12(c) of the Company
Disclosure Schedule, the Companies and Company Subsidiaries, together with
the JLW Partnerships (as defined in the Europe/USA Region Agreement), the
Europe/USA Region Companies and the Subsidiaries thereof, the Asia Region
Companies and the Subsidiaries thereof on a collective basis own or have
the valid right to use and (except in the case of the JLW Partnerships)
will, as of the Integration Completion Date (after giving effect to the
Integration), own or have the valid right to use (i) the trademark (or
service mark) "Jones Lang Wootton" in connection with the real estate
agency, management and advisory business in the following countries:
Australia, France, Germany, Hong Kong, the Netherlands, Ireland, Singapore,
the United Kingdom and the United States of America (the "Designated
Countries"), (ii) the property management software program known as
"Credo," developed internally by JLW entities for JLW England, and (iii) to
the Knowledge of each Seller, Company or Company Subsidiary, any other
Intangible Property Rights used in the conduct of their businesses as of
the date hereof and (except in the case of the JLW Partnerships) thereof.
Except as set forth on Schedule 3.12(c) of the Company Disclosure Schedule,
no Company or Company Subsidiary has granted any mortgages, pledges,
security interests, liens, charges or options to acquire (collectively,
"Interests") in any Intangible Property Rights owned by it or in its rights
under any License of Intangible Property Rights to which it is a party or
has Knowledge of any Interests granted therein by any predecessor-in-
interest which are still effective. Except as set forth in Section 3.12(a)
of the Company Disclosure Schedule, no registration or application listed
in Section 3.12(a) of the Company Disclosure Schedule (i) has been
cancelled, abandoned or has expired, (ii) is the subject of any existing
or, to the Knowledge of each Seller, Company and Company Subsidiary,
threatened opposition, interference, cancellation or other proceeding
before any Authority, in each case, as to which any Company or Company
Subsidiary has received written notice, and (iii) is, as of the date
hereof, standing in the record ownership of the entity listed as record
owner on Section 3.12(a) of the Company Disclosure Schedule. Except as set
forth in Section 3.12(c) of the Company Disclosure Schedule, each trademark
or service mark registration listed in Section 3.12(a) of the Company
Disclosure Schedule for the trademark (or service mark) "Jones Lang
Wootton" insofar as the same relates to the use thereof in connection with
the real estate agency, management and advisory business in the Designated
Countries, is valid as of the date hereof and will, as of the Integration
Completion Date (after giving effect to the Integration), be valid;
provided, however, that for the avoidance of doubt, this representation and
warranty shall not extend to the "globe logo device" whether used alone, in
connection with "Jones Lang Wootton," "JLW" or otherwise.
(d) Except as set forth in Section 3.12(d) of the Company
Disclosure Schedule, to the Knowledge of each Seller, Company and Company
Subsidiary: (i) the operation of the businesses currently conducted by the
Companies and Company Subsidiaries does not infringe upon, or make
unauthorized use of, any Intangible Property Right of any third party
(i.e., any Person or Persons other than the Companies, Company
Subsidiaries, JLW Partnerships, Asia Region Companies, Australasia Region
Companies or Subsidiaries or Affiliates of any thereof; provided, that such
Affiliates shall be Affiliates of Parent immediately following the Closing)
and (ii) there are no material unasserted claims for past infringement or
past unauthorized use by any Company or any Company Subsidiary of any third
parties' (as defined above) Intangible Property Rights during the past
three (3) years. Except as set forth in Section 3.12(d) of the Company
Disclosure Schedule, there are no claims as to which any Company or Company
Subsidiary has received written notice pending or, to the Knowledge of each
Seller, Company and Company Subsidiary, threatened against any Company or
Company Subsidiary in respect of infringement or unauthorized use by any of
them of any third parties' (as defined above) Intangible Property Rights.
Except as set forth in Section 3.12(d) of the Company Disclosure Schedule,
to the Knowledge of each Seller, Company and Company Subsidiary, no third
party (as defined above) is infringing upon, or making unauthorized use of,
any Intangible Property Rights owned by any Company or Company Subsidiary.
Except as set forth in Section 3.12(d) of the Company Disclosure Schedule,
no claims alleging infringement or unauthorized use by third parties (as so
defined) of Intangible Property Rights owned or used by any Company or
Company Subsidiary have been made in writing by any Company or Company
Subsidiary within the past three (3) years. Except as set forth in Section
3.12(d) of the Company Disclosure Schedule, there is no action, suit, or
arbitration as to which any Company or Company Subsidiary has received
written notice pending or, to the Knowledge of each Seller, Company and
Company Subsidiary, threatened against any Company or Company Subsidiary
which relates to Intangible Property Rights owned or used by any Company or
Company Subsidiary or to any Scheduled Agreement.
(e) Except as set forth in Section 3.12(e) of the Company
Disclosure Schedule, the operations of each Company and Company Subsidiary
have been and are being conducted in accordance with all applicable Laws
and other requirements of any Authority having jurisdiction over any
Company or Company Subsidiary, or any of their respective properties,
assets or business, which relate to data protection including, but not
limited to, the Data Protection Act of 1984 and the Data Protection Act of
1988 and, to the Knowledge of any Seller, Company or Company Subsidiary,
which relate to Intangible Property, except for such matters as would not
individually or in the aggregate, have a Company Material Adverse Effect.
(f) Except as set forth in Section 3.12(f) of the Company
Disclosure Schedule, there are no settlements, judgments, decrees, or
orders currently in force, which restrict, in any material respect, any
Company's or Company Subsidiary's rights to use any of the Intangible
Property Rights owned by any Company or Company Subsidiary.
(g) No Consents from any Authority or any party to a
Scheduled Agreement are necessary for execution and delivery of this
Agreement, the other Operative Agreements or the Integration Agreements by
any Company or the consummation by any Company of the transactions
contemplated hereby and thereby.
(h) Except as set forth in Section 3.12(h) of the Company
Disclosure Schedule, no current or former director, officer or, to the
Knowledge of any Company or Company Subsidiary, any current or former
employee of any Company or Company Subsidiary will, after giving effect to
the Integration, including any Post-Closing Integration Actions, own or
have any rights in or to any Intangible Property Right owned or used by any
Company or Company Subsidiary in the ordinary course of its business.
(i) This Section 3.12 and Sections 3.5, 3.6, 3.8, 3.26, 3.27
and 3.28 contain the exclusive representations and warranties of the
Sellers, Companies and Management Shareholders concerning Intangible
Property Rights and Licenses relating thereto.
Section 3.13 Certain Contracts. (a) Section 3.13(a) of the Company
Disclosure Schedule lists all material Contracts to which any Company or
Company Subsidiary is a party or by which it or any of its properties or
assets may be bound or affected ("Listed Agreements"), which list includes
each of the following types of Contracts (whether or not material): (i) all
property management contracts that contributed US$250,000 or more during
the year ended December 31, 1997 or would reasonably be expected to
contribute US$250,000 or more over the twelve months ending December 31,
1998 to the revenue of the Companies and the Company Subsidiaries; (ii) all
investment advisory contracts that contributed US$250,000 or more during
the year ended December 31, 1997 or would reasonably be expected to
contribute US$250,000 or more over the 12 months ending December 31, 1998
to the revenue of the Companies and the Company Subsidiaries; (iii) all
personal property leases where the rent exceeded US$100,000 during the year
ended December 31, 1997 or would reasonably be expected to exceed
US$250,000 over the term of the lease; (iv) all employment or other
compensation based contracts (including, without limitation, non-
competition, severance or indemnification agreements) which are currently
in effect or, upon Closing, will be in effect (in which event the contract
being replaced thereby need not be so listed; provided that no Company or
Company Subsidiary would have any Liability thereunder) for which any
Company or Company Subsidiary has or will have, as applicable, any
continuing obligations with (A) any current or former officer or director
of any Company or Company Subsidiary (or any company which is controlled by
any such individual) other than any Designated JLW Shareholder, and (B) any
other employee of any of the same whose annualized salary, bonus and other
benefits exceeds US$100,000 per annum (other than any Designated JLW
Shareholder) and (v) any contract of employment to be entered into by any
Company or Company Subsidiary with any Designated JLW Shareholder, (vi) all
consulting Contracts requiring the payment in excess of US$100,000 per
annum or US$100,000 over the 12 months ending December 31, 1998; (vii)
union, guild, industrial agreements and registered and unregistered
enterprise agreements relating to, and any employee handbook for, employees
of any Company or Company Subsidiary; (viii) instruments for borrowed money
(including, without limitation, any indentures, guarantees, loan
agreements, sale and leaseback agreements, or purchase money obligations
incurred in connection with the acquisition of property), involving more
than $100,000; (ix) agreements for acquisitions or dispositions (by merger,
purchase or sale of assets or stock or otherwise) of material assets, as to
which any Company or Company Subsidiary has continuing obligations or
rights; (x) joint venture or partnership agreements; (xi) any Contract
containing provisions that specifically provide circumstances pursuant to
which any Company or Company Subsidiary may be required to return fees paid
under such Contract (other than as a result of breach or non-performance
under such Contract), which Liability could be expected to exceed
US$100,000; (xii) guarantees, suretyships, indemnification and contribution
agreements; and (xiii) Contracts for employment of any broker or finder in
connection with the transactions contemplated by this Agreement or the
Other Purchase Agreements or for any brokerage fees or commissions or
finders' fees or for any financial advisory or consulting fees in
connection therewith. Except as indicated in Section 3.13(a) of the
Company Disclosure Schedule, a true and complete copy of each Listed
Agreement (together with all amendments thereto) has been provided to
Parent. Except as set forth in Section 3.13 of the Company Disclosure
Schedule each Listed Agreement is a legal, valid, binding and enforceable
obligation of the Company or Company Subsidiary which is a party thereto
and, to the Knowledge of each Seller, Company or Company Subsidiary, the
other parties thereto, except as enforceability may be limited by
bankruptcy, insolvency, reorganization and similar Laws affecting creditors
generally and by the availability of equitable remedies. Except as set
forth in Section 3.13(a) of the Company Disclosure Schedule, no Company,
Company Subsidiary or, to the Knowledge of each Seller, Company or Company
Subsidiary, any other party, is in default, violation or breach in any
respect under any Listed Agreement, and no event has occurred and is
continuing that constitutes or with notice or the passage of time would
constitute, such a default, violation or breach in any respect under any
Listed Agreement, other than, in each case such defaults, violations or
breaches which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, no Contract or License restricts, in any material (in
relation to each such entity) respect, the ability of any Company or
Company Subsidiary to own, possess or use its assets or conduct its
operations in any geographic area.
Section 3.14 Licenses and Other Authorizations. Except as set forth
in Section 3.14 of the Company Disclosure Schedule, the Companies and the
Company Subsidiaries have received all Licenses of any Authority material
to the ownership or leasing of their respective properties and to the
conduct of the JLW Businesses as currently conducted. Except as disclosed
in Section 3.14 of the Company Disclosure Schedule, all such Licenses are
valid and in full force and effect. The Companies and the Company
Subsidiaries are operating in compliance with the conditions and
requirements of such Licenses and, except as disclosed in Section 3.14 of
the Company Disclosure Schedule, no proceeding is pending or, to the
Knowledge of any Seller, Company or Company Subsidiary, threatened, seeking
the revocation or limitation of any such Licenses. Assuming the related
Consents set forth in Section 3.6 or 3.7 of the Company Disclosure Schedule
have been obtained prior to the Closing Date, to the extent that any
transfers of such Licenses are provided for as part of the transactions
contemplated by this Agreement, such transfers will be permitted, and none
of such Licenses will be terminated or impaired or become terminable as a
result of the transactions contemplated hereby or by the Other Operative
Agreements or the Integration Agreements.
Section 3.15 Year 2000 and Euro Compliance. The Companies have
instituted a plan to test whether the Computer Systems owned by or licensed
to any Company or Company Subsidiary will be Year 2000 Compliant. To the
Knowledge of each Seller, Company or Company Subsidiary, the sum of (i) the
direct costs (excluding any costs that would be incurred in the ordinary
course of business absent the need to become Year 2000 Compliant or Euro
Compliant) of making the Computer Systems owned by or leased to any JLW
Partnership, Europe/USA Region Company, Australasia Region Company or Asia
Region Company, or any of their respective Subsidiaries (but, for the
avoidance of doubt, excluding any Computer Systems that are owned by or
leased to the owners of or tenants located in, any Managed Properties) to
become Year 2000 Compliant and, in the case of any JLW Partnership or
Europe/USA Region Company, or any of their respective Subsidiaries, Euro
Compliant and (ii) any payments, individually or in the aggregate, under
the indemnification obligation to the Australia and New Zealand Banking
Group for Year 2000 problems pursuant to clause 23.5 of the Service
Provider Agreement for the Provision of Property Services dated May 5, 1998
between the Australia and New Zealand Banking Group, JLW Australia and P&O
Australia Limited, or under any guarantee thereof, by any Australasia
Region Company or Subsidiary thereof, are not reasonably expected to exceed
in the aggregate the amount set forth in Section 3.15 of the Company
Disclosure Schedule. "Computer Systems" means, with respect to any Person,
the computer software, firmware, hardware (whether general or special
purpose), and other similar or related items of automated, computerized or
software system(s) that are owned by or licensed to such Person. "Year
2000 Compliant" means, with respect to any Computer Systems, the ability of
such Computer Systems (to the extent reasonably necessary in the ordinary
work of business) to process data, without material impairment as to
performance, involving dates prior to, during or after the year 2000.
"Euro Compliant" means, with respect to any Computer Systems, the ability
of such Computer Systems (to the extent reasonably necessary in the
ordinary work of business) to process data, without material impairment as
to performance, involving the single European currency (including without
limitation complying with the conversion and rounding rules set forth in
Council Regulation 11/03/97 upon the advent of the European Monetary
Union).
Section 3.16 Clients. Section 3.16(a) of the Company Disclosure
Schedule sets forth (a) on a country-by-country basis, the names of the ten
largest clients, as measured by combined revenue ("significant clients"),
of the Companies and Company Subsidiaries during the 12-month period ended
December 31, 1997 or during the 6-month period ending on June 30, 1998 and
(b) the aggregate amount for which each significant client (as so defined)
was invoiced during such period on a combined basis. Except as set forth
in Section 3.16(b) of the Company Disclosure Schedule, no significant
client (as so defined) (i) has ceased, or indicated to any Company or
Company Subsidiary that it shall cease, to use the services of any Company
or Company Subsidiary, (ii) has substantially reduced or indicated to any
Company or Company Subsidiary that it shall substantially reduce, the use
of the services of any Company or Company Subsidiary or (iii) has sought,
or is seeking, to renegotiate the terms of any Contract under which any
Company or Company Subsidiary is providing services to such significant
client, including in each case after the consummation of the transactions
contemplated hereby and by the other Operative Agreements. Except as
disclosed in Section 3.16(b) to the Company Disclosure Schedule, to the
Knowledge of each Seller, Company or Company Subsidiary, no significant
client (as so defined) has otherwise threatened to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement.
Section 3.17 Operation of the Businesses. Except as set forth in
Section 3.17 of the Company Disclosure Schedule, the Companies and the
Company Subsidiaries have, and after Closing, the Companies and Company
Subsidiaries will have, all rights, properties and assets, real, personal
and mixed, tangible and intangible relating to or used or held for use in
the conduct of the businesses conducted by the Companies and Company
Subsidiaries (the "Assets") during the past 12 months (except inventory
sold, cash disposed of, accounts receivable collected, prepaid expenses
realized, contracts partially or fully performed, and properties or assets
replaced by equivalent or superior properties or assets (in each case in
the ordinary and usual course of business). To the Knowledge of each
Seller, Company or Company Subsidiary, all of the Assets are reasonably
adequate for the purposes for which they are currently used or held for
use.
Section 3.18 Insurance. Section 3.18 of the Company Disclosure
Schedule contains (i) an accurate and complete list of all material
policies of property, fire, liability, worker's compensation and other
forms of insurance owned or held by each Company or Company Subsidiary, and
(ii) an accurate and complete list of each claim in excess of US$100,000
relating to such policies made during the last 24 months. To the Knowledge
of each Seller, Company or Company Subsidiary, such policies provide
adequate insurance coverage consistent with industry practice for the
assets and operations of the Companies and Company Subsidiaries. All such
policies are in full force and effect, and all premiums with respect
thereto covering all periods up to and including the date of the Closing
have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies shall not
terminate or lapse prior to or on the Closing Date by reason of, the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement. Section 3.18 of the Company Disclosure
Schedule sets forth a list of third party risks which are insured by a
Company or Company Subsidiary and a list of any claims made against or paid
by the Companies or Company Subsidiaries.
Section 3.19 Labor Relations. Except to the extent set forth in
Section 3.19 of the Company Disclosure Schedule: (a) no Company or Company
Subsidiary is a party to any award, enterprise, other Contracts, written
work rules or practices agreed to with any union, labor organization,
employee association, works council or body of employee representatives;
(b) there is no unfair labor practice charge or complaint against any
Company or Company Subsidiary pending or, to the Knowledge of each Seller,
Company or Company Subsidiary, threatened before the National Labor
Relations Board or any similar foreign Authority, including, without
limitation, the Australian Industrial Relations Commission, which in either
case would reasonably be expected to have a Company Material Adverse
Effect; and (c) there is no labor strike, dispute, slowdown, lockout or
stoppage pending or, to the Knowledge of each Seller, Company or Company
Subsidiary, threatened against or affecting any Company or Company
Subsidiary which would reasonably be expected to have a Company Material
Adverse Effect.
Section 3.20 Employee Benefit Matters. (a) Section 3.20(a) of the
Company Disclosure Schedule sets forth a true and complete list of each
Plan, whether formal or informal, written or oral. Except to the extent
set forth in Section 3.20(a) of the Company Disclosure Schedule: (i) each
Plan required to be filed or registered with or approved by any applicable
governmental or regulatory body or authority has been so filed, registered
or approved and has been maintained in good standing with such body or
authority, and each such Plan is now and has always been operated in full
compliance in all material respects with all applicable laws and
regulations; (ii) no Plan is subject to the provisions of ERISA; (iii) the
fair market value of the assets of each funded Plan, the liability of each
insurer for any Plan funded through insurance or the book reserve
established for any Plan together with any contributions accruing on or
before the Closing Date, in each case as shall be reflected in the books
and records of such Company or such Company Subsidiary sponsoring such
Plan, are or will be sufficient, on a combined basis, to procure or provide
for the benefits determined on an ongoing basis accrued to the Closing Date
payable to all current and former participants of such Plan according to
the actuarial assumptions and valuations most recently used to determine
employer contributions to such Plan; and (iv) full payment has been made or
will be made, in accordance with applicable law and the provisions of each
Plan, of all amounts which any Company or Company Subsidiary is required to
pay on or prior to the Closing Date under the terms of each Plan as of the
last day of the most recent plan year thereof ended prior to the date of
this Agreement, and all such amounts properly accrued through the Closing
Date with respect to the current plan year thereof ended prior to the date
of this Agreement, and all such amounts properly accrued through the
Closing Date with respect to the current plan year thereof will be paid by
such Company or such Company Subsidiary on or prior to the Closing Date or
will be properly reflected on the books and records of such Company or such
Company Subsidiary.
(b) Except to the extent set forth in Section 3.20(b) of the
Company Disclosure Schedule, (i) with respect to each Plan, each Company or
Company Subsidiary has heretofore delivered to Parent true and complete
copies of each of the following documents: (A) a copy of such Plan
(including all amendments thereto), (B) a copy of the annual report (which
shall include non-discrimination tests, where applicable), if required
under applicable Law, with respect to each such Plan for the two most
recently completed plan years, (C) a copy of the actuarial report, if
required under applicable Law, with respect to each such Plan for the three
most recently completed plan years, (D) a copy of the most recent "summary
plan description," together with each "summary of material modifications,"
given to members or otherwise required under applicable Law with respect to
each Plan, (E) if the Plan is funded through a trust or any third-party
funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof, and
(F) the most recent letter, certification or other document, if any,
received from any applicable governmental or regulatory body or authority
evidencing the registration or exemption from registration and/or approval
of any Plan required to be so registered (or possess a certificate of
exemption) or approved; (ii) there are no pending or, to the Knowledge of
each Seller, Company and Company Subsidiary, threatened or anticipated
material claims by, on behalf of or against any of the Plans, and no
material litigation or administrative or other proceeding has occurred or,
to the Knowledge of each Seller, Company and Company Subsidiary, is
threatened involving any Plan, and (iii) the consummation of the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement shall not, either alone or in combination with
another event, except as set forth in Section 3.20(b) of the Company
Disclosure Schedule, (A) accelerate the time of payment or vesting or
increase the amount of compensation due any employee or officer of any
Company or Company Subsidiary or (B) entitle any current or former employee
or officer of any Company or Company Subsidiary to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement.
(c) Australian Superannuation Funds.
(i) Definitions. In this Section 3.20(c), unless the
contrary intention appears, complying superannuation fund and year of
income have the same meaning as they have in the Superannuation Industry
(Supervision) Act 1993 ("Superannuation Act") or the regulations made under
the Superannuation Act.
(ii) No Agreements. No Company or Company Subsidiary is
a party to any agreement with any union or industrial organization in
respect of superannuation benefits for its employees.
(iii) No Funds. Other than the Companies' superannuation
fund (the "Companies' Funds"), (A) there are no superannuation, retirement
or provident funds or other arrangements providing for any payment to
directors, employees or sub-contractors on their retirement or death, or on
the occurrence of any permanent or temporary disability in operation by or
in relation to any of the Companies or Company Subsidiaries or their
directors, employees or sub-contractors; and (B) none of the Companies or
Company Subsidiaries contributes to any funds which will provide its
directors, employees or sub-contractors or their respective dependants with
pensions, annuities or lump sum payments on retirement or earlier, death or
otherwise.
(iv) Companies' Funds. The following applies with
respect to Companies' Funds:
(A) contributions are paid to the Companies'
Funds at intervals not less than monthly and, otherwise than in the
ordinary course of administration, there are no outstanding and unpaid
contributions on the part of any of the Companies or any of the Company
Subsidiaries or any other Person who is required to contribute to the
Companies' Funds;
(B) contributions to the Companies' Funds satisfy
each of the Companies' or any Company Subsidiaries' obligations to make
superannuation contributions under relevant industrial agreements and
awards;
(C) otherwise than in the ordinary course of
administration, there are no outstanding and unpaid benefits currently due
to any Person under the Companies' Funds;
(D) there are no outstanding and unpaid premiums
in regard to any policy of insurance relating to the provision of benefits
under the Companies' Funds;
(E) each of the Companies and Company
Subsidiaries is entitled to measure its compliance with the requirements of
the Superannuation Guarantee (Administration) Act 1992 ("SGA Act") by
reference to the earnings base specified in the relevant Companies' Fund
trust deed rather than by reference to ordinary time earnings (as defined
in the SGA Act) of its directors, employees and sub-contractors;
(F) full particulars of the assets (including any
policies of insurance) held by the Companies' Funds are included in Section
3.20(c) of the Company Disclosure Schedule;
(G) the assets of the Companies' Funds and the
past and present rate of contributions by each of the Companies and Company
Subsidiaries and by their respective directors, employees or sub-
contractors to the Companies' Funds, after making adequate provision for
Taxes and expenses of the Companies' Funds, are such as will enable the
respective trustees to provide out of the Companies' Funds the benefits to
be provided under them;
(H) since the date of the notice under section 12
or Section 13 of the Occupational Superannuation Standards Act 1987 or
Section 40 of the Superannuation Industry Act, no Company or Company
Subsidiary is aware of any fact or circumstance which would result in the
Companies' Funds not being complying superannuation funds in relation to
any year of income or part of a year of income;
(I) the latest audited accounts of the Companies'
Funds:
(1) have been prepared in accordance with
the Corporations Law and with generally accepted accounting principles and
standards;
(2) show a true and fair view of the
financial position and the assets and liabilities of the Companies' Funds
as at the end of the relevant year of income and of the income and expenses
of the Companies' Funds for the relevant year of income;
(3) have been prepared on a basis
consistent with the accounting policies applied in the corresponding
accounts of the Companies' Funds for the preceding three years of income;
(4) are not affected by any material,
unusual or material non-recurring item;
(5) take account of all material gains and
losses, whether realized or unrealized, arising from foreign currency
transactions;
(6) contain adequate provisions for Taxes
for or in respect of the Companies' Funds and the trustees for the period
from the date of the last audited accounts up to the Completion Date;
(7) contain provisions adequate to cover,
or full particulars in notes of, all other material liabilities (whether
quantified or otherwise) of the Companies' Funds at the end of the relevant
year of income; and
(8) disclose all contingent obligations and
contingent liabilities which are material in the aggregate;
(J) to the Knowledge of each Seller, Company or
Company Subsidiary, no director, employee or subcontractor who is a member
of the Companies' Funds has any right or entitlement to have any benefit
under the Companies' Funds augmented, increased or accelerated by reason of
this Agreement, the other Operative Agreements or any of the transactions
contemplated hereby or thereby, or by reason of any other arrangement,
agreement or understanding;
(K) a list of the names of all Persons who are
members of the Companies' Funds has been supplied to Parent and all of
those Persons named are directors, employees or sub-contractors of the
Companies or Company Subsidiaries and are not directors, employees or sub-
contractors of any other Person;
(L) the names of the respective trustees have
been supplied to Parent and the trustees have been appointed in accordance
with the terms of the respective trust deeds of the Companies' Funds and
all other legal requirements;
(M) to the Knowledge of each Seller, Company or
Company Subsidiary:
(1) neither the trustee nor any of the
directors of the trustees have breached any provision of the Superannuation
Industry (Supervision) Act 1993 and Regulations which is applicable to the
Companies' Funds;
(2) all assets of the Companies' Funds are
held in the name of the trustees of the Companies' Funds; and
(3) the trustees have not entered into and
are not bound by any arrangement, agreement or understanding relating to
the assets of the Companies' funds, the provision of administrative or
actuarial services or the provision of advice or other services to the
trustees other than as set forth in Section 3.20(c) of the Company
Disclosure Schedule;
(N) all Taxes which have been assessed or imposed
upon the Companies' Funds or the trustees of the Companies' Funds and;
(1) which are due and payable have been
paid by the final date for payment by the trustees of the Companies' Funds;
or
(2) which are not yet payable but become
payable prior to the Closing Date will be paid by the due date;
(O) all relevant stamp duty has been paid in
relation to the trust deeds of the Companies' Funds and amendments, if any,
to the trust deeds of the Companies' Funds;
(P) a copy of the trust deeds of the Companies'
Funds, together with all amendments to date, are included in Section
3.20(c) of the Company Disclosure Schedule;
(Q) no claim has been made against the trustee or
against any Person whom any of the Companies are or may be liable to
indemnify or compensate in respect of any act, event, omission or other
matter arising out of or in connection with the Companies' Funds and having
made all diligent enquiries, neither the Sellers nor the Companies are
aware of any circumstances which may give rise to any such claim;
(R) no undertaking or assurance has been given to
directors, employees or sub-contractors of any of the Companies or any of
the Company Subsidiaries as to the continuance, introduction, increase or
improvement of any benefits under the Companies' Funds.
(v) Superannuation Guarantee Charge. None of the
Companies or any of the Company Subsidiaries will be liable to pay the
superannuation guarantee charge in respect of any of its directors,
employees or sub-contractors for any contribution period (as defined in the
SGA Act) up to the Closing Date.
(vi) No liability. Except for the Companies' Funds,
none of the Companies or any of the Company Subsidiaries is under any
present legal liability or voluntary commitment (whether or not legally
binding) to pay to any Person any pension, superannuation, allowance,
retirement gratuity or like benefits or any damages of compensation for
loss of office or employment or for unfair or wrongful dismissal.
Section 3.21 Litigation. Except as set forth in Section 3.21 of the
Company Disclosure Schedule, there is no Action pending or, to the
Knowledge of each Seller, Company or Company Subsidiary, threatened
against or involving any Seller, Company or Company Subsidiary which would
reasonably be expected to have a Company Material Adverse Effect, or which
questions or challenges the validity of this Agreement, any other Operative
Agreement or any Integration Agreement or any action taken or to be taken
by any JLW Party pursuant to this Agreement, any other Operative Agreement
or any Integration Agreement or in connection with the transactions
contemplated hereby and thereby. No Company or Company Subsidiary is
subject to any judgment, order or decree entered in any Action which
purports to limit in any material respect, or which may have a material
adverse effect on, its business practices or its ability to acquire any
property or conduct all or any material portion of the businesses conducted
by the Companies and the Company Subsidiaries in any locality.
Section 3.22 Compliance with Law. (a) Except as set forth in
Section 3.22(a) of the Company Disclosure Schedule, the operations of each
Company and Company Subsidiary have been and are being conducted in
accordance with all applicable Laws and other requirements of any
Authority, having jurisdiction over any Company or Company Subsidiary, or
any of their respective properties, assets or business, including, without
limitation, all such Laws and requirements relating to antitrust, fair
trading and consumer protection, currency exchange, health, occupational
safety, employment practices, wages and hours, pension, insurance,
securities and trading-with-the-enemy matters and planning and development,
except in each case for such matters as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(b) Except as set forth in Section 3.22(b) of the Company
Disclosure Schedule, neither any Company or Company Subsidiary, nor any of
their respective Affiliates, nor any officer, employee or agent of any
thereof, nor any other person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other
person who is or may be in a position to help or hinder any part of the JLW
Businesses (or assist any of such Persons in connection with any actual or
proposed transaction relating to any part of the JLW Businesses) (i) which
subjected or might have subjected any of such Persons to any damage or
penalty in any civil, criminal or governmental litigation or proceeding,
(ii) which if not given in the past, would have had a Company Material
Adverse Effect, (iii) which if not continued in the future, would have a
Company Material Adverse Effect or subject any of such Persons to suit or
penalty in any private or governmental litigation or proceeding or (iv) for
the purpose of establishing or maintaining any concealed fund or concealed
bank account.
(c) To the Knowledge of any Management Shareholder, no
Company or Company Subsidiary is a party to any agreement, arrangement or
concerted practice or is carrying on any practice which in whole or in part
contravenes or is invalidated by or is required to be registered under any
anti-trust, fair trading, consumer protection or analogous legislation in
any jurisdiction in which the businesses are carried on or assets are held.
Except as set forth in Section 3.23(c) of the Company Disclosure Schedule,
to the Knowledge of any Management Shareholder, no Company or Company
Subsidiary has received any formal or informal communications or
notification that any proceeding under any applicable anti-trust, fair
trading, consumer protection or similar legislation in any jurisdiction
have been initiated, nor any such proceedings contemplated by any relevant
Authority, nor has any claim been made or threatened alleging any
contravention of any such legislation.
Section 3.23 Taxes. Except as disclosed in Section 3.23 of the
Company Disclosure Schedule:
(a) All Tax Returns required to be filed with respect to each
Company, each Company Subsidiary or the affiliated, combined or unitary
group of which any Company or any Company Subsidiary is or was a member
have been duly and timely filed, except for those returns which
individually or in the aggregate, would not have a Company Material Adverse
Effect, and all such Tax Returns are true, correct and complete, except for
any deficiencies in respect of filed Tax Returns which, individually or in
the aggregate, would not have a Company Material Adverse Effect. Each
Company and each Company Subsidiary has duly and timely paid all Taxes and
other charges that are due with respect to all periods ending on or before
June 30, 1998, whether or not shown as due on any Tax Return, except for
Taxes which have been reserved for and shown on the Australasia Interim
Balance Sheet. There are no Liens with respect to Taxes (except for Liens
with respect to real property Taxes not yet due) upon any of the assets of
any Company or any Company Subsidiary. No Seller, Company or Company
Subsidiary is a party to, is bound by, or has any obligation under, any Tax
sharing, allocation, indemnity or similar Contract, nor is liable for the
Taxes of any other person. Each Company and each Company Subsidiary has
established due and sufficient reserves on the Australasia Interim Balance
Sheet for the payment of all Taxes in accordance with UK GAAP.
(b) All Tax deficiencies that have been asserted, proposed or
assessed in writing against or with respect to any Company or any Company
Subsidiary by any taxing authority have been paid in full or finally
settled, and no issue (including with respect to transfer pricing) has been
raised in writing by any taxing authority in any examination, audit or
other proceeding that, by application of the same or similar principles,
reasonably could be expected to result in a material proposed deficiency
for any other period not so examined. There are no outstanding Contracts,
consents, waivers or arrangements extending the statutory period of
limitation applicable to any Tax Return or claim for, or the period for the
collection or assessment of, Taxes due from any Company or any Company
Subsidiary for any taxable period.
(c) No Seller Company or Company Subsidiary has been or is in
violation (or with notice or lapse of time or both, would be in violation)
of any applicable Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections
1441 and 1442 of the Code or similar provisions under any foreign Laws).
Each Seller, each Company and each Company Subsidiary has duly and timely
withheld from employee salaries, wages and other compensation and paid over
to the appropriate taxing authorities all amounts required to be so
withheld and paid over for all periods under all applicable Laws.
(d) No audit or other proceeding by any domestic or foreign
court, governmental or regulatory authority, or similar Person is pending
or, to the Knowledge of each Company and Company Subsidiary, threatened
with respect to any Taxes due from any Company or any Company Subsidiary or
any Tax Return filed or required to be filed by or relating to any Company
or any Company Subsidiary. No Company or Company Subsidiary shall be
required to include any amount in income for any taxable period ending
after the Closing Date attributable to a change in method of accounting
made within any of the four taxable periods prior to the Closing Date.
(e) Section 3.23(e) of the Company Disclosure Schedule sets
forth the states, political subdivisions thereof and foreign countries in
which each Company or Company Subsidiary files or joins in filing any
consolidated, unitary, combined or similar Tax Returns (or have such Tax
Returns filed on their behalf). No claim has ever been made by an
authority in any jurisdiction where any Company or any Company Subsidiary
has not filed Tax Returns that they are or may be subject to taxation by
that jurisdiction.
(f) To the Knowledge of each Seller, Company, Company
Subsidiary, and Management Shareholder, no Tax imposed on or with respect
to the income or liability of any Shareholder is required to be withheld as
a result of any of the transfers, including the delivery of the
Consideration Shares, the Cash Consideration or any other payment or
consideration as a result of or in connection with the consummation of the
transactions contemplated by this Agreement and the other Operative
Agreements. Except for Taxes which are reserved for and shown in any Final
Closing Balance Sheet, no Company or Company Subsidiary shall have
liability for (i) Taxes (including, without limitation, withholding Taxes)
of any Shareholder or (ii) Taxes attributable to or incurred in connection
with the Integration.
(g) None of the Companies or Company Subsidiaries has made an
election for U.S. federal tax purposes to be treated as a partnership or
entity other than a corporation.
(h) [Intentionally Left Blank]
(i) Nothing has occurred in respect of any Company or any
Company Subsidiary which will cause the disallowance for income tax
purposes of the carry forward of losses other than as a result of a
transfer of Shares under this Agreement.
(j) All particulars given to any governmental or regulatory
authority in connection with or affecting any application for any ruling,
consent or clearance on behalf of any Company or any Company Subsidiary
within any of the four taxable periods prior to the Closing Date fully and
accurately disclosed all facts and circumstances material for the decision
of the authority. Each ruling, consent or clearance is valid and
effective. Each transaction for which that ruling, consent or clearance
has previously been obtained has been carried into effect in accordance
with the terms of the relevant application, ruling, consent or clearance.
(k) Each Company and each Company Subsidiary:
(i) maintains and has retained for the period required
by law, accurate records of franking credits and franking debits (as
defined in the 1936 Act) in respect of its current and earlier accounting
periods;
(ii) has franked to the required amount any dividend it
has paid;
(iii) has not franked any dividend it has paid to the
extent that a franking deficit has or will arise at the end of the
succeeding franking year; and
(iv) has a franking account surplus at least equal to
the balance disclosed on the Closing Date.
(1) Each Company and each Company Subsidiary maintains and
has retained for the period required by law:
(i) accurate records of all assets to which Part IIIA
of the 1936 Act or Part 3 of the 1997 Act applies or has applied and were
acquired since September 19, 1985, other than assets acquired before that
date, but deemed to be acquired after that date for taxation purposes
pursuant to Section 160ZZS of the 1936 Act; and
(ii) without limiting the generality of the foregoing,
accurate records of all information relating to those assets as referred to
in Section 160ZZU of the 1936 Act and in Division 121 of the 1997 Act.
(m) There will be no Tax resulting from the application of
Section 160ZZOA of the 1936 Act or Subdivision 104-J of the 1997 Act (or
any statutory re-enactment or replacement of either provision) as a result
of the transfer of Shares under this Agreement by reason of Section 160ZZO
of the 1936 Act or Subdivision 126-B of the 1997 Act having applied in
relation to the disposal of an asset to any Company or any Company
Subsidiary.
(n) All stamp duty and other similar tax payable except for
any that is payable by USA Acquisition Sub or Australia Acquisition Sub in
respect of every Contract (including an Integration Document) or
transaction to which any Company or any Company Subsidiary is or has been a
party, or by which any Company or any Company Subsidiary derives, has
derived or will derive a substantial benefit, has been duly paid except for
stamp duty or other similar taxes which have been reserved for and will be
shown on the Final Closing Balance Sheet for the Companies and the Company
Subsidiaries. No Contract is unstamped or insufficiently stamped. No
event has occurred as a result of which any duty has become payable, from
which any Company or any Company Subsidiary may have obtained relief. In
particular, but without limitation:
(i) No Company or Company Subsidiary has given an
undertaking as a condition of or in connection with the granting of
corporate reconstruction relief from stamp duty otherwise payable under
either:
(A) '137R of the Victorian Stamps Act 1958;
(B) '49C of the Queensland Stamp Act 1894;
(C) Part IIIBAAA of the Western Australian Stamp
Act 1921; or
(D) the stamp duty legislation of any other
Australian State or Territory;
(collectively, the "CRR provisions");
(ii) No Company or Company Subsidiary will be required
to pay any Victorian, Queensland or Western Australian stamp duty or stamp
duty in any other Australian State or Territory (including fines, penalties
or interest) under the CRR provisions as a consequence of this Agreement
being entered into, or any of the transactions contemplated by it
occurring.
(o) No Company or Company Subsidiary has done anything which
has or would give rise to any liability to taxation under the Taxation
(Unpaid Company Tax) Assessment Act 1982, whether or not liability has been
discharged.
(p) The provisions of Section 160ZZS of the 1936 Act applies
to any asset acquired or deemed to have been acquired by JLW Australia or
any of its Subsidiaries before September 20, 1985 to deem these assets to
have been acquired for market value no later than on December 31, 1990.
(q) JLW Australia Parent will obtain and make available to
Parent all information it may obtain, including valuations, if any,
relating to the application of Section 160ZZS of the 1936 Act to JLW
Australia no later than the earlier of: (i) 30 days after it has reached a
conclusion as to the date upon which that section applies; or (ii) June 30,
1999.
(r) The following provisions do not apply to alter the
Australian capital gains tax cost base of any shares in any Company
Subsidiary: (x) Division 19A of Part IIIA of the Income Tax Assessment Act
1936 (the "1936 Act") and (y) Division 19B of Part III of the 1936 Act or
Division 140 of the Income Tax Assessment Act 1997 (the "1997 Act").
(s) The following goodwill had only a nominal value: (i) the
goodwill associated with the business operations which JLW Australia Pty
Limited carried on until these business operations were restructured during
the 1991 and 1992 years and (ii) the goodwill associated with the business
operations of JLW Administration Pty Limited when these operations were
ceased during the year ended December 31, 1996.
(t) No tax is payable as a result of the redemption of
preference shares held by JLW Australia Pty Limited in: (i) JLW (NSW) Pty
Limited; (ii) JLW (SA) Pty Limited; and (iii) JLW (WA) Pty Limited.
(u) The transfer of the minority interest of JLW Australia
Pty Limited in the following entities to other JLW group companies will not
give rise to any significant Australian income tax or capital gains tax
liability: (a) JLW Transact Limited (Hong Kong), (b) JLW Transact Pty
Limited (Singapore), (c) JLW Transact (Thailand) Co. Limited, (d) Jones
Lang Wootton Limited (Hong Kong), (e) JLW Property Consultants Pty Limited
(Singapore), (f) Benbridge Australia Pty Limited and (g) JLW Transact
Limited (New Zealand).
Notwithstanding the foregoing, the representations and warranties contained
in this Section 3.23, insofar as they concern the Tax affairs of any
Seller, shall be deemed not to exist unless what would (in the absence of
this provision) have constituted a breach of one or more of those
representations and warranties results in a claim under Section 1.1 of the
Escrow Agreement.
Section 3.24 Environmental Matters. (a) This Section 3.24 and
Sections 3.6, 3.8 and 3.26 contain the exclusive representations and
warranties concerning any environmental matters, including, but not limited
to, concerning any Environmental Laws or Materials of Environmental
Concern. Except as set forth in Section 3.24 of the Company Disclosure
Schedule, and except for any Action, claim or litigation which could not
reasonably be expected to have a Company Material Adverse Effect, no
Seller, Company or Company Subsidiary has received written notice of any
Action pending, nor to the Knowledge of each Seller, Company or Company
Subsidiary, has any Action, claim or litigation been asserted or threatened
against any Seller, Company or Company Subsidiary nor, to the Knowledge of
each Seller, Company or Company Subsidiary, is any Action, claim or
litigation pending or threatened against the properties currently or
formerly under management by any Company or Company Subsidiary ("Managed
Properties"), nor to the Knowledge of each Seller, Company or Company
Subsidiary, are there any circumstances which could reasonably be expected
to form the basis for such claim against the Managed Properties, pertaining
to: (i) off-site disposal or arranging for disposal or a release of
Materials of Environmental Concern; (ii) migration of Materials of
Environmental Concern from Managed Properties; (iii) any nuisance or tres-
pass emanating from Managed Properties; (iv) violations of any applicable
Environmental Laws; (v) releases of Materials of Environmental Concern at
or from current or former Managed Properties (including claims for response
costs); or (vi) third-party claims for personal injury or property damage
arising out of the release of or exposure to Materials of Environmental
Concern at or from the Managed Properties.
(b) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, the Companies and the Company Subsidiaries are, and,
to the Knowledge of each Seller, Company or Company Subsidiary, the Managed
Properties are, in compliance in all respects with applicable Environmental
Laws, except for such noncompliance which could not reasonably be expected
to have a Company Material Adverse Effect.
(c) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, to the Knowledge of each Seller, Company and Company
Subsidiary, and except for any of the following which could not reasonably
be expected to have a Company Material Adverse Effect, (i) there has been
no material spill, disposal or release of any Materials of Environmental
Concern or substance on, at or from the Managed Properties, except for any
such spill, disposal or release that occurred in compliance with applicable
Environmental Laws (provided that, for purposes of this Agreement,
reporting of a spill, disposal or release does not make an unauthorized
spill, disposal or release in compliance with Environmental Laws), (ii)
none of the Managed Properties is listed or, has been proposed to be listed
under any state, federal or foreign superfund or similar law, (iii) none of
the Managed Properties is or was a treatment, storage or disposal facility
requiring a permit under any hazardous waste law and (iv) the tenants under
its management have occupied their premises at the Managed Properties and
operated their businesses at the Managed Properties in compliance, in all
material respects, with the Environmental Laws.
(d) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, the Companies and the Company Subsidiaries are not
currently paying any fines, settlements, judgments, assessments or remedial
costs because of an alleged violation of or liability under any
Environmental Law or any past or present release or presence of Materials
of Environmental Concern at the Managed Properties, nor, to the Knowledge
of each Seller, Company or Company Subsidiary, has any client party to any
Contract with any Company or any Company Subsidiary asserted that any
Company or Company Subsidiary is liable for any such costs, except for any
such fines, settlements, judgments, assessments or remedial costs which
could not reasonably be expected to have a Company Material Adverse Effect.
Section 3.25 Personnel. Section 3.25 of the Company Disclosure
Schedule sets forth a list of all employees as of June 30, 1998 of each
Company and Company Subsidiary. Such list indicates as to each such
employee who is a Shareholder and each other such employee whose current
annualized salary, bonus and benefits exceed US$100,000: (a) date of
commencement of service and period of continuous employment; (b) job title
or brief job description and place of work; (c) any material commitments or
arrangements with such employees as to salary or bonuses, if applicable,
other than those commitments or arrangements set forth in Section 3.13 of
the Company Disclosure Schedule; and (d) as of the date hereof, the names
of any such employees who have given or received notice to terminate their
employment. Except as disclosed in Section 3.25 of the Company Disclosure
Schedule, to the Knowledge of each Seller, Company or Company Subsidiary,
since June 30, 1998, no officer, director or employee thereof has given
notice or indicated his or her intent to give notice of termination of
employment, which termination, together with any such other terminations
would be reasonably likely to have a material adverse effect on the
Companies and the Company Subsidiaries taken as a whole.
Section 3.26 Disclosure Documents. None of the information included
in the Offering Memorandum or Proxy Statement supplied or to be supplied by
any Shareholder, Related JLW Owner, Seller, Company or Company Subsidiary
relating to any Shareholder, Related JLW Owner, JLW Seller, Company, Asia
Region Company or Europe/USA Region Company, or any of their respective
Subsidiaries, including the SCCA or the Integration, for inclusion in the
Offering Memorandum and the Proxy Statement, as the case may be, will, in
the case of the Offering Memorandum, at the time of mailing to the
Shareholders, and, in the case of the Proxy Statement, either at the time
of mailing of the Proxy Statement to stockholders of Parent or at the time
of the meeting of such stockholders to be held in connection therewith,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 3.27 Integration Matters. Except as set forth in Section
3.27 of the Company Disclosure Schedule, the Integration, as it relates to
the Shareholders, the Related JLW Owners, the Sellers, the Companies and
the Company Subsidiaries, will be completed in compliance in all material
respects with all applicable Laws and will not result in any material
Liability to any of the Companies, the Company Subsidiaries, Parent or
Parent's Affiliates. The copies of the Integration Agreements and the
Ancillary Documents (as defined in the Integration Plan) heretofore
delivered to and approved by Parent by or on behalf of the Shareholders'
Representatives are complete and correct copies thereof.
Section 3.28 Related Party Transactions. Section 3.28 of the Company
Disclosure Schedule contains an accurate listing of any current or former
directors, officers or key employees of any Company or Company Subsidiary
and, to the Knowledge of any Seller, Company or Company Subsidiary, any
relatives of any of the foregoing, who is, directly or indirectly, a party
to any transaction (other than in respect to compensation or travel expense
account reimbursement in the ordinary course of business consistent with
past practice) with or has any loan or obligation outstanding to or from
any Company or Company Subsidiary (or for which any of them is or may be
liable under any guarantee or otherwise). Section 3.28 of the Company
Disclosure Schedule sets forth a brief description of each such
transaction, including without limitation, any Contract providing for the
furnishing of services (other than employment contracts), or the rental of
real or personal property from, or otherwise requiring payments to, any
such Person or to any relative of any such Person.
Section 3.29 Securities Laws Matters. Neither any Seller, Company or
Company Subsidiary, nor any of their respective Affiliates, nor any Person
acting on its or their behalf, (i) has made or will make, directly or
indirectly, offers or sales of any security, or has solicited or will
solicit offers to buy any security, under circumstances that would require
the consent of any Authority under applicable Australian securities laws in
connection with the issuance of the Convertible Notes (or the Consideration
Shares issuable upon conversion thereof) hereunder, or (ii) has engaged, or
will engage, in any "directed selling efforts" (as defined in Regulation S)
with respect to the Consideration Shares or the Convertible Notes. The
principal amount of each Convertible Note, and therefore the amount payable
by JLW Australia Parent and each Shareholder in respect of Consideration
Shares issued to or on behalf of JLW Australia Parent and each such
Shareholder upon conversion of such Convertible Note, will not be less than
A$500,000.
Section 3.30 Opinion of Financial Advisor. The Sellers have received
the opinion of Peter J. Solomon Company Limited, financial advisor to the
Sellers, to the effect that, as of the date of this Agreement, the
Consideration to be received by the Shareholders and the Other Shareholders
under this Agreement and the Other Purchase Agreements is, in the
aggregate, fair to such Shareholders and Other Shareholders from a
financial point of view.
Section 3.31 Certain Fees. Except as contemplated by the agreements
listed in Section 3.13(a)(xiii) of the Company Disclosure Schedule, no
Seller, Company or Company Subsidiary or any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees or for any
financial advisory or consulting fees, in each case in connection with the
transactions contemplated by this Agreement or the other Operative
Agreements, including, without limitation, the Integration.
ARTICLE IIIA
CERTAIN REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLERS
The Sellers, jointly and severally, make the representations
and warranties set forth below to the Buyers:
Section 3.1A Ownership and Sale of Shares. To the extent that
any Seller is identified on Annex E hereto as owning Shares of one or more
of the Companies, except as set forth in Section 3.1A of the Company
Disclosure Schedule, such Seller owns, and will, as of the Closing Date,
own, legally and beneficially (or, in the case of a Seller that is a
trustee, legally) the Shares identified on Annex E hereto as being owned by
such Seller, and such Seller shall sell to US Acquisition Sub or Australia
Acquisition Sub, as applicable, at the Closing such Shares together with
all rights of any nature whatsoever now or after the date of this Agreement
attached or accruing to them, free and clear of all Encumbrances. US
Acquisition Sub or Australia Acquisition Sub, as applicable, shall, from
and after the Closing, be entitled to exercise all rights attached or
accruing to the Shares transferred to it by such Seller, including,
without limitation, the right to receive all dividends paid or made on or
after the Closing Date (except as otherwise contemplated by this
Agreement). Such Seller does not own or have an interest in any other
Shares. Upon completion of the Integration, such Seller will have no
rights in or to any of the specific assets, properties or rights (other
than cash permitted to be distributed or paid in accordance with the
Integration Agreements or this Agreement) of or used by any Company or
Company Subsidiary. Such Seller has nor right or claim to any payment or
consideration (other than cash permitted to be distributed or paid in
accordance with the Integration Agreements or this Agreement) from any
Company or Company Subsidiary as a result of or in connection with the
consummation of the transactions contemplated by this Agreement, the other
Operative Agreements and the Integration Agreements.
Section 3.2A Authorization. (a) If any Seller is a Trustee
Seller, such Seller is the lawful and duly appointed trustee of the
Applicable Trust, and has full power, authority and legal right under the
Applicable Trust Deed and otherwise, to own the Shares that such Trustee
Seller, in its capacity as such trustee, now owns and to execute, deliver
and perform its obligations under this Agreement, the other Operative
Agreements and the Integration Agreements to which such Seller is a party
and to consummate the transactions contemplated hereby and thereby. There
are no trustees of any Applicable Trust other than the Seller who has
entered into this Agreement on behalf of the beneficiaries under the
Applicable Trust Deed and such Seller has caused to be delivered to Parent
a true, complete, and correct copy of the Applicable Trust Deed or other
evidence satisfactory to the Buyers of such Seller's power, authority and
legal right referred to above. Except as set forth in Section 3.1A of the
Company Disclosure Schedule, each Seller has taken all action necessary to
authorize and approve the execution and the delivery by such Seller of this
Agreement, the other Operative Agreements and the Integration Agreement to
which such Seller is a party, and no other action on the part of the
beneficiaries of the Applicable Trust is required for such Seller to
execute and deliver this Agreement, the other Operative Agreements and each
Integration Agreement to which such Seller is a party, and to consummate
the transactions contemplated hereby and thereby. This Agreement, the
other Operative Agreements, and each Integration Agreement to which such
Seller is a party, has been duly and validly executed and delivered by such
Seller, and constitutes a valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar Laws affecting creditors generally and by general principles
of equity, regardless of whether in a proceeding in equity or at law.
(b) If any Seller is a Corporate Seller, such Seller has all
requisite corporate power and authority to own the Shares that such Seller
owns, and to execute, deliver and perform its obligations under this
Agreement, the other Operative Agreements and each Integration Agreement to
which it is a party and to consummate the transactions contemplated hereby
and thereby. Except as set forth in Section 3.2A of the Company Disclosure
Schedule, such Seller has taken all corporate action necessary to authorize
and approve the execution and delivery by such Seller of this Agreement,
the other Operative Agreements and each Integration Agreement to which it
is a party, and no other action on the part of the shareholders of such
Seller is required for such Seller to execute and deliver this Agreement,
the other Operative Agreements and each Integration Agreement to which it
is a party, and to consummate the transactions contemplated hereby and
thereby. This Agreement, the other Operative Agreements and each
Integration Agreement to which such Seller is a party has been duly and
validly executed and delivered by such Seller and constitutes a valid and
binding agreement of such Seller, enforceable against such Seller in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization and other similar Laws affecting
creditors generally and by general principles of equity, regardless of
whether in a proceeding at equity or in law.
Section 3.3A No Violation. Neither the execution and delivery
by any Seller of this Agreement, the other Operative Agreements or any
Integration Agreement to which such Seller is a party nor the consummation
by such Seller of the transactions contemplated hereby or thereby shall:
(i) violate or be in conflict with any provision of the certificate of
incorporation and bylaws or memorandum or articles of association (or
similar organizational documents), as applicable, of such Seller (or, in
the case of a Trustee Seller, the Applicable Trust Deed); (ii) violate, be
in conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, cause or permit
the acceleration of, or give rise to any right of termination, imposition
of fees or penalties under, any debt, Contract, instrument or other
obligation to which such Seller is a party or by which its assets are bound
or affected, or result in the creation or imposition of any Lien upon any
property or assets (including any Encumbrance upon any Shares) of such
Seller (or, in the case of a Trustee Seller, of the Applicable Trust); or
(iii) violate any applicable Law of any Authority; except, in the case of
clause (ii) or (iii) above, for any of the same that, individually or in
the aggregate, would not materially impair the ability of such Seller to
perform its obligations hereunder or thereunder or prevent or materially
delay the consummation of the transactions contemplated hereby and
thereby.
Section 3.4A Consents and Approvals. Except as set forth in
Section 3.4A, 3.6 or 3.7 of the Company Disclosure Schedule, no Consents
from or of any third party or any Authority are necessary for execution and
delivery by any Seller of this Agreement, the other Operative Agreements or
the Integration Agreements to which such Seller is a party or the
consummation by such Seller of the transactions contemplated hereby or
thereby, except for compliance with the Required Regulatory Approvals, and
except for such other Consents as to which the failure to obtain,
individually or in the aggregate, would not impair the ability of such
Seller to perform its obligations hereunder or thereunder or prevent or
materially delay the consummation of the transactions contemplated hereby
and thereby.
Section 3.5A Investment Matters. (a) Each Seller is resident in
the jurisdiction of its incorporation or formation.
(b) Each Seller agrees not to engage in any hedging
transactions with regard to the Convertible Notes (and the Consideration
Shares issuable upon conversion thereof) unless in compliance with the
Securities Act.
(c) Each Seller acknowledges and agrees that the Convertible
Notes (and the Consideration Shares issuable upon conversion thereof) being
offered and sold to it are being offered and sold in reliance on specific
exemptions from the registration requirements of the United States federal
and state securities laws and that Parent is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments
and understandings of such Seller set forth herein in order to determine
the applicability of such exemptions and the suitability of such Seller to
acquire the Convertible Notes (and the Consideration Shares issuable upon
conversion thereof).
(d) Each Seller has received and has had an opportunity to
carefully review Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, Parent's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998 and June 30, 1998, Parent's 1997 Annual
Report to Stockholders and proxy statement dated March 31, 1998 and
Parent's Current Report on Form 8-K dated September 3, 1998, and the Seller
has had a reasonable opportunity to ask questions of and receive answers
from Parent concerning Parent, and to obtain any additional information
reasonably necessary to verify the accuracy of the information furnished to
the Seller concerning Parent and all such questions, if any, have been
answered to the full satisfaction of Seller.
(e) Each Seller acknowledges that no representations or
warranties have been made to it by Parent or any agent, employee or
Affiliate of Parent other than those contained in this Agreement, and in
entering into this transaction such Seller is not relying upon any
information, other than that referred to in the foregoing paragraph,
contained in this Agreement and the other Operative Agreements, and the
results of independent investigations by such Seller and its
representatives; provided, that each Seller acknowledges and agrees that
the only representations or warranties that Parent has made with respect to
such information are as set forth in Sections 4.7 of this Agreement.
Section 3.6A Regulation S.
(a) Each Seller acknowledges that each certificate
representing the Convertible Notes delivered to or on behalf of such Seller
and, if the Conversion Right is exercised, each certificate representing
Consideration Shares delivered to or on behalf of such Seller shall include
the following legend:
THE [NOTE] [SHARES] REPRESENTED BY THIS CERTIFICATE (THE
['NOTE']['SHARES']) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. [THE SALE, PLEDGE OR
OTHER TRANSFER OF THIS NOTE WITHOUT THE PRIOR WRITTEN CONSENT OF [JLLINT,
INC.] [LPI (AUSTRALIA) HOLDINGS PTY LIMITED] (["US ACQUISITION SUB"]
["AUSTRALIA ACQUISITION SUB"]) IS PROHIBITED.] BY THE ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT SUCH HOLDER IS NOT A U.S. PERSON AND IS
ACQUIRING THE [NOTE] [SHARES] IN AN OFFSHORE TRANSACTION, (2) AGREES THAT
SUCH HOLDER WILL NOT RESELL OR OTHERWISE TRANSFER THE [NOTE] [SHARES]
EXCEPT (A) TO JONESLANG LASALLE INCORPORATED (THE 'COMPANY') OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (C) INSIDE THE UNITED STATES, TO A TRANSFEREE THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE COMPANY A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE SHARES (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE COMPANY), (D)
OUTSIDE THE UNITED STATES, IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULES 903, 904 AND 905 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F)
PURSUANT TO ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE ACT (IF
AVAILABLE) AND (3) AGREES THAT SUCH HOLDER WILL GIVE EACH PERSON TO WHOM
THE [NOTE] [SHARES] ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE [NOTE] [SHARES]
PURSUANT TO CLAUSES (C), (E) OR (F) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN,
THE TERMS 'OFFSHORE TRANSACTION,' 'UNITED STATES' AND 'U.S. PERSON' HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
(b) Each Seller acknowledges that any certificate
representing Consideration Shares issuable upon such conversion shall also
include the following legend:
IN ADDITION, THE SHARES ARE SUBJECT TO THE PROVISIONS OF A
STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND BETWEEN THE
COMPANY AND THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF, AND AN
INDEMNITY AND ESCROW AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND AMONG
THE COMPANY, THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF AND THE
OTHER PARTIES NAMED THEREIN, WHICH INCLUDE, WITHOUT LIMITATION, VARIOUS
ADDITIONAL RESTRICTIONS ON TRANSFER OF THE SHARES AND THE GRANTING OF
CERTAIN VOTING RIGHTS, A COPY OF WHICH WILL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT CHARGE.
(c) Each Seller understands that the Convertible Notes (and
the Consideration Shares issuable upon conversion thereof) are being issued
in reliance on Regulation S and have not been registered under the
Securities Act or with any securities regulatory authority of any state of
the United States or other jurisdiction and, therefore, that such
Convertible Notes (and the Consideration Shares issuable upon conversion
thereof, or any securities issued in exchange therefor or in substitution
thereof) cannot be resold in the absence of such registration, except
pursuant to an exemption from, or in a transaction not subject to, such
registration requirements.
(d) The transfer of the Convertible Notes by any Seller to
the related Shareholders will be made only in accordance with the
applicable provisions of Rule 903, 904 or 905 under the Securities Act or
pursuant to an available exemption from the registration requirements of
the Securities Act.
(e) Each Seller is, and any Person for whose account it is
acquiring Convertible Notes (and the Consideration Shares issuable upon
conversion thereof) is, outside the "United States" (as defined under
Regulation S), and this Agreement and each of the Other Operative
Agreements was executed, and the investment decision to enter into this
Agreement was made, outside the United States.
(f) No Seller is in the business of buying and selling
securities.
(g) No Seller, nor any of its Affiliates, nor anyone acting
on behalf of any of the foregoing has engaged in, and during the Restricted
Period will not engage in, any "directed selling efforts" (as defined
under Regulation S) with respect to any Convertible Notes (or the
Consideration Shares issuable upon conversion thereof).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT,
US ACQUISITION SUB AND AUSTRALIA ACQUISITION SUB
Parent, US Acquisition Sub and Australia Acquisition Sub,
jointly and severally, hereby represent and warrant to each of the JLW
Parties that:
Section 4.1 Corporate Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maryland. Parent (i) has all requisite corporate power and
authority to carry on its businesses as they are now being conducted by it
and to own the properties and assets it now owns; and (ii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all the jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not be reasonably expected to have a Parent Material
Adverse Effect. True and complete copies of the Articles of Incorporation
of Parent ("Parent Articles of Incorporation") and the Amended and Restated
Bylaws of Parent ("Parent Bylaws"), as presently in effect, are attached to
Section 4.1 of the Parent Disclosure Schedule.
Section 4.2 Capitalization. The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock and 10,000,000 shares
of preferred stock, $.01 par value per share ("Parent Preferred Stock").
As of September 30, 1998, there were outstanding 16,230,358 shares of
Parent Common Stock, no shares of Parent Preferred Stock and no shares of
Parent Common Stock or Parent Preferred Stock were held in Parent's
treasury. In addition, as of September 30, 1998, 2,215,000 shares of
Parent Common Stock were reserved or registered for issuance under Parent's
Employee Stock Purchase Plan, as amended, 1997 Stock Award and Incentive
Plan, as amended, and Stock Compensation Program, as amended (collectively,
the "Parent Stock Plans"), and no shares of Parent Common Stock or Parent
Preferred Stock were specifically reserved or registered for any other
purposes. All of the issued and outstanding shares of Parent Common Stock
have been validly issued and are fully paid and non-assessable and free of
preemptive rights, and the Consideration Shares will be (when issued as
contemplated by this Agreement) validly issued and fully paid and non-
assessable and free of pre-emptive rights. Except as set forth in this
Section 4.2, except for the obligation of Parent to issue Consideration
Shares and ESOT Shares under this Agreement and to issue Consideration
Shares (as defined under the Other Purchase Agreements) and ESOT Shares
under the Other Purchase Agreements, and except under the Parent Stock
Plans, including upon the exercise of options outstanding as of September
30, 1998 to purchase an aggregate of 1,110,400 shares of Parent Common
Stock and any such options issued or granted subsequent to September 30,
1998 ("Parent Options"), as of the date hereof, there are outstanding,
(i) no shares of capital stock or other voting securities of Parent, (ii)
no securities of Parent or any Parent Subsidiary convertible into or
exchangeable for shares of capital stock or voting securities of Parent
and (iii) no options or other rights to acquire from Parent or any Parent
Subsidiary, and no obligation of Parent or any Parent Subsidiary to issue,
any capital stock or, voting securities of Parent or securities convertible
into or exchangeable for capital stock or voting securities of Parent (the
items in clauses (i), (ii) and (iii) being referred to collectively as the
"Parent Securities"). Other than under the Parent Stock Plans and as set
forth in Section 4.2 of the Parent Disclosure Schedule, there are no
outstanding obligations of Parent or any Parent Subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities.
Section 4.3 Subsidiaries and Affiliates. Except as set forth in
Section 4.3 of the Parent Disclosure Schedule, all the outstanding capital
stock or other equity interests of each Parent Significant Subsidiary is
owned, directly or indirectly, as of the date hereof by Parent and will be
owned, directly or indirectly, as of the Closing Date, by Parent, in each
case free and clear of all Encumbrances, and has been validly issued and is
fully paid and, to the extent that the concept of assessability of capital
stock is potentially applicable, is nonassessable. Each Parent Significant
Subsidiary: (i) is duly organized or incorporated and validly existing
(and, if applicable) in good standing under the laws of its jurisdiction of
incorporation or formation; (ii) has all requisite corporate or similar
power and authority to carry on its business as it is now being conducted
and to own the properties and assets it now owns; and (iii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not have a Parent Material Adverse Effect. True and
complete copies of the certificate of incorporation and bylaws or similar
charter documents, as presently in effect, of each Parent Significant
Subsidiary have been previously provided to the JLW Parties. For purposes
of this Section 4.3 only, "Parent Significant Subsidiaries" shall be deemed
to include US Acquisition Sub and Australia Acquisition Sub.
Section 4.4 Authorization. (a) Parent has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and the other Operative Agreements and to carry out the
transactions contemplated hereby and thereby. The Board of Parent has
taken all corporate action (including all action of the Board) necessary to
authorize and approve the execution, delivery and performance of this
Agreement and the other Operative Agreements and no other corporate action
is required on the part of Parent to authorize the execution, delivery and
performance of this Agreement and the other Operative Agreements (including
without limitation the issuance of the Convertible Notes and the issuance
of Consideration Shares upon conversion of the Convertible Notes or
otherwise), subject only to approval of (i) the amendment and restatement
of the Parent Articles of Incorporation as described in Section
1.9(a)(i)(A) hereof, (ii) the issuance of the Consideration Shares and
(iii) the amendments to Parent's amended and restated stock incentive plan
as described in Section 1.9(a)(i)(C) hereof (collectively, the "Proposed
Actions"), in each case by the affirmative vote of the holders of a
majority of the shares of Parent Common Stock present in person or
represented by proxy at the meeting contemplated by Section 6.5(a) hereof,
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by Parent, and
this Agreement constitutes, and each other Operative Agreement (including
without limitation the Convertible Notes), to which Parent is to be a
party, when executed and delivered by Parent, will constitute a valid and
binding agreement of Parent, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
the availability of equitable remedies.
(b) Each of US Acquisition Sub and Australia Acquisition Sub
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, and the other Operative
Agreements to which it is a party and to carry out the transactions
contemplated hereby and thereby. The board of directors of each of US
Acquisition Sub and Australia Acquisition Sub, as applicable, has taken all
corporate action necessary to authorize and approve the execution, delivery
and performance of this Agreement and the other Operative Agreements to
which it is a party and no other corporate action is required on the part
of US Acquisition Sub or Australia Acquisition Sub, as applicable to
authorize the execution, delivery and performance by it of this Agreement
and the other Operative Agreements to which it is a party. This Agreement
has been duly and validly executed and delivered by US Acquisition Sub and
Australia Acquisition Sub, and this Agreement constitutes, and each other
Operative Agreement to which US Acquisition Sub and Australia Acquisition
Sub is a party, when executed and delivered by US Acquisition Sub and
Australia Acquisition Sub, as applicable, will constitute a valid and
binding agreement of US Acquisition Sub and Australia Acquisition Sub, as
applicable, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar Laws affecting creditors generally and by the availability of
equitable remedies.
Section 4.5 No Violation. Neither the execution and delivery by
Parent, US Acquisition Sub or Australia Acquisition Sub of this Agreement
nor any other Operative Agreement nor the consummation by Parent, US
Acquisition Sub and Australia Acquisition Sub of the transactions
contemplated hereby or thereby shall: (i) violate or be in conflict with
any provision of the Parent Articles of Incorporation, Parent Bylaws or the
certificate of incorporation or bylaws (or similar organizational
documents) of any Parent Subsidiary; (ii) except as specified in Section
4.5 or 4.6 of the Parent Disclosure Schedule, violate, or be in conflict
with, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, cause or permit the
acceleration of, or give rise to any right of termination, imposition of
fees or penalties under any debt, Contract, instrument or other obligation
to which Parent or any Parent Subsidiary is a party or by which their
respective assets are bound, or result in the creation or imposition of any
Lien upon any property or assets of Parent or any Parent Subsidiary; or
(iii) violate any applicable Law of any Authority; except, in the case of
clauses (ii) and (iii) above, for any of the same that, individually or in
the aggregate, would not reasonably be expected to have a Parent Material
Adverse Effect or materially impair the ability of Parent, US Acquisition
Sub or Australia Acquisition Sub to perform its obligations hereunder or
thereunder or prevent or materially delay the consummation of the
transactions contemplated hereby and thereby.
Section 4.6 Consents and Approvals. Except as set forth in Section
4.5 or 4.6 of the Parent Disclosure Schedule, no Consents from or of any
third party or any Authority are necessary for execution and delivery of
this Agreement or the other Operative Agreements by Parent, US Acquisition
Sub or Australia Acquisition Sub or the consummation by Parent, US
Acquisition Sub or Australia Acquisition Sub of the transactions
contemplated hereby and thereby, except for such Consents as to which the
failure to obtain, individually or in the aggregate, would not reasonably
be expected to have a Parent Material Adverse Effect or materially impair
the ability of Parent, US Acquisition Sub or Australia Acquisition Sub to
perform its obligations hereunder or thereunder or prevent or materially
delay the consummation of the transactions contemplated hereby and thereby.
Section 4.7 SEC Reports and Financial Statements. Each periodic
report, registration statement and definitive proxy statement filed by
Parent with the SEC since July 17, 1997 (as such documents have since the
time of their filing been amended and each document filed between the date
hereof and the Closing, the "Parent SEC Reports"), which include all the
documents (other than preliminary material) that Parent was required to
file with the SEC since such date, as of their respective dates, complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, applicable to such Parent SEC Reports.
None of the Parent SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except for such statements, if
any, as have been modified by subsequent filings prior to the date hereof.
The financial statements of Parent and its Subsidiaries included in such
reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with US GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) and fairly present (subject in the
case of the unaudited statements, to normal, year-end audit adjustments
which are not material in amount or effect) the consolidated financial
position of Parent and its Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended.
Section 4.8 No Undisclosed Liabilities. There are no Liabilities of
Parent or any Parent Subsidiary of any kind whatsoever and Parent knows of
no valid basis for the assertion of any such Liabilities, and no existing
condition, situation or set of circumstances exists which could reasonably
be expected to result in a Liability, other than:
(a) Liabilities adequately and expressly reflected and
reserved for on the unaudited consolidated balance sheet of Parent and the
Parent Subsidiaries as of June 30, 1998 (including the notes thereto)
contained in the Parent SEC Reports (the "Parent Interim Balance Sheet");
(b) Liabilities incurred in the ordinary and usual course of
business consistent with past practice since June 30, 1998;
(c) Liabilities set forth in Section 4.8(c) of the Parent
Disclosure Schedule; and
(d) Liabilities which, individually or in the aggregate,
would not reasonably be expected to have a Parent Material Adverse Effect.
Section 4.9 Absence of Certain Changes or Events. Except as and to
the extent disclosed in the Parent SEC Reports and as and to the extent set
forth in Section 4.9 of the Parent Disclosure Schedule, since June 30,
1998, (a) Parent and each Parent Subsidiary has conducted its businesses
only in the ordinary and usual course of business consistent with past
practice and (b) (i) no individual or cumulative material adverse change in
or effect on the business, properties, assets, liabilities, financial
condition or results of operations of Parent and the Parent Subsidiaries,
taken as a whole, has occurred; (ii) no individual or cumulative event or
development has occurred that is reasonably expected to have a Parent
Material Adverse Effect; or (iii) neither Parent nor any Parent Subsidiary
has taken, or permitted to be taken, any action that, if taken or permitted
to be taken during the period from the date of this Agreement through the
Closing Date without the consent of the Sellers' Representatives, would
constitute a breach of Section 6.1 hereof. Parent has heretofore delivered
to the Sellers a true and correct copy of the Purchase Agreement dated as
of August 31, 1998 by and among Parent, a Subsidiary of Parent, Lend Lease
Corporation Limited and certain Subsidiaries thereof, together with all
related exhibits and schedules (the "Compass Agreement"), and except as set
forth in Section 4.9 of the Parent Disclosure Schedule, the transactions
contemplated by the Compass Agreement have heretofore been consummated in
accordance with the terms of such agreement.
Section 4.10 Licenses and Other Authorizations. Parent and the
Parent Subsidiaries have received all Licenses of any Authority material to
the ownership or leasing of their respective properties and to the conduct
of their respective businesses as currently conducted. Except as disclosed
in Section 4.10 of the Parent Disclosure Schedule, all such Licenses are
valid and in full force and effect. Parent and the Parent Subsidiaries are
operating in material compliance with the conditions and requirements of
such Licenses and, except as disclosed in Section 4.10 of the Parent
Disclosure Schedule, no proceeding is pending or, to the Knowledge of
Parent, threatened, seeking the revocation or limitation of any such
Licenses. Assuming the related Consents set forth in Section 4.5 or 4.6 of
the Parent Disclosure Schedule have been obtained prior to the Closing
Date, none of such Licenses will be terminated or impaired or become
terminable as a result of the transactions contemplated hereby or by the
other Operative Agreements.
Section 4.11 Insurance. All material policies of property, fire,
liability, worker's compensation and other forms of insurance owned or held
by Parent or any Parent Subsidiary are in full force and effect, and all
premiums with respect thereto covering all periods up to and including the
date of the Closing have been paid, if due, and no notice of cancellation
or termination has been received with respect to any such policy. Such
policies shall not terminate or lapse prior to or on the Closing Date by
reason of the transactions contemplated by this Agreement or any other
Operative Agreement.
Section 4.12 Labor Relations. Except to the extent set forth in
Section 4.12 of the Parent Disclosure Schedule: (a) neither Parent nor any
Parent Subsidiary is a party to any collective bargaining agreements, other
Contracts, written work rules or practices agreed to with any labor
organization, employee association or works council or body of employee
representatives; (b) there is no unfair labor practice charge or complaint
against Parent or any Parent Subsidiary pending or, to the Knowledge of
Parent, threatened before the National Labor Relations Board or any similar
foreign Authority which in either case would reasonably be expected to have
a Parent Material Adverse Effect; and (c) there is no labor strike,
dispute, slowdown, lockout or stoppage pending or, to the Knowledge of
Parent, threatened against or affecting Parent or any Parent Subsidiary
which would reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.13 Parent Employee Benefit Matters. (a) U.S. Employee
Benefit Matters: Section 4.13(a) of the Company Disclosure Schedule sets
forth a true and complete list of each Parent Domestic Plan, whether formal
or informal, written or oral, and indicates which of such Parent Domestic
Plans is a "multiemployer plan," as such term is defined in section (3)(37)
of ERISA. No Parent Domestic Plan that is a "single employer plan," as
such term is defined in section 3(41) of ERISA, is subject to Section 302
or Title IV of ERISA. Except as set forth in Section 4.13(a) of the Parent
Disclosure Schedule, with respect to each Parent Domestic Plan that is a
single employer plan: (i) each such plan has been established and
maintained in compliance in all material respects with its terms, including
ERISA and the Code; (ii) with respect to each such plan that is intended to
be "qualified" within the meaning of Section 401(a) of the Code, such plan
has been determined by the IRS to be so qualified (and no fact or
circumstance exists which would affect such qualification); (iii) (A)
neither Parent nor any Parent Subsidiary has filed an application under
Rev. Proc. 98-22, 1998-12 I.R.B. (the Employee Plans Compliance Resolution
System) or any predecessor program thereto with respect to any Parent
Domestic Plan, (B) any liabilities with respect of previous filings under
such programs have been satisfied in full, and (C) no fact or circumstance
exists that would necessitate such a filing to maintain the qualified
status of any Parent Domestic Plan; (iv) no such plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code;
(v) neither Parent nor any Parent Subsidiary, nor any such plan or trust
created thereunder or any trustee or administrator thereof has engaged in
a transaction in connection with which Parent or any Parent Subsidiary, any
such plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any such plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to Section 4975 or 4976 of the Code; (vi) full
payment has been made, or will be made in accordance with Section 404(a)(6)
of the Code, of all amounts which Parent, any Parent Subsidiary or ERISA
Affiliate thereof is required to pay under the terms of each such plan as
of the last day of the most recent plan year thereof ended prior to the
date of this Agreement, and all such amounts properly accrued through the
Closing Date with respect to the current plan year thereof will be paid by
Parent or the applicable Parent Subsidiary on or prior to the Closing Date
or will be properly reflected on the books and records of Parent or the
applicable Parent Subsidiary or ERISA Affiliate; (vii) no such plan
provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured), with respect to current or former employees of
Parent or any Parent Subsidiary for periods extending beyond their
retirement or other termination of service (other than (A) coverage
mandated by applicable law, (B) death benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, (C)
deferred compensation benefits accrued as liabilities on the books and
records of Parent or such sponsoring Parent Subsidiary or (D) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary)); and (viii) no amounts payable under any such plans will fail
to be deductible for Federal income tax purposes by virtue of Section
162(m) or 280G of the Code. Neither Parent nor any Parent Subsidiary has
an outstanding liability in respect of (i) a failure to make a required
contribution or payment to a multiemployer plan or (ii) a complete or
partial withdrawal under Section 4203 or 4205 of ERISA from a multiemployer
plan. No circumstance exists that presents a material risk of a partial
withdrawal from a multiemployer plan. To the Knowledge of Parent and each
Parent Subsidiary, no circumstance exists that presents a material risk
that any such plan will go into reorganization.
(b) Non-U.S. Employee Benefit Matters: Section 4.13(b) of
the Parent Disclosure Schedule sets forth a true and complete list of each
Parent Foreign Plan, whether formal or informal, written or oral. Except
to the extent set forth in Section 4.13(a) of the Parent Disclosure
Schedule: (i) each Parent Foreign Plan required to be filed or registered
with or approved by any applicable governmental or regulatory body or
authority has been so filed, registered or approved and has been maintained
in good standing with such body or authority, and each such Parent Foreign
Plan is now and has always been operated in full compliance in all material
respects with all applicable laws and regulations; (ii) no Parent Foreign
Plan is subject to the provisions of ERISA; (iii) the fair market value of
the assets of each funded Parent Foreign Plan, the liability of each
insurer for any Parent Foreign Plan funded through insurance or the book
reserve established for any Parent Foreign Plan together with any
contributions accruing on or before the Closing Date, in each case as shall
be reflected in the books and records of Parent or the Parent Subsidiary
sponsoring such Parent Foreign Plan, are or will be sufficient, on a
combined basis, to procure or provide for the benefits determined on an
ongoing basis accrued to the Closing Date payable to all current and former
participants of such Parent Foreign Plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Parent Foreign Plan; and (iv) full payment has been
made or will be made, in accordance with applicable law and the provisions
of each Parent Foreign Plan, of all amounts which Parent or any Parent
Subsidiary is required to pay on or prior to the Closing Date under the
terms of each Parent Foreign Plan as of the last day of the most recent
plan year thereof ended prior to the date of this Agreement, and all such
amounts properly accrued through the Closing Date with respect to the
current plan year thereof ended prior to the date of this Agreement, and
all such amounts properly accrued through the Closing Date with respect to
the current plan year thereof will be paid by Parent or such Parent
Subsidiary on or prior to the Closing Date or will be properly reflected on
the books and records of Parent or such Parent Subsidiary.
(c) Parent Domestic Plans and Parent Foreign Plans: Except
to the extent set forth in Section 4.13(c) of the Parent Disclosure
Schedule, (i) with respect to each Parent Domestic Plan that is a single
employer plan and with respect to each Parent Foreign Plan, Parent has
heretofore delivered to Sellers' Representatives true and complete copies
of each of the following documents: (A) a copy of such Parent Domestic
Plan and Parent Foreign Plan (including all amendments thereto), (B) a copy
of the annual report (which shall include non-discrimination tests, where
applicable), if required under ERISA or other applicable law, with respect
to each such Parent Domestic Plan and Parent Foreign Plan for the two most
recently completed plan years, (C) a copy of the actuarial report, if
required under ERISA or other applicable law, with respect to each such
Parent Domestic Plan and Parent Foreign Plan for the three most recently
completed plan years, (D) a copy of the most recent "summary plan
description," together with each "summary of material modifications,"
required under ERISA with respect to each Parent Domestic Plan, and any
plan description, required under applicable law with respect to each Parent
Foreign Plan, (E) if the Parent Domestic Plan or Parent Foreign Plan is
funded through a trust or any third-party funding vehicle, a copy of the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof, and (F) the most recent determination
letter received from the IRS with respect to such Parent Domestic Plan that
is intended to be qualified under Section 401 of the Code, and the most
recent letter, certification or other document, if any, received from any
applicable governmental or regulatory body or authority evidencing the
registration and/or approval of any Parent Foreign Plan required to be so
registered or approved; (ii) there are no pending or, to the Knowledge of
Parent and each Parent Subsidiary, threatened or anticipated material
claims by, on behalf of or against any of the Parent Domestic Plans or
Parent Foreign Plans, and no material litigation or administrative or other
proceeding (including, without limitation, any litigation or proceeding
under Title IV of ERISA) has occurred or, to the Knowledge of Parent and
each Parent Subsidiary, is threatened involving any Parent Domestic Plan or
Parent Foreign Plan, and (iii) the consummation of the transactions
contemplated by this Agreement or any other Operative Agreement shall not,
either alone or in combination with another event, except as set forth in
Section 4.13(c) of the Parent Disclosure Schedule, (A) accelerate the time
of payment or vesting or increase the amount of compensation due any
employee or officer of Parent or any Parent Subsidiary, (B) entitle any
current or former employee or officer of Parent or any Parent Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (C) with respect to any Parent
Domestic Plan that is a single employer plan, constitute a prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available.
Section 4.14 Litigation. Except as set forth in Section 4.14 of the
Parent Disclosure Schedule, there is no Action pending or, to the Knowledge
of Parent, threatened against or involving Parent or any Parent Subsidiary
which would reasonably be expected to have a Parent Material Adverse
Effect, or which questions or challenges the validity of this Agreement or
any other Operative Agreement or any action taken or to be taken by Parent
pursuant to this Agreement or any other Operative Agreement or in
connection with the transactions contemplated hereby and thereby. Neither
Parent nor any Parent Subsidiary is subject to any judgment, order or
decree entered in any Action which purports to limit in any respect, or
which may have a material adverse effect on, its business practices or its
ability to acquire any property or conduct all or any material portion of
the businesses conducted by Parent and the Parent Subsidiaries in any
locality.
Section 4.15 Compliance with Law. Except as set forth in Section
4.15 of the Parent Disclosure Schedule, the operations of Parent and each
Parent Subsidiary have been and are being conducted in accordance with all
applicable Laws and other requirements of any Authority having jurisdiction
over Parent or any Parent Subsidiary, or any of their respective
properties, assets or business, including, without limitation, all such
Laws and requirements relating to antitrust, consumer protection, currency
exchange, health, occupational safety, employment practices, wages and
hours, pension, securities, and trading-with-the-enemy matters and planning
and development, except for such matters as would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.16 Taxes. Except as set forth in Section 4.16 of the
Parent Disclosure Schedule:
(a) All Tax Returns required to be filed with respect to
Parent and the Parent Subsidiaries or the affiliated, combined or unitary
group of which Parent or any Parent Subsidiary is or was a member have been
duly and timely filed, except for those returns which, individually or in
the aggregate, would not have a Parent Material Adverse Effect, and all
such Tax Returns are true, correct and complete. Parent and each Parent
Subsidiary has duly and timely paid all Taxes and other charges that are
due, whether or not shown as due on any Tax Return, except for Taxes
reserved for on the financial statements of Parent and the Parent
Subsidiaries. There are no Liens with respect to Taxes (except for Liens
with respect to real property Taxes not yet due) upon any of the assets of
Parent or any Parent Subsidiary. None of Parent or any Parent Subsidiary
is a party to, is bound by, or has any obligation under, any Tax sharing,
allocation, indemnity or similar Contract, nor is liable for the Taxes of
any other person. Parent and the Parent Subsidiaries have established due
and sufficient reserves on the financial statements of Parent and the
Parent Subsidiaries for the payment of all Taxes in accordance with US
GAAP.
(b) All Tax deficiencies that have been asserted, proposed or
assessed in writing against or with respect to Parent or any Parent
Subsidiary by any taxing authority have been paid in full or finally
settled, and no issue (including with respect to transfer pricing) has been
raised in writing by any taxing authority in any examination, audit or
other proceeding that, by application of the same or similar principles,
reasonably could be expected to result in a material proposed deficiency
for any other period not so examined. There are no outstanding Contracts,
consents, waivers or arrangements extending the statutory period of
limitation applicable to any Tax Return or claim for, or the period for the
collection or assessment of, Taxes due from Parent or any Parent Subsidiary
for any taxable period.
(c) Neither Parent or any Parent Subsidiary has been or is in
violation (or with notice or lapse of time or both, would be in violation)
of any applicable Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections
1441 and 1442 of the Code or similar provisions under any foreign Laws).
Parent and each Parent Subsidiary has duly and timely withheld from
employee salaries, wages and other compensation and paid over to the
appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable Laws.
(d) No audit or other proceeding by any domestic or foreign
court, governmental or regulatory authority, or similar Person is pending
or, to the Knowledge of Parent and any Parent Subsidiary, threatened with
respect to any Taxes due from Parent or any Parent Subsidiary or any Tax
Return filed or required to be filed by or relating to Parent or any Parent
Subsidiary.
(e) No claim has ever been made by an authority in any
jurisdiction where Parent or any Parent Subsidiary has not filed Tax
Returns that they are or may be subject to taxation by that jurisdiction.
Section 4.17 Activities of US Acquisition Sub and Australia
Acquisition Sub. As of the date hereof and the Integration Commencement
Date, except for obligations or liabilities incurred or agreements or
arrangements entered into in connection with the transactions contemplated
hereby and by the Other Purchase Agreements, in connection with their
incorporation or organization or described in Section 4.17 of the Parent
Disclosure Schedule, neither US Acquisition Sub nor Australia Acquisition
Sub has or will have incurred, directly or indirectly, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any Person.
Section 4.18 Opinion of Financial Advisors. Parent has received the
opinion of Morgan Stanley & Co. Incorporated, financial advisors to Parent,
to the effect that, as of the date of this Agreement, the Consideration to
be paid by the Buyers under this Agreement and the Other Purchase
Agreements is fair to Parent's stockholders from a financial point of view.
Section 4.19 Certain Fees. Except for Morgan Stanley & Co.
Incorporated and William Blair & Company, neither Parent nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement or the
other Operative Agreements.
Section 4.20 Disclosure Documents. The Offering Memorandum and the
Proxy Statement will not, in the case of the Offering Memorandum, as of the
date thereof, or, in the case of the Proxy Statement, either at the time of
the mailing of the Proxy Statement to the stockholders of Parent or at the
time of the meeting of such stockholders to be held in connection
therewith, contain any untrue statement of any material fact or omit to
state any material fact required to be stated therein or necessary to in
order to make the statements therein, in light of the circumstances under
which they are or were made, not misleading, provided that no
representation or warranty is made as to the information included therein
that relates to any Shareholder, Other Shareholder, JLW Seller, Company,
Asia Region Company or Europe/USA Region Company, or any of their
respective Subsidiaries, including, with respect to the Integration, this
Agreement, the Other Purchase Agreements or the transactions contemplated
hereby or thereby.
Section 4.21 Other. The Board of Parent has approved this Agreement,
the other Operative Agreements, the Other Purchase Agreements and the
transactions contemplated hereby and thereby and such approval is
sufficient to render inapplicable any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation
enacted under the laws of the State of Illinois or the State of Maryland
(including, without limitation, any of the provisions of Subtitle 6 or 7 of
the General Corporation Law of Maryland) to the purchase or sale of the
Consideration Shares pursuant to this Agreement, the Joinder Agreements,
the Other Purchase Agreements or the Other Joinder Agreements. As of the
date hereof, Parent has not adopted any "poison pill" or "shareholder
rights plan." As of the Closing Date, Parent will not have adopted a
"poison pill" or "shareholder rights plan" which would be applicable to the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE SELLERS AND THE COMPANIES
Section 5.1 Operation of the Companies. From the date hereof to the
Closing, except as described in Section 5.1 of the Company Disclosure
Schedule or as otherwise permitted by or provided in this Agreement, the
other Operative Agreements or the Integration Plan or the Integration
Agreements, or except as consented to in writing by Parent (which consent
shall not be unreasonably withheld or delayed), each of the Sellers and
the Companies agrees that:
(a) Such Company shall (and the Seller which is the parent
thereof shall cause such Company to), and shall (and the Seller which is
the parent thereof shall cause such Company to) cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, conduct its
business only in the ordinary and usual course and substantially in the
same manner as heretofore conducted.
(b) Such Seller or Company shall (and the Seller which is the
Parent thereof shall cause such Company to) perform all acts to be
performed by it pursuant to this Agreement, any other Operative Agreements
and the Integration Plan and the Integration Agreements and shall refrain
from taking any action (other than any action permitted by or provided in
this Agreement) that would result in the representations and warranties of
the Sellers, the Companies or the Management Shareholders hereunder or of
the Shareholders or the Related JLW Owners of such Shareholders under the
Joinder Agreements becoming untrue in any material respect or any of the
conditions to Closing not being satisfied.
Without limiting the generality of the foregoing, except as described in
Section 5.1 of the Company Disclosure Schedule or as otherwise permitted or
contemplated by this Agreement, the other Operative Agreements or the
Integration Plan or the Integration Agreements, or except as consented to
in writing by Parent (which consent will not be unreasonably withheld or
delayed), from the date hereof to the Closing, such Company shall not (and
the Seller which is the parent thereof shall cause such Company not to),
and shall cause (and the Seller which is the parent thereof shall cause
such Company to cause) each Company Subsidiary which is a direct or
indirect Subsidiary thereof not to:
(i) amend its certificate of incorporation, bylaws or
memorandum and articles of association (or similar organizational
documents), as applicable, or adopt or pass further regulations or
resolutions inconsistent therewith;
(ii) other than in the ordinary course of business
consistent with past practice (A) incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt
securities or guarantee any debt securities of any other Person (other than
any Company or Company Subsidiary), or (B) make any loans, advances or
capital contributions to, or investments in, any other Person (other than
to any Company or Company Subsidiary), or enter into any material Contract;
(iii) acquire, by merging or consolidating with or by
purchasing equity interests in or assets of any other Person or otherwise,
any material assets of or any equity interests in any other Person;
(iv) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (A) the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice or as required by
their terms, of liabilities reflected or specifically reserved against in
or contemplated by the Australasia Interim Financial Statements; (B)
claims, liabilities or obligations that are incurred after the date thereof
in the ordinary course of business consistent with past practice or that
are immaterial (in relation to each such entity) if not incurred in the
ordinary course of business; or (C) the payment, discharge or satisfaction
in the ordinary course of business consistent with past practice of
obligations under (1) Contracts or Licenses listed or disclosed in the
Company Disclosure Schedule or not required to be listed or disclosed
therein by reason of materiality or other specifically identified
exceptions or exclusions set forth in such representations and warranties
or (2) Contracts or Licenses entered into after the date of this Agreement
in accordance with the limitations set forth in this Section 5.1;
(v) pay, discharge or satisfy any material Lien, unless
required by the terms thereof or of the documents evidencing or governing
any related indebtedness;
(vi) permit or allow any of its respective material
properties or assets, real, personal or mixed, tangible or intangible, to
be subjected to any Lien, except for any Permitted Liens incurred in the
ordinary course of business consistent with past practice;
(vii)cancel any material debts or claims, or waive any
rights of material value or, sell, transfer or convey any of its respective
material properties or assets, real, personal or mixed, tangible or
intangible;
(viii) enter into any employment or severance
agreement with any officer, director, shareholder or employee thereof who
receives or would receive annual compensation in excess of US$100,000;
(ix) enter into or amend any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement in respect
of the compensation payable or to become payable to any of its officers,
directors, shareholders or employees (other than salary increases in the
ordinary course of business consistent with past practice to employees who
are not officers, directors or shareholders of any of the Companies or
Company Subsidiaries which, in the aggregate, are not material and year-end
bonuses in the ordinary course of business consistent with past practice);
(x) make any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit;
(xi) declare, pay or make, or set aside for payment or
making, any dividend or other distribution in respect of its issued
share capital or capital stock or other securities, as applicable, or
directly or indirectly redeem, purchase or otherwise acquire any of its
issued share capital or capital stock or other securities, other than
dividends paid or payable by a wholly owned Company Subsidiary to a Company
or another wholly owned Company Subsidiary;
(xii) issue, allot, create, grant or sell any of its
shares of capital stock or other equity securities or issue, grant or sell
any security, option, warrant, call, subscription or other right of any
kind, fixed or contingent, that directly or indirectly calls for the
issuance, allotment, sale, pledge or other disposition of any of its issued
share capital, shares of capital stock or other equity securities;
(xiii) make any change in any accounting or tax
principles, practices or methods, except as may be required by applicable
generally accepted accounting principles or applicable Law;
(xiv) make any material tax election or settle or
comprise any material income tax liability;
(xv) terminate or amend or fail to perform any of its
obligations under any material Contract to which it is a party or by which
it or any of its assets are bound;
(xvi) enter into any material joint venture or
partnership;
(xvii) settle any material lawsuits, claims, actions,
investigations or proceedings; or
(xviii) authorize or enter into any obligation or
commitment (or otherwise agree) to take any of the foregoing actions.
(c) Such Seller and Company shall, and shall cause each
Company Subsidiary which is a direct or indirect Subsidiary thereof to,
give prompt notice to Parent of (i) any Company Material Adverse Effect,
(ii) any change which makes it likely that any representation or warranty
set forth in this Agreement regarding the Sellers, the Companies or the
Company Subsidiaries will not be true in any material respect at the
Integration Commencement Date or the Closing, as applicable or would be
likely to cause any condition to the obligations of any party hereto to
consummate the transactions contemplated by this Agreement not to be
satisfied or (iii) the failure of the Sellers or the Companies to comply
with or satisfy any covenant or agreement to be complied with or satisfied
by it pursuant to this Agreement, the other Operative Agreements and the
Integration Plan and Integration Agreements which would likely cause a
condition to the obligations of any party to effect the transactions
contemplated by this Agreement not to be satisfied.
(d) Such Company shall, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, use
commercially reasonable efforts to take such action as may be necessary to
maintain, preserve, renew and keep in full force and effect its existence
and its material rights and franchises.
(e) Such Company shall, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, use
commercially reasonable efforts to preserve intact the existing
relationships with its clients and employees and others with respect to the
businesses with which it has business relationships. Such Company shall,
and shall cause each Company Subsidiary which is a direct or indirect
Subsidiary thereof to, permit the Buyers to contact suppliers, customers
and employees in coordination with personnel of such Company or Company
Subsidiary for purposes of facilitating the transactions contemplated
hereby.
Section 5.2 Access. Subject to compliance with applicable Law, upon
reasonable notice, each Company shall, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, give Parent
and its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to its
offices, properties, books and records, furnish to Parent and its counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data as such persons may reasonably request, and
instruct and request each of its partners, directors, officers, employees,
counsel and financial advisors (as applicable) to cooperate with Parent in
its investigation of the businesses of the Companies and Company
Subsidiaries and in the planning for the combination of the businesses of
the Companies and Parent following the consummation of the transactions
contemplated hereby; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by the Sellers,
the Companies or the Management Shareholders hereunder or the Shareholders
or the Related JLW Owners of such Shareholders under the Joinder
Agreements. All information obtained pursuant to this Section 5.2, or
otherwise pursuant to this Agreement, shall be governed by the
Confidentiality Agreement, dated as of June 4, 1998, by and among Parent
and the various individuals and entities party thereto (the
"Confidentiality Agreement").
Section 5.3 Consents. The Sellers and the Companies shall, unless
otherwise agreed to by Parent, use commercially reasonable efforts to
obtain, prior to the Closing (a) all Consents required to consummate the
transactions contemplated by this Agreement, the other Operative Agreements
or the Integration Plan and the Integration Agreements, including, without
limitation, the Consents required by Sections 3.6 and 3.7 of the Company
Disclosure Schedule, and (b) such additional Consents as Parent or its
counsel shall reasonably determine to be necessary. All such Consents
shall be in writing and executed counterparts thereof shall be delivered to
Parent promptly after receipt thereof by any Seller or Company but in no
event later than the Integration Commencement Date.
Section 5.4 Closing Net Worth. The Sellers and the Companies shall
cause the Final Australasia Region Closing Net Worth to be positive.
Section 5.5 Other Offers. From the date hereof until the termination
hereof, each of the Sellers and the Companies shall not, and shall cause
each Company Subsidiary which is a direct or indirect Subsidiary thereof
not to, and shall not permit the directors, officers, employees, agents and
advisors of the Sellers and the Companies and the Company Subsidiaries to,
directly or indirectly, (i) take any action to solicit, initiate or
knowingly encourage any JLW Acquisition Proposal or (ii) engage in
negotiations with, or disclose any nonpublic information relating to any
Seller, Company or Company Subsidiary or afford access to the properties,
books or records of any Seller, Company or Company Subsidiary to, any
Person that may be considering making, or has made, a JLW Acquisition
Proposal; provided, that any Seller or Company may respond to inquiries
with respect to a JLW Acquisition Proposal for the sole purpose of
informing the inquiring Person that no discussions of any kind may occur
while this Section 5.5 is in effect. Each of the Sellers and the Companies
will promptly (and in no event later than 24 hours after receipt of the
relevant JLW Acquisition Proposal or request for information) notify Parent
in writing of the receipt of any JLW Acquisition Proposal or request for
information (which notice shall identify the Person making the JLW
Acquisition Proposal or request and set forth the material terms and
conditions thereof). For purposes of this Section 5.5, "JLW Acquisition
Proposal" means any offer or proposal for, or any indication of interest
in, a merger, consolidation or other business combination involving any of
the Sellers, the Companies or the Company Subsidiaries or the acquisition
of any equity interest in, or a substantial portion of the assets of, any
of the Sellers, the Companies or the Company Subsidiaries, other than the
transactions contemplated by this Agreement and the Other Purchase
Agreements.
Section 5.6 Integration Matters. Without the prior written consent
of Parent (which consent shall not be unreasonably withheld or delayed), no
JLW Party shall (i) amend the Integration Plan or any Integration
Agreement, (ii) extend the time for the performance of any of the
obligations thereunder, (iii) waive any inaccuracies in the representations
and warranties contained in any Integration Document, (iv) waive
compliance with any of the agreements or conditions contained therein, or
(v) enter into any agreement, arrangement or understanding other than as
set forth in the Integration Plan or Integration Agreements in respect of
the transactions contemplated thereby; provided, however, that the
foregoing shall not prohibit the Sellers' Representatives from waiving any
condition contained in any Integration Agreement that the Sellers'
Representatives could waive pursuant to Article VII or IX hereof.
Section 5.7 Nine-Month Financial Statements. The Sellers and the
Companies shall cause to be prepared and, as soon thereafter as practicable
but in no event later than November 16, 1998, deliver to Parent the Nine-
Month Interim Financial Statements and the JLW Combined 9/30 Financial
Statement Schedules, in each case as contemplated by the provisions of
Section 3.8(b) hereof.
Section 5.8 Intercompany Accounts. Effective as of the Closing, all
intercompany receivables, payables and loans then existing between the
Sellers or any Continuing Affiliate, on the one hand, and any Company or
Company Subsidiary on the other hand, shall be settled by dividend in kind
or capital contribution in kind.
Section 5.9 Name Changes. Except as set forth in Section 5.9 of the
Company Disclosure Schedule, following the Closing Date, no Seller shall
make, or permit any Continuing Affiliate to make, use of the names "JONES
LANG WOOTTON" or "JLW" or associated marks, or any confusingly similar
names or marks. Within 30 days following the Closing Date, each Seller
shall, and shall cause each Continuing Affiliate to, remove the words
"JONES LANG WOOTTON" or "JLW," if they appear, from its corporate title by
making an appropriate filing with the appropriate Authority in each
relevant jurisdiction. Except as set forth in Section 5.9 of the Company
Disclosure Schedule, following the Closing Date, each Seller shall not, and
the Sellers shall cause each Continuing Affiliate not to, use, attempt to
register or challenge any of the Buyers', the Companies' or the Company
Subsidiaries' rights to use or register any trademark, service mark, trade
name, logo or trade dress identical to, or confusingly similar to, "JONES
LANG WOOTTON," "JLW" or the "globe logo device" in any jurisdiction
throughout the world.
Section 5.10 Certain Charges. Each Seller and Company shall use
commercially reasonable efforts to pay, discharge or satisfy, prior to the
Closing, the Liens described in Schedule 5.10 of the Company Disclosure
Schedule.
Section 5.11 Stockholder Agreement. On or prior to the Closing, JLW
Australia Parent shall enter into a stockholder agreement, in form and
substance reasonably acceptable to Parent (the "JLW Australia Stockholder
Agreement").
ARTICLE VI
COVENANTS OF PARENT
Section 6.1 Operation of Parent. From the date hereof to the
Closing, except as described in Section 6.1 of the Parent Disclosure
Schedule or as otherwise permitted by or provided in this Agreement, the
other Operative Agreements or the Integration Plan or the Integration
Agreements, or except as consented to in writing by the Sellers'
Representatives (which consent shall not be unreasonably withheld or
delayed), Parent agrees that:
(a) Parent shall, and shall cause each Parent Subsidiary to,
conduct its business only in the ordinary and usual course and
substantially in the same manner as heretofore conducted.
(b) Parent shall, and shall cause US Acquisition Sub and
Australia Acquisition Sub to, perform all acts to be performed by it
pursuant to this Agreement, any other Operative Agreements and the
Integration Plan and the Integration Agreements and shall refrain from
taking any action (other than any action permitted by or provided in this
Agreement) that would result in the representations and warranties of
Parent, US Acquisition Sub or Australia Acquisition Sub hereunder becoming
untrue in any material respect or any of the conditions to Closing not be
satisfied.
Without limiting the generality of the foregoing, except as described in
Section 6.1 of the Parent Disclosure Schedule or as otherwise permitted or
contemplated by this Agreement, the other Operative Agreements or the
Integration Plan or the Integration Agreements or except as consented to in
writing by the Sellers' Representatives (which consent will not be
unreasonably withheld or delayed), from the date hereof to the Closing,
Parent shall not, and shall cause each Parent Subsidiary not to:
(i) amend its certificate of incorporation or bylaws
(or similar organizational documents) or adopt or pass further regulations
or resolutions inconsistent therewith;
(ii) other than in the ordinary course of business
consistent with past practice (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of any other Person (other than any Parent
Subsidiary), or (B) make any loans, advances or capital contributions to,
or investments in, any other Person (other than to any Parent Subsidiary),
or enter into any material Contract;
(iii) acquire, by merging or consolidating with or by
purchasing equity interests in or assets of any other Person or otherwise,
any material assets of or any equity interests in any other Person;
(iv) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than (A) the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, or as required
by their terms, of liabilities reflected or specifically reserved against
in or contemplated by the Parent Interim Balance Sheet, (B) claims,
liabilities or obligations that are incurred after the date thereof in the
ordinary course of business consistent with past practice or that are
immaterial liabilities if not incurred in the ordinary course of business
or (C) the payment discharge or satisfaction in the ordinary course of
business consistent with past practice of obligations under any Contracts
or Licenses to which Parent or any Parent Subsidiary is bound as of the
date hereof or entered into after the date of this Agreement in accordance
with the limitations set forth in this Section 6.1;
(v) pay, discharge or satisfy any material Lien unless
required by the terms thereof or the documents evidencing or governing any
related indebtedness;
(vi) permit or allow any of its respective material
properties or assets, real, personal or mixed, tangible or intangible, to
be subjected to any Lien, except for any Permitted Liens incurred in the
ordinary course of business consistent with past practice;
(vii) cancel any material debts or claims, or waive any
rights of material value or, sell, transfer or convey any of its respective
material properties or assets, real, personal or mixed, tangible or
intangible;
(viii) enter into any employment or severance
agreement with any partner, officer, director, shareholder or employee
thereof who receives or would receive annual compensation in excess of
US$100,000;
(ix) enter into or amend any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement in respect
of the compensation payable or to become payable to any of its officers,
directors or employees (other than salary increases in the ordinary course
of business consistent with past practice to employees who are not officers
or directors of Parent which, in the aggregate, are not material and year-
end bonuses in the ordinary course of business consistent with past
practice);
(x) make any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit;
(xi) declare, pay or make, or set aside for payment or
making, any dividend or other distribution in respect of its capital stock
or other securities, or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock or other securities, other than
dividends paid or payable by a wholly owned Parent Subsidiary to Parent or
another wholly owned Parent Subsidiary;
(xiii) other than pursuant to the Parent Stock Plans,
issue, allot, create, grant or sell any shares of its capital stock or any
equity security or issue, grant or sell any security, option, warrant,
call, subscription or other right of any kind, fixed or contingent, that
directly or indirectly calls for the issuance, allotment, sale, pledge or
other disposition of any shares of its capital stock or other equity
securities;
(xiii) make any change in any accounting or tax
principles, practices or methods, except as may be required by applicable
generally accepted accounting principles or applicable Law;
(xiv) make any material tax election or settle or
compromise any material income tax liability;
(xv) terminate or amend or fail to perform any of its
obligations under any material Contract to which it is a party or by
which it or any of its assets are bound;
(xvi) enter into any material joint venture or
partnership;
(xvii) settle any material lawsuits, claims, actions,
investigations or proceedings; or
(xviii) authorize or enter into any obligations or
commitment (or otherwise agree) to take any of the foregoing actions.
(c) Parent shall, and shall cause each Parent Subsidiary to,
give prompt notice to the Sellers' Representatives of (i) any Parent
Material Adverse Effect, (ii) any change which makes it likely that any
representation or warranty set forth in this Agreement regarding Parent
will not be true in any material respect at the Integration Commencement
Date or the Closing, as applicable, or would be likely to cause any
condition to the obligations of any party hereto to consummate the
transactions contemplated by this Agreement not to be satisfied or (iii)
the failure of Parent, US Acquisition Sub or Australia Acquisition Sub to
comply with or satisfy any covenant or agreement to be complied with or
satisfied by it pursuant to this Agreement and the other Operative
Agreements which would likely cause a condition to the obligations of any
party to effect the transactions contemplated by this Agreement not to be
satisfied.
(d) Parent shall, and shall cause each Parent Subsidiary to,
use commercially reasonable efforts to take such action as may be necessary
to maintain, preserve, renew and keep in full force and effect its
existence and its material rights and franchises.
(e) Parent shall, and shall cause each Parent Subsidiary to,
use commercially reasonable efforts to preserve intact the existing
relationships with its clients and employees and others with respect to the
businesses with which it has business relationships. Parent shall, and
shall cause each Parent Subsidiary to, permit the Shareholders'
Representatives or their designees to contact suppliers, customers and
employees in coordination with the personnel of Parent or such Parent
Subsidiary for purposes of facilitating the transactions contemplated
hereby.
Section 6.2 Access. Subject to compliance with applicable Law, upon
reasonable notice, Parent shall, and shall cause each Parent Subsidiary to,
give the Sellers and the Companies, their respective counsel, financial
advisors, auditors and other authorized representatives reasonable access
during normal business hours to its offices, properties, books and records,
furnish to the Sellers and the Companies, their respective counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data as such persons may reasonably request, and
instruct and request each of its directors, officers, employees, counsel
and financial advisors (as applicable) to cooperate with the Sellers and
the Companies in their investigation of the businesses of Parent and the
Parent Subsidiaries and in the planning for the combination of the
businesses of the Companies and Parent following the consummation of the
transactions contemplated hereby; provided that no investigation pursuant
to this Section shall affect any representation or warranty given by the
Parent hereunder. All information obtained pursuant to this Section 6.2,
or otherwise pursuant to this Agreement shall be governed by the
Confidentiality Agreement.
Section 6.3 Consents. Each of US Acquisition Sub, Australia
Acquisition Sub and Parent shall use, unless otherwise agreed by the
Sellers' Representatives, commercially reasonable efforts to obtain, prior
to the Closing, (a) all Consents required to consummate the transactions
contemplated by this Agreement and the other Operative Agreements,
including, without limitation, the Consents required by Sections 4.5 and
4.6 of the Parent Disclosure Schedule, and (b) such additional Consents as
the Sellers and the Sellers' Representatives or counsel to the Sellers
shall reasonably determine to be necessary. All such Consents shall be in
writing and executed counterparts thereof shall be delivered to the
Sellers' Representatives promptly after receipt thereof by Parent but in no
event later than the Integration Commencement Date.
Section 6.4 Listing of Consideration Shares. Parent shall use
commercially reasonable efforts to cause the Consideration Shares to be
approved for listing on the NYSE, subject to official notice of issuance,
on or prior to the Integration Commencement Date.
Section 6.5 Stockholder Approval; Proxy. (a) Parent shall, in
accordance with applicable Law and the Articles of Incorporation and Bylaws
of Parent, cause a special meeting of its stockholders to be duly called
and held for the purpose of voting (and will hold such a vote at such
meeting) on the approval of the Proposed Actions as promptly as practicable
following the Shareholder Determination Date.
(b) In connection with such meeting, Parent shall promptly
prepare and file with the SEC, and use its reasonable efforts to have
cleared by the SEC and after the Commitment Date mail to its stockholders,
a proxy statement (the "Proxy Statement") that complies as to form in all
material respects with all relevant provisions of the Exchange Act relating
to the meeting of Parent's stockholders to be held in connection with this
Agreement and includes (when so filed) such information as the Management
Shareholders shall reasonably request. Parent shall consult with the
Shareholder's Representatives, the Sellers, the Companies and the financial
advisers and counsel to the Sellers in connection with, and shall permit
them to participate in, the preparation of the Proxy Statement. Parent
shall promptly notify them of the receipt of comments of the SEC with
respect to the Proxy Statement and requests by the SEC for amendments or
supplements to the Proxy Statement or for additional information, and shall
promptly supply them with copies of all correspondence between Parent (or
its representatives) and the SEC (or its staff) and shall permit such
counsel to participate in all telephone conferences or meetings with the
SEC (or its staff) relating thereto.
(c) The Proxy Statement shall include the approval and
recommendation of the Board of Parent in favor of this Agreement and the
Other Purchase Agreements and the transactions contemplated hereby and
thereby, including the Proposed Actions, and unless Parent shall modify or
withdraw such recommendation, Parent shall use all reasonable efforts to
solicit from its stockholders proxies in favor of the foregoing and take
all other actions reasonably necessary or advisable to secure the requisite
vote or consent of stockholders required by Maryland law and the NYSE;
provided, that Parent may modify or withdraw such recommendation, but only
if and to the extent that (i) a Parent Acquisition Proposal has been made
prior to the time that the Board determines to withdraw or modify its
recommendation, (ii) the Board reasonably concludes in good faith, based on
advice from its outside counsel, that the failure to make such withdrawal
or modification would violate the fiduciary duties of the Board under
applicable Law, and (iii) Parent shall have delivered to the Shareholders'
Representatives, at least two Business Days prior to such withdrawal or
modification, a written notice advising the Shareholders' Representatives
that Parent has received a Parent Acquisition Proposal, identifying the
person making such Parent Acquisition Proposal, setting forth the material
terms and conditions of such Parent Acquisition Proposal and indicating
that the Board proposes to withdraw or modify its recommendation.
Section 6.6 Other Offers. From the date hereof until the termination
hereof, Parent shall not, and shall cause each of the Parent Subsidiaries
not to, and shall not permit the directors, officers, employees, agents and
advisors of Parent and any of the Parent Subsidiaries to, directly or
indirectly, (i) take any action to solicit, initiate or knowingly encourage
any Parent Acquisition Proposal or (ii) engage in negotiations with, or
disclose any nonpublic information relating to Parent or any of the Parent
Subsidiaries or afford access to the properties, books or records of Parent
or any of the Parent Subsidiaries to, any Person that may be considering
making, or has made, a Parent Acquisition Proposal; provided, however, that
Parent may engage in negotiations with, disclose nonpublic information
relating to Parent and any of the Parent Subsidiaries and afford access to
the properties, books and records of Parent and any of the Parent
Subsidiaries to, any Person who has made a Parent Acquisition Proposal and
take such other actions as are customarily undertaken in connection with
the negotiation and evaluation of a Parent Acquisition Proposal if, and to
the extent that, the Board reasonably concludes in good faith based on
advice from its outside counsel that the failure to take such action would
violate the fiduciary duties of the Board under applicable Law; provided
that, prior to any such negotiations, disclosure of non-public information,
affording of access or the taking of such other actions, such Person enters
into a confidentiality agreement with Parent on customary terms. Parent
will promptly (and in no event later than 24 hours after receipt of the
relevant Parent Acquisition Proposal or request for information) notify the
Shareholders' Representatives in writing of the receipt of any Parent
Acquisition Proposal or request for information (which notice shall
identify the Person making the Parent Acquisition Proposal or request and
set forth the material terms and conditions thereof). Parent will keep the
Shareholders' Representatives fully informed on a current basis of the
status and details of any Parent Acquisition Proposal and any request for
information. Parent shall, and shall cause the Parent Subsidiaries and the
directors and officers and financial and legal advisers of Parent and the
Parent Subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any Person heretofore
conducted with respect to any Parent Acquisition Proposal. Notwithstanding
any provision of this Section 6.6, nothing in this Section 6.6 shall
prohibit Parent or the Board from talking and disclosing to Parent's
stockholders a position with respect to a Parent Acquisition Proposal by a
third party to the extent required under the Exchange Act or from making
such disclosure to the Company's stockholders which, in the judgment of the
Board based on the advice of outside counsel, is required under applicable
Law; provided that nothing in this sentence shall affect the obligations of
Parent and the Board under any other provision of this Agreement. For
purposes of this Agreement, "Parent Acquisition Proposal" means any offer
or proposal for, or any indiction of interest in, a merger, consolidation
or other business combination involving Parent or any of the Parent
Subsidiaries or the acquisition of any equity interest in, or a substantial
portion of the assets of, Parent or any of the Parent Subsidiaries, other
than the transactions contemplated by this Agreement and the Other Purchase
Agreements.
Section 6.7 Employee Trust. At or prior to Closing, Parent shall
establish a trust (the "ESOT") for the purpose of holding 1,772,324 shares
of Parent Common Stock (which shall be deposited therein, collectively, by
Parent, US Acquisition Sub, US Acquisition Sub II and Australia Acquisition
Sub on or prior to the Closing Date) (the "ESOT Shares") for distribution
to certain employees of the JLW Businesses (the "JLW Employees"). The
trust agreement and the related agreements required to establish the ESOT
(the "ESOT Agreements") shall reflect the terms set forth in Annex L
attached hereto and such other terms as Parent and the Sellers'
Representatives shall mutually agree. The trustee of the ESOT (the "ESOT
Trustee") will be determined in accordance with and shall have the rights
and obligations specified in Annex L hereto and the ESOT Agreements. The
ESOT Agreements shall provide (to the extent set forth in Annex L) for the
creation of sub trusts within the ESOT, for the benefit of employees of
specified Companies, Asian Region Companies and Australasia Region
Companies and the Subsidiaries thereof (each a "Sub Trust" or an "ESOT Sub
Trust", which Sub Trusts shall include a "JLW Australasia ESOT Sub Trust,"
a "JLW Asia ESOT Sub Trust," a "JLW England ESOT Sub Trust," a "JLW
Scotland ESOT Sub Trust" and the "JLW Ireland ESOT Sub Trust"), which Sub
Trusts shall be controlled by one or more persons designated pursuant to
the SCCA. Parent and Sellers' Representatives agree to cooperate in good
faith to determine the additional requirements of the ESOT and to negotiate
in good faith the satisfactory resolution of such requirements prior to
Closing. The parties hereto agree that (i) 91,988 ESOT Shares (the "ESOT
Escrow Shares") shall be included in the Escrow Shares and (ii) 108,895
ESOT Shares (the "ESOT Adjustment Shares") shall be included in the
Adjustment Shares, in each case to be delivered to the Escrow Agent on
behalf of the ESOT pursuant to Section 1.3 hereof and Section 1.3 of each
of the Other Purchase Agreements.
Section 6.8 Certain Stockholder Agreements. Parent shall use
commercially reasonable efforts to solicit the execution and delivery by
each current director, officer and employee of Parent or any Parent
Subsidiary who is a former partner in DEL of a stockholder agreement, in
the form attached hereto as Exhibit 3 (the "DEL Stockholder Agreement"), on
or prior to the Integration Commencement Date.
Section 6.9 Certain Instruments of Indemnification. On or prior to
the Integration Commencement, Parent shall execute and deliver the
instruments of assumption of indemnification obligations in the respective
forms attached hereto as Exhibit 5 and Exhibit 6.
Section 6.10 Employee Stock Options. To the extent that Parent or
any Parent Subsidiary issues or grants, or has issued or granted, (i) any
stock options, stock appreciation rights, bonus or restricted stock awards,
restricted stock units, performance shares or other stock based incentive
awards, whether issued under a formal stock based incentive plan or
otherwise, or (ii) any cash-based awards granted under a stock based
incentive plan (the awards referred to in (i) and (ii) being sometimes
referred to herein as "Stock Options") to any employees of Parent or any
Parent Subsidiary, which employees were so employed prior to the Closing
Date (other than any new employees after June 30, 1998) at any time after
June 30, 1998 and prior to the third anniversary of the Closing Date,
Parent shall cause at least an equivalent number of like Stock Options to
be issued or granted, on or about the time of such grant or issuance (or,
in the case of Stock Options granted or issued prior to the Closing Date,
as soon as reasonably practicable after the Closing Date) to employees of
Parent or any Subsidiary thereof who were employees of the JLW Businesses
immediately prior to the Closing Date.
Section 6.11 Director and Officer Indemnification. For a period of
three years following the Closing Date, Parent shall not amend any charter,
bylaw or other constitutional document of any Company or Company
Subsidiary, in each case as in effect at June 30, 1998, in such a way as to
remove or reduce any right to indemnification thereunder in favor of any
director or officer thereof.
Section 6.12 Note Purchase Agreement Matters. Parent acknowledges
that JLW Australia Parent may cause each certificate representing
Consideration Shares issued to any Shareholder which remains subject to a
note purchase agreement, entered into between such Shareholder and JLW
Australia Parent, to include a legend to the effect that no transfer of
such Consideration Shares may be effected without the prior written consent
of JLW Australia Parent. To assist in effectuating the provisions of this
Section 6.12, the parties hereto hereby consent to the entry of stop
transfer orders, and Parent agrees to cause such stop transfer orders to be
entered, with Parent's transfer agent against the transfer of any such
Consideration Shares, which stop transfer orders will be withdrawn if and
to the extent joint written instructions requesting such withdrawal are
delivered to such transfer agent by the holder(s) of such Consideration
Shares and JLW Australia Holdings Parent.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the Buyers to purchase the Shares at the
Closing and to perform their respective other agreements under this
Agreement and the other Operative Agreements to be performed by them at the
Closing, and the obligations of the Sellers to sell the Shares at the
Closing and the obligations of the Sellers, the Companies, the Shareholders
and the Related JLW Owners to perform their respective other agreements
under this Agreement, the other Operative Agreements and the Integration
Agreements to be performed by them as part of the Integration or at the
Closing, as the case may be, shall be subject to the satisfaction or waiver
by Parent and the Sellers' Representatives and the Shareholders'
Representatives, in the case of actions to be taken at the Closing of the
following conditions that are specified to be satisfied on the Closing Date
(or, in the case of Section 7.5, at (or before) the time specified therein)
or, in the case of actions to be taken as part of the Integration, of the
following conditions that are specified to be satisfied on (or before) the
Integration Commencement Date:
Section 7.1 No Injunctions or Restraints. On the Integration
Commencement Date and on the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court or other Authority of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated
as so provided.
Section 7.2 No Litigation. On the Integration Commencement Date and
on the Closing Date, there shall not be pending by any Authority any Action
(or by any other Person any Action which has a reasonable likelihood of
success), (i) challenging or seeking to restrain or prohibit the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement or seeking to obtain, in connection with the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement, any damages that would reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse
Effect, (ii) seeking to prohibit or limit the ownership or operation by
Parent, the Companies or any or all of them, or any of their respective
Subsidiaries, of any material portion of their respective businesses or
assets, or to compel Parent, the Companies or any or all of them, or any of
their respective Subsidiaries, to dispose of or hold separate any material
portion of such businesses or assets or (iii) seeking to prohibit Parent
from exercising its rights under or otherwise enjoying the benefits of the
other Operative Agreements.
Section 7.3 HSR Act and Other Approvals. (a) On the Integration
Commencement Date, (i) any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement and the Other
Purchase Agreements shall have expired or been terminated, (ii) the
Required Regulatory Approvals shall have been obtained or filed or shall
have occurred and be in effect, and (iii) all other authorizations,
consents, orders or approvals of, or regulations, declarations or filings
with, or expirations of applicable waiting periods imposed by, any
Authority necessary for the consummation of the transactions contemplated
by this Agreement, any other Operative Agreement or any Integration
Agreement, including filings and consents required pursuant to other
applicable antitrust and competition Laws, shall have been obtained or
filed or shall have occurred and be in effect, except where the failure of
which to be obtained or filed or to have occurred and be in effect,
individually or in the aggregate, would not have or reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse
Effect or result in a violation of any criminal laws.
(b) On the Integration Commencement Date, there shall have
been obtained or received and in effect (i) each of the Consents listed or
described on Schedule 7.3(b) of the Parent Disclosure Schedule, (ii) each
of the Consents listed or described on Schedule 7.3(b) of the Company
Disclosure Schedule and (iii) any other Consents from third Persons (other
than Authorities) to any of the transactions contemplated by this
Agreement, the other Operative Agreements or any Integration Agreements
that may be required under any Contract or License to which Parent, US
Acquisition Sub, Australia Acquisition Sub, any Seller or any Company, or
any of their respective direct or indirect Subsidiaries, is a party or by
which any of such Persons is bound with respect to which the failure to
obtain or receive would, individually or in the aggregate, have or
reasonably be expected to have a Parent Material Adverse Effect or a
Company Material Adverse Effect.
Section 7.4 Stockholders Vote. On or prior to the Integration
Commencement Date, the Proposed Actions to be submitted for the approval of
the stockholders of Parent shall have been approved by the requisite vote
of Parent's stockholders.
Section 7.5 Other Closings. The consummation of the transactions
contemplated by each of the Other Purchase Agreements shall have occurred
concurrently with the Closing.
Section 7.6 Consummation of the Integration. On the Closing Date,
the transactions contemplated by the Integration Plan and the Integration
Agreements (other than the Post-Closing Integration Actions) shall have
been (or shall have theretofore been) consummated in accordance with the
terms and conditions of the Integration Plan and the Integration
Agreements, without modification of the terms thereof or waiver of any of
the conditions precedent thereto, unless Parent shall have consented
thereto in writing (which consent will not be unreasonably withheld or
delayed); and the Integration shall have been (or shall have theretofore
been) consummated in all material respects in accordance with all
applicable Laws.
Section 7.7 Execution and Delivery of the other Operative Agreements.
On the Integration Commencement Date, each Shareholder and each Related JLW
Owner listed on the Final Master Shareholder List and each Other
Shareholder and Related JLW Owner listed on the Final Master Shareholder
List attached to each of the Other Purchase Agreements shall have (or shall
have theretofore) duly executed and delivered to Parent: (i) a Joinder
Agreement or Other Joinder Agreement, as applicable, (ii) a Stockholder
Agreement and (iii) an Escrow Agreement.
Section 7.8 Amendments. The Articles of Amendment and Restatement of
Parent, in the form attached hereto as Annex I, shall have become
effective; the amendment to the Articles of Incorporation of LACM
contemplated by clause (a)(i)(B) of Section 1.9 hereof shall have become
effective.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE BUYERS
The obligations of the Buyers to purchase the Shares at the
Closing and to perform their respective other agreements under this
Agreement and the other Operative Agreements to be performed by them as
part of the Integration or at the Closing, is subject to the satisfaction
or waiver by Parent, in the case of actions to be taken at the Closing, of
the following conditions that are specified to be satisfied on the Closing
Date or, in the case of actions to be taken as part of the Integration, of
the following conditions that are specified to be satisfied on the
Integration Commencement Date:
Section 8.1 Representations and Warranties Correct as of the
Integration Commencement Date. On the Integration Commencement Date, the
representations and warranties of the Sellers, the Companies, the
Management Shareholders, the Shareholders and the Related JLW Owners made
herein, in the other Operative Agreements or in the Integration Agreements
and qualified as to Company Material Adverse Effect shall be true and
correct in all respects at and as of the Integration Commencement Date,
with the same force and effect as though made at and as of the Integration
Commencement Date (except to the extent a representation or warranty speaks
specifically as of an earlier date, in which event the same shall be true
and correct in all respects as of such earlier date), except for any
changes therein permitted or contemplated by this Agreement. On the
Integration Commencement Date, each such representation and warranty not so
qualified shall be true and correct in all respects at and as of the
Integration Commencement Date, with the same force and effect as though
made at and as of the Integration Commencement Date (except to the extent a
representation or warranty speaks specifically as of an earlier date, in
which event the same shall be true and correct in all respects as of such
earlier date), and except for any changes therein permitted or contemplated
by this Agreement, except for such failures of such representations or
warranties to be true and correct in all respects as would not,
individually or in the aggregate, have or reasonably be expected to have a
Company Material Adverse Effect.
Section 8.2 Certain Representations and Warranties Correct as of the
Closing Date. On the Closing Date, the representations and warranties of
the Sellers, the Companies and the Management Shareholders set forth in
Section 3.1 hereof, the representations and warranties of the Sellers in
Article IIIA hereof and the representations and warranties of the
Shareholders and the Related JLW Owners contained in the Applicable Joinder
Agreements shall be true and correct in all respects at and as of the
Closing Date.
Section 8.3 Performance; No Default. (a) On the Integration
Commencement Date, the JLW Parties shall have performed and complied in all
material respects with all the obligations and agreements required by this
Agreement and the other Operative Agreements to which they or any of them
is a party to be performed or complied with by the JLW Parties at or prior
to the Integration Commencement Date.
(b) On the Closing Date, the JLW Parties shall have performed
and complied in all material respects with all the obligations and
agreements required by this Agreement and the other Operative Agreements to
which they or any of them is a party to be performed or complied with by
the JLW Parties at or prior to the Closing Date.
(c) On the Integration Commencement Date, the Shareholders
and the Related JLW Owners shall have complied in all material respects
with all obligations and agreements required by this Agreement and the
other Operative Agreements to be performed by them at or prior to the
Integration Commencement Date.
(d) On the Closing Date, the Shareholders and the Related JLW
Owners shall have complied in all material respects with all obligations
and agreements required by this Agreement and the other Operative
Agreements to be performed by them at or prior to the Closing Date.
Section 8.4 Delivery of Certificate. Each of the Sellers, Companies
and Management Shareholders shall have delivered to Parent (i) on the
Integration Commencement Date, a certificate, dated the Integration
Commencement Date, executed by it or him certifying to the fulfillment of
the conditions set forth in Sections 8.1, 8.3(a) and 8.3(c) hereof and (ii)
on the Closing Date, a certificate, dated the Closing Date, executed by it
or him certifying to the fulfillment of the conditions set forth in
Sections 8.2, 8.3(b) and 8.3(d) hereof, provided that, in the case of the
certification by each of the Management Shareholders, such certification
(x) shall be limited to the Knowledge of such Management Shareholder and
(y) shall not apply to representations and warranties set forth in Article
II or III of any Joinder Agreement (other than the representations and
warranties set forth in such Articles of the Joinder Agreement to which
such Management Shareholder is a party, which certification
(notwithstanding clause (x) above) shall not be limited to his Knowledge).
Section 8.5 Opinions of Counsel to the Sellers and the Companies. On
the Closing Date, the Sellers' Representatives shall have delivered to
Parent opinions of counsel to the Sellers and the Companies as to such
matters as Parent shall reasonably request, which opinions shall be in a
form reasonably satisfactory to counsel to Parent.
Section 8.6 Comfort Letter. Parent shall have received a comfort
letter, dated the date of the Proxy Statement and the date of Parent's
stockholders' meeting referred to in Section 6.5 hereof and on the
Integration Commencement Date, from each public accounting firm who has
issued a report on any of the Audited Financial Statements in each case in
form and substance reasonably satisfactory to Parent, regarding the
financial statements, in the respective forms set forth in Annex O hereto.
Section 8.7 Settlement of Related Party Accounts. On the Integration
Commencement Date, except as set forth in Section 8.7 to the Company
Disclosure Schedule, all amounts owed by any Related Parties, or any
Persons in which any such Related Party has a material interest, to any
Company or Company Subsidiary shall have been paid in full.
Section 8.8 No Material Adverse Effect. On the Integration
Commencement Date, since June 30, 1998, there shall have been no Company
Material Adverse Effect.
Section 8.9 Continuing Affiliate Releases. On the Integration
Commencement Date, Parent shall have received a general release from each
Continuing Affiliate, in each case in the form set forth in Exhibit 7
hereto.
Section 8.10 Stockholder Agreement. JLW Australia Parent shall have
executed and delivered to Parent the JLW Australia Stockholder Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE
SELLERS AND THE SHAREHOLDERS
The obligations of the Sellers to sell the Shares at the
Closing and the obligations of the Sellers, the Companies, the Company
Subsidiaries, the Shareholders, and the Related JLW Owners to perform their
respective other agreements under this Agreement, the other Operative
Agreements and the Integration Agreements to be performed by them as part
of the Integration and at the Closing shall be subject to the satisfaction
or waiver by the Sellers' Representatives and the Shareholders'
Representatives, in the case of actions to be taken at the Closing, of the
following conditions that are specified to be satisfied on the Closing Date
or, in the case of actions to be taken as part of the Integration, of the
following conditions that are specified to be satisfied on (or before) the
Integration Commencement Date:
Section 9.1 Representations and Warranties Correct as of the
Integration Commencement Date. On the Integration Commencement Date, each
representation and warranty of each Buyer made herein and qualified as to
Parent Material Adverse Effect shall be true and correct in all respects at
and as of the Integration Commencement Date, with the same force and effect
as though made at and as of the Integration Commencement Date (except to
the extent a representation or warranty speaks specifically as of an
earlier date, in which event the same shall be true and correct in all
respects as of such earlier date), except for any changes therein permitted
or contemplated by this Agreement. On the Integration Commencement Date,
each such representation and warranty not so qualified shall be true and
correct in all respects at and as of the Integration Commencement Date,
with the same force and effect as though made at and as of the Integration
Commencement Date (except to the extent a representation or warranty speaks
specifically as of an earlier date, in which event the same shall be true
and correct in all respects as of such earlier date, except for any changes
therein permitted or contemplated by this Agreement and except for such
failures of such representations and warranties to be true and correct in
all respects as would not, individually or in the aggregate, have or
reasonably be expected to have a Parent Material Adverse Effect.
Section 9.2 Performance; No Default. (a) On the Integration
Commencement Date, each Buyer shall have performed and complied in all
material respects with all the obligations and agreements required by this
Agreement and the other Operative Agreements to be performed or complied
with by it at or prior to the Integration Commencement Date.
(b) On the Closing Date, each Buyer shall have performed and
complied in all material respects with all the obligations and agreements
required by this Agreement and the other Operative Agreements to be
performed or complied with by it at or prior to the Closing Date.
Section 9.3 Delivery of Certificate. Parent shall have delivered to
the Sellers' Representatives (i) on the Integration Commencement Date, a
certificate, dated the Integration Commencement Date, executed by an
executive officer of Parent, certifying to the fulfillment of the
conditions set forth in Sections 9.1 and 9.2(a) hereof and (ii) on the
Closing Date, a certificate, dated the Closing Date, executed by an
executive officer of Parent, certifying to the fulfillment of the
conditions set forth in Section 9.2(b) hereof.
Section 9.4 Opinions of Counsel to Parent. On the Closing Date,
Parent shall have delivered to the Sellers' Representatives opinions of
counsel to Parent as to such matters as the Sellers' Representatives and
the Shareholders' Representatives shall reasonably request, which opinions
shall be in a form reasonably satisfactory to counsel to the Sellers and
the Companies.
Section 9.5 Good Standing Certificate. On the Integration
Commencement Date, the Sellers' Representatives shall have received a
certificate from Parent, in form and substance reasonably satisfactory to
counsel to the Companies from the Department of Assessments and Taxation of
Maryland, evidencing the existence, good standing and organization of
Parent under the laws of Maryland and its current payment of taxes.
Section 9.6 Listing of Consideration Shares. On the Integration
Commencement Date, the Consideration Shares shall have been approved (or
theretofore approved) for listing on the NYSE, subject to official notice
of issuance, and a copy of the letter from the NYSE evidencing such
approval shall have been delivered to the Shareholders' Representatives.
Section 9.7 Certain Stockholder Agreements. On the Integration
Commencement Date, each current director, officer and employee of Parent or
any Parent Subsidiary who is a former partner in DEL shall have (or shall
have theretofore) executed and delivered to Parent a DEL Stockholder
Agreement.
Section 9.8 No Material Adverse Effect. On the Integration
Commencement Date, since June 30, 1998, there shall have been no Parent
Material Adverse Effect.
Section 9.9 Directors and Officers. The JLW Directors shall have
been elected to the Board (and the only other directors on the Board shall
be the Parent Directors), effective immediately following the Closing, and
Chris Peacock and Mike Smith shall have been elected to the offices of
President, Deputy Chief Executive Officer and Chief Operating Officer of
Parent and Deputy Chairman of the Board of Parent, respectively, effective
immediately following the Closing.
Section 9.10 Amendments. The Amended Parent Bylaws shall have been
adopted and not rescinded, modified or amended.
ARTICLE X
TAX MATTERS
Section 10.1 Allocation of Purchase Price. The final allocation of
the Consideration among the Shares of the Companies for all purposes
(including tax and financial accounting purposes) shall be determined by
agreement between Parent and Sellers' Representatives. Parent and each
JLW Party shall file all Tax Returns (including amended returns and claims
for refund) and information reports in a manner consistent with such
allocation.
Section 10.2 Tax Returns. (a) The Shareholders' Representatives or
their duly authorized agents shall prepare and timely file all outstanding
Tax Returns of the Companies and Company Subsidiaries for taxable periods
ending on or before the Closing on a basis which is, where applicable,
consistent with that used in the preparation of the Tax Return of (in each
case) the relevant Company or Company Subsidiary for any immediately
preceding taxable period, save where to do so would be contrary to law.
Parent shall provide or procure that the Companies and Company Subsidiaries
provide any assistance reasonably requested by the Shareholders'
Representatives for that purpose, including access to the books, accounts
and records of the Companies and Company Subsidiaries. The Shareholders'
Representatives shall notify Parent in writing that a Tax Return must be
submitted at least twenty Business Days prior to the submission and Parent
shall be entitled, on giving reasonable notice to the Shareholders'
Representatives, to review any Tax Return prior to submission. Parent
shall provide or procure that the Companies and Company Subsidiaries cause
those Tax Returns to be authorized, signed and submitted to the appropriate
authority without amendment or with such amendments as Parent and the
Shareholders' Representatives shall agree unless, in the opinion of Parent,
there is no reasonable basis for any position taken on such returns or the
signing or filing of such return would subject Parent, the Companies, the
Company Subsidiaries or any of their officers, directors, employees, agents
or Affiliates to fines, penalties or similar charges.
(b) Parent shall prepare and file or cause to be prepared and
filed those Tax Returns which relate to taxable periods of the Companies
and Company Subsidiaries commencing on or before the Closing and ending
after the Closing ("Straddle Returns") on a basis which is, where
applicable, consistent with that used in the preparation of the Tax Return
of (in each case) the relevant Company or Company Subsidiary for any
immediately preceding taxable period, save where to do so would be contrary
to law. Parent shall notify the Shareholders' Representatives in writing
that a Straddle Return must be submitted at least twenty Business Days
prior to the submission and the Shareholders' Representatives shall be
entitled, on giving reasonable notice to Parent, to review any Straddle
Return prior to submission. Parent shall make any changes as reasonably
requested by the Shareholders' Representatives or their duly authorized
agent provided such changes would not have a material adverse effect to
Parent. None of the Shareholders or any of their respective Affiliates
shall otherwise amend, refile or in any other way modify any Tax Return
relating in whole or in part to any Company or Company Subsidiary or the
JLW Businesses with respect to any taxable period ending on or before the
Closing Date without the prior written consent of Parent.
Section 10.3 Mutual Cooperation. Subject to Section 10.2 hereof and
the Escrow Agreement, Parent, on the one hand, and each Shareholder, on the
other, shall cooperate fully at such time and to the extent reasonably
requested by the other party in connection with the preparation and filing
of any Tax Return or the conduct of any audit, dispute, proceeding, suit or
action concerning any Tax. Such cooperation shall include (i) the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to the preparation and filing of
such Tax Return, or any such audit, litigation or other proceeding, (ii)
explanation of any material provided hereunder, (iii) the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any Tax Return by any of Parent, Shareholders, Companies or
Company Subsidiaries, or in connection with an audit, proceeding, suit or
action respecting any Tax, and (iv) the use of the parties' commercially
reasonable efforts to obtain any documentation from an Authority or a third
party that may be necessary or helpful in connection with the foregoing.
Section 10.4 Tax Covenant. It is the intent of the parties that the
purchase and sale of the Shares as contemplated in this Agreement be
treated as a taxable transaction for United States Federal Income tax
purposes. If prior to the Closing, Parent determines that such purchase
and sale may not be so treated, then Parent and each JLW Party shall work
together in good faith to modify the transactions contemplated hereby, if
feasible, to effectuate such intent.
ARTICLE XI
TERMINATION
Section 11.1 Termination of Agreement. This Agreement and the
Applicable Joinder Agreements and the other Operative Agreements may be
terminated at any time prior to the Closing:
(a) by mutual consent of the Sellers' Representatives and
Parent;
(b) by either the Sellers' Representatives or Parent if (i)
the Closing shall not have occurred on or before March 31, 1999, provided,
however, that the right to terminate this Agreement pursuant to this clause
(i) shall not be available to (A) the Sellers' Representatives if the
failure of any JLW Party, Shareholder or Related JLW Owner of any
Shareholder (if applicable) to fulfill any obligation, covenant or
agreement of such JLW Party, Shareholder or Related JLW Owner under this
Agreement, any other Operative Agreement, any Integration Agreement or
Applicable Joinder Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date and (B) Parent if
the failure of any Buyer to fulfill any obligation, covenant or agreement
of any Buyer under this Agreement or any other Operative Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or
before such date or (ii) if the Closing shall not have occurred on or
before September 30, 1999;
(c) by either the Sellers' Representatives or Parent in the
event any court of competent jurisdiction or other Authority of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree or ruling or other
action shall have become final and nonappealable;
(d) by Parent (provided, that no Buyer is then in material
breach of any of its representations, warranties or covenants in this
Agreement) if there shall have been a material breach of any of the
representations, warranties or covenants of any Shareholder or Related JLW
Owner (if applicable) or JLW Party in this Agreement, any other Operative
Agreement or any Integration Agreement, which breach (x) would result in a
failure of a condition set forth in Section 8.1, 8.2 or 8.3 of this
Agreement and (y) cannot be or has not been cured within 60 days following
written notice thereof to the Sellers' Representatives and the party
committing such breach (which notice shall specify in reasonable detail the
nature of such breach);
(e) by the Sellers' Representatives (provided that the
Shareholders, the Related JLW Owners (if applicable), or the JLW Parties
are not then in material breach of any of their respective representations,
warranties, agreements or covenants in this Agreement, any other Operative
Agreement or any Integration Agreement) if there shall have been a material
breach by any Buyer of any of its representations, warranties, agreements
or covenants in this Agreement, which breach (x) would result in a failure
of a condition set forth in Section 9.1 or 9.2 of this Agreement and (y)
cannot be or has not been cured within 60 days following written notice
thereof to Parent (which notice shall specify in reasonable detail the
nature of such breach);
(f) by either the Sellers' Representatives or Parent, if, at
the meeting of Parent's stockholders (including any adjournment or
postponement thereof) called pursuant to Section 6.5 hereof, the requisite
vote of the stockholders of Parent to approve the Proposed Actions shall
not have been obtained (or, if obtained, thereafter revoked or rescinded);
(g) by the Sellers' Representatives, in the event that the
Board of Parent shall have (i) not approved and recommended, or withdrawn
or modified in a manner adverse to the JLW Parties its approval or
recommendation of, the transactions contemplated by this Agreement, the
Applicable Joinder Agreements, the Other Purchase Agreements and the Other
Joinder Agreements (including the Proposed Actions), or any of them or (ii)
failed to call and hold the special meeting of the stockholders of Parent
at which the Proposed Actions are presented to and voted upon by the
stockholders of Parent in accordance with Section 6.5;
(h) by Parent if the Final Master Shareholder List shall not
have been delivered to and accepted by Parent on or prior to the Commitment
Date, provided that Parent gives written notice of such termination to the
Sellers' Representatives within two Business Days thereafter; or
(i) by Parent or the Sellers' Representatives at any time
prior to the mailing of the final Proxy Statement, if the pro forma
consolidated balance sheet of Parent and the Companies, the Asia Region
Companies and the Europe/USA Region Companies as of June 30, 1998 (which
balance sheet assumes that the transactions contemplated by this Agreement
and the Other Purchase Agreements had occurred on June 30, 1998) included
in the final Proxy Statement, and the pro forma consolidated financial
statements of Parent and the Companies, the Asia Region Companies and the
Europe/USA Region Companies for the six months ended June 30, 1998 and the
year ended December 31, 1997 (which statements assume that the transactions
contemplated by this Agreement and the Other Purchase Agreements had
occurred on January 1, 1997) included therein, shall in each case not be
substantially the same as those contained in the Offering Memorandum, other
than as a result of (i) the inclusion of (A) financial information relating
to the transactions contemplated by the Compass Agreement and the financial
statements of the entities or businesses acquired pursuant to the Compass
Agreement or (B) the financial statements of the applicable entities for
the nine months ended September 30, 1998 (rather than for the six months
ended June 30, 1998), or (ii) changes which are not material or, if
material, are reasonably acceptable to Parent and the Sellers'
Representatives.
In addition, (i) this Agreement and the Applicable Joinder
Agreements and the other Operative Agreements shall terminate automatically
(without any action on the part of the Sellers' Representatives or Parent)
in the event that either or both of the Other Purchase Agreements shall
have terminated or been terminated pursuant to and in accordance with
Section 11.1(f) or Section 11.1(g) thereof and (ii) this Agreement and the
Applicable Joinder Agreements and the Other Operative Agreements shall
terminate automatically (without any action on the part of the Sellers'
Representatives or Parent) in the event that either or both of the Other
Purchase Agreements shall have terminated or been terminated pursuant to
and in accordance with any subsection of Section 11.1 thereof other than
Section 11.1(f) and Section 11.1(g).
Section 11.2 Effect of Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 11.1 hereof, written
notice thereof shall forthwith be given to the other parties and the
transactions contemplated by this Agreement and the Applicable Joinder
Agreements shall be terminated and abandoned, without further action by
Parent, the Sellers' Representatives or any other party hereto. If the
transactions contemplated by this Agreement and the Applicable Joinder
Agreements are so terminated and abandoned as provided herein:
(a) Notwithstanding any such termination, Sections 11.2,
11.3, 13.2, 13.9, 13.10, 13.11 and 13.14 hereof shall remain in full force
and effect;
(b) The Confidentiality Agreement shall remain in full force
and effect; and
(c) No party hereto shall have any liability or further
obligation to any other party to this Agreement or the Applicable Joinder
Agreements, except (i) as stated in subparagraphs (a) and (b) of this
Section 11.2 or (ii) for any wilful breach of this Agreement or the
Applicable Joinder Agreements; provided that, in the case of wilful breach
by any JLW Party, no Buyer shall be entitled to recover any damages or
obtain any similar relief from any Shareholder, Related JLW Owner, Sellers'
Representative, Shareholders' Representative, Company or Company
Subsidiary, it being agreed and acknowledged that damages or similar relief
to which any Buyer might be entitled by reason of any such wilful breach
shall be obtained solely from the Sellers; provided, that the foregoing
shall not limit any equitable remedies available to the Buyers prior to
termination of this Agreement as a result of a breach or violation of this
Agreement or any Applicable Joinder Agreement.
Section 11.3 Termination Fee. Notwithstanding any other provision of
this Agreement, if this Agreement and each of the Other Purchase Agreements
is terminated pursuant to Section 11.1(f) or 11.1(g) hereof and thereof or
clause (i) of the last sentence of Section 11.1 hereof or thereof Parent
shall promptly pay to the Shareholders' Representatives on behalf of the
Sellers US$1,473,155 (the "Termination Fee").
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
Section 12.1 Survival of Representations, Warranties and Covenants.
None of the representations and warranties of the Buyers contained in this
Agreement or any other Operative Agreement, or any instrument delivered
pursuant hereto or thereto, shall survive the Closing. All representations
and warranties of the Sellers, the Companies, the Management Shareholders,
the Shareholders and the Related JLW Owners contained in this Agreement or
any other Operative Agreement, or any instrument delivered pursuant hereto
or thereto, shall survive the Closing for the period specified in the
Escrow Agreement. The covenants and agreements of Parent contained in this
Agreement or any other Operative Agreement, or any instrument delivered
pursuant hereto or thereto, shall not survive the Closing, unless such
covenants or agreements specified terms or are contemplated to be performed
in whole or in part on or after the Closing, in which case any such
covenants or agreements shall survive for such specify terms or until
performed in full. The covenants and agreements of the JLW Parties
contained herein and the Shareholders and the Related JLW Owners in the
Applicable Joinder Agreements or any other Operative Agreement shall
survive the Closing without limitation as to time unless such covenants or
agreements specify a term, in which case such covenants or agreements shall
survive for such specified term. The right to indemnification under the
Escrow Agreement with respect to representations, warranties, covenants and
obligations in this Agreement, the Applicable Joinder Agreement and the
Other Joinder Agreements shall not be affected by any investigation
conducted or Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement, the
Applicable Joinder Agreement and the Other Joinder Agreements or the
Closing Date, with respect to the accuracy or inaccuracy of, or compliance
with, any such representation, warranty, covenant or obligation. The
waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification under the Escrow
Agreement with respect to such representations, warranties, covenants and
obligations.
Section 12.2 Indemnification of the Buyers. Parent and the other
Indemnified Persons (as defined in the Escrow Agreement), shall be
indemnified, defended and held harmless from and against any and all
Liabilities and against all claims in respect thereof to the extent, and
subject to the terms, conditions and limitations, set forth in the Escrow
Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Further Efforts. Each of the parties to this Agreement
shall: (i) promptly make any filings required by them or any of their
subsidiaries, and thereafter make any other submissions required under all
applicable Laws with respect to the transactions contemplated hereby and by
the other Operative Agreements; and (ii) use commercially reasonable
efforts to promptly take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this
Agreement and the other Operative Agreements. In addition, in the event of
any Action relating hereto or to the transactions contemplated by this
Agreement and by the other Operative Agreements, the parties to this
Agreement agree to cooperate and use commercially reasonable efforts to
defend against and respond thereto.
Section 13.2 Expenses. Subject to Section 11.3 hereof and except as
otherwise expressly provided herein or therein, each of the JLW Parties and
the Buyers shall pay its own legal, accounting and other miscellaneous
expenses incident to this Agreement, the other Operative Agreements and the
Integration Agreements and the transactions contemplated hereby and
thereby; provided, that the JLW Parties may cause any of their expenses to
be paid or assumed by one or more of the Companies, so long as each such
payment or assumption is identified and reflected in the Final Closing
Statements.
Section 13.3 Press Releases and Announcements. After the date of
this Agreement and prior to the Closing, no party to this Agreement shall
directly or indirectly make or cause to be made any public announcement or
disclosure, or issue any notice with respect to this Agreement or any other
Operative Agreement or the transactions contemplated by this Agreement and
the other Operative Agreements without the prior consent of the Sellers'
Representatives, in the case of Parent, and Parent, in the case of any JLW
Parties; provided, that any party to this Agreement may make any public
announcement or disclosure which is with the advice of counsel, required by
applicable Law or regulations or applicable stock exchange requirements.
Section 13.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the other Operative Agreements, the schedules and
the other writings referenced herein or therein and the Confidentiality
Agreement (a) constitute the entire understanding and agreement of the
parties hereto and thereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between
such parties and (b) are not intended to confer upon any Person other than
the parties any rights or remedies hereunder.
Section 13.5 Amendment, Extension and Waiver. At any time prior to
the Closing Date, Parent, the Sellers' Representatives and the
Shareholders' Representatives may (a) amend this Agreement, (b) extend the
time for the performance of any of the obligations or other acts of the
parties hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (d) waive compliance with any of the agreements or conditions contained
herein. This Agreement may not be amended except by an instrument in
writing signed by Parent, by the Sellers' Representatives and the
Shareholders' Representatives on behalf of all of the Sellers and the
Companies and all of the Shareholders and Related JLW Owners. Any
agreement on the part of a party hereto to any extension or waiver under
this Section 13.5 shall be valid only if set forth in an instrument in
writing signed by Parent and the Shareholders' Representatives.
Section 13.6 Headings. The Article and Section headings contained
herein are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 13.7 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier, or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed received)
to the parties at the addresses set forth below (or to such other addresses
or, in the case of copies, to such other Persons as shall be set forth in
notices given in accordance with the provisions hereof). Such notices
shall be deemed given: at the time personally delivered, if delivered by
hand with receipt acknowledged; upon transmission thereof by the sender and
issuance by the transmitting machine of a confirmation slip that the number
of pages constituting the notice have been transmitted without error, if
telecopied, and the second business day after timely delivery to the
courier, if sent by air courier.
(i) If to any Seller or Company, to:
Ken Winterschladen and David Gold
JLW Australia Pty Limited
Northpoint
Level 27
100 Miller Street
North Sydney
(ii) If to the Sellers' Representatives, to:
Chris Peacock
c/o Jones Lang Wootton
22 Hanover Square
London W1A 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Mike Smith
c/o Jones Lang Wootton
22 Hanover Square
London W1A 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
(iii) If to the Shareholders' Representatives, to:
Robert Orr
c/o Jones Lang Wootton
22 Hanover Square
London WIA 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Gerry Kipling
c/o Jones Lang Wootton Ltd
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Ken Winterschladen
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-2-9323-5888
Fax: 61-2-9232-8120
(iv) If to a Shareholder or Management Shareholder, to such
Shareholder or Management Shareholder at the address, telephone number or
fax number set forth on the Applicable Joinder Agreement to which such
Shareholder or Management Shareholder is a party.
(v) In the case of (i), (ii), (iii) and (iv) above, with a
copy (which shall not constitute notice) given in the manner prescribed
above, to:
Richard Jones
c/o Jones Lang Wootton
9 Queen Victoria Street
London EC4N 4YY
England
Telephone: 44-171-248-6040
Fax: 44-171-454-8888
and to:
Christopher Radford
c/o Jones Lang Wootton Ltd
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Andrew Martin
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-3-9672-6666
Fax: 61-3-9600-1715
and to:
Slaughter and May
35 Basinghall Street
London EC2V
Attn: Andrew McClean, Esq.
Telephone: 171-600-1200
Fax: 171-600-0289
and to:
Sidley & Austin
875 Third Avenue
New York, NY 10022
Attn: James D. Johnson, Esq.
Telephone: 212-906-2000
Fax: 212-906-2021
(v) If to any Buyer:
LaSalle Partners Incorporated
200 East Randolph Street
Chicago, Illinois 60601
Attn: Chief Executive Officer
Telephone: 312-782-5800
Fax: 312-228-0980
With a copy (which shall not constitute notice) given in the manner
prescribed above, to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Rodd M. Schreiber, Esq.
Telephone: 312-407-0700
Fax: 312-407-0411
and to:
Hagan & Associates
200 East Randolph Street
Suite 4322
Chicago, Illinois 60601
Attn: Robert K. Hagan
Telephone: 312-228-2994
Fax: 312-228-0982
Section 13.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned
by any party without the written consent of the other parties.
Section 13.9 Applicable Law. Except as otherwise specified in this
Agreement, this Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Illinois, without giving effect
to the conflict of laws provisions thereof.
Section 13.10 Jurisdiction. Subject to the arbitration provisions
set forth in Section 7.1 of the Escrow Agreement, each of the parties
hereto hereby expressly and irrevocably submits to the non-exclusive
personal jurisdiction of the United States District Court for the Northern
District of Illinois and to the jurisdiction of any other competent court
of the State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441, and to the non-exclusive
jurisdiction of the High Court of England and Wales in London (the "English
Courts"), in connection with all disputes arising out of or in connection
with this Agreement or the transactions contemplated hereby and agrees not
to commence any litigation relating thereto except in such courts; provided
that if the aforementioned Illinois Courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal court located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile. Notwith-
standing the foregoing, each of the parties hereto agrees that each of the
other parties shall have the right to bring any action or proceeding for
enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
Section 13.11 Service of Process. Each party irrevocably consents to
the service of process outside the territorial jurisdiction of the courts
referred to in Section 13.10 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified in or pursuant to Section 13.7 hereof. However, the
foregoing shall not limit the right of a party to effect service of process
on the other party by any other legally available method.
Section 13.2 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 13.13 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 13.14 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO
THE FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
ARTICLE XIV
CERTAIN DEFINITIONS
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Authority of any nature,
civil, criminal, regulatory or otherwise, in law or in equity.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such first mentioned
Person, it being agreed that, for avoidance of doubt, the Continuing
Affiliates shall not be Affiliates.
"Applicable Trust" means the trust operated pursuant to the
Transact (NZ) Trust Deed or Transact (AUS) Trust Deed, as applicable.
"Applicable Trust Deed" means the Transact (NZ) Trust Deed or
Transact (AUS) Trust Deed, as applicable.
"Asia Region Sellers" means the entities named as "Sellers"
under the Asia Region Agreement.
"Asia Region Shareholders" means, collectively, the Persons
named as "Shareholders" on the Final Master Shareholder List under the Asia
Region Agreement.
"Asia-Related Equity Interests" means, collectively, the
following equity interest held by JLW Australia as of the date of this
Agreement: (i) 10 "A" Shares and 100 "B" Shares of JLW Property Consultants
Pte Ltd, a Singapore corporation, (ii) 10 "A" Shares of Jones Lang Wootton
Limited, a Hong Kong corporation, (iii) 4,000 shares of JLW Transact
(Thailand) Co. Limited, a Thailand corporation, (iv) 9,000 ordinary shares
of JLW Transact Pte Limited, a Singapore corporation and (v) 1,000 shares
of JLW Transact Limited (HK), a Hong Kong corporation.
"Business Day" means any day (other than a Saturday or Sunday)
on which banks are permitted to be open and transact business in Chicago,
Illinois and London, England.
"Closing Net Worth"means, in respect of a specified group of
companies, the sum of the book values of all assets of such companies,
minus the sum of all liabilities of such companies, determined in each case
on a consolidated or combined basis (as applicable) in accordance with the
Agreed Generally Accepted Accounting Principles based on the applicable
Closing Balance Sheet, or applicable Final Closing Balance Sheet, as
applicable. Notwithstanding the foregoing, for purposes of calculating
such Closing Net Worth: (a) the applicable Closing Balance Sheets or Final
Closing Balance Sheets shall include, among other things, accruals (if not
satisfied in full) for (i) Liabilities to former partners of JLW England,
JLW Ireland and JLW Scotland, (ii) Liabilities relating to the Jones Lang
Wootton (Hong Kong) Annuity Scheme, (iii) Transfer Taxes payable by any of
such companies in connection with the Integration and the other
transactions contemplated by this Agreement and the Other Purchase
Agreements, (iv) other Tax Liabilities of any such companies relating to
the Integration and the other transactions contemplated by this Agreement
and the Other Purchase Agreements, and (v) out-of-pocket fees and expenses
(including, without limitation, legal, financial advisory and accounting)
payable by any of such companies in connection with the Integration and the
other transactions contemplated by this Agreement and the Other Purchase
Agreements; and (b) there shall be added to the assets of the applicable
group of companies to the extent paid prior to Closing or accrued on the
applicable Closing Balance Sheet or Final Closing Balance Sheet, an amount
equal to (i) any Transfer Taxes of a type described in clause (iii) above
("JLW Transfer Taxes"), whether so accrued or previously paid (or payable
by Parent or any Parent Subsidiaries and deemed accrued or accrued as
provided below), to the extent that the total of such JLW Transfer Taxes so
accrued or paid is less than or equal to US$3 million in the aggregate for
all Companies, Asia Region Companies and Australasia Region Companies and
their respective Subsidiaries and (ii) any out-of-pocket fees and expenses
of a type described in clause (v) above ("JLW Fees and Expenses"), whether
accrued or previously paid (or payable by Parent or any Parent Subsidiaries
and deemed accrued or accrued as provided below), to the extent that the
total of such fees and expenses is less than or equal to US$12 million in
the aggregate for all Companies, Asia Region Companies and Australasia
Region Companies and their respective Subsidiaries (it being understood
that the credits for any such JLW Transfer Taxes or JLW Fees and Expenses
so previously paid or accrued shall be allocated among the Closing Balance
Sheets (or Final Closing Balance Sheets) in such manner as the
Shareholders' Representatives shall specify); provided that the amount
required to be added back to the assets of the applicable group of
companies shall be net of any associated tax benefits to such group of
companies as included on the applicable Closing Balance Sheet (or Final
Closing Balance Sheet). For the purpose of determining such Closing Net
Worth, there shall be pro forma accruals on the applicable Closing Balance
Sheets and Final Closing Balance Sheets (a) in an aggregate amount equal to
any Transfer Taxes payable by Parent or any of its Subsidiaries in
connection with the Integration or the transactions contemplated by this
Agreement and the Other Purchase Agreements (to the extent not already
accrued for on any Closing Balance Sheet or Final Closing Balance Sheet)
and (b) in an aggregate amount equal to the aggregate amount of any out-of-
pocket fees and expenses (including, without limitation, legal, financial
advisory and accounting fees and expenses) that are (i) attributable to any
JLW Partnership, Company (as defined in the Europe/USA Region Agreement),
Asia Region Company or Australasia Region Company or any of their
respective Subsidiaries in connection with the Integration or the
transactions contemplated by this Agreement and the Other Purchase
Agreements but (ii) have not been accrued on any Closing Balance Sheet or
Final Closing Balance Sheet, as the case may be, and (iii) are payable by
Parent or any Parent Subsidiary. Any such pro forma accruals shall be
apportioned among the five Closing Balance Sheets (and corresponding Final
Closing Balance Sheets) in such manner as the Shareholders' Representatives
shall specify.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Disclosure Schedule" means the disclosure schedule
delivered by the Sellers' Representatives to Parent prior to the execution
of this Agreement.
"Company Material Adverse Effect" means (i) an individual or
cumulative material adverse change in or effect on the business,
properties, assets, liabilities, financial condition or results of
operations of the Companies, the Asia Region Companies and the Europe/USA
Region Companies and their respective Subsidiaries, taken as a whole, (ii)
an individual or cumulative event or development that is reasonably
expected to have a material adverse change in or effect on the business,
properties, assets, liabilities, financial condition or results of
operations of the Companies, the Asia Region Companies and the Europe/USA
Region Companies and their respective Subsidiaries, taken as a whole, or
(iii) any adverse change which would prevent any JLW Seller, Shareholder,
Other Shareholder, JLW Seller, Company, Asia Region Company or Europe/USA
Region Company from consummating the transactions contemplated by this
Agreement and the Other Purchase Agreements.
"Company Subsidiary" or "Company Subsidiaries" means any direct
or indirect Subsidiary of a Company.
"Consent" means any consent, approval, waiver, grant,
concession, Contract, License, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any
Person, including, without limitation, any Authority.
"Consideration" means, collectively, the Convertible Notes
(including the Consideration Shares issuable upon conversion thereof) and
the Cash Consideration.
"Continuing Affiliate" means any of JLW Executive
Superannuation Pty Limited (NSW), Caylott Pty Limited (NSW), JLW Nominees
Pty Limited (NSW), JLW Administration Pty Limited (Australia), JLW Property
Financial Services Limited (Australia), Jones Lang Wootton Fund Management
Pty Limited (Australia), JLW Fund Management Pty Limited (Australia), Jones
Lang Wootton International Fund Management Pty Limited (Australia), JLW
International Fund Management Pty Limited (Australia), JLW Fund Management
Limited (New Zealand, JLW Facilities Management Limited (New Zealand) or
Jones Lang Wootton International Fund Management Limited (New Zealand).
"Contract" or "Contracts" means any agreement, arrangement or
understanding, whether written or oral, including, without limitation, any
agreement to manage the operation and/or leasing of commercial or retail
property, mortgage, indenture, note, guarantee, lease, License, franchise
purchase agreement or sale agreement.
"Controlled Affiliate" means, with respect to any Shareholder
or, if applicable, Related JLW Owner, any Person controlled, directly or
indirectly, through one or more intermediaries, by such Shareholder or, if
applicable, such Related JLW Owner.
"Corporate Seller" means either JLW Australia Parent or JLW
(NZ) Holdings Parent.
"DEL" means DEL-LPL Limited Partnership, a Delaware limited
partnership, or DEL-LPAML Limited Partnership, a Delaware limited
partnership, or both.
"Encumbrances" means all Liens and any other material
limitations or restrictions on rights of ownership (including any
restriction on the right to vote, sell or otherwise dispose of any share
capital or capital stock or other ownership interest) or other encumbrances
of any nature whatsoever.
"Environmental Laws" means all federal, national, interstate,
state, provincial, local and foreign Laws, legislation (whether, without
limitation, civil, criminal or administrative) statutes, treaties,
statutory instruments, directives, by-laws, judgments regulations, notices,
orders, government circulars, codes of practice and guidance notes or
decisions of any competent regulatory body relating to pollution or
protection of or compensation of harm to human health, safety, or the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"ERISA Affiliate" means, with respect to any entity, any trade
or business, whether or not incorporated that, together with any such
entity would be deemed a "single employer" within the meaning of Section
4001(b)(1) of ERISA.
"Europe/USA Region Shareholders" means, collectively, the
Persons named as "Shareholders" on the Final Master Shareholder List under
the Europe/USA Region Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Final Master Shareholder List" means the definitive list of
Shareholders who, together with any Related JLW Owners, have executed and
delivered to Parent each of the Applicable Joinder Agreement, the
Stockholder Agreement, the Escrow Agreement, and any other documents,
instruments or writings required to be delivered by such Shareholders and
Related JLW Owners pursuant to this Agreement, which list is to be
delivered to Parent pursuant to Section 2.1 hereof and shall set forth with
respect to each Shareholder, (i) the name of such Shareholder and, if
applicable, the Related JLW Owner, (ii) the residence and citizenship of
such Shareholder and, if applicable, the Related JLW Owner, (iii) the
Shares (by Company), or beneficial ownership, as applicable, currently
owned by or allocated to such Shareholder and, if applicable, the Related
JLW Owner, and (iv) the number of shares of Parent Common Stock issuable
(other than Adjustment Shares) in respect of such Shares (upon conversion
of the applicable Convertible Note), which shares shall be identified as
Initial Distribution Shares, Forfeiture Shares and Escrow Shares.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended.
"Income Tax" or "Income Taxes" means any federal, state, local
or foreign income, franchise or similar Tax.
"Independent Director" means any individual who is not (i) a
past or present employee or officer of Parent or any Company, Europe/USA
Region Company or Asia Region Company, or any of their respective
Affiliates or (ii) any Affiliate of such an employee or officer, except in
each case as otherwise agreed by the Parent Nominating Committee and the
JLW Nominating Committee.
"Intangible Property Rights" means the following:
(i) Patent Rights. All United States, international
and foreign patents and patent applications, and utility models
("Patents");
(ii) Trademarks. Common law and registered
trademarks, service marks and tradenames and all applications for
registration of the foregoing ("Trademarks");
(iii) Computer Programs. Computer programs, including
all source and object code, data compilations and collections of data,
whether machine-readable or otherwise (the "Computer Programs");
(iv) Copyrights. United States and foreign registered
and unregistered copyrights, applications for copyright registration,
including copyrights in Computer Programs, business information and
topography or semi-conductor chip product "mask works" ("Copyrights");
(v) Personal Rights. Rights of publicity and privacy
including, without limitation, the right to use the names,
likenesses, signatures, voices, personal information and biographies of
real persons; and
(vi) Technology. Trade secrets and confidential
information, technology and know-how.
"Integration" means the series of actions contemplated to be
taken under the terms of the Integration Plan and the Integration
Agreements.
"IRS" means the United States Internal Revenue Service.
"JLW Combined 9/30 Balance Sheet Schedules"means the schedules
combining the Nine-Month Interim Financial Statements, so as to eliminate
or adjust for (A) intercompany activity between or among any one or more of
(1) JLW England and its Subsidiaries, (2) JLW Scotland and its Subsidiaries
and (3) JLW Ireland and its Subsidiaries, (B) intercompany activity between
or among (x) any one or more of such entities and (y) any one or more of
the Asia Region Companies and their respective Subsidiaries and (z) any one
or more of the Australasia Region Companies and their respective
Subsidiaries and (C) the gross-up of revenues and expenses (previously
accounted for under the cost or equity method of accounting) related to the
businesses which will be one-hundred percent owned as a result of the
transactions contemplated by this Agreement and the Other Purchase
Agreements, in each case as of September 30, 1998.
"JLW Combined 9/30 Financial Statement Schedules" means,
collectively, the JLW Combined 9/30 Income Statement Schedules and the JLW
Combined 9/30 Balance Sheet Schedules.
"JLW Combined 9/30 Income Statement Schedules" means the
schedules combining the consolidated or combined (as applicable) profit and
loss accounts contained in the Nine-Month Interim Financial Statements, so
as to eliminate or adjust for (A) intercompany activity between or among
any one or more of (1) JLW England and its Subsidiaries, (2) JLW Scotland
and its Subsidiaries, and (3) JLW Ireland and its Subsidiaries, (B)
intercompany activity between or among (x) any one or more of such entities
and (y) any one ore more of the Asia Region Companies and their respective
Subsidiaries and (z) any one or more of the Australasia Region Companies
and their respective Subsidiaries, and (C) the gross-up of revenues and
expenses (previously accounted for under the cost or equity method of
accounting) related to the businesses which will be one-hundred percent
owned as a result of the transactions contemplated by this Agreement and
the Other Purchase Agreements, in each case for the nine months period
ended September 30, 1998.
"JLW Parties" means, collectively, the Sellers, the Companies
and the Management Shareholders and any one of them is individually
referred to as a JLW Party.
"JLW Sellers" means collectively, (i) each of the JLW
Partnerships, (ii) the Sellers and (iii) the Persons named as "Sellers" in
the Asia Region Agreement.
"Knowledge" means with respect to (i) any Management
Shareholder such Management Shareholder's actual knowledge without any
obligation to undertake any inquiry, (ii) Sellers, the Companies and the
Company Subsidiaries, the actual knowledge of the persons identified on
Exhibit 8 hereto after reasonable inquiry of the employees of the Companies
and Company Subsidiaries who are responsible for information technology and
intellectual property matters, regulatory matters, compliance with
environmental laws, employee benefits and labor matters and litigation
matters and (iii) Parent and the Parent Subsidiaries, the actual knowledge
of the persons identified on Exhibit 9 hereto after reasonable inquiry of
the employees of Parent and the Parent Subsidiaries who are responsible for
regulatory matters, employee benefits and labor matters and litigation
matters.
"Liabilities" shall mean any and all debts, losses,
liabilities, claims, damages, fines, costs, royalties, proceedings,
deficiencies or obligations (including those arising out of any Action,
such as any settlement or compromise thereof or judgment or award therein),
of any nature, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due, and whether or not resulting
from third-party claims, and any out-of-pocket costs and expenses
(including reasonable attorneys', accountants', or other fees and expenses
incurred in defending any Action or in investigating any of the same or in
asserting any rights hereunder).
"Licenses" means all licenses, permits, franchises and other
authorizations.
"Liens" means all mortgages, pledges, security interests,
liens, charges, options, conditional sales Contracts, claims, restrictions,
covenants, easements, rights of way, title defects or third party interests
or other Encumbrances or restrictions of any nature whatsoever.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, waste, toxic substances, hazardous substances,
dangerous substances, radioactive materials, asbestos, petroleum and
petroleum products and similar materials.
"Nine-Month Interim Financial Statements" means the unaudited
consolidated or combined (as applicable) balance sheet of the Companies and
the Company Subsidiaries, in each case as of September 30, 1998 and the
related consolidated or combined (as applicable) profit and loss account,
statement of cash flows, statement of movements on reserves and statement
of total recognized gains and losses for the nine month period then ended.
"NYSE" means the New York Stock Exchange, Inc.
"Offering Memorandum" means the Offering Memorandum relating to
the transactions contemplated by the Operative Agreements (as defined
herein and as defined in each Other Purchase Agreement) to be delivered to
the Designated JLW Shareholders.
"Operative Agreements" means, collectively, this Agreement, the
Joinder Agreements, the Stockholder Agreements, the Escrow Agreement and
the Convertible Notes.
"Other Joinder Agreements" means the Joinder Agreements (Asia)
and the Joinder Agreements (Europe/USA), in the forms attached to the Asia
Region Agreement and the Europe/USA Region Agreement, respectively.
"Other Shareholders" means, collectively, the Asia Region
Shareholders and the Europe/USA Region Shareholders.
"Parent Disclosure Schedule" means the disclosure schedule
delivered by Parent to the Shareholders' Representatives prior to the
execution of this Agreement.
"Parent Material Adverse Effect" means (i) an individual or
cumulative material adverse change in, or effect on, the business,
properties, assets, liabilities, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole, or (ii) an
individual or cumulative event or development that is reasonably expected
to have a material adverse change in or effect on the business, properties,
assets, liabilities, financial condition or results of operations of Parent
and its Subsidiaries, taken as a whole, or (iii) any adverse change which
would prevent Parent or any other Buyer (as defined herein and in the Asia
Region Agreement) from consummating the transactions contemplated by this
Agreement and the Other Purchase Agreements.
"Parent Domestic Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option and
other equity compensation, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, supplemental pension or
retirement plan, program, Contract, agreement or arrangement, and each
other "employee benefit plan" (within the meaning of section 3(3) of ERISA)
that is sponsored, maintained or contributed to or required to be
contributed to by Parent or a Parent Subsidiary for the benefit of any
employee or former employee of the Parent or Parent Subsidiary and with
respect to which any Parent or Parent Subsidiary may incur liability, but
excluding any such plan, program, Contract, agreement or arrangement that
is (i) maintained outside of the United States (as described in Section
4(b)(4) of ERISA) or (ii) benefitting any employee or former employee of
any Compass entity.
"Parent Foreign Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option and
other equity compensation, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement,
or supplemental pension or retirement plan, program, Contract, agreement or
arrangement, and each other employee benefit plan or perquisite that (i) is
sponsored, maintained or contributed to or required to be contributed to by
Parent or a Parent Subsidiary for the benefit of any employee of former
employee of Parent or Parent Subsidiary and with respect to which Parent or
Parent Subsidiary may incur liability and (ii) is not a Parent Domestic
Plan; provided, however, that, for purposes of this Agreement, the term
"Parent Foreign Plan" shall not include any such plan benefitting any
employee or former employee of any Compass entity.
"Parent Significant Subsidiary" means any Parent Subsidiary
that
constitutes a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
"Parent Subsidiary" or "Parent Subsidiaries" means any direct
or indirect Subsidiary of Parent.
"Permitted Liens" means (i) liens shown on the Interim
Financial Statements or the Parent Interim Balance Sheet, as applicable, as
securing specified liabilities (with respect to which no default exists),
(ii) liens for current taxes not yet due and (iii) minor imperfections of
title and encumbrances, if any, which are not substantial in amount, do not
detract from the value of the property subject thereto or impair the
operations related thereto and have arisen only in the ordinary and usual
course of business consistent with past practice.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Plan" shall mean each bonus, deferred compensation, incentive
compensation, stock purchase, stock option and other equity compensation
plan program, Contract or arrangement; each employment, consulting,
severance or termination pay plan, program, Contract or arrangement; each
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program,
agreement or arrangement, and each other employee benefit plan that is
sponsored, maintained or contributed to or required to be contributed to by
any Company or Company Subsidiary, for the benefit of any employee or
former employee of any Company or Company Subsidiary and with respect to
which any Company or Company Subsidiary may incur liability.
"Related JLW Owner" means the director, officer or employee of
a Seller, Company or Company Subsidiary both (i) who owns or holds an
interest (beneficial or otherwise), direct or indirect, in any Shareholder
or through which such Shareholder will acquire Shares in the Integration
and (ii) whose name is set forth opposite such Shareholder's name on the
Final Master Shareholder List.
"Related Parties" means any Shareholder, the Related JLW Owner
of such Shareholder (if applicable), the spouse of such Shareholder, the
spouse of such Related JLW Owner (if applicable), any descendant of such
Shareholder, any descendant of the Related JLW Owner (if applicable) and
any Controlled Affiliate of any of the foregoing Persons.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Sellers' Representatives" means Chris Peacock and Mike Smith
or, after execution of the SCCA, any of their respective alternates as
provided in the SCCA.
"Shareholder Determination Date" means the date upon which the
Final Master Shareholder List is accepted by Parent.
"Shareholders' Representatives" shall mean Robert Orr, Ken
Winterschladen and Gerry Kipling, and Richard Jones, Christopher Radford
and Andrew Martin, as their respective alternates, pursuant to the SCCA.
"Subsidiary" or "Subsidiaries" means, with respect to any
Person, any other Person, the voting securities, other voting ownership or
voting partnership interests of which that are sufficient to elect at least
a majority of its board of directors or other governing body (or, if there
are not such voting interests, 50% or more of the equity interest of which)
at the time of determination, are owned directly or indirectly by such
first mentioned Person.
"Tax" or "Taxes" means taxes of any kind, levies or other like
assessments, customs, duties, imposts, charges or fees, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real
or personal property, asset, document, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, withholding,
employment, social security, workers compensation, utility, severance,
production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed by or
payable to the United States, or any state, county, local or foreign
government or subdivision or agency thereof, imposed with respect to the
income, business, operations or assets of any Company or Company
Subsidiary, and in each instance such term shall include any interest,
penalties and additions to Tax attributable to any such Tax.
"Tax Return" means any return, report, information return,
schedule or other document (including any related or supporting
information) with respect to Taxes filed or required to be filed with any
Authority.
"Transfer Taxes" means any transfer, documentary, sales, use,
stamp, duties, recording, filing or other similar tax or fees (including
any penalties, interest or additions).
"Trustee Seller" means either the Transact (NZ) Trust Trustee
or the Transact (AUS) Trust Trustee, as applicable.
"UK GAAP" means generally accepted accounting principles, as in
effect in the United Kingdom.
"US GAAP" means generally accepted accounting principles, as in
effect in the United States.
<PAGE>
IN WITNESS WHEREOF, this Purchase and Sale Agreement
(Australasia) has been duly executed and delivered by each of the
Management Shareholders and the duly authorized officer of each of the
Sellers, the Companies, Parent, US Acquisition Sub and Australia
Acquisition Sub, as of the day and year first above written.
LASALLE PARTNERS INCORPORATED
By: /s/ William E. Sullivan
Name: William E. Sullivan
Title: Executive Vice President and Chief
Financial Officer
JLLINT, INC.
By: /s/ Jeanann Diab
Name: Jeanann Diab
Title: Vice President
LPI (AUSTRALIA) HOLDINGS PTY LIMITED
By: /s/ Jeanann Diab
Name: Jeanann Diab
Title: Vice President
<PAGE>
JLW HOLDINGS PTY LIMITED
By: /s/ Michael Smith
Name: Michael Smith
Title: Director
JLW AUSTRALIA PTY LIMITED
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
JLW (NEW ZEALAND) HOLDINGS PTY LTD.
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
Witness signature: /s/ Robert Scott
Grant
Name of witness: Robert Scott Grant
Occupation: Chartered Accountant
City/Town: Melbourne, Victoria
JONES LANG WOOTTON HOLDINGS LIMITED
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
Witness signature: /s/ Robert Scott
Grant
Name of witness: Robert Scott Grant
Occupation: Chartered Accountant
City/Town: Melbourne, Victoria
JLW TRANSACT LIMITED
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
Witness signature: /s/ Robert Scott
Grant
Name of witness: Robert Scott Grant
Occupation: Chartered Accountant
City/Town: Melbourne, Victoria
JONES LANG WOOTTON TRANSACT PTY LTD.
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
JONES LANG WOOTTON TRANSACT (VIC) PTY LTD.
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
JONES LANG WOOTTON TRANSACT (QLD) PTY LTD
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
BENBRIDGE (NZ) LIMITED, as Trustee
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
Witness signature: /s/ Robert Scott
Grant
Name of witness: Robert Scott Grant
Occupation: Chartered Accountant
City/Town: Melbourne, Victoria
BENBRIDGE AUSTRALIA PTY LIMITED,
as Trustee
By: /s/ Michael Smith
Name: Michael Smith
Title: Director
<PAGE>
MANAGEMENT SHAREHOLDERS:
/s/ Mike Smith
Mike Smith
/s/ Chris Peacock
Chris Peacock
/s/ Robin Broadhurst
Robin Broadhurst
/s/ Chris Brown
Chris Brown
/s/ Michael Dow
Michael Dow
/s/ Gerry Kipling
Gerry Kipling
/s/ Peter Lee
Peter Lee
/s/ Robert Orr
Robert Orr
/s/ Clive Pickford
Clive Pickford
/s/ Ken Winterschladen
Ken Winterschladen
EXHIBIT 10.3
- ------------
PURCHASE AND SALE AGREEMENT
(ASIA)
by and among
LASALLE PARTNERS INCORPORATED,
JLLINT, INC.,
JLLIP, INC.,
THE JONES LANG WOOTTON ENTITIES LISTED HEREIN,
The Persons named as "Management Shareholders"
on the Signature Pages hereto
and
The "Shareholders" and "Related JLW Owners"
who hereafter execute a Purchase and Sale Joinder
Agreement (Asia)
dated as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . 3
SECTION 1.1 Purchase and Sale of Shares . . . . . 3
Section 1.2 Purchase Price. . . . . . . . . . . . 4
Section 1.3 Escrow of Certain Consideration
Shares. . . . . . . . . . . . . . . . 4
Section 1.4 Consideration Adjustment. . . . . . . 5
Section 1.5 Closing . . . . . . . . . . . . . . . 13
Section 1.6 Deliveries by the Shareholders. . . . 14
Section 1.7 Deliveries by the Buyer . . . . . . . 14
Section 1.8 Representatives . . . . . . . . . . . 15
Section 1.9 Corporate Governance Matters. . . . . 17
Section 1.10 Integration . . . . . . . . . . . . . 20
ARTICLE II
MATTERS RELATING TO THE SHAREHOLDER
TRANSACTION DOCUMENTS; REALLOCATION . . . . . . . . . . 20
Section 2.1 Signing Procedures. . . . . . . . . . 20
Section 2.2 Permitted Reallocation of
Consideration and Shares. . . . . . . 22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
SELLERS, THE COMPANIES AND THE
MANAGEMENT SHAREHOLDERS . . . . . . . . . . . . . . . . 22
Section 3.1 Shares; Claims to Assets. . . . . . . 23
Section 3.2 Corporate Organization. . . . . . . . 23
Section 3.3 Capitalization of the Companies . . . 24
Section 3.4 Subsidiaries and Affiliates . . . . . 25
Section 3.5 Authorization . . . . . . . . . . . . 25
Section 3.6 No Violation. . . . . . . . . . . . . 25
Section 3.7 Consents and Approvals. . . . . . . . 26
<PAGE>
Page
----
Section 3.8 Financial Statements. . . . . . . . . 26
Section 3.9 No Undisclosed Liabilities. . . . . . 28
Section 3.10 Absence of Certain Changes. . . . . . 29
Section 3.11 Real Property . . . . . . . . . . . . 29
Section 3.12 Intangible Property Rights. . . . . . 29
Section 3.13 Certain Contracts . . . . . . . . . . 32
Section 3.14 Licenses and Other
Authorizations. . . . . . . . . . . . 33
Section 3.15 Year 2000 and Euro Compliance . . . . 33
Section 3.16 Clients . . . . . . . . . . . . . . . 34
Section 3.17 Operation of the Businesses . . . . . 34
Section 3.18 Insurance . . . . . . . . . . . . . . 35
Section 3.19 Labor Relations . . . . . . . . . . . 35
Section 3.20 Employee Benefit Matters. . . . . . . 35
Section 3.21 Litigation. . . . . . . . . . . . . . 37
Section 3.22 Compliance with Law . . . . . . . . . 37
Section 3.23 Taxes . . . . . . . . . . . . . . . . 38
Section 3.24 Environmental Matters . . . . . . . . 39
Section 3.25 Personnel . . . . . . . . . . . . . . 40
Section 3.26 Disclosure Documents. . . . . . . . . 41
Section 3.27 Integration Matters . . . . . . . . . 41
Section 3.28 Related Party Transactions. . . . . . 41
Section 3.29 Securities Laws Matters . . . . . . . 41
Section 3.30 Opinion of Financial Advisor. . . . . 41
Section 3.31 Certain Fees. . . . . . . . . . . . . 41
ARTICLE IIIA
CERTAIN REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLERS. . . . . . . . . . . . . . 42
Section 3.1A Ownership and Sale of Shares. . . . . 42
Section 3.2A Authorization . . . . . . . . . . . . 42
Section 3.3A No Violation. . . . . . . . . . . . . 43
Section 3.4A Consents and Approvals. . . . . . . . 43
Section 3.5A Investment Matters. . . . . . . . . . 43
Section 3.6A Regulation S. . . . . . . . . . . . . 44
<PAGE>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT, US ACQUISITION SUB AND
US ACQUISITION SUB II . . . . . . . . . . . . . . . . . 45
Section 4.1 Corporate Organization. . . . . . . . 45
Section 4.2 Capitalization. . . . . . . . . . . . 45
Section 4.3 Subsidiaries and Affiliates . . . . . 46
Section 4.4 Authorization . . . . . . . . . . . . 46
Section 4.5 No Violation. . . . . . . . . . . . . 47
Section 4.6 Consents and Approvals. . . . . . . . 47
Section 4.7 SEC Reports and Financial
Statements. . . . . . . . . . . . . . 48
Section 4.8 No Undisclosed Liabilities. . . . . . 48
Section 4.9 Absence of Certain Changes
or Events . . . . . . . . . . . . . . 48
Section 4.10 Licenses and Other
Authorizations. . . . . . . . . . . . 49
Section 4.11 Insurance . . . . . . . . . . . . . . 49
Section 4.12 Labor Relations . . . . . . . . . . . 49
Section 4.13 Parent Employee Benefit Matters . . . 49
Section 4.14 Litigation. . . . . . . . . . . . . . 52
Section 4.15 Compliance with Law . . . . . . . . . 52
Section 4.16 Taxes . . . . . . . . . . . . . . . . 52
Section 4.17 Activities of US Acquisition
Sub and US Acquisition
Sub II. . . . . . . . . . . . . . . . 53
Section 4.18 Opinion of Financial Advisors . . . . 53
Section 4.19 Certain Fees. . . . . . . . . . . . . 53
Section 4.20 Disclosure Documents. . . . . . . . . 53
Section 4.21 Other . . . . . . . . . . . . . . . . 54
ARTICLE V
COVENANTS OF THE SELLERS
AND THE COMPANIES . . . . . . . . . . . . . . . . . . . 54
Section 5.1 Operation of the Companies. . . . . . 54
Section 5.2 Access. . . . . . . . . . . . . . . . 57
Section 5.3 Consents. . . . . . . . . . . . . . . 57
Section 5.4 Closing Net Worth . . . . . . . . . . 57
Section 5.5 Other Offers. . . . . . . . . . . . . 57
<PAGE>
Page
----
Section 5.6 Integration Matters . . . . . . . . . 58
Section 5.7 Nine-Month Financial Statements . . . 58
Section 5.8 Name Changes. . . . . . . . . . . . . 58
ARTICLE VI
COVENANTS OF PARENT . . . . . . . . . . . . . . . . . . 59
Section 6.1 Operation of Parent . . . . . . . . . 59
Section 6.2 Access. . . . . . . . . . . . . . . . 61
Section 6.3 Consents. . . . . . . . . . . . . . . 61
Section 6.4 Listing of Consideration Shares . . . 62
Section 6.5 Stockholder Approval; Proxy . . . . . 62
Section 6.6 Other Offers. . . . . . . . . . . . . 62
Section 6.7 Employee Trust. . . . . . . . . . . . 63
Section 6.8 Certain Stockholder Agreements. . . . 64
Section 6.9 Certain Instruments of
Indemnification . . . . . . . . . . . 64
Section 6.10 Employee Stock Options. . . . . . . . 64
section 6.11 Director and Officer
Indemnification . . . . . . . . . . . 64
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES. . . . . . . . 64
Section 7.1 No Injunctions or Restraints. . . . . 65
Section 7.2 No Litigation . . . . . . . . . . . . 65
Section 7.3 HSR Act and Other Approvals . . . . . 65
Section 7.4 Stockholders Vote . . . . . . . . . . 66
Section 7.5 Other Closings. . . . . . . . . . . . 66
Section 7.6 Consummation of the Integration . . . 66
Section 7.7 Execution and Delivery of the
other Operative Agreements. . . . . . 66
Section 7.8 Amendments. . . . . . . . . . . . . . 66
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT . . . . . . . . . . 66
Section 8.1 Representations and Warranties
Correct as of the Integration
Commencement Date . . . . . . . . . . 66
<PAGE>
Page
----
Section 8.2 Certain Representations and
Warranties Correct as of the
Closing Date. . . . . . . . . . . . . 67
Section 8.3 Performance; No Default . . . . . . . 67
Section 8.4 Delivery of Certificate . . . . . . . 67
Section 8.5 Opinions of Counsel to the
Sellers and the Companies . . . . . . 68
Section 8.6 Comfort Letter. . . . . . . . . . . . 68
Section 8.7 Settlement of Related Party
Accounts. . . . . . . . . . . . . . . 68
Section 8.8 No Material Adverse Effect. . . . . . 68
Section 8.9 Termination of Annuity Scheme . . . . 68
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS
AND THE SHAREHOLDERS. . . . . . . . . . . . . . . . . . 68
Section 9.1 Representations and Warranties
Correct as of the Integration
Commencement Date . . . . . . . . . . 68
Section 9.2 Performance; No Default . . . . . . . 69
Section 9.3 Delivery of Certificate . . . . . . . 69
Section 9.4 Opinions of Counsel to Parent . . . . 69
Section 9.5 Good Standing Certificate . . . . . . 69
Section 9.6 Listing of Consideration Shares . . . 69
Section 9.7 Certain Stockholder Agreements. . . . 69
Section 9.8 No Material Adverse Effect. . . . . . 69
Section 9.9 Amendments. . . . . . . . . . . . . . 70
Section 9.10 Directors and Officers. . . . . . . . 70
ARTICLE X
TAX MATTERS . . . . . . . . . . . . . . . . . . . 70
Section 10.1 Allocation of Purchase Price. . . . . 70
Section 10.2 Tax Returns . . . . . . . . . . . . . 70
Section 10.3 Mutual Cooperation. . . . . . . . . . 71
Section 10.4 Tax Covenant. . . . . . . . . . . . . 71
<PAGE>
Page
----
ARTICLE XI
TERMINATION . . . . . . . . . . . . . . . . . . . 71
Section 11.1 Termination of Agreement. . . . . . . 71
Section 11.2 Effect of Termination . . . . . . . . 73
Section 11.3 Termination Fee . . . . . . . . . . . 73
ARTICLE XII
SURVIVAL AND INDEMNIFICATION. . . . . . . . . . . . . . 74
Section 12.1 Survival of Representations,
Warranties and Covenants. . . . . . . 74
Section 12.2 Indemnification of the Buyers . . . . 74
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 74
Section 13.1 Further Efforts . . . . . . . . . . . 74
Section 13.2 Expenses. . . . . . . . . . . . . . . 75
Section 13.3 Press Releases and
Announcements . . . . . . . . . . . . 75
Section 13.4 Entire Agreement; No Third
Party Beneficiaries . . . . . . . . . 75
Section 13.5 Amendment, Extension and Waiver . . . 75
Section 13.6 Headings. . . . . . . . . . . . . . . 75
Section 13.7 Notices . . . . . . . . . . . . . . . 75
Section 13.8 Assignment. . . . . . . . . . . . . . 78
Section 13.9 Applicable Law. . . . . . . . . . . . 78
Section 13.10 Jurisdiction. . . . . . . . . . . . . 78
Section 13.11 Service of Process. . . . . . . . . . 79
Section 13.12 Words in Singular and
Plural Form . . . . . . . . . . . . . 79
Section 13.13 Counterparts. . . . . . . . . . . . . 79
Section 13.14 Waiver of Jury Trial. . . . . . . . . 79
ARTICLE XIV
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . 79
<PAGE>
EXHIBITS
Exhibit 1 Agreed Generally Accepted Accounting Principles
Exhibit 2 Determination of 1999 Compensation Expense
Exhibit 3 Form of DEL Stockholder Agreement
Exhibit 4 [Intentionally Left Blank]
Exhibit 5 [Intentionally Left Blank]
Exhibit 6 Form of Instrument of Assumption
Exhibit 7 Form of Instrument of Assumption
Exhibit 8 Persons deemed to have Knowledge for purposes of the
Companies and
Company Subsidiaries
Exhibit 9 Persons deemed to have Knowledge for purposes of the Parent
<PAGE>
ANNEXES
Annex A Form of Purchase and Sale Joinder Agreement (Asia)
Annex B Integration Plan and Integration Agreements
Annex C Form of Stockholder Agreement
Annex D Form of Indemnity and Escrow Agreement
Annex E Sellers and Share Information
Annex F Form of Share Transfer Form
Annex G [Intentionally Left Blank]
Annex H Articles of Amendment and Restatement of Parent
Annex I [Intentionally Left Blank]
Annex J [Intentionally Left Blank]
Annex K Amended and Restated Bylaws of Parent
Annex L Terms of the ESOT
Annex M [Intentionally Left Blank]
Annex N [Intentionally Left Blank]
Annex O Form of Comfort Letter
<PAGE>
INDEX OF DEFINED TERMS
Term Defined
in Section
Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Additional JLW Procon I Trust Beneficial Owners. . . . . . . . . . Preamble
Adjustment Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2
Adjustment Shares Conversion Amount. . . . . . . . . . . . . . . . . 1.4(e)
Adjustment Shares Deficit. . . . . . . . . . . . . . . . . . . . . . 1.4(l)
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Agreed Generally Accepted Accounting Principle . . . . . . . . . . . 1.4(b)
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Allocation Notice. . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(k)
Allocation Notice Delivery Period . . . . . . . . . . . . . . . . . 1.4(k)
Amended Parent Bylaws. . . . . . . . . . . . . . . . . . . . . . 1.9(a)(ii)
Annuity Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . .3.20(c)
Annuity Scheme Trust Deed. . . . . . . . . . . . . . . . . . . . . .3.20(c)
Applicable Auditors. . . . . . . . . . . . . . . . . . . . . . . . . 1.4(b)
Applicable Integration Agreements . . . . . . . . . . . . . . . . . 2.1(a)
Applicable Joinder Agreement . . . . . . . . . . . . . . . . . . . . 1.1(b)
Applicable Trust . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Applicable Trust Deed. . . . . . . . . . . . . . . . . . . . . .Article XIV
Asia Interim Financial Statements. . . . . . . . . . . . . . . . . . 3.8(a)
Asia Region Adjustment Amount. . . . . . . . . . . . . . . . . . . . 1.4(h)
Asia Region Adjustment Shares. . . . . . . . . . . . . . . . . . . . 1.4(a)
Asia Region Agreement. . . . . . . . . . . . . . . . . . . . . . . Preamble
Asia Region Balance Sheet. . . . . . . . . . . . . . . . . . . . . . 1.4(b)
Asia Region Closing Net Worth. . . . . . . . . . . . . . . . . . . . 1.4(b)
Asia Region Companies. . . . . . . . . . . . . . . . . . . . . . . Preamble
Asia Region 1999 Income Statement. . . . . . . . . . . . . . . . . . 1.4(p)
Asia Region Financial Statements . . . . . . . . . . . . . . . . . . 1.4(b)
Asia Region Share Deficit. . . . . . . . . . . . . . . . . . . . . . 1.4(h)
Asia Region Shareholders . . . . . . . . . . . . . . . . . . . . . Preamble
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17
Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . .3.8
Australasia Region Adjustment Amount . . . . . . . . . . . . . . . . 1.4(i)
Australasia Region Adjustment Shares . . . . . . . . . . . . . . . . 1.4(a)
Australasia Region Agreement . . . . . . . . . . . . . . . . . . . Preamble
Australasia Region Balance Sheet . . . . . . . . . . . . . . . . . . 1.4(b)
Australasia Region Closing Net Worth . . . . . . . . . . . . . . . . 1.4(b)
Australasia Region Companies . . . . . . . . . . . . . . . . . . . Preamble
Australasia Region 1999 Income Statement . . . . . . . . . . . . . . 1.4(p)
Australasia Region Financial Statements. . . . . . . . . . . . . . . 1.4(b)
Australasia Region Share Deficit . . . . . . . . . . . . . . . . . . 1.4(i)
Australasia Region Shareholders. . . . . . . . . . . . . . . . .Article XIV
Australia Acquisition Sub. . . . . . . . . . . . . . . . . . . . . Preamble
Authorized Actions . . . . . . . . . . . . . . . . . . . . . . . .1.8(b)(i)
Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(b)
BSL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Buyer(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Cash Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(a)
Closing Authorized Actions . . . . . . . . . . . . . . . . . . . .1.8(b)(i)
Closing Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 1.4(b)
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(b)(ii)
Closing Financial Statements . . . . . . . . . . . . . . . . . . . . 1.4(b)
Closing Net Worth. . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Closing Statement Resolution Period. . . . . . . . . . . . . . . . . 1.4(c)
Closing Statements . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(b)
Closing Statements Objection . . . . . . . . . . . . . . . . . . . . 1.4(c)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Commencement Date. . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Commitment Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Companies Shares . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Disclosure Schedule. . . . . . . . . . . . . . . . . . .Article XIV
Company Material Adverse Effect. . . . . . . . . . . . . . . . .Article XIV
Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . .Article XIV
Company Subsidiary . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Compass Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . .4.9
Computer Programs. . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . .5.2
Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Consideration. . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Consideration Shares . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Continuing Affiliate . . . . . . . . . . . . . . . . . . . . . .Article XIV
Contract(s). . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Controlled Affiliate . . . . . . . . . . . . . . . . . . . . . .Article XIV
Cook Islands Companies Act . . . . . . . . . . . . . . . . . . . . . . .3.2
Cook Islands Registrar . . . . . . . . . . . . . . . . . . . . . . . . .3.2
Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
DEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
DEL Stockholder Agreement. . . . . . . . . . . . . . . . . . . . . . . .6.8
Designated Countries . . . . . . . . . . . . . . . . . . . . . . . .3.12(c)
Designated JLW Shareholder(s). . . . . . . . . . . . . . . . . . . . 2.1(a)
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
English Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.10
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . .Article XIV
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Escrow Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2
ESOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
ESOT Adjustment Shares . . . . . . . . . . . . . . . . . . . . . . . . .6.7
ESOT Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
ESOT Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
ESOT Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
ESOT Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
Euro Compliant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15
Europe/USA Region Agreement. . . . . . . . . . . . . . . . . . . . Preamble
Europe/USA Region Companies. . . . . . . . . . . . . . . . . . . . Preamble
Europe/USA Region Shareholders . . . . . . . . . . . . . . . . . . Preamble
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Fifteenth Director . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(g)
Final Asia Region Closing Net Worth. . . . . . . . . . . . . . . . . 1.4(c)
Final Australasia Region Closing Net Worth . . . . . . . . . . . . . 1.4(c)
Final Closing Balance Sheets . . . . . . . . . . . . . . . . . . . . 1.4(c)
Final Closing Statements . . . . . . . . . . . . . . . . . . . . . . 1.4(c)
Final Closing Statements Determination Date. . . . . . . . . . . . . 1.4(e)
Final Closing Financial Statements . . . . . . . . . . . . . . . . . 1.4(c)
Final JLW England Closing Net Worth. . . . . . . . . . . . . . . . . 1.4(c)
Final JLW Ireland Closing Net Worth. . . . . . . . . . . . . . . . . 1.4(c)
Final JLW Scotland Closing Net Worth . . . . . . . . . . . . . . . . 1.4(c)
Final Master Shareholder List. . . . . . . . . . . . . . . . . .Article XIV
Final Return Date. . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 3.8(a)
Forfeiture Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2
Forfeiture Shares Escrow Agent . . . . . . . . . . . . . . . . . . . . .1.2
HK Companies Ordinance . . . . . . . . . . . . . . . . . . . . . . . . .3.2
HK Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.2
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Illinois Courts. . . . . . . . . . . . . . . . . . . . . . . . . . . .13.10
Income Tax(es) . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
1999 Income Statements . . . . . . . . . . . . . . . . . . . . . . . 1.4(p)
Independent Director . . . . . . . . . . . . . . . . . . . . . .Article XIV
Initial Consideration Shares . . . . . . . . . . . . . . . . . . . . . .1.2
Initial Distribution Shares. . . . . . . . . . . . . . . . . . . . . . .1.2
Instruction Letter . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Intangible Property Rights . . . . . . . . . . . . . . . . . . .Article XIV
Integration. . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Integration Agreements . . . . . . . . . . . . . . . . . . . . . . Preamble
Integration Commencement Date. . . . . . . . . . . . . . . . . . .1.5(b)(i)
Integration Completion . . . . . . . . . . . . . . . . . . . . . .1.5(b)(i)
Integration Completion Date. . . . . . . . . . . . . . . . . . . .1.5(b)(i)
Integration Escrow Agreement . . . . . . . . . . . . . . . . . . . .1.10(b)
Integration Plan . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.12(c)
Interim Financial Statements . . . . . . . . . . . . . . . . . . . . 3.8(a)
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
JLW Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . .5.5
JLW Asia ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . . . . .6.7
JLW Australasia ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . .6.7
JLW Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Combined 9/30 Balance Sheet Schedules. . . . . . . . . . . .Article XIV
JLW Combined Balance Sheet Schedules . . . . . . . . . . . . . . . . 3.8(a)
JLW Combined Financial Statement Schedules . . . . . . . . . . . . . 3.8(a)
JLW Combined 9/30 Financial Statement Schedules. . . . . . . . .Article XIV
JLW Combined Income Statement Schedules. . . . . . . . . . . . . . . 3.8(a)
JLW Combined Interim Balance Sheet Schedules . . . . . . . . . . . . 3.8(a)
JLW Combined 9/30 Income Statement Schedules . . . . . . . . . . . . . .3.8
JLW Combined Year-End Balance Sheet Schedules. . . . . . . . . . . . 3.8(a)
JLW Continuation . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(b)
JLW Employee Directors . . . . . . . . . . . . . . . . . . . . . . . 1.9(b)
JLW Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(h)
JLW England Adjustment Amount. . . . . . . . . . . . . . . . . . . . 1.4(e)
JLW England Adjustment Shares. . . . . . . . . . . . . . . . . . . . 1.4(a)
JLW England Balance Sheet. . . . . . . . . . . . . . . . . . . . . . 1.4(b)
JLW England Closing Net Worth. . . . . . . . . . . . . . . . . . . . 1.4(b)
JLW England ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . . . .6.7
JLW England 1999 Income Statement. . . . . . . . . . . . . . . . . . 1.4(p)
JLW England Financial Statements . . . . . . . . . . . . . . . . . . 1.4(b)
JLW England Share Deficit. . . . . . . . . . . . . . . . . . . . . . 1.4(e)
JLW England Shareholders . . . . . . . . . . . . . . . . . . . . . . 1.4(a)
JLW Fees and Expenses. . . . . . . . . . . . . . . . . . . . . .Article XIV
JLW Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Independent Directors. . . . . . . . . . . . . . . . . . . . . . 1.9(b)
JLW Ireland Adjustment Amount. . . . . . . . . . . . . . . . . . . . 1.4(g)
JLW Ireland Adjustment Shares. . . . . . . . . . . . . . . . . . . . 1.4(a)
JLW Ireland Balance Sheet. . . . . . . . . . . . . . . . . . . . . . 1.4(b)
JLW Ireland Closing Net Worth. . . . . . . . . . . . . . . . . . . . 1.4(b)
JLW Ireland ESOT Sub Trust . . . . . . . . . . . . . . . . . . . . . . .6.7
JLW Ireland 1999 Income Statement. . . . . . . . . . . . . . . . . . 1.4(p)
JLW Ireland Financial Statements . . . . . . . . . . . . . . . . . . 1.4(b)
JLW Ireland Share Deficit. . . . . . . . . . . . . . . . . . . . . . 1.4(g)
JLW Ireland Shareholders . . . . . . . . . . . . . . . . . . . . . . 1.4(a)
JLW Nominating Committee . . . . . . . . . . . . . . . . . . . . . . 1.9(d)
JLW Pacific. . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Pacific Shares . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Parties. . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
JLW Procon Trust Beneficial Owners . . . . . . . . . . . . . . . . Preamble
JLW Procon I Trust Beneficial Owners . . . . . . . . . . . . . . . Preamble
JLW Procon II Trust Beneficial Owners. . . . . . . . . . . . . . . Preamble
JLW Procon I Trust Deed. . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Procon II Trust Deed . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Procon I Trust Trustee . . . . . . . . . . . . . . . . . . . . Preamble
JLW Procon II Trust Trustee. . . . . . . . . . . . . . . . . . . . Preamble
JLW Scotland Adjustment Amount . . . . . . . . . . . . . . . . . . . 1.4(f)
JLW Scotland Adjustment Shares . . . . . . . . . . . . . . . . . . . 1.4(a)
JLW Scotland Balance Sheet . . . . . . . . . . . . . . . . . . . . . 1.4(b)
JLW Scotland Closing Net Worth . . . . . . . . . . . . . . . . . . . 1.4(b)
JLW Scotland ESOT Sub Trust. . . . . . . . . . . . . . . . . . . . . . .6.7
JLW Scotland 1999 Income Statement . . . . . . . . . . . . . . . . . 1.4(p)
JLW Scotland Financial Statements. . . . . . . . . . . . . . . . . . 1.4(b)
JLW Scotland Share Deficit . . . . . . . . . . . . . . . . . . . . . 1.4(f)
JLW Scotland Shareholders. . . . . . . . . . . . . . . . . . . . . . 1.4(a)
JLW Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
JLW Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Transact Trust Beneficial Owners . . . . . . . . . . . . . . . Preamble
JLW Transact Trust Deed. . . . . . . . . . . . . . . . . . . . . . Preamble
JLW Transact Trust Trustee . . . . . . . . . . . . . . . . . . . . Preamble
JLW Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . .Article XIV
JLW USA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Joinder Agreement. . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
LACM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.9(a)(i)
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . .3.11(b)
Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Listed Agreements. . . . . . . . . . . . . . . . . . . . . . . . . .3.13(a)
Managed Properties . . . . . . . . . . . . . . . . . . . . . . . . .3.24(a)
Management Shareholder(s). . . . . . . . . . . . . . . . . . . . . Preamble
Materials of Environmental Concern . . . . . . . . . . . . . . .Article XIV
Minimum Asia Region Closing Net Worth. . . . . . . . . . . . . . . . 1.4(h)
Minimum Australasia Region Closing Net Worth . . . . . . . . . . . . 1.4(i)
Minimum JLW England Closing Net Worth. . . . . . . . . . . . . . . . 1.4(e)
Minimum JLW Ireland Closing Net Worth. . . . . . . . . . . . . . . . 1.4(g)
Minimum JLW Scotland Closing Net Worth . . . . . . . . . . . . . . . 1.4(f)
Neutral Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(d)
NewCo 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
NewCo 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
NewCo 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Nine-Month Interim Financial Statements. . . . . . . . . . . . .Article XIV
Nominating Committees. . . . . . . . . . . . . . . . . . . . . . . . 1.9(d)
Non-Participating Designated JLW Shareholders. . . . . . . . . . . . . .2.2
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Offering Memorandum. . . . . . . . . . . . . . . . . . . . . . .Article XIV
Operative Agreements . . . . . . . . . . . . . . . . . . . . . .Article XIV
Other Authorized Actions . . . . . . . . . . . . . . . . . . . . .1.8(b)(i)
Other Joinder Agreements . . . . . . . . . . . . . . . . . . . .Article XIV
Other Purchase Agreements. . . . . . . . . . . . . . . . . . . . . Preamble
Other Shareholder(s) . . . . . . . . . . . . . . . . . . . . . .Article XIV
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Acquisition Proposal. . . . . . . . . . . . . . . . . . . . . . .6.6
Parent Articles of Incorporation . . . . . . . . . . . . . . . . . . 4.1(a)
Parent Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
Parent Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Parent Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(b)
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . .Article XIV
Parent Domestic Plan . . . . . . . . . . . . . . . . . . . . . .Article XIV
Parent Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(h)
Parent Employee Directors. . . . . . . . . . . . . . . . . . . . . . 1.9(b)
Parent Foreign Plan. . . . . . . . . . . . . . . . . . . . . . .Article XIV
Parent Independent Directors . . . . . . . . . . . . . . . . . . . . 1.9(b)
Parent Interim Balance Sheet . . . . . . . . . . . . . . . . . . . . 4.8(a)
Parent Material Adverse Effect . . . . . . . . . . . . . . . . .Article XIV
Parent Nominating Committee. . . . . . . . . . . . . . . . . . . . . 1.9(d)
Parent Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Parent Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Parent SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .4.7
Parent Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Parent Significant Subsidiary. . . . . . . . . . . . . . . . . .Article XIV
Parent Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Parent Subsidiaries. . . . . . . . . . . . . . . . . . . . . . .Article XIV
Parent Subsidiary. . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
PIL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article IV
Post-Closing Integration Actions . . . . . . . . . . . . . . . . . .1.10(a)
Preliminary Master Shareholder List. . . . . . . . . . . . . . . . Preamble
Proposed Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.4
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5(b)
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . .3.11(b)
Related JLW Owner. . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Related Parties. . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Required Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . .3.7
SCCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8(a)
SCCA Expenses Reserve. . . . . . . . . . . . . . . . . . . . . . . . 1.8(d)
Scheduled Agreements . . . . . . . . . . . . . . . . . . . . . . . .3.12(b)
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Seller(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Sellers' Representatives . . . . . . . . . . . . . . . . . . . .Article XIV
Shareholder(s) . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Shareholder Determination Date . . . . . . . . . . . . . . . . .Article XIV
Shareholders' Representatives. . . . . . . . . . . . . . . . . .Article XIV
Shareholder Transaction Documents. . . . . . . . . . . . . . . . . . 2.1(a)
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Singapore Companies Act. . . . . . . . . . . . . . . . . . . . . . . . .3.2
Singapore Registrar. . . . . . . . . . . . . . . . . . . . . . . . . . .3.2
significant clients. . . . . . . . . . . . . . . . . . . . . . . . .3.16(a)
Straddle Returns . . . . . . . . . . . . . . . . . . . . . . . . . .10.2(b)
Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
Stockholder Agreement. . . . . . . . . . . . . . . . . . . . . . . Preamble
1999 Stub Period . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(p)
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Sub Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.7
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Termination Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
Thailand Civil Code. . . . . . . . . . . . . . . . . . . . . . . . . . .3.2
Thailand Ministry of Commerce. . . . . . . . . . . . . . . . . . . . . .3.2
Thailand Registrar of Companies. . . . . . . . . . . . . . . . . . . . .3.2
Third Party Scheduled Agreement. . . . . . . . . . . . . . . . . . .3.12(b)
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Transact HK. . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Transact Limited . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Transact Singapore . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Transact Thailand. . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Transition Period. . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(b)
UK GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
US Acquisition Sub . . . . . . . . . . . . . . . . . . . . . . . . Preamble
US Acquisition Sub II. . . . . . . . . . . . . . . . . . . . . . . Preamble
US GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Article XIV
Year 2000 Complaint. . . . . . . . . . . . . . . . . . . . . . . . . . 3.15
<PAGE>
PURCHASE AND SALE AGREEMENT (ASIA)
PURCHASE AND SALE AGREEMENT (ASIA), dated as of October 21,
1998 (this "Agreement" or this "Asia Region Agreement"), by and among (i)
LASALLE PARTNERS INCORPORATED, a Maryland corporation ("Parent"), JLLINT,
INC., an Illinois corporation and an indirect wholly-owned subsidiary of
Parent ("US Acquisition Sub"), and JLLIP, INC., an Illinois corporation and
an indirect wholly-owned subsidiary of Parent ("US Acquisition Sub II")
(each of Parent, US Acquisition Sub, and US Acquisition Sub II is
individually referred to herein as a "Buyer" and collectively referred to
herein as the "Buyers"); (ii) PROCON INTERNATIONAL LIMITED, a Cook Islands
corporation ("PIL"), as trustee (the "JLW Procon I Trust Trustee") under
the Declaration of Trust, dated September 11, 1998 (the "JLW Procon I Trust
Deed"), by PIL for the persons named as "Beneficial Owners" on the Schedule
thereto (the "JLW Procon I Trust Beneficial Owners"), PIL, as trustee (the
"JLW Procon II Trust Trustee") under the Declaration of Trust, dated
October 9, 1998 (the "JLW Procon II Trust Deed"), by PIL for the persons
named as "Beneficiaries" on the Schedule thereto (the "JLW Procon II Trust
Beneficial Owners"), and BENBRIDGE SINGAPORE PTE LIMITED, a Singapore
corporation ("BSL"), as trustee (the "JLW Transact Trust Trustee") under
the Deed of Trust, dated May 12, 1997 (the "JLW Transact Trust Deed"), by
and between BSL, as trustee, and Jones Lang Wootton Transact Pty Limited, a
corporation organized under the laws of New South Wales ("Transact
Limited"), as Settlor, for the "Beneficiaries" (as defined in the JLW
Transact Trust Deed, the "JLW Transact Trust Beneficial Owners") (each of
the JLW Procon Trust Trustee and the JLW Transact Trust Trustee (on behalf
of the respective beneficiaries under the Applicable Trust Deed, is
individually referred to herein as a "Seller" and collectively referred to
herein as the "Sellers"); (iii) JLW PACIFIC LIMITED, a Cook Islands
corporation ("JLW Pacific"), JLW ASIA HOLDINGS LIMITED, a Cook Islands
corporation ("JLW Holdings"), JLW TRANSACT (THAILAND) CO. LIMITED, a
Thailand company ("Transact Thailand"), JLW TRANSACT PTE LTD., a Singapore
company ("Transact Singapore"), and JLW TRANSACT LIMITED, a Hong Kong
company ("Transact HK") (each of JLW Pacific, JLW Holdings, Transact
Thailand, Transact Singapore and Transact HK is individually referred to
herein as a "Company" and collectively referred to herein as the
"Companies" or the "Asia Region Companies"); (iv) the persons named as
"Management Shareholders" on the signature pages hereto (each a "Management
Shareholder" and, collectively, the "Management Shareholders"); and (v)
each of the JLW Procon I Trust Beneficial Owners, each of the JLW Procon II
Trust Beneficial Owners, each person who has the right to become a JLW
Procon I Trust Beneficial Owner (the "Additional JLW Procon I Trust
Beneficial Owners"), and the JLW Transact Trust Beneficial Owners listed in
each case as "Shareholders" on the Preliminary Master Shareholder List,
attached as Schedule A to the Company Disclosure Schedule (the "Preliminary
Master Shareholder List"), together with any Related JLW Owners, who
execute and deliver Joinder Agreements (Asia), in the form attached hereto
as Annex A (each a "Joinder Agreement"), and each of the other Shareholder
Transaction Documents (as hereinafter defined) (each Person listed as a
Shareholder on the Preliminary Master Shareholder List who duly executes
and delivers (and whose Related JLW Owner, if any, executes and delivers)
each of the Shareholder Transaction Documents is individually referred to
herein as a "Shareholder" and collectively referred to herein as the
"Shareholders" or the "Asia Region Shareholders").
WHEREAS, in accordance with the plan of integration (the
"Integration Plan") and the related integration agreements (the
"Integration Agreements"), attached hereto as Annex B , JLW Australia Pty
Ltd. ("JLW Australia") shall transfer all of its interests in (i) JLW
Property Consultants Pte Ltd (Singapore) and Jones Lang Wootton Limited
(HK) to JLW Asia Holdings and (ii) Transact Thailand, Transact Singapore
and Transact HK to BSL;
WHEREAS, the Sellers collectively are the legal owners of all
of the issued share capital of each of JLW Holdings, Transact Thailand,
Transact Singapore and Transact HK (the "Companies Shares") and all of the
issued share capital of JLW Pacific (the "JLW Pacific Shares," and together
with the Companies Shares, the "Shares");
WHEREAS, (i) the Sellers collectively desire to sell, and US
Acquisition Sub desires to purchase, all, but not less than all, of the
Companies Shares, and (ii) the Sellers collectively desire to sell, and US
Acquisition Sub II desires to purchase, all, but not less than all, of the
JLW Pacific Shares, all upon the terms and subject to the conditions set
forth in this Agreement and the other Operative Agreements;
WHEREAS, as a condition of and inducement to the Buyers'
willingness to consummate the transactions contemplated hereby, Parent and
each Shareholder (and each Related JLW Owner, if applicable) will enter
into (i) a Stockholder Agreement, in the form attached hereto as Annex C
(the "Stockholder Agreement"), and (ii) an Indemnity and Escrow Agreement,
in the form attached hereto as Annex D (the "Escrow Agreement");
WHEREAS, as of the date hereof, Parent and the other parties
named therein are entering into a Purchase and Sale Agreement (the
"Europe/USA Region Agreement"), pursuant to which, upon the terms and
subject to the conditions set forth therein, Parent has the right (and may
be required) to acquire all of the issued and outstanding share capital of
each of Jones Lang Wootton, a corporation incorporated under the laws of
England ("NewCo1"), J.L.W. (Scotland) Corporate, a corporation incorporated
under the laws of Scotland ("NewCo 2"), Slaneyglen Company, a corporation
incorporated under the laws of Eire ("NewCo 3"), JLW Supply Company, a
corporation incorporated under the laws of England ("JLW Supply"), Jones
Lang Wootton USA Inc., a Delaware corporation ("JLW USA"), and JLW
Continuation, Ltd., a corporation incorporated under the laws of England
("JLW Continuation") (collectively, the "Europe/USA Region Companies");
WHEREAS, as of the date hereof, Parent, US Acquisition Sub and
LPI (Australia) Holdings Pty Limited, a corporation organized under the
laws of the Australian Capital Territory and an indirect wholly-owned
subsidiary of Parent ("Australia Acquisition Sub"), and the other parties
named therein are entering into a Purchase and Sale Agreement (the
"Australasia Region Agreement" and, together with the Europe/USA Region
Agreement, the "Other Purchase Agreements"), pursuant to which, upon the
terms and subject to the conditions set forth therein, (i) Australia
Acquisition Sub will acquire all of the issued and outstanding share
capital of each of JLW Australia Pty Limited, a New South Wales company,
Jones Lang Wootton Transact Pty Ltd., a New South Wales company, Jones Lang
Wootton Transact (VIC) Pty Ltd., a Victoria company, and Jones Lang Wootton
Transact (Qld) Pty Ltd., a Queensland company, and (ii) US Acquisition Sub
will acquire all of the issued and outstanding share capital of each of
Jones Lang Wootton Holdings Limited, a New Zealand company, and JLW
Transact Limited (New Zealand), a New Zealand company (the companies
referred to in clauses (i) and (ii) above whose shares are to be acquired
are collectively referred to herein as the "Australasia Region Companies");
WHEREAS, each member of the Board of Parent who is an employee
of Parent has executed and delivered to Chris Peacock and Mike Smith and
each or either of them, with full power of substitution, an irrevocable
proxy to vote all of the shares of Parent Common Stock (as hereinafter
defined) owned by such member in favor of the Proposed Actions (as
hereinafter defined) at the special meeting of stockholders of Parent to be
held in connection with the transactions contemplated by this Agreement and
the Other Purchase Agreements; and
WHEREAS, pursuant to this Agreement and the Other Purchase
Agreements, Parent has the right (and may be required) to acquire, directly
or indirectly, all of the asset and property management, advisory and other
real estate-related businesses of the Companies, the Europe/USA Region
Companies and the Australasia Region Companies and their respective
Subsidiaries (such businesses being collectively referred to herein as the
"JLW Businesses"), including all such businesses currently being carried on
by the JLW Partnerships and their respective direct and indirect
Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein,
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale of Shares. (a) Upon the terms and
subject to the conditions set forth herein, at the Closing, each of (i) the
JLW Procon I Trust Trustee and the JLW Transact Trust Trustee shall (on
behalf of the JLW Procon I Trust Beneficial Owners and the JLW Transact
Trust Beneficial Owners, respectively) sell, assign, transfer, convey and
deliver to US Acquisition Sub, and US Acquisition Sub shall (and Parent
shall cause US Acquisition Sub to) purchase, acquire and accept from each
of the JLW Procon I Trust Trustee and the JLW Transact Trust Trustee (on
behalf of the JLW Procon I Trust Beneficial Owners and the JLW Transact
Trust Beneficial Owners, respectively), all of the Companies Shares owned
by such Seller as set forth in column 2 of Annex E hereto, free and clear
of all Encumbrances (other than Encumbrances created by or through Parent)
and together with all benefits and rights attaching or accruing thereto,
and (ii) the JLW Procon II Trust Trustee (on behalf of the JLW Procon II
Trust Beneficial Owners) shall sell, assign, transfer, convey and deliver
to US Acquisition Sub II, and US Acquisition Sub II shall (and Parent
shall cause US Acquisition Sub II to) purchase, acquire and accept from the
JLW Procon II Trust Trustee (on behalf of the JLW Procon II Trust
Beneficial Owners), all of the JLW Pacific Shares owned by such Seller as
set forth opposite such Seller's name in column 2 of Annex E hereto, free
and clear of all Encumbrances (other than Encumbrances created by or
through Parent) and together with all benefits and rights attaching or
accruing thereto, for (A) the number of newly issued shares of common
stock, $.01 par value per share ("Parent Common Stock"), of Parent (the
"Consideration Shares" which term shall also be deemed to include any
Adjustment Shares that may be distributed at such Seller's direction to
Shareholders pursuant to Section 1.4 below) specified in column 3 of Annex
E hereto, and (B) cash, in United States dollars (the "Cash
Consideration"), in the amount calculated in accordance with the formula
set forth in column 4 of Annex E hereto; it being agreed that the aggregate
(and maximum) number of Consideration Shares that will be issued pursuant
to this Agreement and the Applicable Joinder Agreements shall be 3,770,793.
(b) Notwithstanding the provisions of Section 1.1(a) hereof,
each Seller acknowledges and agrees that the Consideration Shares and the
Cash Consideration otherwise payable to such Seller in respect of the
Shares owned by it shall be distributed, and such Seller hereby directs the
Buyers to distribute such Consideration Shares and Cash Consideration, to
or on behalf of the Shareholders in each case as specified or calculated in
accordance with the formulas set forth in columns 3 and 4, respectively, of
Annex B to the Joinder Agreement to which such Shareholder is a party (the
"Applicable Joinder Agreement") (except as otherwise specified herein, all
references herein to "Annex B" to an Applicable Joinder Agreement refer to
the definitive Annex B, as modified pursuant to Section 2.2 hereof),
pursuant to and in accordance with Section 1.2 hereof, in full satisfaction
of the Buyers' obligations under Section 1.1(a) and Section 1.2 hereof.
Section 1.2 Purchase Price. Upon the terms and subject to the
conditions set forth herein, in consideration for the sale, assignment,
transfer, conveyance and delivery of the Companies Shares owned by each
Seller to US Acquisition Sub and, in the case of JLW Pacific Shares, to US
Acquisition Sub II at the Closing and pursuant to the direction of the
Sellers under Section 1.1(b) hereof, each of US Acquisition Sub and US
Acquisition Sub II, as applicable, shall (and Parent shall cause such
Buyers to) deliver, or cause to be delivered, at Closing to (a) the
Shareholders' Representatives, on behalf of each Shareholder, (i) the
number of shares of Parent Common Stock specified in column 3(a) of Annex B
to the Applicable Joinder Agreement (the "Initial Distribution Shares"),
which Initial Distribution Shares shall be issued in the name of such
Shareholder, (ii) the number of shares of Parent Common Stock specified in
column 3(b) of Annex B to the Applicable Joinder Agreement (the "Forfeiture
Shares" and, together with Initial Distribution Shares, the "Initial
Consideration Shares"), which Forfeiture Shares, subject to clause (c) of
Section 1.3 below, shall be deposited in escrow with the escrow agent
appointed pursuant to the SCCA (the "Forfeiture Shares Escrow Agent")
pursuant to the applicable provisions of the SCCA and held and distributed
in accordance with the terms thereof, and (iii) the Cash Consideration, in
United States dollars, calculated in accordance with the formula set forth
in column 4 of Annex B to the Applicable Joinder Agreement, all of which
Cash Consideration shall be paid to and retained by the Shareholders'
Representatives (on behalf of such Shareholder) as a reserve for certain
expenses as provided in Section 1.8(d) hereof, and (b) Harris Trust and
Savings Bank (the "Escrow Agent") (i) the number of shares of Parent
Common Stock specified in column 3(c) of Annex B to the Applicable Joinder
Agreement, to be deposited in escrow as Escrow Shares pursuant to clause
(b) of Section 1.3 hereof and (ii) the number of shares of Parent Common
Stock specified in column 3(d) of Annex B to the Applicable Joinder
Agreement to be deposited in escrow as Adjustment Shares pursuant to clause
(a) of Section 1.3 hereof, which Escrow Shares and Adjustment Shares shall
be held and disposed of in accordance with the applicable provisions of the
Escrow Agreement and the applicable provisions of this Agreement. The
aggregate number of shares of Parent Common Stock to be deposited with the
Escrow Agent pursuant to clause (b)(i) of this Section 1.2, clause (b)(i)
of Section 1.2 of each of the Other Purchase Agreements and clause (i) of
the last sentence of Section 6.7 of this Agreement and each of the Other
Purchase Agreements shall be 750,000 shares (the "Escrow Shares") and the
aggregate number of shares of Parent Common Stock to be deposited with the
Escrow Agent pursuant to clause (b)(ii) of this Section 1.2, clause (b)(ii)
of Section 1.2 of each of the Other Purchase Agreements and clause (ii) of
the last sentence of Section 6.7 of this Agreement and each of the Other
Purchase Agreements shall be 1,241,683 shares (the "Adjustment Shares");
provided that the Forfeiture Shares issuable pursuant to this Agreement
shall also be initially deposited with the Escrow Agent as additional
Escrow Shares to be held and disbursed in accordance with the applicable
provisions of the Escrow Agreement.
Section 1.3 Escrow of Certain Consideration Shares. On the Closing
Date, the Buyers shall deliver to (a) the Escrow Agent a certificate
(issued in the name of the Escrow Agent or its nominee) representing the
Adjustment Shares (including the ESOT Adjustment Shares) for the purpose of
securing the consideration adjustment obligations, as set forth in Section
1.4 of this Agreement and each of the Other Purchase Agreements, (b) the
Escrow Agent a certificate (issued in the name of the Escrow Agent or its
nominee) representing the Escrow Shares (including the ESOT Escrow Shares)
for the purpose of securing the indemnification obligations of the
Shareholders and the Other Shareholders, as set forth in the Escrow
Agreement and (c) the Escrow Agent a certificate (issued in the name of the
Escrow Agent or its nominee) representing the Forfeiture Shares of each
Shareholder for the purpose of securing (as additional Escrow Shares) the
indemnification obligations of the Shareholders under the applicable
provisions of the Escrow Agreement and, following the release of such
Forfeiture Shares, such Forfeiture Shares will be delivered to the
Forfeiture Shares Escrow Agent for the purpose of ensuring compliance with
the forfeiture provisions relating to the Shareholders, the Other
Shareholders and the Related JLW Owners, if any, contained in the SCCA.
The Adjustment Shares and the Escrow Shares shall be held by the Escrow
Agent under the Escrow Agreement pursuant to the terms thereof. The
Adjustment Shares and the Escrow Shares shall be held and disposed of
solely for the purposes and in accordance with the terms of this Agreement,
the Other Purchase Agreements and the Escrow Agreement. The Forfeiture
Shares shall be held and disposed of by the Escrow Agent pursuant to the
applicable provisions of the Escrow Agreement and, upon release, by the
Forfeiture Shares Escrow Agent under the applicable provisions of the SCCA.
Section 1.4 Consideration Adjustment. (a) Subject to the completion
of any adjustments required under this Section 1.4, (i) the Europe/USA
Region Shareholders listed on the Final Master Shareholder List under the
Europe/USA Region Agreement as owning Shares of NewCo 1, JLW USA, JLW
Supply or JLW Continuation (the "JLW England Shareholders") and the JLW
England ESOT Sub Trust shall collectively be entitled to receive 697,736
Adjustment Shares (the "JLW England Adjustment Shares"), (ii) the
Europe/USA Region Shareholders listed on the Final Master Shareholder List
under the Europe/USA Region Agreement as owning Shares of NewCo 2 (the "JLW
Scotland Shareholders") and the JLW Scotland ESOT Sub Trust shall
collectively be entitled to receive 22,456 Adjustment Shares (the "JLW
Scotland Adjustment Shares"), (iii) the Europe/USA Region Shareholders
listed on the Final Master Shareholder List under the Europe/USA Region
Agreement as owning Shares of JLW Ireland (the "JLW Ireland Shareholders")
and the JLW Ireland ESOT Sub Trust shall collectively be entitled to
receive 44,642 Adjustment Shares (the "JLW Ireland Adjustment Shares"),
(iv) the Asia Region Shareholders and the Asia Region ESOT Sub Trust shall
collectively be entitled to receive 329,750 Adjustment Shares (the "Asia
Region Adjustment Shares") and (v) the Australasia Region Shareholders and
the Australasia Region ESOT Sub Trust shall collectively be entitled to
receive 147,099 Adjustment Shares (the "Australasia Region Adjustment
Shares").
(b) As soon as practicable, but in no event later than 50
days following the Closing Date, Parent shall cause to be prepared and
delivered to the Shareholders' Representatives (i) a consolidated or
combined balance sheet, as applicable, in each case as of the close of
business on the Business Day immediately preceding the Closing Date,
audited by the independent certified public accountants who audited the
applicable Audited Financial Statements (or the Audited Financial
Statements of the applicable predecessor entity or entities) (the
"Applicable Auditors") of each of (A) NewCo 1, JLW Supply, JLW USA and JLW
Continuation, including their respective direct and indirect Subsidiaries
(the "JLW England Balance Sheet"), (B) NewCo 2, including its direct and
indirect Subsidiaries (the "JLW Scotland Balance Sheet"), (C) NewCo 3,
including its direct and indirect Subsidiaries (the "JLW Ireland Balance
Sheet"), (D) the Asia Region Companies, including their respective direct
and indirect Subsidiaries (the "Asia Region Balance Sheet"), and (E) the
Australasia Region Companies, including their respective direct and
indirect Subsidiaries (the "Australasia Region Balance Sheet" and, together
with the JLW England Balance Sheet, JLW Scotland Balance Sheet, JLW Ireland
Balance Sheet and Asia Region Balance Sheet, the "Closing Balance Sheets"),
(ii) the consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movement on reserves and statements
of total recognized gains and losses for the period from January 1, 1998 to
the Closing Date (or for such other period(s) as may be required pursuant
to Section 1.4(p) below) for each of (A) NewCo 1, JLW Supply, JLW USA and
JLW Continuation, including their respective direct and indirect
Subsidiaries (including their respective predecessors, as applicable) (the
"JLW England Financial Statements"), (B) NewCo 2, including its direct and
indirect Subsidiaries (including their respective predecessors, as
applicable) (the "JLW Scotland Financial Statements"), (C) NewCo 3,
including its direct and indirect Subsidiaries (including their respective
predecessors, as applicable) (the "JLW Ireland Financial Statements"), (D)
the Asia Region Companies including their respective direct and indirect
Subsidiaries (the "Asia Region Financial Statements") and (E) the
Australasia Region Companies, including their direct and indirect
Subsidiaries (the "Australasia Region Financial Statements" and, together
with the JLW England Financial Statements, the JLW Scotland Financial
Statements, the JLW Ireland Financial Statements and the Asia Region
Financial Statements, the "Closing Financial Statements"), audited by the
Applicable Auditors for each of the foregoing, and (iii) a calculation of
the Closing Net Worth based on the applicable Closing Balance Sheet and
certified by the Applicable Auditors for each of (A) NewCo 1, JLW Supply,
JLW USA and JLW Continuation, including their respective direct and
indirect Subsidiaries (the "JLW England Closing Net Worth"), (B) NewCo 2,
including its direct and indirect Subsidiaries (the "JLW Scotland Closing
Net Worth"), (C) NewCo 3, including its direct and indirect Subsidiaries
(the "JLW Ireland Closing Net Worth"), (D) the Companies, including their
respective direct and indirect Subsidiaries (the "Asia Region Closing Net
Worth"), and (E) the Australasia Region Companies, including their
respective direct and indirect Subsidiaries (the "Australasia Region
Closing Net Worth") (such calculations, together with the Closing Financial
Statements (if required for the purposes of Section 1.4(p) hereof) and the
Closing Balance Sheets, the "Closing Statements"). The Closing Balance
Sheets and the related Closing Financial Statements shall be prepared in
accordance with UK GAAP (but shall be denominated in US dollars) in
accordance with the accounting principles set forth in Exhibit 1 hereto
(collectively, the "Agreed Generally Accepted Accounting Principles"), and
the Closing Net Worth shall be calculated in accordance with this
Agreement. The Closing Balance Sheets and the related Closing Financial
Statements shall include footnotes converting various items therein to US
GAAP, in a manner consistent with the Audited Financial Statements. The
reasonable costs of auditing the Closing Balance Sheets and the related
Closing Financial Statements and certifying the related calculations shall
be paid by Parent but included as a current liability on the Closing
Balance Sheets (the allocation of such liability among such balance sheets,
to be determined by the Shareholders' Representatives); it being the intent
of the parties that such costs will thus be economically borne by the
Shareholders, the Other Shareholders and the ESOT. The scope of such audit
shall be consistent with the scope of the audit conducted in preparing the
Audited Financial Statements.
(c) In order to facilitate their review of the Closing
Statements, the Shareholders' Representatives and their authorized
representatives and advisors shall have access to (i) all relevant books
and records and (ii) all accountants' work papers used in connection with
the preparation of the Closing Balance Sheets and the Closing Financial
Statements, as well as to the accounting staff of Parent who prepared such
statements and the Applicable Auditors who audited such statements. Unless
the Shareholders' Representatives deliver written notice to Parent on or
prior to the 25th day after receipt of the Closing Statements of their
disagreement as to any item included in or omitted from the Closing
Statements (a "Closing Statements Objection"), which Closing Statements
Objection, if any, shall be required to include all such disagreements with
reasonable specificity to the extent practicable which the Shareholders'
Representatives will assert with respect to any such items, the parties
shall be deemed to have accepted and agreed to the Closing Statements. If
the Shareholders' Representatives so notify Parent of a Closing Statements
Objection, the Shareholders' Representatives and Parent shall, within 15
days following the date of such notice (the "Closing Statement Resolution
Period"), attempt to resolve their differences. Any resolution by them as
to any disputed amount shall be final and binding on the parties hereto.
The term "Final Closing Statements" shall mean the definitive Closing
Statements as agreed to (or deemed agreed to) by Parent and the
Shareholders' Representatives, or in the absence of such agreement, the
definitive Closing Statements including any adjustments resulting from the
determination made by the Neutral Auditor (in addition to those items
theretofore agreed to by Parent and the Shareholders' Representatives), the
term "Final Closing Balance Sheets" shall mean the definitive Closing
Balance Sheets included in such Final Closing Statements and, to the extent
applicable, the term "Final Closing Financial Statements" shall mean the
definitive profit and loss accounts included in such Final Closing
Statements. The terms "Final JLW England Closing Net Worth," "Final JLW
Scotland Closing Net Worth,""Final JLW Ireland Closing Net Worth," "Final
Asia Region Closing Net Worth" and "Final Australasia Region Closing Net
Worth" shall mean the definitive Closing Net Worth of (i) NewCo 1, JLW
Supply, JLW USA and JLW Continuation, (ii) NewCo 2, (iii) NewCo 3, (iv) the
Companies and (v) the Australasia Region Companies, respectively, including
their respective direct and indirect Subsidiaries, based on the applicable
Final Closing Balance Sheets.
(d) If, at the conclusion of the Closing Statement Resolution
Period, Parent and the Shareholders' Representatives have not resolved all
disputes, then all amounts remaining in dispute shall, at the election of
either party, be submitted to Arthur Andersen (UK). (the "Neutral
Auditor"). Parent and the Shareholder's Representatives agree to execute,
if requested by the Neutral Auditor, a reasonable engagement letter, and
shall make available to the Neutral Auditor such books, records and other
information within their control as the Neutral Auditor may reasonably
request. All fees and expenses of the Neutral Auditor shall be borne by
Parent. The Neutral Auditor shall act as an expert, not as an arbitrator,
to determine only those issues remaining in dispute, based on the
presentations by Parent and the Shareholders' Representatives (and their
respective advisors) and, to the extent such Neutral Auditor shall deem
appropriate, on an independent investigation (but not an audit) of such
other relevant books and records, accountants' work papers and other
information as such Neutral Auditor deems reasonably necessary for the
purpose of resolving the issues in dispute. The Neutral Auditor shall be
instructed to make its determination within 30 days of its engagement,
which determination shall be set forth in a written statement delivered to
Parent and the Shareholders' Representatives and shall be final and binding
on the parties hereto and the ESOT Trustee.
(e) Subject to Section 1.4(k), if the Final JLW England
Closing Net Worth is less than US$22,476,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum JLW England Closing
Net Worth") (the amount of such deficiency being referred to herein as the
"JLW England Adjustment Amount"), then the number of JLW England Adjustment
Shares to be delivered to the JLW England Shareholders and the ESOT Trustee
on behalf of the JLW England ESOT Sub Trust shall be reduced by the number
of shares of Parent Common Stock equal to the quotient obtained by dividing
the JLW England Adjustment Amount by an amount (such amount being
hereinafter referred to as the "Adjustment Shares Conversion Amount") equal
to 92.5 percent of the average closing price of Parent Common Stock (as
reported on the New York Stock Exchange Composite Tape) for the five-
trading day period that includes the two trading days immediately
preceding, the trading day including and the two trading days immediately
following the day (the "Final Closing Statements Determination Date") on
which the Final Closing Statements are agreed to by the parties or finally
determined by the Neutral Auditor; provided that if such quotient exceeds
the number of JLW England Adjustment Shares (such excess number of shares
being referred to herein as the "JLW England Share Deficit"), then the JLW
Scotland Adjustment Shares, JLW Ireland Adjustment Shares, Asia Region
Adjustment Shares and Australasia Region Adjustment Shares shall be reduced
by an aggregate number equal to the JLW England Share Deficit, apportioned
among them pro rata on the basis of the number of Adjustment Shares
originally allocated herein to the JLW Scotland Shareholders, JLW Ireland
Shareholders, Asia Region Shareholders and Australasia Region Shareholders
(and the related ESOT Sub Trusts); provided, further, that if such
reduction or any subsequent reduction reduces to zero the number of
Adjustment Shares issuable to the JLW Scotland Shareholders, JLW Ireland
Shareholders, Asia Region Shareholders or Australasia Region Shareholders
(and the related ESOT Sub Trusts), any remaining JLW England Share Deficit
shall be deducted from any Adjustment Shares then remaining issuable to the
JLW Scotland Shareholders, JLW Ireland Shareholders, Asia Region
Shareholders or Australasia Region Shareholders (and the related ESOT Sub
Trusts) pro rata (on the basis of the Adjustment Shares then remaining
issuable to each such group).
(f) Subject to Section 1.4(k), if the Final JLW Scotland
Closing Net Worth is less than US$724,000, as such amount may be adjusted
pursuant to Section 1.4(p) below (the "Minimum JLW Scotland Closing Net
Worth") (the amount of such deficiency being referred to herein as the "JLW
Scotland Adjustment Amount"), then the number of JLW Scotland Adjustment
Shares to be delivered to the JLW Scotland Shareholders and the ESOT
Trustee on behalf of the JLW Scotland ESOT Sub Trust shall be reduced by
the number of shares of Parent Common Stock equal to the quotient obtained
by dividing the JLW Scotland Adjustment Amount by the Adjustment Shares
Conversion Amount; provided that if such quotient exceeds the number of JLW
Scotland Adjustment Shares (such excess number of shares being referred to
herein as the "JLW Scotland Share Deficit"), then the JLW England
Adjustment Shares, JLW Ireland Adjustment Shares, Asia Region Adjustment
Shares and Australasia Region Adjustment Shares shall be reduced by an
aggregate number equal to the JLW Scotland Share Deficit, apportioned among
them pro rata on the basis of the number of Adjustment Shares originally
allocated herein to the JLW England Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders and Australasia Region Shareholders (and the
related ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Ireland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW Scotland Share Deficit shall be
deducted from any Adjustment Shares then remaining issuable to the JLW
England Shareholders, JLW Ireland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of the Adjustment Shares then remaining issuable to each such
group).
(g) Subject to Section 1.4(k), if the Final JLW Ireland
Closing Net Worth is less than US$1,440,000, as such amount may be adjusted
pursuant to Section 1.4(p) below (the "Minimum JLW Ireland Closing Net
Worth") (the amount of such deficiency being referred to herein as the "JLW
Ireland Adjustment Amount"), then the number of JLW Ireland Adjustment
Shares to be delivered to the JLW Ireland Shareholders and the ESOT Trustee
on behalf of the JLW Ireland ESOT Sub Trust shall be reduced by the number
of shares of Parent Common Stock equal to the quotient obtained by dividing
the JLW Ireland Adjustment Amount by the Adjustment Shares Conversion
Amount; provided that if such quotient exceeds the number of JLW Ireland
Adjustment Shares (such excess number of Shares being referred to herein as
the "JLW Ireland Share Deficit"), then the JLW England Adjustment Shares,
JLW Scotland Adjustment Shares, Asia Region Adjustment Shares and
Australasia Region Adjustment Shares shall be reduced by an aggregate
number equal to the JLW Ireland Share Deficit, apportioned among them pro
rata on the basis of the number of Adjustment Shares originally allocated
herein to the JLW England Shareholders, JLW Scotland Shareholders, Asia
Region Shareholders and Australasia Region Shareholders (and the related
ESOT Sub Trusts); provided, further, that if such reduction or any
subsequent reduction reduces to zero the number of Adjustment Shares
issuable to the JLW England Shareholders, JLW Scotland Shareholders, Asia
Region Shareholders or Australasia Region Shareholders (and the related
ESOT Sub Trusts), any remaining JLW Ireland Share Deficit shall be deducted
from any Adjustment Shares then remaining issuable to the JLW England
Shareholders, JLW Scotland Shareholders, Asia Region Shareholders or
Australasia Region Shareholders (and the related ESOT Sub Trusts) pro rata
(on the basis of the Adjustment Shares then remaining issuable to each such
group).
(h) Subject to Section 1.4(k), if the Final Asia Region
Closing Net Worth is less than US$10,624,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum Asia Region
Closing Net Worth") (the amount of such deficiency being referred to herein
as the "Asia Region Adjustment Amount"), then the number of Asia Region
Adjustment Shares to be delivered to the Asia Region Shareholders and the
ESOT Trustee on behalf of the JLW Asia ESOT Sub Trust shall be reduced by
the number of shares of Parent Common Stock equal to the quotient obtained
by dividing the Asia Region Adjustment Amount by the Adjustment Shares
Conversion Amount; provided that if such quotient exceeds the number of
Asia Region Adjustment Shares (such excess number of shares being referred
to herein as the "Asia Region Share Deficit"), then the JLW England
Adjustment Shares, JLW Scotland Adjustment Shares, JLW Ireland Adjustment
Shares and Australasia Region Adjustment Shares shall be reduced by an
aggregate number equal to the Asia Region Share Deficit, apportioned among
them pro rata on the basis of the number of Adjustment Shares originally
allocated herein to the JLW England Shareholders, JLW Scotland
Shareholders, JLW Ireland Shareholders and Australasia Region Shareholders
(and the related ESOT Sub Trusts); provided, further, that if such
reduction or any subsequent reduction reduces to zero the number of
Adjustment Shares issuable to the JLW England Shareholders, JLW Scotland
Shareholders, JLW Ireland Shareholders or Australasia Region Shareholders
(and the related ESOT Sub Trusts), any remaining Asia Region Share Deficit
shall be deducted from any Adjustment Shares then remaining issuable to the
JLW England Shareholders, JLW Scotland Shareholders, JLW Ireland
Shareholders or Australasia Region Shareholders (and the related ESOT Sub
Trusts) pro rata (on the basis of Adjustment Shares then remaining issuable
to each such group).
(i) Subject to Section 1.4(k), if the Final Australasia
Region Closing Net Worth is less than US$4,736,000, as such amount may be
adjusted pursuant to Section 1.4(p) below (the "Minimum Australasia Region
Closing Net Worth") (the amount of such deficiency being referred to herein
as the "Australasia Region Adjustment Amount"), then the number of
Australasia Region Adjustment Shares to be delivered to the Australasia
Region Shareholders and the ESOT Trustee on behalf of the JLW Australasia
ESOT Sub Trust shall be reduced by the number of shares of Parent Common
Stock equal to the quotient obtained by dividing the Australasia Region
Adjustment Amount by the Adjustment Shares Conversion Amount; provided that
if such quotient exceeds the number of Australasia Region Adjustment Shares
(such excess number of shares being referred to herein as the "Australasia
Region Share Deficit"), then the JLW England Adjustment Shares, JLW
Scotland Adjustment Shares, JLW Ireland Adjustment Shares and Asia Region
Adjustment Shares shall be reduced by an aggregate number equal to the
Australasia Region Share Deficit, apportioned among them pro rata on the
basis of the number of Adjustment Shares originally allocated herein to the
JLW England Shareholders, JLW Scotland Shareholders, JLW Ireland
Shareholders and Asia Region Shareholders (and the related ESOT Sub
Trusts); provided, further, that if such reduction or any subsequent
reduction reduces to zero the number of Adjustment Shares issuable to the
JLW England Shareholders, JLW Scotland Shareholders, JLW Ireland
Shareholders or Asia Region Shareholders (and the related ESOT Sub Trusts),
any remaining Australasia Region Share Deficit shall be deducted from any
Adjustment Shares then remaining issuable to the JLW England Shareholders,
JLW Scotland Shareholders, JLW Ireland Shareholders or Asia Region
Shareholders (and the related ESOT Sub Trusts) pro rata (on the basis of
the Adjustment Shares then remaining issuable to each such group).
(j) [Intentionally Left Blank]
(k) After giving effect to the adjustments set forth in
Sections 1.4(e)-(i) above, each JLW England Shareholder, JLW Scotland
Shareholder and JLW Ireland Shareholder (and the related ESOT Sub Trusts)
shall be entitled to receive such Shareholder's (or ESOT Sub Trust's) pro
rata share of any then remaining JLW England Adjustment Shares, JLW
Scotland Adjustment Shares or JLW Ireland Adjustment Shares, respectively.
Each such Shareholder's (or ESOT Sub Trust's) pro rata share shall be
determined on the basis of the ratio which the Initial Consideration Shares
issuable to such Shareholder pursuant to columns 3(a) and 3(b) of Annex B
to the Applicable Joinder Agreement (or, in the case of an ESOT Sub Trust,
the number of ESOT Shares deposited in such ESOT Sub Trust pursuant to
Section 6.7 of this Agreement and Section 6.7 of the Other Purchase
Agreements) bear to the aggregate number of Initial Consideration Shares
issuable to all JLW England Shareholders, JLW Scotland Shareholders or JLW
Ireland Shareholders, together with the number of ESOT Shares deposited
with the related ESOT Sub Trusts, as applicable. The allocation of the
Asia Region Adjustment Shares and Australasia Region Adjustment Shares
remaining issuable after the adjustments set forth in Sections 1.4(e)-(i)
above among the Asia Region Shareholders and Australasia Region
Shareholders (and the related ESOT Sub Trusts), respectively, shall be
determined by the Shareholders' Representatives and included in a written
notice (the "Allocation Notice") provided to Parent and the Escrow Agent by
the Shareholders' Representatives within 30 days following the Final
Closing Statements Delivery Date (the "Allocation Notice Delivery Period").
Notwithstanding anything to the contrary contained herein, in the event
that the number of JLW England Adjustment Shares, JLW Scotland Adjustment
Shares, JLW Ireland Adjustment Shares, Asia Region Adjustment Shares or
Australasia Region Adjustment Shares issuable, respectively, to the JLW
England Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders or Australasia Region Shareholders (and the
related ESOT Sub Trusts) would be required to be reduced pursuant to the
adjustments set forth in Sections 1.4(e)-(i) above, the Shareholder's
Representatives shall have the option, exercisable during the Allocation
Notice Delivery Period, to pay, on behalf of some or all of such JLW
England Shareholders, JLW Scotland Shareholders, JLW Ireland Shareholders,
Asia Region Shareholders and/or Australasia Region Shareholders (and the
related ESOT Sub Trusts), up to an amount in cash in United States dollars
equal to the JLW England Adjustment Amount, JLW Scotland Adjustment Amount,
JLW Ireland Adjustment Amount, Asia Region Adjustment Amount or Australasia
Adjustment Amount, as applicable, or to surrender to Parent an equivalent
number of Initial Distribution Shares (based on a per share value equal to
the Adjustment Shares Conversion Amount), in which case the applicable
Adjustment Amount shall be reduced pro tanto. Any such cash payment must
be in United States dollars and received by Parent prior to the end of the
Allocation Notice Delivery Period. Any such Initial Distribution Shares
shall be surrendered to and received by Parent during the Allocation Notice
Delivery Period, together with all necessary assignments and stock powers.
The Adjustment Amount shall be reduced by an amount equal to any such cash
payment and the value of any Initial Distribution Shares so surrendered,
provided that for the purposes of this calculation, each Initial
Distribution Share shall be deemed to have a value equal to the Adjustment
Shares Conversion Amount. At the end of the Allocation Notice Delivery
Period, any Adjustment Shares that have become subject to a reduction
pursuant to Sections 1.4(e)-(i) (after giving effect to any payment or
surrender of Shares pursuant to this Section 1.4(k)) shall be returned to
Parent by the Escrow Agent.
(l) If the adjustments set forth in Sections 1.4(e)-(i) above
(after giving effect to any payment or surrender of Shares pursuant to
Section 1.4(k)) result in a reduction in Adjustment Shares that exceeds the
aggregate number of Adjustment Shares (such excess amount being referred to
herein as the "Adjustment Shares Deficit"), then in addition to the
elimination of the Adjustment Shares (and return of such Adjustment Shares
to Parent by the Escrow Agent), (A) each Shareholder and Other Shareholder
shall return, or cause to be returned, and (B) the ESOT Trustee shall
return, to the Transfer Agent for cancellation, certificates representing
Initial Distribution Shares received by such Shareholder or Other
Shareholder or ESOT Shares received by such ESOT Trustee, as the case may
be, as soon as practicable, but in any event no later than five Business
Days after notice from Parent following the expiration of the Allocation
Notice Delivery Period. The Transfer Agent shall cancel each such
certificate and issue to each Shareholder, Other Shareholder or ESOT
Trustee (on behalf of the applicable ESOT Sub Trust), as applicable, a new
certificate representing such Shareholder's or Other Shareholder's Initial
Distribution Shares or ESOT Shares, as the case may be, less such
Shareholder's, Other Shareholder's and the ESOT's pro rata share (on the
basis of the Initial Consideration Shares issued to all Shareholders and
Other Shareholders and ESOT Shares issued to the ESOT) of the Adjustment
Shares Deficit (based on a per share value equal to the Adjustment Shares
Conversion Amount). In the event that the Initial Distribution Shares held
by the Shareholders and the Other Shareholders are not sufficient to
satisfy their portion of the Adjustment Shares Deficit, the Shareholders
shall cause the Forfeiture Shares Escrow Agent under the SCCA or the Escrow
Agent with respect to the Forfeiture Shares of the Asia Region Shareholders
to return to the Transfer Agent for cancellation the certificate
representing the Forfeiture Shares, as soon as practicable, but in any
event no later than five Business Days after the expiration of the
Allocation Notice Delivery Period. The Transfer Agent shall cancel such
certificate and issue to the Forfeiture Shares Escrow Agent or the Escrow
Agent, as applicable, a new certificate representing the Forfeiture Shares,
less the number of Forfeiture Shares equal to the amount of the Adjustment
Shares Deficit that remains unsatisfied based on a per share value equal to
the Adjustment Shares Conversion Amount. To assist in effectuating the
provisions of this Section 1.4(l), the Shareholders and ESOT Trustee hereby
consent to the entry of stop transfer orders with the Transfer Agent
against the transfer of any Initial Consideration Shares held by such
Shareholders and any ESOT Shares held by such ESOT Trustee that are
required to be returned to the Transfer Agent for cancellation pursuant to
the terms hereof, which stop transfer orders shall be withdrawn by Parent,
in each case, once the applicable Initial Consideration Shares, ESOT Shares
or Forfeiture Shares, as applicable, are so returned.
(m) Certificates representing the Adjustment Shares that may
be deliverable after the adjustments and reallocations, if any, described
in this Section 1.4 shall be delivered by Parent to the Shareholders, the
Other Shareholders and the ESOT Trustee on behalf of the applicable ESOT
Sub Trusts, as appropriate, within 10 Business Days following the end of
the Allocation Notice Delivery Period together with any Adjustment Shares
Related Property (as defined in Section 4.1 of the Escrow Agreement). If
any provision of this Section 1.4 would require the Escrow Agent to deliver
a fraction of a share of Parent Common Stock to a Shareholder, Other
Shareholder or ESOT, Parent shall instead purchase such fraction of a share
from the Escrow Agent in exchange for a cash amount equal to the Adjustment
Shares Conversion Amount multiplied by such fraction, which cash amount
shall be paid over by the Escrow Agent to the applicable Shareholder, Other
Shareholder or ESOT Sub Trust in lieu of such fraction of a share.
(n) [Intentionally Left Blank]
(o) In the event that (i) the Final JLW England Closing Net
Worth exceeds the Minimum JLW England Closing New Worth, (ii) the Final JLW
Scotland Closing Net Worth exceeds the Minimum JLW Scotland Closing Net
Worth, (iii) the Final JLW Ireland Closing New Worth exceeds the Minimum
JLW Ireland Closing New Worth, (iv) the Final Asia Region Closing Net Worth
exceeds the Minimum Asia Region Closing Net Worth or (v) the Final
Australasia Region Closing Net Worth exceeds the Minimum Australasia Region
Closing Net Worth, Parent shall pay to the JLW England Shareholders, JLW
Scotland Shareholders, JLW Ireland Shareholders, Asia Region Shareholders
or Australasia Region Shareholders, as applicable, an amount equal to such
excess (unless such excess is otherwise paid or distributed to them), by
delivery of cash in the amount of such excess by wire transfer to an
account or accounts designated by the Shareholders' Representatives. Such
payment will be made within 60 days following the Final Closing Statements
Determination Date.
(p) In the event that the Integration Commencement takes
place later than January 15, 1999: (i) the JLW England Financial Statements
shall include both (A) a profit and loss account for the year ending
December 31, 1998 and (B) a profit and loss account for the period
beginning on January 1, 1999 and ending on the Closing Date (the "JLW
England 1999 Income Statement," with such period being sometimes referred
to herein as the "1999 Stub Period"), (ii) the JLW Scotland Financial
Statements shall include both (A) a profit and loss account for the year
ending December 31, 1998 and (B) a profit and loss account for the 1999
Stub Period (the "JLW Scotland 1999 Income Statement"), (iii) the JLW
Ireland Financial Statements shall include both (A) a profit and loss
account for the year ending December 31, 1998 and (B) a profit and loss
account for the 1999 Stub period (the "JLW Ireland 1999 Income Statement"),
(iv) the Asia Region Financial Statements shall include both (A) a profit
and loss account for the year ending December 31, 1998 and (B) a profit and
loss account for the 1999 Stub Period (the "Asia Region 1999 Income
Statement") and (v) the Australasia Region Financial Statements shall
include both (A) a profit and loss account for the year ending December 31,
1998 and (B) a profit and loss account for 1999 Stub Period (the
"Australasia Region 1999 Income Statement" and, together with the JLW
England 1999 Income Statement, the JLW Scotland 1999 Income Statement, the
JLW Ireland 1999 Income Statement and the Asia Region 1999 Income
Statement, the "1999 Income Statements"). The 1999 Income Statements shall
be prepared in accordance with the Agreed Generally Accepted Accounting
Principles, provided that compensation expense in respect of the persons
described in Exhibit 2 hereto shall be determined on a pro forma basis in
accordance with such Exhibit 2 and the associated pro forma tax benefit or
tax charge shall also be computed in accordance with such Exhibit 2. Based
on the 1999 Income Statements included in the Final Closing Statements: (i)
the Minimum JLW England Closing Net Worth shall be increased by any pro
forma profit on ordinary activities after taxation, or decreased by any pro
forma loss on ordinary activities after taxation, for the 1999 Stub Period
as shown on such JLW England 1999 Income Statement, (ii) the Minimum JLW
Scotland Closing Net Worth shall be increased by any pro forma profit on
ordinary activities after taxation, or decreased by any pro forma loss on
ordinary activities after taxation, for the 1999 Stub Period as shown on
such JLW Scotland 1999 Income Statement, (iii) the Minimum JLW Ireland
Closing Net Worth shall be increased by any pro forma profit on ordinary
activities after taxation, or decreased by any pro forma loss on ordinary
operations after taxation, or decreased by any pro forma loss on ordinary
activities after taxation, for the 1999 Stub Period as shown on such JLW
Ireland 1999 Income Statement, (iv) the Minimum Asia Region Closing Net
Worth shall be increased by any pro forma profit on ordinary activities
after taxation, for the 1999 Stub Period as shown on such Asia Region 1999
Income Statement and (v) the Minimum Australasia Region Closing Net Worth
shall be increased by any pro forma profit on ordinary activities after
taxation, or decreased by any pro forma loss on ordinary operations after
taxation, for the 1999 Stub Period as shown on such Australasia Region 1999
Income Statement.
Section 1.5 Closing. (a) Upon the terms and subject to the
conditions set forth herein, the purchase and sale of the Shares pursuant
to this Agreement (the "Closing") shall take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP in London, England, at 9:00 A.M.,
local time, on the Closing Date.
(b) The Integration, the Closing under this Agreement and the
closing of the transactions contemplated by the Other Purchase Agreements
shall, upon the terms and subject to the conditions set forth in the
Integration Agreements, this Agreement and the Other Purchase Agreements,
be consummated, if at all, in the following order and shall, for purposes
of this Agreement, be deemed effective as of the Closing Date:
(i) On the third Business Day following the date on
which all of the conditions set forth in Articles VII, VIII and IX hereof
and in Articles VII, VIII and IX of each of the Other Purchase Agreements
(other than the conditions specified in Sections 7.5 and 7.6 hereof and
thereof and other than the conditions that by their terms relate to the
Closing Date) have been satisfied or waived, or such other time as Parent
and the Sellers' Representatives may mutually agree upon in writing (such
date being sometimes referred to herein as the "Integration Commencement
Date"), the JLW Parties, the Shareholders and the Related JLW Owners will
take (or cause to be taken) the actions contemplated to be taken under the
terms of the Integration Plan and the Integration Agreements, in the order
provided therein and on a basis such that (except as to any Post-Closing
Integration Actions) the Integration will be completed (the "Integration
Completion") no later than the third Business Day following the Integration
Commencement Date or as soon thereafter as practicable, but in no event
later than five Business Days after the Integration Commencement Date (the
date of such completion being sometimes referred to herein as the
"Integration Completion Date"); provided that prior to the commencement of
the Integration, Parent shall have delivered to the Sellers'
Representatives a certificate of acknowledgment that the conditions
precedent to the commencement of the Integration described above have been
so satisfied or waived; and
(ii) On the later to occur of (A) the Business Day next
following the receipt of the Call Notice or the Put Notice (as such terms
are defined in the Europe/USA Region Agreement) under the Europe/USA Region
Agreement, as the case may be, and (B) the date on which the conditions to
the obligations of the parties under this Agreement which relate to the
Closing Date (other than Section 7.5 hereof) and under both the Europe/USA
Region Agreement and Australasia Region Agreement which relate to the
Closing Date (as such term is defined in the Europe/USA Region Agreement
and Australasia Region Agreement) (other than Section 7.5 thereof) shall
have been satisfied or waived, or such other time as Parent and the
Sellers' Representatives may mutually agree upon in writing, the closing of
the transactions contemplated by this Agreement, the Europe/USA Region
Agreement and the Australasia Region Agreement shall be consummated (the
date of such consummation being sometimes referred to herein as the
"Closing Date").
Section 1.6 Deliveries by the Shareholders. At the Closing, the
Sellers' Representatives, on behalf of the Sellers, or the Sellers shall
deliver, or cause to be delivered, to the applicable Buyers the following:
(a) share certificates representing all of the Shares, with
duly executed stock transfer forms in the applicable form of Annex F
hereto, and otherwise in a form reasonably acceptable to the applicable
Buyers for transfer on the books of the relevant Companies;
(b) all such other documents (including any necessary waivers
or consents) as may be required to enable US Acquisition Sub or US
Acquisition Sub II, as applicable, to be registered as the holder of the
Shares, including a power of attorney duly executed by each Seller in the
form of Annex G hereto;
(c) the Common Seal (if applicable), Share Register and Share
Certificate Books (or similar instruments), with any unissued share
certificates, all minute books and other statutory books (which shall be
written-up to but not including the Closing) of each Company;
(d) the original Certificate of Incorporation (or similar
organizational document) of each Company and Company Subsidiary;
(e) executed counterparts of any Consents obtained pursuant
to Section 5.3 hereof and not previously delivered to Buyers pursuant to
such Section;
(f) the certificates referred to in clause (ii) of Section
8.4 hereof;
(g) the opinions of counsel referred to in Section 8.5
hereof; and
(h) all other previously undelivered documents, instruments
or writings required to be delivered by any JLW Party to Buyers at or prior
to the Closing, pursuant to this Agreement or any other Operative
Agreement.
Section 1.7 Deliveries by the Buyers. (a) At the Closing, Parent
shall deliver, or cause to be delivered, to the Shareholders'
Representatives, on behalf of the Sellers and the Shareholders, the
following:
(i) duly executed stock certificates representing the
Initial Distribution Shares in the names specified in column 1 of Annex B
to the Applicable Joinder Agreements and in the denominations set forth in
column 3(a) of Annex B thereto;
(ii) [Intentionally Left Blank];
(iii) [Intentionally Left Blank];
(iv) the SCCA Expenses Reserve in United States dollars
by wire transfer to an account designated by the Shareholders'
Representatives at least three Business Days prior to the Closing Date;
(v) the executive officer certificate referred to in
clause (ii) of Section 9.3 hereof;
(vi) the opinions of counsel referred to in Section 9.4
hereof;
(vii) executed counterparts of any Consents obtained
pursuant to Section 6.3 hereof and not previously delivered to the Sellers'
Representatives pursuant to such Section;
(viii) a copy of the Articles of Amendment and
Restatement of Parent adopted pursuant to Section 1.9(a)(i)(A), in the form
attached hereto as Annex H, as certified by the Secretary of State of
Maryland, and a copy of the Amended Parent By-laws adopted pursuant to
Section 1.9(a)(ii), as certified by the Secretary of Parent together with
evidence reasonably satisfactory to the Sellers' Representatives showing
that the JLW Directors shall have been elected to the Board (and that the
only other directors on the Board shall be the Parent Directors),
effective immediately following the Closing, and that Chris Peacock and
Mike Smith shall have been elected by the Board to the offices of
President, Deputy Chief Executive Officer and Chief Operating Officer of
Parent, and Deputy Chairman of the Board of Parent, respectively, effective
immediately following the Closing; and
(ix) all other previously undelivered documents,
instruments or writings required to be delivered by the Buyers to the
Sellers, Shareholders or the Sellers' Representatives at or prior to the
Closing, pursuant to this Agreement or any other Operative Agreement.
(b) At the Closing, the Buyers shall (and Parent shall cause
Buyers to) deliver, or cause to be delivered, to the Escrow Agent, the
following:
(i) a certificate issued in the name of the Escrow
Agent or its nominee representing the Adjustment Shares;
(ii) a certificate issued in the name of the Escrow
Agent or its nominee representing the Escrow Shares; and
(iii) a certificate issued in the name of the Escrow
Agent or its nominee representing the Forfeiture Shares.
Section 1.8 Representatives. (a) The parties acknowledge and agree
that prior to the Shareholder Determination Date, the Shareholders, the
Other Shareholders, the Related JLW Owners and the ESOT Trustee (on behalf
of the ESOT) will execute a Sellers' Contribution and Coordination
Agreement (the "SCCA") relating to, among other things, the selection,
replacement, rights and obligations of the Sellers' Representatives and the
Shareholders' Representatives, which SCCA shall be in a form reasonably
acceptable to Parent. The SCCA as executed shall not be amended without
the consent of Parent, which consent will not be unreasonably withheld or
delayed.
(b) Each JLW Party, Shareholder and Related JLW Owner agrees
that:
(i) Parent shall be able to rely conclusively on the
instructions or actions of (A) the Sellers' Representatives, or any of
them, as to any instructions or actions required or permitted to be taken
by the Sellers' Representatives hereunder or under any other Operative
Agreement or the SCCA when executed, which instructions or actions shall be
binding on each such JLW Party, Shareholder and Related JLW Owner (the
"Closing Authorized Actions"), and (B) the Shareholders' Representatives as
to the settlement of any claims of indemnification against the Escrow Fund
by any Indemnified Persons (as defined in the Escrow Agreement) pursuant to
the Escrow Agreement, the resolution of any dispute regarding Adjustment
Shares under Section 1.4 or any other actions expressly required or
permitted to be taken by the Shareholders' Representatives hereunder or
under the SCCA or any of the Operative Agreements (the "Other Authorized
Actions" and, together with the Closing Authorized Actions, the "Authorized
Actions"). No party hereunder or the Escrow Agent shall have any cause of
action against Parent or any other Indemnified Person to the extent Parent
or any other such Indemnified Person has relied upon such instructions or
actions of the Sellers' Representatives or the Shareholders'
Representatives.
(ii) [Intentionally Left Blank].
(iii) The provisions of this Section 1.8 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any Seller,
Shareholder, Other Shareholder or any Related JLW Owner or ESOT Trustee may
have against the Sellers' Representatives or the Shareholders'
Representatives for any breach of the SCCA.
(iv) Remedies available at law for any breach of the
provisions of this Section 1.8 are inadequate. Therefore, Buyers shall be
entitled to temporary and permanent injunctive relief without the necessity
of proving damages if Buyers brings an action to enforce the provisions of
this Section 1.8.
(v) The provisions of this Section 1.8 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of each Seller, Shareholder, Other
Shareholder, Related JLW Owner and ESOT Trustee, and any references in this
Agreement to a Seller or the Sellers, a Shareholder or the Shareholders or
a Related JLW Owner or the Related JLW Owners shall mean and include the
successors to the Seller's or Sellers', the Shareholder's or Shareholders'
or the Related JLW Owner's or Related JLW Owners' rights hereunder, whether
pursuant to testamentary disposition, the laws of descent and distribution
or otherwise.
(c) In performing their functions and duties under this
Section 1.8, the Sellers' Representatives and Shareholders' Representatives
shall act solely as agents of the Sellers, the Shareholders, the Other
Shareholders, the Related JLW Owners and the ESOT and do not assume and
shall not be deemed to have assumed any obligation or relationship of
agency, trustee or fiduciary with or for the Buyers, the Companies or any
of their respective Subsidiaries. The Sellers' Representatives and
Shareholders' Representatives shall have no liability to the Buyers, the
Companies or any of their respective Subsidiaries hereunder in their
capacity as such.
(d) The Shareholders hereby agree that all of the Cash
Consideration that would have otherwise been payable to such Shareholders
pursuant to Section 1.2 of this Agreement and all or a portion of the Cash
Consideration that would have otherwise been payable to the Other
Shareholders pursuant to Section 1.2 of the Other Purchase Agreements and
to the Sellers under Section 1.1(a) of the Australasia Region Agreement
(the "SCCA Expenses Reserve") shall instead be retained by the
Shareholders' Representatives to be held and disbursed as provided in the
SCCA. Such SCCA Expenses Reserve shall be apportioned among the
Shareholders, such Other Shareholders and such Sellers pro rata based on
the aggregate amount of the Consideration Shares and the Cash Consideration
originally allocated to each of them. The Shareholders hereby authorize
Parent to deliver to the Shareholders' Representatives the SCCA Expenses
Reserve in lieu of paying the Cash Consideration to the Shareholders.
Section 1.9 Corporate Governance Matters. (a) As of the Closing,
(i) Parent shall use all reasonable efforts to cause (A) the Articles of
Amendment and Restatement of Parent attached hereto as Annex I to become
effective, (B) the Articles of Incorporation of LaSalle Advisors Capital
Management, Inc. ("LACM") to be amended to change its name to "LaSalle
Investment Management, Inc." and (C) the number of shares of Parent Common
Stock reserved for issuance under Parent's 1997 Stock Award and Incentive
Plan, as amended, to be increased to 4,160,000; and (ii) Parent shall cause
the Amended and Restated Bylaws of Parent to be amended and restated to
read in their entirety as set forth in Annex K hereto (the "Amended Parent
Bylaws").
(b) The number of directors comprising the full board of
directors of Parent (the "Board") as of the Closing and until the earlier
of (i) the first Business Day following the fifth annual meeting of the
stockholders of Parent following the Closing and (ii) June 1, 2003 (the
"Transition Period") shall be fourteen; provided that the number of
directors comprising the Board may at any time be increased to fifteen by a
resolution approved by the Parent Nominating Committee and the JLW
Nominating Committee (each as defined below) and by a majority of the
entire Board of Directors. As of the Closing, seven of such directors
shall have been designated by Parent (the "Parent Directors") and seven of
such directors shall have been designated by the Sellers' Representatives
(the "JLW Directors"). The Parent Directors shall include four executive
officers of Parent ("Parent Employee Directors," which term shall also be
deemed to refer to any replacement for a Parent Employee Director elected
in accordance with the applicable provisions of Article X of the Amended
Parent Bylaws) and three Independent Directors (the "Parent Independent
Directors," which term shall also be deemed to refer to any replacement for
a Parent Independent Director elected in accordance with the applicable
provisions of Article X of the Amended Parent Bylaws who shall be an
Independent Director) and the JLW Directors shall include four executive
officers of the JLW Businesses ("JLW Employee Directors," which term shall
also be deemed to refer to any replacement for a JLW Employee Director
elected in accordance with the applicable provisions of Article X of the
Amended Parent Bylaws) and three Independent Directors (the "JLW
Independent Directors" which term shall also be deemed to refer to any
replacement for a JLW Independent Director elected in accordance with the
applicable provisions of Article X of the Amended Parent Bylaws who shall
be an Independent Director), at least one of which JLW Independent
Directors shall have his or her primary place of business and residence
outside of the United Kingdom. The initial Parent Employee Directors will
be Stuart L. Scott, M.G. Rose, Robert C. Spoerri and Daniel W. Cummings and
the initial Parent Independent Directors will be Darryl Hartley-Leonard,
Thomas C. Theobald and John R. Walter. The initial JLW Directors will be
selected by the Sellers' Representatives no later than 45 days following
the date of this Agreement and shall be subject to the approval of Parent,
which approval shall not be unreasonably withheld or delayed. If, prior to
the Closing, any Parent Director or JLW Director shall decline or be unable
to serve, Parent or the Sellers' Representatives, as the case may be, shall
designate another individual to serve in such director's place, subject to
the requirement that at least three of the Parent Directors and three of
the JLW Directors shall be Independent Directors and subject to the
approval of the Sellers' Representatives (in the case of the Parent
Directors) or Parent (in the case of the JLW Directors), as applicable,
which approval shall not be unreasonably withheld or delayed. Parent shall
cause the individuals designated by the Sellers' Representatives as the
initial JLW Directors to be appointed as directors of Parent immediately
following the Closing.
(c) The initial designation of the JLW Directors among the
three classes of directors comprising the Board shall be agreed among
Parent and the Sellers' Representatives, provided that the Parent Directors
and the JLW Directors shall be divided as equally as is feasible among such
classes. During the Transition Period, each standing committee of the
Board shall be constituted of an equal number of (i) Parent Directors, who
shall be selected by the Parent Nominating Committee, and (ii) JLW
Directors, who shall be selected by the JLW Nominating Committee.
Notwithstanding the foregoing, at any time when a Fifteenth Director (as
defined below) is in office, the Parent Nominating Committee and the JLW
Nominating Committee may, acting as a single committee, appoint the
Fifteenth Director as an additional member of any committee of the Board,
which appointment must be approved by a majority of the members of the
Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee.
(d) During the Transition Period, the Parent Employee
Directors in office from time to time, together with two or more Parent
Independent Directors selected by such Parent Employee Directors, shall
constitute a committee of the Board (the "Parent Nominating Committee")
with the powers and duties delegated to such committee in Article X of the
Amended Parent Bylaws, and the JLW Employee Directors in office from time
to time, together with two or more JLW Independent Directors selected by
such JLW Employee Directors, shall constitute a committee of the Board (the
"JLW Nominating Committee") with the powers and duties delegated to such
committee in Article X of the Amended Parent Bylaws. Except as otherwise
set forth in such Article X, the Parent Nominating Committee and the JLW
Nominating Committee (collectively, the "Nominating Committees") will
exercise all power and authority of the Board with respect to the
designation of persons as the nominees of the Board for election to, or
designating persons to fill vacancies on, the Board. Notwithstanding any
other provision hereof to the Company of the Amended Parent Bylaws, (i) it
shall be a qualification for any director elected by the Board to replace
any JLW Director (whose term is expiring or has expired or who shall have
been removed or become disqualified or who shall have resigned, retired,
died or otherwise shall fail to continue to serve as a director of Parent)
that such replacement director shall have been nominated by the JLW
Nominating Committee, and (ii) it shall be a qualification for any director
elected by the Board to replace any Parent Director (whose term is expiring
or has expired or who shall have been removed or become disqualified or who
shall have resigned, retired, died or otherwise shall fail to continue to
serve as a director of Parent) that such replacement director shall have
been nominated by the Parent Nominating Committee.
(e) During the Transition Period, prior to each meeting of
the stockholders at which the term of office of any Parent Director is
expiring or at which any replacement for a Parent Director is to be
elected, the Parent Nominating Committee may designate a nominee for
election to such position (which designee must be reasonably acceptable to
the JLW Nominating Committee), and prior to each meeting of the
stockholders at which the term of office of any JLW Director is expiring or
at which any replacement for a JLW Director is to be elected, the JLW
Nominating Committee may designate a nominee for election to such position
(which designee must be reasonably acceptable to the Parent Nominating
Committee); provided that at least three Parent Directors and at least
three JLW Directors shall at all times be Independent Directors; provided,
further, that at least one JLW Independent Director shall at all times have
his primary place of business and residence outside of the United Kingdom.
<PAGE>
(f) During the Transition Period, if any Parent Director is
removed from the Board, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board, the Parent
Nominating Committee shall have the exclusive power to designate a person
to fill such vacancy, and if any JLW Director is removed from the Board,
becomes disqualified, resigns, retires, dies or otherwise cannot continue
to serve as a member of the Board, the JLW Nominating Committee shall have
the exclusive power to designate a person to fill such vacancy, in each
case, subject to the approval of a majority of directors then remaining in
office; provided that at least three Parent Directors and three JLW
Directors shall at all times be Independent Directors; provided, further,
that one JLW Independent Director shall at all times have his primary place
of business and residence outside of the United Kingdom.
(g) During the Transition Period, in the event that the
number of members constituting the Board is increased to fifteen in
accordance with Section 1.9(b) hereof, the Parent Nominating Committee and
the JLW Nominating Committee, acting as a single committee, shall elect an
Independent Director to fill such vacancy (the "Fifteenth Director"), which
Independent Director must be approved by a majority of the members of the
Parent Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of the entire Board. Prior to any
meeting of the stockholders at which the term of office of such Fifteenth
Director is expiring or at which a replacement for such director is to be
elected, the Parent Nominating Committee and the JLW Nominating Committee,
acting as a single committee, shall designate a nominee for such position,
which Independent Director must be approved by a majority of the members of
the Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee, and at such meeting of stockholders the nominations
shall not be closed or the vote taken until such nominee shall have been
nominated. During the Transition Period, neither the Board nor any
committee thereof shall nominate (or cause there to be nominated) any
person to replace such Fifteenth Director who has not been so designated by
the Nominating Committees. In the event that such Fifteenth Director is
removed from the Board, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board, the Parent
Nominating Committee and the JLW Nominating Committee, acting as a single
committee, shall have exclusive power on behalf of the Board to designate a
person to fill such vacancy and shall jointly, acting as a single
committee, designate an Independent Director to serve in such position,
which Independent Director must be approved by a majority of the members of
the Parent Nominating Committee, a majority of the members of the JLW
Nominating Committee and a majority of directors then remaining in office.
(h) Stuart L. Scott shall hold the position of Chairman of
the Board and Chief Executive Officer of Parent for a period of at least
two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity.
Christopher Peacock shall hold the position of President, Deputy Chief
Executive Officer and Chief Operating Officer of Parent for a period of at
least two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity. If at any
time following the Closing, the position of Chairman of the Board and Chief
Executive Officer of Parent or President, Deputy Chief Executive Officer
and Chief Operating Officer of Parent becomes vacant, such vacancy shall be
filled by a majority vote of the entire Board of Directors; provided that
during the two-year period immediately following the Closing, the Chairman
of the Board and Chief Executive Officer of Parent and President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent shall be
selected from the officers or employees of Parent immediately prior to the
Closing ("Parent Employees") and the partners, officers or employees of the
JLW Businesses immediately prior to the Closing ("JLW Employees");
provided, further, that during such period, (i) if the office of the
Chairman and Chief Executive Officer of Parent is held by a Parent
Employee, then the office of President, Deputy Chief Executive Officer and
Chief Operating Officer of Parent shall be held by a JLW Employee and (ii)
if the office of Chairman of the Board and Chief Executive Officer of
Parent is held by a JLW Employee, then the office of President, Deputy
Chief Executive Officer and Chief Operating Officer of Parent shall be held
by a Parent Employee. The Chairman of the Board and Chief Executive
Officer, the President, Deputy Chief Executive Officer and Chief Operating
Officer of Parent may only be removed from office by a majority vote of the
entire Board of Directors; provided that neither Mr. Scott nor Mr. Peacock
may be removed from such respective positions, with or without cause, prior
to the second anniversary of the Closing, unless such removal is approved
by at least two-thirds of the entire Board.
(i) During the Transition Period, the affirmative vote of at
least 75% of the entire Board of Directors shall be required to alter or
amend, or adopt any provision inconsistent with, or repeal, in whole or in
part, Article III, Article IV or Article X of the Amended Parent Bylaws.
(j) As used in this Section 1.9, "entire Board" means the
total number of directors Parent would have if there were no vacancies.
Section 1.10 Integration. (a) In order to accomplish and effect
the Integration, each of the JLW Parties, the Shareholders and the Related
JLW Owners will take (or cause to be taken) the actions contemplated to be
taken by such Persons under the terms of the Integration Plan and the
Integration Agreements, subject to satisfaction or waiver of the conditions
set forth therein, in the order provided therein and on a basis such that
(except as otherwise set forth below) the Integration Completion will occur
no later than the third Business Day or as soon thereafter as is
practicable following the Integration Commencement Date but in no event
later than five Business Days thereafter; provided that any action
identified in the Integration Plan and the Integration Agreements as being
a "post-closing action" (the "Post-Closing Integration Actions") may be
postponed until after the Closing Date; provided further, that the Sellers,
the Shareholders and the Related JLW Owners shall have no responsibility
after the Closing Date with respect to the performance of any Post-Closing
Integration Actions contemplated to be taken by any Company or Company
Subsidiary under the Integration Plan and the Integration Agreements.
(b) Certain of the Sellers, the Companies and the
Shareholders and Related JLW Owners are entering into an Escrow Agreement
in the form attached to Annex B hereto (the "Integration Escrow
Agreement"), pursuant to which certain agreements, instruments and other
documents described in the Integration Plan have been or will be deposited
with the Escrow Agents described therein for the purpose of facilitating
the implementation of the Integration Plan.
ARTICLE II
MATTERS RELATING TO THE
SHAREHOLDER TRANSACTION DOCUMENTS;
REALLOCATION
Section 2.1 Signing Procedures. (a) The signing procedures set
forth in this Section 2.1 shall not commence until the satisfaction of any
applicable regulatory requirements. Parent shall promptly complete the
preparation of such Offering Memorandum and in doing so shall consult with
the Shareholders' Representatives, the JLW Sellers, the Companies and the
financial advisers and counsel to the JLW Sellers in connection therewith,
and shall permit them to participate in the preparation of such Offering
Memorandum. As soon as reasonably practicable after the satisfaction of
the last such regulatory requirement, with respect to each Person listed as
a "Shareholder" on the Preliminary Master Shareholder List and to each
person listed as a "Shareholder" on the Preliminary Master Shareholder List
attached to each of the Other Purchase Agreements (each a "Designated JLW
Shareholder" and, collectively, the "Designated JLW Shareholders"), (i) the
applicable JLW Sellers will distribute, or cause to be distributed, to such
Designated JLW Shareholder (A) a letter from one or more of the Management
Shareholders on behalf of the International Board of the JLW Businesses
(and in each case in his or their respective capacities as members of such
International Board), substantially in the form approved by Parent, which
letter shall include the approval and recommendation of such International
Board in favor of this Agreement and the Other Purchase Agreements and the
transactions contemplated hereby and thereby, including but not limited to
the sale of Shares, (B) execution copies of the Integration Agreements (if
any) to which such Designated JLW Shareholder is contemplated to be a party
pursuant to the Integration Plan (the "Applicable Integration Agreements"),
(C) an execution copy of a form of employment contract to be entered into
by such Designated JLW Shareholder or Related JLW Owner and a Company or
Company Subsidiary, in a form previously provided to Parent and (D) with
respect to Additional JLW Procon I Trust Beneficial Owners, execution
copies of the agreements and instruments necessary for such person to
become a JLW Procon I Trust Beneficial Owner, and (ii) Parent will
distribute, or cause to be distributed, to such Designated JLW Shareholder
(A) a copy of the Offering Memorandum, (B) an execution copy of each of the
Applicable Joinder Agreement, the Stockholder Agreement and the Escrow
Agreement (the agreements referenced in clauses (i)(B), (i)(C) and (ii)(B)
above are collectively referred to herein as the "Shareholder Transaction
Documents"), and (C) a letter (the "Instruction Letter") setting forth
instructions for returning to Parent the agreements referenced in clause
(ii)(B) above as executed by such Designated JLW Shareholder and Related
JLW Owner, if applicable, which letter shall provide that if such
Designated JLW Shareholder desires to enter into such agreements, then such
agreements must be signed by such Designated JLW Shareholder and, if the
Person named as the "Shareholder" in such agreements is not a natural
person, the Related JLW Owner, and received by Parent by the 21st day (or
such later date approved by Parent) (the "Final Return Date") after the
date upon which the Shareholder Transaction Documents are first distributed
to the Designated JLW Shareholders (the "Commencement Date"). The
Instruction Letter shall also indicate the method for a Shareholder to
revoke such Shareholder's acceptance prior to the Final Return Date. If
requested by Parent, the signature of each Shareholder shall be guaranteed
or witnessed in accordance with local practice or custom in the
jurisdiction in which such signature is given; provided that such practice
or custom must be reasonably satisfactory to Parent. Promptly following
the Final Return Date, Parent shall sign each of the Shareholder
Transaction Documents properly completed, executed and returned to Parent,
and shall promptly return fully executed originals thereof to the
applicable Shareholders, together with copies thereof to the Shareholders'
Representatives.
(b) On or prior to the date (the "Commitment Date") falling
35 days (or such later date as Parent and the Shareholders'
Representatives may mutually agree upon in writing) after the Commencement
Date, the Shareholders' Representatives shall prepare and, subject to
paragraph (c) of this Section 2.1, deliver to Parent the Final Master
Shareholder List. Parent shall provide to the Shareholders'
Representatives, in the course of each day during the period between the
Commencement Date and the Commitment Date, a list of each Designated JLW
Shareholder who has, by midday on the previous day and pursuant to and in
accordance with the instructions provided in the Instruction Letter,
executed and delivered to Parent the documents referred to therein.
(c) If the Final Master Shareholder List delivered to Parent
is identical to the Preliminary Master Shareholder List, then Parent shall
be required to accept such Final Master Shareholder List. If the Final
Master Shareholder List does not include the name of each Designated JLW
Shareholder, the Shareholders' Representatives shall not be obligated to
deliver the Final Master Shareholder List. If the Final Master Shareholder
List does not include the name of each Designated JLW Shareholder, Parent
shall have the right to reject such list by written notice thereof
delivered to the Shareholders' Representatives. Notwithstanding any such
rejection by Parent of a Final Master Shareholder List, during the period
between the Commencement Date and the Commitment Date, the Shareholders'
Representatives shall be entitled to deliver a revised Final Master
Shareholder List, subject to Parent's right to reject such Final Master
Shareholder List in accordance with the third sentence of this Section
2.1(c). Parent shall acknowledge any acceptance by Parent of a Final
Master Shareholder List by delivering written notice of such acceptance
promptly to the Shareholders' Representatives. The parties acknowledge and
agree that the acceptance by Parent of a Final Master Shareholder List
which does not include the name of each Designated JLW Shareholder shall
not constitute a waiver by Parent of any inaccuracy or breach of any
representation or warranty contained herein or in any Joinder Agreement or
any rights of the Indemnified Persons under the Escrow Agreement.
Section 2.2 Permitted Reallocation of Consideration and Shares. In
the event that any Designated JLW Shareholders are not included on the
Final Master Shareholder List (collectively, the "Non-Participating
Designated JLW Shareholders"), the Consideration Shares and Cash
Consideration, if any, that were allocated to such Non-Participating
Designated JLW Shareholders on the Preliminary Master Shareholder List or
the Preliminary Master Shareholder Lists attached to the Other Purchase
Agreements, as the case may be, shall be reallocated, as follows:
Consideration Shares and Cash Consideration allocated to a Non-
Participating Designated JLW Shareholder that would have been a (i) JLW
England Shareholder, (ii) JLW Scotland Shareholder, (iii) JLW Ireland
Shareholder, (iv) Asia Region Shareholder or (v) Australasia Region
Shareholder, shall be reallocated among the other JLW England Shareholders,
JLW Scotland Shareholders, JLW Ireland Shareholders, Asia Region
Shareholders or Australasia Region Shareholders, as the case may be, pro
rata among such JLW England Shareholders, JLW Scotland Shareholders, JLW
Ireland Shareholders, Asia Region Shareholders or Australasia Region
Shareholders, as the case may be (on the basis of the Initial Consideration
Shares issued to such Shareholders). As soon as practicable following the
Shareholder Determination Date, the Shareholders' Representatives, with the
cooperation of Parent, shall deliver, or cause to be delivered, to each
Shareholder and Other Shareholder a definitive Annex B to the Applicable
Joinder Agreement and Other Joinder Agreement, as applicable, reflecting
such reallocation. Any reallocation pursuant to this Section 2.2 shall be
reflected in an equivalent reallocation pursuant to the Integration
Agreement (if any) pursuant to which the relevant Shareholder receives his
or her Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS, THE COMPANIES
AND THE MANAGEMENT SHAREHOLDERS
The Sellers, jointly and severally, the Companies, jointly and
severally, and the Management Shareholders, severally and not jointly,
make the representations and warranties set forth below to the Buyers (the
parties hereto agree that (i) the representations and warranties of each
Management Shareholder set forth in this Article III shall be expressly
limited to such Management Shareholder's Knowledge, and that, except to the
extent provided in Section 11.2 hereof, no Management Shareholder shall
have any liability with respect to any such representation and warranty
unless and until the Closing occurs and (ii) the representations and
warranties of the Companies contained herein shall not give rise to any
right to indemnification against such Companies and shall only be made to
the extent that it is lawful for the Companies to make such representations
and warranties).
Section 3.1 Shares; Claims to Assets. (a) As of the date of this
Agreement (assuming that the Designated JLW Shareholders execute and
deliver the Shareholder Transaction Documents), the Designated JLW
Shareholders will be the only Persons entitled to receive any of the
Consideration Shares or the Cash Consideration upon completion of the
transactions contemplated hereby and by the other Operative Agreements.
Upon completion of the Integration, the Shares will comprise in the
aggregate the whole of the issued and outstanding share capital of the
Companies. Upon completion of the Integration, no Person, other than the
Shareholders and their Related JLW Owners, if applicable, and then only to
the extent provided in Annex B to the Applicable Joinder Agreements or as
specifically provided for herein or in the other Operative Agreements, will
have any right or claim to any of the Consideration Shares or Cash
Consideration or (other than as expressly provided in this Agreement) other
payment or consideration (with respect to an ownership, partnership, trust
or similar interest, right of participation or otherwise) from any of the
Companies or Company Subsidiaries as a result of or in connection with the
consummation of the transactions contemplated by this Agreement, the Other
Purchase Agreements and the Operative Agreements.
(b) Except as set forth in Section 3.1 of the Company
Disclosure Schedule, no current or former shareholder, director, officer or
employee of any Seller, Company or Company Subsidiary owns or has any
rights in or to any of the specific assets, properties or rights (other
than cash permitted to be distributed or paid in accordance with this
Agreement or Annex B to an Applicable Joinder Agreement) of or used by any
Company or Company Subsidiary in the ordinary course of its business.
Section 3.2 Corporate Organization. Each of JLW Pacific and JLW
Holdings is duly incorporated and validly existing under the laws of the
Cook Islands; Transact Thailand is duly incorporated and validly existing
under the laws of Thailand; Transact Singapore is duly incorporated and
validly existing under the laws of Singapore; and Transact HK is duly
incorporated and validly existing under the laws of Hong Kong. Each
Company (i) has all requisite corporate power and authority to carry on its
business as currently conducted and to own the properties and assets
currently owned by it and (ii) is duly qualified or licensed to do business
as a foreign Person (and, if applicable, in good standing) in all the
jurisdictions in which such qualification or licensing is required, except
jurisdictions in which the failure to be so qualified or licensed (and, if
applicable, in good standing) would not be reasonably expected to have a
Company Material Adverse Effect. True and complete copies of the
certificate of incorporation and bylaws or memorandum and articles of
association (or similar organizational documents), as applicable, and, (a)
in the case of JLW Pacific and JLW Holdings, any other documents required
to be annexed thereto in accordance with the International Companies Act
1981-82 of the Cook Islands (the "Cook Islands Companies Act"), (b) in the
case of Transact Thailand, any other documents required to be annexed
thereto in accordance with The Civil and Commercial Code of Thailand (the
"Thailand Civil Code"), (c) in the case of Transact Singapore, any other
documents required to be annexed thereto in accordance with the Companies
Act, Chapter 50 of Singapore (the "Singapore Companies Act") and (d) in the
case of Transact HK, any other documents required to be annexed thereto in
accordance with Section 117 of the Companies Ordinance (Cap. 32 of the Laws
of Hong Kong) (the "HK Companies Ordinance"), all as presently in effect,
are attached to Section 3.2 of the Company Disclosure Schedule. In respect
of each of JLW Pacific and JLW Holdings, all filings required by law to be
made with the Registrar of International and Foreign Companies of the Cook
Islands (the "Cook Islands Registrar") have been made, and neither JLW
Pacific nor JLW Holdings has received any application or request for
ratification of its statutory registers or any notice that any of them is
incorrect. In respect of Transact Thailand, all filings required by law to
be made with the Registrar of Companies and Partnerships (the "Thailand
Registrar of Companies") and the Ministry of Commerce in Thailand (the
"Thailand Ministry of Commerce") have been made and Transact Thailand has
not received any application request for ratification of its statutory
registers or any notice that any of them are incorrect. In respect of
Transact Singapore, all filings required by law to be made with the
Registrar of Companies and Businesses of Singapore (the "Singapore
Registrar") have been made, and Transact Singapore has not received any
application or request for ratification of its statutory registers or any
notice that any of them is incorrect. In respect of Transact HK, all
filings required by law to be made with the Registrar of Companies in Hong
Kong (the "HK Registrar") have been made, and Transact HK has not received
any application or request for ratification of its statutory registers or
any notice that any of them is incorrect.
Section 3.3 Capitalization of the Companies. (a) The authorized
share capital of (i) JLW Pacific consists of 3,000 ordinary shares of US$1
per share divided into A-Z classes of 100 shares each and 400 unclassified
ordinary shares, of which 100 "A" shares of US$1 per share are issued and
outstanding; (ii) JLW Holdings consists of 3,000 ordinary shares of US$1
per share divided into A-Z classes of 100 shares each and 400 unclassified
ordinary shares, of which 4 "A" shares and 1 "B" share of US$1 per share
are issued and outstanding and 2,995 shares are held in its treasury; (iii)
Transact Thailand consists of 40,000 shares, par value 100 Baht per share,
of which 40,000 shares are issued and outstanding and no shares are held in
its treasury; (iv) Transact Singapore consists of 90,000 ordinary shares of
S$1 per ordinary share and 10,000 preference shares of S$1 per preference
share, of which all 100,000 shares are issued and outstanding and no shares
are held in its treasury; and (v) Transact HK consists of 10,000 shares of
HK$1 each, of which 10,000 shares are issued and outstanding and no shares
are held in its treasury. As of the date hereof (and as of the Closing
Date), all of the Shares of each of the Companies have been (and will have
been) validly issued and are (and will be) fully paid up. The legal and
beneficial owners of all of the Shares as of the date hereof are set forth
in Section 3.3(a) of the Company Disclosure Schedule and the legal and
beneficial owners of all of the Shares as of the Closing Date shall be
identified on the Final Master Shareholder List.
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, there are no outstanding: (i) securities convertible
into or exchangeable for, directly or indirectly, any share capital
(including the Shares), debentures or other securities of any Company or
Company Subsidiary; or (ii) subscriptions, options, warrants, calls,
rights, contracts, commitments, understandings, restrictions or
arrangements relating to the issuance, allotment, sale, purchase, transfer
or voting of any share capital (including the Shares), debentures or other
securities of any Company or Company Subsidiary. Except as set forth in
Section 3.3(b) of the Company Disclosure Schedule, no Company or Company
Subsidiary: (i) is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire, retire, cancel, reduce or redeem any of
its issued share capital, capital stock or other ownership interests; and
(ii) has any liability for dividends or other distributions declared,
accrued or unaccrued with respect to any of its issued share capital or
capital stock or in respect of any ownership, trust or other participating
interest therein.
Section 3.4 Subsidiaries and Affiliates. Section 3.4 of the Company
Disclosure Schedule sets forth the name, jurisdiction of incorporation or
formation and authorized, issued and outstanding share capital of each
Company Subsidiary. Except as disclosed in Section 3.4 of the Company
Disclosure Schedule, no Company owns, directly or indirectly, any share
capital or other equity securities of any Person or has any direct or
indirect equity or ownership interest or in any partnership, joint venture
or business. Except as set forth in Section 3.4 of the Company Disclosure
Schedule, all the outstanding share capital or capital stock, as
applicable, of each Company Subsidiary is owned, directly or indirectly, as
of the date hereof, by one or more Companies and will be owned, directly or
indirectly, as of the Closing Date, by one or more Companies, in each case
free and clear of all Encumbrances, and has been validly issued and is
fully paid and, to the extent that the concept of assessability of capital
stock is potentially applicable, is nonassessable. Each Company
Subsidiary: (i) is duly organized or incorporated and validly existing
(and, if applicable in good standing) under the laws of its jurisdiction of
incorporation or formation; (ii) has all requisite corporate or similar
power and authority to carry on its business as it is now being conducted
and to own the properties and assets it now owns; and (iii) is duly
qualified or licensed to do business as a foreign entity (and, if
applicable, in good standing) in all jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not have a Company Material Adverse Effect. True and
complete copies of the certificate of incorporation and bylaws or
memorandum and articles of association (or similar organizational
documents) and all documents required to be annexed thereto, as applicable,
as presently in effect, of each Company Subsidiary have been previously
provided to Parent.
Section 3.5 Authorization. Each Company has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and the Integration Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. Each Company
has taken all corporate action necessary to authorize and approve the
execution and delivery by such Company of this Agreement and each
Integration Agreement to which it is a party, and no other action on the
part of the shareholders of such Company is required for such Company to
execute and deliver this Agreement and each Integration Agreement to which
it is a party, and to consummate the transactions contemplated hereby and
thereby. This Agreement and each Integration Agreement has been duly and
validly executed and delivered by each JLW Party which is a party thereto
and constitute a valid and binding agreement of each such JLW Party,
enforceable against each such JLW Party in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding at
equity or in law.
Section 3.6 No Violation. Neither the execution and delivery by any
JLW Party of this Agreement or any other Operative Agreement or Integration
Agreement to which it is a party, nor the consummation by any Seller or
Company of the transactions contemplated hereby or thereby, shall: (i)
violate or be in conflict with any provision of the certificate of
incorporation and bylaws or memorandum of articles of association (or
similar organizational documents), as applicable, of any Seller, Company or
Company Subsidiary; (ii) except as specified in Section 3.6 or 3.7 of the
Company Disclosure Schedule, violate, be in conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, cause or permit the acceleration of, or give
rise to any right of termination, imposition of fees or penalties under,
any debt, Contract, instrument or other obligation to which any Seller,
Company or Company Subsidiary is a party or by which its assets are bound
or affected, or result in the creation or imposition of any Lien upon any
property or assets (including any Encumbrance upon any Shares) of any JLW
Party or Company Subsidiary; or (iii) violate any statute, law, judgment,
decree, order, regulation, rule or other similar authoritative matters
("Laws") of any foreign, federal, state or local governmental, quasi-
governmental, administrative, regulatory or judicial court, department,
commission, agency, board, bureau, instrumentality or other authority
("Authority"); except, in the case of clause (ii) or (iii) above, for any
of the same that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect or materially impair the
ability of any JLW Party to perform his, her or its obligations hereunder
or thereunder or prevent or materially delay the consummation of the
transactions contemplated hereby and thereby.
Section 3.7 Consents and Approvals. Except as set forth in Section
3.6 or 3.7 of the Company Disclosure Schedule, no Consents from or of any
third party or any Authority are necessary for execution and delivery of
this Agreement, the other Operative Agreements or the Integration
Agreements by any Seller or Company or the consummation by any Seller or
Company of the transactions contemplated hereby or thereby, or to enable
the Companies and the Company Subsidiaries to continue to conduct the
businesses currently conducted by the Companies and the Company
Subsidiaries at their present locations after the Closing Date in a manner
which is consistent with that in which such businesses are presently
conducted, except for the approval of the Bermuda Monetary Authority (the
"Required Regulatory Approvals"), and except for such other Consents as to
which the failure to obtain, individually or in the aggregate, would not
be reasonably expected to have a Company Material Adverse Effect or
materially impair the ability of any JLW Party to perform his, her or its
obligations hereunder or thereunder or prevent or materially delay the
consummation of the transactions contemplated hereby and thereby.
Section 3.8 Financial Statements. (a) Set forth in Section 3.8 of
the Company Disclosure Schedule are: (i) the audited consolidated or
combined (as applicable) balance sheets of (A) JLW England and its
Subsidiaries, (B) JLW Scotland and its Subsidiaries, (C) JLW Ireland and
its Subsidiaries, (D) the Asia Region Companies and their respective
Subsidiaries and (E) the Australasia Region Companies and their respective
Subsidiaries in each case as of December 31, 1997 and the related
consolidated or combined (as applicable) profit and loss accounts,
statements of cash flows, statements of movements on reserves and
statements of total recognized gains and losses for the year then ended
(including notes thereto and the accounting policies used in connection
therewith), all certified by independent certified public accountants,
whose reports thereon are included therein (the "Audited Financial
Statements"), (ii) the unaudited consolidated or combined (as applicable)
balance sheets of (A) JLW England and its Subsidiaries, (B) JLW Scotland
and its Subsidiaries, (C) JLW Ireland and its Subsidiaries, (D) the Asia
Region Companies and their respective Subsidiaries and (E) the Australasia
Region Companies and their respective Subsidiaries in each case as of June
30, 1998 and the related consolidated or combined (as applicable) profit
and loss accounts statements of cash flows, statements of movements on
reserves and statements of total recognized gains and losses for the six-
month period then ended (collectively the "Interim Financial Statements"
(or, in the case of the Companies and the Company Subsidiaries, the "Asia
Interim Financial Statements") and, collectively with the Audited Financial
Statements, the "Financial Statements"), (iii) the schedules combining the
foregoing balance sheets, so as to eliminate or adjust for (A) intercompany
activity between or among any one or more of (1) JLW England and its
Subsidiaries, (2) JLW Scotland and its Subsidiaries and (3) JLW Ireland
and its Subsidiaries, (B) intercompany activity between or among (x) any
one or more of such entities and (y) any one or more of the Asia Region
Companies and their respective Subsidiaries and (z) any one or more of the
Australasia Region Companies and their respective Subsidiaries and (C) the
gross-up of revenues and expenses (previously accounted for under the cost
or equity method of accounting) related to the businesses which will be one
hundred percent owned as a result of the transactions contemplated by this
Agreement and the Other Purchase Agreements, in each case as of December
31, 1997 (the "JLW Combined Year-End Balance Sheet Schedules") and June 30,
1998 (the "JLW Combined Interim Balance Sheet Schedules" and, collectively
with the JLW Combined Year-End Balance Sheet Schedules, the "JLW Combined
Balance Sheet Schedules") and (iv) the schedules combining the foregoing
consolidated or combined (as applicable) profit and loss accounts so as to
eliminate or adjust for (A) intercompany activity between or among any one
or more of (1) JLW England and its Subsidiaries, (2) JLW Scotland and its
Subsidiaries, and (3) JLW Ireland and its Subsidiaries, (B) intercompany
activity between or among (x) any one or more of such entities and (y) any
one or more of the Asia Region Companies and their respective Subsidiaries
and (z) any one or more of the Australasia Region Companies and their
respective Subsidiaries and (C) the gross-up of revenues and expenses
(previously accounted for under the cost or equity method of accounting)
related to the businesses which will be one-hundred percent owned as a
result of the transactions contemplated by this Agreement and the Other
Purchase Agreements, in each case for the year ended December 31, 1997 and
the six-month period ended June 30, 1998 (the "JLW Combined Income
Statement Schedules" and, collectively with the JLW Combined Balance Sheet
Schedules, the "JLW Combined Financial Statement Schedules"). The
consolidated or combined (as applicable) financial statements of the Asia
Region Companies and their respective Subsidiaries included in the
Financial Statements (including the notes thereto) fairly present in all
material respects the consolidated or combined (as applicable) financial
condition of the entities referred to therein as of the respective dates
and for the respective periods referred to therein (subject, in the case of
the financial statements as of and for the six months ended, June 30, 1998,
to normal year-end adjustments that will not be material (in relation to
the applicable financial statements) in amount or effect) in conformity
with UK GAAP consistently applied. The financial statements referred to in
the immediately preceding sentence have been derived from the books and
records of the entities referred to therein. Certain notes to the
financial statements referred to in such sentence contain reconciliations
of net income, partners' funds or shareholders' equity (as applicable) and
cash flows of such entities from UK GAAP to US GAAP, and such net income,
partners' funds or shareholders' equity (as applicable) and cash flows of
such entities as so reconciled are fairly presented in all material
respects as of the respective dates and for the respective periods referred
to therein (subject, in the case of any of the same as of, and for the six
months ended, June 30, 1998, to normal year-end adjustments that will not
be material (in relation to the applicable financial statements) in amount
or effect), in conformity with US GAAP. The JLW Combined Balance Sheet
Schedules and the JLW Combined Income Statement Schedules include the
appropriate combining adjustments (including the eliminations and
adjustments referred to in subclauses (A), (B) and (C) of clauses (iii) and
(iv) of the first sentence of this Section 3.8(a)) which have been properly
applied to the historical amounts in the compilation thereof.
(b) The consolidated or combined (as applicable) financial
statements of the Companies and the Company Subsidiaries, included in each
case in the Nine-Month Interim Financial Statements to be delivered
pursuant to Section 5.7 hereof will fairly present in all material respects
the consolidated or combined (as applicable) financial condition of the
entities referred to therein as of the respective dates and for the
respective periods referred to therein (subject to normal year-end
adjustments that will not be material (in relation to the applicable
financial statements) in amount or effect) in conformity with UK GAAP
consistently applied. The Nine-Month Interim Financial Statements will be
derived from the books and records of the entities referred to therein.
Certain notes to the Nine-Month Interim Financial Statements will contain
reconciliations of net income, partners' funds or shareholders' equity (as
applicable) and cash flows of such entities from UK GAAP to US GAAP, and
such net income, partners' funds or shareholders' equity (as applicable)
and cash flows of such entities as so reconciled will be fairly presented
in all material respects as of the date and for the period referred to
therein (subject to normal year-end adjustments that will not be material
(in relation to the applicable financial statements) in amount or effect),
in conformity with US GAAP. The JLW Combined 9/30 Balance Sheet Schedules
and the JLW Combined 9/30 Income Statement Schedules to be delivered
pursuant to Section 5.7 hereof will include the appropriate combining
adjustments (including the eliminations and adjustments referred to in
clauses (A), (B) and (C) in the definitions of JLW Combined 9/30 Balance
Sheet Schedules and JLW Combined 9/30 Income Statement Schedules) which
will be properly applied to the historical amounts in the compilation
thereof.
(c) To the knowledge of each Seller, Company and Company
Subsidiary, the accounting books and records of each Company and Company
Subsidiary (i) are correct and complete in all material respects (after
taking into account adjustments made in the ordinary course of business
consistent with past practice necessary to produce the applicable
accounts); (ii) are properly maintained in all material respects (in
relation to each such entity) in a manner consistent with past practice;
and (iii) have recorded therein all the properties, assets and liabilities
of such entity required to be so recorded under applicable generally
accepted accounting standards.
Section 3.9 No Undisclosed Liabilities. There are no Liabilities of
any Company or Company Subsidiary of any kind whatsoever and no Management
Shareholder, Seller, Company or Company Subsidiary knows of any valid basis
for the assertion of any such Liabilities, and no existing condition,
situation or set of circumstances exists which could reasonably be expected
to result in a Liability, other than:
(a) Liabilities adequately and expressly reflected and
reserved for in the Asia Interim Financial Statements;
(b) Liabilities incurred in the ordinary and usual course of
business consistent with past practice since June 30, 1998;
(c) Liabilities set forth in Section 3.9(c) of the Company
Disclosure Schedule;
(d) Liabilities disclosed in other sections of the Company
Disclosure Schedule in respect of representations and warranties set forth
in other sections of this Article III or not required to be disclosed in
other sections of the Company Disclosure Schedule by reason of materiality
or other specifically identified exceptions or exclusions set forth in such
representations and warranties;
(e) Liabilities arising under (x) Contracts or Licenses
listed or disclosed in other sections of the Company Disclosure Schedule in
respect of representations or warranties set forth in other sections of
this Article III or (y) Contracts or Licenses not required to be listed or
described in other sections of the Company Disclosure Schedule in respect
of such representations and warranties by reason of materiality or other
specifically identified exceptions or exclusions set forth therein (other
than Liabilities arising out of breaches or violations of such Contracts or
Licenses); and
(f) other Liabilities which, in any individual case, do not
exceed US$500,000.
Section 3.10 Absence of Certain Changes. Except as and to the extent
set forth in Section 3.10 of the Company Disclosure Schedule, since June
30, 1998, (a) each Company and Company Subsidiary has conducted its
businesses only in the ordinary and usual course of business consistent
with past practice and (b) (i) no individual or cumulative material adverse
change in the business, properties, assets, liabilities, financial
condition or results of operations of the Companies and the Company
Subsidiaries, taken as a whole, has occurred, (ii) no individual or
cumulative event or development has occurred that is reasonably expected in
the reasonable opinion of JLW Holdings to have a material adverse change in
or effect on the business, properties, assets, liabilities, financial
condition or results of operations of the Companies and the Company
Subsidiaries, taken as a whole, and (iii) no Company or Company Subsidiary
has taken, or permitted to be taken, any action that, if taken or permitted
to be taken during the period from the date of this Agreement through the
Closing Date without the consent of Parent, would constitute a breach of
Section 5.1 hereof.
Section 3.11 Real Property.
(a) Owned Real Property. No Company or Company Subsidiary
owns any real property.
(b) Real Property Leases. Section 3.11 of the Company
Disclosure Schedule contains a complete and correct list of all real
property leased (the "Leased Real Property") by any Company or Company
Subsidiary setting forth the address, landlord and tenant for each such
lease (collectively, the "Real Property Leases"). The Sellers have
delivered to Parent correct and complete copies of the Real Property Leases
(including any amendments, modifications or supplements thereto). Each
Real Property Lease is in full force and effect. No Company, Company
Subsidiary or, to the Knowledge of each Seller, Company and Company
Subsidiary, any other party is in default, violation or breach in any
respect under any covenant in any Real Property Lease, and no event has
occurred and is continuing that constitutes or, with notice or the passage
of time or both, would constitute such a default, violation or breach in
any respect under any covenant in any Real Property Lease nor has any such
default, violation or breach been waived or acquiesced in, which default,
breach or violation in any such case would reasonably be expected to have a
Company Material Adverse Effect. Except as set forth in Section 3.11 of
the Company Disclosure Schedule, no Company or Company Subsidiary has
sublet to any third party any portion of property covered by the Real
Property Leases.
Section 3.12 Intangible Property Rights. (a) Section 3.12(a) of the
Company Disclosure Schedule sets forth a complete and accurate list of all
Patents and Trademark and Copyright registrations and applications, each as
owned by any Company or Company Subsidiary.
(b) Section 3.12(b) of the Company Disclosure Schedule
identifies all commercially significant license agreements relating to
Intangible Property Rights (excluding shrink wrap licenses and other
Licenses relating to commercially-available software) to which any Company
or Company Subsidiary is a party (the "Scheduled Agreements"). Except as
indicated in Section 3.12(b) of the Company Disclosure Schedule, a true and
complete copy of each Scheduled Agreement (together with all amendments
thereto) has been provided to Parent. Each Scheduled Agreement between
any Company or Company Subsidiary, and any Person or Persons other than:
(i) any other Company or Company Subsidiary or any Affiliate thereof, (ii)
any Europe/USA Region Company, or any Subsidiary thereof, or any Affiliate
of any thereof, or (iii) any Australasia Region Company, or any Subsidiary
thereof, or Affiliate of any thereof (each a "Third Party Scheduled
Agreement"), is a legal, valid, binding and enforceable obligation of the
Company or Company Subsidiary which is/are a party or parties thereto and,
to the Knowledge of each Seller, Company and Company Subsidiary, the other
parties thereto, except as enforceability may be limited by bankruptcy,
insolvency, reorganization and similar Laws affecting creditors generally
and by the availability of equitable remedies. Except as indicated in
Section 3.12(b) of the Company Disclosure Schedule, no Company, Company
Subsidiary or, to the Knowledge of each Seller, Company and Company
Subsidiary, any other party, is in default, violation or breach in any
material respect under any Third Party Scheduled Agreement and no event has
occurred and is continuing that constitutes or with notice or the passage
of time would constitute, such a default, violation or breach in any
material respect under any Third Party Scheduled Agreement.
(c) Except as set forth in Section 3.12(c) of the Company
Disclosure Schedule, the Companies and Company Subsidiaries, together with
the JLW Partnerships (as defined in the Europe/USA Region Agreement),
Europe/USA Region Companies and the Subsidiaries thereof and the
Australasia Region Companies and the Subsidiaries thereof, on a collective
basis own or have the valid right to use and (except in the case of the JLW
Partnerships) will, as of the Integration Completion Date (after giving
effect to the Integration), own or have the valid right to use (i) the
trademark (or service mark) "Jones Lang Wootton" in connection with the
real estate agency, management and advisory business in the following
countries: Australia, France, Germany, Hong Kong, the Netherlands, Ireland,
Singapore, the United Kingdom and the United States of America (the
"Designated Countries"), (ii) the property management software program
known as "Credo," developed internally by JLW entities for JLW England, and
(iii) to the Knowledge of each Seller, Company or Company Subsidiary, any
other Intangible Property Rights used in the conduct of their businesses as
of the date hereof and (except in the case of the JLW Partnerships)
thereof. Except as set forth on Schedule 3.12(c) of the Company Disclosure
Schedule, no Company or Company Subsidiary has granted any mortgages,
pledges, security interests, liens, charges or options to acquire
(collectively, "Interests") in any Intangible Property Rights owned by it
or in its rights under any License of Intangible Property Rights to which
it is a party or has Knowledge of any Interests granted therein by any
predecessor-in-interest which are still effective. Except as set forth in
Section 3.12(a) of the Company Disclosure Schedule, no registration or
application listed in Section 3.12(a) of the Company Disclosure Schedule
(i) has been cancelled, abandoned or has expired, (ii) is the subject of
any existing or, to the Knowledge of each Seller, Company and Company
Subsidiary, threatened opposition, interference, cancellation or other
proceeding before any Authority, in each case, as to which any Company or
Company Subsidiary has received written notice, and (iii) is, as of the
date hereof, standing in the record ownership of the entity listed as
record owner on Section 3.12(a) of the Company Disclosure Schedule. Except
as set forth in Section 3.12(c) of the Company Disclosure Schedule, each
trademark or service mark registration listed in Section 3.12(a) of the
Company Disclosure Schedule for the trademark (or service mark) "Jones Lang
Wootton" insofar as the same relates to the use thereof in connection with
the real estate agency, management and advisory business in the Designated
Countries, is valid as of the date hereof and will, as of the Integration
Completion Date (after giving effect to the Integration), be valid;
provided, however, that for the avoidance of doubt, this representation and
warranty shall not extend to the "globe logo device" whether used alone, in
connection with "Jones Lang Wootton," "JLW" or otherwise.
(d) Except as set forth in Section 3.12(d) of the Company
Disclosure Schedule, to the Knowledge of each Seller, Company and Company
Subsidiary: (i) the operation of the businesses currently conducted by the
Companies and Company Subsidiaries does not infringe upon, or make
unauthorized use of, any Intangible Property Right of any third party
(i.e., any Person or Persons other than the Companies or Company
Subsidiaries, the JLW Partnerships, Europe/USA Region Companies,
Australasia Region Companies or Subsidiaries or Affiliates of any thereof;
provided, that such Affiliates shall be Affiliates of Parent immediately
following the Closing) and (ii) there are no material unasserted claims for
past infringement or past unauthorized use by any Company or any Company
Subsidiary of any third parties' (as defined above) Intangible Property
Rights during the past three (3) years. Except as set forth in Section
3.12(d) of the Company Disclosure Schedule, there are no claims as to which
any Company or Company Subsidiary has received written notice pending or,
to the Knowledge of each Seller, Company and Company Subsidiary, threatened
against any Company or Company Subsidiary in respect of infringement or
unauthorized use by any of them of any third parties' (as defined above)
Intangible Property Rights. Except as set forth in Section 3.12(d) of the
Company Disclosure Schedule, to the Knowledge of each Seller, Company and
Company Subsidiary, no third party (as defined above) is infringing upon,
or making unauthorized use of any Intangible Property Rights owned by any
Company or Company Subsidiary. Except as set forth in Section 3.12(d) of
the Company Disclosure Schedule, no claims alleging infringement or
unauthorized use by third parties (as so defined) of Intangible Property
Rights owned or used by any Company or Company Subsidiary have been made in
writing by any Company or Company Subsidiary within the past three (3)
years. Except as set forth in Section 3.12(d) of the Company Disclosure
Schedule, there is no action, suit, or arbitration as to which any Company
or Company Subsidiary has received written notice pending or, to the
Knowledge of each Seller, Company and Company Subsidiary, threatened
against any Company or Company Subsidiary which relates to Intangible
Property Rights owned or used by any Company or Company Subsidiary or to
any Scheduled Agreement.
(e) Except as set forth in Section 3.12(e) of the Company
Disclosure Schedule, the operations of each Company and Company Subsidiary
have been and are being conducted in accordance with all applicable Laws
and other requirements of any Authority having jurisdiction over any
Company or Company Subsidiary, or any of their respective properties,
assets or business, which relate to data protection including, but not
limited to, the Personal Data (Privacy) Ordinance (Cap. 486) of the Laws of
Hong Kong and, to the Knowledge of any Seller, Company or Company
Subsidiary, which relate to Intangible Property, except for such matters as
would not individually or in the aggregate, have a Company Material Adverse
Effect.
(f) Except as set forth in Section 3.12(f) of the Company
Disclosure Schedule, there are no settlements, judgments, decrees, or
orders currently in force, which restrict, in any material respect, any
Company's or Company Subsidiary's rights to use any of the Intangible
Property Rights owned by any Company or Company Subsidiary.
(g) No Consents from any Authority or any party to a
Scheduled Agreement are necessary for execution and delivery of this
Agreement, the other Operative Agreements or the Integration Agreements by
any Company or the consummation by any Company of the transactions
contemplated hereby and thereby.
(h) Except as set forth in Section 3.12(h) of the Company
Disclosure Schedule, no current or former director, officer or, to the
Knowledge of any Seller, Company or Company Subsidiary, any current or
former employee of any Company or Company Subsidiary owns or has any rights
in or to any Intangible Property Right owned or used by any Company or
Company Subsidiary in the ordinary course of its business.
(i) This Section 3.12 and Sections 3.5, 3.6, 3.8, 3.26, 3.27
and 3.28 contain the exclusive representations and warranties of the
Sellers, Companies and Management Shareholders concerning Intangible
Property Rights and Licenses relating thereto.
Section 3.13 Certain Contracts. (a) Section 3.13(a) of the Company
Disclosure Schedule lists all material Contracts to which any Company or
Company Subsidiary is a party or by which it or any of its properties or
assets may be bound or affected ("Listed Agreements"), which list includes
each of the following types of Contracts (whether or not material): (i)
all property management contracts that contributed US$250,000 or more
during the year ended December 31, 1997 or would reasonably be expected to
contribute US$250,000 or more over the twelve months ending December 31,
1998 to the revenue of the Companies and the Company Subsidiaries; (ii) all
investment advisory contracts that contributed US$250,000 or more during
the year ended December 31, 1997 or would reasonably be expected to
contribute US$250,000 or more over the 12 months ending December 31, 1998
to the revenue of the Companies and the Company Subsidiaries; (iii) all
personal property leases where the rent exceeded US$100,000 during the year
ended December 31, 1997 or would reasonably be expected to exceed
US$250,000 over the term of the lease; (iv) all employment or other
compensation based contracts (including, without limitation, non-
competition, severance or indemnification agreements) which are currently
in effect or, upon Closing, will be in effect (in which event the contract
being replaced thereby need not be so listed; provided that no Company or
Company Subsidiary would have any Liability thereunder) for which any
Company or Company Subsidiary has or will have, as applicable, any
continuing obligations with (A) any current or former officer or director
of any Company or Company Subsidiary (or any company which is controlled by
any such individual) other than any Designated JLW Shareholder, and (B) any
other employee of any of the same whose annualized salary, bonus and other
benefits exceeds US$100,000 per annum (other than any Designated JLW
Shareholder) and (v) any contract of employment to be entered into by any
Company or Company Subsidiary with any Designated JLW Shareholder,
(vi) all consulting Contracts requiring the payment in excess of US$100,000
per annum or US$100,000 over the 12 months ending December 31, 1998; (vii)
union, guild or collective bargaining contracts relating to, and any
employee handbook for, employees of any Company or Company Subsidiary;
(viii) instruments for borrowed money (including, without limitation, any
indentures, guarantees, loan agreements, sale and leaseback agreements, or
purchase money obligations incurred in connection with the acquisition of
property), involving more than $100,000; (ix) agreements for acquisitions
or dispositions (by merger, purchase or sale of assets or stock or
otherwise) of material assets, as to which any Company or Company
Subsidiary has continuing obligations or rights; (x) joint venture or
partnership agreements; (xi) any Contract containing provisions that
specifically provide circumstances pursuant to which any Company or Company
Subsidiary may be required to return fees paid under such Contract (other
than as a result of breach or non-performance under such Contract), which
Liability could be expected to exceed US$100,000; (xii) guarantees,
suretyships, indemnification and contribution agreements; and (xiii)
Contracts for employment of any broker or finder in connection with the
transactions contemplated by this Agreement or the Other Purchase
Agreements or for any brokerage fees or commissions or finders' fees or for
any financial advisory or consulting fees in connection therewith. Except
as indicated in Section 3.13(a) of the Company Disclosure Schedule, a true
and complete copy of each Listed Agreement (together with all amendments
thereto) has been provided to Parent. Except as set forth in Section
3.13(a) of the Company Disclosure Schedule, each Listed Agreement is a
legal, valid, binding and enforceable obligation of the Company or Company
Subsidiary which is a party thereto and, to the Knowledge of each Seller,
Company or Company Subsidiary, the other parties thereto, except as
enforceability may be limited by bankruptcy, insolvency, reorganization and
similar Laws affecting creditors generally and by the availability of
equitable remedies. Except as set forth in Section 3.13(a) of the Company
Disclosure Schedule, no Company, Company Subsidiary or, to the Knowledge of
each Seller, Company or Company Subsidiary, any other party, is in
default, violation or breach in any respect under any Listed Agreement, and
no event has occurred and is continuing that constitutes or with notice or
the passage of time would constitute, such a default, violation or breach
in any respect under any Listed Agreement, other than in each case such
defaults violations or breaches which individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, no Contract or License restricts, in any material (in
relation to each such entity) respect, the ability of any Company or
Company Subsidiary to own, possess or use its assets or conduct its
operations in any geographic area.
Section 3.14 Licenses and Other Authorizations. Except as set forth
in Section 3.14 of the Company Disclosure Schedule, the Companies and the
Company Subsidiaries have received all Licenses of any Authority material
to the ownership or leasing of their respective properties and to the
conduct of the JLW Businesses as currently conducted. Except as disclosed
in Section 3.14 of the Company Disclosure Schedule, all such Licenses are
valid and in full force and effect. The Companies and the Company
Subsidiaries are operating in compliance with the conditions and
requirements of such Licenses and, except as disclosed in Section 3.14 of
the Company Disclosure Schedule, no proceeding is pending or, to the
Knowledge of any Seller, Company or Company Subsidiary, threatened, seeking
the revocation or limitation of any such Licenses. Assuming the related
Consents set forth in Section 3.6 or 3.7 of the Company Disclosure Schedule
have been obtained prior to the Closing Date, to the extent that any
transfers of such Licenses are provided for as part of the transactions
contemplated by this Agreement, such transfers will be permitted, and none
of such Licenses will be terminated or impaired or become terminable as a
result of the transactions contemplated hereby or by the Other Operative
Agreements or the Integration Agreements.
Section 3.15 Year 2000 and Euro Compliance. The Companies have
instituted a plan to test whether the Computer Systems owned by or licensed
to any Company or Company Subsidiary will be Year 2000 Compliant. To the
Knowledge of each Seller, Company or Company Subsidiary, the sum of (i) the
direct costs (excluding any costs that would be incurred in the ordinary
course of business absent the need to become Year 2000 Compliant or Euro
Compliant) of making the Computer Systems owned by or leased to any JLW
Partnership, Europe/USA Region Company, Australasia Region Company or Asia
Region Company, or any of their respective Subsidiaries (but, for the
avoidance of doubt, excluding any Computer Systems that are owned by or
leased to the owners of or tenants located in, any Managed Properties) to
become Year 2000 Compliant and, in the case of any JLW Partnership or
Europe/USA Region Company, or any of their respective Subsidiaries, Euro
Compliant and (ii) any payments, individually or in the aggregate, under
the indemnification obligation to the Australia and New Zealand Banking
Group for Year 2000 problems pursuant to clause 23.5 of the Service
Provider Agreement for the Provision of Property Services dated May 5, 1998
between the Australia and New Zealand Banking Group, JLW Australia and P&O
Australia Limited, or under any guarantee thereof, by any Australasia
Region Company or Subsidiary thereof, are not reasonably expected to exceed
in the aggregate the amount set forth in Section 3.15 of the Company
Disclosure Schedule. "Computer Systems" means, with respect to any Person,
the computer software, firmware, hardware (whether general or special
purpose), and other similar or related items of automated, computerized or
software system(s) that are owned by or licensed to such Person. "Year
2000 Compliant" means, with respect to any Computer Systems, the ability of
such Computer Systems (to the extent reasonably necessary in the ordinary
work of business) to process data, without material impairment as to
performance, involving dates prior to, during or after the year 2000.
"Euro Compliant" means, with respect to any Computer Systems, the ability
of such Computer Systems (to the extent reasonably necessary in the
ordinary work of business) to process data, without material impairment as
to performance, involving the single European currency (including without
limitation complying with the conversion and rounding rules set forth in
Council Regulation 11/03/97 upon the advent of the European Monetary
Union).
Section 3.16 Clients. Section 3.16(a) of the Company Disclosure
Schedule sets forth (a) on a country-by-country basis, the names of the ten
largest clients, as measured by combined revenue ("significant clients"),
of the Companies and Company Subsidiaries during the 12-month period ended
December 31, 1997 or during the 6-month period ending on June 30, 1998 and
(b) the aggregate amount for which each significant client (as so defined)
was invoiced during such period on a combined basis. Except as set forth
in Section 3.16(b) of the Company Disclosure Schedule, no significant
client (as so defined) (i) has ceased, or indicated to any Company or
Company Subsidiary that it shall cease, to use the services of any Company
or Company Subsidiary, (ii) has substantially reduced or indicated to any
Company or Company Subsidiary that it shall substantially reduce, the use
of the services of any Company or Company Subsidiary or (iii) has sought,
or is seeking, to renegotiate the terms of any Contract under which any
Company or Company Subsidiary is providing services to such significant
client, including in each case after the consummation of the transactions
contemplated hereby and by the other Operative Agreements. Except as
disclosed in Section 3.16(b) to the Company Disclosure Schedule, to the
Knowledge of each Seller, Company or Company Subsidiary, no significant
client (as so defined) has otherwise threatened to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement.
Section 3.17 Operation of the Businesses. Except as set forth in
Section 3.17 of the Company Disclosure Schedule, the Companies and the
Company Subsidiaries have, and after Closing, the Companies and Company
Subsidiaries will have, all rights, properties and assets, real, personal
and mixed, tangible and intangible relating to or used or held for use in
the conduct of the businesses conducted by the Companies and Company
Subsidiaries (the "Assets") during the past 12 months (except inventory
sold, cash disposed of, accounts receivable collected, prepaid expenses
realized, contracts partially or fully performed, and properties or assets
replaced by equivalent or superior properties or assets (in each case in
the ordinary and usual course of business). To the Knowledge of each
Seller, Company or Company Subsidiary, all of the Assets are reasonably
adequate for the purposes for which they are currently used or held for
use.
Section 3.18 Insurance. Section 3.18 of the Company Disclosure
Schedule contains (i) an accurate and complete list of all material
policies of property, fire, liability, worker's compensation and other
forms of insurance owned or held by each Company or Company Subsidiary, and
(ii) an accurate and complete list of each claim in excess of US$100,000
relating to such policies made during the last 24 months. To the Knowledge
of each Seller, Company or Company Subsidiary, such policies provide
adequate insurance coverage consistent with industry practice for the
assets and operations of the Companies and Company Subsidiaries. All such
policies are in full force and effect, and all premiums with respect
thereto covering all periods up to and including the date of the Closing
have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies shall not
terminate or lapse prior to or on the Closing Date by reason of the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement. Section 3.18 of the Company Disclosure
Schedule sets forth a list of third party risks which are insured by a
Company or Company Subsidiary and a list of any claims made against or paid
by the Companies or Company Subsidiaries.
Section 3.19 Labor Relations. Except to the extent set forth in
Section 3.19 of the Company Disclosure Schedule: (a) no Company or Company
Subsidiary is a party to any collective bargaining agreements, other
Contracts, written work rules or practices agreed to with any labor
organization, employee association, works council or body of employee
representatives; (b) there is no unfair labor practice charge or complaint
against any Company or Company Subsidiary pending or, to the Knowledge of
each Seller, Company or Company Subsidiary, threatened before the National
Labor Relations Board or any similar foreign Authority which in either case
would reasonably be expected to have a Company Material Adverse Effect; and
(c) there is no labor strike, dispute, slowdown, lockout or stoppage
pending or, to the Knowledge of each Seller, Company or Company Subsidiary,
threatened against or affecting any Company or Company Subsidiary which
would reasonably be expected to have a Company Material Adverse Effect.
Section 3.20 Employee Benefit Matters. (a) Section 3.20(a) of the
Company Disclosure Schedule sets forth a true and complete list of each
Plan, whether formal or informal, written or oral. Except to the extent
set forth in Section 3.20(a) of the Company Disclosure Schedule: (i) each
Plan required to be filed or registered with or approved by any applicable
governmental or regulatory body or authority has been so filed, registered
or approved and has been maintained in good standing with such body or
authority, and each such Plan is now and has always been operated in full
compliance in all material respects with all applicable laws and
regulations; (ii) no Plan is subject to the provisions of ERISA; (iii) the
fair market value of the assets of each funded Plan, the liability of each
insurer for any Plan funded through insurance or the book reserve
established for any Plan together with any contributions accruing on or
before the Closing Date, in each case as shall be reflected in the books
and records of such Company or such Company Subsidiary sponsoring such
Plan, are or will be sufficient, on a combined basis, to procure or provide
for the benefits determined on an ongoing basis accrued to the Closing Date
payable to all current and former participants of such Plan according to
the actuarial assumptions and valuations most recently used to determine
employer contributions to such Plan; and (iv) full payment has been made or
will be made, in accordance with applicable law and the provisions of each
Plan, of all amounts which any Company or Company Subsidiary is required to
pay on or prior to the Closing Date under the terms of each Plan as of the
last day of the most recent plan year thereof ended prior to the date of
this Agreement, and all such amounts properly accrued through the Closing
Date with respect to the current plan year thereof ended prior to the date
of this Agreement, and all such amounts properly accrued through the
Closing Date with respect to the current plan year thereof will be paid by
such Company or such Company Subsidiary on or prior to the Closing Date or
will be properly reflected on the books and records of such Company or such
Company Subsidiary.
(b) Except to the extent set forth in Section 3.20(b) of the
Company Disclosure Schedule, (i) with respect to each Plan, each Company or
Company Subsidiary has heretofore delivered to Parent true and complete
copies of each of the following documents: (A) a copy of such Plan
(including all amendments thereto), (B) a copy of the annual report (which
shall include non-discrimination tests, where applicable), if required
under applicable Law, with respect to each such Plan for the two most
recently completed plan years, (C) a copy of the actuarial report, if
required under applicable Law, with respect to each such Plan for the three
most recently completed plan years, (D) a copy of the most recent "summary
plan description," together with each "summary of material modifications,"
given to members or otherwise required under applicable Law with respect to
each Plan, (E) if the Plan is funded through a trust or any third-party
funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof, and
(F) the most recent letter, certification or other document, if any,
received from any applicable governmental or regulatory body or authority
evidencing the registration or exemption from registration and/or approval
of any Plan required to be so registered (or possess a certificate of
exemption) or approved; (ii) there are no pending or, to the Knowledge of
each Seller, Company and Company Subsidiary, threatened or anticipated
material claims by, on behalf of or against any of the Plans, and no
material litigation or administrative or other proceeding has occurred or,
to the Knowledge of each Seller, Company and Company Subsidiary, is
threatened involving any Plan, and (iii) the consummation of the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement shall not, either alone or in combination with
another event, except as set forth in Section 3.20(b) of the Company
Disclosure Schedule, (A) accelerate the time of payment or vesting or
increase the amount of compensation due any employee or officer of any
Company or Company Subsidiary, or (B) entitle any current or former
employee or officer of any Company or Company Subsidiary to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement.
(c) Except to the extent set forth in Section 3.20(c) of the
Company Disclosure Schedule, in relation to the Jones Lang Wootton (Hong
Kong) Annuity Scheme (the "Annuity Scheme"), which was established by a
Trust Deed (the "Annuity Scheme Trust Deed") dated April 1, 1991 between
JLW Holdings, as "Company" for the purposes of the Annuity Scheme, and
Procon Services, as trustee of the Annuity Scheme, no circumstance exists
pursuant to which (i) any Company or Company Subsidiary or (ii) Parent or
any Parent Subsidiary could incur any liability (whether present or future,
and whether actual or contingent) of any kind whatsoever. In addition,
except as described in Section 3.20(c) of the Company Disclosure Schedule,
none of the Companies, Company Subsidiaries, Parent or Parent Subsidiaries:
(i) has any outstanding liability to make any form of contribution or
payment to the Annuity Scheme or the trustee of the Annuity Scheme (or
could have or incur any such liability in respect of future contributions),
(ii) has any outstanding liability to pay any benefit or other payment to
any member or prospective member (or Person claiming to be entitled to be a
member) of the Annuity Scheme or to any Person having or claiming to have
an entitlement under the Annuity Scheme (or could have or incur any such
liability in respect of future benefits or payments), (iii) has any
outstanding liability to pay any amount to any Person in respect of the
termination of the Annuity Scheme (or could have or incur any such future
liability) (other than professional expenses and fees) to any person
whatsoever in relation to the Annuity Scheme (or could have or incur any
such liability in respect of future fees, charges or expenses), (v) has any
outstanding liability to pay any taxes or other fiscal charges or social
security costs or governmental fees or levies (including fines or
penalties) in any jurisdiction in relation to the Annuity Scheme (or could
have or incur any such liability in respect of such taxes or other fiscal
charges or social security costs or fees or levies or fines or penalties),
(vi) is or could become involved as a party in any actual or threatened
proceedings relating to the Annuity Scheme, and there are no circumstances
which could give rise to such proceedings, and none of the Companies,
Company Subsidiaries, Parent or Parent Subsidiaries is or could become the
subject of any compliant to, or investigation or inquiry by, any Authority
in relation to the Annuity Scheme. On the Closing Date, there shall be no
liability (whether present or future, actual or contingent, accrued or
unaccrued, known or unknown) relating to the Annuity Scheme which will not
be reserved for on the Final Closing Balance Sheet for the Asia Region
Companies.
Section 3.21 Litigation. Except as set forth in Section 3.21 of the
Company Disclosure Schedule, there is no Action, pending or, to the
Knowledge of each Seller, Company or Company Subsidiary, threatened against
or involving any Seller, Company or Company Subsidiary which would
reasonably be expected to have a Company Material Adverse Effect, or which
questions or challenges the validity of this Agreement, any other Operative
Agreement or any Integration Agreement or any action taken or to be taken
by any JLW Party pursuant to this Agreement, any other Operative Agreement
or any Integration Agreement or in connection with the transactions
contemplated hereby and thereby. No Company or Company Subsidiary is
subject to any judgment, order or decree entered in any Action which
purports to limit in any material respect, or which may have a material
adverse effect on, its business practices or its ability to acquire any
property or conduct all or any material portion of the businesses conducted
by the Companies and the Company Subsidiaries in any locality.
Section 3.22 Compliance with Law. (a) Except as set forth in
Section 3.22(a) of the Company Disclosure Schedule, the operations of each
Company and Company Subsidiary have been and are being conducted in
accordance with all applicable Laws and other requirements of any
Authority, having jurisdiction over any Company or Company Subsidiary, or
any of their respective properties, assets or business, including, without
limitation, all such Laws and requirements relating to antitrust, fair
trading and consumer protection, currency exchange, health, occupational
safety, employment practices, wages and hours, pension, insurance,
securities and trading-with-the-enemy matters and planning and development,
except in each case for such matters as would not, individually or in the
aggregate, reasonably be expected have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.22(b) of the Company
Disclosure Schedule, neither any Company or Company Subsidiary, nor any of
their respective Affiliates, nor any officer, employee or agent of any
thereof, nor any other person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other
person who is or may be in a position to help or hinder any part of the JLW
Businesses (or assist any of such Persons in connection with any actual or
proposed transaction relating to any part of the JLW Businesses) (i) which
subjected or might have subjected any of such Persons to any damage or
penalty in any civil, criminal or governmental litigation or proceeding,
(ii) which if not given in the past, would have had a Company Material
Adverse Effect, (iii) which if not continued in the future, would have a
Company Material Adverse Effect or subject any of such Persons to suit or
penalty in any private or governmental litigation or proceeding or (iv) for
the purpose of establishing or maintaining any concealed fund or concealed
bank account.
(c) To the Knowledge of any Management Shareholder, no
Company or Company Subsidiary is a party to any agreement, arrangement or
concerted practice or is carrying on any practice which in whole or in part
contravenes or is invalidated by or is required to be registered under any
anti-trust, fair trading, consumer protection or analogous legislation in
any jurisdiction in which the businesses are carried on or assets are held.
Except as set forth in Section 3.23(c) of the Company Disclosure Schedule,
to the Knowledge of any Management Shareholder, no Company or Company
Subsidiary has received any formal or informal communications or
notification that any proceeding under any applicable anti-trust, fair
trading, consumer protection or similar legislation in any jurisdiction
have been initiated, nor any such proceedings contemplated by any relevant
Authority, nor has any claim been made or threatened alleging any
contravention of any such legislation.
Section 3.23 Taxes. Except as disclosed in Section 3.23 of the
Company Disclosure Schedule:
(a) All Tax Returns required to be filed with respect to each
Company, each Company Subsidiary or the affiliated, combined or unitary
group of which any Company or any Company Subsidiary is or was a member
have been duly and timely filed except for those returns which individually
or in the aggregate, would not have a Company Material Adverse Effect and
all such Tax Returns are true, correct and complete, except for any
deficiencies in respect of filed Tax Returns which individually or in the
aggregate, would not have a Company Material Adverse Effect. Each Company
and each Company Subsidiary has duly and timely paid all Taxes and other
charges that are due with respect to all periods ending on or before
June 30, 1998, whether or not shown as due on any Tax Return, except for
Taxes which have been reserved for and shown on the Asia Interim Balance
Sheet. There are no Liens with respect to Taxes (except for Liens with
respect to real property Taxes not yet due) upon any of the assets of any
Company or any Company Subsidiary. No Seller, Company or Company
Subsidiary is a party to, is bound by, or has any obligation under, any Tax
sharing, allocation, indemnity or similar Contract, nor is liable for the
Taxes of any other person. Each Company and each Company Subsidiary has
established due and sufficient reserves on the Asia Interim Balance Sheet
for the payment of all Taxes in accordance with UK GAAP.
(b) All Tax deficiencies that have been asserted, proposed or
assessed in writing against or with respect to any Company or any Company
Subsidiary by any taxing authority have been paid in full or finally
settled, and no issue (including with respect to transfer pricing) has been
raised in writing by any taxing authority in any examination, audit or
other proceeding that, by application of the same or similar principles,
reasonably could be expected to result in a material proposed deficiency
for any other period not so examined. There are no outstanding Contracts,
consents, waivers or arrangements extending the statutory period of
limitation applicable to any Tax Return or claim for, or the period for the
collection or assessment of, Taxes due from any Company or any Company
Subsidiary for any taxable period.
(c) No Company or Company Subsidiary has been or is in
violation (or with notice or lapse of time or both, would be in violation)
of any applicable Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections
1441 and 1442 of the Code or similar provisions under any foreign Laws).
Each Company and each Company Subsidiary has duly and timely withheld from
employee salaries, wages and other compensation and paid over to the
appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable Laws.
(d) No audit or other proceeding by any domestic or foreign
court, governmental or regulatory authority, or similar Person is pending
or, to the Knowledge of each Company and Company Subsidiary, threatened
with respect to any Taxes due from any Company or any Company Subsidiary or
any Tax Return filed or required to be filed by or relating to any Company
or any Company Subsidiary. No Company or Company Subsidiary shall be
required to include any amount in income for any taxable period ending
after the Closing Date which is attributable to an adjustment pursuant to
Section 481(a) of the Code (or any similar provisions under any foreign
laws).
(e) Section 3.23(e) of the Company Disclosure Schedule sets
forth the states, political subdivisions thereof and foreign countries in
which each Company or Company Subsidiary files or joins in filing any
consolidated, unitary, combined or similar Tax Returns (or have such Tax
Returns filed on their behalf). No claim has ever been made by an
authority in any jurisdiction where any Company or any Company Subsidiary
has not filed Tax Returns that they are or may be subject to taxation by
that jurisdiction.
(f) To the Knowledge of each Seller, Company and Company
Subsidiary, and Management Shareholder, no Tax imposed on or with respect
to the income or liability of any Shareholder is required to be withheld as
a result of any of the transfers, including the delivery of the
Consideration Shares, the Cash Consideration or any other payment or
consideration as a result of or in connection with the consummation of the
transactions contemplated by this Agreement and the other Operative
Agreements. Except for Taxes which are reserved for and shown on any Final
Closing Balance Sheet, no Company or Company Subsidiary shall have
liability for (i) Taxes (including, without limitation, withholding Taxes)
of any Shareholder, or (ii) Taxes attributable to or incurred in connection
with the Integration.
(g) None of the Companies or Company Subsidiaries has made an
election for U.S. federal tax purposes to be treated as a partnership or
entity other than a corporation.
Section 3.24 Environmental Matters. (a) This Section 3.24 and
Sections 3.6, 3.8 and 3.26 contain the exclusive representations and
warranties concerning any environmental matters, including, but not limited
to, concerning any Environmental Laws or Materials of Environmental
Concern. Except as set forth in Section 3.24 of the Company Disclosure
Schedule, and except for any Action, claim or litigation which could not
reasonably be expected to have a Company Material Adverse Effect, no
Seller, Company or Company Subsidiary has received written notice of any
Action pending, nor to the Knowledge of each Seller, Company or Company
Subsidiary, has any Action, claim or litigation been asserted or threatened
against any Seller, Company or Company Subsidiary nor, to the Knowledge of
each Seller, Company or Company Subsidiary, is any Action, claim or
litigation pending or threatened against the properties currently or
formerly under management by any Company or Company Subsidiary ("Managed
Properties"), nor to the Knowledge of each Seller, Company or Company
Subsidiary, are there any circumstances which could reasonably be expected
to form the basis for such claim against the Managed Properties, pertaining
to: (i) off-site disposal or arranging for disposal or a release of
Materials of Environmental Concern; (ii) migration of Materials of
Environmental Concern from Managed Properties; (iii) any nuisance or tres-
pass emanating from Managed Properties; (iv) violations of any applicable
Environmental Laws; (v) releases of Materials of Environmental Concern at
or from current or former Managed Properties (including claims for response
costs); or (vi) third-party claims for personal injury or property damage
arising out of the release of or exposure to Materials of Environmental
Concern at or from the Managed Properties.
(b) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, the Companies and the Company Subsidiaries are, and,
to the Knowledge of each Seller, Company or Company Subsidiary, the Managed
Properties are, in compliance in all respects with applicable Environmental
Laws, except for such noncompliance which could not reasonably be expected
to have a Company Material Adverse Effect.
(c) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, to the Knowledge of each Seller, Company and Company
Subsidiary, and except for any of the following which could not reasonably
be expected to have a Company Material Adverse Effect, (i) there has been
no material spill, disposal or release of any Materials of Environmental
Concern or substance on, at or from the Managed Properties, except for any
such spill, disposal or release that occurred in compliance with applicable
Environmental Laws (provided that, for purposes of this Agreement,
reporting of a spill, disposal or release does not make an unauthorized
spill, disposal or release in compliance with Environmental Laws), (ii)
none of the Managed Properties is listed or has been proposed to be listed
under any state, federal or foreign superfund or similar law, (iii) none of
the Managed Properties is or was a treatment, storage or disposal facility
requiring a permit under any hazardous waste law and (iv) the tenants under
its management have occupied their premises at the Managed Properties and
operated their businesses at the Managed Properties in compliance, in all
material respects, with the Environmental Laws.
(d) Except as set forth in Section 3.24 of the Company
Disclosure Schedule, the Companies and the Company Subsidiaries are not
currently paying any fines, settlements, judgments, assessments or remedial
costs because of an alleged violation of or liability under any
Environmental Law or any past or present release or presence of Materials
of Environmental Concern at the Managed Properties, nor, to the Knowledge
of each Seller, Company or Company Subsidiary, has any client party to any
Contract with any Company or any Company Subsidiary asserted that any
Company or Company Subsidiary is liable for any such costs, except for any
such fines, settlements, judgments, assessments or remedial costs which
could not reasonably be expected to have a Company Material Adverse Effect.
Section 3.25 Personnel. Section 3.25 of the Company Disclosure
Schedule sets forth a list of all employees as of June 30, 1998 of each
Company and Company Subsidiary. Such list indicates as to each such
employee who is a Shareholder and each other such employee whose current
annualized salary, bonus and benefits exceed US$100,000: (a) date of
commencement of service and period of continuous employment; (b) job title
or brief job description and place of work; (c) any material commitments or
arrangements with such employees as to salary or bonuses, if applicable,
other than those commitments or arrangements set forth in Section 3.13 of
the Company Disclosure Schedule and; (d) as of the date hereof, the names
of any such employees who have given or received notice to terminate their
employment. Except as disclosed in Section 3.25 of the Company Disclosure
Schedule, to the Knowledge of each Seller, Company or Company Subsidiary,
since June 30, 1998 no officer, director or employee thereof has given
notice or indicated his or her intent to give notice of termination of
employment, which termination, together with any such other terminations,
would be reasonably likely to have a material adverse effect on the
Companies and the Company Subsidiaries taken as a whole.
Section 3.26 Disclosure Documents. None of the information included
in the Offering Memorandum or Proxy Statement supplied or to be supplied by
any Shareholder, JLW Related Owner, Seller, Company or Company Subsidiary
relating to any Shareholder, Related JLW Owner, JLW Seller, Company,
Europe/USA Company or Australasia Region Company, or any of their
respective Subsidiaries, including the SCCA or the Integration, for
inclusion in the Offering Memorandum and the Proxy Statement, as the case
may be, will, in the case of the Offering Memorandum, at the time of
mailing to the Shareholders, and, in the case of the Proxy Statement,
either at the time of mailing of the Proxy Statement to stockholders of
Parent or at the time of the meeting of such stockholders to be held in
connection therewith, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 3.27 Integration Matters. Except as set forth in Section
3.27 of the Company Disclosure Schedule, the Integration, as it relates to
the Shareholders, the Related JLW Owners, the Sellers, the Companies and
the Company Subsidiaries, will be completed in compliance in all material
respects with all applicable Laws and will not result in any material
Liability to any of the Companies, the Company Subsidiaries, Parent or
Parent's Affiliates. The copies of the Integration Agreements and the
Ancillary Documents (as defined in the Integration Plan) heretofore
delivered to and approved by Parent by or on behalf of the Shareholders'
Representatives are complete and correct copies thereof . No part of the
Integration constitutes a public offering under (i) the Protection of
Investors Ordinance (Cap. 335 of the Laws of Hong Kong), (ii) the Hong Kong
Companies Ordinance or (iii) the Singapore Companies Act.
Section 3.28 Related Party Transactions. Section 3.28 of the Company
Disclosure Schedule contains an accurate listing of any current or former
directors, officers or key employees of any Company or Company Subsidiary
and, to the Knowledge of any Seller, Company or Company Subsidiary, any
relatives of any of the foregoing, who is, directly or indirectly, a party
to any transaction (other than in respect to compensation or travel expense
account reimbursement in the ordinary course of business consistent with
past practice) with or has any loan or obligation outstanding to or from
any Company or Company Subsidiary (or for which any of them is or may be
liable under any guarantee or otherwise). Section 3.28 of the Company
Disclosure Schedule sets forth a brief description of each such
transaction, including without limitation, any Contract providing for the
furnishing of services (other than employment contracts), or the rental of
real or personal property from, or otherwise requiring payments to, any
such Person or to any relative of any such Person.
Section 3.29 Securities Laws Matters. Neither any Seller, Company,
Company Subsidiary, nor any of their respective Affiliates, nor any Person
acting on its or their behalf, has engaged, or will engage, in any
"directed selling efforts" (as defined in Regulation S) with respect to the
Consideration Shares.
Section 3.30 Opinion of Financial Advisor. The Sellers have received
the opinion of Peter J. Solomon Company Limited, financial advisor to the
Sellers, to the effect that, as of the date of this Agreement, the
Consideration to be received by the Shareholders and the Other Shareholders
under this Agreement and the Other Purchase Agreements is, in the
aggregate, fair to such Shareholders and Other Shareholders from a
financial point of view.
Section 3.31 Certain Fees. Except as contemplated by the agreements
listed in Section 3.13(a)(xiii) of the Company Disclosure Schedule, no
Seller, Company or Company Subsidiary or any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees or for any
financial advisory or consulting fees, in each case in connection with the
transactions contemplated by this Agreement or the other Operative
Agreements, including, without limitation, the Integration.
ARTICLE IIIA
CERTAIN REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLERS
The Sellers, jointly and severally, make the representations
and warranties set forth below to the Buyers:
Section 3.1A Ownership and Sale of Shares. To the extent that
any Seller is identified on Annex E hereto as owning Shares of one or more
of the Companies, such Seller owns, and will, as of the Closing Date, own,
legally and beneficially (or, in the case of a Seller that is a trustee,
legally), the Shares identified on Annex E hereto as being owned by such
Seller, and such Seller shall sell to US Acquisition Sub or US Acquisition
Sub II, as applicable, at the Closing such Shares together with all rights
of any nature whatsoever now or after the date of this Agreement attached
or accruing to them, free and clear of all Encumbrances. US Acquisition
Sub or US Acquisition Sub II, as applicable, shall, from and after the
Closing, be entitled to exercise all rights attached or accruing to the
Shares transferred to it by such Seller, including, without limitation,
the right to receive all dividends paid or made on or after the Closing
Date (except as otherwise contemplated by this Agreement). Such Seller
does not own or have an interest in any other Shares. Upon completion of
the Integration, such Seller will have no rights in or to any of the
specific assets, properties or rights (other than cash permitted to be
distributed or paid in accordance with the Integration Agreements or this
Agreement) of or used by any Company or Company Subsidiary. Such Seller
has no right or claim to any payment or consideration (other than cash
permitted to be distributed or paid in accordance with the Integration
Agreements or this Agreement) from any of the Companies or Company
Subsidiaries as a result of or in connection with the consummation of the
transactions contemplated by this Agreement, the other Operative Agreements
and the Integration Agreements.
Section 3.2A Authorization. Each of the Sellers is the lawful
and duly appointed trustee of the Applicable Trust, and has full power,
authority and legal right under the Applicable Trust Deed and otherwise to
own the Shares that such Seller, in its capacity as such trustee, now owns
and to execute, deliver and perform its obligations under this Agreement,
the other Operative Agreements and the Integration Agreements to which such
Seller is a party and to consummate the transactions contemplated hereby
and thereby. There are no trustees of any Applicable Trust other than the
Seller who has entered into this Agreement on behalf of the beneficiaries
under the Applicable Trust Deed and such Seller has caused to be delivered
to Parent a true, complete, and correct copy of the Applicable Trust Deed
or other evidence satisfactory to the Buyers of such Seller's power,
authority and legal right referred to above. Except as set forth in
Section 3.1A of the Company Disclosure Schedule, each Seller has taken all
action necessary to authorize and approve the execution and the delivery by
such Seller of this Agreement, the other Operative Agreements and each
Integration Agreement to which such Seller is a party and no other action
on the part of the beneficiaries of the Applicable Trust is required for
such Seller to execute and deliver this Agreement, the other Operative
Agreements and each Integration Agreement to which such Seller is a party,
and to consummate the transactions contemplated hereby and thereby. This
Agreement, the other Operative Agreements, and each Integration Agreement
to which such Seller is a party, has been duly and validly executed and
delivered by such Seller, and constitutes a valid and binding agreement of
such Seller, enforceable against such Seller in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding in
equity or at law.
Section 3.3A No Violation. Neither the execution and delivery
by any Seller of this Agreement, the other Operative Agreements or any
Integration Agreement to which such Seller is a party nor the consummation
by such Seller of the transactions contemplated hereby or thereby shall:
(i) violate or be in conflict with any provision of the certificate of
incorporation and bylaws or memorandum or articles of association (or
similar organizational documents), as applicable, of such Seller or the
Applicable Trust Deed; (ii) violate, be in conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, cause or permit the acceleration of, or give
rise to any right of termination, imposition of fees or penalties under,
any debt, Contract, instrument or other obligation to which such Seller is
a party or by which its assets are bound or affected, or result in the
creation or imposition of any Lien upon any property or assets of the
Applicable Trust (including any Encumbrance upon any Shares); or (iii)
violate any applicable Law of any Authority; except, in the case of clause
(ii) or (iii) above, for any of the same that, individually or in the
aggregate, would not materially impair the ability of such Seller to
perform its obligations hereunder or thereunder or prevent or materially
delay the consummation of the transactions contemplated hereby and thereby.
Section 3.4A Consents and Approvals. Except as set forth in
Sections 3.4A, 3.6 or 3.7 of the Company Disclosure Schedule, no Consents
from or of any third party or any Authority are necessary for execution and
delivery by any Seller of this Agreement, the other Operative Agreements or
the Integration Agreements to which such Seller is a party or the
consummation by it, of the transactions contemplated hereby or thereby,
except for compliance with the Required Regulatory Approvals, and except
for such other Consents as to which the failure to obtain, individually or
in the aggregate, would not impair the ability of such Seller to perform
its obligations hereunder or thereunder or prevent or materially delay the
consummation of the transactions contemplated hereby and thereby.
Section 3.5A Investment Matters. (a) Each Seller is resident in
the jurisdiction of its incorporation or formation.
(b) Each Seller agrees not to engage in any hedging
transactions with regard to Consideration Shares unless in compliance with
the Securities Act.
(c) Each Seller acknowledges and agrees that the
Consideration Shares being offered and sold to it are being offered and
sold in reliance on specific exemptions from the registration requirements
of the United States federal and state securities laws and that Parent is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Seller set forth
herein in order to determine the applicability of such exemptions and the
suitability of such Seller to acquire Consideration Shares.
(d) Each Seller has received and has had an opportunity to
carefully review Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, Parent's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998 and June 30, 1998, Parent's 1997 Annual
Report to Stockholders and proxy statement dated March 31, 1998 and
Parent's Current Report on Form 8-K dated September 3, 1998, and the Seller
has had a reasonable opportunity to ask questions of and receive answers
from Parent concerning Parent, and to obtain any additional information
reasonably necessary to verify the accuracy of the information furnished to
the Seller concerning Parent and all such questions, if any, have been
answered to the full satisfaction of Seller.
(e) Each Seller acknowledges that no representations or
warranties have been made to it by Parent or any agent, employee or
Affiliate of Parent other than those contained in this Agreement, and in
entering into this transaction such Seller is not relying upon any
information, other than that referred to in the foregoing paragraph,
contained in this Agreement and the other Operative Agreements, and the
results of independent investigations by such Seller and its
representatives; provided that each Seller acknowledges and agrees that the
only representations or warranties that Parent has made with respect to
such information are as set forth in Section 4.7 of this Agreement.
Section 3.6A Regulation S.
(a) Each Seller acknowledges that each certificate
representing Consideration Shares delivered to or on behalf of such Seller
shall include the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE 'SHARES') HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE 'ACT'), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH BELOW. BY THE ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT SUCH HOLDER IS NOT A U.S. PERSON AND IS ACQUIRING THE
SHARES IN AN OFFSHORE TRANSACTION, (2) AGREES THAT SUCH HOLDER WILL NOT
RESELL OR OTHERWISE TRANSFER THE SHARES EXCEPT (A) TO JONES LANG LASALLE
INCORPORATED (THE 'COMPANY') OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED
STATES, TO A TRANSFEREE THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
COMPANY A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SHARES (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE COMPANY), (D) OUTSIDE THE UNITED STATES, IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULES 903, 904 AND 905 UNDER THE
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT TO ANY OTHER EXEMPTION FROM
REGISTRATION UNDER THE ACT (IF AVAILABLE) AND (3) AGREES THAT SUCH HOLDER
WILL GIVE EACH PERSON TO WHOM THE SHARES ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THE SHARES PURSUANT TO CLAUSES (C), (E) OR (F) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS 'OFFSHORE TRANSACTION,'
'UNITED STATES' AND 'U.S. PERSON' HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE ACT.
(b) Each Seller understands that Consideration Shares are
being issued in reliance on Regulation S and have not been registered under
the Securities Act or with any securities regulatory authority of any state
of the United States or other jurisdiction and, therefore, that such
Consideration Shares (and all securities issued in exchange therefor or in
substitution thereof) cannot be resold in the absence of such registration,
except pursuant to an exemption from, or in a transaction not subject to,
such registration requirements.
(c) The distribution of Consideration Shares by any Seller to
the related Shareholders will be made only in accordance with the
applicable provisions of Rule 903, 904 or 905 under the Securities Act or
pursuant to an available exemption from the registration requirements of
the Securities Act.
(d) Each Seller is, and any Person for whose account it is
acquiring Consideration Shares is, outside the "United States" (as defined
under Regulation S), and this Agreement and each of the Other Operative
Agreements was executed, and the investment decision to enter into this
Agreement was made, outside the United States.
(e) No Seller, nor any of its Affiliates, nor anyone acting
on behalf of any of the foregoing has engaged in, and during the Restricted
Period will not engage in, any "directed selling efforts" (as defined under
Regulation S) with respect to any Consideration Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT,
US ACQUISITION SUB AND US ACQUISITION SUB II
Parent, US Acquisition Sub and US Acquisition Sub II, jointly
and severally, hereby represent and warrant to the JLW Parties that:
Section 4.1 Corporate Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maryland. Parent (i) has all requisite corporate power and
authority to carry on its businesses as they are now being conducted by it
and to own the properties and assets it now owns; and (ii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all the jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not be reasonably expected to have a Parent Material
Adverse Effect. True and complete copies of the Articles of Incorporation
of Parent ("Parent Articles of Incorporation") and the Amended and Restated
Bylaws of Parent ("Parent Bylaws"), as presently in effect, are attached to
Section 4.1 of the Parent Disclosure Schedule.
Section 4.2 Capitalization. The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock and 10,000,000 shares
of preferred stock, $.01 par value per share ("Parent Preferred Stock").
As of September 30, 1998, there were outstanding 16,230,358 shares of
Parent Common Stock, no shares of Parent Preferred Stock and no shares of
Parent Common Stock or Parent Preferred Stock were held in Parent's
treasury. In addition, as of September 30, 1998, 2,215,000 shares of
Parent Common Stock were reserved or registered for issuance under Parent's
Employee Stock Purchase Plan, as amended, 1997 Stock Award and Incentive
Plan, as amended, and Stock Compensation Program, as amended (collectively,
the "Parent Stock Plans"), and no shares of Parent Common Stock or Parent
Preferred Stock were specifically reserved or registered for any other
purposes. All of the issued and outstanding shares of Parent Common Stock
have been validly issued and are fully paid and non-assessable and free of
preemptive rights, and the Consideration Shares will be (when issued at the
Closing as contemplated by this Agreement) validly issued and fully paid
and non-assessable and free of pre-emptive rights. Except as set forth in
this Section 4.2, except for the obligation of Parent to issue
Consideration Shares and ESOT Shares under this Agreement and to issue
Consideration Shares (as defined under the Other Purchase Agreements) and
ESOT Shares under the Other Purchase Agreements and except under the Parent
Stock Plans, including upon the exercise of options outstanding as of
September 30, 1998 to purchase an aggregate of 1,110,400 shares of Parent
Common Stock and any such options issued or granted subsequent to September
30, 1998 ("Parent Options"), as of the date hereof, there are outstanding,
(i) no shares of capital stock or other voting securities of Parent, (ii)
no securities of Parent or any Parent Subsidiary convertible into or
exchangeable for shares of capital stock or voting securities of Parent and
(iii) no options or other rights to acquire from Parent or any Parent
Subsidiary, and no obligation of Parent or any Parent Subsidiary to issue,
any capital stock or voting securities of Parent or securities convertible
into or exchangeable for capital stock or voting securities of Parent (the
items in clauses (i), (ii) and (iii) being referred to collectively as the
"Parent Securities"). Other than under the Parent Stock Plans and as set
forth in Section 4.2 of the Parent Disclosure Schedule, there are no
outstanding obligations of Parent or any Parent Subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities.
Section 4.3 Subsidiaries and Affiliates. Except as set forth in
Section 4.3 of the Parent Disclosure Schedule, all the outstanding capital
stock or other equity interests of each Parent Significant Subsidiary is
owned, directly or indirectly, as of the date hereof by Parent and will be
owned, directly or indirectly, as of the Closing Date, by Parent, in each
case free and clear of all Encumbrances, and has been validly issued and is
fully paid and, to the extent that the concept of assessability of capital
stock is potentially applicable, is nonassessable. Each Parent Significant
Subsidiary: (i) is duly organized or incorporated and validly existing
(and, if applicable) in good standing under the laws of its jurisdiction of
incorporation or formation; (ii) has all requisite corporate or similar
power and authority to carry on its business as it is now being conducted
and to own the properties and assets it now owns; and (iii) is duly
qualified or licensed to do business as a foreign Person (and, if
applicable, in good standing) in all jurisdictions in which such
qualification or licensing is required, except jurisdictions in which the
failure to be so qualified or licensed (or, if applicable, in good
standing) would not have a Parent Material Adverse Effect. True and
complete copies of the certificate of incorporation and bylaws or similar
charter documents, as presently in effect, of each Parent Significant
Subsidiary have been previously provided to the JLW Parties. For purposes
of this Section 4.3 only, "Parent Significant Subsidiaries" shall be deemed
to include US Acquisition Sub and US Acquisition Sub II.
Section 4.4 Authorization. (a) Parent has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and the other Operative Agreements and to carry out the
transactions contemplated hereby and thereby. The Board of Parent has
taken all corporate action (including all action of the Board) necessary to
authorize and approve the execution, delivery and performance of this
Agreement and the other Operative Agreements and no other corporate action
is required on the part of Parent to authorize the execution, delivery and
performance of this Agreement and the other Operative Agreements (including
without limitation the issuance of the Consideration Shares), subject only
to approval of (i) the amendment and restatement of the Parent Articles of
Incorporation as described in Section 1.9(a)(i)(A) hereof, (ii) the
issuance of the Consideration Shares and (iii) the amendments to Parent's
amended and restated stock incentive plan as described in Section
1.9(a)(i)(C) hereof (collectively, the "Proposed Actions"), in each case by
the affirmative vote of the holders of a majority of the shares of Parent
Common Stock present in person or represented by proxy at the meeting
contemplated by Section 6.5(a) hereof, and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by Parent, and this Agreement constitutes, and each
other Operative Agreement to which Parent is to be a party, when executed
and delivered by Parent, will constitute a valid and binding agreement of
Parent, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar Laws affecting creditors generally and by the availability of
equitable remedies.
(b) Each of US Acquisition Sub and US Acquisition Sub II has
all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement, and the other Operative Agreements to
which it is a party and to carry out the transactions contemplated hereby
and thereby. The board of directors of each of US Acquisition Sub and US
Acquisition Sub II, as applicable, has taken all corporate action necessary
to authorize and approve the execution, delivery and performance of this
Agreement and the other Operative Agreements to which it is a party and no
other corporate action is required on the part of US Acquisition Sub or US
Acquisition Sub II, as applicable, to authorize the execution, delivery and
performance by it of this Agreement and the other Operative Agreements to
which it is a party. This Agreement has been duly and validly executed and
delivered by US Acquisition Sub and US Acquisition Sub II, and this
Agreement constitutes, and each other Operative Agreement to which US
Acquisition Sub and US Acquisition Sub II is a party, when executed and
delivered by US Acquisition Sub and US Acquisition Sub II, will constitute
a valid and binding agreement of US Acquisition Sub and US Acquisition Sub
II, as applicable, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization and
other similar Laws affecting creditors generally and by the availability of
equitable remedies.
Section 4.5 No Violation. Neither the execution and delivery by
Parent, US Acquisition Sub or US Acquisition Sub II of this Agreement nor
any other Operative Agreement nor the consummation by Parent, US
Acquisition Sub and US Acquisition Sub II of the transactions contemplated
hereby or thereby shall: (i) violate or be in conflict with any provision
of the Parent Articles of Incorporation, Parent Bylaws or the certificate
of incorporation or bylaws (or similar organizational documents) of any
Parent Subsidiary; (ii) except as specified in Section 4.5 or 4.6 of the
Parent Disclosure Schedule, violate, or be in conflict with, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, cause or permit the acceleration of, or give
rise to any right of termination, imposition of fees or penalties under any
debt, Contract, instrument or other obligation to which Parent or any
Parent Subsidiary is a party or by which their respective assets are bound,
or result in the creation or imposition of any Lien upon any property or
assets of Parent or any Parent Subsidiary; or (iii) violate any applicable
Law of any Authority; except, in the case of clauses (ii) and (iii) above,
for any of the same that, individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect or
materially impair the ability of Parent, US Acquisition Sub or US
Acquisition Sub II to perform its obligations hereunder or thereunder or
prevent or materially delay the consummation of the transactions
contemplated hereby and thereby.
Section 4.6 Consents and Approvals. Except as set forth in Section
4.5 or 4.6 of the Parent Disclosure Schedule, no Consents from or of any
third party or any Authority are necessary for execution and delivery of
this Agreement or the other Operative Agreements by Parent, US Acquisition
Sub or US Acquisition Sub II or the consummation by Parent, US Acquisition
Sub and US Acquisition Sub II of the transactions contemplated hereby and
thereby, except for such Consents as to which the failure to obtain,
individually or in the aggregate, would not reasonably be expected to have
a Parent Material Adverse Effect or materially impair the ability of
Parent, US Acquisition Sub or US Acquisition Sub II to perform its
obligations hereunder or thereunder or prevent or materially delay the
consummation of the transactions contemplated hereby and thereby.
Section 4.7 SEC Reports and Financial Statements. Each periodic
report, registration statement and definitive proxy statement filed by
Parent with the SEC since July 17, 1997 (as such documents have since the
time of their filing been amended and each document filed between the date
hereof and the Closing, the "Parent SEC Reports"), which include all the
documents (other than preliminary material) that Parent was required to
file with the SEC since such date, as of their respective dates, complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, applicable to such Parent SEC Reports.
None of the Parent SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except for such statements, if
any, as have been modified by subsequent filings prior to the date hereof.
The financial statements of Parent and its Subsidiaries included in such
reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with US GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) and fairly present (subject in the
case of the unaudited statements, to normal, year-end audit adjustments
which are not material in amount or effect) the consolidated financial
position of Parent and its Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended.
Section 4.8 No Undisclosed Liabilities. There are no Liabilities of
Parent or any Parent Subsidiary of any kind whatsoever and Parent knows of
no valid basis for the assertion of any such Liabilities, and no existing
condition, situation or set of circumstances exists which could reasonably
be expected to result in a Liability, other than:
(a) Liabilities adequately and expressly reflected and
reserved for on the unaudited consolidated balance sheet of Parent and the
Parent Subsidiaries as of June 30, 1998 (including the notes thereto)
contained in the Parent SEC Reports (the "Parent Interim Balance Sheet");
(b) Liabilities incurred in the ordinary and usual course of
business consistent with past practice since June 30, 1998;
(c) Liabilities set forth in Section 4.8(c) of the Parent
Disclosure Schedule; and
(d) Liabilities which, individually or in the aggregate,
would not reasonably be expected to have a Parent Material Adverse Effect.
Section 4.9 Absence of Certain Changes or Events. Except as and to
the extent disclosed in the Parent SEC Reports and as and to the extent set
forth in Section 4.9 of the Parent Disclosure Schedule, since June 30,
1998, (a) Parent and each Parent Subsidiary has conducted its businesses
only in the ordinary and usual course of business consistent with past
practice and (b) (i) no individual or cumulative material adverse change in
or effect on the business, properties, assets, liabilities, financial
condition or results of operations of Parent and the Parent Subsidiaries,
taken as a whole, has occurred; (ii) no individual or cumulative event or
development has occurred that is reasonably expected in the reasonable
opinion of management to have a Parent Material Adverse Effect; or (iii)
neither Parent nor any Parent Subsidiary has taken, or permitted to be
taken, any action that, if taken or permitted to be taken during the period
from the date of this Agreement through the Closing Date without the
consent of the Sellers' Representatives, would constitute a breach of
Section 6.1 hereof. Parent has heretofore delivered to the Sellers a true
and correct copy of the Purchase Agreement dated as of August 31, 1998 by
and among Parent, a Subsidiary of Parent, Lend Lease Corporation Limited
and certain Subsidiaries thereof, together with all related exhibits and
schedules (the "Compass Agreement"), and except as set forth in Section 4.9
of the Parent Disclosure Schedule, the transactions contemplated by the
Compass Agreement have heretofore been consummated in accordance with the
terms of such agreement.
Section 4.10 Licenses and Other Authorizations. Parent and the
Parent Subsidiaries have received all Licenses of any Authority material to
the ownership or leasing of their respective properties and to the conduct
of their respective businesses as currently conducted. Except as disclosed
in Section 4.10 of the Parent Disclosure Schedule, all such Licenses are
valid and in full force and effect. Parent and the Parent Subsidiaries are
operating in material compliance with the conditions and requirements of
such Licenses and, except as disclosed in Section 4.10 of the Parent
Disclosure Schedule, no proceeding is pending or, to the Knowledge of
Parent, threatened, seeking the revocation or limitation of any such
Licenses. Assuming the related Consents set forth in Section 4.5 or 4.6 of
the Parent Disclosure Schedule have been obtained prior to the Closing
Date, none of such Licenses will be terminated or impaired or become
terminable as a result of the transactions contemplated hereby or by the
other Operative Agreements.
Section 4.11 Insurance. All material policies of property, fire,
liability, worker's compensation and other forms of insurance owned or held
by Parent or any Parent Subsidiary are in full force and effect, and all
premiums with respect thereto covering all periods up to and including the
date of the Closing have been paid, if due, and no notice of cancellation
or termination has been received with respect to any such policy. Such
policies shall not terminate or lapse prior to or on the Closing Date by
reason of the transactions contemplated by this Agreement or any other
Operative Agreement.
Section 4.12 Labor Relations. Except to the extent set forth in
Section 4.12 of the Parent Disclosure Schedule: (a) neither Parent nor any
Parent Subsidiary is a party to any collective bargaining agreements, other
Contracts, written work rules or practices agreed to with any labor
organization, employee association or works council or body of employee
representatives; (b) there is no unfair labor practice charge or complaint
against Parent or any Parent Subsidiary pending or, to the Knowledge of
Parent, threatened before the National Labor Relations Board or any similar
foreign Authority which in either case would reasonably be expected to have
a Parent Material Adverse Effect; and (c) there is no labor strike,
dispute, slowdown, lockout or stoppage pending or, to the Knowledge of
Parent, threatened against or affecting Parent or any Parent Subsidiary
which would reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.13 Parent Employee Benefit Matters. (a) U.S. Employee
Benefit Matters: Section 4.13(a) of the Company Disclosure Schedule sets
forth a true and complete list of each Parent Domestic Plan, whether formal
or informal, written or oral, and indicates which of such Parent Domestic
Plans is a "multiemployer plan," as such term is defined in section (3)(37)
of ERISA. No Parent Domestic Plan that is a "single employer plan," as
such term is defined in section 3(41) of ERISA, is subject to Section 302
or Title IV of ERISA. Except as set forth in Section 4.13(a) of the Parent
Disclosure Schedule, with respect to each Parent Domestic Plan that is a
single employer plan: (i) each such plan has been established and
maintained in compliance in all material respects with its terms, including
ERISA and the Code; (ii) with respect to each such plan that is intended to
be "qualified" within the meaning of Section 401(a) of the Code, such plan
has been determined by the IRS to be so qualified (and no fact or
circumstance exists which would affect such qualification); (iii) (A)
neither Parent nor any Parent Subsidiary has filed an application under
Rev. Proc. 98-22, 1998-12 I.R.B. (the Employee Plans Compliance Resolution
System) or any predecessor program thereto with respect to any Parent
Domestic Plan, (B) any liabilities with respect of previous filings under
such programs have been satisfied in full, and (C) no fact or circumstance
exists that would necessitate such a filing to maintain the qualified
status of any Parent Domestic Plan; (iv) no such plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code;
(v) neither Parent nor any Parent Subsidiary, nor any such plan or trust
created thereunder or any trustee or administrator thereof has engaged in a
transaction in connection with which Parent or any Parent Subsidiary, any
such plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any such plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to Section 4975 or 4976 of the Code; (vi) full
payment has been made, or will be made in accordance with Section 404(a)(6)
of the Code, of all amounts which Parent, any Parent Subsidiary or ERISA
Affiliate thereof is required to pay under the terms of each such plan as
of the last day of the most recent plan year thereof ended prior to the
date of this Agreement, and all such amounts properly accrued through the
Closing Date with respect to the current plan year thereof will be paid by
Parent or the applicable Parent Subsidiary on or prior to the Closing Date
or will be properly reflected on the books and records of Parent or the
applicable Parent Subsidiary or ERISA Affiliate; (vii) no such plan
provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured), with respect to current or former employees of
Parent or any Parent Subsidiary for periods extending beyond their
retirement or other termination of service (other than (A) coverage
mandated by applicable law, (B) death benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, (C)
deferred compensation benefits accrued as liabilities on the books and
records of Parent or such sponsoring Parent Subsidiary or (D) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary)); and (viii) no amounts payable under any such plans will fail
to be deductible for Federal income tax purposes by virtue of Section
162(m) or 280G of the Code. Neither Parent nor any Parent Subsidiary has
an outstanding liability in respect of (i) a failure to make a required
contribution or payment to a multiemployer plan or (ii) a complete or
partial withdrawal under Section 4203 or 4205 of ERISA from a multiemployer
plan. No circumstance exists that presents a material risk of a partial
withdrawal from a multiemployer plan. To the Knowledge of Parent and each
Parent Subsidiary, no circumstance exists that presents a material risk
that any such plan will go into reorganization.
(b) Non-U.S. Employee Benefit Matters: Section 4.13(b) of
the Parent Disclosure Schedule sets forth a true and complete list of each
Parent Foreign Plan, whether formal or informal, written or oral. Except
to the extent set forth in Section 4.13(a) of the Parent Disclosure
Schedule: (i) each Parent Foreign Plan required to be filed or registered
with or approved by any applicable governmental or regulatory body or
authority has been so filed, registered or approved and has been maintained
in good standing with such body or authority, and each such Parent Foreign
Plan is now and has always been operated in full compliance in all material
respects with all applicable laws and regulations; (ii) no Parent Foreign
Plan is subject to the provisions of ERISA; (iii) the fair market value of
the assets of each funded Parent Foreign Plan, the liability of each
insurer for any Parent Foreign Plan funded through insurance or the book
reserve established for any Parent Foreign Plan together with any
contributions accruing on or before the Closing Date, in each case as shall
be reflected in the books and records of Parent or the Parent Subsidiary
sponsoring such Parent Foreign Plan, are or will be sufficient, on a
combined basis, to procure or provide for the benefits determined on an
ongoing basis accrued to the Closing Date payable to all current and former
participants of such Parent Foreign Plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Parent Foreign Plan; and (iv) full payment has been
made or will be made, in accordance with applicable law and the provisions
of each Parent Foreign Plan, of all amounts which Parent or any Parent
Subsidiary is required to pay on or prior to the Closing Date under the
terms of each Parent Foreign Plan as of the last day of the most recent
plan year thereof ended prior to the date of this Agreement, and all such
amounts properly accrued through the Closing Date with respect to the
current plan year thereof ended prior to the date of this Agreement, and
all such amounts properly accrued through the Closing Date with respect to
the current plan year thereof will be paid by Parent or such Parent
Subsidiary on or prior to the Closing Date or will be properly reflected on
the books and records of Parent or such Parent Subsidiary.
(c) Parent Domestic Plans and Parent Foreign Plans: Except
to the extent set forth in Section 4.13(c) of the Parent Disclosure
Schedule, (i) with respect to each Parent Domestic Plan that is a single
employer plan and with respect to each Parent Foreign Plan, Parent has
heretofore delivered to Sellers' Representatives true and complete copies
of each of the following documents: (A) a copy of such Parent Domestic
Plan and Parent Foreign Plan (including all amendments thereto), (B) a copy
of the annual report (which shall include non-discrimination tests, where
applicable), if required under ERISA or other applicable law, with respect
to each such Parent Domestic Plan and Parent Foreign Plan for the two most
recently completed plan years, (C) a copy of the actuarial report, if
required under ERISA or other applicable law, with respect to each such
Parent Domestic Plan and Parent Foreign Plan for the three most recently
completed plan years, (D) a copy of the most recent "summary plan
description," together with each "summary of material modifications,"
required under ERISA with respect to each Parent Domestic Plan, and any
plan description, required under applicable law with respect to each Parent
Foreign Plan, (E) if the Parent Domestic Plan or Parent Foreign Plan is
funded through a trust or any third-party funding vehicle, a copy of the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof, and (F) the most recent determination
letter received from the IRS with respect to such Parent Domestic Plan that
is intended to be qualified under Section 401 of the Code, and the most
recent letter, certification or other document, if any, received from any
applicable governmental or regulatory body or authority evidencing the
registration and/or approval of any Parent Foreign Plan required to be so
registered or approved; (ii) there are no pending or, to the Knowledge of
Parent and each Parent Subsidiary, threatened or anticipated material
claims by, on behalf of or against any of the Parent Domestic Plans or
Parent Foreign Plans, and no material litigation or administrative or other
proceeding (including, without limitation, any litigation or proceeding
under Title IV of ERISA) has occurred or, to the Knowledge of Parent and
each Parent Subsidiary, is threatened involving any Parent Domestic Plan or
Parent Foreign Plan, and (iii) the consummation of the transactions
contemplated by this Agreement or any other Operative Agreement shall not,
either alone or in combination with another event, except as set forth in
Section 4.13(c) of the Parent Disclosure Schedule, (A) accelerate the time
of payment or vesting or increase the amount of compensation due any
employee or officer of Parent or any Parent Subsidiary, (B) entitle any
current or former employee or officer of Parent or any Parent Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (C) with respect to any Parent
Domestic Plan that is a single employer plan, constitute a prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available.
Section 4.14 Litigation. Except as set forth in Section 4.14 of the
Parent Disclosure Schedule, there is no Action pending or, to the Knowledge
of Parent, threatened against or involving Parent or any Parent Subsidiary
which would reasonably be expected to have a Parent Material Adverse
Effect, or which questions or challenges the validity of this Agreement or
any other Operative Agreement or any action taken or to be taken by Parent
pursuant to this Agreement or any other Operative Agreement or in
connection with the transactions contemplated hereby and thereby. Neither
Parent nor any Parent Subsidiary is subject to any judgment, order or
decree entered in any Action which purports to limit in any respect, or
which may have a material adverse effect on, its business practices or its
ability to acquire any property or conduct all or any material portion of
the businesses conducted by Parent and the Parent Subsidiaries in any
locality.
Section 4.15 Compliance with Law. Except as set forth in Section
4.15 of the Parent Disclosure Schedule, the operations of Parent and each
Parent Subsidiary have been and are being conducted in accordance with all
applicable Laws and other requirements of any Authority having jurisdiction
over Parent or any Parent Subsidiary, or any of their respective
properties, assets or business, including, without limitation, all such
Laws and requirements relating to antitrust, consumer protection, currency
exchange, health, occupational safety, employment practices, wages and
hours, pension, securities, and trading-with-the-enemy matters and planning
and development, except for such matters as would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.16 Taxes. Except as set forth in Section 4.16 of the
Parent Disclosure Schedule:
(a) All Tax Returns required to be filed with respect to
Parent and the Parent Subsidiaries or the affiliated, combined or unitary
group of which Parent or any Parent Subsidiary is or was a member have been
duly and timely filed, except for those returns which, individually or in
the aggregate, would not have a Parent Material Adverse Effect, and all
such Tax Returns are true, correct and complete. Parent and each Parent
Subsidiary has duly and timely paid all Taxes and other charges that are
due, whether or not shown as due on any Tax Return, except for Taxes
reserved for on the financial statements of Parent and the Parent
Subsidiaries. There are no Liens with respect to Taxes (except for Liens
with respect to real property Taxes not yet due) upon any of the assets of
Parent or any Parent Subsidiary. None of Parent or any Parent Subsidiary
is a party to, is bound by, or has any obligation under, any Tax sharing,
allocation, indemnity or similar Contract, nor is liable for the Taxes of
any other person. Parent and the Parent Subsidiaries have established due
and sufficient reserves on the financial statements of Parent and the
Parent Subsidiaries for the payment of all Taxes in accordance with US
GAAP.
(b) All Tax deficiencies that have been asserted, proposed or
assessed in writing against or with respect to Parent or any Parent
Subsidiary by any taxing authority have been paid in full or finally
settled, and no issue (including with respect to transfer pricing) has been
raised in writing by any taxing authority in any examination, audit or
other proceeding that, by application of the same or similar principles,
reasonably could be expected to result in a material proposed deficiency
for any other period not so examined. There are no outstanding Contracts,
consents, waivers or arrangements extending the statutory period of
limitation applicable to any Tax Return or claim for, or the period for the
collection or assessment of, Taxes due from Parent or any Parent Subsidiary
for any taxable period.
(c) Neither Parent or any Parent Subsidiary has been or is in
violation (or with notice or lapse of time or both, would be in violation)
of any applicable Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections
1441 and 1442 of the Code or similar provisions under any foreign Laws).
Parent and each Parent Subsidiary has duly and timely withheld from
employee salaries, wages and other compensation and paid over to the
appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable Laws.
(d) No audit or other proceeding by any domestic or foreign
court, governmental or regulatory authority, or similar Person is pending
or, to the Knowledge of Parent and any Parent Subsidiary, threatened with
respect to any Taxes due from Parent or any Parent Subsidiary or any Tax
Return filed or required to be filed by or relating to Parent or any Parent
Subsidiary.
(e) No claim has ever been made by an authority in any
jurisdiction where Parent or any Parent Subsidiary has not filed Tax
Returns that they are or may be subject to taxation by that jurisdiction.
Section 4.17 Activities of US Acquisition Sub and US Acquisition Sub
II. As of the date hereof and the Integration Commencement Date, except
for obligations or liabilities incurred or agreements or arrangements
entered into in connection with the transactions contemplated hereby and by
the Other Purchase Agreements, in connection with their incorporation or
organization or described in Section 4.17 of the Parent Disclosure
Schedule, neither US Acquisition Sub nor US Acquisition Sub II has or will
have incurred, directly or indirectly, any obligations or liabilities or
engaged in any business activities of any type or kind whatsoever or
entered into any agreements or arrangements with any Person.
Section 4.18 Opinion of Financial Advisors. Parent has received the
opinion of Morgan Stanley & Co. Incorporated, financial advisors to Parent,
to the effect that, as of the date of this Agreement, the Consideration to
be paid by the Buyers under this Agreement and the Other Purchase
Agreements is fair to Parent's stockholders from a financial point of view.
Section 4.19 Certain Fees. Except for Morgan Stanley & Co.
Incorporated and William Blair & Company, neither Parent nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement or the
other Operative Agreements.
Section 4.20 Disclosure Documents. The Offering Memorandum and the
Proxy Statement will not, in the case of the Offering Memorandum, as of the
date thereof or, in the case of the Proxy Statement, either at the time of
the mailing of the Proxy Statement to the stockholders of Parent or at the
time of the meeting of such stockholders to be held in connection
therewith, contain any untrue statement of any material fact or omit to
state any material fact required to be stated therein or necessary to in
order to make the statements therein, in light of the circumstances under
which they are or were made, not misleading, provided that no
representation or warranty is made as to the information included therein
that relates to any Shareholder, Other Shareholder, JLW Seller, Company,
Europe/USA Region Company or Australasia Region Company, or any of their
respective Subsidiaries, including, with respect to the Integration, this
Agreement, the Other Purchase Agreements or the transactions contemplated
hereby or thereby.
Section 4.21 Other. The Board of Parent has approved this Agreement,
the other Operative Agreements, the Other Purchase Agreements and the
transactions contemplated hereby and thereby and such approval is
sufficient to render inapplicable any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation
enacted under the laws of the State of Illinois or the State of Maryland
(including, without limitation, any of the provisions of Subtitle 6 or 7 of
the General Corporation Law of Maryland) to the purchase or sale of the
Consideration Shares pursuant to this Agreement, the Joinder Agreements,
the Other Purchase Agreements or the Other Joinder Agreements. As of the
date hereof, Parent has not adopted any "poison pill" or "shareholder
rights plan." As of the Closing Date, Parent will not have adopted a
"poison pill" or "shareholder rights plan" which would be applicable to the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE SELLERS
AND THE COMPANIES
Section 5.1 Operation of the Companies. From the date hereof to the
Closing, except as described in Section 5.1 of the Company Disclosure
Schedule or as otherwise permitted by or provided in this Agreement, the
other Operative Agreements or the Integration Plan or the Integration
Agreements, or except as consented to in writing by Parent (which consent
shall not be unreasonably withheld or delayed), each of the Sellers and the
Companies agrees that:
(a) Such Company shall (and the Seller which is the parent
thereof shall cause such Company to), and shall cause (and the Seller which
is the parent thereof shall cause such Company to cause) each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, conduct its
business only in the ordinary and usual course and substantially in the
same manner as heretofore conducted.
(b) Such Seller and Company shall (and the Seller which is
the parent thereof shall cause such Company to) perform all acts to be
performed by it pursuant to this Agreement, any other Operative Agreements
and the Integration Plan and the Integration Agreements and shall refrain
from taking any action (other than any action permitted by or provided in
this Agreement) that would result in the representations and warranties of
the Sellers, the Companies or the Management Shareholders hereunder or of
the Shareholders or the Related JLW Owners of such Shareholders under the
Joinder Agreements becoming untrue in any material respect or any of the
conditions to Closing not being satisfied.
Without limiting the generality of the foregoing, except as described in
Section 5.1 of the Company Disclosure Schedule or as otherwise permitted or
contemplated by this Agreement, the other Operative Agreements or the
Integration Plan or the Integration Agreements, or except as consented to
in writing by Parent (which consent will not be unreasonably withheld or
delayed), from the date hereof to the Closing, such Company shall not (and
the Seller which is the parent thereof shall cause such Company not to),
and shall cause (and the Seller which is the parent thereof shall cause
such Company to cause) each Company Subsidiary which is a direct or
indirect Subsidiary thereof not to:
(i) amend its certificate of incorporation, bylaws or
memorandum and articles of association (or similar organizational
documents), as applicable, or adopt or pass further regulations or
resolutions inconsistent therewith;
(ii) other than in the ordinary course of business
consistent with past practice (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of any other Person (other than any Company
or Company Subsidiary), or (B) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to any
Company or Company Subsidiary), or enter into any material Contract;
(iii) acquire, by merging or consolidating with or by
purchasing equity interests in or assets of any other Person or otherwise,
any material assets of or any equity interests in any other Person;
(iv) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (A) the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice or as required by
their terms, of liabilities reflected or specifically reserved against in
or contemplated by the Asia Interim Financial Statements; (B) claims,
liabilities or obligations that are incurred after the date thereof in the
ordinary course of business consistent with past practice or that are
immaterial (in relation to each such entity) if not incurred in the
ordinary course of business or (C) the payment, discharge or satisfaction
in the ordinary course of business consistent with past practice of
obligations under (1) Contracts or Licenses listed or disclosed in the
Company Disclosure Schedule or not required to be listed or disclosed
therein by reason of materiality or other specifically identified
exceptions or exclusions set forth in such representations and warranties
or (2) Contracts or Licenses entered into after the date of this Agreement
in accordance with the limitations set forth in this Section 5.1;
(v) pay, discharge or satisfy any material Lien, unless
required by the terms thereof or of the documents evidencing or governing
any related indebtedness;
(vi) permit or allow any of its respective material
properties or assets, real, personal or mixed, tangible or intangible, to
be subjected to any Lien, except for any Permitted Liens incurred in the
ordinary course of business consistent with past practice;
(vii) cancel any material debts or claims, or waive any
rights of material value or, sell, transfer or convey any of its respective
material properties or assets, real, personal or mixed, tangible or
intangible;
(viii) enter into any employment or severance agreement
with any officer, director, shareholder or employee thereof who receives or
would receive annual compensation in excess of US$100,000;
(ix) enter into or amend any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement in respect of the
compensation payable or to become payable to any of its officers,
directors, shareholders or employees (other than salary increases in the
ordinary course of business consistent with past practice to employees who
are not officers, directors or shareholders of any of the Companies or
Company Subsidiaries which, in the aggregate, are not material and year-end
bonuses in the ordinary course of business consistent with past practice);
(x) make any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit;
(xi) declare, pay or make, or set aside for payment or
making, any dividend or other distribution in respect of its issued share
capital or capital stock or other securities, as applicable, or directly or
indirectly redeem, purchase or otherwise acquire any of its issued share
capital or capital stock or other securities, other than dividends paid or
payable by a wholly owned Company Subsidiary to a Company or another wholly
owned Company Subsidiary;
(xii) issue, allot, create, grant or sell any of its
shares of capital stock or other equity securities or issue, grant or sell
any security, option, warrant, call, subscription or other right of any
kind, fixed or contingent, that directly or indirectly calls for the
issuance, allotment, sale, pledge or other disposition of any of its issued
share capital, shares of capital stock or other equity securities;
(xiii) make any change in any accounting or tax
principles, practices or methods, except as may be required by applicable
generally accepted accounting principles or applicable Law;
(xiv) make any material tax election or settle or
comprise any material income tax liability;
(xv) terminate or amend or fail to perform any of its
obligations under any material Contract to which it is a party or by which
it or any of its assets are bound;
(xvi) enter into any material joint venture or
partnership;
(xvii) settle any material lawsuits, claims, actions,
investigations or proceedings; or
(xviii) authorize or enter into any obligation or
commitment (or otherwise agree) to take any of the foregoing actions.
(c) Such Seller and Company shall, and shall cause each
Company Subsidiary which is a direct or indirect Subsidiary thereof to,
give prompt notice to Parent of (i) any Company Material Adverse Effect,
(ii) any change which makes it likely that any representation or warranty
set forth in this Agreement regarding the Sellers, the Companies or the
Company Subsidiaries will not be true in any material respect at the
Integration Commencement Date or the Closing, as applicable, or would be
likely to cause any condition to the obligations of any party hereto to
consummate the transactions contemplated by this Agreement not to be
satisfied or (iii) the failure of the Sellers or the Companies to comply
with or satisfy any covenant or agreement to be complied with or satisfied
by it pursuant to this Agreement, the other Operative Agreements and the
Integration Plan and Integration Agreements which would likely cause a
condition to the obligations of any party to effect the transactions
contemplated by this Agreement not to be satisfied.
(d) Such Company shall, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, use
commercially reasonable efforts to take such action as may be necessary to
maintain, preserve, renew and keep in full force and effect its existence
and its material rights and franchises.
(e) Such Company shall, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, use
commercially reasonable efforts to preserve intact the existing
relationships with its clients and employees and others with respect to the
businesses with which it has business relationships. Such Company shall,
and shall cause each Company Subsidiary which is a direct or indirect
Subsidiary thereof to, permit the Buyers to contact suppliers, customers
and employees in coordination with personnel of such Company or Company
Subsidiary for purposes of facilitating the transactions contemplated
hereby.
Section 5.2 Access. Subject to compliance with applicable Law, upon
reasonable notice, each Company shall, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof to, give Parent
and its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to its
offices, properties, books and records, furnish to Parent and its counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data as such persons may reasonably request, and
instruct and request each of its partners, directors, officers, employees,
counsel and financial advisors (as applicable) to cooperate with Parent in
its investigation of the businesses of the Companies and Company
Subsidiaries and in the planning for the combination of the businesses of
the Companies and Parent following the consummation of the transactions
contemplated hereby; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by the Management
Shareholders, the Sellers or the Companies hereunder or the Shareholders
or the Related JLW Owners of such Shareholders under the Joinder
Agreements. All information obtained pursuant to this Section 5.2, or
otherwise pursuant to this Agreement, shall be governed by the
Confidentiality Agreement, dated as of June 4, 1998, by and among Parent
and the various individuals and entities party thereto (the
"Confidentiality Agreement").
Section 5.3 Consents. The Sellers and the Companies shall, unless
otherwise agreed to by Parent, use commercially reasonable efforts to
obtain, prior to the Closing (a) all Consents required to consummate the
transactions contemplated by this Agreement, the other Operative Agreements
or the Integration Plan and the Integration Agreements, including, without
limitation, the Consents required by Sections 3.6 and 3.7 of the Company
Disclosure Schedule, and (b) such additional Consents as Parent or its
counsel shall reasonably determine to be necessary. All such Consents
shall be in writing and executed counterparts thereof shall be delivered to
Parent promptly after receipt thereof by any Seller or Company but in no
event later than the Integration Commencement Date.
Section 5.4 Closing Net Worth. The Sellers and the Companies shall
cause the Final Asia Region Closing Net Worth to be positive.
Section 5.5 Other Offers. From the date hereof until the termination
hereof, each of the Sellers and the Companies shall not, and shall cause
each Company Subsidiary which is a direct or indirect Subsidiary thereof
not to, and shall not permit the directors, officers, employees, agents and
advisors of the Sellers and the Companies and the Company Subsidiaries to,
directly or indirectly, (i) take any action to solicit, initiate or
knowingly encourage any JLW Acquisition Proposal or (ii) engage in
negotiations with, or disclose any nonpublic information relating to any
Seller, Company or Company Subsidiary or afford access to the properties,
books or records of any Seller, Company or Company Subsidiary to, any
Person that may be considering making, or has made, a JLW Acquisition
Proposal; provided, that any Seller or Company may respond to inquiries
with respect to a JLW Acquisition Proposal for the sole purpose of
informing the inquiring Person that no discussions of any kind may occur
while this Section 5.5 is in effect. Each of the Sellers and the Companies
will promptly (and in no event later than 24 hours after receipt of the
relevant JLW Acquisition Proposal or request for information) notify Parent
in writing of the receipt of any JLW Acquisition Proposal or request for
information (which notice shall identify the Person making the JLW
Acquisition Proposal or request and set forth the material terms and
conditions thereof). For purposes of this Section 5.5, "JLW Acquisition
Proposal" means any offer or proposal for, or any indication of interest
in, a merger, consolidation or other business combination involving any of
the Sellers, the Companies or the Company Subsidiaries or the acquisition
of any equity interest in, or a substantial portion of the assets of, any
of the Sellers, the Companies or the Company Subsidiaries, other than the
transactions contemplated by this Agreement and the Other Purchase
Agreements.
Section 5.6 Integration Matters. Without the prior written consent
of Parent (which consent shall not be unreasonably withheld or delayed), no
JLW Party shall (i) amend the Integration Plan or any Integration
Agreement, (ii) extend the time for the performance of any of the
obligations thereunder, (iii) waive any inaccuracies in the representations
and warranties contained in any Integration Document, (iv) waive
compliance with any of the agreements or conditions contained therein, or
(v) enter into any agreement, arrangement or understanding other than as
set forth in the Integration Plan or Integration Agreements in respect of
the transactions contemplated thereby; provided, however, that the
foregoing shall not prohibit the Sellers' Representatives from waiving any
condition contained in any Integration Agreement that the Sellers'
Representatives could waive pursuant to Article VII or IX hereof.
Section 5.7 Nine-Month Financial Statements. The Sellers and the
Companies shall cause to be prepared and, as soon thereafter as practicable
but in no event later than November 16, 1998, deliver to Parent the Nine-
Month Interim Financial Statements and the JLW Combined 9/30 Financial
Statement Schedules, in each case as contemplated by the provisions of
Section 3.8(b) hereof.
Section 5.8 Name Changes. Except as set forth in Section 5.9 of the
Company Disclosure Schedule, following the Closing Date, no Seller shall
make, or permit any Continuing Affiliate to make, use of the names "JONES
LANG WOOTTON" or "JLW" or associated marks, or any confusingly similar
names or marks. Within 30 days following the Closing Date, each Seller
shall, and shall cause each Continuing Affiliate to, remove the words
"JONES LANG WOOTTON" or "JLW," if they appear, from its corporate title by
making an appropriate filing with the appropriate Authority in each
relevant jurisdiction. Except as set forth in Section 5.9 of the Company
Disclosure Schedule, following the Closing Date, each Seller shall not, and
the Sellers shall cause each Continuing Affiliate not to, use, attempt to
register or challenge any of the Buyers', the Companies' or the Company
Subsidiaries' rights to use or register any trademark, service mark, trade
name, logo or trade dress identical to, or confusingly similar to, "JONES
LANG WOOTTON," "JLW" or the "globe logo device" in any jurisdiction
throughout the world.
ARTICLE VI
COVENANTS OF PARENT
Section 6.1 Operation of Parent. From the date of hereof to the
Closing, except as described in Section 6.1 of the Parent Disclosure
Schedule or as otherwise permitted by or provided in this Agreement, the
other Operative Agreements or the Integration Plan or the Integration
Agreements, or except as consented to in writing by the Sellers'
Representatives (which consent shall not be unreasonably withheld or
delayed), Parent agrees that:
(a) Parent shall, and shall cause each Parent Subsidiary to,
conduct its business only in the ordinary and usual course and
substantially in the same manner as heretofore conducted.
(b) Parent shall, and shall cause US Acquisition Sub and US
Acquisition Sub II to, perform all acts to be performed by it pursuant to
this Agreement, any other Operative Agreements and the Integration Plan and
the Integration Agreements and shall refrain from taking any action (other
than any action permitted by or provided in this Agreement) that would
result in the representations and warranties of Parent, US Acquisition Sub
or US Acquisition Sub II hereunder becoming untrue in any material respect
or any of the conditions to Closing not be satisfied.
Without limiting the generality of the foregoing, except as described in
Section 6.1 of the Parent Disclosure Schedule or as otherwise permitted or
contemplated by this Agreement, the other Operative Agreements or the
Integration Plan or the Integration Agreements or except as consented to in
writing by the Sellers' Representatives (which consent will not be
unreasonably withheld or delayed), from the date hereof to the Closing,
Parent shall not, and shall cause each Parent Subsidiary not to:
(i) amend its certificate of incorporation or bylaws
(or similar organizational documents) or adopt or pass further regulations
or resolutions inconsistent therewith;
(ii) other than in the ordinary course of business
consistent with past practice (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of any other Person (other than any Parent
Subsidiary), or (B) make any loans, advances or capital contributions to,
or investments in, any other Person (other than to any Parent Subsidiary),
or enter into any material Contract;
(iii) acquire, by merging or consolidating with or by
purchasing equity interests in or assets of any other Person or otherwise,
any material assets of or any equity interests in any other Person;
(iv) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than (A) the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, or as required
by their terms, of liabilities reflected or specifically reserved against
in or contemplated by the Parent Interim Balance Sheet, (B) claims,
liabilities or obligations that are incurred after the date thereof in the
ordinary course of business consistent with past practice or that are
immaterial liabilities if not incurred in the ordinary course of business
or (C) the payment discharge or satisfaction in the ordinary course of
business consistent with past practice of obligations under any Contracts
or Licenses to which Parent or any Parent Subsidiary is bound as of the
date hereof or entered into after the date of this Agreement in accordance
with the limitations set forth in this Section 6.1;
(v) pay, discharge or satisfy any material Lien unless
required by the terms thereof or the documents evidencing or governing any
related indebtedness;
(vi) permit or allow any of its respective material
properties or assets, real, personal or mixed, tangible or intangible, to
be subjected to any Lien, except for any Permitted Liens incurred in the
ordinary course of business consistent with past practice;
(vii) cancel any material debts or claims, or waive any
rights of material value or, sell, transfer or convey any of its respective
material properties or assets, real, personal or mixed, tangible or
intangible;
(viii) enter into any employment or severance agreement
with any partner, officer, director, shareholder or employee thereof who
receives or would receive annual compensation in excess of US$100,000;
(ix) enter into or amend any bonus, pension, profit-
sharing or other plan, commitment, policy or arrangement in respect of the
compensation payable or to become payable to any of its officers, directors
or employees (other than salary increases in the ordinary course of
business consistent with past practice to employees who are not officers or
directors of Parent which, in the aggregate, are not material and year-end
bonuses in the ordinary course of business consistent with past practice);
(x) make any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment or contribution, other than in
the ordinary course of business consistent with past practice, or
voluntarily accelerate the vesting of any compensation or benefit;
(xi) declare, pay or make, or set aside for payment or
making, any dividend or other distribution in respect of its capital stock
or other securities, or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock or other securities, other than
dividends paid or payable by a wholly owned Parent Subsidiary to Parent or
another wholly owned Parent Subsidiary;
(xii) other than pursuant to the Parent Stock Plans,
issue, allot, create, grant or sell any shares of its capital stock or any
equity security or issue, grant or sell any security, option, warrant,
call, subscription or other right of any kind, fixed or contingent, that
directly or indirectly calls for the issuance, allotment, sale, pledge or
other disposition of any shares of its capital stock or other equity
securities;
(xiii) make any change in any accounting or tax
principles, practices or methods, except as may be required by applicable
generally accepted accounting principles or applicable Law;
(xiv) make any material tax election or settle or
compromise any material income tax liability;
(xv) terminate or amend or fail to perform any of its
obligations under any material Contract to which it is a party or by which
it or any of its assets are bound;
(xvi) enter into any material joint venture or
partnership;
(xvii) settle any material lawsuits, claims, actions,
investigations or proceedings; or
(xviii) authorize or enter into any obligations or
commitment (or otherwise agree) to take any of the foregoing actions.
(c) Parent shall, and shall cause each Parent Subsidiary to,
give prompt notice to the Sellers' Representatives of (i) any Parent
Material Adverse Effect, (ii) any change which makes it likely that any
representation or warranty set forth in this Agreement regarding Parent
will not be true in any material respect at the Integration Commencement
Date or the Closing, as applicable, or would be likely to cause any
condition to the obligations of any party hereto to consummate the
transactions contemplated by this Agreement not to be satisfied or (iii)
the failure of Parent, US Acquisition Sub or US Acquisition Sub II to
comply with or satisfy any covenant or agreement to be complied with or
satisfied by it pursuant to this Agreement and the other Operative
Agreements which would likely cause a condition to the obligations of any
party to effect the transactions contemplated by this Agreement not to be
satisfied.
(d) Parent shall, and shall cause each Parent Subsidiary to,
use commercially reasonable efforts to take such action as may be
necessary to maintain, preserve, renew and keep in full force and effect
its existence and its material rights and franchises.
(e) Parent shall, and shall cause each Parent Subsidiary to,
use commercially reasonable efforts to preserve intact the existing
relationships with its clients and employees and others with respect to the
businesses with which it has business relationships. Parent shall, and
shall cause each Parent Subsidiary to, permit the Shareholders'
Representatives or their designees to contact suppliers, customers and
employees in coordination with the personnel of Parent or such Parent
Subsidiary for purposes of facilitating the transactions contemplated
hereby.
Section 6.2 Access. Subject to compliance with applicable Law, upon
reasonable notice, Parent shall, and shall cause each Parent Subsidiary to,
give the Sellers and the Companies, their respective counsel, financial
advisors, auditors and other authorized representatives reasonable access
during normal business hours to its offices, properties, books and records,
furnish to the Sellers and the Companies, their respective counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data as such persons may reasonably request, and
instruct and request each of its directors, officers, employees, counsel
and financial advisors (as applicable) to cooperate with the Sellers and
the Companies in their investigation of the businesses of Parent and the
Parent Subsidiaries and in the planning for the combination of the
businesses of the Companies and Parent following the consummation of the
transactions contemplated hereby; provided that no investigation pursuant
to this Section shall affect any representation or warranty given by the
Parent hereunder. All information obtained pursuant to this Section 6.2,
or otherwise pursuant to this Agreement shall be governed by the
Confidentiality Agreement.
Section 6.3 Consents. Each of US Acquisition Sub, US Acquisition Sub
II and Parent shall use, unless otherwise agreed by the Sellers'
Representatives, commercially reasonable efforts to obtain, prior to the
Closing, (a) all Consents required to consummate the transactions
contemplated by this Agreement and the other Operative Agreements,
including, without limitation, the Consents required by Sections 4.5 and
4.6 of the Parent Disclosure Schedule, and (b) such additional Consents as
the Sellers' Representatives or counsel to the Sellers shall reasonably
determine to be necessary. All such Consents shall be in writing and
executed counterparts thereof shall be delivered to the Sellers'
Representatives promptly after receipt thereof by Parent but in no event
later than the Integration Commencement Date.
Section 6.4 Listing of Consideration Shares. Parent shall use
commercially reasonable efforts to cause the Consideration Shares to be
approved for listing on the NYSE, subject to official notice of issuance,
on or prior to the Integration Commencement Date.
Section 6.5 Stockholder Approval; Proxy. (a) Parent shall, in
accordance with applicable Law and the Articles of Incorporation and Bylaws
of Parent, cause a special meeting of its stockholders to be duly called
and held for the purpose of voting (and will hold such a vote at such
meeting) on the approval of the Proposed Actions as promptly as practicable
following the Shareholder Determination Date.
(b) In connection with such meeting, Parent shall promptly
prepare and file with the SEC, and use its reasonable efforts to have
cleared by the SEC and after the Commitment Date mail to its stockholders,
a proxy statement (the "Proxy Statement") that complies as to form in all
material respects with all relevant provisions of the Exchange Act relating
to the meeting of Parent's stockholders to be held in connection with this
Agreement and includes (when so filed) such information as the Management
Shareholders shall reasonably request. Parent shall consult with the
Shareholder's Representatives, the Sellers, the Companies and the financial
advisers and counsel to the Sellers in connection with, and shall permit
them to participate in, the preparation of the Proxy Statement. Parent
shall promptly notify them of the receipt of comments of the SEC with
respect to the Proxy Statement and requests by the SEC for amendments or
supplements to the Proxy Statement or for additional information, and shall
promptly supply them with copies of all correspondence between Parent (or
its representatives) and the SEC (or its staff) and shall permit such
counsel to participate in all telephone conferences or meetings with the
SEC (or its staff) relating thereto.
(c) The Proxy Statement shall include the approval and
recommendation of the Board of Parent in favor of this Agreement and the
Other Purchase Agreements and the transactions contemplated hereby and
thereby, including the Proposed Actions, and unless Parent shall modify or
withdraw such recommendation, Parent shall use all reasonable efforts to
solicit from its stockholders proxies in favor of the foregoing and take
all other actions reasonably necessary or advisable to secure the requisite
vote or consent of stockholders required by Maryland law and the NYSE;
provided, that Parent may modify or withdraw such recommendation, but only
if and to the extent that (i) a Parent Acquisition Proposal has been made
prior to the time that the Board determines to withdraw or modify its
recommendation, (ii) the Board reasonably concludes in good faith, based
on advice from its outside counsel, that the failure to make such
withdrawal or modification would violate the fiduciary duties of the Board
under applicable Law, and (iii) Parent shall have delivered to the
Shareholders' Representatives, at least two Business Days prior to such
withdrawal or modification, a written notice advising the Shareholders'
Representatives that Parent has received a Parent Acquisition Proposal,
identifying the person making such Parent Acquisition Proposal, setting
forth the material terms and conditions of such Parent Acquisition Proposal
and indicating that the Board proposes to withdraw or modify its
recommendation.
Section 6.6 Other Offers. From the date hereof until the termination
hereof, Parent shall not, and shall cause each of the Parent Subsidiaries
not to, and shall not permit the directors, officers, employees, agents and
advisors of Parent and any of the Parent Subsidiaries to, directly or
indirectly, (i) take any action to solicit, initiate or knowingly encourage
any Parent Acquisition Proposal or (ii) engage in negotiations with, or
disclose any nonpublic information relating to Parent or any of the Parent
Subsidiaries or afford access to the properties, books or records of Parent
or any of the Parent Subsidiaries to, any Person that may be considering
making, or has made, a Parent Acquisition Proposal; provided, however, that
Parent may engage in negotiations with, disclose nonpublic information
relating to Parent and any of the Parent Subsidiaries and afford access to
the properties, books and records of Parent and any of the Parent
Subsidiaries to, any Person who has made a Parent Acquisition Proposal and
take such other actions as are customarily undertaken in connection with
the negotiation and evaluation of a Parent Acquisition Proposal if, and to
the extent that, the Board reasonably concludes in good faith based on
advice from its outside counsel that the failure to take such action would
violate the fiduciary duties of the Board under applicable Law; provided
that, prior to any such negotiations, disclosure of non-public information,
affording of access or the taking of such other actions, such Person enters
into a confidentiality agreement with Parent on customary terms. Parent
will promptly (and in no event later than 24 hours after receipt of the
relevant Parent Acquisition Proposal or request for information) notify the
Shareholders' Representatives in writing of the receipt of any Parent
Acquisition Proposal or request for information (which notice shall
identify the Person making the Parent Acquisition Proposal or request and
set forth the material terms and conditions thereof). Parent will keep the
Shareholders' Representatives fully informed on a current basis of the
status and details of any Parent Acquisition Proposal and any request for
information. Parent shall, and shall cause the Parent Subsidiaries and the
directors and officers and financial and legal advisers of Parent and the
Parent Subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any Person heretofore
conducted with respect to any Parent Acquisition Proposal. Notwithstanding
any provision of this Section 6.6, nothing in this Section 6.6 shall
prohibit Parent or the Board from talking and disclosing to Parent's
stockholders a position with respect to a Parent Acquisition Proposal by a
third party to the extent required under the Exchange Act or from making
such disclosure to the Company's stockholders which, in the judgment of the
Board based on the advice of outside counsel, is required under applicable
Law; provided that nothing in this sentence shall affect the obligations of
Parent and the Board under any other provision of this Agreement. For
purposes of this Agreement, "Parent Acquisition Proposal" means any offer
or proposal for, or any indiction of interest in, a merger, consolidation
or other business combination involving Parent or any of the Parent
Subsidiaries or the acquisition of any equity interest in, or a substantial
portion of the assets of, Parent or any of the Parent Subsidiaries, other
than the transactions contemplated by this Agreement and the Other Purchase
Agreements.
Section 6.7 Employee Trust. At or prior to Closing, Parent shall
establish a trust (the "ESOT") for the purpose of holding 1,772,324 shares
of Parent Common Stock (which shall be deposited therein, collectively, by
Parent, US Acquisition Sub, US Acquisition Sub II and Australia Acquisition
Sub on or prior to the Closing Date) (the "ESOT Shares") for distribution
to certain JLW Employees. The trust agreement and the related agreements
required to establish the ESOT (the "ESOT Agreements") shall reflect the
terms set forth in Annex L attached hereto and such other terms as Parent
and the Sellers' Representatives shall mutually agree. The trustee of the
ESOT (the "ESOT Trustee") will be determined in accordance with and shall
have the rights and obligations specified in Annex L hereto and the ESOT
Agreements. The ESOT Agreements shall provide (to the extent set forth in
Annex L) for the creation of sub trusts within the ESOT for the benefit of
employees of specified Companies, Asian Region Companies and Australasia
Region Companies and the Subsidiaries thereof(each a "Sub Trust" or an
"ESOT Sub Trust", which Sub Trusts shall include a "JLW Australasia ESOT
Sub Trust," a "JLW Asia ESOT Sub Trust," a "JLW England ESOT Sub Trust," a
"JLW Scotland ESOT Sub Trust" and the "JLW Ireland ESOT Sub Trust"), which
Sub Trusts shall be controlled by one or more persons designated pursuant
to the SCCA. Parent and Sellers' Representatives agree to cooperate in
good faith to determine the additional requirements of the ESOT and to
negotiate in good faith the satisfactory resolution of such requirements
prior to Closing. The parties hereto agree that (i) 91,988 ESOT Shares
(the "ESOT Escrow Shares") shall be included in the Escrow Shares and (ii)
108,895 ESOT Shares (the "ESOT Adjustment Shares") shall be included in the
Adjustment Shares, in each case to be delivered to the Escrow Agent on
behalf of the ESOT pursuant to Section 1.3 hereof and Section 1.3 of each
of the Other Purchase Agreements.
Section 6.8 Certain Stockholder Agreements. Parent shall use
commercially reasonable efforts to solicit the execution and delivery by
each current director, officer and employee of Parent or any Parent
Subsidiary who is a former partner in DEL of a stockholder agreement, in
the form attached hereto as Exhibit 3 (the "DEL Stockholder Agreement"), on
or prior to the Integration Commencement Date.
Section 6.9 Certain Instruments of Indemnification. On or prior to
the Integration Commencement Date, Parent shall execute and deliver the
instruments of assumption of indemnification obligations in the respective
forms attached hereto as Exhibit 6 and Exhibit 7.
Section 6.10 Employee Stock Options. To the extent that Parent or
any Parent Subsidiary issues or grants, or has issued or granted, (i) any
stock options, stock appreciation rights, bonus or restricted stock awards,
restricted stock units, performance shares or other stock based incentive
awards, whether issued under a formal stock based incentive plan or
otherwise, or (ii) any cash-based awards granted under a stock based
incentive plan (the awards referred to in (i) and (ii) being sometimes
referred to herein as "Stock Options") to any employees of Parent or any
Parent Subsidiary, which employees were so employed prior to the Closing
Date (other than any new employees after June 30, 1998) at any time after
June 30, 1998 and prior to the third anniversary of the Closing Date,
Parent shall cause at least an equivalent number of like Stock Options to
be issued or granted, on or about the time of such grant or issuance (or,
in the case of Stock Options granted or issued prior to the Closing Date,
as soon as reasonably practicable after the Closing Date) to employees of
Parent or any Subsidiary thereof who were employees of the JLW Businesses
immediately prior to the Closing Date.
Section 6.11 Director and Officer Indemnification. For a period of
three years following the Closing Date, Parent shall not amend any charter,
bylaw or other constitutional document of any Company or Company
Subsidiary, in each case as in effect at June 30, 1998, in such a way as to
remove or reduce any right to indemnification thereunder in favor of any
director or officer thereof.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the Buyers to purchase the Shares at the
Closing and to perform their respective other agreements under this
Agreement and the other Operative Agreements to be performed by them at the
Closing, and the obligations of the Sellers to sell the Shares at the
Closing and the obligations of the Sellers, the Companies, the Shareholders
and the Related JLW Owners to perform their respective other agreements
under this Agreement, the other Operative Agreements and the Integration
Agreements to be performed by them as part of the Integration or at the
Closing, as the case may be, shall be subject to the satisfaction or waiver
by Parent and the Sellers' Representatives and the Shareholders'
Representatives, in the case of actions to be taken at the Closing, of the
following conditions that are specified to be satisfied on the Closing Date
(or, in the case of Section 7.5, at (or before) the time specified therein)
or, in the case of actions to be taken as part of the Integration, of the
following conditions that are specified to be satisfied on (or before) the
Integration Commencement Date:
Section 7.1 No Injunctions or Restraints. On the Integration
Commencement Date and on the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court or other Authority of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated
as so provided.
Section 7.2 No Litigation. On the Integration Commencement Date and
on the Closing Date, there shall not be pending by any Authority any Action
(or by any other Person any Action which has a reasonable likelihood of
success), (i) challenging or seeking to restrain or prohibit the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement or seeking to obtain, in connection with the
transactions contemplated by this Agreement, any other Operative Agreement
or any Integration Agreement, any damages that would reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse
Effect, (ii) seeking to prohibit or limit the ownership or operation by
Parent, the Companies or any or all of them, or any of their respective
Subsidiaries, of any material portion of their respective businesses or
assets, or to compel Parent, the Companies or any or all of them, or any of
their respective Subsidiaries, to dispose of or hold separate any material
portion of such businesses or assets or (iii) seeking to prohibit Parent
from exercising its rights under or otherwise enjoying the benefits of the
other Operative Agreements.
Section 7.3 HSR Act and Other Approvals. (a) On the Integration
Commencement Date, (i) any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement and the Other
Purchase Agreements shall have expired or been terminated, (ii) the
Required Regulatory Approvals shall have been obtained or filed or shall
have occurred and be in effect, and (iii) all other authorizations,
consents, orders or approvals of, or regulations, declarations or filings
with, or expirations of applicable waiting periods imposed by, any
Authority necessary for the consummation of the transactions contemplated
by this Agreement, any other Operative Agreement or any Integration
Agreement, including filings and consents required pursuant to other
applicable antitrust and competition Laws, shall have been obtained or
filed or shall have occurred and be in effect, except where the failure of
which to be obtained or filed or to have occurred and be in effect,
individually or in the aggregate, would not have or reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse
Effect or result in a violation of any criminal laws.
(b) On the Integration Commencement Date, there shall have
been obtained or received and in effect (i) each of the Consents listed or
described on Schedule 7.3(b) of the Parent Disclosure Schedule, (ii) each
of the Consents listed or described on Schedule 7.3(b) of the Company
Disclosure Schedule and (iii) any other Consents from third Persons (other
than Authorities) to any of the transactions contemplated by this
Agreement, the other Operative Agreements or any Integration Agreements
that may be required under any Contract or License to which Parent, US
Acquisition Sub, US Acquisition Sub II, any Seller or any Company, or any
of their respective direct or indirect Subsidiaries, is a party or by which
any of such Persons is bound with respect to which the failure to obtain or
receive would, individually or in the aggregate, have or reasonably be
expected to have a Parent Material Adverse Effect or a Company Material
Adverse Effect.
Section 7.4 Stockholders Vote. On or prior to the Integration
Commencement Date, the Proposed Actions to be submitted for the approval of
the stockholders of Parent shall have been approved by the requisite vote
of Parent's stockholders.
Section 7.5 Other Closings. The consummation of the transactions
contemplated by each of the Other Purchase Agreements shall have occurred
concurrently with the Closing.
Section 7.6 Consummation of the Integration. On the Closing Date,
the transactions contemplated by the Integration Plan and the Integration
Agreements (other than the Post-Closing Integration Actions) shall have
been (or shall have theretofore been) consummated in accordance with the
terms and conditions of the Integration Plan and the Integration
Agreements, without modification of the terms thereof or waiver of any of
the conditions precedent thereto, unless Parent shall have consented
thereto in writing (which consent will not be unreasonably withheld or
delayed); and the Integration shall have been (or shall have theretofore
been) consummated in all material respects in accordance with all
applicable Laws).
Section 7.7 Execution and Delivery of the other Operative Agreements.
On the Integration Commencement Date, each Shareholder and each Related JLW
Owner listed on the Final Master Shareholder List and each Other
Shareholder and Related JLW Owner listed on the Final Master Shareholder
List attached to each of the Other Purchase Agreements shall have (or shall
have theretofore) duly executed and delivered to Parent: (i) a Joinder
Agreement or Other Joinder Agreement, as applicable, (ii) a Stockholder
Agreement and (iii) an Escrow Agreement.
Section 7.8 Amendments. The Articles of Amendment and Restatement of
Parent, in the form attached hereto as Annex H, shall have become
effective; the amendment to the Articles of Incorporation of LACM
contemplated by clause (a)(i)(B) of Section 1.9 hereof shall have become
effective.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT
The obligations of the Buyers to purchase the Shares at the
Closing and to perform their respective other agreements under this
Agreement and the other Operative Agreements to be performed by them as
part of the Integration or at the Closing, is subject to the satisfaction
or waiver by Parent, in the case of actions to be taken at the Closing, of
the following conditions that are specified to be satisfied on the Closing
Date or, in the case of actions to be taken as part of the Integration, of
the following conditions that are specified to be satisfied on (or before)
the Integration Commencement Date:
Section 8.1 Representations and Warranties Correct as of the
Integration Commencement Date. On the Integration Commencement Date, the
representations and warranties of the Shareholders, the Related JLW Owners,
the Sellers, the Companies and the Management Shareholders made herein, in
the other Operative Agreements or in the Integration Agreements and
qualified as to Company Material Adverse Effect shall be true and correct
in all respects at and as of the Integration Commencement Date, with the
same force and effect as though made at and as of the Integration
Commencement Date (except to the extent a representation or warranty speaks
specifically as of an earlier date, in which event the same shall be true
and correct in all respects as of such earlier date), except for any
changes therein permitted or contemplated by this Agreement. On the
Integration Commencement Date, each such representation and warranty not so
qualified shall be true and correct in all respects at and as of the
Integration Commencement Date, with the same force and effect as though
made at and as of the Integration Commencement Date (except to the extent a
representation or warranty speaks specifically as of an earlier date, in
which event the same shall be true and correct in all respects as of such
earlier date), and except for any changes therein permitted or contemplated
by this Agreement, except for such failures of such representations or
warranties to be true and correct in all respects as would not,
individually or in the aggregate, have or reasonably be expected to have a
Company Material Adverse Effect.
Section 8.2 Certain Representations and Warranties Correct as of the
Closing Date. On the Closing Date, the representations and warranties of
the Sellers, the Companies and the Management Shareholders set forth in
Section 3.1 hereof, the representations and warranties of the Sellers in
Article IIIA hereof and the representations and warranties of the
Shareholders and the Related JLW Owners contained in the Applicable Joinder
Agreements shall be true and correct in all respects at and as of the
Closing Date.
Section 8.3 Performance; No Default. (a) On the Integration
Commencement Date, the JLW Parties shall have performed and complied in all
material respects with all the obligations and agreements required by this
Agreement and the other Operative Agreements to which they or any of them
is a party to be performed or complied with by the JLW Parties at or prior
to the Integration Commencement Date.
(b) On the Closing Date, the JLW Parties shall have performed
and complied in all material respects with all the obligations and
agreements required by this Agreement and the other Operative Agreements to
which they or any of them is a party to be performed or complied with by
the JLW Parties at or prior to the Closing Date.
(c) On the Integration Commencement Date, the Shareholders
and the Related JLW Owners shall have complied in all material respects
with all obligations and agreements required by this Agreement and the
other Operative Agreements to be performed by them at or prior to the
Integration Commencement Date.
(d) On the Closing Date, Shareholders and the Related JLW
Owners shall have complied in all material respects with all obligations
and agreements required by this Agreement and the other Operative
Agreements to be performed by them at or prior to the Closing Date.
Section 8.4 Delivery of Certificate. Each of the Sellers, Companies
and Management Shareholders shall have delivered to Parent (i) on the
Integration Commencement Date, a certificate, dated the Integration
Commencement Dat
ye, executed by it or him certifying to the fulfillment of the conditions
set forth in Sections 8.1, 8.3(a) and 8.3(c) hereof and (ii) on the Closing
Date, a certificate, dated the Closing Date, executed by it or him
certifying to the fulfillment of the conditions set forth in Sections 8.2,
8.3(b) and 8.3(d) hereof, provided that, in the case of the certification
by each of the Management Shareholders, such certification (x) shall be
limited to the Knowledge of such Management Shareholder and (y) shall not
apply to representations and warranties set forth in Article II or III of
any Joinder Agreement (other than the representations and warranties set
forth in such Articles of the Joinder Agreement to which such Management
Shareholder is a party, which certification (notwithstanding clause (x)
above) shall not be limited to his Knowledge).
Section 8.5 Opinions of Counsel to the Sellers and the Companies.
On the Closing Date, the Sellers' Representatives shall have delivered to
Parent opinions of counsel to the Sellers and the Companies as to such
matters as Parent shall reasonably request, which opinions shall be in a
form reasonably satisfactory to counsel to Parent.
Section 8.6 Comfort Letter. Parent shall have received a comfort
letter, dated the date of the Proxy Statement and the date of Parent's
stockholders' meeting referred to in Section 6.5 hereof and on the
Integration Commencement Date, from each public accounting firm who has
issued a report on any of the Audited Financial Statements in each case in
form and substance reasonably satisfactory to Parent, regarding the
financial statements, in the respective forms set forth in Annex O hereto.
Section 8.7 Settlement of Related Party Accounts. On the Integration
Commencement Date, except as set forth in Section 8.7 to the Company
Disclosure Schedule, all amounts owed by any Related Parties, or any
Persons in which any such Related Party has a material interest, to any
Company or Company Subsidiary shall have been paid in full.
Section 8.8 No Material Adverse Effect. On the Integration
Commencement Date, since June 30, 1998, there shall have been no Company
Material Adverse Effect.
Section 8.9 Termination of Annuity Scheme. On the Integration
Commencement Date, the Annuity Scheme shall have (or shall have
theretofore) been terminated in a manner reasonably acceptable to Parent.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS AND THE SHAREHOLDERS
The obligations of the Sellers to sell the Shares at the
Closing and the obligations of the Sellers, the Companies, the Company
Subsidiaries, the Shareholders and the Related JLW Owners to perform their
other agreements under this Agreement, the other Operative Agreements and
the Integration Agreements to be performed by them as part of the
Integration and at the Closing shall be subject to the satisfaction or
waiver by the Sellers' Representatives and the Shareholders'
Representatives, in the case of actions to be taken at the Closing, of the
following conditions that are specified to be satisfied on the Closing Date
or, in the case of actions to be taken as part of the Integration, of the
following conditions that are specified to be satisfied on (or before) the
Integration Commencement Date:
Section 9.1 Representations and Warranties Correct as of the
Integration Commencement Date. On the Integration Commencement Date, each
representation and warranty of each Buyer made herein and qualified as to
Parent Material Adverse Effect shall be true and correct in all respects at
and as of the Integration Commencement Date, with the same force and effect
as though made at and as of the Integration Commencement Date (except to
the extent a representation or warranty speaks specifically as of an
earlier date, in which event the same shall be true and correct in all
respects as of such earlier date), except for any changes therein permitted
or contemplated by this Agreement. On the Integration Commencement Date,
each such representation and warranty not so qualified shall be true and
correct in all respects at and as of the Integration Commencement Date,
with the same force and effect as though made at and as of the Integration
Commencement Date (except to the extent a representation or warranty speaks
specifically as of an earlier date, in which event the same shall be true
and correct in all respects as of such earlier date, except for any changes
therein permitted or contemplated by this Agreement and except for such
failures of such representations and warranties to be true and correct in
all respects as would not, individually or in the aggregate, have or
reasonably be expected to have a Parent Material Adverse Effect.
Section 9.2 Performance; No Default. (a) On the Integration
Commencement Date, each Buyer shall have performed and complied in all
material respects with all the obligations and agreements required by this
Agreement and the other Operative Agreements to be performed or complied
with by it at or prior to the Integration Commencement Date.
(b) On the Closing Date, each Buyer shall have performed and
complied in all material respects with all the obligations and agreements
required by this Agreement and the other Operative Agreements to be
performed or complied with by it at or prior to the Closing Date.
Section 9.3 Delivery of Certificate. Parent shall have delivered to
the Sellers' Representatives (i) on the Integration Commencement Date, a
certificate, dated the Integration Commencement Date, executed by an
executive officer of Parent, certifying to the fulfillment of the
conditions set forth in Sections 9.1 and 9.2(a) hereof and (ii) on the
Closing Date, a certificate, dated the Closing Date, executed by an
executive officer of Parent, certifying to the fulfillment of the
conditions set forth in Section 9.2(b) hereof.
Section 9.4 Opinions of Counsel to Parent. On the Closing Date,
Parent shall have delivered to the Sellers' Representatives opinions of
counsel to Parent as to such matters as the Sellers' Representatives shall
reasonably request, which opinions shall be in a form reasonably
satisfactory to counsel to the Sellers and the Companies.
Section 9.5 Good Standing Certificate. On the Integration
Commencement Date, the Sellers' Representatives shall have received a
certificate from Parent, in form and substance reasonably satisfactory to
counsel to the Companies from the Department of Assessments and Taxation of
Maryland, evidencing the existence, good standing and organization of
Parent under the laws of Maryland and its current payment of taxes.
Section 9.6 Listing of Consideration Shares. On the Integration
Commencement Date, the Consideration Shares shall have been approved (or
theretofore approved) for listing on the NYSE, subject to official notice
of issuance, and a copy of the letter from the NYSE evidencing such
approval shall have been delivered to the Shareholders' Representatives.
Section 9.7 Certain Stockholder Agreements. On the Integration
Commencement Date, each current director, officer and employee of Parent or
any Parent Subsidiary who is a former partner in DEL shall have (or shall
have theretofore) executed and delivered to Parent a DEL Stockholder
Agreement.
Section 9.8 No Material Adverse Effect. On the Integration
Commencement Date, since June 30, 1998, there shall have been no Parent
Material Adverse Effect.
Section 9.9 Amendments. The Amended Parent Bylaws shall have been
adopted by Parent's Board and not rescinded, modified or amended.
Section 9.10 Directors and Officers. The JLW Directors shall have
been elected to the Board (and the only other directors on the Board shall
be the Parent Directors), effective immediately following the Closing, and
Chris Peacock and Mike Smith shall have been elected to the offices of
President, Deputy Chief Executive Officer and Chief Operating Officer of
Parent and Deputy Chairman of the Board of Parent, respectively, effective
immediately following the Closing.
ARTICLE X
TAX MATTERS
Section 10.1 Allocation of Purchase Price. The final allocation of
the Consideration among the Shares of the Companies for all purposes
(including tax and financial accounting purposes) shall be determined by
agreement between Parent and Sellers' Representatives. Parent and each JLW
Party shall file all Tax Returns (including amended returns and claims for
refund) and information reports in a manner consistent with such
allocation.
Section 10.2 Tax Returns. (a) The Shareholders' Representatives
or their duly authorized agents shall prepare and timely file all
outstanding Tax Returns of the Companies and Company Subsidiaries for
taxable periods ending on or before the Closing on a basis which is, where
applicable, consistent with that used in the preparation of the Tax Return
of (in each case) the relevant Company or Company Subsidiary for any
immediately preceding taxable period, save where to do so would be contrary
to law. Parent shall provide or procure that the Companies and Company
Subsidiaries provide any assistance reasonably requested by the
Shareholders' Representatives for that purpose, including access to the
books, accounts and records of the Companies and Company Subsidiaries. The
Shareholders' Representatives shall notify Parent in writing that a Tax
Return must be submitted at least twenty Business Days prior to the
submission and Parent shall be entitled, on giving reasonable notice to the
Shareholders' Representatives, to review any Tax Return prior to
submission. Parent shall provide or procure that the Companies and Company
Subsidiaries cause those Tax Returns to be authorized, signed and submitted
to the appropriate authority without amendment or with such amendments as
Parent and the Shareholders' Representatives shall agree unless, in the
opinion of Parent, there is no reasonable basis for any position taken on
such returns or the signing or filing of such return would subject Parent,
the Companies, the Company Subsidiaries or any of their officers,
directors, employees, agents or Affiliates to fines, penalties or similar
charges.
(b) Parent shall prepare and file or cause to be prepared and
filed those Tax Returns which relate to taxable periods of the Companies
and Company Subsidiaries commencing on or before the Closing and ending
after the Closing ("Straddle Returns") on a basis which is, where
applicable, consistent with that used in the preparation of the Tax Return
of (in each case) the relevant Company or Company Subsidiary for any
immediately preceding taxable period, save where to do so would be contrary
to law. Parent shall notify the Shareholders' Representatives in writing
that a Straddle Return must be submitted at least twenty Business Days
prior to the submission and the Shareholders' Representatives shall be
entitled, on giving reasonable notice to Parent, to review any Straddle
Return prior to submission. Parent shall make any changes as reasonably
requested by the Shareholders' Representatives or their duly authorized
agent provided such changes would not have a material adverse effect to
Parent. None of the Shareholders or any of their respective Affiliates
shall otherwise amend, refile or in any other way modify any Tax Return
relating in whole or in part to any Company or Company Subsidiary or the
JLW Businesses with respect to any taxable period ending on or before the
Closing Date without the prior written consent of Parent.
Section 10.3 Mutual Cooperation. Subject to Section 10.2 hereof and
the Escrow Agreement, Parent, on the one hand, and each Shareholder, on the
other, shall cooperate fully at such time and to the extent reasonably
requested by the other party in connection with the preparation and filing
of any Tax Return or the conduct of any audit, dispute, proceeding, suit or
action concerning any Tax. Such cooperation shall include (i) the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to the preparation and filing of
such Tax Return, or any such audit, litigation or other proceeding, (ii)
explanation of any material provided hereunder, (iii) the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any Tax Return by any of Parent, Shareholders, Companies or
Company Subsidiaries, or in connection with an audit, proceeding, suit or
action respecting any Tax, and (iv) the use of the parties' commercially
reasonable efforts to obtain any documentation from an Authority or a third
party that may be necessary or helpful in connection with the foregoing.
Section 10.4 Tax Covenant. It is the intent of the parties that the
purchase and sale of the Shares as contemplated in this Agreement be
treated as a taxable transaction for United States Federal Income tax
purposes. If prior to the Closing, Parent determines that such purchase
and sale may not be so treated, then Parent and each JLW Party shall work
together in good faith to modify the transactions contemplated hereby, if
feasible, to effectuate such intent.
ARTICLE XI
TERMINATION
Section 11.1 Termination of Agreement. This Agreement and the
Applicable Joinder Agreements and the other Operative Agreements may be
terminated at any time prior to the Closing:
(a) by mutual consent of the Sellers' Representatives and
Parent;
(b) by either the Sellers' Representatives or Parent if (i)
the Closing shall not have occurred on or before March 31, 1999, provided,
however, that the right to terminate this Agreement pursuant to this clause
(i) shall not be available to (A) the Sellers' Representatives if the
failure of any JLW Party, Shareholder or Related JLW Owner of any
Shareholder (if applicable) to fulfill any obligation, covenant or
agreement of such JLW Party, Shareholder or Related JLW Owner under this
Agreement, any other Operative Agreement, any Integration Agreement or
Applicable Joinder Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date and (B) Parent if
the failure of any Buyer to fulfill any obligation, covenant or agreement
of any Buyer under this Agreement or any other Operative Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or
before such date or (ii) if the Closing shall not have occurred on or
before September 30, 1999;
(c) by either the Sellers' Representatives or Parent in the
event any court of competent jurisdiction or other Authority of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree or ruling or other
action shall have become final and nonappealable;
(d) by Parent (provided, that no Buyer is then in material
breach of any of its representations, warranties or covenants in this
Agreement) if there shall have been a material breach of any of the
representations, warranties or covenants of any Shareholder or Related JLW
Owner (if applicable) or JLW Party in this Agreement, any other Operative
Agreement or any Integration Agreement, which breach (x) would result in a
failure of a condition set forth in Section 8.1, 8.2 or 8.3 of this
Agreement and (y) cannot be or has not been cured within 60 days following
written notice thereof to the Sellers' Representatives and the party
committing such breach (which notice shall specify in reasonable detail the
nature of such breach);
(e) by the Sellers' Representatives (provided that the
Shareholders, the Related JLW Owners (if applicable), or the JLW Parties
are not then in material breach of any of their respective representations,
warranties, agreements or covenants in this Agreement, any other Operative
Agreement or any Integration Agreement) if there shall have been a material
breach by any Buyer of any of its representations, warranties, agreements
or covenants in this Agreement, which breach (x) would result in a failure
of a condition set forth in Section 9.1 or 9.2 of this Agreement and (y)
cannot be or has not been cured within 60 days following written notice
thereof to Parent (which notice shall specify in reasonable detail the
nature of such breach);
(f) by either the Sellers' Representatives or Parent, if, at
the meeting of Parent's stockholders (including any adjournment or
postponement thereof) called pursuant to Section 6.5 hereof, the requisite
vote of the stockholders of Parent to approve the Proposed Actions shall
not have been obtained (or, if obtained, thereafter revoked or rescinded);
(g) by the Sellers' Representatives, in the event that the
Board of Parent shall have (i) not approved and recommended, or withdrawn
or modified in a manner adverse to the JLW Parties its approval or
recommendation of, the transactions contemplated by this Agreement, the
Applicable Joinder Agreements, the Other Purchase Agreements and the Other
Joinder Agreements (including the Proposed Actions), or any of them or (ii)
failed to call and hold the special meeting of the stockholders of Parent
at which the Proposed Actions are presented to and voted upon by the
stockholders of Parent in accordance with Section 6.5;
(h) by Parent if the Final Master Shareholder List shall not
have been delivered to and accepted by Parent on or prior to the Commitment
Date provided that Parent gives written notice of such termination to the
Sellers' Representatives within two Business Days thereafter; or
(i) by Parent or the Sellers' Representatives at any time
prior to the mailing of the final Proxy Statement, if the pro forma
consolidated balance sheet of Parent and the Companies, the Europe/USA
Region Companies and the Australasia Region Companies as of June 30, 1998
(which balance sheet assumes that the transactions contemplated by this
Agreement and the Other Purchase Agreements had occurred on June 30, 1998)
included in the final Proxy Statement, and the pro forma consolidated
financial statements of Parent and the Companies, the Europe/USA Region
Companies and the Australasia Region Companies for the six months ended
June 30, 1998 and the year ended December 31, 1997 (which statements assume
that the transactions contemplated by this Agreement and the Other Purchase
Agreements had occurred on January 1, 1997) included therein, shall in each
case not be substantially the same as those contained in the Offering
Memorandum, other than as a result of (i) the inclusion of (A) financial
information relating to the transactions contemplated by the Compass
Agreement and the financial statements of the entities or businesses
acquired pursuant to the Compass Agreement or(B) the financial statements
of the applicable entities for the nine months ended September 30, 1998
(rather than for the six months ended June 30, 1998), or (ii) changes which
are not material or, if material, are reasonably acceptable to Parent and
the Sellers' Representatives.
In addition, (i) this Agreement and the Applicable Joinder
Agreements and the other Operative Agreements shall terminate automatically
(without any action on the part of the Sellers' Representatives or Parent)
in the event that either or both of the Other Purchase Agreements shall
have terminated or been terminated pursuant to and in accordance with
Section 11.1(f) or Section 11.1(g) thereof and (ii) this Agreement and the
Applicable Joinder Agreements and the Other Operative Agreements shall
terminate automatically (without any action on the part of the Sellers'
Representatives or Parent) in the event that either or both of the Other
Purchase Agreements shall have terminated or been terminated pursuant to
and in accordance with any subsection of Section 11.1 thereof other than
Section 11.1(f) and Section 11.1(g).
Section 11.2 Effect of Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 11.1 hereof, written
notice thereof shall forthwith be given to the other parties and the
transactions contemplated by this Agreement and the Applicable Joinder
Agreements shall be terminated and abandoned, without further action by
Parent, the Sellers' Representatives or any other party hereto. If the
transactions contemplated by this Agreement and the Applicable Joinder
Agreements are so terminated and abandoned as provided herein:
(a) Notwithstanding any such termination, Sections 11.2,
11.3, 13.2, 13.9, 13.10, 13.11 and 13.14 hereof shall remain in full force
and effect;
(b) The Confidentiality Agreement shall remain in full force
and effect; and
(c) No party hereto shall have any liability or further
obligation to any other party to this Agreement or the Applicable Joinder
Agreements except (i) as stated in subparagraphs (a) and (b) of this
Section 11.2 or (ii) for any wilful breach of this Agreement or the
Applicable Joinder Agreements, provided that, in the case of willful breach
by any JLW Party, no Buyer shall be entitled to recover any damages or
obtain any similar relief from any Shareholder, Related JLW Owner, Sellers'
Representative, Shareholder's Representative, Company or Company
Subsidiary, it being agreed and acknowledged that damages or similar relief
to which any Buyer might be entitled by reason of any such wilful breach
shall be obtained solely from the Sellers; provided that the foregoing
shall not limit any equitable remedies available to the Buyers prior to
termination of this Agreement as a result of a breach or violation of this
Agreement or any Applicable Joinder Agreement.
Section 11.3 Termination Fee. Notwithstanding any other provision of
this Agreement, if this Agreement and each of the Other Purchase Agreements
is terminated pursuant to Section 11.1(f) or 11.1(g) hereof and thereof or
clause (i) of the last sentence of Section 11.1 hereof or thereof, Parent
shall promptly pay to the Sellers' Representatives on behalf of the Sellers
US$3,178,866 (the "Termination Fee").
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
Section 12.1 Survival of Representations, Warranties and Covenants.
None of the representations and warranties of the Buyers contained in this
Agreement or any other Operative Agreement, or any instrument delivered
pursuant hereto or thereto, shall survive the Closing. All representations
and warranties of the Sellers, the Companies, the Management Shareholders,
the Shareholders and the Related JLW Owners contained in this Agreement or
any other Operative Agreement, or any instrument delivered pursuant hereto
or thereto, shall survive the Closing for the period specified in the
Escrow Agreement. The covenants and agreements of Parent contained in this
Agreement or any other Operative Agreement, or any instrument delivered
pursuant hereto or thereto, shall not survive the Closing, unless such
covenants or agreements specify terms or are contemplated to be performed
in whole or in part on or after the Closing, in which case any such
covenants or agreements shall survive for such specified terms or until
performed in full. The covenants and agreements of the JLW Parties
contained herein and the Shareholders and the Related JLW Owners in the
Applicable Joinder Agreements or any other Operative Agreement shall
survive the Closing without limitation as to time unless such covenants or
agreements specify a term, in which case such covenants or agreements shall
survive for such specified term. The right to indemnification under the
Escrow Agreement with respect to representations, warranties, covenants and
obligations in this Agreement, the Applicable Joinder Agreement and the
Other Joinder Agreements shall not be affected by any investigation
conducted or Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement, the
Applicable Joinder Agreement and the Other Joinder Agreements or the
Closing Date, with respect to the accuracy or inaccuracy of, or compliance
with, any such representation, warranty, covenant or obligation. The
waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification under the Escrow
Agreement with respect to such representations, warranties, covenants and
obligations.
Section 12.2 Indemnification of the Buyers. Parent and the other
Indemnified Persons shall be indemnified, defended and held harmless from
and against any and all Liabilities and against all claims in respect
thereof to the extent, and subject to the terms, conditions and
limitations, set forth in the Escrow Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Further Efforts. Each of the parties to this Agreement
shall: (i) promptly make any filings required by them or any of their
subsidiaries, and thereafter make any other submissions required under all
applicable Laws with respect to the transactions contemplated hereby and by
the other Operative Agreements; and (ii) use commercially reasonable
efforts to promptly take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this
Agreement and the other Operative Agreements. In addition, in the event of
any Action relating hereto or to the transactions contemplated by this
Agreement and by the other Operative Agreements, the parties to this
Agreement agree to cooperate and use commercially reasonable efforts to
defend against and respond thereto.
Section 13.2 Expenses. Subject to Section 11.3 hereof and except as
otherwise expressly provided herein or therein, each of the JLW Parties and
Parent shall pay its own legal, accounting and other miscellaneous expenses
incident to this Agreement, the other Operative Agreements and the
Integration Agreements and the transactions contemplated hereby and
thereby; provided, that the JLW Parties may cause any of their expenses to
be paid or assumed by one or more of the Companies, so long as each such
payment or assumption is identified and reflected in the Final Closing
Statements.
Section 13.3 Press Releases and Announcements. After the date of
this Agreement and prior to the Closing, no party to this Agreement shall
directly or indirectly make or cause to be made any public announcement or
disclosure, or issue any notice with respect to this Agreement or any other
Operative Agreement or the transactions contemplated by this Agreement and
the other Operative Agreements without the prior consent of the Sellers'
Representatives, in the case of Parent, and Parent, in the case of any JLW
Parties; provided, that any party to this Agreement may make any public
announcement or disclosure which is with the advice of counsel, required by
applicable Law or regulations or applicable stock exchange requirements.
Section 13.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the other Operative Agreements, the schedules and
the other writings referenced herein or therein and the Confidentiality
Agreement (a) constitute the entire understanding and agreement of the
parties hereto and thereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between
such parties and (b) are not intended to confer upon any Person other than
the parties any rights or remedies hereunder.
Section 13.5 Amendment, Extension and Waiver. At any time prior to
the Closing Date, Parent, the Sellers' Representatives and the
Shareholders' Representatives may (a) amend this Agreement, (b) extend the
time for the performance of any of the obligations or other acts of the
parties hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (d) waive compliance with any of the agreements or conditions contained
herein. This Agreement may not be amended except by an instrument in
writing signed by Parent and by the Sellers' Representatives and the
Shareholders' Representatives on behalf of all of the Sellers and the
Companies and all of the Shareholders and Related JLW Owners. Any
agreement on the part of a party hereto to any extension or waiver under
this Section 13.5 shall be valid only if set forth in an instrument in
writing signed by Parent and the Shareholders' Representatives.
Section 13.6 Headings. The Article and Section headings contained
herein are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 13.7 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier, or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed received)
to the parties at the addresses set forth below (or to such other addresses
or, in the case of copies, to such other Persons as shall be set forth in
notices given in accordance with the provisions hereof). Such notices
shall be deemed given: at the time personally delivered, if delivered by
hand with receipt acknowledged; upon transmission thereof by the sender
and issuance by the transmitting machine of a confirmation slip that the
number of pages constituting the notice have been transmitted without
error, if telecopied, and the second business day after timely delivery to
the courier, if sent by air courier.
(i) If to the Sellers or any Company, to:
Procon International Limited
c/o Jones Lang Wootton
16th & 17th Floors
Dorset House, Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Attn: Gerry Kipling
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Benbridge Singapore PTE Limited
c/o Jones Lang Wootton
16th & 17th Floors
Dorset House, Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Attn: Gerry Kipling
Telephone: 852-2846-5000
Fax: 852-2968-1008
(ii) If to the Sellers' Representatives, to:
Chris Peacock
c/o Jones Lang Wootton
22 Hanover Square
London W1A 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Mike Smith
c/o Jones Lang Wootton
22 Hanover Square
London W1A 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
(iii) If to the Shareholders' Representatives, to:
Robert Orr
c/o Jones Lang Wootton
22 Hanover Square
London WIA 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Gerry Kipling
c/o Jones Lang Wootton
16th & 17th Floors
Dorset House, Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Ken Winterschladen
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-2-9323-5888
Fax: 61-2-9232-8120
(iv) If to a Shareholder or Management Shareholder, to such
Shareholder or Management Shareholder at the address, telephone number or
fax number set forth on the Applicable Joinder Agreement to which such
Shareholder or Management Shareholder is a party.
(v) In the case of (i), (ii), (iii) and (iv) above, with a
copy (which shall not constitute notice) given in the manner prescribed
above, to:
Richard Jones
c/o Jones Lang Wootton
9 Queen Victoria Street
London EC4N 4YY
England
Telephone: 44-171-248-6040
Fax: 44-171-454-8888
and to:
Christopher Redford
c/o Jones Lang Wootton
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Andrew Martin
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone:
Fax:
and to:
Slaughter and May
35 Basinghall Street
London EC2V
Attn: Andrew McClean, Esq.
Telephone: 171-600-1200
Fax: 171-600-0289
and to:
Sidley & Austin
875 Third Avenue
New York, NY 10022
Attn: James D. Johnson, Esq.
Telephone: 212-906-2000
Fax: 212-906-2021
If to Parent:
LaSalle Partners Incorporated
200 East Randolph Street
Chicago, Illinois 60601
Attn: Chief Executive Officer
Telephone: 312-782-5800
Fax: 312-228-0980
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Rodd M. Schreiber, Esq.
Telephone: 312-407-0700
Fax: 312-407-0411
and to:
Hagan & Associates
200 East Randolph Street
Suite 4322
Chicago, Illinois 60601
Attn: Robert K. Hagan
Telephone: (312) 228-2994
Fax: (312) 228-0982
Section 13.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned
by any party without the written consent of the other parties.
Section 13.9 Applicable Law. Except as otherwise specified in this
Agreement, this Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Illinois, without giving effect
to the conflict of laws provisions thereof.
Section 13.10 Jurisdiction. Subject to the arbitration provisions
set forth in Section 7.1 of the Escrow Agreement, each of the parties
hereto hereby expressly and irrevocably submits to the non-exclusive
personal jurisdiction of the United States District Court for the Northern
District of Illinois and to the jurisdiction of any other competent court
of the State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441, and to the non-exclusive
jurisdiction of the High Court of England and Wales in London (the "English
Courts"), in connection with all disputes arising out of or in connection
with this Agreement or the transactions contemplated hereby and agrees not
to commence any litigation relating thereto except in such courts; provided
that if the aforementioned Illinois Courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal court located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile. Notwith-
standing the foregoing, each of the parties hereto agrees that each of the
other parties shall have the right to bring any action or proceeding for
enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
Section 13.11 Service of Process. Each party irrevocably consents to
the service of process outside the territorial jurisdiction of the courts
referred to in Section 13.10 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified in or pursuant to Section 13.7 hereof. However, the
foregoing shall not limit the right of a party to effect service of process
on the other party by any other legally available method.
Section 13.12 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 13.13 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 13.14 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO
THE FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
ARTICLE XIV
CERTAIN DEFINITIONS
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Authority of any nature,
civil, criminal, regulatory or otherwise, in law or in equity.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such first mentioned
Person, it being agreed that, for avoidance of doubt, the Continuing
Affiliates shall not be Affiliates.
"Applicable Trust" means the trust operated pursuant to the JLW
Procon Trust Deed or JLW Transact Trust Deed, as applicable.
"Applicable Trust Deed" means the JLW Procon Trust Deed or JLW
Transact Trust Deed, as applicable.
"Australasia Region Shareholders" means, collectively, the
Persons named as "Shareholders" on the Final Master Shareholder List under
the Australasia Region Agreement.
"Business Day" means any day (other than a Saturday or Sunday)
on which banks are permitted to be open and transact business in Chicago,
Illinois and London, England.
"Closing Net Worth" means, in respect of a specified group of
companies, the sum of the book values of all assets of such companies,
minus the sum of all liabilities of such companies, determined in each case
on a consolidated or combined basis (as applicable) in accordance with the
Agreed Generally Accepted Accounting Principles based on the applicable
Closing Balance Sheet, or applicable Final Closing Balance Sheet, as
applicable. Notwithstanding the foregoing, for purposes of calculating
such Closing Net Worth: (a) the applicable Closing Balance Sheets or Final
Closing Balance Sheets shall include, among other things, accruals (if not
satisfied in full) for (i) Liabilities to former partners of JLW England,
JLW Ireland and JLW Scotland, (ii) Liabilities relating to the Jones Lang
Wootton (Hong Kong) Annuity Scheme, (iii) Transfer Taxes payable by any of
such companies in connection with the Integration and the other
transactions contemplated by this Agreement and the Other Purchase
Agreements, (iv) other Tax Liabilities of any such companies relating to
the Integration and the other transactions contemplated by this Agreement
and the Other Purchase Agreements, and (v) out-of-pocket fees and expenses
(including, without limitation, legal, financial advisory and accounting)
payable by any of such companies in connection with the Integration and the
other transactions contemplated by this Agreement and the Other Purchase
Agreements; and (b) there shall be added to the assets of the applicable
group of companies to the extent paid prior to Closing or accrued on the
applicable Closing Balance Sheet or Final Closing Balance Sheet, an amount
equal to (i) any Transfer Taxes of a type described in clause (iii) above
("JLW Transfer Taxes"), whether so accrued or previously paid (or payable
by Parent or any Parent Subsidiaries and deemed accrued or accrued as
provided below), to the extent that the total of such JLW Transfer Taxes so
accrued or paid is less than or equal to US$3 million in the aggregate for
all Companies, Europe/USA Region Companies and Australasia Region Companies
and their respective Subsidiaries and (ii) any out-of-pocket fees and
expenses of a type described in clause (v) above ("JLW Fees and Expenses"),
whether accrued or previously paid (or payable by Parent or any Parent
Subsidiaries and deemed accrued or accrued as provided below), to the
extent that the total of such fees and expenses is less than or equal to
US$12 million in the aggregate for all Companies, Asia Region Companies and
Australasia Region Companies and their respective Subsidiaries (it being
understood that the credits for any such JLW Transfer Taxes or JLW Fees and
Expenses so previously paid or accrued shall be allocated among the Closing
Balance Sheets (or Final Closing Balance Sheets) in such manner as the
Shareholders' Representatives shall specify); provided that the amount
required to be added back to the assets of the applicable group of
companies shall be net of any associated tax benefits to such group of
companies as included on the applicable Closing Balance Sheet (or Final
Closing Balance Sheet). For the purpose of determining such Closing Net
Worth, there shall be pro forma accruals on the applicable Closing Balance
Sheets and Final Closing Balance Sheets (a) in an aggregate amount equal to
any Transfer Taxes payable by Parent or any of its Subsidiaries in
connection with the Integration or the transactions contemplated by this
Agreement and the Other Purchase Agreements (to the extent not already
accrued for on any Closing Balance Sheet or Final Closing Balance Sheet)
and (b) in an aggregate amount equal to the aggregate amount of any out-of-
pocket fees and expenses (including, without limitation, legal, financial
advisory and accounting fees and expenses) that are (i) attributable to any
JLW Partnership, Company (as defined in the Europe/USA Region Agreement),
Asia Region Company or Australasia Region Company or any of their
respective Subsidiaries in connection with the Integration or the
transactions contemplated by this Agreement and the Other Purchase
Agreements but (ii) have not been accrued on any Closing Balance Sheet or
Final Closing Balance Sheet, as the case may be, and (iii) are payable by
Parent or any Parent Subsidiary. Any such pro forma accruals shall be
apportioned among the five Closing Balance Sheets (and corresponding Final
Closing Balance Sheets) in such manner as the Shareholders' Representatives
shall specify.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Disclosure Schedule" means the disclosure schedule
delivered by the Sellers' Representatives to Parent prior to the execution
of this Agreement.
"Company Material Adverse Effect" means (i) an individual or
cumulative material adverse change in or effect on the business,
properties, assets, liabilities, financial condition or results of
operations of the Companies, the Europe/USA Region Companies and the
Australasia Region Companies and their respective Subsidiaries, taken as a
whole, (ii) an individual or cumulative event or development that is
reasonably expected to have a material adverse change in or effect on the
business, properties, assets, liabilities, financial condition or results
of operations of the Companies, the Europe/USA Region Companies and the
Australasia Region Companies and their respective Subsidiaries, taken as a
whole, or (iii) any adverse change which would prevent any Shareholder,
Other Shareholder, JLW Seller, Company, Europe/USA Region Company or
Australasia Region Company from consummating the transactions contemplated
by this Agreement and the Other Purchase Agreements.
"Company Subsidiary" or "Company Subsidiaries" means any direct
or indirect Subsidiary of a Company.
"Consent" means any consent, approval, waiver, grant,
concession, Contract, License, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any
Person, including, without limitation, any Authority.
"Consideration" means, collectively, the Consideration Shares
and the Cash Consideration.
"Continuing Affiliate" means any of PT Procon Matra Indah
(Indonesia), PT Procon Indah (Indonesia), Procon Konsulindo (Indonesia), PT
Procon Graha Indah (Indonesia), PT Antanila Permai (Indonesia), Procon
Services Company (Hong Kong) and Singham Sulaiman Sdn Bhd (Malaysia).
"Contract" or "Contracts" means any agreement, arrangement or
understanding, whether written or oral, including, without limitation, any
agreement to manage the operation and/or leasing of commercial or retail
property, mortgage, indenture, note, guarantee, lease, License, franchise
purchase agreement or sale agreement.
"Controlled Affiliate" means, with respect to any Shareholder
or, if applicable, Related JLW Owner any Person controlled, directly or
indirectly, through one or more intermediaries, by such Shareholder or, if
applicable, such Related JLW Owner.
"DEL" means DEL-LPL Limited Partnership, a Delaware limited
partnership, or DEL-LPAML Limited Partnership, a Delaware limited
partnership, or both.
"Encumbrances" means all Liens and any other material
limitations or restrictions on rights of ownership (including any
restriction on the right to vote, sell or otherwise dispose of any share
capital or capital stock or other ownership interest) or other encumbrances
of any nature whatsoever.
"Environmental Laws" means all federal, national, interstate,
state, provincial, local and foreign Laws, legislation (whether, without
limitation, civil, criminal or administrative) statutes, treaties,
statutory instruments, directives, by-laws, judgments, regulations,
notices, orders, government circulars, codes of practice and guidance notes
or decisions of any competent regulatory body relating to pollution or
protection of or compensation of harm to human health, safety, or the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"ERISA Affiliate" means, with respect to any entity, any trade
or business, whether or not incorporated that, together with any such
entity would be deemed a "single employer" within the meaning of Section
4001(b)(1) of ERISA.
"Europe/USA Region Shareholders" means, collectively, the
Persons named as "Shareholders" on the Final Master Shareholder List under
the Europe/USA Region Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Final Master Shareholder List" means the definitive list of
Shareholders who, together with any Related JLW Owners, have executed and
delivered to Parent each of the Applicable Joinder Agreement, the
Stockholder Agreement, the Escrow Agreement, and any other documents,
instruments or writings required to be delivered by such Shareholders and
Related JLW Owners pursuant to this Agreement, which list is to be
delivered to Parent pursuant to Section 2.1 hereof and shall set forth with
respect to each Shareholder, (i) the name of such Shareholder and, if
applicable, the Related JLW Owner, (ii) the residence and citizenship of
such Shareholder and, if applicable the Related JLW Owner, (iii) the Shares
(by Company), or beneficial ownership, as applicable, currently owned by or
allocated to such Shareholder and, if applicable the Related JLW Owner,
(iv) the number of shares of Parent Common Stock issuable (other than
Adjustment Shares) in respect of such Shares, which shares shall be
identified as Initial Distribution Shares, Forfeiture Shares and Escrow
Shares and (v) the Cash Consideration (or a formula for calculating such
Cash Consideration) payable to such Shareholder.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended.
"Income Tax" or "Income Taxes" means any federal, state, local
or foreign income, franchise or similar Tax.
"Independent Director" means any individual who is not (i) a
past or present employee or officer of Parent or any Company, Europe/USA
Region Company or Australasia Region Company, or any of their respective
Affiliates, or (ii) any Affiliate of such an employee or officer, except in
each case as otherwise agreed by the Parent Nominating Committee and the
JLW Nominating Committee.
"Intangible Property Rights" means the following:
(i) Patent Rights. All United States, international
and foreign patents and patent applications, and utility models
("Patents");
(ii) Trademarks. Common law and registered
trademarks, service marks and tradenames and all applications for
registration of the foregoing ("Trademarks");
(iii) Computer Programs. Computer programs, including
all source and object code, data compilations and collections of data,
whether machine-readable or otherwise (the "Computer Programs");
(iv) Copyrights. United States and foreign registered
and unregistered copyrights, applications for copyright registration,
including copyrights in Computer Programs, business information and
topography or semi-conductor chip product "mask works" ("Copyrights");
(v) Personal Rights. Rights of publicity and privacy
including, without limitation, the right to use the names, likenesses,
signatures, voices, personal information and biographies of real persons;
and
(vi) Technology. Trade secrets and confidential
information, technology and know-how.
"Integration" means the series of actions contemplated to be
taken under the terms of the Integration Plan and the Integration
Agreements.
"IRS" means the United States Internal Revenue Service.
"JLW Combined 9/30 Balance Sheet Schedules" means the schedules
combining the Nine-Month Interim Financial Statements, so as to eliminate
or adjust for (A) intercompany activity between or among any one or more of
(1) JLW England and its Subsidiaries, (2) JLW Scotland and its Subsidiaries
and (3) JLW Ireland and its Subsidiaries, (B) intercompany activity between
or among (x) any one or more of such entities and (y) any one or more of
the Asian Region Companies and their respective Subsidiaries and (z) any
one or more of the Australasia Region Companies and their respective
Subsidiaries and (C) the gross-up of revenues and expenses (previously
accounted for under the cost in equity method of accounting) related to the
businesses which will be one-hundred percent (100%) owned as a result of
the transactions contemplated by this Agreement and the Other Purchase
Agreements, in each case as of September 30, 1998.
"JLW Combined 9/30 Financial Statement Schedules" means,
collectively, the JLW Combined 9/30 Income Statement Schedules and the JLW
Combined 9/30 Balance Sheet Schedules.
"JLW Combined 9/30 Income Statement Schedules" means the
schedules combining the consolidated or combined (as applicable) profit and
loss accounts contained in the Nine-Month Interim Financial Statements, so
as to eliminate or adjust for (A) intercompany activity between or among
any one or more of (1) JLW England and its Subsidiaries, (2) JLW Scotland
and its Subsidiaries, and (3) JLW Ireland and its Subsidiaries, (B)
intercompany activity between or among (x) any one or more of such entities
and (y) any one or more of the Asian Region Companies and their respective
Subsidiaries and (z) any one or more of the Australasia Region Companies
and their respective Subsidiaries and (C) the gross-up of revenues and
expenses (previously accounted for under the cost or equity method of
accounting) related to the businesses which will be one-hundred percent
owned as a result of the transactions contemplated by this Agreement and
the Other Purchase Agreements, in each case for the nine months period
ended September 30, 1998.
"JLW Parties" means, collectively, the Sellers, the Companies
and the Management Shareholders, and any one of them is individually
referred to as a JLW Party.
"JLW Sellers" means, collectively, (i) each of the JLW
Partnerships, (ii) the Sellers and (iii) the Persons named as "Sellers" in
the Australasia Region Agreement.
"Knowledge" means with respect to (i) any Management
Shareholder such Management Shareholder's actual knowledge without any
obligation to undertake any inquiry, (ii) Sellers, the Companies and the
Company Subsidiaries, the actual knowledge of the persons identified on
Exhibit 8 hereto after reasonable inquiry of the employees of the Companies
and Company Subsidiaries who are responsible for information technology and
intellectual property matters, regulatory matters, compliance with
environmental laws, employee benefits and labor matters and litigation
matters and (iii) Parent and the Parent Subsidiaries, the actual knowledge
of the persons identified on Exhibit 9 hereto after reasonable inquiry of
the employees of Parent and the Parent Subsidiaries who are responsible for
regulatory matters, employee benefits and labor matters and litigation
matters.
"Liabilities" shall mean any and all debts, losses,
liabilities, claims, damages, fines, costs, royalties, proceedings,
deficiencies or obligations (including those arising out of any Action,
such as any settlement or compromise thereof or judgment or award therein),
of any nature, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due, and whether or not resulting
from third-party claims, and any out-of-pocket costs and expenses
(including reasonable attorneys', accountants', or other fees and expenses
incurred in defending any Action or in investigating any of the same or in
asserting any rights hereunder).
"Licenses" means all licenses, permits, franchises and other
authorizations.
"Liens" means all mortgages, pledges, security interests,
liens, charges, options, conditional sales Contracts, claims, restrictions,
covenants, easements, rights of way, title defects or third party interests
or other Encumbrances or restrictions of any nature whatsoever.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, waste, toxic substances, hazardous substances,
dangerous substances, radioactive materials, asbestos, petroleum and
petroleum products and similar materials.
"Nine-Month Interim Financial Statements" means the unaudited
consolidated or combined (as applicable) balance sheet of Companies and the
Company Subsidiaries, as of September 30, 1998 and the related consolidated
or combined (as applicable) profit and loss account, statement of cash
flows, statement of movements on reserves and statement of total recognized
gains and losses for the nine month period then ended.
"NYSE" means the New York Stock Exchange, Inc.
"Offering Memorandum" means the Offering Memorandum relating to
the transactions contemplated by the Operative Agreements (as defined
herein and as defined in each Other Purchase Agreement) to be delivered to
the Designated JLW Shareholders.
"Operative Agreements" means, collectively, this Agreement, the
Joinder Agreements, the Stockholder Agreements and the Escrow Agreement.
"Other Joinder Agreements" means the Joinder Agreements
(Europe/USA) and the Joinder Agreements (Australasia), in the forms
attached to the Europe/USA Region Agreement and the Australasia Region
Agreement, respectively.
"Other Shareholders" means, collectively, the Europe/USA Region
Shareholders and the Australasia Region Shareholders.
"Parent Disclosure Schedule" means the disclosure schedule
delivered by Parent to the Shareholders' Representatives prior to the
execution of this Agreement.
"Parent Material Adverse Effect" means (i) an individual or
cumulative material adverse change in, or effect on, the business,
properties, assets, liabilities, financial condition or results of
operations of Parent and its Subsidiaries, taken as whole, or (ii) an
individual or cumulative event or development that is reasonably expected
to have a material adverse change in or effect on the business, properties,
assets, liabilities, financial condition or results of operations of Parent
and its Subsidiaries, taken as whole, or (iii) any adverse change which
would prevent Parent or any other Buyer (as defined herein and in the
Australasia Region Agreement) from consummating the transactions
contemplated by this Agreement and the Other Purchase Agreements.
"Parent Domestic Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option and
other equity compensation, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, supplemental pension or
retirement plan, program, Contract, agreement or arrangement, and each
other "employee benefit plan" (within the meaning of section 3(3) of ERISA)
that is sponsored, maintained or contributed to or required to be
contributed to by Parent or a Parent Subsidiary for the benefit of any
employee or former employee of the Parent or Parent Subsidiary and with
respect to which any Parent or Parent Subsidiary may incur liability, but
excluding any such plan, program, Contract, agreement or arrangement that
is (i) maintained outside of the United States (as described in Section
4(b)(4) of ERISA) or (ii) benefitting any employee or former employee of
any Compass entity.
"Parent Foreign Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option and
other equity compensation, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement,
or supplemental pension or retirement plan, program, Contract, agreement or
arrangement, and each other employee benefit plan or perquisite that (i) is
sponsored, maintained or contributed to or required to be contributed to by
Parent or a Parent Subsidiary for the benefit of any employee of former
employee of Parent or Parent Subsidiary and with respect to which Parent or
Parent Subsidiary may incur liability and (ii) is not a Parent Domestic
Plan; provided, however, that, for purposes of this Agreement, the term
"Parent Foreign Plan" shall not include any such plan benefitting any
employee or former employee of any Compass entity.
"Parent Significant Subsidiary" means any Parent Subsidiary
that constitutes a "significant subsidiary" within the meaning of Rule 1-02
of Regulation S-X of the SEC.
"Parent Subsidiary" or "Parent Subsidiaries" means any direct
or indirect Subsidiary of Parent.
"Permitted Liens" means (i) liens shown on the Interim
Financial Statements or the Parent Interim Balance Sheet, as applicable, as
securing specified liabilities (with respect to which no default exists),
(ii) liens for current taxes not yet due and (iii) minor imperfections of
title and encumbrances, if any, which are not substantial in amount, do not
detract from the value of the property subject thereto or impair the
operations related thereto and have arisen only in the ordinary and usual
course of business consistent with past practice.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Plan" shall mean each bonus, deferred compensation, incentive
compensation, stock purchase, stock option and other equity compensation
plan program, Contract or arrangement; each employment, consulting,
severance or termination pay plan, program, Contract or arrangement; each
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program,
agreement or arrangement, and each other employee benefit plan that is
sponsored, maintained or contributed to or required to be contributed to by
any Company or Company Subsidiary, for the benefit of any employee or
former employee of any Company or Company Subsidiary and with respect to
which any Company or Company Subsidiary may incur liability.
"Related JLW Owner" means the director, officer or employee of
a Seller, Company or Company Subsidiary both (i) who owns or holds an
interest (beneficial or otherwise), direct or indirect, in any Shareholder
or through which such Shareholder will acquire Shares in the Integration
and (ii) whose name is set forth opposite such Shareholder's name on the
Final Master Shareholder List.
"Related Parties" means any Shareholder, the Related JLW Owner
of such Shareholder (if applicable), the spouse of such Shareholder, the
spouse of such Related JLW Owner (if applicable), any descendant of such
Shareholder, any descendant of the Related JLW Owner (if applicable) and
any Controlled Affiliate of any of the foregoing Persons.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Sellers' Representatives" means Chris Peacock and Mike Smith
or, after execution of the SCCA, any of their respective alternates as
provided in the SCCA.
"Shareholders' Representatives" shall mean Robert Orr, Ken
Winterschladen and Gerry Kipling, and Richard Jones, Christopher Radford
and Andrew Martin, as their respective alternates, pursuant to the SCCA.
"Shareholder Determination Date" means the date upon which the
Final Master Shareholder List is accepted by Parent.
"Subsidiary" or "Subsidiaries" means, with respect to any
Person, any other Person, the voting securities, other voting ownership or
voting partnership interests of which that are sufficient to elect at least
a majority of its board of directors or other governing body (or, if there
are not such voting interests, 50% or more of the equity interest of which)
at the time of determination, are owned directly or indirectly by such
first mentioned Person.
"Tax" or "Taxes" means taxes of any kind, levies or other like
assessments, customs, duties, imposts, charges or fees, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real
or personal property, asset, document, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, withholding,
employment, social security, workers compensation, utility, severance,
production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed by or
payable to the United States, or any state, county, local or foreign
government or subdivision or agency thereof, imposed with respect to the
income, business, operations or assets of any Company or Company
Subsidiary, and in each instance such term shall include any interest,
penalties and additions to Tax attributable to any such Tax.
"Tax Return" means any return, report, information return,
schedule or other document (including any related or supporting
information) with respect to Taxes filed or required to be filed with any
Authority.
"Transfer Taxes" means any transfer, documentary, sales, use,
stamp, duties, recording, filing or other similar tax or fees (including
any penalties, interest or additions).
"UK GAAP" means generally accepted accounting principles, as in
effect in the United Kingdom.
"US GAAP" means generally accepted accounting principles, as in
effect in the United States.
<PAGE>
IN WITNESS WHEREOF, this Purchase and Sale Agreement (Asia) has
been duly executed and delivered by each of the Management Shareholders and
the duly authorized officer of each of the Sellers, the Companies, Parent,
US Acquisition Sub and US Acquisition Sub II, as of the day and year first
above written.
LASALLE PARTNERS INCORPORATED
By: /s/ William E. Sullivan
Name: William E. Sullivan
Title: Executive Vice President and Chief
Financial
Officer
JLLINT, INC.
By: /s/ Jeanann Diab
Name: Jeanann Diab
Title: Vice President
JLLIP, INC.
By: /s/ Jeanann Diab
Name: Jeanann Diab
Title: Vice President
JLW ASIA HOLDINGS LIMITED
By: /s/ Gerard A. Kipling
Name: Gerard A. Kipling
Title: Director
JLW PACIFIC LIMITED
By: /s/ Christopher M.G. Brown
Name: Christopher M.G. Brown
Title: Director
JLW TRANSACT (THAILAND) CO. LIMITED
By: /s/ Michael Smith
Name: Michael Smith
Title: Authorized Signatory
JLW TRANSACT PTE LTD.
By: /s/ Christopher M.G. Brown
Name: Christopher M.G. Brown
Title: Director
JLW TRANSACT LIMITED
By: /s/ Christopher M.G. Brown
Name: Christopher M.G. Brown
Title: Director
BENBRIDGE SINGAPORE PTE LIMITED, as Trustee
By: /s/ Christopher M.G. Brown
Name: Christopher M.G. Brown
Title: Director
PROCON INTERNATIONAL LIMITED, as Trustee
under the JLW Procon I Trust Deed
By: /s/ Gerard A. Kipling
Name: Gerard A. Kipling
Title: Director
PROCON INTERNATIONAL LIMITED, as Trustee
under the JLW Procon II Trust Deed
By: /s/ Gerard A. Kipling
Name: Gerard A. Kipling
Title: Director
<PAGE>
MANAGEMENT SHAREHOLDERS:
/s/ Mike Smith
Mike Smith
/s/ Chris Peacock
Chris Peacock
/s/ Robin Broadhurst
Robin Broadhurst
/s/ Chris Brown
Chris Brown
/s/ Michael Dow
Michael Dow
/s/ Gerry Kipling
Gerry Kipling
/s/ Peter Lee
Peter Lee
/s/ Robert Orr
Robert Orr
/s/ Clive Pickford
Clive Pickford
/s/ Ken Winterschladen
Ken Winterschladen
EXHIBIT 10.4
- ------------
[FORM OF PURCHASE AND SALE JOINDER AGREEMENT
(EUROPE/USA)]
PURCHASE AND SALE JOINDER AGREEMENT
(EUROPE/USA)
by and among
LASALLE PARTNERS INCORPORATED,
The Person named as "Shareholder" on the Signature Page hereto
and, if applicable,
The person named as "Related JLW Owner" on the Signature Page hereto
dated as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
PURCHASE AND SALE OF SHARES. . . . . . . . . . . . 2
Section 1.1 Europe/USA Region Agreement . . . 2
Section 1.2 Purchase and Sale of Shares . . . 2
Section 1.3 Purchase Price. . . . . . . . . . 3
Section 1.4 Representatives . . . . . . . . . 3
Section 1.5 Integration . . . . . . . . . . . 5
Section 1.6 Certain Covenants . . . . . . . . 5
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE RELATED
JLW OWNER . . . . . . . . . . . . . . . . . 5
Section 2.1 Ownership and Sale of Shares. . . 5
Section 2.2 Authorization . . . . . . . . . . 6
Section 2.3 No Violation. . . . . . . . . . . 7
Section 2.4 Consents and Approvals. . . . . . 8
Section 2.5 Shareholder Information . . . . . 8
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SHAREHOLDER AND THE
RELATED JLW OWNER. . . . . . . . . . . . . . . . . 9
Section 3.1 Investment Matters. . . . . . . . 9
Section 3.2 Regulation S. . . . . . . . . . . 10
ARTICLE IV
TERMINATION . . . . . . . . . . . . . . . . . 12
Section 4.1 Termination of Agreement. . . . . 12
<PAGE>
Page
----
ARTICLE V
SURVIVAL, INDEMNIFICATION AND
GENERAL RELEASE . . . . . . . . . . . . . . . . . 12
Section 5.1 Survival of Representations,
Warranties and Covenants. . . . . 12
Section 5.2 Indemnification . . . . . . . . . 12
Section 5.3 Release by the Shareholder. . . . 12
ARTICLE VI
DEFINITIONS . . . . . . . . . . . . . . . . . 13
Section 6.1 Certain Terms . . . . . . . . . . 13
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . 14
Section 7.1 Specific Enforcement;
Other Remedies. . . . . . . . . . 14
Section 7.2 Severability. . . . . . . . . . . 14
Section 7.3 Expenses. . . . . . . . . . . . . 15
Section 7.4 Press Releases and
Announcements . . . . . . . . . . 15
Section 7.5 Entire Agreement; No Third
Party Beneficiaries . . . . . . . 15
Section 7.6 Amendment and Modification. . . . 15
Section 7.7 Notices . . . . . . . . . . . . . 15
Section 7.8 Assignment. . . . . . . . . . . . 15
Section 7.9 Headings. . . . . . . . . . . . . 15
Section 7.10 Applicable Law. . . . . . . . . . 15
Section 7.11 Jurisdiction. . . . . . . . . . . 16
Section 7.12 Words in Singular and
Plural Form . . . . . . . . . . . 16
Section 7.13 Service of Process. . . . . . . . 16
Section 7.14 Counterparts. . . . . . . . . . . 16
Section 7.15 Waiver of Jury Trial. . . . . . . 16
Annex A Purchase and Sale Agreement (Europe/USA)
Annex B Shareholder and Share Information
<PAGE>
PURCHASE AND SALE JOINDER AGREEMENT (EUROPE/USA)
PURCHASE AND SALE JOINDER AGREEMENT, dated as of October 21,
1998 (this "Agreement"), by and among (i) LASALLE PARTNERS INCORPORATED, a
Maryland corporation ("Parent"), (ii) the Person named as "Shareholder" on
the signature page hereto (the "Shareholder"), and, if applicable, (iii)
the person named as "Related JLW Owner" on the signature page hereto (the
"Related JLW Owner").
Capitalized terms used but not defined herein have the
respective meanings ascribed to them in the Purchase and Sale Agreement
(Europe/USA), dated as of October 21, 1998, a copy of which is attached
hereto as Annex A (the "Europe/USA Region Agreement"), by and among Parent,
the Jones Lang Wootton-related entities named therein as parties, the
persons named as "Management Shareholders" on the signature pages thereto,
the Shareholder and, if applicable, the Related JLW Owner (in each case, by
execution and delivery of this Agreement), and each other Person who
executes and delivers a Purchase and Sale Joinder Agreement (Europe/USA)
identical to this Agreement (collectively, the "Other Europe/USA Joinder
Agreements").
WHEREAS, pursuant to the Integration Plan and the Integration
Agreements, various actions are to be taken and, upon completion of the
Integration, the Shareholders will collectively own all of the issued share
capital or capital stock, as applicable, of the Companies (the "Shares");
WHEREAS, the Shareholders collectively desire to grant to
Parent an irrevocable right to purchase all, but not less than all, of the
Shares, all upon the terms and subject to the conditions set forth in this
Agreement, the Europe/USA Region Agreement and the other Operative
Agreements;
WHEREAS, Parent desires to grant to the Shareholders an
irrevocable right to cause Parent to purchase all, but not less than all,
of the Shares, all upon the terms and subject to the conditions set forth
in this Agreement, the Europe/USA Region Agreement and the other Operative
Agreements;
WHEREAS, as a condition of and inducement to Parent's
willingness to consummate the transactions contemplated hereby and by the
Other Europe/USA Joinder Agreements and the Europe/USA Region Agreement,
all of the Shareholders (together with any Related JLW Owners) will be
required to have entered into, and Parent and the Shareholder (and, if
applicable, the Related JLW Owner) are entering into, (i) this Agreement or
an Other Europe/USA Joinder Agreement (and thereby the Europe/USA Region
Agreement), (ii) a Stockholder Agreement and (iii) the Escrow Agreement;
WHEREAS, as of the date hereof, Parent, JLLINT, Inc., an
Illinois corporation and an indirect wholly-owned subsidiary of Parent ("US
Acquisition Sub"), JLLIP, Inc., an Illinois corporation and an indirect
wholly-owned subsidiary of Parent ("US Acquisition Sub II"), and the other
parties named therein are entering into a Purchase and Sale Agreement (the
"Asia Region Agreement") , pursuant to which, upon the terms and subject to
the conditions set forth therein, US Acquisition Sub and US Acquisition Sub
II collectively will acquire (except as otherwise set forth therein) all of
the issued share capital of each of the Asia Region Companies;
WHEREAS, as of the date hereof, Parent, US Acquisition Sub, LPI
(Australia) Holdings Pty Limited, a corporation organized under the laws of
the Australian Capital Territory and an indirect wholly-owned subsidiary of
Parent ("Australia Acquisition Sub"), and the other parties named therein
are entering into a Purchase and Sale Agreement (the "Australasia Region
Agreement" and, together with the Asia Region Agreement, the "Other
Purchase Agreements"), pursuant to which, upon the terms and subject to the
conditions set forth therein, Australia Acquisition Sub and US Acquisition
Sub collectively will acquire all of the issued and outstanding capital
stock of the Australasia Region Companies; and
WHEREAS, pursuant to this Agreement, the Other Europe/USA
Joinder Agreements, the Other Joinder Agreements, the Europe/USA Region
Agreement and the Other Purchase Agreements, Parent has the right (and may
be required) to acquire, directly or indirectly, all of the asset and
property management, advisory and other real estate-related businesses of
the Companies, the Asia Region Companies and the Australasia Region
Companies and their respective Subsidiaries (such businesses being
collectively referred to herein as the "JLW Businesses"), including all
such businesses currently being carried on by the JLW Partnerships and
their respective direct and indirect Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein, in
the Europe/USA Region Agreement and in the other Operative Agreements to
which the Shareholder (and, if applicable, the Related JLW Owner) is a
party, intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Europe/USA Region Agreement. By executing this
Agreement, the Shareholder (and, if applicable, the Related JLW Owner)
authorizes the additional signature page hereto to be attached as a
counterpart to the Europe/USA Region Agreement, and agrees to be bound by
and subject to the terms of the Europe/USA Region Agreement as if the
Shareholder (and, if applicable, the Related JLW Owner) had executed such
Europe/USA Region Agreement on the date of its original execution.
Section 1.2 Purchase and Sale of Shares. (a) Parent shall have the
right (the "Call Right"), exercisable by written notice (a "Call Notice")
from Parent to the Sellers' Representatives, at any time following the
Integration Completion and prior to midnight on the Business Day next
following the Integration Completion Date (the "Exercise Period"), to
purchase all, but not less than all, of the Shares owned by the
Shareholder, upon the terms and subject to the conditions set forth herein
and in the Europe/USA Region Agreement.
(b) The Shareholder, together with the other Shareholders,
shall have the right (the "Put Right"), exercisable by written notice (a
"Put Notice") from the Sellers' Representatives to Parent, at any time
during the Exercise Period, to cause Parent to purchase all, but not less
than all, of the Shares owned by the Shareholder, upon the terms and
subject to the conditions set forth herein and in the Europe/USA Region
Agreement.
(c) If either (i) Parent exercises its Call Right by
delivering a Call Notice during the Exercise Period to the Sellers'
Representatives or (ii) the Shareholders exercise their Put Right by the
Sellers' Representatives delivering a Put Notice during the Exercise Period
to Parent, then upon the terms and subject to the conditions set forth
herein and in the Europe/USA Region Agreement, at the Closing, the
Shareholder shall sell, assign, transfer, convey and deliver to Parent, and
Parent shall purchase, acquire and accept from the Shareholder, all of the
Shares owned by the Shareholder, as set forth in column 5 of Annex B hereto
(except as otherwise specified herein, all references in this Agreement to
"Annex B" refer to the definitive Annex B, as modified pursuant to Section
2.2 of the Europe/USA Region Agreement), free and clear of all Encumbrances
(other than Encumbrances created by or through Parent) and together with
all benefits and rights attaching or accruing thereto, for (A) the number
of newly issued shares of common stock, $.01 par value per share ("Parent
Common Stock"), of Parent (the "Consideration Shares") set forth in column
3 of Annex B hereto, subject to adjustment in accordance with Sections 1.3
and 1.4 of the Europe/USA Region Agreement and (B) cash, in United States
dollars (the "Cash Consideration"), in the amount calculated in accordance
with the formula set forth in column 4 of Annex B hereto.
Section 1.3 Purchase Price. Upon the terms and subject to the
conditions set forth herein and in the Europe/USA Region Agreement, in
consideration for the sale, assignment, transfer, conveyance and delivery
of the Shares owned by the Shareholder to Parent at the Closing, Parent
shall deliver, or cause to be delivered, at the Closing, to (a) the
Shareholders' Representatives, on behalf of the Shareholder, (i) the number
of shares of Parent Common Stock specified in column 3(a) of Annex B hereto
(the "Initial Distribution Shares"), which Initial Distribution Shares
shall be issued in the name of Shareholder, (ii) the number of shares of
Parent Common Stock specified in column 3(b) of Annex B hereto (the
"Forfeiture Shares" and, together with the Initial Distribution Shares, the
"Initial Consideration Shares"), which Forfeiture Shares shall be deposited
in escrow with the escrow agent appointed pursuant to the SCCA (the
"Forfeiture Shares Escrow Agent") pursuant to the applicable provisions of
the SCCA and held and distributed in accordance with the terms thereof, and
(iii) the Cash Consideration, in United States dollars, calculated in
accordance with the formula set forth in column 4 of Annex B hereto, all of
which Cash Consideration shall be paid to and retained by the Shareholders'
Representatives (on behalf of the Shareholder) as a reserve for certain
expenses as provided in Section 1.4 (c) hereof; and (b) Harris Trust and
Savings Bank (the "Escrow Agent") (i) the number of shares of Parent
Common Stock specified in column 3(c) of Annex B hereto to be deposited in
escrow as Escrow Shares pursuant to clause (b) of Section 1.3 of the
Europe/USA Region Agreement, and (ii) the number of shares of Parent Common
Stock specified in column 3(d) of Annex B hereto to be deposited in escrow
as Adjustment Shares pursuant to clause (a) of Section 1.3 of the
Europe/USA Region Agreement which Escrow Shares and Adjustment Shares shall
be held and disposed of in accordance with the applicable provisions of the
Escrow Agreement and the applicable provisions of the Europe/USA Region
Agreement. The aggregate number of shares of Parent Common Stock to be
deposited with the Escrow Agent pursuant to clause (b)(i) of this Section
1.3, clause (b)(i) of Section 1.2 of the Europe/USA Region Agreement and
each of the Other Purchase Agreements and clause (i) of the last sentence
of Section 6.7 of the Europe/USA Region Agreement and each of the Other
Purchase Agreements shall be 750,000 shares (the "Escrow Shares") and the
aggregate number of shares of Parent Common Stock to be deposited with the
Escrow Agent pursuant to clause (b)(ii) of this Section 1.3, clause (b)(ii)
of Section 1.2 of the Europe/USA Region Agreement and each of the Other
Purchase Agreements and clause (ii) of the last sentence of Section 6.7 of
the Europe/USA Region Agreement and each of the Other Purchase Agreements
shall be 1,241,683 shares (the "Adjustment Shares"); provided that the
Forfeiture Shares issuable pursuant to the Asia Region Agreement shall also
be deposited with the Escrow Agent as additional Escrow Shares to be held
and disposed of in accordance with the applicable provisions of the Escrow
Agreement.
Section 1.4 Representatives. (a) The parties acknowledge and agree
that prior to the Shareholder Determination Date, the Shareholders, the
Other Shareholders, the Related JLW Owners and the ESOT Trustee (on behalf
of the ESOT) will execute a Sellers' Contribution and Coordination
Agreement (the "SCCA") relating to, among other things, the selection,
replacement, rights and obligations of the Sellers' Representatives and the
Shareholders' Representatives, which SCCA shall be in a form reasonably
acceptable to Parent. The SCCA, as executed, shall not be amended without
the consent of Parent, which consent will not be unreasonably withheld or
delayed.
(b) By execution of this Agreement, the Shareholder and, if
applicable, the Related JLW Owner and the JLW Party agree that:
(i) Parent shall be able to rely conclusively on the
instructions or actions of (A) the Sellers' Representatives, or any of
them, as to any instructions or actions required or permitted to be taken
by the Sellers' Representatives hereunder or under any other Operative
Agreement or the SCCA when executed, which instructions or actions shall be
binding on such Shareholder, Related JLW Owner and JLW Parties (the
"Closing Authorized Actions"), and (B) the Shareholders' Representatives as
to the settlement of any claims of indemnification against the Escrow Fund
(as defined in the Escrow Agreement) by any Indemnified Persons pursuant to
the Escrow Agreement, the resolution of any dispute regarding Adjustment
Shares under Section 1.4 of the Europe/USA Region Agreement or any other
actions required or permitted to be taken by the Shareholders'
Representatives hereunder or under the SCCA or any of the Operative
Agreements (the "Other Authorized Actions" and, together with the Closing
Authorized Actions, the "Authorized Actions"). No party hereunder or the
Escrow Agent shall have any cause of action against Parent or any other
Indemnified Person to the extent Parent or any other such Indemnified
Person has relied upon such instructions or actions of the Sellers'
Representatives or the Shareholders' Representatives.
(ii) [Intentionally Left Blank].
(iii) The provisions of this Section 1.4 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that the Shareholder or,
if applicable, the Related JLW Owner or ESOT Trustee may have against the
Sellers' Representatives or the Shareholders' Representatives for any
breach of the SCCA.
(iv) Remedies available at law for any breach of the
provisions of this Section 1.4 are inadequate. Therefore, Parent and the
Companies shall be entitled to temporary and permanent injunctive relief
without the necessity of proving damages if any of Parent and/or any
Company brings an action to enforce the provisions of this Section 1.4.
(v) The provisions of this Section 1.4 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of the Shareholder and, if applicable,
the Related JLW Owner and ESOT Trustee, and any references in this
Agreement or in the Europe/USA Region Agreement to a Shareholder or the
Shareholders or the Related JLW Owner or the Related JLW Owners shall mean
and include the successors to the Shareholder's or Shareholders' or the
Related JLW Owner's or Related JLW Owners' rights hereunder and thereunder,
whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
(c) The Shareholder hereby agrees that all of the Cash
Consideration that would have otherwise been payable to the Shareholder
pursuant to Section 1.3 of this Agreement and all or a portion of the Cash
Consideration that would have otherwise been payable to the Other
Shareholders pursuant to Section 1.3 of the Other Joinder Agreements and to
the Sellers under Section 1.1(a) of the Australasia Region Agreement (the
"SCCA Expenses Reserve") shall instead be retained by the Shareholders'
Representatives to be held and disbursed as provided in the SCCA. Such
SCCA Expenses Reserve shall be apportioned among the Shareholders, such
Other Shareholders and such Sellers pro rata based on the aggregate amount
of Consideration Shares and Cash Consideration originally allocated to each
of them. The Shareholder hereby authorizes Parent to deliver to the
Shareholders' Representatives the SCCA Expenses Reserve in lieu of paying
the Cash Consideration otherwise deliverable to the Shareholder.
Section 1.5 Integration. (a) In order to accomplish and effect the
Integration, the Shareholder and, if applicable, the Related JLW Owner will
take (or cause to be taken) the actions contemplated to be taken by the
Shareholder and such Related JLW Owner under the terms of the Integration
Plan and the Integration Agreements, subject to satisfaction or waiver of
the conditions set forth therein, in the order provided therein and on a
basis such that (except as otherwise set forth below) the Integration
Completion will occur no later than the third Business Day or as soon
thereafter as is practicable following the Integration Commencement Date,
but in no event later than five Business Days thereafter; provided that any
Post-Closing Integration Actions may be postponed until after the Closing
Date; provided, further, that the Shareholder and such Related JLW Owner
shall have no responsibility after the Closing Date with respect to the
performance of any Post-Closing Integration Actions contemplated to be
taken by any Company or Company Subsidiary under the Integration Plan and
the Integration Agreements.
(b) If required under the Integration Plan or any Integration
Agreement, the Shareholder and, if applicable, the Related JLW Owner shall
have entered into an Escrow Agreement in the form attached to Annex B to
the Europe/USA Region Agreement (the "Integration Escrow Agreement"),
pursuant to which certain agreements, instruments and other documents
described in the Integration Plan have been or will be deposited with the
Escrow Agents described therein for the purpose of facilitating the
implementation of the Integration Plan.
Section 1.6 Certain Covenants. The Shareholder hereby covenants and
agrees that, from the date hereof to the Closing, such Shareholder shall
not Transfer any Shares or right to receive Shares (or any ownership or
other interest in any JLW Partnership that may be exchangeable for Shares
pursuant to the Integration Plan) to any Person. The Related JLW Owner, if
any, hereby covenants and agrees that, from the date hereof to the Closing,
such Related JLW Owner shall not Transfer any interest (beneficial or
otherwise), direct or indirect, in the Shareholder to any Person. The
Related JLW Owner, if any, shall cause the Shareholder to perform each of
the obligations of such Shareholder set forth in this Agreement and in each
of the other Operative Agreements and the Integration Agreements to which
such Shareholder is a party.
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE RELATED JLW OWNER
The Shareholder and, if applicable, the Related JLW Owner,
jointly and severally, hereby make the following representations and
warranties to Parent:
Section 2.1 Ownership and Sale of Shares. To the extent that the
Shareholder is identified on Annex B hereto as owning Shares of one or more
of the Companies, (i) the Shareholder (A) if a natural person or a
corporation (a "Corporate Shareholder"), will, as of the Closing Date, own,
legally and beneficially, and (B) if a trustee (a "Trustee Shareholder")
under a trust (the "Trust"), will, as of the Closing Date, own, legally,
and the Related JLW Owner (and, to the extent applicable, any of his or her
descendants and/or spouse who are also beneficiaries of the Trust) will, as
of the Closing Date, own, beneficially, the Shares identified on Annex B as
being owned by the Shareholder, and (ii) the Shareholder (if a natural
person, in the case of Shares of NewCo l, with full title guarantee
(pursuant to the Law of Property (Miscellaneous Provisions) Act 1994 of
England and Wales)) shall sell to Parent at the Closing such Shares
together with all rights of any nature whatsoever now or after the date of
this Agreement attached or accruing to them, free and clear of all
Encumbrances. Parent shall, from and after the Closing, be entitled to
exercise all rights attached or accruing to the Shares transferred to
Parent by the Shareholder, including, without limitation, the right to
receive all dividends paid or made on or after the Closing Date. Except as
set forth on Annex B hereto, neither the Shareholder nor, if applicable,
the Related JLW Owner owns or has an interest in any other Shares. Except
as set forth on Annex B hereto, neither such Shareholder nor, if
applicable, the Related JLW Owner has (except solely in such person's
capacity as a partner in any JLW Partnership) and/or after the Integration
will have any rights in or to any of the specific assets, properties or
rights of or used by any JLW Partnership, Company or Company Subsidiary.
Other than as specifically provided in the Europe/USA Region Agreement, the
other Operative Agreements or the Integration Agreements, neither such
Shareholder nor, if applicable, the Related JLW Owner has any right or
claim to any payment or consideration (with respect to an ownership,
partnership, trust or similar interest, right of participation or
otherwise) from any of the Companies or Company Subsidiaries as a result of
or in connection with the consummation of the transactions contemplated by
this Agreement, the Europe/USA Region Agreement, the other Operative
Agreements and the Integration Agreements.
Section 2.2 Authorization. (a) The Related JLW Owner, if any, has
full power, capacity and authority to execute, deliver and perform this
Agreement, the other Operative Agreements and the Integration Agreements to
which such Related JLW Owner is a party and to carry out the transactions
contemplated hereby and thereby. No other action on the part of the
Related JLW Owner is necessary to execute and deliver each of this
Agreement, the other Operative Agreements and the Integration Agreements to
which such Related JLW Owner is a party and the consummation of the
transactions contemplated hereby and thereby, including, without
limitation, the Integration. Each of this Agreement, the other Operative
Agreements and the Integration Agreements to which the Related JLW Owner is
a party has been duly and validly executed and delivered by such Related
JLW Owner and constitutes a valid and binding agreement of such Related JLW
Owner, enforceable against such Related JLW Owner in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding in
equity or at law.
(b) The Shareholder (i) if a Corporate Shareholder, has all
requisite corporate power and authority, (ii) if a natural person, has
full power, capacity and authority and (iii) if a Trustee Shareholder, is
the lawful and duly appointed trustee of the Trust, and has full power,
authority and legal right under the trust agreement, will or other
instrument pursuant to which such Trustee Shareholder acts as trustee (the
"Trust Agreement"), to execute, deliver and perform each of this Agreement,
the other Operative Agreements and the Integration Agreements to which the
Shareholder (or, in the case of a Trustee Shareholder, the Trust) is a
party and to carry out the transactions contemplated hereby and thereby.
If the Shareholder is a Corporate Shareholder, such Shareholder is duly
organized or incorporated and validly existing (and, if applicable) in good
standing under the laws of its jurisdiction of incorporation or formation
and has all requisite corporate or similar power and authority to carry on
its business as it is now being conducted and to own the properties and
assets it now owns. If the Shareholder is a Trustee Shareholder, there are
no trustees of such Trust other than the Trustee Shareholder who has
entered into this Agreement on behalf of such Trust, and such Trustee
Shareholder has caused to be delivered to Parent a true, correct and
complete copy of the Trust Agreement or other evidence satisfactory to
Parent of such Trustee Shareholder's power, authority and legal right
referred to above. No other action on the part of the Shareholder (or, in
the case of a Corporate Shareholder or Trustee Shareholder, the
shareholders of such Shareholder or beneficiaries of such Trust, as the
case may be) is necessary to authorize and approve the execution and
delivery by the Shareholder (in the case of a Trustee Shareholder, the
Trust) of each of this Agreement, the other Operative Agreements and the
Integration Agreements to which the Shareholder (in the case of a Trustee
Shareholder, the Trust) is a party and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the
Integration. Each of this Agreement, the other Operative Agreements and
the Integration Agreements to which the Shareholder (in the case of a
Trustee Shareholder, the Trust) is a party has been duly and validly
executed and delivered by the Shareholder and constitutes a valid and
binding agreement of the Shareholder (in the case of a Trustee Shareholder,
the Trust), enforceable against the Shareholder (in the case of a Trustee
Shareholder, the Trust) in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization and other similar
Laws affecting creditors generally and by general principles of equity
(with respect to a Trustee Shareholder, other than principles of fiduciary
duty), regardless of whether in a proceeding in equity or at law.
Section 2.3 No Violation. (a) Neither the execution and delivery by
the Related JLW Owner, if any, of this Agreement or any other Operative
Agreement or Integration Agreement to which the Related JLW Owner is a
party nor the consummation by the Related JLW Owner of the transactions
contemplated hereby or thereby shall: (i) violate, conflict with,
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, cause or permit the acceleration
of, or give rise to any right of termination, imposition of fees or
penalties under, any indebtedness, contract, instrument or other obligation
to which the Related JLW Owner is a party or by which the Related JLW Owner
or the Related JLW Owner's assets are bound or affected, or result in the
creation or imposition of any Lien upon any properties or assets (including
any Encumbrance upon any Shares) of the Related JLW Owner; or (ii) violate
any statute, law, judgment, decree, order, regulation, rule or other
similar authoritative matters of any foreign, federal, state or local
governmental or quasi-governmental, administrative, regulatory or judicial
court, department, commission, agency, board, bureau, instrumentality or
other authority to which the Related JLW Owner is subject; except, in the
case of clause (i) or (ii) above, for any of the same that, individually or
in the aggregate, would not reasonably be expected to materially impair the
ability of such Related JLW Owner to perform his or her obligations
hereunder or thereunder or prevent or materially delay the consummation of
the transactions contemplated hereby and thereby.
(b) Neither the execution and delivery by the Shareholder of
this Agreement or, any other Operative Agreement or Integration Agreement
to which the Shareholder (in the case of a Trustee Shareholder, the Trust)
is a party nor the consummation by the Shareholder of the transactions
contemplated hereby or thereby shall: (i) in the case of a Corporate
Shareholder, violate or be in conflict with any provision of the
certificate of incorporation and bylaws or memorandum or articles of
association (or similar organizational documents), as applicable, of the
Shareholder; (ii) in the case of a Trustee Shareholder, violate or be in
conflict with the Trust Agreement or any provision of the certificate of
incorporation and bylaws or memorandum of articles of association (or
similar organizational documents), as applicable, of the Trustee
Shareholder; (iii) violate, conflict with, constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, cause or permit the acceleration of, or give rise to any
right of termination, imposition of fees or penalties under, any
indebtedness, contract, instrument or other obligation to which the
Shareholder (in the case of a Trustee Shareholder, the Trust) is a party or
by which the Shareholder (in the case of a Trustee Shareholder, the Trust)
or the Shareholder's (or, in the case of a Trustee Shareholder, the
Trust's) assets are bound or affected, or result in the creation or
imposition of any Lien upon any properties or assets (including any
Encumbrance upon any Shares) of the Shareholder (or, in the case of a
Trustee Shareholder, the Trust); or (iv) violate any statute, law,
judgment, decree, order, regulation, rule or other similar authoritative
matters of any foreign, federal, state or local governmental or quasi-
governmental, administrative, regulatory or judicial court, department,
commission, agency, board, bureau, instrumentality or other authority to
which the Shareholder (or, in the case of a Trustee Shareholder, the Trust)
is subject; except, in the case of clause (iii) or (iv) above, for any of
the same that, individually or in the aggregate, would not reasonably be
expected to materially impair the ability of such Shareholder to perform
his, her or its obligations hereunder or thereunder or prevent or
materially delay the consummation of the transactions contemplated hereby
and thereby.
Section 2.4 Consents and Approvals. No Consents from or of any third
party or any Authority are necessary for the execution and delivery by the
Shareholder and, if applicable, the Related JLW Owner of this Agreement or
any other Operative Agreement or Integration Agreement to which the
Shareholder or such Related JLW Owner (or, in the case of a Trustee
Shareholder, the Trust) is a party or the consummation by the Shareholder
and such Related JLW Owner of the transactions contemplated hereby and
thereby, except for the making of such filings or the receipt of such
approvals as to which the failure to make or obtain would not, individually
or in the aggregate, reasonably be expected to materially impair the
ability of the Shareholder and such Related JLW Owner to perform his, her
or its obligations hereunder or thereunder or prevent or materially delay
the consummation of the transactions contemplated hereby or thereby.
Section 2.5 Shareholder Information. The Shareholder is either (i)
a natural person and a partner of a JLW Partnership or an employee of the
JLW Businesses who has acquired or will acquire in the Integration the
Shares identified on Annex B as being owned by the Shareholder, or (ii) a
Corporate Shareholder or a Trustee Shareholder who (A) has acquired or will
acquire in the Integration the Shares identified on Annex B as being owned
by the Shareholder and whose name is set forth on Annex B hereto opposite
the name of the Related JLW Owner and (B) qualifies as a Permitted
Transferee of the Related JLW Owner. In the event that clause (ii) of the
immediately preceding sentence is applicable, the Related JLW Owner is a
partner of a JLW Partnership or employee of the JLW Businesses, whose name
is set forth on Annex B hereto opposite the name of the Shareholder to whom
such Related JLW Owner has transferred or will transfer in the Integration
the Shares (or such Related JLW Owner's right to acquire the Shares)
identified on Annex B as being owned by the Shareholder.
<PAGE>
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SHAREHOLDER AND THE RELATED JLW OWNER
The Shareholder and, if applicable, the Related JLW Owner, jointly
and severally, hereby make the following representations, warranties and
covenants to Parent:
Section 3.1 Investment Matters. (a) The Shareholder and, if
applicable, the Related JLW Owner are resident in the country identified
under the Shareholder's and Related JLW Owner's names in columns 1 and 2,
respectively, of Annex B hereto, and neither the Shareholder nor, if
applicable, the Related JLW Owner is resident in a territory outside such
country.
(b) The Shareholder and, if applicable, the Related JLW Owner
agree not to engage in any hedging transactions with regard to the
Consideration Shares unless in compliance with the Securities Act.
(c) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the Consideration Shares will be subject to the
provisions of the Stockholder Agreement, including, without limitation, the
restrictions on transfer and voting restrictions contained therein.
(d) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the Consideration Shares are being offered and
sold to the Shareholder in reliance on specific exemptions from the
registration requirements of the United States federal and state securities
laws and that Parent is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of the Shareholder and, if applicable, the Related JLW Owner set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Shareholder to acquire Consideration Shares.
(e) The Shareholder and, if applicable, the Related JLW Owner
have received and have had an opportunity to carefully review the Offering
Memorandum, dated as of [!], 1998, delivered to the Shareholder and, if
applicable, the Related JLW Owner prior to the execution of this Agreement,
Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, Parent's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998, Parent's 1997 Annual Report to Stockholders and
proxy statement dated March 31, 1998 and Parent's Current Report on Form 8-
K dated September 3, 1998, and the Shareholder and, if applicable, the
Related JLW Owner have had a reasonable opportunity to ask questions of and
receive answers from Parent concerning Parent, and to obtain any additional
information reasonably necessary to verify the accuracy of the information
furnished to the Shareholder or such Related JLW Owner concerning Parent
and all such questions, if any, have been answered to the full satisfaction
of the Shareholder and, if applicable, the Related JLW Owner.
(f) The Shareholder and, if applicable, the Related JLW
Owner acknowledge that no representations or warranties have been made to
the Shareholder or such Related JLW Owner by Parent or any agent, employee
or Affiliate of Parent other than those contained in the Europe/USA Region
Agreement, and in entering into this transaction the Shareholder and, if
applicable, the Related JLW Owner are not relying upon any information,
other than that referred to in the foregoing paragraph, contained in the
Europe/USA Region Agreement and the other Operative Agreements, and the
results of independent investigations by the Shareholder and, if
applicable, the Related JLW Owner and his, her or its representatives;
provided that the Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the only representations or warranties that
Parent has made with respect to such information are as set forth in
Sections 4.7 and 4.19 of the Europe/USA Region Agreement.
Section 3.2 Regulation S.
(a) The Shareholder and, if applicable, the Related JLW Owner
acknowledge that each certificate representing Consideration Shares
delivered to or on behalf of the Shareholder shall include the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE 'SHARES') HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE 'ACT'), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH BELOW. BY THE ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT SUCH HOLDER IS NOT A U.S. PERSON AND IS ACQUIRING THE
SHARES IN AN OFFSHORE TRANSACTION, (2) AGREES THAT SUCH HOLDER WILL NOT
RESELL OR OTHERWISE TRANSFER THE SHARES EXCEPT (A) TO JONESLANG LASALLE
INCORPORATED (THE 'COMPANY') OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED
STATES, TO A TRANSFEREE THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
COMPANY A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SHARES (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE COMPANY), (D) OUTSIDE THE UNITED STATES, IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULES 904 AND 905 UNDER THE ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE) OR (F) PURSUANT TO ANY OTHER EXEMPTION FROM
REGISTRATION UNDER THE ACT (IF AVAILABLE) AND (3) AGREES THAT SUCH HOLDER
WILL GIVE EACH PERSON TO WHOM THE SHARES ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THE SHARES PURSUANT TO CLAUSES (C), (E) OR (F) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS 'OFFSHORE TRANSACTION,'
'UNITED STATES' AND 'U.S. PERSON' HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE ACT.
IN ADDITION, THE SHARES ARE SUBJECT TO THE PROVISIONS OF A
STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND BETWEEN THE
COMPANY AND THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF, AND AN
INDEMNITY AND ESCROW AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND AMONG
THE COMPANY, THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF AND THE
OTHER PARTIES NAMED THEREIN, WHICH INCLUDE, WITHOUT LIMITATION, VARIOUS
ADDITIONAL RESTRICTIONS ON TRANSFER OF THE SHARES AND THE GRANTING OF
CERTAIN VOTING RIGHTS, A COPY OF WHICH WILL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT CHARGE.
(b) The Shareholder and, if applicable, the Related JLW Owner
understand that the Consideration Shares are being issued to the
Shareholder in reliance on Regulation S and have not been registered under
the Securities Act or with any securities regulatory authority of any state
of the United States or other jurisdiction and, therefore, that such
Consideration Shares (and all securities issued in exchange therefor or in
substitution thereof) cannot be resold in the absence of such registration,
except pursuant to an exemption from, or in a transaction not subject to,
such registration requirements. Except as set forth in the Stockholder
Agreement, the Shareholder, and if applicable, the Related JLW Owner are
aware that Parent is under no obligation to effect any such registration
under the Securities Act or otherwise with respect to such Consideration
Shares (or any securities issued in exchange therefor or in substitution
thereof), or to file for or comply with any exemption from such
registration.
(c) The Shareholder is, and any person for whose account it
is acquiring the Consideration Shares is, outside the "United States" (as
defined under Regulation S), and this Agreement and each of the Other
Operative Agreements was executed, and the investment decision to enter
into this Agreement was made, outside the United States.
(d) Neither the Shareholder nor, if applicable, the Related
JLW Owner is in the business of buying and selling securities.
(e) Neither the Shareholder nor, if applicable, the Related
JLW Owner will offer, sell or deliver any of the Consideration Shares, or
any interest or participation therein, until one year after the Closing
Date (the "Restricted Period"), except in an "offshore transaction" (as
defined under Regulation S) in accordance with Rule 904 of Regulation S,
pursuant to an effective registration statement under the Securities Act,
pursuant to Rule 144 under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act and
otherwise in accordance with this Agreement, the Europe/USA Region
Agreement and the Stockholder Agreement.
(f) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that any resale or other transfer, or attempted
resale or other transfer, which Parent determines in good faith was made
other than in compliance with the restrictions stated herein and in the
Stockholder Agreement shall not be recognized by Parent in respect of
Consideration Shares, and that Parent may deliver a corresponding stop-
transfer order to the Transfer Agent to that effect. For so long as
Consideration Shares are subject to the provisions of the Stockholder
Agreement, no resale or other transfer of such Consideration Shares shall
be made unless in compliance with Article IV of the Stockholder Agreement,
including the requirement that prior to any such resale or other transfer,
Parent is furnished evidence reasonably satisfactory to Parent that such
resale or transfer is being made in compliance with the applicable
provisions of the Stockholder Agreement. At any time after such
Consideration Shares are no longer subject to the provisions of the
Stockholder Agreement, upon the written request of the holder thereof,
Parent shall remove the second legend set forth in Section 3.2(a) hereof
from the certificate(s) representing such Consideration Shares or replace
such certificate(s) with certificate(s) not bearing such legend.
(g) If the Shareholder or, if applicable, the Related JLW
Owner intend to transfer any of the Consideration Shares, or any interest
or participation therein, prior to the expiration of the Restricted Period,
the Shareholder or the Related JLW Owner, as the case may be, shall deliver
to Parent a written opinion of counsel to the transferee, which counsel and
opinion shall be reasonably satisfactory to Parent, to the effect that the
offer, sale and transfer of the Consideration Shares are not subject to
registration under the Securities Act or are permitted under Regulation S.
At any time after the Restricted Period, upon the written request of the
holder thereof, together with a written opinion of counsel, which counsel
and opinion shall be reasonably satisfactory to Parent, to the effect that
the first legend set forth in Section 3.2(a) hereof is no longer required
on the certificate(s) representing such Consideration Shares under the
applicable requirements of the Securities Act, Parent shall remove such
legend from the certificate(s) representing such Consideration Shares or
replace such certificate(s) with certificate(s) not bearing such legend.
(h) The Shareholder has not engaged in, and during the
Restricted Period will not engage in, any "directed selling efforts" (as
defined under Regulation S) with respect to any Consideration Shares.
ARTICLE IV
TERMINATION
Section 4.1 Termination of Agreement. This Agreement shall terminate
automatically upon the termination of the Europe/USA Region Agreement
pursuant to and in accordance with the terms of Article XI thereof. If
this Agreement is so terminated and abandoned as provided herein, no party
hereto shall have any liability or further obligation to any other party to
this Agreement, except as set forth in the Europe/USA Region Agreement.
Sections 7.3 and 7.4 hereof shall survive the termination of this
Agreement.
ARTICLE V
SURVIVAL, INDEMNIFICATION AND GENERAL RELEASE
Section 5.1 Survival of Representations, Warranties and Covenants.
None of the representations and warranties of Parent contained in this
Agreement, the Europe/USA Region Agreement or any other Operative
Agreement, or any instrument delivered pursuant hereto or thereto, shall
survive the Closing. All representations and warranties of the Shareholder
and, if applicable, the Related JLW Owner contained in this Agreement or
any other Operative Agreement, or any instrument delivered pursuant hereto
or thereto, shall survive the Closing for the period specified in the
Escrow Agreement. The covenants and agreements of Parent contained in this
Agreement, the Europe/USA Region Agreement or any other Operative
Agreement, or any instrument delivered pursuant hereto or thereto, shall
not survive the Closing, unless such covenants or agreements specify terms
or are contemplated to be performed in whole or in part on or after the
Closing, in which case any such covenants or agreements shall survive for
such specified terms or until performed in full. The covenants and
agreements of the Shareholder and, if applicable, the Related JLW Owner
contained in this Agreement, the Europe/USA Region Agreement or any other
Operative Agreement shall survive the Closing without limitation as to time
unless the covenant or agreement specifies a term, in which case such
covenant or agreement shall survive for such specified term.
Section 5.2 Indemnification. Parent and the other Indemnified
Persons (as defined in the Escrow Agreement), shall be indemnified,
defended and held harmless from and against any and all Liabilities and
against all claims in respect thereof to the extent, and subject to the
terms, conditions and limitations set forth in the Escrow Agreement.
Section 5.3 Release by the Shareholder. The Shareholder and, if
applicable, the Related JLW Owner, for themselves and for each of their
respective Associated Parties, to the fullest extent permitted by
applicable law, hereby, irrevocably, unconditionally and completely
releases, waives, relinquishes and forever discharges each of (i) the
Buyers from any claims or causes of action arising out of or relating to
the Integration (other than Post-Closing Actions) or the allocation of the
Consideration among the Shareholders and Other Shareholders under the
Purchase Agreements, and (ii) the Companies, the Asia Region Companies and
the Australasia Region Companies together with their respective
Subsidiaries, successors and past, present and future assigns, directors,
officers, employees, agents and representatives in their capacities as such
(other than the Shareholder and, if applicable, the Related JLW Owner) of
any of the foregoing (collectively, the "Released Persons"), from all past,
present and future disputes, claims, controversies, demands, rights,
obligations, liabilities, actions and causes of action of every kind and
nature (whether accrued or unaccrued) whatsoever against any one or more of
the Released Persons, which are related directly or indirectly to events
occurring prior to the Closing Date (other than, in each case, any
Surviving Claims), including: (A) any unknown, unsuspected or undisclosed
claim; (B) any claim or right that may be asserted or exercised by the
Shareholder and, if applicable, the Related JLW Owner in such Shareholder's
or Related JLW Owner's capacity as a shareholder, director, officer or
employee of any Company, Asia Region Company or Australasia Region Company,
or any of their respective Subsidiaries, as a partner or former partner in
any predecessor of any Company, Asia Region Company or Australasia Region
Company, or any of their respective Subsidiaries, or as a direct or
indirect beneficiary of any trust or trust arrangement, whether implied or
actual, relating directly or indirectly to any portion of the businesses or
assets of the JLW Businesses (including, without limitation, the right to
receive profits therefrom or an ownership or other participatory interest
or right therein) or in any other capacity; and (C) any claim, right or
cause of action based upon any breach of any express, implied, oral or
written contract or agreement; provided that the releases set forth in the
foregoing clauses (i) and (ii) shall not apply to any Surviving Claims.
ARTICLE VI
DEFINITIONS
Section 6.1 Certain Terms. When used in this Agreement, the
following terms shall have the meanings specified:
"Associated Parties" when used herein with respect to the
Shareholder or the JLW Related Owner, means and includes: (i) the
Shareholder's or Related JLW Owner's, successors, executors,
administrators, beneficiaries, heirs and estate; and (ii) the Shareholder's
or Related JLW Owner's future assigns.
"Buyers" means, collectively, Parent, US Acquisition Sub and
Australia Acquisition Sub.
"Operative Agreements" means, collectively, this Agreement, the
Europe/USA Region Agreement, the Stockholder Agreement, the Escrow
Agreement and the Indemnification Agreement Guarantees.
"Other Joinder Agreements" means the Purchase and Sale Joinder
Agreement (Asia) and the Purchase and Sale Joinder Agreement (Australasia),
in the form attached to the Asia Region Agreement and the Australasia
Region Agreement, respectively.
"Other Shareholders" means, collectively, the Persons whose
names appear on one of the Preliminary Master Shareholder Lists attached to
the Purchase Agreements, and who execute and deliver the applicable Other
Joinder Agreements and the other applicable Shareholder Transaction
Documents.
"Permitted Transfer" means: (a) a Transfer of Consideration
Shares between the Related JLW Owner and any descendant of such Related JLW
Owner; (b) a Transfer of Consideration Shares between the Related JLW Owner
and the spouse or surviving spouse of such Related JLW Owner or of any
descendant of such Related JLW Owner; (c) a Transfer of Consideration
Shares between the Related JLW Owner and any trust of which there are no
beneficiaries and continue to be, during the term of the Stockholder
Agreement, no beneficiaries other than such Related JLW Owner and/or one or
more of the Persons described in clauses (a) and (b); (d) a Transfer of
Consideration Shares between the Related JLW Owner and any corporation or
limited liability company of which there are and continue to be, during the
term of the Stockholder Agreement, no stockholders (or other Persons
holding any direct or indirect ownership interest therein) other than such
Related JLW Owner and/or one or more of the Persons described in clauses
(a) and (b).
"Permitted Transferee" means any Person who shall have acquired
and who shall hold Consideration Shares pursuant to a Permitted Transfer.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Regulation S" means Regulation S under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended
and any successor statute, and the rules and regulations of the SEC
promulgated thereunder.
"Surviving Claim" means any of the following: (i) any claim
arising out of rights expressly granted to a Shareholder or, if applicable,
Related JLW Owner, under the Integration Agreements; (ii) any right to
compensation or employee benefits accrued in the ordinary course of
employment; (iii) any right to reimbursement of employee expenses that are
reimbursable pursuant to applicable existing policies (as such policies may
be modified from time to time) prior to the Closing Date consistent with
the limitations set forth in Article V of the Europe/USA Region Agreement;
(iv) any other claim arising under any employment or service agreement
between such Shareholder or, if applicable, Related JLW Owner, and any
Released Person; (v) any claim for indemnification that the Shareholder or,
if applicable, Related JLW Owner may have against any Released Person under
the applicable corporate charter, by-laws or similar organizational
documents or under applicable insurance, if any, or in respect of actions
taken by such Shareholder or, if applicable, Related JLW Owner within the
scope of his or her employment or as a director or officer of any Released
Person.; or (vi) any right expressly set forth in the Europe/USA Region
Agreement or any other Operative Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Specific Enforcement; Other Remedies. The Shareholder
and, if applicable, the Related JLW Owner acknowledges and agrees that
Parent would be irreparably damaged in the event any of the provisions of
this Agreement were not performed by the Shareholder and such Related JLW
Owner in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that Parent shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States (or any state thereof) or country having jurisdiction, in
addition to any other remedy to which Parent may be entitled at law or
equity.
Section 7.2 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby
(unless such a construction is unreasonable).
Section 7.3 Expenses. Except as provided in the Europe/USA Region
Agreement, each of the parties hereto shall pay his, her or its own legal,
accounting and other miscellaneous expenses incident to this Agreement, the
other Operative Agreements and the Integration Agreements.
Section 7.4 Press Releases and Announcements. After the date of this
Agreement and prior to the Closing, neither the Shareholder nor, if
applicable, the Related JLW Owner shall directly or indirectly make or
cause to be made any public announcement or disclosure, or issue any notice
with respect to this Agreement or any other Operative Agreement or the
transactions contemplated by this Agreement and the other Operative
Agreements, without the prior written consent of Parent.
Section 7.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the Europe/USA Region Agreement and the other
Operative Agreements, and the schedules and the other writings referenced
herein and therein, (a) constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto and (b) are not intended to confer upon any person other
than the parties any rights or remedies hereunder.
Section 7.6 Amendment and Modification. This Agreement may not be
amended, modified or supplemented except by an agreement in writing signed
by each of the parties hereto.
Section 7.7 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier, or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed
received), in each case addressed to the party to be notified, in the case
of Parent, at the address set forth in the Europe/USA Region Agreement and,
in the case of the Shareholder or, if applicable, the Related JLW Owner, at
the address set forth on the signature page hereto, or such other address
of a party as such party shall have specified by prior written notice to
the other party in accordance with this Section 7.7. Such notices shall be
deemed given: at the time personally delivered, if delivered by hand with
receipt acknowledged; upon transmission thereof by the sender and issuance
by the transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error, if telecopied;
when answered back if telexed; and the second business day after timely
delivery to the courier, if sent by air courier.
Section 7.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned
by any party without the written consent of the other parties.
Section 7.9 Headings. The Article and Section headings contained
herein are for reference purposes only and shall not effect in any way the
meaning or interpretation of this Agreement.
Section 7.10 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Illinois, without giving effect to the conflict of laws provisions thereof.
Section 7.11 Jurisdiction. Subject to the arbitration provisions set
forth in Section 7.1 of the Escrow Agreement, each of the parties hereto
hereby expressly and irrevocably submits to the non-exclusive personal
jurisdiction of the United States District Court for the Northern District
of Illinois, and to the jurisdiction of any other competent court of the
State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441, and to the non-exclusive
jurisdiction of the High Court of England and Wales in London (the "English
Courts"), in connection with all disputes arising out of or in connection
with this Agreement or the transactions contemplated hereby and agrees not
to commence any litigation relating thereto except in such courts; provided
that if the aforementioned Illinois Courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal court located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each of party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each of the parties hereto agrees that each
of the other parties shall have the right to bring any action or proceeding
for enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
Section 7.12 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 7.13 Service of Process. Each party irrevocably consents to
the service of process outside the territorial jurisdiction of the courts
referred to in Section 7.11 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified herein. However, the foregoing shall not limit the
right of a party to effect service of process on the other party by any
other legally available method.
Section 7.14 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Section 7.15 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO THE
FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
<PAGE>
IN WITNESS WHEREOF, the Shareholder and, if applicable, the
Related JLW Owner and Parent have caused this Purchase and Sale Joinder
Agreement (Europe/USA) to be duly executed and delivered as of the day and
year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
<PAGE>
IN WITNESS WHEREOF, the Shareholder and, if applicable, the
Related JLW Owner and Parent have caused this Purchase and Sale Joinder
Agreement (Europe/USA) to be duly executed and delivered as of the day and
year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
EXHIBIT 10.5
- ------------
[FORM OF PURCHASE AND SALE JOINDER AGREEMENT
(AUSTRALASIA)]
PURCHASE AND SALE JOINDER AGREEMENT
(AUSTRALASIA)
by and among
LASALLE PARTNERS INCORPORATED,
The Person named as "Shareholder" on the Signature Page hereto
and, if applicable,
The person named as "Related JLW Owner" on the Signature Page hereto
dated as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
ISSUANCE AND CONVERSION OF THE CONVERTIBLE NOTE. . 2
Section 1.1 Australasia Region Agreement. . . 2
Section 1.2 [Intentionally Left Blank]. . . . 2
Section 1.3 Redemption of Convertible Notes . 2
Section 1.4 Representatives . . . . . . . . . 3
Section 1.5 [Intentionally Left Blank]. . . . 4
Section 1.6 Certain Covenants . . . . . . . . 4
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE RELATED JLW OWNER . . . 4
Section 2.1 Interest in Shares and
Consideration . . . . . . . . . . 4
Section 2.2 Authorization . . . . . . . . . . 4
Section 2.3 No Violation. . . . . . . . . . . 5
Section 2.4 Consents and Approvals. . . . . . 6
Section 2.5 Shareholder Information . . . . . 6
ARTICLE III
CERTAIN REPRESENTATION, WARRANTIES AND COVENANTS
OF THE SHAREHOLDER AND THE RELATED JLW OWNER . . . 6
Section 3.1 Investment Matters. . . . . . . . 7
Section 3.2 Regulation S. . . . . . . . . . . 8
ARTICLE IV
TERMINATION . . . . . . . . . . . . . . . . . 10
Section 4.1 Termination of Agreement. . . . . 10
<PAGE>
Page
----
ARTICLE V
SURVIVAL, INDEMNIFICATION AND GENERAL RELEASE. . . 10
Section 5.1 Survival of Representations,
Warranties and Covenants. . . . . 10
Section 5.2 Indemnification . . . . . . . . . 10
Section 5.3 General Release by the Shareholder 10
ARTICLE VI
DEFINITIONS . . . . . . . . . . . . . . . . . 11
Section 6.1 Certain Terms . . . . . . . . . . 11
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . 12
Section 7.1 Specific Enforcement;
Other Remedies. . . . . . . . . . 12
Section 7.2 Severability. . . . . . . . . . . 12
Section 7.3 Expenses. . . . . . . . . . . . . 12
Section 7.4 Press Releases and
Announcements . . . . . . . . . . 12
Section 7.5 Entire Agreement; No Third
Party Beneficiaries . . . . . . . 13
Section 7.6 Amendment and Modification. . . . 13
Section 7.7 Notices . . . . . . . . . . . . . 13
Section 7.8 Assignment. . . . . . . . . . . . 13
Section 7.9 Headings. . . . . . . . . . . . . 13
Section 7.10 Applicable Law. . . . . . . . . . 13
Section 7.11 Jurisdiction. . . . . . . . . . . 13
Section 7.12 Words in Singular and
Plural Form . . . . . . . . . . . 14
Section 7.13 Service of Process. . . . . . . . 14
Section 7.14 Counterparts. . . . . . . . . . . 14
Section 7.15 Waiver of Jury Trial. . . . . . . 14
Annex A Purchase and Sale Agreement (Australasia)
Annex B Shareholder and Share Information
Annex C Form of Convertible Note
<PAGE>
PURCHASE AND SALE JOINDER AGREEMENT (AUSTRALASIA)
PURCHASE AND SALE JOINDER AGREEMENT, dated as of October 21,
1998 (this "Agreement"), by and among (i) LASALLE PARTNERS INCORPORATED, a
Maryland corporation ("Parent"), (ii) the Person named as "Shareholder" on
the signature page hereto (the "Shareholder"), and, if applicable, (iii)
the person named as "Related JLW Owner" on the signature page hereto (the
"Related JLW Owner").
Capitalized terms used but not defined herein have the
respective meanings ascribed to them in the Purchase and Sale Agreement
(Australasia), dated as of October 21, 1998, a copy of which is attached
hereto as Annex A (the "Australasia Region Agreement"), by and among
Parent, JLLINT, Inc., an Illinois corporation and an indirect wholly-owned
subsidiary of Parent ("US Acquisition Sub"), LPI (Australia) Holdings Pty
Limited, a corporation organized under the laws of the Australian Capital
Territory ("Australia Acquisition Sub"), the Jones Lang Wootton-related
entities named therein as parties, the persons named as "Management
Shareholders" on the signature pages thereto, the Shareholder and, if
applicable, the Related JLW Owner (in each case, by execution and delivery
of this Agreement), and each Person who executes and delivers a Purchase
and Sale Joinder Agreement (Australasia) identical to this Agreement
(collectively, the "Other Australasia Joinder Agreements").
WHEREAS, pursuant to the Australasia Region Agreement, the
Sellers described therein have agreed to sell the Shares of the Companies
described therein to US Acquisition Sub or Australia Acquisition Sub, as
applicable, in exchange for the Cash Consideration and Convertible Notes as
described therein;
WHEREAS, (i) pursuant to the Australasia Region Agreement, JLW
(NZ) Holdings Parent has directed US Acquisition Sub to issue to the
Shareholder, or (ii) pursuant to an agreement heretofore entered into
between the Shareholder and the relevant Seller (the "Note Purchase
Agreement"), the Shareholder has agreed to purchase from such Seller, in
either case, a portion of the Convertible Note otherwise issuable to such
Seller;
WHEREAS, as a condition of and inducement to the Buyers'
willingness to consummate the transactions contemplated hereby and by the
Other Australasia Joinder Agreements and the Australasia Region Agreement,
all of the Shareholders (together with any Related JLW Owners) will be
required to have entered into, and Parent and the Shareholder (and, if
applicable, the Related JLW Owner) are entering into, (i) this Agreement or
an Other Australasia Joinder Agreement (and thereby the Australasia Region
Agreement), (ii) a Stockholder Agreement and (iii) the Escrow Agreement;
WHEREAS, as of the date hereof, Parent, US Acquisition Sub,
JLLIP, Inc., an Illinois corporation and an indirect wholly-owned
subsidiary of Parent ("US Acquisition Sub II"), and the other parties named
therein are entering into a Purchase and Sale Agreement (the "Asia Region
Agreement"), pursuant to which, upon the terms and subject to the
conditions set forth therein, US Acquisition Sub and US Acquisition Sub II
collectively will acquire (except as otherwise set forth therein) all of
the issued share capital of each of the Asia Region Companies;
WHEREAS, as of the date hereof, Parent and the other parties
named therein are entering into a Purchase and Sale Agreement (the
"Europe/USA Region Agreement" and, together with the Asia Region Agreement,
the "Other Purchase Agreements"), pursuant to which, upon the terms and
subject to the conditions set forth therein, Parent has the right (and may
be required) to acquire all of the issued and outstanding share capital or
capital stock, as applicable, of each of the Europe/USA Region Companies;
and
WHEREAS, pursuant to this Agreement, the Other Australasia
Joinder Agreements, the Other Joinder Agreements, the Australasia Region
Agreement and the Other Purchase Agreements, Parent has the right (and may
be required) to acquire, directly or indirectly, all of the asset and
property management, advisory and other real estate-related businesses of
the Companies, the Asia Region Companies and the Europe/USA Region
Companies and their respective Subsidiaries (such businesses being
collectively referred to herein as the "JLW Businesses"), including all
such businesses currently being carried on by the JLW Partnerships and
their respective direct and indirect Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein, in
the Australasia Region Agreement and in the other Operative Agreements to
which the Shareholder (and, if applicable, the Related JLW Owner) is a
party, intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I
ISSUANCE AND CONVERSION OF THE CONVERTIBLE NOTE
Section 1.1 Australasia Region Agreement. By executing this
Agreement, the Shareholder (and, if applicable, the Related JLW Owner)
authorizes the additional signature page hereto to be attached as a
counterpart to the Australasia Region Agreement, and agrees to be bound by
and subject to the terms of the Australasia Region Agreement as if the
Shareholder (and, if applicable, the Related JLW Owner) had executed such
Australasia Region Agreement on the date of its original execution.
Section 1.1
Section 1.2 [Intentionally Left Blank.]
Section 1.3 Redemption of Convertible Notes. Column 3 of Annex B
hereto (except as otherwise specified herein, all references in this
Agreement to "Annex B" refers to the definitive Annex B, as modified
pursuant to Section 2.2 of the Australasia Region Agreement) specifies the
aggregate principal amount of the Convertible Note issuable to the
Shareholder pursuant to Section 1.1(b) of the Asia Region Purchase
Agreement. If either Australia Acquisition Sub or US Acquisition Sub, as
applicable, as the issuer of the Convertible Note, or the Shareholder, as
the holder of such Convertible Note, exercises the Conversion Right (as
defined in the Convertible Note) in accordance with the provisions of such
Convertible Note, then the entire principal amount of such Convertible Note
shall be converted into the number of newly issued shares of common stock,
$.01 par value per share ("Parent Common Stock"), of Parent, determined by
dividing the principal amount of such Convertible Note by the Conversion
Amount (as defined in the Convertible Note), which number of shares of
Parent Common Stock (the "Consideration Shares") shall be specified in
column 3 of Annex B hereto, subject to adjustment in accordance with
Sections 1.3 and 1.4 of the Australasian Region Agreement. Upon such
conversion, Australia Acquisition Sub or US Acquisition Sub, as applicable,
shall deliver, or cause to be delivered, to: (a) the Shareholders'
Representatives, on behalf of the Shareholder, (i) the number of shares of
Parent Common Stock specified in column 3(a) of Annex B hereto (the
"Initial Distribution Shares"), which Initial Distribution Shares shall be
issued in the name of the Shareholder and (ii) the number of shares of
Parent Common Stock specified in column 3(b) of Annex B hereto (the
"Forfeiture Shares" and, together with the Initial Distribution Shares, the
"Initial Consideration Shares"), which Forfeiture Shares shall be deposited
in escrow with the escrow agent appointed pursuant to the SCCA (the
"Forfeiture Shares Escrow Agent") pursuant to the applicable provisions of
the SCCA, and held and distributed in accordance with the terms thereof;
and (b) Harris Trust and Savings Bank (the "Escrow Agent") (i) the number
of shares of Parent Common Stock specified in column 3(c) of Annex B
hereto, to be deposited in escrow as Escrow Shares pursuant to clause (b)
of Section 1.3 of the Australasia Region Agreement, and (ii) the number of
shares of Parent Common Stock specified in column 3(d) of Annex B to be
deposited in escrow as Adjustment Shares pursuant to clause (a) of Section
1.3 of the Australasia Region Agreement, which Escrow Shares and Adjustment
Shares shall be held and disposed of in accordance with the applicable
provisions of the Escrow Agreement and the applicable provisions of the
Australasia Region Agreement. The aggregate number of shares of Parent
Common Stock to be deposited with the Escrow Agent pursuant to clause
(b)(i) of Section 1.2 of the Australasia Region Agreement, clause (b)(i) of
Section 1.2 of each of the Other Purchase Agreements and clause (i) of the
last sentence of Section 6.7 of the Australasia Region Agreement and each
of the Other Purchase Agreements shall be 750,000 shares (the "Escrow
Shares")), and (ii) the aggregate number of shares of Parent Common Stock
to be deposited with the Escrow Agent pursuant to clause (a) of Section 1.3
of the Australasia Region Agreement, which shares, together with the shares
deposited in escrow pursuant to clause (b)(ii) of Section 1.2 of each of
the Other Purchase Agreements, and clause (ii) of Section 6.7 of the
Australasia Region Agreement, and each of the Other Purchase Agreements
shall be 1,241,683 shares (the "Adjustment Shares"); provided that the
Forfeiture Shares issuable pursuant to the Asia Region Agreement shall also
be initially deposited with the Escrow Agent as additional Escrow Shares to
be held and disposed of in accordance with the applicable provisions of the
Escrow Agreement.
Section 1.4 Representatives. (a) The parties acknowledge and agree
that prior to the Shareholder Determination Date the Sellers, the
Shareholders, the Other Shareholders, the Related JLW Owners and the ESOT
Trustee (on behalf of the ESOT) will execute a Sellers' Contribution and
Coordination Agreement (the "SCCA") relating to, among other things, the
selection, replacement, rights and obligations of the Sellers'
Representatives and the Shareholders' Representatives, which SCCA shall be
in a form reasonably acceptable to Parent. The SCCA, as executed, shall
not be amended without the consent of Parent, which consent will not be
unreasonably withheld or delayed.
(b) By execution of this Agreement, the Shareholder and, if
applicable, the Related JLW Owner agree that:
(i) The Buyers shall be able to rely conclusively on
the instructions or actions of (A) the Sellers' Representatives, or any of
them, as to any instructions or actions required or permitted to be taken
by the Sellers' Representatives hereunder or under any other Operative
Agreement or the SCCA when executed, which instructions or actions shall be
binding on each such Shareholder, Related JLW Owner and JLW Party (the
"Closing Authorized Actions"), and (B) the Shareholders' Representatives as
to the settlement of any claims of indemnification against the Escrow Fund
(as defined in the Escrow Agreement) by any Indemnified Persons pursuant to
the Escrow Agreement, the resolution of any dispute regarding Adjustment
Shares under Section 1.4 of the Australasia Region Agreement or any other
actions required or permitted to be taken by the Shareholders'
Representatives hereunder or under the SCCA when executed or any of the
Operative Agreements (the "Other Authorized Actions" and, together with the
Closing Authorized Actions, the "Authorized Actions"). No party hereunder
or the Escrow Agent shall have any cause of action against any of the
Buyers or any other Indemnified Person to the extent any such Buyer or any
other such Indemnified Person has relied upon such instructions or actions
of the Sellers' Representatives or the Shareholders' Representatives.
(ii) [Intentionally Left Blank]
(iii)The provisions of this Section 1.4 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that the Shareholder or,
if applicable, the Related JLW Owner or ESOT Trustee may have against the
Sellers' Representatives or the Shareholders' Representatives for any
breach of the SCCA or otherwise.
(iv) Remedies available at law for any breach of the
provisions of this Section 1.4 are inadequate. Therefore, Parent and the
Companies shall be entitled to temporary and permanent injunctive relief
without the necessity of proving damages if any of Parent and/or any
Company brings an action to enforce the provisions of this Section 1.4.
(v) The provisions of this Section 1.4 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of the Shareholder and, if applicable,
the Related JLW Owner and ESOT Trustee, and any references in this
Agreement or in the Australasia Region Agreement to a Shareholder or the
Shareholders or the Related JLW Owner or the Related JLW Owners shall mean
and include the successors to the Shareholder's or Shareholders' or the
Related JLW Owner's or Related JLW Owners' rights hereunder and thereunder,
whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
Section 1.5 [Intentionally Left Blank.]
Section 1.6 Certain Covenants. The Shareholder hereby covenants and
agrees that, from the date hereof to the Closing, such Shareholder shall
not Transfer, directly or indirectly, the right to receive the Convertible
Note (or any Consideration Shares issuable upon the conversion thereof) or,
if applicable, any rights under the Note Purchase Agreement, or any
ownership or other interest in any Seller or Affiliate thereof. The
Related JLW Owner, if any, shall cause the Shareholder to perform each of
the obligations of such Shareholder set forth in this Agreement and in each
of the other Operative Agreements to which such Shareholder is a party.
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE RELATED JLW OWNER
The Shareholder and, if applicable, the Related JLW Owner,
jointly and severally, hereby make the following representations and
warranties to Parent:
Section 2.1 Interest in Shares and Consideration. (a) Neither the
Shareholder nor, if applicable, the Related JLW Owner, owns or has any
interest in any Shares, other than as a trust beneficiary in respect of one
or more Sellers. Except as set forth on Annex B hereto, neither the
Shareholder nor, if applicable, the Related JLW Owner has any rights in or
to any of the specific assets, properties or rights of or used by any
Company or Company Subsidiary. Other than as specifically provided in the
Asia Region Agreement or the other Operative Agreements, neither the
Shareholder nor, if applicable, the Related JLW Owner has any right or
claim to any payment or consideration (with respect to an ownership,
partnership, trust or similar interest, right of participation or
otherwise) from any of the Companies or Company Subsidiaries, as a result
of or in connection with the consummation of the transactions contemplated
by this Agreement, the other Operative Agreements and the Integration
Agreements.
Section 2.2 Authorization. (a) The Related JLW Owner, if any, has
full power, capacity and authority to execute, deliver and perform this
Agreement and the other Operative Agreements to which such Related JLW
Owner is a party and to carry out the transactions contemplated hereby and
thereby. No other action on the part of the Related JLW Owner is necessary
to execute and deliver each of this Agreement and the other Operative
Agreements to which such Related JLW Owner is a party and the consummation
of the transactions contemplated hereby and thereby. Each of this
Agreement and the other Operative Agreements to which the Related JLW Owner
is a party has been duly and validly executed and delivered by such Related
JLW Owner and constitutes a valid and binding agreement of such Related JLW
Owner, enforceable against such Related JLW Owner in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding in
equity or at law.
(b) The Shareholder (i) if a corporation (a "Corporate
Shareholder"), has all requisite corporate power and authority, (ii) if a
natural person, has full power, capacity and authority and (iii) if a
trustee (a "Trustee Shareholder") under a trust (the "Trust"), is the
lawful and duly appointed trustee of the Trust, and has full power,
authority and legal right under the trust agreement, will or other
instrument pursuant to which such Trustee Shareholder acts as trustee (the
"Trust Agreement"), to execute, deliver and perform each of this Agreement
and the other Operative Agreements to which the Shareholder (or, in the
case of a Trustee Shareholder, the Trust) is a party and to carry out the
transactions contemplated hereby and thereby. If the Shareholder is a
Corporate Shareholder, such Shareholder is duly organized or incorporated
and validly existing (and, if applicable) in good standing under the laws
of its jurisdiction of incorporation or formation and has all requisite
corporate or similar power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns. If
the Shareholder is a Trustee Shareholder, there are no trustees of such
Trust other than the Trustee Shareholder who has entered into this
Agreement on behalf of such Trust, and such Trustee Shareholder has caused
to be delivered to Parent a true, correct and complete copy of the Trust
Agreement or other evidence satisfactory to Parent of such Trustee
Shareholder's power, authority and legal right referred to above. No other
action on the part of the Shareholder (or, in the case of a Corporate
Shareholder or Trustee Shareholder, the shareholders of such Shareholder or
beneficiaries of such Trust, as the case may be) is necessary to authorize
and approve the execution and delivery by the Shareholder (in the case of a
Trustee Shareholder, the Trust) of each of this Agreement and the other
Operative Agreements to which the Shareholder (in the case of a Trustee
Shareholder, the Trust) is a party and the consummation of the transactions
contemplated hereby and thereby. Each of this Agreement and the other
Operative Agreements to which the Shareholder (in the case of a Trustee
Shareholder, the Trust) is a party has been duly and validly executed and
delivered by the Shareholder and constitutes a valid and binding agreement
of the Shareholder (in the case of a Trustee Shareholder, the Trust),
enforceable against the Shareholder (in the case of a Trustee Shareholder,
the Trust) in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization and other similar Laws
affecting creditors generally and by general principles of equity (with
respect to a Trustee Shareholder, other than principles of fiduciary duty),
regardless of whether in a proceeding in equity or at law.
Section 2.3 No Violation. (a) Neither the execution and delivery by
the Related JLW Owner, if any, of this Agreement or any other Operative
Agreement to which the Related JLW Owner is a party nor the consummation by
the Related JLW Owner of the transactions contemplated hereby or thereby
shall: (i) violate, conflict with, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under,
cause or permit the acceleration of, or give rise to any right of
termination, imposition of fees or penalties under, any indebtedness,
contract, instrument or other obligation to which the Related JLW Owner is
a party or by which the Related JLW Owner or the Related JLW Owner's assets
are bound or affected, or result in the creation or imposition of any Lien
upon any of the Shares or any properties or assets of the Related JLW
Owner; or (ii) violate any statute, law, judgment, decree, order,
regulation, rule or other similar authoritative matters of any foreign,
federal, state or local governmental or quasi-governmental, administrative,
regulatory or judicial court, department, commission, agency, board,
bureau, instrumentality or other authority to which the Related JLW Owner
is subject; except, in the case of clause (i) or (ii) above, for any of the
same that, individually or in the aggregate, would not reasonably be
expected to materially impair the ability of such Related JLW Owner to
perform his or her obligations hereunder or thereunder or prevent or
materially delay the consummation of the transactions contemplated hereby
and thereby.
(b) Neither the execution and delivery by the Shareholder of
this Agreement or any other Operative Agreement to which the Shareholder
(in the case of a Trustee Shareholder, the Trust) is a party nor the
consummation by the Shareholder of the transactions contemplated hereby or
thereby shall: (i) in the case of a Corporate Shareholder, violate or be in
conflict with any provision of the certificate of incorporation and bylaws
or memorandum of articles of association (or similar organizational
documents), as applicable, of the Shareholder; (ii) in the case of a
Trustee Shareholder, violate or be in conflict with the Trust Agreement or
any provision of the certificate of incorporation and bylaws or memorandum
articles of association (or similar organizational documents), as
applicable, of the Trustee Shareholder; (iii) violate, conflict with,
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, cause or permit the acceleration
of, or give rise to any right of termination, imposition of fees or
penalties under, any indebtedness, contract, instrument or other obligation
to which the Shareholder (or, in the case of a Trustee Shareholder, the
Trust) is a party or by which the Shareholder (or, in the case of a Trustee
Shareholder, the Trust) or the Shareholder's (or, in the case of a Trustee
Shareholder, the Trust's) assets are bound or affected, or result in the
creation or imposition of any Lien upon any of the Shares or any properties
or assets of the Shareholder (or, in the case of a Trustee Shareholder, the
Trust); or (iv) violate any statute, law, judgment, decree, order,
regulation, rule or other similar authoritative matters of any foreign,
federal, state or local governmental or quasi-governmental, administrative,
regulatory or judicial court, department, commission, agency, board,
bureau, instrumentality or other authority to which the Shareholder (or, in
the case of a Trustee Shareholder, the Trust) is subject; except, in the
case of clause (iii) or (iv) above, for any of the same that, individually
or in the aggregate, would not reasonably be expected to materially impair
the ability of such Shareholder to perform his, her or its obligations
hereunder or thereunder or prevent or materially delay the consummation of
the transactions contemplated hereby and thereby.
Section 2.4 Consents and Approvals. No Consents from or of any third
party or any Authority are necessary for the execution and delivery by the
Shareholder and, if applicable, the Related JLW Owner of this Agreement or
any other Operative Agreement to which the Shareholder or such Related JLW
Owner (or, in the case of a Trustee Shareholder, the Trust) is a party or
the consummation by the Shareholder and such Related JLW Owner of the
transactions contemplated hereby and thereby, except for the making of such
filings or the receipt of such approvals as to which the failure to make or
obtain would not, individually or in the aggregate, reasonably be expected
to materially impair the ability of the Shareholder and such Related JLW
Owner to perform his, her or its obligations hereunder or thereunder or
prevent or materially delay the consummation of the transactions
contemplated hereby or thereby.
Section 2.5 Shareholder Information. The Shareholder is either (i) a
natural person and an employee of the JLW Businesses or (ii) a Corporate
Shareholder or a Trustee Shareholder who qualifies as a Permitted JLW
Shareholder of the Related JLW Owner. In the event that clause (ii) of the
immediately preceding sentence is applicable, the Related JLW Owner is an
employee of the JLW Businesses whose name is set forth on Annex B hereto
opposite the name of the Shareholder.
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SHAREHOLDER AND THE RELATED JLW OWNER
The Shareholder and, if applicable, the Related JLW Owner, jointly
and severally, hereby make the following representations, warranties and
covenants to Parent:
Section 3.1 Investment Matters. (a) The Shareholder and, if
applicable, the Related JLW Owner are resident in the country identified
under the Shareholder's and Related JLW Owner's names in columns 1 and 2,
respectively, of Annex B hereto, and neither the Shareholder nor, if
applicable, the Related JLW Owner is resident in a territory outside such
country.
(b) The Shareholder and, if applicable, the Related JLW Owner
agree not to engage in any hedging transactions with regard to the
Convertible Note (and the Consideration Shares issuable upon conversion
thereof) unless in compliance with the Securities Act.
(c) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the Consideration Shares issuable upon
conversion of the Convertible Note will, upon issuance thereof, be subject
to the provisions of the Stockholder Agreement, including, without
limitation, the restrictions on transfer and voting restrictions contained
therein.
(d) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the Convertible Note (and the Consideration
Shares issuable upon conversion thereof) are being offered and sold to the
Shareholder in reliance on specific exemptions from the registration
requirements of the United States federal and state securities laws and
that Parent is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the
Shareholder and, if applicable, the Related JLW Owner set forth herein in
order to determine the applicability of such exemptions and the suitability
of the Shareholder to acquire the Convertible Note (and the Consideration
Shares issuable upon conversion thereof).
(e) The Shareholder and, if applicable, the Related JLW Owner
have received and have had an opportunity to carefully review the Offering
Memorandum, dated as of [!], 1998, delivered to the Shareholder and, if
applicable, the Related JLW Owner prior to the execution of this Agreement,
Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, Parent's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998, Parent's 1997 Annual Report to Stockholders and
proxy statement dated March 31, 1998 and Parent's Current Report on Form 8-
K dated September 3, 1998, and the Shareholder and, if applicable, the
Related JLW Owner have had a reasonable opportunity to ask questions of and
receive answers from Parent concerning Parent, and to obtain any additional
information reasonably necessary to verify the accuracy of the information
furnished to the Shareholder or such Related JLW Owner concerning Parent
and all such questions, if any, have been answered to the full satisfaction
of the Shareholder and, if applicable, the Related JLW Owner.
(f) The Shareholder and, if applicable, the Related JLW
Owner acknowledge that no representations or warranties have been made to
the Shareholder or such Related JLW Owner by Parent or any agent, employee
or Affiliate of Parent other than those contained in the Australasia Region
Agreement, and in entering into this transaction the Shareholder and, if
applicable, the Related JLW Owner are not relying upon any information,
other than that referred to in the foregoing paragraph, contained in the
Australasia Region Agreement and the other Operative Agreements, and the
results of independent investigations by the Shareholder and, if
applicable, the Related JLW Owner and his, her or its representatives;
provided that the Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the only representations or warranties that
Parent has made with respect to such information are as set forth in
Sections 4.7 and 4.20 of the Australasia Region Agreement.
Section 3.2 Regulation S.
(a) The Shareholder and, if applicable, the Related JLW Owner
acknowledge that the Convertible Note and, if the Conversion Right is
exercised, each certificate representing Consideration Shares delivered to
or on behalf of the Shareholder shall include the following legend:
THE [NOTE] [SHARES] REPRESENTED BY THIS CERTIFICATE (THE
['NOTE']['SHARES']) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. [THE SALE, PLEDGE OR
OTHER TRANSFER OF THIS NOTE WITHOUT THE PRIOR WRITTEN CONSENT OF [JLLINT,
INC.] [LPI (AUSTRALIA) HOLDINGS PTY LIMITED] (["US ACQUISITION SUB"]
["AUSTRALIA ACQUISITION SUB"]) IS PROHIBITED.] BY THE ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT SUCH HOLDER IS NOT A U.S. PERSON AND IS
ACQUIRING THE [NOTE] [SHARES] IN AN OFFSHORE TRANSACTION, (2) AGREES THAT
SUCH HOLDER WILL NOT RESELL OR OTHERWISE TRANSFER THE [NOTE] [SHARES]
EXCEPT (A) TO JONESLANG LASALLE INCORPORATED (THE 'COMPANY') OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (C) INSIDE THE UNITED STATES, TO A TRANSFEREE THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE COMPANY A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE SHARES (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE COMPANY), (D)
OUTSIDE THE UNITED STATES, IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULES 904 AND 905 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F)
PURSUANT TO ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE ACT (IF
AVAILABLE) AND (3) AGREES THAT SUCH HOLDER WILL GIVE EACH PERSON TO WHOM
THE [NOTE] [SHARES] ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE [NOTE] [SHARES]
PURSUANT TO CLAUSES (C), (E) OR (F) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN,
THE TERMS 'OFFSHORE TRANSACTION,' 'UNITED STATES' AND 'U.S. PERSON' HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
(b) The Shareholder and, if applicable, the Related JLW Owner
acknowledge that any certificate representing Consideration Shares issuable
upon such conversion shall also include the following legend:
IN ADDITION, THE SHARES ARE SUBJECT TO THE PROVISIONS OF A
STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND BETWEEN THE
COMPANY AND THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF, AND AN
INDEMNITY AND ESCROW AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND AMONG
THE COMPANY, THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF AND THE
OTHER PARTIES NAMED THEREIN, WHICH INCLUDE, WITHOUT LIMITATION, VARIOUS
ADDITIONAL RESTRICTIONS ON TRANSFER OF THE SHARES AND THE GRANTING OF
CERTAIN VOTING RIGHTS, A COPY OF WHICH WILL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT CHARGE.
(c) The Shareholder and, if applicable, the Related JLW Owner
understand that the Convertible Note (and the Consideration Shares issuable
upon conversion thereof) are being issued to the Shareholder in reliance on
Regulation S and have not been registered under the Securities Act or with
any securities regulatory authority of any state of the United States or
other jurisdiction and, therefore, that such Convertible Note (and the
Consideration Shares issuable upon conversion thereof, and all securities
issued in exchange therefor or in substitution thereof) cannot be resold in
the absence of such registration, except pursuant to an exemption from, or
in a transaction not subject to, such registration requirements. Except as
set forth in the Stockholder Agreement, the Shareholder, and if applicable,
the Related JLW Owner are aware that Parent is under no obligation to
effect any such registration under the Securities Act or otherwise with
respect to such Convertible Note or Consideration Shares (or any securities
issued in exchange therefor or in substitution thereof), or to file for or
comply with any exemption from such registration.
(d) The Shareholder is, and any person for whose account it
is acquiring the Convertible Note (and the Consideration Shares issuable
upon conversion thereof) is, outside the "United States" (as defined under
Regulation S), and this Agreement and each of the Other Operative
Agreements was executed, and the investment decision to enter into this
Agreement was made, outside the United States.
(e) Neither the Shareholder nor, if applicable, the Related
JLW Owner is in the business of buying and selling securities.
(f) Neither the Shareholder nor, if applicable, the Related
JLW Owner will offer, sell or deliver the Convertible Note (or any of the
Consideration Shares issuable upon conversion thereof), or any interest or
participation therein, until one year after the Closing Date (the
"Restricted Period"), except in an "offshore transaction" (as defined under
Regulation S) in accordance with Rule 904 of Regulation S, pursuant to an
effective registration statement under the Securities Act, pursuant to Rule
144 under the Securities Act or pursuant to another exemption from the
registration requirements of the Securities Act and otherwise in accordance
with this Agreement, the Australasia Region Agreement and the Stockholder
Agreement.
(g) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that any resale or other transfer, or attempted
resale or other transfer, which Parent determines in good faith was made
other than in compliance with the restrictions stated herein and in the
Stockholder Agreement shall not be recognized by Parent in respect of
Consideration Shares issuable upon conversion of the Convertible Note, and
that Parent may deliver a corresponding stop-transfer order to the Transfer
Agent to that effect. For so long as Consideration Shares are subject to
the provisions of the Stockholder Agreement, no resale or other transfer of
such Consideration Shares shall be made unless in compliance with Article
IV of the Stockholder Agreement, including the requirement that prior to
any such resale or other transfer, Parent is furnished evidence reasonably
satisfactory to Parent that such resale or transfer is being made in
compliance with the applicable provisions of the Stockholder Agreement. At
any time after such Consideration Shares are no longer subject to the
provisions of the Stockholder Agreement, upon the written request of the
holder thereof, Parent shall remove the legend set forth in Section 3.2(b)
hereof from the certificate(s) representing such Consideration Shares or
replace such certificate(s) with certificate(s) not bearing such legend.
(h) If the Shareholder or, if applicable, the Related JLW
Owner intends to transfer any of the Convertible Note (or the Consideration
Shares issuable upon conversion thereof), or any interest or participation
therein, prior to the expiration of the Restricted Period, the Shareholder
or the Related JLW Owner, as the case may be, shall deliver to Parent a
written opinion of counsel to the transferee, which counsel and opinion
shall be reasonably satisfactory to Parent, to the effect that the offer,
sale and transfer of such Convertible Note (or the Consideration Shares
issuable upon conversion thereof), or any interest or participation
therein, are not subject to registration under the Securities Act or are
permitted under Regulation S. At any time after the Restricted Period,
upon the written request of the holder thereof, together with a written
opinion of counsel, which counsel and opinion shall be reasonably
satisfactory to Parent, to the effect that the legend set forth in Section
3.2(a) hereof is no longer required on the certificate(s) representing such
Consideration Shares under the applicable requirements of the Securities
Act, Parent shall remove such legend from the certificate(s) representing
such Consideration Shares or replace such certificate(s) with
certificate(s) not bearing such legend.
(i) Neither the Shareholder nor any Related JLW Owner has
engaged in, nor during the Restricted Period will engage in, any "directed
selling efforts" (as defined under Regulation S) with respect to the
Convertible Note (or any Consideration Shares issuable upon conversion
thereof).
ARTICLE IV
TERMINATION
Section 4.1 Termination of Agreement. This Agreement shall terminate
automatically upon the termination of the Australasia Region Agreement
pursuant to and in accordance with the terms of Article XI thereof. If
this Agreement is so terminated and abandoned as provided herein, no party
hereto shall have any liability or further obligation to any other party to
this Agreement, except as set forth in the Australasia Region Agreement.
Sections 7.3 and 7.4 hereof shall survive the termination of this
Agreement.
ARTICLE V
SURVIVAL, INDEMNIFICATION AND GENERAL RELEASE
Section 5.1 Survival of Representations, Warranties and Covenants.
None of the representations and warranties of Parent contained in this
Agreement, the Australasia Region Agreement or any other Operative
Agreement, or any instrument delivered pursuant hereto or thereto, shall
survive the Closing. All representations and warranties of the Shareholder
and, if applicable, the Related JLW Owner contained in this Agreement or
any other Operative Agreement, or any instrument delivered pursuant hereto
or thereto, shall survive the Closing for the period specified in the
Escrow Agreement. The covenants and agreements of Parent contained in this
Agreement, the Asia Region Agreement or any other Operative Agreement, or
any instrument delivered pursuant hereto or thereto, shall not survive the
Closing, unless such covenants or agreements specify terms or are
contemplated to be performed in whole or in part on or after the Closing,
in which case any such covenants or agreements shall survive for such
specified terms or until performed in full. The covenants and agreements
of the Shareholder and, if applicable, the Related JLW Owner contained in
this Agreement, the Asia Region Agreement or any other Operative Agreement
shall survive the Closing without limitation as to time unless the covenant
or agreement specifies a term, in which case such covenant or agreement
shall survive for such specified term.
Section 5.2 Indemnification. Parent and the other Indemnified
Persons (as defined in the Escrow Agreement), shall be indemnified,
defended and held harmless from and against any and all Liabilities and
against all claims in respect thereof to the extent, and subject to the
terms, conditions and limitations set forth in the Escrow Agreement.
Section 5.3 Release by the Shareholder. The Shareholder and, if
applicable, the Related JLW Owner, for themselves and for each of their
respective Associated Parties, to the fullest extent permitted by
applicable law, hereby irrevocably, unconditionally and completely
releases, waives, relinquishes and forever discharges each of (i) the
Buyers from any claims or causes of action arising out of or relating to
the Integration (other than Post-Closing Actions) or the allocation of the
Consideration among the Shareholders and Other Shareholders under the
Purchase Agreements, and (ii) the Companies, the Asia Region Companies and
the Europe/USA Region Companies, together with their respective
Subsidiaries, successors and past, present and future assigns, directors,
officers, employees, agents and representatives in their capacities as such
(other than the Shareholder and, if applicable, the Related JLW Owner) of
any of the foregoing (collectively, the "Released Persons"), from all past,
present and future disputes, claims, controversies, demands, rights,
obligations, liabilities, actions and causes of action of every kind and
nature (whether accrued or unaccrued) whatsoever against any one or more of
the Released Persons, which are related directly or indirectly to events
occurring prior to the Closing Date (other than, in each case, any
Surviving Claims), including: (A) any unknown, unsuspected or undisclosed
claim; (B) any claim or right that may be asserted or exercised by the
Shareholder and, if applicable, the Related JLW Owner in such Shareholder's
or Related JLW Owner's capacity as a shareholder, director, officer or
employee of any Company, Asia Region Company or Europe/USA Region Company,
or any of their respective Subsidiaries, as a partner or former partner in
any predecessor of any Company, Asia Region Company or Europe/USA Region
Company, or any of their respective Subsidiaries, or as a direct or
indirect beneficiary of any trust or trust arrangement, whether implied or
actual, relating directly or indirectly to any portion of the businesses or
assets of the JLW Businesses (including, without limitation, the right to
receive profits therefrom or an ownership or other participatory interest
or right therein) or in any other capacity; and (C) any claim, right or
cause of action based upon any breach of any express, implied, oral or
written contract or agreement; provided that the releases set forth in the
foregoing clauses (i) and (ii) shall not apply to any Surviving Claims.
ARTICLE VI
DEFINITIONS
Section 6.1 Certain Terms. When used in this Agreement, the
following terms shall have the meanings specified:
"Associated Parties" when used herein with respect to the
Shareholder or the JLW Related Owner, means and includes: (i) the
Shareholder's or Related JLW Owner's successors, executors, administrators,
beneficiaries, heirs and estate; and (ii) the Shareholder's or Related JLW
Owner's future assigns.
"Buyers" means, collectively, Parent, US Acquisition Sub and
Australia Acquisition Sub.
"Operative Agreements" means, collectively, this Agreement, the
Australasia Region Agreement, the Stockholder Agreement, the Escrow
Agreement, the Convertible Notes and the Indemnification Agreement
Guarantees.
"Other Joinder Agreements" means the Purchase and Sale Joinder
Agreement (Asia) and the Purchase and Sale Joinder Agreement (Europe/USA),
in the form attached to the Asia Region Agreement and the Europe/USA Region
Agreement, respectively.
"Other Shareholders" means, collectively, the Persons whose
names appear on one of the Preliminary Master Shareholder Lists attached to
the Purchase Agreements, and who execute and deliver the applicable Other
Joinder Agreements and the other applicable Shareholder Transaction
Documents.
"Permitted JLW Shareholder" means, in respect of the Related
JLW Owner: (a) a trust of which there are no beneficiaries other than such
Related JLW Owner and/or any descendant(s) of such Related JLW Owner, the
spouse or surviving spouse of such Related JLW Owner (each a "permitted
beneficiary"), or (b) a corporation or limited liability company of which
there are no stockholders or members (or other Persons holding any direct
or indirect ownership interest therein) other than such Related JLW Owner
and/or one or more permitted beneficiaries.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Regulation S" means Regulation S under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended
and any successor statute, and the rules and regulations of the SEC
promulgated thereunder.
"Surviving Claim" means any of the following: (i) any claim
arising out of rights expressly granted to a Shareholder or, if applicable,
Related JLW Owner, under the Integration Agreements; (ii) any right to
compensation or employee benefits accrued in the ordinary course of
employment; (iii) any right to reimbursement of employee expenses that are
reimbursable pursuant to applicable existing policies (as such policies may
be modified from time to time) prior to the Closing Date consistent with
the limitations set forth in Article V of the Australasia Region Agreement;
(iv) any other claim arising under any employment or service agreement
between such Shareholder or, if applicable, Related JLW Owner, and any
Released Person; (v) any claim for indemnification that the Shareholder or,
if applicable, Related JLW Owner may have against any Released Person under
the applicable corporate charter, by-laws or similar organizational
documents or under applicable insurance, if any, or in respect of actions
taken by such Shareholder or, if applicable, Related JLW Owner within the
scope of his or her employment or as a director or officer of any Released
Person; or (vi) any right expressly set forth in the Australasia Region
Agreement or any other Operative Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Specific Enforcement; Other Remedies. The Shareholder
and, if applicable, the Related JLW Owner acknowledges and agrees that
Parent would be irreparably damaged in the event any of the provisions of
this Agreement were not performed by the Shareholder and such Related JLW
Owner in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that Parent shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States (or any state thereof) or country having jurisdiction, in
addition to any other remedy to which Parent may be entitled at law or
equity.
Section 7.2 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby
(unless such a construction is unreasonable).
Section 7.3 Expenses. Except as provided in the Australasia Region
Agreement, each of the parties hereto shall pay his, her or its own legal,
accounting and other miscellaneous expenses incident to this Agreement, the
other Operative Agreements and the Integration Agreements.
Section 7.4 Press Releases and Announcements. After the date of this
Agreement and prior to the Closing, neither the Shareholder nor, if
applicable, the Related JLW Owner shall directly or indirectly make or
cause to be made any public announcement or disclosure, or issue any notice
with respect to this Agreement or any other Operative Agreement or the
transactions contemplated by this Agreement and the other Operative
Agreements, without the prior written consent of Parent.
Section 7.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the Australasia Region Agreement and the other
Operative Agreements, and the schedules and the other writings referenced
herein and therein, (a) constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto and (b) are not intended to confer upon any person other
than the parties any rights or remedies hereunder.
Section 7.6 Amendment and Modification. This Agreement may not be
amended, modified or supplemented except by an agreement in writing signed
by each of the parties hereto.
Section 7.7 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed
received), in each case addressed to the party to be notified, in the case
of Parent, at the address set forth in the Australasia Region Agreement
and, in the case of the Shareholder or, if applicable, the Related JLW
Owner, at the address set forth on the signature page hereto, or such other
address of a party as such party shall have specified by prior written
notice to the other party in accordance with this Section 7.7. Such
notices shall be deemed given: at the time personally delivered, if
delivered by hand with receipt acknowledged; upon transmission thereof by
the sender and issuance by the transmitting machine of a confirmation slip
that the number of pages constituting the notice have been transmitted
without error, if telecopied; when answered back if telexed; and the second
business day after timely delivery to the courier, if sent by air courier.
Section 7.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned
by any party without the written consent of the other parties.
Section 7.9 Headings. The Article and Section headings contained
herein are for reference purposes only and shall not effect in any way the
meaning or interpretation of this Agreement.
Section 7.10 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Illinois, without giving effect to the conflict of laws provisions thereof.
Section 7.11 Jurisdiction. Subject to the arbitration provisions set
forth in Section 7.1 of the Escrow Agreement, each of the parties hereto
hereby expressly and irrevocably submits to the non-exclusive personal
jurisdiction of the United States District Court for the Northern District
of Illinois, and to the jurisdiction of any other competent court of the
State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441, and to the non-exclusive
jurisdiction of the High Court of England and Wales in London (the "English
Courts"), in connection with all disputes arising out of or in connection
with this Agreement or the transactions contemplated hereby and agrees not
to commence any litigation relating thereto except in such courts; provided
that if the aforementioned Illinois Courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal court located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each of party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each of the parties hereto agrees that each
of the other parties shall have the right to bring any action or proceeding
for enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
Section 7.12 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 7.13 Service of Process. Each party irrevocably consents to
the service of process outside the territorial jurisdiction of the courts
referred to in Section 7.11 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified herein. However, the foregoing shall not limit the
right of a party to effect service of process on the other party by any
other legally available method.
Section 7.14 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Section 7.15 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO THE
FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
<PAGE>
IN WITNESS WHEREOF, the Shareholder and, if applicable, the
Related JLW Owner and Parent have caused this Purchase and Sale Joinder
Agreement (Australasia) to be duly executed and delivered as of the day and
year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
<PAGE>
IN WITNESS WHEREOF, the Shareholder and, if applicable, the
Related JLW Owner and Parent have caused this Purchase and Sale Joinder
Agreement (Australasia) to be duly executed and delivered as of the day and
year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
EXHIBIT 10.6
- ------------
[FORM OF PURCHASE AND SALE JOINDER AGREEMENT
(ASIA)]
PURCHASE AND SALE JOINDER AGREEMENT
(ASIA)
by and among
LASALLE PARTNERS INCORPORATED,
The Person named as "Shareholder" on the Signature Page hereto
and, if applicable,
The person named as "Related JLW Owner" on the Signature Page hereto
dated as of October 21, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
PURCHASE AND SALE OF SHARES. . . . . . . . . . . . 3
Section 1.1 Asia Region Agreement . . . . . . 3
Section 1.2 [Intentionally Left Blank]. . . . 3
Section 1.3 Purchase Price. . . . . . . . . . 3
Section 1.4 Representatives . . . . . . . . . 3
Section 1.5 [Intentionally Left Blank]. . . . 5
Section 1.6 Certain Covenants . . . . . . . . 5
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE RELATED JLW OWNER . . . 5
Section 2.1 Interests in Shares and
Consideration . . . . . . . . . . 5
Section 2.2 Authorization . . . . . . . . . . 5
Section 2.3 No Violation. . . . . . . . . . . 6
Section 2.4 Consents and Approvals. . . . . . 7
Section 2.5 Shareholder Information . . . . . 7
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SHAREHOLDER AND THE RELATED JLW OWNER . . . 7
Section 3.1 Investment Matters. . . . . . . . 7
Section 3.2 Regulation S. . . . . . . . . . . 9
ARTICLE IV
TERMINATION . . . . . . . . . . . . . . . . . 10
Section 4.1 Termination of Agreement. . . . . 10
<PAGE>
Page
----
ARTICLE V
SURVIVAL, INDEMNIFICATION AND GENERAL RELEASE. . . 11
Section 5.1 Survival of Representations,
Warranties and Covenants. . . . . 11
Section 5.2 Indemnification . . . . . . . . . 11
Section 5.3 Release by the Shareholder. . . . 11
ARTICLE VI
DEFINITIONS . . . . . . . . . . . . . . . . . 12
Section 6.1 Certain Terms . . . . . . . . . . 12
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . 13
Section 7.1 Specific Enforcement;
Other Remedies. . . . . . . . . . 13
Section 7.2 Severability. . . . . . . . . . . 13
Section 7.3 Expenses. . . . . . . . . . . . . 13
Section 7.4 Press Releases and
Announcements . . . . . . . . . . 13
Section 7.5 Entire Agreement; No Third
Party Beneficiaries . . . . . . . 13
Section 7.6 Amendment and Modification. . . . 13
Section 7.7 Notices . . . . . . . . . . . . . 13
Section 7.8 Assignment. . . . . . . . . . . . 14
Section 7.9 Headings. . . . . . . . . . . . . 14
Section 7.10 Applicable Law. . . . . . . . . . 14
Section 7.11 Jurisdiction. . . . . . . . . . . 14
Section 7.12 Words in Singular and
Plural Form . . . . . . . . . . . 14
Section 7.13 Service of Process. . . . . . . . 14
Section 7.14 Counterparts. . . . . . . . . . . 15
Section 7.15 Waiver of Jury Trial. . . . . . . 15
Annex A Purchase and Sale Agreement (Asia)
Annex B Shareholder and Share Information
<PAGE>
PURCHASE AND SALE JOINDER AGREEMENT (ASIA)
PURCHASE AND SALE JOINDER AGREEMENT, dated as of October 21,
1998 (this "Agreement"), by and among (i) LASALLE PARTNERS INCORPORATED, a
Maryland corporation ("Parent"), (ii) the Person named as "Shareholder" on
the signature page hereto (the "Shareholder"), and, if applicable, (iii)
the person named as "Related JLW Owner" on the signature page hereto (the
"Related JLW Owner").
Capitalized terms used but not defined herein have the
respective meanings ascribed to them in the Purchase and Sale Agreement
(Asia), dated as of October 21, 1998, a copy of which is attached hereto as
Annex A (the "Asia Region Agreement"), by and among Parent, JLLINT, Inc.,
an Illinois corporation and an indirect wholly-owned subsidiary of Parent
("US Acquisition Sub"), JLLIP, Inc., an Illinois corporation and an
indirect wholly-owned subsidiary of Parent ("US Acquisition Sub II"), the
Jones Lang Wootton-related entities named therein as parties, the persons
named as "Management Shareholders" on the signature pages thereto, the
Shareholder and, if applicable, the Related JLW Owner (in each case, by
execution and delivery of this Agreement), and each other Person who
executes and delivers a Purchase and Sale Joinder Agreement (Asia)
identical to this Agreement (collectively, the "Other Asia Joinder
Agreements").
WHEREAS, pursuant to the Asia Region Agreement, the Sellers
described therein have agreed to sell the Shares of the Companies described
therein to US Acquisition Sub or US Acquisition Sub II, as applicable, in
exchange for the Cash Consideration and shares of Parent Common Stock
described therein;
WHEREAS, pursuant to the Asia Region Agreement, the relevant
Seller has directed US Acquisition Sub or US Acquisition Sub II, as
applicable, to distribute to or on behalf of the Shareholder the number of
shares of Parent Common Stock and the amount of Cash Consideration
specified or calculated in accordance with the formula set forth in columns
3 and 4, respectively, of Annex B hereto (except as otherwise specified
herein, all references in this Agreement to "Annex B" refer to the
definitive Annex B, as modified pursuant to Section 2.2 of the Asia Region
Agreement), as contemplated in Section 1.1(b) of the Asia Region Agreement,
subject to adjustment in accordance with Sections 1.3 and 1.4 of the Asia
Region Agreement;
WHEREAS, as a condition of and inducement to the Buyers'
willingness to consummate the transactions contemplated hereby and by the
Other Asia Joinder Agreements and the Asia Region Agreement, all of the
Shareholders (together with any Related JLW Owners) will be required to
have entered into, and Parent and the Shareholder (and, if applicable, the
Related JLW Owner) are entering into, (i) this Agreement or an Other Asia
Joinder Agreement (and thereby the Asia Region Agreement), (ii) a
Stockholder Agreement and (iii) the Escrow Agreement;
WHEREAS, as of the date hereof, Parent and the other parties
named therein are entering into a Purchase and Sale Agreement (the
"Europe/USA Region Agreement"), pursuant to which, upon the terms and
subject to the conditions set forth therein, Parent has the right (and may
be required) to acquire (except as otherwise set forth therein) all of the
issued share capital or capital stock, as applicable, of each of the
Europe/USA Region Companies;
WHEREAS, as of the date hereof, Parent, US Acquisition Sub, LPI
(Australia) Holdings Pty Limited, a corporation organized under the laws of
the Australian Capital Territory and an indirect wholly-owned subsidiary of
Parent ("Australia Acquisition Sub"), and the other parties named therein
are entering into a Purchase and Sale Agreement (the "Australasia Region
Agreement" and, together with the Europe/USA Region Agreement, the "Other
Purchase Agreements"), pursuant to which, upon the terms and subject to the
conditions set forth therein, Australia Acquisition Sub and US Acquisition
Sub collectively will acquire (except as otherwise set forth therein) all
of the issued share capital of the Australasia Region Companies; and
WHEREAS, pursuant to this Agreement, the Other Asia Joinder
Agreements, the Other Joinder Agreements, the Asia Region Agreement and the
Other Purchase Agreements, Parent has the right (and may be required) to
acquire, directly or indirectly, all of the asset and property management,
advisory and other real estate-related businesses of the Companies, the
Europe/USA Region Companies and the Australasia Region Companies and their
respective Subsidiaries (such businesses being collectively referred to
herein as the "JLW Businesses"), including all such businesses currently
being carried on by the JLW Partnerships and their respective direct and
indirect Subsidiaries.
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein, in
the Asia Region Agreement and in the other Operative Agreements to which
the Shareholder (and, if applicable, the Related JLW Owner) is a party,
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Asia Region Agreement. By executing this Agreement, the
Shareholder (and, if applicable, the Related JLW Owner) authorizes the
additional signature page hereto to be attached as a counterpart to the
Asia Region Agreement, and agrees to be bound by and subject to the terms
of the Asia Region Agreement as if the Shareholder (and, if applicable, the
Related JLW Owner) had executed such Asia Region Agreement on the date of
its original execution.
Section 1.2 [Intentionally Left Blank]
Section 1.3 Purchase Price. Upon the terms and subject to the
conditions set forth herein and in the Asia Region Agreement, in
consideration for the sale, assignment, transfer, conveyance and delivery
of the Companies Shares owned by each Seller to US Acquisition Sub and, in
the case of JLW Pacific Shares, to US Acquisition Sub II, at the Closing
and, pursuant to the direction of the Sellers under Section 1.1(b) of the
Asia Region Agreement, US Acquisition Sub or US Acquisition Sub II, as
applicable, shall (and Parent shall cause such Buyer to) deliver, or cause
to be delivered, at the Closing to: (a) the Shareholders' Representatives,
on behalf of the Shareholder, (i) the number of shares of Parent Common
Stock specified in column 3(a) of Annex B hereto (the "Initial Distribution
Shares"), which Initial Distribution Shares shall be issued in the name of
Shareholder, (ii) the number of shares of Parent Common Stock specified in
column 3(b) of Annex B hereto (the "Forfeiture Shares" and, together with
the Initial Distribution Shares, the "Initial Consideration Shares"), which
Forfeiture Shares, subject to clause (c) of Section 1.3 of the Asia Region
Agreement, shall be deposited in escrow with the escrow agent appointed
pursuant to the SCCA (the "Forfeiture Shares Escrow Agent") pursuant to the
applicable provisions of the SCCA and held and distributed in accordance
with the terms thereof, and (iii) the Cash Consideration, in United States
dollars, calculated in accordance with the formula set forth in column 4 of
Annex B hereto, all of which Cash Consideration shall be paid to and
retained by the Shareholders' Representatives (on behalf of the
Shareholder) as a reserve for certain expenses as provided in Section
1.4(c) hereof; and (b) Harris Trust and Savings Bank (the "Escrow Agent")
(i) the number of shares of Parent Common Stock specified in column 3(c) of
Annex B hereto to be deposited in escrow as Escrow Shares pursuant to
clause (b) of Section 1.3 of the Asia Region Agreement, and (ii) the number
of shares of Parent Common Stock specified in column 3(d) of Annex B hereto
to be deposited in escrow as Adjustment Shares pursuant to clause (a) of
Section 1.3 of the Asia Region Agreement, which Escrow Shares and
Adjustment Shares shall be held and disposed of in accordance with the
applicable provisions of the Escrow Agreement and the applicable provisions
of the Asia Region Agreement. The aggregate number of shares of Parent
Common Stock to be deposited with the Escrow Agent pursuant to clause
(b)(i) of this Section 1.2, clause (b)(i) of Section 1.3 of the Asia Region
Agreement and of the Other Purchase Agreements and clause (i) of the last
sentence of Section 6.7 of the Asia Region Agreement and each of the Other
Purchase Agreements shall be 750,000 shares (the "Escrow Shares") and the
aggregate number of shares of Parent Common Stock to be deposited with the
Escrow Agent pursuant to clause (b)(ii) of this Section 1.3, clause (b)(ii)
of Section 1.2 of the Asia Region Agreement and each of the Other Purchase
Agreements, and clause (ii) of the last sentence of Section 6.7 of the
Asia Region Agreement and each of the Other Purchase Agreements shall be
1,241,683 shares (the "Adjustment Shares"); provided that the Forfeiture
Shares issuable pursuant to the Asia Region Agreement shall also be
initially deposited with the Escrow Agent as additional Escrow Shares to be
held and disposed of in accordance with the applicable provisions of the
Escrow Agreement.
Section 1.4 Representatives. (a) The parties acknowledge and agree
that prior to the Shareholder Determination Date, the Shareholders, the
Other Shareholders, the Related JLW Owners and the ESOT Trustee (on behalf
of the ESOT) will execute a Sellers' Contribution and Coordination
Agreement (the "SCCA") relating to, among other things, the selection,
replacement, rights and obligations of the Sellers' Representatives and the
Shareholders' Representatives, which SCCA shall be in a form reasonably
acceptable to Parent. The SCCA, as executed, shall not be amended without
the consent of Parent, which consent will not be unreasonably withheld or
delayed.
(b) By execution of this Agreement, the Shareholder and, if
applicable, the Related JLW Owner agree that:
(i) The Buyers shall be able to rely conclusively on
the instructions or actions of (A) the Sellers' Representatives, or any of
them, as to any instructions or actions required or permitted to be taken
by the Sellers' Representatives hereunder or under any other Operative
Agreement or the SCCA when executed, which instructions or actions shall be
binding on each such Shareholder, Related JLW Owner and JLW Party (the
"Closing Authorized Actions"), and (B) the Shareholders' Representatives as
to the settlement of any claims of indemnification against the Escrow Fund
(as defined in the Escrow Agreement) by any Indemnified Persons pursuant to
the Escrow Agreement, the resolution of any dispute regarding Adjustment
Shares under Section 1.4 of the Asia Region Agreement or any other actions
required or permitted to be taken by the Shareholders' Representatives
hereunder or under the SCCA when executed or any of the Operative
Agreements (the "Other Authorized Actions" and, together with the Closing
Authorized Actions, the "Authorized Actions"). No party hereunder or the
Escrow Agent shall have any cause of action against any of the Buyers or
any other Indemnified Person to the extent any such Buyer or any other such
Indemnified Person has relied upon such instructions or actions of the
Sellers' Representatives or the Shareholders' Representatives.
(ii) [Intentionally Left Blank]
(iii) The provisions of this Section 1.4 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that the Shareholder or,
if applicable, the Related JLW Owner or ESOT Trustee may have against the
Sellers' Representatives or the Shareholders' Representatives for any
breach of the SCCA or otherwise.
(iv) Remedies available at law for any breach of the
provisions of this Section 1.4 are inadequate. Therefore, Parent and the
Companies shall be entitled to temporary and permanent injunctive relief
without the necessity of proving damages if any of Parent and/or any
Company brings an action to enforce the provisions of this Section 1.4.
(v) The provisions of this Section 1.4 shall be binding
upon the executors, heirs, legal representatives, personal representatives,
successor trustees, and successors of the Shareholder and, if applicable,
the Related JLW Owner and ESOT Trustee, and any references in this
Agreement or in the Asia Region Agreement to a Shareholder or the
Shareholders or the Related JLW Owner or the Related JLW Owners shall mean
and include the successors to the Shareholder's or Shareholders' or the
Related JLW Owner's or Related JLW Owners' rights hereunder and thereunder,
whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
(c) The Shareholder hereby agrees that all of the Cash
Consideration that would have otherwise been payable to the Shareholder
pursuant to Section 1.3 of this Agreement and all or a portion of the Cash
Consideration that would otherwise have been payable to the Other
Shareholders pursuant to Section 1.3 of the Other Joinder Agreements and to
the Sellers under Section 1.1(a) of the Australasia Region Agreement (the
"SCCA Expenses Reserve") shall instead be retained by the Shareholders'
Representatives to be held and disbursed as provided in the SCCA. Such
SCCA Expenses Reserve shall be apportioned among the Shareholders, such
Other Shareholders and such Sellers pro rata based on the aggregate amount
of Consideration Shares and Cash Consideration originally allocated to each
of them. The Shareholder hereby authorizes Parent to deliver to the
Shareholders' Representatives the SCCA Expenses Reserve in lieu of paying
the Cash Consideration otherwise deliverable to the Shareholder.
Section 1.5 [Intentionally Left Blank]
Section 1.6 Certain Covenants. The Shareholder hereby covenants and
agrees that, from the date hereof to the Closing, such Shareholder shall
not Transfer, directly or indirectly, the right to receive any
Consideration Shares (or any ownership or other interest in any Seller or
Affiliate thereof). The Related JLW Owner, if any, shall cause the
Shareholder to perform each of the obligations of such Shareholder set
forth in this Agreement and in each of the other Operative Agreements to
which such Shareholder is a party.
ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE RELATED JLW OWNER
The Shareholder and, if applicable, the Related JLW Owner,
jointly and severally, hereby make the following representations and
warranties to Parent:
Section 2.1 Interests in Shares and Consideration. Neither the
Shareholder nor, if applicable, the Related JLW Owner, owns or has any
interest in any Shares other than as a trust beneficiary in respect of one
or more Sellers. Except as set forth on Annex B hereto, neither the
Shareholder nor, if applicable, the Related JLW Owner has any rights in or
to any of the specific assets, properties or rights of or used by any
Company or Company Subsidiary. Other than as specifically provided in the
Asia Region Agreement or the other Operative Agreements, neither the
Shareholder nor, if applicable, the Related JLW Owner has any right or
claim to any payment or consideration (with respect to an ownership,
partnership, trust or similar interest, right of participation or
otherwise) from any of the Companies or Company Subsidiaries, as a result
of or in connection with the consummation of the transactions contemplated
by this Agreement, the other Operative Agreements and the Integration
Agreements.
Section 2.2 Authorization. (a) The Related JLW Owner, if any, has
full power, capacity and authority to execute, deliver and perform this
Agreement and the other Operative Agreements to which such Related JLW
Owner is a party and to carry out the transactions contemplated hereby and
thereby. No other action on the part of the Related JLW Owner is necessary
to execute and deliver each of this Agreement and the other Operative
Agreements to which such Related JLW Owner is a party and the consummation
of the transactions contemplated hereby and thereby. Each of this
Agreement and the other Operative Agreements to which the Related JLW Owner
is a party has been duly and validly executed and delivered by such Related
JLW Owner and constitutes a valid and binding agreement of such Related JLW
Owner, enforceable against such Related JLW Owner in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar Laws affecting creditors generally and by
general principles of equity, regardless of whether in a proceeding in
equity or at law.
(b) The Shareholder (i) if a corporation (a "Corporate
Shareholder"), has all requisite corporate power and authority, (ii) if a
natural person, has full power, capacity and authority and (iii) if a
trustee (a "Trustee Shareholder") under a trust (the "Trust"), is the
lawful and duly appointed trustee of the Trust, and has full power,
authority and legal right under the trust agreement, will or other
instrument pursuant to which such Trustee Shareholder acts as trustee (the
"Trust Agreement"), to execute, deliver and perform each of this Agreement
and the other Operative Agreements to which the Shareholder (or, in the
case of a Trustee Shareholder, the Trust) is a party and to carry out the
transactions contemplated hereby and thereby. If the Shareholder is a
Corporate Shareholder, such Shareholder is duly organized or incorporated
and validly existing (and, if applicable) in good standing under the laws
of its jurisdiction of incorporation or formation and has all requisite
corporate or similar power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns. If
the Shareholder is a Trustee Shareholder, there are no trustees of such
Trust other than the Trustee Shareholder who has entered into this
Agreement on behalf of such Trust, and such Trustee Shareholder has caused
to be delivered to Parent a true, correct and complete copy of the Trust
Agreement or other evidence satisfactory to Parent of such Trustee
Shareholder's power, authority and legal right referred to above. No other
action on the part of the Shareholder (or, in the case of a Corporate
Shareholder or Trustee Shareholder, the shareholders of such Shareholder or
beneficiaries of such Trust, as the case may be) is necessary to authorize
and approve the execution and delivery by the Shareholder (in the case of a
Trustee Shareholder, the Trust) of each of this Agreement and the other
Operative Agreements to which the Shareholder (in the case of a Trustee
Shareholder, the Trust) is a party and the consummation of the transactions
contemplated hereby and thereby. Each of this Agreement and the other
Operative Agreements to which the Shareholder (in the case of a Trustee
Shareholder, the Trust) is a party has been duly and validly executed and
delivered by the Shareholder and constitutes a valid and binding agreement
of the Shareholder (in the case of a Trustee Shareholder, the Trust),
enforceable against the Shareholder (in the case of a Trustee Shareholder,
the Trust) in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization and other similar Laws
affecting creditors generally and by general principles of equity (with
respect to a Trustee Shareholder, other than principles of fiduciary duty),
regardless of whether in a proceeding in equity or at law.
Section 2.3 No Violation. (a) Neither the execution and delivery by
the Related JLW Owner, if any, of this Agreement or any other Operative
Agreement to which the Related JLW Owner is a party nor the consummation by
the Related JLW Owner of the transactions contemplated hereby or thereby
shall: (i) violate, conflict with, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under,
cause or permit the acceleration of, or give rise to any right of
termination, imposition of fees or penalties under, any indebtedness,
contract, instrument or other obligation to which the Related JLW Owner is
a party or by which the Related JLW Owner or the Related JLW Owner's assets
are bound or affected, or result in the creation or imposition of any Lien
upon any of the Shares or any properties or assets of the Related JLW
Owner; or (ii) violate any statute, law, judgment, decree, order,
regulation, rule or other similar authoritative matters of any foreign,
federal, state or local governmental or quasi-governmental, administrative,
regulatory or judicial court, department, commission, agency, board,
bureau, instrumentality or other authority to which the Related JLW Owner
is subject; except, in the case of clause (i) or (ii) above, for any of the
same that, individually or in the aggregate, would not reasonably be
expected to materially impair the ability of such Related JLW Owner to
perform his or her obligations hereunder or thereunder or prevent or
materially delay the consummation of the transactions contemplated hereby
and thereby.
(b) Neither the execution and delivery by the Shareholder of
this Agreement or any other Operative Agreement to which the Shareholder
(in the case of a Trustee Shareholder, the Trust) is a party nor the
consummation by the Shareholder of the transactions contemplated hereby or
thereby shall: (i) in the case of a Corporate Shareholder, violate or be in
conflict with any provision of the certificate of incorporation and bylaws
or memorandum or articles of association (or similar organizational
documents), as applicable, of the Shareholder; (ii) in the case of a
Trustee Shareholder, violate or be in conflict with the Trust Agreement or
any provision of the certificate of incorporation and bylaws or memorandum
of articles of association (or similar organizational documents), as
applicable, of the Trustee Shareholder; (iii) violate, conflict with,
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, cause or permit the acceleration
of, or give rise to any right of termination, imposition of fees or
penalties under, any indebtedness, contract, instrument or other obligation
to which the Shareholder (or, in the case of a Trustee Shareholder, the
Trust) is a party or by which the Shareholder (or, in the case of a Trustee
Shareholder, the Trust) or the Shareholder's (or, in the case of a Trustee
Shareholder, the Trust's) assets are bound or affected, or result in the
creation or imposition of any Lien upon any of the Shares or any properties
or assets of the Shareholder (or, in the case of a Trustee Shareholder,
the Trust); or (iv) violate any statute, law, judgment, decree, order,
regulation, rule or other similar authoritative matters of any foreign,
federal, state or local governmental or quasi-governmental, administrative,
regulatory or judicial court, department, commission, agency, board,
bureau, instrumentality or other authority to which the Shareholder (or, in
the case of a Trustee Shareholder, the Trust) is subject; except, in the
case of clause (iii) or (iv) above, for any of the same that, individually
or in the aggregate, would not reasonably be expected to materially impair
the ability of such Shareholder to perform his, her or its obligations
hereunder or thereunder or prevent or materially delay the consummation of
the transactions contemplated hereby and thereby.
Section 2.4 Consents and Approvals. No Consents from or of any third
party or any Authority are necessary for the execution and delivery by the
Shareholder and, if applicable, the Related JLW Owner of this Agreement or
any other Operative Agreement to which the Shareholder or such Related JLW
Owner (or, in the case of a Trustee Shareholder, the Trust) is a party or
the consummation by the Shareholder and such Related JLW Owner of the
transactions contemplated hereby and thereby, except for the making of such
filings or the receipt of such approvals as to which the failure to make or
obtain would not, individually or in the aggregate, reasonably be expected
to materially impair the ability of the Shareholder and such Related JLW
Owner to perform his, her or its obligations hereunder or thereunder or
prevent or materially delay the consummation of the transactions
contemplated hereby or thereby.
Section 2.5 Shareholder Information. The Shareholder is either (i) a
natural person and an employee of the JLW Businesses, or (ii) a Corporate
Shareholder or a Trustee Shareholder who qualifies as a Permitted JLW
Shareholder of the Related JLW Owner. In the event that clause (ii) of the
immediately preceding sentence is applicable, the Related JLW Owner is an
employee of the JLW Businesses whose name is set forth on Annex B hereto
opposite the name of the Shareholder.
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SHAREHOLDER AND THE RELATED JLW OWNER
The Shareholder and, if applicable, the Related JLW Owner, jointly
and severally, hereby make the following representations, warranties and
covenants to Parent:
Section 3.1 Investment Matters. (a) The Shareholder and, if
applicable, the Related JLW Owner are resident in the country identified
under the Shareholder's and Related JLW Owner's names in columns 1 and 2,
respectively, of Annex B hereto, and neither the Shareholder nor, if
applicable, the Related JLW Owner is resident in a territory outside such
country.
(b) The Shareholder and, if applicable, the Related JLW Owner
agree not to engage in any hedging transactions with regard to the
Consideration Shares unless in compliance with the Securities Act.
(c) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the Consideration Shares will be subject to the
provisions of the Stockholder Agreement, including, without limitation, the
restrictions on transfer and voting restrictions contained therein.
(d) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that the Consideration Shares are being offered and
sold to the Shareholder in reliance on specific exemptions from the
registration requirements of the United States federal and state securities
laws and that Parent is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of the Shareholder and, if applicable, the Related JLW Owner set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Shareholder to acquire Consideration Shares.
(e) The Shareholder and, if applicable, the Related JLW Owner
have received and have had an opportunity to carefully review the Offering
Memorandum, dated as of [!], 1998, delivered to the Shareholder and, if
applicable, the Related JLW Owner prior to the execution of this Agreement,
Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, Parent's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998, Parent's 1997 Annual Report to Stockholders and
proxy statement dated March 31, 1998 and Parent's Current Report on Form 8-
K dated September 3, 1998, and the Shareholder and, if applicable, the
Related JLW Owner have had a reasonable opportunity to ask questions of and
receive answers from Parent concerning Parent, and to obtain any additional
information reasonably necessary to verify the accuracy of the information
furnished to the Shareholder or such Related JLW Owner concerning Parent
and all such questions, if any, have been answered to the full satisfaction
of the Shareholder and, if applicable, the Related JLW Owner.
(f) The Shareholder and, if applicable, the Related JLW
Owner acknowledge that no representations or warranties have been made to
the Shareholder or such Related JLW Owner by Parent or any agent, employee
or Affiliate of Parent other than those contained in the Asia Region
Agreement, and in entering into this transaction the Shareholder and, if
applicable, the Related JLW Owner are not relying upon any information,
other than that referred to in the foregoing paragraph, contained in the
Asia Region Agreement and the other Operative Agreements, and the results
of independent investigations by the Shareholder and, if applicable, the
Related JLW Owner and his, her or its representatives; provided that the
Shareholder and, if applicable, the Related JLW Owner acknowledge and agree
that the only representations or warranties that Parent has made with
respect to such information are as set forth in Section 4.7 and 4.20 of the
Asia Region Agreement.
<PAGE>
Section 3.2 Regulation S.
(a) The Shareholder and, if applicable, the Related JLW Owner
acknowledge that each certificate representing Consideration Shares
delivered to or on behalf of the Shareholder shall include the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE 'SHARES') HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE 'ACT'), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH BELOW. BY THE ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT SUCH HOLDER IS NOT A U.S. PERSON AND IS ACQUIRING THE
SHARES IN AN OFFSHORE TRANSACTION, (2) AGREES THAT SUCH HOLDER WILL NOT
RESELL OR OTHERWISE TRANSFER THE SHARES EXCEPT (A) TO JONESLANG LASALLE
INCORPORATED (THE 'COMPANY') OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED
STATES, TO A TRANSFEREE THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
COMPANY A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SHARES (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE COMPANY), (D) OUTSIDE THE UNITED STATES, IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULES 904 AND 905 UNDER THE ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE) OR (F) PURSUANT TO ANY OTHER EXEMPTION FROM
REGISTRATION UNDER THE ACT (IF AVAILABLE) AND (3) AGREES THAT SUCH HOLDER
WILL GIVE EACH PERSON TO WHOM THE SHARES ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THE SHARES PURSUANT TO CLAUSES (C), (E) OR (F) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS 'OFFSHORE TRANSACTION,'
'UNITED STATES' AND 'U.S. PERSON' HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE ACT.
IN ADDITION, THE SHARES ARE SUBJECT TO THE PROVISIONS OF A
STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND BETWEEN THE
COMPANY AND THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF, AND AN
INDEMNITY AND ESCROW AGREEMENT, DATED AS OF OCTOBER 21, 1998, BY AND AMONG
THE COMPANY, THE PERSON WHOSE NAME APPEARS ON THE REVERSE HEREOF AND THE
OTHER PARTIES NAMED THEREIN, WHICH INCLUDE, WITHOUT LIMITATION, VARIOUS
ADDITIONAL RESTRICTIONS ON TRANSFER OF THE SHARES AND THE GRANTING OF
CERTAIN VOTING RIGHTS, A COPY OF WHICH WILL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT CHARGE.
(b) The Shareholder and, if applicable, the Related JLW Owner
understand that the Consideration Shares are being issued to the
Shareholder in reliance on Regulation S and have not been registered under
the Securities Act or with any securities regulatory authority of any state
of the United States or other jurisdiction and, therefore, that such
Consideration Shares (and all securities issued in exchange therefor or in
substitution thereof) cannot be resold in the absence of such registration,
except pursuant to an exemption from, or in a transaction not subject to,
such registration requirements. Except as set forth in the Stockholder
Agreement, the Shareholder, and if applicable, the Related JLW Owner are
aware that Parent is under no obligation to effect any such registration
under the Securities Act or otherwise with respect to such Consideration
Shares (or any securities issued in exchange therefor or in substitution
thereof), or to file for or comply with any exemption from such
registration.
(c) The Shareholder is, and any person for whose account it
is acquiring the Consideration Shares is, outside the "United States" (as
defined under Regulation S), and this Agreement and each of the Other
Operative Agreements was executed, and the investment decision to enter
into this Agreement was made, outside the United States.
(d) Neither the Shareholder nor, if applicable, the Related
JLW Owner is in the business of buying and selling securities.
(e) Neither the Shareholder nor, if applicable, the Related
JLW Owner will offer, sell or deliver any of the Consideration Shares, or
any interest or participation therein, until one year after the Closing
Date (the "Restricted Period"), except in an "offshore transaction" (as
defined under Regulation S) in accordance with Rule 904 of Regulation S,
pursuant to an effective registration statement under the Securities Act,
pursuant to Rule 144 under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act and
otherwise in accordance with this Agreement, the Asia Region Agreement and
the Stockholder Agreement.
(f) The Shareholder and, if applicable, the Related JLW Owner
acknowledge and agree that any resale or other transfer, or attempted
resale or other transfer, which Parent determines in good faith was made
other than in compliance with the restrictions stated herein and in the
Stockholder Agreement shall not be recognized by Parent in respect of
Consideration Shares, and that Parent may deliver a corresponding stop-
transfer order to the Transfer Agent to that effect. For so long as
Consideration Shares are subject to the provisions of the Stockholder
Agreement, no resale or other transfer of such Consideration Shares shall
be made unless in compliance with Article IV of the Stockholder Agreement,
including the requirement that prior to any such resale or other transfer,
Parent is furnished evidence reasonably satisfactory to Parent that such
resale or transfer is being made in compliance with the applicable
provisions of the Stockholder Agreement. At any time after such
Consideration Shares are no longer subject to the provisions of the
Stockholder Agreement, upon the written request of the holder thereof,
Parent shall remove the second legend set forth in Section 3.2(a) hereof
from the certificate(s) representing such Consideration Shares or replace
such certificate(s) with certificate(s) not bearing such legend.
(g) If the Shareholder or, if applicable, the Related JLW
Owner intend to transfer any of the Consideration Shares, or any interest
or participation therein, prior to the expiration of the Restricted Period,
the Shareholder or the Related JLW Owner, as the case may be, shall deliver
to Parent a written opinion of counsel to the transferee, which counsel and
opinion shall be reasonably satisfactory to Parent, to the effect that the
offer, sale and transfer of the Consideration Shares are not subject to
registration under the Securities Act or are permitted under Regulation S.
At any time after the Restricted Period, upon the written request of the
holder thereof, together with a written opinion of counsel, which counsel
and opinion shall be reasonably satisfactory to Parent, to the effect that
the first legend set forth in Section 3.2(a) hereof is no longer required
on the certificate(s) representing such Consideration Shares under the
applicable requirements of the Securities Act, Parent shall remove such
legend from the certificate(s) representing such Consideration Shares or
replace such certificate(s) with certificate(s) not bearing such legend.
(h) Neither the Shareholder nor any Related JLW Owner has
engaged in, nor during the Restricted Period will engage in, any "directed
selling efforts" (as defined under Regulation S) with respect to any
Consideration Shares.
ARTICLE IV
TERMINATION
Section 4.1 Termination of Agreement. This Agreement shall terminate
automatically upon the termination of the Asia Region Agreement pursuant to
and in accordance with the terms of Article XI thereof. If this Agreement
is so terminated and abandoned as provided herein, no party hereto shall
have any liability or further obligation to any other party to this
Agreement, except as set forth in the Asia Region Agreement. Sections 7.3
and 7.4 hereof shall survive the termination of this Agreement.
ARTICLE V
SURVIVAL, INDEMNIFICATION AND GENERAL RELEASE
Section 5.1 Survival of Representations, Warranties and Covenants.
None of the representations and warranties of Parent contained in this
Agreement, the Asia Region Agreement or any other Operative Agreement, or
any instrument delivered pursuant hereto or thereto, shall survive the
Closing. All representations and warranties of the Shareholder and, if
applicable, the Related JLW Owner contained in this Agreement or any other
Operative Agreement, or any instrument delivered pursuant hereto or
thereto, shall survive the Closing for the period specified in the Escrow
Agreement. The covenants and agreements of Parent contained in this
Agreement, the Asia Region Agreement or any other Operative Agreement, or
any instrument delivered pursuant hereto or thereto, shall not survive the
Closing, unless such covenants or agreements specify terms or are
contemplated to be performed in whole or in part on or after the Closing,
in which case any such covenants or agreements shall survive for such
specified terms or until performed in full. The covenants and agreements
of the Shareholder and, if applicable, the Related JLW Owner contained in
this Agreement, the Asia Region Agreement or any other Operative Agreement
shall survive the Closing without limitation as to time unless the covenant
or agreement specifies a term, in which case such covenant or agreement
shall survive for such specified term.
Section 5.2 Indemnification. Parent and the other Indemnified
Persons (as defined in the Escrow Agreement), shall be indemnified,
defended and held harmless from and against any and all Liabilities and
against all claims in respect thereof to the extent, and subject to the
terms, conditions and limitations set forth in the Escrow Agreement.
Section 5.3 Release by the Shareholder. The Shareholder and, if
applicable, the Related JLW Owner, for themselves and for each of their
respective Associated Parties, to the fullest extent permitted by
applicable law, hereby, irrevocably, unconditionally and completely
releases, waives, relinquishes and forever discharges each of (i) the
Buyers from any claims or causes of action arising out of or relating to
the Integration (other than Post-Closing Actions) or the allocation of the
Consideration among the Shareholders and Other Shareholders under the
Purchase Agreements, and (ii) the Companies, the Europe/USA Region
Companies and the Australasia Region Companies together with their
respective Subsidiaries, successors and past, present and future assigns,
directors, officers, employees, agents and representatives in their
capacities as such (other than the Shareholder and, if applicable, the
Related JLW Owner) of any of the foregoing (collectively, the "Released
Persons"), from all past, present and future disputes, claims,
controversies, demands, rights, obligations, liabilities, actions and
causes of action of every kind and nature (whether accrued or unaccrued)
whatsoever against any one or more of the Released Persons, which are
related directly or indirectly to events occurring prior to the Closing
Date (other than, in each case, any Surviving Claims), including: (A) any
unknown, unsuspected or undisclosed claim; (B) any claim or right that may
be asserted or exercised by the Shareholder and, if applicable, the Related
JLW Owner in such Shareholder's or Related JLW Owner's capacity as a
shareholder, director, officer or employee of any Company, Europe/USA
Region Company or Australasia Region Company, or any of their respective
Subsidiaries, as a partner or former partner in any predecessor of any
Company, Europe/USA Region Company or Australasia Region Company, or any of
their respective Subsidiaries, or as a direct or indirect beneficiary of
any trust or trust arrangement, whether implied or actual, relating
directly or indirectly to any portion of the businesses or assets of the
JLW Businesses (including, without limitation, the right to receive profits
therefrom or an ownership or other participatory interest or right therein)
or in any other capacity; and (C) any claim, right or cause of action based
upon any breach of any express, implied, oral or written contract or
agreement; provided that the releases set forth in the foregoing clauses
(i) and (ii) shall not apply to any Surviving Claims.
ARTICLE VI
DEFINITIONS
Section 6.1 Certain Terms. When used in this Agreement, the
following terms shall have the meanings specified:
"Associated Parties" when used herein with respect to the
Shareholder or the JLW Related Owner, means and includes: (i) the
Shareholder's or Related JLW Owner's successors, executors, administrators,
beneficiaries, heirs and estate; and (ii) the Shareholder's or Related JLW
Owner's future assigns.
"Buyers" means, collectively, Parent, US Acquisition Sub and US
Acquisition Sub II.
"Operative Agreements" means, collectively, this Agreement, the
Asia Region Agreement, the Stockholder Agreement, the Escrow Agreement and
the Indemnification Agreement Guarantees.
"Other Joinder Agreements" means the Purchase and Sale Joinder
Agreement (Europe/USA) and the Purchase and Sale Joinder Agreement
(Australasia), in the form attached to the Europe/USA Region Agreement and
the Australasia Region Agreement, respectively.
"Other Shareholders" means, collectively, the Persons whose
names appear on one of the Preliminary Master Shareholder Lists attached to
the Purchase Agreements, and who execute and deliver the applicable Other
Joinder Agreements and the other applicable Shareholder Transaction
Documents.
"Permitted JLW Shareholder" means, in respect of the Related
JLW Owner: (a) a trust of which there are no beneficiaries other than such
Related JLW Owner and/or any descendant(s) of such Related JLW Owner, the
spouse or surviving spouse of such Related JLW Owner (each a "permitted
beneficiary"), or (b) a corporation or limited liability company of which
there are no stockholders or members (or other Persons holding any direct
or indirect ownership interest therein) other than such Related JLW Owner
and/or one or more permitted beneficiaries.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Regulation S" means Regulation S under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended
and any successor statute, and the rules and regulations of the SEC
promulgated thereunder.
"Surviving Claim" means any of the following: (i) any claim
arising out of rights expressly granted to a Shareholder or, if applicable,
Related JLW Owner, under the Integration Agreements; (ii) any right to
compensation or employee benefits accrued in the ordinary course of
employment; (iii) any right to reimbursement of employee expenses that are
reimbursable pursuant to applicable existing policies (as such policies may
be modified from time to time) prior to the Closing Date consistent with
the limitations set forth in Article V of the Asia Region Agreement; (iv)
any other claim arising under any employment or service agreement between
such Shareholder or, if applicable, Related JLW Owner, and any Released
Person; (v) any claim for indemnification that the Shareholder or, if
applicable, Related JLW Owner may have against any Released Person under
the applicable corporate charter, by-laws or similar organizational
documents or under applicable insurance, if any, or in respect of actions
taken by such Shareholder or, if applicable, Related JLW Owner within the
scope of his or her employment or as a director or officer of any Released
Person; or (vi) any right expressly set forth in the Asia Region Agreement
or any other Operative Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Specific Enforcement; Other Remedies. The Shareholder
and, if applicable, the Related JLW Owner acknowledges and agrees that
Parent would be irreparably damaged in the event any of the provisions of
this Agreement were not performed by the Shareholder and such Related JLW
Owner in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that Parent shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States (or any state thereof) or country having jurisdiction, in
addition to any other remedy to which Parent may be entitled at law or
equity.
Section 7.2 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby
(unless such a construction is unreasonable).
Section 7.3 Expenses. Except as provided in the Asia Region
Agreement, each of the parties hereto shall pay his, her or its own legal,
accounting and other miscellaneous expenses incident to this Agreement, the
other Operative Agreements and the Integration Agreements.
Section 7.4 Press Releases and Announcements. After the date of this
Agreement and prior to the Closing, neither the Shareholder nor, if
applicable, the Related JLW Owner shall directly or indirectly make or
cause to be made any public announcement or disclosure, or issue any notice
with respect to this Agreement or any other Operative Agreement or the
transactions contemplated by this Agreement and the other Operative
Agreements, without the prior written consent of Parent.
Section 7.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the Asia Region Agreement and the other Operative
Agreements, and the schedules and the other writings referenced herein and
therein, (a) constitute the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto and (b) are not intended to confer upon any person other
than the parties any rights or remedies hereunder.
Section 7.6 Amendment and Modification. This Agreement may not be
amended, modified or supplemented except by an agreement in writing signed
by each of the parties hereto.
Section 7.7 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier, or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed
received), in each case addressed to the party to be notified, in the case
of Parent, at the address set forth in the Asia Region Agreement and, in
the case of the Shareholder or, if applicable, the Related JLW Owner, at
the address set forth on the signature page hereto, or such other address
of a party as such party shall have specified by prior written notice to
the other party in accordance with this Section 7.7. Such notices shall be
deemed given: at the time personally delivered, if delivered by hand with
receipt acknowledged; upon transmission thereof by the sender and issuance
by the transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error, if telecopied;
when answered back if telexed; and the second business day after timely
delivery to the courier, if sent by air courier.
Section 7.8 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned
by any party without the written consent of the other parties.
Section 7.9 Headings. The Article and Section headings contained
herein are for reference purposes only and shall not effect in any way the
meaning or interpretation of this Agreement.
Section 7.10 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Illinois, without giving effect to the conflict of laws provisions thereof.
Section 7.11 Jurisdiction. Subject to the arbitration provisions set
forth in Section 7.1 of the Escrow Agreement, each of the parties hereto
hereby expressly and irrevocably submits to the non-exclusive personal
jurisdiction of the United States District Court for the Northern District
of Illinois, and to the jurisdiction of any other competent court of the
State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441, and to the non-exclusive
jurisdiction of the High Court of England and Wales in London (the "English
Courts"), in connection with all disputes arising out of or in connection
with this Agreement or the transactions contemplated hereby and agrees not
to commence any litigation relating thereto except in such courts; provided
that if the aforementioned Illinois Courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal court located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each of party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each of the parties hereto agrees that each
of the other parties shall have the right to bring any action or proceeding
for enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
Section 7.12 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 7.13 Service of Process. Each party irrevocably consents to
the service of process outside the territorial jurisdiction of the courts
referred to in Section 7.11 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified herein. However, the foregoing shall not limit the
right of a party to effect service of process on the other party by any
other legally available method.
Section 7.14 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Section 7.15 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO THE
FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
<PAGE>
IN WITNESS WHEREOF, the Shareholder and, if applicable, the
Related JLW Owner and Parent have caused this Purchase and Sale Joinder
Agreement (Asia) to be duly executed and delivered as of the day and year
first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
<PAGE>
IN WITNESS WHEREOF, the Shareholder and, if applicable, the
Related JLW Owner and Parent have caused this Purchase and Sale Joinder
Agreement (Asia) to be duly executed and delivered as of the day and year
first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
EXHIBIT 10.7
- ------------
[FORM OF INDEMNITY AND ESCROW AGREEMENT]
INDEMNITY AND ESCROW AGREEMENT, dated as of October 21, 1998
(this "Agreement"), by and among (i) LaSalle Partners Incorporated, a
Maryland corporation ("Parent"), JLLINT, Inc., an Illinois corporation and
an indirect wholly-owned subsidiary of Parent ("US Acquisition Sub"),
JLLIP, Inc., an Illinois corporation and an indirect wholly-owned subsid-
iary of Parent ("US Acquisition Sub II"), LPI (Australia) Holdings Pty
Limited, a corporation organized under the laws of the Australian Capital
Territory and an indirect wholly-owned subsidiary of Parent ("Australia
Acquisition Sub" and, together with Parent, US Acquisition Sub and US
Acquisition Sub II, the "Buyers"), (ii) the Persons named as "Shareholders"
on the signature pages hereto (each a "Shareholder" and, collectively, the
"Shareholders" (which term includes the Management Shareholders)), and in
respect of each Shareholder, if applicable, the person named as its
"Related JLW Owner" on the applicable signature page hereto (each a
"Related JLW Owner" and, collectively, the "Related JLW Owners") and (iii)
Harris Trust and Savings Bank, as escrow agent (the "Escrow Agent").
WHEREAS, as of the date hereof, Parent and the other parties
named therein are entering into a Purchase and Sale Agreement (the "Eu-
rope/USA Region Agreement"), pursuant to which, among other things, Parent
has the right (and may be required) to acquire all of the issued and
outstanding capital stock or share capital, as applicable, of each of the
Europe/USA Region Companies;
WHEREAS, as of the date hereof, Parent, US Acquisition Sub, US
Acquisition Sub II and the other parties named therein are entering into a
Purchase and Sale Agreement, (the "Asia Region Agreement"), pursuant to
which, among other things, US Acquisition Sub and US Acquisition Sub II
will collectively acquire (except as otherwise set forth therein) all of
the issued and outstanding share capital of each of the Asia Region
Companies;
WHEREAS, as of the date hereof, Parent, US Acquisition Sub,
Australia Acquisition Sub and the other parties named therein are entering
into a Purchase and Sale Agreement (the "Australasia Region Agreement" and,
together with the Europe/USA Region Agreement and the Asia Region Agree-
ment, the "Purchase Agreements" and each, individually, a "Purchase
Agreement"), pursuant to which, among other things, Australia Acquisition
Sub and US Acquisition Sub will collectively acquire all of the issued and
outstanding share capital of each of the Australasia Region Companies;
WHEREAS, it is a condition to the consummation of the transac-
tions contemplated by the Purchase Agreement and Joinder Agreement to which
each Shareholder and in respect of such Shareholder, if applicable, its
Related JLW Owner are parties (the "Applicable Purchase Agreement" and the
"Applicable Joinder Agreement," respectively) that such Shareholder and, if
applicable, such Related JLW Owner execute and deliver this Agreement;
WHEREAS, pursuant to Section 6.7 of each Purchase Agreement,
the Buyers have agreed, among other things, to establish a trust (the
"ESOT," with the trustee thereof being referred to herein as the "ESOT
Trustee") for the purpose of holding and distributing 1,787,710 shares of
Parent Common Stock (the "ESOT Shares") to certain employees of the JLW
Businesses, in accordance with the terms and conditions to be set forth in
the trust agreement (the "ESOT Trust Agreement") to be entered into in
connection therewith;
WHEREAS, in connection with the creation of the ESOT, the
Buyers will collectively deposit with the Escrow Agent (i) 93,023 ESOT
Shares on behalf of the ESOT to be held by the Escrow Agent as Escrow
Shares and (ii) 110,171 ESOT Shares on behalf of the ESOT to be held by the
Escrow Agent as Adjustment Shares;
WHEREAS, the ESOT Trustee shall enter into an appropriate
joinder agreement (the "ESOT Joinder Agreement"), pursuant to which, among
other things, such ESOT Trustee shall become a party to this Agreement and
agree to be bound by the applicable terms hereof, in each case solely in
its capacity as trustee of the ESOT;
WHEREAS, pursuant to Section 1.3(c) of the Asia Region Agree-
ment, the appropriate Buyers will collectively deposit with the Escrow
Agent all of the Forfeiture Shares under the Asia Region Agreement (the
"Asia Region Forfeiture Shares") to be held by the Escrow Agent as Escrow
Shares, pursuant to and in accordance with Sections 1.1(f), 3.4(e) and 3.7
hereof;
WHEREAS, Sections 1.2, 1.3 and 6.7 of each Purchase Agreement
and Sections 1.2 and 1.3 of each Joinder Agreement provide for the place-
ment in escrow, pursuant to the terms of this Agreement, of the Escrow
Shares and the Adjustment Shares;
WHEREAS, pursuant to a Shareholders Contribution and Coordina-
tion Agreement to be entered into pursuant to Section 1.8 of each Purchase
Agreement (the "SCCA"), the Shareholders, the Related JLW Owners and the
JLW Sellers are expected to appoint Robert Orr, Ken Winterschladen and
Gerry Kipling as the "Shareholders' Representatives," and Richard Jones,
Christopher Radford and Andrew Martin as their respective alternates, for
the purposes of the Purchase Agreements, the Joinder Agreements and this
Agreement and have agreed to reapportion the various indemnification and
payment obligations of the Shareholders and the Related JLW Owners under
this Agreement, the Joinder Agreements and the Purchase Agreements; and
WHEREAS, pursuant to the Purchase Agreements, the SCCA and the
Joinder Agreements the Shareholders have authorized the Shareholders'
Representatives to, among other things, (i) take all action necessary in
connection with the defense and/or settlement of any claims made against
the Escrow Fund (as hereinafter defined), (ii) give and receive on behalf
of the Shareholders and the Related JLW Owners certain notices required to
be given under this Agreement, and (iii) take on behalf of the Shareholders
and the Related JLW Owners certain additional actions contemplated to be
taken by or on behalf of the Shareholders and the Related JLW Owners by the
terms of this Agreement.
NOW THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, in the Purchase
Agreements and in the other Operative Agreements (as defined in each of the
Purchase Agreements, which Operative Agreements as so defined are herein
collectively referred to as the "Operative Agreements," and each, individu-
ally, as an "Operative Agreement"), the receipt and sufficiency of which
are hereby acknowledged, and intended to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
INDEMNIFICATION
Section 1.1 Indemnification by the Shareholders.
Subject to the terms and conditions and limitations set forth in this
Agreement, each of the Buyers and their respective Subsidiaries and
Affiliates (other than in each case the Europe/USA Region Companies, the
Asia Region Companies, the Australasia Region Companies and their respec-
tive Subsidiaries, but subject to the last paragraph of this Section
1.1(a)) together with their respective directors, officers, employees and
agents (collectively, the "Indemnified Persons") shall be defended,
indemnified and held harmless from and against any and all Losses and
Expenses arising out of or relating to:
(i) (x) any breach by any Article III
Entity of any representation or warranty of such Article III Entity
contained in Article III of any Purchase Agreement or in any certificate
delivered on behalf of any Article III Entity, to the Buyers or any of them
pursuant thereto, (y) except as disclosed in Section 3.23 of the Company
Disclosure Schedule to each of the Purchase Agreements, all Taxes of any
JLW Partnership, Europe/USA Region Company (or Subsidiary thereof), Asia
Region Company (or Subsidiary thereof) or Australasia Region Company (or
Subsidiary thereof) (whether or not shown as due on any Tax Return)
attributable to any taxable year or period ending on or before the Closing
Date, including any Pre-Closing Period (as defined in Section 2.3), except
for Taxes which are reserved for and shown on any Final Closing Date
Balance Sheet and (z) any claim for indemnification made pursuant to the
agreements referenced in Section 6.11 of each Purchase Agreement, but only
to the extent that the claim that gave rise to such indemnification claim
arose out of or was related to the allocation of Consideration among the
Shareholders (with a claim for indemnification based on (A) a breach
referred to in clause (x) or, (B) clause (z) above or (C) in respect of any
such Taxes referred to in clause (y) above being sometimes referred to
herein as an "Entity Misrepresentation Claim");
(ii) any intentional and wilful breach
by any Management Shareholder of any representation or warranty of such
Management Shareholder contained in Article III of any Purchase Agreement
or in any certificate delivered by such Management Shareholder pursuant to
Section 8.4 of such Purchase Agreement (with a claim for indemnification
based on such a breach being sometimes referred to herein as a "Management
Misrepresentation Claim");
(iii) any breach by any Shareholder or
Related JLW Owner of any representation or warranty of such Shareholder or
Related JLW Owner contained in any Joinder Agreement (with a claim for
indemnification based on such a breach being sometimes referred to herein
as an "Individual Shareholder Misrepresentation Claim");
(iv) any breach by any JLW Seller, Eu-
rope/USA Region Company, Asia Region Company or Australasia
Region Company of any covenant or agreement of such JLW Seller Europe/USA
Region Company, Asia Region Company or Australasia Region Company contained
in any Purchase Agreement (with a claim for indemnification based on such a
breach being sometimes referred to herein as an "Entity Covenant Claim,"
which claim, in the case of any Europe/USA Region Company, Asia Region
Company or Australasia Region Company, may only be based on a breach that
has occurred prior to the Closing);
(v) any breach by any Shareholder or
Related JLW Owner of any covenant or agreement of such Shareholder or
Related JLW Owner contained in any Joinder Agreement or other Operative
Agreement (with any claim for indemnification based on such a breach being
sometimes referred to herein as a "Shareholder Covenant Claim");
(vi) all expenses reasonably incurred
in connection with enforcing any arbitrator awards pursuant to Article VIII
hereof; and
(vii) any item specified on Schedule 2
hereto.
For purposes of this Agreement, any Losses or Expenses incurred
by any Europe/USA Region Company, Asia Region Company or Australasia Region
Company, or any of their respective Subsidiaries, shall be deemed to be
Losses or Expenses incurred by the Buyers, and the indemnification of the
Indemnified Persons provided for in this Agreement shall be provided by the
Shareholders and their Related JLW Owners pursuant to and in accordance
with the terms, conditions and limitations set forth in this Agreement;
provided that the Escrow Shares deposited with the Escrow Agent on behalf
of the ESOT (the "ESOT Escrow Shares") shall also be available in accor-
dance with the terms, conditions and limitations set forth in this Agree-
ment to satisfy the indemnification obligations of the Shareholders and
their Related JLW Owners to the extent a claim is made against the Escrow
Fund. Notwithstanding anything to the contrary contained in this Agree-
ment, (i) each Asia Region Shareholder and such Shareholder's Related JLW
Owner, if any (jointly and severally between such Shareholder and its
Related JLW Owner), shall, severally and not jointly, indemnify, defend and
hold harmless the Indemnified Persons from and against any and all Losses
and Expenses arising out of or relating to (A) any breach by any JLW Seller
of any representation or warranty of any JLW Seller under Article IIIA of
the Asia Region Agreement and (B) any breach by any JLW Seller of any
covenant or agreement of any JLW Seller under Article I (other than
Sections 1.4 through 1.9) or Article IIIA of the Asia Region Agreement and
(ii) each Australasia Region Shareholder and such Shareholder's Related JLW
Owner, if any (jointly and severally between such Shareholder and its
Related JLW Owner), shall, severally and not jointly, indemnify, defend and
hold harmless the Indemnified Persons from and against any and all Losses
and Expenses arising out of or relating to (A) any breach by any JLW Seller
of any representation or warranty of any JLW Seller under Article IIIA of
the Australasia Region Agreement and (B) any breach by any JLW Seller of
any covenant or agreement of any JLW Seller under Article I (other than
Sections 1.4 through 1.9) or Article IIIA of the Australasia Region
Agreement. For purposes of this Agreement: (i) any claim under clause
(i)(A) or clause (ii)(A) of the immediately preceding sentence shall be
deemed an Individual Shareholder's Misrepresentation Claim, (ii) any claim
under clause (i)(B) or clause (ii)(B) of the immediately preceding sentence
shall be deemed a Shareholder Covenant Claim, (iii) the several liability
of each Asia Region Shareholder (together with its Related JLW Owner, if
any) shall be based on such Asia Region Shareholder's pro rata share of the
Losses and Expenses subject to indemnification hereunder, which pro rata
share shall be based on the proportion that the number of Initial Consider-
ation Shares allocated to such Asia Region Shareholder on the Final Master
Shareholder List under the Asia Region Agreement bears to the aggregate
number of Initial Consideration Shares allocated to all Asia Region
Shareholders on such Final Master Shareholder List and (iv) the several
liability of each Australasian Region Shareholder (together with its
Related JLW Owner, if any) shall be based on its pro rata share of the
Losses and Expenses subject to indemnification, which pro rata share shall
be based on the proportion that the number of Initial Consideration Shares
allocated to such Australasia Region Shareholder on the Final Master
Shareholder List under the Australasia Region Agreement bears to the
aggregate number of Initial Consideration Shares allocated to all Austral-
asia Region Shareholders on such Final Master Shareholder List.
(b) Notwithstanding any other provision hereof, and except
with respect to any Recourse Claim, the sole monetary recourse or monetary
relief of all Indemnified Persons against any Person (including, without
limitation, any JLW Seller, Shareholder or Related JLW Owner) or asset in
respect of any and all Losses and Expenses set forth or referred to in
Section 1.1 hereof or Losses and Expenses otherwise based upon or arising
out of or under this Agreement, the Purchase Agreements or any other
Operative Agreements, or upon or arising out of the facts and circumstances
giving rise to such Losses or Expenses (regardless of the legal theory or
the nature of the claim for recovery or cause of action) shall be limited
to the indemnification provided hereunder from (and only to the extent of)
the Escrow Fund as the same may exist from time to time, provided, that
nothing contained herein shall preclude any assertion of any equitable
remedies that may exist for fraud; and provided, further, that the Escrow
Fund shall not be available for Losses or Expenses incurred as a result of
any breach of any covenant contained in any Stockholder Agreement.
(c) Notwithstanding the provisions of Section 1.1(a) hereof:
(i) with respect to any Individual Shareholder Misrep-
resentation Claim or Shareholder Covenant Claim, each Shareholder and, if
applicable, its Related JLW Owner from whom such Shareholder has received
Shares (or the right to receive Shares) breaching the applicable represen-
tation, warranty or covenant contained in the Applicable Joinder Agreement
or other Operative Agreement to which such Shareholder or such Related JLW
Owner is a party (jointly and severally between such Shareholder and such
Related JLW Owner) shall be severally liable for any Losses and Expenses
arising out of or relating to any such breach; and
(ii) with respect to any Management Misrepresentation
Claim, each Management Shareholder who has intentionally and willfully
breached the applicable representation or warranty shall be severally
liable for any Losses and Expenses arising out of or relating to any such
breach, but only to the extent that such breach, individually or in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect.
(d) Notwithstanding any other provisions hereof, the liabili-
ty of each Shareholder and, if applicable, its Related JLW Owner for
monetary damages or monetary relief, including each Management Shareholder,
under this Agreement, the Applicable Joinder Agreement and the other
Operative Agreements to which such Shareholder and, if applicable, each
Related JLW Owner is a party (whether based on a breach of any agreement,
covenant, representation or warranty contained therein or pursuant to any
indemnification obligation set forth therein or based on any other cause of
action or legal theory in respect thereof) shall not exceed the aggregate
value of the Consideration received or to be received by such Shareholder
and Related JLW Owner under the Applicable Joinder Agreement, this Agree-
ment, the SCCA or other Operative Agreements to which such Shareholder and,
if applicable, Related JLW Owner is a party (it being understood that, for
such purposes, each Consideration Share shall be valued at an amount equal
to US$32.215 (subject to appropriate adjustment in the case of stock
dividends, stock splits, combinations or other recapitalizations of Parent
effected after the date hereof). The ESOT Escrow Shares shall be available
in accordance with the terms, conditions and limitations set forth in this
Agreement to satisfy the indemnification obligations of the Shareholders
and their Related JLW Owners to the extent a claim is made against the
Escrow Fund (it being understood that, for such purposes, each ESOT Escrow
Share shall be valued at an amount equal to US$32.215 (subject to appropri-
ate adjustment in the case of stock dividends, stock splits, combinations
or other recapitalizations of Parent effected after the date hereof).
(e) Notwithstanding the provisions of Section 1.1(a)(i) or
Section 1.1(a)(vii) hereof, to the extent that Indemnified Persons incur
Losses or Expenses under such Section 1.1(a)(i) or such Section 1.1(a)(vii-
), the Indemnified Persons shall be entitled to indemnification only with
respect to any claim relating to Losses and Expenses which (as finally
determined hereunder) individually exceeds US$100,000 (each a "Minimum
Claim") and in any event only if the aggregate amount of all Minimum Claims
by all Indemnified Persons (as finally determined hereunder) exceeds
US$5,000,000, in which case, the Indemnified Persons shall be indemnified
for the full amount of all such Minimum Claims; provided, that the forego-
ing limitations do not apply with respect to a Recourse Claim or any Entity
Misrepresentation Claim arising out of or relating to any breach by any
Article III Entity of any representation or warranty of such Article III
Entity contained in Section 3.1 of any Purchase Agreement; provided that to
the extent that Parent actually receives an indemnification payment
directly from a Shareholder or the Related JLW Owner in respect of such
Recourse Claim or Entity Misrepresentation Claim, the amount of such
payment shall not be counted in determining whether the minimum Claims
exceed US$5,000,000. For purposes of determining any breach of the
representations and warranties referred to in Section 1.1(a)(i) hereof,
references to "Company Material Adverse Effect," "material" or "materially"
or any other word that is derived from the word "material" set forth
therein shall be disregarded, except as, and to the extent, set forth on
Schedule 1 hereto.
(f) Notwithstanding any other provision of this Agreement,
the Asia Region Forfeiture Shares shall be available in accordance with the
terms, conditions and limitations set forth in this Agreement solely to
satisfy the indemnification obligations of the Asia Region Shareholders and
their Related JLW Owners to the extent a claim is made against the Escrow
Fund for any Entity Misrepresentation Claim arising out of or relating to
any breach of Section 3.1 of the Asia Region Agreement (an "Asian Title
Claim").
(g) Notwithstanding any other provision of this Agreement, as
of and after the Closing, no Europe/USA Region Company, Asia Region Company
or Australasia Region Company, or any of their respective Subsidiaries,
shall have any liability under this Agreement, and no JLW Seller, JLW
Party, Asia Region Shareholder, Australasia Region Shareholder or Eu-
rope/USA Region Shareholder or Related JLW Owner of any of the foregoing,
if any, shall threaten or bring any claim or Action whatsoever against a
Europe/USA Region Company, Asia Region Company or Australasia Region
Company, or any of their respective Subsidiaries or Affiliates or any of
their respective directors, officers, employees and agents (other than
against a Europe/USA Region Shareholder, Asia Regional Shareholder, or
Australasia Region Shareholder or any Related JLW Owner of any of the
foregoing for contribution to any amounts payable by such JLW Seller, JLW
Party, Asia Region Shareholder, Australasia Region Shareholder, Europe/USA
Region Shareholder or Related JLW Owner or any of the foregoing under this
Section 1.1 or Article II hereof or otherwise under this Agreement.
(h) Notwithstanding the provisions of Section 1.1(a) hereof,
(i) no claim for indemnification may be asserted by any Indemnified Person
under this Agreement prior to the Closing Date, and no Entity Misrepresen-
tation Claim, Management Misrepresentation Claim or Entity Covenant Claim
may be asserted unless notice of such claim is properly given pursuant to
Section 1.2 hereof prior to (A) the date which is five (5) Business Days
prior to December 31, 2000 with respect to any Asian Title Claim that is
asserted in respect of the Asia Region Forfeiture Shares and (B) the 450th
day after the Closing Date with respect to all other Entity Misrepresenta-
tion Claims, Management Misrepresentation Claims and Entity Covenant Claims
and (ii) any Individual Shareholder Misrepresentation Claim, Shareholder
Covenant Claim or any claim made under Article II hereof may be asserted at
any time.
(i) Notwithstanding anything to the contrary contained
herein, each Party shall bear its own Expenses incurred in connection with
any Action, arbitration or Claim solely between the parties hereto (other
than pursuant to Section 6.5 of any Stockholder Agreement), subject to the
right of any court or arbitration panel to award Expenses to the prevailing
party (excluding Expenses incurred in connection with the enforcement of
any judgment or award).
(j) Neither Article I nor Article II of this Agreement nor,
for the avoidance of doubt, any covenant or indemnity contained in any of
the Purchase Agreements shall:-
(A) cover any Tax Liability consisting of
Transfer Taxes ("IP Transfer Taxes") arising in respect of the
Intellectual Property Rights transferred to NewCo 1 pursuant to the
Integration Agreements (so that, for the avoidance of doubt, any liability
in respect of IP Transfer Taxes shall not count towards the Transfer Tax
Threshold as defined in Section 2.1(a)(ii)); or
(B) cover any Tax Liability attributable to any
amendment, modification or tax election (including in particular any
voluntary disclaimer of the whole or part of any allowance available under
Part II of the Capital Allowances Act 1990 or the failure to make or
maintain a valid claim for any other available relief from Tax) made to or
in a Tax Return by the Indemnified Persons after the Closing Date with
respect to any Tax Return for a Pre-Closing Period without the consent of
the Shareholders' Representatives (which consent shall not be unreasonably
withheld or delayed) with respect to such Company or Company Subsidiary.
Any cash payment made to an Indemnified Person in respect of a
liability arising under this Agreement in respect of any of the Purchase
Agreements (an "Indemnity Payment") shall so far as possible constitute
repayment of any Cash Consideration paid under the Applicable Purchase
Agreement to the Person making the Indemnity Payment in question.
(k) EACH SHAREHOLDER AND ITS RELATED JLW OWNER (AS APPLICA-
BLE) ACKNOWLEDGES THAT SUCH SHAREHOLDER AND RELATED JLW OWNER HAS RECEIVED
A COPY OF THE APPLICABLE JOINDER AGREEMENT AND THE APPLICABLE PURCHASE
AGREEMENT AND HAS REVIEWED EACH SUCH AGREEMENT, INCLUDING, WITHOUT LIMITA-
TION, (I) THE REPRESENTATIONS AND WARRANTIES OF SUCH SHAREHOLDER AND
RELATED JLW OWNER (AS APPLICABLE) CONTAINED IN THE APPLICABLE JOINDER
AGREEMENT (AND (A) WITH RESPECT TO THE ASIA REGION SHAREHOLDERS, THE
REPRESENTATIONS AND WARRANTIES OF THE APPLICABLE JLW SELLERS UNDER ARTICLE
IIIA OF THE ASIA REGION PURCHASE AGREEMENT AND (B) WITH RESPECT TO THE
AUSTRALASIA REGION SHAREHOLDERS, THE REPRESENTATIONS AND WARRANTIES OF THE
APPLICABLE JLW SELLERS UNDER ARTICLE IIIA OF THE AUSTRALASIA REGION
PURCHASE AGREEMENT) AND (II) WITH RESPECT TO MANAGEMENT SHAREHOLDERS, THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III OF EACH OF THE
PURCHASE AGREEMENTS.
Section 1.2 Notice. The parties intend that all indemni-
fication claims be made as promptly as practicable by the Indemnified
Persons. Whenever any claim shall arise for indemnification under Section
1.1(a) or Article II hereof, the Indemnified Person shall promptly notify
(i) the Shareholders' Representatives and (ii) each Shareholder, if any,
and, if applicable, the Related JLW Owner against whom a claim for indemni-
fication is being made directly, of the facts constituting the basis for
such claim and, to the extent ascertainable at that time, a good faith
estimate of the amount of Losses that are subject to such claim. Subject
to Section 1.1(e) hereof, the failure by the Indemnified Persons to so
notify shall not relieve the Indemnifying Persons of any liability that he,
she, it or they may have to the Indemnified Persons, except to the extent
the Indemnifying Persons demonstrate that the defense of such action is
materially prejudiced thereby. In the case of any Asian Title Claim, the
claim notice shall specify an allocation of such claim between the Asia
Region Forfeiture Escrow Shares and the other Escrow Shares comprising the
Escrow Fund. The applicable Indemnified Persons shall also notify the
Shareholders' Representatives (and any applicable Shareholder and, if
applicable, the Related JLW Owner) on a quarterly basis of (i) the amount
of any Expenses incurred by such Indemnified Persons during the preceding
quarter for which indemnification is to be sought and (ii) any change in
the estimated amount of Losses subject to such claim. For purposes of this
Agreement, "Indemnifying Persons" means the Person or Persons obligated to
indemnify the Indemnified Persons.
Section 1.3 Claims by Third Parties. With respect to
claims made by third parties, the Indemnified Persons shall be entitled to
control the defense of such claims and shall use commercially reasonable
efforts to defend such claims in connection therewith with counsel reason-
ably satisfactory to the Indemnifying Persons and shall conduct such
defense in good faith; provided, that:
(a) the Indemnifying Persons and the Shareholders'
Representatives shall be entitled to participate in the defense of such
claim and to employ counsel at their own expense to assist in the handling
of such claim;
(b) With respect to claims other than Tax claims, no
Indemnified Person shall consent to the entry of any judgment or enter into
any settlement without the consent of (x) the Indemnifying Person or
Persons and (y) the Shareholders' Representatives (if a claim is being made
against the Escrow Fund) (which consent shall not be unreasonably withheld
or delayed), (i) if such judgment or settlement does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnifying Person of a release from all liability with respect to such
claim, (ii) if such judgment or settlement would result in the finding or
admission of any violation of Law, (iii) if as a result of such consent or
settlement, injunctive or other equitable relief would be imposed against
the Indemnifying Party, or (iv) such settlement would result in Liabilities
not covered by the Escrow Fund; provided that, prior to settling any claim
with respect to which such consent is not required, the Indemnified Persons
shall nonetheless consult with and consider in good faith the views of the
Indemnifying Persons and the Shareholders' Representatives; and
(c) with respect to Tax claims, no Indemnified Person
shall consent to the entry of any judgment or enter into any settlement
without the consent (which consent shall not be unreasonably withheld) of
the Indemnifying Person or Persons and, if a claim is being made against
the Escrow Fund, the Shareholders' Representatives.
ARTICLE II
TAX MATTERS
Section 2.1 Special Tax and other Indemnification by the
Shareholders and Related JLW Owners. (a) Each Shareholder and, if applica-
ble, its Related JLW Owner (jointly and severally between such Shareholder
and its Related JLW Owner) severally agrees to indemnify, defend and hold
the Indemnified Persons harmless from and against,
(i) (x) all Taxes of such Shareholder
and the Related JLW Owner, if applicable, and (y) any social security,
contributions or similar employment Tax in respect of such Shareholder
and/or Related JLW Owner, if applicable, imposed on any of the Europe/USA
Region Companies, the Asia Region Companies, the Australasia Region
Companies or any of their respective Subsidiaries and any other Taxes
required to be withheld as a result of or in connection with the income of,
or the payment or transfer of Consideration to, such Shareholder and/or
Related JLW Owner (but excluding any Transfer Taxes), but in each case only
to the extent such Taxes are not reserved for and shown on the Final
Closing Date Balance Sheets;
(ii) any Transfer Taxes arising out of
or in connection with any transaction between (x) such Shareholder and/or
such Related JLW Owner and (y) the Buyers, the JLW Partnerships, the JLW
Sellers, the Europe/USA Region Companies, the Asia Region Companies, the
Australasia Region Companies or any of their respective Subsidiaries
contemplated by the Purchase Agreements (including the Integration) or this
Agreement, but only to the extent that the aggregate amount of Transfer
Taxes indemnifiable under this provision by all Shareholders and Related
JLW Owners (such aggregate indemnification amount without giving effect to
the limitation below being herein called the "Aggregate Transfer Tax
Liability") exceeds the greater of (1) US$3 million and (2) the aggregate
amount reserved for and shown on the Final Closing Date Balance Sheets (the
amount of any excess being herein called the "Excess Amount" and the
difference between the Excess Amount and the Aggregate Transfer Tax
Liability being herein called the "Transfer Tax Threshold") and provided
that the liability of any particular Shareholder (and/or its Related JLW
Owner, if applicable) in respect of any Excess Amount shall be limited to
the amount of such Excess Amount which, as a percentage, is equal to the
ratio of the Aggregate Transfer Tax Liability arising out of or in connec-
tion with transactions with such Shareholder (and/or its Related JLW Owner,
if applicable) to the Aggregate Transfer Tax Liability arising out of or in
connection with the transactions with all Shareholders (and/or their
Related JLW Owners, if applicable); and
(iii) all expenses reasonably incurred
in connection with enforcing any arbitrator awards pursuant to Article VII
hereof in respect of any indemnification claim under this Article II.
(b) The Shareholders and the Related JLW Owners
specified on Exhibit 1 to this Agreement shall, jointly and severally,
indemnify, defend and hold the Indemnified Persons harmless from and
against, all Taxes of JLW Holdings Pty Limited and JLW Australia Pty
Limited for any taxable year or taxable period ending on or before the
Closing Date, including any Pre-Closing Period (as hereinafter defined),
except to the extent reserved for and shown on the applicable Final Closing
Date Balance Sheet and (for the avoidance of doubt) taking proper account
of any Tax benefit realized after the Closing Date which is attributable to
any Tax detriment suffered prior to the Closing Date.
(c) For purposes of this Section 2.1, any reference to
a Shareholder or Related JLW Owner with respect to the Asia Region Compa-
nies, the Australasia Region Companies or any of their respective Subsid-
iaries shall be deemed to include any Seller in which such Shareholder or
Related JLW Owner is a direct or indirect shareholder, beneficiary or
owner. In case of any Liability under Section 2.1 attributable to this
subsection (c), each Shareholder and, if applicable, its Related JLW Owner)
agrees severally to indemnify, defend and hold the Indemnified Persons
harmless from and against all such Liabilities, Taxes, Transfer Taxes and
expenses, but in each case only for that part of such Liabilities, Taxes,
Transfer Taxes and expenses which, as a percentage, is equal to the
percentage of the issued share capital of any Seller which is a corporation
or beneficial ownership interest of any Seller which is a trust held
directly or indirectly by such Shareholder (or its Related JLW Owner)
immediately prior to the Closing.
Section 2.2 JLW Continuation. Each Shareholder and, if
applicable Related JLW Owner specified on Exhibit 2 hereto (such Sharehold-
ers and Related JLW Owners together being all of the holders of all of the
issued share capital of JLW Continuation) agrees severally (but as between
each such Shareholder and its Related JLW Owner, jointly and severally) to
indemnify, defend and hold the Indemnified Persons harmless from and
against (a) all Liabilities of JLW Continuation arising out of or in
connection with any period prior to the Closing Date, including with
respect to Taxes for any taxable year or period ending on or before the
Closing Date including any Pre-Closing Period, and (b) all expenses
reasonably incurred in connection with enforcing any arbitrator awards
pursuant to this Section 2.2, but in each case only for that part of such
Liabilities, Taxes or expenses which, as a percentage, is equal to the
percentage of the issued share capital of JLW Continuation held by such
Shareholder (or its Related JLW Owner) immediately prior to the Closing.
Section 2.3 English Partnership Deed. Each Shareholder
and, if applicable, Related JLW Owner specified on Exhibit 3 hereto shall
severally (but as between each such Shareholder and its Related JLW Owner,
jointly and severally) indemnify, defend and hold the Indemnified Persons
harmless from and against, any Liabilities arising out of or in connection
with the Jones Lang Wootton Retired Partners' Deed by and among the parties
named therein, dated 18th February 1994, as amended, except to the extent
reserved for and shown on the applicable Final Closing Balance Sheet.
Section 2.4 Jones Lang Wootton (Hong Kong) Annuity
Scheme. Each Shareholder and, if applicable, Related JLW Owner specified
on Exhibit 4 hereto shall severally (but as between each such Shareholder
and its Related JLW Owner, jointly and severally) indemnify, defend and
hold the Indemnified Persons harmless from and against, (i) any Liabilities
arising out of or in connection with the Trust Deed and Rules by and
between JLW Asia Holdings Limited and Procon Services Company, dated 1st
April 1994, establishing the Jones Lang Wootton (Hong Kong) Annuity Scheme
and (ii) any Liabilities arising out of any claims by ex-directors of JLW
Hong Kong to profit shares pursuant to their rights as creditors thereof,
except to the extent reserved for and shown on the applicable Final Closing
Balance Sheet.
Section 2.5 Closing Period. For purposes of Sections
1.1, 2.1 and 2.2, any Taxes for a taxable period beginning on or before the
Closing Date and ending after the Closing Date (the "Closing Period") shall
be apportioned between the Buyers and the applicable Shareholder(s) and
Related JLW Owner(s) as if the Closing Period had ended on the Closing Date
and the portion of the Closing Period deemed to end on the Closing Date
shall be deemed to be a taxable period (the "Pre-Closing Period"). All
real property taxes, personal property taxes, intangible taxes and similar
ad valorem obligations levied with respect to the assets of any Europe/USA
Region Company, Asia Region Company or Australasia Region Company or any of
their respective Subsidiaries shall be apportioned between the Buyers and
the applicable Shareholder(s) and Related JLW Owner(s) as of the Closing
Date based on the number of days of such taxable period included in the
Pre-Closing Period and the number of days of such taxable period after the
Closing Date.
Section 2.6 Claims for Indemnification. The parties
intend that all indemnification claims under this Article II shall be made
as provided in Article I hereof.
Section 2.7 Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
(a) "Tax" or "Taxes" means taxes of any kind, levies or
other like assessments, customs, duties, imposts, charges or fees, includ-
ing, without limitation, income, gross receipts, ad valorem, value added,
excise, real or personal property, asset, document, sales, use, license,
payroll, transaction, capital, net worth and franchise taxes, withholding,
employment, social security, workers compensation, utility, severance,
production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed by or
payable to the United States, or any state, county, local or foreign
government or subdivision or agency thereof, imposed with respect to the
income, business, operations or assets of any Europe/USA Region Company,
Asia Region Company or Australasia Region Company, or any of their respec-
tive Subsidiaries, and in each instance such term shall include any
interest, penalties and additions to Tax attributable to any such Tax.
(b) "Tax Return" means any return, report, information
return, schedule or other document (including any related or supporting
information) with respect to Taxes filed or required to be filed with any
Authority.
(c) "Transfer Taxes" means any transfer, documentary,
sales, use, stamp, duties, recording, filing or other similar tax or fees
(including any penalties, interest or additions).
ARTICLE III
ESCROW PROCEDURES
Section 3.1 Acknowledgment of Receipt. On the Closing
Date, the Buyers shall deliver to the Escrow Agent the Escrow Shares,
pursuant to, and in accordance with, Sections 1.2 and 1.3 of each of the
Purchase Agreements, in the name of the Escrow Agent (or its nominee), to
be held as nominee and for the benefit of the Shareholders and the ESOT as
set forth in this Agreement. As so deposited, the Escrow Shares, together
with any distributions, property or other rights distributed (including,
without limitation, upon a stock split, stock dividend or other recapital-
ization of Parent), other than any cash dividends, with respect to or in
exchange for, or otherwise attaching to, the Escrow Shares, are herein
collectively referred to as the "Escrow Fund." Each of the parties hereto
acknowledges and agrees that the Escrow Shares will not be issued in the
name of any Shareholder until released to such Shareholder or the ESOT
Trustee pursuant to this Agreement and each Shareholder and the ESOT
Trustee agrees that such Shareholder and ESOT Trustee shall not sell,
transfer, encumber or otherwise dispose of any Escrow Shares or other
property constituting a part of the Escrow Fund deposited hereunder or any
interest therein unless and until such Escrow Shares or other property
constituting a part of the Escrow Fund are delivered to such Shareholder or
the ESOT Trustee pursuant to the terms of this Escrow Agreement, and any
purported transfer in violation of the foregoing restriction shall be null,
void and of no force or effect. The Escrow Agent shall acknowledge receipt
of the Escrow Shares in writing to the Shareholders' Representatives (on
behalf of the Shareholders) and the ESOT Trustee (on behalf of the ESOT)
and the Buyers, and agrees to hold and dispose of the Escrow Fund in
accordance with the terms and conditions set forth herein. The Escrow
Agent shall maintain for each Shareholder and the ESOT a subaccount (a
"Subaccount") reflecting such Shareholder's and the ESOT's interest in the
Escrow Shares or other property constituting the Escrow Fund from time to
time. The allocation of the Escrow Shares delivered to the Escrow Agent on
the Closing Date to the Shareholders' and the ESOT's Subaccounts shall be
made pursuant to the joint written instructions of Parent and the Share-
holders' Representatives at the time of such delivery in accordance with
the Final Master Shareholders List under each of the Purchase Agreements.
The balance of the Escrow Shares in each Subaccount shall be adjusted from
time to time by the Escrow Agent to reflect any portion of any Allowed
Claim (as hereinafter defined) debited against such Subaccount in accor-
dance with the provisions of Section 3.4(e) below, as well as any distribu-
tions of Escrow Shares and property constituting the Escrow Fund to the
relevant Shareholder or the ESOT Trustee (on behalf of the ESOT). In the
event of any stock split, stock dividend or other combination or subdivi-
sion of the Escrow Shares, or the receipt of any other dividend or distri-
bution in respect of any of the Escrow Shares, the Subaccounts of the
Shareholders and the ESOT shall be adjusted accordingly. Any cash divi-
dends received by the Escrow Agent in respect of any Escrow Shares allocat-
ed to any Subaccount shall be promptly paid over by the Escrow Agent to the
relevant Shareholder or the ESOT Trustee (on behalf of the ESOT), as
applicable.
Section 3.2 Authority of Escrow Agent. Each Shareholder,
by execution and delivery of this Agreement, and the ESOT Trustee, by
execution and delivery of the ESOT Joinder Agreement, constitutes and
appoints the Escrow Agent as his, her or its true and lawful agent and
attorney-in-fact to hold in his, her or its name (or nominee's name), and
to assign and transfer the Escrow Shares and the Escrow Fund for the ESOT
Trustee and each such Shareholder and in the place and stead of the ESOT
Trustee and each such Shareholder, as fully and to all the same extent as
the ESOT Trustee or such Shareholder could do in his, her or its own
behalf, as shall from time to time be required in accordance with the
provisions of this Agreement. In furtherance of the foregoing and not in
limitation thereof, the Escrow Agent is specifically authorized to forward
any certificates representing any of the Escrow Shares or any other
property constituting a part of the Escrow Fund to Parent's transfer agent
for purposes of having any such shares or other property surrendered to
Parent as may be necessary to comply with the terms of this Agreement.
Such authority of the Escrow Agent shall not be affected by the subsequent
bankruptcy, insolvency, death, disability or incompetence of any of the
Shareholders.
Section 3.3 Ownership of Escrow Fund; Voting. Unless
and until assigned, transferred and delivered to Parent, the Shareholders
or the ESOT Trustee (on behalf of the ESOT) in accordance with the provi-
sions hereof, the Escrow Shares and any other property constituting a part
of the Escrow Fund deposited with the Escrow Agent shall be held in trust
for the ESOT and each Shareholder in proportion to the number of Escrow
Shares allocated from time to time to the Subaccount of the ESOT and each
such Shareholder (such number of Escrow Shares being referred to herein, as
with respect to the ESOT or each such Shareholder, the ESOT's or such
Shareholder's, as the case may be, "Proportionate Share"). All distribu-
tions, property and other rights distributed (including, without limita-
tion, upon a stock split, stock dividend or other recapitalization of
Parent), other than cash dividends, with respect to or in exchange for, or
otherwise attaching to, the Escrow Shares shall attach to and run with, or
be exchanged for, as the case may be, the Escrow Shares, shall become a
part of the Escrow Fund and shall be delivered to the ESOT Trustee (on
behalf of the ESOT), the Shareholders or Parent in accordance with the
terms and conditions of this Agreement.
(b) The Escrow Agent shall (to the extent legally permissi-
ble) vote the Escrow Shares allocated to a Shareholder's Subaccount in
accordance with the applicable provisions of the Stockholder Agreement to
which such Shareholder is a party, provided that if such Stockholder
Agreement does not contain instructions as to how such Escrow Shares shall
be voted, the Escrow Agent shall vote such Escrow Shares in accordance with
the joint written instructions of Parent and such Shareholder, provided
further that if the Stockholder Agreement does not contain such instruc-
tions and Parent and such Shareholder do not provide the Escrow Agent with
joint written instructions, the Escrow Agent shall not, and shall have no
duty to, vote the Escrow Shares. The Escrow Agent shall (to the extent
legally permissible) vote the Escrow Shares allocated to the Subaccount of
the ESOT in proportion to the vote of the other Escrow Shares.
Section 3.4 Disposition of Escrow Fund. Subject to the
terms and conditions set forth in this Agreement (including, without
limitation, Section 1.1(f)) each Indemnified Person shall be entitled to
receive payment directly from the Escrow Fund in the amount which, at any
time and from time to time, such Indemnified Person is entitled to be
indemnified as provided in Sections 1.1, 2.1 or 2.2 hereof, as applicable,
in each case in accordance with the following provisions:
(a) If and whenever any Indemnified Person (the
"Claiming Party") shall assert a claim pursuant to Sections 1.1, 2.1 or 2.2
of this Agreement (the "Claim") as to which a claim against the Escrow Fund
is desired and permitted to be made, the Claiming Party shall provide the
Escrow Agent and the Shareholders' Representatives with the notice (the
"Claim Notice") contemplated by Section 1.2 hereof.
(b) If the Shareholders' Representatives receive a
Claim Notice, they may, as herein provided, respond in writing to such
Claim Notice (with a copy to the Escrow Agent) within 20 days from the date
the same was delivered (herein called the "Response Period"). If the
Shareholders' Representatives do not forward a written response to the
Escrow Agent and the Claiming Party within the Response Period, then the
Shareholders' Representatives shall be deemed to have acknowledged the
correctness of such Claim for the full amount thereof as specified in the
Claim Notice, but solely for the purpose of the Claiming Party's claim
against the Escrow Fund. If the Shareholders' Representatives acknowledge
the correctness of a Claim for such purpose in a writing to the Escrow
Agent or if the Shareholders' Representatives are deemed to have acknowl-
edged the correctness of a Claim for such purpose pursuant to the foregoing
sentence, then the Escrow Agent shall (i) immediately notify the Claiming
Party in writing, with a copy to the Shareholders' Representatives and
Parent, that the Claim described in the Claim Notice is accepted by the
Shareholders' Representatives (such notice being hereinafter referred to as
the "Acceptance Notice"); (ii) within two Business Days thereof, deliver or
cause to be delivered to Parent's transfer agent certificates representing
Escrow Shares, valued in accordance with Section 3.4(d) hereof (and/or to
Parent any other property constituting a part of the Escrow Fund), for
purposes of having any such shares or other property surrendered to Parent,
in an aggregate amount equal to the lesser of (A) the amount specified in
the Claim Notice and (B) the aggregate amount remaining in the Escrow Fund.
(c) At any time during an applicable Response Period,
the Shareholders' Representatives may notify the Claiming Party, with a
copy to the Escrow Agent, that the Claim described in the applicable Claim
Notice or any portion thereof is disputed by the Shareholders' Representa-
tives (such notice being hereinafter referred to as the "Dispute Notice").
Upon receipt of a Dispute Notice, the Escrow Agent shall immediately (i)
follow the procedures set forth in clauses (i) and (ii) of Section 3.4(b)
hereof with respect to an amount equal to that portion, if any, of the
Claim which is not disputed by the Shareholders' Representatives and (ii)
shall not distribute to the ESOT Trustee (on behalf of the ESOT) or any
Shareholders pursuant to the provisions of Section 3.6 hereof that portion
of the Escrow Fund equal to the amount of the Claim which is disputed by
the Shareholders' Representatives (the "Disputed Amount"). Thereafter, the
Escrow Agent shall not take any action with respect to such Disputed Amount
until the Escrow Agent shall have received a certified copy of a final
decision of arbitrators rendered in accordance with the provisions set
forth in Section 7.1 hereof with respect to the Disputed Amount, or the
Escrow Agent shall have received a copy of a written agreement between the
Claiming Party and the Shareholders' Representatives resolving such dispute
and setting forth the amount, if any, of the Disputed Amount which such
Claiming Party is entitled to receive. If the Claiming Party and the
Shareholders' Representatives do not resolve a dispute regarding a Claim
within 10 days after the delivery of a Dispute Notice, either party may
submit the dispute to arbitrators for resolution in accordance with the
provisions of Section 7.1 hereof. The Escrow Agent will follow the
procedures set forth in clauses (i) and (ii) of Section 3.4(b) hereof with
respect to the amount the Claiming Party is entitled to receive as set
forth in such arbitrator's decision after the expiration of two Business
Days from the receipt of such decision or, in the event that the amount to
which the Claiming Party is entitled is established pursuant to an agree-
ment between the Claiming Party and the Shareholders' Representatives,
within two Business Days after the Escrow Agent's receipt of such agree-
ment.
(d) For purposes of this Agreement, each Escrow Share
shall be valued at an amount equal to US$32.215 (subject to appropriate
adjustment in the case of stock dividends, stock splits, combinations or
other recapitalizations of Parent effected after the date hereof, in which
event Parent and the Shareholders' Representatives will provide written
notice to the Escrow Agent of such adjustment value ).
(e) In the event that any Escrow Shares or other
property forming part of the Escrow Fund is distributed by the Escrow Agent
to Parent in accordance with the provisions of this Section 3.4 in respect
of any portion of a Claim that has been finally determined by agreement of
Parent and the Shareholders' Representatives or by the decision of arbitra-
tors pursuant to the terms of this Agreement (an "Allowed Claim"), the
allocation of the deduction of such Escrow Shares or other property to the
Subaccounts of the ESOT and the Shareholders shall be made by the Escrow
Agent in accordance with the written instructions of the Shareholders'
Representatives (which instructions may, for example, indicate that such
deductions will be allocated only to certain Subaccounts and not others)
and in the absence of any such instructions shall be allocated to the
Subaccounts of the ESOT and all Shareholders on the basis of the ESOT's and
such Shareholder's Proportionate Share.
(f) Notwithstanding anything to the contrary contained
in this Agreement, the Indemnified Persons shall not be required but are
entitled to make a claim against the Escrow Fund with respect to a Share-
holder Claim or Management Misrepresentation Claim. In addition, in
respect of any single Shareholder Claim or Management Misrepresentation
Claim, Parent may bring separate claims against the applicable Shareholder
and/or the applicable Related JLW Owner and the Escrow Fund, provided that
Parent's aggregate recovery whether from the Escrow Fund or such Sharehold-
er and/or Related JLW Owner, or both, shall not exceed the aggregate value
of such Claim. In such event, unless otherwise agreed in writing at the
time by all relevant parties, no determination or finding made in a Claim
against the Escrow Fund shall have any preclusive effect (including without
limitation any claim of res judicata) in respect of a Claim against any
Shareholder and/or any Related JLW Owner, or vice versa.
(g) In order to assist in effectuating the provisions
of this Agreement, in the event that the Indemnified Persons are finally
determined to be entitled to indemnification with respect to Losses and/or
Expenses relating to a Claim made pursuant to this Agreement, the Share-
holder or Shareholders, and/or their respective Related JLW Owner or
Related JLW Owners, if applicable, consent to the entry of stop transfer
orders with Parent's transfer agent against the transfer of any Consider-
ation Shares owned by such Shareholder or Shareholders or Related JLW Owner
or Related JLW Owners, until such time as (i) Consideration Shares with a
value equal to the amount of such finally determined Losses and/or Expenses
(using the value specified in Section 3.4(d) hereof) have been surrendered
to Parent for cancellation or (ii) cash equal to the amount of such finally
determined Losses and/or Expenses has been paid to Parent, in which case
such stop transfer orders shall be withdrawn by Parent, in each case, as
soon as practicable following such surrender of Consideration Shares or
cash payment.
Section 3.5 Distribution of Escrow Fund. Notwithstanding
anything to the contrary contained in this Agreement, but subject to
Section 3.7 below:
(a) On the first business day after the 450th day after
the Closing Date (the "Distribution Date"), the Escrow Agent shall deliver
to Parent, with a copy to the Shareholders' Representatives, the Escrow
Agent's calculation (the "Distribution Notice") (which calculation, absent
manifest error, shall be final and binding as to each of the parties
hereto) of the original number of Escrow Shares placed in escrow less the
sum of (i) the number of Escrow Shares, if any, by which the Escrow Fund
has been reduced pursuant to Section 3.4(b) or 3.4(c) hereof, (ii) the
number of Escrow Shares equal to the aggregate dollar amount of all Claims,
if any, asserted pursuant to Section 1.1, 2.1 or 2.2 of this Agreement
(other than any Asian Title Claims pending in respect of the Asia Region
Forfeiture Shares) and set forth in Claim Notices that are subject to an
unexpired Response Period pending as of the Distribution Date, in each case
to which the Shareholders' Representatives have not responded pursuant to
Section 3.4(b) or (c) hereof, and (iii) the number of Escrow Shares equal
to the aggregate dollar amount of all Disputed Amounts, if any, as of the
Distribution Date with respect to Claims asserted pursuant to Section 1.1,
2.1 or 2.2 of this Agreement (other than any Asian Title Claims pending in
respect of the Asia Region Forfeiture Shares) (the Escrow Shares remaining
after the deductions described in clauses (i), (ii) and (iii) being herein
called the "Distribution Shares"). The Escrow Agent shall distribute to
the Shareholders and the ESOT Trustee (on behalf of the ESOT) their
respective Proportionate Share of the Distribution Shares (and any related
property) within two Business Days after the Distribution Date or if an
Allocation Proposal has been made, within two Business Days following the
10 Business Day period referenced in Section 3.4(e).
(b) [Intentionally Left Blank]
(c) Upon distribution of the entire Escrow Fund
pursuant to the terms of this Agreement, the obligations of the Escrow
Agent under this Agreement shall terminate.
(d) At any time prior to final termination of this
Agreement as provided in Section 3.5(c) hereof, the Escrow Agent shall, if
so instructed in a writing signed by Parent and the Shareholders' Represen-
tatives, take or omit to take such action with respect to the Escrow Fund
as is specified in such writing and delivered to the Escrow Agent.
(e) The Escrow Agent shall be authorized to withhold or
deduct from distributions or payments to the Shareholders and the ESOT and
to pay over to any applicable governmental or regulatory authority any
amounts which it reasonably determines may be required to be so withheld or
deducted pursuant to applicable law. All amounts withheld pursuant to the
provisions of any applicable law with respect to any distribution or
payments shall be treated as amounts distributed to such Shareholder or, as
the case may be, the ESOT, pursuant to this Section 3.5 for all purposes
under this Agreement.
(f) Notwithstanding the foregoing, in the event that
under any of the provisions contained herein, the Escrow Agent would be
required to deliver fractional interests in Escrow Shares to the ESOT
Trustee (on behalf of the ESOT) or any Shareholder, Parent shall purchase
from the Escrow Agent such a number of Escrow Shares (or fractional
interests therein) as shall be necessary to eliminate such fractional
interests, at a per share purchase price equal to the closing sale price
for Parent Common Stock as reported on the New York Stock Exchange Compos-
ite Transactions Tape for the second Business Day immediately preceding any
such purchase. In such event, the Escrow Agent shall distribute to the
ESOT Trustee (on behalf of the ESOT) or any such Shareholders who otherwise
would have been entitled to fractional interests in shares of Parent Common
Stock, the cash equivalent of such fractional shares (based on the purchase
price as described above).
Section 3.6 Other Distributions. After the Distribution
Date and promptly following each acceptance of a Claim (other than an Asian
Title Claim pending in respect of the Asia Region Forfeiture Shares)
pursuant to Section 3.4(b) or resolution of any Disputed Amounts pursuant
to Section 3.4(c), the Escrow Agent shall deliver to Parent, with a copy to
the Shareholders' Representatives, a notice (the "Remaining Escrow Distri-
bution Notice") of the Escrow Agent's calculation (which calculation,
absent manifest error, shall be final and binding as to each of the parties
hereto) of the remaining Escrow Shares in escrow (the "Remaining Escrow
Shares") less the sum of (i) the number of Remaining Escrow Shares equal to
the aggregate dollar amount of all Claims, if any, asserted pursuant to
Section 1.1, 2.1 or 2.2 of this Agreement (other than Asian Title Claims
pending in respect of the Asia Region Forfeiture Shares) and set forth in
Claim Notices that are subject to an unexpired Response Period pending as
of the date of the Remaining Escrow Distribution Notice, in each case to
which the Shareholders' Representatives have not responded pursuant to
Section 3.4(b) or (c) hereof, and (ii) the number of Remaining Escrow
Shares equal to the aggregate dollar amount of all Disputed Amounts, if
any, as of the date of the Escrow Distribution Notice with respect to
Claims asserted pursuant to Section 1.1, 2.1 or 2.2 of this Agreement
(other than Asian Title Claims pending in respect of the Asia Region
Forfeiture Shares) (the Escrow Shares remaining after the deductions
described in clause (i), (ii) and (iii) being herein called the "Remaining
Escrow Distribution Shares").
(b) The procedure for distributing the Remaining Escrow
Distribution Shares shall be the same as the procedure for distributing the
Distribution Shares as provided in Section 3.5 hereof.
Section 3.7 Asia Region Forfeiture Shares. Notwithstand-
ing anything to the contrary herein, for purposes of Sections 3.5 and 3.6,
the term "Escrow Shares" shall not include the Asia Region Forfeiture
Shares. No Asia Region Forfeiture Shares shall be distributed by the
Escrow Agent to the Asia Region Shareholders until the date which is five
(5) Business Days prior to December 31, 2000 which date shall be the
"Distribution Date" for purposes of distributing such Asia Region Forfei-
ture Shares (and any related property) to the Asia Region Shareholders.
Thereafter, the procedures followed for the distribution of Escrow Shares
and Remaining Escrow Shares in Sections 3.5 and Section 3.6 shall be
followed for the distribution of Asia Region Forfeiture Shares; provided
that to the extent that any Asia Region Forfeiture Shares are distributable
from the Escrow Fund, such shares shall be delivered to the Forfeiture
Shares Escrow Agent pursuant to Section 1.3 of each Purchase Agreement.
ARTICLE IV
ADJUSTMENT SHARES
Section 4.1 Acknowledgment of Receipt. On the Closing
Date, the Buyers shall deliver to the Escrow Agent the Adjustment Shares,
pursuant to, and in accordance with, Sections 1.2, 1.3 and 1.4 of each of
the Purchase Agreements, in the name of the Escrow Agent (or its nominee),
to be held as nominee and for the benefit of the ESOT and the Shareholders,
together with any distributions, property or other rights distributed
(including, without limitation, upon a stock split, stock dividend or other
recapitalization of Parent), with respect to or in exchange for, or
otherwise attaching to, the Adjustment Shares (the "Adjustment Shares
Related Property"), as set forth in this Agreement. Each of the parties
hereto acknowledges and agrees that the Adjustment Shares will not be
issued in the name of the ESOT or any Shareholder, and the Adjustment
Shares Related Property will not be distributed in the name of the ESOT or
any Shareholder, until released to the ESOT Trustee (on behalf of the ESOT)
or such Shareholder pursuant to this Agreement and Section 1.4 of the
Purchase Agreements and each Shareholder agrees that such Shareholder shall
not sell, transfer, encumber or otherwise dispose of any Adjustment Shares
or any Adjustment Shares Related Property unless and until such Adjustment
Shares are delivered, or such Adjustment Shares Related Property is
distributed, to such Shareholder pursuant to the terms of this Agreement
and Section 1.4 of the Purchase Agreements, and any purported transfer in
violation of the foregoing restriction shall be null, void and of no force
or effect. The Escrow Agent shall acknowledge receipt of the Adjustment
Shares and any Adjustment Shares Related Property in writing to the
Shareholders' Representatives and the Buyers, and agrees to hold and
dispose of such Adjustment Shares and any Adjustment Shares Related
Property in accordance with the terms and conditions set forth herein.
Section 4.2 Delivery of Adjustment Shares. The Escrow
Agent shall deliver the Adjustment Shares (together with any Adjustment
Shares Related Property) to one or more of the Buyers, the ESOT Trustee (on
behalf of the ESOT) or some or all of the Shareholders, in each case in
accordance with the joint instructions of Parent and the Shareholders'
Representatives, which instructions shall be given pursuant to Section 1.4
of the Purchase Agreements.
ARTICLE V
MATTERS RELATING TO THE ESCROW AGENT
Section 5.1 Liability of the Escrow Agent. The Escrow
Agent shall not be liable for any act it may do or omit to do hereunder as
the Escrow Agent, while acting in good faith and in the exercise of its own
best judgment and any act done or omitted by it pursuant to the written
advice of its attorneys shall be conclusive evidence of such good faith.
The Escrow Agent shall not be answerable for any action taken pursuant to
any notice, request, consent, certificate, order or other document in the
belief that the same is genuine when signed or acknowledged by a proper
person. The Escrow Agent shall not be under obligation to assure or
monitor the performance by the Buyers, the JLW Sellers, the Shareholders'
Representatives, the ESOT Trustee (on behalf of the ESOT), the Shareholders
or the Related JLW Owners under the Purchase Agreements or any other
Operative Agreements or to the performance of any duty specified herein by
any party other than the Escrow Agent. The Buyers, the Shareholders and
the Related JLW Owners agree to hold the Escrow Agent harmless and jointly
and severally indemnify the Escrow Agent against any loss, liability,
expenses (including attorney's fees and expenses), claim or demand arising
out of or in connection with the performance of its obligations in accor-
dance with the provisions of this Agreement, except for gross negligence or
willful misconduct of the Escrow Agent. The foregoing indemnities in this
paragraph shall survive the resignation of the Escrow Agent or the termina-
tion of this Agreement. The Escrow Agent's duties are only such as are
specifically provided herein and under applicable law, and the Escrow Agent
is not charged with any duties or responsibilities in connection with any
other agreements or documents, including, without limitation, the Purchase
Agreements. The Escrow Agent shall incur no liability whatsoever to the
Buyers, the ESOT, the Shareholders or the Related JLW Owners, except for
gross negligence or willful misconduct. The Escrow Agent shall have no
responsibility hereunder other than to follow faithfully the instructions
contained herein. The Escrow Agent shall be able to rely conclusively on
the instructions or actions of the Shareholders' Representatives as to the
settlement of any claims of indemnification against the Escrow Fund (as
defined in the Escrow Agreement) by any Indemnified Persons pursuant to
this Agreement or any other actions expressly required or permitted to be
taken by the Shareholders' Representatives hereunder, and no party hereun-
der shall have any cause of action against the Escrow Agent to the extent
the Escrow Agent has relied upon the instructions or actions of the
Shareholders' Representatives. The costs and expenses of enforcing this
right of indemnification shall also be paid by the Buyers and Shareholders.
Section 5.2 The Escrow Agent Fees. The Buyers agree to
pay the Escrow Agent a fee according to the fee letter attached hereto as
Exhibit 5. Fees are payable in advance as compensation for the ordinary
administrative services to be rendered hereunder, and the Buyers agree to
pay equally all expenses of the Escrow Agent, including its attorney's
reasonable fees and expenses, which it may incur in connection with the
performance of its duties under this Agreement.
Section 5.3 Resignation of Escrow Agent. The Escrow
Agent may resign at any time by giving written notice thereof to the other
parties hereto, but such resignation shall not become effective until a
successor Escrow Agent shall have been appointed and shall have accepted
such appointment in writing. Any such successor Escrow Agent shall be
selected by mutual agreement of the Shareholders' Representatives and
Parent. If an instrument of acceptance by a successor Escrow Agent shall
not have been delivered to the Escrow Agent within 30 days after the giving
of such notice of resignation, the resigning Escrow Agent may, at the
expense of the Buyers, petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent. If any property subject hereto is
at any time attached, garnished or levied upon, under any court order, or
in case the payment, assignment, transfer, conveyance or delivery of any
such property shall be stayed or enjoined by any court order, or in case
any order, judgement or decree shall be made or entered by any court
affecting such property, or any part thereof, then in any such events, the
Escrow Agent is authorized, in its sole discretion, to rely upon and comply
with any such order, writ, judgement or decree, which it is advised by
legal counsel (of its own choosing) is binding upon it, and if it complies
with any such order, writ, judgment or decree, it shall not be liable to
any of the parties hereto or to any other person, firm or corporation by
reason of such compliance, even though such order, writ, judgment or decree
may be subsequently reversed, modified, annulled, set aside or vacated.
ARTICLE VI
DEFINITIONS
Section 6.1 Certain Terms. Capitalized terms used but
not defined herein have the respective meanings ascribed to them in the
Purchase Agreements and where defined in more than one Purchase Agreement
shall include the meaning ascribed to such term in each such Purchase
Agreement. When used in this Agreement, the following terms shall have the
meanings specified:
"Closing Date" shall have, for purposes of Section 2.3 hereof,
the meaning ascribed to such term in the Australasian Region Agreement and,
for all other purposes of this Agreement, the meaning ascribed to such term
in the Europe/USA Region Agreement.
"Expenses" means any and all expenses reasonably incurred in
connection with investigating, defending or asserting any claim, action,
suit or proceeding incident to any matter indemnified against hereunder
(including, without limitation, court filing fees, court costs, costs of
investigation, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, financial advisors, consultants,
accountants and other professionals and experts and other expenses of
litigation).
"Article III Entity" means, each of the Persons making repre-
sentations and warranties under Article III of any Purchase Agreement,
excluding the Management Shareholders
"Joinder Agreement" means the Joinder Agreement in the form
attached as Annex A either to the Europe/USA Region Agreement, the Asia
Region Agreement or the Australasia Region Agreement.
"Losses" means any and all Liabilities and all claims in
respect thereof (including, without limitation, losses, damages, costs,
obligations, settlement payments, awards, judgments, fines, interest,
penalties, fees, deficiencies or other charges other than Expenses and
expenses enforcing any arbitration award).
"Recourse Claim" means, collectively: (i) any Shareholder
Claim (but subject, in the case of any deemed Individual Shareholder
Misrepresentation Claim or deemed Shareholder Covenant Claim, to the
limitations set forth in clauses (iii) and (iv) of the last paragraph of
Section 1(a) hereof) and (ii) any Management Misrepresentation Claim. In
no event shall any claim against the ESOT be deemed to be a Recourse Claim.
"Shareholder Claim" means, collectively: (i) any Individual
Shareholder Misrepresentation Claim (or deemed Shareholder Covenant Claim),
(ii) any Shareholder Covenant Claim (or deemed Individual Shareholder
Misrepresentation Claim) and (iii) any claim for indemnification pursuant
to Article II hereof.
"Shareholders' Representatives" has the meaning set forth in
the preamble and includes any successor to any Shareholders' Representa-
tive, and alternate to any Shareholders' Representative appointed in
accordance with the SCCA.
"Tax Liability" means any Losses, Expenses or other liabilities
relating to Tax for which an Indemnified Person could (subject to any
applicable limitations or restrictions in the Operative Agreements) make a
claim under Article I or Article II of this Agreement or, for the avoidance
of doubt, under any indemnity or covenant contained in any of the Purchase
Agreements.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Arbitration. (a) All controversies with
respect to any Disputed Amount or any other claims for indemnification
hereunder shall be finally settled (i) exclusively by arbitration (as
provided herein) between Parent and the Shareholders' Representatives with
respect to all claims subject to indemnification hereunder relating to the
Escrow Fund, or (ii) except with respect to claims under the Stockholder
Agreements, exclusively by arbitration (as provided herein) between Parent
and the individual Shareholder or Shareholders and/or, if applicable,
Related JLW Owner or Related JLW Owners with respect to all other claims
subject to indemnification hereunder, in each case under clause (i) or (ii)
above under the Arbitration Rules of the International Chamber of Commerce
(the "ICC"), as amended from time to time (the "Rules") and as modified by
this Agreement.
(b) The arbitration shall be held in London, England or such
other jurisdiction as the parties jointly select. The arbitration proceed-
ings shall be conducted, and the award shall be rendered, in the English
language. In the event of an arbitration involving two parties hereto,
there shall be three arbitrators of whom each the claimant and the respon-
dent shall select one in accordance with the Rules. The two arbitrators so
nominated, once confirmed by the International Court of Arbitration of the
ICC ("ICC Court"), shall nominate a third arbitrator to serve as chairman,
such nomination to be made within 30 days of the confirmation by the ICC
Court of the second arbitrator. If the first two arbitrators shall fail
to nominate a third arbitrator within said 30-day period, such third
arbitrator shall be appointed by the ICC Court. In the event of an
arbitration involving more than two parties hereto, there shall be three
arbitrators who shall be jointly nominated by the parties. If the parties
fail so to nominate the arbitrators within 30 days from the date when the
claimant(s)' notice of arbitration is communicated to the respondent(s), at
the request of any party the arbitrators shall be appointed by the ICC
Court within 30 days of such request.
(c) Any arbitration award shall be final and binding upon the
parties, and shall be the sole and exclusive remedy between and among the
parties regarding any claims, counter-claims, issues, or accounting
presented to the arbitral tribunal. The parties hereby expressly agree
that leave to appeal under Section 45 or Section 69 of the English Arbitra-
tion Act 1996 may not be sought with respect to any question of law arising
in the course of the arbitration or with respect to any award made.
Judgment upon any award may be entered in any court having jurisdiction
thereof but entry of such judgment will not be required to make such award
effective.
(d) Except as may otherwise be agreed in writing by the
parties or as ordered by the arbitrators upon substantial justification
shown, the hearing for any dispute will be held within 120 days after the
arbitration panel has been finally determined. The arbitrators will state
the factual and legal basis for the award. This Agreement and the rights
and obligations of the parties shall remain in full force and effect
pending the award in any arbitration proceeding hereunder.
Section 7.2 Entire Agreement; No Third Party Beneficia-
ries. This Agreement and, as to the parties hereto other than the Escrow
Agent, together with the Purchase Agreements and the other Operative
Agreements, the Schedules and the other writings referenced herein or
therein (a) constitute the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements or understandings, inducements or condi-
tions, express or implied, written or oral, between the parties with
respect hereto and (b) are not intended to confer upon any person other
than the parties any rights or remedies hereunder.
Section 7.3 Amendment, Extension and Waiver. This
Agreement may be amended only in writing signed by Parent and the Share-
holders' Representatives. Upon such amendment, the amendment shall be
binding on all Shareholders and Related JLW Owners and the other parties
hereto; provided that no such amendment shall increase the liability or
adversely affect the individual rights of an individual Shareholder or
Related JLW Owner, unless the affected Shareholder or Related JLW Owner
shall have agreed in writing to be bound by such amendment.
Section 7.4 Notices. All notices, requests, demands and
other communications made under or by reason of the provisions of this
Agreement shall be in writing and shall be given by hand-delivery, air
courier or telecopier (with a copy also sent by hand delivery or air
courier, which shall not alter the time at which the telecopier notice is
deemed received), to the parties at the addresses set forth below (or to
such other addresses or, in the case of copies, to such other Persons as
shall be set forth in notices given in accordance with the provisions
hereof). Such notices shall be deemed given: at the time personally
delivered, if delivered by hand with receipt acknowledged; upon transmis-
sion thereof by the sender and issuance by the transmitting machine of a
confirmation slip that the number of pages constituting the notice have
been transmitted without error, if telecopied; and the second business day
after timely delivery to the courier, if sent by air courier.
If (i) to any Shareholder or Related JLW Owner, if applicable,
to the address set forth on the signature page of the Applicable Joinder
Agreement for such Shareholder or (ii) to the ESOT Trustee, the address set
forth on the signature page to the ESOT Joinder Agreement.
If to the Shareholders' Representatives:
Robert Orr
c/o Jones Lang Wootton
22 Hanover Square
London WIA 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Gerry Kipling
c/o Jones Lang Wootton Ltd
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Ken Winterschladen
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-2-9323-5888
Fax: 61-2-9232-8120
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Richard Jones
c/o Jones Lang Wootton
9 Queen Victoria Street
London EC4N 4YY
England
Telephone: 44-171-248 6040
Fax: 44-171-454-8888
and to:
Christopher Radford
c/o Jones Lang Wootton Ltd
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Andrew Martin
c/o Jones Lang Wootton
Grosvenor Place
225 George Street
Sydney NSW 2000
Australia
Telephone: 61-2-9323-5888
Fax: 61-2-9232-8120
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Slaughter and May
35 Basinghall Street
London EC2V
Attn: Andrew McClean, Esq.
Telephone: (0171) 600-1200
Fax: (0171) 600-0289
and to:
Sidley & Austin
875 Third Avenue
New York, NY 10022
Attn: James D. Johnson, Esq,
Telephone: (212) 906-2000
Fax: (212) 906-2021
If to the Buyer:
LaSalle Partners Incorporated
200 East Randolph Street
Chicago, Illinois 60601
Attention: Chief Financial Officer
Telephone: (312)782-5800
Fax: (312)228-0980
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attention: Rodd M. Schreiber, Esq.
Telephone: (312) 407-0700
Fax: (312) 407-0411
If to the Escrow Agent:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Escrow Division/Marianne Tinerella
Telephone: (312) 461-2420
Fax: (312) 461-3525
Section 7.5 Incorporated Provisions. The provisions of
Sections 13.2, and Sections 13.8 through 13.14 of the Purchase Agreements
shall be deemed incorporated herein, mutatis mutandis.
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby execute this
Indemnity and Escrow Agreement, by and among each Shareholder and, if
applicable, its Related JLW Owner, and the duly authorized officer of each
of the Buyers and the Escrow Agent, in each case as of the day and year
first above written.
LASALLE PARTNERS INCORPORATED
By:
Name:
Title:
JLLINT, INC.
By:
Name:
Title:
JLLIP, INC.
By:
Name:
Title:
LPI (AUSTRALIA) HOLDINGS PTY LIMITED
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
By:
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby execute(s) this
Indemnity and Escrow Agreement, by and among each Shareholder and, if
applicable, its Related JLW Owner, and the duly authorized officer of each
of the Buyers and the Escrow Agent, in each case as of the day and year
first above written.
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
EXHIBIT 10.8
- ------------
[FORM OF STOCKHOLDER AGREEMENT]
STOCKHOLDER AGREEMENT, dated as of October 21, 1998
(this "Agreement"), by and among (i) LaSalle Partners
Incorporated, a Maryland corporation ("Parent"), (ii) the
Person named as "Stockholder" on the signature page hereto and
(iii) if the Stockholder is not a natural person, the person
named as "Related JLW Owner" on the signature page hereto.
WHEREAS, as of the date hereof, Parent and the other
parties named therein are entering into a Purchase and Sale
Agreement (the "Europe/USA Region Agreement"), pursuant to
which, among other things, Parent has the right (and may be
required) to acquire all of the issued and outstanding capital
stock or share capital, as applicable, of each of the
Europe/USA Region Companies;
WHEREAS, as of the date hereof, Parent, US
Acquisition Sub, US Acquisition Sub II and the other parties
named therein are entering into a Purchase and Sale Agreement
(the "Asia Region Agreement"), pursuant to which, among other
things, US Acquisition Sub will acquire (except as otherwise
set forth therein) all of the issued and outstanding share
capital of each of the Asia Region Companies;
WHEREAS, as of the date hereof, Parent, US
Acquisition Sub, Australia Acquisition Sub and the other
parties named therein are entering into a Purchase and Sale
Agreement (the "Australasia Region Agreement" and, together
with the Europe/USA Region Agreement and the Asia Region
Agreement, the "Purchase Agreements" and each, individually, a
"Purchase Agreement"), pursuant to which, among other things,
Australia Acquisition Sub and US Acquisition Sub will
collectively acquire all of the issued and outstanding share
capital of each of the Australasia Region Companies;
WHEREAS, as of the date hereof, Parent and the
Stockholder and, if applicable, the Related JLW Owner are
entering into a Joinder Agreement (the "Applicable Joinder
Agreement"), pursuant to which, among other things, the
Stockholder and, if applicable, the Related JLW Owner are
agreeing to be bound by and subject to the terms of the
applicable Purchase Agreement (the "Applicable Purchase
Agreement"); and
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Applicable Purchase Agreement
and the Applicable Joinder Agreement that the Stockholder and,
if applicable, the Related JLW Owner execute and deliver this
Agreement.
NOW THEREFORE, in consideration of the premises and
the mutual covenants, agreements, representations and
warranties contained herein, in the Applicable Joinder
Agreement and in the other Operative Agreements to which the
Stockholder and, if applicable, the Related JLW Owner are
parties, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms. Capitalized terms used
but not defined herein have the respective meanings ascribed to
them in the Applicable Joinder Agreement or the Applicable
Purchase Agreement. When used in this Agreement, the following
terms shall have the meanings specified:
"Additional Party Signature Page" means a signature
page in the form attached hereto as Annex A.
"beneficial ownership" shall have the meaning set
forth under Rule 13d-3 promulgated by the SEC under the
Exchange Act.
"Board" means the entire board of directors of
Parent, as constituted in accordance with Parent's By-laws from
time to time.
"Common Stock" means the common stock, $.01 par value
per share, of Parent.
"Consideration Shares" means any shares of Common
Stock received, or to be received, by the Stockholder pursuant
to the Applicable Joinder Agreement, the Applicable Purchase
Agreement or the SCCA.
"Controlled Affiliate" means any Person controlled,
directly or indirectly, through one or more intermediaries, by
the Stockholder or, if applicable, the Related JLW Owner.
"Corporate Holder" shall have the meaning set forth
in the definition of the term "Permitted Transfer."
"DEL" means DEL-LPL Limited Partnership, a Delaware
limited partnership, or DEL-LPAML Limited Partnership, a
Delaware limited partnership, or both.
"Exchange Act" means the Securities Exchange Act of
1934, as amended and from time to time in effect and any
successor statute.
"group" shall have the meaning set forth in Section
13(d)(3) of the Exchange Act.
"JLW Registrable Securities" means, at any time, all
Consideration Shares (and any shares of Common Stock received
in respect of such Consideration Shares) issued pursuant to the
Purchase Agreements and owned by current directors, officers
and employees of Parent, or any direct or indirect Subsidiary
thereof, who were partners, directors, officers or employees of
the JLW Businesses.
"Joinder Agreement" means the Joinder Agreement in
the form attached as Annex A to the Europe/USA Region
Agreement, the Asia Region Agreement or the Australasia Region
Agreement, as applicable.
"Partnership Holder" shall have the meaning set forth
in the definition of the term "Permitted Transfer."
"Permitted Transfer" means: (a) a Transfer of
Consideration Shares between the Stockholder or, if applicable,
the Related JLW Owner and any descendant of such Stockholder
or, if the Stockholder is not a natural person, the Related JLW
Owner; (b) a Transfer of Consideration Shares between the
Stockholder or, if applicable, the Related JLW Owner and the
spouse or surviving spouse of such Stockholder or, if such
Stockholder is not a natural person, the Related JLW Owner or
of any descendant of such Stockholder or Related JLW Owner; (c)
a Transfer of Consideration Shares between the Stockholder or,
if applicable, the Related JLW Owner and/or one or more of the
Persons described in clauses (a) or (b) and any trust (a "Trust
Holder") of which there are and continue to be, during the term
of this Agreement, no beneficiaries other than such Stockholder
or Related JLW Owner and/or one or more of the Persons
described in clauses (a) and (b)( "Qualifying Beneficiaries")
or, if the Stockholder is such a Trust Holder, between such
Trust Holder and the Qualifying Beneficiaries of such Trust
Holder; (d) a Transfer of Consideration Shares between the
Stockholder or, if applicable, the Related JLW Owner and/or one
or more of the Persons described in clauses (a) or (b) and any
corporation or limited liability company (a "Corporate Holder")
of which there are and continue to be, during the term of this
Agreement, no stockholders (or other Persons holding any direct
or indirect ownership interest therein) other than such
Stockholder or Related JLW Owner and/or one or more of the
Persons described in clauses (a) and (b) ("Qualifying
Stockholders") or, if the Stockholder is such a Corporate
Holder, between such Corporate Holder and the Qualifying
Stockholders of such Corporate Holder; or (e) a Transfer of
Consideration Shares between the Stockholder or, if applicable,
the Related JLW Owner and/or one or more of the Persons
described in clauses (a) or (b) and any general or limited
partnership (a "Partnership Holder") of which there are and
continue to be, during the term of this Agreement, no partners
(or other Persons holding any direct or indirect ownership
interest therein) other than such Stockholder or Related JLW
Owner and/or one or more of the Persons described in clauses
(a) and (b) ("Qualifying Partners") or, if the Stockholder is
such a Partnership Holder, between such Partnership Holder and
its Qualifying Partners; it being understood, with respect to
Transfers to any of the Persons described in clauses (c), (d)
or (e), that the later sale or transfer of any direct or
indirect beneficial or ownership interest therein (as
applicable) would constitute an indirect Transfer of the
Consideration Shares previously Transferred to such Person and
shall be made only pursuant to and in accordance with the terms
of this Agreement as if it were a direct transfer of
Consideration Shares. No Permitted Transfer shall be valid or
effective unless the proposed Permitted Transferee first agrees
in writing to be bound by the terms of this Agreement as if it
were a Stockholder by delivering a duly executed Additional
Party Signature Page to Parent.
"Permitted Transferee" means any Person who shall
have acquired and who shall hold Consideration Shares pursuant
to a Permitted Transfer.
"Registrable Securities" means, at any time, the
Consideration Shares (and any shares of Common Stock received
in respect of such Consideration Shares) that are subject to
this Agreement.
"Regulation S" means Regulation S promulgated by the
SEC under the Securities Act.
"Related JLW Owner" means the person named as
"Related JLW Owner" on the signature page hereto who is a
director, officer, employee or partner of a JLW Partnership,
Europe/USA Region Company, Asia Region Company, Australasia
Region Company, or any of their respective Subsidiaries, and
who owns or holds an interest, (beneficial or otherwise) direct
or indirect, in the Stockholder, or through which such
Stockholder will acquire Shares in the Integration.
"Rule 144" means Rule 144 promulgated by the SEC
under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as
amended and from time to time in effect and any successor
statute.
"Stockholder" means the Person named as "Stockholder"
on the signature page hereto and each Permitted Transferee
thereof; it being understood that, for purposes of this
definition, the term "Stockholder" shall include a Trustee
solely in its capacity as trustee of a Trust Holder, and not in
its individual capacity, unless such Trustee is independently a
Stockholder or Related JLW Owner, or a Controlled Affiliate of
the Stockholder or Related JLW Owner.
"Transfer" means, with respect to Consideration
Shares, any sale, assignment, pledge, hypothecation,
encumbrance, gift or other disposition or transfer of such
Consideration Shares in any manner whatsoever, direct or
indirect, including without limitation by the merger,
consolidation or sale of securities of the holder of such
Consideration Shares or an entity which owns, directly or
indirectly, a majority of the equity interest in such holder.
"Trustee" means the trustee of a Trust Holder.
"Trust Holder" shall have the meaning set forth in
the definition of the term "Permitted Transfer."
"Voting Securities" means (i) Common Stock
(including, without limitation, the Consideration Shares), (ii)
any other securities of Parent entitled to vote generally for
the election of directors of Parent and (iii) any securities of
Parent convertible into or exchangeable for or exercisable for
any Common Stock or such other securities.
Section 1.2 Words in Singular and Plural Form.
Words used in the singular form in this Agreement shall be
deemed to import the plural, and vice versa, as the sense may
require.
ARTICLE II
TERM
Section 2.1 Effectiveness of Agreement. This
Agreement shall be effective upon the Closing of the
transactions contemplated by the Purchase Agreements (the
"Effective Date").
Section 2.2 Term of Agreement. This Agreement shall
terminate on the date (the "Termination Date") that is the
earliest to occur of (i) the first Business Day immediately
following the fifth annual meeting of stockholders of Parent
following the Effective Date, (ii) June 1, 2003 and (iii) such
date as of which this Agreement has been terminated by mutual
agreement of Parent and the Stockholder.
ARTICLE III
COVENANTS
Section 3.1 Covenants. During the period commencing
on the Effective Date and ending on the Termination Date (the
"Covenant Period"), each of the Stockholder and, if
applicable, the Related JLW Owner shall not, and shall cause
each of their respective Controlled Affiliates not to, directly
or indirectly:
(a) make, or in any way cause or participate
in, any "solicitation" of "proxies" (as such terms are defined
or used in Rule 14a-1 promulgated under the Exchange Act) with
respect to Parent, become a "participant" in any "election
contest" (as such terms are defined or used in Rule 14a-11
promulgated under the Exchange Act) with respect to Parent, or
seek to advise, encourage or influence any person or entity
with respect to the voting of any Voting Securities, or execute
any written consent with respect to Parent or any Voting
Securities (except as otherwise permitted or required by this
Agreement);
(b) (i) initiate, propose or otherwise solicit
(or participate in the solicitation of) stockholders for the
approval of one or more stockholder proposals with respect to
Parent, as described in Rule 14a-8 promulgated under the
Exchange Act or otherwise, (ii) induce or attempt to induce any
other individual or entity to initiate, propose or solicit any
such stockholder proposal, or (iii) seek election to or seek to
place a representative on the Board, except as permitted by
this Agreement or the Applicable Joinder Agreement;
(c) in any manner, agree, attempt, seek or
propose (or make any request for permission) to deposit any
Voting Securities, directly or indirectly, in any voting trust
or similar arrangement or to subject any Voting Securities to
any other voting or proxy agreement, arrangement or
understanding, except as permitted or required by this
Agreement, provided that this Section 3.1(c) shall not prohibit
any such arrangement solely among the Stockholder and, if
applicable, the Related JLW Owner and/or one or more Controlled
Affiliates, Qualifying Beneficiaries, Qualifying Stockholders
or Qualifying Partners thereof, provided, further, that the
Stockholder and, if applicable, the Related JLW Owner shall,
and shall cause each of their respective Controlled Affiliates
to, comply with the other covenants and agreements contained
herein;
(d) form, join or in any way participate in a
group, act in concert with any other person or entity or
otherwise take any action or actions which would cause it to be
deemed a "person" (for purposes of Section 13(d) of the
Exchange Act) with respect to any Voting Securities of Parent,
provided that this Section 3.1 (d) shall not prohibit any such
arrangement solely among the Stockholder and, if applicable,
the Related JLW Owner and/or one or more Controlled Affiliates,
Qualifying Beneficiaries, Qualifying Stockholders or Qualifying
Partners thereof, provided, further, that the Stockholder and,
if applicable, the Related JLW Owner shall, and shall cause
each of their respective Controlled Affiliates to, comply with
the other covenants and agreements contained herein;
(e) participate in or encourage the formation
of any group (i) which owns, seeks or offers to acquire
beneficial ownership of any securities of Parent or rights to
acquire such securities or (ii) which seeks or offers to affect
control of Parent for the purpose of circumventing any
provision of this Agreement or Section 1.9 of the Purchase
Agreements, provided that Section 3.1(e)(i) hereof shall not
prohibit any such arrangement solely among the Stockholder and,
if applicable, the Related JLW Owner and/or one or more
Controlled Affiliates, Qualifying Beneficiaries, Qualifying
Stockholders or Qualifying Partners thereof, provided, further,
that the Stockholder and, if applicable, the Related JLW Owner
shall, and shall cause each of their respective Controlled
Affiliates to, comply with the other covenants and agreements
contained herein;
(f) (i) solicit, seek or offer to effect, (ii)
negotiate with or provide any information to any party with
respect to, (iii) make any statement or proposal, whether
written or oral, either alone or in concert with others, to the
Board, or to any director or to any other legal or beneficial
owner of Voting Securities of Parent with respect to, or (iv)
otherwise make any public announcement, proposal, offer or
filing under the Exchange Act, any similar statute or
otherwise, or take action to cause Parent to make any such
announcement, proposal, offer or filing with respect to:
(A) any form of business combination or similar transaction
involving Parent (other than transactions contemplated by this
Agreement, the Purchase Agreements and the other Operative
Agreements (as defined in each of the Purchase Agreements)) or
any Subsidiary thereof, including, without limitation, a
merger, tender or exchange offer or liquidation of Parent's
assets, (B) any form of restructuring, recapitalization or
similar transaction with respect to Parent or any Subsidiary
thereof, including, without limitation, a merger, tender or
exchange offer involving Parent or any Subsidiary thereof or
liquidation of Parent's assets, (C) any disposition of all or
substantially all of the assets of Parent, (D) any request to
amend, waive or terminate any of the provisions of this Section
3.1 or (E) any proposal or other statement inconsistent with
the terms of this Agreement; provided, that nothing contained
in this Section 3.1(f) shall be construed to prevent the
Stockholder or, if applicable, the Related JLW Owner (1) from
doing any of the foregoing in his or her capacity as an
employee, officer or director of Parent or any Subsidiary of
Parent (subject to the direction and control of the Board and
any officer of Parent or such Subsidiary to which such
Stockholder or, if applicable, the Related JLW Owner reports in
his or her capacity as such an officer or employee) or (2)
acting in his or her capacity as an employee, officer or
director of Parent or any Subsidiary of Parent, from
participating in, or otherwise seeking to affect (x) the
outcome of discussions and votes of the Board with respect to
matters coming before it or (y) decisions made or policies
formulated in connection with the management and operation of
the business of Parent, Parent's Subsidiaries and Affiliates,
and any divisions thereof;
(g) take any action challenging the validity or
enforceability of any covenant or agreement contained in this
Agreement; or
(h) instigate, advise, assist, encourage or
finance (or assist or arrange financing to or for) any Person
in connection with any of the foregoing.
Notwithstanding the foregoing, any action taken by the
Shareholder's Representatives pursuant to and in accordance
with the terms and conditions of the SCCA shall be deemed not,
in any such event, to be prohibited by this Agreement.
ARTICLE IV
TRANSFER RESTRICTIONS
Section 4.1 Restrictions on Transfer.
(a) During the period commencing on the
Effective Date and ending on the first anniversary thereof (the
"No Sale Period"), neither the Stockholder nor, if applicable,
the Related JLW Owner shall effect or permit any Transfer of
any Consideration Shares owned by the Stockholder, except:
(i) any Permitted Transfer;
(ii) the Stockholder or such
Related JLW Owner, as the case may be, shall be permitted to
pledge or grant a security interest in any or all Consideration
Shares owned by the Stockholder or the Related JLW Owner to a
bona fide financial institution as security for a bona fide
loan made to the Stockholder or such Related JLW Owner by such
financial institution; provided, that, prior to any such pledge
or the grant of any such security interest during the No Sale
Period, such financial institution shall agree in writing that
such financial institution shall not be entitled to foreclose
or otherwise realize upon such Consideration Shares prior to
the end of the No Sale Period unless (A) such financial
institution (i) retains such Consideration Shares until the end
of the No Sale Period and (ii) agrees in writing that such
Consideration Shares shall remain subject to this Agreement, or
(B) such financial institution forecloses upon and sells such
Consideration Shares in the ordinary course of business to an
unrelated third-party who first agrees in writing to be bound
by the terms of this Agreement as if such Person was a
Stockholder by delivering a duly executed Additional Party
Signature Page to Parent;
(iii) any Transfer to one or
more Shareholders or Other Shareholders (as such terms are
defined in the Applicable Purchase Agreement) or a Permitted
Transferee thereof pursuant to and in accordance with the terms
and conditions of the Applicable Joinder Agreement and the
SCCA;
(iv) pursuant to any tender or
exchange offer made pursuant to Section 14(d) of the Exchange
Act, with respect to which the Board does not recommend that
stockholders of Parent reject such offer (it being understood
that the Stockholder or such Related JLW Owner, as the case may
be, may not tender any such Consideration Shares pursuant to
such tender or exchange offer until Parent has publicly taken a
position with respect to such offer or has stated that it will
remain neutral or is unable to take a position with respect
thereto, in accordance with Rule 14e-2 of the Exchange Act, any
successor regulation or otherwise);
(v) pursuant to (A) a merger or
consolidation in which Parent is acquired or the Consideration
Shares held by the Stockholder or such Related JLW Owner are
automatically converted or exchanged, (B) a sale of all or
substantially all of Parent's assets to another Person or (C)
any other Transfer approved by the Board;
(vi) pursuant to any
registration statement filed by Parent on the Stockholder's
behalf; or
(vii) to Parent or any
Subsidiary thereof.
(b) Following the No Sale Period, neither the
Stockholder nor, if applicable, any Related JLW Owner shall
effect or permit any Transfer of any Consideration Shares owned
by such Stockholder pursuant to any tender or exchange offer
made pursuant to Section 14(d) of the Exchange Act, if the
Board has recommended that stockholders of Parent reject such
offer, and which recommendation has not been withdrawn (it
being understood that the Stockholder or such Related JLW
Owner, as the case may be, may not tender any such
Consideration Shares pursuant to such tender or exchange offer
until Parent has publicly taken a position with respect to such
offer or has stated that it will remain neutral or is unable to
take a position with respect thereto, in accordance with Rule
14e-2 of the Exchange Act, any successor regulation or
otherwise).
(c) Following the No Sale Period, unless the
Stockholder or, if applicable, such Related JLW Owner Transfers
Consideration Shares pursuant to the provisions of Rule 144(f)
or on a bona fide sale transaction on a foreign securities
exchange that would otherwise comply with paragraph (f) of Rule
144, if such paragraph of such rule were applicable to such
sale, the Stockholder or such Related JLW Owner, as the case
may be, shall take all reasonable actions to assure that no
Transfer of Consideration Shares is effected if, after such
Transfer, any Person (together with such Person's Affiliates
and the members of any group to which such Person is a member)
who acquires such Consideration Shares will own, or would
reasonably be expected to own, beneficially or of record,
directly or indirectly, Voting Securities representing 5% or
more of the total then outstanding Voting Securities.
(d) Notwithstanding anything to the contrary
contained herein, following the No Sale Period, unless
Consideration Shares are Transferred in a bona fide sale
transaction to a Person as to which the Stockholder or such
Related JLW Owner, if any, does not have (i) a greater than
five percent (5%), direct or indirect, financial, beneficial or
ownership interest or a familial relationship or (ii) the
right, directly or indirectly, to direct or control the voting
or disposition of such Consideration Shares held by such
Person, it shall be a further condition to any such Transfer
that the proposed transferee be (a) one or more Shareholders or
Other Shareholders (as such terms are defined in the Applicable
Purchase Agreement) or a Permitted Transferee thereof pursuant
to and in accordance with the terms and conditions of the
Applicable Joinder Agreement and the SCCA or (b) a Permitted
Transferee of the transferor; provided that such Stockholder
shall be entitled to make a bona fide gift to a legitimate
charitable institution (a "Charitable Transferee"), if such
Stockholder has no direct or indirect financial, beneficial or
similar interest in such Charitable Transferee and such
proposed Charitable Transferee first agrees in writing to be
bound by the terms of this Agreement as if it were a
Stockholder by delivering a duly executed Additional Party
Signature Page to this Agreement.
(e) Notwithstanding anything to the contrary
contained herein, neither the Stockholder nor, if applicable,
such Related JLW Owner shall effect or permit any Transfer of
any Consideration Shares owned by the Stockholder during or
after the No Sale Period, except in accordance with Section 3.2
of the Applicable Joinder Agreement, the terms of which are
incorporated herein by reference, or pursuant to an effective
registration statement under the Securities Act.
Section 4.2 Notice of Sale; Attempted Transfers Void.
The Stockholder or, if applicable, the Related JLW Owner shall
give Parent prompt notice of any Transfer of any Consideration
Shares held by the Stockholder or such Related JLW Owner. Any
attempted Transfer of Consideration Shares in violation of the
provisions of this Agreement shall be null and void and of no
force or effect, and the Consideration Shares subject to such
attempted Transfer shall remain subject to this Agreement.
Prior to any such attempted Transfer, the Stockholder shall
furnish, or cause to be furnished, to Parent evidence
reasonably satisfactory to Parent that such Transfer is being
made in compliance with the applicable provisions of this
Agreement.
Section 4.3 Legend and Stop Transfer Order. To
assist in effectuating the provisions of this Agreement, the
Stockholder and, if applicable, the Related JLW Owner hereby
consent (i) to the placement of the legends set forth in
Section 3.2 of the Applicable Joinder Agreement on all
certificates representing Consideration Shares owned, of record
or beneficially, by such Stockholder or Related JLW Owner,
until such Consideration Shares are no longer subject to the
terms of this Agreement or such legends are no longer required
by or can be removed in accordance with the above-referenced
section of the Applicable Joinder Agreement and (ii) to the
entry of stop transfer orders with Parent's transfer agent
against the Transfer of the Consideration Shares held by the
Stockholder or such Related JLW Owner, as the case may be,
except in compliance with the requirements of this Agreement,
the Applicable Joinder Agreement and the other Operative
Agreements.
ARTICLE V
VOTING
Section 5.1 Obligation to be Counted for Quorum.
During the Covenant Period, the Stockholder and, if applicable,
the Related JLW Owner (with respect to any Voting Securities
for which such Related JLW Owner has voting power) shall be
(and shall cause each Controlled Affiliate thereof that holds
Voting Securities to be) present, in person or by proxy (and
without further action Parent and the Stockholder and, if
applicable, such Related JLW Owner hereby agree that the
Stockholder and/or such Related JLW Owner, as the case may be,
shall be deemed to be present), at all meetings of stockholders
of Parent at which one or more of the matters described in
Section 5.2 or 5.3 hereof is to be submitted to a vote of the
stockholders of Parent so that all Voting Securities owned,
beneficially or of record, by the Stockholder or such Related
JLW Owner (or any such Controlled Affiliates) may be counted
for purposes of determining the presence of a quorum at such
meetings; provided, that with respect to meetings at which any
action is proposed to be taken regarding matters other than for
which the irrevocable proxy granted pursuant to Section 5.2 or
5.3 hereof is applicable, the Stockholder or such Related JLW
Owner, as the case may be, shall be deemed not to be in breach
of this Section 5.1 with respect to any such meeting if (a)
Parent shall fail to give the Stockholder or such Related JLW
Owner timely and proper notice of such meeting together with
(i) a form of proxy appointing one or more persons designated
by the Board to act as proxy for the Stockholder or such
Related JLW Owner and (ii) instructions for the execution of
such proxy by the Stockholder or such Related JLW Owner and
return of such proxy by ordinary mail, or (b) if the
Stockholder or such Related JLW Owner executes and returns such
proxy in accordance with such instructions, the person or
persons appointed to act for the Stockholder or such Related
JLW Owner in such proxy shall fail for any reason to attend
such meeting on behalf of the Stockholder or such Related JLW
Owner and be counted for purposes of determining the presence
of a quorum.
Section 5.2 Maintenance of Board Composition. During
the Covenant Period, the Stockholder and, if applicable, the
Related JLW Owner (with respect to any Voting Securities for
which such Related JLW Owner has voting power) agrees to take
(and to cause each Controlled Affiliate thereof that holds
Voting Securities to take) any and all Necessary Action (as
defined below) so as to cause (and in accordance with Section
2-507 of the General Corporation Law of Maryland hereby grants
to the individual serving from time to time as the corporate
secretary of Parent an irrevocable proxy during the Covenant
Period to vote any shares of Voting Securities held by the
Stockholder or such Related JLW Owner, as the case may be, for
the purpose of causing) the composition of the Board to be as
set forth in Section 1.9 of the Purchase Agreements.
"Necessary Action" for the purposes hereof means any and all
actions within the Stockholder's or such Related JLW Owner's
(or such Controlled Affiliate's) power and authority as a
stockholder of Parent or, if applicable, as a director or
officer of Parent, subject to any applicable fiduciary or legal
limitations, which actions may include (subject to the
foregoing limitations): (a) providing written consents with
respect to, the Voting Securities for which such Stockholder or
such Related JLW Owner (or such Controlled Affiliate) has
voting power, (b) calling special meetings of the stockholders
of Parent or, if applicable, the Board, (c) waiving notice with
respect to such meetings, (d) attending meetings of
stockholders (either in person or by proxy) or, if applicable,
the Board (either in person or by conference telephone), (e)
acting to fill vacancies in directorships on the Board and (f)
voting in favor of any required amendments to the Articles of
Incorporation or Bylaws of Parent; provided that the
Stockholder or such Related JLW Owner, as the case may be,
shall be deemed not to be in breach of any requirement of this
Section 5.2 with respect to attending or voting at any meeting
of the stockholders of Parent if (x) Parent shall fail to give
the Stockholder or such Related JLW Owner timely and proper
notice of such meeting together with (1) if the proxy described
above is not applicable, a form of proxy appointing one or more
persons designated by the Board to act as proxy for the
Stockholder or such Related JLW Owner and (2) instructions for
the execution of such proxy by the Stockholder or such Related
JLW Owner and return of such proxy by ordinary mail, or (y) if
the Stockholder or such Related JLW Owner executes and returns
such proxy in accordance with such instructions, the person or
persons appointed to act for the Stockholder or such Related
JLW Owner in such proxy shall fail for any reason to attend
such meeting or exercise the voting power granted pursuant to
such proxy.
Section 5.3 Voting by the Stockholder. During the
Covenant Period, the Stockholder and, if applicable, the
Related JLW Owner (with respect to any Voting Securities for
which such Related JLW Owner has voting power) agrees to vote
(and to cause each Controlled Affiliate thereof that holds
Voting Securities to vote) all Voting Securities with respect
to which the Stockholder or such Related JLW Owner (or such
Controlled Affiliate) has voting power (and in accordance with
Section 2-507 of the General Corporation Law of Maryland hereby
grants to the individual serving from time to time as the
corporate secretary of Parent an irrevocable proxy during the
Covenant Period to vote any share of Voting Securities held by
the Stockholder or such Related JLW Owner, as the case may be)
in accordance with the recommendation or direction of the Board
on all matters (a) submitted to the vote of stockholders of
Parent which have been proposed by any stockholder or
stockholders, as to which the Board has recommended against
approving (and such recommendation has not been withdrawn or
changed to a recommendation for approval) or (b) relating to
any merger or consolidation involving Parent, any sale of all
or substantially all of Parent's assets or any similar
transactions, as to which the Board has recommended against
approving (and such recommendation has not been withdrawn or
changed to a recommendation for approval).
ARTICLE VI
REGISTRATION RIGHTS
Section 6.1 Incidental Registration. During the
Covenant Period, if Parent proposes to file a registration
statement under the Securities Act with respect to an offering
for its own account or for the account of others of any class
of Voting Security (other than a registration statement (i) on
Form S-4 or S-8 (or any successor form), or (ii) filed in
connection with an exchange offer or an offering of securities
solely to Parent=s then existing stockholders), then, at the
sole discretion of the Board, Parent may (unless Parent is
registering shares of Voting Securities owned by current
directors, officers and employees of Parent who were partners
in DEL ("DEL Registrable Securities"), in which case Parent
shall) offer holders of JLW Registrable Securities the
opportunity to register such JLW Registrable Securities in such
offering, in accordance with the terms of such offering by in
each case giving written notice of such proposed filing to
holders of JLW Registrable Securities at least 20 days before
the anticipated filing date.
Section 6.2 Notification; Reduction. (a) The holder
of Registrable Securities shall notify Parent promptly (and in
no event later than 10 days after notice) of his, her or its
desire to include such Registrable Securities in the
registration statement. In the event that any registration
effected pursuant to this Article VI shall involve, in whole or
in part, a firm commitment underwritten public offering of
Common Stock, and the managing underwriter of such offering
shall be of the opinion that the inclusion of the number of JLW
Registrable Securities and the DEL Registrable Securities
sought to be included therein would materially and adversely
affect the distribution of the securities to be sold, the total
number of shares of Common Stock allocable to holders of JLW
Registrable Securities and holders of DEL Registrable
Securities which such underwriter indicates may be included
therein shall be allocated among the holders of JLW Registrable
Securities, as a group, and the holders of DEL Registrable
Securities, as a group, on the basis of the ratio of the
aggregate number of JLW Registrable Securities or DEL
Registrable Securities, as owned by such group on the Closing
Date, as the case may be, to the aggregate number of JLW
Registrable Securities and DEL Registrable Securities owned by
both such groups as of the Closing Date; provided that, if
either such group does not use its allocation, the remaining
shares allocated to such group may be used by the other group
and apportioned among the members thereof on a pro rata basis
or any other method upon which the Shareholders'
Representatives (in the case of the holders of JLW Registrable
Securities) or the Parent Employee Directors (in the case of
the holders of DEL Registrable Securities) may agree. If the
number of JLW Registrable Securities or DEL Registrable
Securities requested to be included in such registration
statement exceeds either such group's allocation, the available
shares shall be apportioned among the members of such group on
a pro rata basis (on the basis of the number of JLW Registrable
Securities or DEL Registrable Securities, as the case may be,
owned by the applicable holders). Notwithstanding the
foregoing, the Shareholders' Representatives shall in any event
be entitled to reapportion among the holders of JLW Registrable
Securities the total number of shares of Common Stock allocated
to such holders, which reapportionment, if any, shall be
included in a written notice provided to Parent by the
Shareholders' Representatives within 10 days after notice of
such allocation.
(b) Notwithstanding anything to the contrary
contained in this Article VI, Parent may withdraw any
registration statement referred to in this Article VI at any
time for any reason without thereby incurring any liability to
any other party hereto.
Section 6.3 Registration Procedures.
(a) If and when any Registrable Securities are to be
registered pursuant to this Article VI, Parent will as
expediently as possible:
(i) furnish to the holder of
Registrable Securities such number of copies of the
registration statement and the prospectus included therein
(including each preliminary prospectus), including any
supplements thereto, and other documents as such persons
reasonably may request in order to facilitate the public sale
or other disposition of the Registrable Securities covered by
such registration statement;
(ii) use its best efforts to register or
qualify the Registrable Securities covered by such registration
statement under the securities or "blue sky" laws of such
jurisdictions as the holder of Registrable Securities or, in
the case of an underwritten public offering, the managing
underwriter reasonably shall request, provided, however, that
Parent shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(iii) use its best efforts to list the
Registrable Securities covered by such registration statement
with any securities exchange on which the Common Stock of
Parent is then listed;
(iv) immediately notify the holder of
Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act,
of the happening of any event as a result of which the
prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, or if it is necessary
to amend or supplement such prospectus to comply with the law,
in which case the holder of Registrable Securities shall
immediately cease delivery of such prospectus and Parent will,
at the request of such holder of Registrable Securities,
prepare and furnish to such holder of Registrable Securities a
reasonable number of copies of a supplement or an amendment to
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares of Registrable
Securities, such prospectus, as amended or supplemented, will
comply with the law;
(v) as necessary to satisfy applicable
due diligence requirements, make available for inspection by
the holder of Registrable Securities and any attorney,
accountant or other agent retained by such holder of
Registrable Securities, subject to reasonable agreements
regarding confidentiality, financial and other records,
pertinent corporate documents and properties of Parent, and
cause Parent's officers, directors and employees to supply all
information reasonably requested by such holder of Registrable
Securities, attorney, accountant or agent, in connection with
such registration statement; and
(vi) issue to any underwriter to which
any holder of Registrable Securities may sell such Registrable
Securities in connection with any such registrations (and to
any direct or indirect transferee of any such underwriter or to
such holder of Registrable Securities, if such registered
offering is not underwritten) certificates evidencing such
Registrable Securities without any legend restricting the
transferability of the shares of the holder of Registrable
Securities.
(b) In connection with each registration hereunder,
the holder of Registrable Securities will furnish to Parent in
writing such information with respect to himself, herself or
itself and the proposed distribution by such holder as
reasonably shall be necessary in order to assure compliance
with federal and applicable state securities laws.
(c) In connection with the preparation and filing of
each registration statement registering Registrable Securities
under the Securities Act, Parent shall give the holder of
Registrable Securities and his, her or its counsel and accoun-
tants, the opportunity to review such registration statement,
each prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto.
(d) In connection with each registration pursuant to
this Article VI covering an underwritten public offering,
Parent and the holder of Registrable Securities agree to enter
into a written agreement with the managing underwriter in such
form and containing such provisions as are customary in the
securities business for such an arrangement between such
underwriter and companies of Parent's size and investment
stature; provided, however, that the holder of Registrable
Securities shall not be required to make any representations,
warranties or covenants relating to Parent and that Parent
shall make such representations, warranties and covenants.
Section 6.4 Expenses. (a) All expenses incurred by
Parent in complying with this Article VI, including, without
limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent
public accountants for Parent, fees and expenses (including
counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer
agents and registrars, costs of insurance and fees and
disbursements not to exceed $50,000 for one counsel for all
Europe/USA Region Shareholders, Asia Region Shareholders,
Australia Region Shareholders and any related holders of JLW
Registrable Securities who are participating in such offering,
but excluding any Selling Expenses, are called "Registration
Expenses." All underwriting discounts and selling commissions
applicable to the sale of Registrable Securities are called
"Selling Expenses."
(b) Parent will pay all Registration Expenses in
accordance with each registration statement under this Article
VI. All Selling Expenses in connection with each registration
statement under this Article VI shall be borne by the
participating holders in proportion to the number of shares
sold by each, or by such participating holders other than
Parent (except to the extent Parent shall be a seller) as they
may otherwise agree.
Section 6.5 Indemnification and Contribution. (a) In
the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to this Article
VI, Parent will indemnify and hold harmless the holder of
Registrable Securities and each other person, if any, who
controls such holder of Registrable Securities against any
losses, claims, damages or liabilities, joint or several, to
which they may become subject under the Securities Act, the
Exchange Act, or other foreign, federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which Registrable
Securities of such holder of Registrable Securities were
registered under the Securities Act pursuant to this Article
VI, any preliminary prospectus or final prospectus contained
therein, or any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and
will reimburse each such person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action,
provided, however, that Parent will not be liable in any such
case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so
made in conformity with information pertaining to such holder
of Registrable Securities or any such controlling person
furnished to Parent by such holder of Registrable Securities or
any such controlling person in writing specifically for use in
such registration statement or prospectus, and provided further
that, in the case of an offering that is not a firm commitment
underwritten public offering, with respect to any untrue
statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus, such indemnity in
this subsection (a) shall not inure to the benefit of any
holder of Registrable Securities if the person asserting any
such loss, claim, damage or liability who purchased the
Registrable Securities which are the subject thereof did not
receive a copy of an amended preliminary prospectus or final
prospectus (or final prospectus as amended or supplemented) at
or prior to the written confirmation of the sale of such
Registrable Securities to such person and the untrue statement
or alleged untrue statement or omission or alleged omission of
a material fact made in such preliminary prospectus was
corrected in the amended preliminary prospectus or final
prospectus (or final prospectus as amended and supplemented).
(b) In the event of a registration of any of the
Registrable Securities under the Securities Act pursuant to
this Article VI, the holder of Registrable Securities will
indemnify and hold harmless Parent, each person, if any, who
controls Parent within the meaning of the Securities Act, each
officer of Parent who signs the registration statement, each
director of Parent, each underwriter and each person who
controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint
or several, to which Parent or such officer, director,
underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement under which such Registrable Securities was
registered under the Securities Act pursuant to this Article
VI, any preliminary prospectus or final prospectus contained
therein, or any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and
will reimburse Parent and each such officer, director,
underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, provided, however, that such holder of
Registrable Securities will be liable hereunder in any such
case if and only to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with
information pertaining to such holder of Registrable Securities
furnished in writing to Parent by such holder of Registrable
Securities specifically for use in such registration statement
or prospectus, and provided, further, however, that any
liability of the holder of Registrable Securities hereunder
shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such
holder of Registrable Securities under such registration
statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the
proceeds received by such holder of Registrable Securities from
the sale of Registrable Securities covered by such registration
statement, net of all Selling Expenses actually borne by such
holder of Registrable Securities.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other
than under this Article VI and shall relieve it only for any
liability which it may have to such indemnified party under
this Article VI if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to
the extent it shall wish, to assume and undertake the defense
thereof with counsel satisfactory to such indemnified party,
and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake
the defense thereof, the indemnifying party shall not be liable
to such indemnified party under this Article VI for any legal
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation and of liaison with one counsel so selected,
provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that
there may be reasonable defenses available to it which are
different from or additional to those available to the
indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right
to select separate counsel (limited to one for all indemnified
parties) and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses
and fees of such separate counsel and other expenses related to
such participation to be reimbursed by the indemnifying party
as incurred.
(d) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any
case in which either (i) any holder of Registrable Securities
exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification
pursuant to this Section 6.5 but it is judicially determined
(by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or
the denial of the last right or appeal) that such
indemnification may not be enforced in such case
notwithstanding the fact that this Section 6.5 provides for
indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such holder
or any such controlling person in circumstances for which
indemnification is provided under this Section 6.5, then, and
in each such case, Parent and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such
proportion that such holder is responsible for the portion
represented by the percentage that the public offering price of
all Registrable Securities offered by such holder pursuant to
the registration statement bears to the public offering price
of all securities offered by all sellers (including Parent)
pursuant to such registration statement, and that Parent is
responsible for the remaining portion; provided, however, that,
in any such case, (A) no such holder will be required to
contribute any amount in excess of the public offering price of
such Registrable Securities offered by him, her or it pursuant
to such registration statement net of all Selling Expenses
actually borne by such holder of Registrable Securities; and
(B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
ARTICLE VII
GENERAL
Section 7.1 Specific Enforcement; Other Remedies.
Each party hereto (other than Parent) acknowledges and agrees
that Parent would be irreparably damaged in the event any of
the provisions of this Agreement were not performed by such
party in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that Parent shall be
entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United
States (or any state thereof) or country having jurisdiction,
in addition to any other remedy to which Parent may be entitled
at law or equity.
Section 7.2 Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable,
the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby (unless
such a construction is unreasonable).
Section 7.3 Headings. The Article and Section
headings contained herein are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement.
Section 7.4 Notices. All notices, requests, demands
and other communications made under or by reason of the
provisions of this Agreement shall be in writing and shall be
given by hand-delivery, air courier or telecopier (with a copy
also sent by hand delivery or air courier, which shall not
alter the time at which the telecopier notice is deemed
received), in each case addressed to the party to be notified,
in the case of Parent, at the address set forth in the
Applicable Joinder Agreement and, in the case of any other
party hereto, at the address set forth on the signature page
hereto or any Additional Party Signature Page, as applicable,
or such other address of a party as such party shall have
specified by prior written notice to the other party in
accordance with this Section 7.4. Such notices shall be deemed
given: at the time personally delivered, if delivered by hand
with receipt acknowledged; at the time received if sent
certified or registered mail; upon transmission thereof by the
sender and issuance by the transmitting machine of a
confirmation slip that the number of pages constituting the
notice have been transmitted without error, if telecopied, and
the second business day after timely delivery to the courier,
if sent by air courier.
Section 7.5 Applicable Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of Maryland, without giving effect to the
conflicts-of-law provisions thereof.
Section 7.6 Jurisdiction. Each of the parties
hereto hereby expressly and irrevocably submits to the non-
exclusive personal jurisdiction of the United States District
Court for the Northern District of Illinois, and to the
jurisdiction of any other competent court of the State of
Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal
to such federal court under 28 U.S.C. ' 1441, in connection
with all disputes arising out of or in connection with this
Agreement and agrees not to commence any litigation relating
thereto except in such courts; provided that if the aforemen-
tioned courts do not have subject matter jurisdiction, then the
proceeding shall be brought in any other state or federal court
located in the State of Illinois, preserving, however, all
rights of removal to such federal court under 28 U.S.C. ' 1441.
Notwithstanding the foregoing, the parties hereto agree that no
suit, action or proceeding may be brought in any state court in
the State of Illinois unless jurisdiction is unavailable in any
federal court in the State of Illinois. Each party hereby
waives the right to any other jurisdiction or venue for any
litigation arising out of or in connection with this Agreement
or the transactions contemplated hereby to which any of them
may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each of the parties hereto
agrees that each of the other parties shall have the right to
bring any action or proceeding for enforcement of a judgment
entered by the Illinois Courts in any other court or
jurisdiction.
Section 7.7 Service of Process. Each party
irrevocably consents to the service of process outside the
territorial jurisdiction of the courts referred to in Section
7.6 hereof in any such action or proceeding by giving copies
thereof by hand-delivery or air courier to his, her or its
address, as specified herein; provided, that the foregoing
shall not limit the right of a party to effect service of
process on the other party by any other legally available
method.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY
HEREBY WAIVES (TO THE FULLEST EXTENT PERMITTED BY LAW) ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE
PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, EXCEPT WITH THE WRITTEN CONSENT OF EACH OF THE
PARTIES, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 7.9 Entire Agreement. This Agreement, the
Applicable Joinder Agreement and the other Operative Agreements
constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof.
Section 7.10 Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors, legal representatives and assigns,
but this Agreement (or any of the rights hereunder) may not be
assigned by any party without the written consent of the other
party, except, in the case of the Stockholder, to any Permitted
Transferee. Except as provided in Sections 4.1(a)(i),
4.1(a)(ii) and 4.1(d) hereof, no transferee of Voting
Securities shall be bound by any provision of this Agreement.
Section 7.11 Amendment and Modification. This
Agreement may not be amended, modified or supplemented except
by an agreement in writing signed by both of the parties
hereto.
Section 7.12 Counterparts. This Agreement may be
executed simultaneously in counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Stockholder, if applicable,
the Related JLW Owner and Parent have caused this Agreement to
be duly executed as of the day and year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
SIGNATURE CONFIRMATION SHAREHOLDER:
Name:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
SIGNATURE CONFIRMATION* RELATED JLW OWNER:
Name:
Title:
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
<PAGE>
ANNEX A
ADDITIONAL PARTY SIGNATURE PAGE
The undersigned hereby executes the Stockholder
Agreement, dated as of October [!], 1998 (the "Agreement"), by
and among LaSalle Partners Incorporated, a Maryland
corporation, the Person named as "Stockholder" on the signature
page thereto and, if applicable, the person named as "Related
JLW Owner" on the signature page thereto, pursuant to the terms
and conditions thereof, authorizes this signature page to be
attached to a counterpart of the Agreement and agrees to be
bound by the Agreement as if the undersigned had executed the
Agreement as a Stockholder on and as of the date thereof.
Dated:
SIGNATURE CONFIRMATION
Name:
Title (if applicable):
Address:
By:
Name:
Title: Telephone:
Fax:
Dated:
EXHIBIT 10.9
- ------------
[FORM OF DEL STOCKHOLDER AGREEMENT]
STOCKHOLDER AGREEMENT, dated as of October [!], 1998 (this
"Agreement"), by and among (i) LaSalle Partners Incorporated, a Maryland
corporation ("Parent"), (ii) the Person named as "Stockholder" on the
signature page hereto (the "Stockholder") and (iii) if the Stockholder is
not a natural person, the person named as "Related DEL Owner" on the
signature page hereto.
WHEREAS, as of the date hereof, Parent and the other parties
named therein are entering into Purchase and Sale Agreements (the "Purchase
Agreements"), pursuant to which, among other things, it is contemplated
that Parent will acquire, directly or indirectly, the asset and property
management, advisory and other real estate-related businesses currently
being conducted under the name "Jones Lang Wootton" (the "JLW Business");
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Purchase Agreements that each Person who
will receive shares of common stock, $.01 par value per share ("Common
Stock"), of Parent, upon the terms and subject to the conditions set forth
in the Purchase Agreements, shall have executed and delivered a stockholder
agreement that is similar in many respect to this Agreement;
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Purchase Agreements that each current
director, officer and employee of Parent, or any Subsidiary thereof, who
was a former partner in DEL and each entity that was a partner of DEL on
June 30, 1998 (each a "DEL Stockholder" and, collectively, the "DEL
Stockholders") and each Related DEL Owner if applicable, shall have
executed and delivered a Stockholder Agreement in the form of this
Agreement (with this Agreement and the Stockholder Agreements being
executed and delivered by the other DEL Stockholders and Related DEL Owners
if applicable being herein called the "DEL Stockholder Agreements"); and
WHEREAS, Parent, DEL and the other parties named therein have
entered into a Registration Rights Agreement, dated as of April 22, 1997
(the "Registration Rights Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms. When used in this Agreement, the
following terms shall have the meanings specified:
"Additional Party Signature Page" means a signature page in the
form attached hereto as Exhibit A.
"beneficial ownership" shall have the meaning set forth under
Rule 13d-3 promulgated by the SEC under the Exchange Act.
"Board" means the entire board of directors of Parent, as
constituted in accordance with Parent's By-laws from time to time.
"Business Day" means any day (other than a Saturday or Sunday)
on which banks are permitted to be open and transact business in Chicago,
Illinois and London, England.
"Closing" means the closing of the transactions contemplated by
the Purchase Agreements.
"Closing Date" means the date upon which the Closing under each
of the Purchase Agreements occurs.
"Controlled Affiliate" means any Person controlled, directly or
indirectly, through one or more intermediaries, by the Stockholder or, if
applicable, the Related DEL Owner.
"Corporate Holder" shall have the meaning set forth in the
definition of the term Related Party Transfer.
"DEL" means DEL-LPL Limited Partnership, a Delaware limited
partnership, or DEL-LPAML Limited Partnership, a Delaware limited
partnership, or both.
"DEL Registrable Securities" means, at any time, all Restricted
Stock owned by DEL Stockholders who are current directors, officers or
employees of Parent or any direct or indirect Subsidiary thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended and from time to time in effect and any successor statute.
"group" shall have the meaning set forth in Section 13(d)(3) of
the Exchange Act.
"JLW Registrable Securities" means, at any time, all
Consideration Shares (and any shares of Common Stock received in respect of
such Consideration Shares) issued pursuant to the Purchase Agreements and
owned by current directors, officers and employees of Parent, or any direct
or indirect Subsidiary thereof, who were partners, directors, officers or
employees of the JLW Businesses.
"Parent Employee Directors" means, collectively, the four
executive officers of Parent who are members of the Board.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision
thereof, trust or other entity.
"Registrable Securities" means, at any time, the Restricted
Stock (and any shares of Common Stock received in respect of such
Restricted Stock) that are subject to this Agreement.
"Related DEL Owner" means the person named as "Related DEL
Owner" on the signature page hereto who is a director, officer, employee or
partner of Parent or any Subsidiary thereof and who owns or holds an
interest, (beneficial or otherwise) direct or indirect, in the Stockholder.
"Related Party Transfer" means: (a) a Transfer of Restricted
Stock between the Stockholder, or if applicable, the Related DEL Owner and
any descendant of such Stockholder or, if the Stockholder is not a natural
person, the Related DEL Owner; (b) a Transfer of Restricted Stock between
the Stockholder or, if applicable, the Related DEL Owner and the spouse or
surviving spouse of such Stockholder or, if such Stockholder is not a
natural person, the Related DEL Owner or of any descendant of such
Stockholder or Related DEL Owner; (c) a Transfer of Restricted Stock
between the Stockholder or, if applicable, the Related DEL Owner and/or one
or more of the Persons described in clauses (a) or (b) (a "Qualifying
Persons") and any trust (a "Trust Holder") in respect of which such
Stockholder or Related DEL Owner and/or one or more Qualifying Persons have
a greater than five percent (5%), direct or indirect, financial, beneficial
or ownership interest, or have the right to direct or control the voting or
disposition of the Restricted Stock held by such Trust Holder; (d) a
Transfer of Restricted Stock between the Stockholder or, if applicable, the
Related DEL Owner and/or one or more Qualifying Persons and any corporation
or limited liability company (a "Corporate Holder") in respect of which the
Stockholder and, if applicable, the Related DEL Owner, and/or one or more
Qualifying Persons have a greater than five percent (5%), direct or
indirect, financial, beneficial or ownership interest, or have the right to
direct or control the voting or disposition of the Restricted Stock held by
such Corporate Holder; (e) a Transfer of Restricted Stock between the
Stockholder or, if applicable, the Related DEL Owner and/or one or more
Qualifying Persons and any general or limited partnership (a "Partnership
Holder") in respect of which the Stockholders or, if applicable, the
Related DEL Owner and/or one or more Qualifying Persons have a greater than
five percent (5%) direct or indirect financial, beneficial or ownership
interest, or have the right to direct or control the voting or disposition
of the Restricted Stock held by such Partnership Holder; or (f) a Transfer
of Restricted Stock between the Stockholder and the Related DEL Owner.
"Related Party Transferee" means any Person who shall have
acquired and who shall hold Restricted Stock pursuant to a Related Party
Transfer.
"Restricted Stock" shall mean the shares of Common Stock owned
by the Stockholder at and as of the Effective Date hereof which were
received by such Stockholder upon the dissolution of DEL but excluding
shares of Comon Stock which (a) have been registered under the Securities
Act pursuant to an effective registration statement filed thereunder and
disposed of in accordance with the registration statement covering them, or
(b) have been publicly sold pursuant to Rule 144 or under the Securities
Act.
"Rule 144" means Rule 144 promulgated by the SEC under the
Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended
and from time to time in effect and any successor statute.
"Subsidiary" of any Person means any other Person in respect of
which such first Person owns voting securities, other voting ownership or
voting partnership interests that are sufficient to elect at least a
majority of the board of directors or other governing body of such other
Person (or, if there are no such voting interests, 50% or more of the
equity interest of which) at the time of such determination, are owned by
such first Person or another Subsidiary of such first Person.
"Transfer" means, with respect to Restricted Stock, any sale,
assignment, pledge, hypothecation, encumbrance, gift or other disposition
or transfer of such Restricted Stock in any manner whatsoever, direct or
indirect, including without limitation by the merger, consolidation or sale
of securities of the holder of such Restricted Stock or an entity which
owns, directly or indirectly, a majority of the equity interest in such
holder.
"Voting Securities" means (i) Common Stock (including, without
limitation, the Restricted Stock), (ii) any other securities of Parent
entitled to vote generally for the election of directors of Parent and
(iii) any securities of Parent convertible into or exchangeable for or
exercisable for any Common Stock or such other securities.
Section 1.2 Words in Singular and Plural Form. Words used in
the singular form in this Agreement shall be deemed to import the plural,
and vice versa, as the sense may require.
ARTICLE II
TERM
Section 2.1 Effectiveness of Agreement. This Agreement shall
be effective upon the Closing of the transactions contemplated by the
Purchase Agreements (the "Effective Date").
Section 2.2 Term of Agreement. This Agreement shall terminate on
the date (the "Termination Date") that is the earliest to occur of (i) the
first Business Day immediately following the fifth annual meeting of
stockholders of Parent following the Effective Date, (ii) June 1, 2003 and
(iii) such date as of which this Agreement has been terminated by mutual
agreement of Parent and the Stockholder.
ARTICLE III
COVENANTS
Section 3.1 Covenants. During the period commencing on the
Effective Date and ending on the Termination Date (the "Covenant Period"),
each of the Stockholder and, if applicable, the Related DEL Owner shall
not, and shall cause each of their respective Controlled Affiliates not to,
directly or indirectly:
(a) make, or in any way cause or participate in, any
"solicitation" of "proxies" (as such terms are defined or used in Rule 14a-
1 promulgated under the Exchange Act) with respect to Parent, become a
"participant" in any "election contest" (as such terms are defined or used
in Rule 14a-11 promulgated under the Exchange Act) with respect to Parent,
or seek to advise, encourage or influence any person or entity with respect
to the voting of any Voting Securities, or execute any written consent with
respect to Parent or any Voting Securities (except as otherwise permitted
or required by this Agreement);
(b) (i) initiate, propose or otherwise solicit (or
participate in the solicitation of) stockholders for the approval of one or
more stockholder proposals with respect to Parent, as described in Rule
14a-8 promulgated under the Exchange Act or otherwise, (ii) induce or
attempt to induce any other individual or entity to initiate, propose or
solicit any such stockholder proposal, or (iii) seek election to or seek to
place a representative on the Board, except as permitted by this Agreement;
(c) in any manner, agree, attempt, seek or propose (or make
any request for permission) to deposit any Voting Securities, directly or
indirectly, in any voting trust or similar arrangement or to subject any
Voting Securities to any other voting or proxy agreement, arrangement or
understanding, except as permitted or required by this Agreement, provided
that this Section 3.1(c) shall not prohibit any such arrangement solely
among the Stockholder and, if applicable, the Related DEL Owner and/or one
or more of their respective Controlled Affiliates or any Qualifying
Persons, provided, further, that the Stockholder and, if applicable, the
Related DEL Owner shall, and shall cause each of their respective
Controlled Affiliates to, comply with the other covenants and agreements
contained herein;
(d) form, join or in any way participate in a group, act
inconcert with any other person or entity or otherwise take any action or
actions which would cause it to be deemed a "person" (for purposes of
Section 13(d) of the Exchange Act) with respect to any Voting Securities of
Parent, provided that this Section 3.1 (d) shall not prohibit any such
arrangement solely among the Stockholder and, if applicable, the Related
DEL Owner and/or one or more of their respective Controlled Affiliates or
any Qualifying Persons, provided, further, that the Stockholder and, if
applicable, the Related DEL Owner shall, and shall cause each of their
respective Controlled Affiliates to, comply with the other covenants and
agreements contained herein;
(e) (i) participate in or encourage the formation of any
group which owns, seeks or offers to acquire beneficial ownership of any
securities of Parent or rights to acquire such securities or (ii) which
seeks or offers to affect control of Parent for the purpose of
circumventing any provision of this Agreement, provided that Section
3.1(e)(i) hereof shall not prohibit any such arrangement solely among the
Stockholder and, if applicable, the Related DEL Owner and/or one or more of
their respective Controlled Affiliates or any Qualifying Persons, provided,
further, that the Stockholder and, if applicable, the Related DEL Owner
shall, and shall cause each of their respective Controlled Affiliates to,
comply with the other covenants and agreements contained herein;
(f) (i) solicit, seek or offer to effect, (ii) negotiate with
or provide any information to any party with respect to, (iii) make any
statement or proposal, whether written or oral, either alone or in concert
with others, to the Board, or to any director or to any other legal or
beneficial owner of Voting Securities of Parent with respect to, or (iv)
otherwise make any public announcement, proposal, offer or filing under the
Exchange Act, any similar statute or otherwise, or take action to cause
Parent to make any such announcement, proposal, offer or filing with
respect to: (A) any form of business combination or similar transaction
involving Parent (other than transactions contemplated by this Agreement,
the Purchase Agreements and the other Operative Agreements (as defined in
each of the Purchase Agreements)) or any Subsidiary thereof, including,
without limitation, a merger, tender or exchange offer or liquidation of
Parent's assets, (B) any form of restructuring, recapitalization or similar
transaction with respect to Parent or any Subsidiary thereof, including,
without limitation, a merger, tender or exchange offer involving Parent or
any Subsidiary thereof or liquidation of Parent's assets, (C) any
disposition of all or substantially all of the assets of Parent, (D) any
request to amend, waive or terminate any of the provisions of this Section
3.1 or (E) any proposal or other statement inconsistent with the terms of
this Agreement; provided that nothing contained in this Section 3.1(f)
shall be construed to prevent the Stockholder or, if applicable, the
Related DEL Owner (1) from doing any of the foregoing in his or her
capacity as an employee, officer or director of Parent or any Subsidiary of
Parent (subject to the direction and control of the Board and any officer
of Parent or such Subsidiary to which such Stockholder or, if applicable,
the Related DEL Owner reports in his or her capacity as such an officer or
employee) or (2) acting in his or her capacity as an employee, officer or
director of Parent or any Subsidiary of Parent, from participating in, or
otherwise seeking to affect (x) the outcome of discussions and votes of the
Board with respect to matters coming before it or (y) decisions made or
policies formulated in connection with the management and operation of the
business of Parent, Parent's Subsidiaries and Affiliates, and any divisions
thereof;
(g) take any action challenging the validity or
enforceability of any covenant or agreement contained in this Agreement; or
(h) instigate, advise, assist, encourage or finance (or
assist or arrange financing to or for) any Person in connection with any of
the foregoing.
ARTICLE IV
TRANSFER RESTRICTIONS
Section 4.1 Restrictions on Transfer. During the Covenant
Period:
(a) the Stockholder or, if applicable, the Related DEL Owner
shall not effect or permit any Transfer of any Restricted Stock owned by
such Stockholder pursuant to any tender or exchange offer made pursuant to
Section 14(d) of the Exchange Act, if the Board has recommended that
stockholders of Parent reject such offer, and which recommendation has not
been withdrawn (it being understood that the Stockholder or such Related
DEL Owner, as the case may be, may not tender any Restricted Stock pursuant
to such tender or exchange offer until Parent has publicly taken a position
with respect to such offer or has stated that it will remain neutral or is
unable to take a position with respect thereto), in accordance with Rule
14e-2 of the Exchange Act, any successor regulation or otherwise;
(b) unless the Stockholder or, if applicable, the Related DEL
Owner Transfers Restricted Stock pursuant to the provisions of Rule 144(f),
in a bona fide sale transaction on a foreign securities exchange that would
otherwise comply with paragraph (f) of Rule 144, if such paragraph of such
rule were applicable to such sale or in an underwritten public offering
pursuant to an effective registration statement under the Securities Act,
the Stockholder or Related DEL Owner, as the case may be, shall take all
reasonable actions to assure that no Transfer of Restricted Stock is
effected if, after such Transfer, any Person (together with such Person's
Affiliates and the members of any group to which such Person is a member)
who acquires such Restricted Stock will own, or would reasonably be
expected to own, beneficially or of record, directly or indirectly, Voting
Securities representing 5% or more of the total then outstanding Voting
Securities; and
(c) the Stockholder or, if applicable, the Related DEL Owner
shall not Transfer any Restricted Stock to any Related Party Transferee
unless such Related Party Transferee first agrees in writing to be bound by
the terms of this Agreement as if it were a Stockholder by delivering a
duly executed Additional Party Signature Page to Parent.
Section 4.2 Notice of Sale; Attempted Transfers Void. The
Stockholder or, if applicable, the Related DEL Owner shall give Parent
prompt notice of any Transfer of any Restricted Stock held by the
Stockholder or such Related DEL Owner, as the case may be. Any attempted
Transfer of Restricted Stock in violation of the provisions of this
Agreement shall be null and void and of no force or effect, and the
Restricted Stock subject to such attempted Transfer shall remain subject to
this Agreement. Prior to any such attempted Transfer, the Stockholder
shall furnish, or cause to be furnished, to Parent evidence reasonably
satisfactory to Parent that such Transfer is being made in compliance with
the applicable provisions of this Agreement.
Section 4.3 Legend and Stop Transfer Order.
(a) To assist in effectuating the provisions of this
Agreement, the Stockholder and, if applicable, the Related DEL Owner hereby
consents to the placement of the legend set forth below on all certificates
representing Restricted Stock owned, of record or beneficially, by such
Stockholder or Related DEL Owner, as the case may be, until such Restricted
Stock is no longer subject to the terms of this Agreement:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE 'SHARES') ARE
SUBJECT TO THE PROVISIONS OF A STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER
[!], 1998, BY AND BETWEEN THE COMPANY AND THE PERSON WHOSE NAME APPEARS ON
THE REVERSE HEREOF, WHICH INCLUDES, WITHOUT LIMITATION, VARIOUS ADDITIONAL
RESTRICTIONS ON TRANSFER OF THE SHARES AND THE GRANTING OF CERTAIN VOTING
RIGHTS, A COPY OF WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST WITHOUT CHARGE.
(b) The Stockholder and, if applicable, the Related DEL Owner
acknowledges that any Transfer of Restricted Stock, or attempted Transfer,
made other than in compliance with the restrictions stated herein shall not
be recognized by Parent, and that Parent may deliver a corresponding stop-
transfer order to its transfer agent. Subject to the requirements hereof,
at any time after Restricted Stock is no longer subject to the provisions
of this Agreement, upon the written request of the holder thereof, Parent
shall remove the legend set forth in Section 4.3(a) hereof from the
certificate(s) representing such Restricted Stock or replace such
certificate(s) with certificate(s) not bearing such legend
ARTICLE V
VOTING
Section 5.1 Obligation to be Counted for Quorum. During the
Covenant Period, the Stockholder and, if applicable, the Related DEL Owner
(with respect to any Voting Securities for which such Related DEL Owner has
voting power) shall be (and shall cause each Controlled Affiliate thereof
that holds Voting Securities to be) present, in person or by proxy (and
without further action, Parent and the Stockholder and, if applicable, such
Related DEL Owner hereby agree that the Stockholder and/or such Related DEL
Owner, as the case may be, shall be deemed to be present), at all meetings
of stockholders of Parent at which one or more of the matters described in
Section 5.2 or 5.3 hereof is to be submitted to a vote of the stockholders
of Parent so that all Voting Securities owned, beneficially or of record,
by the Stockholder or such Related DEL Owner, as the case may be (or any
such Controlled Affiliates), may be counted for purposes of determining the
presence of a quorum at such meetings; provided, that with respect to
meetings at which any action is proposed to be taken regarding matters
other than for which the irrevocable proxy granted pursuant to Section 5.2
or 5.3 hereof is applicable, the Stockholder or such related DEL Owner, as
the case may be, shall be deemed not to be in breach of this Section 5.1
with respect to any such meeting if (a) Parent shall fail to give the
Stockholder or such related DEL Owner, as the case may be, timely and
proper notice of such meeting together with (i) a form of proxy appointing
one or more persons designated by the Board to act as proxy for the
Stockholder or such related DEL Owner, as the case may be, and (ii)
instructions for the execution of such proxy by the Stockholder or such
Related DEL Owner, as the case may be, and return of such proxy by ordinary
mail, or (b) if the Stockholder or such Related DEL Owner, as the case may
be, executes and returns such proxy in accordance with such instructions,
the person or persons appointed to act for the Stockholder or such Related
DEL Owner, as the case may be, in such proxy shall fail for any reason to
attend such meeting on behalf of the Stockholder or such related DEL Owner,
as the case may be, and be counted for purposes of determining the presence
of a quorum.
Section 5.2 Maintenance of Board Composition. During the
Covenant Period, the Stockholder and, if applicable, the Related DEL Owner
(with respect to any Voting Securities for which such Related DEL Owner has
voting power) agrees to take (and to cause each Controlled Affiliate
thereof that holds Voting Securities to take) any and all Necessary Action
(as defined below) so as to cause (and in accordance with Section 2-507 of
the General Corporation Law of Maryland hereby grants to the individual
serving from time to time as the corporate secretary of Parent an
irrevocable proxy during the Covenant Period to vote any shares of Voting
Securities held by the Stockholder or such Related DEL Owner, as the case
may be, for the purpose of causing) the composition of the Board to be as
set forth in Article X of the Amended and Restated Bylaws of Parent
attached hereto as Annex A (including, without limitation, voting at any
meeting of the stockholders of Parent in favor of any nominee for a
director of Parent proposed by any Nominating Committee). "Necessary
Action" for the purposes hereof means any and all actions within the
Stockholder's or such Related DEL Owner's, as the case may be (or such
Controlled Affiliate's), power and authority as a stockholder of Parent or,
if applicable, as a director or officer of Parent, subject to any
applicable fiduciary or legal limitations, which actions may include
(subject to the foregoing limitations): (a) providing written consents
with respect to the Voting Securities for which such Stockholder or such
Related DEL Owner, as the case may be (or such Controlled Affiliate), has
voting power, (b) calling special meetings of the stockholders of Parent
or, if applicable, the Board, (c) waiving notice with respect to such
meetings, (d) attending meetings of stockholders (either in person or by
proxy) or, if applicable, the Board (either in person or by conference
telephone), (e) acting to fill vacancies in directorships on the Board and
(f) voting in favor of any required amendments to the Articles of
Incorporation or Bylaws of Parent; provided that the Stockholder or such
Related DEL Owner, as the case may be, shall be deemed not to be in breach
of any requirement of this Section 5.2 with respect to attending or voting
at any meeting of the stockholders of Parent if (x) Parent shall fail to
give the Stockholder or such Related DEL Owner, as the case may be, timely
and proper notice of such meeting together with (1) if the proxy described
above is not applicable, a form of proxy appointing one or more persons
designated by the Board to act as proxy for the Stockholder or such Related
DEL Owner, as the case may be, and (2) instructions for the execution of
such proxy by the Stockholder or such Related DEL Owner, as the case may
be, and return of such proxy by ordinary mail, or (y) if the Stockholder or
such Related DEL Owner, as the case may be, executes and returns such proxy
in accordance with such instructions, the person or persons appointed to
act for the Stockholder or such Related DEL Owner, as the case may be, in
such proxy shall fail for any reason to attend such meeting or exercise the
voting power granted pursuant to such proxy.
Section 5.3 Voting by the Stockholder. During the Covenant
Period, the Stockholder and, if applicable, the Related DEL Owner (with
respect to any Voting Securities for which such Related DEL owner has
voting power) agrees to vote (and to cause each Controlled Affiliate
thereof that holds Voting Securities to vote) all Voting Securities with
respect to which the Stockholder or such Related DEL Owner, as the case may
be (or such Controlled Affiliate), has voting power (and in accordance with
Section 2-507 of the General Corporation Law of Maryland hereby grants to
the individual serving from time to time as the corporate secretary of
Parent an irrevocable proxy during the Covenant Period to vote any share of
Voting Securities held by the Stockholder or such Related DEL Owner, as the
case may be) in accordance with the recommendation or direction of the
Board on all matters (a) submitted to the vote of stockholders of Parent
which have been proposed by any stockholder or stockholders, as to which
the Board has recommended against approving (and such recommendation has
not been withdrawn or changed to a recommendation for approval) or
(b) relating to any merger or consolidation involving Parent, any sale of
all or substantially all of Parent's assets or any similar transactions, as
to which the Board has recommended against approving (and such
recommendation has not been withdrawn or changed to a recommendation for
approval).
ARTICLE VI
MATTERS RELATING TO THE
REGISTRATION RIGHTS AGREEMENT
Section 6.1 Registration Rights. The Stockholder and, if
applicable, the Related DEL Owner hereby agrees that, during the Covenant
Period, if Parent proposes to file a registration statement under the
Securities Act with respect to an offering for its own account or for the
account of others of any class of Voting Security (other than a
registration statement (i) on Form S-4 or S-8 (or any successor form), or
(ii) filed in connection with an exchange offer or an offering of
securities solely to Parent's then existing stockholders), then, at the
sole discretion of the Board, Parent may (unless Parent is registering JLW
Registrable Securities, in which case Parent shall) offer holders of DEL
Registrable Securities the opportunity to register such DEL Registrable
Securities in such offering, in accordance with the terms of such offering
by in each case giving written notice of such proposed filing to holders of
DEL Registrable Securities at least 20 days before the anticipated filing
date.
Section 6.2 Notification; Reduction.
(a) The holder of Registrable Securities shall notify Parent
promptly (and in no event later than 10 days after notice) of his, her or
its desire to include such Registrable Securities in the registration
statement. In the event that any registration effected pursuant to this
Article VI shall involve, in whole or in part, a firm commitment
underwritten public offering of Common Stock, and the managing underwriter
of such offering shall be of the opinion that the inclusion of the number
of JLW Registrable Securities and the DEL Registrable Securities sought to
be included therein would materially and adversely affect the distribution
of the securities to be sold, the total number of shares of Common Stock
allocable to holders of JLW Registrable Securities and holders of DEL
Registrable Securities which such underwriter indicates may be included
therein shall be allocated among the holders of JLW Registrable Securities,
as a group, and the holders of DEL Registrable Securities, as a group, on
the basis of the ratio of the aggregate number of JLW Registrable
Securities or DEL Registrable Securities, as owned by such group on the
Closing Date, as the case may be, to the aggregate number of JLW
Registrable Securities and DEL Registrable Securities owned by both such
groups as of the Closing Date; provided that, if either such group does
not use its entire allocation, the remaining shares allocated to such group
may be used by the other group. Any such shares allocated to the holders
of DEL Registrable Securities shall be apportioned among such holders on a
pro rata basis or any other method upon which the Parent Employee
Directors may agree. If the number of DEL Registrable Securities requested
to be included in such registration statement exceeds the number of shares
allocated to the holders of DEL Registrable Securities, as a group, the
available shares shall be apportioned among the members of such group on a
pro rata basis (on the basis of the number of DEL Registrable Securities
owned by the applicable holders or any other method upon which the Parent
Employee Directors may agree).
(b) Notwithstanding anything to the contrary contained in
this Article VI, Parent may withdraw any registration statement referred to
in this Article VI at any time for any reason without thereby incurring any
liability to any other party hereto.
Section 6.3 Registration Procedures.
(a) If and when any Registrable Securities are to be
registered pursuant to this Article VI, Parent will as expediently as
possible:
(i) furnish to the holder of Registrable Securities
such number of copies of the registration statement and the prospectus
included therein (including each preliminary prospectus), including any
amendments and supplements thereto, and other documents as such Person
reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such registration
statement;
(ii) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the holder of
Registrable Securities or, in the case of an underwritten public offering,
the managing underwriter reasonably shall request, provided, however, that
Parent shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(iii) use its best efforts to list the Registrable
Securities covered by such registration statement with any securities
exchange on which the Common Stock of Parent is then listed;
(iv) immediately notify the holder of Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing, or if it is necessary to amend or supplement such prospectus to
comply with the law, in which case the holder of Registrable Securities
shall immediately cease delivery of such prospectus and Parent will, at the
request of such holder of Registrable Securities, prepare and furnish to
such holder of Registrable Securities a reasonable number of copies of a
supplement or an amendment to such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such shares of Registrable
Securities, such prospectus, as amended or supplemented, will comply with
the law;
(v) as necessary to satisfy applicable due diligence
requirements, make available for inspection by the holder of Registrable
Securities and any attorney, accountant or other agent retained by such
holder of Registrable Securities, subject to reasonable agreements
regarding confidentiality, financial and other records, pertinent corporate
documents and properties of Parent, and cause Parent's officers, directors
and employees to supply all information reasonably requested by such holder
of Registrable Securities, attorney, accountant or agent, in connection
with such registration statement; and
(vi) issue to any underwriter to which any holder of
Registrable Securities may sell such Registrable Securities in connection
with any such registrations (and to any direct or indirect transferee of
any such underwriter or to such holder of Registrable Securities, if such
registered offering is not underwritten) certificates evidencing such
Registrable Securities without any legend restricting the transferability
of the shares of the holder of Registrable Securities.
(b) In connection with each registration hereunder, the
holder of Registrable Securities will furnish to Parent in writing such
information with respect to himself, herself or itself and the proposed
distribution by such holder as reasonably shall be necessary in order to
assure compliance with federal and applicable state securities laws.
(c) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the
Securities Act, Parent shall give the holder of Registrable Securities and
his, her or its counsel and accountants, the opportunity to review such
registration statement, each prospectus included therein or filed with the
SEC, and each amendment thereof or supplement thereto.
(d) In connection with each registration pursuant to this
Article VI covering an underwritten public offering, Parent and the holder
of Registrable Securities agree to enter into a written agreement with the
managing underwriter in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of Parent's size and investment stature;
provided, however, that the holder of Registrable Securities shall not be
required to make any representations, warranties or covenants relating to
Parent and that Parent shall make such representations, warranties and
covenants.
Section 6.4 Expenses. (a) All expenses incurred by Parent in
complying with this Article VI, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for Parent, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and fees and disbursements not to exceed
$50,000 for one counsel for all holders of DEL Registrable Securities who
are participating in such offering, but excluding any Selling Expenses, are
called "Registration Expenses." All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are called
"Selling Expenses".
(b) Parent will pay all Registration Expenses in accordance
with each registration statement under this Article VI. All Selling
Expenses in connection with each registration statement under this Article
VI shall be borne by the participating holders in proportion to the number
of shares sold by each, or by such participating holders other than Parent
(except to the extent Parent shall be a seller) as they may otherwise
agree.
Section 6.5 Indemnification and Contribution. (a) In the
event of a registration of any of the Registrable Securities under the
Securities Act pursuant to this Article VI, Parent will indemnify and hold
harmless the holder of Registrable Securities and each other person, if
any, who controls such holder of Registrable Securities against any losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act, the Exchange Act, or other foreign,
federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which DEL Registrable
Securities of such holder of Registrable Securities were registered under
the Securities Act pursuant to this Article VI, any preliminary prospectus
or final prospectus contained therein, or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each such person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action , provided, however, that Parent
will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so
made in conformity with information pertaining to such holder of
Registrable Securities or any such controlling person furnished to Parent
by such holder of Registrable Securities or any such controlling person in
writing specifically for use in such registration statement or prospectus,
and provided further that, in the case of an offering that is not a firm
commitment underwritten public offering, with respect to any untrue
statement or alleged untrue statement or omission or alleged omission made
in any preliminary prospectus, such indemnity in this subsection (a) shall
not inure to the benefit of any holder of Registrable Securities if the
person asserting any such loss, claim, damage or liability who purchased
the Registrable Securities which are the subject thereof did not receive a
copy of an amended preliminary prospectus or final prospectus (or final
prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person and
the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact made in such preliminary prospectus was
corrected in the amended preliminary prospectus or final prospectus (or
final prospectus as amended and supplemented).
(b) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to this Article VI, the holder
of Registrable Securities will indemnify and hold harmless Parent, each
person, if any, who controls Parent within the meaning of the Securities
Act, each officer of Parent who signs the registration statement, each
director of Parent, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which Parent or such
officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Registrable
Securities was registered under the Securities Act pursuant to this Article
VI, any preliminary prospectus or final prospectus contained therein, or
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse Parent and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, provided, however, that
such holder of Registrable Securities will be liable hereunder in any such
case if and only to the extent that any such loss, claim, damage, liability
or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and
in conformity with information pertaining to such holder of Registrable
Securities furnished in writing to Parent by such holder of Registrable
Securities specifically for use in such registration statement or
prospectus, and provided, further, however, that any liability of the
holder of Registrable Securities hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the shares sold
by such holder of Registrable Securities under such registration statement
bears to the total public offering price of all securities sold thereunder,
but not in any event to exceed the proceeds received by such holder of
Registrable Securities from the sale of Registrable Securities covered by
such registration statement, net of all Selling Expenses actually borne by
such holder of Registrable Securities.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Article VI and shall relieve it only for any liability which it may have to
such indemnified party under this Article VI if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under this Article VI for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with one counsel so
selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional
to those available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to
select separate counsel (limited to one for all indemnified parties) and to
assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
(d) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i)
any holder of Registrable Securities exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 6.5 but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial
of the last right or appeal) that such indemnification may not be enforced
in such case notwithstanding the fact that this Section 6.5 provides for
indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such holder or any such controlling
person in circumstances for which indemnification is provided under this
Section 6.5, then, and in each such case, Parent and such holder will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion
that such holder is responsible for the portion represented by the
percentage that the public offering price of all Registrable Securities
offered by such holder pursuant to the registration statement bears to the
public offering price of all securities offered by all sellers (including
Parent) pursuant to such registration statement, and that Parent is
responsible for the remaining portion, provided, however, that, in any such
case, (A) no such holder will be required to contribute any amount in
excess of the public offering price of such Registrable Securities offered
by him, her or it pursuant to such registration statement net of all
Selling Expenses actually borne by such holder of Registrable Securities;
and (B) no person or entity guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
ARTICLE VII
GENERAL
Section 7.1Specific Enforcement; Other Remedies. Each
party hereto (other than Parent) acknowledges and agrees that Parent would
be irreparably damaged in the event any of the provisions of this Agreement
were not performed by such party in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that Parent shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States (or any state thereof)
or country having jurisdiction, in addition to any other remedy to which
Parent may be entitled at law or equity.
Section 7.2Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby
(unless such a construction is unreasonable).
Section 7.3Headings. The Article and Section headings
contained herein are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 7.4Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier or
telecopier (with a copy also sent by hand delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed
received), in each case addressed to the party to be notified, in the case
of Parent, at LaSalle Partners Incorporated, 200 East Randolph Drive
Chicago, Illinois 60601, Attn: Chief Financial Officer and, in the case of
any other party hereto, at the address set forth on the signature page
hereto or any Additional Party Signature Page, as applicable, or such other
address of a party as such party shall have specified by prior written
notice to the other party in accordance with this Section 7.4. Such
notices shall be deemed given: at the time personally delivered, if
delivered by hand with receipt acknowledged; at the time received if sent
certified or registered mail; upon transmission thereof by the sender and
issuance by the transmitting machine of a confirmation slip that the number
of pages constituting the notice have been transmitted without error, if
telecopied, and the second business day after timely delivery to the
courier, if sent by air courier.
Section 7.5Applicable Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of
Maryland, without giving effect to the conflicts-of-law provisions thereof.
Section 7.6 Jurisdiction. Each of the parties hereto hereby
expressly and irrevocably submits to the non-exclusive personal
jurisdiction of the United States District Court for the Northern District
of Illinois, and to the jurisdiction of any other competent court of the
State of Illinois located in the County of Cook (collectively, the
"Illinois Courts"), preserving, however, all rights of removal to such
federal court under 28 U.S.C. ' 1441, in connection with all disputes
arising out of or in connection with this Agreement and agrees not to
commence any litigation relating thereto except in such courts; provided
that if the aforementioned courts do not have subject matter jurisdiction,
then the proceeding shall be brought in any other state or federal court
located in the State of Illinois, preserving, however, all rights of
removal to such federal court under 28 U.S.C. ' 1441. Notwithstanding the
foregoing, the parties hereto agree that no suit, action or proceeding may
be brought in any state court in the State of Illinois unless jurisdiction
is unavailable in any federal court in the State of Illinois. Each party
hereby waives the right to any other jurisdiction or venue for any
litigation arising out of or in connection with this Agreement or the
transactions contemplated hereby to which any of them may be entitled by
reason of its present or future domicile. Notwithstanding the foregoing,
each of the parties hereto agrees that each of the other parties shall have
the right to bring any action or proceeding for enforcement of a judgment
entered by the Illinois Courts in any other court or jurisdiction.
Section 7.7Service of Process. Each party irrevocably
consents to the service of process outside the territorial jurisdiction of
the courts referred to in Section 7.6 hereof in any such action or
proceeding by giving copies thereof by hand-delivery or air courier to his,
her or its address, as specified herein; provided, that the foregoing shall
not limit the right of a party to effect service of process on the other
party by any other legally available method.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES
(TO THE FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, EXCEPT
WITH THE WRITTEN CONSENT OF EACH OF THE PARTIES, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 7.9Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard
to the subject matter hereof and supercedes the Registration Rights
Agreement to the extent that the Stockholder had any rights thereunder.
Section 7.10 Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns, but this Agreement (or any
of the rights hereunder) may not be assigned by any party without the
written consent of the other party.
Section 7.11 Amendment and Modification. This Agreement
may not be amended, modified or supplemented except by an agreement in
writing signed by both of the parties hereto.
Section 7.12 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Stockholder and Parent have caused this
Agreement to be duly executed as of the day and year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
STOCKHOLDER:
Name:
Address:
Telephone:
Fax:
RELATED DEL OWNER (if applicable)
Name:
Address:
Telephone:
Fax:
<PAGE>
EXHIBIT A
ADDITIONAL PARTY SIGNATURE PAGE
IN WITNESS WHEREOF, the Stockholder, if applicable, the Related
DEL Owner and Parent have caused this Agreement to be duly executed as of
the day and year first above written.
LASALLE PARTNERS
INCORPORATED
By:
Name:
Title:
STOCKHOLDER:
Name:
Address:
Telephone:
Fax:
RELATED DEL OWNER (if applicable)
Name:
Address:
Telephone:
Fax:
EXHIBIT 23.1
- ------------
The Directors
LaSalle Partners Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
United States of America
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of LaSalle Partners Incorporated of our report
dated 23 November 1998 with respect to the consolidated financial
statements of Jones Lang Wootton (the English partnership and subsidiaries)
as of 31 December 1997 and 1996 and for each of the three years ended 31
December 1997, which reports appears in the Current Report on Form 8-K of
LaSalle Partners Incorporated dated 22 October 1998, and filed with the
Securities and Exchange Commission on or around 8 December 1998.
/S/ DELOITTE & TOUCHE
8 December 1998
EXHIBIT 23.2
- ------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-42183) pertaining to the LaSalle Partners Incorporated
Employee Stock Purchase Plan, LaSalle Partners Incorporated 1997 Stock
Award and Incentive Plan and LaSalle Partners Incorporated Stock
Compensation Program of our report dated October 20, 1998 with respect to
the consolidated financial statements of Jones Lang Wootton - Scotland
included in the Current Report on Form 8-K of LaSalle Partners Incorporated
dated October 22, 1998 filed with the Securities and Exchange Commission.
/S/ ERNST & YOUNG
GLASGOW, SCOTLAND
DECEMBER 4, 1998
EXHIBIT 23.3
- ------------
The Board of Directors
LaSalle Partners Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
United States of America
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of LaSalle Partners Incorporated of our report
dated 24 November 1998 with respect to the combined financial statements of
Jones Lang Wootton - Irish Practice as of 31 December 1997 and 1996 and for
each of the years in the three year period ended 31 December 1997, which
report appears in the Current Report on Form 8-K of LaSalle Partners
Incorporated dated 22 October 1998.
/S/ DELOITTE & TOUCHE
8 December 1998
EXHIBIT 23.4
- ------------
The Board of Directors
JLW Asia Holdings Limited
Hong Kong
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of LaSalle Partners Incorporated of our report
dated 12 November 1998 with respect to the Group balance sheets of JLW Asia
Holdings Limited and subsidiaries ("the Group") as of 31 December 1997 and
1996, and the related Group profit and loss accounts, Group statements of
total recognised gains and losses, reconciliations of shareholders' funds
and cash flows for each of the years in the three-year period ended 31
December 1997, which report appears in the Current Report on Form 8-K of
LaSalle Partners Incorporated dated 22 October 1998. Our report is based
in part upon the report of other independent auditors, with respect to JLW
Property Consultants Pte Ltd and its subsidiaries for the periods indicated
in their report thereon.
/S/ KPMG
Certified Public Accountants
Hong Kong
7 December 1998
EXHIBIT 23.5
- ------------
The Board of Directors
JLW Property Consultants Pte Ltd
9 Raffles Place
#39-00 Republic Plaza
Singapore 048619
Dear Sirs
JLW Property Consultants Pte Ltd & Its Subsidiary Companies
Years Ended 31 December 1996 and 31 December 1997
Independent Auditors' Report
We consent to the incorporation by reference in the Registration Statement
(No. 333-42193) on Form S-8 of LaSalle Partners Incorporated of our report
dated 12 March 1998 with respect to consolidated financial statements of
JLW Property Consultants Pte Ltd and its subsidiary companies as of 31
December 1997 and 31 December 1996 and the related profit and loss accounts
and cash flow statement for each of the three-year period ended 31 December
1997, which report appears in the Current Report on Form 8-K of LaSalle
Partners Incorporated dated 22 October 1998.
Yours truly
/S/ COOPERS & LYBRAND
Certified Public Accountants
Singapore, 7 December 1998
EXHIBIT 23.6
- ------------
7 December 1998
The Board of Directors
LaSalle Partners Incorporated
Chicago, Illinois
The Board of Directors
Jones Lang Wootton Australia Pty Limited
Level 27, Northpoint
Miller Street
NORTH SYDNEY NSW 2060
Ladies and Gentlemen
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of LaSalle Partners Incorporated of our report
dated 23 November 1998 with respect to the combined financial statements of
the JLW Australasia group as of 31 December 1997 and 1996 and for each of
the years in the three year period ended 31 December 1997, which report
appears in the Current Report on Form 8-K of LaSalle Partners Incorporated
dated 22 October 1998.
/S/ ERNST & YOUNG
EXHIBIT 23.7
- ------------
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
LaSalle Partners Incorporated
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of LaSalle Partners Incorporated of our report
dated September 21, 1998, except for note 12, which is as of October 31,
1998 with respect to the combined financial statements of the Compass Group
as of December 31, 1997 and for the period June 11, 1997 to December 31,
1997, which report appears in the Current Report on Form 8-K of LaSalle
Partners Incorporated dated October 22, 1998.
/S/ KPMG PEAT MARWICK LLP
Chicago, Illinois
December 8, 1998
